REG - Proton Power Systems - Final Results <Origin Href="QuoteRef">P6K.L</Origin> - Part 2
06/05/2016 07:06
- Part 2: For the preceding part double click ID:nRSF4321Xa
Diluted Basic Diluted
£'000 £'000 £'000 £'000
Loss attributable to equity holders of the Company (9,172) (9,172) (10,138) (10,138)
Weighted average number of Ordinary shares in issue (thousands) 642,377 642,377 640,865 640,865
Effect of dilutive potential Ordinary shares from share options and convertible debt (thousands) - - - -
Adjusted weighted average number of Ordinary shares 642,377 642,377 640,865 640,865
Pence per share Pence per share Pence per share Pence per share
Loss per share (pence per share) (1.4) (1.4) (1.6) (1.6)
10. Intangible assets - Group
Goodwill Copyrights, trademarks and other intellectual property rights Development costs Total
£'000 £'000 £'000 £'000
Cost
At 1 January 2014 2,126 271 1,357 3,754
Exchange differences - (18) (86) (104)
Additions - 24 4 28
Disposals - (12) - (12)
At 31 December 2014 2,126 265 1,275 3,666
At 1 January 2015 2,126 265 1,275 3,666
Exchange differences - (16) (68) (84)
Additions - 91 - 91
Transfers - 42 - 42
Disposals - (130) (108) (238)
At 31 December 2015 2,126 252 1,099 3,477
Accumulated Amortisation
At 1 January 2014 - 178 1,357 1,535
Exchange differences - (13) (86) (99)
Charged in year 2,126 43 - 2,169
Disposals - (3) - (3)
At 31 December 2014 2,126 205 1,271 3,602
At 1 January 2015 2,126 205 1,271 3,602
Exchange differences - (18) (68) (86)
Charged in year - 65 - 65
Disposals - (125) (108) (233)
At 31 December 2015 2,126 127 1,095 3,348
Net book value
At 31 December 2015 - 125 4 129
At 31 December 2014 - 60 4 64
At 1 January 2014 2,126 93 - 2,219
Self-developed intangible assets in the amount of £133,000 (2014: £28,000) are
recognized in the reporting year, because the prerequisites of IAS 38 have
been fulfilled.
The amortisation charge above is recognized in the administrative expenses in
the income statement.
As self-developed intangible assets are not material to the Group financial
statements no impairment test has been performed.
There are no individually significant intangible assets.
Amortisation and impairment charges are recognised within administrative
expenses.
11. Property, plant and equipment - Group
Leasehold property improvements Technical equipment & machinery Office & other equipment Self-constructed plant & machinery Total
£'000 £'000 £'000 £'000 £'000
Cost
At 1 January 2014 417 1,243 733 53 2,446
Exchange differences (30) (67) (47) (7) (151)
Additions 123 31 40 119 313
Transfers - (20) - 20 -
Disposals - - (36) - (36)
At 31 December 2014 510 1,187 690 185 2,572
At 1 January 2015 510 1,187 690 185 2,572
Exchange differences (30) (64) (47) (12) (153)
Additions 34 133 70 123 360
Transfers (4) 115 22 (175) (42)
Disposals (12) (813) (543) - (1,368)
At 31 December 2015 498 558 192 121 1,369
Accumulated Depreciation
At 1 January 2014 155 988 653 - 1,796
Exchange differences (12) (54) (42) - (108)
Charge for year 87 117 42 - 246
Disposals - - (34) - (34)
At 31 December 2014 230 1,051 619 - 1,900
At 1 January 2015 230 1,051 619 - 1,900
Exchange differences (13) (58) (44) - (115)
Charge for year 37 92 44 - 173
Disposals (12) (813) (542) - (1,367)
At 31 December 2015 242 272 77 - 591
Net book value
At 31 December 2015 256 286 115 121 778
At 31 December 2014 280 136 71 185 672
At 1 January 2014 262 255 80 53 650
12. Investment in subsidiary undertaking
2015 2014
Company £'000 £'000
Shares in Group undertaking
Cost
At beginning of year 51,757 46,821
Additions 5,165 4,936
At end of year 56,922 51,757
Impairment
At beginning of year 51,757 44,884
Charge for the year 5,165 6,873
At end of year 56,922 51,757
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 (2014:
charge) in the year of £5,165,000 (2014: £6,873,000) the Board has determined
the recoverable amount on a value in use basis using a discounted cash flow
model.
