TIDMAFC
RNS Number : 5021J
AFC Energy Plc
29 June 2017
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via a Regulatory Information
Service ("RIS"), this inside information is now considered to be in
the public domain.
29 June 2017
AFC Energy PLC
("AFC Energy", "AFC" or "the Company")
Interim Results
AFC Energy (AIM: AFC), the industrial fuel cell power company,
is pleased to announce its interim results for the six-month period
ended 30 April 2017.
Highlights
-- AFC Energy is on track to reach initial demonstration of a
commercially deployable fuel cell by the end of 2017
-- Industry de Nora S.p.A ("De Nora") collaboration continues to
evidence improved performance in fuel cell longevity without
compromise in power output, availability, cost or efficiency
-- Significant technical progress made in performance of the
fuel cell system against AFC Energy's metrics of commercialisation:
performance, longevity, availability, cost and efficiency
-- Engineering studies commenced in collaboration with Covestro
AG in Germany and Peel Environmental in the UK for commercial fuel
cell projects
-- Several other commercial projects under evaluation with local
and international project partners, including those previously
announced in Korea and the Middle East
-- Successful GBP8.1 million (before expenses) fundraise through
a placement, subscription and shareholder open offer, with new
institutional investors welcomed to the share register
-- Cash balance at 30 April 2017: GBP8.4 million (30 April 2016: GBP2.8 million)
-- Receipt of EUR0.9 million from EU's Fuel Cells and Hydrogen Joint Undertaking ("FCH JU")
-- Strengthened leadership team with appointment of Chief
Operating Officer and Chief Financial Officer
Mr. Adam Bond, AFC Energy's Chief Executive Officer, said: "I am
extremely pleased with the very strong technical progress made by
AFC Energy during the first six months of this year, particularly
underpinned by the collaboration agreement with De Nora. The
Company has a strengthened balance sheet following the fundraise in
March 2017, has commenced engineering studies on deployment
projects, and strengthened its leadership team, positioning the
Company well for the aggressive work programme set for initial
demonstration of commercial operating parameters by the end of
2017."
For further information, please contact:
AFC Energy plc
Adam Bond (Chief Executive Officer) +44 (0) 20 3697 1209
Cantor Fitzgerald Europe - Nominated Adviser and Joint
Broker
Andrew Craig +44 (0) 20 7894 7000
Richard Salmond
M C Peat & Co LLP - Joint Broker
Charlie Peat +44 (0) 20 7104 2334
Lionsgate Communications - Public Relations
Jonathan Charles +44 (0) 20 3697 1209
About AFC Energy
AFC Energy plc has developed and successfully demonstrated its
alkaline fuel cell system, which converts hydrogen into "clean"
electricity. AFC Energy's key project POWER-UP demonstrated the
world's largest operational alkaline fuel cell system at Air
Products' industrial gas plant in Stade, Germany in January 2016.
The Company is now looking to build upon an already established
pipeline of commercial opportunities and drive the findings from
the development phase of the technology into a technically
optimised and commercially relevant fuel cell system. For further
information, please visit our website: www.afcenergy.com
Chief Executive Officer's Report
The success of modern society across the globe increasingly
depends to a large degree on the availability of reliable, cost
effective and localised electricity. AFC Energy recognises the
immediate global demand that exists for delivery of a reliable,
affordable and environmentally sustainable power supply that should
not only have the potential to displace conventional fossil derived
power, but also draw on the most abundant element in the universe
as its long-term carbon-free fuel source - Hydrogen.
To deliver these objectives, AFC Energy has been developing a
fuel cell system that not only compares positively against its
peers in terms of operating metrics, but also against conventional
power generation. The Company was challenged at the beginning of
2015 to deliver a commercial fuel cell system capable of deployment
within a three-year window - 2017 is the final year of that
window.
Over the past six months as the technology has continued to
develop, we have seen a number of breakthroughs which, when
combined into a single fuel cell system, demonstrate the potential
for AFC Energy's fuel cell systems and their varied applications in
the real world.
The Company adopts a strict industry led definition of what it
believes to be commercial - these have been defined against
reference to the "metrics of commercialisation" which, although not
unique to AFC Energy, can often be forgotten in the technological
roadmap to success.
I have been most proud of the progress AFC Energy has made in
the first six months of the financial year in progressing the
development of the technology against these metrics. In
collaboration with our technology partner, De Nora, AFC Energy has
seen significant improvements to the fuel cell system design from
the system first commissioned in Stade back in January 2016.
At the annual general meeting of the Company held in April 2017,
the Company provided insights, for the first time, on the recent
technical improvements we have achieved and the work we still have
to complete in the second half of 2017. I am pleased to confirm
that the Company remains on target with its work programme for the
remainder of 2017.
The following provides an overview of some of these areas of
development and progress with many tangible outcomes of this work
being seen in the testing conducted since the end of April
2017.
