AFC ENERGY PLC

Earnings Release • Mar 19, 2025

National Storage Mechanism | Additional information

RNS Number : 1992B

AFC Energy Plc

19 March 2025

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER ARTICLE 7 OF THE EU REGULATION 596/2014 AS IT FORMS PART OF THE UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

19 March 2025

AFC Energy PLC

("AFC Energy" or the "Company")

Final Results for year ended 31 October 2024 and Strategic Update

AFC Energy (AIM: AFC), a leading provider of hydrogen power generation technologies, is pleased to announce its results for the year ended 31 October 2024 ("FY 2024").  The results are included below and copies are available at  www.afcenergy.com .

John Wilson, Chief Executive of AFC Energy, said:

"Since joining AFC Energy, my focus has been on working with the Board to develop the optimal plan to accelerate our path to commercialisation shaped around how we focus on areas of greatest opportunity and deliver a market push, rather than relying solely on market pull.

We see a compelling opportunity to displace fossil or carbon-intensive fuels by offering an integrated hydrogen solution that is both clean and commercially viable on a total cost of ownership basis, thereby solving the twin challenges of cost and availability that continue to restrict adoption.  We believe AFC Energy is well-positioned to be among the first to deliver a commercially viable, zero-emission alternative to diesel at scale.

Today's launch of the Hy-5 ammonia cracker reflects that opportunity. We can now provide hydrogen onsite, at materially lower cost and without the need for complex supply chains or new infrastructure. This addresses both the economic and logistical barriers faced by many construction companies and industrial operators. Compared to alternatives like bottled hydrogen or static electrolysers, Hy-5 will deliver a faster, more flexible and cost-effective route to decarbonisation.

We continue to see significant opportunity in our fuel cell technology. Through our joint venture with Speedy Hire, we've gained valuable deployment experience and market insight, and a more cost-effective hydrogen supply will unlock significant growth. We now see a clear path to lowering generator costs and deploying scalable, modular systems that address the diverse demands of our customers.

Together, our ammonia cracking and fuel cell technologies give us the ability to offer a fully integrated, zero-emission alternative to diesel generators - one that we believe will be competitive not just on sustainability grounds, but also on cost. This combination gives us the ability to achieve price parity with Stage 5 diesel generators, a critical benchmark for mainstream commercial adoption, particularly in the construction sector. This underpins the strategic direction we are now pursuing. We have already seen strong engagement across multiple sectors, including infrastructure, transportation and off-grid power. It is increasingly clear that hydrogen adoption can be dramatically accelerated if we provide solutions that remove cost and complexity from the equation. That is the role we intend to play.

Our strategy going forward is therefore about focus. We are directing more of our resources into accelerating production of the Hy-5 and larger-scale crackers, while also driving down the cost and increasing the scalability of our fuel cell systems. We believe this will position AFC Energy for faster growth and significantly greater value creation in the years ahead. We look forward to updating shareholders as we execute this strategy and work towards delivering clean, low-cost hydrogen power at scale."

FY 2024 Highlights:

·    Delivery of 20, 30kW S Series H-Power Generators to our joint venture with Speedy Hire Plc, Speedy Hydrogen Solutions, generating £4.0m of revenue (2023: £nil);

·    Deployment of 45 kVA H-Power Generator (comprising 30kW fuel cell and 60kWh battery) at an ACCIONA construction site in Madrid, Spain;

·    Establishment of production facility capable of producing up to 250 fuel cells annually;

·    Launch of Hyamtec to drive the commercialisation of AFC's proprietary ammonia cracker technology for an affordable, scalable and accelerated route for hydrogen production;

·    £15.4 million cash at year end;

·    Loss after tax of £17.4m (2023: £17.5m); and

·    R&D investment in 2024 of £9.5m (2023: £8.5m), with £2.7m R&D tax credits received (2023: £4.1m).

Post period developments

·    Commencement of roll out and near term deployment of H-Power generator sets to Speedy Hydrogen Solutions' end customers with continued pipeline development;

·    H-Power generator shipped to TAMGO for Aramco trial and mutual joint business plan to capitalise on the regional opportunity under development;

·    Launch of Gen 3 H-Power S+ 200kW generator, based on initial ABB investment but at significantly lower price point - now on trial deployment with Brett Aggregates; and

·    Appointments of new CEO, John Wilson, and CFO, Karl Bostock, to drive AFC's commercialisation.

Strategic Repositioning: from technology-led to market-led growth

·    Successful commercialisation of AFC Energy's world-leading technology is the clear focus for the new management team;

·    Strategic priority is now on delivering low-cost, on-site hydrogen production and price parity with incumbent diesel solutions; and

·    We are focusing on market "push" through innovative lower cost hydrogen solutions to remove final barriers to adoption.

Fuel Cell Priorities

·    Focused on driving substantial manufacturing cost reductions for both the S Series and S+ Series H-Power Generators;

·    Programmes underway to deliver material reductions in size and weight of the H-Power Generator product portfolio;

·    Improving performance of S-Series stack technology; and

·    Developing compact 100kW modular, scalable power module for S+ Series.

Hyamtec Priorities

·    Commercialisation of Hy5, the world's first containerised, portable, cracking module capable of producing up to 500kg/day which was launched today for delivery from 2026;

·    Scaling of multi-heat source increasing throughput 100 fold for large scale industrial heat and hydrogen pipeline system;

·    Improving energy efficiency and thermal response; and

·    Confirmation and protection of the manufacturing methods for low-cost assembly.

·    Commercial roll-out and demonstration of Hyamtec systems to build up in-field operational data; and

·    Successful PCT (patent) applications filed based on core technology with a further batch to follow in 2025.

End to End Solutions

·    From 2026, hydrogen provided by Hy5, in conjunction with AFC fuel cells aims to provide TCO (total cost of ownership) parity with a stage 5 diesel generator, accelerating the transition to clean energy at price point equivalence; and

·    Accelerated plans to further significantly reduce the cost of S Series Generators by up to two thirds of current costs, resulting in decision, in agreement with Speedy, to pause plans for mass roll out of generators to preserve cash and drive substantial adoption in the medium term.

Outlook

·    Additional 30kW fuel cell generator sales to Speedy Hydrogen Solutions are expected to follow successful customer deployments:

o JV partners working to support increased customer deployments. Delivery of further orders will follow achievement of targeted manufacturing cost reductions; and

o We expect our strategic repositioning to significantly increase market penetration and volume of units sold in the medium term due to achieving cost parity with stage 5 diesel generators.

·    Advanced discussions regarding development and deployment of large scale cracker systems:

o Already able to deliver profitably at a highly competitive, and market disruptive, price point; and

o Significant industrial engagement across multiple market application segments.

·    UK Government grants of up to £3.7 million secured for FY2025.

Investor Presentation

John Wilson, Chief Executive Officer and Karl Bostock, Chief Financial Officer, will host a live presentation for retail investors via Investor Meet Company on 20 March 2025, at 14.00 hrs GMT.

The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 19 March 2025, 17:00 hrs GMT, or at any time during the live presentation.

Investors can sign up to Investor Meet Company for free and add to meet AFC ENERGY PLC via: https://www.investormeetcompany.com/afc-energy-plc/register-investor

For further information, please contact:

AFC Energy plc John Wilson (Chief Executive Officer)  Karl Bostock (Chief Financial Officer)	+44 (0) 14 8327 6726 investors@afcenergy.com
Peel Hunt LLP - Nominated Adviser and Joint Broker Richard Crichton / Georgia Langoulant / Emily Bhasin	+44 (0) 207 418 8900
Zeus - Joint Broker David Foreman / James Hornigold (Investment Banking) Dominic King (Corporate Broking) / Rupert Woolfenden (Sales)	+44 (0) 203 829 5000
RBC Capital Markets - Joint Broker Matthew Coakes / Teri Su Eduardo Famini / Jack Wood FTI Consulting  - Financial PR Advisors Ben Brewerton / Chris Laing / Evie Taylor	+44 (0) 20 7653 4000 +44 (0) 203 727 1000 afcenergy@fticonsulting.com

About AFC Energy

AFC Energy plc is a leading innovator in hydrogen-based power and ammonia cracking solutions, delivering clean energy for on-grid and off-grid applications. The Company's hydrogen fuel cell technology provides a sustainable alternative to diesel power generation, supporting electric vehicle charging, decentralised power systems for construction, and temporary power needs. AFC Energy is also exploring new opportunities across maritime, data centres, and rail, driving the decarbonisation of growing electrification demands.

The Company's subsidiary, Hyamtec, is commercialising proprietary ammonia cracking technology to unlock new opportunities in distributed hydrogen production. This includes hydrogen refuelling, natural gas displacement for industrial processes, and hydrogen combustion engine conversions. Hyamtec's solutions are designed to meet the decarbonisation needs of industries such as mining, cement, asphalt, power generation, and heavy engineering, supporting the global transition to clean energy.

Chairman's Report

This year, we achieved significant milestones that reflect our operational progress, including the production and delivery of our first batch of fuel cells, the successful launch of the Hyamtec brand, and the expansion of our manufacturing capacity to support these developments. These achievements reinforce AFC's position as a key contributor to the global energy transition.

The market environment for hydrogen is rapidly evolving, and the momentum behind renewable energy remains strong. Globally, numerous large-scale projects have reached final investment decisions to produce hydrogen from renewable sources, with many adopting ammonia as a transport medium. Challenges remain, particularly in the availability, logistics, and cost of hydrogen. However, regulatory and commercial pressures on sectors such as construction to achieve net-zero emissions is increasingly driving adoption of clean energy alternatives. In the UK, initiatives such as the Hydrogen Allocation Round and investments by the National Wealth Fund are paving the way for increased hydrogen supply at more attractive prices. Against this backdrop, AFC's ammonia cracking technology offers a transformative opportunity to support decarbonisation in hard-to-abate sectors like heavy manufacturing, cement, industrial heating and stationary engines, providing a carbon-neutral alternative to LNG and natural gas.

Strategically, our focus on the construction sector represents a deliberate and necessary shift in AFC's approach. Over recent years, we successfully demonstrated our fuel cell technology across a variety of applications, gaining positive feedback from partners. However, while the technology performed to expectations, commercial traction in these sectors remained elusive. Challenges such as the lack of affordable hydrogen supply, infrastructure constraints, and transportation hurdles often stalled broader adoption. Even in cases where hydrogen was available at competitive prices, companies were hesitant to commit to substantial changes in their business models, particularly where reliance on government subsidies created uncertainties. The lack of experience with hydrogen as a fuel and a reluctance to take on the risks of being first movers further compounded the issue. Adoption will inevitably occur in these sectors, and whilst validation and verification of our technology has been proven, our focus is now concentrated on where the barriers to adoption are lower.

