REG - Proton Motor Power - Half-year Report
28/09/2022 07:01
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RNS Number : 8992A Proton Motor Power Systems PLC 28 September 2022
28 September 2022
Proton Motor Power Systems plc
("Proton Motor" or the "Company")
Unaudited Interim Results for the six months to 30 June 2022
Proton Motor Power Systems plc (AIM: PPS), the designer, developer and
producer of fuel cells and fuel cell electric hybrid systems with a
zero-carbon footprint, announces its unaudited interim results for the six
months ended to 30 June 2022 (the "Period" or "H1 2022").
Operational Highlights
- Successful installation of two marine HyShip®71 Fuel Cell systems
for Fincantieri
- Successful Factory Acceptance Test (FAT) of a HyFrame® S36 Fuel
Cell system with long-standing client Deutsche Bahnbau Group GmbH (German
Rail)
- In line with order intake for a series of standard products,
production labour has been restructured to include groups specifically
dedicated to the various standard product groupings, thereby increasing
production efficiency
- After the period end, launch of large power generator pack (90kW)
Financial Highlights
- Order intake of £1.5m (H1 2021: £1.8m) for a total order book at
the period end of £2.3m to be delivered by 2023, including repeat orders from
existing customers and income from maintenance agreements
- Sales of £980k in H1 2022 (H1 2021: £922k)
- Generating a positive gross margin
- Increased existing loan facilities with principal shareholders by
approximately €12.5m
Dr. Nahab, CEO of Proton, commented: "Although faced with highly challenging
trading conditions in 2022, the Company has made further progress. In the year
ahead, we are focused on further progressing the maturity of the Group's
technology offer, ramping up production capacity and exploiting the current
potential order intake and sales pipeline.
"Furthermore, it is anticipated that the significant strengthening of
political commitment to hydrogen, continuing to be evident in 2022, will
contribute to further accentuating the demand for hydrogen related products,
such as the fuel cell."
For further information:
Proton Motor Power Systems Plc
Dr Faiz Nahab, CEO
Helmut Gierse, Chairman
Roman Kotlarzewski, CFO +49 (0) 173 189 0923
Antonio Bossi, Non-Executive Director
Investor relations: www.protonpowersystems.com
investor-relations@proton-motor.de (mailto:investor-relations@proton-motor.de)
Allenby Capital Limited
Nominated Adviser & Broker +44 (0) 20 3328 5656
James Reeve / Vivek Bhardwaj
About Proton Motor Fuel Cell GmbH
Proton Motor has more than 20 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 offers complete fuel cell and hybrid systems from a single source - from
the development and production through the implementation of customized
solutions. The focus of Proton Motor is on back-to-base, for example, for
mobile, marine and stationary solutions applications. The product portfolio
consists of base-fuel cell systems, standard complete systems, as well as
customized systems.
Proton Motor serves IT, Telecoms, public infrastructure and healthcare
customers in Germany, Europe and Middle East with power supply solutions for
DC and AC power demand. In addition to power supply, SPower also offers
solutions for Solar Systems as well as a new product line for Solar Energy
Storage.
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 REPORT
We are pleased to report our unaudited results for the six months ended 30
June 2022.
Overview
Proton Motor has strengthened its organisation in order to continue to deliver
complete zero emission power supply solutions through the addition of new
staff in the production and product development teams.
Finance
Proton Motor received orders for £1.5m in the first half year of the year
including a number of repeat orders from existing customers. Repeat orders
allow better planning of production material purchases on more favourable
terms, which management expects will lead to an improvement in margins.
Sales in H1 2022 were £980k (H1 2020: £922k), arising from the 2021 and H1
2022 order intake. These sales were generated in the stationary and maritime
sectors, together with service and engineering income. £1.5m was invested in
the development programme and our workforce has increased to 108 (H1 2021: 99)
full time employees. In line with demand, we added staff resources
predominantly in the areas of production and product development.
During the Period, we generated a Gross Profit of £265k (H1 2021: £97k)
representing a 173 per cent increase.
Excluding the impact of exchange losses, the operating loss in the first half
of 2022 was £4.9m (H1 2021: £3.9m). This was in line with our budgeted
expectations and resulted from further investments in product development,
production and staff in addition to manufacturing infrastructure.
£213k was invested in equipment and infrastructure during the period (H1
2021: £197k).
The "Fair value movements" in the H1 2021 financial results related to the
embedded derivative, which was a non-operating, non-cash item, required by
IFRS financial reporting, which was based on gauging the potential effects of
partial convertible interest on loan financing. Due to the waiver of
convertible interest on loan financing at the end of 2021, there is no fair
value movement in H1 2022, as the embedded derivative associated with the
convertible interest has been eliminated. The non-operating result in the
first half of 2022 was negatively affected by the movement of exchange rates
between Pound Sterling and the Euro.