Technical and Operations
In November 2016, AFC Energy successfully completed the
development of its Generation 2 ("Gen2") fuel cell system. The Gen2
system incorporates design changes that empirically extended the
operating life of the fuel cell stack whilst increasing stack
availability and reducing cost. In addition, the Gen2 testing
programme demonstrated that AFC Energy's fuel cell system is
capable of accepting lower grade industrial hydrogen (direct from
industrial plant without clean-up or processing) relative to the
laboratory standard hydrogen (99.999%) that has been used by the
Company since 2006. The impact this has on addressable market size
and affordability of AFC Energy's fuel cell technology should not
be underestimated and creates an enlarged market for AFC Energy to
pursue.
Technological enhancements have been further progressed via the
Joint Development Agreement ("JDA"), announced in mid-2016, between
the Company and De Nora, an industry leader in the field of
electrochemistry and electrodes. AFC Energy has performed, as at
the end of April 2017, more than 145 tests with De Nora using
several configurations and different system specifications,
targeting specific variations to aspects of the fuel cell system
design, utilising De Nora's experience in the water electrolysis
and chlor-alkali industry. An expert team from De Nora have
collaborated with AFC Energy's team to deliver a number of material
improvements to the AFC Energy fuel cell system, particularly
increasing electrode longevity which, for most fuel cell companies,
has been the 'Achilles Heel' of their technology.
As a result of these extensive tests, the Company is
increasingly confident that it is possible for AFC Energy fuel
cells to exceed the Company's commercial lifetime target of 12
months. Indeed, many of De Nora's own alkaline electrodes used in
industry are warranted for well over 12 months, giving us
confidence that prolonged electrode life and system affordability
is well within our grasp. Several iterations of the fuel cells have
shown a robust performance over an extended period with a
materially lower rate of degradation than previously
experienced.
Importantly, based on the results obtained under the JDA, AFC
Energy is now targeting a commercial life expectancy more than 12
months and at a lower cost of delivery than earlier generations of
its fuel cell. This increase in longevity is expected to materially
reduce the cost of power produced and consequently, increase the
potential market size of the AFC Energy fuel cell system and its
profitability.
The improvements in longevity seen in the JDA tests are being
integrated into the Company's current fuel cell stack design and
AFC Energy plans to execute further longevity demonstrations at
industrial scale to confirm these enhancements later in 2017. These
latest design modifications, revised stack engineering and the
ability of AFC Energy's fuel cells to use a lower grade hydrogen
demonstrates a sample of the commercial progression of the AFC
Energy fuel cell system which the Company will be able to make use
of in penetrating its target markets.
In April 2017, AFC Energy and De Nora agreed to commence the
next phase of the JDA and to commit further resources and funding
to further improve the overall performance and economics delivered
by the AFC Energy fuel cell system. Stage 2 of the JDA will now
focus on the integration of the best performing electrodes from
Phase 1 within the enhanced fuel cell stack to derive a frozen
baseline technology platform capable of warranted mass production.
In turn, this will be validated at AFC Energy's industrial facility
in Stade, Germany in the second half of 2017. The validation will
include verifying the metrics associated with power output,
longevity, efficiency and availability.
Commercial
In November 2016 AFC Energy signed an agreement with Peel
Environmental Limited ("Peel") to assess the techno-economic
feasibility of the UK's largest fuel cell precinct at Peel's Protos
Industrial Park. Protos is located between Manchester, Liverpool
and Chester and will deliver 250 hectares of industrial development
in the North West of England. AFC Energy will conduct the
assessment in collaboration with Peel and other third-party
partners to review a range of hydrogen sources and offtake
arrangements and work with local stakeholders to address potential
for deployment of fuel cell projects at Protos. At the time of
writing, discussions continue with local partners for the supply of
hydrogen to the project.
In March 2017, the Company received confirmation from PowerHouse
Energy plc ("PowerHouse") of the Company's first commercial sale of
a small-scale alkaline hydrogen fuel cell system. Confirmation of
the order is made in accordance with the agreement between AFC
Energy and PowerHouse announced to the market in April 2014. AFC
Energy will deliver the system once all parties are satisfied that
the PowerHouse waste gasification system is generating a hydrogen
stream specification appropriate for the operation of the AFC
Energy proprietary fuel cell system.
In addition, we continue to hold extensive discussions with
other prospective strategic, technical and project-related partners
for the development and international deployment of our fuel cell
systems, including those partners previously announced to the
market since the beginning of 2015 in Korea and the Middle
East.
Financial Review
During the six-months to 30 April 2017, an operating loss of
GBP2.7 million (30 April 2016: GBP3.8 million) was recorded. In the
period, the Company continued to recognise grant income under the
European Framework Programme 7 for the POWER-UP and ALKOMMONIA
projects, albeit at a lower level than in the previous period as
these projects enter their final stages. Direct labour and material
costs associated with the projects were recognised in cost of
sales. Administrative expenses remained largely static, reflecting
tight control of costs.