13. Trade and other receivables
Group Company
2015 2014 2015 2014
£'000 £'000 £'000 £'000
Trade receivables 261 308 - -
Other receivables 20 17 9 3
Amounts due from Group companies - - 55 35
Prepayments and accrued income 15 16 11 9
296 341 75 47
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair values.
In addition some of the unimpaired trade receivables are past due as at the
reporting date. The age of financial assets past due but not impaired is as
follows:
Group
2015 2014
£'000 £'000
Not more than three months (all denominated in Euros) 116 134
The Directors consider that trade and other receivables which are not past due
or impaired show no risk of requiring impairment.
14. Cash and cash equivalents
Group Company
2015 2014 2015 2014
£'000 £'000 £'000 £'000
Cash at bank and in hand 614 180 2 -
Bank overdraft (Note 16) (80) - - -
534 180 2 2
The Directors consider that the carrying amount of cash and cash equivalents
approximates to their fair values.
15. Trade and other payables
Group Company
2015 2014 2015 2014
£'000 £'000 £'000 £'000
Trade payables 526 202 1 23
Other payables 489 92 - -
Accruals and deferred income 465 488 180 148
1,480 782 181 171
The Directors consider that the carrying amount of trade and other payables
approximates to their fair values.
16. Borrowings
Group Company
2015 2014 2015 2014
£'000 £'000 £'000 £'000
Bank overdraft 80 - - -
Loans
Current 2,004 262 1,757 -
Non-current 21,104 16,782 21,104 16,782
Current and total borrowings 23,188 17,044 22,861 16,782
During 2014 the Group and Company entered into a new loan agreement with
Roundstone Properties Limited which combined all existing Roundstone
Properties Limited's loans and provided total facilities of E16,500,000. The
loans under this facility were repayable on 6 May 2017 and carry interest at
10% per annum. Roundstone Properties Limited has the option to convert accrued
interest and outstanding interest at any time into Ordinary shares in the
Company at 2p per share. This facility was fully utilised during 2014.
On 14 December 2014 the Group and Company entered into a loan agreement with
Mr Falih Nahab which provides facilities of E10,000,000. The loan was
repayable on 13 December 2017 and carries interest at 10% per annum. Mr Falih
Nahab has the option to convert accrued interest and outstanding interest at
any time into Ordinary shares in the Company at 2p per share. At 31 December
2015 total advances under this facility were E7,720,000. Mr Falih Nahab is the
brother of Mr Faiz Nahab, a Director of the Company and both are treated as
related parties.
These instruments were classified as a debt host instrument with an embedded
derivative being the conversion feature. The embedded derivative has been fair
valued and the residual value of the instrument had been recognised as debt.
The debt has subsequently been measured at amortised cost.
On 24 July 2013 the Group and Company entered into a new loan agreement with
Roundstone Properties Limited providing E2,383,841. The loan is unsecured,
repayable on 23 July 2016 and carries interest at LIBOR plus 2% per annum.
Interest is to be rolled up and repaid at the termination of the agreement.
The Company has the option to repay interest annually.
The redemption dates of these loans were extended by Roundstone Properties
Limited and Mr Falih Nahab in March 2016 as follows:
· E2.4m to 23 June 2018
· E16.5m; E5.6m to 30 September 2018 and E10.9m to 6 May
2018
· E10m to 31 March 2019
During 2013 Roundstone Properties Limited provided short-terms loans directly
to SPower of E335,000. The loans are interest free and repayable on demand.
The Directors consider that the carrying amount of borrowings approximates to
their fair value.
17. Embedded derivatives on convertible interest
Group Company
2015 2014 2015 2014
£'000 £'000 £'000 £'000
Embedded derivatives on convertible interest 9,542 6,622 9,542 6,622
The embedded derivatives relate to the conversion features attached to
convertible interest as disclosed under note 16. The derivatives are initially
recognised at fair value and fair valued at each subsequent accounting
reference date.
18. 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
£10,339,000 (2014: £9,731,000) in respect of losses amounting to £3,661,000
(2014: £3,661,000) and E49,751,000 (2014: E43,112,000).
19. Share capital
The share capital of Proton Power Systems plc consists of fully paid Ordinary
shares with a par value of £0.01 (2014: £0.01) and Deferred Ordinary shares
with a par value of £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 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.
On 4 February 2015 525,740 Ordinary shares of 1p each were issued each at a
price of 3.88p per share in settlement of a supplier's invoice.
On 13 May 2015 478,571 Ordinary shares of 1p each were issued each at a price
of 4.375p per share in settlement of a supplier's invoice.
