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

16 July 2025

AFC Energy PLC

("AFC Energy" or the "Company")

Interim Results for the half year to 30 April 2025

AFC Energy plc (AIM: AFC), a leading provider of hydrogen power generation solutions and technologies, is pleased to announce its interim results for the half year ended 30 April 2025 (H1 FY25).

John Wilson, Chief Executive of AFC Energy, said:

"It is now six months since Karl Bostock, Chief Financial Officer, and I joined AFC Energy and began to develop our plan to accelerate commercialisation of our technology through delivering a market push, rather than reliance on a market pull that would require Governmental subsidies and support. 

Currently, the hydrogen economy is constrained by both cost and infrastructure challenges - to overcome these requires a high level of creativity to affect market disruption.  We are in the process of delivering this through an 85% cost reduction in our hydrogen fuel cell generators, coupled with our unique FaaS (fuel as a service) model (announced in April), delivered via our Hy-5 units that will produce hydrogen by cracking ammonia at site, and on demand.

We continue to validate our technology through strategic partnerships and especially through the Joint Development Agreement recently signed with our S&P 500 partner, which verifies the protection provided by the intellectual property of our reactor technology.

"The next 18 months will be a period of accelerating commercial delivery for AFC Energy and the Board looks to the future with renewed optimism."

Corporate Highlights

·      New commercially driven leadership team with proven track record of market delivery and creating shareholder value

·      Launch of the HY-5, the world's first portable cracker under the FaaS commercial model

·      New business strategy launched, focused on delivering offsite power at cost parity with diesel in 2026, without Government subsidy

·      Actions taken to reduce the cash burn rate

·      Cash of £4.26 million at period end. Cash at 30 June 2025 of £2.6m with £1.6m in tax credits and £0.6m of grants to be received in July 2026

Post-period end

·      The Company will today announce the launch of a fundraise for approximately £20m (gross) via a placing and subscription, including £0.5m by directors and a retail offer of up to £5m (the "Fundraise"). Separate announcements will be made in due course regarding the placing, the subscription and the retail offer and the associate terms

·      Joint Development Agreement with a leading S&P 500 industrial company to develop small to large scale ammonia crackers suitable for portside cracking and industrial applications (the "JDA")

·      Strategic supply agreement with Volex to support the scale up of hydrogen generator production, validating the Company's ability to deliver the next generation of generators at an 85% cost reduction compared to those built in FY24

·      Joint Venture with Industrial Chemicals Group ("ICL"), a leading independent chemical company, to utilise AFC Energy's cracking technology to produce and sell hydrogen at a market disruptive price

Outlook

The business is focused on delivering low cost, high reliability 30kW hydrogen fuel cell generators and Hy-5 ammonia crackers in 2026.

·      Operationally, AFC Energy is focused on delivering four major projects:

o  Packaging and certification of the Hy-5;

o  Packaging and certification of the next generation of 30kW hydrogen generators;

o  Development of large-scale crackers through a JDA with a leading S&P 500 company; and

o  Relocation of AFC Energy's cracker facility to an ICL site to enable the production and sale of hydrogen.

·      Commercially, the business is focused on:

o  Orderbook development for the Hy-5;

o  Selling hydrogen from the pilot cracker (up to 400 kg per day) from an ICL site; and

o  Supporting Speedy Hire's generator deployments to drive future generator orders.

Key Financials

-ENDS-

For further information, please contact:

About AFC Energy

AFC Energy plc is a leading provider of hydrogen energy solutions, to provide clean electricity for on and off grid power applications. The Company's fuel cell technology is targeting near term commercial deployment across the construction and temporary power markets with longer term opportunities in electric vehicle charging, maritime and data centres as part of a portfolio approach to the decarbonisation of society's growing electrification needs.  The Company's proprietary ammonia cracking technology further highlights emerging opportunities across the distributed hydrogen production market with a focus on hydrogen's role in supporting industries facing challenges in decarbonisation, such as mining, cement and heavy engineering.