The net cash inflow in the six-months to 30 April 2017 was
GBP5.5 million (30 April 2016: GBP1.1 million net outflow) as a
result of the Company's careful control of operating and capital
costs, and the successful fundraise which raised a total of GBP8.1
million (before costs).
The fundraise consisted of a placing and subscription to raise
GBP6.0 million plus an Open Offer to existing shareholders to raise
an additional GBP2.1 million. We are pleased that the Open Offer to
our existing shareholders was oversubscribed by 56.9%, and to
welcome Schroder Investment Management onto the share register, who
invested GBP3.3 million into AFC Energy, representing 8.44% of the
total share capital.
The cash balance at 30 April 2017 was GBP8.4 million (30 April
2016: GBP2.8 million).
The Board of AFC Energy does not intend to declare a dividend in
respect of this period.
Outlook
The outlook for the remainder of 2017 is in line with our
expectations. Consistent with the three-year window targeted by AFC
Energy in 2015 for demonstration of a commercial fuel cell system,
the Company has a number of programmes on track that will deliver
robust performance enhancement against of the metrics of
commercialisation. These include:
-- the full integration of the AFC Energy / De Nora JDA
electrode into the industrial scale fuel cell system and obtaining
operational data from the stack;
-- operation of a hydrogen recirculation system increasing the
conversion efficiency of hydrogen to power of the system (and
thereby reducing the cost of hydrogen in commercial projects);
-- demonstration of the fundamental change in stack design with
further enhanced gas and liquid flow plates;
-- removal of the nickel frame around the electrode which
represents a material proportion of the overall stack cost; and
-- implementation of a change in design of the air scrubbing
unit that will dramatically reduce the cost of processing air for
the chemical reaction within the fuel cell stack.
These are a sample of the works currently being integrated into
the AFC Energy base design, which by the end of the year, should
also include the engineering of a new 1MW system in our
portfolio.
AFC Energy continues to assess a range of other highly
complementary technologies which, when integrated with our own,
could provide a material advantage in our go to market strategy as
a strong participant in the hydrogen economy relative to a number
of our peers.
We remain fully committed to alkaline fuel cells for our target
applications and markets which we continue to believe can provide
significant operating and cost benefits once commercially deployed,
compared to other fuel cell technologies.
A number of pieces of research work we are now conducting,
whilst not affecting the timelines set for this year, will, once
demonstrated, further significantly enhance our fuel cell
technology and place AFC Energy as a strategic leader in the fuel
cell space not only in the UK, but internationally.
Finally, I would like to thank all the staff, partners and
contractors working with AFC Energy, together with the EU's FCH JU,
and the Board for their continued support and look forward to
reporting back to shareholders during 2017 with news of further
progress.
Adam Bond
Chief Executive Officer
29 June 2017
STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 April 2017
Six-months Six-months Year ended
ended ended
30 April 30 April 31 October
2017 2016 2016
GBP GBP GBP
Note Unaudited Unaudited Audited
------------------------- ----- ------------ ------------ ------------
EU Grant income 201,762 763,204 967,606
Cost of sales (312,261) (2,072,480) (1,883,650)
------------------------- ----- ------------ ------------ ------------
Gross loss (110,499) (1,309,276) (916,044)
Other income 36,558 80,164 146,479
Administrative expenses (2,611,693) (2,583,185) (5,561,096)
------------------------- ----- ------------ ------------ ------------
Operating loss (2,685,634) (3,812,297) (6,330,661)
------------------------- ----- ------------ ------------ ------------
Finance cost 3 (969) (148,787) (148,233)
------------------------- ----- ------------ ------------ ------------
Loss before tax (2,686,603) (3,961,084) (6,478,894)
------------------------- ----- ------------ ------------ ------------
Taxation 4 250,002 500,429 822,830
------------------------- ----- ------------ ------------ ------------
Loss for the financial
period and total
comprehensive loss
attributable to owners
of the Company (2,436,601) (3,460,655) (5,656,064)
------------------------- ----- ------------ ------------ ------------
Basic loss per share 5 (0.73)p (1.15)p (1.86)p
Diluted loss per
share 5 (0.73)p (1.15)p (1.86)p
------------------------- ----- ------------ ------------ ------------
All amounts relate to continuing operations.
