REG - Proton Motor Power - Final Results
13/06/2022 07:00
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RNS Number : 5473O Proton Motor Power Systems PLC 13 June 2022
13 June 2022
Proton Motor Power Systems plc
("Proton", the "Company" or the "Group")
Final Results
Proton Motor Power Systems plc (AIM: PPS), the designer, developer and
producer of fuel cells and fuel cell electric hybrid systems with a zero
carbon footprint, announces its audited results for the year ended 31 December
2021 (the "Financial Year").
Highlights:
· Total order intake in 2021 of £2,800k (2020: £7,300k, including
a single large multi-year framework agreement announced in Q1 2020 amounting
to £4,500k, which was not repeated in 2021)
· 49% of the order intake in 2021 (2020: 76%) was derived from the
stationary segment with other orders being spread across the mobile, maritime,
rail and engineering segments. Notable orders announced throughout the
Financial Year included:
o Multiple orders from GKN Hydrogen for our S8 Fuel Cell System
o An MoU signed with Electra Commercial Vehicles Limited to act as system
integrator to integrate Proton Motor fuel cells into the Electra truck
portfolio followed by an initial order
o Further order from E-Trucks Europe for seven HyRange 43 hydrogen fuel cell
systems
o Agreement with Torqeedo GmbH ("Torqeedo") for the Marine segment
· Sales in 2021 were £2,771k (2020: £1,893k), representing an
annual increase of 46%
· Gross Profit of £425k in 2021 (2020: gross loss of £83k)
· Excluding the impact of the embedded derivative together with
exchange losses, the operating loss in 2021 was £9,121k vs. £7,128k in 2020
which is in line with our budgeted expectations. The increased loss resulted
principally from further investment in the technical development area, in
Group support staff and infrastructure
· The embedded derivative is a non-operating, non-cash item,
required by IFRS, which is based on gauging the potential effects of partial
convertible interest on loan financing. Due to the waiver of convertible
interest on loan financing announced in December 2021 the source of the
embedded derivative no longer exists, so that the entire liability relating to
the derivative has been reversed, resulting in a substantial one off
non-operating gain of £609,200k in 2021
· Cash burn from operating activities has increased during the
period from £4,700k in 2020 to £8,700k in line with increased investment in
staff and technology development. Cash flow is the Group's key financial
performance target and our objective is to achieve positive cash flow in the
shortest time possible. Current contracts are quoted with up-front payments
reducing reliance on working capital as we continue to invest in our
manufacturing capability. The cash position as of 31 December 2021 was
£2,152k (31 December 2020: £2,739k)
Post year end
· Q1 2022 order intake of £1,100k
· At the end of April 2022, the production backlog had a sales
value of £3,200k. The fulfilment of this backlog will result in deliveries of
varying configurations of fuel cell systems and also service maintenance
charges to customers both in 2022 and 2023
Following the year end, existing loan facilities have been increased by a
further €12,500k to ensure operational and investment financing into 2023
with a view to accelerating the investment programme in the face of increasing
demand.
Outlook
In the year ahead we are focused on progressing the maturity of the group
technology offer, ramping up production capacity and exploiting the current
potential sales pipeline. The current outlook at the end of 2021 looking into
2022 is more optimistic than that at the end of 2020.
The Board would like to thank all our customers who believe in us, our team of
committed employees and our shareholders who have the vision to invest in our
mission.
Dr. Nahab, CEO of Proton, commented: "Although faced with highly challenging
trading conditions in 2021, the Company has made significant progress. In the
year ahead, we are focused on further progressing the maturity of the Group's
technology offer, ramping up production capacity and exploiting the current
potential order intake and sales pipeline.
"Furthermore, it is anticipated that the significant strengthening of
political commitment to hydrogen, as evident in 2021, will contribute to
further accentuating the demand for hydrogen related products, such as the
fuel cell."
Posting of accounts and notice of AGM
Notice of the Company's annual general meeting, to be held on 29 June 2022 at
9.30 a.m. BST/10.30 a.m. CET at Proton Motor Fuel Cell GmbH, 7, Benz Street,
82178 Puchheim, Germany, has been sent to shareholders. The Company's audited
annual report for the year ended 31 December 2021 will be posted to
shareholders shortly and a downloadable version of the annual report and AGM
notice will be available on the Company´s website,
www.protonmotor-powersystems.com (http://www.protonmotor-powersystems.com) .
- Ends -
For further information:
Proton Motor Power Systems Plc
Dr Faiz Nahab, CEO
Helmut Gierse,
Chairman
Roman Kotlarzewski, CFO +49 (0) 173 189 0923
Antonio Bossi, Non-Executive Director
Investor relations: www.protonpowersystems.com
investor-relations@proton-motor.de
Allenby Capital Limited
Nominated Adviser & Broker +44 (0) 20 3328 5656
James Reeve / Vivek Bhardwaj
Chairman's statement and strategic report
We are pleased to report our results for the year ended 31 December 2021.
Overview:
Proton Motor Power Systems plc ("Proton Motor") has made further progress this
year in proving its technology, building up capacity and sales pipeline. We
have strengthened our organisation to be able to deliver complete power supply
solutions. In spite of the COVID-19 backdrop, a further strengthening of
industry and consumer demand for alternative sources of energy continues to be
evident in the period under review. Proton Motor´s technology offer continues
to mature to remain aligned with this growing demand and supports the
continuing commercialisation process of the group. This is evidenced by the
order intake in Q1 2022, which amounted to 39% of the total order intake for
the year 2021. The potential sales order and production pipeline remains
strong as at the date of this report.
Having implemented from the onset all recommended protective measures at its
factory in Puchheim, to date Proton Motor has not been affected by COVID-19.
However, there have been several isolated cases of COVID-19 amongst the
Company staff as at the date of the report. Whilst our staff have had to
maintain social distancing and other recommended measures to protect
themselves against the virus, our factory in Puchheim remained and remains
fully operational and our production capacity has been unaffected. As a
result, our factory in Puchheim has been able to focus on manufacturing and
delivering the above mentioned order intake.
View to the future
The world is committed to protecting the environment. European cities and
governments, supported by various European Commission initiatives, must reduce
inner-city pollution drastically. China fights against smog in its big cities.
After Dieselgate in the US and Europe, battery electric vehicles ("BEV") are
being widely adopted. All this is generating a market for clean transport and
energy. As a consequence, the world market for fuel cell products and
solutions is more active than ever.
Beside pure battery solutions, hydrogen fuel cells offer an alternative
solution more suitable to a number of stationary and off- and on-highway
applications. Corporations such as Toyota, Hyundai, and Daimler are pushing
the technology forward. Fuel cells provide benefits such as fast refuelling
and long range of operation. Hydrogen can be produced cleanly and can make use
of surplus energy from wind and solar power. Europe has put major funding
programmes in place to set up a hydrogen infrastructure. The same is now
happening in Japan, Korea and China. The Chinese government is fully committed
to fuel cell technology with major regulatory and funding support.
Proton Motor has profound experience in applications in heavy duty vehicles
such as buses and trucks, stationary power solutions, ships, rail machines and
material handling applications. Proton Motor, with just over 100 staff
members, is relatively small but, with our strong IP and experience, a
powerful company. Proton Motor has developed and continues to develop its own
fuel cell stacks. Systems are designed from first simulation, prototype up to
final solution for volume manufacturing. Proton Motor is cooperating with
German and European based companies in the field of fuel cell technology.
The industry is now benefitting from ever increasing commitment at the
political level. For example, the EU originated European Clean Hydrogen
Alliance (ECH2A) was announced as part of the New Industrial Strategy for
Europe, which was launched on 8 July 2020 within the context of the hydrogen
strategy for a climate-neutral Europe
(https://ec.europa.eu/energy/sites/ener/files/hydrogen_strategy.pdf) .
The European Clean Hydrogen Alliance aims at an ambitious deployment of
hydrogen technologies by 2030, bringing together renewable and low-carbon
hydrogen production, demand in industry, mobility and other sectors, and
hydrogen transmission and distribution. With the alliance, the EU wants to
build its global leadership in this domain, to support the EU's commitment to
reach carbon neutrality by 2050. https://www.ech2a.eu/ (https://www.ech2a.eu/)
Proton Motor has been participating in the ECH2A founding process.
