REG - AFC Energy Plc - Interim Results
31/07/2023 07:00
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RNS Number : 6398H AFC Energy Plc 31 July 2023
The information contained within this announcement is deemed by the company to
constitute inside information as stipulated under the EU market abuse
regulation (596/2014).
31 July 2023
AFC Energy plc
("AFC" or the "Company")
Interim Results
AFC Energy Plc (AIM: AFC), a leading provider of hydrogen power generation
technologies, is pleased to announce its interim results for the half year
ended 30 April 2023.
Commercial Highlights
· Successful H-Power Tower generator leased programme across eight
customer sites generating further revenue from S Series platform
· Follow on agreement with ACCIONA, for six-month lease with option
to purchase, of H-Power Generator plus battery energy storage system, to be
deployed in 2023
· First deployment of H-Power Tower in film and TV production
sector with large US production studio
· Confirmation of successful validation by ABB E-mobility of new S+
Series liquid cooled fuel cell stacks
· Successful completion of Extreme E Season 2 EV charging contract
· Award (post period end) of up to £4.3m of matched grant funding
from UK Government to support transition from diesel generators at UK
construction, mining and quarrying sites
· Announced (post period end) plan to execute on our plant hire
strategy with the proposed launch of a UK dedicated hydrogen powered generator
hire business with Speedy Hire
o 50:50 joint venture (JV) to be established
o Speedy Hire is the UK's leading tools and equipment hire services company
o Initial commitment by joint venture of £2m in new H-Power Generators
o Further orders expected in line with growing demand for zero emission
power across the UK
o Potential to become a significant UK hydrogen off-taker leveraging further
value
Operational highlights
· S Series H-Power Tower & Generator:
o Completed production run of first 10 H-Power Towers for field deployment
and internal acceptance testing
o Design completed and ordering commenced for components of next generation
S Series 30kW H-Power Generator for completion this year
o Appointment of consultants to support delivery of a scaled up third party
contract manufacturing strategy
· S+ Series H-Power Generator:
o Design completed for 200kW H-Power Generator system
o c.850kW of new S+ Series fuel cell stacks (>100kW per stack) already
manufactured and ready for 200kW system integration this year
o Ordering commenced for components of first 200kW S+ Series liquid cooled
fuel cell system
o 200kW system specification consistent with first ABB system order with
preparation for CE marking commenced
· Ammonia cracker:
o Launch of AFC Energy's next generation ammonia cracker technology platform
o Successfully produced first fuel cell grade hydrogen from cracker reactor,
demonstrating "Ammonia to Power" with AFC Energy fuel cell integration
o Identified potential high-volume routes to market, with partners, where
the benefits of our novel technology are well positioned
· Hydrogen supply:
o Hydrogen offtake agreement with Air Products renewed (post period end) at
the Company's Stade facility in Northern Germany to facilitate onsite factory
acceptance testing of fuel cell systems over the next five years
Financial highlights
· Cash and cash equivalents at 30 April 2023 of £32.7m (30 April
2022: £48.6m)
· Investment by ABB E-mobility in a further £2m in newly issued
shares
· Revenue of £0.2m (H1 2022: £0.3m)
· Deferred revenue in respect of ABB contract at 30 April 2023 of
£1.4m (30 April 2022: £2.0m)
· Loss for the period of £6.3m (H1 2022: £7.8m)
· R&D tax credit generated of £1.8m (H1 2022: £0.7m)
· R&D credit receivable at 30 April 2023 of £4.8m (30 April
2022: £1.8m)
Outlook
· Proposed launch of the Speedy Hire joint venture with initial
H-Power Generator sales
· Rental revenue from H-Power Towers (through Speedy Hire going
forwards) before transition to higher sales next financial year
· Delivery of first next generation S Series H-Power Generator to
ACCIONA during 2023
· £/kW cost reduction, relative to H-Power Towers, of c.50% given
benefits of additional value engineering and scale
· Complete manufacture during 2023 of first 200kW S+ H-Power
Generator (designed for ABB and subsequent CE marking)
· Establish path to scaled contract manufacturing, with initial
system orders to be delivered from the Company's Dunsfold facility in Surrey
· Modular ammonia cracker system delivered for operation and
progression with prospective partners / customers of cracker technology
· Deliver the first scaled ammonia cracking test facility in the UK
Adam Bond, Chief Executive of AFC Energy, said:
"We continue to see an accelerated push to decarbonise hard to abate sectors
such as construction and temporary power and are pleased to see this reflected
in the traction we are receiving. Clearly our focus must remain on delivery of
our strategy of initial customer deployments followed by cementing long term
collaborations with plant hire groups and, with our new partner Speedy Hire in
the UK, we now have a line of site to tangible product sales and manufacturing
scale up. The recently received backing from the UK Government through our
funding award, together with the new targets in the displacement of diesel on
construction sites, creates a perfect backdrop for AFC Energy's success in the
UK."
