Report & Accounts
for the year ended 31 October 2009
Alkaline fuel cell systems
for clean electricity
Report & Accounts for the year ended 31 October 2009
AFC Energy develops low-cost alkaline fuel cell
systems that use hydrogen to produce clean electricity.
AFC Energy’s fuel cell systems are developed with commercial viability as the key driver and
in this regard we have re-engineered proven alkaline fuel cell technology:
• High efficiency levels. Using readily available hydrogen and air as the source
of oxygen, electrical efficiency is up to 60% which compares to around 30% for
conventional electricity generating technology.
• Low cost materials. Electrodes are made from proprietary materials that cost less than
5% of platinum electrodes.
• Low temperature and pressure. Operating at less than 100 degrees centigrade
enables us to use plastic mouldings for many parts.
• Hydrogen sealing. By using low pressures, hydrogen is easily sealed within the system.
• Thermal management. By using a circulating liquid electrolyte, we prevent excessive
heat build up at the electrodes.
• Balance of plant. The majority of components are off-the shelf and mass
manufactured for other uses enabling us to benefit from these economies of scale.
• Value engineered for assembly. The component count has significantly reduced and
commercial units are designed for easy assembly.
AFC Energy has significantly reduced the cost of its technology to make its fuel cell
systems a commercially compelling product.
Contents
•
About AFC Energy
PlC 1
•
Chairman’s Statement
•
Operating and Financial Review
•
Directors’ Report
•
Statement of Directors’ Responsibilities
•
Independent Auditors’ Report
•
Income Statement
•
Balance Sheet
•
Cash Flow Statement
•
Statement of Changes in Equity
•
Notes forming part
of the Financial Statements
•
Notice of Annual General Meeting
•
Form of Proxy
•
Directors, Company Secretary
and Advisers
2
4
8
13
14
15
16
17
18
19
34
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AFC ENERGY PLC Report & Accounts 2009
About AFC Energy plc
Operational and financial highlights
• Successful trial of initial Alpha fuel cell system at AkzoNobel in April 2009
• Second chlor-alkali partnership signed with Ineos ChlorVinyls
• Significant progress in both electrode specification and system design
• 5 further patents applied for
• Technical and management team strengthened to support anticipated growth
• Operating costs further reduced
Since the period end
• £2.2 million raised through share placing and option/warrant conversions
• Cash balance, at end February 2010 of £3.19 million
• Heads of Agreement signed with Linc Energy to exploit underground coal gasification
• SuperGreen Power Station project initiated with WSP Group plc, CEL International and
Air Products as confirmed partners
• Agreement with Centrica plc for reservation of future capacity
Ian Balchin, CEO commented,
Our objective is to develop and commercialise an alkaline fuel cell system for the 21st
century at a significantly lower cost than any other fuel cell system. We have made
considerable technical progress this year and have deepened and widened our commercial
relationships with key partners. Our Alpha system fuel cell will be further tested by both
AkzoNobel and Linc Energy during 2010 and we remain on track to deliver our first 50kW
unit in 2011.
Tim Yeo, Chairman added,
I am delighted that the new management team has accelerated the technical and
commercial development of the Company beyond R&D and towards revenue. I firmly
believe that AFC Energy is now fully equipped to prioritise and develop its many
commercial partnerships during its next phase.
1
AFC ENERGY PLC Report & Accounts 2009
Chairman’s Statement
The Company remains focused on its goal of developing fuel
cells for industrial companies to generate electricity from the
hydrogen that they produce as a by-product.
Introduction
It is a pleasure to report the Company’s substantial
progress during the year to 31 October 2009. We have
delivered a fuel cell system to our first commercial
customer, AkzoNobel, and have built on that strong
foundation with a range of additional, world class
partnerships. These include, INEOS ChlorVinyls and,
Waste2Tricity Ltd (which has entered into a relationship
with Alter NRG Westinghouse). Since the end of
the financial year, progress has accelerated further
and commercial relationships have been formed
with Centrica, WSP Environment and Energy, CEL
International, Air Products, Linc Energy and B9 Coal.
During the year the Company’s technical progress
accelerated significantly and was validated by the
second independent review of AFC’s technology by the
Centre for Process Innovation (CPI) which we reported in
November 2009. We delivered an Alpha fuel cell system
to AkzoNobel’s Bitterfeld site (chlor-alkali) in Germany in
April 2009. Following installation, integration and load
cycling tests, the first electricity was exported from this
system to AkzoNobel’s local grid during tests in June.
Strategy
The Company remains committed to developing and
commercialising low cost alkaline fuel cell systems that
generate clean electricity from hydrogen feedstocks
that are widely available directly or indirectly, from many
different sources.
The Company is addressing the chlor-alkali industry
directly and will work with partner organisations to
access additional markets. The Letter of Intent signed
by the Company in August with INEOS ChlorVinyls
achieves the goal set out in last year’s report to seek
additional customers from within the chlorine and
chlorate industries.
The Company expects that, following an initial period
of direct sales, it will move to a business model where it
supplies fuel cell systems under an ESCO (Energy Supply
Contract), a well established model which enables us
to participate in a share of the revenue generated by
our fuel cell systems rather than from the sale of capital
equipment. This mechanism has the potential to enable
a faster, more profitable roll out of the technology.
Partnerships
In February 2009 the Company formalised its agreement
with Waste2Tricity Ltd for municipal energy from waste
applications. Waste2Tricty is currently working with
waste gasification operator, Alter NRG Westinghouse.
Since the year end the Company has become more
closely involved in the Underground Coal Gasification
(‘UCG’) sector, recognising it as the largest potential
market that we have yet reported on for our low cost
fuel cell technology. On 8th December 2009, AFC signed
a binding Heads of Agreement with B9 Coal Limited
and Linc Energy Limited (ASX: LNC), Australia’s leader in
clean coal technology. Since then we have configured
and assembled an Alpha fuel cell system which is now
ready for shipping to an operational UCG plant in
Chinchilla, Australia, and for which our first payment
has been received.
B9 Coal Limited also has an agreement with UCG
developer, Thornton New Energy, who have rights to
a major coal field under the Firth of Forth in Scotland.
The Company has also initiated its SuperGreen Power
Station demonstrator project. This initiative will
commence with the demonstration of a 50kW fuel cell
system and, subject to commercial support, it will lead
to a 1MW power station demonstrator.
Finance
During the year the Company has continued to
implement a tight control on its operating expenditure
whilst making modest investments in capital equipment
and processes to reduce the overall development cost
and timescale. Operating costs during the six months
to 31 October 2009 were £160k on average, compared
with £250k on average for the same period of the
previous year.
A successful share placing was completed in December
2009, raising £2 million after expenses. We received
strong support from our existing institutional
shareholder base and welcomed new institutional and
private investors. We remain grateful for the continued
support of all our shareholders.
2
AFC ENERGY PLC Report & Accounts 2009
Operating Framework
Concerns about the high level of greenhouse gas
emissions from traditional methods of electricity
generation are increasing world wide. In the United
States the Obama administration is addressing this issue
far more urgently than its predecessor. In Europe efforts
to develop low carbon methods of producing electricity
are intensifying. In Asia similar work is under way.
This is an extremely favourable background for the
Company’s operations. Financial incentives for the use of
our technology are likely to increase. Customers, actual
and potential, are becoming more concerned about their
carbon footprints as these come under closer scrutiny
from governments, regulators, other businesses and the
general public.
The Company is therefore well placed to contribute to
the global shift to lower carbon technology.
Management and Board
During the year, we have reshaped the team working
within the Company to match its objectives. In
particular, we have made senior appointments in
materials, modelling and production management. It is
the intention of the Board to ensure that all staff receive
share options in the Company to help ensure that the
objectives of individuals are aligned with those of the
Company and also to reward the value that is created.
Ian Balchin joined the Company during October 2008 as
part time Managing Director. I am pleased that following
his considerable efforts and positive contribution to the
Company’s progress he was appointed to the Board as
Chief Executive Officer during November 2009.
Dr Gene Lewis, who was originally recruited to the
Company at the end of 2008 as Chief Technical Officer,
was appointed to the Board as Technical Director in
July 2009. He has demonstrated significant technical
achievements and under his leadership the Company’s
technical programme is now back on track.
David Marson was appointed to the Board as Finance
Director in July 2009 having commenced work with the
Company in November 2008. He has used his
considerable experience to implement best practice and
quality procedures which have significantly improved the
Company’s financial performance.
During the year Harry Epstein stepped down as a Non-
Executive Director although he continues to be available
to provide advice to the Company on supply chain
matters and commercial opportunities. Mike Mangan,
who has served as a Non-Executive Director since before
the Company’s admission to AIM will be retiring from
the Board in May 2010 although his technical skills will
still be available to the Company as required.
Additionally Terry Walsh who has served as the
Company’s Commercial Director will leave the
board with effect from today to focus on the
chlor-alkali sector.
I would like to thank all three of these for their hard
work and help in bringing the Company closer to
achieving its operating goals.
