AFC Energy (AFC)

 

LSE:AFC: Final Results

AFC Energy

24 Mar 2017 07:00:06

AFC Energy Plc

RNS Number : 3761A
AFC Energy Plc
24 March 2017
 

24 March 2017

Embargoed until 07:00

 

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.

 

AFC Energy PLC

("AFC Energy" or "the Company")

 

Final Results and Notice of AGM

 

AFC Energy (AIM: AFC), the industrial fuel cell power company, is pleased to announce its final results for the year ended 31 October 2016.

 

FY16 Highlights

 

·      Commissioning of AFC Energy's first industrial scale 240kW fuel cell system and sale of power at Stade, Germany

·      Entry into Strategic Technology Collaboration with Industrie De Nora S.p.A. - one of the largest manufacturers of electrolysers, electrodes, coatings and electrochemical solutions  

·      Material improvement in fuel cell longevity and availability, and reduction of stack cost, through Generation 2 fuel cell development programme

·      Commencement of commercial fuel cell deployment and detailed discussions with several international power utilities, industrial groups and Government bodies

·      Strategic Engineering Partnership Agreement with plantIng GmbH in support of fuel cell Balance of Plant engineering and design

·      Raised £3.6 million through placing and offer for subscription in January 2016

·      Appointment of Cantor Fitzgerald Europe as Nominated Adviser and Joint Broker

·      Operating loss of £6.3 million (2015: £8.6 million)

·      Cash reserves at 31 October 2016 of £2.9 million (31 October 2015: £1.8 million)

 

Post Period Highlights

 

·      Successful completion of Generation 2 fuel cell system

·      Strategic Partnership with Peel Environmental to assess the techno-economic feasibility for fuel cell deployment in the UK's Northern Powerhouse  

·      Raised £8.1 million before expenses through a placing, subscription and open offer to shareholders:

·     Schroders plc largest investor in the successful £6.0 million share placement and subscription

·     £2.1 million open offer to shareholders over-subscribed by 56.9% 

·      Appointment of Chief Operating Officer

 

Adam Bond, CEO of AFC Energy, commented: "2016 was an important year of consolidation for the Company with material improvements not only in the fuel cell technology platform, but also in the dialogue with several key commercial and strategic partners for AFC Energy. The corporate value gained from AFC Energy's collaboration with De Nora, and the commencement of commercial project developments with Peel Environmental, cannot be undervalued and positions the Company well for an accelerated programme of activities in 2017."

 

 

 

Notice of AGM

 

AFC Energy also today gives notice that its Annual General Meeting will be held at Chelsea Football Club, Stamford Bridge, Fulham, London SW6 1HS at 11am on Tuesday 25 April 2017.

 

The Annual Report and Accounts and Notice of AGM will be sent to shareholders in late March and will be available for download from the Company's website, www.afcenergy.com, in accordance with AIM Rule 20.

 

 

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

Richard Salmond 

                          

 

+44 (0) 20 7894 7000

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 an 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

 

 

 

 

Chairman's Statement - Staying the Course

 

After good technical and strategic progress in 2016, AFC Energy is poised to move into commercialisation in 2017 with a strengthened management team and a now strengthened balance sheet.

 

Overview

In November 2016, the Paris Agreement on Climate Change came into force. For the first time, legally binding limits to global temperature rises have been agreed by nearly 200 countries. While the carbon emission curbs proposed are not themselves legally binding, the mechanism for periodically tightening those pledges is.

 

Governments including the US, China, India, and from the EU, are now collectively obliged to constrain global warming to no more than 2oC above pre-industrial levels (1.4oC above present levels).

 

While the journey to implement the required carbon emission reductions will inevitably face challenges along the way, not least given the recent pronouncements from the new US administration, it is evident that the wider international community remains committed to a lower carbon economy.

 

There is also support by global business leaders - one prime example being the recent announcement of the establishment of the Hydrogen Council, at the Davos 2017 World Economic Forum. Its members - including Royal Dutch Shell, Alstom, Air Liquide, Daimler and Toyota, among others - plan to invest €10 billion in hydrogen-related products within the next five years.

 

Hydrogen is expected to play a key role in supporting this transition to a low-carbon economy, especially within the transport, energy and petrochemical industry sectors, and the associated value chain.

 

The Board therefore continues to believe that stationary fuel cells have an important role to play globally and that AFC Energy has the technology and team to take a central position within this low-carbon economy, for both industrial scale and distributed generation applications.

 

Key Developments

The successful generation, in January 2016, of gross electrical output in excess of 200kW at the Company's first industrial scale fuel cell power plant in Germany, was a strong start to the year.

 

To maintain momentum, in March 2016, the Board issued the 2016 Strategic Milestones. Underpinning these milestones was the necessity to define, and share with our stakeholders, the fundamental metrics which the Company is focusing on to enable the commercialisation of the AFC Energy fuel cell system: Power, Longevity, Availability, Cost, and Efficiency. Both the management team and the Board remain focused on finalising the development of a readily deployable commercial product which is attractive to our target customer base.

 

Among other 2016 achievements, AFC Energy delivered the Generation 2 ("Gen2") fuel cell system which operated for more than 1,000 continuous hours (at which point the test was concluded), completed the basic design and engineering of the Company's new 10kW fuel cell system, and initiated and advanced dialogue for several commercial fuel cell opportunities. This was complemented by our success in establishing two new key strategic partnerships with Industrie De Nora S.p.A. and plantIng GmbH - both providing strong technical expertise and sector experience to support AFC Energy deliver its commercialisation objectives.

 

The journey continues into 2017 with the Company now prioritising its activities to enable the commercial deployment of its fuel cell systems. The successful completion of the £8.1 million equity fundraise in March 2017 provides the Company with a strong cash position to achieve this target.

 

While there may be challenges along the way, the Board and I remain confident that AFC Energy has set the appropriate course to achieve commercialisation. Our experienced leadership and strengthened management team should enable us to continue to make sound progress with our partners.

 

I would like to thank all the staff, partners and contractors working with AFC Energy, in addition to my fellow Board members and shareholders, for their continued support.

 

 

 

 

Operational Review

 

2016 was an important year of consolidation for the Company with material improvements not only in the fuel cell technology platform, but also in the dialogue with several key commercial and strategic partners for AFC Energy. The corporate value gained from AFC Energy's collaboration with De Nora, and the commencement of commercial project developments with Peel Environmental, cannot be undervalued and positions the Company well for an accelerated programme of activities in 2017.

 

In December 2014, the Board of AFC Energy made a conscious decision to switch its focus away from the laboratory to the acceleration of R&D and ultimately the commercialisation of an industrial-scale fuel cell system. In taking this decision, I outlined a three-year window of opportunity which would see AFC Energy progress from a company that had managed to deliver a "9 cell stack" (equivalent to less than 1kW of gross output) through to a technology platform capable of running multi-megawatt projects across several international jurisdictions.

 

It is safe to say 2015 saw significant progress not only in upscaling the stack from 9 cells to 101 cells in a few months, but also in delivering the world's largest alkaline fuel cell installation in Stade, Germany with a nameplate capacity of 240kW. The progress was tangible and outcomes were transparent insofar as for the first time in AFC Energy's history, the Company had a reference plant capable of demonstrating the operating capability of its proprietary fuel cell technology. Whilst many investors saw this as the end of the commercialisation roadmap, the process of accelerating the installation in Stade delivered for AFC Energy many findings which could only be identified once a fully industrial system was up and running, and indeed, with these findings came the need for further refinement of the system. To this end, 2016 became the year of consolidation.

 

Having now done the hard yards and exhibited the technical discipline to bring AFC Energy's fuel cell technology back to where we believe it needs to be in order to drive commercial partnering opportunities, I believe 2017 to be the year in which we start to see the fruits of our collective labour as we close in on the final phase of the three-year window.

