REG - Proton Motor Power - Final Results
28/06/2024 07:00
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RNS Number : 2480U Proton Motor Power Systems PLC 28 June 2024
28 June 2024
Proton Motor Power Systems plc
("Proton Motor", 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, is pleased to announce its audited results for the year
ended 31 December 2023 (the "Financial Year").
Highlights
· Total order intake in 2023 of £2,512k (2022: £2,653k),
including a mix of repeat and new customer orders, supporting current and
future revenue.
· At the year end the production backlog was £2,471k (2022:
£2,659k). Fulfilment of this backlog will result in deliveries of varying
configurations of fuel cell systems and also service maintenance charges to
customers both in 2024 and 2025.
· There was a notable shift in demand during the year to stationary
applications which comprised 96% of order intake in 2023 (2022: 59%). Notable
orders announced throughout the year included:
o DB Bahnbau Gruppe, part of Deutsch Bahn AG for an indoor emergency power
unit including HyCabinet S24 with 3 HyModule S8s
o Redexis HyShelter a combined heat and power source from renewable onsite
hydrogen production for an Iberostar hotel in Majorca
o University Stuttgart a HyShelter 215 Power as combined heat and power
source from renewable onsite hydrogen
· Sales in 2023 were £2,122k (2022: £2,088k), representing an
annual increase of 1.7%.
· The number of system sales in 2023 increased by 83% to 42 (2022:
23 system sales).
· The operating loss in 2023 was £10,368k (2022: £10,542k),
resulting principally from further investment in the technical development
area, staff and infrastructure.
· Progress in the delivery of the new production facility with
production planned to commence from the new facility in 2025.
Commenting, Dr Nahab, CEO of Proton, said:
"In 2023 the Company saw the delivery of further milestones as it progresses
towards the commercialisation of its leading products and meets the
anticipated increase in market demand for fuel cells, as the European economy
transitions away from fossil fuels. The Company is approaching this by
establishing a stronger production base and investing in its sales and
marketing efforts to drive and further grow its sales pipeline. These efforts
are reflected in establishing our new state of the art production facility and
the delivery of systems to new and established customers during the year".
Posting of accounts
Copies of the annual report and accounts for the year ended 31 December 2023
will be posted to shareholders shortly and a downloadable version will be
available on the Company´s website, www.protonmotor-powersystems.com
(http://www.protonmotor-powersystems.com/) . As announced on 11 June 2024, a
general meeting of the Company will be convened to approve the accounts and a
further announcement will be made in due course.
- Ends -
For further information:
Proton Motor Power Systems Plc
Dr Faiz Nahab, CEO
Roman Kotlarzewski, CFO +49 (0) 173 189 0923
www.protonpowersystems.com
Allenby Capital Limited
Nominated Adviser & Broker +44 (0) 20 3328 5656
James Reeve / Vivek Bhardwaj
Celicourt Communications
PR Adviser +44 (0) 20 7770 6424 / protonmotor@celicourt.uk
Mark Antelme / Philip Dennis /
Charlie Denley-Myerson
About Proton Motor
Proton Motor has 25 years of experience in Power Solutions using CleanTech
technologies such as hydrogen fuel cells, fuel cell and hybrid systems with a
zero carbon footprint. Based in Puchheim near Munich, Proton Motor develops
and produces standard Products as well as customised solutions. The focus of
Proton Motor is on stationary solutions, as well as heavy-duty, marine and
rail applications. The product portfolio consists of base-fuel cell systems,
standard complete, as well as customised systems.
Proton Motor Fuel Cell GmbH is a wholly owned subsidiary of Proton Motor Power
Systems plc. The Company has been quoted on the AIM market of the London Stock
Exchange since October 2006 (code: PPS).
Chairman's Statement
We are pleased to report our results for the year ended 31 December 2023.
Overview
Proton Motor Power Systems plc ("Proton Motor") has made further progress this
year in proving and maturing its technology and wide product offering, and
building up capacity to deliver complete zero-emission power supply solutions
for stationary, heavy duty transport, marine and rail applications
The Company's focus is now on achieving economies of scale by increasing
production capacity, and seeking strategic partnerships to provide new
channels to market.
Highlights
· Total order intake in 2023 of £2,512k (2022: £2,653k),
including a mix of repeat and new customer orders, supporting current and
future revenue.
· At the year end the production backlog was £2,471k (2022:
£2,659k). Fulfilment of this backlog will result in deliveries of varying
configurations of fuel cell systems and also service maintenance charges to
customers both in 2024 and 2025.
· There was a notable shift in demand during the year to stationary
applications which comprised 96% of order intake in 2023 (2022: 59%). Notable
orders announced throughout the year included:
o DB Bahnbau Gruppe, part of Deutsch Bahn AG for an indoor emergency power
unit including HyCabinet S24 with 3 HyModule S8s
o Redexis HyShelter a combined heat and power source from renewable onsite
hydrogen production for an Iberostar hotel in Majorca
o University Stuttgart a HyShelter 215 Power as combined heat and power
source from renewable onsite hydrogen
· Sales in 2023 were £2,122k (2022: £2,088k), representing an
annual increase of 1.7%%.
· The number of system sales in 2023 increased by 83% to 42 (2022:
23 system sales).
· The operating loss in 2023 was £10,368k (2022: £10,542k),
resulting principally from further investment in the technical development
area, staff and infrastructure.
· Progress in the delivery of the new production facility with
production planned to commence from the new facility in 2025.
Cash utilisation from operating activities has increased during the period to
£9,959k (2022: £9,056k) 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 time possible by increasing sales
and reducing costs. 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 2023 was
£2,741k (31 December 2022: £2,720k).
Post year end developments included:
· Introduction of the new HyModule S4 fuel cell system in early
2024, a smaller version of our S8 zero-emission heat and power generator to
replace diesel and gas alternatives.
· A restructuring programme to match the business plan for the new
year, based on a headcount of 93. The Board continues to monitor the Company's
cost structure to ensure that this remains aligned with growth expectations in
the short to medium term.
· During the period to June 2024, the Company utilised the loan
facility it has in place with its principal shareholder, as announced on 20
June 2023, in excess of its limit by approximately €6 million. This was
necessitated by the decision to accelerate payments on sums due for the new
production facility and the delayed receipt of a payment due from a customer.
· A new shareholder loan facility of up to €12 million to ensure
operational and investment financing from July 2024 to the end June 2025 has
been entered into.
· Order intake during the first five months of 2024 to the end of
May was lower than expected at £0.5 million (same period in 2023: £1.4
million) and this is likely to be reflected in lower sales for the full year.
Proton Motor Power Systems plc continues to make progress in its strategy to
commercialise its comprehensive suite of hydrogen fuel cell systems, covering
all the key application markets of stationary, heavy-duty transport, marine
and rail. This includes a focus on developing near-term sales from existing
customers, moving them from product testing to regular repeat orders,
development of new customers relationships, and initiation of strategic
partnerships to provide new channels to market.
The Company's strategy is to meet expected fuel cell demand, and to invest in
additional production capacity and sales and marketing, in order to grow
volumes and reap the benefit of economies of scale.