Since the recruitment of Ian Balchin, Gene Lewis and
David Marson I am delighted that their commercial,
operational and technical skills have been fully
unleashed to accelerate the technical and commercial
development of the Company beyond R&D and
towards revenue. I firmly believe that AFC is now fully
equipped to prioritise and develop its many commercial
partnerships during its next phase. I look forward to
reporting on this next year.
On behalf of our newly-strengthened Board, I wish to
thank all the Company’s employees for their continued
efforts on behalf of shareholders, customers and,
ultimately, the environment.
Tim Yeo
Chairman
10 March 2010
3
AFC ENERGY PLC Report & Accounts 2009
Operating and Financial Review
We believe that the successful commercialisation of AFC Energy’s
fuel cell system technology will be as important to a hydrogen
economy in the 21st century as the internal combustion engine
was to the petrochemical industry in the 20th century.
We have made some important changes to our technical
team to further strengthen key areas such as materials,
fluid modelling, value engineering and manufacturing.
Our development facility has been significantly upgraded
during the year to improve the quality, quantity and
throughput of development work. Iterative work on
catalyst materials can now proceed around thirty times
faster than it was at the start of the reporting period.
We now have the capability to produce up to 1000
electrodes per day, depending upon the exact processing
conditions. Our work focuses on non-precious metal
catalysts using materials which can be less than 5% of
the cost of platinum.
At the core of our system is the electrode cartridge,
comprised of a stack of individual electrochemical cells.
During the period we made significant progress with
electrode materials and the technology for collecting
the electrical current from the cells. The technical
programme is continuous. However, we periodically
consolidate our developments into a new generation of
electrodes for use in the fuel cell system tests.
Since our fuel cell system is designed to be operated at
less than 100 degrees centigrade we are able to choose
from many low cost materials for its construction. This
relatively low temperature of operation means that we
generate water rather than steam as a by-product of the
system and so no pressure vessels are required. This also
enables us to keep construction costs low.
We have also developed a low cost method for ensuring
that hydrogen (the smallest molecule) is sealed within
the fuel cell system.
Alpha Fuel Cell System
The electrical power output of our small (less than a
cubic metre) fuel cell system depends upon the number
and composition of the electrodes used.
Alpha fuel cell systems are capable of automatic
operation and remote monitoring. The performance
of each individual cell can monitored remotely and
maintenance can be scheduled to be carried out only
when required.
Introduction
Alkaline fuel cells are a proven technology that has been
around for decades. AFC Energy is now developing 21st
century alkaline fuel cell systems for generating clean
electricity from hydrogen.
Our principal objective is to re-engineer alkaline
fuel cells systems so that they are significantly more
economic than any other fuel cell system. This will
enable widespread adoption in a number of large
industries. We have applied modern low-cost materials
and processes, as well as computer aided design and
value engineering methodologies, to radically reduce
the cost of manufacture, operation and maintenance
of this technology. Our projected manufacturing costs
per kilowatt hour of installed capacity are on a par with
conventional electricity generating technology.
Our initial target market is the surplus hydrogen
generated by the chlor-alkali industry. This is hydrogen
that currently has little or no economic value and is ideal
for high-efficiency conversion into electricity and water
in our alkaline fuel cell systems. During the year we
Alpha fuel cell system
successfully installed and tested our first fuel cell system
at AkzoNobel’s plant in Bitterfeld, Germany.
Technical Progress
AFC Energy has made significant and rapid technical
progress under the leadership of its Technical Director,
Dr Gene Lewis.
IMAGE TO BE SUPPLIED
4
AFC ENERGY PLC Report & Accounts 2009
and the desire to minimise the carbon footprint in
manufacturing the fuel cell systems. A large proportion
of this system will be reusable and/or recyclable.
SuperGreen Power Station
This initiative will showcase our fuel cell systems, enable
relationships to be built with partner organisations and
raise the profile of the participating companies ahead of
commercial roll out.
Initially, the SuperGreen Power Station will demonstrate
a 50kW large scale fuel cell system in operation close
to our development facility in Surrey, UK. To date
confirmed partners in the project include WSP Energy
and Environment, CEL International and Air Products.
These organisations are respectively involved in
planning and regulations, engineering and gas handling
and supply.
We have demonstrated that an electrode cartridge can
be replaced in 90 minutes. This is the elapsed time from
stopping a working Alpha fuel cell system, replacing the
cartridge and returning it to operating power again.
Large Scale Fuel Cell Systems
Feeding on the results from the Alpha fuel cell
system, work on the large-scale fuel cell system
was started during the year in parallel with work
on the Alpha fuel cell system. It is this larger system
that will become the building block for
multi-megawatt installations.
We are on track to deliver our first 50kW system to
AkzoNobel during 2011. We will use sufficient electrodes
to ensure that it meets the power specification.
The emerging design of the large scale fuel cell system
lends itself to low cost mass assembly. Other than the
possibility that we will manufacture electrodes, the
assembly of fuel cell systems will be carried out by third
parties. This should enable faster roll out and lower
capital expenditure costs for the Company.
The design has also taken into account the need to
minimise the time taken to carry out maintenance
Multi-megawatt SuperGreen power station (concept)
5
AFC ENERGY PLC Report & Accounts 2009
Operating and Financial Review continued
Financial Highlights
During the early part of the year all aspects of the
Company’s operations were reviewed. We were able to
improve operational efficiency and reduce costs whilst
still accelerating the technical development programme.
As a result of the review, our operating cash costs
(excluding changes in working capital) in the year to
31 October 2009 were reduced to £1.9 million,
compared with £2.6 million in the previous year.
A successful placing of 21,500,000 shares was
completed in December 2009, raising £2 million after
expenses and through which we have welcomed a
number of new institutional and private investors. The
Company received a further £167,000 in February 2010
as a result of the exercise of options and warrants issued
in February 2007 as part of a pre-IPO fund raising.
Intellectual Property
We regularly review the intellectual property generated
by our technical programme and apply for patent
protection for significant inventions.
Since reporting last year, the Company has submitted 5
new patent applications covering inventions relating to
low cost alkaline fuel cells.
Health and Safety
The health and safety of our employees and those we
work with is regularly reviewed by and on behalf of
the Board.
Commercial Outlook
Within our chlor-alkali target market we have made
significant progress over the year. In addition to our
contract with AkzoNobel we have entered into a letter
of intent with INEOS ChlorVinyls to develop a hydrogen
fuel cell project at its manufacturing complex in
Runcorn, Cheshire, UK.
Whilst we anticipate selling the first few megawatts of
power generating capacity, our intention is to move to
an Energy Supply Company (ESCo) business model as
soon as possible. Under the ESCo model, AFC Energy
would obtain financing to build and supply fuel cell
systems to a customer and then share the revenue
generated by the installed equipment. Our financial
modelling shows that there is a distinct benefit to the
Company from doing this, especially as we expect, over
time, that new generations of electrode cartridges will
be increasingly lower cost per kilowatt hour of electricity
generated and that we will be able to retrofit them to
installed fuel cell systems.
The models show that our electrode cartridges only
need an operational life of a few months for our fuel
cells systems to become economic and that payback can
be achieved in around 2 years from sales of electricity
generated. In some applications the demineralised water
and heat produced by the fuel cell system will also have
a considerable value.
In summary, we believe that AFC Energy has the
makings of a highly attractive commercial product.
To access other markets the Company will continue
working with and though third parties. In this way we
intend to harness the expertise and resources available
from partner companies to accelerate the timescales
for reaching new markets whilst improving the
likelihood of success and minimising the distraction
this causes the Company.
The second market opportunity that we have developed
is with Waste2Tricity Limited, a company focused on
the efficient conversion of municipal solid waste into
electricity. During the year it has formed strategic
relationships with AlterNRG Westinghouse and
others. It is currently in the process of raising funds
for the next phase of its commercial development. If
successful, Waste2Tricity will purchase an exclusive
UK licence for the Company’s fuel cell technology for
use in the conversion of waste into electricity. Whilst,
this has taken slightly longer than originally envisaged,
it is currently in discussions regarding some major
commercial opportunities which have potential to
generate revenue for the Company.
6
The third market opportunity is Underground Coal
Gasification (UCG). We have also entered into contract
a with B9 Coal Limited and Linc Energy (ASX:LNC). Linc
Energy is a leader in the development of converting
underground coal into synthetic gas for processing into
diesel and/or electrical power. Linc Energy plans to install
hundreds of megawatts of generating capacity over the
next few years.
The carbon dioxide produced from power generation
is relatively easy to capture and has the prospect of
being pumped back underground to be stored in the
caverns created when the coal is burnt out – offering
the tantalising prospect of clean power from coal. Under
the £200,000 contract, we are supplying Linc Energy
with an Alpha fuel cell system for testing with hydrogen
produced from the underground coal gasification
process. Under the agreement, Linc Energy also has the
option to buy up to £2.3 million of new shares in the
Company before the end of 2011.
Elsewhere, as commercial momentum builds we have
begun to take orders reserving future production
capacity. The first order in this regard is from Centrica
plc for 250kW of capacity for use with a flagship
project. We are also in discussions with many other
global organisations about developing future markets.
I look forward to reporting our continued progress
towards commercialisation and thank all those working
for and with the Company for their support.
