03:00 Thu 24 Mar 2016
AFC Energy Plc - Final Results and Notice of AGM
Embargoed until 07:00
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Final Results and Notice of AGM
FY15 Highlights
· Successful testing of 25, 51 and complete 101 fuel cell stacks
· Successful completion of Milestone 10, POWER-UP Programme with testing of entire tier of eight fuel cells
· 50MW Project Development Agreement with
· 10MW Heads of Agreement with
· 300MW MoU with
· Income increased to
· Diluted loss per share of 1.66p (2014: 2.42p)
Post Period Highlights
· Raised
· Commissioning of KORE System and production of power at Stade,
· Heads of Agreement with global manufacturer
· Heads of Agreement with
· Receipt of
· Strategic Partnership Agreement with plantIng GmbH
· 2016 Strategic Milestones and Outcomes
Notice of AGM
The Annual Report and Accounts and Notice of AGM will be sent to shareholders in early April and will be available for download from the Company's website, www.afcenergy.com, in accordance with AIM Rule 20.
For further information, please contact:
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+44 (0) 20 3697 1209 |
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+44 (0) 20 7894 7000 |
M C Peat & Co LLP - Joint Broker |
+44 (0) 20 7104 2334 |
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Lionsgate Communications - Public Relations
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+44 (0) 20 3697 1209 |
About
Chairman's Statement
The Company made great progress in 2015 both technologically and commercially.
Overview
The future for low carbon technology took a huge positive stride forward in early 2016 following the
While fossil fuel prices - notably oil - have continued to weaken in recent months, following Paris it is clear that the choice will no longer be simply about price - the world is now committed to a lower carbon future.
Stationary fuel cells can play a major part in this globally and while there has been - and remains - substantial activity in
The opportunity for
Key developments
In
In what was a seminal moment for
This achievement firmly establishes the next important phase of development for the Company.
From a commercial standpoint, during the year the Company signed:
· A formal 50MW project development agreement with
· A Heads of Agreement for 10MW with
· A further Memorandum of Understanding with
These build on the commercial progress made in 2014 and demonstrate the very high level of global interest in the Company's fuel cell.
Shortly after the year-end - in
Partners
Summary
The Company made good progress in 2015, both technologically and commercially. My thanks go to everyone at
Having now established that the full KORE system is capable of delivering what it promised, 2016 is likely to be a pivotal year for the Company as we further demonstrate the system's commerciality and we also anticipate further progress on manufacturing and commercial orders.
The Board remains confident of the Company's potential and, with the right resources, of its ability to achieve shareholder expectations.
Operational Review from the CEO
The Company is looking ahead to build upon its now proven technology and its established pipeline of commercial opportunities to drive the findings from the development phase into a technically optimised and commercially viable fuel cell system.
The past 12 months represent a pivotal year for
Operating Review
Technology
Throughout 2015,
This final 101 fuel cell stack test demonstrated the operability of the fundamental building block of the KORE system giving us the flexibility to consider a whole range of alternative products - from a single cartridge product to multi-mega watt systems.
As a result,
Achieving the penultimate Milestone 10 in
Post Year-end developments
Equity Funding
Following on from the penultimate Milestone 10 in
The net proceeds of the subscription were deployed to enable
Milestone 11
Since the fundraise, the Company has received >
Following Milestone 11,
2016 Strategic Milestones and Outcomes
In
Partnerships
The POWER-UP programme in Stade has been our main point of focus and its success would not have been possible without the involvement of our key partners.
We now have a system operating in
Engineering and design work associated with delivering the POWER-UP programme on site was supported by our engineering partners plantIng and
In the meantime,
I've already mentioned the Power Purchase Agreement with the utility
FUNDED PROJECTS: PROJECT POWER-UP
POWER-UP has been
Financial Overview
In 2015,
Overall post tax losses to
OUTLOOK
I said last year that our targets were ambitious and they remain so. I still firmly believe that we will achieve our aggressive target of 1GW (1,000MW) of fuel cell capacity installed or under development by the end of 2020.