STATEMENT OF FINANCIAL POSITION
As at 30 April 2017
30 April 30 April 31 October
2017 2016 2016
GBP GBP GBP
Note Unaudited Unaudited Audited
--------------------------- ----- ------------- ------------- -------------
Assets
Non-current assets
Intangible assets 6 358,548 360,524 344,457
Property and equipment 7 65,910 99,596 89,384
Investment - - -
--------------------------- ----- ------------- ------------- -------------
424,458 460,120 433,841
--------------------------- ----- ------------- ------------- -------------
Current assets
Inventory and work
in progress 8 164,255 - 150,932
Other receivables 9 2,011,928 3,812,294 2,595,963
Cash and cash equivalents 10 8,419,671 2,837,130 2,910,862
Restricted cash 10 105,752 91,105 112,077
--------------------------- ----- ------------- ------------- -------------
10,701,606 6,740,529 5,769,834
--------------------------- ----- ------------- ------------- -------------
Total assets 11,126,064 7,200,649 6,203,675
--------------------------- ----- ------------- ------------- -------------
Capital and reserves
attributable to owners
of the Company
Share capital 11 390,948 308,344 310,014
Share premium 11 45,454,067 37,604,267 37,843,613
Other reserve 3,242,858 2,772,061 3,234,492
Retained deficit (38,499,998) (34,290,742) (36,486,151)
--------------------------- ----- ------------- ------------- -------------
Total equity attributable
to Shareholders 10,587,875 6,393,930 4,901,968
--------------------------- ----- ------------- ------------- -------------
Current liabilities
Trade and other payables 12 538,189 806,719 1,295,904
--------------------------- ----- ------------- ------------- -------------
538,189 806,719 1,295,904
--------------------------- ----- ------------- ------------- -------------
Non-current liabilities
Trade and other payables 12 - - 5,803
--------------------------- ----- ------------- ------------- -------------
- - 5,803
--------------------------- ----- ------------- ------------- -------------
Total equity and
liabilities 11,126,064 7,200,649 6,203,675
--------------------------- ----- ------------- ------------- -------------
STATEMENT OF CHANGES IN EQUITY
For the period ended 30 April 2017
Share Share Other Retained Total
Capital Premium Reserve Deficit Equity
GBP GBP GBP GBP GBP
Unaudited Unaudited Unaudited Unaudited Unaudited
----------------------- ---------- ----------- ---------- ------------- ------------
Balance at 1 November
2016 310,014 37,843,613 3,234,492 (36,486,151) 4,901,968
----------------------- ---------- ----------- ---------- ------------- ------------
Comprehensive loss
for the period - - - (2,436,601) (2,436,601)
Issue of equity
shares 80,934 7,610,454 - - 7,691,388
Equity-settled
share-based payments - - 8,366 422,754 431,120
----------------------- ---------- ----------- ---------- ------------- ------------
Transactions with
owners 80,934 7,610,454 8,366 - 8,122,508
----------------------- ---------- ----------- ---------- ------------- ------------
Balance at 30 April
2017 390,948 45,454,067 3,242,858 (38,499,998) 10,587,875
----------------------- ---------- ----------- ---------- ------------- ------------
Share Share Other Retained Total
Capital Premium Reserve Deficit Equity
GBP GBP GBP GBP GBP
Unaudited Unaudited Unaudited Unaudited Unaudited
----------------------- ---------- ----------- ---------- ------------- ------------
Balance at 1 November
2015 289,904 33,947,857 2,207,441 (30,830,087) 5,615,115
----------------------- ---------- ----------- ---------- ------------- ------------
Comprehensive loss
for the period - - - (3,460,655) (3,460,655)
Issue of equity
shares 18,440 3,656,410 - - 3,674,850
Equity-settled
share-based payments - - 564,620 - 564,620
----------------------- ---------- ----------- ---------- ------------- ------------
Transactions with
owners 18,440 3,656,410 564,620 - 4,239,470
----------------------- ---------- ----------- ---------- ------------- ------------
Balance at 30 April
2016 308,344 37,604,267 2,772,061 (34,290,742) 6,393,930
----------------------- ---------- ----------- ---------- ------------- ------------
Share Share Other Retained Total
Capital Premium Reserve Deficit Equity
GBP GBP GBP GBP GBP
Audited Audited Audited Audited Audited
----------------------- --------- ----------- ---------- ------------- ------------
Balance at 1 November
2015 289,904 33,947,857 2,207,441 (30,830,087) 5,615,115
----------------------- --------- ----------- ---------- ------------- ------------
Comprehensive loss
for the period - - - (5,656,064) (5,656,064)
Issue of equity
shares 20,110 3,895,756 - - 3,915,866
Equity-settled
share-based payments - - 1,027,051 - 1,027,051
----------------------- --------- ----------- ---------- ------------- ------------
Transactions with
owners 20,110 3,895,756 1,027,051 - 4,942,917
----------------------- --------- ----------- ---------- ------------- ------------
Balance at 31 October
2016 310,014 37,843,613 3,234,492 (36,486,151) 4,901,968
----------------------- --------- ----------- ---------- ------------- ------------
Share capital is the amount subscribed for shares at 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.
Other reserve represents the charge to equity in respect of
equity-settled share-based payments.
Retained deficit represents the cumulative loss of the Company
attributable to equity Shareholders.