Proton Motor is already participating in the EU REVIVE project. REVIVE stands
for 'Refuse Vehicle Innovation and Validation in Europe'. The project has been
running from the beginning of 2018 and will continue for 4 years until the end
of 2021. The objective of REVIVE is to significantly advance the state of
development of fuel cell refuse trucks, by integrating fuel cell powertrains
into 15 vehicles and deploying them across 8 sites in Europe. It aims to
deliver substantial technical progress by integrating fuel cell systems from
three suppliers into a mainstream DAF chassis, and developing effective
hardware and control strategies to meet highly demanding refuse truck duty
cycles.
There is also the EU JIVE project. The JIVE (Joint Initiative for hydrogen
Vehicles across Europe) project seeks to deploy 139 new zero emission fuel
cell buses and associated refuelling infrastructure across five countries.
JIVE is running for six years from January 2017 and is co-funded by a €32
million grant from the FCH JU (Fuel Cells and Hydrogen Joint Undertaking)
under the European Union Horizon 2020 framework programme for research and
innovation. The project consortium comprises 22 partners from seven countries.
Germany is a prime market for the Proton Group. On 3 June 2020 Germany´s
coalition government presented a €130 billion (£114 billion) fiscal
stimulus package. This package includes the following elements with regard to
the role of hydrogen:
· The 'national fuel cell strategy' will support the hydrogen
industry with €7 billion. The goal is to make Germany a global champion in
the hydrogen industry and to export it on a global basis. By 2030, Germany
plans to install 30 Gigawatt of electrolysers to produce green hydrogen from
offshore and onshore alternative energy. Additionally, the German government
is seeking to support the shift from fossil energy to hydrogen in all types of
industrial processes.
· The automotive supplier industry received a bonus programme worth
€2 billion in the years 2020 and 2021 to invest into R&D for new
technology.
· Subsidies worth €1.2 billion for public and private operators
of buses and commercial vehicles with alternative power units.
Proton Stationary
This market includes back up power for critical infrastructure, telecoms and
data centre installations. Buildings and the storage of renewable energy in
hydrogen are also becoming an interesting growing market as evidenced by the
installation of an autonomous ecosystem in Switzerland which included one of
our fuel cells.
Stationary fuel cell units can replace diesel generators in telecoms, data
centres and ecological houses. The benefits for the end user are that fuel
cell units require less maintenance than the old polluting generators that are
prone to algae build-up in the diesel tank, which causes high maintenance
cost. It is also possible to monitor the Proton Motor system remotely, which
again saves time and manpower.
Proton Mobility/Rail
This market includes city buses, airport vehicles, trucks, off-road vehicles,
rail and other heavy duty vehicles and fork lift trucks. The mobility sector
sees many future challenges with emission free to automated driving with the
vehicle becoming a power source itself.
In addition to the EU REVIVE and EU JIVE projects mentioned above, Proton
Motor is also participating in the EU Standard-Sized Heavy-Duty Hydrogen
Project ("StasHH"). The consortium comprises 11 fuel cell module suppliers,
nine original equipment manufacturers and five research, test, engineering
and/or knowledge institutes and will standardise physical dimensions, flow and
digital interfaces, test protocols and safety requirements of the fuel cell
modules that can be stacked and integrated in heavy duty applications like
forklifts, buses, trucks, trains, ships, and construction equipment. The
consortium receives €7.5 million funding from the European Union, through
the "Fuel Cells and Hydrogen Joint Undertaking" (FCH JU), in order to
kickstart the adoption of fuel cells in the heavy duty sector. The total
budget for the StasHH mission is €15.2 million.
Further mobile applications of the Proton Motor technology will be seen in the
public transport and logistics arena. Proton Motor was the first company to
develop a hybrid range extender battery/fuel cell system. This technology
permits the usage of both systems in an optimised way with long lifetime
expectation. In the meantime, the range extender concept is being adopted by
the industry especially for heavy duty vehicle applications.
Proton Maritime
Building on the success with our tourist ship in Hamburg, Proton Motor sells
the know-how capability to partners to evolve this market. The Group delivered
the first feasibility study for an underwater vessel. Proton Motor, again,
clearly demonstrates capability within the technology.
Proton Motor is participating in a Bavarian funded project Ma-Hy-Hy, together
with the main partner Torqeedo. Torqeedo, part of the Deutz Group, is a leader
in electric mobility on water offering electric and hybrid drives from 0.5 to
100kW for commercial and recreational use. The project has the target to
develop a marine hydrogen hybrid system building kit, which will be able to
deliver fuel cell powers between 30 and 120 kW and variable hydrogen storage
capacity. The project will complement Torqeedo's existing Deep Blue Hybrid
portfolio of marine drive systems.
Group activities
Following the successful completion of the production lines for the fourth
generation Stack Modules and the PM Module S8 systems, the group has been
focusing on selling fuel cell systems with an electrical power output from 8
kW up to 150 kW for mobile, stationary, maritime and rail applications.
Especially the number of produced PM Module S8 units is increasing, because of
regular order income of several customers like GKN Hydrogen.
With these fourth-generation fuel cell stacks and systems the Group has set up
strategic partnerships with electrical drive train manufacturers and
industrial partners. The systems can be used in combination with a battery to
a hybrid drive train for electric driven light duty vehicles, trucks, inner
city buses or industrial power supply solutions. We also expect growing demand
in the near future from truck manufacturers for municipality maintenance
vehicles. Also, the fourth-generation fuel cell stacks will be used for rail
and maritime applications.
As part of the EU funded project REVIVE, in which Proton Motor has been a
member of the project consortium since 2019, a fuel cell system for
integration into a garbage truck has been designed. A Stack Module PM400-144
is being integrated into the HyRange® 43 fuel cell system. The integration
into the truck is being carried out together with the vehicle manufacturer
ETrucks from Belgium. The first system was delivered in 2020. Since then,
ETrucks repeatedly ordered HyRange® 43 fuel cell systems in two designs. One
design is for mounting under the driver's cabin and the second is for mounting
on the roof. By the end of Q1 2022, ETrucks has ordered 21 HyRange® 43
systems, of which six have been delivered.
In mid-2021 Proton Motor received the order of a HyRange® 43 fuel system from
Electra Commercial Vehicles Limited (Electra) for the use in a truck. The
system was delivered at the end of 2021. The integration of the fuel cell
system by Electra is now complete and the testing of the truck has started.
In November 2021 a HyShelter 240 system was delivered to our customer Shell
New Energies. HyShelter 240 is a transportable off-grid power supply system
based on PM Frame 43 fuel cell systems. The system is intended to power
Shell's own line of portable hydrogen refuelling units for heavy duty
vehicles. In 2021, a Swiss customer ordered a fuel cell system based on our PM
Frame 28 for use as an emergency power system for a road tunnel. The system
was delivered at the end of 2021 and set in operation successfully at the
beginning of 2022.
The setting up of the production line for the stacks and stack modules for the
PM Module S8 systems achieved a major step in the direction of industrialised
production. We now intend to set up the production line for the PM Frame
systems. With the integration of the automated fuel cell production line into
the series production together with a planned extension of the production
area, Proton Motor is achieving a continuous increase of its overall
production capacity.
Furthermore, the Group has designed a multi stack system for power demands
beyond 100 kW for larger trucks, trains, ships and larger stationary
applications. The first multi stack systems, based on the fourth generation
PM400 stack modules, consist of up to three stack modules. These types of
systems were successfully designed and delivered for a maritime project. Also,
a HyRail 213 fuel cell system, based on two fully redundant multi stack
systems, were successfully delivered to our customer for integration into a
rail milling machine.
Outlook
In the year ahead, we are focused on progressing the maturity of the group
technology offer, ramping up production capacity and exploiting the current
potential sales pipeline. The current outlook at the end of 2021 looking into
2022 is more optimistic than at the end of 2020.
I would like to personally thank all our customers who believe in us, our team
of committed employees and our shareholders who have the vision to invest in
our mission.