-ENDS-
AFC Energy plc +44 (0) 14 8327 6726
Adam Bond (Chief Executive Officer) investors@afcenergy.com (mailto:investors@afcenergy.com)
Peel Hunt LLP - Nominated Adviser and Joint Broker +44 (0) 207 418 8900
Richard Crichton / Tom Ballard / Georgia Langoulant
Zeus - Joint Broker +44 (0) 203 829 5000
David Foreman / James Hornigold (Investment Banking)
Dominic King (Corporate Broking) / Rupert Woolfenden (Sales)
FTI Consulting - Financial PR Advisors +44 (0) 203 727 1000
Ben Brewerton / Tilly Abraham / 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,
both air cooled (S Series) and liquid cooled (S+ Series), to
generate clean energy in support of the global energy transition. Based
in the UK, the Company's scalable systems provide off-grid, zero emission
power that are already being deployed for rapid electric vehicle charging and
the replacement of diesel generators for temporary power applications.
AFC Energy is also working with global partners in the deployment of
products for the Maritime, Ports, Data Centres and Rail
industries, emphasising the central role of its technology in the
decarbonisation of global industry.
Chief Executive's Statement
I am pleased to report that in the first half of 2023, AFC Energy has
continued to make progress across all areas of its business as it seeks to
provide a technically and commercially viable alternative to the $20bn a year
diesel generator market.
Government and industry, both in the UK and overseas, continue to support the
transition away from highly polluting diesel combustion engines with several
high-profile infrastructure projects now targeting diesel free sites this
decade.
"HS2 are building the world's most sustainable high-speed railway and the goal
is to reduce carbon emissions and achieve net zero from 2035. Cutting the
diesel HS2 use to power the vast construction operations - and stopping using
it completely - is fundamental to our ambition." Extract from HS2 Website
Publicly, a lot of the work undertaken in H1 only became apparent after the
period end, such as our collaboration with the UK's leading tools and
equipment hire services business, Speedy Hire. This agreement has taken many
months to get to this stage.
Our collaboration with Speedy Hire to launch a dedicated hydrogen powered
generator plant hire business, is now a key focus for AFC Energy's growth
strategy. The joint venture (JV) is targeting incorporation this year with
an initial order commitment of £2m towards the purchase of AFC Energy's
latest S Series H-Power Generators.
Growth in generator orders from the JV will be in line with expected growing
demand for zero emission power across the UK; however, with many tens of
thousands of diesel generators currently in operation on construction sites in
the UK, this market alone offers tremendous growth potential.
Delivery of this, together with other commercial partnerships currently under
development, is a tribute to the highly skilled and motivated workforce at AFC
Energy to which I'm extremely grateful.
Fuel Cell Update
The first half of 2023 saw 8 new leased deployments of the H-Power Tower on
construction and off-grid sites, further validating the technology and its
operability in a range of conditions. The high quality feedback received
from these field trials has now been collated and has facilitated several
improvements and upgrades for the next generation H-Power Generator. The
first of this new version will be delivered to ACCIONA under a new six-month
lease and sale option agreement later this year.
The accelerated nature in which AFC Energy's technology team have been able to
reflect system upgrades, scaled the system to 30kW and reduced component
pricing has been a true testament to their commitment to commercialisation.
We are forecasting that the 30kW H-Power Generator, harmonised to an external
battery energy storage system, will be on site later this year and, with its
sizing reflecting where we believe the immediate market demand for power needs
on construction sites lies, we are confident of further system orders.
The strategy of first approaching end user construction companies for H-Power
Generator demonstration, building up a critical mass of interest in the
technology, and then collaborating with the plant hire industry has been
proven with our new partnership with Speedy Hire. We have been working with
the management of Speedy Hire for several months to develop the principles of
a joint venture, believing this model affords many commercial benefits for
both companies, with an optimised risk / reward balance achieved under this
model. Based on feedback from our initial phase of field trial customers,
many of whom are also customers of Speedy Hire, we believe the market for a
scalable, targeted, zero emission, hydrogen fuelled generator offering in the
UK market is strong. The JV will provide a clear avenue in which both Speedy
Hire and AFC Energy can achieve scale and first mover advantage in addressing
the needs of this growth market. The initial focus of this venture will be
on the 30kW H-Power Generator.
Importantly, the potential scale that collaborations like Speedy Hire present
also mean our buying power across the supply chain improves, meaning better
pricing in a fairly short order. We are already seeing large cost discounts
across key fuel cell and balance of plant components achieved through scale
and are confident this, and other partnerships, will enable AFC Energy to
progress quicker down the cost curve for our customers.