Finally, I would like to thank again all the staff and contractors working with
Principal Risks and Uncertainties
Managing Risks
Effective risk management underpins the delivery of our objectives. It is essential to protecting our reputation and generating sustainable shareholder value. We aim to identify key risks at an early stage and develop actions to eliminate them or mitigate their impact and likelihood to an acceptable level.
Risk management processes are embedded at both Company and project levels and form an integral part of day-to-day business activity. They help management and delivery teams to identify and understand the risks they face in delivering business objectives and to develop mitigations to manage those risks.
Risk and Impact |
Management Strategy |
Delayed technology development necessary to meet minimum industry and commercial standards of the fuel cell system |
Since 2015, |
Insufficient working capital to fund the Company's technology development plan and operate the business |
The adoption of a budgeted technology development plan, supported by prudent budgetary controls that can be measured and monitored periodically provides a robust means of mitigating risk of insufficient working capital. The ability to demonstrate progress against predefined milestones that demonstrate substantive commercial development of the fuel cell system also enhances the Company's ability to access new funding if required through the capital markets. |
Insufficient operational capability and capacity to deliver project contracts |
The strategy for transition of |
Loss or breach of intellectual property |
|
Health and safety breaches of incidents |
Failure of health and safety systems put at risk the reputational integrity of the Company and its operational capability at its respective facilities. Robust health and safety management and an environment of continuous improvement and reinforcement of safety culture is paramount for the Company and enforced at all levels of the management and staff. Adherence to codes and standards surrounding health and safety provides a transparent mitigation to the risk of breaches and ensures the integrity of |
Design and quality issues with |
As the Company progresses to a commercial business entity, design defects and poor quality management could have a direct impact on the Company's market reputation and positioning, with consequential loss of value to shareholders, together with the potential for financial consequences (eg. performance warranties and guarantees). |
Statement of Comprehensive Income
for the year ended
|
|
Year ended |
Year ended |
|
|
|
|
|
Note |
£ |
restated £ |
EU Grant income |
|
2,262,506 |
782,236 |
Cost of sales |
|
(4,846,933) |
(1,029,460) |
Gross (loss)/profit |
|
(2,584,427) |
(247,224) |
|
|
|
|
Other income |
|
51,080 |
13,899 |
Administrative expenses |
|
(6,112,856) |
(5,037,309) |
Operating loss |
5 |
(8,646,203) |
(5,270,634) |
|
|
|
|
Financial income/(loss) |
8 |
3,294,272 |
(587,663) |
Loss before tax |
|
(5,351,931) |
(5,858,297) |
Taxation |
9 |
569,706 |
421,280 |
Loss for the financial year and total comprehensive |
|
|
|
loss attributable to owners of the Company |
|
(4,782,225) |
(5,437,017) |
|
|
|
|
Basic loss per share |
10 |
(1.66)p |
(2.42)p |
Diluted loss per share |
10 |
(1.66)p |
(2.42)p |
All amounts relate to continuing operations.
