REG - Proton Motor Power - Half-year Report
14/09/2023 07:00
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RNS Number : 3724M Proton Motor Power Systems PLC 14 September 2023
14 September 2023
Proton Motor Power Systems plc
("Proton Motor" or the "Company")
Unaudited Interim Results for the six months to 30 June 2023
Proton Motor Power Systems plc (AIM: PPS), the designer and producer of
hydrogen fuel cells and hydrogen fuel cell electric hybrid systems, announces
its unaudited interim results for the six months ended to 30 June 2023 (the
"Period" or "H1 2023").
Operational Highlights
- Delivery of 19 fuel cell systems from across the Company's product
range to customers
- Strengthened the board with the appointment of Mr. Ali Naini as a
Non-Executive Director
- New 13,500m² production facility expected to support scale up of
product production capacity:
o 15-year lease signed
o Good progress made in planning the transfer of manufacturing and
development activities to the new site
Financial Highlights
- Order intake of £1.4m (H1 2022: £1.5m)
- Total order book at the Period end of £3.7m, including repeat
orders from existing customers and income from maintenance agreements
- Sales of £929k (H1 2022: £980k)
- Generated a positive gross margin
- Increased existing loan facilities with principal shareholders by
approximately €14.5m
Dr. Faiz Nahab, CEO of Proton Motor, commented:
"Activity during the period has been focused on continuing to position Proton
Motor to be able to take advantage of the expected growth in demand for fuel
cells, as the public and political will grows towards the transition to a
decarbonised energy system. Part of that focus has been on ensuring the
Company is well placed to scale production to meet demand, while there's also
been a drive to grow and develop sales and marketing channels to support the
delivery of more near-term opportunities and access to future demand. Having
invested in products that we know are market-leading, turning our attention to
scaling-up production and sales is a natural next step."
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
(mailto:protonmotor@celicourt.uk)
Mark Antelme / Philip Dennis
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 mobile, marine and rail
applications. The product portfolio consists of base-fuel cell systems,
standard, 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 report
Introduction
We are pleased to report our unaudited results for the six months ended 30
June 2023. During the period, the Company has continued to make good progress
in positioning itself to take advantage of the expected growth in demand for
fuel cells, as part of the solution towards decarbonising the world energy
systems, on the back of growing public, political and commercial momentum.
The real focus of activity has been to ensure the Company is well placed to be
able to scale production and take advantage of near and longer-term
opportunities by further improving access to market. In support of this, and
the future development of the business, the Company has also sought to
strengthen its Board with the appointment of Mr. Ali Naini as a Non-Executive
Director.
Operations
In October 2022, the Company announced that it signed a fifteen-year lease
agreement for 13,500m² modern premises. This new facility is anticipated to
contribute towards enhanced and efficient production throughflows. In
addition, this new facility is anticipated to substantially expand the
Company's manufacturing, testing and development capacity.
The facility is located in the town of Fuerstenfeldbruck, less than 12
kilometres from Proton Motor's existing operations, and is contained within
the Munich metropolitan region. Good progress is being made on the
coordination and planning for the transfer of operations to the new facility,
which is expected to be operational in 2024. This process is being supported
by a rent-free period of 10.5 months from April 2023.
The new premises comprise over 13,500m² of useable space, of which over
10,500 m² can be dedicated to production, testing and development with the
remainder of the space being devoted to office usage. This represents a
seven-fold increase in the amount of space available for production when
compared to the Company's current premises.
During the first half of the year, the Company saw the team broadly stabilise,
after a period of growth that is complementary to the increase in space now
available to the Company. In addition to the focus on scaling operations,
there was also an increased focus on the development of sales channels and
market access for the Company's range of products.
Proton Motor is fortunate in that it has built close and trusted relationships
with a wide range of blue-chip organisations during the build and test phase
of its products, which have and will continue to offer market opportunity. As
a result, the Company already benefits from repeat orders, based on the
confidence these businesses have in the products being offered. Nonetheless,
the Company recognises the need to develop wider market access and during the
period this resulted in several 'letters of intent' being signed and the
development of framework agreements aimed at supporting near and longer-term
sales.
Alongside these company specific initiatives to drive sales, there is also a
recognition across the industry that the ultimate driver of fuel cell adoption
will be regulatory. Though it is not possible to say with absolute certainty
when the inflection point driving this adoption will be reached, the increase
in momentum of regulation and growth in substantive commercial conversations
would suggest we are now much nearer that point. This is evidenced by Proton
Motor's early-stage discussions with existing customers concerning potential
future orders of fuel cell systems.
Finance
Proton Motor received orders for £1.4m in the first half year of the year,
including several 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 2023 were £929k (H1 2022: £980k), arising from the 2022 and H1
2023 order intake. These sales were primarily generated in the stationary
sector. £2.3m was invested in the development programme and our workforce has
increased to 115 (H1 2022: 108) full time employees. In line with demand, we
have added staff resources predominantly in the areas of production and
product development.