The growth in system orders requires a focus on manufacturing scale up. Over
the past two years, AFC Energy has invested in its UK facilities and is well
positioned to deliver sufficient H-Power Generators at its Dunsfold site to
meet short term deployment needs. However, the uplift in future order
quantities from collaborations such as that with Speedy Hire necessitates the
review of third-party contract models for system components, sub-assemblies,
and entire generator assembly. We have appointed consultants well versed in
the scale up of hydrogen fuel cell technologies, to support us in developing
our strategy, assessing opportunities for scaling up with an emphasis on
Germany, which benefits from a more mature hydrogen sector and increased
availability of lower cost hydrogen. We look forward to providing further
detail on this in due course.
Over the past six months, we have also seen material progress in the
validation of the liquid cooled, higher power density S+ Series fuel cell
generators. This technology was first tested in Germany in October 2022 as
part of our collaboration with ABB, and following the successful validation,
multiple stacks, each more than 100kW in nameplate capacity, are now on site
in Dunsfold awaiting integration into individual 200kW modules.
We remain confident of completing the first 200kW H-Power Generator this year,
subject to the timely delivery of all components across the supply chain.
Once completed, we plan to commence the CE marking process to enable sales
across Europe.
The emphasis of the business is now on the scaling up of H-Power Generators,
initially with a focus on the air cooled S Series, where we believe the
majority of the short term system demand lies within our core target
markets. With this in mind, the Company has decided, in collaboration with
Juelich, to cancel the contract announced in 2020, for the sale of a 100kW L
Series generator, which if delivered, would now prove a distraction to the
Company's core technology and customer targets. Juelich confirmed it would
only expect to be in a position to receive any fuel cell system in 2024 and
so, with the progression of AFC Energy's technology, cost inflation and the
delay to delivery, this was a mutual decision.
Fuel Conversion Update
In March this year, we announced the launch of our next generation ammonia
cracking technology platform. For AFC Energy, maritime was always regarded
as a key target market due to its growing emphasis on hydrogen carrier fuels
such as ammonia. Indeed, last year, the International Energy Agency
confirmed its estimate that up to 45% of the maritime fleet will be
decarbonised through the adoption of ammonia fuels.
For this reason, the development of an ammonia cracker was always part of the
technology development roadmap. However, the accelerating global search for
energy security and independence means that the role of ammonia has become far
more pronounced with large volumes of clean ammonia contracted to be imported
to Europe, and Asia, from countries benefiting from low-cost hydrogen
production. This in turn has created a short-term opportunity to position
the Company's ammonia cracking technology to capitalise on the immediacy of
this demand.
Over the past six months, much testing and validation of the Company's new
cracker technology has been carried out, validating the performance of the
system and enabling progress towards a fully working modular reactor core.
Longevity testing of reactors has continued to build operational hours with
limited, if any, evidence of strain on materials.
The reactor has a number of commercialisation opportunities, both as a cracker
to make hydrogen within a combustion engine architecture, which is something
we are speaking to engine manufacturers about, through to hydrogen refuelling
infrastructure to support the decarbonisation of transport, namely trucks and
heavy-duty transport where "traditional" hydrogen refuelling infrastructure is
not feasible.
We continue to explore a number of these use cases that are generated through
our core cracker technology and expect to be making further progress with
partners towards demonstrations later this year. Firstrevenue from the
cracker is not expected before 2025.
ABB E-mobility
On 28 March 2023, after internal analysis following the trials in October
2022, ABB E-mobility confirmed that AFC Energy had successfully validated the
first S+ Series liquid cooled fuel cell stacks. Operating in parallel, the
initial stacks provided a 100kW nameplate rating. As a result of this, the
Sale and Development Agreement, signed on 15 November 2021, was revised such
that:
- ABB will have a pre-agreed discount, to be spread over the
purchases of the first ten fuel cell systems, the first of which would be
purchased under the revised contract, with the subsequent nine at ABB's
option; and
- The payment of the remaining £2.0m, of the £4.0m, to be used
for the purchase of issued shares in AFC Energy.
The £2.0m balance, was received on 5 April 2023 and the shares issued shortly
thereafter. The shares are of the same class and have the same voting rights
as those already in issue. The cash value to AFC Energy of the original
contract therefore remains unchanged at £4.0m. Payment for the first, and
subsequent 200kW S+ Series H-Power Generators would be in addition to the
£4.0m.
Financial update
We recognised revenue in the period of £0.2m (H1 2022: £0.3m). £0.1m of
this revenue was generated by the last race in the Extreme-E five-race series,
with the balance coming from rentals of the H-Power Towers to customers
including: Keltbray and Kier.
