REG - AFC Energy Plc - Interim Results
29/06/2022 07:00
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RNS Number : 5510Q AFC Energy Plc 29 June 2022
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the EU market abuse
regulation (596/2014).
29 June 2022
AFC Energy plc
("AFC" or the "Company")
Interim Results
AFC Energy (AIM: AFC), a leading provider of hydrogen power generation
technologies, is pleased to announce its interim results for the half year
ended 30 April 2022.
Commercial Highlights
· First commercial order of S Series liquid cooled fuel cell system
received from ABB worth up to £4m
o High power density system
o Initially to be configured for EV charging use in grid constrained
environments
o System design contemplates other applications especially maritime and data
centres
o £2m non-refundable deposit received from ABB (revenue recognition upon
milestone achievement)
o Next milestone payment of £1 million due upon delivery of initial 100kW
unit scheduled for this year
· Considerable progress has been made since the launch of the
Company's new power dense S Series fuel cell systems and Power Tower products
in Q1 2022
o Partners and customers have opted to amend earlier agreements in order to
upgrade to the Company's latest Hydrogen power generation platforms.
· Order book of further qualified fuel cell deployment enquiries
continues to strengthen, leading to system leasing contracts
· Secured series of initial leasing contracts with construction
sector:
o Acciona Power Tower field trial to be conducted across several months in
Spain during H2
o Power Tower system leased to Keltbray for UK construction site deployment
in coming weeks
o Power Tower system leased to Kier for South West construction site
deployment in August 2022 (signed post period-end)
· Extreme E contracted to continue to use AFC Energy's L Series
fuel cell for all five rounds of Season 2 following a successful inaugural
season
· Successful deployment of L Series fuel cell system to Urban-Air
Port's Air One deployment in Coventry designed to support electric vertical
take-off and landing (eVTOL) aircraft and serve as a hub for other sustainable
modes of transport like electric vehicles (EVs)
· Successfully achieved Approval in Principle ("AiP") in December
2021 from international certification agency DNV for Ammonia based fuel cell
and cracker system for cargo ships in conjunction with ship builder, VARD
o AiP receipt has led to multiple new enquiries from ship builders
interested in exploring auxiliary and propulsion systems .
Financial Highlights
· Revenue of £0.28 million (HY 2021: £0.15 million) includes
revenue earned for Extreme E second season series contract renewal
· Initial payment of £2 million collected from ABB
· Half year cash balance of £48.6m (HY 2021: £61.3m) with a loss
for the period of £8.5m (HY 2021: £3.6m)
· Company continues to target full year growth in revenue
Operational Highlights
· Production, technical and operating capacity significantly
enhanced during the period with employee numbers up to 87 at period end
(2021: 34) further improving depth of skills and experience
· Significant facility upgrades completed with new offices,
manufacturing and testing facilities
· Graeme Lewis, Chief Financial Officer, has today informed the
Company that he wishes to retire. In order to ensure an orderly handover to
his successor, Graeme has agreed to stay with the Company until 30 April 2023.
The Company has commenced the process of recruiting a successor and will
update the market in due course.