Chief Executive's Statement

Strategy Reset

Following the change of leadership in early 2025, the Company's strategy has been fundamentally repositioned. 

The revised strategy is positioned to achieve commercial viability during 2026 by delivering a product set that provides cost parity with diesel for offsite power applications without the need for Government subsidies. 

Thanks to our partners at Speedy Hire, we are able to holistically understand the TCO (total costs of ownership) of a generator set.  To deliver cost parity without subsidy, it was necessary to deliver the following:

1.     An 85% reduction in the cost of a generator in low volume batches, delivered through our partnership with Volex.

2.     Sell hydrogen at significantly lower prices than current market rates.  This will be delivered through two routes, firstly the relocation of our pilot cracker from Dunsfold to an Industrial Chemicals Group site (RNS dated 4^th July 2025); and secondly through the launch of the Hy-5 unit which will be available from the end of Q4 2026 (as reported with the FY24 annual results).

Through these actions, we will deliver a solution which has a TCO at, or below, the current cost of using diesel generators.

Technical Validation

To confirm the validity of the revised strategy it was necessary to ensure that our technology has product market fit.  In order to achieve this AFC Energy has sought validation from industry as follows:

·      Speedy Hire - our JV with Speedy Hire provides valuable insights into how customers use our products, the challenges they face and the cost the market is willing to bear. 

·      S&P 500 JDA partner - this large and technically competent business spent a significant amount of time undertaking market due diligence on a global scale and chose AFC Energy's technology above all others.  This is testament to the hard work of the talented team in Dunsfold and the strength and depth of the IP that we have filed.

·      Volex - we are working with Volex to further reduce the cost of our generators as we scale.  Coupled with their global footprint, we will benefit from their materials leverage and supply chain expertise.

·      Industrial Chemicals Group - ICL provides expertise in both production and supply of chemicals, with docking infrastructure for delivery of ammonia.

The financial statements primarily reflect the following activities:

·      The completion of the Red Diesel Replacement project, part funded by the UK Government to replace a diesel generator with hydrogen power.  Successful completion of this project generated £2.3m of grant income.

·    Completion of the current generation production run of 30kW generators.  18 of the 20 units sold to our Joint Venture Speedy Hydrogen Solutions (SHS) were transacted in the last month of the FY24 and hence the working capital impact on FY25.  The business used spare components to build a further 8 generators in H1 as well as procured parts to support warranty commitments.

Financial update

Overview

As reported above, the major items included in the results for H1 are the completion of the Red Diesel Replacement (RDR) grant and the finalisation of the build of 29 generators (20 of them sold to the Speedy Hire JV).  The cash flow is reported in the detail below in the statutory format, however the analysis below better explains the use of cash:

Notes

1.         Included in the fixed cost cash burn are the costs for the ongoing development of the cracker

2.         Grant income of £1.7m received in Q3 with £0.2m to follow

3.         R&D tax credit of £1.6m due end of July

The Company experienced some delay in receiving the payment for the RDR despite having incurred all the cost. In addition to this, there was a delay in the filling of the annual tax return (due to a change in finance leadership) which delayed the receipt of R&D tax credits relating to FY24 which are now expected at the end of July 2025.  The cash balance adjusting for the timing of the grant, R&D tax credits and a vat refund relating to costs incurred as part of the RDR grant, the cash balance as at 30 April would have been £8.5m

Operating activities

For H1 FY25 the business recognised a post-tax loss of £10.1m (H1 FY24: £8.3m).  This was after revenue of £0.0m (H1 FY24 £0.4m) and was driven by operating costs of £11.8m (H1 FY24: £9.6m) less R&D tax credits of £1.5m (H1 FY24: £1.1m).  As a result of the current market conditions, the directors have concluded that in order to be commercially viable the business needs to provide product that is at or near cost parity with diesel on a total cost of ownership basis.  For this reason, the H1 FY25 operating costs include a £2.9m write off of inventory (primarily generators built to date) reflective of the change in business strategy.  Normalising for this adjustment, H1 FY25 operating costs would be £8.9m.