 

Operating Review

Technology

Having spent much of my career in the energy sector, the expectations of a power plant developer and owner on a generation technology provider always come back to their ability to demonstrate five key metrics which at AFC Energy have become known as the "metrics of commercialisation". These metrics, being, Power, Longevity, Availability, Cost and Efficiency, have provided AFC Energy with its internal key performance indicators of success throughout the year.

 

The commissioning and demonstration of AFC Energy's 240kW system in Stade in January 2016 went a significant way to demonstrate the capability of the Company's proprietary fuel cell technology package. In particular, it demonstrated the ability of our system to deliver power from our fuel cell at or near nameplate on a cartridge by cartridge basis, providing empirical evidence for the first time of the technology's longevity, availability, cost and efficiency. In all cases, the Stade reference plant gave clear guidance as to those areas AFC Energy needed to address before its technology could be classed as "commercial".

 

Throughout 2016, AFC Energy embarked on a series of work packages, colloquially named "Gen2" which sought to address a number of the issues associated with our findings identified at Stade. The endeavours made on these work packages included a more focused discipline by which the technology development and rigorous assessment of these findings became solutions. To the credit of AFC Energy's team, the culmination of these work packages came in the latter quarter of the year when two of AFC Energy's stacks, operating at Stade and at the Company's facilities in Surrey, delivered in excess of 1,000 hours of continuous operation at very high levels of availability over this period. This compared with a few tens of hours at Stade upon initial commissioning in January 2016, ahead of eventually meeting our milestones.

 

In addition to this achievement of longevity and availability was AFC Energy's demonstration that its technology could accept, without loss, hydrogen sourced at much lower qualities than had been tested previously. The lower grade hydrogen being used in these Gen2 trials was akin to that found at industrial gas plants and capable of being stripped direct from, for example, a chlor-alkali plant - one of AFC Energy's key target markets for fuel cell deployment. This outcome alone had an enormous impact not only on the size of market AFC Energy would now address, but also on the economics of each project which might otherwise have required extensive investment in hydrogen clean-up before being capable of acceptance by AFC Energy's fuel cell.

 

The Gen2 design, not only of the fuel cell stack and electrodes, but also the balance of plant, significantly built on the system employed at AFC Energy's industrial test facility at Stade, incorporating design changes to extend the operating life of the fuel cell stack, while increasing stack availability, and reducing stack cost.

 

In parallel to this work, we identified the significant value that could be extracted from partnering with one of the world's leading experts in the field of electro-chemistry, De Nora, particularly in learning from their own experiences in the successful provision of long life alkaline systems to the electrolysis and chlor-alkali markets over many decades. To this end, following months of technical due diligence and discussions, the parties entered a Joint Development Agreement ("JDA") in August 2016 which ran in parallel to the Gen2 development programme.

 

We have been extremely pleased with many of the outcomes from the JDA which are now giving renewed confidence to the delivery of a fuel cell cartridge capable of running for at least twelve months, and indeed, exceeding twelve months in due course. The collaboration between our two companies is progressing very well and we are delighted with the positive working relationship that has formed between our organisations over a relatively short time. We expect further announcements throughout 2017 regarding the success of this relationship and the tangible benefits we are starting to see from this strategic collaboration.

 

Additionally, through collaboration with De Nora, there is an opportunity for AFC Energy to better address the chlor-alkali sector, a significant producer of vented hydrogen, for which De Nora is a strong part of the supply chain. I believe this collaboration will deliver a technology platform that enhances the commercialisation timeline and our future success in the alkaline fuel cell space.

 

When put together, the advances achieved by AFC Energy as part of the Gen2 programme, with the outcomes of the JDA collaboration with De Nora, give me increasing confidence that we are nearing a point when the AFC Energy technology platform will be in a position to positively confirm its ability to meet the five metrics of commercialisation and therefore, position the Company for project collaboration and commercial deployment during the course of the next twelve months.

 

Market Opportunities

At the recent World Economic Forum in Davos, the 13-member Hydrogen Council announced its establishment, calling on Governments to support the development of infrastructure for a hydrogen "ecosystem". Given representation from leading global multinationals including Royal Dutch Shell, Alstom, Air Liquide, Daimler and Toyota, this illustrates the significant resources being devoted to the foundations of a global hydrogen economy. AFC Energy will centre itself firmly within that international "ecosystem", initially across several targeted regions/countries, to support the commercialisation of our alkaline fuel cell systems, for industrial scale, distributed and related applications.

 

Addressable market opportunities identified by the Company include large-scale stationary industrial power plants, integration with industrial and chemical plants with surplus hydrogen, and off-grid decentralised power generation. To this end, our business model remains intact and robust in pushing forward with new project collaboration opportunities.

 

The past twelve months have seen an aggressive push by the Company into key target markets and industries within those markets. As a result of this investment, we have positioned AFC Energy well to now begin to capitalise on these opportunities, particularly as the robustness of the technology platform improves and we are able to extract real and empirical data from the operating cartridges that supports the metrics of commercialisation to our partners. It is fair to say that whilst expectations were set through the 2016 Milestones that commercial agreements would be reached within that year, the status of the technology at that time provided a challenging platform in which to conclude these transactions. However, each of the partners we have been in dialogue over this time remains open and we are hopeful that 2017 will give rise to an improved platform from which to progress several project deployment opportunities.

 

Whilst our target markets for the most part have remained unchanged, with focus on the Middle East, and North East Asia (Korea and Japan), we have also seen renewed interest from Europe, principally in the UK and Germany.

 

It remains the building block of AFC Energy's commercialisation model to stay focussed on delivering a viable fuel cell system through adoption of our existing core fuel cell technology platform. Whilst a well-known pitfall of clean tech companies has been to diversify offerings too early and divert focus on what might otherwise be core factors in the development roadmap, we have identified a number of deployment opportunities that, when integrated with other technologies, provide real and market-based solutions to existing market-based problems.

 

Key within this are two new models for AFC Energy's fuel cell deployment which we believe could generate new growth markets for our technology platform. Firstly, in recognition of the growing need for energy storage solutions and the role of batteries within that mix, I have commissioned AFC Energy to develop a "Hydrogen Battery" which, when integrated with curtailed renewable energy sources, electrolysis and hydrogen buffers, provides an efficient, affordable and robust alternative to "conventional" battery technologies. This integration does not change the form or make-up of AFC Energy's fuel cell technology, but provides a key conversion technology solution that provides a bridge between intermittent renewable power and flexible power demand profiling as is exhibited in any modern-day power market.

 

AFC Energy is also looking to properly integrate its fuel cell technology platform with tertiary water treatment and again, electrolysis, as a basis for remote water treatment solutions to reduce the cost of offsite wastewater transportation and subsequent treatment for many extractive industries, primarily in oil and gas. This is an early phase development but again, utilising AFC Energy's existing fuel cell technology platform and architecture to integrate with other technologies to provide a market-based solution to an ever-increasing problem of contaminated water treatment and disposal.

 

Post Year-End Developments

AFC Energy's objective is to be a world-class energy company that leverages the deployment of low cost, high performance alkaline fuel cell technology to target global industrial scale opportunities.

 

In November 2016, we entered into an important agreement with UK-based Peel Environmental ("Peel"), to assess a substantive fuel cell development opportunity at Peel's Protos Industrial Park located in Chester, UK. This site provides several potential industrial hydrogen sources, some of which are currently venting hydrogen, which in turn, opens the door to scalable fuel cell opportunities.

 

As owner of the Protos site, Peel, together with its regional contacts and permitting and consenting capability, is an ideal partner for AFC Energy to collaborate in the UK's "Northern Powerhouse". This project has the potential, following commencement at the 1MW scale, to scale up to an estimated 35MW to 50MW of installed capacity. AFC Energy has already, in conjunction with Peel, commenced dialogue with stakeholders of such potential projects and for the necessary study phase work. With these steps underway we will provide an update later in 2017.