CASH FLOW STATEMENT
For the period ended 30 April 2017
Six-months Six-months Year ended
ended ended
30 April 30 April 31 October
2017 2016 2016
GBP GBP GBP
Unaudited Unaudited Audited
------------------------------- ------------ ------------ ------------
Cash flows from operating
activities
Loss before tax for
the period (2,686,603) (3,961,084) (6,478,894)
Adjustments for:
Depreciation and amortisation 42,847 72,577 172,608
Profit on disposal
of tangible assets - - (40,750)
Equity-settled share-based
payment expenses 431,120 564,620 1,027,051
Payment of shares in
lieu of cash 46,250 85,850 326,632
Interest received (807) (900) (3,415)
R&D tax credits receivable 250,002 - (104,291)
Loss on derivative
financial investment - 149,687 149,687
------------------------------- ------------ ------------ ------------
Cash flows from operating
activities before changes
in working capital and
provisions (1,917,191) (3,089,250) (4,951,372)
R&D tax credits received - - 927,121
Decrease/(Increase)
in restricted cash 6,325 - (20,972)
(Increase)/Decrease
in Inventory and work
in progress (13,323) 219,421 68,489
Decrease in other receivables 584,035 146,475 862,377
Decrease in trade and
other payables (763,518) (866,840) (371,852)
------------------------------- ------------ ------------ ------------
Cash absorbed by operating
activities (2,103,672) (3,590,194) (3,486,209)
------------------------------- ------------ ------------ ------------
Cash flows from investing
activities
Purchase of plant and
equipment (2,344) (35,901) (81,424)
Additions to intangible
assets (31,120) (42,292) (70,287)
Proceeds of disposal
of tangible assets - - 40,750
Interest received 807 900 3,415
------------------------------- ------------ ------------ ------------
Net cash absorbed by
investing activities (32,657) (77,293) (107,546)
------------------------------- ------------ ------------ ------------
Cash flows from financing
activities
Proceeds from the issue
of share capital 8,068,426 3,600,000 3,600,000
Costs of issue of share
capital (423,288) (11,000) (11,000)
Derivative financial
asset - 1,159,172 1,159,172
------------------------------- ------------ ------------ ------------
Net cash from financing
activities 7,645,138 4,748,172 4,748,172
------------------------------- ------------ ------------ ------------
Net increase in cash
and cash equivalents 5,508,809 1,080,685 1,154,417
Cash and cash equivalents
at start of period 2,910,862 1,756,445 1,756,445
------------------------------- ------------ ------------ ------------
Cash and cash equivalents
at end of period 8,419,671 2,837,130 2,910,862
------------------------------- ------------ ------------ ------------
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 2017 are
unaudited. They have been prepared in accordance with IAS 34
'Interim Financial Reporting' as adopted by the EU. 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 2016. 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.
b. Revenue
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Company and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received, excluding discounts, rebates, and other
sales taxes or duty. Revenue arising from the provision of services
is recognised when and to the extent that the Company obtains the
right to consideration in exchange for the performance of its
contractual obligations.
c. Grants
The Company participates in three projects, LASER-CELL,
ALKAMMONIA and POWER-UP, which receive funding from the European
Union ("EU"). These grants are based on periodic claims for
qualifying expenditure incurred by all the entities participating
in each project consortium. The Company acts as coordinator for all
three projects and submits claims and receives funding on behalf of
the other participants in each project consortium. Grant funds of
other participants are paid over to them as soon as they are
received and only the grant funding relating specifically to the
Company's activities is reflected in the statement of comprehensive
income. The qualifying expenditure is shown in the statement of
comprehensive income as cost of sales. Grants, including grants
from the EU, are recognised in the statement of comprehensive
income in the same period as the expenditure to which the grant
relates.
d. Other Income
Other income represents sales by the Company of waste
materials.
e. Development Costs
Development expenditure does not meet the strict criteria for
capitalisation under IAS 38 and has been recognised as an expense.
Expenditure on and relating to the Company's alkaline fuel cell
system installed at Stade in Germany under the EU funded POWER-UP
project is considered to be development expenditure to date, as the
module is the first of its kind that has been produced.
f. Foreign Currency
The financial statements of the Company are 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 balance sheet date, monetary
items denominated in foreign currencies are retranslated at the
rates prevailing at the balance sheet date.
g. Inventory and Work in Progress
Inventory is recorded at the lower of cost and net realisable
value. Cost comprises purchase cost plus production overheads.
h. Other Receivables
Other receivables arise principally through the provision by the
Company of activities associated with grant-funded projects. They
also include other types of contractual monetary assets. These
assets are initially recognised at fair value and are subsequently
measured at amortised cost less any provision for impairment.
i. Property 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 administrative expenses on a straight-line basis over the
estimated useful lives of each part of an item of property, plant
and equipment. The estimated useful lives are as follows:
-- Leasehold improvements 1 to 3 years
-- Fixtures, fittings and equipment 1 to 3 years
-- Vehicles 3 to 4 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 property, plant and equipment and
the carrying value of tangible fixed assets are assessed annually
and any impairment is charged to the statement of comprehensive
income.
j. Intangible Assets
Expenditure on research activities is recognised in the
statement of comprehensive income as an expense as incurred.