On 30 July 2015 100,000 Ordinary shares of 1p each were issued each at a price
of 2p per share for cash in settlement of share options exercised.
On 30 October 2015 200,000 Ordinary shares of 1p each were issued each at a
price of 3p per share for cash in settlement of share options exercised.
Details of share options in issue are given in Note 7.
The number of shares in issue at the balance sheet date is 642,821,872 (2014:
641,517,561) Ordinary shares of 1p each (2014: 1p each) and 327,963,452 (2014:
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.
2015 2014
Ordinary shares Deferred ordinary shares Ordinary shares Deferred ordinary shares
No.'000 £'000 No.'000 £'000 No.'000 £'000 No.'000 £'000
Shares authorised, issued and fully paid
At the beginning of the year 641,518 6,415 327,963 3,280 639,919 6,399 327,963 3,280
Share issue 1,304 13 - - 1,599 16 - -
642,822 6,428 327,963 3,280 641,518 6,415 327,963 3,280
20. 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. Total future lease
payments under non-cancellable operating leases are as follows:
2015 2014
Land and buildings Other Land and buildings Other
Group £'000 £'000 £'000 £'000
Operating leases which expire:
Within one year 7 - 343 -
In the second to fifth years inclusive 427 - 415 -
After more than five years - - - -
434 - 758 -
21. Related party transactions
During the year ended 31 December 2015 the Group and Company entered into the
following related party transactions:
Group Company
Year ended 31 December Year ended 31 December
2015 2014 2015 2014
£'000 £'000 £'000 £'000
(Expenses) / Income
Roundstone Properties Limited effective loan interest (1,656) (1,215) (1,656) (1,215)
Roundstone Properties Limited other loan interest (36) (41) (36) (41)
Thomas Melzcer 3 2 - -
Helmut Gierse (20) (20) (20) (20)
Team B Partners LLP (4) (14) (4) (14)
IJP Business & Finance Services Limited (95) - (95) -
At 31 December 2015 the Group and Company had the following balances with
related parties:
Group Company
Year ended 31 December Year ended 31 December
2015 2014 2015 2014
£'000 £'000 £'000 £'000
Amounts due (to) / from
Roundstone Properties Limited borrowings and embedded derivatives (see Notes 16 and 17) (24,104) (23,007) (24,104) (23,007)
Roundstone Properties Limited interest accrual (108) (73) (108) (73)
Roundstone Properties Limited bank guarantee (368) - - -
Roundstone Properties Limited loans to SPower (247) (262) - -
Falih Nahab (8,299) (397) (8,299) (397)
Thomas Melzcer 62 62 - -
Team B Partners LLP - (3) - (3)
IJP Business & Finance Services Limited - - - -
Further borrowings were drawn down during the year which contained embedded
derivatives. In accordance with IAS 39 these have been fair valued.
During the year the Company made capital contributions to Proton Motor Fuel
Cells GmbH of £5,165,000 (2014: £4,936,000) and to SPower of £nil (2014:
£nil).
The amount due from Thomas Melzcer relates to a director loan balance which
was extended during the year.
22. Risk management objectives and policies
The Group's activities expose it to a variety of financial risks:
§ foreign exchange risk (note 23);
§ credit risk (note 24); and
§ liquidity risk (note 25).
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.
23. 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 2015 Year ended 31 December 2014
E'000 £'000 E'000 £'000
Financial assets 376 277 420 329
Financial liabilities (43,794) (32,272) (30,971) (24,240)
Short-term exposure (43,418) (31,995) (30,551) (23,911)
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 +/- 12.87%
change of the Sterling/Euro exchange rate for the year ended at 31 December
2015 (2014: 7.04%). 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 12.87% (2014: 7.04%) then
this would have had the following impact:
Year ended 31 December 2015 Year ended 31 December 2014
£'000 £'000
Net result for the year (4,118) (1,683)
Equity (4,118) (1,683)
If the Euro had weakened against Sterling by 12.87% (2014: 7.04%) then this
would have had the following impact:
Year ended 31 December 2015 Year ended 31 December 2014
£'000 £'000
Net result for the year 4,118 1,683
Equity 4,118 1,683
Exposures to foreign exchange rates vary during the year depending on the
value of Euro denominated loans. Nonetheless, the analysis above is considered
to be representative of Group's exposure to currency risk.
24. Credit risk analysis
Credit risk is managed on a Group basis. Credit risk arises from cash and
deposits with banks, as well as credit exposures to customers, including
outstanding receivables and committed transactions. For banks and financial
institutions, only independently rated parties with a minimum rating of 'A'
are accepted. If customers are independently rated, these ratings are used.