Statement of Financial Position
as at
|
|
|
|
|
|
Note |
£ |
restated £ |
£ |
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Intangible assets |
11 |
338,176 |
279,073 |
180,733 |
Property and equipment |
12 |
116,328 |
609,441 |
858,806 |
Investment |
13 |
- |
52,500 |
52,500 |
Derivative financial instrument |
15 |
- |
479,761 |
- |
|
|
454,504 |
1,420,775 |
1,092,039 |
|
|
|
|
|
Current assets |
|
|
|
|
Inventory and work in progress |
14 |
219,421 |
157,048 |
174,469 |
Derivative financial instrument |
21 |
1,308,859 |
753,909 |
- |
Trade and other receivables |
15 |
3,458,340 |
3,502,892 |
1,717,808 |
Cash and cash equivalents |
16 |
1,756,445 |
4,858,203 |
6,961,338 |
Restricted cash |
16 |
91,105 |
- |
- |
|
|
6,834,170 |
9,272,052 |
8,853,615 |
Total assets |
|
7,288,674 |
10,692,827 |
9,945,654 |
|
|
|
|
|
Capital and reserves attributable to owners of the Company |
|
|
|
|
Share capital |
17 |
289,904 |
285,684 |
223,325 |
Share premium |
17 |
33,947,857 |
33,332,478 |
27,566,408 |
Other reserve |
|
2,207,441 |
3,032,472 |
2,792,504 |
Retained deficit |
|
(30,830,087) |
(27,089,095) |
(21,652,078) |
Total equity attributable to Shareholders |
|
5,615,115 |
9,561,539 |
8,930,159 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
19 |
1,673,559 |
1,131,288 |
1,015,495 |
|
|
1,673,559 |
1,131,288 |
1,015,495 |
|
|
|
|
|
Total equity and liabilities |
|
7,288,674 |
10,692,827 |
9,945,654 |
These financial statements were approved and authorised for issue by the Board on
Chairman Finance Director and Company Secretary
Registered number: 05668788
Statement of Changes in Equity
for the year ended
|
Share |
Share |
Other |
Retained |
Total |
|
Capital |
Premium |
Reserve |
Loss |
Equity |
|
£ |
£ |
£ |
£ |
£ |
Balance at |
223,325 |
27,566,408 |
2,792,504 |
(21,652,078) |
8,930,159 |
Loss after tax for the year |
- |
- |
- |
(5,437,017) |
(5,437,017) |
Comprehensive income for the year |
- |
- |
- |
(5,437,017) |
(5,437,017) |
Issue of equity shares |
62,359 |
5,766,070 |
- |
- |
5,828,429 |
Equity-settled share-based payments |
- |
- |
239,968 |
- |
239,968 |
Transactions with owners |
62,359 |
5,766,070 |
239,968 |
- |
6,068,397 |
Balance at |
285,684 |
33,332,478 |
3,032,472 |
(27,089,095) |
9,561,539 |
Loss after tax for the year |
- |
- |
- |
(4,782,225) |
(4,782,225) |
Comprehensive income for the year |
- |
- |
- |
(4,782,225) |
(4,782,225) |
Issue of equity shares |
4,220 |
615,379 |
- |
- |
619,599 |
Equity-settled share-based payments |
- |
- |
(825,031) |
1,041,233 |
216,202 |
Transactions with owners |
4,220 |
615,379 |
(825,031) |
1,041,233 |
835,801 |
Balance at |
289,904 |
33,947,857 |
2,207,441 |
(30,830,087) |
5,615,115 |
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.
Cash Flow Statement
for the year ended
|
|
|
|
|
Note |
£ |
£ restated |
Cash flows from operating activities |
|
|
|
Loss before tax for the year |
|
(5,351,931) |
(5,858,297) |
Adjustments for: |
|
|
|
Depreciation and amortisation |
11,12 |
278,291 |
312,487 |
Impairment of intangible asset investment |
|
52,500 |
- |
Loss on disposal of tangible assets |
|
286,743 |
- |
Equity-settled share-based payment expenses |
18d |
216,202 |
239,968 |
Payment of shares in lieu of cash |
|
331,000 |
- |
Finance income |
|
(5,775) |
(48,667) |
R&D tax credits receivable |
|
(174,937) |
- |
(Gain)/Loss on derivative financial investment |
|
(3,288,497) |
636,330 |
Cash flows from operating activities before changes in working capital and provisions |
|
(7,656,404) |
(4,718,179) |
R&D tax credits received |
|
813,696 |
361,174 |
(Increase) in restricted cash |
|
(91,105) |
- |
(Increase)/Decrease in Inventory and Work in Progress |
|
(62,373) |
17,421 |
(Increase) in trade and other receivables |
|
(24,500) |
(1,724,978) |
Increase in trade and other payables |
|
542,271 |
115,793 |
Cash absorbed by operating activities |
|
(6,478,415) |
(5,948,769) |
Cash flows from investing activities |
|
|
|
Purchase of plant and equipment |
12 |
(36,845) |
(51,247) |
Additions to intangible assets |
11 |
(98,980) |
(110,215) |
Proceeds of disposal of tangible assets |
|
4,800 |
- |
Interest received |
8 |
5,775 |
48,667 |
Net cash absorbed by investing activities |
