REG - AFC Energy Plc Speedy Hire PLC - Launch of Speedy Hydrogen Solutions & First Orders

AFC EnergyAnnouncement

15/11/2023 07:15

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RNS Number : 4636T  AFC Energy Plc  15 November 2023

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15 November 2023

 

 

AFC Energy PLC

("AFC Energy" or the "Company")

 

First Commercial H-Power Orders with Launch of "Speedy Hydrogen Solutions"
Joint Venture

 

AFC Energy (AIM: AFC), a leading provider of hydrogen power generation
technologies, is pleased to announce the signing of its Joint Venture
Agreement (the "JVA") with Speedy Hire Plc ("Speedy"), for the formation of a
dedicated hydrogen powered generator plant hire business, Speedy Hydrogen
Solutions Ltd ("SHS").

 

 

Highlights

 

·      SHS incorporated as a 50:50 Joint Venture to provide exclusive
access to AFC Energy's H-Power Generators across the UK and Irish markets.

 

·      First year H-Power Generator sales to SHS of up to £4.7m.

 

·      Exclusivity subject to SHS satisfying annual growth in minimum
order quantity over first three years.

 

·      H-Power Generator sales to be phased into SHS over the first
contract year.

 

·      AFC Energy to procure and sell hydrogen fuel, technical and
operational support to SHS.

 

·      Speedy to provide marketing, accounting and logistical support to
SHS's operations.

 

·      Strong customer interest with growing pipeline.

 

 

Background

 

Speedy Hire is the UK and Ireland's leading provider of tools, specialist
equipment and services and is seeing strong demand from its customers for
sustainable portable power solutions.  This demand is driven by tendering
requirements and emission regulations with UK projects such as HS2 targeting
the removal of diesel generators from all sites by 2029.

 

On 28 July 2023, Speedy and AFC Energy announced the proposed launch of a
dedicated hydrogen powered generator plant hire business servicing the UK and
Irish construction and temporary power markets. Since the announcement, strong
interest has been confirmed from Speedy's customers with a growing pipeline
established.

 

Today, both companies are pleased to announce the launch of Speedy Hydrogen
Solutions.

 

 

Key Terms

 

SHS is a newly incorporated joint venture to be owned equally by Speedy and
AFC Energy and is positioned to be the market leader in the UK and Ireland's
hydrogen generator hire market.

 

SHS is governed by a newly executed JVA and will purchase H-Power Generators
from AFC Energy for hiring to Speedy on commercial terms.  Speedy will
on-hire the H-Power Generators, on a three year exclusive basis, to its
customers in the UK and Ireland.

 

AFC Energy will sell H-Power Generators and services to SHS under a Supply and
Maintenance Agreement ("SMA"), also executed, which will include the
procurement and sale of hydrogen fuel, as well as site surveys, technical and
operational support to Speedy and its customers.  Incremental revenue
opportunities arise from the provision of ancillary support and equipment
under the SMA.

 

Speedy will in turn, under a separate agreement, provide marketing, accounting
and logistical support to SHS and its own customers.

 

The H-Power Generators will be available for hire exclusively in the UK and
Ireland from late this year through Speedy for an initial three-year
period.

 

Speedy and AFC Energy shall each have the right to appoint two Directors to
the Board of the JV.

 

 

Order

 

Under the SMA, SHS commits to an initial order from AFC Energy, for delivery
throughout the first six months of 2024, of generators at a committed value of
£2m with the intention to increase orders up to c.£4.7m across the first
full contract year (commencing 1 Nov. 2023).  The delivery profile of
generators above the committed value is subject to performance and market
uptake consistent with the business plan.

 

A minimum order quantity is provided for under the Supply and Maintenance
Agreement between AFC Energy and SHS, which increases annually, in order for
SHS to maintain exclusivity in the UK and Ireland.  The minimum order
quantity is phased over three years, with potential for further growth to meet
customer demand at the time.

 

 

Joint Venture Funding

 

To fund the first contract year's orders, an initial total equity injection
into SHS (as a subscription for shares) of £1.25m (£0.625m each) shall be
made upon formation of SHS.  This injection shall be funded out of each
company's respective cash reserves which, in the case of AFC Energy, stood at
c.£27m at 31 October 2023.

 

Subsequent tranches of funding will become payable into SHS  in the form of
commercial interest bearing loan notes from each of Speedy and AFC Energy to
support the increased number of H-Power Generators deployed into SHS.
 Payment is expected to be made from existing cash resources of each
company.  Future payments into SHS shall be predicated on satisfaction of
certain operational milestones in accordance with the JVA.

 

 

Dan Evans, Chief Executive at Speedy Hire, said:

 

" Our JV with AFC Energy further strengthens our market leadership in
combining product innovation and sustainability solutions that are
increasingly critical and in demand from our customers. We continue to make
progress in the delivery of our ambitious plan to be a net zero business by
2040 and, together with other recently announced developments like the
acquisition of Green Power Hire, provide strong and unique evidence of our
Velocity strategy in action."

 

Adam Bond, Chief Executive at AFC Energy, said:

"We are pleased to announce this exciting collaboration with the UK's leading
sustainable plant hire business, Speedy Hire.  We have every confidence that
SHS will support the UK and Irish construction sector's transition away from
diesel towards its ambitious decarbonisation targets, representing a game
changer in the way sustainable off-grid power is delivered to industry.  With
strong interest already evidenced from contractors and at industry events, we
expect this venture to now raise the bar in the delivery of sustainable
off-grid power."

 

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)

 Peel Hunt LLP - Nominated Adviser and Joint Broker

 Richard Crichton / Tom Ballard / Georgia Langoulant            +44 (0) 207 418 8900

 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 / Nick Hennis / Tilly Abraham                    afcenergy@fticonsulting.com (mailto:afcenergy@fticonsulting.com)

 

 

About AFC Energy

 

AFC Energy plc is a leading provider of hydrogen energy solutions, to provide
clean electricity for on and off grid power applications. The Company's fuel
cell technology is now deployable as electric vehicle chargers, off-grid
decentralised power systems for construction and temporary power with emerging
opportunities across maritime, data centres and rail as part of a portfolio
approach to the decarbonisation of society's growing electrification needs.

 

About Speedy Hire

 

Founded in 1977, Speedy is the UK's leading provider of tools and equipment
hire services to a wide range of customers in the construction,
infrastructure, industrial, and support services markets, as well as to local
trade, and retail. The Group provides complementary support services through
the provision of training, asset management and compliance services. Speedy is
certified nationally to ISO50001, ISO9001, ISO14001, ISO17020, ISO27001 and
ISO45001. The Group operates from c.180 fixed sites and selected B&Q
stores across the UK and Ireland together with a number of on-site facilities
at client locations and through a joint venture in Kazakhstan.

 

 

 

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