Helmut Gierse 10 June 2022
Non-Executive Chairman
Consolidated income statement
for the year ended 31 December 2021
Note 2021 2020
£'000 £'000
Revenue 4 2,771 1,893
Cost of sales (2,346) (1,976)
Gross profit / (loss) 425 (83)
Other operating income 501 492
Administrative expenses (10,047) (7,537)
Operating loss (9,121) (7,128)
Finance income 9 3 3
Finance income / (costs) 10 3,222 (8,638)
(Loss) for the year before embedded derivatives (5,896) (15,763)
Fair value gain / (loss) on embedded derivatives 22 609,201 (386,870)
Profit / (Loss) for the year before tax 5 603,305 (402,633)
Tax 8 - -
Profit / (Loss) for the year after tax 603,305 (402,633)
Profit / (Loss) per share (expressed as pence per share)
Basic 11 78.1 (57.0)
Diluted 78.1 (26.4)
11
Loss per share excluding embedded derivative
(expressed as pence per share)
Basic 11 (0.8) (2.2)
Diluted 11 (0.8) (1.0)
Consolidated statement of comprehensive income
for the year ended 31 December 2021
2021 2020
£'000 £'000
Profit/(Loss) for the year 603,305 (402,633)
Other comprehensive income / (expense)
Items that may not be reclassified to profit and loss
Exchange differences on translating foreign operations (586) (761)
Total other comprehensive (expense) (586) (761)
Total comprehensive income / (expense) for the year 602,719 (403,394)
Attributable to owners of the parent 602,719 (403,394)
Group balance sheets
as at 31 December 2021
Group
Note 2021 2020
£'000 £'000
Assets
Non-current assets
Intangible assets 12 78 64
Property, plant and equipment 13 1,619 1,484
Right-of-use assets 14 111 285
Fixed asset investments 15 11 11
1,819 1,844
Current assets
Inventories 16 1,835 1,790
Trade and other receivables 17 1,624 348
Cash and cash equivalents 18 2,152 2,739
5,611 4,877
Total assets 7,430 6,721
Liabilities
Current liabilities
Trade and other payables 19 4,498 4,389
Lease debt 20 111 196
Borrowings 21 517 814
5,126 5,399
Non-current liabilities
Lease debt 20 8 104
Borrowings 21 83,956 79,238
Embedded derivatives on convertible interest 22 - 609,201
83,964 688,543
Total liabilities 89,090 693,942
Net liabilities (81,660) (687,221)
Equity
Equity attributable to equity holders of the parent company
Share capital 24 11,023 10,598
Share premium 20,390 19,574
Merger reserve 15,656 15,656
Reverse acquisition reserve (13,861) (13,861)
Share option reserve 2,187 949
Foreign translation reserve 11,745 11,038
Capital contributions reserves 1,143 1,215
Accumulated losses
At 1 January 2021 (732,390) (328,996)
Profit / (Loss) for the year attributable to the owners 603,305 (402,633)
Other changes in retained earnings (858) (761)
Total equity (81,660) (687,221)
Company balance sheets
as at 31 December 2021
Company
Note 2021 2020
£'000 £'000
Assets
Current assets
Trade and other receivables 17 366 209
Cash and cash equivalents 18 20 5
386 214
Total assets 386 214
Liabilities
Current liabilities
Trade and other payables 19 780 364
Lease debt - -
Borrowings - -
780 364
Non-current liabilities
Lease debt - -
Borrowings 21 83,956 79,238
Embedded derivatives on convertible interest 22 - 609,201
83,956 688,439
Total liabilities 84,736 688,803
Net liabilities (84,350) (688,589)
Equity
Equity attributable to equity holders of the parent company
Share capital 24 11,023 10,598
Share premium 20,390 19,574
Merger reserve 15,656 15,656
Share option reserve 2,187 949
Accumulated losses
At 1 January 2021 (735,366) (332,560)
Profit/(loss) for the year attributable to the owners 602,032 (402,806)
Other changes in retained earnings (272) -
Total equity (84,350) (688,589)
Group and Company statements of changes in equity
for the year ended 31 December 2021
Group Share Capital Share Premium Merger Reserve Reverse Acquisition Reserve Share Option Reserve Foreign Translation Reserve Capital Contribution Reserves Accumulated Losses Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
£'000
Balance at 1 January 2020 9,970 18,704 15,656 (13,861) 968 10,437 1,151 (328,996) (285,971)
Share based payments - - - - (19) - - - (19)
Proceeds from share issues 628 870 - - - - - - 1,498
Transactions with owners 628 870 - - (19) - - - 1,479
Loss for the year - - - - - - - (402,633) (402,633)
Other comprehensive income:
Currency translation differences - - - - - 601 64 (761) (96)
Total comprehensive income for the year - - - - - 601 64 (403,394) (402,729)
Balance at 31 December 2020 10,598 19,574 15,656 (13,861) 949 11,038 1,215 (732,390) (687,221)
Balance at 1 January 2021 10,598 19,574 15,656 (13,861) 949 11,038 1,215 (732,390) (687,221)
Share based payments 4 284 - - 1,238 - - (272) 1,254
Proceeds from share issues 421 532 - - - - - - 953
Transactions with owners 425 816 - - 1,238 - - (272) 2,207
Profit for the year - - - - - - - 603,305 603,305
Other comprehensive income:
Currency translation differences - - - - - 707 (72) (586) 49
Total comprehensive income for the year - - - - - 707 (72) 602,719 603,354
Balance at 31 December 2021 11,023 20,390 15,656 (13,861) 2,187 11,745 1,143 (129,943) (81,660)
Statements of changes in equity - Company
Company Share Capital Share Premium Merger Reserve Share Option Reserve Accumulated Losses Total Equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2020 9,970 18,704 15,656 968 (332,560) (287,262)
Share based payments - - - (19) - (19)
Proceeds from share issues 628 870 - - - 1,498
Transactions with owners 628 870 - (19) - 1,479
Loss for the year - - - - (402,806) (402,806)
Total comprehensive expense for the year - - - - (402,806) (402,806)
Balance at 31 December 2020 10,598 19,574 15,656 949 (735,366) (688,589)
Balance at 1 January 2021 10,598 19,574 15,656 949 (735,366) (688,589)
Share based payments 4 284 - 1,238 (272) 1,254
Proceeds from share issues 421 532 - - - 953
Transactions with owners 425 816 - 1,238 (272) 2,207
Profit for the year - - - - 602,032 602,032
Total comprehensive expense for the year - - - - 602,032 602,032
Balance at 31 December 2021 11,023 20,390 15,656 2,187 (133,606) (84,350)
Share premium
Costs directly associated with the issue of the new shares have been set off
against the premium generated on issue of new shares.
Merger reserve
The merger reserve of £15,656,000 arises as a result of the acquisition of
Proton Motor Fuel Cell GmbH and represents the difference between the nominal
value of the share capital issued by the Company and its fair value at 31
October 2006, the date of the acquisition.
Reverse acquisition reserve
The reverse acquisition reserve (Group only) arises as a result of the method
of accounting for the acquisition of Proton Motor Fuel Cell GmbH by the
Company. In accordance with IFRS 3 the acquisition has been accounted for as a
reverse acquisition.
Share option reserve
The Group operates two equity settled share-based compensation schemes. The
fair value of the employee services received for the grant of the share
awards/options is recognised as an expense. The total amount to be expensed
over the vesting period is determined by reference to the fair value of the
share awards/options granted. At each balance sheet date the Company revises
its estimate of the number of share awards/options that are expected to vest.
The original expense and revisions of the original estimates are reflected in
the income statement with a corresponding adjustment to equity. The share
option reserve represents the balance of that equity.
