Member Info for MakhandaMatt

I have to say that I am utterly perplexed at the negative commentary associated with the recent management stock option grant. As clearly explained in the RNS these awards have been made to compensate the newly appointed CEO and CFO for "unvested incentives" which have been forfeited. This is standard market practice and a necessary but not sufficient requirement in attracting top talent. These are not performance-based stock options but nevertheless both individuals have left their previous employer - an unlisted entity - and have agreed to accept a meaningful, staggered equity exposure which will vest over the next 3 years. This is designed to mirror their previous remuneration which I suspect will have had a much more significant cash component and clearly highlights their confidence in the outlook for AFC. I personally view this as unambiguously positive news. We now have a competent management team with extensive operational experience of running a manufacturing business who are contractually incentivised to remain in place for the next 3 years.

I am not writing this post with any expectation of "ramping" the share price but rather to correct some of the utterly vacuous commentary that has been written since the news was disclosed. As shareholders we will have an opportunity to hear firsthand from the CEO and CFO and should expect to receive an honest appraisal of the status quo and their plans for unlocking the obvious growth potential they have both identified. They are both aware of the increased scrutiny they will now face in running a listed company and are clearly comfortable with the risk/reward profile.

I have also been contemplating the trading behaviour from Helikon and am very surprised at the scale of their shorting activity. This is not a routine trading position anticipating a near term drop in the share price but rather a "fundamental" short which is constructed over time and predicated on the company's business model failing. Typically hedge funds will avoid running concentrated short positions in illiquid stocks - such as AFC - as the share price is volatile and the cost of covering (buying back the short) can be prohibitively expensive. In theory the risk exposure is infinite versus the potential profit which is capped. Should the share price appreciate considerably then Helikon will be forced to buy shares at a significant loss. Effectively this is an "extremely high conviction" trade that the technology and product offering from AFC will comprehensively flounder. A flurry of positive news early next year could prompt quite a violently positive share price reaction.....

Thanks Aaroon - much appreciated.

Thanks Aaron for the feedback. Do you know if the AGM was recorded? For some reason I was denied virtual access. Did the Board provide any more context on the going concern status?

I am a fervent supporter of this company and believe that the market in general is completely underestimating the operational leverage it offers. The next 6 months (heading into the end of FY2025) are absolutely critical. If the management team can deliver on the cashflow breakeven target then the upside in the share price is exceptional.

The quality of OEM programmes (blue chip, "anchor" clients) and the cumulative total initial lifetime revenue both provide a strong, long term underpin - from $321m in FY2023 to $392m in FY2024. The market is looking for signs that the recent trend in negative jaws (growth in OPEX > growth in revenue) will reverse which will alleviate the risk of a liquidity strain triggering a solvency crisis.

At the upcoming AGM I will be acutely scrutinising any messaging from the BoD that the cash position remains a top priority and that there is complete alignment with the management team on the levers at their disposal should they encounter any unexpected shortfall. If this communication is forthcoming I believe that it will be extremely reassuring and well received.

I believe that this company is on the cusp of delivering outstanding results and investors are not fully appreciating the significant profit growth which will follow the shift in gross margins and revenue contribution from Royalties. Tangible delivery on meaningful cost containment measures will yield substantial benefit along with any indication on whether we have witnessed a peak in R&D expense. 

The larger asset managers will remain on the sidelines until there is greater clarity but this represents the opportunity for more nimble investors with a higher risk appetite. The second half of FY 2025 is critical but I am personally very excited at what the future holds.

I am surprised at the ongoing negative commentary around this company. Having reviewed the investor meeting in detail over the weekend I am exceptionally reassured and excited. Gary and Peter answered questions in a detailed and transparent fashion and addressed the key issues which have been weighing on the share price. The establishment of Hyamtec as standalone subsidiary makes solid commercial sense and there is clearly an opportunity to unlock significant value. The introduction of a Sage ERP is a major step forward and will greatly assist in managing inventory and working capital.

From my perspective this company is on the cusp of delivering outstanding performance and as investors we have the possibility to support and participate in the upside. We should be celebrating this success and positive outlook. The arrival of the new CEO at the start of January will be another strong catalyst and step in the right direction. The existing management team resisted the urge to provide unrealistic KPIs but committed to delivering on milestones in the near term and building credibility.

There is sufficient cash available and no need for a capital raise. The CFO has identified pragmatic cost cutting measures which can be actioned. The company has made significant modifications to their product suite which will further enhance their marketability. The relationship with Speedy Hire is delivering great results and the partnership with TAMGO is generating traction and providing access to a substantial, untapped market.

I can fully understand if existing, long term shareholders adopt a "wait and see" approach but there is a great opportunity to attract new investors to this stock and it will not take a huge amount of momentum to force the likes of Helikon and other short sellers to cover their positions.

I appreciate that this has been a challenging investment for longer term holders who have been frustrated at the lack of delivery but I am convinced that this company is one of the most attractive stocks to hold in 2025. This trading update is unequivocally positive and a full vindication of the strategy. There are significant tailwinds ahead in terms of legislative change, government policy and grant funding which are all supportive of the business model. A new CEO with operational experience of building a manufacturing business in the industrial sector is another substantial step forward.

The recent share price weakness has been a factor of concern over the early production challenges, change in leadership and news vacuum which has prompted much speculation. All of these issues have been addressed. There has been no negative surprise in terms of R&D expenses or excess working capital and the company has made a clear commitment on near term anticipated cash burn. There is no need for a capital raise and the company has access to alternate sources of funding.