Operating costs of £8.2m (H1 2022: £8.8m) were predominantly incurred in
respect of qualifying R&D activities and generated an R&D credit for
the period of £1.8m (H1 2022: £0.7m), as set out in the table below:
Qualifying R&D expenditure £'m
- Materials 1.6
- Payroll 3.0
- Other 0.7
5.3
Non-qualifying expenditure 2.9
8.2
R&D credit 1.8
In keeping with the Company's changing status from research to development to
commercialisation, operating costs are stated after deduction of £0.2m in
respect of capitalised development costs for the S Series H-Power Generator.
This is the first time such costs have been capitalised by the Company.
The £2.0m receipt from ABB and £1.0m receipt from R&D credits in respect
of the 2021 financial year meant that the Company finished the year with a
cash balance of £32.7m, in line with the expected cash burn for overheads of
about £1.1m per month (based on £6.8m over six-months). A summary of the
cash flow is set out within the table below:
£'m
Net loss before tax (8.0)
Non-cash items 1.2
(6.8)
R&D credits received 1.0
Working capital movement (2.3)
(8.1)
Investing activities (1.1)
Financing activities 1.7
(7.5)
Opening cash 40.2
32.7
The cash position at 30 June 2023 was £30.4m with monthly cash burn expected
to increase towards £1.5m per month (before reimbursements under the grant)
as the company scales up for delivery of the S Series H-Power Generators for
the grant, ACCIONA and Speedy Hire.
Outlook
We remain extremely optimistic over the outlook for the hydrogen economy and
AFC Energy's role in it. Material funding continues to be allocated by both
Governments and the private sector and we now are seeing the fruits of that
investment.
For AFC Energy, the focus for the remainder of this year is to make the first
delivery of the next generation H-Power Generators, with a particular focus on
fulfilling market demand from Speedy Hire in the UK and ACCIONA in Spain. We
are confident that we are on track to deliver on these commitments, thereby
underpinning our revenue targets for next year.
The remainder of this financial year will see continued rental revenue from
H-Power Towers (via Speedy Hire) and hydrogen sales into those sites, before
the transition to a larger sales-based revenue model through our relationship
with Speedy Hire and other potential distributors, dealers and plant hire
businesses overseas.
The continued execution of our strategy to deliver a zero emission, hydrogen
fuelled generator to displace diesel continues to align very well with
industry projections and commitments and so it is important to capitalise on
these opportunities with short term focus on market penetration and
deployments.
We will continue to deliver on our manufacturing strategy highlighting
progress with potential third-party contract manufacturers who can support our
ambitious scale up targets.
Further evidence of a scaled up, modular ammonia cracker technology is also
forecast over the next six months, highlighting the potential value AFC Energy
has not just in fuel cell technology, but also hydrogen generation - each a
huge addressable market in their own right.
STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 April 2023
Six months ended Six months ended Year ended
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Note Unaudited Unaudited Audited
Revenue from customer contracts 3 201 276 582
Cost of sales (164) (251) (467)
Gross income 37 25 115
Other income 13 - 22
Operating costs 4 (8,209) (8,627) (19,749)
Operating loss (8,159) (8,602) (19,612)
Finance cost 5 (42) (25) (19)
Bank interest receivable 5 184 84 143
Loss before tax (8,017) (8,543 ) (19,488)
Taxation 6 1,765 745 3,042
Loss for the financial period and total comprehensive loss attributable to
owners of the Company
(6,252) (7,798) (16,446)
Basic loss per share 7 (0.85) (1.06)p (2.24)p
Diluted loss per share 7 (0.85) (1.06)p (2.24)p
All amounts relate to continuing operations. There were no items of other
comprehensive income during the period.
The above unaudited statement of profit and loss should be read in conjunction
with the accompanying notes.
STATEMENT OF FINANCIAL POSITION
As at 30 April 2023
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Note Unaudited Unaudited Audited
Assets
Non-current assets
Intangible assets 8 496 890 311
Right-of-use assets 9 1,353 733 976
Tangible fixed assets 10 3,761 3,197 3,282
5,610 4,820 4,569
Current assets
Inventory 43 668 43
Receivables 11 2,892 935 1,160
Income tax receivable 4,815 1,778 4,075
Cash and cash equivalents 32,736 48,578 40,220
Restricted cash 612 612 612
41,098 52,571 46,110
Total assets 46,708 57,391 50,679
Current liabilities
Payables 12 (3,084) (3,920) (3,644)
Lease liabilities (478) (266) (298)
(3,562) (4,186) (3,942)
Non-current liabilities
Lease liabilities (847) (490) (698)
Provisions (301) (400) (301)
(1,148) (890) (999)
Total liabilities (4,710) (5,076) (4,941)
Total net assets 41,998 52,315 45,738
Capital and reserves attributable to owners of the Company
Share capital 745 735 735
Share premium 118,477 116,457 116,487
Other reserve 4,585 2,673 4,073
Retained deficit (81,809) (67,550) (75,557)
Total equity attributable to shareholders
41,998 52,315 45,738
The above unaudited statement of financial position should be read in
conjunction with the accompanying notes.
STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 April 2023
Share capital Share premium Other reserve Retained loss
£000 £000 £000 £000 Total
£000
Balance at 1 November 2022 735 116,487 4,073 (75,557) 45,738
Loss after tax for the period - - - (6,252) (6,252)
Total comprehensive income - - - (6,252) (6,252)
Issue of equity shares 10 1,990 - - 2,000
Exercise of share options
Equity settled share-based payments
- Charged in the period - - 512 - 512
Total transactions with shareholders 10 1,990 512 - 2,512
Balance at 30 April 2023 745 118,477 4,585 (81,809) 41,998
For the six months ended 30 April 2022
Share capital Share premium Other reserve Retained loss
£000 £000 £000 £000 Total
£000
Balance at 1 November 2021 734 116,448 2,456 (59,752) 59,886
Loss after tax for the period - - - (7,798) (7,798)
Total comprehensive income - - - (7,798) (7,798)
Issue of equity shares 1 9 - - 10
Exercise of share options
Equity settled share-based payments
- Charged in the period - - 217 - 217
Total transactions with shareholders 1 9 217 - 227
Balance at 30 April 2022 735 116,457 2,673 (67,550) 52,315
For the year ended 31 October 2022
Share capital Share premium Other reserve Retained loss
£000 £000 £000 £000 Total
£000
Balance at 1 November 2021 734 116,448 2,456 (59,752) 59,886
Loss after tax for the year - - - (16,446) (16,446)
Total comprehensive income - - - (16,446) (16,446)
Issue of equity shares 1 39 - - 40
Exercise of share options
Equity settled share-based payments
- Lapsed or exercised in the period - - (641) 641 -
- Charged in the period - - 1,682 - 1,682
Fair value of warrants accounted for as equity - - 576 - 576
Total transactions with shareholders 1 39 1,617 641 2,258
Balance at 31 October 2022 735 116,487 4,073 (75,557) 45,738
The above unaudited statements of changes in equity should be read in
conjunction with the accompanying note.
CASH FLOW STATEMENT
For the six months ended 30 April 2022
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Note Unaudited Unaudited Audited
Cash flows from operating activities
Loss before tax for the period (8,017) (8,543) (19,488)
Adjustments for:
Amortisation of intangible assets 8 34 61 473
Impairment of intangible assets 8 - - 294
Depreciation of right of use asset 9 229 151 379
Depreciation of tangible assets 10 578 559 994
Impairment of tangible assets 10 - - 255
Loss on disposal of tangible assets 10 - - 126
Equity-settled share-based payment expenses
512 217 1,682
Interest received 5 (184) (84) (143)
Lease finance charges 5 35 15 33
Cash flows from operating activities before changes in working capital and
provisions
(6,813) (7,624) (15,395)
R&D tax credits received 1,025 549 546
Increase/(decrease) in inventory - (7) 618
(Increase)/decrease in other receivables
(2,153) 79 (145)
Increase/(decrease) in payables (141) 2,224 1,948
Increase/(decrease) in provision - (253) (353)
Cash absorbed by operating activities
(8,082) (5,032) (12,781)
Cash flows from investing activities
Purchase of plant and equipment 10 (1,057) (1,488) (2,388)
Additions to intangible assets 8 (218) (205) (334)
Interest received 5 184 84 151
Net cash absorbed by investing activities
(1,091) (1,609) (2,571)
Cash flows from financing activities
Proceeds from the issue of share capital 2,000 - -
Proceeds from the exercise of options - 9 40
Proceeds from the grant of warrants - - 576
Lease payments (276) (150) (381)
Lease interest paid 5 (35) (15) (38)
Net cash from financing activities 1,689 (156) 197
Net decrease in cash and cash equivalents
(7,484) (6,796) (15,155)
Cash and cash equivalents at start of period
40,220 55,375 55,375
Cash and cash equivalents at end of period
32,736 48,578 40,220
The above unaudited statement of cash flows should be read in conjunction with
the accompanying note.
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Details of the significant accounting policies are set out below.
a) Basis of preparation
These interim results for the six-months ended 30 April 2023 are unaudited.
They have been prepared in accordance with IAS 34 'Interim Financial
Reporting' in conformity with Companies Act 2006. These interim results have
been drawn up using the accounting policies and presentation consistent with
those disclosed and applied in the annual report and accounts for the year
ended 31 October 2022. The comparative information contained in the report
does not constitute the accounts within the meaning of section 435 of the
Companies Act 2006.