Excluding the impact of exchange differences, the operating loss in the first
half of 2023 was £6.1m (H1 2022: £4.9m). This was in line with our budgeted
expectations and resulted from further investments in product development,
production and staff in addition to manufacturing infrastructure.
£239k was invested in equipment and infrastructure during the period (H1
2022: £213k).
The new facility's lease has been capitalised in line with IFRS 16 and is
accounted for as a right of use asset.
Cash burn from operating activities increased during the Period to £6.8m (H1
2022: £4.8m), reflecting the increased level of activity to deliver our sales
pipeline and from further investment. Current contracts are quoted with
up-front payments, which reduces reliance on working capital and allows the
Company to continue to invest in its manufacturing capability. The cash
position as at 30 June 2023 was £2.7m (30 June 2022: £2.2m).
We were very pleased with the continued support of our principal shareholders
with whom we agreed to increase the existing financing facilities by €14.5
million to ensure operational financing for the Company into 2024. 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 continue to believe in
us, our committed employees and our shareholders who have the vision to invest
in our mission.
Current trading and outlook
It is evident that the awareness of hydrogen as an alternative clean energy
source for the future is increasing to a considerable extent both amongst the
public as well as within industry, and that the demand for associated
technologies, including fuel cells, will also increase substantially.
As such, the Company will continue to invest in positioning itself to take
advantage of that growth as it builds, through near-term and longer-term
opportunities, through a proven product, that can be scaled and readily has
access to the market through a variety of different channels.
Helmut Gierse
Non-Executive Chairman
STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2023 2022 2022
£´ 000 £´ 000 £´ 000
Revenue 929 980 2,088
Cost of sales (914) (715) (2,089)
Gross profit 15 265 (1)
Other operating income 98 211 604
Administrative expenses (6,213) (5,455) (11,057)
Operating loss (6,100) (4,979) (10,454)
Finance income 2 1 0
Finance costs incl. exchange gains((losses) 554 (3,064) (8,450)
(Loss) for the period attributable to shareholders (5,544) (8,042) (18,904)
(Loss) per share (expressed as pence per share)
Basic (0.4) (0.5) (1.2)
Diluted (0.4) (0.5) (1.2)
OTHER COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2023 2022 2022
£´ 000 £´ 000 £´ 000
Profit/(Loss) for the period (5,544) (8,042) (18,904)
Othe comprehensive (expense) / income
Items that may not be reclassified to profit and loss
Exchange differences on translating foreign operations (332) (97) (959)
Total other comprehensive (expense) for the period (332) (97) (959)
Attributable to equity holders of the parent (5,876) (8,139) (19,863)
STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2023 2022 2022
£´ 000 £´ 000 £´ 000
Assets
Non-current assets
Intangible assets 110 107 149
Property, plant and equipment 1,970 1,589 2,037
Right of use assets 11,191 13 452
Finance investment 0 11 -
13,271 1,720 2,638
Current assets
Inventories 2,469 2,408 2,302
Trade and other receivables 1,052 1,242 946
Cash and cash equivalents 2,662 2,183 2,720
Total current assets 6,183 5,833 5,968
Total assets 19,454 7,553 8,606
Current Liabilities
Trade and other payables (4,072) (4,831) (4,657)
Lease debt (742) (14) (215)
Borrowings (432) (410) (466)
(5,246) (5,255) (5,338)
Non-current liabilities
Borrowings (108,415) (91,859) (103,007)
Lease debt (11,045) (4) (252)
Total liabilities (124,706) (97,118) (108,597)
Net liabilities (105,252) (89,565) (99,991)
Equity
Capital and reserves attributable to equity shareholders
Share capital 11,049 11,025 11,040
Share premium account 20,963 20,415 20,717
Merger reserve 15,656 15,656 15,656
Reverse acquisition reserve (13,861) (13,861) (13,861)
Share option reserve 3,058 2,393 2,728
Foreign translation reserve 12,115 (10,683) 12,509
Capital contributions 289,434 289,462 289,497
Accumulated losses:
Opening balance (438,122) (395,931) (418,234)
Loss for the year attributable to the owners (5,544) (8,042) (18,904)
Other changes in retained earnings 0 1 (1,139)
Total equity (105,252) (89,565) (99,991)
STATEMENT OF CHANGES IN EQUITY
Reverse Share Foreign Capital
Share Share Merger Acquisition Option Translation contribution Accumulated Total
Capital Premium Reserve Reserve Reserve Reserve Reserve Loss Equity
£´ 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 - - - - 206 - - - 206
Proceeds from share issues 2 25 - - - - - - 27
Currency translation differences - - - - - - - - -