Operations
Central to meeting supply is the investment Proton is making through a new and
far more efficient production facility, having signed a 15-year lease on a new
and larger premise in 2022. The Company hosted various clients and media at an
introduction ceremony for the new facility in August and is currently making
good progress with its move from the existing facility. Requisite planning
permission is anticipated to be received in summer 2024 to permit the
installation of hydrogen storage facilities, which, once installed, will
enable production to start at the new facility in 2025.
Much of the focus for 2023 was on planning for the move across to the new
facility. This included planning for the installation of the stacking robot,
which will be installed shortly, and progressing regulatory approvals for
hydrogen storage and infrastructure.
On the sales side, the Company's strategy is to develop near-term sales
through existing customers, as they transition from testing and approvals to
commercial orders and developing the customer base, via targeted marketing
initiatives at industry events and direct engagement. With a number of
customers having now been through the testing period for the Company's
products, we are already seeing the number of repeat orders grow, as reflected
in 2023 sales. We would expect to see further repeat order as additional
clients gain comfort and understanding of the technology. In addition, in
February the Company signed an MOU with WILO SE, through which it expects to
derive synergies from access to WILO's extensive distribution and customer
network, while cooperating with them on decentralised and decarbonised energy
supply.
Results & Financing
The Company delivered results for the year in line with budget. This saw
revenue of £2.1m and an operating loss of £10.4m. Proton ended the year with
cash of £2.7m, reflecting the continued support of our principal shareholder,
with whom it was agreed to further extend the loan facility by €17.5m during
the year. This ensures operational financing for the Company in 2024. The
principal on the new facility is not convertible and interest is charged at
EURIBOR +3%.
The revenue line reflects a 40% increase in system sales to £2m, offset by
lower revenue from maintenance activities. This is an encouraging change,
reflecting a further development of the Company's customer base. In terms of
quantity, the increase in systems sales represents the delivery of 42 systems
in 2023, compared to 23 in the prior year, and an increase in megawatt terms
of 40% to 0.7MW.
The operating loss for the period is the result of an increase in operational
expenses, on the back of the increase in headcount, sales and marketing
expenditure, and additional development costs, which were not capitalised.
The Company ended the year with a sales order backlog of £2.5m. This was
supported by an order intake for the year of £2.5m, from a combination of
existing and new customers, representing a total of 42 systems of varying
sizes.
The order intake included a further 15 systems from GKN Hydrogen Germany, 18
systems from UMSTRO and 3 systems from WILO SE, among other orders. The order
of a further 15 systems from GKN Hydrogen Germany, brings the total number of
systems ordered by the company to 46. These additional systems were
successfully delivered in November 2023.
Towards the end of the year, the Company secured a grant from the German
Ministry for Economics and Climate to help develop modular renewable and
self-sufficient energy supply using hydrogen technology, as part of a
consortium, which includes GKN Hydrogen. The basis of the grant is to match
the Company's investments by 50%, over a period of 36 months. In addition to
the financial benefit, working within the consortium will help support and
develop existing customer and developer relationships.
Market Outlook
Hydrogen as a zero-emission energy carrier will undoubtedly play a major role
in the success of the energy transition, and a significant number of hydrogen
generation projects are in development. Fuel cells represent the most
efficient way of using hydrogen to create electricity for transport and
stationary applications.
In transport, experience has confirmed the Company's long-held view that fuel
cells are best for heavy duty applications such as trucks, ships and rail.
What we are seeing currently is earlier adoption across the stationary
application market. This alone represents a very significant and growing
opportunity, on the back of the increasing need for back-up power, critical
power systems and off-grid solutions. Much of this market is currently served
by diesel generators, which are highly polluting and expensive to run and
maintain, making fuel cells an attractive alternative, with identical
usability characteristics.
Adoption will inevitably take time, as customers need to get comfortable and
gain confidence in the technology. That said, we are increasingly seeing
repeat orders, from multiple blue-chip clients that have now gone through that
process. That includes companies such as DB Bahnbau Gruppe GmbH, a subsidiary
of Deutsche Bahn AG, Germany's leading full-service provider for rail
infrastructure.
Board and Management
I agreed to assume the role of Chairman in May 2024, to fill the vacancy
created by the retirement of longstanding chairman Mr. Helmut Gierse, and to
assist the Company in its search for suitable strategic partnerships. I have
over 20 years' experience of Climate Technology investments, including helping
the Company in 2007 negotiate to bring in its current main shareholder.
The Board would like to thank Mr. Helmut Gierse for the tremendous
contribution he has made to the business over the last 15 years and wish him a
healthy and long retirement.
During the year, Mr Manfred Limbrunner, a long standing senior member of
Proton Motor, assumed the role of Director of Investor Relations and
Communications. This is a key role in the development of the business, as it
seeks to widen its shareholder base and expands its pipeline of opportunities,
through sales, marketing and wider communication.
Outlook
The Company has a diverse range of products covering stationary, heavy duty
transport, marine and rail which it will continue to maintain and develop in
line with market demand.
Reflecting the increasing interest in liquid cooled fuel cell technology and
combined heat and power applications, the Company introduced the HyModule S4
system in January. This is a smaller version of the Company's S8 product,
aimed at competing directly in the diesel and natural gas generator market,
for those looking for a "plug and play" emission free alternative for combined
heat and power applications. It is a product that is in-line with the
Company's near-term focus on the stationary market, in response to market
demand, which we look forward to developing further over the coming years.
Proton Motor is also looking forward to progressing several grant funding
options to support its near and longer term strategy and technology
development. These initiatives will also support existing relationships,
including among the existing customer base, forming part of the Company's
drive to grow it sales pipeline.
We are encouraged to witness market adoption taking place as customers seek
solutions to meet emission reduction and energy storage targets and the wishes
of their investors and customers, and discover the benefits of Proton's track
record as one of Europe's longest established fuel cell development companies.
Proton Motor is well placed to take advantage of the opportunities that lay
ahead.
Ali Naini
Non-Executive Chairman
27 June 2024
Strategic Report
Business review
Proton Motor Power Systems plc ("Proton Motor") and its subsidiaries' (the
"Group") principal activity is the development and production of hydrogen low
temperature proton exchange membrane ("PEM") fuel cells and fuel cell systems
and hybrid systems through its German subsidiary Proton Motor Fuel Cell GmbH
("PM").
A low temperature PEM fuel cell is a device that converts the chemical energy
of a hydrogen and an oxidant into electric and thermal power, with only water
as a by- product. In principle, its functionality is like a combustion engine,
but without any harmful emissions and does not require recharging as long as
an ongoing hydrogen source is available. Operating fuel cells in combined heat
and power mode 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 are a number of types of fuel
cell, classified by the type of electrolyte used, including alkali, molten
carbonate, 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 demands of the market which the Group has
specified for its intended commercial applications.
Proton Motor has made further progress this year in proving its technology,
building up capacity. The Group sees a strong market trend to focus on
hydrogen as a renewable energy carrier to manage the energy transmission
process, especially in stationary applications for combined power and heat
generation, autonomous power supply, power to power applications and emergency
power supply, where a strong market ramp up is expected over the coming years.
Also, for the transition of the transport sector from combustions engines
(based on fossil energy carriers) to an emission free transport sector with
electric drive trains, hydrogen-based fuel cells in combination with a battery
will play an important role, given the likelihood of bottlenecks caused by
electricity infrastructure. In all of the above sectors and applications, the
Group has significant know-how in fuel cell stacks, systems and applications.