As such, the construction sector presented a uniquely compelling requirement for hydrogen solutions. In this industry, immediate demand is being driven by significant infrastructure projects with zero- emission mandates and regulatory changes such as the removal of advantageous red diesel pricing in the UK. These dynamics created an environment where hydrogen is not just a desirable option but an essential one. At the same time, the construction sector is challenging, with demanding environmental conditions, a need for highly mobile and user-friendly equipment, and requirements for seamless integration into existing workflows and risk assessments. Tackling these challenges has given us the opportunity to refine and enhance our offering, building capabilities that can be applied across less demanding sectors in the future.

Our partnership with Speedy Hire plc, through the Speedy Hydrogen Solutions joint venture, has been pivotal in this strategy. Speedy's willingness to invest as a first mover in this sector aligns perfectly with the immediate needs of the UK construction market. By working closely with Speedy and major UK construction companies, we are gaining invaluable insights that inform the continuous development of our products and associated services. The rental model employed by Speedy also lowers the risk for end users, making it easier for them to adopt hydrogen- powered solutions. Furthermore, the characteristics of our 30kW fuel cells often allow them to replace much larger diesel generators, particularly when deployed as part of hybrid systems incorporating renewable or traditional energy sources.

This focused approach has enabled us to transition away from one-off projects in other sectors, where short-term commercial traction was unclear, to concentrate on scaling and improving our current fuel cell solutions. In parallel, we are investing in the development of future iterations and scaling- up opportunities. The experience and success we are achieving with Speedy in the UK serves as a potential blueprint for geographic expansion into markets such as the Middle East and the US.

Our strategic rationale also includes the development of ammonia cracking technology. With major global players committing to hydrogen production using ammonia as a carrier, we see a clear path to addressing the needs of energy- intensive, hard-to-abate sectors such as cement, asphalt and mining. Ammonia is also the obvious choice for marine applications, given the scale and efficiency required.

In certain use cases, hydrogen combustion engines (powered by ammonia-cracked hydrogen) offer a better solution than fuel cells, particularly for heavy-duty equipment like excavators and other plant machinery.

The pace of our development, combined with validation and interest from leading industrial players, reinforces our confidence in the potential of our technology. We are developing a roadmap to deliver on-site cost parity (or even superiority) with diesel, without relying on government subsidies before 2030.

By unlocking the potential for cost- effective hydrogen deployment, we are laying the groundwork for widespread adoption of this critical fuel, driving decarbonisation and opening new opportunities for AFC Energy in the global clean energy economy.

This year has also been notable for governance and leadership transitions. We achieved ISO certifications 9001, 24001, and 14001, which underscore our commitment to operational excellence and sustainability.

Internally, we continue to enhance our sustainability framework through an active ESG Committee chaired by Monika Biddulph, reflecting our commitment to being a responsible business. Our executive management has been strengthened by the addition of John Wilson and Karl Bostock, whose proven track records in scaling engineering companies make them the ideal leaders for AFC's next growth phase. At the same time, we acknowledge the significant contributions of Adam Bond, who, after twelve years with the company (ten as CEO) returned to his family in Australia, and Peter Dixon-Clarke, who provided invaluable support over the past two years as CFO. During this transitional period, I stepped in as interim CEO before resuming my role as Non- Executive Chairman. While we have chosen not to make changes to the composition of our Non-Executive Directors at this time, we remain aware of the need to improve diversity.

We successfully raised £15.8 million (gross) during the year, an important achievement in a challenging small-cap market. This funding has supported our strategic initiatives and strengthened our financial position. Shareholder engagement has been a priority, with visits from institutional investors and the introduction of interactive 'Investor Meets Company' sessions, which have broadened our communication with retail shareholders.

One of the Board's key responsibilities is fostering the Company's corporate culture. To do so, the Board regularly reviews AFC Energy's culture, behaviours, skills and principal risks against the values the Company has adopted, including the results of the staff survey. The Board considers that the executive management continues to build the appropriate culture and underlying processes to maintain and enhance a corporate culture fit for success.

Looking to the future, we are focused on scaling our operations to meet the increasing global demand for clean energy solutions.

Chief Executive Officer's Report

This year, we took a major step forward in repositioning the Company, transforming from a research-driven organisation into one with serious manufacturing capability and a clear focus on commercialisation.

We successfully delivered our first significant revenues in the Company's history and launched our world-leading capabilities in ammonia cracking technology. These achievements reflect the depth of our innovation and our commitment to delivering sustainable, zero-emission power solutions at scale. Hydrogen is poised to become a cornerstone of the future zero- carbon economy. Whilst much attention has been focused on the production of hydrogen, there remains a critical need to address its usage and transport. AFC Energy is uniquely positioned to bridge this gap, with solutions that enable hydrogen to be utilised effectively for off-grid power, as a clean alternative to diesel, and through ammonia cracking to provide a scalable and immediate solution in hard-to-abate sectors. These include industries currently reliant on gas or LNG, where electricity is not a viable substitute.

In the short term, our joint venture with Speedy Hire plc (Speedy), Speedy Hydrogen Solutions, has provided us with a unique opportunity to address an immediate and compelling need in the construction sector. By collaborating with Speedy, we have been able to deliver practical, deployable solutions, gaining invaluable insights that inform our product development and strategy.

This year's operational achievements reflect the hard work and adaptability of our team. A significant milestone was the establishment of a production facility capable of producing up to 250 fuel cell units annually (demonstrated by a production run with output greater than five units per week on a single shift). Such a production run requires the assembly of nearly 1,000 components per unit from a global supply chain. Usability was a particular focus - our redesigned user interface now mimics traditional diesel generators, making it more accessible to operators unfamiliar with hydrogen technology. Integration with battery energy storage systems and advanced telemetry for remote monitoring has added further value, ensuring our solutions meet the complex needs of modern construction sites.

The launch of our Hyamtec subsidiary has opened up a wealth of opportunities in ammonia cracking. Over the past two years, we have focused on developing and protecting the intellectual property for a wide range of applications. Our work includes collaborations with institutions like the University of Nottingham to integrate ammonia crackers with engines, the production of the largest operational modular cracker capable of producing hydrogen to fuel-cell quality, and the development of smaller, more flexible units for live testing and deployment. Discussions are also underway with potential partners for large-scale deployments in energy- intensive sectors, such as asphalt production.

Of course, challenges remain. Hydrogen pricing and logistics continue to pose barriers, while adoption in some sectors, such as EV charging and marine, is hindered by market readiness rather than our technology. However, these markets are now showing signs of accelerating and it is also possible that ammonia cracking will play a part in addressing these issues, allowing hydrogen to be transported efficiently and used flexibly across multiple applications.

Our people have been at the heart of our success this year, enabling us to transition from engineering to production and deployment with remarkable speed. Staff numbers peaked at 145 to support intensive production and engineering projects, but we have since reduced this to under 120. Contractors have largely been converted to employees, reducing costs and reinforcing the stability of our workforce as we scale for the future.

Looking ahead, AFC Energy's goal is clear: to position ourselves as a world leader in the deployment of hydrogen-fuelled solutions. We aim to demonstrate an effective path forward for our chosen sectors, not just in the UK but globally. We also see significant potential to unlock shareholder value through the expansion of our ammonia cracker business, helping to overcome key barriers and open new markets for hydrogen as a fuel.

To support these ambitions, we have begun playing a more active role in the UK hydrogen ecosystem. Through engagement with bodies like Hydrogen UK and the UK Government, as well as collaboration with other world- leading hydrogen companies, we believe the UK has the potential to replicate its leadership in offshore wind within the hydrogen economy. By fostering collaboration across the value chain - from electrolysers and fuel cells to distribution and combustion engines - the UK can capture and retain its world-leading intellectual property, driving both economic and environmental value.

AFC Energy is proud to be at the forefront of this transition. With our innovative solutions, strategic focus, and commitment to sustainability, we are well-positioned to lead in shaping the future of hydrogen- powered energy.

Chief Financial Officer's Report

FY 2024 represented an important step in the Company's journey to commercialising the market leading technology it has created. During the year there were two milestone events, namely the deployment of an S Series generator into Acciona and the manufacture and sale of 20 S Series generators to the joint venture, Speedy Hydrogen Solutions (SHS) which was completed at the end of Q4. The production run of these 20 units represents a successful pilot manufacturing run and as expected for this stage in the development cycle, these units delivered a gross loss of £1.7m (2023: £0.3m) which was £1.2m favourable versus initial forecast.

Due to the progress made in commercialising the Company's technology, the Directors believe it is appropriate to recognise £4.4m (2023: £nil) of development costs under IAS 38 Intangible Assets. The development cost attributable to fuel cells totalled £3.2m and fuel processing was £1.2m.

Following the successful delivery of £4.0m of revenue (2023: £0.2m) the Company produced a loss after tax of £17.4m (2023: £17.5m). This loss was driven by operating costs of £18.1m (2023: £20.0m) offset by interest earned of £0.3m (2023: £0.5m), R&D tax credits of £1.9m (2023:£2.1m) and other income, consisting of grant income £0.1m (2023:£nil), RDEC £0.2m (2023:£nil) and other incidental income £0.1m (2023:£nil). Of the £18.1m of operating costs, £1.7m (2023: £4.7m) related to R&D materials not qualifying for capitalisation,£9.1m (2023: £9.6m) to staff costs and £7.3m (2023: £5.7m) to other administrative expenses. Of the administrative expenses, £4.0m (2023: £2.4m) related to non-cash items, mainly depreciation and share-based payments.

During FY2024, the Company incorporated Hyamtec Limited with the intention of creating a separate operating division for the Company's fuel processing activities. However, during FY24 no transfer of trade or assets were made and although reference is made to the Hyamtec division, for reporting purposes, all of the activity sits within AFC Energy plc.

Closing cash position of £15.4m

A summary of the cash flow for the 2024 financial year is set out within the table below:

	2024	2023
Net Loss Before Tax	(19.3)	(19.6)
Non-cash items	3.9	2.2
R&D Credits Received	2.7	4.1
Working Capital	(6.2)	0.2
	(18.9)	(13.1)
Investing Activities	(7.7)	(1.2)
Financing Activities	14.6	1.5
	(12.0)	(12.8)
Opening Cash	27.4	40.2
Closing Cash	15.4	27.4

Operational cash burn (i.e., before investing or financing activities) of £18.9m included £6.2m of increased working capital. £4.0m relates to a trade debtor receivable from Speedy Hydrogen Solutions Limited pursuant to invoices raised in October 2024. The Company has also invested in £1.8m of inventory to support the commercialisation phase of the S Series.

