REG - Proton Motor Power - Final Results
20/06/2023 07:00
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RNS Number : 2235D Proton Motor Power Systems PLC 20 June 2023
20 June 2023
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
2022 (the "Financial Year").
Chairman's statement
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. Whilst industry and consumer demand for alternative sources of
energy continues, the period under review was impacted by the effects of the
Russian invasion of Ukraine. Proton Motor´s technology offer continues to
mature to remain aligned with this growing demand and supports the continuing
commercialisation process of the group.
Highlights
· Total order intake in 2022 of £2,653k (2021: £2,800k), having
started the year with five new orders in January - February 2022, we saw a
quieter summer period as a result of the Ukraine invasion.
· At the year end the production backlog was £2,950k (2021:
£2,514k). Fulfilment of this backlog will result in deliveries of varying
configurations of fuel cell systems and also service maintenance charges to
customers both in 2023 and 2024.
· 59% of order intake in 2022 (2021: 49%) was derived from the
stationary segment, with other orders primarily from the mobile segment.
Notable orders announced throughout the year included:
o further order from E-Trucks Europe for nine HyRange 43 hydrogen fuel cell
systems, together with the corresponding maintenance agreement; and
o a significant order from GKN Hydrogen for 15 S8 stationary fuel cell
systems.
· Sales in 2022 were £2,088k (2021: £2,771k), representing an
annual change of -25%.
· The operating loss in 2022 was £10,542k vs. £9,121k in 2021
(excluding the effect of embedded derivative in 2021). The increased loss
resulted principally from further investment in the technical development
area, in staff and infrastructure.
· Cash burn from operating activities has increased during the
period from £8,726k in 2021 to £9,207k, in-line with increased investment in
staff and technology development and in preparation for our move to new
premises. Cash flow is the Group's key financial performance target and our
objective is to achieve positive cash flow in the shortest timeframe 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 at 31 December 2022 was £2,579k (31 December 2021:
£2,152k).
· A fifteen-year lease agreement has been signed for modern
premises which will permit enhanced and efficient production throughflows and
provide space to substantially expand the Group's manufacturing, testing and
development capacity. The new premises comprises over 13,500 square metres of
useable space, of which over 10,500 square metres can be dedicated to
production, testing and development with the remainder of the space being
devoted to office usage. This represents a seven fold increase in the amount
of space available for production when compared to the Company´s current
premises.
· In 2022, Proton´s fuel cell system HyRange® won the Prize for
Energy 2022 from the federal state of Hesse.
Post year end
· Order intake for the 5 months ended May 2023: £2,552k (5 months
ended May 2022: £1,517k).
· At the end of May 2023, the production backlog had a sales value
of £4,317k (May 2022: £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 2023 and 2024.
· Following the year end, existing loan facilities have been
increased by a further €14,500k to ensure operational and investment
financing into 2024 with a view to accelerating the investment programme in
the face of increasing demand.
Outlook
In the year ahead we are focused on substantially expanding production and
development capacity in order to match increasing market demand.
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: "In the year ahead, we will be focused
particularly on ramping up production capacity in the new premises and
exploiting the current potential order intake and sales and production
pipeline.
Posting of accounts and notice of AGM
Notice of the Company's annual general meeting, to be held on 30 June 2023 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 2022 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) .
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
Celicourt Communications
PR Adviser +44 (0) 20 8434 264
Mark Antelme / Philip Dennis
Strategic report
Business review
Proton Motor Power Systems plc and subsidiaries' ("the Group's") principal
activity is the development of hydrogen fuel cells and fuel cell hybrid
systems through its German subsidiary Proton Motor Fuel Cell GmbH ("PM").
A fuel cell is a device that converts the chemical energy of a fuel and an
oxidant into electricity, with only warm water as a by- product. In principle,
it functions like a combustion engine, but without any harmful emissions and
does not require recharging as long as an ongoing fuel source, such as
hydrogen, is available. It also emits heat which can be used for example to
support heating of passenger buses or buildings. This increases the system
efficiency significantly.
Fuel cell engines are widely regarded as a potential alternative to internal
combustion engines, power from fossil fuels and battery technology. Fuel cell
engines produce no noxious gases and pure hydrogen fuel cells produce no
harmful emissions such as carbon dioxide. There is a number of types of fuel
cell, classified by the type of electrolyte used, including alkali, molten
carbonate, proton exchange membrane ("PEM"), phosphoric acid, and solid oxide.
Proton Motor has selected a PEM-based fuel cell as the Directors believe that,
based on the PEM's start/stop capability, dynamic operation and life time, it
is the only technology able to meet the overall criteria which the Group has
specified for its intended commercial applications.
Proton Motor Power Systems plc ("Proton Motor") has made further progress this
year in proving its technology, building up capacity and its sales pipeline.
The Group sees a strong trend in the market for a transition from pure
battery-driven vehicles to hybrid systems (fuel cells and batteries),
particularly for larger vehicles such as buses and trucks. The Group has
significant know-how in fuel cell stacks and hybridisation. Over the years,
different applications provide good examples of Proton Motor's in depth
know-how. These include: the Deutsche Bahn back-up power solutions; the
containerised 100kw power solution for the renewable energy campus at APEX;
the fuel cell based power genset HyShelter® 240 for Shell Hydrogen; the
HyRail fuel cell system for a rail milling machine for the Austrian company
Linsinger; a TriHyBus in Czech Republic; the HyRange® 43 fuel cell system for
garbage collecting trucks; and a number of different maritime projects,
including the ZEUS project with Fincantieri.
The Group also continues to see an increase in the potential order sizes from
the market. To be prepared for this, Proton Motor will be expanding its
production capacity to several thousand stacks, fuel cell systems and turnkey
solution per year. To facilitate this, Proton has signed a lease agreement for
an additional production site, near to its headquarters in Puchheim.
Production at the new facility is expected to commence in 2024.