|
(125,250) |
(112,795) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Proceeds from the issue of share capital |
|
288,599 |
6,232,428 |
Costs of issue of share capital |
|
- |
(403,999) |
Derivative financial asset |
21 |
3,213,308 |
(1,870,000) |
Net cash from financing activities |
|
3,501,907 |
3,958,429 |
|
|
|
|
Net (decrease) in cash and cash equivalents |
|
(3,101,758) |
(2,103,135) |
Cash and cash equivalents at start of year |
|
4,858,203 |
6,961,338 |
Cash and cash equivalents at end of year |
16 |
1,756,445 |
4,858,203 |
1. Corporate information
The address of its registered office is Finsgate,
2. Basis of preparation and accounting policies
The financial statements of
The Company prepares cash flow forecasts based on current estimates of future revenues and expenditure. These are agreed by the Board and monitored against actual expenditure to ensure the Company's resources are sufficient for the Directors to prepare the accounts on a going concern basis. In
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.
These results are audited, however the financial information does not constitute statutory accounts as defined under section 434 of the Companies Act 2006. The financial information for the year ended
a. New and Revised Standards Adopted by the Company
· IFRS 10 Consolidated Financial Statements is effective from
· IFRS 11 Joint Arrangements is effective from
· IFRS 12 Disclosures of Interests with Other Entities is effective from
· Amendments to IAS 27 Separate Financial Statements is effective from
· Amendments to IAS 28 Investments in Associates and Joint Ventures is effective from
· Amendments to IAS 32 Financial Instruments: Presentation is effective from
· Amendments to IAS 36 Impairment of Assets is effective from
b. Standards, Amendments and Interpretations to Published Standards not yet effective
At the date of authorisation of these 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 financial statements:
· IFRS 9 Financial Instruments is effective from
· IFRS 15 Revenue from contracts with customers. The new standard will replace IAS 18 Revenue and IAS 11 Construction contracts. It will become effective for accounting periods on or after
· IFRS 16 Leases is effective from
The Company expects no impact from the adoption of IFRS 9. As the Company is not currently revenue generating, there would be no impact relating to the adoption of IFRS 15 on the current financial position. The Company will determine the effects of the adoption of IFRS 15 in future periods.
2. Basis of preparation and accounting policies continued
c. Capital Policy
The Company manages its equity as capital. Equity comprises the items detailed within the principal accounting policy for equity and financial details can be found in the Statement of Financial Position. The Company adheres to the capital maintenance requirements as set out in the Companies Act.
d. 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. Licence income is recognised in accordance with the substance of the agreement. When a licensee has the right to use certain technology for a specified period of time, this is usually on a straight-line basis over the life of the agreement in accordance with IAS 18.
e. Grants
The Company participates in three projects, LASERCELL, ALKAMMONIA and POWER-UP, which receive funding from the
f. Development Costs
Development expenditure does not meet the strict criteria for capitalisation under IAS 38 and has been recognised as an expense. Expenditure on and relating to the Company's KORE fuel cell module installed at Stade in
g. 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 IAS 21, transactions entered into by the Company in a currency other than the functional currency are recorded at the rates ruling when the transactions occur. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date.
h. Inventory and Work in Progress
Inventory is recorded at the lower of cost and net realisable value. 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.
i. 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.
j. 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.
k. 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.