 

More recently, in March 2017, we announced the successful completion of an £8.1 million fundraise by way of a placement, subscription and shareholder offer, which heralded the arrival of new financial institutions on the share register. In addition, we considered it important to provide our existing shareholders with an opportunity to participate, and this was rewarded with a full take up under the open offer. The fundraise will assist the Company to fulfil its strategy to deliver commercial contracts by 2018.

 

Funded Projects: Project POWER-UP and ALKAMMONIA

AFC Energy continues to pursue the requirements of the POWER-UP and ALKAMMONIA EU-funded programmes. Much of the work required to deliver POWER-UP was undertaken during the course of 2015 with further work throughout 2016 contributing to the overall objectives of the POWER-UP programme and its key stakeholders. AFC Energy continues to hold dialogue with the Fuel Cell and Hydrogen Joint Undertaking ("FCH JU") with regards the programme and very much appreciates for the support the FCH JU have provided the Company in delivering this significant project. The project is due to come to an end on 30 June 2017 and we expect to have delivered the vast majority of outcomes originally agreed with the EU when originally awarded this grant back in 2013.

 

In addition to POWER-UP, and despite a delay as a consequence of one of our key projects partners entering into administration back in 2014, the ALKAMMONIA project continues with the bulk of work required for AFC Energy's delivery of a small-scale system completed (as announced during the course of 2016). We are now awaiting delivery of the pilot scale ammonia cracker from a project partner in the first half of 2017. We look forward to updating the market on this project over the coming months.

 

Financial Overview

In 2016, AFC Energy's EU grant and other income was £1.0 million (2015: £2.3 million). The Company continued to be engaged during the year, and at year-end, in three EU-funded projects, ALKAMMONIA, LASER-CELL and POWER-UP. Overall activity on these EU-funded projects was lower than in the previous year, in particular due to the high level of activity associated with the POWER-UP project in the previous year, resulting in lower expenditure through cost of sales.

 

Overall expenditure on research and development qualifying for R&D tax credits was £2.9 million (2015: £3.5 million), demonstrating the continued high-level of commitment to develop the Company's fuel cell system.

 

An operating loss to 31 October 2016 of £6.3 million (2015: £8.6 million) has been recorded. Cash balances at 31 October 2016, excluding restricted cash, were £2.9 million (2015: £1.8 million). As mentioned in "Post year-end developments" above, subsequent to the year-end in March 2017, the Company successfully raised £8.1 million before expenses through a placement, subscription and shareholder open offer.

 

Outlook

In December 2014, AFC Energy's commercialisation strategy was updated to deliver technical and commercial progression over a three-year window. In 2015, the primary focus was on building and successfully commissioning the world's largest alkaline fuel cell power plant. In 2016, our focus progressed to the delivery of a second generation fuel cell system and initiation of a commercial pipeline. In 2017, that journey continues, with the opportunity for the commercial deployment of our fuel cell systems.

 

AFC Energy's objective is to be a world class energy company that leverages the deployment of low cost, high performance alkaline fuel cell technology to target global industrial scale, distributed generation and other related opportunities. Stationary fuel cell applications represent the largest sub-sector in a hydrogen economy that is rapidly building global momentum.

 

In 2017, as we further evaluate our project opportunities, our primary focus remains the deployment of our fuel cell systems in commercial opportunities. As we develop this commercial pipeline, our stakeholders will witness renewed emphasis on system and cartridge cost reductions to ensure our technology can operate in an increasingly competitive and efficient manner. To achieve this, we continue to review our supply chain and the scope for recycling our fuel cells, as well as opportunities to improve the design of key components and system engineering.

 

2017 will also see further focus on delivering the Company's commitments with its key partners, including those under the JDA with De Nora where significant advancements in the fuel cell system continue to be made. Our achievements to date optimally position AFC Energy for the delivery of commercial transactions and in turn support collaboration with our partners, for the international deployment of our fuel cell systems.

 

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.

 

 

Managing our Risks

 

Effective risk management underpins the delivery of our objectives. It is essential to protect our reputation and generate sustainable shareholder value. We aim to identify key risks at an early stage and develop actions to eliminate them or mitigate their impact and likelihood to an acceptable level.

 

Our approach to risk

There are a number of risks and uncertainties that could adversely impact the achievement of the Company's strategy. The Board of Directors has identified and discussed the risks that are considered to have the highest severity and likelihood, along with the mitigations the Company adopts to either avoid the risk occurring or manage the impact.

 

Our risk management process

The Executive Directors are responsible for managing and mitigating the risks to the Company. The Audit Committee reviews the processes and controls for ensuring key risks are identified and managed appropriately. The Committee is responsible for monitoring the quality of internal controls and for ensuring that the financial performance of the Company is properly monitored, controlled, and reported. The AIM Rules Compliance Committee is responsible for, among other things, monitoring the quality of internal procedures, resources and controls to enable compliance by the Company with the AIM Rules and the AIM Rules for Nominated Advisers.

 

Risk management processes have been embedded at both Company and project levels, and form an integral day-to-day business activity. The processes support management and project teams to identify and understand the risks they face in delivering Company objectives and to develop mitigations to manage those risks.

 

Our Principal Risks

Risk

Mitigation

1 Health and Safety

The risk of health and safety incidents or breaches.

Robust health and safety management, and continuous improvement and reinforcement of a safety-first culture in all work place environments, is paramount for the Company and enforced at all levels.

 

Adherence to codes and standards surrounding health and safety provides a transparent framework to minimise the risk of incidents, and ensures the integrity of AFC Energy's health and safety remains intact for the sake of our employees, partners, contractors and shareholders.

2 Technology

The risk is that we will not be able to successfully develop and apply the Company's alkaline fuel cell technology to potential products at the right cost or performance.

 

The risk that technology is successfully developed but slower than anticipated.

 

The risk that technical failure at product trials could affect ability to provide a product to customers.

The Company has implemented a robust control of technological progress against a budgeted plan, adopting principles of "technology readiness levels".

 

External partners have also been identified and where relevant, engaged to support the development plan with transparent KPIs and road maps to develop a product that meets commercial product metrics, relating to power, longevity, availability, cost and efficiency.

3 Competition and market opportunity

The risk that the advantages of our technology are eroded by competitors and this impacts the Company's future profitability and growth opportunities.

The Company is targeting different regional markets and we are broadening the application of our product in order to minimise the risk of failure in a single market or product.

 

We continuously monitor market developments, and competitor activity.

4 Intellectual Property

The Company's competitive advantage is at risk from a loss or breach of its intellectual property rights.

The Company benefits from external advice provided by qualified patent attorneys. The integrity of the Company's IP management and the manner in which all contractual negotiations with third parties takes place to ensure IP protection and compliance are of critical importance to maintaining shareholder value. IP registers are reviewed regularly both in terms of existing patents, and also in terms of future and unregistered protection.

5 Operational

There is a risk that the Company has insufficient operational capability and capacity to deliver project contracts in compliance with contractual commitments.

The strategy for transition from technology development to commercial deployment focuses on long-term partnerships and collaboration with industry leading companies. Our partners and specialist external advisers are identified and developed to complement AFC Energy's project execution capability, both in terms of understanding local regulatory environments, through to construction, funding, operational and logistical support. This strategy will continue to be employed over the short to medium term by the Company.

 

 

6 Design and quality

The risk of design and quality issues with our alkaline fuel cell technology.

As the Company progresses towards product commercialisation, design defects and poor quality management, within the manufacturing processes, could have a direct impact on the Company's market reputation, with consequential loss of value. The Company adopts a high standard of manufacturing process and quality control to mitigate to a large extent the risk of product quality issues and failure.

