Improved manufacturing capability

· Manufacturing capability modernised and scaled up to support the production of an initial fleet of hydrogen powered generators for the joint venture with Speedy.

Growing demand for clean energy solutions - TAMGO

· First sale under the TAMGO Distribution Agreement of a hydrogen fuelled power generator plus battery energy storage system (BESS) into the MENA region.

Launch of Hyamtec Division for Ammonia Cracker technology

· Accelerated development activity in ammonia cracking, a critical technology for localised hydrogen production that holds immense potential in industrial decarbonisation, and brought this within a new division; Hyamtec.

Gary Bullard, Chief Executive Officer of AFC Energy, commented:

"2024 has been a landmark year for AFC Energy. Our performance reflects the solid progress we have made in expanding our reach and capabilities. The recent expansion of our manufacturing capacity has enabled us to meet growing demand, including the delivery of an initial fleet of generators for our joint venture with Speedy Hire. This achievement, alongside advancements in our ammonia cracking technology within the new Hyamtec Division, underscores our commitment to driving decarbonisation across diverse industries.

"Our hydrogen solutions have resonated strongly within key sectors, particularly construction, where clients are increasingly prioritising sustainable alternatives to diesel. As we look forward, we are focused on further scaling production, optimising operational efficiency, and strengthening strategic partnerships to accelerate growth. With our innovation-led approach, I am confident that AFC is well-positioned to lead in the transition to a clean energy future."

Financial Performance

Revenue (unaudited)

The Company recognised unaudited revenue of approximately £4.0 million for FY24, driven primarily by sales of hydrogen fuelled power generators to Speedy Hire Services (SHS) for lease to customers of Speedy. Future sales to SHS will be based on the rate of take-up by lease customers, along with the customer feedback and use data being gathered as part of each deployment.

Also included within revenue is the first sale under the, previously announced, TAMGO Distribution Agreement of a hydrogen power generator plus battery energy storage system (BESS).

The generator and BESS mobilised to ACCIONA earlier this year is currently earning lease revenue on a six-month pre-purchase trial ending in FY25. It is performing well and on trial completion ACCIONA has the option to extend or purchase, at which point the related sales revenue would be recognised.

Cash and net receivables (unaudited)

During FY24, the Company raised £15.8 million (before expenses) by way of an institutional placing, a retail REX offering and purchases by several directors. At 31st October 2024, the Company held unaudited cash and cash equivalents of £15.4 million and unaudited trade receivables less trade payables of £2.5 million.

The year end unaudited cash balance includes the receipt of £2.7 million in respect of the FY23 R&D tax credit claimed by the Company. This balance received is £0.6 million greater than that carried in the FY23 balance sheet as the Company qualified for an enhanced recovery rate under recent legislation as an R&D intensive medium sized company.

As expected, the unaudited cash burn for overheads equated to approximately £1.3 million per month. A programme of FY25 cost savings, including reduced R&D spending, is expected to reduce this to approximately £1.2 million per month.

Operational Performance

Fuel Cell Division: Key Developments

The Fuel Cell Division continues to be the main driver of AFC's growth, with significant progress made in scaling the manufacturing of air-cooled generators for deployment across the construction and energy sectors. These generators use hydrogen as a fuel and are used to generate electricity for off-grid applications as a zero-emission alternative to traditional diesel generators.

Considerable effort has been put into building out our first pilot manufacturing line. Despite early challenges, we have achieved our production and quality targets for the year. Overcoming the initial challenges drove us to make faster progress in diversifying and expanding our supplier base, implementing more agile and cost-effective methods for production, and establishing outsource manufacturing partnerships for key components and assemblies. Specifically, we made significant progress with our manufacturing partner Illuming in the production of our fuel-cell stacks and have begun the first stage of our outsourced manufacturing partnership with Zollner, with the production of key electrical and mechanical assemblies for our generators.

Speedy Hydrogen Solutions ('SHS') - our JV with Speedy Hire plc ('Speedy')

SHS has been a major area of focus over the past several months and as well as the successful production of the initial fleet of generators, we have secured access to specialist equipment like customised Battery Energy Storage Systems (BESS) through our partnership with Speedy ancillary equipment, and reliable hydrogen fuel supply.

Reception by customers has been very positive and we have worked closely with the Speedy teams, site management personnel, bid leads, and health and safety teams to deliver fully managed solutions into real-world applications and to deliver the levels of service that customers expect from Speedy.

We have developed a robust commercial pipeline of opportunities, largely with premier construction and infrastructure companies. While the initial deployment of generators has been into trial or training environments to build experience and the full value proposition, we are now progressing to live use applications with several leading construction companies.

Our hydrogen generators have a unique profile in terms of efficiency and output. In many applications, a 30kW hydrogen generator can replace a 100kW diesel generator. Combining our generators with an intelligent BESS and other renewable sources can offer hybrid power systems that improve fuel efficiency and eliminate carbon emissions, which is crucial for the sectors and customers we target and support.

Early client engagement has indicated that there could be increased opportunity through expanding the role of SHS to address broader customer needs using hybrid power systems. We also have received customer interest in having both rental and purchase options, as well as possible "try and buy" approaches. We have agreed with Speedy to investigate expanding the role of SHS to address these and other opportunities.