Ian Balchin
Chief Executive Officer
10 March 2010
AFC ENERGY PLC Report & Accounts 2009
7
AFC ENERGY PLC Report & Accounts 2009
Directors’ Report
The Directors present their report together with the audited financial statements for the year ended
31 October 2009. The comparative period was from 1 November 2007 to 31 October 2008.
Principal activity and review of business developments
The principal activity of AFC Energy plc (or ‘the Company’) was the development of fuel cells.
Reviews of operations, business developments and current projects are included in the Chairman’s Statement and the
Operating and Financial Review.
Results and dividend
The results for the year are set out in the income statement on page 15
No dividends were paid in the year. The Directors do not intend to declare a dividend in respect of the year.
Principal risks and uncertainties
The major risk faced by the business relates to the technical progress in development of the fuel cell system and
the fulfilment of contractual obligations with AkzoNobel. Financial risks include the risk of additional development
expenditure being required to produce a commercial product. The Company’s approach to the management of these
risks is described in the Operating and Financial Review.
Key performance indicators
Given the nature of the business and that the Company is in the development phase of its products, the Directors
are of the opinion that analysis using financial KPIs is not appropriate for an understanding of the development,
performance or position of the business at this time. However, the Directors constantly review overall expenditure
compared to budget and the Company’s cash position.
2009
£
2008
£
1,868,601
3,610,204
Cash and cash equivalents at the year end
Directors and their interests
The Directors who served during the year were:
Tim Yeo
Simon Walters
David Marson
Otto Carlisle
Gene Lewis
Terry Walsh
Chairman
Finance Director (resigned 2 July 2009)
Finance Director (appointed 2 July 2009)
Technical Director (resigned 29 January 2009)
Technical Director (appointed 2 July 2009)
Commercial Director (appointed 30 January 2009)
Dr Michael Mangan
Non-Executive
Harry Epstein
Mitchell Field
Gerard Sauer
Non-Executive (resigned 2 July 2009)
Non-Executive
Chief Executive Officer (resigned 19 December 2008)
8
AFC ENERGY PLC Report & Accounts 2009
On 31 October 2009 the Directors’ interests in the equity share capital of the Company were:
Number of
Ordinary shares
of 0.1p
Number of
Ordinary shares
of 0.1p
2009
227,272
2008
227,272
–
–
–
–
–
–
–
–
2,097,845
2,097,845
Number of
options and
warrants over
Ordinary
shares of 0.1p
2009
Number of
options and
warrants over
Ordinary
shares of 0.1p
2008
2,617,490
1,117,490
500,000
1,000,000
1,000,000
700,000
350,000
–
–
–
350,000
–
Tim Yeo MP
David Marson
Gene Lewis
Terry Walsh
Dr Michael Mangan
Mitchell Field
A Director appointed during or after the year must stand for re-appointment at the first Annual General Meeting
after such appointment. Accordingly, Ian Balchin, David Marson and Gene Lewis offer themselves for re-appointment.
Directors’ remuneration
Name
Tim Yeo MP
Simon Walters
(see note 24)
David Marson
(see note 24)
Otto Carlisle
Gene Lewis
Terry Walsh
Dr Michael Mangan
Harry Epstein
Mitchell Field
Gerard Sauer
Salary
£
45,000
–
Share-based
payment
expense
£
4,147
–
Other
compensation
£
–
23,800
Total
2009
£
49,147
23,800
Total
2008
£
55,998
63,863
857
15,976
16,833
–
21,250
25,000
78,000
20,000
–
–
–
2,064
1,773
2,666
968
–
968
14,942
42,6481
129
–
–
–
–
–
65,962
26,902
80,666
20,968
–
968
90,200
–
–
30,724
20,000
–
14,942
306,577
1 Includes compensation for loss of office. See Note 22
9
AFC ENERGY PLC Report & Accounts 2009
Directors’ Report continued
Directors’ service contracts
Tim Yeo was appointed as Chairman and Non-Executive Director under the terms of a Non-Executive letter dated
20 February 2007 for an indefinite term, subject to a minimum of six months’ notice.
David Marson entered into a consultancy agreement with the Company on 1 November 2008, subject to one
months’ notice by either party (see also note 24).
Gene Lewis’ service contract with the Company commenced on 1 November 2008 for an indefinite term, subject to
six months’ notice by either party.
Terry Walsh service contract with the Company commenced on 23 July 2008 for an indefinite term, subject to three
months’ notice by either party.
Dr Michael Mangan’s services as a Non-Executive Director are provided under the terms of a Non-Executive letter of
appointment dated 14 December 2006 for an indefinite term, subject to a minimum of six months’ notice.
Mitchell Field was elected as a Non-Executive Director at the Company’s AGM on 10 April 2008.
Board changes
Details of changes to the membership of the Board are disclosed in note 22 to the financial statements.
Capital structure
Details of the Company’s share capital are disclosed in notes 16 and 17 of the financial statements.
Shareholder funds have been used to develop the alpha fuel cell system, to undertake testing of the system and to
design the 50kW system that will become the Company’s initial commercial product.
On 10 March 2010, the Company was aware of the following holdings of three per cent or more in the Company’s
issued share capital:
Age of Reason Foundation
Chase Nominees Ltd
Eturab Trade Corporation
Harry Epstein
Giltspur Nominees Ltd
Number of
shares
22,602,420
10,248,000
8,000,000
7,000,000
5,395,260
Approximate
percentage of
the Company’s
issued share
capital
14.98
6.79
5.30
4.64
3.58
Political and charitable donations
Charitable donations in the year amounted to £ nil (2008: £300).
Corporate governance
The Directors seek, as far as is considered appropriate having regard to the size and nature of activities of the
Company, to comply with the Combined Code on Corporate Governance applicable to listed companies. The Board
is assisted in this regard by a number of committees with delegated authority.
10
AFC ENERGY PLC Report & Accounts 2009
The Company’s organisational structure has clearly documented and communicated levels of responsibility, delegated
authority and reporting procedures. The professionalism and competence of employees is maintained through
recruitment, performance appraisal, written job descriptions and personal training and development plans. The Board
supports the highest levels of commitment and integrity from employees. Expected standards of behaviour are set
out in the Staff Handbook, a copy of which is given to all employees.
Audit Committee
The Company’s Audit Committee comprises Tim Yeo, Michael Mangan and Mitchell Field. The Committee meets
at least twice a year and at any other time when it is appropriate to discuss audit, accounting or control issues. The
Committee will meet the external Auditors, without executive Board members being present, to review accounting
and internal control matters.
The Committee’s principal objectives are to review annual and interim financial statements; to review accounting
policies; to review with management and the Company’s external Auditors the effectiveness of internal controls; to
oversee the publication of reserve and resource statements to ensure compliance with best practice under the new
AIM rules; and to review with the Company’s external Auditors the scope and results of their audit. Tim Yeo chairs
the Audit Committee.
Remuneration Committee
The Remuneration Committee’s members are Tim Yeo, Michael Mangan and Mitchell Field who review the
performance of the Executive Directors and set the scale and structure of their remuneration and the basis of their
service agreements. In determining remuneration, the Committee seeks to enable the Company to attract and retain
executives of the highest calibre. The Committee also makes recommendations to the Board concerning allocation of
share options to employees. No Directors participate in discussions or decisions concerning their own remuneration.
This Committee is also responsible for nominating candidates, for the approval of the Board, to fill either executive or
Non-Executive vacancies or additional appointments to the Board.
Details of the Directors’ remuneration, service agreements and their interests in the share capital of the Company are
disclosed in the Directors’ Report.
AIM Rules Compliance Committee
The AIM Rules Compliance Committee comprises Tim Yeo, Michael Mangan and Mitchell Field and meets as
appropriate. The Committee monitors internal procedures, resources and controls to enable the Company to comply
with AIM rules.
Payments to creditors
The Company’s policy is to settle the terms of payment with its suppliers when agreeing the terms of each
transaction, either by accepting the suppliers’ terms or by making the suppliers aware of alternative terms, and to
abide by the agreed terms. Trade creditors of the Company at 31 October 2009 represented 57 days (2008: 50 days)
of annual purchases.
Liability insurance for company officers
The Company has in place a Directors’ and Officers’ insurance policy.
Financial risk management objectives
These are detailed in note 20 to the financial statements.
Research and development
The company invests substantially in research and development and makes claims under the Government’s R&D tax
credit scheme. In the year to 31 October 2009, relevant expenditure totalled £932,085 (2008: £1,288,107).
11
AFC ENERGY PLC Report & Accounts 2009
Directors’ Report continued
Going concern
The Company raised £2,000,000, after expenses in December 2009. The Directors are satisfied that for the
foreseeable future, the monthly cash requirement to meet the development programme agreed with major
customers, including AkzoNobel, will not be significantly greater than that incurred in the year to October 2009.
They expect the Company to receive modest cash receipts from exercise of maturing options and warrants and from
small numbers of sales of development systems. Therefore, the Directors are satisfied that the Company has sufficient
resources to continue its operations and to meet its commitments for the foreseeable future.
Post-balance sheet events
Details of post-balance sheet events are provided in note 22 to the financial statements.