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
2. Basis of preparation and accounting policies continued
k. Property and Equipment continued
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.
l. Intangible Assets
Expenditure on research activities is recognised in the income statement as an expense as incurred. Expenditure in establishing a Patent is capitalised and written off over its useful life.
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
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 and any impairment is charged to the income statement.
m. Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits with major banking institutions realisable within 3 months. Restricted cash is
n. 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 advance which has not been fully recognised in the Income Statement pending delivery to the customer. The carrying value is fair value.
o. Leases
Finance 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 Leases
Operating lease rentals are charged to the Income Statement on a straight-line basis over the lease term.
p. Financial Assets
All of the Company's financial assets are loans and receivables and investments. 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. Investments are accounted for at cost less impairment.
2. Basis of preparation and accounting policies continued
q. Financial Instruments
Financial assets and liabilities are recognised on the balance sheet when the Company becomes a party to the contractual provisions of the instrument.
· Cash and cash equivalents comprise cash held at bank and short-term deposits
· Trade payables are not interest bearing and are stated at their nominal value
· Equity instruments issued by the Company are recorded at the proceeds received except where those proceeds appear to be less than the fair value of the equity instruments issued, in which case the equity instruments are recorded at fair value. The difference between the proceeds received and the fair value is reflected in the share-based payments reserve.
r. Valuation of Derivative Financial Instrument
The Company has placed shares with
s. 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 the Black-Scholes 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.
t. Provisions
Provisions are recognised when the Company has a present obligation as a result of a past event and it is probable that the Company will be required to settle the obligation. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the balance sheet date and are discounted to present value where the effect is material.
u. 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.
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 their recovery.
v. R&D Tax Credits
The Company's research and development activities allow it to claim R&D tax credits from HMRC in respect of qualifying expenditure; these credits are reflected in the income statement in administrative expenses or in the taxation line depending on the nature of the credit.
w. Pension Contributions
The Company operates a defined contribution pension scheme which is open to all employees and makes monthly employer contributions to the scheme in respect of employees who join the scheme. These employer contributions are currently capped at 3% of the employee's salary and are reflected in the statement of comprehensive income in the period for which they are made.
x. Restatement of Comparatives
Certain balances have been restated from 2014; this relates to the derivative financial instrument which had been included with trade and other receivables on the face of the statement of financial position and is now shown separately. The amounts received and receivable under EU grants have been reclassified from Revenue to EU Grant Income.
3. Critical accounting judgements and key sources of estimation and uncertainty
In the preparation of the financial statements management makes certain judgements and estimates that impact the financial statements. While these judgements are continually reviewed, the facts and circumstances underlying these judgements may change, resulting in a change to the estimates that could impact the results of the Company. In particular:
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 during the year and subsequent to
Useful Lives and Impairment 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. After undertaking a comprehensive review of intangible assets, management has concluded that no impairment has arisen with respect to intangible assets during the year and subsequent to
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 IAS 38 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
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 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.
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.
Licence Fees
Licence fees are recognised on a straight line basis over the life of the licence, with payments being received in staggered instalments. Fees which are contingent on an event are recognised when the Company believes that it is probable that the event will occur.