This inventory will support future builds as well as providing critical spare parts once the units are being used in the field. In Q1 of FY25, the business made cost reductions in order to reduce the ongoing cash burn rate to £1.0m per month. On a linear basis, this suggests a cash runway at similar expenditure levels, of 12 months beyond the end of the 2024 financial year. However, taking into account the unwinding of the opening debtor balance together with grant income and the receipt of R&D tax credits, the runway extends to March 2026. This cash runway will reduce in proportion to the rate at which the Company scales up its commercial and manufacturing capabilities and additional funds will be required to deliver these. In preparing the base case for the going concern assessment, other factors have been taken into consideration (refer to note 2 to the financial information).

£9.5m of R&D investment (with £4.4m being capitalised)

During FY2024, the Company invested £9.5m (2023:£8.5m) in research and development, of which 89% is expected to qualify under the UK Government's R&D tax credit scheme. This was deployed as follows:

	2024	2023
Materials	3.7	3.3
Labour	4.6	4.7
Other	1.2	0.5
Total before capitalisation	9.5	8.5
Capitalised	(4.4)	-
Total profit and loss charge	5.1	8.5

Key developments achieved during FY 2024 include:

·    Prototype build of the second generation of fuel processing cracker.

·    Deployment of an enhanced high-throughput cracker test facility, allowing for a 25x increase in scale and 10x increase in pressure.

·    Completed phase one of the accelerated durability assessment achieving more than 4,500 hours of operation without failure on the S Series fuel cell product.

·    Finalised design for next generation S Series and S+ Series fuel cells and commenced prototype build.

Government Grants

During the year the Company has benefitted from a UK Government grant awarded by the Department for Energy Security and Net Zero under its Red Diesel Replacement scheme. A field trial is expected for both the air cooled and liquid cooled generators, alongside a hybrid battery, at one, or more Brett Aggregates quarries.

During the 2024 financial year, this grant contributed £0.5m towards the funding of development costs of which £0.1m has been recognised in the statement of comprehensive income, and the remainder recognised as deferred income which will be released in line with the amortisation of the capitalised development costs. The grant has a cap of £4.3m with the mechanics consisting of a 50% reimbursement of qualifying costs.

Joint venture with Speedy Hire

Last year the annual report explained the commercial elements of the joint venture with Speedy Hire. Key highlights include execution of joint venture agreements, joint investment into the joint venture of £1.2m and sales of equipment from the Company to the joint venture totalling £4.0m. Speedy are now responsible for the deployment of these units into the field to demonstrate market acceptance and are being supported by the AFC Energy team. Future orders from the joint venture are dependent on the success of these deployments.

Going concern

Management believes that whilst the accounts are correctly prepared on a going concern basis, there is a material uncertainty with regards to going concern. It is not unusual for a company at our stage of development to be in this position.          

To deliver on the Company's intention to commercialise its growing market opportunities it needs to scale up its manufacturing output and continue investing in research and development, both of which will require additional funding. Whilst the Board recognises the challenges of fundraising in the current economic climate, it is confident that when the Company chooses to seek additional funding it will be available. This view is based primarily on the:

·    growing levels of interest expressed by the construction market in the recent joint venture with Speedy Hire plc;

·    continued positive feedback from external advisors; and

·    growing levels of institutional engagement, in both the fuel cell and fuel processing value streams, particularly following recent site visits.

This is further discussed in the notes to the accounts.

Statement of Comprehensive Income for the year ended 31 October 2024

				Year ended 31 October 2024		Year ended 31 October 2023
		Note		£000		£000
Revenue from customer contracts		5		4,002			227
Cost of sales				(5,868)			(294)
Gross loss				(1,866)			(67)
Other income		6		429			41
Operating costs		7		(18,133)			(19,994)
Operating loss				(19,570)			(20,020)
Finance income		11		316			512
Finance costs		11		(55)			(53)
Loss before tax				(19,309)			(19,561)
Taxation		12		1,890			2,086
Loss for the financial year and total comprehensive loss attributable to the owners of the company				(17,419)			(17,475)
Basic loss per share (pence)		13		(2.22)			(2.36)
Diluted loss per share (pence)		13		(2.22)			(2.36)

All amounts relate to continuing operations.  There was no other comprehensive income in the year (2023: £nil).

Statement of financial position as at 31 October 2024

				Year ended 31 October 2024				Year ended 31 October 2023
		Note		£000				£000
Assets
Non-current assets
Intangible assets		14			4,626		264
Right-of-use assets		15			646		1,097
Investment in joint venture		16			625		-
Property, plant and equipment		17			4,666		3,756
					10,563		5,117
Current assets
Inventory		18			1,948		178
Trade and other receivables		19			6,737		1,231
Income tax receivable					1,517		2,088
Restricted cash		20			433		258
Cash and cash equivalents		20			15,374		27,366
					26,009		31,121
Total assets					36,572		36,238
Current liabilities
Trade and other payables		21			4,955		3,728
Lease liabilities		22			505		477
Provisions		23			217		-
					5,677		4,205
Non-current liabilities
Lease liabilities		22			159		647
Provisions		23			468		301
					627		948
Total liabilities					6,304		5,153
Capital and reserves attributable to the owners of the parent
Share capital		24			854		746
Share premium		24			133,555		118,520
Other reserve					4,629		3,779
Retained loss					(108,770)		(91,960)
Total equity attributable to shareholders					30,268		31,085
Total equity and liabilities					36,572		36,238

Statement of changes in equity for the year ended 31 October 2024

		Share capital		Share premium		Other reserve		Retained loss				Total
		£000		£000		£000		£000				£000
Balance at 1 November 2022		735		116,487		4,073				(75,557)				45,738
Loss after tax for the year		-		-		-				(17,475)				(17,475)
Issue of equity shares		10		1,990		-				-				2,000
Equity-settled share-based payments
-  Lapsed or exercised in the year		1		43		(1,072)				1,072				44
-  Charged in the year		-		-		778				-				778
Fair value of warrants accounted for as equity		-		-		-				-				-
Balance at 31 October 2023		746		118,520		3,779				(91,960)				31,085
Loss after tax for the year		-		-		-				(17,419)				(17,419)
Issue of equity shares		105		14,810		-				-				14,915
Equity-settled share-based payments
-  Lapsed or exercised in the year		3		225		(609)				609				228
-  Charged in the year		-		-		1,459				-				1,459
Balance at 31 October 2024		854		133,555		4,629				(108,770)				30,268

Share capital is the amount subscribed for shares at the 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. The issue of shares above is presented net of issue cost (refer to Note 24 for further details on issue costs).

Other reserve represents the charge to equity in respect of unexercised equity-settled share-based payments and warrants granted.

Retained deficit represents the cumulative loss of the Company attributable to equity shareholders of the parent company.

Cash flow statement for the year ended 31 October 2024

				Year ended 31 October 2024		Year ended 31 October 2023
		Note		£000		£000
Cash flows from operating activities
Loss before tax for the year				(19,309)		(19,561)
Adjustments for:
Amortisation of intangible assets		14		81		110
Loss on disposal of intangible assets		14		-		1
Depreciation of right-of-use assets		15		470		455
Depreciation of property, plant and equipment		17		2,043		1,099
Loss on disposal of property, plant and equipment				-		34
Share-based payments		25		1,459		778
Finance income				(316)		(428)
Lease finance charges				41		69
R&D tax credits receivable				(224)		-
Working capital changes:
(Increase) in restricted cash				(176)		354
(Increase) in inventory				(1,770)		(135)
(Increase) in receivables				(5,506)		(109)
Increase in payable				1,227		121
Increase in provisions				384		-
				(21,596)		(17,212)
R&D tax credits received				2,685		4,073
Net cash flows from operating activities				(18,911)		(13,139)
Capital investment in joint venture		16		(625)		-
Purchase of plant and equipment		17		(2,952)		(1,607)
Additions to intangible assets		14		(4,443)		(63)
Interest received		11		316		428
Net cash flows used in investing activities				(7,704)		(1,242)
Proceeds from the issue of share capital				15,792		2,000
Proceeds from the exercise of options				228		45
Cost of issue of share capital		24		(877)		-
Lease payments		22		(520)		(518)
Net cash flows from financing activities				14,623		1,527
Net increase/(decrease) in cash and cash equivalents				(11,992)		(12,854)
Cash and cash equivalents at the start of the year				27,366		40,220
Cash and cash equivalents at the end of the year		20		15,374		27,366

Notes forming part of the financial information

1.  Corporate information

AFC Energy Plc (the Company or the parent) is a public limited company incorporated in England & Wales. The address of the registered office is Unit 71.4, Dunsfold Park, Cranleigh, Surrey, GU6 8TB.  The Company is quoted on the AIM Market of the London Stock Exchange with the ticker symbol LSE:AFC.

The principal activity of the Company is the development and manufacturing of fuel cells and development of fuel processing technology and equipment.

2.  Accounting policies

Accounting convention

The final results for the year ended 31 October 2024 were approved by the Board of Directors on 18 March 2025. The final results do not constitute full accounts within the meaning of section 434 of the Companies Act 2006 but are derived from audited financial information for the year ended 31 October 2024 and the year ended 31 October 2023.

This announcement is prepared on the same basis as set out in the audited statutory accounts for the year ended 31 October 2024. The accounts for the years ended 31 October 2024 and 31 October 2023, upon which the auditors issued unqualified opinions, also had no statement under section 498(2) or (3) of the Companies Act 2006. The auditors' report includes reference to the material uncertainty relating to going concern. See below for more details of the going concern assessment performed by the Board of Directors.

While the financial information included in this results announcement has been prepared in accordance with the recognition and measurement criteria of UK adopted international accounting standards (IFRS), this announcement does not in itself contain sufficient information to comply with IFRS.

The Company has taken advantage of the exemption under Section 402 of the Companies Act 2006, which allows a parent company not to prepare consolidated financial information where its subsidiaries are immaterial both individually and in aggregate.

The directors have assessed the size, nature, and financial impact of the company's subsidiaries and have concluded that they are immaterial for the purpose of presenting a true and fair view of the company's financial position. Accordingly, the company has not prepared consolidated financial information and instead has prepared individual financial information in accordance with applicable accounting standards.

The company accounts for its investment in joint ventures at cost in accordance with IAS 27 Separate Financial Statements. For further details refer to the accounting policy note below.

This financial information is prepared in pounds sterling and rounded to the nearest thousand.

Going concern

The financial information has been prepared on a going concern basis notwithstanding the trading losses being carried forward and the expectation that the trading losses will continue for the near to medium future as the Company transitions from predominantly undertaking research and development to a more commercial basis.

In line with normal practice, and prior to signing this report, the Directors are required to assess whether it is appropriate to prepare the financial information on a going concern basis. In making this assessment the Directors need to be satisfied that the Company can meet its obligations as they fall due for at least 12 months from the date of this report.