Group statements of cash flows
for the year ended 31 December 2021
Group
Year ended 31 December
2021 2020
£'000 £'000
Cash flows from operating activities
Profit / (Loss) for the year 603,305 (402,633)
Adjustments for:
Depreciation and amortisation 641 574
Interest income (3) (3)
Interest expense 1,498 5,192
Share based payments 966 (19)
Movement in inventories (45) 618
Movement in trade and other receivables (1,276) (108)
Movement in trade and other payables 109 1,340
Movement in fair value of embedded derivatives (609,201) 386,870
Effect of foreign exchange rates (4,720) 3,446
Net cash (used in) / generated from operating activities (8,726) (4,723)
Cash flows from investing activities
Purchase of intangible assets (44) (56)
Purchase of property, plant and equipment (633) (373)
Interest received 3 3
Net cash used in investing activities (674) (426)
Cash flows from financing activities
Proceeds from issue of loan instruments 7,962 5,776
Proceeds from issue of new shares 1,241 1,498
Repayment of other borrowings (297) -
New obligations of lease debt 21 -
Repayment of obligations under lease debt (202) (187)
Net cash generated from financing activities 8,725 7,087
Net increase/(decrease) in cash and cash equivalents (675) 1,938
Effect of foreign exchange rates 88 (227)
Opening cash and cash equivalents 2,739 1,028
Closing cash and cash equivalents 2,152 2,739
Company statements of cash flows
for the year ended 31 December 2021
Company
Year ended 31 December
2021 2020
£'000 £'000
Cash flows from operating activities
Loss for the year 602,032 (402,806)
Adjustments for:
Impairment of investment 8,877 6,912
Interest income (12) (45)
Interest expense 1,476 5,148
Share based payments 966 (19)
Movement in trade and other receivables (156) (109)
Movement in trade and other payables 415 200
Movement in fair value of embedded derivatives (609,201) 386,870
Effect of foreign exchange rates (4,720) 3,446
Net cash (used in) / generated from operating activities (323) (403)
Cash flows from investing activities
Capital contribution to subsidiaries (8,877) (6,912)
Interest received 12 45
Net cash used in investing activities (8,865) (6,867)
Cash flows from financing activities
Proceeds from issue of loan instruments 7,962 5,776
Proceeds from issue of new shares 1,241 1,498
Repayment of short-term borrowings - -
Net cash generated from financing activities 9,203 7,274
Net increase/(decrease) in cash and cash equivalents 15 4
Effect of foreign exchange rates - (1)
Opening cash and cash equivalents 5 2
Closing cash and cash equivalents 20 5
Notes to the financial statements
1. General information
Proton Motor Power Systems plc (the "Company") and its subsidiaries (together
the "Group") design, develop, manufacture and test fuel cells and fuel cell
hybrid systems as well as the related technical components. The Group's
design, research and development and production facilities are located in
Germany.
The Company is a public limited liability company incorporated in England and
Wales and domiciled in the UK. The address of its registered office is Aldgate
Tower, 2 Leman Street, London, E1 8QN. The Company was admitted to AIM on 31
October 2006 and its shares are quoted on this exchange.
Directors
The Directors who held office during the year and up to the date of approval
of this announcement were as follows:
Dr. Faiz
Nahab
Chief Executive 1,3
Helmut
Gierse
Chairman2
Antonio Bossi (appointed 5 August 2021) Non-Executive
Director 5
Sebastian
Goldner
Chief Technical Officer and Chief Operations Officer
Roman
Kotlarzewski
Chief Financial Officer and Company Secretary 4,6
Manfred
Limbrunner
Director Sales and Marketing
1 Chairman of the Remuneration Committee.
2 Chairman of the Audit Committee.
3 Chairman of the Nominations Committee.
4 Member of the Remuneration Committee.
5 Member of the Audit Committee.
6 Member of the Nominations Committee.
2. Summary of significant accounting policies
The Board approved this announcement on 9 June 2022. The financial information
included in this announcement does not constitute the Group´s statutory
accounts for the years ended 31 December 2021 or 31 December 2020. Statutory
accounts for the year ended 31 December 2020 have been delivered to Companies
House. The statutory accounts for the year ended 31 December 2021 will be
delivered to Companies House accordingly.
Basis of preparation
The consolidated financial statements of the Group and the financial
statements of the Company have been prepared in accordance with UK adopted
international accounting standards (IFRS) and with those parts of the
Companies Act 2006 applicable to those companies reporting under IFRS.
The consolidated financial statements and the financial statements of the
Company have been prepared under the historical cost convention and in
accordance with IFRS interpretations (IFRS IC) except for embedded derivatives
which are carried at fair value through the income statement and on the basis
that the Group continues to be a going concern.
Until such time as the Group achieves operational cash inflows through
becoming a volume producer of its products to a receptive market it will
remain dependent on its ability to raise cash to fund its operations from
existing and potential shareholders and the debt market. The Group has
historically been dependent on the continuing financial support of its main
investors, SFN Cleantech Investment Ltd and Mr Falih Nahab to meet its
day-to-day working capital requirements. The Group has loans with SFN
Cleantech Investment Ltd of €2.4m and €26.1m and also a loan facility with
Mr. Falih Nahab of €50.6m. The repayment date for all loans is 31 December
2025. As such the loans are held as non-current borrowings in the financial
statements.
Subsequent to the 2021 year end the following changes to the existing loan
facilities were made:
Lender: Facility at Drawn down as at Increase Facility at the
31 December 2021 31 December 2021 of facility date of this report
SFN Cleantech Investment Ltd €26.1m €23.6m €6.2m €32.3m
*(£21.9m) *(£19.8m) *(£5.2m) *(£27.1m)
SFN Cleantech Investment Ltd €2.4m €2.4m € nil €2.4m
*(£2.0m) *(£2.0m) *(£2.0m)
Mr. Falih Nahab €50.6m €48.7m €6.3m €56.9m
*(£42.5m) *(£40.9m) *(£5.3m) *(£47.8m)
Total €79.1m €74.7m €12.5m €91.6m
*(£66.4m) *(£62.7m) *(£10.5m) *(£76.9m)
The Group will, at the date of sign off of the accounts, have in place
committed facilities from SFN Cleantech Investment Ltd and Mr Falih Nahab of
up to €91.6m which will become repayable at the end of 2025. Cash flow
forecasts demonstrate that the undrawn portions of these committed facilities
enable the Company and the Group to meet its cash requirements for the period
up to at least June 2023. The Company and Group are also able to defer
discretionary spend during this period to provide further cash flow headroom,
should this be required.
At this point in time there has been no indication of circumstances which
would lead to either or both SFN Cleantech Investment Ltd and Mr Falih Nahab
withdrawing this support beyond June 2023. Both SFN Cleantech Investment Ltd
and Mr Falih Nahab have confirmed their intention to fund further investment
through the sale of shares in the Company.
Due to the variability of the value of shareholding in the Company and lack of
knowledge of other assets held, material uncertainty exists which may cast
significant doubt upon the Group and the Company's ability to continue as a
going concern. The Directors firmly believe however that the Group and Company
remain a going concern on the grounds that both SFN Cleantech Investment Ltd
and Falih Nahab have continued to support both entities throughout recent
years, as well as funding having been agreed by SFN Cleantech Investment Ltd
and Falih Nahab for at least the next 12 months.
The financial statements do not include the adjustments that would result if
the Group or the Company was unable to continue as a going concern.
3. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual
results. Estimates and judgements are continually evaluated and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. The
estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial period are discussed below.
Recognition of development costs
Self developed intangible assets are recognised where the Group can estimate
that it is probable that future economic benefits will flow to the entity. See
Note 12.
Classification and fair value of financial instruments
The Group uses judgement to determine the classification of certain financial
instruments, in particular convertible loans advanced during the year.
Judgement is applied to determine whether the instrument is a debt, equity or
compound instrument and whether any embedded derivatives exist within the
contracts.
Judgements have been made regarding whether the conversion feature meets the
"fixed for fixed" test in each instrument. In the case of each instrument it
is deemed it is not met on the basis that the loan is in Euros and shares are
in Sterling.
The fair values of the embedded derivatives were determined using the
Black-Scholes valuation model. The valuation was performed by an independent
expert and significant inputs into the calculation include the share price of
the Company at the valuation date and the estimate of total accrued interest
as at the exercise date. The underlying expected volatility of share price and
risk-free rate of interest were determined by reference to the historical data
of the Company. In applying these valuation techniques, management use
estimates and assumptions that are, as far as possible, consistent with
observable market data. Where applicable market data is not observable,
management uses its best estimate about the assumptions that market
participants would make. These estimates may vary from the actual prices that
would be achieved in an arm's length transaction at the reporting date.
Determining residual values and useful economic lives of intangible fixed
assets and property, plant & equipment
The Group depreciates property, plant & equipment and amortises intangible
fixed assets over their estimated useful lives. The estimation of the useful
lives of assets is based on historic performance as well as expectations about
future use and therefore requires estimates and assumptions to be applied by
management.
Judgement is applied by management when determining the residual values of
property, plant & equipment and intangible fixed assets. When determining
the residual value management aim to assess the amount that the Group would
currently obtain for the disposal of the asset, if it were already of the
condition expected at the end of its useful economic life.
The carrying amount of group intangible fixed assets at the reporting date was
£78k (2020: £64k) and the carrying amount of group property, plant &
equipment at the reporting date was £1,619k (2020: £1,484k).