Relations with shareholders
The Board attaches great importance to maintaining good relationships with shareholders. The Board regards the
Annual General Meeting as an opportunity to communicate directly with investors, who are encouraged to attend
and participate.
AGM notice
Notice of the Annual General Meeting of the Company for 2009 is on page 34.
Auditors
A resolution to re-appoint the Auditors of the Company, Jeffreys Henry LLP, will be proposed at the forthcoming
Annual General Meeting. Jeffreys Henry LLP have expressed their willingness to continue as Auditors of the Company.
This report was approved by the Board of Directors on 10 March 2010.
David Marson
Company Secretary
12
AFC ENERGY PLC Report & Accounts 2009
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and financial statements in accordance with applicable
law and International Financial Reporting Standards.
Company law requires the Directors to prepare financial statements for each financial period. Under that law the
Directors have elected to prepare the financial statements in accordance with International Financial Reporting
Standards as adopted for use in the European Union. The financial statements are required by law to give a true and
fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing
those financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed
and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any
time the financial position of the Company and enable them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the company’s website (www.afcenergy.com) and
legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Statement of disclosure to auditor
So far as the Directors are aware, there is no relevant audit information of which the Company’s Auditors are
unaware, and each Director has taken all the steps that he ought to have taken as Director in order to make himself
aware of any relevant audit information and to establish that the Company’s Auditors are aware of that information.
13
AFC ENERGY PLC Report & Accounts 2009
Independent Auditors’ Report to the
shareholders of AFC Energy plc
We have audited the financial statements of AFC Energy plc for the year ended 31October 2009 which comprise
the Income Statement, the Balance Sheet, the Statement of Cash Flow, the Statement of Changes in Equity and the
related notes. The financial reporting framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on page 13, the directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our
responsibility is to audit the financial statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical
Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company’s members as a body in
accordance with Sections 495 to 497 of the Companies Act 2006 and for no other purpose. We do not, in giving this
opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company’s
circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the Directors; and the overall presentation of the financial statements.
Opinion on financial statements
In our opinion the financial statements:
•
give a true and fair view of the state of the Company’s affairs as at 31 October 2009;
•
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
•
have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
•
the information given in the Directors’ Report for the financial year for which the financial statements are prepared
is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
•
adequate accounting records have not been kept, or
•
the financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
•
we have not received all the information and explanations we require for our audit.
Mark Tenzer
(Senior statutory auditor) Date 10 March 2010
for and on behalf of Jeffreys Henry LLP, Statutory Auditor
Chartered Accountants & Registered Auditors
Finsgate, 5-7 Cranwood Street, London, EC1V 9EE
14
AFC ENERGY PLC Report & Accounts 2009
Year ended
31 October
2009
£
Year ended
31 October
2008
£
Note
–
–
–
4,664
–
–
–
–
(2,345,651)
(3,110,515)
(2,280,731)
(2,863,177)
(64,920)
(247,338)
(2,340,987)
(3,110,515)
67,890
(26,651)
150,320
–
(2,299,748)
(2,960,195)
219,220
308,427
(2,080,528)
(2,651,768)
(1.63)p
(1.63)p
(2.51)p
(2.51)p
17c
5
8
9a
10
11
11
Income Statement
Revenue
Direct expenses
Gross profit/(loss)
Other income
Administrative expenses
Analysed as:
Administrative expenses
Equity-settled share-based payments
Operating loss
Financial income
Share of loss of Associate
Loss before tax
Taxation
Loss for the year attributable to equity holders
Basic loss per share
Diluted loss per share
All amounts relate to continuing operations.
The notes on pages 19 to 33 form part of these financial statements.
15
AFC ENERGY PLC Report & Accounts 2009
Balance Sheet
Assets
Non-current assets
Intangible assets
Property and equipment
Trade and other receivables
Current assets
Work in progress
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity attributable to ordinary shareholders
Share capital
Share premium
Other reserve
Retained loss
Total equity
Current liabilities
Trade and other payables
31 October
2009
£
31 October
2008
£
Note
12
13
9b
14
15
16b
308,525
270,069
124,849
703,443
123,740
307,644
1,868,601
2,299,985
307,852
504,458
–
812,310
123,740
592,055
3,610,204
4,325,999
3,003,428
5,138,309
127,683
8,940,379
602,308
127,683
8,940,379
537,388
(6,986,367)
(4,905,839)
2,684,003
4,699,611
18
319,425
319,425
438,698
438,698
Total equity and liabilities
3,003,428
5,138,309
The notes on pages 19 to 33 form part of these financial statements.
These financial statements were approved and authorised for issue by the Board on 10 March 2010.
Tim Yeo
Chairman
David Marson
Finance Director
16
AFC ENERGY PLC Report & Accounts 2009
Cash Flow Statement
31 October
2009
£
31 October
2008
£
Note
Cash flows from operating activities
Loss before tax for the year
Adjustments for:
Depreciation and amortisation
Equity-settled share-based payment expenses
17c
Finance income
Share of loss of associate
Cash flows from operating activities before changes in
working capital and provisions
Corporation tax received
Decrease/(increase) in trade and other receivables
Decrease/(increase) in trade and other payables
Cash absorbed by operating activities
Cash flows from investing activities
Purchase of plant and equipment
Acquisitions of patents
Disposal of plant and equipment
Loans to Associates
Interest received
Net cash absorbed by investing activities
Cash flows from financing activities
Proceeds from the issue of share capital
Costs of issue of share capital
Net cash from financing activities
13
12
9a
8
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at 31 October
15
(2,299,748)
(2,960,195)
345,005
64,920
(67,890)
26,651
293,473
247,338
(150,320)
–
(1,931,062)
(2,569,704)
463,721
38,411
(119,273)
–
54,198
26,157
(1,548,203)
(2,489,349)
(105,192)
(18,820)
12,722
(150,000)
67,890
(193,400)
–
–
–
(1,741,603)
3,610,204
1,868,601
(308,829)
(25,478)
–
150,320
(183,987)
4,400,000
(244,810)
4155,190
1,481,854
2,128,350
3,610,204
17
AFC ENERGY PLC Report & Accounts 2009
Statement of Changes in Equity
For the year ended 31 October 2009
Balance at 1 November 2007
87,683
4,825,189
290,050
(2,254,071)
2,948,851
Share
Capital
£
Share
Premium
£
Other
Reserve
£
Retained
Loss
£
Total
Equity
£
Loss after tax for the year
Total recognised in income and
expense for the year
Issue of equity shares
Share issue expenses
Equity-settled share-based payments
–
–
–
–
40,000
4,360,000
(244,810)
–
–
–
–
–
–
(2,651,768)
(2,651,768)
(2,651,768)
(2,651,768)
–
–
–
4,400,000
(244,810)
247,338
–
247,338
Balance at 31 October 2008
127,683
8,940,379
537,388
(4,905,839)
4,699,611
Balance at 1 November 2008
127,683
8,940,379
537,388
(4,905,839)
4,699,611
Loss after tax for the year
Total recognised in income and
expense for the year
Equity-settled share-based payments
–
–
–
–
–
–
–
–
(2,080,528)
(2,080,528)
(2,080,528)
(2,080,528)
64,920
–
64,920
Balance at 31 October 2009
127,683
8,940,379
602,308
(6,986,367)
2,684,003
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital over the nominal value of these
shares net of share issue expenses.
Other reserve represents the credit to equity in respect of equity-settled share-based payments.
Retained earnings represent the cumulative loss of the Company attributable to equity shareholders.
18
AFC ENERGY PLC Report & Accounts 2009
Notes forming part of the Financial Statements
1. Corporate information
AFC Energy plc (‘the Company’) is a public limited company incorporated in England & Wales and quoted on the
Alternative Investment Market of the London Stock Exchange.
The address of its registered office is Finsgate, 5-7 Cranwood Street, London, EC1V 9EE.
2. Basis of preparation and accounting policies
These consolidated financial statements of AFC Energy plc have been prepared in accordance with International
Financial Reporting Standards (IFRSs), International Accounting Standards (IASs) and International Financial Reporting
Interpretations Committee (IFRIC) interpretations (collectively ‘IFRSs’) as adopted for use in the European Union
and as issued by the International Accounting Standards Board and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
The accounting policies set out below have, unless otherwise stated, been applied consistently in these
financial statements.
Judgements made by the Directors in the application of these accounting policies that have significant effect on
the financial statements and estimates with a significant risk of material adjustment in the next year are discussed
in note 3.
a. Standards, amendments and interpretations to published standards not yet effective.
At the date of authorisation of these consolidated financial statements, the IASB and IFRIC have issued the following
standards and interpretations which are effective for annual accounting periods beginning on or after the stated
effective date. These standards and interpretations are not effective for and have not been applied in the preparation
of these consolidated financial statements:
–
IAS 1: Presentation of Financial Statements (Revised 2008) (effective as of 1 January 2009).
–
IAS 23: Borrowing Costs (Revised 2008) (effective as of 1 January 2009).
–
IAS 27: Consolidated and Separate Financial Statements (Amended) (effective as of 1 July 2009).