The Group has always recognised the commercial importance and value of
protecting its intellectual property ("IP") and, therefore, the need to
protect it wherever possible by way of patents and trademarks. The Group's key
IP portfolio comprises a mixture of granted patents, patent applications,
trademarks, confidential information and know-how.
The Group undertakes comprehensive business planning to define long-term
strategic objectives and goals. Annual budgets and operational plans are
prepared utilising financial and non-financial Key Performance Indicators
("KPIs"). Business performance is measured by KPIs which include monitoring of
actual against budget and rolling forecasts, and R&D project status. These
are reported to the Board on a monthly basis. It is difficult to disclose
non-financial key performance indicators which are not commercially sensitive,
such as the number of fuel cells produced and the fuel cell production cost
per kW of output.
The Company began as Magnet Motor, opening its factory in 1980. The technology
and application roadmap went from the world's first triple hybrid forklift
truck to a fuel cell ship. After that PM developed the triple hybrid Skoda bus
in 2008. Containerised power solutions completed the application portfolio.
All those applications are powered via our own fuel cell stacks, with a robust
design for a long lifetime. The Company established operations close to Munich
area and was one of the first German designers and manufacturers of fuel
cells.
View to the future
The world is committed to protecting the environment. Cities and governments,
pushed by the European Commission, must reduce inner-city pollution
drastically. Society and economy have to switch to renewable energy sources
such as wind and solar. These energy sources are only available on a
fluctuating basis and therefore the need for a long time storage solution is
needed, and hydrogen is the only possibility. In this regard the fuel cells
will ramp up as the ideal consumers for emission free power and energy supply.
China fights against smog in its big cities. After Dieselgate in the US and
Europe, electric vehicles with batteries are on the move. All this is
generating a market for clean transport and energy. Based on that development,
the world market for fuel cell products and solutions is more active than
ever.
Beside pure battery solutions, hydrogen fuel cells are in focus. 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 is reproducible 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. With just over 100 staff members it is
relatively small but regarding 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.
Market drivers
The Board views that growth in the fuel cell market will be determined by the
following factors:
· The ongoing depletion of fossil fuel reserves;
· United Nations Framework Convention on Climate Change ("UNFCCC")
COP legalisation on climate change;
· Strengthening competitiveness on cleantech technology in Europe
and making Europe more independent from Asia
· Current and future air quality regulation;
· Growing industrial and consumer demand for alternative sources of
energy;
· The potential long term competitiveness of the auto and
transportation industries;
· Energy security concerns;
· Limitations of purely battery powered propulsion systems;
· Renewable energy storage systems industrial buildings and private
residences;
· Discussions regarding hydrogen as an energy storage for green
energy (power to gas);
· A growing global demand for transportation;
· Increasingly urgent demands for healthy breathable air in urban
centres and for action to mitigate the adverse aspects of climate change;
· The growing availability and the compelling economics of cleaner
fuels; and
· Increasing political commitment to hydrogen on an EU, national
and regional level.
Increasing political commitment to hydrogen as an energy source:
European Union (EU)
· 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. 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 engines 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.
Federal Republic of Germany
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 over two years. 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 will receive 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.
United Kingdom
· UK (November 2020): 5GW of low carbon H2 production by 2030 &
£240m in to a Net Zero Hydrogen Fund (part of the UK government's 10-point
plan for a Green Industrial Revolution).
Identification of Target Market segments
According to a study conducted by the market research company Global Market
Insights the 2021 global fuel cells market size was valued at approximately
USD 3.0 billion, The upwards trend in fuel cell demand is foreseen to
continue. Expecting a CAGR of 10.1 % during the years 2022-2030, the total
market size will exceed USD 8.6 billion in 2030 (Fuel Cell Market Size |
Industry Share Report, 2022-2030 (gminsights.com)
(https://www.gminsights.com/industry-analysis/fuel-cell-market) ).
Proton Motor has identified the following broad market segments:
· Stationary applications
· Automotive applications
· Rail
· Maritime
More specifically these include:
· Solutions for renewable energy storage systems based on hydrogen;
· grid independent or grid isolated power supply.
· power supply systems for emergency power systems (e.g. for
critical infrastructure or datacentre)
· heavy and light duty vehicles (e.g. trucks, city busses)
· Ships and boats
· rail machines and passenger trains
· off-road applications (e.g. material handling, construction
machines)
For this reason the Group has structured its operational business units into
the same four segments.
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 the 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
and other heavy duty vehicles such as fork lift trucks. The mobility sector
sees many future challenges with emission free to automated driving with the
vehicle becoming a power source itself. Proton Motor is participating in the
EU REVIVE project. REVIVE stands for 'Refuse Vehicle Innovation and Validation
in Europe'. The project has been started in 2018 and will run until mid 2024.
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.
Proton Motor is also participating in the EU StasHH Project. The consortium
operating together as "StasHH" (Standard-Sized Heavy-Duty Hydrogen) comprises
11 fuel cell module suppliers, 9 original equipment manufacturers and 5
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 engine. This technology
permits the usage of both systems in an optimised way with long lifetime
expectation. In the meantime, the range extender concept is adopted by the
industry especially for heavy duty vehicle applications.
The ongoing "Dieselgate" situation and the COP targets present the industry as
a whole but in particular the automotive, industry with a huge challenge.
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.
Power Solutions are becoming tailor-made
CleanTech Power Solutions will become more diverse and more flexible. That is
why at Proton Motor we are making our offering of products and services
bespoke to customer requirements based on our standard suite of CleanTech
products aimed at each market sector in a scalable modular approach. As power
requirements increase our approach allows users to simply add additional
modules all controlled from our unique software. This shift towards modular
standardisation results in accelerated deployment in our target markets with
simplification and cost reduction.