Technology Highlights
· Launched the new S Series Power Tower utilising AFC Energy's
Hybrid Fuel Cell ("HFC") platform
o offers materially higher energy density than earlier generation products
o aimed at the ability to use Methanol and Ammonia alongside Hydrogen to
offer fuel cell customers a "flex fuel" solution
· Development of the 2.5kW air cooled, high energy dense, fuel cell
technology platform which is the core component of the Power Tower system
· Working with methanol reformer and ammonia cracker technologies
to optimise whole of system operation to drive reductions in Total Cost of
Ownership ("TCO")
· Completed Front End Engineering and Design ("FEED") study for
Fuel Tower concept utilising methanol reformer technology platforms to support
Power Tower deployments
· A number of further technology developments are expected in the
second half of the year, including:
o Integration of methanol reformer into Power Tower unit validating new fuel
flex platform
o Taking receipt of scaled up ammonia cracker technology for integration
with fuel cell systems
o Creation of new technology platforms upstream of the fuel cell for wider
value chain exposure
o Multiple Power Tower configuration to increase power output and higher
voltage efficiencies
Outlook
· Series of Power Tower deployments at construction sites in the UK
and Spain in H2 will deliver valuable field data ahead of wider customer
deployment
o Initial leased system deployments to construction market expected to lead
to further deployments and commercial orders
o ACCIONA Power Tower system undergoing final commissioning before
deployment to Spain over the next fortnight
· Expected delivery in latter part of the year of ABB's first
milestone of 100kW high energy dense S Series Liquid Cooled fuel cell system
run on Hydrogen
· System cost reductions combined with high cost of diesel and the
removal of UK diesel subsidies are driving increased levels of customer
enquiries
· Revenues from the leasing of Power Tower systems to be
supplemented by the associated supply of Hydrogen on commercial terms
· Continued cost reduction of system and components through
engineering and volume pricing
· Ongoing dialogue with maritime sector raising profile of AFC
Energy's technology for shipping and portside applications
Adam Bond, Chief Executive of AFC Energy, said:
"I am pleased that following the launch earlier this year of our Power Tower
fuel cell platform, AFC Energy will see several of these new systems being
operated by strategic partners in off-grid environments in the coming months.
We are carefully selecting strategic partners that have a pressing need and
desire to lead in the decarbonisation of their industries in line with Net
Zero aspirations.
"We continue to assess our manufacturing scale up and supply chain and are
preparing for growth in system production and deployment. The Power Tower,
whilst currently focussing on Hydrogen fuel, will also be able to meet the
demands of clients for Hydrogen carrier fuel compatibility later this year
with the integration of methanol reformer technology. We believe, based on
market feedback, that this will lead to an increase in the number of systems
deployed and also the size of those systems.
"Our robust cash position enables us to continue to invest in our people,
products and technology platforms to maximise our potential within the global
clean energy space. The macro environment of high global energy prices and
drive for enhanced energy security and independence continues to create a
compelling environment for accelerated growth of the global Hydrogen market
and we remain focused on delivering tangible deployment expectations for the
full year."
-ENDS-
For further information, please contact:
AFC Energy plc +44 (0) 14 8327 6726
Adam Bond (Chief Executive Officer) investors@afcenergy.com (mailto:investors@afcenergy.com)
Ben Bradshaw (Head of Marketing)
Peel Hunt LLP - Nominated Adviser and Joint Broker +44 (0) 207 418 8900
Richard Crichton / Tom Ballard / Alexander Allen
M C Peat & Co LLP - Joint Broker +44 (0) 20 7104 2334
Charlie Peat
Zeus - Joint Broker +44 (0) 203 829 5000
Daniel Harris / James Hornigold (Investment Banking)
Dominic King (Corporate Broking) / Rupert Woolfenden (Sales)
FTI Consulting - Financial PR Advisors +44 (0) 203 727 1000
Ben Brewerton / Nick Hennis / Dhruv Soni afcenergy@fticonsulting.com (mailto:afcenergy@fticonsulting.com)
About AFC Energy plc
AFC Energy plc is a leading provider of hydrogen fuel cell power
systems to generate clean energy in support of the global energy
transition. Based in the UK, the Company's scalable systems provide
off-grid, zero emission power that are already being deployed for rapid
electric vehicle charging and the replacement of diesel generators for
temporary power applications. AFC Energy is also working with global
partners in the deployment of products for the Maritime, Ports, Data Centres
and Rail industries, emphasising the central role of its technology in the
decarbonisation of global industry.
Operational review
AFC Energy continues to scale up its operations supporting the global
transition to Net Zero. We have invested both in people and facilities to
create a global centre of excellence in fuel cells and flex fuelling systems
unrivalled in the world. This team, together with contributions from our
strategic partners, aims to deliver competitive integrated fuel cell solutions
to meet the needs of a sustainable transition away from diesel generators.
We continue to engage with customers and other end users whose feedback is
important to help us continually align our product development roadmap with
their needs and timelines.