–
IFRS 2: Share-Based Payments: Vesting conditions and Cancellations (Amended) (effective as of 1 January 2009).
–
IFRS 3: Business Combinations (Revised) (effective as of 1 July 2009) includes an amendment to the treatment of
minority interests (renamed non-controlling interests), amendments to the calculation of goodwill, a change to
the method of accounting for acquisitions in stages, amendment to the accounting for contingent consideration
and changes to the recognition and measurement of certain assets and liabilities.
–
IFRS 8: Operating Segments (effective as of 1 January 2009).
–
–
IFRIC Interpretation 15: Agreements for the Construction of Real Estate (effective as of 1 January 2009 – not yet
endorsed by the EU).
IFRIC Interpretation 17: Distributions of non-cash assets to owners (effective 1 July 2009, not yet endorsed by
the EU).
–
IFRIC Interpretation 18: Transfers of assets from customers (effective 1 July 2009, not yet endorsed by the EU).
– Amendments to IAS32 Financial Instruments: Presentation and IAS1 Presentation of Financial Statements –
Puttable Financial Instruments and Obligations Arising on Liquidation (effective for beginning on or after
1 January 2009).
19
AFC ENERGY PLC Report & Accounts 2009
Notes forming part of the Financial Statements continued
2. Basis of preparation and accounting policies continued
– Amendments to IFRS1 and IAS27 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
(effective for accounting periods beginning on or after 1 January 2009).
– Eligible Hedged Items (Amendment to IAS 39 Financial Instruments: Recognition and Measurement). Entities shall
apply the amendment retrospectively for annual periods beginning on or after 1 July 2009. This amendment is still
to be endorsed by the EU.
The Directors anticipate that the adoption of these standards and interpretations will not have a material impact
on the Company’s financial statements in the period of initial adoption with the exception of IAS23: Borrowing
Costs (Revised) which will require interest incurred in respect of long term development projects to be capitalised
within the relevant project and of IFRS 3: Business Combinations (Revised), which will require transaction costs
arising on business combinations to be expensed to the income statement as opposed to the existing treatment of
capitalisation, in the event that acquisitions are undertaken.
b. Capital Policy
The Company manages its equity as capital. Equity comprises the items detailed within the principal accounting
policy for equity and financial details can be found in the balance sheet. The Company adheres to the capital
maintenance requirements as set out in the Companies Act.
c. Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding
discounts, rebates, and other sales taxes or duty. Revenue arising from the provision of services is recognised when
and to the extent that the Company obtains the right to consideration in exchange for the performance of its
contractual obligations.
d. Development costs
Development expenditure does not meet the strict criteria for capitalisation under IAS 38 and has been recognised as
an expense.
Prior year laboratory costs have been re-classified from direct expense to administrative expenses as they do not
relate to revenue generating contracts.
e. Foreign currency
The financial statements of the Company are presented in the currency of the primary economic environment in
which it operates (the functional currency) which is pounds sterling. In accordance with IAS21, transactions entered
into by the Company in a currency other than the functional currency are recorded at the rates ruling when the
transactions occur. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at
the rates prevailing at the balance sheet date.
f. Work in Progress
Work in progress is valued at cost, less the cost of work invoiced on incomplete contracts and less foreseeable losses.
Cost comprises purchase cost plus production overheads.
g. Trade and other receivables
Trade and other receivables arise principally through the provision by the Company of goods and services to
customers (trade debtors). They also include other types of contractual monetary assets. These assets are initially
recognised at fair value and are subsequently measured at amortised cost less any provision for impairment.
20
AFC ENERGY PLC Report & Accounts 2009
h. Loans and other receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. After initial measurement, loans and receivables are carried at amortised cost using the effective
interest method less any allowance for impairment. Gains and losses are recognised in profit or loss when the loans
and receivables are derecognised or impaired, as well as through the amortisation process.
The Company’s loans and receivables include cash and cash equivalents. These include cash in hand, and deposits
held at call with banks.
i. Property and equipment
Property and equipment are stated at cost less any subsequent accumulated depreciation and impairment losses.
Where parts of an item of property and equipment have different useful lives, they are accounted for as separate
items of property and equipment.
Leases in which the Company assumes substantially all the risks and rewards of ownership of the leased asset
are classified as finance leases. Leased assets acquired by way of finance lease are stated at an amount equal to
the lower of their fair value and the present value of the minimum lease payments at inception of the lease, less
accumulated depreciation and impairment losses.
Depreciation is charged to the income statement within cost of sales and administrative expenses on a straight-line
basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful
lives are as follows:
– Leasehold improvements
1 to 3 years
– Fixtures, fittings and equipment
1 to 3 years
– Vehicles
3 to 4 years
Expenses incurred in respect of the maintenance and repair of property and equipment are charged against income
when incurred. Refurbishment and improvement expenditure, where the benefit is expected to be long lasting, is
capitalised as part of the appropriate asset.
The useful economic lives of property, plant and equipment and the carrying value of tangible fixed assets are
assessed annually and any impairment is charged to the income statement.
j. Intangible assets
Expenditure on research activities is recognised in the income statement as an expense as incurred.
Other intangible assets that are acquired by the Company are stated at cost less accumulated amortisation and
impairment losses.
Amortisation of intangible assets is charged using the straight-line method to administrative expenses over the
following period:
Patents 20 years
k. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with major banking institutions realisable within
180 days.
21
AFC ENERGY PLC Report & Accounts 2009
Notes forming part of the Financial Statements continued
2. Basis of preparation and accounting policies continued
l. Other financial liabilities
The Company classifies its financial liabilities as:
Trade and other payables
These are initially recognised at invoiced value. These arise principally from the receipt of goods and services. There is
no material difference between the invoiced value and the value calculated on an amortised cost basis or fair value.
Deferred income
This is the carrying value of income received from a customer in respect of the order for five 3.5kW systems which
has not been recognised in the Income Statement pending delivery to the customer. The carrying value is fair value.
m. Leases
Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the
leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the
present value of the minimum lease payments. Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are reflected in profit or loss. Capitalised leased assets are depreciated over the shorter of the
estimated useful life of the asset and the lease term, if there is no reasonable certainty that the Company will obtain
ownership by the end of the lease term. Operating lease rentals are charged to income in equal annual amounts over
the lease term.
n. Financial assets
All of the Company’s financial assets are loans and receivables. Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in an active market. They are included in current
assets at fair value and comprise trade and other receivables and cash and cash equivalents.
o. Share-based payment transactions
The Company awards share options and warrants to certain Directors and employees to acquire shares of
the Company. The fair value of options and warrants granted is recognised as an employee expense with a
corresponding increase in equity. The fair value is measured at grant date and spread over the period during
which the Directors and employees become unconditionally entitled to the options or warrants. The fair value of
the options and warrants granted is measured using a binomial option valuation model, taking into account the
terms and conditions upon which the options and warrants were granted. The amount recognised as an expense is
adjusted to reflect the actual number of share options and warrants that vest only where vesting is dependent upon
the satisfaction of service and non-market vesting conditions or where the vesting periods themselves are amended
by the introduction of new schemes and the absorption of earlier schemes by agreement between the Company and
the relevant Directors and employees. Where options or warrants granted are cancelled, all future charges arising in
respect of the grant are charged to the income statement on the date of cancellation.
p. Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that
the Group will be required to settle the obligation. Provisions are measured at the present value of management’s
best estimate of the expenditure required to settle the present obligation at the balance sheet date and are
discounted to present value where the effect is material.
q. Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
22
AFC ENERGY PLC Report & Accounts 2009
Current tax is the expected tax payable or recoverable on the taxable income for the year, using tax rates enacted
or substantively enacted at the balance sheet date together with any adjustment to tax payable in respect of
previous years.
Deferred tax assets are not recognised due to the uncertainty of the period over which they will be recovered.
3. Significant accounting estimates and judgements
Carrying values of property and equipment.
The Company monitors internal and external indicators of impairment relating to its property and equipment.
Management has considered whether any indicators of impairment have arisen over certain assets relating to these
assets. After assessing these, management has concluded that no impairment has arisen in respect of these assets
during the year and subsequent to 31 October 2009.
Useful lives of intangible assets, and property and equipment
Intangible assets, and property and equipment are amortised or depreciated over their useful lives. Useful lives are
based on the management’s estimates of the period that the assets will generate revenue, which are periodically
reviewed for continued appropriateness.
Income taxes and withholding taxes
The Company believes that its receivables for tax recoverable are adequate for all open audit years based on its
assessment of many factors including past experience and interpretations of tax law. This assessment relies on
estimates and assumptions and may involve a series of complex judgements about future events. To the extent that
the final tax outcome of these matters is different from the amounts recorded, such differences will impact income
tax expense in the period in which such determination is made.
Capitalisation of development expenditure
The Company uses the criteria of IAS38 to determine whether development expenditure should be capitalised. After
assessing these, management has concluded it would not be appropriate to capitalise development expenditure
incurred during the year ended 31 October 2009.
Share-based payments
Certain employees (including Directors and senior executives) of the Company receive remuneration in the form
of share-based payment transactions, whereby employees render services as consideration for equity instruments
(‘equity-settled transactions’).