Inventory provisions
In accordance with IAS 2 the Group regularly reviews its inventory to ensure
it is carried at the lower of cost or net realisable value. The management
constantly reviews slow moving and obsolete items arising from changes in the
product mix demanded by customers, reductions in overall volumes, supplier
failures and strategic resourcing decisions. Obsolescence provisions are
calculated based on current market values and future sales of inventories. If
this review identifies significant levels of obsolete inventory, this
obsolescence is charged to the income statement as an impairment. The total
inventory provision included in the balance sheet at the reporting date was
£77k (2020: £12k).
Share-based payments
Non-market performance and service conditions are included in assumptions
about the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each reporting
period, the Group revises its estimates of the number of options that are
expected to vest based on the non-market vesting conditions. It recognises the
impact of the revision to original estimates, if any, in the income statement,
with a corresponding adjustment to equity.
4. Segmental information
The Group has adopted the requirements of IFRS8 'Operating segments'. The
standard requires operating segments to be identified on the basis of internal
financial information about components of the Group that are regularly
reviewed by the Chief Operating Decision Maker ('CODM') to allocate resources
to the segments and to assess their performance. The CODM has been identified
as the Board of Directors. The Board considers the business from a
product/services perspective.
Based on an analysis of risks and returns, the Directors consider that the
Group has only one identifiable operating segment: green energy. All property,
plant and equipment is located in Germany.
Revenue from external customers
2021 2020
£'000 £'000
United Kingdom 149 -
Germany 913 900
Rest of Europe 1,705 515
Rest of the World 4 478
2,771 1,893
Sales to Linsinger and Shell represented 42.5% of the Group's revenue in 2021
(2020: Apex and E-Trucks Europe 42.5%).
The results as reviewed by the CODM for the only identified segment are as
presented in the financial statements with the exception of the 2021
revaluation gain on the fair value of the embedded derivative of £609,201k
(2020: £386,870k loss) and the associated impact on the balance sheet.
5. Loss for the year before tax
2021 2020
£'000 £'000
Loss on ordinary activities before taxation is stated
after charging
Depreciation and amortisation 641 574
Hire of other assets - operating leases 84 106
Pension contributions 85 76
Change in fair value of embedded derivatives - 386,870
Foreign exchange losses - 3,446
after crediting
Gain in fair value of embedded derivatives (609,201) -
Amortisation of grants from public bodies (408) (37)
Foreign exchange gains (4,720) -
6. Auditors' remuneration
2020 2019
£'000 £'000
Audit services
Fees payable to the Company's auditor for the audit of the parent Company and 25 28
consolidated financial statements
Fees payable to the Company's auditor and its associates for other services:
Other services 9 2
34 30
7. Staff numbers and costs
The monthly average number of persons employed by the Group (including
Directors) during the year, analysed by category, was as follows:
2021 2020
Development and construction 59 47
Administration and sales 45 41
104 88
The aggregate payroll costs of these persons were as follows:
Group
2021 2020
£'000 £'000
Wages and salaries 5,094 4,252
Share based payments 1,319 169
Social security costs 954 777
Other pension costs 85 76
7,452 5,274
There are no staff, or direct wages specific to the Company. Share based
payments charge to the non-executive and executive Directors of the Company is
£154k (2020: £188k).
Share based payments
The Group has incurred an expense in respect of shares and share options
during the year issued to employees as follows:
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Share options (64) (19) (64) (19)
Share awards 1,318 - 1,318 -
Shares 65 188 65 188
1,319 169 1,319 169
The cost of the share options granted during 2021 to the Group is being
charged over a two year period from the date of grant at which point they
become exercisable.
At 31 December 2021 the Group operated a single share option scheme ("SOS").
The SOS allows the Company to grant options to acquire shares to eligible
employees. Options granted under the SOS are unapproved by HM Revenue &
Customs. The maximum number of shares over which options may be granted under
the SOS may not be greater than 15 per cent of the Company's issued share
capital at the date of grant when added to options or awards granted in the
previous 10 years. The exercise of options can take place at any time after
the second anniversary of the date of grant. Options cannot, in any event, be
exercised after the tenth anniversary of the date of grant.
All share-based employee remuneration will be settled in equity. The Group has
no legal or constructive obligation to repurchase or settle options. Share
options and weighted average exercise price are as follows for the reporting
periods presented:
2021 2020
Number Weighted average exercise price Number Weighted average exercise price
000´s £ 000´s £
Opening balance 46,197 0.048 49,635 0.228
Exercised - 0.000 (2,250) (0.030)
Forfeited (6,585) (0.042) (1,188) (0.076)
Closing balance 39,612 0.046 46,197 0.048
The fair values of options granted were determined using the Black-Scholes
valuation model. Significant inputs into the calculation include a weighted
average share price and exercise prices. Furthermore, the calculation takes
into account future dividends of nil and volatility rates of between 50% and
98%, based on expected share price. Risk-free interest rate was determined
between 0.640% and 5.125% for the various grants of options. It is assumed
that options granted under the SOS have an average remaining life of 28 months
(2020:34 months).
The underlying expected volatility was determined by reference to the
historical data, of the Company. No special features inherent to the options
granted were incorporated into the measurement of fair value.
At 31 December 2021 the Group also operates a Key Person Stock Award Scheme
whereby key staff members can build up an entitlement to target amounts of
shares over a period of three to ten years, with the vesting condition that
the employees are still employed at the time the entitlement vests. After
three years amounts of shares subject to predetermined thresholds can be drawn
annually. The remaining full entitlement can be drawn after ten years.
The fair values of awards granted were determined using the Black-Scholes
valuation model. Significant inputs into the calculation include a weighted
average share price and exercise prices. Furthermore, the calculation takes
into account future dividends of nil and volatility rates of 50%, based on
expected share price. Risk-free interest rate was determined between 0.021%
and 1.313% for the various grants of awards.
The number of Ordinary 1p shares issued under the scheme in the year having
vested was 400,000 (2020: nil). The total number of outstanding awards yet to
vest at reporting date is 38.75m Ordinary 0.5p shares (2020: 19.78m Ordinary
1p shares). The weighted average of time to vest for outstanding awards is 5.2
years (2020: 6.2 years) and weighted average fair value of outstanding awards
is 0.32p (2020: 0.32p).
8. Tax
The tax on the Group's loss before tax differs from the theoretical amounts 2021 2020
that would arise using the weighted average tax rate applicable to losses of
the Companies as follows:
£'000 £'000
Tax reconciliation
Profit / (Loss) before tax 603,305 (402,633)
Expected tax credit at 19% (2020:19%) 114,628 (76,500)
Effects of different tax rates on foreign subsidiaries (457) (404)
Expenses not deductible for tax purposes 285 74,492
Income not taxable for tax purposes (115,748) -
Tax losses carried forward 1,292 2,412
Tax charge - -
9. Finance income
Group
2021 2020
£'000 £'000
Interest 3 3
3 3
10. Finance costs
Group
2021 2020
£'000 £'000
Interest 1,498 5,192
Exchange (gain) / loss on shareholder loans (4,720) 3,446
(3,222) 8,638
11. Loss per share
Basic loss per share is calculated by dividing the loss attributable to equity
holders of the Company by the weighted average number of Ordinary shares in
issue during the year.
Diluted loss per share is calculated by adjusting the weighted average number
of ordinary shares outstanding to assume conversion of all dilutive potential
ordinary shares. The Company has two categories of dilutive potential ordinary
shares, share options and convertible debt; however, dilutive ordinary shares
have not been included in the calculation of loss per share because they are
non-dilutive for these periods.