Commercial activity
Our target markets remain unchanged with our immediate focus being the
displacement of diesel generators from the off-grid / grid constrained
environment. With the UK's removal of fiscal subsidies on the red diesel
traditionally used in construction and off-grid power markets, together with
the growing cost of diesel fuel due to macro circumstances, we are seeing an
acceleration in the all in cost of highly pollutant generators making premium
priced "green" alternatives a more viable solution in the market today.
AFC Energy's commercial activity therefore continues to target those markets
where industry dynamics and policy drivers support early adoption of our
hydrogen fuel cells. The optionality afforded by our "fuel flex" approach,
giving customers the choice of fuel between direct Hydrogen or Hydrogen
carrier fuels such as Green Ammonia and Green Methanol to achieve the lowest
total cost of ownership, is driving increased market engagement and continues
to be our unique selling point into the off-grid power market.
The construction sector continues to be a market where the desire and need for
immediate change is most evident and is therefore expected to be one of the
first sectors to transition from diesel generators to Hydrogen fuel cells.
Deployment agreements signed with Keltbray and Kier Group, two leading UK
contractors, in addition to Spanish construction group, Acciona, will generate
revenue this year and provide valuable proof points for customers, regulators,
procurement authorities and most importantly, site operators. Initial
contracts will allow counter parties to familiarise themselves with our 10kW
Power Tower, before larger capacity Power Towers become available with the
next design series. A unique selling point sought by all these customers is a
flexible fuelling technology which sets us apart from competing technologies
by offering a lower total cost of ownership. The Company is confident that
successful initial deployments will lead to further commercial orders.
Our current pipeline is principally front ended with short term leases which
will provide modest revenues (compared to eventual sales) but the quality of
our customers, due to their scale and market influence (including with plant
hire businesses), gives us confidence of successfully demonstrating our
systems to the industry, with resultant growth and quantum of revenue
following thereafter.
Extreme E, following a successful partnership in the inaugural season, has
contracted to continue to use our "L" Series fuel cell platform, for the five
round, 2022 season. This partnership continues to provide evidence of how
AFC Energy's technology can operate in the harshest of conditions in some of
the remotest locations on Earth. The championship continues to also provide
high levels of publicity and customer enquiries whilst also generating revenue
from the leasing of equipment for the year.
Progress on collaborations
In November 2021, we announced the sale and development agreement with ABB.
Under the agreement, ABB has already paid £2 million with two further
instalments, worth a combined total of £2 million, due on successful
completion of laboratory and field testing.
By committing to purchase the first 'S' series liquid cooled system, ABB is
helping to fund the wider liquid cooled platform project - the basis for all
larger (>100KW) fuel cell systems envisaged for use in maritime, data
centre and large stationary power installations. ABB's participation
provides us with direct end user feedback on the system which will form the
basis for continuous product development improvements.
The majority of work performed to date has been setting up the infrastructure,
both people and manufacturing equipment, and the design and development of the
core technology for the key components of this next generation fuel cell
platform. Our current expectation is for laboratory validation to begin in
the latter part of the year.
Whilst the platform is specifically intended for high voltage EV charging, the
system, once delivered, will also form the basis of collaborations across
other ABB markets, including maritime and data centre applications. Over the
past six months, through ABB, we have commenced dialogue with several of their
customers in the maritime and data centre sectors.
Our relationship with Juelich continues to evolve. Their original order was
for a 100 kW "L" series bespoke system; however, after further discussions on
our product development roadmap, agreement was been reached to review and
update the deliverables in line with technology progression. However,
Juelich has advised due to further delays with regards the civils of the
project mean they will be unable to take possession until the H2 2023. In
the interim, Juelich has made a down payment to AFC Energy to demonstrate its
ongoing commitment to the project.
In December 2021, we announced that DNV, the international certification
agency, had awarded "Approval in Principle" ("AiP") status for the ZeroCoaster
ammonia fuelled cargo ship, confirming independently that the design concept
was feasible. Vard, the consortium leader, are leading commercial activities
in regards the marketing of the vessel's design to customers. We see this as a
sizeable medium to long term opportunity as the transition to zero / low
carbon shipping technologies takes place. Following receipt of the AiP, we
have received a significant number of enquiries from ship yards and maritime
operators seeking to undertake diligence over our technology platforms,
ranging from cracker to fuel cell. We have also had early interest from ship
builders in green methanol based solutions, however these also represent early
discussions and are longer term opportunities within the global maritime
sector.