Other Fuel Cell activity

Our first generator deployment into a live site, managed directly by the customer, was into Acciona in Spain. We have been getting practical operational feedback, refining the use of the BESS and helping improve our software capability, supporting the roll-out with SHS. Our generators also provide us with real-time telemetry allowing us to ensure optimum performance.

We recognised our first generator sale into the Middle East with our exclusive distributor in the region, TAMGO, which marks an important step forward in a market that we see as offering substantial opportunity over the coming years. We are actively engaging and supporting TAMGO in building a strong commercial pipeline within the MENA region which includes the submission of tenders for various opportunities within the region to deploy zero-emission hybrid systems comprising our generators, BESS, and solar arrays.

As part of our broader efforts to support the UK's decarbonisation goals, AFC has also been awarded funding through the Red Diesel Replacement (RDR) project. We are developing both a new air-cooled and large liquid-cooled (200kW) generator which are on target to be deployed into two quarries in 1Q 2025.

Especially in the UK, access to a reliable and cost-effective supply of hydrogen together with effective delivery mechanisms is critical. We continue to make good progress with hydrogen providers and distributors. We have also made our own investments, including in our own on-site ammonia cracker facility which can produce up to 400kg of fuel-cell grade hydrogen a day, and in two NanoSun Transportable Hydrogen Storage Systems which can each hold 435kg of hydrogen fuel (sufficient to power one of our generators for over a month in live operation).

Hyamtec Division

The Hyamtec Division, which leads our efforts in ammonia cracking and hydrogen generation, is a critical part of AFC's strategic roadmap for growth. 50% of global emissions come from the hard to abate heavy industrial sectors where hydrogen is an obvious alternative to existing fossil fuels. However, transporting vast quantities of hydrogen to most industrial sites is impractical without a network of pipelines. The alternatives, such as electrolytic hydrogen generation on-site are often impractical as they require significant electrical power which the current grid is not scaled for, nor would such electricity necessarily be produced from renewable sources.

Our approach will allow an alternative where these companies could deliver ammonia to site and locally create their own hydrogen in a cost-effective way, with little energy required. In the medium term, we see this approach significantly reducing emissions and potentially being as cost-effective as fossil-fuel alternatives. Ammonia is one of the most widely used, commoditised and available industrial chemicals, already well-understood by these companies, and easy to transport to sites in the quantities needed.

Thanks to the support of the UKRI Government grant we have been making significant headway to demonstrate a version of our ammonia cracker technology integrated with a lightly modified internal combustion engine. We now also see immediate applicability of this technology in powering multi-megawatt engines such as those in distributed power generation, marine and mining. The same cracker technology can also produce high grade hydrogen where required on-site, for example to fuel a complete zero-emission large construction site. Here the hydrogen produced could fuel hydrogen combustion engines (as in large diggers), and be used for heating, lighting and for powering hydrogen generators such as AFC provides, for local electrical power and charging vehicles.

This year, the Hyamtec team has made significant progress in bringing our site demonstration cracker unit to market. This unit, scheduled for first commercial deployments in Q4 2024, is smaller than the large-scale systems we aim to deploy in the future, but it offers an efficient and cost-effective solution for initial trials.

We are building a strong network of partners keen to engage in early trial activity which we will use to refine the proposition and support our continued development during the coming year. We expect to see several such deployments and initial revenue generated by this activity in the next financial year.

Outlook

Looking ahead, AFC Energy's strategic focus for FY25 will centre on building demand and scaling up production of our hydrogen-powered generators, through deepening relationships with key partners like Speedy Hire and TAMGO, and through investigating opportunities to accelerate production capability.

We believe Hyamtec represents significant but unrecognised value to our shareholders, and we have a clear programme to develop and demonstrate our world-leading capability through partners and early-adopters.

We are pleased that the new UK Government has progressed several funding and policy measures that are favourable to our corporate objectives. These include the creation of the National Wealth Fund, capitalised with £27.8 billion, especially with green hydrogen, ports and green steel making up three of its five priority areas. The new Industrial Strategy Green Paper confirms that Advanced Manufacturing and Clean Energy Industries are to be among 8 sectors identified with "highest growth potential". The Government has also progressed £22 billion in funding for the carbon capture schemes in the north of England, and the Budget re-committed funding for the 11 HAR1 green hydrogen production projects.

As previously announced, we are pleased that John Wilson will take on the role of CEO on 6 January 2025.

Investor Presentation

The Company will provide a live presentation via Investor Meet Company at 2.00pm on Thursday 7 November, 2024. The presentation will be open to all existing and potential shareholders and will include a Q&A session.

Investors can sign up to Investor Meet Company for free and add to meet AFC Energy via:

https://www.investormeetcompany.com/afc-energy-plc/register-investor

Investors who already follow AFC Energy on the Investor Meet Company platform will automatically be invited.

ENC Receives Order for Three Zero Emissions Axess® EVO-FC™ Hydrogen Fuel Cell Buses From Rochester-Genesee Regional Transportation Authority (RGRTA)