Another step in the right direction is a tangible shift in communication with less reliance on marketing spin and more focus on clear delivery. At this stage - quite rightly - the market is assigning no value to the Hyamtec division but this is essentially a free call option and a further source of revenue upside.

The company has established strategic relationships with credible partners across key industries and geographies which are yielding positive results. I understand certain investors will await further evidence of progress but in the interim this is a very compelling buying opportunity on a risk adjusted basis.

Very true....hopefully this will be their Melvin Capital/GameStop moment. The danger of being short an illiquid, small cap stock is that you can experience an extremely uncomfortable short squeeze at any time. I still remain very constructive on the company and am looking forward to the new CEO actively taking over the reins and re-establishing credibility with investors.

Hi ColdFishPie, I am a recent investor in SEE which I view as a well-capitalised business with market-leading technology and a credible, strategic partner. The company released a positive trading update which reflected solid revenue growth and a healthy cash position. I would like to see more detailed KPIs and more information on cashflow conversion from the OEM programme awards but at this stage I remain very constructive on the company's outlook. I have a number of investments in similar companies which are evolving from an R&D background and acknowledge that the transition is not always straightforward and can sometimes require management change. I am always keen to learn/expose any bias on my investment thesis - what is the crux of your concern?

Hi Gyroman,

I am not qualified to give you financial advice but am happy to share my own perspective. The company successfully raised GBP15m in June through an oversubscribed offering of new shares which was a very positive endorsement. Since then the CEO has departed (I personally suspect that he was fired or at least encouraged to leave), we have been in a news vacuum and a major shareholder has dumped shares into the market. At this stage the company has been unable to react as it is in a closed period (financial year end approaching) and any meaningful prospective buyers are waiting for an operational and financial update. Unfortunately for the time being the selling activity is likely to dominate.

I remain invested in this company as: 1) I believe in the products; 2) I am excited at the prospect of a competent CEO joining; and 3) I do not foresee the company experiencing any near term liquidity issues. I am using the current share price weakness to "average" down my entry price. What would prompt me to change my current view is if there are any design or manufacturing issues with the current product suite which impairs their marketability and/or the company starts to confront higher than expected cashflow burn necessitating a further capital raise.

The company is at a critical juncture pivoting from an R&D platform to a fully functioning manufacturing entity. The transition will be painful and uncomfortable for shareholders (and I fully respect the frustration expressed from long term investors). The questions you have to answer are whether you believe in the "technology" the company has thus far developed and how easy it is for competitors to replicate it, and whether the business is adequately capitalised to navigate the next 6-12 months as it builds an order book.

Just following on from my earlier post. Yesterday a large, existing shareholder sold 26m shares at 9.25p. The broker facilitating the transaction bought the shares at a material discount to the prevailing market price as they are now trying to onward sell the shares as profitably as possible which is creating a short term overhang on the price. A total of 39m shares traded yesterday so the broker is probably still left with a material position to exit over the coming days and this will suppress the price until this is cleared.

The technical explanation for today's share price drop is that one investor sold a total of 26, 348, 768 shares at a price of 9.25p this morning via an "off market" block trade. This information is disclosed by the London Stock Exchange. We will find out shortly the identity of the seller in the next day or two as the company is required to notify the market via an RNS of any change in shareholding > 3% of the issued shares outstanding. This typically occurs 24-48 hours after the trade has been executed.

Fully agreed Reality Chap. At this stage it remains a speculative investment but the key next milestones over the coming months are:

1) Appointment of a new CEO

2) Delivery of meaningful orderbook growth from both Speedy Hire and TAMGO

3) Visibility on tangible revenue conversion from the orderbook growth

4) Evidence of successful product delivery (on time and on budget)

4) Clarity on the ammonia cracker commercial objectives

The building blocks are in place but we need a management team who can establish credibility by delivering against transparent KPIs. As the business begins to demonstrate scalability both in terms of product delivery, revenue and tier 1 client acquisition the stock will attract a greater following from institutional investors which will have a dramatic impact. The risks are that a new CEO deliberately resets expectations lower and/or the cashburn dramatically increases necessitating a further equity raise. The idea that Speedy Hydrogen Solutions as a new JV can source funding on a standalone/ringfenced basis is commercially naive. In the interim the share price will remain at the mercy of retail investor sentiment.

I am a tad nervous entering the fray on this chat group but here goes....I am a relatively new investor in AFC and am reasonably encouraged by today's presentation. I invested in the company primarily on the basis of its technology and not management. The body language between the CEO and CFO looked very negative and I now suspect that Adam's departure is not of his own volition. This company is at a critical juncture evolving from R&D into a commercially viable entity. Managing unchartered working capital cycles and prioritising cashflow will be critical....the CFO seat is crucial.

Stating the obvious but the new CEO appointment will be pivotal and it needs to be an individual with a track record of successfully scaling up a manufacturing business. No disrespect at all to Adam but he is woefully ill-equipped to do this and has acknowledged as much. This is not an exercise in simply growing the order book but also entails managing overheads, leveraging assets and ensuring that the gross margin is maximised. Manufacturing JVs will help top line revenue but hugely impact profit.

At this stage it is impossible to even remotely value the company accurately and analyst forecasts are entirely redundant. We simply do not have sufficient basic information to perform a very rudimentary analysis....but we know that the technology works and has broad applicability, and this "IP" has a value. I personally would not anticipate any material share price move in the next 12 months (because the order book could quadruple to GBP100m but it is entirely irrelevant if the market is unsighted on how this translates into bottom line profit) but firmly believe that this will represent a great investment for a patient investor on a 24 month plus time horizon. The transition to a successful, manufacturing business (as evidenced by an ability to generate significant net income and preserve its gross margin) will be profound.