Group activities
With the successful setting up of the production lines for the fourth
generation PM400 Stack Modules, the HyModule® S8 systems and the HyFrame®
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. The Group has increased production of its
HyModule® S8 and HyFrame® units, due to regular order income from several
customers, including GKN Hydrogen, Umstro and Wilo.
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
connected 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 manufacturers of 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 have repeatedly ordered HyRange® 43 fuel cell systems in two designs.
One design for mounting under the driver's cabin and the second is for
mounting on the roof. In total, ETrucks has ordered 21 HyRange® 43 systems,
11 of which have been delivered to date.
Since mid-2022, the HyShelter® 240 system commissioned by Shell has been in
normal operation and was handed over to the operator. In April 2023, Shell
ordered an additional two HyShelter® 240 systems which will be delivered in
2024.
The Group's HyFrame® systems are also being used in Hydrogen solutions by the
German company Wilo. Since April 2023, three HyFrame® S36 fuel cell systems
have been in operation in the H2Powerplant of Wilo at the Wilo headquarters in
Dortmund.
After the successful installation of the production line for the HyModule® S8
fuel cell system at the Group's headquarter in Puchheim, in 2022 a first
production line for HyFrame® fuel cell systems were installed. In October
2022, the Group signed a rental agreement for a new production facility in
Fürstenfeldbruck, near to Proton Motor´s Puchheim headquarter. The new site
will be mainly used for the production and commissioning of fuel cell stacks,
systems and containerized turnkey solutions. The start of production at the
new facility is planned to commence in 2024. The automated fuel cell stack
production will be integrated in the new facility. With this new site, Proton
will expand its production capacities to several thousand stacks, fuel cell
systems and turnkey solutions per year.
Operational Strategy
Sales and growth strategy
Proton Motor is seeking to ramp up capacity to achieve organic growth through
its own sales and production capacity and is also seeking to achieve growth by
offering licensing partnerships, which will allow manufacture of the complete
system locally by a licensing partner. Furthermore, Proton Motor is seeking
mutually beneficial cooperations with suitable partners within joint ventures
and other such undertakings.
Proton Motor is targeting mid-size technology companies as well as large
multinationals as cooperation partners. The Group is specifically looking for
partners with market access for its applications and solutions. These partners
should already be active in the market for electric power supply solutions or
be planning to address those markets. Adding a fuel cell is often seen as the
key to solving critical problems associated with pure battery or diesel
powered products.
The Group will offer solutions for all four target markets: stationary,
automotive, rail and maritime. The Group will also continue its focus on
further developing fuel cell stacks and systems.
The sales process always starts with consulting, simulation, packaging study,
integration, testing and final roll out with service support. Proton Motor can
act as turnkey supplier for a complete solution with all the necessary
know-how under one roof. A one-stop CleanTech Power Solution provider. To
have its own fuel cell stack gives a complete product offering from stack to
final application which the Directors see as necessary to supply customers
with a complete and optimised solution. The benefits for customers are
obvious. Know-how and solutions are available for a fast integration process,
saving time and money for our customers. The Group has signed cooperation
agreements with companies, which provide the planning and integration part of
a project.
The Group sees growing market demand for safe, secure and clean power
world-wide. Data centre demand will be significant in the coming years. The
combination of the fuel cell series with a UPS and the optimisation of both
systems will help to boost sales in the near future. The newly designed
product with capabilities to be integrated and controlled via a smart grid
will also have great potential.
Manufacturing strategy
To date, the Group's HyStack® fuel cell modules and fuel cell hybrid systems
have been produced in relatively small volumes, on a project-by-project basis,
largely utilising a combination of semi-automated processes and manual
assembly. In order to meet our manufacturing goals and achieve the market
demand, the Directors have: identified target markets and commercial
applications;
· established further key commercial partnerships within these
target markets;
· designed the Group's fuel cells and fuel cell hybrid systems to
meet the engineering requirements for volume manufacturing;
· switched over to a new and more cost effective stack generation
which will lead to a decrease in production costs;
· established quality control procedures;
· installed professional commercial test benches to ensure high
quality standards for the Group's fuel cells and fuel cell engines;
· built up a new electrical infrastructure for continuous testing;
· reviewed, risk assessed and secured supplier and component
manufacturing relationships;
· identified second source suppliers and addressed new suppliers
for critical components;
· identified and assessed major commercial factors, such as cost,
availability, robustness and durability of components; and
· secured and properly documented necessary regulatory and
operational approvals for each application.
Competitive advantages
The Directors are confident that the Group's technology brings the following
distinct combination of characteristics to the power systems market:
· zero harmful emissions;
· lower fuel consumption than comparable commercial alternatives;
· silent operation;
· standard fuel cell stack for use in multiple applications;
· modular fuel cell systems for easy customer adoptions;
· a reliable, robust and durable technology; and
· successful integration of fuel cell technology into a hybrid
system.
Principal risks and uncertainties
The management of the business and the execution of the Group's strategy are
subject to a number of risks. The Board reviews these risks, as outlined in
the Corporate Governance Statement, and puts in place policies to mitigate
them.
s172(1) statement
The disclosures required for s172 reporting can be found in the respective
section of the financial statements.
Outlook
The Group's principal objective is to expand volume manufacturing initially
through the investment in our new premises and beyond that with industrial
partners based on licence agreements and mutually beneficial cooperations,
such as joint ventures. This will enable the Group to achieve a more
economically competitive unit cost for its fuel cells and fuel cell hybrid
systems. Also the Group will utilize the sales channels of its industrial
partners to address various markets and ensure growth of sales volume. The
Directors believe that the advanced stage of commercialisation of the Group's
technology, coupled with the Group's preferred partnerships, will enable the
business to establish itself firmly as a leading, global, fuel cell, fuel cell
hybrid system provider.
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.