7 Access to finance

The risk the Company has insufficient capital to fund technology and early project development - this may require additional equity funding to achieve commercialisation.

The Company adopts a budgeted technology development plan, aligned to pre-defined milestones, supported by prudent budgetary controls that can be measured and monitored to provide a robust means of mitigating risk of insufficient working capital.

 

The Company is targeting meeting its financing needs from a mix of grant funding, tax credits and equity funding, which may be sought from institutional, retail or strategic sources. Once it reaches project deployment, additional sources of debt funding, such as project finance will also be considered.

8 Regulatory and compliance

The risk that the Company or its staff breach applicable regulations.

The Company is publicly listed on the AIM market, which results in significant disclosure and reporting obligations to the regulator, investors and other stakeholders. The Board and management, in consultation with its Nomad and legal advisers seek to ensure that applicable legislation is complied with. Further, the AIM Rules Compliance Committee actively supervises this area to ensure compliance.

 

9 Key personnel

The risk that key technical personnel who possess critical design know-how, depart the Company.

Key technical staff possess significant know-how regarding the ongoing development of the Company's technology. Loss of these staff members may adversely affect the ability of the Company to progress its research and development in a manner which is likely to achieve commercialisation.

 

The Company actively monitors remuneration policy to ensure that staff are incentivised to remain with the Company. The Company requires current and former employees and directors to comply with stringent confidentiality obligations.

 

 

 

 

Statement of Comprehensive Income

for the year ended 31 October 2016

 

 

 

Year ended

Year ended

 

 

31 October 2016

31 October 2015

 

Note

£

£

EU Grant income

 

967,606

2,262,506

Cost of sales

 

(1,883,650)

(4,846,933)

Gross loss

 

(916,044)

(2,584,427)

 

 

 

 

Other income

 

146,479

51,080

Administrative expenses

 

(5,561,096)

(6,112,856)

Operating loss

5

(6,330,661)

(8,646,203)

 

 

 

 

Finance (cost)/income

8

(148,233)

3,294,272

Loss before tax

 

(6,478,894)

(5,351,931)

Taxation

9

822,830

569,706

Loss for the financial year and total comprehensive loss attributable to owners of the Company

 

(5,656,064)

(4,782,225)

 

 

 

 

 

 

 

 

Basic loss per share

10

(1.86)p

(1.66)p

Diluted loss per share

10

(1.86)p

(1.66)p

 

All amounts relate to continuing operations.

 

 

 

Statement of Financial Position

as at 31 October 2016

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

Note

£

£

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Intangible assets

 

 

11

344,457

338,176

Property and equipment

 

 

12

89,384

116,328

Investment

 

 

13

-

-

 

 

 

 

433,841

454,504

Current assets

 

 

 

 

 

Inventory and work in progress

 

 

14

150,932

219,421

Derivative financial instrument

 

 

21

-

1,308,859

Trade and other receivables

 

 

15

2,595,963

3,458,340

Cash and cash equivalents

 

 

16

2,910,862

1,756,445

Restricted cash

 

 

16

112,077

91,105

 

 

 

 

5,769,834

6,834,170

 

 

 

 

 

 

Total assets

 

 

 

6,203,675

7,288,674

 

 

 

 

 

 

Capital and reserves attributable to owners of the Company

 

 

 

 

 

Share capital

 

 

17

310,014

289,904

Share premium

 

 

17

37,843,613

33,947,857

Other reserve

 

 

 

3,234,492

2,207,441

Retained deficit

 

 

 

(36,486,151)

(30,830,087)

Total equity attributable to Shareholders

 

 

 

4,901,968

5,615,115

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

 

19

1,295,904

1,673,559

 

 

 

 

1,295,904

1,673,559

Non-current liabilities

 

 

 

 

 

Trade and other payables

 

 

19

5,803

-

 

 

 

 

5,803

-

 

 

 

 

 

 

Total equity and liabilities

 

 

 

6,203,675

7,288,674

 

These financial statements were approved and authorised for issue by the Board on 23 March 2017.

 

Tim Yeo                                                               Adam Bond

Chairman                                                             Chief Executive Officer

 

AFC Energy plc

Registered number: 05668788 

 

 

 

Statement of Changes in Equity

for the year ended 31 October 2016

 

 

 

 

Share

Share

Other

Retained

Total

 

 

 

Capital

Premium

Reserve

Deficit

Equity

 

 

Note

£

£

£

£

£

Balance at 1 November 2014

 

 

285,684

33,332,478

3,032,472

(27,089,095)

9,561,539

Comprehensive loss for the year

 

 

-

-

-

(4,782,225)

(4,782,225)

Issue of equity shares

 

 

4,220

615,379

-

-

619,599

Equity-settled share-based payments

 

 

-

-

(825,031)

1,041,233

216,202

Transactions with owners

 

 

4,220

615,379

(825,031)

1,041,233

835,801

Balance at 31 October 2015

 

 

289,904

33,947,857

2,207,441

(30,830,087)

5,615,115

Comprehensive loss for the year

 

 

-

-

-

(5,656,064)

(5,656,064)

Issue of equity shares

 

17

20,110

3,895,756

-

-

3,915,866

Equity-settled share-based payments

 

18

-

-

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 year ended 31 October 2016

 

 

 

31 October 2016

31 October 2015

 

Note

£

£

Cash flows from operating activities

 

 

 

Loss before tax for the year

 

(6,478,894)

(5,351,931)

Adjustments for:

 

 

 

 Depreciation and amortisation

11,12

172,608

278,291

 Impairment of intangible asset investment

 

-

52,500

 (Profit)/Loss on disposal of tangible assets

 

(40,750)

286,743

 Equity-settled share-based payment expenses

18d

1,027,051

216,202

 Payment of shares in lieu of cash

 

326,632

331,000

 Interest received

8

(3,415)

(5,775)

 R&D tax credits receivable

 

(104,291)

(174,937)

 Loss/(Gain) on derivative financial investment

21

149,687

(3,288,497)

Cash flows from operating activities before changes in working capital and provisions

 

(4,951,372)

(7,656,404)

R&D tax credits received

 

927,121

813,696

Increase in restricted cash

 

(20,972)

(91,105)

Decrease/(Increase) in Inventory and Work in Progress

 

68,489

(62,373)

Decrease/(Increase) in trade and other receivables

 

862,377

(24,500)

(Decrease)/Increase in trade and other payables

 

(371,852)

542,271

Cash absorbed by operating activities

 

(3,486,209)

(6,478,415)

Cash flows from investing activities

 

 

 

Purchase of plant and equipment

12

(81,424)

(36,845)

Additions to intangible assets

11

(70,287)

(98,980)

Proceeds of disposal of tangible assets

 

40,750

4,800

Interest received

8

3,415

5,775

Net cash absorbed by investing activities

 

(107,546)

(125,250)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from the issue of share capital

 

3,600,000

288,599

Costs of issue of share capital

 

(11,000)

-

Derivative financial asset

21

1,159,172

3,213,308

Net cash from financing activities

 

4,748,172

3,501,907

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

1,154,417

(3,101,758)

Cash and cash equivalents at start of year

 

1,756,445

4,858,203

Cash and cash equivalents at end of year

16

2,910,862

1,756,445

 

 

 

Notes Forming Part of the Financial Statements

 

1. CORPORATE INFORMATION

AFC Energy plc ("the Company") is a public limited company incorporated in England & Wales and quoted on the Alternative Investment Market of the London Stock Exchange.

 

The address of its registered office is Finsgate, 5-7 Cranwood Street, London, EC1V 9EE.

