Member Info for Piltick

There can't be any price sensitive news released at the AGM, but it can be released immediately prior.

Good point fitumsh!

Whether averaging down or not, they wouldn't put in more money if they thought it was going to go down. So I regard this as encouraging.

"Pure electric vehicles are more suitable for urban and short-distance passenger travel, while hydrogen fuel cells are more suitable for long-distance and large commercial vehicles, Huang said."

This is a great quote, and exactly what I have believed for ages, so it's very encouraging to have it confirmed by someone of note who presumably knows what he's talking about. This became apparent to me as the owner of a RAV4 hybrid, because it is obvious that it's great and economical for driving around in town in EV mode, giving a good milage, but faster out-of-town driving and long-distance requires a different fuel type - petrol in the case of the RAV4 - but hydrogen would would also do the job perfectly well.

My conclusion is that, as the report continues, "hydrogen fuel cell vehicles and pure electric vehicles will coexist and complement each other for a long time to meet the needs of transportation and people’s travel."

£59.4M according to the accounts at 30 June last year. Of course that's the total of the accounting losses, will almost certainly be different to the tax losses according to the tax computation, but they will be in the same ball-park. So I expect it will be a few years before PHE pay any tax.

Just a point to bear in mind - the company shouldn't have to pay tax on annual profits as long as they are carrying forward trading losses.

PART 2:

“AFC Energy now has a reliable source of electrodes that have both longevity and economy.”
What is the current status regarding 4 year longevity?

“…working with our partners to use fuel cells in place of diesel gensets for a major construction project in Surrey.”
Presumably this is referring to Dunsfold Park. What are the timelines now?

“The new alkaline fuel cell platform will enable quicker response times, far greater power density facilitating reduced system weight, smaller volume and footprint whilst still maintaining high efficiency all whilst being able to accept lower grade hydrogen fuel sources…”
Would this enable an AFC fuel cell to generate electricity using hydrogen from PHE’s DMG system without the need to purify the hydrogen through an expensive PSA system?

PART 1:

I have had a look again at the latest two RNS updates and have picked out the issues that I feel would be good to have updates or answers either before and at the AGM. Perhaps someone would like to ask some of these questions at the AGM:

RNS 15th Nov. 2018, Commercial Update:

“AFC Energy has now successfully concluded the majority of engineering design to bring to market its first commercial fuel cell system.“
So when does AFC now anticipate selling its first Fuel Cell?

“…contract negotiations are underway to create the first fully containerised Alkaline Fuel Cell system…”
Can we have an update on these negotiations? When is the contract likely to be signed?

“…and is in the final stages of confirming an electrode pairing for the Southern Oil project in Australia.These electrodes are expected to be supplied by Industrie De Nora to AFC Energy in Q1 2019, subject to agreement on the terms of a Strategic Electrode Supply Agreement.”
Has this been achieved in Q1?

RNS 12 April 2019:

“However, as we have stated before, the technology was not ready for commercial manufacture, with both component longevity and cost issues hampering the potential commercial exploitation.”
So what is the update situation?

“…our engineering team is currently designing a containerised solution to enable rapid cost-effective deployment for off grid applications.”
This was also stated in the RNS on 15th November. So what is the update situation?

“…Southern Oil who are making major modifications to one of their re-refinery plants in Australia.
AFC Energy expects to agree final terms and deliver a fuel cell system to Southern Oil's Gladstone refinery once they have finished the design of their plant modifications and confirmed the volume of hydrogen available for the fuel cell system.”
So what is the update situation? Estimated timeline for installation?

“Our commercial strategy will be conducted in three phases:”
So what is the update situation on each of the three phases?

“We announced in 2018 that we would also be targeting the market for static auxiliary power and seeking to displace the current generation of polluting diesel gensets.”
When will AFC be in a position to sell the first FC unit to displace gensets?

“Today we can state that we have engineered the right product to take to market, we have the right people on board to make this happen and we have identified the right market opportunities to build a successful and profitable company.”
So what is the timeline for the future? What are the targets for the next 12 months?

“Upon successful completion of this phase a contract with Advanced Plastics as preferred mass manufacturer will be agreed.”
Latest progress on this? When is a contract expected to be signed?

And another thing - I was under the impression that initially they would be using the syngas with a gas generator to produce electricity, not hydrogen. It has been stated that the Capex for the first DMG unit would be c. £7M which would not cover the cost of the PSA equipment to purify the hydrogen to vehicle fuel standards - an additional c. £5M I believe. That would only come later, and probably with another DMG unit at a different location, when they have established a market for the hydrogen.

So, this statement in the report is not entirely accurate:
"At first, the facility will use the hydrogen it generates for onsite electricity production. Once upgraded, the hydrogen could then be distributed for other uses in the pipeline or used for vehicle refueling."

I would agree Newboy, W2T will never fill 54 acres. That is probably the whole area that's designated for waste to energy by several companies and several different processes.

NB: waste to energy processes, not W2T!!

Lazy reporting, I reckon.

stokey, the £400k revenue is only to cover the cost of PHE arranging the design and FEED together with any sub-contractor costs that may be involved in this process. It doesn't give an estimate of the the costs that will be involved in this, so we don't know how much will be left over as profit for PHE when the task is completed.

And of course this has nothing to do with the licence fee of 20% of net revenue that will come to PHE from the SPV when the DMG is up and running.

Excellent video.

Trevor Milton, CEO of Nikola, said:
"Sales of electric cars are growing worldwide as batteries and component costs improve, led by Tesla, and increasing numbers of medium- and heavy-duty electric trucks and buses can be found on the streets of big cities and at ports. But the physics of long-range semis, hauling up to 80,000 pounds including the cab and trailer, mean the winning technology is still a wildcard."

“If you want to electrify heavy-duty trucks, a Class-8 truck needs seven tons or 700-kilowatt hours of battery in there, that makes four to five packs to store in the truck. By comparison, you get the same range from a few hundred kilograms of hydrogen,” said Bernd Heid, a senior partner at McKinsey & Company, who researches trucking industry trends and technology.

Yep, I reckon hydrogen-FC will definitely win over the battery EV.

This is not death spiral financing. I have seen lots of those, and this is not one of them. Death spiral financing does not take 42 months for the CLNs to mature, they usually mature right away.

Only 6 days left for AFC to issue announcement of the AGM, and that includes a weekend so only 4 working days left. Will they take it to the wire?

I believe that PHE have the right to take a shareholding in any of the Special Purpose Units (Joint Ventures) that will be paying for and operating the DMG units, in which case they will get their equity share of the profits of the SPV (JV) as well as their 20% of the net revenues.

But of course, in order to take a shareholding, they will need to be able to fund their share of the capital cost.

As far as I can see they are not producing hydrogen but using the syngas through a boiler to produce electricity and heat.

One or two bits of info not mentioned but which I would be interested to know:
1. What process is being used to produce the hydrogen.
2. How "green" is the process for the production of hydrogen
3. How much does this hydrogen cost per kg and how does the cost compare with the cost of diesel on a per mile basis for the buses.

I would expect that PHE's DMG system would score favourably against all of the above, when we get one up and running!

Audible, I don't believe that it's Peel's strategy to buy or invest in the machinery and equipment, they create the overall infrastructure and then lease individual sites to companies who are involved in renewables. But I don't think they intend to invest in the individual companies nor in their processes.

The full statement in W2T's IPO document is:
"Toyota Tsusho – NDA signed, technology reviewed & Toyota Tsusho has issued draft HoT which will be discussed and signed in Q1/2"

I wouldn't expect a RNS until the HoT is signed, hopefully soon.