Dr. Faiz Nahab Date: 19 June 2023
Chief Executive Officer
Consolidated income statement
for the year ended 31 December 2022
Note 2022 2021
as restated
£'000 £'000
Revenue 4 2,088 2,771
Cost of sales (2,089) (2,346)
Gross (loss)/ profit (1) 425
Other operating income 604 501
Administrative expenses (11,057) (10,047)
Operating loss (10,454) (9,121)
Finance income 9 - 3
Finance (costs) / income 10 (8,450) 3,222
(Loss) for the year before embedded derivatives (18,904) (5,896)
Fair value gain on embedded derivatives 22 - 320,910
(Loss) / Profit for the year before tax 5 (18,904) 315,014
Tax 8 - -
(Loss) / Profit for the year after tax (18,904) 315,014
(Loss) / Profit per share (expressed as pence per share) 2022 2021
as restated
Basic 11 (1.2) 20.4
Diluted (1.2) 20.2
11
Loss per share excluding embedded derivative
(expressed as pence per share)
Basic 11 (1.2) (0.4)
Diluted 11 (1.2) (0.4)
Consolidated statement of comprehensive income
for the year ended 31 December 2022
2022 2021
as restated
£'000 £'000
(Loss) / Profit for the year (18,904) 315,014
Other comprehensive (expense)
Items that may not be reclassified to profit and loss
Exchange differences on translating foreign operations (959) (586)
Total other comprehensive (expense) (959) (586)
Total comprehensive (expense) for the year (19,863) 314,428
Attributable to owners of the parent (19,863) 314,428
Consolidated Statement of Financial Position
as at 31 December 2022
Group
Note 2022 2021
as restated
£'000 £'000
Assets
Non-current assets
Intangible assets 12 149 78
Property, plant and equipment 13 2,037 1,918
Right-of-use assets 14 452 111
Fixed asset investments 15 - 11
2,638 1,819
Current assets
Inventories 16 2,302 1,835
Trade and other receivables 17 946 1,624
Cash and cash equivalents 18 2,720 2,152
5,968 5,611
Total assets 8,606 7,430
Liabilities
Current liabilities
Trade and other payables 19 4,657 4,498
Lease debt 20 215 111
Borrowings 21 466 517
5,338 5,126
Non-current liabilities
Lease debt 20 252 8
Borrowings 21 103,007 83,956
103,259 83,964
Total liabilities 108,597 89,090
Net liabilities (99,991) (81,660)
Equity
Equity attributable to equity holders of the parent company
Share capital 24 11,040 11,023
Share premium 20,717 20,390
Merger reserve 15,656 15,656
Reverse acquisition reserve (13,861) (13,861)
Share option reserve 2,728 2,187
Foreign translation reserve 12,509 11,745
Capital contribution reserve 289,497 289,434
Accumulated losses
At 1 January 2022 (418,234) (732,390)
(Loss) / Profit for the year attributable to the owners (18,904) 315,014
Other changes in retained earnings (1,139) (858)
Total equity (99,991) (81,660)
Statement of Financial Position - Company
as at 31 December 2022
Company
Note 2022 2021
As restated
£'000 £'000
Assets
Current assets
Trade and other receivables 17 254 366
Cash and cash equivalents 18 9 20
263 386
Total assets 263 386
Liabilities
Current liabilities
Trade and other payables 19 751 780
Lease debt - -
Borrowings - -
751 780
Non-current liabilities
Lease debt - -
Borrowings 21 103,007 83,956
103,007 83,956
Total liabilities 103,758 84,736
Net liabilities (103,495) (84,350)
Equity
Equity attributable to equity holders of the parent company
Share capital 24 11,040 11,023
Share premium 20,717 20,390
Capital contribution reserve 288,291 288,291
Merger reserve 15,656 15,656
Share option reserve 2,728 2,187
Accumulated losses
At 1 January 2022 (421,897) (735,366)
(Loss) / profit for the year attributable to the owners (19,849) 313,741
Other changes in retained earnings (181) (272)
Total equity (103,495) (84,350)
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
Group Share Capital Share Premium Merger Reserve Reverse Acquisition Reserve Share Option Reserve Foreign Translation Reserve Capital Contribution Reserve Accumulated Losses Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
£'000
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
Derecognition of embedded derivative - as restated - - - - - - 288,291 - 288,291
Transactions with owners - as restated 425 816 - - 1,238 - 288,291 (272) 290,498
Profit for the year - - - - - - - 315,014 315,014
Other comprehensive income:
Currency translation differences - - - - - 707 (72) (586) 49
Total comprehensive income for the year - as restated - - - - - 707 (72) 314,428 315,063
Balance at 31 December 2021 - as restated 11,023 20,390 15,656 (13,861) 2,187 11,745 289,434 (418,234) (81,660)
Balance at 1 January 2022 11,023 20,390 15,656 (13,861) 2,187 11,745 289,434 (418,234) (81,660)
Share based payments 13 217 - - 541 - - (180) 591
Proceeds from share issues 4 110 - - - - - - 114
Transactions with owners 17 327 - - 541 - - (180) 705
Loss for the year - - - - - - - (18,904) (18,904)
Other comprehensive income:
Currency translation differences - - - - - 764 63 (959) (132)
Total comprehensive income for the year - - - - - 764 63 (19,863) (19,036)
Balance at 31 December 2022 11,040 20,717 15,656 (13,861) 2,728 12,509 289,497 (438,277) (99,991)
Statements of Changes in Equity - Company
for the year ended 31 December 2022
Company Share Capital Share Premium Capital Contribution Reserve Merger Reserve Share Option Reserve Accumulated Losses Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000
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
Derecognition of embedded derivative - - 288,291 - - - 288,291
- as restated
Transactions with owners - as restated 425 816 288,291 - 1,238 (272) 290,498
Profit for the year - - - - - 313,741 313,741
Total comprehensive expense for the year - as restated - - - - - 313,741 313,741
Balance at 31 December 2021 - as restated 11,023 20,390 288,291 15,656 2,187 (421,897) (84,350)
Balance at 1 January 2022 11,023 20,390 288,291 15,656 2,187 (421,897) (84,350)
Share based payments 13 217 - - 541 (181) 590
Proceeds from share issues 4 110 - - - - 114
Transactions with owners 17 327 - - 541 (181) 704
Loss for the year - - - - - (19,849) (19,849)
Total comprehensive expense for the year - - - - - (19,849) (19,849)
Balance at 31 December 2022 11,040 20,717 288,291 15,656 2,728 (441,927) (103,495)
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.
