Interim Results

RNS Number : 2596E

Proton Power Systems PLC

25 September 2008

 



Press release

25 September 2008

Proton Power Systems plc

('Proton Power' or 'the Group')

Interim Results

Proton Power Systems plc (AIM: PPS), a designer, developer and producer of fuel cells and fuel cell electric hybrid systems, announces its Interim Results for the six months ended 30 June 2008.  The Interim Report and Accounts will be posted to shareholders today and electronic copies are available to view on the Group's website at www.protonpowersystems.com

Highlights:

	Turnover up 54% to £455,000 (2007: £295,000)
	Loss of £1.3m (2007: £951,000)
	Secured £3m of new funds by placing new shares at 10p per share.
	Awarded Bavarian Innovation Award for its triple hybrid technology
	Strengthened the management team with the appointments of: - Thomas Melczer as CEO  - Ali Naini as a non-executive Director and Deputy Chairman - Dr Faiz Nahab as a non-executive Director

Post half year end highlights

	Launched the world's first hybrid fuel cell powered passenger ferry in the class up to 100 passengers
	TÜV SÜD approval for new fuel cell module, PM 200
	The Company expects to raise a further £2 million via the conditional subscription of 20,000,000 new shares at 10 pence per share
	Paid off loan finance

Commenting on the results, John Wall, Chairman of Proton Power, said: 'This has been an important six months for Proton Power and we now have the foundations in place to progress with volume production. In the second half of the year we will be expanding our application portfolio and will be putting strong efforts into the design for stationary power supplies, where there is a strong market demand.  I am very excited about the forthcoming months, as we drive the Group forward, and I look forward to updating you as we progress our growth strategy.' 

For further information:

Proton Power Systems plc
John Wall, Chairman	Tel: [phone]
Ali Naini, Deputy Chairman	Tel: [phone]
Thomas Melczer, CEO	Tel: [phone]
	www.protonpowersystems.com

Arbuthnot Securities Limited
Tom Griffiths / Antonio Bossi	Tel: [phone]
	www.arbuthnotsecurities.co.uk

Media enquiries:

Abchurch Communications Limited
Justin Heath / Stephanie Cuthbert / Monique Tsang	Tel: [phone]
[e-mail]	www.abchurch-group.com

  Chairman's and CEO's statement

Financial overview

We are pleased to report our unaudited Interim Results for the half year ended 30 June 2008 and to welcome Thomas Melczer as CEO.

In the 6 months to 30 June 2008 turnover was £455,000 which was in line with expectations and which compares with £295,000 in the same period of 2007. The out-turn for the half year was a loss of £1,286,000 which was also in line with expectations and compares with a loss for the first half year in 2007 of £951,000.

On 28 May 2008 the Group secured funds of £3m, by the placing of 30,000,000 new shares at 10p per share. This allowed the Group to repay the balance of the loan from General Capital Venture Finance Limited of £678,000 shortly after the period end. The Group is now free of loan finance and the progress which has been achieved over the last 12 months can now continue. 

Business development

In addition to continuous development work for our core fuel cell stacks, we also continued to work on the R&D and application design of fuel cell based hybrid solutions for the:

	passenger ferry which will operate on Hamburg's Alster river;
	utility street cleaning vehicle for Bucher/EMPA in Switzerland;
	city bus for Skoda Electric, which will operate in Prague;
	eco carrier transportation vehicle for Karmann in Germany; and
	hybrid system for forklifts.

These projects will allow us to offer, with our development partners, comprehensive solutions for different transportation applications, all based on our fuel cell technology.

Outlook

In June 2008, we proudly announced that Proton won the Bavarian Innovation Award for its triple hybrid technology. That underlines our leading position in the technology of fuel cell based back to base solutions. On 29 August 2008, the ferry for Hamburg's Alster river named 'Alsterwasser' was unveiled as the world's first hybrid fuel cell powered passenger ferry. 

With regard to applications, we have decided to put strong efforts into the design of fuel cell based solutions for stationary power supplies in the second half of 2008. There, we see a market with a high volume demand for solutions with long back up times which can be tapped by standardised products. Fuel cell based products can provide an optimised solution for such applications in the IT and Telecom markets. Those solutions will be based on our existing modular fuel cell products.