 

 

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The financial statements of AFC Energy plc have been prepared in accordance with International Financial Reporting Standards ("IFRSs"), International Accounting Standards ("IASs") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations (collectively "IFRSs") as adopted for use in the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

The Company prepares cash flow forecasts based on current estimates of future revenues and expenditure. These are agreed by the Board and monitored against actual expenditure to ensure the Company's resources are sufficient for the Directors to prepare the accounts on a going concern basis. In March 2017 the Company successfully raised approximately £8.1 million before expenses through a placing, subscription and open offer. The Directors remain confident that they will continue to be able to raise money to fund the Company's continuing activities as required.

 

The accounting policies set out below have, unless otherwise stated, been applied consistently in these financial statements.

 

Judgements made by the Directors in the application of these accounting policies that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 3.

 

a. Standards, Amendments and Interpretations to Published Standards not yet effective

At the date of authorisation of these financial statements, the IASB and IFRIC have issued the following standards and interpretations, which are effective for annual accounting periods beginning on or after the stated effective date. These standards and interpretations are not effective for and have not been applied in the preparation of these financial statements:

 

·     IFRS 9 Financial Instruments is effective from 1 January 2015. This standard includes requirements for recognition and measurement, derecognition and hedge accounting.

·     IFRS 15 Revenue from contracts with customers. The new standard will replace IAS 18 Revenue and IAS 11 Construction contracts. It will become effective for accounting periods on or after 1 January 2018 at the earliest.

·     IFRS 16 Leases is effective from 1 January 2019. Management has not yet analysed the input to the financial statements upon adoption.

 

The Company expects no impact from the adoption of IFRS 9. As the Company is not currently revenue generating, there would be no impact relating to the adoption of IFRS 15 on the current financial position. The Company will determine the effects of the adoption of IFRS 16 in future periods.

 

b. Capital Policy

The Company manages its equity as capital. Equity comprises the items detailed within the principal accounting policy for equity and financial details can be found in the statement of financial position. The Company adheres to the capital maintenance requirements as set out in the Companies Act.

 

c. 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.

 

d. Grants

The Company participates in three projects, LASER-CELL, ALKAMMONIA and POWER-UP, which receive funding from the 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 European Union, are recognised in the statement of comprehensive income in the same period as the expenditure to which the grant relates.

 

e. Other Income

Other income represents sales by the Company of waste materials.

 

f. 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 and has not yet operated at full power output for an extended period.

 

g. 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.

 

h. Inventory and Work in Progress

Inventory is recorded at the lower of cost and net realisable value. Work in progress is valued at cost, less the cost of work invoiced on incomplete contracts and less foreseeable losses. Cost comprises purchase cost plus production overheads.

 

i. Trade and Other Receivables

Trade and 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.

 

j. Loans and Other Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, loans and receivables are carried at amortised cost using the effective interest method less any allowance for impairment. Gains and
losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

 

The Company's loans and receivables include cash and cash equivalents. These include cash in hand, and deposits held at call with banks.

 

k. 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 cost of sales and 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.

 

l. 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.

 

m. 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 €125,000 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.

 

n. 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.

 

o. 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.

 

p. 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 trade and other receivables and cash and cash equivalents. Investments are accounted for at cost less impairment.

 

q. 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.

 

r. 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 as disclosed in the notes to these financial statements. 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 and, hence, as at 31 October 2016, the financial instrument had a zero value.

 

s. 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.

 

t. Provisions

Provisions are recognised when the Company has a present obligation as a result of a past event and it is probable that the Company will be required to settle the obligation. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the balance sheet date and are discounted to present value where the effect is material.

 

u. Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

 

Current tax is the expected tax payable or recoverable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date together with any adjustment to tax payable in respect of previous years.

 

Deferred tax assets are not recognised due to the uncertainty of their recovery.

 

v. 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.

 

w. 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.

 

 

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

In the preparation of the financial statements management makes certain judgements and estimates that impact the financial statements. While these judgements are continually reviewed, the facts and circumstances underlying these judgements may change, resulting in a change to the estimates that could impact the results of the Company. In particular:

 

Useful Lives and Impairment of Intangible Assets

Intangible assets are amortised over their useful lives. 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. After undertaking a comprehensive review of intangible assets, management has concluded that no impairment has arisen with respect to intangible assets during the year and subsequent to 31 October 2016 (2015: £nil).

 

Income Taxes and Withholding Taxes

The Company believes that its receivables for tax recoverable are adequate for all open audit years based on its assessment of many factors, including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgements about future events. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.

 

Capitalisation of Development Expenditure

The Company uses the criteria of IAS 38 to determine whether development expenditure should be capitalised. After assessing these, management has concluded that, until the Company's fuel cell system is proven to be commercially deployable, it would not be appropriate to capitalise development expenditure. Consequently, all development expenditure has been charged to the statement of comprehensive income during the year ended 31 October 2016.

 

Share-Based Payments

Certain employees (including Directors and senior Executives) of the Company receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments ("equity-settled transactions").

 

The fair value is determined using an appropriate pricing model.

 

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ("the vesting date"). The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

 

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-settled award are modified, the minimum expense recognised is the expense as if the terms had not been modified. An additional expense is recognised for any modification which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

 

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

 

 

4. SEGMENTAL ANALYSIS

Operating segments are determined by the chief operating decision maker based on information used to allocate the Company's resources. The information as presented to internal management is consistent with the statement of comprehensive income. It has been determined that there is one operating segment, the development of fuel cells. In the year to 31 October 2016, the Company operated mainly in the United Kingdom and in Germany. All non-current assets are located in the United Kingdom.

 

 

5. OPERATING LOSS

This has been stated after:

 

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

R&D tax credit receivable

 

 

 

 

 

(59,487)

(174,937)

Depreciation/Impairment of property and equipment

 

 

 

 

 

238,414

198,769

Amortisation/Impairment of intangible assets

 

 

 

 

 

64,240

79,522

R&D expenditure

 

 

 

 

 

2,914,050

3,475,657

Write off of Waste2Tricity investment and receivable

 

 

 

 

 

-

558,983

Equity-settled share-based payment expense

 

 

 

 

 

1,027,051

216,202

Foreign exchange differences

 

 

 

 

 

(334,898)

42,975

Auditor's remuneration - audit

 

 

 

 

 

30,900

30,000

Auditor's remuneration - corporation tax

 

 

 

 

 

3,500

9,500

Auditor's remuneration - R&D tax credit services

 

 

 

 

 

19,500

-

 

 

6. STAFF NUMBERS AND COSTS, INCLUDING DIRECTORS

The average numbers of employees in the year were:

 

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

Number

Number

Support, operations and technical

 

 

 

 

 

37

39

Administration

 

 

 

 

 

6

5

 

 

 

 

 

 

43

44

 

The aggregate payroll costs for these persons were:

 

 

 

 

 

 

 

£

£

Wages and salaries (including Directors' emoluments)

 

 

 

 

 

1,983,582

2,660,709

Social security

 

 

 

 

 

239,738

317,242

Employer's pension contributions

 

 

 

 

 

37,976

35,095

Equity-settled share-based payment expense

 

 

 

 

 

1,027,051

216,202

 

 

 

 

 

 

3,288,347

3,229,248

 

 

7. DIRECTORS' REMUNERATION

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

Wages and salaries

 

 

 

 

 

379,355

978,656

Social security

 

 

 

 

 

65,113

131,225

Equity-settled share-based payment expense

 

 

 

 

 

821,002

170,001

Other compensation

 

 

 

 

 

295,827

48,149

Company pension contributions

 

 

 

 

 

2,504

1,844

 

 

 

 

 

 

1,563,801

1,329,875

 

 

 

 

 

 

 

 

The emoluments of the Chairman

 

 

 

 

 

56,575

57,346

 

 

 

 

 

 

 

 

The emoluments of the highest-paid Director (see below)

 

 

 

 

 

