Final Results

Source: RNS
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:

 

DB Bahnbau Gruppe, part of Deutsch Bahn AG for an indoor emergency power unit including HyCabinet S24 with 3 HyModule S8s

Redexis HyShelter a combined heat and power source from renewable onsite hydrogen production for an Iberostar hotel in Majorca

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. 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:

 

DB Bahnbau Gruppe, part of Deutsch Bahn AG for an indoor emergency power unit including HyCabinet S24 with 3 HyModule S8s

Redexis HyShelter a combined heat and power source from renewable onsite hydrogen production for an Iberostar hotel in Majorca

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.

·      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/

·      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 Executive1,3

Helmut Gierse (Retired on 22 May 2024)               Non-Executive Director and Former Chairman

Antonio Bossi                                                     Non-Executive Director2

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 Secretary4,5

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

31 December 2023

Drawn down as at

31 December 2023

Increase

of facility

Facility at the

date of this report

SFN Cleantech Investment Ltd

€32.3m

*(£28.0m)

€29.7m

*(£25.7m)

€ nil

€32.3m

*(£28.0m)

€2.4m

*(£2.1m)

€2.4m

*(£2.1m)

€ nil

€2.4m

*(£2.1m)

€71.4m

*(£61.9m)

€69.0m

*(£59.8m)

€6.1m

*(£5.3m)

 

€77.5m

*(£67.2m)

 

€ nil

€ nil

€12.0m

*(£10.4m)

€ 12.0m

*(10.4m)

Total

€106.1m

*(£92.0m)

€101.1m

*(£87.6m)

€12.0m

*(£15.7m)

€124.2m

*(£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 interest                (1,833)           (1,200)

(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

2023

2022




£´ 000

£´ 000

£´ 000

Cash and cash equivalents



2,741

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:

 





6 to 12

1 to 5





months

years





£´ 000

£´ 000

Trade payables




-

-

Other short term financial liabilities



-

-

Lease debt




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:

 





6 to 12

1 to 5





months

years





£´ 000

£´ 000

Trade payables




-

-

Other short term financial liabilities



-

-

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


in scope of



receivables

IAS 39

Total

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

Cash and cash equivalents

2,741

-

2,741

-

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


in scope of



receivables

IAS 39

Total

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

Cash and cash equivalents

2,720

-

2,720

-

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

-

-

Lease debt

14,749

-

-

14,749

-

-

-

Borrowings

117,208

-

-

117,208

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

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

-

-










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

2023

2022





£´ 000

£´ 000

£´ 000

Total liabilities




137,682

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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