A number of new or amended standards became applicable for the current
reporting period. The Company did not have to change its accounting policies
or make retrospective adjustments as a result of adopting these standards.
These interim results have been prepared on a going concern basis
notwithstanding the trading losses being carried forward and the expectation
that trading losses will continue for the near future as the company
transitions from research and development to commercial operations.
The directors are required to assess whether it is appropriate prepare these
interim results on a going concern basis. In making this assessment the
directors need to be satisfied that the company can meet its obligations as
they fall due for at least 12 months from the date of this report.
The directors make their assessment based on a cash flow model prepared by
management which sets out expected cash flows through to 31 October 2024.
Extending the period beyond the minimum 12 months from the date of this report
provides additional comfort when making the assessment.
Downside sensitivities have been applied to the cash flows primarily related
to an overspend of product development costs (for both materials and labour)
and an under-recovery of R&D tax credits.
Having concluded that the company remains a going concern, these interim
results have therefore been prepared on that basis.
2. SEGMENTAL ANALYSIS
Operating segments are determined by the chief operating decision maker based
on information used to allocate the Company's resources. The information as
presented to internal management is consistent with the statement of
comprehensive income. It has been determined that there is one operating
segment, which researches and develops fuel cell and fuel conversion
technologies. In the period to 30 April 2023, the Company operated mainly in
the United Kingdom. All non-current assets are in the United Kingdom.
3. REVENUE
Six months ended Six months ended Year ended
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Unaudited Unaudited Audited
Rendering of services earned over time
Rental 133 107 225
Other revenue 68 169 357
Revenue 201 276 582
Being
Cah consideration 129 82 367
Consideration in kind 72 194 215
Revenue 201 276 582
The consideration in kind related to marketing services received from the
customer and fair valued in accordance with the contract. The fair value was
expressly quantified in the contract and agreed by both parties.
4. OPERATING COSTS
The operating costs consist of:
Six months ended Six months ended Year ended
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Unaudited Unaudited Audited
Materials 1,502 2,788 5,105
Payroll (excluding directors) 3,078 1,483 4,907
4,580 4,271 10,012
Directors' costs 776 813 1,642
Other employment costs 463 655 1,047
Occupancy costs 368 972 772
Other administrative expenses 911 985 2,750
7,098 7,695 16,223
Amortisation of intangible assets 34 62 474
Depreciation of Right of Use assets 229 151 379
Depreciation of tangible fixed assets 578 559 994
Less depreciation of rental asset charged to cost of sales
(96) (112) (218)
Consideration in kind 72 194 215
Share based payments 512 217 1,682
Operating costs capitalised (218) - -
8,209 8,766 19,749
Occupancy costs include repairs and maintenance, utilities and lease
payments. For the six-months ended 30 April 2022, occupancy costs included
information technology costs, which have been reclassified into administrative
expenses to better reflect the nature of the costs.
5. NET FINANCE INCOME
Six months ended Six months ended Year ended
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Unaudited Unaudited Audited
Lease interest (35) (15) (38)
Exchange rate differences - (9) 21
Bank charges (7) (1) (2)
Total finance cost (42) (25) (19)
Bank interest receivable 184 84 143
142 59 124
6. TAXATION
Six months ended Six months ended Year ended
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Unaudited Unaudited Audited
Recognised in the statement of comprehensive income:
R&D tax credit - current period 1,765 745 3,050
R&D tax credit - prior year - - (8)
Total tax credit 1,765 745 3,042
7. LOSS PER SHARE
The calculation of the basic loss per share is based upon the net loss after
tax attributable to ordinary Shareholders and a weighted average number of
shares in issue for the period.
Six months ended Six months ended Year ended
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Unaudited Unaudited Audited
Basic loss per share (pence) 0.85 1.06p 2.24p
Diluted loss per share (pence) 0.85 1.06p 2.24p
Loss attributable to equity Shareholders £6,252 £7,798k 16,466k
Weighted average number of shares in issue
736,732 734,500 734,745
Diluted earnings per share:
There are share options and warrants outstanding as at 30 April 2023 which, if
exercised, would increase the number of shares in issue. However, the
diluted loss per share is the same as the basic loss per share, as the loss
for the period has an anti-dilutive effect.