As part of this assessment, the Directors reviewed the Company's forecast cash position through to March 2026. This was based on the agreed budget for the 2025 financial year and the forecast for the 2026 financial year. The company has sufficient cash reserves to continue to operate as planned until end of March 2026 however it will require additional funding beyond this date. Should the forecast not be met, additional funding would be required within the going concern assessment period.

The Board reviewed possible downside scenarios to establish the resilience of the Company's cash reserves and identified the impact of continuing high levels of cost inflation, particularly on employee remuneration and supply chain, combined with delays of sales receipts as a particular risk.

Based on this assessment, and on the Company's intention to capitalise on its growing market opportunities by scaling up its manufacturing output and continuing to invest in research and development, the Board has concluded that additional funding will be required to deliver on these plans.

Whilst the Company is a going concern, further funding will be required for the period beyond the 12 months after the approval of the annual financial information, which indicates the existence of a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern.

Whilst the Board recognises the challenges of fundraising in the current economic climate, it is confident that when the Company does choose to seek additional funding that it will be available.  This view is based primarily on the:

~     recent technical successes of both the fuel cell and fuel processing teams;

~     UK Government requirements for construction tenders to include a non-diesel solution for onsite electricity generation;

~     growing levels of interest expressed by the construction market in the recent joint venture with Speedy Hire Plc;

~     positive feedback from external advisors; and

~     growing levels of institutional engagement, in both the fuel cell and fuel processing value streams, particularly following recent site visits.

Based on the above, the Directors have concluded that the Company remains a going concern and the financial information hastherefore been prepared on that basis.

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

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

Standards, amendments and interpretations to published standards not yet effective

The following amendments to the accounting standards, issued by the IASB and endorsed by the UK, were adopted by the Company from 1 November 2023 with no material impact on the Company's results, financial position or disclosures:

·    IAS 1 and IFRS Practice Statement 2 (amended) - Disclosure of Accounting Policies;

·    IAS 8 (amended) - Definition of Accounting Estimate;

·    IAS 12 (amended) - Income Taxes: Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction;

·    IAS 12 (amended) - International Tax Reform - Pillar Two Model Rules;

·    IFRS 17 (amended) - Insurance Contracts; IFRS 17 (amended) and IFRS 9 - Comparative Information

The following standard and amendments issued by the IASB have been endorsed by the UK and have not been adopted by the Company. The Company intends to adopt these new and amended standards and interpretations, if applicable, when they become effective:

·    IAS 1 (amended) - Classification of liabilities as current or non-current, Non-current Liabilities with Covenants;

·    IFRS 10 and IAS 28 (amended) - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture;

·    IFRS 16 (amended) - Lease Liability in a Sale and Leaseback;

·    IAS 7 and IFRS 7 (amended) - Supplier Finance Arrangements;

·    IAS 21 (amended) - Lack of Exchangeability

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 2006.

Revenue recognition

To determine whether to recognise revenue, a five-step process is followed:

•             Identifying the contract with a customer;

•             Identifying the performance obligations;

•             Determining the transaction price;

•             Allocating the transaction price to the performance obligations; and

•             Recognising revenue as the performance obligations are satisfied.

Complex contracts include competing priorities such as financial targets, support capabilities, and delivery schedules.  A complex contract will have multiple independent issues which must all be negotiated individually.

Revenue is generated from complex contracts covering the:

•             Sale of goods and parts,

•             Sale of services and maintenance, and

•             Short-term rental contracts which may be either single or multiple contracts.  Multiple contracts are accounted for as a single contract where one or more of the following criteria are met:

o  The contracts were negotiated as a single commercial package,

o  Consideration of one contract depends upon the other contract, or

o  Some or all the goods and services comprise a single performance obligation.

The promises in each contract are analysed to determine if these represent performance obligations individually, or in combination with other promises. Performance obligations in the contracts are analysed between either distinct physical goods and services delivered or service level agreements. The transaction price of the performance obligations is based upon the contract terms considering both cash and non-cash consideration. Non-cash consideration is valued at fair value taking into consideration contract terms and known arm's length pricing where available. In the event there are multiple performance obligations in a contract, the price is allocated to the performance obligations based on the relative costs of fulfilling each obligation plus a margin.

Revenue is recognised either at a point in time or over time, as the performance obligations are satisfied by transferring the promised goods or services to its customers. Deferred revenue is recognised for consideration received in respect of unsatisfied performance obligations and the Company reports these amounts as payables in the statement of financial position.

Similarly, if a performance obligation is satisfied in advance of any consideration, a contract asset is recognised in the statement of financial position.

Rental as service and long-term service contracts

Revenue is recognised over time based on outputs provided to the customer, because this is the most accurate measurement of the satisfaction of the performance obligation as it matches the consumption of the benefits obtained by the customer.  The customer is simultaneously receiving and consuming the benefits as the Company performs its obligations.  Revenue can comprise a fixed rental charge and a variable charge related to the usage of assets or other services including pass-through costs where pass-through refers to the variable charge, for example Hydrogen.

Sale (standard products) contracts

Certain products are not deemed bespoke because the company can sell them to various customers.  Revenue from such standard products is - recognised at a point of time only when the performance obligation has been fulfilled and ownership of the goods has transferred, which is typically factory or site acceptance test, which is the official handover of control of the goods to the customer.  .

During the product build, deposits and progress payments are reflected in the statement of financial position as deferred revenue.

Sale (customised products) contracts

Certain bespoke products under customised contracts have no alternative use to the company. In addition such contracts have a right to payment for performance to date. Revenues from such customised products are recognised over time according to how much of the performance obligation has been satisfied.  This is measured using the input or output method. Under the input method, the extent of inputs towards satisfying the performance obligation is compared with the expected total inputs required.  Any changes in expectation are reflected in the total inputs figure as they become known. The progress percentage obtained is then applied to the transaction price associated with that performance obligation. Under the output method, revenue is recognised on the basis of direct measurement of the value to the customer of the goods or services transferred to date relative to the remaining goods and services promised under the contract.

Government grants

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. The company presents grants related to an expense item as other operating income in the statement of comprehensive income.

When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.

Foreign currency

The financial information of the Company is 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 Statement of Financial Position date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the date of the Statement of Financial Position.

Inventory

Inventory is recorded at the lower of actual cost and net realisable value, applying the average cost methodology.

Work in progress comprises direct labour, direct materials and direct overheads. Direct labour is allocated on an input basis that reflects the consumption of those resources in the production process.

Cash and cash equivalents

For the purpose of the statement of cash flows, cash and cash equivalents comprise cash balances and bank overdrafts that form an integral part of the Company's cash management process.  They are recorded in the statement of financial position and valued at amortised cost.

Restricted cash represents bank deposit accounts where disbursement is dependent upon certain contractual performance conditions.

Other receivables

These assets are initially recognised at fair value and are subsequently measured at amortised cost less any provision for impairment.

Property, plant 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/or operating expenses on a straight-line basis over the estimated useful lives of each part of an item of plant, machinery and equipment.  Depreciation of the assets commences when the assets are available for use. The estimated useful lives are as follows:

Decommissioning asset	Life of the contract
Leasehold improvements		Life of the lease
Plant, machinery and equipment		3 to 10 years
Rental assets		3 to 5 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 tangible fixed assets are reviewed annually, and any revision is accounted for as a change in accounting estimate and the net book value of the asset, at the time of the revision, is depreciated over the remaining revised economic life of the asset.

Right-of-use assets

At inception each contract is assessed as to whether it conveys the right to control the use of an identified asset and obtain substantially all the economic benefits from the use of that asset, for a period in exchange for consideration.  If so, the contract should be accounted for as a lease and the Company should recognise a right-of-use asset, and related lease liability, at the lease commencement date.

The right-of-use assets comprise the corresponding lease liability, lease payments made before the commencement date, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses. The lease liability is initially measured at the present value of the lease payments and discounted using the interest rate implicit in the lease or, if that rate cannot be determined, the incremental borrowing rate is used.  The lease liability continues to be measured at amortised cost using the effective interest method.  It is remeasured when there is a change in the future lease payments. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset.

At lease commencement date, a right-of-use and lease liability are recognised on the statement of financial position. The right-of-use asset is measured at cost, which comprises the initial measurement of the lease liability, any initial direct costs incurred, an estimate of costs to dismantle and remove the asset at the end of the lease term and any lease payments made in advance of the lease commencement date.

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in-substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

After initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes to in-substance payments. Interest expense is recognised in finance costs in the statement of comprehensive income.

Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. The depreciation expense is recognised within operating costs or cost of sales depending on the nature of the underlying asset.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

Short-term leases and low value assets are accounted for using the practical expedients set out in IFRS 16 and the payments are recognised as an expense in profit or loss on a straight-line basis over the lease term.

The Company has elected not to recognise right-of-use assets and lease liabilities for leases of less than 12-months and leases of low value assets. These largely relate to short-term rentals of equipment.  The lease payments associated with these leases are expensed on a straight-line basis over the lease term.

Intangible assets

The useful economic lives of intangible fixed assets are reviewed annually, and any revision is accounted for as a change in accounting estimate and the net book value of the asset, at the time of the revision, is amortised over the remaining revised economic life of the asset. Amortisation only commences when the asset is available for use.

Development costs

Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate:

·    The technical feasibility of completing the intangible asset so that the asset will be available for use or sale

·    Its intention to complete and its ability and intention to use or sell the asset

·    How the asset will generate future economic benefits

·    The availability of resources to complete the asset

·    The ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete, and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in operating costs. During the period of development, the asset is tested for impairment annually.

Research costs are expensed as incurred.

Patent and commercial rights

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 operating expenses over the following periods:

Patents	10 to 20 years
Commercial rights	5 years

Investment in joint ventures

The Company holds 50% interest in a joint venture, Speedy Hydrogen Services Limited.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Company's investment in its joint venture is initially recognised at cost, including directly attributable transaction costs. Subsequently, the carrying amount is adjusted for any impairment losses, if applicable. The Company assesses the investment for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Impairment testing of intangible assets and property, plant and equipment

At each statement of financial position date, the carrying amounts of the assets are reviewed to determine whether there is any indication that those assets have suffered an impairment loss.  If any such indication exists, the recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). In assessing whether an impairment is required, the carrying value of the asset is compared with its recoverable amount.  The recoverable amount is the higher of the fair value less costs of disposal (FVLCD) and value in use (VIU).