Discussions with Al Taaqa Alternative Solutions for a distribution agreement
has continued with valuable insights received on the end user demand which can
be summarised as a >100 kW system supported by flexible fuelling solutions.
The relationship is ongoing and we are currently evaluating these requirements
into our product roadmap and looking at ways to accelerate the timeline
whereby we can deliver to their needs.
A joint deployment team has been set up with Acciona and a construction
project in Andalucia has been identified and evaluated as the planned test
site. The unique selling point Acciona see with our solution is access to a
flexible fuelling solution which provides a lower total cost of ownership than
other similar competing technologies. We are finalising the production of the
first Power Tower and expect to have the unit on site shortly.
Fuel cell platforms
Investment focus has been on the design and accelerated build of our latest
2.5kW air cooled fuel cell module and the associated "S" series stack which is
the fundamental building block of our air-cooled fuel cell solutions aimed at
near term target markets. The 2.5kW module forms the basis of our 10kW Power
Tower. The performance of the 2.5kW module has surpassed expectations in
terms of system efficiency and power output and, in collaboration with our
supply chain partners, we are already seeing sizeable cost reductions across
key component parts.
Due to global supply chain challenges experienced by many industries at
present, we have made early investments into the purchase of long lead items
so that when finalised we are in a position to embark upon a sizeable initial
production run of hybrid units for customers.
Further development work has been done on integration platforms which drive
modularity and scalability for our customers; specifically, the first Power
Tower units have been developed and are part of the initial production run for
field trialling. It is likely that the air cooled platform will form the
basis of all systems up to (approx.) 100kW nameplate capacity.
In addition to the 2.5kW air cooled fuel cell module, we have also commenced a
sizeable piece of work in delivering a fast track liquid cooled system
supported by ABB's partnership with us. The liquid cooled system will most
likely be sized in modules of 100kW and therefore provide the platform for
larger scaled systems designed for the maritime and data centre markets.
In each of these configurations, being air cooled or liquid cooled, we expect
to have the ability to offer both alkaline and hybrid based systems. In the
short term, focus will be on early stage hybrid system deployment at sub 100kW
scale where hydrogen or methanol are likely to provide an earlier route to
market, with ammonia lending itself to larger scale systems.
In respect to core technology development, we have been assessing our own MEA
technology against externally available materials in order to balance time to
market, performance specifications and durability - all of which are critical
to the total cost of ownership for our customers. Ultimately, our aim is to
develop a suite of polymer options allowing us to tailor chemistries to meet
the specific application and fuel requirements - "flex fuelling". This is
fully consistent with the alkaline and hybrid fuel cell platforms under
development. Importantly, we are focussing on technologies which give us
fastest route to market whilst also matching customer fuelling strategies.
During the past six months, work has continued with independent institutions
to validate the performance of AFC Energy's AlkaMem membrane in water
electrolyser formats. The results have been very encouraging and whilst not
an immediate priority for the Company, the membrane in electrolyser format
clearly affords value creation opportunities beyond the immediate corporate
focus of fuel cell system deployment.
De Nora continue to support us and Extreme E through the provision of
electrodes for the L series units.
Fuel systems
As part of our "fuel flex" strategy, AFC Energy has evaluated a wide range of
existing ammonia cracker and methanol reformer technologies which are
available in the market today. At present, AFC Energy has in operation
working crackers and reformers at its Dunsfold facility with work ongoing to
fully integrate the operability of these systems into Power Towers and the ABB
200kW system set for deployment in 2023. These technologies are at the heart
of our fuel flex approach to fuel cells with the objective of driving down
total cost of ownership based on low cost fuelling alternatives.
A FEED study has recently been completed for the Fuel Tower concept using
methanol as an alternative hydrogen carrier to support our suite of Power
Tower branded products with options for scaling up to >100kW systems
already in play.
A design for a 100kW+ ammonia cracker has also been completed in house with
orders placed for systems sourced from third party suppliers.