4. Segmental analysis
Operating segments are determined by the chief operating decision maker based on information used to allocate the Company's resources. The information as presented to internal management is consistent with the Statement of Comprehensive Income. It has been determined that there is one operating segment, the development of fuel cells. In the year to
5. Operating loss
This has been stated after:
|
Year ended £ |
Year ended £ |
Government grants received and receivable |
(2,262,506) |
(591,269) |
R&D tax credit receivable |
(174,937) |
- |
Depreciation/Impairment of property and equipment |
198,769 |
300,612 |
Research and Development expenditure |
3,475,657 |
1,284,044 |
Amortisation/Impairment of intangible assets |
79,522 |
11,875 |
Write off of Waste2Tricity investment and receivable |
558,983 |
- |
Equity-settled share-based payment expense |
216,202 |
239,968 |
Foreign exchange differences |
42,975 |
44,211 |
Auditor's remuneration - audit |
30,000 |
20,000 |
Auditor's remuneration - tax |
9,500 |
2,500 |
Auditor's remuneration - other services |
- |
14,360 |
6. Staff numbers and costs, including Directors
The average numbers of employees in the year were:
|
Year ended Number |
Year ended Number |
Support, operations and technical |
39 |
37 |
Administration |
5 |
12 |
|
44 |
49 |
The aggregate payroll costs for these persons were:
|
£ |
£ |
Wages and salaries (including Directors' emoluments) |
2,660,709 |
2,214,039 |
Social security |
317,242 |
247,339 |
Employer's pension contributions |
35,095 |
31,443 |
Equity-settled share-based payment expense |
216,202 |
239,968 |
|
3,229,248 |
2,732,789 |
7. Directors' remuneration
|
Year ended £ |
Year ended £ |
Wages and salaries |
978,656 |
667,078 |
Social security |
131,225 |
80,535 |
Equity-settled share-based payment expense |
170,001 |
83,829 |
Other compensation (see note 25) |
48,149 |
82,923 |
Company pension contributions |
1,844 |
12,569 |
|
1,329,875 |
926,934 |
|
|
|
The emoluments of the Chairman |
57,346 |
58,325 |
|
|
|
The emoluments of the highest-paid Director |
661,932 |
370,613 |
Company pension contributions of highest paid Director |
- |
8,000 |
The remuneration, details of share options and interests in the Company's shares of each Director are shown in the Directors' Report.
8. Financial income
|
Year ended 31 October 2015 £ |
Year ended 31 October 2014 £ |
Gain/(Loss) on derivative financial instrument |
3,288,497 |
(636,330) |
Bank interest receivable |
5,775 |
48,667 |
Total interest receivable |
3,294,272 |
(587,663) |
9. Taxation
Recognised in the income statement |
Year ended 31 October 2015 £ |
Year ended 31 October 2014 £ |
Research and development tax credit - current year |
(569,706) |
(421,280) |
Total tax credit |
(569,706) |
(421,280) |
|
|
|
Reconciliation of effective tax rates |
|
|
|
|
|
Loss before tax |
(5,351,931) |
(5,858,297) |
Tax using the domestic rate of corporation tax of 20.42% (2014: 21.67%) |
(1,092,864) |
(1,269,298) |
|
|
|
Effect of: |
|
|
Expenses not deductible for tax purposes |
659,518 |
151,115 |
Above the line tax credit |
185,396 |
19,643 |
Research and development allowance |
(450,148) |
(347,762) |
Research and development tax credit |
(569,706) |
(421,280) |
Depreciation in excess of capital allowances |
47,737 |
65,133 |
Losses surrendered for research and development |
232,349 |
625,971 |
Unutilised losses carried forward |
418,012 |
755,198 |
Total tax credit for the year |
(569,706) |
(421,280) |
10. Loss per share
The calculation of the basic loss per share is based upon the net loss after tax attributable to ordinary Shareholders of £4,782,225 (2014: loss of £5,437,017) and a weighted average number of shares in issue for the year.
|
Year ended 31 October 2015 |
Year ended 31 October 2014 |
Basic loss per share (pence) |
(1.66)p |
(2.42)p |
Diluted loss per share (pence) |
(1.66)p |
(2.42)p |
Loss attributable to equity Shareholders |
(4,782,225) |
(5,437,017) |
|
Number |
Number |
Weighted average number of shares in issue |
288,431,626 |
224,533,287 |
Diluted earnings per share
As set out in Note 18, there are share options and warrants outstanding as at 31 October 2015 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 year has an anti-dilutive effect.