Financial instruments

Financial instruments are measured on initial recognition at fair value, plus, in the case of financial instruments other than those classified as fair value through profit or loss (FVTPL), directly attributable transaction costs.  Receivables are initially recognised at transaction price.  Financial instruments are recognised when the Company becomes a party to the contracts that give rise to them and are classified as amortised cost, fair value through profit or loss or fair value through other comprehensive income, as appropriate.  The Company considers whether a contract contains an embedded derivative when the entity first becomes a party to it.  The embedded derivatives are separated from the host contract if the host contract is not measured at fair value through profit or loss and when the economic characteristics and risks are not closely related to those of the host contract.  Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.

In the periods presented the Company does not have any financial assets categorised as FVTPL or FVOCI.

Financial assets at amortised cost

A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding and is not designated as FVTPL.  Financial assets classified as amortised cost are measured after initial recognition at amortised cost using the effective interest method, less any provision for impairment Cash, restricted cash, trade receivables and certain other assets are classified as, and measured at, amortised cost.

Financial liabilities

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition.  Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method.  Gains and losses are recognised in net earnings when the liabilities are derecognised as well as through the amortisation process.  Borrowing liabilities are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date. Accounts payable and accrued liabilities and lease liabilities are classified as, and measured at, amortised cost.

Impairment of financial assets

A loss allowance for expected credit losses is recognised in the Statement of Comprehensive Income for financial assets measured at amortised cost.  At each year end date, on a forward-looking basis, the Company assesses the expected credit losses associated with its financial assets (such as trade receivables) carried at amortised cost.

The expected loss rates are based on the historical credit losses adjusted to reflect current and forward-looking information on economic factors affecting the ability of the customers to settle the receivables.

The impairment methodology applied depends on whether there has been a significant increase in credit risk.  The expected credit losses are required to be measured through a loss allowance at an amount equal to the 12-month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date), or full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).  A loss allowance for full lifetime expected credit losses is required for a financial instrument if the credit risk of that financial instrument has increased significantly since initial recognition.

Derecognition of financial assets and liabilities

A financial asset is derecognised when either the rights to receive cash flows from the asset have expired or the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party.  If neither the rights to receive cash flows from the asset have expired nor the Company has transferred its rights to receive cash flows from the asset, the Company will assess whether it has relinquished control of the asset or not.  If the Company does not control the asset, then derecognition is appropriate.  A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability.  The difference in the respective carrying amounts is recognised in the statement of Comprehensive Income.

Share-based payment transactions

The fair value of options granted under the Employee Share Option Plan, the Employee Performance Share Plan and the Save-As-You-Earn scheme are recognised as an employee benefits expense, with a corresponding increase in equity.  The total amount to be expensed is determined by reference to the fair value of the options granted:

*    Including any market performance conditions (e.g., the Company's share price)

*    Excluding the impact of any service and non-market performance vesting conditions (e.g., profitability, sales growth targets and remaining an employee for a specified time)

*    Including the impact of any non-vesting conditions (e.g., the requirement for employees to save or hold shares for a specific period)

The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied.  At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

Modifications after the vesting date to terms and conditions of equity-based payments which increase the fair value are recognised over the remaining vesting period. If the fair value of the revised equity-based payments is less than the original valuation, then the original valuation is expensed as if the modification never occurred.

The fair value of warrants issued is also recognised as a share-based payment expense with a corresponding increase in equity.

Provisions

General

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 statement of financial position date and are discounted to present value where the effect is material.

Onerous contracts

If the company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract. An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

Warranty provisions

Warranty provisions are recognised for the estimated liability to repair or replace products under warranty at the time revenue is recognised. The provision is an estimate calculated based on most likely serviceable component to wear out at modular and generator level, level of volumes, product mix and repair and replacement cost.

Decommissioning liability

The Company records a provision for decommissioning costs to remediate the environmental damage of a manufacturing facility for supply of hydrogen fuel. Decommissioning costs are provided for at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the relevant asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount, where material, is expensed as incurred and recognised in the statement of profit or loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate.

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.

Tax due for the current and prior periods is recognised as a liability, to the extent that it has not yet been settled, and as an asset if the amounts already paid exceed the amount due.  The benefit of a tax loss which can be carried back to recover current tax of a prior period is recognised as an asset.

Current tax assets and liabilities are measured at the amount expected to be paid to/ recovered from taxation authorities, using the rates/laws that have been enacted or substantively enacted by the balance sheet date.

A deferred tax asset is recognised for deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability other than in a business combination which, at the time of the transaction, does not affect accounting profit or taxable profit.

The carrying amount of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Any such reduction is subsequently reversed to the extent that it becomes probable that sufficient taxable profit will be available.

A deferred tax asset is recognised for an unused tax loss carry forward or unused tax credit if, and only if, it is considered probable that there will be sufficient future taxable profit against which the loss or credit carry forward can be utilised.

The Company does not currently recognise a deferred tax asset in relation to trading losses, as near-term taxable profits, against which to offset the asset, are not considered probable.

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 under the SME R&D Tax Relief Scheme and the Research & Development Expenditure Credit (RDEC) Scheme. Under the SME scheme, the company recognises R&D tax credits in the taxation line in the statement of comprehensive income and it recognises the RDEC credit as other income above the operating profit line in the statement of comprehensive income.

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 capped at 5% of the employee's salary and are reflected in the statement of comprehensive income in the period for which they are made.

The amount recognised in the period is the contribution payable in exchange for services rendered by employees during the period.

3.  Critical accounting judgments and key sources of estimation uncertainty

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

Critical accounting judgments

The following are the judgments made by management in applying the accounting policies of the Company that have the most significant effect on the financial information:

Customer contracts and revenue recognition

Customer contracts typically include the provision of goods or services, including sales of hydrogen fuel cells generators and related equipment, installation and maintenance services, engineering services and provision of hydrogen. 

Customer agreements can be complex, involve multiple legal documents and have a duration covering multiple accounting periods including different performance obligations and payment terms designed to manage cash flow rather than the underlying arm's length transaction price. 

For customised products contracts management uses judgment in determining whether certain promises withing the contract constitute distinct performance obligations, whether those are satisfied over time or at a point in time and finally on the most appropriate method of allocating the transaction price. These judgments are made based on the interpretation of key clauses and conditions within each customer contract.

For standard product contracts where revenue is recognised at a point in time rather than over time, management uses judgement to assess the point of transfer of control to the customer at the point of acceptance of the products by the customer.

Capitalisation of development expenditure

The Company capitalises costs for product development projects. Such costs include non-recurring engineering, design costs and prototype costs. Initial capitalisation of costs is based on management's judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. All development costs associated with the fuel cell cash generating (production) unit have been capitalised from the point of signing the Supply and Maintenance Agreement with Speedy Hydrogen Solutions (SHS) Limited on 14th November 2023. A key milestone for all liquid cooled fuel cell related projects was the signing of the exclusive distribution agreement with Tamgo group on 4th September 2023 and therefore all development costs, related to liquid-cooled projects incurred the year ended 31 October 2024 have been capitalised on projects related to this.

For the Fuel Processing Cash Generating Unit a key milestone event for establishing economic feasibility was the externally verified Hydrogen purity output, announced via RNS on 4th December 2023.

In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project and the expected period of benefits. At 31 October 2024, the carrying amount of capitalised development costs was £3,244,000 for fuel cell manufacturing technologies and £1,160,000 for fuel processing.

Principal versus agent considerations - hydrogen fuel cells sales to joint venture

Management have determined that the joint venture is the principal in the contractual relationship with its customer because on balance it obtains control over the products once those are transferred over to them. This is also contractually supported by the fact that the joint venture takes the inventory risk and has discretion in establishing the prices with its customer.

Key source of estimation uncertainty

Impairment of development expenditure

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm's length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are relevant to the capitalised development costs recognised by the Company. The key assumptions used to determine the recoverable amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in Note 14.

Share-based payments

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

The fair value is determined using either the Black-Scholes valuation model, Modified Binomial Tree model or a Monte Carlo model for market-based conditions.  Both are appropriate for considering the effects of the vesting conditions, expected exercise period and the dividend policy of the Company.

The cost of equity-settled transactions is expensed, together with a corresponding increase in equity over the period the Directors expect the performance criteria will be fulfilled.  For market performance criteria this estimate is made at the time of grant considering historic share price performance and volatility.  For non-market-based performance criteria, an estimate is made at the time of grant and reviewed annually thereafter considering progress on the operational objectives set, plans and budgets.

The estimation uncertainty relating to share-based payments is not at risk of material change in future years other than in relation to management's estimate of the extent to which the non-market-based performance criteria will be met.

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 2024, the Company operated mainly in the United Kingdom.  All non-current assets are in the United Kingdom.

Revenue for the period was all generated from fuel cell systems.

The fuel processing operations are expected to commence in future financial years, and therefore it is not appropriate to detail this as a separate operating segment.

5.  Revenue

				Year ended 31 October 2024		Year ended 31 October 2023
Revenue from contracts with customers				£000		£000
Sales of fuel cell generators				3,976		137
Rental revenue				26		-
Other revenue				-		90
				4,002		227
Being:
Cash consideration				4,002		161
Consideration in kind				-		66
				4,002		227

£3,829,000 of the revenue during 2024 was recognised at a point in time rather than over time.

The consideration in kind relates to marketing services received from the customer and is fair valued in accordance with the contract.

One customer A (FY23: one customer B) accounted for more than 10% of revenue: 

		Year ended 31 October 2024				Year ended 31 October 2023
		£000		%		£000		%
Customer A		3,829		95.6
Customer B		-		-		130		57.1

The majority of the other revenue relates to sales of hydrogen to the renter of the fuel cell generators.

Unsatisfied performance obligations were:

		Total		Within one year		Within two to five years
		£000		£000		£000
31 October 2023		1,423		-		1,423
31 October 2024		1,571		148		1,423

The aggregate amount of the transaction price allocated to contracts that are not fully satisfied as of 31 October 2024 was £1,571,000 (2023: £1,423,000).

£1.4m deferred revenue is to be recognised over a three year period from the date a commercial and fully certified product is available. The £1.4m deferred revenue liability is to be offset against each unit sold to the customer at a rate of £150,000 per unit, up to a maximum value of £1.5m.  

6.  Other income

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Government grants income				130		-
R&D expenditure credits				224		-
Other				75		41
				429		41

7.  Operating costs

										Year ended 2024 Total			Year ended 2023 Total
										£000			£000
Materials										1,685			4,679
										1,685			4,679
Payroll costs
Payroll (excluding directors)										6,746			6,690
Directors' costs										1,526			1,895
Other employment costs										865			1,033
										9,137			9,618
Other administrative expenses
Occupancy costs										461			884
Other administrative expenses										2,825			2,370
										3,286			3,254
Non-cash costs
Amortisation of intangible assets										81			110
Depreciation of right-of-use assets										470			455
Depreciation of tangible fixed assets										2,043			1,099
Less depreciation of rental asset charged to cost of sales										(28)			(65)
Consideration in kind										-			66
Share-based payments charge										1,459			778
										4,025			2,443
										18,133			19,994

Research and development costs

The Company's fuel cells manufacturing and fuel processing research and development activities concentrate on the development of new design, engineering and prototype build. In 2024 the Company spent in total £9,512,000 (2023: £8,487,000) on research and development. 