Over the years, different applications provide good examples of Proton Motor's
in-depth know-how. These include: back-up power solutions (e.g for tetra radio
stations, railway control centres or road tunnels) outdoor (HyShelter®) and
indoor (HyCabinet) solutions for heat & power generation up to 215 kVA
power output and autonomous power supply solutions based on a fuel cell
battery hybrid solution (e.g. HyShelter® with up to 180 kW output power. In
the mobility markets, the Company has also built a high level of knowledge,
based on the different solutions created, including: HyRange® 43 fuel cell
systems for the integration into garbage collecting trucks from E-Trucks
Europe, the HyRail® fuel cell system for a rail milling machine for the
Austrian company Linsinger and HyShip® inside the maritime project ZEUS from
Fincantieri.
In addition to developing application and a customer specific driven sales
approach, the customer base for the standardized stationary fuel cell systems
HyModule® and HyFrame® has also developed. The Group´s long term customers,
GKN Hydrogen, Umstro and Ostermeier, regularly order these types of fuel cell
systems and integrate them in their applications.
The Group 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 new
production site, near its headquarters in Puchheim. It is expected that the
process of moving to the new facilities will gather pace, once the application
to build the hydrogen storage tanks is approved, later in the summer, with the
start of production from the new facility then planned for 2025.
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 quarterly basis and to executive management on
a monthly basis.
The Company began as Magnet Motor, opening its factory in 1996. The technology
and application roadmap went from the world's first triple hybrid forklift
truck to the world's first fuel cell ship. After that Proton Motor developed
the triple hybrid Skoda bus in 2008. Turnkey power solutions completed the
application portfolio. All those applications are powered via our own fuel
cell stacks HyStack®, with a robust design for a long lifetime. The Company
established operations close to the 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. European cities and
governments, supported by the European Commission, must reduce inner-city
pollution drastically. Society and the economy have to switch to renewable
energy sources, such as wind and solar, and combustion manufacturing industry
and supply chains must be transformed towards clean technology. Renewable
energy sources are only available on a fluctuating basis and therefore much
more power capacity is required to be installed, than the average of demand,
resulting in the need for a long term and loss free energy storage solutions
and a transportable energy carrier, with hydrogen being the only possibility.
In this regard fuel cells will become the ideal consumer for hydrogen. China
fights against smog in its big cities. After Dieselgate in the US and Europe,
electric vehicles with batteries are on the move, but electric grid
restrictions have become apparent. Supply constraints on fossil fuels, due to
military conflicts, such as in Ukraine, have also strengthened the need for
hydrogen strategies in Europe. All this is generating a market demand for a
clean power supply in all markets. Based on that development, the world market
for fuel cell products and solutions is more active than ever.
Besides pure battery solutions, hydrogen fuel cells are in focus. Corporations
such as Toyota, Hyundai, Bosch and Cellcentric are pushing the technology
forward. Hydrogen powered fuel cells provide benefits such as fast refuelling
and long range of operation. Hydrogen is reproducible and can be a store of
surplus energy from wind and solar power. Europe has put major funding
programmes in place to set up hydrogen infrastructure and manufacturing of
hydrogen technology. 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 deep experience in applications for stationary power
solutions, heavy duty vehicles, such as buses and trucks, ships, rail machines
and material handling. With 93 staff members , it is a 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 believes that growth in the fuel cell market will be determined by
the following factors:
· 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;
· Expansion of renewable energy sources and therefore the need of
energy storage;
· Limitations of purely battery powered systems and electrical
infrastructure constraints;
· Renewable energy storage systems in industrial buildings and
private residencies.
· 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 effects 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.
· Proton Motor is also participating in the EU StasHH Project. The
consortium operating together as "StasHH" (Standard-Sized Heavy-Duty Hydrogen)
comprising 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 received €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.
Federal Republic of Germany
Germany is a prime market for the 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. The goal is to make Germany a global champion in the hydrogen
industry. 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.
· Since 2023 Proton Motor has participated in the German funded
project MarrakEsH. The consortium consists of universities and institutes, the
industrial companies Infineon Technologies, Würth and GKN Hydrogen as
partners. The target of the project is to develop a modular, renewable, and
self-sufficient energy supply based H2 technology. Proton Motor will design a
new HyModule® product with a power output of around 12 kW, as an extension of
the current available HyModule® product line.
United Kingdom
· UK (November 2020): 5GW of low carbon H2 production by 2030 &
£240m into a Net Zero Hydrogen Fund (part of the UK government's 10-point
plan for a Green Industrial Revolution).
Company Strategy and product offering
Proton Motor's vision is to revolutionise the energy industry through clean
technology innovations, aligning with EU climate goals to pave the way for a
sustainable and green future. Guided by strategic goals, the Company
endeavours to achieve the following objectives:
Vision: PM's vision is to create a clean world for the next generations while
being economically successful and creating new added value in Europe.
Mission: As a team, PM develops, produces, and distributes emission-free,
sustainable, and reliable system solutions in-line with market needs. PM has
built up and will extend long-term relationships with its customers and
suppliers. As quality is important to PM, it establishes high standards in
purchasing, production, service and maintenance.
Strategic goals: With the vision of a sustainable future, Proton Motor aims to
deploy fuel cell systems across various market sectors, ensuring widespread
adoption of its cutting-edge technology. The company focuses currently with
its standard Hy brand products on the stationary market with spillover effects
into the mobility markets (heavy-duty, rail and maritime) with customizable
systems to tailor solutions to needs of volume customers, ensuring maximum
customer focus and fastest time to market. Central to the strategy is
cost-effective manufacturing and superior performance parameters, even with
current low production volumes that, it is hoped, will soon grow exponentially
and will dramatically reduce costs. Prioritizing sustainability throughout the
lifecycle of its products minimizes environmental impact while maximizing
long-term value for customers.
Strategy: To achieve these goals, Proton Motor allocates a significant portion
of resources to further development, leveraging innovations to reduce costs
and enhance performance. Its flexibility allows the company to adapt swiftly
to evolving market demands, ensuring that solutions remain at the forefront of
technological advancements. Rapidly expanding production capacities to meet
growing demand, Proton Motor focuses on penetrating the market quickly to
secure significant market shares across various sectors. High levels of
standardization, digitization and automation drive overall market growth,
while collaborating with other industry players fosters innovation and
progress. The company's strategy involves developing concrete use cases for
current and future customers, collaborating on concepts integrating battery
systems, and other complementary technologies. While reaching breakeven is the
company's main objective, the initial focus is on market penetration.
Operative Concept: Operationally, Proton Motor is implementing concrete
development activities, and made an application in 2024 to participate in
Innovation Fund projects and executing specific projects with customers. Pilot
projects serve as winning new customers, preparing the market, informing
strategic decisions, and refining offerings. Governmental affairs, marketing
and sales efforts are aligned with strategic objectives, ensuring effective
communication of the value proposition to target markets.
In securing financing for its initiatives, Proton Motor is now actively
engaging with investors and governmental funding programs. This holistic
approach to the Company's strategy positions Proton Motor as a leader in the
Cleantech sector, poised to drive meaningful change and make a lasting impact
on the energy and industrial landscape.