Expenditure in establishing a patent is capitalised and written off
over its useful life.
Other 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 administrative expenses over the following
period:
-- Patents 20 years
Useful lives are based on the management's estimates of the
period that the assets will generate revenue, which are
periodically reviewed for continued appropriateness and any
impairment is charged to the statement of comprehensive income.
k. Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call
deposits with major banking institutions realisable within three
months. Restricted cash is EUR125,000 held in escrow to support a
bank guarantee in favour of Air Products GmbH relating to
contractual obligations by the Company in relation to the Stade
site in Germany.
l. Other Financial Liabilities
The Company classifies its financial liabilities as:
Trade and Other Payables:
These are initially recognised at invoiced value. These arise
principally from the receipt of goods and services. There is no
material difference between the invoiced value and the value
calculated on an amortised cost basis or fair value.
Deferred Income:
This is the carrying value of income received from a customer in
advance which has not been fully recognised in the statement of
comprehensive income pending delivery to the customer. The carrying
value is fair value.
m. Leases
Finance Leases:
Finance leases, which transfer to the Company substantially all
the risks and benefits incidental to ownership of the leased item,
are capitalised at the inception of the lease at the fair value of
the leased property. Capitalised leased assets are depreciated over
the estimated useful life of the asset. Lease payments are
apportioned between the finance charges and reduction of the lease
liability so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are reflected
in the statement of comprehensive income.
Operating Leases:
Leases in which a significant portion of the risks and rewards
of ownership are retained by the lessor are classified as operating
leases. Payments made under operating leases are charged to the
statement of comprehensive income on a straight-line basis over the
period of the lease.
n. Financial Assets
All of the Company's financial assets are loans and receivables
and investments. Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in
an active market. They are included in current assets at fair value
and comprise other receivables and cash and cash equivalents.
Investments are accounted for at cost less impairment.
o. Financial Instruments
Financial assets and liabilities are recognised on the balance
sheet when the Company becomes a party to the contractual
provisions of the instrument.
-- Cash and cash equivalents comprise cash held at bank and short-term deposits
-- Receivables are recognised initially at fair value and
subsequently held at amortised cost less an allowance for any
uncollectable amounts when the full amount is no longer considered
receivable
-- Trade payables are not interest bearing and are stated at their nominal value
-- Equity instruments issued by the Company are recorded at the
proceeds received except where those proceeds appear to be less
than the fair value of the equity instruments issued, in which case
the equity instruments are recorded at fair value. The difference
between the proceeds received and the fair value is reflected in
the share-based payments reserve.
p. Valuation of Derivative Financial Instrument
In 2014, the Company placed shares with Lanstead Capital L.P.
and at the same time entered into an equity swap agreement in
respect of the subscriptions for which consideration will be
received monthly over an 18-month period. The amount receivable
each month was dependent on the Company's share price performance
and gains and losses arising on monthly settlements are reflected
in the statement of comprehensive income in administrative
expenses. The financial instrument closed in April 2016.
q. Share-Based Payment Transactions
The Company awards share options and warrants to certain
Directors and employees to acquire shares of the Company. The fair
value of options and warrants granted is recognised as an employee
expense with a corresponding increase in equity. The fair value is
measured at grant date and spread over the period during which the
Directors and employees become unconditionally entitled to the
options or warrants. The fair value of the options and warrants
granted is measured using the Black-Scholes option valuation model,
taking into account the terms and conditions upon which the options
and warrants were granted. The amount recognised as an expense is
adjusted to reflect the actual number of share options and warrants
that vest only where vesting is dependent upon the satisfaction of
service and non-market vesting conditions or where the vesting
periods themselves are amended by the introduction of new schemes
and the absorption of earlier schemes by agreement between the
Company and the relevant Directors and employees. Where options or
warrants granted are cancelled, all future charges arising in
respect of the grant are charged to the statement of comprehensive
income on the date of cancellation.
r. Taxation
Tax on the profit or loss for the period 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.
Current tax is the expected tax payable or recoverable on the
taxable income for the period, using tax rates enacted or
substantively enacted at the balance sheet date together with any
adjustment to tax payable in respect of previous periods.
Deferred tax assets are not recognised due to the uncertainty of
their recovery.
s. 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; these credits are reflected in the statement of
comprehensive income in administrative expenses or in the taxation
line depending on the nature of the credit.
t. 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 currently capped at 3% of the employee's
salary and are reflected in the statement of comprehensive income
in the period for which they are made.
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, the development of
fuel cells. In the period to 30 April 2017, the Company operated
mainly in the United Kingdom and in Germany. All non-current assets
are located in the United Kingdom.
