AIM Invest Forum Ian Williamson

November 2014All pages are deemed copyright AFC Energy November 2014

DISCLAIMERThese presentation materials are confidential. These presentation materials do not constitute or form part of any offer for sale or subscription or any solicitation for any offer to buy or subscribe for any securities nor shall they or any part of them form the basis of or be relied upon in connection with any contract or commitment whatsoever. Whilst all reasonable care has been taken to ensure that the facts stated in these presentation materials are accurate and that any forecasts, opinions and expectations contained therein are fair and reasonable, no reliance whatsoever should be placed on them. Accordingly, no representation or warranty express or implied is made to the fairness, accuracy, completeness or correctness of these materials or opinions contained therein and each recipient of these presentation materials must make its own investigation and assessment of the matters contained therein. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given, and no responsibility or liability is accepted, as to the achievement or reasonableness of any future projections or the assumptions underlying them, or any forecasts, estimates, or statements as to prospects contained or referred to in these presentation materials. No responsibility or liability whatsoever is accepted by any person for any loss howsoever arising from any use of, or in connection with, these presentation materials or their contents or otherwise arising in connection therewith. In issuing these presentation materials, neither the Company nor Zeus Capital undertakes any obligation to update or to correct any inaccuracies which may become apparent in these presentation materials. These presentation materials are being supplied to you for your own information and may not be distributed, published, reproduced or otherwise made available to any other person, in whole or in part, for any purposes whatsoever. In particular, they should not be distributed to or otherwise made available to persons with addresses in Canada, Australia, Japan, the Republic of South Africa or the United States, its territories or possessions or in any other jurisdiction outside of the United Kingdom where such distribution or availability may lead to a breach of any law or regulatory requirements. The distribution of these presentation materials in other jurisdictions may be restricted by law, and persons into whose possession these presentation materials come should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the relevant jurisdiction. In the United Kingdom, these presentation materials have not been approved by an authorised person pursuant to section 21 of the Financial Services and Markets Act (the "FSMA") and, accordingly, these presentation materials are only directed at persons in the United Kingdom who fall within the exemptions contained in Articles 19 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (such as persons who are authorised or exempt persons within the meaning of the FSMA and certain other investment professionals, high net worth companies, unincorporated associations or partnerships and the trustees of high value trusts) and persons who are otherwise permitted by law to receive them. These presentation materials are directed only at persons having professional experience in matters relating to investments and any investment or investment activity to which these presentation materials relate is only available to such persons. Persons of any other description, including those who do not have professional experience in matters relating to investments, should not rely on these presentation materials or act upon their content. These presentation materials have not been approved by the Financial Conduct Authority (the "FCA") as a prospectus for the purposes of section 87A of the FSMA and have not been filed with the FCA pursuant to the United Kingdom Prospectus Rules. No offer of shares in the Company will be made in the United Kingdom in circumstances which would require such a prospectus to be prepared. These presentation materials may contain forward-looking statements that reflect the Company's current expectations regarding future events, the Company's liquidity and results of operations, as well as the Company's working capital requirements and future capital raising activities. Forward-looking statements involve risks and uncertainties. Actual events could differ materially from expectations embodied in forward-looking statements and depend on a number of factors, some of which may be beyond the Company's control. Zeus Capital is authorised and regulated by the Financial Conduct Authority is advising the Company and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Zeus Capital. Any other person should seek their own independent legal, investment and tax advice as they see fit. Zeus Capital’s responsibilities as the Company’s Nominated Adviser under the AIM Rules will be owed solely to the London Stock Exchange plc and not to the Company, to any of its directors or any other person in respect of a decision to subscribe for or acquire shares or other securities in the Company. Zeus Capital has not authorised the contents of, or any part of, the Slides and no representation or warranty, express or implied, is made as to any of its contents. By attending the presentation and/or accepting this document you agree to be bound by the foregoing limitations and restrictions and, in particular, will be taken to have represented, warranted and undertaken that you have read and agree to comply with the contents of this notice.

2

• Revenue in 2012 tops $1 billion, $2 billion by 2014• Stationary fuel cells represent over 70% of sector revenue at end 2013• 20 companies represent 95% of the stationary sector revenue• 780 MW market by 2015 in Korea alone (Source Kepco)

• 7000 MW market globally by 2022

Global fuel cell market…coming of age…

Source Navigant Research – Q1 2014 stationary fuel cell report 3

• Alkaline fuel cells proven to work…• Years of reliable mission critical operation• Most electrically efficient fuel cell• Failed to compete historically due to:

• system cost• cheap fossil fuels• application areas

1950s technology…….