2021 2020
11. Loss per share
Basic Diluted Basic Diluted
£'000 £'000 £'000 £'000
As restated
Loss before embedded derivative (5,896) (5,896) (15,763) (15,763)
Fair value gain / (loss) on embedded derivatives 609,201 609,201 (386,870) (386,870)
Gain / (Loss) attributable to equity holders of the Company 603,305 603,305 (402,633) (402,633)
Weighted average number of Ordinary shares in issue (thousands) 772,677 772,677 706,344 706,344
Effect of dilutive potential Ordinary shares from convertible debt (thousands) - - - 816,749
Adjusted weighted average number of Ordinary shares 772,677 772,677 706,344 1,523,093
Pence per share Pence per share Pence per share Pence per share
Gain/(loss) per share (pence per share) 78.1 78.1 (57.0) (26.4)
Loss per share before embedded derivatives (pence per share) (0.8) (0.8) (2.2) (1.0)
Goodwill Copyrights, trademarks and other intellectual property rights Development costs Total
12. Intangible assets - Group
£'000 £'000 £'000 £'000
Cost
At 1 January 2020 2,126 229 - 2,355
Exchange differences - 13 - 13
Additions - 56 - 56
Transfers - - - -
Disposals - - - -
-
At 31 December 2020 2,126 298 - 2,424
At 1 January 2021 2,126 298 - 2,424
Exchange differences - (18) - (18)
Additions - 44 - 44
Transfers - - - -
Disposals - - - -
-
At 31 December 2021 2,126 324 - 2,450
Accumulated Amortisation
At 1 January 2020 2,126 198 - 2,324
Exchange differences - 10 - 10
Charged in year - 26 - 26
Disposals - - - -
At 31 December 2020 2,126 234 - 2,360
At 1 January 2021 2,126 234 - 2,360
Exchange differences - (14) - (14)
Charged in year - 26 - 26
Disposals - - - -
At 31 December 2021 2,126 246 - 2,372
Net book value
At 31 December 2021 - 78 - 78
At 31 December 2020 - 64 - 64
At 1 January 2020 - 31 - 31
Self-developed intangible assets in the amount of £26,000 (2020: £56,000)
are recognised in the reporting year, because the prerequisites of IAS 38 have
been fulfilled.
Amortisation and impairment charges are recognised within administrative
expenses.
As self-developed intangible assets are not material to the Group financial
statements no impairment test has been performed.
There are no individually significant intangible assets.
The company does not hold any intangible assets.
13. Property, plant and equipment - Group
Leasehold property improvements Technical equipment & machinery Office & other equipment Self-constructed plant & machinery Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2020 644 1,179 702 184 2,709
Exchange differences 36 66 39 10 151
Additions - 100 142 131 373
Transfers - 174 - (174) -
Disposals - - (32) - (32)
At 31 December 2020 680 1,519 851 151 3,201
At 1 January 2021 680 1,519 851 151 3,201
Exchange differences (40) (91) (51) (9) (191)
Additions 41 93 104 395 633
Transfers - 183 - (183) -
Disposals (2) (73) (78) - (153)
At 31 December 2021 679 1,631 826 354 3,490
Accumulated Depreciation
At 1 January 2020 365 664 274 - 1,303
Exchange differences 21 38 16 - 75
Charge for year 66 148 139 - 353
Disposals - - (14) - (14)
At 31 December 2020 452 850 415 - 1,717
At 1 January 2021 452 850 415 - 1,717
Exchange differences (28) (55) (30) - (113)
Charge for year 65 186 169 - 420
Disposals (2) (73) (78) - (153)
At 31 December 2021 487 908 476 - 1,871
1
Net book value
At 31 December 2021 192 723 350 354 1,619
At 31 December 2020 228 669 436 151 1,484
At 1 January 2020 279 515 428 184 1,406
The company does not hold any property, plant and equipment.
14. Right-of-use assets - Group
Land and buildings Plant and machinery Total
£'000 £'000 £'000
Cost
At 1 January 2020 584 74 658
Additions - - -
At 31 December 2020 584 74 658
At 1 January 2021 584 74 658
Additions - 21 21
At 31 December 2021 584 95 679
Accumulated Depreciation
At 1 January 2020 167 13 180
Charge for year 167 26 193
At 31 December 2020 334 39 373
At 1 January 2021 334 39 373
Charge for year 167 28 195
At 31 December 2021 501 67 568
Net book value
At 31 December 2021 83 27 111
At 31 December 2020 250 35 285
At 1 January 2020 417 61 478
The company does not hold any right-of-use assets.
15. Fixed asset investments
2020 2019
Group £'000 £'000
Shares in associate undertaking
Cost
At beginning of year 18 7
Additions - 11
At end of year 18 18
Impairment
At beginning of year 7 -
Charge for the year - 7
At end of year 7 7
Net book value
At end of year 11 11
In Q3 2019 Proton signed a joint venture agreement to establish Nexus-e GmbH,
a company registered in Achern, Germany. Proton owns 50.00% of the share
capital of Nexus-e GmbH.
2021 2020
Company £'000 £'000
Shares in Group undertaking
Cost
At beginning of year 89,524 82,612
Additions 8,877 6,912
At end of year 98,401 89,524
Impairment
At beginning of year 89,524 82,612
Charge for the year 8,877 6,912
At end of year 98,401 89,524
Net book value
At end of year - -
On 31 October 2006 the Company acquired the entire share capital of Proton
Motor Fuel Cell GmbH, a company incorporated in Germany. The cost of
investment comprises shares issued to acquire the Company valued at the
listing price of 80p per share, together with costs relating to the
acquisition and subsequent capital contributions made to the subsidiary.
Following a review of the Company's assets the Board has concluded that there
are sufficient grounds for its investment in the subsidiary undertakings to be
subject to an impairment review under IAS 36. In arriving at the charge in the
year of £8,877k (2020: £6,912k) the Board has determined the recoverable
amount on a value in use basis using a discounted cash flow model.
16. Inventories
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Work in progress 157 295 - -
Consumable stores - - - -
Raw materials 1,678 1,495 - -
1,835 1,790 - -
The cost of goods sold during 2021 is £2,346k (2020: £1,976k). It includes
£77k impairment loss for slow moving inventories and goods anticipated to be
sold at a loss.
17. Trade and other receivables
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Trade receivables 811 181 179 -
Other receivables 479 122 33 -
Amounts due from Group companies - - 126 197
Prepayments and accrued income 334 45 27 12
1,624 348 366 209
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair values.
In addition some of the unimpaired trade receivables are past due as at the
reporting date. The age of financial assets past due but not impaired is as
follows:
Group
2021 2020
£'000 £'000
Not more than three months (all denominated in Euros) - -
The Directors consider that trade and other receivables which are not past due
or impaired show no risk of requiring impairment.
18. Cash and cash equivalents
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Cash at bank and in hand 2,152 2,739 20 5
2,152 2,739 20 5
The Directors consider that the carrying amount of cash and cash equivalents
approximates to their fair values.
19. Trade and other payables
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Trade payables 505 276 - -
Other payables 3,130 3,371 203 1
Amounts due to Group companies - - 259 132
Accruals and deferred income 863 742 318 231
4,498 4,389 780 364
The Directors consider that the carrying amount of trade and other payables
approximates to their fair values.
20. Lease debt
The company implemented IFRS 16 'Leases' as of 1 January 2019 (see Note 2).
Whilst the Company implemented the accounting standard using the Cumulative
retrospective approach which does not require comparatives to be restated the
below fully details the effect of IFRS 16 on the Company's lease debt.
A summary of the lease debt maturity is shown below:
Group
Principal Interest Total 2020
2021
£'000 £'000 £'000 £'000
Less than 1 year 116 (5) 111 196
Between 2 and 5 years 8 - 8 104
Over 5 years - - - -
124 (5) 119 300
The carrying value of assets held under lease within right-of-use assets is
£111k (2020: £285k). The balances relate to the Benzstrasse 7, Puchheim,
Germany property lease and a number of vehicle leases held in Proton Motor
Fuel Cell GmbH.
21. Borrowings
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Bank overdraft 517 814 - -
Loans
Current - - - -
Non-current 83,956 79,238 83,956 79,238
Current and total borrowings 84,473 80,052 83,956 79,238
Included within non-current borrowings as at year end are amounts of £30,320k
(2020: £27,144k) due to SFN Cleantech Investment Limited which includes a
principal loan of €23.6m (2020: €18.4m) and accrued interest thereon. The
principal loan attracts interest of EURIBOR+3% per annum (2020: 10%). At the
end of 2020 SFN Cleantech Investment Limited had the option to convert the
accrued interest at any time into Ordinary shares in the parent company at
varying rates per share. At the end of 2021 SFN Cleantech Investment Limited
waived its right to convert interest on their loan. Subsequent to the year end
it was agreed to extend this loan facility by a further €6.2m, from €26.1m
to €32.3m.