Product offering
Proton Motor has demonstrated and validated a wide range of fuel-cell based
zero-emission propulsion and energy systems. The Company maintains an active
exchange, with national and international customers, in various applications
and markets. Proton Motor has developed and extensively validated its core
technology, the fuel cell stacks HyStack(®) 200 - and HyStack(®) 400 - which
together offer a modular power range from 4 kW to 50 kW. These are used in the
market related products:
Fuel cell systems for stationary applications
For stationary systems, the current product range includes emergency power
systems for numerous industrial applications, e.g. for secure
telecommunications (BDBOS), road tunnels or railway switching stations.
Especially for the railway switching stations emergency power supply systems
for indoor use, with 25 kVA and 50 kVA available. Autonomous energy systems,
for residential houses/apartments, e.g. power generated by solar energy is
stored as hydrogen and released as needed, power supply systems (on or off
grid) with large power ratings (e.g. 90 kVA-220kVA) in containers, e.g. for
grid-independent energy supply of transportable hydrogen filling stations
(project performed together with Shell) in containers.
The stationary market seems to have the highest near-term market potential.
Not only has Europe been the fastest growing market for stationary PEM Fuel
Cells over the last ten years, in terms of global market volumes and growth,
indications are that PEM Fuel Cells (using graphite Bipolar Plates (with a
long lifetime) have the greatest potential within stationary applications.
Global market value, in megawatt, is expected to increase from 1,787 megawatt
in 2026 to 22,026 megawatt in 2032, while the global market for fuel cells is
expected to grow significantly by 2032, from EUR 7.5 bn. in 2026 to EUR 69.9
bn. in 2032. Proton Motor is therefore prioritising the stationary market
segment in the near and medium term.
Fuel cell drive system for mobility
For mobile fuel cell propulsion, the zero-emission propulsion systems
developed and produced by Proton Motor are: designed and produced to meet the
needs of specific customers and can combine with a battery system, forming a
seamless solution. In this sector Proton Motor offers the following product
range: HyRange for the heavy-duty market, HyShip for the maritime market and
HyRail for the rail market.
The possibility of the proposed system configuration offers a perfect
combination of high performance, extended operating time, and fast refuelling,
without the need of external battery charging. This setup could ensure
continuous operation with minimal weight, storing all driving and heating
energy in hydrogen and the battery only supplying peak power and storing
breaking energy. The fuel cell hybrid system will then meet all performance
requirements with zero emissions, quick refuelling, and lower costs compared
to diesel or battery-only alternatives. It requires minimal maintenance and
enables proactive servicing through online monitoring.
Proton Motor's technology spans various mobility sectors, including heavy duty
vehicles, trains, and maritime vessels. Collaborations with leading
shipbuilders, such as Fincantieri, demonstrate their commitment to sustainable
transportation solutions.
Partnerships with customers for customised energy systems
Proton Motor offers customised system solutions, based on the modular system
kit and the HyStack(®) technology over its entire product range. Proton Motor
is known for its mature and thoroughly validated fuel cell products and enjoys
an excellent reputation (e.g. see follow up orders from GKN Hydrogen or DB
Bahnbau Gruppe) in the industry for its customer orientated services in the
areas of solution design, engineering, testing, integration, commissioning,
servicing, and performance monitoring. The customised plant design process
begins with a detailed concept development phase, defining key parameters
including the application environment and use case, peak and average power
requirements, system dimensions, range, duration, and operating cost targets.
System design and manufacturing, followed by customer support for integration,
commissioning, service- and maintenance complete the process. The customer
will be trained in all supporting processes to reduce engineering and
supporting Proton Motors efforts within recurring orders. Usually,
negotiations for framework agreements and larger series orders result after
the build-up of recurring orders.
Group activities
With the successful setting up of the production line for the standardized
fuel cell systems HyModule® and HyFrame®, the Group has been focusing on
selling these direct to customers or integrate this into the turnkey solutions
HyCabinet and HyShelter®. At the end of January, at the HyVolution 2024 in
Paris, the HyModule® S4 was presented to the market. With this additional
system the Group extends the standardized fuel cell system product portfolio
from 4kW to 40 kW. Through various customer projects, the offering of turnkey
solutions was also extended by HyShelter® 87 and 215 and the HyCabinet S24
and S43 solution. With this, turnkey solutions of up to 215 kVA power output,
with 400 VAC, can be offered as a standard for power and heat generation to
the market.
For both HyShelter® versions orders are in house. A HyShelter® 87 will be
supplied by mid of 2024 to the Spanish company Redexis, to supply an
Imberostar hotel on the island Mallorca with green electricity and heat. A
HyShelter 215 will be delivered to the University of Stuttgart in the third
quarter of 2024 to be integrated into a pilot energy park, based fully on
green hydrogen. In addition, the Group has increased the production of its
HyModule® S8 and HyFrame® units, in response to regular orders from several
customers, including GKN Hydrogen, Umstro, Ostermeier and H2PowerCell.
The Group is also working to extend the power range of its fuel cell systems
into the three-digit kilowatt power range, with the product line HyScale®
to be established in the second half of 2024. The HyScale® systems are
designed as multistack consisting of up to four HyStack® 400 stacks. The
first functional prototype has been tested successful in the Group's
laboratories. With these HyScale® systems, stationary applications for
autonomous power supply or power and heat generation into megawatt output
power can be offered to the market.
As part of the EU funded project REVIVE, in which Proton Motor has been a
member of the project consortium since 2019, a HyRange® 43 fuel cell system
for integration into a garbage truck has been designed. A HyStack®400, with
144 cells, is being integrated into the HyRange® 43 fuel cell system. The
integration into the truck is being carried out together with the vehicle
manufacturer, E-Trucks, from Belgium. The first system was delivered in 2020.
Since then, E-Trucks 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, E-Trucks has ordered 21 HyRange® 43
systems, 14 of which have been delivered to date and are operating in garbage
collecting trucks.
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 used for the production and commissioning of fuel cell
stacks, systems and containerized turnkey solutions. In October 2023 the
Company filed the documents needed to gain building permission for the
hydrogen storage tanks with the building department of the City of
Fürstenfeldbruck. Currently the Group expects permission to be approved by
mid of 2024. Post approval, construction on site will commence. The start of
production from the facility is planned for 2025. The automated fuel cell
stack production robot will also be integrated in the new facility, as part of
the construction phase. With this new site, Proton Motor will have an
immediate production capacity for up to 180 MW of fuel cell power,
representing the manufacturing of up to 5,000 stacks, fuel cell systems and
turnkey solutions per year.
Operational Strategy
Sales and growth strategy
The following table shows the concrete commercialisation strategy by PM:
The strategy is to start from the European market (DACH-Region, Benelux, Spain
and France) as the initial market and address customers based in Europe
(including UK). As soon as European market penetration has stabilized,
manufacturing capacity has increased and funding has progressed, the Company
intends to address the wider world market. The commercialisation strategy is
based on the following three phases:
Phase 1 - Market introduction until 2026: Market ramp-up in Europe, with the
Hy brand product range, focused on the decentralized/local stationary fuel
cell power plants market. This market is seeing earlier adoption and highest
levels of traction. In this phase, Proton Motor will also target European
customers that export their products worldwide, despite fulfilment taking
place within Europe. In this phase the first demonstrators with new
customers and (end)users will be brought into the market and customers and
(end)users will be trained (integration, start-up, service/maintenance) and
supported. Additionally, adopters, planers and integrators will be trained so
they can be seen as marketing multipliers in the market.