Research and development costs of £5,108,000 (2023: £8,487,000) that are not eligible for capitalisation have been expensed in the period incurred and recognised in operating expenses.

In 2024 development costs meeting the recognition criteria for capitalisation under IAS 38 Intangible Assets were £4,403,000 (2023: £Nil) (refer to note 14).  Out of the total of £4,403,000 capitalised development costs, £1,507,000 relate to staff costs.

8.  Auditor's remuneration

Fees paid to the auditors included within the operating costs were:

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Audit				260		218
Other assurance services				-		17

9.  Employee numbers and costs, including directors

The average number of employees in the year were:

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Support, operations and technical				130		113
Directors				6		7
				136		120

The aggregate payroll costs for directors and employees were:

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Wages and salaries				8,803		7,290
Social security				992		1,000
Employers' pension contributions				335		295
Total employee costs				10,130		8,585
Less: capitalised as development costs				(1,507)		-
				8,623		8,585
Equity-settled share-based payments expense				1,459		778
				10,082		9,363

Details of the employee costs associated with the company's key management personnel are included in note 27.

10.            Directors' remuneration

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Salary and benefits				1,153		1,599
Pension				28		46
Total directors' remuneration				1,181		1,645

In addition directors received total of £235,000 (2023: £Nil) termination benefits in the year.

				Year ended 31 October 2024		Year ended 31 October 2023
Highest paid director				£000		£000
Wages and salaries				503		601
Termination benefit				235		-
Benefits in kind				45		44
				783		645
Employers' pension contributions				17		16
				800		661

11.            Net finance income/(cost)

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Lease interest				(41)		(69)
Exchange rate differences				-		22
Bank charges				(14)		(6)
Total finance cost				(55)		(53)
Finance income				316		512
Net finance income				261		459

12.            Taxation

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Recognised in the statement of comprehensive income
R&D tax credit - current year				1,293		2,088
R&D tax credit - prior year				597		(2)
Total tax credit				1,890		2,086
Reconciliation of effective tax rates
Loss before tax				(19,309)		(19,561)
Tax using the domestic rate of corporation tax at 25.00% (2023: 22.52%)				4,827		4,405
Effect of:
Change in unrecognised deferred tax resulting from tax losses				(2,430)		(2,443)
Non-deductible items				(245)		(43)
Depreciation in excess of capital allowances				(19)		(6)
Other differences				(320)		-
R&D expenditure credits				(75)		-
R&D enhanced deduction on qualifying R&D expenditure				913		1,959
R&D rate adjustment on surrendered losses				(1,358)		(1,784)
Adjustment to R&D tax credit - prior year				597		(2)
Total tax credit				1,890		2,086

Deferred tax assets that have not been recognised are set out below:

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Intangible assets				(1,814)		(429)
Property, plant and equipment				1,923		860
Share-based payments				142		57
Other differences				-		11
Losses carried forward				16,825		14,389
Unrecognised deferred tax assets				17,076		14,888

Deferred tax assets of £1,814,000 (2023: £429,000) have been recognised but offset against deferred tax liabilities of the same amount arising in the same jurisdiction.

The cumulative tax losses in the amount of £67.3 million (2023: £57.6 million) that are available indefinitely for offsetting against future taxable profits have not been recognised as the Directors consider that it is unlikely that they will be realised in the foreseeable future.

The prior year R&D tax credit of £597,000 is largely due to a higher tax rates for R&D intensive schemes enacted post 31 October 2023.

The 2021 Finance Act increased the UK corporation tax rate to 25% from 1 April 2023, which will affect any future tax charges.

13.            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 year.

				Year ended 31 October 2024		Year ended 31 October 2023
Basic loss per share (pence)				(2.22)		(2.36)
Diluted loss per share (pence)				(2.22)		(2.36)
Loss attributable to equity shareholders £000				(17,419)		(17,475)
Weighted average number of shares in issue				784,681,892		741,451,346

Diluted earnings per share

As set out in note 25, there are share options and warrants (accounted for under IFRS 2: Share based payments) outstanding as at 31 October 2024 which, if exercised, would increase the number of shares in issue.  Given the losses for the year, there is no dilution of losses per share in the year ended 31 October 2024 nor the previous year.

14.            Intangible assets

				Development costs		Patents & commercial rights		Total intangible assets
				£000		£000		£000
Cost
At 1 November 2022				229		1,341		1,570
Additions				-		63		63
Disposals				(229)		-		(229)
At 31 October 2023				-		1,404		1,404
Additions				4,403		40		4,443
Disposals				-		-		-
At 31 October 2024				4,403		1,444		5,847
Amortisation
At 1 November 2022				229		1,030		1,259
Charge for the year				-		110		110
Impairment charge				(229)		-		(229)
At 31 October 2023				-		1,140		1,140
Charge for the year				-		81		81
Disposals				-		-		-
At 31 October 2024				-		1,221		1,221
Net book value
At 31 October 2023				-		264		264
At 31 October 2024				4,403		223		4,626

Impairment review of capitalised development costs

For impairment testing purpose internally generated capitalised development costs are allocated to two cash generating units ('CGU') - Fuel Processing and Fuel Cells, which are likely to be future operating and reportable segments.

The value in use for both fuel processing and fuel cells manufacturing CGUs, is based on the cash flows expected to be generated by the projected production profiles over 5 years since commencement of production. Estimated production volumes and cash flows, including operating and capital expenditure, are derived from the business plans for the two units. Key assumptions used in the value in use calculations for both CGUs were the post tax discount rates of 16.3%, a terminal growth rate of 3% and significant growth in the operating cash flows as a result of the projected increase in production profiles.

No impairment of the development costs balances in either fuel cells or fuel processing is recognized during 2024. Recoverable amounts are significantly exceeding carrying values even when applying large swings in key assumptions underpinning the value in use calculations for both fuel processing and fuel cells manufacturing CGUs.

15.            Right-of-use assets

								Cars	Buildings	Total
								£000	£000	£000
Cost
At 1 November 2021								-	1,885	1,885
Additions								-	576	576
Disposals								-	(476)	(476)
At 31 October 2023								-	1,985	1,985
Additions								19	-	19
Disposals								-	-	-
At 31 October 2024								19	1,985	2,004
Depreciation
At 1 November 2022								-	909	909
Charge for the year								-	455	455
Disposals								-	(476)	(476)
At 31 October 2023								-	888	888
Charge for the year								1	469	470
At 31 October 2024								1	1,357	1,358
Net book value
At 31 October 2023								-	1,097	1,097
At 31 October 2024								18	628	646

Refer to Note 22 for disclosure of the associated lease liabilities.

16.            Investment in joint venture

The Company has a 50% interest in a joint venture, Speedy Hydrogen Solutions Limited. The joint venture was incorporated on 6th November 2023 and the two joint venture partners invested £625,000 capital each.

						2024
						£000
1 November 2023						-
Capital invested						625
Impairment						-
31 October 2024						625

As part of the JV agreement the Company along with its partner may subscribe to up to £3,750,000 Secured Loan Notes. The loan notes are repayable in three years' time and interest is payable at 2.00% above bank of England base rate . The milestone conditions required for the allotment of the loan notes had not occurred as of 31st October 2024.

17.            Property, plant and equipment

		Rental Asset		Leasehold improvements	Decommissioning Asset	Plant, machinery and equipment	Assets under construction	Total
		£000		£000	£000	£000	£000	£000
Cost
At 1 November 2022		-		2,570	300	3,562	406	6,838
Additions		-		985	-	334	288	1,607
Disposals		-		(9)	-	(25)	-	(34)
At 31 October 2023		-		3,546	300	3,871	694	8,411
Additions		348		169	167	1,886	382	2,952
Transfers		-		303	-	103	(406)	-
Disposals		-		-	-	(2,483)	-	(2,483)
At 31 October 2024		348		4,018	467	3,377	670	8,880
Depreciation
At November 2022		-		746	285	2,525	-	3,556
Charge for the year		-		648	15	436		1,099
At 31 October 2023		-		1,394	300	2,961	-	4,655
Charge for the year		29		1,221	77	715		2,043
Disposals				-	-	(2,483)	-	(2,483)
At 31 October 2024			29	2,615	377	1,193	-	4,214
Net book value
At 31 October 2023	-			2,152	-	910	694	3,756
At 31 October 2024	319			1,403	90	2,184	670	4,666

18.            Inventory

				31 October 2024		31 October 2023
				£000		£000
Raw materials				1,782		185
Work-in-progress				615		405
Provision				(449)		(412)
Inventory				1,948		178

Inventory expensed as cost of sales during the year was £5,348,000 (2023: £nil). As at 31 October 24, work -in-progress was written down by £449,000 to net realisable value.

19.            Trade and other receivables

				31 October 2024		31 October 2023
				£000		£000
Trade receivables				249		107
Receivable from joint venture				4,114		-
VAT receivables				8		383
Other receivables				313		217
Prepayments				2,053		524
				6,737		1,231

The company has committed to provide sufficient funds to the joint venture along with JV partners to settle the obligation (refer also to note 16).

Included within prepayments is an amount of £1,378,000 (2023: £119,000) in relation to payments made to suppliers in advance of receipt of stock.

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

20.            Cash and cash equivalents

				31 October 2024		31 October 2023
				£000		£000
Cash at bank				769		303
Bank deposits				14,605		27,063
				15,374		27,366

There is no material foreign exchange movement in respect of cash and cash equivalents.

Restricted cash of £433,720 (2023: £258,000) is not included within cash and cash equivalents and is held in escrow to support bank guarantees provided under contractual obligations to suppliers and customers.

21.            Trade and other payables

				31 October 2024		31 October 2023
				£000		£000
Trade payables				1,826		931
Deferred revenue				1,804		1,423
Other payables				468		416
Accruals				857		958
				4,955		3,728

Included in Accruals as of 31 October 2024 is an amount of £290,000 in relation to bonuses (2023: £690,000).

Deferred revenue under the ABB contract of £2m is reduced by £577,000 fair value of the warrants granted on the same day, 15 November 2021, as the two contracts are considered to be linked.