8. INTANGIBLE ASSETS
Development Commercial Intangible
costs Patents rights assets
£000 £000 £000 £000
Cost
As at 1 November 2022 229 1,220 121 1,570
Additions 218 1 - 219
Disposal (229) - - (229)
As at 30 April 2023 218 1,221 121 1,560
Amortisation
As at 1 November 2022 229 979 51 1,259
Charge for the financial period - 22 12 34
Disposal (229) - - (229)
As at 30 April 2023 - 1,001 63 1,064
Net book value
As at 1 November 2022 - 241 70 311
As at 30 April 2023 218 219 58 496
Development Commercial Intangible
costs Patents rights assets
£000 £000 £000 £000
Cost
As at 1 November 2021 229 886 121 1,236
Additions - 206 - 334
As at 30 April 2022 229 1,092 121 1,442
Amortisation
As at 1 November 2021 74 384 33 491
Charge for the financial period 0 14 47 61
As at 30 April 2022 74 398 80 552
Net book value
As at 1 November 2021 155 504 88 747
As at 30 April 2022 155 694 41 890
Development Commercial Intangible
costs Patents rights assets
£000 £000 £000 £000
Cost
As at 1 November 2021 229 886 121 1,236
Additions - 334 - 334
As at 31 October 2022 229 1,220 121 1,570
Amortisation
As at 1 November 2021 74 384 33 491
Charge for the year 34 422 18 474
Impairment charge 121 173 - 294
As at 31 October 2022 229 979 51 1,259
Net book value
As at 1 November 2021 155 504 88 747
As at 31 October 2022 - 241 70 311
9. RIGHT-OF-USE ASSETS
Buildings
£000
Cost
As at 1 November 2022 1,885
Additions 606
Disposals (476)
As at 30 April 2023 2,009
Depreciation
As at 1 November 2022 909
Charge for the financial period 229
Disposals (476)
As at 30 April 2023 662
Net book value
As at 1 November 2022 976
As at 30 April 2023 1,353
Buildings
£000
Cost
As at 1 November 2021 1,415
Additions -
As at 30 April 2022 1,415
Depreciation
As at 1 November 2021 531
Charge for the financial period 151
As at 30 April 2022 682
Net book value
As at 1 November 2021 884
As at 30 April 2022 733
Buildings
£000
Cost
As at 1 November 2021 1,415
Additions 470
As at 31 October 2022 1,885
Depreciation
As at 1 November 2021 530
Charge for the year 379
As at 31 October 2022 909
Net book value
As at 1 November 2021 884
As at 31 October 2022 976
10.tangible fixed ASSETS
Leasehold Decommissioning Fixtures, Motor Demonstration Subtotal
Improvements Asset fittings and vehicles equipment £000
£000 £000 equipment £000 £000
£000
Cost
As at 1 November 2022 2,570 300 1,581 18 504 4,973
Additions - - 32 32 - 64
As at 30 April 2023 2,570 300 1,613 50 504 5,037
Depreciation
As at 1 November 2022 746 285 1,327 18 334 2,710
Charge for the financial period
303 5 79 - 23 410
As at 30 April 2023 1,049 290 1,406 18 357 3,120
Net book value
As at 1 November 2022 1,824 15 254 - 170 2,263
As at 30 April 2023 1,521 10 207 32 147 1,917
Subtotal Rental asset Computer Manu- Assets Total
£000 £000 equipment facturing under £000
£000 and test construction
stands £000
£000
Cost
As at 1 November 2022 4,973 703 318 438 406 6,838
Additions 64 - 9 - 984 1,057
As at 30 April 2023 5,037 703 327 438 1,390 7,895
Depreciation
As at 1 November 2022 2,710 504 157 185 - 3,556
Charge for the financial period
410 96 46 26 - 578
As at 30 April 2023 3,120 600 203 211 - 4,134
Net book value
As at 1 November 2022 2,263 199 161 253 406 3,282
As at 30 April 2023 1,917 103 124 227 1,390 3,761
The company has set up a decommissioning asset for the estimated cost of
removing the plant and equipment installed at the Stade site in Germany.
Having renewed the Stade hydrogen offtake agreement for a further five-years,
from January 2023, no decision has been taken as to when the site might be
decommissioned.
£1.2m of the assets under construction relate to leasehold improvement work
concluded following the end of the six-month period.