Phase 2 - Market Expansion 2027/28: Newly won customers and (end) users will
lead to recurring orders with reduced necessary support from Proton Motor
(integration, start-up, service/maintenance). Also, through the installed
marketing multipliers the sales and marketing reach will be increased to win
new customers which can then step by step lead (integration, start-up,
service/maintenance) to additional opportunities. Expansion of the mobile fuel
cell product offering will take place through further establishing Proton
Motor's profile and competence in more complex and challenging markets: Road
transport, rail and ships. Proton Motor expects demand growth in mobile
applications to occur later, due to the more complex infrastructure
challenges. These associated markets are still in a relatively early phase of
development. The standard product portfolio will be increased in the
stationary market to higher power system products and standard products in the
early mobile markets. Start of partnering process with strategic
partners/investors to expand product offerings towards fuel cell stacks,
increasing volume and reducing costs which will lead to market acceleration.
Leading also into stack manufacturing and JVs and system manufacturing
licensing.
Phase 3 - Market growth >2029: Expected the start of exponential growth, on
the back of renewable hydrogen being available in large quantities. This will
be leading to increasing orders from existing and newly won customers in the
stationary sector and recurring orders without the need of integration/startup
support from Proton Motor, leading to new resources for further market ramp
up. Mobility markets will grow as the refilling infrastructure is widely
installed and hydrogen logistics established. Standardized fuel cell product
offerings will be increased, and new markets will be analysed and potentially
addressed as the profitability of Proton Motor is increased. This will lead to
recurring orders without the need of integration/startup support from Proton
Motor, leading to new resources for further market ramp up. Proton Motor
envisages having established partnerships with one or more multinational
strategic partners/investors, leading towards mass manufacturing
partnerships/JVs of fuel cell stacks introducing the first offerings from the
Hy brand product range outside of Europe by 2030. Target regions are North
America and Middle East. Proton Motor's production strategy here is to grant
system manufacturing licences (no licence for the HyStacks®) to non-European
partners in the relevant sales regions as volumes increase and products become
established.
Specific measures to realise the commercialisation strategy include the
following steps:
(1) Reference projects and case studies, meaning the acquisition of reference
users through our existing network of contacts, as well as via general
contractors and the completion of a large numbers of demonstration projects in
different European countries.
(2) Customers and partners, meaning presenting the complete Hy brand product
range to potential OEMs and general contractors, with whom Proton Motor
already has established business relationships as well as publications related
to the Hy brand product range, to reach potential end customers (e.g. trade
journals, conference presentations).
The initial marketing is based on a pull strategy. Proton Motor will present
product information at international trade fairs, conferences and associated
digital channels. Proton Motor will also attend regional trade fairs, as the
regional context is an important reference point within the Proton Motor
culture. Proton Motor will continue to be a member of various hydrogen economy
trade bodies to promote hydrogen technologies. Furthermore, it will advertise
its products in trade journals and raise awareness amongst the general public.
Proton Motor also intends to give interested parties and potential end
customers the opportunity to attend regular webinars, at which the Hy products
will be described in more detail.
In the first two marketing phases listed above, Proton Motor is focusing on
Europe, for the following reasons:
· Existing market knowledge and intelligence. Europe is Proton
Motor's home market. As part of this market study, a thorough analysis of the
European market, including market segmentation and identification of target
customer groups, has been conducted,
· Market size and growth. Europe is one of the strongest growth
areas globally for fuel cells. Furthermore, it is expected that hydrogen
prices will decrease.
· Existing contractual agreements with multiple OEMs and system
developers, most of which currently are best positioned to serve the European
market.
· Important suppliers for PM located mainly in Europe (e.g. Germany
and Denmark)
· In the third phase the USA, Middle East and Africa are identified
as significant potential markets.
Manufacturing strategy
To date, the Group's HyStack® fuel cell stacks, fuel cell systems and
turnkey solutions 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, which include:
· Establishing further key commercial partnerships within these
target markets;
· Designing the Group's fuel cells and fuel cell systems to meet
the engineering requirements for volume manufacturing;
· Switching over to a new and more cost-effective stack generation,
which will lead to a decrease in production costs;
· Establishing quality control procedures;
· Installing professional commercial test benches to ensure high
quality standards for the Group's fuel cells and fuel cell engines;
· Building up a new electrical infrastructure for continuous
testing;
· Reviewing, risk assessed and secured supplier and component
manufacturing relationships;
· Identifying second source suppliers and addressed new suppliers
for critical components;
· Identifying and assessed major commercial factors, such as cost,
availability, robustness and durability of components; and
· Securing and properly documenting 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 on pages 12 and 17 of
the financial statements.
Outlook
The Group's principal objective is to expand volume manufacturing, initially
through the investment in 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.
On behalf of the Board
Dr. Faiz
Nahab
Chief Executive Officer
27 June 2024
Consolidated income statement
for the year ended 31 December 2023
Note 2023 2022
£'000 £'000
Revenue 4 2,122 2,088
Cost of sales (1,654) (2,089)
Gross profit/(loss) 468 (1)
Other operating income 2,071 604
Administrative expenses (12,907) (11,057)
Operating loss (10,368) (10,454)
Finance income 9 - -
Finance (costs) / income 10 (4,160) (8,450)
(Loss) / Profit for the year before tax 5 (14,528) (18,904)
Tax 8
(Loss) / Profit for the year after tax (14,528) (18,904)
(Loss) / Profit per share (expressed as pence per share) 2023 2022
Basic 11 (0.9) (1.2)
Diluted 11 (0.9) (1.2)
Consolidated statement of comprehensive income
for the year ended 31 December 2023
2023 2022
£'000 £'000
(Loss) for the year (14,528) (18,904)
Other comprehensive (expense)
Items that may not be reclassified to profit and loss
Exchange differences on translating foreign operations (1,301) (959)
Total other comprehensive (expense) (1,301) (959)
Total comprehensive (expense) for the year (15,829) (19,863)
Attributable to owners of the parent (15,829) (19,863)
Consolidated statement of financial position
as at 31 December 2023 Group
2023 2022
Note £'000 £'000
Assets
Non-current assets
Intangible assets 12 95 149
Property, plant and equipment 13 3,483 2,037
Right-of-use assets 14 13,660 452
Fixed asset investments 15 - -
17,238 2,638
Current assets
Inventories 16 2,760 2,302
Trade and other receivables 17 3,235 946
Cash and cash equivalents 18 2,741 2,720
8,736 5,968
Total assets 25,974 8,606
Liabilities
Current liabilities
Trade and other payables 19 5,725 4,657
Lease debt 20 828 215
Borrowings 21 261 466
6,814 5,338
Non-current liabilities
Lease debt 20 13,921 252
Borrowings 21 116,947 103,007
130,868 103,259
Total liabilities 137,682 108,597
Net liabilities (111,708) (99,991)
Equity
Equity attributable to equity holders of the parent company
Share capital 23 11,235 11,040
Share premium 22,816 20,717
Merger reserve 15,656 15,656
Reverse acquisition reserve (13,861) (13,861)
Share option reserve 3,346 2,728
Foreign translation reserve 13,855 12,509
Capital contribution reserve 289,470 289,497
Accumulated losses
At 1 January 2023 (439,697) (418,234)
(Loss) for the year attributable to the owners (14,528) (18,904)
Other changes in retained earnings - (1,139)
Total equity (111,708) (99,991)
Consolidated Statement of Changes in Equity
for the year ended 31 December 2023
Reverse Share Foreign Capital
Share Share Merger Acquisition Option Translation Contribution Accumulated Total
Capital Premium Reserve Reserve Reserve Reserve reserve Losses Equity
Group £´ 000 £´ 000 £´ 000 £´ 000 £´ 000 £´ 000 £´ 000 £´ 000 £´ 000
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 period - - - - - - - (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)
Balance at 1 January 2023 11,040 20,717 15,656 (13,861) 2,728 12,509 289,497 (438,277) (99,991)
Share based payments 10 186 - - 618 - - (119) 695
Proceeds from share issues 185 1,913 - - - - - - 2,098
Transactions with owners 195 2,099 - - 618 - - (119) 2,793
Loss for the period - - - - - - - (14,528) (14,528)
Other comprehensive income:
Currency translation differences - - - - - 1,346 (27) (1,301) 18
Total comprehensive income for the year - - - - - 1,346 (27) (15,829) (14,510)
Balance at 31 December 2023 11,235 22,816 15,656 (13,861) 3,346 13,855 289,470 (454,225) (111,708)
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 capital 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.
