AFC Energy Quarterly Newsletter - September 2016
I am pleased to provide an overview of the Company's activities for the quarter ended 30th September 2016.
· New Leadership Team
· Commercial and Strategic Relationships
· Technology & Product Development
· Receipt of R&D Tax Credits
· Launch of new brand identity
New Leadership Team
Given AFC Energy's ongoing transition from an R&D-focused technology company to a commercial business, I decided to establish a new leadership team, reporting directly to me.
Our recent appointment Bill Suglani is our new Head of Finance and Company Secretary. Bill joined us from BP Plc where he spent 22 years in a wide range of finance and commercial leadership roles, both in the UK and the US. In his most recent role as Group Finance and Control Director, Bill was responsible for ensuring and maintaining a robust and effective financial controls and reporting environment, leading the delivery of a portfolio of key internal audits and various change management and finance transformation projects. Bill was further responsible for preparing quarterly reporting and presentations for the BP Plc Group CFO, Main Board Audit Committee and Finance leadership team. He previously qualified as an ACA, working with KPMG in the UK. Bill is experienced in leading finance and shared services teams with full P&L, cash, balance sheet and statutory accounts responsibility, and end to end financial planning, performance management and reporting across multiple global and culturally diverse operations. We are very pleased to welcome Bill to AFC Energy in this key leadership role.
In addition, Christopher Reynolds, who has been with AFC since June 2010, was promoted to the new position of Head of Technical & Operations. Christopher has provided an excellent contribution to AFC over the past six years leading much of the work undertaken in the area of manufacturing and quality control, as well as providing leadership roles across several areas of the Company, including significant contributions to the fuel cell development team. In particular, Christopher is leading AFC's Joint Development Agreement initiative with De Nora and is welcomed to this new and important role in the Company's commercialisation strategy.
And last but in no way least, Nick Ploumis, who has been with AFC since 2014 as Project Manager and led the successful project management and delivery of the POWER-UP project in Stade becomes our new Head of Projects. Nick also assumes responsibility for AFC's project-related business development activities, including managing the plantIng strategic engineering partnership.
My congratulations go out to all three.
On 26th August, we announced the departure of our Finance Director, Christopher Tawney, in order to pursue other business interests. Christopher joined AFC Energy in 2014 and I would again like to thank Christopher for the contribution made to the business in the last two years and wish him every success in the future.
Commercial and Strategic Relationships
Our active dialogue with prospective global industrial partners successfully culminated this quarter in the signing on 5th August of one of the Company's most important strategic agreements since its origination; a Joint Development Agreement ("JDA") with Italy's Industrie De Nora S.p.A. ("De Nora"), a global leader in the field of electro-chemistry and electrodes. We're very pleased to have a quality world class technology partner in De Nora collaborating with our technical team; and with both teams now actively engaged in exchanging ideas on technical enhancements, we are already starting to see the fruits of this initiative both in technology development and in potential new commercial markets to pursue. Importantly, the JDA with De Nora aims to facilitate a further improvement in the performance characteristics of our fuel cell technology and accelerate the timescale for achieving our targeted key metrics for: power, longevity, reliability, efficiency and cost. We look forward to providing further updates to the market on the outcomes of the JDA with De Nora, believing this collaboration will present a material opportunity for both parties in the near term for the enhancement of shareholder value.
Elsewhere, we are acutely aware of the market's desire to see commitments for the placement of AFC Energy's fuel cell system into the global energy market; indeed this is an important stated milestone for the Company this calendar year. Negotiations are continuing with commercial parties interested in working with AFC Energy in this regard and we continue to strive to meet the commitments as stipulated within the milestones for this year.
Technology & Product Development
In addition to the key developments highlighted above in AFC Energy's collaboration with De Nora, I was very pleased that the team accomplished Milestone 4 of the 2016 Strategic Milestones ahead of schedule when in early July we announced completion of the design and basic engineering of the new 10kW fuel cell system and its accompanying balance of plant. We continue discussions with potential supply chain and delivery partners for the 10kW system which is also likely to provide the basis for the system adopted in the Alkammonia project currently underway in conjunction with the EU and project partners.
I'm also happy to report that validation testing of our Generation 2 fuel cell stacks commenced on schedule in September and is ongoing at our test facilities in Dunsfold, UK and Stade, Germany. Notably, during the past three months, through improvements in stack design and build quality delivered through the Gen2 development programme, we have achieved over 180% improvement in fuel cell stack continuous operating hours and over 320% improvement in total stack running hours over the past quarter, further validating the incredible work our technical teams have and continue to deliver for the Company. I hope and expect the collaboration with De Nora will further enhance these metrics in the short term.
Meanwhile, solid progress continues with the larger 1MW scale system (Milestone 5). Design concepts have been completed by our engineering partner plantIng and we are still on target for this system to be available for procurement next year.
Receipt of R&D Tax Credits
In the past quarter, AFC Energy received £927,000 from HMRC related to the Company's claim for R&D tax credits over the last financial year. The increase in UK R&D tax credits relative to prior years relates primarily to the incremental funding of the Stade project and associated costs in technology development and upscaling. Importantly, we also commissioned a review of prior year's R&D tax credit claims where incremental unclaimed expenses were identified and lodged for payment.
AFC Energy also received a €135,000 German VAT refund paid in the first half of this year. Further, for our EU-funded project Alkammonia initiative - a proof of concept system designed to provide power in remote applications - AFC Energy received its share for the project from the EU's Fuel Cell and Hydrogen Joint Undertaking (FCH JU), amounting to €181,000. This was for costs incurred for the period 1st November 2014 to 30th April 2016.
Launch of new brand identity
Last month, we announced the launch of the Company's new brand identity reflecting its planned transition to a commercial company. This included a new logo and new website, which I hope you find easier to navigate and source information.
Finally, I would like to thank all the staff, partners and contractors working with AFC together with the EU's FCH JU, and the Board, for their continued support.
Chief Executive Officer
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ('MAR). Upon the publication of this announcement via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.
This information is provided by RNS