11. Intangible assets
|
2015 Patents £ |
2014 Patents £ |
Cost |
|
|
Balance at 1 November |
748,113 |
637,898 |
Retirements |
(401,166) |
- |
Additions |
98,980 |
110,215 |
Balance at 31 October |
445,927 |
748,113 |
|
|
|
Amortisation |
|
|
Balance at 1 November |
469,040 |
457,165 |
Retirements |
(401,166) |
- |
Charge for the year |
39,877 |
11,875 |
Balance at 31 October |
107,751 |
469,040 |
Net book value |
338,176 |
279,073 |
12. Property and equipment
|
Leasehold improvements £ |
Fixtures, fittings and equipment £ |
Motor Vehicles £ |
Total £ |
Cost |
|
|
|
|
At 31 October 2013 |
221,512 |
2,693,951 |
10,495 |
2,925,958 |
Additions |
51,247 |
- |
- |
51,247 |
At 31 October 2014 |
272,759 |
2,693,951 |
10,495 |
2,977,205 |
Transfers |
45,852 |
(45,852) |
- |
- |
Additions |
18,851 |
- |
17,994 |
36,845 |
Disposals |
- |
(1,326,821) |
(10,495) |
(1,337,316) |
At 31 October 2015 |
337,462 |
1,321,278 |
17,994 |
1,676,734 |
|
|
|
|
|
Depreciation |
|
|
|
|
At 31 October 2013 |
213,057 |
1,847,390 |
6,705 |
2,067,152 |
Charge for the year |
27,047 |
270,067 |
3,498 |
300,612 |
At 31 October 2014 |
240,104 |
2,117,457 |
10,203 |
2,367,764 |
Transfers |
9,783 |
(9,783) |
- |
- |
Charge for the year |
39,645 |
194,882 |
3,887 |
238,414 |
Disposals |
- |
(1,035,277) |
(10,495) |
(1,045,772) |
At 31 October 2015 |
289,532 |
1,267,279 |
3,595 |
1,560,406 |
|
|
|
|
|
Net Book Value |
|
|
|
|
At 31 October 2015 |
47,930 |
53,999 |
14,399 |
116,328 |
At 31 October 2014 |
32,655 |
576,494 |
292 |
609,441 |
There are no assets held under finance leases.
13. Investment
The Company holds 23% in Waste2Tricity Ltd ("W2T") (a Company registered in England & Wales). As at 31 October 2015 the Company held 230,000 shares representing 23% (2014: 230,000 representing 23%) of the share capital of W2T. In the view of the Directors this investment has no value currently and has been recognised at cost less impairment. No revenue was recognised in the period under the licence agreements with Waste2Tricity Limited and Waste2Tricity International (Thailand) Limited and accrued licence fees receivable as at 31 October 2014 of £506,483 has also been written off.
|
Year ended 31 October 2015 £ |
Year ended 31 October 2014 £ |
Investment in W2T |
- |
52,500 |
14. Inventory and work in progress
|
Year ended 31 October 2015 £ |
Year ended 31 October 2014 £ |
Inventory |
219,421 |
88,304 |
Work in progress |
- |
68,744 |
|
219,421 |
157,048 |
15. Trade and other receivables
|
Year ended 31 October 2015 £ |
Year ended 31 October 2014 £ |
Current: |
|
|
R&D tax credits receivable |
718,023 |
787,075 |
EU grants receivable |
2,513,395 |
419,183 |
Other receivables |
226,922 |
2,296,634 |
|
3,458,340 |
3,502,892 |
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.
16. Cash and cash equivalents
|
Year ended 31 October 2015 £ |
Year ended 31 October 2014 £ |
Cash at bank |
675,603 |
2,956,871 |
Bank deposits |
1,080,842 |
1,901,332 |
|
1,756,445 |
4,858,203 |
Cash at bank and bank deposits consist of cash. There is no material foreign exchange movement in respect of cash and cash equivalents. Restricted cash, not included in cash and cash equivalents, is €125,000 held in an escrow account to support a bank guarantee relating to the Stade site.
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