An important part of the upstream integration is the proprietary controls and
systems interfaced being designed by AFC Energy for customer deployment. A
new team of professionals have been hired to develop these systems, creating
further value to end users and shareholders alike. Our experience in the
fuel cell market is that these services are rarely offered by our peers, and
is a key differentiator to our customers.
Whilst focus has been on the integration of third party crackers and reformers
into our fuel cell platforms, work has commenced on a fuelling product
roadmap, distinct from the fuel cell platforms, building on proprietary
knowledge built up in this area and identify opportunities to develop
incremental upstream technology ourselves.
Our original manufacturing agreement with BK Gulf, announced in November 2020,
was for the assembly of "L" Series units. This agreement remains in place.
However, with the strong shift in customer interest towards the "S" Series, we
are realigning our manufacturing strategy towards mass production of these
systems. We continue to benefit from a strong relationship with BK Gulf and
are exploring models for how this partnership might develop.
Facilities scale up
Significant investment has been made during the period to upgrade offices and
manufacturing facilities. Our new facilities can accommodate almost double
the number of staff than before and also incorporate new electronics labs,
cracker and reformer test facilities, manufacturing scale up space and system
commissioning infrastructure. The majority of this work is now coming to an
end with only minor upgrades still required to some lab-based assets.
Growing our workforce
Our workforce grew from 34 to 87 staff since this time last year and continues
to grow with total staff numbers now of just over 100.
Graeme Lewis, Chief Financial Officer, has today informed the Company that he
has elected to retire. Graeme has been CFO at the Company for four years.
Graeme, who joined the Board of Directors in 2020, will not be standing for
re-election at the next AGM but will remain with the Company until 30 April
2023 to ensure an orderly handover as it searches for a replacement. Warren
Partners has been appointed to support the Company in its search for a new
CFO. We wish to thank Graeme for his contribution and support to the Company
over the past four years and wish him every success for the future.
Finances
At the end of the period our cash balance was £48.6 million (2021: £61.3
million), compared to cash absorbed by operating and investing activities of
£6.7 million (2021: £6.8 million). The cash absorbed is after receipt of
deferred customer income of £2 million (2021: £0.4 million).
Loss before tax for the period was £8.5 million (2021: £3.6 million).
Outlook
The macro outlook for sustainable energy remains very strong. Global
commitments to transition towards a net zero world are now being complemented
by pan Governmental commitments to enhance energy independence through
displacement of Russian sourced natural gas. This, along with high oil, gas
and coal prices, is leading to unprecedented investments across the Hydrogen
economy, particularly in Europe.
AFC Energy will see its first Power Tower deployments in the market this year
with strategic customers, particularly in the construction sector, who are
able to influence and drive sustainable change in the decarbonisation of
construction sites and temporary power. These case studies cannot be
undervalued as a means of further validating our value proposition to the
wider temporary power market. Initial revenue from these deployments will be
built around short term funded validations, which are expected to open up new
growth opportunities to rent or sell fuel cell platforms thereafter.
Our partnership with ABB is expected to generate further revenue through our S
Series, new liquid cooled technology platforms capable of deployment across a
range of sectors.
We remain in a strong financial position. Our customers and partners are
aligned with our product development and manufacturing roadmaps, and whilst
the wider economic environment remains uncertain, the need for investment into
sustainable technologies to deliver on environmental priorities is stronger
than ever.
I would like to again express my thanks to all our employees and partners who
have invested significant effort over these past six months to position AFC
Energy to again make strides in driving the Hydrogen economy to a commercial
reality.
Adam Bond
Chief Executive Officer
29 June 2022
STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 April 2022
Six-months ended Six-months ended Year ended
30 April 2022 30 April 2021 31 October 2021
£ £ £
Note Unaudited Unaudited Audited
Revenue from customer contracts 4 275,590 149,062 592,800
Cost of sales (250,668) (145,235) (576,831)
Gross income 24,922 3,827 15,969
Other income 197 - 25,470
Operating costs 5 (8,626,462) (3,589,960) (10,450,005)
Operating loss (8,601,343) (3,586,133) (10,408,566)
Finance cost 6 (25,383) (18,291) (51,694)
Bank interest receivable 6 83,949 6,155 18,690
Loss before tax (8,542,777) (3,598,269) (10,441,570)
Taxation 7 745,293 283,072 1,063,317
Loss for the financial period and total comprehensive loss attributable to
owners of the Company
(7,797,484) (3,315,197) (9,378,253)
Basic loss per share 8 (1.06)p (0.49)p (1.33)p
Diluted loss per share 8 (1.06)p (0.49)p (1.33)p
All amounts relate to continuing operations.