Capital contribution reserve
The captial contribution reserves include a balance of £288,291,235 in
relation to the gain on release of an embedded derivative held by the
shareholders in December 2021. The waiver of a conversion feature on loan
instruments, and subsequent derecognition of embedded derivative, was
considered to constitute a transaction with owners in their capacity as owners
and as such the gain was presented in equity. See Note 22 for further detail.
Consolidated Statement of cash flows
for the year ended 31 December 2022
Group
Year ended 31 December
2022 2021
as restated
£'000 £'000
Cash flows from operating activities
Profit / (Loss) for the year (18,904) 315,014
Adjustments for:
Depreciation and amortisation 666 641
Interest income - (3)
Interest expense 3,629 1,498
Share based payments 361 966
Movement in inventories (466) (45)
Movement in trade and other receivables 678 (1,276)
Movement in trade and other payables 159 109
Movement in fair value of embedded derivatives - (320,910)
Effect of foreign exchange rates 4,821 (4,720)
Net cash (used in) / generated from operating activities (9,056) (8,726)
Cash flows from investing activities
Purchase of intangible assets (102) (44)
Purchase of property, plant and equipment (779) (633)
Interest received - 3
Net cash used in investing activities (881) (674)
Cash flows from financing activities
Proceeds from issue of loan instruments 10,656 7,962
Proceeds from issue of new shares 114 1,241
Repayment of other borrowings (51) (297)
New obligations of lease debt - 21
Repayment of obligations under lease debt (191) (202)
Net cash generated from financing activities 10,528 8,725
Net increase/(decrease) in cash and cash equivalents 591 (675)
Effect of foreign exchange rates (23) 88
Opening cash and cash equivalents 2,152 2,739
Closing cash and cash equivalents 2,720 2,152
Statement of cash flows - Company
for the year ended 31 December 2022
Company
Year ended 31 December
2022 2021
as restated
£'000 £'000
Cash flows from operating activities
Loss for the year (19,849) 313,741
Adjustments for:
Impairment of investment 10,585 8,877
Interest income (7) (12)
Interest expense 3,574 1,476
Share based payments 590 966
Movement in trade and other receivables 112 (156)
Movement in trade and other payables (29) 415
Movement in fair value of embedded derivatives - (320,910)
Effect of foreign exchange rates 4,821 (4,720)
Net cash (used in) / generated from operating activities (203) (323)
Cash flows from investing activities
Capital contribution to subsidiaries (10,585) (8,877)
Interest received 7 12
Net cash used in investing activities (10,578) (8,865)
Cash flows from financing activities
Proceeds from issue of loan instruments 10,656 7,962
Proceeds from issue of new shares 114 1,241
Repayment of short-term borrowings - -
Net cash generated from financing activities 10,770 9,203
Net increase/(decrease) in cash and cash equivalents (11) 15
Effect of foreign exchange rates - -
Opening cash and cash equivalents 20 5
Closing cash and cash equivalents 9 20
Notes to the consolidated 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: c/o
Womble Bond Dickson (UK) LLP, 4 More London Riverside, London, England, SE1
2AU. The Company was admitted to the AIM Market of the London Stock Exchange
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
Chairman(2)
Antonio
Bossi
Non-Executive Director(5)
Ali Naini (appointed 31 May
2023)**( )
Non-Executive Director
Sebastian
Goldner
Chief Technical Officer and Chief Operations
Officer
Roman Kotlarzewski
Chief Financial Officer and Company
Secretary(4,6)
Manfred Limbrunner
Director Governmental Affairs and Funding
(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.
** Ali Naini was appointed as a director on 31 May 2023. His base remuneration
was set at £nil
2. Summary of significant accounting policies
The Board approved this announcement on 19 June 2023. The financial
information included in this announcement does not constitute the Group´s
statutory accounts for the years ended 31 December 2022 or 31 December 2021.
Statutory accounts for the year ended 31 December 2021 have been delivered to
Companies House. The statutory accounts for the year ended 31 December 2022
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 €32.3m and also a loan facility with
Mr. Falih Nahab of €56.9m. 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 2022 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 2022 31 December 2022 of facility date of this report
SFN Cleantech Investment Ltd €32.3m €29.7m € nil €32.3m
*(£28.7m) *(£26.3m) *(£28.7m)
SFN Cleantech Investment Ltd €2.4m €2.4m € nil €2.4m
*(£2.0m) *(£2.0m) *(£2.0m)
Mr. Falih Nahab €56.9m €54.7m €14.5m €71.4m
*(£50.4m) *(£48.5m) *(£12.9m) *(£63.3m)
Total €91.6m €86.8m €14.5m €106.1m
*(£81.1m) *(£76.8m) *(£12.9m) *(£94.0m)
*all loan facilities are denominated in EURO. Balances translated at year end
rate to Group presentation currency of British Pound in the table above for
information purposes only.
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 €106.1m 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 2024. 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 2024. 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 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.
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.
Prior year restatements
In late 2022, the Financial Reporting Council (FRC) submitted a request for
further information on the Group's Annual report and financial statements for
the year ended 31 December 2021. The review conducted by the FRC was a limited
scope review and was based solely on the Group's published Annual report and
financial statements. It does not provide any assurance that the Annual report
and financial statements are correct in all material respects.