AFCs provide on board power for space shuttles and submarines

4

Constraint Industrial Fuel Cells Vehicle Fuel Cells

Weight and size flexible strict, in vehicle

Fuel storage no yes

Power density Low -medium high

Safety systems industrial public

Response/cycles steady state, several per year

rapid, several a day

…modernised by AFC for 21st century• AFC Energy founded in 2006 • Developed new catalyst materials to substitute platinum • Extended fuel cell longevity/performance to a level where it can compete with

fossil fuels and alternative energy at the point of use• Materials, recycling and modular design achieves low lifetime cost of ownership• New KORE system, validated design and now in production • Implemented multiple demonstration projects• Created significant IP and differentiated business proposition for customers• Used less than £29 million total equity since inception, reflecting low cash burn

and tight cost control

5

AFC has turned legacy technology into a market ready product

6

AFC’s modular design

• Simple• 30+ families of patents covering key technology• Basic modular design • Standard industrial materials• Low cost scale-up to automated manufacturing• Designed reuse or recycling• Ease of O&M

System development

7

2009

2012

2014

Alpha - 5kW

Beta - 50kW

KORE - 250kW

KORE – in build

8

Current projects & partnerships

9

Electrode and Cartridge

• AkzoNobel via Bitterfeld trials since 2009

KORE development and build

• Operational review completed• System ‘hazop’ completed• BoP long term build contracts

KORE operation demonstration-Power Up

• First build match funding provided by HFC - JU• Molecules produced by Dow Chemicals, Germany• Site and interconnections by Air Products• Expected delivery of the KORE to Stade mid 2015

Manufacturing toolsAutomated extrusion of electrode layers

10

Manufacturing toolsAutomated electrode stacking

11

2014 BOM COST 2014 FULL REUSE* 2017 on 2017 on with reuse* £-

£2,000

£4,000

£6,000

£8,000

£10,000

£12,000

£14,000

£16,000

£18,000

Cos

t [£]

Product cost reduction Based upon:

• Technical improvements such as reduced substrate area and lower catalyst content

• Purchasing improvements, i.e. the use of lower cost materials at the same quality included

• Recycling and leasing materials

• Scale up12

Efficient, reliable, economically viable

• Desired model is to install, own, remotely operate and maintain• Different business structures considered initially to reduce cash requirements• Willingness to undertake flexible revenue models i.e. partnering & licensing• Use of grant funding to improve capital utilisation for technical development• Strategy allows protected IP position for the company • Focus on MW-scale stationary applications • Targeting low hanging fruit....

• applications where hydrogen is available i.e. chlorine production• ….. Plus key geographic markets with favourable incentive regimes

• e.g. South Korea, US, Germany

13

• South Korea is the 10th largest energy consumer globally• 97% dependence on foreign energy supply - substantial fossil fuel imports• Korea has introduced incentives to increase clean energy independence • Fuel cells are one of the most ‘valuable’ technologies in REC terms

• Kepco, the state-owed Korean electricity utility, is targetting stationary fuel cell installed capacity to increase from 306 MW at present to approximately 780 MW in 2015 and almost double again by 2020

July 2014 announcements

Chang Shin• MOU with a leading hydrogen supplier, for multiple fuel cell systems with a total potential generating

capacity of up to 5MW

Daniel• HoA with a fuel cell focused power plant owner for an initial 1MW fuel cell system with a follow on

option for a further 3MW supply included, depending on performance

Korean stationary fuel cell sector

14

US stationary fuel cell sector• 88MW of fuel cells were installed or ordered by US business in 2013 • Total installed capacity at end 2013 exceeded 170MW• Growth in data centres has produced a burgeoning market for stationary fuel cells

– Companies such as AT&T, ebay, Apple, Verizon• US grid utilities have also begun installing MW grid connected fuel cells

Incentive support is provided at both federal and state level

Allied New Technologies and Foster Wheeler

• Chlor-alkali site at Florida vents large amounts of hydrogen daily as a normal part of its operation.

• Using the vented hydrogen via AFC fuel cells to generate power was therefore conceptually attractive

• A Foster Wheeler study looked at the power generated and its value to Allied or similar sites when using AFC’s fuel cell technology

• Foster Wheeler’s work showed that the system can be operated at a profit which could potentially be enhanced using incentives where available

15

FinancialsIncome• Grant revenue increased at the half year by approximately 500%• Licence revenue increased at the half year by approximately 100%

Costs• Cost controls remains tight• Administration expenses per employee reduced by 24%• Additional spend on space and people delivering technical

advancement

Cash• Cash at half year £4.96m was 2.59 times the cash absorbed

in operating activities during the half year• Raised £6.1m last month from city and open offer

16

Commercially• AFC now has a significant global prospect list in a market showing rapid growth• AFC is in the process of closing its first commercial dealsTechnically• First commercial module will be commissioned mid 2015• Production costs are being reduced rapidly• Output is set to be increased exponentiallyFinancially• Tight ship, low overhead• Mitigation by grant where possible• Revenues beginning to flow

Summary

A simple, game-changing, hydrogen-based, power generation technology

17

Thank you for your kind attentionfor more information please visit

www.afcenergy.com