22.            Lease liabilities

Changes in liabilities arising from financing activities:

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Opening position				1,124		996
Cash flows
Repayment				(520)		(516)
Non-cash
Additions				19		575
Interest expense				41		69
				664		1,124

				31 October 2024		31 October 2023
				£000		£000
Lease liabilities less than 12 months				505		477
Lease liabilities more than 12 months				159		647
				664		1,124

£647,000 of the Company's lease liability as at 31 October 2024 relates to buildings for the occupancy of the campus at Dunsfold Park.  A number of buildings are occupied under licences and these have not been recognised as right-of-use assets.  Of the leases recognised as right-of-use assets, the Company has a commitment on one lease until February 2027 with a break clause in February 2025.  The Company has a commitment on one lease until November 2025 with no break clauses.  Two leases were renewed in January 2023 until January 2026 with no break clauses.

The expense relating to short term leases and leases of low value assets incurred during the year is £84,250 (2023: £102,000).

23.            Provisions

			Product warranties		Decommissioning		Total
			£000		£000		£000
Balance at 31 October 2023			-		301		301
Additions			217		167		384
Utilisation			-		-		-
Balance at 31 October 2024			217		468		685
Current			217		-		217
Non-current			-		468		468

Decommissioning

Included within the total of £468,000 above, £417,150 relates to a provision for the estimated costs of removing the plant and equipment installed at site owned by a supplier of hydrogen fuel. Having renewed the Stade hydrogen offtake agreement for a further five-years, from January 2023, no decision has been taken as to when the site might be decommissioned.

Product warranties

As at 31 October 2024 £217,000 provision is recognised for expected warranty claims on hydrogen fuel cells generators sold during the year. It is expected that these costs will be incurred in the next financial year. The provision is an estimate calculated based on most likely serviceable component to wear out at modular and generator level, level of volumes, product mix and repair and replacement cost.

24.            Issued share capital

		Ordinary shares		Price		Share capital		Share premium before costs of issue			Costs of issue		Share premium net of costs of issue
				£		£000		£000			£000		£000
At 1 November 2022		735,351,171		-		735			119,756		(3,269)		116,487
Issue of shares 5 April 2023		10,000,000		2,000,000		10			1,990		-		1,990
Exercise of options 1 June 2023		10,000		-		-			-		-		-
Exercise of warrants 14 June 2023		900,000		44,325		1			43		-		43
Exercise of PSP award 22 September 2023		255,136		255		-			-		-		-
At 1 November 2023		746,516,307		-		746			121,789		(3,269)		118,520
Exercise of options 13 March 2024		900,000		79,200		1			78		-		78
Exercise of options 23 May 2024		25,000		2,000		-			2		-		2
Exercise of options 04 June 204		37,500		5,775		-			6		-		6
Issue of shares
13 June 2024		74,741,630		11,211,244		75			11,137		(670)		10,467
Issue of shares
1 July 2024		30,537,369		4,580,605		30			4,550		(207)		4,343
Exercise of options 11 September 2024		1,600,000		140,800		2			139		-		139
		854,357,806		-		854			137,701		(4,146)		133,555

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 to maintain a sufficient funding base to enable the Company to meet its working capital needs. The Company has no debt, other than property leases, and therefore a target debt to equity ratio is not relevant at the time.

Share premium is shown before the permitted deduction of costs of issue.  After such deduction the value equals £133,555,000.

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.

25.            Share-based payments

Share-based payment charge:

				31 October 2024		31 October 2023
				£000		£000
Employee Share Option Plan				911		48
Employee Performance Share Plan				591		612
SAYE				(43)		118
				1,459		778

Employee Share Option Plan

The establishment of the Employee Share Option Plan was approved by the Board on 1 August 2018 and amended on 10 October 2018.  The Plan is designed to attract, retain and motivate employees. Under the Plan, participants can be granted options which vest unconditionally or conditionally upon achieving certain performance targets.  Participation in the Plan is solely at the Board's discretion and no employee has a contractual right to participate in the Plan or to receive any guaranteed benefits.

Options are granted under the Plan for no consideration and carry no dividend nor voting rights.

When exercisable, each option is convertible into one ordinary share.

Set out below are summaries of options granted under the Plan:

		Average  exercise price per share option 2024					Number of options 2024			Average exercise price per share option  2023			Number of options 2023
		£								£
At 1 November				0.32			12,970,500			0.35			13,717,167
Granted during the year				0.12			10,428,013			0.16			2,125,000
Exercised during the year				0.09			(2,562,500)			0.09			(10,000)
Lapsed during the year				0.19			(285,000)			0.17			(2,861,667)
Forfeited during the year				0.19			(290,000)			-			-
Amended during the year:
Options at original exercise price				-			-			0.62			(1,000,000)
Options at rebased exercise price				-			-			0.11			1,000,000
At 31 October				0.07			20,261,013			0.32			12,970,500
Vested and exercisable at 31 October							7,283,000						9,630,500

Share options outstanding at the end of the year have the following expiry dates and exercise prices:

Grant date	Expiry date		Exercise price		Share options 2024		Share options 2023
			£
02 December 2013	01 December 2023		0.3400		-		120,000
17 July 2015**	17 July 2028		0.2200		6,000,000		6,000,000
10 September 2018	01 August 2024		0.0880		-		190,000
15 October 2018	15 October 2024		0.0880		-		2,500,000
20 April 2020	20 April 2030		0.1540		783,000		820,500
09 June 2023*	28 June 2031		0.1000		500,000		500,000
09 June 2023*	28 June 2031		0.1250		500,000		500,000
09 June 2023	28 June 2031		0.1526		1,500,000		1,500,000
04 July 2022	04 July 2032		0.1900		215,000		215,000
27 April 2023	27 April 2033		0.0188		625,000		625,000
04 April 2024	04 April 2034		0.1300		238,013		-
18 April 2024	18 April 2034		0.1900		5,890,000		-
10 June 2024	10 June 2034		0.2000		70,000		-
13 June 2024	13 June 2034		0.1600		110,000		-
24 July 2024	24 July 2034		0.1600		110,000		-
05 September 2024	05 September 2034		0.0010		3,400,000		-
06 September 2024	06 September 2034		0.1300		250,000		-
07 October 2024	07 October 2034		0.1300		70,000		-
					20,261,013		12,970,500

*              Award amended by Deed of Variation in 2023.

**           Award amended by Deed of Variation in 2024.

On 13th May 2024, the Company extended by 3 years the expiry term of the 6,000,000 shares options granted originally on 17th July 2015 under the Employee Share Option Plan. The extension of the expiry period resulted in an increase of the fair value of the affected share options by £409,000, which has been recognised as an additional share-based payment expense in the current financial year.

The fair value of the modified share options was determined using 1) Black- Scholes model for 3,000,000 share options not subject to any market conditions and 2) Hybrid model, a combination between Monte Carlo simulation and Binomial tree model, for 3,000,000 share options subject to market conditions. The inputs and assumptions incorporated in the valuation are listed in the table below. The valuation date is the modification date of 14th May 2024.

The table below sets out the inputs used in determining the fair value of the grants of options per the previous table as well as the expense recognised in the accounts in the current year.  The grants in the previous table are linked below based on the exercise price and grant date.

Grant date	Exercise price	Average grant date share price	Average expected volatility per annum	Average risk-free interest rate per annum	Average dividend yield per annum	Average implied option life in years	Average fair value per option	Amount expense in 2024
	£	£					£	£000
04 July 2022	0.1900	0.1900	95.00%	1.83%	0.00%	3.0	0.1140	8
27 April 2023	0.1880	0.1882	78.00%	3.82%	0.00%	3.0	0.0990	21
09 June 2023	0.1000	0.1682	72.00%	4.51%	0.00%	0.7	0.0791	8
09 June 2023	0.1000	0.1682	72.00%	4.51%	0.00%	0.9	0.0825	8
09 June 2023	0.1250	0.1682	72.00%	4.51%	0.00%	1.7	0.0817	24
09 June 2023	0.1250	0.1682	72.00%	4.51%	0.00%	1.9	0.0847	7
09 June 2023	0.1530	0.1682	72.00%	4.51%	0.00%	2.7	0.0856	7
09 June 2023	0.1530	0.1682	72.00%	4.51%	0.00%	2.9	0.0883	22
04 April 2024	0.1300	1.1700	85.08%	3.77%	0.00%	-	0.1500	16
18 April 2024	0.1900	0.1900	85.06%	4.01%	0.00%	-	0.1600	319
10 June 2024	0.2000	0.1900	85.56%	4.05%	0.00%	-	0.1600	3
13 June 2024	0.1600	0.1600	85.40%	3.86%	0.00%	-	0.1400	4
24 July 2024	0.1600	0.1500	85.40%	3.89%	0.00%	-	0.1300	2
05 September 2024	0.0010	0.1300	85.36%	3.63%	0.00%	-	0.1300	50
06 September 2024	0.1300	0.1200	85.35%	3.60%	0.00%	-	0.1000	2
07 October 2024	0.1300	0.1000	85.33%	3.88%	0.00%	-	0.0800	1
13 May 2024*	0.2200	0.2100	76.50%	4.13%	0.00%	-	0.0972	182
13 May 2024*	0.2200	0.2100	76.50%	4.13%	0.00%	-	0.1213	227
								911

*              The grant date is the date of modification of the original share options granted on 17th July 2015.

Performance Share Plan

The establishment of the Performance Share Plan was approved by the Board on 1 September 2021.  The Plan is designed to attract, retain and motivate employees.  Under the Plan, participants can be granted options which vest unconditionally or conditionally upon achieving certain performance targets.  Participation in the Plan is solely at the Board's discretion and no employee has a contractual right to participate in the Plan or to receive any guaranteed benefits.  Award holders are not required to make payment for the grant of an award unless the board determines otherwise.

Options are granted under the Plan for no consideration and carry no dividend nor voting rights.

When exercisable, each option is convertible into one ordinary share.

Set out below are summaries of options granted under the Plan:

		Average exercise price per share option  2024		Number of options 2024		Average exercise price per share option  2023		Number of options 2023
		£
At 1 November		0.001		7,600,904		-		6,131,266
Granted during the year		0.001		6,295,394		0.001		4,664,000
Exercised during the year		0.001		-		0.001		(255,136)
Lapsed during the year		0.001		(620,970)		0.001		(2,939,226)
At 31 October		0.001		13,275,328		0.001		7,600,904
Vested and exercisable at 31 October				-				-

Share options outstanding at the end of the year have the following expiry dates and exercise prices:

Grant date	Expiry date		Exercise price		Share options 2024		Share options 2023
			£
19 November 2021	19 November 2031		0.001		-		620,970
12 July 2022	12 July 2032		0.001		2,315,934		2,315,934
1 June 2023	1 June 2033		0.001		4,664,000		4,664,000
02 May 2024	02 May 2034		0.001		369,405		-
02 May 2024	02 May 2024		0.001		5,925,989		-
					13,275,328		7,600,904

The table below sets out the inputs used in determining the fair value of the grants of options per the previous table as well as the expense recognised in the accounts in the current year.  The grants in the previous table are linked below based on the exercise price and grant date.