1,334,852

661,932

Company pension contributions of highest-paid Director

 

 

 

 

 

-

-

 

Adam Bond's services as Chief Executive Officer and Director during the period were initially provided under a secondment agreement between the Company and Linc Energy Ltd. The secondment agreement expired on 31 December 2015, at which point he became an employee of the Company under a service agreement dated 1 January 2016. During the year ended 31 October 2016, a portion of Adam's remuneration was paid to him by Linc Energy Ltd. and recharged to the Company. A further portion of his salary, totalling £91,250, was settled during the year through the issuance of 500,000 shares in the Company. Included in Adam's other compensation is a £100,000 bonus that has been accrued for as a result of meeting certain performance conditions. The payment of the bonus has not yet been claimed by Adam and is pending final Board approval. During 2015, the Company remitted taxation to HMRC on Adam's behalf in relation to different tax jurisdictions between the UK and Australia. Management believes an amount of £187,000 to be recoverable. As part of Adam's contract with the Company, in 2015 he was granted 6,000,000 share options with an exercise price of £0.51 per share. These options have performance conditions attached to them; 3,000,000 of the options will only vest if specific operational targets for energy output are met, and the remaining options will only vest if the share price achieves and sustains targeted amounts with equal portions vesting at share prices of £1.00, £1.50 and £2.00. In accordance with IFRS 2 (Share-Based Payment), the Company recognises as an employee expense the fair value of options granted to employees. The fair value is determined using an appropriate pricing model, and the resulting expense is recognised over the period in which the performance and/or service conditions are fulfilled ending on the date on which the employee becomes fully entitled to the award. During the year the Company recorded a non-cash expense of £821,002 relating to the options granted to Adam. The vesting conditions for the options has not been reached and hence Adam has not received any cash benefit from the options in the year. Further details are contained in notes 2, 3 and 18.

 

 

8. FINANCe cost

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

(Loss)/Gain on derivative financial instrument

 

 

 

 

 

(149,687)

3,288,497

Interest on finance lease

 

 

 

 

 

(1,961)

-

Bank interest receivable

 

 

 

 

 

3,415

5,775

Total finance (cost)/income

 

 

 

 

 

(148,233)

3,294,272

 

 

9. TAXATION

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

Recognised in the statement of comprehensive income

 

 

 

 

 

£

£

R&D tax credit - current year

 

 

 

 

 

(613,732)

(569,706)

R&D tax credit - prior year

 

 

 

 

 

(209,098)

-

Total tax credit

 

 

 

 

 

(822,830)

(569,706)

 

 

 

 

 

 

 

 

Reconciliation of effective tax rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before tax

 

 

 

 

 

(6,478,894)

(5,351,931)

Tax using the domestic rate of corporation tax of 20.00% (2015: 20.42%)

 

 

 

 

 

(1,295,779)

(1,092,864)

 

 

 

 

 

 

 

 

Effect of:

 

 

 

 

 

 

 

R&D tax credit - prior year

 

 

 

 

 

(209,098)

-

Expenses not deductible for tax purposes

 

 

 

 

 

209,151

659,518

Above the line tax credit

 

 

 

 

 

-

185,396

R&D allowance

 

 

 

 

 

(478,253)

(450,148)

Tax credit on losses surrendered

 

 

 

 

 

(613,452)

(569,706)

Depreciation in excess of capital allowances

 

 

 

 

 

4,920

47,737

Losses surrendered for research and development

 

 

 

 

 

846,141

232,349

Unutilised losses carried forward

 

 

 

 

 

697,625

418,012

Fixed asset differences

 

 

 

 

 

15,915

-

Total tax credit

 

 

 

 

 

(822,830)

(569,706)

 

 

10. LOSS PER SHARE

The calculation of the basic loss per share is based upon the net loss after tax attributable to ordinary Shareholders of £5,656,064 (2015: loss of £4,782,225) and a weighted average number of shares in issue for the year.

 

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

Basic loss per share (pence)

 

 

 

 

 

(1.86)p

(1.66)p

Diluted loss per share (pence)

 

 

 

 

 

(1.86)p

(1.66)p

Loss attributable to equity Shareholders

 

 

 

 

 

(5,656,064)

(4,782,225)

 

 

 

 

 

 

 

Number

Number

Weighted average number of shares in issue

 

 

 

 

 

304,858,560

288,431,626

 

Diluted earnings per share

As set out in note 18, there are share options and warrants outstanding as at 31 October 2016 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 year has an anti-dilutive effect.

 

11. INTANGIBLE ASSETS

 

 

 

 

 

 

2016

2015

 

 

 

 

 

 

Patents

Patents

 

 

 

 

 

 

£

£

Cost

 

 

 

 

 

 

 

Balance at 1 November

 

 

 

 

 

445,927

748,113

Retirements

 

 

 

 

 

-

(401,166)

Additions

 

 

 

 

 

70,521

98,980

Balance at 31 October

 

 

 

 

 

516,448

445,927

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

Balance at 1 November

 

 

 

 

 

107,751

469,040

Retirements

 

 

 

 

 

-

(401,166)

Charge for the year

 

 

 

 

 

64,240

39,877

Balance at 31 October

 

 

 

 

 

171,991

107,751

Net book value

 

 

 

 

 

344,457

338,176

 

 

12. PROPERTY AND EQUIPMENT

 

 

 

 

Leasehold

Fixtures, fittings

 

 

 

 

 

 

improvements

and equipment

Motor vehicles

Total

 

 

 

 

£

£

£

£

Cost

 

 

 

 

 

 

 

At 31 October 2014

 

 

 

272,759

2,693,951

10,495

2,977,205

Transfers

 

 

 

45,852

(45,852)

-

-

Additions

 

 

 

18,851

-

17,994

36,845

Disposals

 

 

 

-

(1,326,821)

(10,495)

(1,337,316)

At 31 October 2015

 

 

 

337,462

1,321,278

17,994

1,676,734

Additions

 

 

 

-

81,424

-

81,424

Disposals

 

 

 

-

(238,797)

-

(238,797)

At 31 October 2016

 

 

 

337,462

1,163,905

17,994

1,519,361

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

At 31 October 2014

 

 

 

240,104

2,117,457

10,203

2,367,764

Transfers

 

 

 

9,783

(9,783)

-

-

Charge for the year

 

 

 

39,645

194,882

3,887

238,414

Disposals

 

 

 

-

(1,035,277)

(10,495)

(1,045,772)

At 31 October 2015

 

 

 

289,532

1,267,279

3,595

1,560,406

Charge for the year

 

 

 

47,930

54,537

5,901

108,368

Disposals

 

 

 

-

(238,797)

-

(238,797)

At 31 October 2016

 

 

 

337,462

1,083,019

9,496

1,429,977

 

 

 

 

 

 

 

 

Net Book Value

 

 

 

 

 

 

 

At 31 October 2016

 

 

 

-

80,886

8,498

89,384

At 31 October 2015

 

 

 

47,930

53,999

14,399

116,328

 

 

13. INVESTMENT

As at 31 October 2016 the Company held 230,000 shares representing 17.5% (2015: 230,000 shares representing 23%) of the share capital of Waste2Tricity Ltd ("W2T") (a company registered in England & Wales). In the view of the Directors this investment has no value currently and has been recognised at cost less impairment. No revenue was recognised in the period under the licence agreements with Waste2Tricity Limited and Waste2Tricity International (Thailand) Limited.

 

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

Investment in W2T

 

 

 

 

 

-

-

 

 

14. INVENTORY AND WORK IN PROGRESS

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

Inventory

 

 

 

 

 

150,932

219,421

Work in progress

 

 

 

 

 

-

-

 

 

 

 

 

 

150,932

219,421

 

 

15. TRADE AND OTHER RECEIVABLES

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

Current:

 

 

 

 

 

 

 

R&D tax credits receivable

 

 

 

 

 

673,219

718,023

EU grants receivable

 

 

 

 

 

1,409,642

2,513,395

Other receivables

 

 

 

 

 

513,102

226,922

 

 

 

 

 

 

2,595,963

3,458,340

 

There is no significant difference between the fair value of the receivables and the values stated above.