The fair value is determined by an external valuer using an appropriate pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award (‘the vesting date’). The cumulative expense recognised for equity-
settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has
expired and the Company’s best estimate of the number of equity instruments that will ultimately vest. The profit or
loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and
end of that period.
23
AFC ENERGY PLC Report & Accounts 2009
Notes forming part of the Financial Statements continued
3. Significant accounting estimates and judgements continued
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional
upon a market condition, which are treated as vesting irrespective of whether or not the market condition is
satisfied, provided that all other performance and/or service conditions are satisfied. Where the terms of an equity-
settled award are modified, the minimum expense recognised is the expense as if the terms had not been modified.
An additional expense is recognised for any modification, which increases the total fair value of the share-based
payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification. Where an
equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award,
and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if
they were a modification of the original award, as described in the previous paragraph.
4. Segmental analysis
A segment is a distinguishable component of the Company that is engaged in providing products or services
in a particular business sector (business segment) or in providing products or services in a particular economic
environment (geographic segment), which is subject to risks and rewards that are different in those other segments.
The Company operated in the year in one segment, the development of fuel cells, and in one principal geographic
area, the United Kingdom, but conducted some system tests at AkzoNobel’s site in Bitterfeld, Germany.
5. Operating loss (2008: loss)
This has been stated after charging:
Depreciation of property and equipment
Research and Development expenditure
Amortisation of intangible assets
Equity-settled share-based payment expense
Auditors’ remuneration – audit
Auditors’ remuneration – other services
6. Staff numbers and costs, including Directors
The average number of employees in the year were:
Support, operations and technical
Administration
The aggregate payroll costs for these persons were:
Wages and salaries (including Directors’ emoluments)
Social security
Equity – settled share-based payment expense
24
Year ended
31 October
2009
£
326,858
932,085
18,147
64,920
17,500
7,330
Year ended
31 October
2008
£
276,972
1,288,107
16,500
247,338
18,000
3,965
Year ended
31 October
2009
Number
Year ended
31 October
2008
Number
20
4
24
£
22
4
26
£
1,013,576
1,137,699
112,532
57,843
103,703
198,397
1,183,951
1,439,799
AFC ENERGY PLC Report & Accounts 2009
7. Directors’ remuneration
Wages and salaries
Social security
Equity-settled share-based payment expense
Other compensation (see note 21 & 22)
The emoluments of the Chairman were:
The emoluments of the highest-paid Director were:
Year ended
31 October
2009
£
189,250
15,904
28,385
82,553
316,092
49,147
80,666
Year ended
31 October
2008
£
296,250
28,067
135,321
166,516
626,154
55,998
306,577
The remuneration, details of share options and interests in the Company’s shares of each Director is shown in the
Directors’ Report on pages 8 to 12.
8. Financial income
Bank interest receivable
Loan interest receivable
Total interest receivable
Year ended
31 October
2009
£
66,390
1,500
67,890
Year ended
31 October
2008
£
150,320
–
150,320
9a. Investment in Associate
The Company acquired 25% of the share capital of Waste2Tricity Ltd (W2T) on 17 June 2009 for £2,500 by
converting £2,500 of the £150,000 loan provided to W2T under an agreement of February 2009. The balance of
the loan is repayable in full by 31 December 2010 and accrues interest at 0.5% above base rate. The loan is shown
in Trade and Other Receivable due after more than 1 year.
The Company’s share of the results of its associate was as follows:
Revenue
Profit/(loss)
Assets
Liabilities
Year ended 31 October 2009
–
(26,651)
7,236
18,685
The Company share of W2T losses if the shareholding had been acquired at 1 November 2008 would have
been £51,449.
9b. Loan to Associate
Loan to W2T, including accrued interest
Share of W2T losses after write off of investment
Loan at 31 October 2009
Year ended
31 October
2009
£
149,000
(24,151)
124,849
Year ended
31 October
2008
£
–
–
–
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AFC ENERGY PLC Report & Accounts 2009
Notes forming part of the Financial Statements continued
10. Taxation
Recognised in the income statement
Research and development tax credit – current year
Research and development tax credit – prior year adjustment
Total tax credit
Reconciliation of effective tax rates
Year ended
31 October
2009
£
228,361
(9,141)
219,220
Year ended
31 October
2008
£
301,942
6,485
308,427
Loss before tax
Tax using the domestic rate of corporation tax of 28% (2008: 30%)
(2,299,748)
643,929
(2,960,195)
888,058
Effect of:
Expenses not deductible for tax purposes
Research and development allowance
Research and development tax credit
Depreciation in excess of capital allowances
Losses surrendered for research and development
Other adjustments
Unutilised losses carried forward
Total tax credit for the year
26,037
(195,318)
228,361
58,536
399,631
–
355,043
228,361
76,295
(217,214)
301,942
23,174
592,164
4,060
409,579
301,942
11. Loss per share
The calculation of the basic loss per share is based upon the net loss after tax attributable to ordinary shareholders of
£2,651,768 (2008: loss of £2,651,768) and a weighted average number of shares in issue for the year.
Basic loss per share (pence)
Diluted loss per share (pence)
Loss attributable to equity shareholders
Weighted average number of shares in issue
Diluted earnings per share
Year ended
31 October
2009
Year ended
31 October
2008
(1.63)p
(1.63)p
(2.51)p
(2.51)p
(2,080,528)
(2,651,768)
Number
Number
127,682,854
105,545,868
The diluted loss per share is the same as the basic loss per share, as the loss for the year has an anti-dilutive effect.
26
AFC ENERGY PLC Report & Accounts 2009
2009
Patents
£
349,583
18,820
368,403
41,731
18,147
59,878
2008
Patents
£
324,105
25,478
349,583
25,231
16,500
41,731
308,525
307,852
Leasehold
improvements
£
126,592
20,400
–
146,992
3,160
–
150,152
50,175
43,970
–
94,145
49,113
–
143,258
Fixtures,
fittings and
equipment
£
510,207
288,429
(61,000)
737,636
102,032
(133,289)
706,379
114,023
233,002
(61,000)
286,025
277,745
(120,566)
443,204
Total
£
636,799
308,829
(61,000)
884,628
105,192
(133,289)
856,531
164,198
276,972
(61,000)
380,170
326,858
(120,566)
586,462
6,894
52,847
263,175
451,611
270,069
504,458
12. Intangible assets
Cost
Balance at 1 November
Additions
Balance at 31 October
Amortisation
Balance at 1 November
Charge for the year
Balance at 31 October
Net book value
13. Property and equipment
Cost
At 1 November 2007
Additions
Disposals
At 31 October 2008
Additions
Disposals
At 31 October 2009
Depreciation
At 1 November 2007
Charge for the year
Disposals
At 31 October 2008
Charge for the year
Disposals
At 31 October 2009
Net book value
At 31 October 2009
At 31 October 2008
There are no assets held under finance leases. No assets have been revalued.
27
AFC ENERGY PLC Report & Accounts 2009
Notes forming part of the Financial Statements continued
14. Trade and other receivables
Trade receivables
Other receivables
Prepayments
2009
£
4,579
254,195
48,870
307,644
2008
£
–
524,917
67,138
592,055
There were no trade and other receivables that were past due or considered to be impaired. The trade and other
receivables balances are categorised as loans and other receivables. There is no significant difference between the
fair-value of the trade and other receivables and the values stated above.
15. Cash and cash equivalents
Cash at bank
Bank deposits
2009
£
–
2008
£
–
1,868,601
1,868,601
3,610,204
3,610,204
Cash at bank and bank deposits consist of cash. There is no material foreign exchange movement in respect of cash
and cash equivalents.
16a. Authorised share capital
Ordinary Shares of 0.1p
700,000,000
700,000,000
700,000
700,000
2009
Number
2008
Number
2009
£
2008
£
16b. Issued share capital
At 1 November 2007
Issue of shares on 21 May 20081
At 31 October 2008 and 31 October 2009
Number
87,682,854
40,000,000
127,682,854
£
87,683
40,000
127,683
1 140,000,000 ordinary shares with a par value of 0.1p per share were issued at 11p per ordinary share by way of a
placing to UK investors. Gross proceeds from the issue amounted to £4,400,000.
The Company considers its capital and reserves attributable to equity shareholders to be the Company’s capital. In
managing its capital, the Company’s primary long-term objective is to provide a return for its equity shareholders
through capital growth. Going forward the Company will seek to maintain a gearing ratio that balances risks
and returns at an acceptable level and also to maintain a sufficient funding base to enable the Company to meet
its working capital needs. The Company’s product development activities are at an early stage and management
considers that no useful target debt to equity gearing ratio can be identified at this time.
Details of the Company’s capital are disclosed in the Company 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.