3. FINANCe cost
Six-months Six-months Year ended
ended ended
30 April 30 April 31 October
2017 2016 2016
GBP GBP GBP
Unaudited Unaudited Audited
------------------------------ ----------- ----------- -----------
Loss on derivative financial
instrument - (149,687) (149,687)
Interest on finance
lease (1,775) - (1,961)
Bank interest receivable 806 900 3,415
------------------------------ ----------- ----------- -----------
Total finance cost (969) (148,787) (148,233)
------------------------------ ----------- ----------- -----------
4. TAXATION
Six-months Six-months Year ended
ended ended
30 April 30 April 31 October
2017 2016 2016
GBP GBP GBP
Recognised in the statement Unaudited Unaudited Audited
of comprehensive income:
----------------------------- ----------- ----------- -----------
R&D tax credit - current
period 250,002 500,429 613,732
R&D tax credit - prior
year - - 209,098
----------------------------- ----------- ----------- -----------
Total tax credit 250,002 500,429 822,830
----------------------------- ----------- ----------- -----------
5. 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 Six-months Year ended
ended ended
30 April 30 April 31 October
2017 2016 2016
Unaudited Unaudited Audited
------------------------- ------------ ------------ ------------
Basic loss per share
(pence) (0.73)p (1.15)p (1.86)p
Diluted loss per share
(pence) (0.73)p (1.15)p (1.86)p
Loss attributable to
equity Shareholders (2,436,601) (3,460,655) (5,656,064)
------------------------- ------------ ------------ ------------
Number Number Number
------------------------- ------------ ------------ ------------
Weighted average number
of shares in issue 333,454,674 301,332,128 304,858,560
------------------------- ------------ ------------ ------------
Diluted earnings per share:
There are share options and warrants outstanding as at 30 April
2017 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.
6. INTANGIBLE ASSETS
Patents
GBP
Unaudited
-------------------- ----------
Cost:
At 1 November 2015 445,927
Additions 42,292
-------------------- ----------
At 30 April 2016 488,219
-------------------- ----------
Additions 28,229
-------------------- ----------
At 31 October 2016 516,448
-------------------- ----------
Additions 31,120
-------------------- ----------
At 30 April 2017 547,568
-------------------- ----------
Amortisation:
At 1 November 2015 107,751
Additions 19,944
-------------------- ----------
At 30 April 2016 127,695
-------------------- ----------
Additions 44,296
-------------------- ----------
At 31 October 2016 171,991
-------------------- ----------
Additions 17,029
-------------------- ----------
At 30 April 2017 189,020
-------------------- ----------
Net Book Value:
-------------------- ----------
At 30 April 2016 360,524
-------------------- ----------
At 31 October 2016 344,457
-------------------- ----------
At 30 April 2017 358,548
-------------------- ----------
7. PROPERTY AND EQUIPMENT
Leasehold Fixtures,
fittings
improvements and equipment Motor Total
vehicles
GBP GBP GBP GBP
Unaudited Unaudited Unaudited Unaudited
-------------------- ------------- -------------- ---------- ----------
Cost:
At 1 November 2015 337,462 1,321,278 17,994 1,676,734
Additions - 35,901 - 35,901
At 30 April 2016 337,462 1,357,179 17,994 1,712,635
-------------------- ------------- -------------- ---------- ----------
Additions - 45,523 - 45,523
Disposals - (238,797) - (238,797)
-------------------- ------------- -------------- ---------- ----------
At 31 October 2016 337,462 1,163,905 17,994 1,519,361
-------------------- ------------- -------------- ---------- ----------
Additions - 2,344 - 2,344
At 30 April 2017 337,462 1,166,249 17,994 1,521,705
-------------------- ------------- -------------- ---------- ----------
Depreciation:
At 1 November 2015 289,532 1,267,279 3,595 1,560,406
Charge for the
period 23,965 25,313 3,355 52,633
At 30 April 2016 313,497 1,292,592 6,950 1,613,039
-------------------- ------------- -------------- ---------- ----------
Charge for the
period 23,965 29,224 2,546 55,735
Disposals - (238,797) - (238,797)
-------------------- ------------- -------------- ---------- ----------
At 31 October 2016 337,462 1,083,019 9,496 1,429,977
-------------------- ------------- -------------- ---------- ----------
Charge for the
period - 22,463 3,355 25,818
At 30 April 2017 337,462 1,105,482 12,851 1,455,795
-------------------- ------------- -------------- ---------- ----------
Net Book Value:
-------------------- ------------- -------------- ---------- ----------
At 30 April 2016 23,965 64,587 11,044 99,596
-------------------- ------------- -------------- ---------- ----------
At 31 October 2016 - 80,886 8,498 89,384
-------------------- ------------- -------------- ---------- ----------
At 30 April 2017 - 60,767 5,143 65,910
-------------------- ------------- -------------- ---------- ----------
8. INVENTORY AND WORK IN PROGRESS
30 April 30 April 31 October
2017 2016 2016
GBP GBP GBP
Unaudited Unaudited Audited
------------------ ---------- ---------- -----------
Inventory 164,255 - 150,932
Work in progress - - -
------------------ ---------- ---------- -----------
164,255 - 150,932
------------------ ---------- ---------- -----------
9. OTHER RECEIVABLES
30 April 30 April 31 October
2017 2016 2016
GBP GBP GBP
Unaudited Unaudited Audited
---------------------------- ---------- ---------- -----------
Current:
R&D tax credits receivable 923,221 1,218,452 673,219
EU grants receivable 599,050 2,342,625 1,409,642
Other receivables 489,657 251,217 513,102
---------------------------- ---------- ---------- -----------
2,011,928 3,812,294 2,595,963
---------------------------- ---------- ---------- -----------
There is no significant difference between the fair value of the
receivables and the values stated above.