Otherwise, if there is no independent rating, risk control assesses the credit
quality of the customer, taking into account its financial position, past
experience and other factors. Individual risk limits are set based on internal
or external ratings in accordance with limits set by the Board.
No credit limits were exceeded during the reporting period, and management
does not expect any losses from non-performance by these counterparties. The
Directors do not consider there to be any significant concentrations of credit
risk.
The Group's maximum exposure to credit risk is limited to the carrying amount
of financial assets recognised at the balance sheet date, as summarised
below:
Group Company
2015 2014 2015 2014
£'000 £'000 £'000 £'000
Cash and cash equivalents 534 180 2 -
Trade and other receivables 281 325 64 38
Short-term exposure 815 505 66 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.
25. 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 2015, the Group's liabilities have contractual maturities
which are summarised below:
Within 6 months 6 to 12 months 1 to 5 years
£'000 £'000 £'000
Trade payables 526 - -
Other short term financial liabilities 464 - -
Borrowings and embedded derivatives on convertible loans 2,004 - 21,104
This compares to the maturity of the Group's financial liabilities in the
previous reporting period as follows:
Within 6 months 6 to 12 months 1 to 5 years
£'000 £'000 £'000
Trade payables 202 - -
Other short term financial liabilities 92 - -
Borrowings and embedded derivatives on convertible loans - 262 16,782
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.
26. Financial instruments
The assets of the Group and Company are categorised as follows:
As at 31 December 2015 Group Company
Loans and receivables Non-financial assets / financial assets not in scope of IAS 39 Total Loans and receivables Non-financial assets / financial assets not in scope of IAS 39 Total
£'000 £'000 £'000 £'000 £'000 £'000
Intangible assets - 129 129 - - -
Property, plant and equipment - 778 778 - - -
Investment in subsidiary - - - - - -
Inventories - 692 692 - - -
Trade and other receivables 281 15 296 64 11 75
Cash and cash equivalents 614 - 614 2 - 2
895 1,614 2,509 66 11 77
As at 31 December 2014 Group Company
Loans and receivables Non-financial assets / financial assets not in scope of IAS 39 Total Loans and receivables Non-financial assets / financial assets not in scope of IAS 39 Total
£'000 £'000 £'000 £'000 £'000 £'000
Intangible assets - 64 64 - - -
Property, plant and equipment - 672 672 - - -
Investment in subsidiary - - - - - -
Inventories - 312 312 - - -
Trade and other receivables 325 16 341 38 9 47
Cash and cash equivalents 180 - 180 - - -
505 1,064 1,569 38 9 47
The liabilities of the Group and Company are categorised as follows:
As at 31 December 2015 Group Company
Financial liabilities at amortised cost Financial liabilities valued at fair value through the income statement Liabilities not within the scope of IAS 39 Total Financial liabilities at amortised cost Financial liabilities valued at fair value through the income statement Liabilities not within the scope of IAS 39 Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Trade and other payables 1,480 - - 1,480 181 - - 181
Borrowings 23,188 - - 23,188 22,861 - - 22,861
Embedded derivatives on convertible loans - 9,542 - 9,542 - 9,542 - 9,542
24,668 9,542 - 34,210 23,042 9,542 - 32,584
As at 31 December 2014 Group Company
Financial liabilities at amortised cost Financial liabilities valued at fair value through the income statement Liabilities not within the scope of IAS 39 Total Financial liabilities at amortised cost Financial liabilities valued at fair value through the income statement Liabilities not within the scope of IAS 39 Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Trade and other payables 744 - 38 782 171 - - 171
Borrowings 17,044 - - 17,044 16,782 - - 16,782
Embedded derivatives on convertible loans - 6,622 - 6,622 - 6,622 - 6,622
17,788 6,622 38 24,448 16,953 6,622 - 23,575
Fair values
Management believe that the fair value of trade and other payables and
borrowings is approximately equal to book value.
IFRS 13 sets out a three-tier hierarchy for financial assets and liabilities
valued at fair value. These are as follows:
§ Level 1 - quoted prices (unadjusted) in active markets for identical assets
and liabilities;
§ Level 2 - inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly; and
§ Level 3 - unobservable inputs for the asset or liability.
The embedded derivatives fall within the fair value hierarchy level 2.
27. 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.
28. Ultimate controlling party
The Directors consider Roundstone Properties Limited to be the Ultimate
Controlling Party. Dr. Faiz Nahab is connected to Roundstone Properties
Limited.
This information is provided by RNS
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