Consolidated Statement of cash flows
for the year ended 31 December 2023
Group
Year ended 31 December
2023 2022
£´ 000 £´ 000
Cash flows from operating activities
Profit / (Loss) for the period (14,528) (18,904)
Adjustments for:
Depreciation and amortisation 1,472 666
Interest expense 6,350 3,629
Share based payments 618 361
Movement in inventories (459) (466)
Movement in trade and other receivables (2,289) 678
Movement in trade and other payables 1,068 159
Exchange rate movements (2,191) 4,821
Net cash (used in) / generated from operating activities (9,959) (9,056)
Cash flows from investing activities
Purchases of intangible assets (29) (102)
Purchases of property, plant and equipment (1,982) (779)
Net cash used in investing activities (2,011) (881)
Cash flows from financing activities
Proceeds from issue of loan instruments 12,311 10,656
Proceeds from issue of new shares 177 114
Repayment of obligations under lease debt (210) (191)
Repayment of short term borrowings (205) (51)
Net cash generated from financing activities 12,073 10,528
Net (decrease ) / increase in cash and cash equivalents 103 591
Effect of foreign exchange rates (82) (23)
Opening cash and cash equivalents 2,720 2,152
Closing cash and cash equivalents 2,741 2,720
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 report were as follows:
Dr. Faiz
Nahab
Chief Executive(1,3)
Helmut Gierse (Retired on 22 May 2024) Non-Executive
Director and Former Chairman
Antonio
Bossi
Non-Executive Director(2)
Ali Naini (appointed as Chairman on 22 May 2024) Non-Executive Director and
Chairman
Sebastian Goldner
Chief Operations Officer
Roman Kotlarzewski
Chief Financial Officer and Company Secretary(4,5)
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 Nominations Committee.
2. Summary of significant accounting policies
The Board approved this announcement on 27 June 2024. The financial
information included in this announcement does not constitute the Group´s
statutory accounts for the years ended 31 December 2023 or 31 December 2022.
Statutory accounts for the year ended 31 December 2022 have been delivered to
Companies House. The statutory accounts for the year ended 31 December 2023
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
financial information set out in this announcement does not constitute
statutory accounts as defined in section 435 of the Companies Act 2006.
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 €71.4m. The repayment date for all loans is 31 December
2025. As such the loans are held as non-current borrowings in the financial
statements.
2. Summary of significant accounting policies (continued)
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 €71.4m. 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 2023 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 2023 31 December 2023 of facility date of this report
SFN Cleantech Investment Ltd €32.3m €29.7m € nil €32.3m
*(£28.0m) *(£25.7m) *(£28.0m)
SFN Cleantech Investment Ltd €2.4m €2.4m € nil €2.4m
*(£2.1m) *(£2.1m) *(£2.1m)
Mr. Falih Nahab €71.4m €69.0m €6.1m €77.5m
*(£61.9m) *(£59.8m) *(£5.3m) *(£67.2m)
Mr. Falih Nahab € nil € nil €12.0m € 12.0m
*(£10.4m) *(10.4m)
Total €106.1m €101.1m €12.0m €124.2m
*(£92.0m) *(£87.6m) *(£15.7m) *(£107.7m)
*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 €118.1m 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 2025. 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 2025.
Due to the continued losses incurred by the Group and lack of operational cash
inflows, 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.
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
2023 2022
£´ 000 £´ 000
United Kingdom (35) 39
Germany 759 1,232
Rest of Europe 1,398 768
Rest of the World - 49
2,122 2,088
Sales to GKN Hydrogen, and E-Trucks represented 50.3% of the Group's revenue
in 2023 (2022: GKN Hydrogen, Wilo SE and Kion Group 43.1%).
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
2023 2022
£´ 000 £´ 000
Loss on ordinary activities before taxation is stated
after charging
Depreciation and amortisation 1,472 665
Hire of other assets - operating leases exempt from IFRS 16 29 79
Pension contributions 104 92
Foreign exchange losses - 4,821
after crediting
Amortisation of grants from public bodies (389) (475)
Foreign exchange gains (2,191) -
6. Auditors' remuneration
2023 2022
£´ 000 £´ 000
Audit services
Fees payable to the Company's auditor for the audit of the
parent company and consolidated financial statements 35 33
Fees payable to the Company's auditor and its associates for
other services: - 3
35 36
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:
2023 2022
Development and construction 69 62
Administration and sales 46 45
115 107
The aggregate payroll costs of these persons were as follows:
2023 2022
£´ 000 £´ 000
Wages and salaries 6,204 5,716
Share based payments 808 700
Social security costs 1,221 1,096
Other pension costs 104 92
8,337 7,604
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
£112k (2022: £111k).
Share based payments
The Group has incurred an expense in respect of shares and share options
during the year issued to employees as follows:
2023 2022
£´ 000 £´ 000
Share options (10) (130)
Share awards 704 721
Shares 114 109
808 700
At 31 December 2023 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:
2023 2022
Weighted Weighted
average average
Number exercise price Number exercise price
000´s £ 000´s £
Opening balance 23,007 0.070 39,612 0.046
Exercised - - - -
Forfeited (1,000) (0.020) (16,605) (0.020)
Closing balance 22,007 0.072 (23,007) 0.070
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 16 months
(2022:28 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 2023 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 (2022: 0.5p) shares issued under the scheme in the
year having vested was 1,975,000 (2022: 2,425,000). The total number of
outstanding awards yet to vest at reporting date is 15.6m Ordinary 0.05p
shares (2022: 18.08m). The weighted average of time to vest for outstanding
awards is 3.5 years (2022: 4.0 years) and weighted average fair value of
outstanding awards is £0.31 (2022: £0.28).
8. 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:
2023 2022
£´ 000 £´ 000
Tax reconciliation
(Loss) before tax (14,528) (18,904)
Expected tax (credit)/charge at 23.52% (2022: 19%) (3,417) (3,592)
Effects of different tax rates on foreign subsidiaries (144) (578)
Expenses not deductible for tax purposes 1,494 690
Tax losses carried forward 2,067 3,480
Tax charge - -
9. Finance income
2023 2022
£´ 000 £´ 000
Interest - -
- -
10. Finance costs
2023 2022
£´ 000 £´ 000
Interest 6,350 3,629
Exchange (gain) / loss on shareholder loans (2,191) 4,821
4,159 8,450
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.