Transactions with owners 2 25 0 0 206 0 0 0 233
Profit for the period - - - - - - - (8,042) (8,042)
Other comprehensive income: - - - - - - - 0
Currency translation differences - - - - - (22,428) 28 22,303 (97)
Total comprehensive income for the year 0 0 0 0 0 (22,428) 28 14,261 (8,139)
Balance at 30 June 2022 11,025 20,415 15,656 (13,861) 2,393 (10,683) 289,462 (403,973) (89,566)
Balance at 1 July 2022 11,025 20,415 15,656 (13,861) 2,393 (10,683) 289,462 (403,973) (89,566)
Share based payments - - - - 335 - - - 335
Proceeds from share issues 15 302 - - - - - - 317
Currency translation differences - - - - - - - - -
Transactions with owners 11,040 20,717 15,656 (13,861) 2,728 (10,683) 289,462 (403,973) (88,914)
Profit for the period - - - - - - - (10,862) (10,862)
Other comprehensive income: - - - - - - - - 0
Currency translation differences - - - - - 23,192 63 (23,441) (186)
Total comprehensive income for the year 0 0 0 0 0 23,192 63 (34,303) (11,048)
Balance at 31 December 2022 11,040 20,717 15,656 (13,861) 2,728 12,509 289,525 (438,276) (99,962)
Balance at 1 January 2023 11,040 20,717 15,656 (13,861) 2,728 12,509 289,525 (438,276) (99,962)
Share based payments - - - - 330 - - - 330
Proceeds from share issues 9 246 - - - - - - 255
Currency translation differences - - - - - - - - -
Transactions with owners 11,049 20,963 15,656 (13,861) 3,058 12,509 289,525 (438,276) (99,377)
Profit for the period - - - - - - - (5,543) (5,543)
Other comprehensive income: - - - - - - - - 0
Currency translation differences - - - - - (394) (91) 153 (332)
Total comprehensive income for the year 0 0 0 0 0 (394) (91) (5,390) (5,875)
Balance at 30 June 2023 11,049 20,963 15,656 (13,861) 3,058 12,115 289,434 (443,666) (105,252)
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 Six months Year ended
to 30 June to 30 June 31 December
2023 2022 2022
£´ 000 £´ 000 £´ 000
Cash flows from operating activities
Profit / (Loss) for the period (5,544) (8,042) (18,904)
Adjustments for
Depreciation and amortisation 278 214 666
Interest income (2) (1) -
Interest expense 3,006 986 3,629
Share based payments (330) (206) 361
Movement in inventories (61) (572) (466)
Movement in trade and other receivables 190 381 678
Movement in trade and other payables (759) 333 159
Exchange rate movements (3,560) 2,079 4,821
Net cash used in operations (6,782) (4,828) (9,056)
Cash flows from investing activities
Purchases of intangible assets (8) (45) (102)
Purchases of property, plant and equipment (231) (169) (779)
Purchase value of leased assets (11,163) - -
Interest received 2 1 -
Net cash used in investing activities (11,400) (213) (881)
Cash flows from financing activities
Proceeds from issue of loan instruments 6,186 4,823 10,656
Proceeds from issue of new shares 585 234 114
New obligations of lease debt 11,163 - -
Repayment of obligations under lease debt 155 (105) (191)
Repayment of short term borrowings 0 (84) (51)
Net cash generated from financing activities 18,089 4,868 10,528
Net (decrease) / increase in cash and cash equivalents (93) (171) 591
Effect of foreign exchange rates 572 203 (23)
Opening cash and cash equivalents 2,183 2,152 2,152
Closing cash and cash equivalents 2,662 2,183 2,720
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 2022 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 2022 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
to 30 June to 30 June 31 December
2023 2022 2022
£´ 000 £´ 000 £´ 000
Share options - - (130)
Share awards 352 206 721
Shares 58 28 109
410 234 700
5. Finance costs including exchange differences
Unaudited Unaudited Audited
Six months Six months Year ended
to 30 June to 30 June 31 December
2023 2022 2022
£´ 000 £´ 000 £´ 000
Interest 3,006 985 3,629
Exchange (gain) on shareholder loans (3,560) - -
Exchange loss on shareholder loans - 2,079 4,821
(554) 3,064 8,450
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
6 months 6 months year ended
ended 30 June ended 30 June 31 December
2023 2023 2022 2022 2022 2022
Basic Diluted Basic Diluted Basic Diluted
£´ 000 £´ 000 £´ 000 £´ 000 £´ 000 £´ 000
Loss attributable to equity holders of the Company (5,544) (5,544) (8,042) (8,042) (18,904) (18,904)
Weighted average number of Ordinary shares in issue (thousands) 1,551,459 1,551,459 1,549,533 1,549,533 1,550,521 1,550,521
Effect of dilutive potential Ordinary shares from share options
and stock awards (thousands) - 18,075 - - - 18,075
Adjusted weighted average number of Ordinary shares 1,551,459 1,569,534 1,549,533 1,549,533 1,550,521 1,568,596
(Loss) per share (pence per share) (0.4) (0.4) (0.5) (0.5) (1.2) (1.2)
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
(http://www.protonmotor-powersystems.com)
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