The increase in R&D tax credits was due to an increase in R&D expenditure as a percentage of total expenditure which will increase the rate from 10% to 14.5%

Revenue

H1 FY25 revenue related to hire of a generator to Acciona. As noted in the Company's FY24 full year results, we stated that we would no longer build to sell the previous version of our generators to Speedy Hire, that resulted in a £255,000 cash cost to AFC Energy.  As the Company executes on its revised strategy, the Company expect to see increased revenues from 2026.

Financing activities (post balance sheet)

The Company will today announce the launch of a fundraise for approximately £20m (gross) via a placing and subscription, including £0.5m by directors and a retail offer of up to £5m. Separate announcements will be made in due course regarding the placing, the subscription and the retail offer and the associate terms.

Strategy

The directors remain confident in the Company's updated strategy and the Board look to the future with renewed optimism.

The technology the business has developed and protected with IP rights is highly sought after (as confirmed by recent announcements) and the Company's talented team in Dunsfold have the skills required to execute the strategy. 

STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 April 2025

All amounts relate to continuing operations.  There were no items of other comprehensive income during the period.

The above unaudited statement of comprehensive income should be read in conjunction with the accompanying notes.

STATEMENT OF FINANCIAL POSITION

As at 30 April 2025

The above unaudited statement of financial position should be read in conjunction with the accompanying notes.

STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 April 2025

For the six months ended 30 April 2024

For the year ended 31 October 2024

The above unaudited statements of changes in equity should be read in conjunction with the accompanying notes.

CASH FLOW STATEMENT

For the six months ended 30 April 2025

The above unaudited statement of cash flows should be read in conjunction with the accompanying notes.

NOTES FORMING PART OF THE FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Details of the significant accounting policies are set out below.

a)             Basis of preparation

These interim results for the six-months ended 30 April 2025 are unaudited.  They have been prepared in accordance with IAS 34 'Interim Financial Reporting' in conformity with Companies Act 2006.  These interim results have been drawn up using the accounting policies and presentation consistent with those disclosed and applied in the annual report and accounts for the year ended 31 October 2024.  The comparative information contained in the report does not constitute the accounts within the meaning of section 435 of the Companies Act 2006.

A number of new or amended standards became applicable for the current reporting period. The Company did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.

The directors believe that whilst the interim accounts are correctly prepared on a going concern basis, there is a material uncertainty with regards to going concern given the Company's current cash position, the trading losses being carried forward and the expectation that trading losses will continue for the near future as the Company transitions from research and development to commercial operations.

The directors are required to assess whether it is appropriate to prepare these interim results on a going concern basis.  In making this assessment the directors need to be satisfied that the Company can meet its obligations as they fall due for at least 12 months from the date of this report.

The directors make their assessment based on a cash flow model prepared by management which sets out expected cash flows for the 12 months from the date of this report.

The downside sensitivities applied to the cash flow forecasts primarily relate to delays to development and delivery and/ or an overspend of cost of sales.

Having concluded that the Company remains a going concern, these interim results have therefore been prepared on that basis.

2. SEGMENTAL ANALYSIS

Operating segments are determined by the chief operating decision maker based on information used to allocate the Company's resources.  The information as presented to internal management is consistent with the statement of comprehensive income.  It has been determined that there is one operating segment, which researches and develops fuel cell and fuel conversion technologies.  In the period to 30 April 2025, the Company operated mainly in the United Kingdom.  All non-current assets are in the United Kingdom.

3. REVENUE

Rental related to ongoing contract released overtime in accordance with IFRS15 to Acciona.

4. OPERATING COSTS

The operating costs consist of:

Occupancy costs include repairs and maintenance, utilities and lease payments. 