Cash burn from operating activities increased during the Period to £4.8m (H1
2021: £4.4m), reflecting the increased level of activity to deliver our sales
pipeline and from further investment. Cash flow is our key financial
performance target and our objective is to achieve a positive cash flow in the
shortest time possible. Current contracts are quoted with up-front payments,
reducing reliance on working capital as we continue to invest in our
manufacturing capability. The cash position as at 30 June 2022 was £2.2m (30
June 2021: £2.7m).
We were very pleased with the continued support of our principal shareholders
with whom we agreed to increase the existing financing facilities by €12.5
million to ensure operational financing for the Company into 2023. The
principal and interest on these additional facilities is not convertible and
interest is charged at EURIBOR+3%.
I personally would like to thank all our customers who believe in us, our
committed employees and our shareholders who have the vision to invest in our
mission.
Current trading and outlook
We are confident of our medium term prospects and are planning to increase our
production capacity to up to 30,000 stacks per annum; this will also involve
moving to new larger premises; the Board and I look forward to updating you on
our progress over the next 12 months and further in the future.
Helmut Gierse
Non-Executive Chairman
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year ended 31 December 2021
Note 2022 2021
£´000 £´000 £´000
Revenue 980 922 2,771
Cost of sales (715) (825) (2,346)
Gross profit 265 97 425
Other operating income 211 234 501
Administrative expenses (5,454) (4,232) (10,047)
Operating loss (4,978) (3,901) (9,121)
Finance income 1 1 3
Finance costs incl. exchange (losses)/gains (3,064) 2,735 3,222
(Loss) for the period before embedded derivatives (8,042) (1,165) (5,896)
Fair value gain on embedded derivatives - 212,739 609,201
(Loss)/Gain for the period attributable to shareholders (8,042) 211,574 603,305
Gain/(Loss) / Profit per share (expressed as pence per share)
Basic 7 (0.5) 27.3 Restated 77.5
Diluted 7 (0.5) 13.2 Restated 77.5
(Loss) / Profit per share (expressed as pence per share) excluding embedded
derivative
Basic 7 (0.5) (0.2) (0.8)
Diluted 7 (0.5) (0.1) (0.8)
OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months to 30 June Six months to 30 June Year ended 31 December 2021
2022 2021
£´000 £´000 £´000
(Loss)/ Profit for the period (8,042) 211,574 603,305
Other comprehensive (expense) / income
Items that may not be reclassified to profit and loss
Exchange differences on translating foreign operations (97) 186 (586)
Total other comprehensive income / (expense) (97) 186 (586)
Total comprehensive (expense) for the period (8,139) 211,760 602,719
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
At 30 June At 30 June At 31 December 2021
2022 2021
£´000 £´000 £´000
Assets
Non-current assets
Intangible assets 107 97 78
Property, plant and equipment 1,589 1,434 1,619
Right-of-use assets 13 210 111
Fixed asset investments 11 11 11
Total non-current assets 1,720 1,752 1,819
Current assets
Inventories 2,408 2,842 1,835
Trade and other receivables 1,242 699 1,624
Cash and cash equivalents 2,183 2,702 2,152
Total current assets 5,833 6,243 5,611
Total Assets 7,553 7,995 7,430
Current Liabilities
Trade and other payables (4,831) (5,019) (4,498)
Lease debt (14) (206) (111)
Borrowings (410) (615) (517)
Total current liabilities (5,255) (5,840) (5,126)
Non-current liabilities
Borrowings (91,859) (80,023) (83,956)
Lease debt (4) (15) (8)
Embedded derivatives on convertible interest - (396,462) -
Total non-current liabilities (91,863) (476,500) (83,964)
Total Liabilities (97,118) (482,340) (89,090)
Net liabilities (89,565) (474,345) (81,660)
Equity
Capital and reserves attributable to equity shareholders
Share capital 11,025 11,022 11,023
Share premium account 20,416 20,254 20,390
Merger reserve 15,656 15,656 15,656
Reverse acquisition reserve (13,861) (13,861) (13,861)
Share option reserve 2,393 961 2,187
Foreign translation reserve (10,682) 9,448 11,745
Capital contributions 1,171 1,215 1,143
Accumulated losses (115,683) (519,040) (129,943)
Total equity (89,565) (474,345) (81,660)
STATEMENT OF CHANGES IN EQUITY
Share Capital Share Premium Merger Reserve Reverse Acquisition Reserve Share Option Reserve Foreign Translation Reserve Capital Contribution Reserves Accumulated Losses Total Equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
£'000
Balance at 1 January 2021 10,598 19,574 15,656 (13,861) 949 11,038 1,215 (732,390) (687,221)
Share based payments - - - - 12 - - - 12
Proceeds from share issues 424 680 - - - - - - 1,104
Currency translation differences - - - - - - - -
Transactions with owners 424 680 - - 12 - - - 1,116