Also included within non-current borrowings as at year end are amounts of
£2,235k (2020: £2,345k) due to SFN Cleantech Investment Limited which
includes a principal loan of €2.3m (2020: €2.3m) and accrued interest
thereon. The principal loan attracts interest of EURIBOR+2% per annum.
Interest is to be rolled up and repaid at the termination of the loan
agreement.
Further included within non-current borrowings as at year end are amounts of
£51,401k (2020: £49,749k) due to Mr Falih Nahab, a brother of Dr Faiz Nahab,
a director of the Company. This balance includes principal loan advances of
€48.7m (2020: €43.5m) and accrued interest thereon. The principal loan
attracts interest of EURIBOR+3% per annum (2020: 10%). At the end of 2020 Mr.
Falih Nahab had the option to convert the accrued interest at any time into
Ordinary shares in the parent company at varying rates per share. At the end
of 2021 Mr. Falih Nahab waived his right to convert interest on his loan.
Subsequent to the year end it was agreed to extend this loan facility by a
further €6.3m, from €50.6m to €56.9m.
The loans are all secured on the assets of the Group.
The redemption date of all loans is 31 December 2025. As such the loans are
held as non-current borrowings.
The debt has been measured at amortised cost.
22. Embedded derivatives on convertible interest
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Embedded derivatives on convertible interest - 609,201 - 609,201
At the end of 2020 the embedded derivatives related to the conversion features
attached to convertible interest as disclosed under note 21. Due to the
waivers of convertible interest signed by SFN Cleantech Investment Limited and
Mr. Falih Nahab, which were executed upon the confirmation of the subdivision
of shares noted in Note 24, the embedded derivative on convertible interest is
no longer applicable at the end of 2021 and thus was reversed in the income
statement. The derivatives were initially recognised at fair value and fair
valued at each subsequent accounting reference date.
The previous fair values of the embedded derivatives were determined using the
Black-Scholes valuation model. The valuation was performed by an independent
expert and significant inputs into the calculation include the share price of
the Company at valuation date and the estimate of total accrued interest as at
the exercise date. The underlying expected volatility of share price and
risk-free rate of interest were determined by reference to the historical data
of the Company.
23. Deferred income tax - Group
Deferred tax assets are recognised for tax loss carry-forwards to the extent
that the realisation of the related benefit through future taxable profits is
probable. The Group has not recognised deferred income tax assets of £25,072k
(2020: £23,398k) in respect of losses amounting to £10,291k (2020: £7,279k)
and €95,053k (2020: €86,251k).
24. Share capital
The share capital of Proton Motor Power Systems plc consists of fully paid
Ordinary shares with a par value of £0.005 (2020: £0.01) and Deferred
Ordinary shares with a par value of £0.01 (2020: £0.01). All Ordinary shares
are equally eligible to receive dividends and the repayment of capital and
represent one vote at the shareholders' meeting of Proton Motor Power Systems
plc. Deferred Ordinary shares have no rights other than the repayment of
capital in the event of a winding up. None of the parent's shares are held by
any company in the Group.
During 2021, 66,667 Ordinary shares of 1p each were issued each at a price of
92p per share in settlement of a Director´s annual fee for the period ended
31 January 2021. Additionally 5,000 Ordinary shares of 1p each were issued as
part of the Employee Share Purchase Scheme during 2021 to a Director at a
price of 66p.
On 29 December 2021 a resolution was passed by shareholders at a General
Meeting to subdivide all of the Company's Ordinary shares in issue at that
date. This resulted in an additional 774,370,274 Ordinary shares being issued
to existing shareholders, with the nominal value of all Ordinary shares
restated to 0.5p each, from 1p per share.
The number of shares in issue at the balance sheet date is 1,548,740,548
Ordinary shares of 0.5p each (2020: 731,828,107 Ordinary shares of 1p each)
and 327,963,452 (2020: 327,963,452) Deferred Ordinary shares of 1p each (2020:
1p each).
Proceeds received in addition to the nominal value of the shares issued during
the year have been included in share premium, less registration and other
regulatory fees and net of related tax benefits.
.
2021 2020
Ordinary shares Deferred ordinary shares Ordinary shares Deferred ordinary shares
No. £'000 No. £'000 No. £'000 No. £'000
´000 '000 '000 '000
Shares authorised, issued and fully paid
At the beginning of the year 731,828 7,318 327,963 3,280 669,008 6,690 327,963 3,280
Share issue 542 5 - - 570 6 - -
Share issue - under share option scheme - - - - 2,250 22 - -
Share issue - conversion on loan interest 42,000 420 - - 60,000 600 - -
Share subdivision 774,370 - - - - - - -
1,548,740 7,743 327,963 3,280 731,828 7,318 327,963 3,280
25. Commitments
Neither the Group nor the Company had any capital commitments at the end of
the financial year, for which no provision has been made. In addition to the
lease debt which is recorded on the Group's balance sheet as per Note 20,
there are also various short term and low value leases which are accounted for
as operating leases. Total future lease payments under non-cancellable
operating leases are as follows:
2021 2020
Land and buildings Other Land and buildings Other
Group £'000 £'000 £'000 £'000
Operating leases payable:
Within one year 11 229 17 105
In the second to fifth years inclusive - 17 3 12
After more than five years - - - -
11 246 20 117
26. Related party transactions
During the year ended 31 December 2021 the Group and Company entered into the
following related party transactions:
Group Company
Year ended 31 December Year ended 31 December
2021 2020 2021 2020
£'000 £'000 £'000 £'000
(Expenses) / Income
SFN Cleantech Investment Limited effective loan interest (452) (1,093) (452) (1,093)
Falih Nahab effective loan interest (993) (2,815) (993) (2,815)
SFN Cleantech Investment Limited other loan interest (30) (40) (30) (40)
SFN Cleantech Investment Limited credit arising on convertible interest waiver 315,703 - 315,703 -
Falih Nahab credit arising on convertible interest waiver 293,498 - 293,498 -
At 31 December 2021 the Group and Company had the following balances with
related parties:
Group Company
Year ended 31 December Year ended 31 December
2020 2019 2020 2019
£'000 £'000 £'000 £'000
Amounts due (to) / from
SFN Cleantech Investment Limited borrowings and embedded derivatives (see (30,320) (342,846) (30,320) (242,195)
Notes 21 and 22)
SFN Cleantech Investment Limited bank guarantee (1,933) (2,055) - -
Dr Faiz Nahab bank guarantee (2,235) (2,345) - -
SFN Cleantech Investment Limited loans to SPower GmbH (51,401) (343,247) (51,401) (443,897)
Falih Nahab borrowings and embedded derivatives (See Notes 21 & 22) (30,320) (342,846) (30,320) (242,195)
Due to the waivers of convertible interest by SFN Cleantech Investment Limited
and Mr. Falih Nahab the embedded derivative on convertible interest is no
longer applicable at the end of 2021 and thus £609.2m was reversed in the
income statement. During the year the Company made capital contributions to
Proton Motor Fuel Cells GmbH of £8,877,000 (2020: £6,912,000) and to SPower
GmbH of £nil (2020: £nil).
27. Risk management objectives and policies
The Group's activities expose it to a variety of financial risks:
§ foreign exchange risk (note 28);
§ credit risk (note 29); and
§ liquidity risk (note 30).
The Group's overall risk management programme focuses on the unpredictability
of cash flows from customers and seeks to minimise potential adverse effects
on the Group's financial performance. The Board has established an overall
treasury policy and has approved procedures and authority levels within which
the treasury function must operate. The Directors conduct a treasury review at
least monthly and the Board receives regular reports covering treasury
activities. Treasury policy is to manage risks within an agreed framework
whilst not taking speculative positions.
The Group's risk management is co-ordinated at Proton Motor Fuel Cell GmbH in
close co-operation with the Board of Directors, and focuses on actively
securing the Group's short to medium term cash flows by minimising the
exposure to financial markets.
28. Foreign currency sensitivity
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the Euro
and Sterling.
The Group does not hedge either economic exposure or the translation exposure
arising from the profits, assets and liabilities of Euro business.