Following completion of this review, the Directors in conjunction with
external advisors and the Audit Committee, have concluded that the subdivision
of ordinary shares should have been treated as an issue of shares without a
corresponding change in resources and therefore a retrospective adjustment
should have been processed as outlined in IAS 33. Furthermore, the treatment
of non-vested shares, which have no performance conditions, should have been
treated as options for the purpose of diluted EPS as per IAS 33.48.
As a result, the comparative basic and diluted EPS disclosures within the
Consolidated income statement, and note 11, have been restated for 2021.
The FRC review also scrutinised the treatment of the gain on derecognition of
the embedded derivatives, which was recognised in full through the income
statement. The embedded derivatives related to conversion features attached to
convertible interest on long-term borrowings from SFN Cleantech Investment
Limited and Mr. Falih Nahab. Given SFN and Mr Nahab are also majority
shareholders, upon review, the Directors have concluded that the waiver of
conversion feature, and subsequent derecognition of embedded derivative,
constituted a transaction with owners in their capacity as owners. As such an
element of the gain should have been presented in equity rather than through
the income statement.
As a result, the comparative Consolidated income statement, Statements of
changes in equity, and all relevant notes have been restated for 2021. The
value of reclassified gain is outlined in note 22.
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
2022 2021
£'000 £'000
United Kingdom 39 149
Germany 1,232 913
Rest of Europe 768 1,705
Rest of the World 49 4
2,088 2,771
Sales to GKN Hydrogen, Wilo SE and Kion Group represented 43.1% of the Group's
revenue in 2022 (2021: Linsinger and Shell 42.5%).
The results as reviewed by the CODM for the only identified segment are as
presented in the financial statements.
5. Loss for the year before tax
2022 2021
as restated
£'000 £'000
Loss on ordinary activities before taxation is stated
after charging
Depreciation and amortisation 665 641
Hire of other assets - operating leases exempt from IFRS 16 79 84
Pension contributions 92 85
Foreign exchange losses 4,821 -
after crediting
Gain in write-back of embedded derivatives - (320,910)
Amortisation of grants from public bodies (475) (408)
Foreign exchange gains - (4,720)
6. Auditors' remuneration
2022 2021
£'000 £'000
Audit services
Fees payable to the Company's auditor for the audit of the parent company and 33 25
consolidated financial statements
Fees payable to the Company's auditor and its associates for other services:
Other services 3 9
36 34
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:
2022 2021
Development and construction 62 59
Administration and sales 45 45
107 104
The aggregate payroll costs of these persons were as follows:
2022 2021
£'000 £'000
Wages and salaries 5,716 5,094
Share based payments 700 1,319
Social security costs 1,096 954
Other pension costs 92 85
7,604 7,452
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
£111k (2021: £154k).
Share based payments
The Group has incurred an expense in respect of shares and share options
during the year issued to employees as follows:
2022 2021
£'000 £'000
Share options (130) (64)
Share awards 721 1,318
Shares 109 65
700 1,319
At 31 December 2022 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:
2022 2021
Number Weighted average exercise price Number Weighted average exercise price
000´s £ 000´s £
Opening balance 39,612 0.046 46,197 0.048
Exercised - 0.000 - 0.000
Forfeited (16,605) (0.020) (6,585) (0.042)
Closing balance 23,007 0.070 39,612 0.046
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
(2021:28 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 2022 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 0.5p (2021: 1p) shares issued under the scheme in the
year having vested was 2,425,000 (2021: 400,000). The total number of
outstanding awards yet to vest at reporting date is 18.08m Ordinary 0.05p
shares (2021: 21.05m Ordinary 0.5p shares). The weighted average of time to
vest for outstanding awards is 4.0 years (2021: 5.2 years) and weighted
average fair value of outstanding awards is £0.28 (2021: £0.32).
8. Tax
2022 2021
£'000 £'000
Corporation tax - -
The tax on the Group's loss before tax differs from the theoretical amounts
that would arise using the weighted average tax rate applicable to losses of
the Companies as follows:
2022 2021
as restated
£'000 £'000
Tax reconciliation
(Loss) / profit before tax (18,904) 315,014
Expected tax (credit)/charge at 19% (2021: 19%) (3,592) 59,853
Effects of different tax rates on foreign subsidiaries (578) (457)
Expenses not deductible for tax purposes 690 285
Income not taxable for tax purposes - (60,973)
Tax losses carried forward 3,480 1,292
Tax charge - -
9. Finance income
2022 2021
£'000 £'000
Interest - 3
- 3
10. Finance costs
2022 2021
£'000 £'000
Interest 3,629 1,498
Exchange loss/ (gain) on shareholder loans 4,821 (4,720)
8,450 (3,222)
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 non-vested shares in the Key Person Share Award
scheme. However, dilutive share options have not been included in the
calculation of loss per share because they are non-dilutive for this period
given their exercise is dependent upon a particular future event.
2022 2021 - as restated
11. Loss per share
Basic Diluted Basic Diluted
£'000 £'000 £'000 £'000
Loss before embedded derivative (18,904) (18,904) (5,896) (5,896)
Fair value gain / (loss) on embedded derivatives - - 320,910 320,910
Gain / (Loss) attributable to equity holders of the Company (18,904) (18,904) 315,014 315,014
Weighted average number of Ordinary shares in issue (thousands) 1,550,521 1,550,521 1,541,111 1,541,111
Effect of dilutive potential Ordinary shares from convertible debt (thousands) - 18,075 - 21,050
Adjusted weighted average number of Ordinary shares (thousands) 1,550,521 1,568,596 1,541,111 1,562,161
Pence per share Pence per share Pence per share Pence per share
Gain/(loss) per share (pence per share) (1.2) (1.2) 20.4 20.2
(Loss) per share before embedded derivatives (pence per share) (1.2) (1.2) (0.4) (0.4)
The comparative for 2021 has been restated as outlined in note 2.