5. NET FINANCE INCOME

6. TAXATION

7. LOSS PER SHARE

The calculation of the basic loss per share is based upon the net loss after tax attributable to ordinary Shareholders and a weighted average number of shares in issue for the period.

Diluted earnings per share: There are share options and warrants outstanding as at 30 April 2025 which, if exercised, would increase the number of shares in issue.  However, the diluted loss per share is the same as the basic loss per share, as the loss for the period has an anti-dilutive effect.

8. INTANGIBLE ASSETS

9. RIGHT-OF-USE ASSETS

10.tangible fixed ASSETS

The Company has set up a decommissioning asset for the estimated cost of removing the plant and equipment installed at the Stade site in Germany. Notice was served to sever the contract in March 2025 and therefore there has been an acceleration of depreciation of this asset to reflect the remaining term of the contract.

11. INVENTORY

Inventory is valued per IAS2 as the lowest of cost or net realisable value. The stock provision recognises the change in expected realisable value driven by managements view on the current market condition.

12. RECEIVABLES

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

Most of the trade receivable balance is the balance of the sales to SHS

The accrued revenue represents the monies recognised for work undertaken under the RDR but not invoiced

grant which was received in June 2025.

13. PAYABLES

The deferred revenue relates to non-refundable payments made under the November 2021 contract with ABB E-mobility (£1,423k).  As part of the renegotiation of this contract in March 2023, it was agreed with ABB that this balance would be earned against pre-agreed discounts over the sale of the first ten units. The remaining (£2,071k) relates to grant income that is treated as a liability according to IAS20 and is released as other income to the income statement in line with amortisation of the associated development asset.

14. INVESTMENT IN JV

The Company signed a Joint Venture Agreement (JVA) with Speedy Hire (SDY) plc in November 2023 which resulted in the creation of Speedy Hydrogen Services (SHS) Limited.

The Company has assessed the relationship with SHS under IFRS11: Joint Arrangements and concluded that it is a joint venture.  As the Company does not control SHS, it has not been consolidated into the Company's results. 

SHS is owned 50:50 by the Company and SDY, with both parties providing initial funding via equity investments of £625,000.  This investment, and any further investments, will be accounted for on a cost basis. 

In addition to the JVA with SDY, the Company signed a Supply & Maintenance Agreement (SMA) with SHS under which it will supply goods, hydrogen fuelled generators, and services.  The SMA has been assessed under IFRS15: Revenue from Contracts with Customers and the Company has concluded, amongst other things, that SHS will be acting as principal in the purchase of generators from the Company for onwards hire. 

During the period no further transactions have occurred between SHS and AFC Energy in line with the change of business plan for the financial year 2025.

15. PosT BALANCE SHEET EVENTS

On 4^th June 2025 the Company announced the signing of a JDA to develop a range of small to large scale highly efficient ammonia crackers for hydrogen production. Successful completion of JDA milestones expected to result in material AFC Energy revenues from 2027 onwards.

On 4^th July 2025 the Company announced a joint venture with Industrial Chemicals Group Limited (ICL) to produce and sell hydrogen at a market disruptive price.

The Company will today announce the launch of a fundraise for approximately £20m (gross) via a placing and subscription, including £0.5m by directors and a retail offer of up to £5m (the "Fundraise"). Separate announcements will be made in due course regarding the placing, the subscription and the retail offer and the associate terms

16. PUBLICATION OF NON-STATUTORY ACCOUNTS

The financial information contained in this interim statement does not constitute accounts as defined by the Companies Act 2006.  The financial information for the preceding period is based on the statutory accounts for the year ended 31 October 2024.  Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.

Copies of the interim statement may be obtained from the Company Secretary, AFC Energy PLC, Unit 71.4 Dunsfold Park, Cranleigh, Surrey GU6 8TB, and can be accessed from the Company's website at www.afcenergy.com.