28
AFC ENERGY PLC Report & Accounts 2009
17a. Share options
At 1 November 2007
Options granted in the year
At 31 October 2008
Options granted in the year
Options lapsed in the year
At 31 October 2009
17b. Warrants
At 1 November 2007 and 31 October 2008
Warrants granted in the year
At 31 October 2009
Number of
options
Exercise price
(p)
Weighted
Average
remaining
contractual life
7,379,660
144,000
7,523,660
6,600,000
3,978,670
10,144,990
10-23
23
3.13
10-23
3.13-22
7.4 yrs
Number of
warrants
Exercise price
(p)
Weighted
Average
remaining
contractual life
4,039,980
4,750,000
8,789,980
10-22
3.13
3.13-22
6.4 yrs
17c. Equity-settled share-based payments charge
Share options
Option
price
Average
grant date
share price
Average
expected
volatility
(p)
10
22
23
23
(p)
9
20
21
14
(pa)
46%
46%
46%
46%
3.13
3.13
113.8%
Average
risk-free
interest
rate
(pa)
4.4%
4.4%
4.4%
4.4%
4.4%
Average
dividend
yield
Average
implied
option life
Average
fair value
per option
(pa)
0.0%
0.0%
0.0%
0.0%
0.0%
(years)
3.5
3.5
3.5
3.5
3
(p)
2.5
6
6
2
2
Adjustment for changes in assumptions in respect of vesting conditions
Total charge for the year (2008: £156,319)
Amount
expensed
in the 2009
accounts
£
15,478
15,536
1,849
323
18,246
–
51,432
29
AFC ENERGY PLC Report & Accounts 2009
Notes forming part of the Financial Statements continued
17c. Equity-settled share-based payments charge continued
Warrants
Warrant
price
Average
grant date
share price
Average
expected
volatility
(p)
10
22
3.13
(p)
20
20
3.13
(pa)
46%
46%
113.8%
Average
risk-free
interest
rate
(pa)
4.4%
4.4%
4.4%
Average
dividend
yield
(pa)
0.0%
0.0%
0.0%
Average
implied
warrant
life
(years)
3.5
3.5
3
Average
fair value
per
warrant
(p)
10
6
2
Amount
expensed
in the 2009
accounts
£
3,440
(3,084)
13,132
Adjustment for changes in assumptions in respect of vesting conditions
Total charge for the year (2008 £91,019)
Total equity-settled share-based payment charge (2008: £247,338)
–
13,488
64,920
Expected volatility has been based on the historical volatility of share price returns over one year to the date of grant
of the options and warrants. Vesting requirements are one year and three years for the exercise of warrants and
options respectively.
The fair value of services received in return for share options and other share-based incentives granted is measured by
reference to the fair value of share options and incentives granted. This estimate is based on a Black-Scholes model
which is considered most appropriate considering the effects of the vesting conditions, expected exercise period and
the dividend policy of the Company.
18. Trade and other payables
Trade payables
Deferred income
Other payables
Accruals
19. Operating lease commitments
Non-cancellable operating leases are as follows:
Within one year
Between one and two years
The lease commitments relate to one vehicle.
2009
£
133,875
123,740
31,723
30,087
319,425
2009
£
7,200
3,600
10,800
2008
£
151,511
123,740
38,461
124,986
438,698
2008
£
42,846
–
42,846
20. 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
30
AFC ENERGY PLC Report & Accounts 2009
to measure them. Further quantitative information in respect of these risks is presented throughout these financial
statements. The significant accounting policies regarding financial instruments are disclosed in note 2 and the
significant accounting estimates and judgements are set out in note 3.
Principal financial instruments
The principal financial instruments used by the Company, from which financial instrument risk arises, are as follows:
Trade and other receivables
Cash and cash equivalents
Trade and other receivables > 1 yr
Trade and other payables
General objectives, policies and processes
2009
£
307,644
1,868,601
124,849
319,425
2008
£
592,055
3,610,204
–
438,698
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 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 statements as shown below.
Trade and other receivables
Cash and cash equivalents
Trade and other receivables > 1 yr
2009
£
307,644
1,868,601
124,849
2008
£
592,055
3,610,204
–
The Company’s principal trade and other receivables arose from work in progress on the contract with AkzoNobel for
which the company has already received payment (held as a payment in advance pending completion of the work).
The Company’s principal trade and other receivables due in more than 1yr arose from a loan to W2T repayable in
December 2010. The recoverability of all amounts shown is expected without material adjustment based on W2T
projections of revenue arising from contracts under negotiation. Credit risk with cash and cash equivalents is reduced
by placing funds with banks with acceptable credit ratings and government support where applicable.
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 Company raised £2 million net of costs after 31 October 2009 to provide
additional financial resources.
The principal liabilities of the Company are trade and other payables in respect of the ongoing product development
programme, Trade and other payables are all payable within 2 months with the exception of the payment in advance
noted above. The Board receives cash flow projections on a regular basis as well as information on cash balances.
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AFC ENERGY PLC Report & Accounts 2009
Notes forming part of the Financial Statements continued
20. Financial instruments continued
Interest rate risk
The Company is exposed to interest rate risk in respect of surplus funds held on deposit.
Fair-value of financial liabilities
Trade and other receivables
2009
£
2008
£
319,425
438,698
There is no difference between the fair-value and book-value of trade and other payables.
Currency risk
The Company does not currently enter into forward exchange contracts or otherwise hedge its potential foreign
exchange exposure. The Board considers that this exposure is not material pending commercialisation of the
Company’s products. The Board monitors and reviews its policies in respect of currency risk on a regular basis.
At 31 October 2009 the Company held no monetary assets or liabilities in currencies other than the functional
currency of the operating units involved (2008: £nil).
21. Capital commitments
The Company had no capital commitments outstanding at 31 October 2009.
22. Board changes and post-balance sheet events
Gerard Sauer resigned as Chief Executive Officer on 13 October 2008, effective from 19 December 2008. On
30 January 2009, Terry Walsh was appointed as Commercial Director. On 29 January 2009, Otto Carlisle left
the Company and ceased to be a Director. He was paid £42,500 in full and final settlement of all contractual
entitlements. On 2 July 2009, Simon Walters resigned as Finance director. On the same day David Marson was
appointed as Finance Director and Gene Lewis was appointed as Technical Director. On 5 November 2009, Ian
Balchin was appointed to the Board as Chief Executive Officer. Terry Walsh stepped down as a Director on
10 March 2010 to focus on the chlor-alkali sector.
On 4 December 2009 the Company raised net proceeds of £2,000,000 million by way of a placing of 21,500,000
new ordinary shares to UK investors.
23. Ultimate controlling party
There is no ultimate controlling party.
24. Related-party transactions
During the year ended 31 October 2009, £26,812 (plus VAT) was invoiced by FD Solutions, the trading name of
DFM Limited (a company registered in England & Wales) for services including Simon Walters as a Director of
AFC Energy plc (2008: £86,160). Mr Walters is also a Director and shareholder of DFM Limited. At 31 October 2009,
the sum owing to DFM Limited was £200 plus VAT (2008: £14,432).
During the year ended 31 October 2009, £40,701 (plus VAT) was invoiced by Hudson Raine Ltd (a company
registered in England & Wales) for services including David Marson as a financial consultant, and latterly for
his services as a Director of AFC Energy plc (2008: £ nil). Mr Marson is also a Director and shareholder of
Hudson Raine Ltd. At 31 October 2009, the sum owing to Hudson Raine Ltd was nil (2008: £ nil).
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AFC ENERGY PLC Report & Accounts 2009
During the year ended 31 October 2009, AFC Energy plc provided Waste2Tricity (a company registered in England
and Wales) with an interest bearing loan of £150,000 repayable in full by December 2010, under the terms of an
agreement to supply AFC fuel cells to W2T for integration into its system for the conversion of municipal solid waste.
The Company subsequently converted £2,500 of the loan to equity for a 25% share of W2T (see note 9). In addition,
AFC incurred costs of £1,835 on behalf of W2T for which it was reimbursed. Tim Yeo and Terry Walsh joined the
board of W2T in December 2008, when AFC Energy was exploring collaborative opportunities with W2T in the UK
waste to energy market. Both directors also serve on the board of AFC Energy. Terry Walsh resigned as a director of
W2T on 18 January 2010 to concentrate on the chlor-alkali market for AFC Energy. In addition, shareholders in W2T
include Adam White, Eturab Corporation and Ian Balchin. Members of the White family are nominated beneficiaries
of the Age of Reason Foundation. Both the Age of Reason Foundation and Eturab Corporation are substantial
shareholders in AFC Energy. Ian Balchin was appointed Chief Executive Officer of AFC Energy on 5 November 2009.
His shareholding in W2T was granted in lieu of payment for work done for W2T before he was employed by
AFC Energy.
During the year ended 31 October 2009, £18,889 (plus VAT) was invoiced by Classband Management Ltd (a
company registered in England & Wales), a company owned by Howard White, for his services. Members of Mr
White’s family are nominated beneficiaries of the Age of Reason Foundation, which is a major shareholder in the
Company. At 31 October 2009, the sum owing to Classband Ltd was nil (2008: £ nil).
During the year ended 31 October 2009, £608 was invoiced by Ben Sauer, son of Gerard Sauer, for website design
and maintenance services (2008: £11,368). The sums were billed at arms-length commercial rates. At 31 October
2009, the sum owing to Mr Sauer was nil (2008: nil).