STATEMENT OF FINANCIAL POSITION
As at 30 April 2022
Six-months ended Six-months ended Year ended
30 April 2022 30 April 2021 31 October 2021
£ £ £
Note Unaudited Unaudited Audited
Assets
Non-current assets
Intangible assets 889,500 770,884 745,649
Right of use assets 733,291 1,079,884 884,181
Tangible fixed assets 3,196,972 1,653,806 2,268,569
4,819,763 3,504,574 3,898,399
Current assets
Inventory 668,001 759,596 660,678
Receivables 9 935,070 838,409 1,014,391
Income tax receivable 1,778,146 801,171 1,581,416
Cash and cash equivalents 48,578,378 61,292,135 55,375,366
Restricted cash 612,000 260,772 612,000
52,571,595 63,952,083 59,243,851
Total assets 57,391,358 67,456,657 63,142,250
Capital and reserves attributable to owners of the Company
Share capital 734,544 732,823 734,484
Share premium 116,457,305 116,186,140 116,448,125
Other reserve 2,672,598 1,752,974 2,456,045
Retained deficit (67,549,677) (53,898,053) (59,752,193)
Total equity attributable to Shareholders 52,314,770 64,773,884 59,886,461
Current liabilities
Payables 10 3,919,984 1,286,753 1,695,758
Lease liabilities 266,294 660,283 322,179
4,186,278 1,947,036 2,017,937
Non-current liabilities
Lease liabilities 489,808 434,565 583,952
Provisions 400,502 301,172 653,900
890,310 735,737 1,237,852
Total liabilities 5,076,588 2,682,773 3,255,789
Total equity and liabilities 57,391,358 67,456,657 63,142,250
CASH FLOW STATEMENT
For the six months ended 30 April 2022
Six-months ended Six-months ended Year ended
30 April 2022 30 April 2021 31 October 2021
£ £ £
Unaudited Unaudited Audited
Restated
Cash flows from operating activities
Loss before tax for the period (8,542,777) (3,598,269) (10,441,570)
Adjustments for:
Amortisation of intangible assets 61,690 54,621 110,413
Depreciation of right of use asset 150,890 154,170 301,961
Depreciation of property and equipment 559,198 102,310 448,275
Loss on disposal of property and equipment - - 3,692
Depreciation of decommissioning asset - 15,682 31,365
Equity-settled share-based payment expenses 216,553 240,000 1,151,987
Interest received (83,949) (6,155) (18,690)
Lease finance charge 14,767 19,920 37,322
Cash flows from operating activities before changes in working capital and (7,623,628) (3,017,721) (8,375,245)
provisions
R&D tax credits received 548,563 - -
Increase/(Decrease) in restricted cash - 9,255 (341,973)
Increase in inventory (7,323) (510,226) (411,308)
(Increase)/Decrease in other receivables 79,321 (312,628) (488,610)
Increase in payables 2,224,226 49,957 458,962
Increase in provision (253,398) - 352,728
Cash absorbed by operating activities (5,032,239) (3,781,363) (8,805,446)
Cash flows from investing activities
Purchase of plant and equipment (1,487,601) (802,648) (1,811,683)
Additions to intangible assets (205,541) (56,236) (86,793)
Interest received 83,949 6,155 18,690
Net cash absorbed by investing activities (1,609,193) (852,729) (1,879,786)
Cash flows from financing activities
Proceeds from the issue of share capital - 36,000,000 36,000,000
Costs of issue of share capital - (1,347,839) (1,347,839)
Proceeds from the exercise of options 9,240 137,396 436,597
Lease payments (150,029) (144,876) (292,305)
Lease interest paid (14,767) (19,920) (37,322)
Net cash from financing activities (155,556) 34,624,761 34,759,131
Net (decrease)/increase in cash and cash equivalents (6,796,988) 29,990,669 24,073,899
Cash and cash equivalents at start of period 55,375,366 31,301,467 31,301,467
Cash and cash equivalents at end of period 48,578,378 61,292,136 55,375,366
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Details of the significant accounting policies are set out below.