12. Intangible assets - Group
Goodwill Copyrights, trademarks and other intellectual property rights Development costs Total
£'000 £'000 £'000 £'000
Cost
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
At 1 January 2022 2,126 324 - 2,450
Exchange differences - 18 - 18
Additions - 102 - 102
Transfers - - - -
Disposals - - - -
-
At 31 December 2022 2,126 444 - 2,570
Accumulated Amortisation
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
At 1 January 2022 2,126 246 - 2,372
Exchange differences - 15 - 15
Charged in year - 34 - 34
Disposals - - - -
At 31 December 2022 2,126 295 - 2,421
Net book value
At 31 December 2022 - 149 - 149
At 31 December 2021 - 78 - 78
At 1 January 2021 - 64 - 64
Self-developed intangible assets in the amount of £102k (2021: £44k) 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 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
At 1 January 2022 679 1,631 826 354 3,490
Exchange differences 37 90 45 20 192
Additions 177 92 304 206 779
Transfers - 191 - (191) -
Disposals - - - - -
At 31 December 2022 893 2,004 1,175 389 4,461
Accumulated Depreciation
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
At 1 January 2022 487 908 476 - 1,871
Exchange differences 29 58 33 - 120
Charge for year 47 210 176 - 433
Disposals - - - - -
At 31 December 2022 563 1,176 685 - 2,424
Net book value
At 31 December 2022 330 828 490 389 2,037
At 31 December 2021 192 723 350 354 1,619
At 1 January 2021 228 669 436 151 1,484
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 2021 584 74 658
Additions - 21 21
At 31 December 2021 584 95 679
At 1 January 2022 584 95 679
Additions 429 110 539
Disposals - (74) (74)
At 31 December 2022 1,013 131 1,144
Accumulated Depreciation
At 1 January 2021 334 39 373
Charge for year 167 28 195
At 31 December 2021 501 67 568
At 1 January 2022 501 67 568
Charge for year 169 29 198
Disposals - (74) (74)
At 31 December 2022 670 22 692
Net book value
At 31 December 2022 343 109 452
At 31 December 2021 83 27 111
At 1 January 2021 250 35 285
The company does not hold any right-of-use assets.
15. Fixed asset investments
2022 2021
Shares in associate undertaking - Group £'000 £'000
Cost
At beginning of year 18 18
Additions - -
At end of year 18 18
Impairment
At beginning of year 7 7
Charge for the year 11 -
At end of year 18 7
Net book value
At end of year - 11
2022 2021
Company £'000 £'000
Shares in Group undertaking
Cost
At beginning of year 98,401 89,524
Additions 10,586 8,877
At end of year 108,987 98,401
Impairment
At beginning of year 98,401 89,524
Charge for the year 10,586 8,877
At end of year 108,987 98,401
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 £10,586k (2021: £8,877k) the Board has determined
the recoverable amount on a value in use basis using a discounted cash flow
model.
16. Inventories
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Work in progress 211 157 - -
Consumable stores - - - -
Raw materials 2,091 1,678 - -
2,302 1,835 - -
The cost of goods sold during 2022 is £2,089k (2021: £2,346k). It includes
£106k (2021: £77k) impairment loss for slow moving inventories and goods
anticipated to be sold at a loss.
17. Trade and other receivables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade receivables 401 811 - 179
Other receivables 425 479 - 33
Amounts due from Group companies - - 225 126
Prepayments and accrued income 120 334 29 27
946 1,624 254 366
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
2022 2021
£'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
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Cash at bank and in hand 2,720 2,152 9 20
2,720 2,152 9 20
The Directors consider that the carrying amount of cash and cash equivalents
approximates to their fair values.
19. Trade and other payables
Group Company
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Trade payables 441 505 - -
Other payables 3,455 3,130 13 203
Amounts due to Group companies - - 468 259
Accruals and deferred income 761 863 270 318
4,657 4,498 751 780
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 2021.
A summary of the lease debt maturity is shown below:
Group
Principal Interest Total 2021
2022
£'000 £'000 £'000 £'000
Less than 1 year 237 (22) 215 111
Between 2 and 5 years 266 (14) 252 8
Over 5 years - - - -
503 (36) 467 119
The carrying value of assets held under lease within right-of-use assets is
£452k (2021: £111k). 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
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Bank overdraft 466 517 - -
Loans
Current - - - -
Non-current 103,007 83,956 103,007 83,956
Current and total borrowings 103,473 84,473 103,007 83,956
Included within non-current borrowings as at year end are amounts of £38,595k
(2021: £30,320k) due to SFN Cleantech Investment Limited which includes a
principal loan of €29.7m (2021: €23.6m) and accrued interest thereon. The
principal loan attracts interest of EURIBOR+3% per annum (2021: 3%).
Also included within non-current borrowings as at year end are amounts of
£2,420k (2021: £2,235k) due to SFN Cleantech Investment Limited which
includes a principal loan of €2.3m (2021: €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
£61,992k (2021: £51,401) due to Mr Falih Nahab, a brother of Dr Faiz Nahab,
a director of the Company. This balance includes principal loan advances of
€54.7m (2021: €48.7m) and accrued interest thereon. The principal loan
attracts interest of EURIBOR+3% per annum (2021: 3%). Subsequent to the year
end it was agreed to extend this loan facility by a further €14.5m, from
€56.9m to €74.1m.
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
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Embedded derivatives on convertible interest - - - -
At the end of 2020, embedded derivatives with a value of £609.2m relating to
conversion features attached to convertible interest on long-term borrowings
were held in the statement of financial position. Due to waivers signed by SFN
Cleantech Investment Limited and Mr. Falih Nahab on the convertible interest,
the embedded derivative was no longer applicable at the end of 2021 and thus
was derecognised.