 

 

16. CASH AND CASH EQUIVALENTS

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

Cash at bank

 

 

 

 

 

1,137,819

675,603

Bank deposits

 

 

 

 

 

1,773,043

1,080,842

 

 

 

 

 

 

2,910,862

1,756,445

 

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 €125,000 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.

 

 

17. ISSUED SHARE CAPITAL

 

 

 

 

 

Ordinary shares

Share premium

Total

 

 

 

 

Number

£

£

£

At 31 October 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

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

 

All issued shares are fully paid.

 

The Company considers its capital and reserves attributable to equity Shareholders to be the Company's capital. In managing its capital, the Company's primary long-term objective is to provide a return for its equity Shareholders through capital growth. Going forward the Company will seek to maintain a gearing ratio that balances risks and returns at an acceptable level and also to maintain a sufficient funding base to enable the Company to meet its working capital needs. The Company's commercial activities are at an early stage and management considers that no useful target debt to equity gearing ratio can be identified at this time.

 

Details of the Company's capital are disclosed in the statement of changes in equity.

 

There have been no other significant changes to the Company's management objectives, policies and processes in the year nor has there been any change in what the Company considers to be capital.

 

 

18a. SHARE OPTIONS

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

average remaining

 

 

 

 

 

Number of options

Exercise price

contractual life

At 31 October 2014

 

 

 

 

7,980,000

3.13-35.75p

6.3 yrs

Options granted in the year

 

 

 

 

7,615,000

17-51p

 

Options exercised in the year

 

 

 

 

(1,150,000)

3.13-24p

 

Options lapsed in the year

 

 

 

 

(590,000)

32-41p

 

At 31 October 2015

 

 

 

 

13,855,000

3.13-51p

7.7 yrs

Options granted in the year

 

 

 

 

-

-

 

Options exercised in the year

 

 

 

 

(1,220,000)

3.13-20.75p

 

Options lapsed in the year

 

 

 

 

(730,000)

17-34p

 

At 31 October 2016

 

 

 

 

11,905,000

3.13-51p

7.1 yrs

 

 

18b. WARRANTS

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

average remaining

 

 

 

 

 

Number of warrants

Exercise price

 contractual life

At 31 October 2014

 

 

 

 

7,047,800

3.13-24p

5.1 yrs

Warrants exercised in the year

 

 

 

 

100,000

3.13p

 

Warrants lapsed in the year

 

 

 

 

-

-

 

At 31 October 2015

 

 

 

 

6,947,800

3.13-24p

4.1 yrs

Warrants exercised in the year

 

 

 

 

-

-

 

Warrants lapsed in the year

 

 

 

 

-

-

 

At 31 October 2016

 

 

 

 

6,947,800

3.13-24p

3.1 yrs

 

 

18c. SAYE

During the year the Company operated a share save scheme.

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

average remaining

 

 

 

 

 

Number of SAYE

Exercise price

contractual life

At 31 October 2014

 

 

 

 

1,065,259

18.6-22p

2.2 yrs

SAYE issued during the year

 

 

 

 

-

-

 

SAYE lapsed/cancelled during the year

 

 

 

 

(485,503)

18.6-22p

 

SAYE exercised during the year

 

 

 

 

(8,409)

22p

 

At 31 October 2015

 

 

 

 

571,347

18.6-22p

1.3 yrs

SAYE issued during the year

 

 

 

 

399,537

12p

 

SAYE lapsed/cancelled during the previous year correction

 

 

 

 

488,714

18.6-22p

 

SAYE lapsed/cancelled during the year

 

 

 

 

(141,516)

22p

 

SAYE exercised during the year

 

 

 

 

-

-

 

At 31 October 2016

 

 

 

 

1,318,082

18.6-22p

1.3 yrs

 

 

18d. EQUITY-SETTLED SHARE-BASED PAYMENTS CHARGE

Share Options

 

 

 

 

 

 

 

Amount

 

Average

Average

Average

Average

Average

Average

expensed

 

grant date

expected

risk-free

dividend

implied

fair value

in the 2016

Option price

share price

volatility

interest rate

yield

option life

per option

accounts

(p)

(p)

(p.a.)

(p.a.)

(p.a.)

(years)

(p)

 £

3.13

3.13

113.8%

4.4%

0%

2.0

2

-

10

10

46%

4.4%

0%

2.5

2.5

-

17

17

80%

1.5%

0%

2.5

9.48

-

17.5

18.75

188%

4.4%

0%

2.5

14.07

-

24

23.75

188%

4.4%

0%

2.5

17.80

-

20.75

20

214.8%

4.4%

0%

2.0

15

-

32

31.75

243%

4.4%

0%

2.5

24

-

34

34

80%

1.5%

0%

2.5

18.96

9,552

35.75

35.75

124.7%

1.5%

0%

2.5

21.8

-

39.25

39.25

80%

1.5%

0%

2.5

21.89

40,489

41

41

80%

1.5%

0%

2.5

22.86

49,778

51

58

75%

2.1%

0%

2.5

32.00

821,002

Total charge for the year (2015: £210,779)

 

 

 

 

 

 

920,821

 

 

18d. EQUITY-SETTLED SHARE-BASED PAYMENTS CHARGE continued

 

Warrants

 

 

 

 

 

 

 

Amount

 

Average

Average

Average

Average

Average

Average

expensed

 

grant date

expected

risk-free

dividend

implied

fair value

in the 2016

Warrant price

share price

volatility

interest rate

yield

option life

per option

accounts

(p)

(p)

(p.a.)

(p.a.)

(p.a.)

(years)

(p)

 £

3.13

3.13

113.8%

4.4%

0%

2.0

2

-

24

23.75

188%

4.4%

0%

2.5

17.8

-

Total charge for the year (2015: £nil)

 

 

 

 

 

 

-

 

 

SAYE

 

 

 

 

 

 

 

Amount

 

Average

Average

Average

Average

Average

Average

expensed

 

grant date

expected

risk-free

dividend

implied

fair value

in the 2016

SAYE price

share price

volatility

interest rate

yield

option life

per option

accounts

(p)

(p)

(p.a.)

(p.a.)

(p.a.)

(years)

(p)

 £

22

27.5

124.7%

1.5%

0%

2.5

21.69

50,511

18.6

23.25

137.5%

1.5%

0%

2.5

19.24

51,092

12

15

78.6%

0.7%

0%

2.0

8.4

4,627

Total charge for the year (2015: £5,423)

 

 

 

 

 

106,230

Total equity-settled share-based payment charge for the year (2015: £216,202)

 

1,027,051

 

Expected volatility has been based on the 3.5 year historical volatility of share price. Vesting requirements are three years for the exercise of warrants and options, except for 500,000 options granted which vest in two years. Certain options and warrants granted to Directors are also subject to performance conditions.

 

Adam Bond received 6,000,000 options on 17 July 2015 with vesting conditions that include market and non-market based conditions. Under the market-based conditions vesting is contingent on the average share price of the Company reaching certain targets. Under non-market based conditions vesting is contingent on the Company's fuel cell system installed at Stade in Germany reaching certain output of wattage targets and the Company entering into commercial contracts.

 

The fair value of services received in return for share options and other share-based incentives granted is measured by reference to the fair value of share options and incentives granted. This estimate is based on a Black-Scholes model for non-market based conditions and a Log-normal Monte Carlo stochastic model for market conditions. Both are appropriate considering the effects of the vesting conditions, expected exercise period and the dividend policy of the Company.