a) Basis of preparation
The interim results for the six-months ended 30 April 2022 are unaudited. They
have been prepared in accordance with IAS 34 'Interim Financial Reporting' in
conformity with Companies Act 2006. The interim results have been drawn up
using the accounting policies and presentation consistent with those disclosed
and applied in the annual report and accounts for the year ended 31 October
2021. The comparative information contained in the report does not constitute
the accounts within the meaning of section 240 of the Companies Act 1985 and
section 435 of the Companies Act 2006.
The financial statements have been prepared on a going concern basis
notwithstanding the trading losses being carried forward and the expectation
that the trading losses will continue for the near future as the Company
transitions from research and development to commercial operations.
The Company currently consumes cash resources and will continue to do so until
sales revenues are sufficiently high enough to generate net cash inflows.
Management have prepared and reviewed five-year financial projections aligned
with ongoing technological, operational and commercial strategies. During the
initial period of commercialisation there will be negative cash flows
dependent upon the speed at which revenue grows. At 30 April 2022 unrestricted
cash resources were £48.6 million. The Directors have reasonable expectation
that sufficient funding exists to meet payment obligations as and when they
fall due. The directors' having taken into account current cash resources,
identified risks including the impact of Covid 19 and financial forecasts the
Company has adequate resources to continue in operational existence for the
foreseeable future (being a period of at least twelve months from the date of
this report). Thus, the Directors believe that it is reasonable to continue to
adopt the going concern basis in preparing the Annual Report and financial
statements.
A number of amended standards became applicable for the current reporting
period. The company did not have to change its accounting policies or make
retrospective adjustments as a result of adopting these amended standards.
The cash flow statement for the six months ended 30 April 2021 have been
restated to bring the disclosure of Right of Use assets entered into in the
period and the proceeds from the issue of share capital and exercise of
options in line with that used in the Annual Report and financial statements
for the year ended 30 October 2021.
3. SEGMENTAL ANALYSIS
Operating segments are determined by the chief operating decision maker based
on information used to allocate the Company's resources. The information as
presented to internal management is consistent with the statement of
comprehensive income. It has been determined that there is one operating
segment, the development of fuel cells. In the period to 30 April 2021, the
Company operated mainly in the United Kingdom and in Germany. All non-current
assets are in the United Kingdom.
4. REVENUE
Six months ended Six months ended Year ended
30 April 2022 30 April 2021 31 October 2021
£ £ £
Unaudited Unaudited Audited
Rendering of services (earned over time)
Rental 275,590 149,062 592,800
Revenue 275,590 149,062 592,800
Being
Cash consideration 81,690 79,283 315,300
Consideration in kind 193,900 69,779 277,500
Revenue 275,590 149,062 592,800
The consideration in kind relates to marketing services received from the
customer and fair valued in accordance with the contract. The fair value was
expressly quantified in the contract and agreed by both parties.
5. OPERATING COSTS
The operating costs consist of:
Six months ended Six months ended Year ended
30 April 2022 30 April 2021 31 October 2021
£ £ £
Unaudited Unaudited Audited
Aggregate payroll costs (less equity settled share based payments expense) 2,295,160 1,243,076 3,886,595
Less indirect labour (639,776) (524,966) (1,689,458)
Direct labour 1,655,384 718,110 2,197,137
Project materials 2,648,926 560,174 1,037,379
Project spend 4,304,310 1,278,284 3,234,516
Indirect labour 639,776 524,966 1,689,458
Other employment costs 655,332 396,288 1,212,226
Occupancy costs, repair and maintenance, utilities and sundry rent 971,774 269,853 967,014
Other administrative expenses 984,846 551,920 1,123,370
Cash expenses 7,556,038 3,021,311 8,226,584
Amortisation of intangible assets 61,690 54,620 110,413
Depreciation of Right of Use assets 150,890 150,980 301,961
Depreciation of tangible fixed assets 559,198 102,310 479,640
Less depreciation of rental asset charged to cost of sales (111,807) (49,040) (98,080)
Consideration in kind 193,900 69,779 277,500
Share based payments 216,553 240,000 1,151,987
Operating costs 8,626,462 3,589,960 10,450,005
Operating costs are managed in two pools. Project costs being the discretional
spend by product development teams which includes direct labour and materials
incurred and the fixed overheads which includes indirect labour, occupancy
costs and other general overheads.