2023 2022
Basic Diluted Basic Diluted
£´ 000 £´ 000 £´ 000 £´ 000
Loss attributable to equity holders of the Company (14,528) (14,528) (18,904) (18,904)
Weighted average number of Ordinary shares in issue (thousands) 1,556,287 1,556,287 1,550,521 1,550,521
Effect of dilutive potential Ordinary shares from share options
and stock awards (thousands) - 15,600 - 18,075
Adjusted weighted average number of Ordinary shares 1,556,287 1,571,887 1,550,521 1,568,596
(Loss) per share (pence per share) (0.9) (0.9) (1.2) (1.2)
12. Intangible assets - Group
Goodwill Copyrights, trademarks and other intellectual property rights Development costs Total
£'000 £'000 £'000 £'000
Cost
At 1 January 2022 2,126 324 - 2,450
Exchange differences - 18 - 18
Additions - 102 - 102
At 31 December 2022 2,126 444 - 2,570
At 1 January 2023 2,126 444 - 2,570
Exchange differences - (9) - (9)
Additions - 29 - 29
At 31 December 2023 2,126 464 - 2,590
Accumulated Amortisation
At 1 January 2022 2,126 246 - 2,372
Exchange differences - 15 - 15
Charged in year - 34 - 34
At 31 December 2022 2,126 295 - 2,421
At 1 January 2023 2,126 295 - 2,421
Exchange differences - (6) - (6)
Charged in year - 80 - 80
At 31 December 2023 2,126 369 - 2,495
Net book value
At 31 December 2023 - 95 - 95
At 31 December 2022 - 149 - 149
At 1 January 2022 - 78 - 78
Self-developed intangible assets in the amount of £29k (2022: £102k) are
recognised in the reporting year, because the prerequisites of IAS 38 have
been fulfilled.
13. Property, plant and equipment - Group
Leasehold Property Improvements Technical equipment & machinery Office and other equipment Assets under construction Total
£'000 £'000 £'000 £'000 £'000
Cost
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
At 1 January 2023 893 2,004 1,175 389 4,461
Exchange differences (20) (45) (26) (8) (99)
Additions 6 105 343 1,528 1,982
Transfers 7 (4) - (3) -
Disposals - - (19) (3) (22)
At 31 December 2023 886 2,060 1,473 1,903 6,322
Accumulated Amortisation
At 1 January 2022 487 908 476 - 1,871
Exchange differences 29 58 33 - 120
Charged in year 47 210 176 - 433
Disposals - - - -
At 31 December 2022 563 1,176 685 - 2,424
At 1 January 2023 563 1,176 685 - 2,424
Exchange differences (12) (26) (15) - (53)
Charged in year 32 240 204 - 476
Disposals - - (8) - (8)
At 31 December 2023 583 1,390 866 - 2,839
Net book value
At 31 December 2023 303 670 607 1,903 3,483
At 31 December 2022 330 828 490 389 2,037
At 1 January 2022 192 723 350 354 1,619
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 2022 584 95 679
Additions 429 110 539
Disposals - (74) (74)
At 31 December 2022 1,013 131 1,144
At 1 January 2023 1,013 131 1,144
Additions 14,110 14 14,124
Disposals - - -
At 31 December 2023 15,123 145 15,268
Accumulated Amortisation
At 1 January 2022 501 67 568
Charged in year 169 29 198
Disposals - (74) (74)
At 31 December 2022 670 22 692
At 1 January 2023 670 22 692
Charged in year 868 48 916
At 31 December 2023 1,538 70 1,608
Net book value
At 31 December 2023 13,585 75 13,660
At 31 December 2022 343 109 452
At 1 January 2022 83 28 111
The company does not hold any right-of-use assets.
15. Fixed asset investments
2023 2022
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 18 7
Additions - 11
At end of year 18 18
Net book value
At end of year - -
2023 2022
Company £'000 £'000
Shares in group undertaking - Group
Cost
At beginning of year 108,987 98,401
Additions 12,342 10,586
At end of year 121,329 108,987
Impairment
At beginning of year 108,987 98,401
Additions 12,342 10,586
At end of year 121,329 108,987
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 £12,342k (2022: £10,586k) the Board has determined the recoverable
amount on a value in use basis using a discounted cash flow model.
16. Inventories
Group Company
2023 2022 2023 2022
£´ 000 £´ 000 £´ 000 £´ 000
Work in progress 418 211 - -
Raw materials 2,342 2,091 - -
2,760 2,302 - -
The cost of goods sold during 2023 is £1,654k (2022: £2,089k). It includes
£118k (2022: £106k) impairment loss for slow moving inventories and goods
anticipated to be sold at a loss.
17. Trade and other receivables
Group Company
2023 2022 2023 2022
£´ 000 £´ 000 £´ 000 £´ 000
Trade receivables 537 401 - -
Other receivables 2,508 425 31 -
Amounts due from Group companies - - 233 225
Prepayments and accrued income 190 120 33 29
3,235 946 296 254
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair values.
17. Trade and other receivables (continued)
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
2023 2022
£´ 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
2023 2022 2023 2022
£´ 000 £´ 000 £´ 000 £´ 000
Cask at bank and in hand 2,741 2,720 5 9
2,741 2,720 5 9
19. Trade and other payables
Group Company
2023 2022 2023 2022
£´ 000 £´ 000 £´ 000 £´ 000
Trade payables 601 441 - -
Other payables 3,976 3,455 20 13
Amounts due to Group companies - - 837 468
Accruals and deferred income 1,148 761 184 270
5,725 4,657 1,041 751
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:
Total
Principal Interest 2023 2022
£'000 £'000 £'000 £'000
Less than 1 year 1,514 (686) 828 215
Between 2 and 5 years 5,867 (2,336) 3,531 252
Over 5 years 13,025 (2,635) 10,390 -
20,406 (5,657) 14,749 467
The carrying value of assets held under lease within right-of-use assets is
£13,660k (2022: £452k). The balances relate
To the Benzstrasse 7, Puchheim, and Fraunhofer Strasse 9, Fürstenfeldbruck
Germany property leases and a number of vehicle leases held in Proton Motor
Fuel Cell GmbH.
21. Borrowings
Group Company
2023 2022 2023 2022
£´ 000 £´ 000 £´ 000 £´ 000
Bank overdraft 261 466 - -
Loans:
Current - - - -
Non-current 116,947 103,007 116,947 103,007
117,208 103,473 116,947 103,007
Included within non-current borrowings as at year end are amounts of £39,576k
(2022: £38,595k) due to SFN Cleantech Investment Limited which includes a
principal loan of €29.7m (2023: €29.7m) and accrued interest thereon. The
principal loan attracts interest of EURIBOR+3% per annum (2022: 3%).
Also included within non-current borrowings as at year end are amounts of
£2,511k (2022: £2,420k) due to SFN Cleantech Investment Limited which
includes a principal loan of €2.3m (2022: €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
£74,860k (2022: £61,992k) due to Mr Falih Nahab, a brother of Dr Faiz Nahab,
a director of the Company. This balance includes principal loan advances of
€69.0m (2023: €54.7m) and accrued interest thereon. The principal loan
attracts interest of EURIBOR+3% per annum (2022: 3%).