During the year ended 31 October 2009, £18,000 (plus VAT) was invoiced by Cranwood Management Ltd (a
company registered in England & Wales) for consultancy services. The company is owned by Adam White. Members
of Mr White’s family are nominated beneficiaries of the Age of Reason Foundation, which is a major shareholder in
the Company. At 31 October 2009, the sum owing to Cranwood Ltd was nil (2008: £ nil).
33
AFC ENERGY PLC Report & Accounts 2009
AFC ENERGY plc
Notice of Annual General Meeting
Registered in England and Wales No. 05668788
Notice is hereby given to all members that the ANNUAL GENERAL MEETING of the above-named Company will be held
at Eversheds LLP, 1 Wood Street, London, EC2V 7WS on Tuesday 13 April 2010 at 2pm for the following reasons:
ORDINARY BUSINESS
To consider and if thought fit, adopt the following resolutions as ordinary resolutions:
1. To receive and approve the financial statements for the year ended 31 October 2009 with the reports of the
Directors and Auditors thereon.
2. To re-appoint Jeffreys Henry LLP as Auditors to hold office from the conclusion of the meeting to the conclusion of
the next meeting at which Financial Statements are laid before the Company at a remuneration to be determined
by the Directors.
3. To re-elect Ian Balchin as a Director.
4. To re-elect David Marson as a Director.
5. To re-elect Gene Lewis as a Director.
6. That, subject to and in accordance with Article 16 of the Company’s Articles of Association, in substitution for all
existing authorities, to the extent unused, the Directors shall have general and unconditional authority for the
purpose of section 551 of the Companies Act 2006 (as amended) (the Act) to exercise all powers of the Company
to allot shares in the Company and to grant rights to subscribe for or to convert any security into shares in the
Company up to a maximum nominal amount of £30,000 provided that such authorities shall expire on 13 April
2011 unless previously renewed, varied or revoked by the Company in General Meeting and the Directors shall
be entitled under the authority hereby conferred or under any renewal thereof to make at any time prior to the
expiry of such authority any offer or agreement, which would or might require such shares to be allotted or rights
to subscribe for or convert securities into shares to be granted after such expiry, and the board may allot shares
and grant rights to subscribe or convert securities into shares in pursuance of such offer or agreement as if the
authority conferred by this resolution had not expired.
SPECIAL BUSINESS
To consider and if thought fit, adopt the following resolution as a special resolution:
7. That subject to and conditional upon the passing of resolution 6 and in accordance with Article 17 of the Companies
Articles of Association, the Directors shall be and are hereby empowered pursuant to section 570 of the Companies
Act 2006 (the Act) to allot equity securities (within the meaning of section 560 of the said Act) for cash pursuant to
the general authority conferred by resolution 6 above and be empowered pursuant to section 573 of the said Act
to sell ordinary shares (as defined in section 560 of the said Act) held by the Company as treasury shares (as defined
in section 724 of the said Act) for cash, as if section 561(1) of the said Act did not apply to such allotment or sale,
provided that this power shall be limited to allotments of equity securities and the sale of treasury shares:
i) in connection with or pursuant to an offer by way of rights, open offer or other pre-emptive offer to the holder
of shares in the Company and other persons entitled to participate therein in proportion (as nearly as practicable)
to their respective holdings, subject to such exclusions or other arrangements as the Directors may consider
necessary or expedient to deal with fractional entitlements or legal or practical problems under the laws of any
territory or the regulations or requirements of any regulatory authority or any stock exchange in any territory;
ii) otherwise than pursuant to sub-paragraph (i) above, up to an aggregate nominal amount of £30,000, and such
powers shall expire on the conclusion of the Annual General Meeting of the Company to be held in 2011 or on
13 April 2011, whichever is earlier, but so that the Company may before such expiry make an offer of agreement
which would or might require equity securities to be allotted or treasury shares to be sold after such expiry, and
the Directors may allot equity securities or sell treasury shares in pursuance of such offer or agreement as if the
power conferred by this resolution had not expired.
By Order of the Board
David Marson
10 March 2010
Notes to the Notice of Annual General Meeting (“AGM”):
Please refer to the notes on the Form of Proxy for guidance on voting.
34
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AFC ENERGY plc – FORM OF PROXY
Registered in England and Wales No. 05668788
For use at the Annual General Meeting to be held on 13 April 2010
(PLEASE PRINT YOUR NAME AND ADDRESS IN FULL IN BLOCK CAPITALS)
I/We
Of
Hereby appoint the Chairman of the meeting*
*If you wish to appoint someone other than the Chairman as your proxy, please delete these words and insert desired name.
To act as my/our proxy to vote on my/our behalf upon any matter proposed at the Annual General Meeting of the
Company to be held on 13 April 2010 and at any adjournment thereof, in such manner as my/our proxy shall think proper,
and if expedient to demand a poll. I/We request such proxy to vote on the following resolutions as indicated below:
Please tick here if this proxy appointment is one of multiple proxies being made (and refer to note 6 below)
Against
For
Vote
withheld
ANNUAL GENERAL MEETING
Resolution 1
To receive and approve the financial statements
Resolution 2
To re-appoint the Auditors
Resolution 3
To re-elect Ian Balchin as a Director
Resolution 4
To re-elect David Marson as a Director
Resolution 5
To re-elect Gene Lewis as a Director
Resolution 6
To authorise the Directors to allot shares and to grant rights to
subscribe for or to convert any security in shares pursuant to
section 551 of the Companies Act 2006 (as amended)
Resolution 7
To approve the allotment of equity securities pursuant to section
570 of the Companies Act 2006
Signature
Date
Number of shares (see notes)
NOTES:
1. Only members whose names appear on the register of members of the
company as at 48 hours before the time of the meeting shall be entitled to
attend the AGM either in person or by proxy and the number of ordinary
shares then registered in their respective names shall determine the number
of votes such persons are entitled to cast on a poll at the AGM.
2. To be valid, this form must be signed and received at the offices of the
Registrars of the Company not less than 48 hours (excluding any part of the
day which is a non-working day) before the time appointed for holding the
meeting. In the case of joint holders, any one holder may sign. If both joint
holders sign conflicting proxies, the wishes of the holder first named on the
register will be accepted.
3. A proxy need not be a member of the Company. Any member entitled
to attend and vote at the AGM is entitled to appoint one or more proxies
(who need not be a member of the Company) to attend and to vote
instead of the member.
4. If the form of proxy is signed on behalf of a shareholder, the copy of the
relevant authority of the signatory to act should also be forwarded to the
Registrars. In the case of a corporation, the form must be under seal or under
hand of a duly authorised officer.
5. Completion and return of this form of proxy does not prevent a shareholder
from attending the meeting and voting in person in which case any votes
cast by the proxy will be excluded.
6. If any other proxy is preferred, delete the words the Chairman of the
Meeting, insert the full name of the proxy or proxies you wish to appoint
and initial the alteration. If you are appointing more than one proxy you
must indicate the number of shares in respect of which you are making this
appointment, you should include the number in the box provided for your
first named proxy and either obtain (an) additional proxy form(s) from the
registrars (0870 707 1302) or you may photocopy this form. Please return all
the forms together and tick the box to indicate each form is one of multiple
instructions being given. Please take care when completing the number of
shares; if the total number of shares exceeds the total held by the member,
all appointments may be invalid.
7. The vote withheld option is provided to enable you to abstain on any
particular resolution. However, it should be noted that a vote withheld is not
a vote in law and will not be counted in the calculation the proportion of
votes For and Against a resolution.
8. Any alteration made in the form of proxy should be initialled.
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Third Fold
Business Reply
Licence Number
RRLU-BGHH-XJLX
Computershare Investor Services PLC
PO Box 1075
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
F
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Second Fold
Directors, Company Secretary and Advisors
Directors
Tim Yeo MP
Ian Balchin
David Marson (Company Secretary)
Gene lewis
Dr Michael Mangan
Mitchell Field
Registered office
Finsgate
5-7 Cranwood Street
london EC1V 9EE
Registered in England: 05668788
Joint Broker
Astaire Securities plc
30 Old Broad Street
london EC2N 1HT
Financial Advisor, NOMAD and
Joint Broker
Allenby Capital plc
32 Davies Street
Mayfair, london W1K 4ND
Bankers
Barclays Bank plc
2 High Street
Chelmsford
Essex CM1 1DS
Principal place of business
Unit 71.4 Dunsfold Park
Stovolds Hill
Cranleigh
Surrey GU6 8TB
Tel: 01483 276726
Fax: 01483 266839
e-mail: info@afcenergy.com
Auditors
Jeffreys Henry llP
Finsgate
5-7 Cranwood Street
london EC1V 9EE
Solicitors
Eversheds llP
1 Wood Street
london EC2V 7WS
Registrars
Computershare Investor Services PlC
PO Box 1075
The Pavilions
Bridgwater Road
Bristol BS99 3FA
This report is printed on 150gsm Black label Satin and 350gsm Black label Satin
AFC Energy plc
Unit 71.4 Dunsfold Park
Stovolds Hill
Cranleigh
Surrey GU6 8TB
Tel: 01483 276726
Fax: 01483 266839
info@afcenergy.com
www.afcenergy.com