Grant date	Exercise price	Average grant date share price	Average expected volatility per annum	Average risk-free interest rate per annum	Average dividend yield per annum	Average implied option life in years	Average fair value per option	Amount expenses in 2024
	Pence	Pence					Pence	£000
19 November 2021	0.001	53.80	76.00%	0.05%	0.00%	0.40	0.43	-
19 November 2021	0.001	53.80	76.00%	0.35%	0.00%	1.40	0.42	80
19 November 2021	0.001	53.80	76.00%	0.05%	0.00%	3.00	0.45	35
15 July 2022	0.001	20.70	95.00%	1.76%	0.00%	3.00	12.70	91
15 July 2022	0.001	20.70	95.00%	1.76%	0.00%	3.00	16.60	119
01 June 2023	0.001	17.91	74.00%	4.29%	0.00%	3.00	8.79	68
01 June 2023	0.001	17.91	74.00%	4.29%	0.00%	3.00	10.92	85
02 May 2024	0.001	18.00	88.11%	4.03%	0.00%	3.00	15.00	9
02 May 2024	0.001	18.00	67.50%	4.49%	0.00%	3.00	10.00	104
Total charge for the year (2023: £612,000)								591

Three grants were made on 19 November 2021.  The first two, of the three disclosed above, related to the Transitional LTIP, and was made in two tranches. The first tranche had a risk free rate of 0.05% whilst the second tranche had a risk-free rate of 0.35%.  The third, of the three above, related to the PSP LTIP and had a risk free rate of 0.05%.

SAYE

Save-as-you-earn (SAYE) 'Sharesave' schemes are open to all eligible employees.  The SAYE schemes allows eligible employees to commit to making a deduction from salary on a monthly basis over three years.  At the end of the three-year period, employees can purchase the Company's ordinary shares of 0.1 pence each ("Ordinary Shares") using the funds saved.

The first AFC Energy SAYE scheme was launched in August 2022 at an exercise price of 20.48 pence per Ordinary Share, representing a 20% discount to the closing market price of the Ordinary Shares prior to the scheme being launched on 3 August 2022.

The second AFC Energy SAYE scheme was launched in September 2023 at an exercise price of 14.304 pence per Ordinary Share, representing a 20% discount to the closing market price of the Ordinary Shares prior to the scheme being launched on 6 September 2023.

The discounts to the closing market prices are in line with the limits of the SAYE scheme as defined by HMRC.

	Average exercise price per option 2024	Number of options 2024	Average exercise price per option 2023	Number of options 2024
	Pence		£
01 November	17.44	3,944,601	20.48	2,007,400
Granted during the year	-	-	14.30	1,937,201
Forfeited during the year	19.42	(1,915,803)	-	-
31 October	15.58	2,028,798	17.44	3,944,601
Vested and exercisable at 31 October	-	-	-	-

Grant date	Expiry date	Exercise price Pence	Share options 2024	Share options 2023
03 August 2022	31 March 2026	20.480	420,989	2,007,400
19 October 2023	30 April 2027	14.304	1,607,809	1,937,201

Grant date	Exercise price	Average grant date share price	Average expected volatility per annum	Average risk-free interest rate per annum	Average dividend yield per annum	Average implied option life in years	Average fair value per option	Amount expenses in 2023
	Pence	Pence					Pence	£000
03 August 2022	20.480	25.60	95.00%	2.93%	0.00%	3.08	17.700	(80)
19 October 2023	14.304	13.97	73.00%	4.72%	0.00%	3.03	7.060	37
Total charge for the year (2023: £118,000)								(43)

Warrants

While the Board issues share options to employees, the Board has the discretion to award warrants from time to time to non-employees, such as non-executive directors and third parties.  Typically, warrants are granted and vest upon certain performance targets.  Grant of warrants is solely at the Board's discretion.

Warrants are granted for no consideration and carry no dividend nor voting rights.  When exercisable, each warrant is convertible into one ordinary share.

Set out below are summaries of warrants granted under the Plan:

	Average exercise price per warrant 2024	Number of warrants 2024	Average exercise price per warrant 2023	Number of warrants 2023
	£		£
01 November	0.670	11,802,720	0.540	15,702,720
Granted during the year	-	-	-	-
Exercised during the year*	-	-	0.049	(900,000)
Lapsed during the year	0.585	(6,802,720)	0.210	(3,000,000)
31 October	0.770	5,000,000		11,802,720
Vested and exercisable at 31 October		-		3,401,360

Grant date	Warrant price	Average grant date share price	Average expected volatility per annum	Average risk-free interest rate per annum	Average dividend yield per annum	Average implied warrant life in years	Average fair value per warrant	Amount expenses in 2024
	Pence	Pence					Pence	£000
13 October 2020	19.5	18.56	102.76%	(0.02)%	0.00%	1	7.01	-
Total charge for the year (2023: £NIL)								-

Grant date	Warrant price	Average grant date share price	Average expected volatility per annum	Average risk-free interest rate per annum	Average dividend yield per annum	Average implied warrant life in years	Average fair value per warrant	Accounted as equity in 2024
	Pence	Pence					Pence	£000
15 November 2021	58.8	58.8	59.1%	0.65%	0.00%	2	6.3	-
15 November 2021	58.8	58.8	59.1%	0.65%	0.00%	2	11.3	-
15 November 2021	58.8	58.8	59.1%	0.65%	0.00%	2	9.9	-
Accounted as equity (2023: £NIL)								-

In the case of the ABB warrants in the table above, the warrant life is two years from the date of vesting.  The first tranche of 3.4 million warrants have fully vested and expired on 4 February 2024 without having been exercised.  Under the revised agreement signed on 28 March 2023, ABB will invest the £2.0 million balance into newly issued share capital, which means that the original milestones 1 and 2 no longer apply. During 2024 the related warrants have been cancelled.

Warrants outstanding at the end of the year have the following expiry dates and exercise prices.

Grant date	Expiry date	Exercise price	Warrants 2024	Warrants 2023
13 January 2021	13 March 2025	0.770	5,000,000	5,000,000
15 November 2021	04 February 2024	0.590	-	3,401,360
15 November 2021	24 months after vesting	0.590	-	1,700,680
15 November 2021	24 months after vesting	0.590	-	1,700,680
			5,000,000	11,802,720

*             These warrants represent share-based payments which have been accounted for under IFRS 2 and disclosures have been made which are required for share based payments, these can be found in notes 9 and 25.

26.            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 this financial information.

Principal financial instruments

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

				Year ended 31 October 2024		Year ended 31 October 2023
		Note		£000		£000
Financial instruments held at amortised cost:
Cash and cash equivalents		20		15,374		27,366
Restricted cash				433		258
Trade and other receivables		19		4,676		324
Total financial assets held at amortised cost				20,483		27,948
Trade & other payables		21		3,151		2,304
Leases		22		664		1,124
Total financial liabilities held at amortised cost				3,815		3,428

There is no significant difference between the fair value and book value of financial instruments.

The Company does not enter 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.

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.

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 information as shown below:

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Cash and cash equivalents				15,374		27,366
Restricted cash				433		258
Tarde and other receivables				4,676		324

Credit risk with cash and cash equivalents is reduced by placing funds with 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 were temporarily held on short-term deposit.  The credit risk provision is estimated on a case by case basis taking into account public information of the counterparty and payment history and no loss is expected.  No expected credit loss has been made as at 31 October 2024 and 2023 as they are estimated to be de minimis.

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 payables are all payable within two months. The Board receives cash flow projections on a regular basis as well as information on cash balances.

The following table shows the Company's financial liabilities by relevant maturity grouping based on contractual maturities.  The amounts included in the analysis are contractual, undiscounted cashflows.

	Less than one year	One to two years	Two to five years	Total contracted cash flows	Carrying amount
31 October 2024	£000	£000	£000	£000	£000
Trade & other payables	3,151	-	-	3,151	3,151
Lease liabilities	525	144	19	688	664
Total financial liabilities	3,676	144	19	3,839	3,815

	Less than one year	One to two years	Two to five years	Total contracted cash flows	Carrying amount
31 October 2023	£000	£000	£000	£000	£000
Trade & other payables	2,304	-	-	2,304	2,304
Lease liabilities	518	518	151	1,187	1,124
Total financial liabilities	2,822	518	151	3,491	3,428

See also note 22, which sets out the lease liabilities for less than 12 months and more than 12 months.

Interest rate risk

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

27.            Related party transactions

Details of Directors' remuneration are given in note 10. A full list of subsidiaries and joint ventures is given in note 28.

Joint venture

During the year the Company made sales of £3,829,000 to Speedy Hydrogen Solutions Limited, a joint venture in which the company is a venturer (refer also to note 16 and note 28). As at the year end, £4,114,000 is receivable from Speedy Hydrogen Solutions Limited and it is included within trade and other receivables (refer to Note 19).

Remuneration of key management personnel

Key management personnel are those individuals who have authority and responsibility for planning, directing and controlling the activities of the Company. For AFC Energy Plc these are considered to be all executive and non-executive directors in office during each financial year.

				Year ended 31 October 2024		Year ended 31 October 2023
				£000		£000
Short-term employee benefits:
Salaries and bonuses				1,101		1,526
Termination benefits				234		-
Benefits in kind				52		74
				1,387		1,600
Post-employment benefits:
Defined contribution pension plans				28		46
				1,415		1,646
Share-based payments				756		629
Total				2,171		2,275

Aggregate gains made by directors on the exercise of share options and warrants was £nil (2023: £129,225).

During the year the directors, in aggregate, subscribed for a total of 666,666 ordinary shares for a total consideration of £100,000.

28.            Joint venture, subsidiary and ultimate controlling party

The company controls 50% of the voting rights of joint venture, Speedy Hydrogen Solutions Limited, which is accounted for and disclosed in accordance with IFRS 11 Joint Arrangements. The joint venture is registered in the United Kingdom with a company number 15264396. The address of the registered office is Chase House 16 The Parks, Newton-Le-Willows, Merseyside, United Kingdom WA12 0JQ.  The principal activity of the joint venture is the leasing of hydrogen fuel cells.

On 29 August 2024, the company incorporated Hyamtec Limited, the only subsidiary of the company.  The subsidiary is registered in the United Kingdom with a registration number 15924441. The address of the registered office is Unit 71.4 Dunsfold Park, Cranleigh, Surrey, United Kingdom, GU6 8TB. The subsidiary is 100% owned by the company and it has not traded since incorporation. Total unpaid share capital of £100 is included within other payables on the company statement of financial position.

There is no ultimate controlling party.

29.            Events occurring after the end of the reporting period

None of which are disclosable.

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