10. CASH AND CASH EQUIVALENTS
30 April 30 April 31 October
2017 2016 2016
GBP GBP GBP
Unaudited Unaudited Audited
--------------- ---------- ---------- -----------
Cash at bank 1,195,182 942,274 1,137,819
Bank deposits 7,224,489 1,894,856 1,773,043
--------------- ---------- ---------- -----------
8,419,671 2,837,130 2,910,862
--------------- ---------- ---------- -----------
Cash at bank and bank deposits consist of cash. There is no
material foreign exchange movement in respect of cash and cash
equivalents. Restricted cash, not included in cash and cash
equivalents, is EUR125,000 held in escrow to support a bank
guarantee in favour of Air Products GmbH relating to contractual
obligations by the Company in relation to the Stade site in
Germany.
11. ISSUED SHARE CAPITAL
Ordinary Share Share Total
shares Capital premium
Number GBP GBP GBP
Unaudited Unaudited Unaudited Unaudited
------------------------------------ ------------ ---------- ----------- -----------
At 1 November 2015 2015 289,903,943 289,904 33,947,858 34,237,762
Issue of shares on 18 January 2016 18,000,000 18,000 3,571,000 3,589,000
Issue of shares on 21 January 2016 250,000 250 56,625 56,875
Issue of shares on 18 April 2016 190,000 190 28,785 28,975
At 30 April 2016 308,343,943 308,344 37,604,268 37,912,612
------------------------------------ ------------ ---------- ----------- -----------
Issue of shares on 19 May 2016 720,000 720 50,670 51,390
Issue of shares on 6 July 2016 250,000 250 34,125 34,375
Issue of shares on 19 August 2016 700,000 700 154,550 155,250
------------------------------------ ------------ ---------- ----------- -----------
At 31 October 2016 310,013,943 310,014 37,843,613 38,153,627
------------------------------------ ------------ ---------- ----------- -----------
Issue of shares on 25 January 2017 250,000 250 46,000 46,250
Issue of shares on 9 March 2017 80,684,262 80,684 7,564,454 7,645,138
------------------------------------ ------------ ---------- ----------- -----------
At 30 April 2017 390,948,205 390,948 45,454,067 45,845,015
------------------------------------ ------------ ---------- ----------- -----------
All issued shares are fully paid.
12. TRADE AND OTHER PAYABLES
30 April 30 April 31 October
2017 2016 2016
GBP GBP GBP
Unaudited Unaudited Audited
-------------------------- ---------- ---------- -----------
Current liabilities:
Trade payables 210,057 421,217 357,118
Deferred income 60,973 228,020 105,727
Finance lease liability 16,246 - 16,246
Other payables 180,376 77,394 677,211
Accruals 70,537 80,088 139,602
-------------------------- ---------- ---------- -----------
538,189 806,719 1,295,904
-------------------------- ---------- ---------- -----------
Non-current liabilities:
Finance lease liability - - 5,803
-------------------------- ---------- ---------- -----------
- - 5,803
-------------------------- ---------- ---------- -----------
13. RELATED PARTY TRANSACTIONS
During the six-months to 30 April 2017:
GBP378 was invoiced to the Company by Richards and Appleby Ltd
(a company registered in England & Wales) for expenses
associated with the services of Mitchell Field as a Director of AFC
Energy plc (2016: GBPnil). Mr. Field is also a Director and
Shareholder of Richards and Appleby Ltd. At 30 April 2017, the sum
owing to Richards and Appleby Ltd was GBP378 (30 April 2016:
GBPnil).
GBP20,100 (exc. VAT) was invoiced to the Company by Locana
Corporation (London) Ltd (a company registered in England &
Wales) for consultancy services (2016: GBP20,100). Mr. Yeo is also
a Director and Shareholder of Locana Corporation (London) Ltd. At
30 April 2017, the sum owing to Locana was GBP3,350 (30 April 2016:
GBP3,350).
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 2016. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAPKPASDXEFF
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June 29, 2017 02:00 ET (06:00 GMT)
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