Profit for the period - - - - - - - 211,574 211,574
Other comprehensive income:
Currency translation differences - - - - - (1,590) - 1,776 186
Total comprehensive income for the year - - - - - (1.590) - 213,350 211,760
Balance at 30 June 2021 11,022 20,254 15,656 (13,861) 961 9,448 1,215 (519,040) (474,345)
Balance at 1 July 2021 11,022 20,254 15,656 (13,861) 961 9,448 1,215 (519,040) (474,345)
Share based payments 4 284 - - 1,226 - - (272) 1,242
Proceeds from share issues (3) (148) - - - - - - (151)
Currency translation differences - - - - - - - -
Transactions with owners 1 136 - - 1,226 - - (272) 1,091
Profit for the period - - - - - - - 391,731 391,731
Other comprehensive income:
Currency translation differences - - - - - 2,297 (72) (2,362) (137)
Total comprehensive income for the year - - - - - 2,297 (72) 389,369 391,594
Balance at 31 December 2021 11,023 20,390 15,656 (13,861) 2,187 11,745 1,143 (129,943) (81,660)
Balance at 1 January 2022 11,023 20,390 15,656 (13,861) 2,187 11,745 1,143 (129,943) (81,660)
Share based payments - - - - 206 - - - 206
Proceeds from share issues 2 26 - - - - - - 28
Currency translation differences - - - - - - - -
Transactions with owners 2 26 - - 206 - - 234
Loss for the period - - - - - - - (8,042) (8,042)
Other comprehensive income:
Currency translation differences - - - - - (22,427) 28 22,302 (97)
Total comprehensive income for the year - - - - - (22,427) 28 14,260 (8,139)
Balance at 30 June 2022 11,025 20,416 15,656 (13,861) 2,393 (10,682) 1,171 (115,683) (89,565)
Share premium account
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 arose as a result of the acquisition of
Proton Motor Fuel Cell GmbH during 2006. The merger reserve represents the
difference between the nominal value of the share capital issued by the
Company and their fair value at 31 October 2006, the date of the acquisition.
Reverse acquisition reserve
The reverse acquisition reserve arose 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 an equity settled share-based compensation scheme. The fair
value of the employee services received for the grant of the 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 options granted. At
each balance sheet date the Company revises its estimate of the number of
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.
CASH FLOW STATEMENT
Unaudited Unaudited Audited
Six months ended 30 June Six months ended 30 June Year ended 31 December 2021
2022 2021
£´000 £´000 £´000
Cash flows from operating activities
Profit / (Loss) for the period (8,042) 211,574 603,305
Adjustments for:
Depreciation and amortisation 214 201 641
Loss on disposal of property, plant and equipment - - -
Impairment of investment - - -
Interest income (1) (1) (3)
Interest expense 986 721 1,498
Share based payments (206) (12) 966
Movement in inventories (572) (1,052) (45)
Movement in trade and other receivables 381 (351) (1,276)
Movement in trade and other payables 333 630 109
Movement in fair value of embedded derivatives - (212,739) (609,201)
Exchange rate movements 2,079 (3,456) (4,720)
Net cash used in operations (4,827) (4,485) (8,726)
Cash flows from investing activities
Purchase of intangible assets (45) (45) (44)
Purchase of property, plant and equipment (169) (152) (633)
Purchase value of leased assets - (21) -
Investment in associate company - - -
Interest received 1 2 3
Net cash used in investing activities (213) (216) (674)
Cash flows from financing activities
Proceeds from issue of loan instruments 4,823 4,423 7,962
Proceeds from issue of new shares 234 30 1,241
New obligations of lease debt - 21 (297)
Repayment of obligations under lease debt (105) (106) 21
Repayment of short term borrowings (84) (175) (202)
Net cash generated from financing activities 4,868 4,193 8,725
Net increase in cash and cash equivalents (171) (508) (675)
Effect of foreign exchange rates 203 471 88
Opening cash and cash equivalents 2,152 2,739 2,739
Closing cash and cash equivalents 2,183 2,702 2,152
Notes to the interim report
1. Basis of preparation
These interim consolidated financial statements of Proton Power Systems plc
were prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB) as
adopted by the European Union and with those parts of the Companies Act 2006
applicable to those companies under IFRS. They were also prepared under the
historical cost convention and in accordance with IFRS interpretations
(IFRICS) 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. The condensed consolidated interim financial statements have
been prepared in accordance with the accounting policies adopted in the 31
December 2021 statutory audited financial statements. No new accounting
standards have been adopted by the group since preparing its last annual
report.