 

 

19. TRADE AND OTHER PAYABLES

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

Current liabilities:

 

 

 

 

 

 

 

Trade payables

 

 

 

 

 

357,118

1,066,600

Deferred income

 

 

 

 

 

105,727

115,698

Finance lease liability

 

 

 

 

 

16,246

-

Other payables

 

 

 

 

 

677,211

319,483

Accruals

 

 

 

 

 

139,602

171,778

 

 

 

 

 

 

1,295,904

1,673,559

Non-current liabilities:

 

 

 

 

 

 

 

Finance lease liability

 

 

 

 

 

5,803

-

 

 

 

 

 

 

5,803

-

 

 

20. Operating lease commitments

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

Non-cancellable operating leases are as follows:

 

 

 

 

 

 

 

Within one year

 

 

 

 

 

80,836

146,496

Between one and five years

 

 

 

 

 

11,717

69,260

Greater than five years

 

 

 

 

 

-

-

 

 

 

 

 

 

92,553

215,756

 

The lease commitments relate to accommodation and three vehicles.

 

21. FINANCIAL INSTRUMENTS

In common with other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements. The accounting policies regarding financial instruments are disclosed in note 2 and the significant accounting estimates and judgements are set out in note 3.

 

Principal Financial Instruments

The principal financial instruments used by the Company, from which financial instrument risk arises, are as follows:

 

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

Loans and receivables:

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

2,910,862

1,756,445

Trade and other receivables

 

 

 

 

 

2,595,963

3,458,340

Fair value through profit and loss:

 

 

 

 

 

 

 

Level 3 derivative financial instrument

 

 

 

 

 

-

1,308,859

Total financial assets

 

 

 

 

 

5,506,825

6,523,644

Trade and other payables

 

 

 

 

 

1,301,707

1,673,559

Total financial liabilities

 

 

 

 

 

1,301,707

1,673,559

 

Financial instruments that are measured subsequent to initial recognition at fair value are grouped into three levels based on the degree to which the fair value is observable as defined by IFRS 7:

·     Level 1 fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets and liabilities;

·     Level 2 fair value measurements are those derived from inputs, other than quoted prices included within Level 1, that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

·     Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data.

 

The derivative financial instrument above, which was classified as a Level 3 derivative financial instrument, is the fair value of the equity swap with Lanstead Capital L.P. ("Lanstead"), entered in October 2014. The equity swap was for an 18-month period ending in April 2016. As at 31 October 2016, the derivative financial instrument is closed and the value is £nil (2015: £1,308,859).

 

In October 2014 the Company issued 22,000,000 new ordinary shares of 0.1p each in the capital of the Company ("Ordinary Shares") at a price of 10p per share to Lanstead for £2,200,000. The Company simultaneously entered into an equity swap with Lanstead for 75% of these shares with a reference price of 13.3333 per share (the "Reference Price"). All 22,000,000 Ordinary Shares were allotted with full rights on the date of the transaction. Of the subscription proceeds of £2,200,000 received from Lanstead, £1,870,000 (85%) was invested by the Company in the equity swap. Investment in the equity swap was a condition of the placing with Lanstead.

 

To the extent that the Company's volume weighted average share price was greater or lower than the Reference Price at each swap settlement, the Company received greater or lower consideration calculated on a pro-rata basis i.e. volume weighted average share price/Reference Price multiplied by the monthly transfer amount.

 

 

 

 

 

 

 

 

£

Value in 2015

 

 

 

 

 

 

1,308,859

Losses recognised in profit and loss

 

 

 

 

 

 

(149,687)

Settlements received

 

 

 

 

 

 

(1,159,172)

Value in 2016

 

 

 

 

 

 

-

 

No financial instruments have been transferred between Levels during the year.

 

General Objectives, Policies and Processes

The Board has overall responsibility for the determination of the Company's risk management objectives and policies and, while retaining ultimate responsibility for them, it has delegated part of the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company's finance team. The Board receives reports from the financial team through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

 

The overall objective of the Board is to set policies that seek to reduce ongoing risk as far as possible without unduly affecting the Company's competitiveness and flexibility. Further details regarding these policies are set out below.

 

 

21. FINANCIAL INSTRUMENTS continued

 

Credit Risk

Credit risk arises principally from the Company's trade and other receivables and cash and cash equivalents. It is the risk that the counterparty fails
to discharge its obligation in respect of the instrument. The maximum exposure to credit risk equals the carrying value of these items in the financial statements as shown below:

 

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

Trade and other receivables

 

 

 

 

 

2,595,963

3,458,340

Cash and cash equivalents

 

 

 

 

 

2,910,862

1,756,445

 

The Company's principal trade and other receivables arose from: a) annual payments for various services held as pre-payments b) VAT debtors receivable from UK and German tax authorities c) an R&D tax credit d) grant funding receivable from the EU. Credit risk with cash and cash equivalents is reduced by placing funds with a range of banks with acceptable credit ratings and government support where applicable and on term deposits with a range of maturity dates. At the year end, most cash was temporarily held on short-term deposit, following maturity of term deposits.

 

Liquidity Risk

Liquidity risk arises from the Company's management of working capital and the amount of funding required for the development programme. It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due. The Company's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due.

 

The principal liabilities of the Company are trade and other payables in respect of the ongoing product development programme. Trade and other payables are all payable within two months. The Board receives cash flow projections on a regular basis as well as information on cash balances.

 

Interest Rate Risk

The Company is exposed to interest rate risk in respect of surplus funds held on deposit and uses fixed interest term deposits to mitigate this risk.

 

Fair Value of Financial Liabilities

 

 

 

 

 

 

Year ended

Year ended

 

 

 

 

 

 

31 October 2016

31 October 2015

 

 

 

 

 

 

£

£

Trade and other payables

 

 

 

 

 

1,301,707

1,673,559

 

There is no difference between the fair value and book value of trade and other payables.

 

The Company does not enter into forward exchange contracts or otherwise hedge its potential foreign exchange exposure. The Board monitors and reviews its policies in respect of currency risk on a regular basis. At 31 October 2016 the Company held no monetary assets or liabilities in currencies other than the functional currency of the operating units involved (2015: £nil).

 

22. CAPITAL COMMITMENTS

The Company had no capital commitments outstanding at 31 October 2016 (2015: £nil).

 

23. BOARD CHANGES AND POST-BALANCE SHEET EVENTS

Board changes are reported under "Directors and their Interests". In March 2017, the Company undertook a placing, subscription and open offer, raising approximately £8.1 million before expenses.

 

24. ULTIMATE CONTROLLING PARTY

There is no ultimate controlling party.

 

25. RELATED PARTY TRANSACTIONS

During the year ended 31 October 2016:

 

£nil was invoiced by Richards and Appleby Ltd (a company registered in England & Wales) for the services of Mitchell Field as a Director of AFC Energy plc (2015: £2,280). Mr. Field is also a Director and Shareholder of Richards and Appleby Ltd. At 31 October 2016, the sum owing to Richards and Appleby Ltd was £nil (2015: £4,780).

 

£65,392 was invoiced by Linc Energy Ltd (a company registered in Australia) for the services of Adam Bond as Director of AFC Energy plc (2015: £212,438). Linc Energy Ltd was, until 30 September 2015, a major Shareholder in the Company. At 31 October 2016 the amount owing to Linc Energy Ltd was £nil (2015: £42,761).

 

£40,200 (plus VAT) was invoiced by Locana Corporation (London) Ltd (a company registered in England & Wales) for consultancy services (2015: £37,640). Mr. Yeo is also a Director and Shareholder of Locana Corporation (London) Ltd. At 31 October 2016, the sum owing to Locana was £3,350 (2015: £3,350).

 


This information is provided by RNS
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