Sunday, 8 March 2020

AFC Energy - Full Year Results

AFC Energy (AFC.L) is a small company listed on the AIM market. However it is one of the market leaders in the hydrogen revolution as we transition from fossil fuels to clean energy. Hydrogen is regarded as a key element in the governments announcement to reach net zero carbon emissions by 2050. The UK will host the COP 26 conference in 2020.

The shares were first added to my green portfolio last September and topped up in December - from 5p up to 27p then down to 12p and up 36p then down to 22p... it's been a rollercoaster ride to say the least!

Last week the company released results for the full year to end October 2019 (link via Investegate).

Over the 12m period losses have narrowed to £3.6m (£5m 2018)

Adam Bond, CEO of AFC Energy, commented: "The past twelve months has seen a clear and ever-growing momentum behind the role of hydrogen as a means of decarbonising the UK's current and future energy mix.  With the successes and achievements delivered by AFC Energy over these same twelve months, we are well positioned to capitalise on this growth market, particularly in support of the transition away from diesel engines in both motive and stationary applications towards clean hydrogen-based alternatives.

The premium priced power achievable in both off-grid and convenience based rapid EV charging present market deployment opportunities as recently validated through feedback received following the Company's EV charger demonstration roadshow throughout the UK earlier this month. 

The next twelve months will see a concerted effort focussed on the sale and deployment of fuel cell systems into these key markets alongside growth in resources to deliver scaled up manufacturing capacity and also sales and commercial coverage of our key targets.  We have the opportunity for clear first mover advantage in the EV charging market in particular and through the much-appreciated efforts of our employees and partners, look forwards to delivering on our commitments to support the UK's and international efforts towards a net zero society"

Share Price past 6 months  (click to enlarge)

The government have recently brought forward the date for phasing out petrol and diesel engine vehicles from 2040 to 2035 and this should strengthen the demand and urgency for alternatives such as battery EVs and hydrogen fuel cell powered vehicles. It will take some time to upgrade the National Grid network and increase capacity so AFC's EV charger should help to bridge the transition. They have many applications - charging hubs for taxis, powering trains, local councils, motorway charging points, fleet charging as well as domestic vehicles.

It is hoped that over the coming year some of this potential can translate into contracts for delivery of the fuel cell systems into the market. This is still a relatively small company - market cap. £95m - operating in a niche but growing market so I expect the share price to be volatile, rising sharply or falling according to market news. 

...a critical piece of the net zero jigsaw

My holding has increased four-fold since purchase last September however in the past month I have taken some of the profits to fund other purchases such as Ceres Power so AFC is still a relatively small percentage of the portfolio. I am hopeful the chancellor will confirm the government's support for renewables and hydrogen as part of the transition to net zero emissions in the budget on Wednesday.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation... investing in smaller companies can be rewarding but is higher risk - always DYOR!

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