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. 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 £35,063k
(2022: £30,482k) in respect of losses amounting to £21,569k (2022:
£14,735k) and €117,410k (2022: €106,285k).
23. Share capital
The share capital of Proton Motor Power Systems plc consists of fully paid
Ordinary shares with a par value of £0.005 (2022: £0.005) and Deferred
Ordinary shares with a par value of £0.01 (2022: £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 2023, 748,497 Ordinary shares of 0.5p each were issued each at prices
of 13.1p and 13.4p per share in settlement of Directors' annual fees for the
period ended 31 December 2023.
The number of shares in issue at the balance sheet date is 1,591,082,645
Ordinary shares of 0.5p each (2022: 1,552,017,675) and 327,963,452 (2021:
327,963,452) Deferred Ordinary shares of 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.
2023 2022
Deferred Deferred
Ordinary ordinary Ordinary ordinary
shares shares shares shares
No. No. No. No.
´000 £'000 ´000 £'000 ´000 £'000 ´000 £'000
Shares authorised, issued and fully paid
At the beginning of the year 1,552,017 7,760 327,963 3,280 1,548,740 7,743 327,963 3,280
Share issue 760 3 - - 852 4 - -
Share issue - under share award/option schemes 1,975 10 - - 2,425 13 - -
Share issue - conversion on loan interest 36,330 182 - - - - - -
1,591,082 7,955 327,963 3,280 1,552,017 7,760 327,963 3,280
24. 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:
2023 2022
Land & Land &
Buildings Other Buildings Other
Group £´ 000 £´ 000 £´ 000 £´ 000
Operating leases payable:
Within one year - 50 - 346
In the second to fifth years inclusive - 2 - 2
After more than five years - - - -
- 52 - 348
25. Related party transactions
During the year ended 31 December 2023 the Group and Company entered into the
following related party transactions:
Group Company
Year ended 31 December Year ended 31 December
2023 2022 2023 2022
£´ 000 £´ 000 £´ 000 £´ 000
(Expenses) / Income
SFN Cleantech Investment Limited effective loan (1,833) (1,200)
interest (1,833) (1,200)
Falih Nahab effective loan interest (3,832) (2,314) (3,832) (2,314)
SFN Cleantech Investment Limited other loan interest (122) (60) (122) (60)
At 31 December 2023 the Group and Company had the following balances with
related parties:
Group Company
Year ended 31 December Year ended 31 December
2023 2022 2023 2022
£´ 000 £´ 000 £´ 000 £´ 000
Amounts due (to)/from
SFN Cleantech Investment Limited borrowings (see Note 21) (39,576) (38,595)
(39,576) (38,595)
SFN Cleantech Investment Limited bank guarante (1,994) (2,039) - -
SFN Cleantech Investment Limited loans to SPower GmbH (2,511) (2,420) - -
Falih Nahab borrowings (see Note 21) (74,860) (61,992) (74,860) (61,992)
During the year the Company made capital contributions to Proton Motor Fuel
Cells GmbH of £12,342,000 (2022: £10,585,000) and to SPower GmbH of £nil
(2022: £nil).
26. Risk management objectives and policies
The Group's activities expose it to a variety of financial risks:
§ foreign exchange risk (note 27);
§ credit risk (note 28); and
§ liquidity risk (note 29).
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.
27. 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 Year ended 31 December
2023 2023 2022 2022
€´ 000 £´ 000 €´ 000 £´ 000
Financial assets 7,952 6,895 4,791 4,248
Financial liabilities (144,381) (125,190) (123,404) (109,410)
At 31 December 2023 (136,429) (118,295) (118,613) (105,162)
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 +/- 5.34% change
of the Sterling/Euro exchange rate for the year ended 31 December 2023 (2022:
9.11%). 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 5.34% (2022: 9.11%) then this
would have had the following impact:
If the Euro had weakened against Sterling by 5.34% (2022: 9.11%) then this
would have had the following impact:
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.
28. 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
28. Credit risk analysis (continued)
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
2023 2022 2023 2022
£´ 000 £´ 000 £´ 000 £´ 000
Cash and cash equivalents 2,741 2,720 5 9
Trade and other receivables 3,235 946 64 29
Short-term exposure 5,976 3,666 69 38
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.
29. 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 2023, the Group's liabilities have contractual maturities
which are summarised below:
within 6 6 to 12 1 to 5
months months years
£´ 000 £´ 000 £´ 000
Trade payables 601 - -
Other short term financial liabilities 5,123 - -
Lease debt 414 414 3,704
Borrowings - 261 116,947
29. Liquidity risk analysis (Continued)
This compares to the maturity of the Group's financial liabilities in the
previous reporting period as follows:
within 6 6 to 12 1 to 5
months months years
£´ 000 £´ 000 £´ 000
Trade payables 441 - -
Other short term financial liabilities 4,216 - -
Lease debt - 215 252
Borrowings - 466 103,007
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.
30. Financial instruments
The assets of the Group and Company are categorised as follows:
Group Company
Non-financial Non-financial
assets / assets /
financial financial
assets not assets not
Loans and in scope of Loans and in scope of
receivables IAS 39 Total receivables IAS 39 Total
As at 31 December 2023 £´ 000 £´ 000 £´ 000 £´ 000 £´ 000 £´ 000
Intangible assets - 95 95 - - -
Property, plant and equipment - 3,483 3,483 - - -
Right-of-use assets - 13,660 13,660 - - -
Fixed asset investments - - - - - -
Inventories - 2,760 2,760 - - -
Trade and other receivables 3,235 - 3,235 297 - 297
Cash and cash equivalents 2,741 - 2,741 5 - 5
5,976 19,998 25,974 302 - 302
Group Company
Non-financial Non-financial
assets / assets /
financial financial
assets not assets not
Loans and in scope of Loans and in scope of
receivables IAS 39 Total receivables IAS 39 Total
As at 31 December 2022 £´ 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
The liabilities of the Group and Company are categorised as follows:
Group Company
Financial Financial
Liabilities Liabilities
valued at fair Liabilities valued at fair Liabilities
Financial value through not within Financial value through not within
Liabilities at the income the scope Liabilities at the income the scope
As at 31 December 2023 amortised cost statement of IAS 39 Total amortised cost statement of IAS 39 Total
£´ 000 £´ 000 £´ 000 £´ 000 £´ 000 £´ 000 £´ 000 £´ 000
Trade and other payables 5,725 - - 5,725 1,042 - - 1,042
Lease debt 14,749 - - 14,749 - - - -
Borrowings 117,208 - - 117,208 116,947 - - 116,947
137,682 - - 137,682 117,989 - - 117,989
Group Company
Financial Financial
Liabilities Liabilities
valued at fair Liabilities valued at fair Liabilities
Financial value through not within Financial value through not within
Liabilities at the income the scope Liabilities at the income the scope
amortised cost statement of IAS 39 Total amortised cost statement of IAS 39 Total
As at 31 December 2022 £´ 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
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.
31. 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
2023 2022 2023 2022
£´ 000 £´ 000 £´ 000 £´ 000
Total liabilities 137,682 108,597 117,989 103,758
Less: cash and cash equivalents (2,741) (2,720) (5) (9)
Adjusted net debt 134,941 105,877 117,984 103,749
32. 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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