As noted in note 2, the derecognition has been restated in the comparative
Consolidated income statement and Statements of changes in equity. Having
previously been recognised in full through the income statement the Directors
have concluded that an element of the gain should have been presented in
equity as the transaction constituted a transaction with owners in their
capacity as owners. In line with IFRS 13, the embedded derivative was revalued
to fair value as at the date of waiver using the same methodology as the
valuation at 31 December 2020, resulting in a £320.9m gain in the income
statement. The remaining £288.3m gain on derecognition was subsequently
recognised in equity, as shown in the Consolidated and Company statement of
changes in equity.
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 £30,482k
(2021: £25,690k) in respect of losses amounting to £14,735k (2021:
£10,291k) and €106,285k (2021: €95,053k).
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 (2021: £0.005) and Deferred
Ordinary shares with a par value of £0.01 (2021: £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 2022, 712,127 Ordinary shares of 0.5p each were issued each at a prices
of 14.5p and 9.13p per share in settlement of Directors' annual fees for the
period ended 31 December 2022.
The number of shares in issue at the balance sheet date is 1,552,017,675
Ordinary shares of 0.5p each (2021: 1,548,740,548 Ordinary shares of 0.5p
each) and 327,963,452 (2021: 327,963,452) Deferred Ordinary shares of 1p each
(2021: 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.
2022 2021
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 1,548,740 7,743 327,963 3,280 731,828 7,318 327,963 3,280
Share issue 852 4 - - 142 1 - -
Share issue - under share award/option schemes 2,425 13 - - 400 4 - -
Share issue - conversion on loan interest - - - - 42,000 420 - -
Share subdivision - - - - 774,370 - - -
1,552,017 7,760 327,963 3,280 1,548,740 7,743 327,963 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:
2022 2021
Land and buildings Other Land and buildings Other
Group £'000 £'000 £'000 £'000
Operating leases payable:
Within one year - 346 11 229
In the second to fifth years inclusive - 2 - 17
After more than five years - - - -
- 348 11 246
Post year end a fifteen-year lease agreement with has been signed for modern
premises permitting for enhanced and efficient production throughflows to
secure space to substantially expand its manufacturing, testing and
development capacity. Lease terms include a monthly cost of £107k following a
10 month rent-free period. The rights and obligations of the lease agreement
transfer to Proton in April 2023 at which time the property will be recognised
in line with IFRS 16.
26. Related party transactions
During the year ended 31 December 2022 the Group and Company entered into the
following related party transactions:
Group Company
Year ended 31 December Year ended 31 December
2022 2021 2022 2021
£'000 £'000 £'000 £'000
(Expenses) / Income
SFN Cleantech Investment Limited effective loan interest (1,200) (452) (1,200) (452)
Falih Nahab effective loan interest (2,314) (993) (2,314) (993)
SFN Cleantech Investment Limited other loan interest (60) (30) (60) (30)
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 2022 the Group and Company had the following balances with
related parties:
Group Company
Year ended 31 December Year ended 31 December
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Amounts due (to) / from
SFN Cleantech Investment Limited borrowings (see Note 21) (38,595) (30,320) (38,595) (30,320)
SFN Cleantech Investment Limited bank guarantee (2,039) (1,933) - -
SFN Cleantech Investment Limited loans to SPower GmbH (2,420) (2,235) - -
Falih Nahab borrowings (See Note 21) (61,992) (51,401) (61,992) (51,401)
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 and equity. During the year the Company made capital
contributions to Proton Motor Fuel Cells GmbH of £10,585,000 (2021:
£8,877,000) and to SPower GmbH of £nil (2021: £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 2022 Year ended 31 December 2021
€'000 £'000 €'000 £'000
Financial assets 4,791 4,248 4,835 4,063
Financial liabilities (123,404) (109,410) (107,161) (90,052)
Short-term exposure (118,613) (105,162) (102,326) (85,989)
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 +/- 9.11% change
of the Sterling/Euro exchange rate for the year ended 31 December 2022 (2021:
7.97%). 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 9.11% (2021: 7.97%) then this
would have had the following impact:
Year ended 31 December 2022 Year ended 31 December 2021
£'000 £'000
Net result for the year (9,580) (6,853)
Equity (9,580) (6,853)
If the Euro had weakened against Sterling by 9.11% (2021: 7.97%) then this
would have had the following impact:
Year ended 31 December 2022 Year ended 31 December 2021
£'000 £'000
Net result for the year 9,580 6,853
Equity 9,580 6,853
Exposures to foreign exchange rates vary during the year depending on the
value of Euro denominated loans. Potential foreign exchange gains and losses
are largely accounting entries given the difference in loan denomination and
presentational currency and therefore do not result in cash gains and losses.
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
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Cash and cash equivalents 2,720 2,152 9 20
Trade and other receivables 946 1,624 29 238
Short-term exposure 3,666 3,776 38 258
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 2022, 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 441 - -
Other short term financial liabilities 4,216 - -
Lease debt - 215 252
Borrowings - 466 103,007
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 505 - -
Other short term financial liabilities 3,993 - -
Lease debt - 111 8
Borrowings - 517 83,596
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 2022 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 - 149 149 - - -
Property, plant and equipment - 2,037 2,037 - - -
Right-of-use assets - 452 452 - - -
Fixed asset investments - - - - - -
Inventories - 2,302 2,302 - - -
Trade and other receivables 946 - 946 254 - 254
Cash and cash equivalents 2,720 - 2,720 9 - 9
3,666 4,940 8,606 263 - 263
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 - - -
Investment in subsidiary - 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
The liabilities of the Group and Company are categorised as follows:
As at 31 December 2022 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 4,657 - - 4,657 751 - - 751
Lease debt 467 - - 467 - - - -
Borrowings 103,473 - - 103,473 103,007 - - 103,007
-
108,597 - - 108,597 103,758 - - 103,758
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
-
89,090 - - 89,090 84,736 - - 84,736
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.
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
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Total liabilities 108,597 89,090 103,758 84,736
Less: cash and cash equivalents (2,720) (2,152) (9) (20)
Adjusted net debt 105,877 86,938 103,749 84,716
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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