The Group has chosen not to adopt IAS 34 (Interim Financial Statements) in
preparing these financial statements therefore the interim financial
information is not in full compliance with IFRS.
The financial information for the half year ended 30 June 2022 set out in this
interim report is unaudited and does not constitute statutory accounts as
defined in Section 434 of the Companies Act 2006. The Group's audited
statutory financial statements for the year ended 31 December 2020 have been
filed with the Registrar of Companies. The independent auditor's report on
those financial statements was unqualified and did not contain statements
under Section 498(2) or (3) of the Companies Act 2006.
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.
In preparing the consolidated financial information, Proton Motor Fuel Cell
GmbH has been deemed to be the acquirer and the Company, the legal parent, has
been deemed to be the acquiree. Under IFRS 3 "Business Combinations", the
acquisition of Proton Motor Fuel Cell GmbH by the Company has been accounted
for as a reverse acquisition and the consolidated IFRS financial information
of the Company is therefore a continuation of the financial information of
Proton Motor Fuel Cell GmbH.
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary, associate or jointly controlled entity
at the date of acquisition. The cost of an acquisition is measured as the fair
value of the assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange. Goodwill is initially recognised as an
asset at cost and is subsequently measured at cost less any accumulated
impairment losses. Goodwill is reviewed for impairment at least annually, or
more frequently where circumstances suggest an impairment may have occurred.
Any impairment is recognised immediately in income statement and is not
subsequently reversed.
On disposal of a subsidiary, the attributable amount of goodwill is included
in the determination of the profit or loss on disposal.
2. 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.
Impairment of goodwill
The carrying value of goodwill must be assessed for impairment annually, or
more frequently if there are indications that goodwill might be impaired. This
requires an estimation of the value in use of the cash generating units to
which goodwill is allocated. Value in use is dependent on estimations of
future cash flows from the cash generating unit and the use of an appropriate
discount rate to discount those cash flows to their present value.
3. Segmental information
An operating segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other operating segments for which discreet financial
information is available and is regularly reviewed by the Chief Operating
Decision Maker ("CODM").
Based on an analysis of risks and returns, the Directors consider that the
Group has only one identifiable operating segment, green energy.
All non-current assets are located in Germany.
4. Share based payments
The Group has incurred an expense in respect of share options and shares
issued to directors as follows:
Unaudited Unaudited Audited
Six months Six months Year ended 31 December 2021
ended 30 June ended 30 June
2022 2021
£´000 £´000 £´000
Share options - 10 (64)
Share awards 206 - 1,318
Shares 28 65 65
234 75 1,319
5. Finance costs including exchange differences
Unaudited Unaudited Audited
Six months ended 30 June Six months ended 30 June Year ended 31 December 2021
2022 2021
£´000 £´000 £´000
Interest 985 721 1,498
Exchange (gain) on shareholder loans - (3,456) (4,720)
Exchange loss on shareholder loans 2,079 - -
Net finance cost (gain)/loss 3,064 (2,735) (3,222)
6. Taxation
Due to losses within the Group, no expenses for tax on income were required in
either the current or prior periods.
7. Profit / (Loss) per share
Unaudited Unaudited Audited
Six months ended 30 June Six months ended 30 June Year ended 31 December 2021
2022 2021
£´000 £´000 £´000 £´000 £´000 £´000
Basic Diluted Basic Diluted Basic Diluted
(Loss) before embedded derivative (8,042) (8,042) (1,165) (1,165) (5,896) (5,896)
Fair value gain - - 212,739 212,739 609,201 609,201
Embedded derivative
(Loss) / Profit attributable to equity holders of the company (8,042) (8,042) 211,574 211,574 603,305 603,305
Weighted average number of ordinary shares (thousands) 1,549,553 1,549,553 774,285 1,597,816 778,571 778,571
(Restated year ended 31 December 2021)
Pence per share Pence per share Pence per share Pence per share
Pence per share Pence per share
(Loss) / Profit per share (pence per share) (Restated (0.5) (0.5) 27.3 13.2 77.5 77.5
Year ended 31 December 2021)
(Loss) / Profit per share (pence per share) excluding embedded derivative (0.5) (0.5) (0.2) (0.1) (0.8) (0.8)
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 period.
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 one category of dilutive potential ordinary
shares: share options, which have not been included in the calculation of loss
per share because they are anti-dilutive for these periods. No interim
dividend has been proposed or paid in relation to the current or prior interim
period.
A copy of the interim report and the information required by AIM Rule 26 is
available from the Company's website at www.protonmotor-powersystems.com
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