Euro denominated financial assets and liabilities, translated into Sterling at
the closing rate, are as follows:
Year ended 31 December 2021 Year ended 31 December 2020
€'000 £'000 €'000 £'000
Financial assets 4,835 4,063 3,744 3,345
Financial liabilities (107,161) (90,052) (770,752) (688,667)
Short-term exposure (102,326) (85,989) (767,008) (685,322)
The following table illustrates the sensitivity of the net result for the year
and equity with regard to the parent Company's financial assets and financial
liabilities and the Sterling/Euro exchange rate. It assumes a +/- 7.97% change
of the Sterling/Euro exchange rate for the year ended 31 December 2021 (2020:
12.78%). This percentage has been determined based on the average market
volatility in exchange rates in the previous 12 months. The sensitivity
analysis is based on the parent Company's foreign currency financial
instruments held at each balance sheet date.
If the Euro had strengthened against Sterling by 7.97% (2020: 12.87%) then
this would have had the following impact:
Year ended 31 December 2021 Year ended 31 December 2020
£'000 £'000
Net result for the year (6,853) (87,584)
Equity (6,853) (87,584)
If the Euro had weakened against Sterling by 7.97% (2020: 12.78%) then this
would have had the following impact:
Year ended 31 December 2021 Year ended 31 December 2020
£'000 £'000
Net result for the year 6,853 87,584
Equity 6,853 87,584
Exposures to foreign exchange rates vary during the year depending on the
value of Euro denominated loans. Nonetheless, the analysis above is considered
to be representative of Group's exposure to currency risk.
29. Credit risk analysis
Credit risk is managed on a Group basis. Credit risk arises from cash and
deposits with banks, as well as credit exposures to customers, including
outstanding receivables and committed transactions. For banks and financial
institutions, only independently rated parties with a minimum rating of 'A'
are accepted. If customers are independently rated, these ratings are used.
Otherwise, if there is no independent rating, risk control assesses the credit
quality of the customer, taking into account its financial position, past
experience and other factors. Individual risk limits are set based on internal
or external ratings in accordance with limits set by the Board.
No credit limits were exceeded during the reporting period, and management
does not expect any losses from non-performance by these counterparties. The
Directors do not consider there to be any significant concentrations of credit
risk.
The Group's maximum exposure to credit risk is limited to the carrying amount
of financial assets recognised at the balance sheet date, as summarised below:
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Cash and cash equivalents 2,152 2,739 20 5
Trade and other receivables 1,624 348 238 12
Short-term exposure 3,776 3,087 258 17
The Group continuously monitors defaults of customers and other
counterparties, identified either individually or by group and incorporates
this information into its credit risk controls. Where available at reasonable
cost, external credit ratings and/or reports on customers and other
counterparties are obtained and used. The Group's policy is to deal only with
creditworthy counterparties.
The Group's management considers that all the above financial assets that are
not impaired for each of the reporting dates under review are of good credit
quality, including those that are past due.
None of the Group's financial assets are secured by collateral or other credit
enhancements.
In respect of trade and other receivables, the Group is not exposed to any
significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The credit risk for liquid
funds and other short-term financial assets is considered negligible, since
the counterparties are reputable banks with high quality external credit
ratings.
30. Liquidity risk analysis
Prudent liquidity risk management includes maintaining sufficient cash and the
availability of funding from an adequate amount of committed credit
facilities. The Group maintains cash to meet its liquidity requirements.
The Group manages its liquidity needs by carefully monitoring scheduled debt
servicing payments for long-term financial liabilities as well as
cash-outflows due in day-to-day business. Liquidity needs are monitored in
various time bands, on a day-to-day and week-to-week basis, as well as on the
basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day
and a 360-day lookout period are identified monthly.
As at 31 December 2021, the Group's liabilities have contractual maturities
which are summarised below:
Within 6 months 6 to 12 months 1 to 5 years
£'000 £'000 £'000
Trade payables 505 - -
Other short term financial liabilities 3,993 - -
Lease debt - 111 8
Borrowings - 517 83,596
This compares to the maturity of the Group's financial liabilities in the
previous reporting period as follows:
Within 6 months 6 to 12 months 1 to 5 years
£'000 £'000 £'000
Trade payables 276 - -
Other short term financial liabilities 4,113 - -
Lease debt - 196 104
Borrowings and embedded derivatives on convertible loans - 814 79,238
The above contractual maturities reflect the gross cash flows, which may
differ to the carrying values of the liabilities at the balance sheet date.
Borrowings and embedded derivatives on convertible loans have been combined as
they relate to the same instruments. Contractual maturities have been assumed
based on the assumption that the lender does not convert the loans into equity
before the repayment date.
31. Financial instruments
The assets of the Group and Company are categorised as follows:
As at 31 December 2021 Group Company
Loans and receivables Non-financial assets / financial assets not in scope of IAS 39 Total Loans and receivables Non-financial assets / financial assets not in scope of IAS 39 Total
£'000 £'000 £'000 £'000 £'000 £'000
Intangible assets - 78 78 - - -
Property, plant and equipment - 1,619 1,619 - - -
Right-of-use assets - 111 111 - - -
Fixed asset investments - 11 11 - - -
Inventories - 1,835 1,835 - - -
Trade and other receivables 1,624 - 1,624 366 - 366
Cash and cash equivalents 2,152 - 2,152 20 - 20
3,776 3,654 7,430 386 - 386
As at 31 December 2020 Group Company
Loans and receivables Non-financial assets / financial assets not in scope of IAS 39 Total Loans and receivables Non-financial assets / financial assets not in scope of IAS 39 Total
£'000 £'000 £'000 £'000 £'000 £'000
Intangible assets - 64 64 - - -
Property, plant and equipment - 1,484 1,484 - - -
Right-of-use assets - 285 285 - - -
Investment in subsidiary - 11 11 - - -
Inventories 1,790 1,790 - - -
Trade and other receivables 348 - 348 209 - 209
Cash and cash equivalents 2,739 - 2,739 5 - 5
3,087 3,634 6,721 214 - 214
The liabilities of the Group and Company are categorised as follows:
As at 31 December 2021 Group Company
Financial liabilities at amortised cost Financial liabilities valued at fair value through the income statement Liabilities not within the scope of IAS 39 Total Financial liabilities at amortised cost Financial liabilities valued at fair value through the income statement Liabilities not within the scope of IAS 39 Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Trade and other payables 4,498 - - 4,498 780 - - 780
Lease debt 119 - - 119 - - - -
Borrowings 84,473 - - 84,473 83,596 - - 83,596
Embedded derivatives on convertible loans - - - - - - - -
89,090 - - 89,090 84,736 - - 84,736
As at 31 December 2020 Group Company
Financial liabilities at amortised cost Financial liabilities valued at fair value through the income statement Liabilities not within the scope of IAS 39 Total Financial liabilities at amortised cost Financial liabilities valued at fair value through the income statement Liabilities not within the scope of IAS 39 Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Trade and other payables 4,389 - - 4,389 364 - - 364
Lease debt 300 - - 300 - - - -
Borrowings 80,052 - - 80,052 79,238 - - 79,238
Embedded derivatives on convertible loans - 609,201 - 609,201 - 609,201 - 609,201
84,741 609,201 - 693,942 79,602 609,201 - 688,803
Fair values
Management believe that the fair value of trade and other payables and
borrowings is approximately equal to book value.
IFRS 13 sets out a three-tier hierarchy for financial assets and liabilities
valued at fair value. These are as follows:
§ Level 1 - quoted prices (unadjusted) in active markets for identical
assets and liabilities;
§ Level 2 - inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly; and
§ Level 3 - unobservable inputs for the asset or liability.
The embedded derivatives fall within the fair value hierarchy level 2.
32. Capital management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern, provide returns for shareholders and
benefits to other stakeholders and to maintain a structure to optimise the
cost of capital. The Group defines capital as debt and equity. In order to
maintain or adjust the capital structure, the Group may consider: the issue or
sale of shares or the sale of assets to reduce debt.
The Group routinely monitors its capital and liquidity requirements through
leverage ratios consistent with industry-wide borrowing standards. There are
no externally imposed capital requirements during the period covered by the
financial statements.
Group Company
2021 2020 2021 2020
£'000 £'000 £'000 £'000
Total liabilities 89,090 693,942 84,736 688,803
Less: cash and cash equivalents (2,152) (2,739) (20) (5)
Adjusted net debt 86,938 691,203 84,716 688,798
33. Ultimate controlling party
The Directors consider SFN Cleantech Investment Ltd to be the Ultimate
Controlling Party at the date of approval of the financial statements. Dr.
Faiz Nahab, Chief Executive, is connected to SFN Cleantech Investment Ltd.
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