Leasehold Decommissioning Fixtures, Motor Demonstration Subtotal
Improvements Asset fittings and vehicles equipment £000
£000 £000 equipment £000 £000
£000
Cost
As at 1 November 2021 958 300 1,340 18 622 3,258
Additions 1,100 - 350 - - 1,450
Disposals - - - - (118) (118)
As at 30 April 2022 2,058 300 1,690 18 504 4,570
Depreciation
As at 1 November 2021 302 265 1,244 18 198 2,027
Charge for the financial period
145 10 33 - 105 293
As at 30 April 2022 447 275 1,277 18 303 2,320
Net book value
As at 1 November 2021 655 35 96 - 424 1,211
As at 30 April 2022 1,611 25 413 - 201 2,250
Subtotal Rental asset Computer Manu- Assets Total
£000 £000 equipment facturing under £000
£000 and test construction
stands £000
£000
Cost
As at 1 November 2021 3,258 703 199 436 - 4,576
Additions 1,450 - 64 - - 1,514
Disposals (118) - - - - (118)
As at 30 April 2022 4,570 703 263 436 - 5,972
Depreciation
As at 1 November 2021 2,027 98 86 96 - 2,307
Charge for the financial period
293 111 26 38 - 468
As at 30 April 2022 2,320 209 112 134 - 2,775
Net book value
As at 1 November 2021 1,211 605 113 340 - 2,269
As at 30 April 2022 2,250 494 151 302 - 3,197
Leasehold Decommissioning Fixtures, Motor Demonstration Subtotal
Improvements Asset fittings and vehicles equipment £000
£000 £000 equipment £000 £000
£000
Cost
As at 1 November 2021 958 300 1,340 18 622 3,258
Additions 1,620 - 241 - - 1,861
Disposals (8) - - - (118) (126)
As at 31 October 2022 2,570 300 1,581 18 504 4,973
Depreciation
As at 1 November 2021 302 265 1,244 18 198 2,027
Charge for the year 444 20 83 - 69 616
Impairment - - - - 67 67
As at 31 October 2022 746 285 1,327 18 334 2,710
Net book value
As at 1 November 2021 655 35 96 - 424 1,211
As at 31 October 2022 1,824 15 254 - 170 2,263
Subtotal Rental asset Computer Manu- Assets Total
£000 £000 equipment facturing under £000
£000 and test construction
stands £000
£000
Cost
As at 1 November 2021 3,258 703 199 436 - 4,576
Additions 1,861 - 119 2 406 2,388
Disposals (126) - - - - (126)
As at 31 October 2022 4,973 703 318 438 406 6,838
Depreciation
As at 1 November 2021 2,027 98 86 96 - 2,307
Charge for the year 616 218 71 89 - 994
Impairment 67 188 - - - 255
As at 31 October 2022 2,710 504 157 185 - 3,556
Net book value
As at 1 November 2021 1,211 605 113 340 - 2,269
As at 31 October 2022 2,263 199 161 253 406 3,282
11. RECEIVABLES
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Unaudited Unaudited Audited
Trade receivables 166 57 142
VAT receivables 1,110 - 401
Other receivables 844 565 303
Prepayments 772 313 314
2,892 935 1,160
There is no significant difference between the fair value of the receivables
and the values stated above. Of the £1.1m of VAT receivables, £0.7m was
received in May 2023.
The increase in other receivables is mainly due to the increase in advance
payments made to suppliers, as the value of materials purchases increases.
12. PAYABLES
30 April 2023 30 April 2022 31 October 2022
£000 £000 £000
Unaudited Unaudited Audited
Trade payables 986 770 445
Deferred revenue 1,424 2,177 1,600
Other payables 485 217 349
Accruals 189 756 1,250
3,084 3,920 3,644
The deferred revenue relates to non-refundable payments made under the
November 2021 ABB contract. As part of the renegotiation of this contract in
March 2023, it was agreed with ABB that this balance would be earned evenly
against pre-agreed discounts over the sale of the first ten units to ABB. If
these sales are not all made within the pre-agreed time period then any
residual balance will be deemed earned by the company, as the payments are
non-refundable.
The £0.2m reduction in deferred revenue between 31 October 2022 and 30 April
2023 reflects the cancellation of the Juelich contract.
13. PosT BALANCE SHEET EVENTS
On 18 July 2023, the company announced that it had renewed the hydrogen
offtake agreement at the Stade facility in Germany. The contract is for a
five-year period, from January 2023, with a six-month notice period.
On 26 July 2023, the company announced that it had secured a UK Government
Grant of up to £4.3m in match funding.
On 27 July 2023, the company announced that it had appointed, effective 1
August 2023, Duncan Neale as a non-executive director and chair of the Audit
Committee.
On 28 July 2023, the company announced the proposed launch of a dedicated
hydrogen powered generator plant hire business as a joint venture with Speedy
Hire plc.
14. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this interim statement does not
constitute accounts as defined by the Companies Act 2006. The financial
information for the preceding period is based on the statutory accounts for
the year ended 31 October 2022. Those accounts, upon which the auditors
issued an unqualified opinion, have been delivered to the Registrar of
Companies.
Copies of the interim statement may be obtained from the Company Secretary,
AFC Energy PLC, Unit 71.4 Dunsfold Park, Cranleigh, Surrey GU6 8TB, and can be
accessed from the Company's website at www.afcenergy.com
(http://www.afcenergy.com) .
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