Other administrative expenses are made up of general costs such as training,
recruitment, travel and miscellaneous expenses, none of which are materially
material.
The warrants granted to ABB are considered to be financial instruments granted
on an arm's length basis and have been accounted for in accordance with IFRS 9
Financial Instruments and IAS 32 Financial Instruments: Presentation. As the
current market price is below the exercise price of the warrants there is no
financial impact in the operating costs of the period.
6. FINANCE COST
Six-months ended Six-months ended Year ended
30 April 2022 30 April 2021 31 October 2021
£ £ £
Unaudited Unaudited Audited
Lease interest (14,767) (12,724) (37,322)
Exchange rate differences (9,377) - (1,684)
Bank charges (1,239) (5,567) (12,688)
Total finance cost (25,383) (18,291) (51,694)
Bank interest receivable 83,949 6,155 18,690
Total finance (cost)/income 58,566 (12,136) (33,004)
7. TAXATION
Six-months ended Six-months ended Year ended
30 April 2022 30 April 2021 31 October 2021
£ £ £
Recognised in the statement of comprehensive income: Unaudited Unaudited Audited
R&D tax credit - current period 745,293 283,072 1,033,588
R&D tax credit - prior year - - 29,729
Total tax credit 745,293 283,072 1,063,317
8. LOSS PER SHARE
The calculation of the basic loss per share is based upon the net loss after
tax attributable to ordinary Shareholders and a weighted average number of
shares in issue for the period.
Six-months ended Six-months ended Year ended
30 April 2022 30 April 2021 31 October 2021
Unaudited Unaudited Audited
Basic loss per share (pence) 1.06p 0.49p 1.33p
Diluted loss per share (pence) 1.06p 0.49p 1.33p
Loss attributable to equity Shareholders £7,797,484 £3,315,197 £9,378,253
Weighted average number of shares in issue 734,500,248 674,707,843 706,413,693
Diluted earnings per share:
There are share options and warrants outstanding as at 30 April 2022 which, if
exercised, would increase the number of shares in issue. However, the diluted
loss per share is the same as the basic loss per share, as the loss for the
period has an anti-dilutive effect.
9. RECEIVABLES
Six-months ended Six-months ended Year ended
30 April 2022 30 April 2021 31 October 2021
£ £ £
Unaudited Unaudited Audited
Trade receivables 57,172 - 299,062
EU grant receivable - 104,547 -
Other receivable 564,518 430,860 382,810
Prepayments 313,380 303,002 332,519
935,070 838,409 1,014,391
There is no significant difference between the fair value of the receivables
and the values stated above.
10. PAYABLES
Six-months ended Six-months ended Year ended
30 April 2022 30 April 2021 31 October 2021
£ £ £
Unaudited Unaudited Audited
Trade payables 770,310 396,171 353,404
Advance payments 2,212,400 112,500 213,903
Other payables 217,380 233,228 143,709
Accruals 719,894 544,854 984,742
3,919,984 1,286,753 1,695,758
The advance payments include billings received from ABB and Juelich.
11. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this interim statement does not
constitute accounts as defined by the Companies Act 2006. The financial
information for the preceding period is based on the statutory accounts for
the year ended 31 October 2021. Those accounts, upon which the auditors issued
an unqualified opinion, have been delivered to the Registrar of Companies.
Copies of the interim statement may be obtained from the Company Secretary,
AFC Energy PLC, Unit 71.4 Dunsfold Park, Cranleigh, Surrey GU6 8TB, and can be
accessed from the Company's website at www.afcenergy.com.
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