In the second half of 2008, the Group intends to start the industrialised production of fuel cells as well as application-specific systems, to be able to serve the growing demand. During that process, the Group will change its organisation and adjust the internal processes accordingly to allow a smooth start of a professional manufacturing line in cooperation with German contract manufacturers. As has been separately announced today, the Company has raised a further £2 million via the conditional subscription of 20,000,000 new shares at 10p per share in order to fund these proposals.

Subsequent to the half year end we appointed Arbuthnot Securities Limited as our nominated adviser and broker and welcomed Dr Faiz Nahab as a non-executive Director and Ali Naini as a non-executive Director and Deputy Chairman. We would also like to extend our thanks to Felix Heidelberg for his past contribution as CEO.

Looking to the near future, rising energy prices and demand for environmentally friendly solutions for transportation as well as stationary power will support the growth of our business. The task is to start volume production of fuel cell solutions to be able to offer attractive prices to our customers. Volume manufacturing and future service business will also support profitability and cash. We would like Proton to be a leader in the fuel cell industry in regard to both size and profit.

Finally may we thank the Proton team and our advisors for their hard work and effort and our shareholders, customers and suppliers for their continued confidence and support.

John Wall FCA Chairman

Thomas Melczer Chief Executive

  Independent review report by Grant Thornton UK LLP to 

Introduction

We have been engaged by the company to review the financial information for the six months ended 30 June 2008 which comprises the consolidated income statement, consolidated balance sheet, consolidated cash flow statement, statement of changes in equity and the related notes 1 to 5. We have read the other information contained in the interim report which comprises only the Chairman's and CEO's statement and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The AIM Rules of the London Stock Exchange require that the accounting policies and presentation applied to the interim figures are consistent with those which will be adopted in the company's annual financial statements having regard to the accounting standards applicable to such annual financial statements. As disclosed in Note 1, the annual financial statements of the Group are prepared in accordance with IFRS as adopted by the EU.

Our responsibility 

Our responsibility is to express to the Company a conclusion on the financial information in the interim financial report based on our review. 

Scope of review 

We conducted our review in accordance with ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries , primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures to the financial information. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the financial information.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the financial information in the interim financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with the basis of accounting described in Note 1. 

Grant Thornton UK LLP	24 September 2008
Chartered Accountants and Registered Auditors
Leeds, England

Consolidated income statement

	Note	Unaudited  6 months to  30 June 2008		Unaudited  6 months to  30 June  2007		Audited  Year to 31 December 2007
		£'000		£'000		£'000
Continuing operations
Revenue		455		295		661
Cost of sales		(1,050)		(423)		(1,594)
Gross loss		(595)		(128)		(933)
Other operating income		51		25		48
Administrative expenses	2	(696)		(882)		(1,504)
Operating loss		(1,240)		(985)		(2,389)
Finance income		12		50		89
Finance costs		(58)		(16)		(69)
Loss for the period attributable to equity holders of the Company		(1,286)		(951)		(2,369)
Loss per share (expressed as pence per share)
Basic	4	(3.5)		(3.0)		(7.6)
Diluted	4	(3.5)		(3.0)		(7.6)

  Consolidated balance sheet

		Unaudited  6 months to  30 June 2008		Unaudited  6 months to  30 June 2007		Audited  Year to 31 December 2007
		£'000		£'000		£'000
Non-current assets
Intangible assets		698		244		398
Property, plant and equipment		216		54		176
		914		298		574
Current assets
Inventories		107		15		108
Trade and other receivables		728		747		934
Cash and cash equivalents		1,563		2,025		682
		2,398		2,787		1,724
Total assets		3,312		3,085		2,298
Capital and reserves
Ordinary shares		3,070		1,570		1,570
Share premium		5,925		4,735		4,735
Merger reserve		15,656		15,656		15,656
Reverse acquisition reserve		(13,862)		(13,862)		(13,862)
Share based payment reserve		564		295		430
Foreign translation reserve		(130)		26		44
Capital contributions		1,076		916		1,002
Retained earnings		(10,605)		(7,958)		(9,444)
Total equity		1,694		1,378		131
Non-current liabilities
Borrowings		-		677		514
Current liabilities
Borrowings		678		299		317
Trade and other payables		940		731		1,336
		1,618		1,030		1,653
Total liabilities		1,618		1,707		2,167
Total equity and liabilities		3,312		3,085		2,298

Statement of changes in equity

	Attributable to equity holders of the Company
	Share Capital	Share Premium	Merger Reserve	Reverse Acquisition Reserve	Share Based Payment Reserve	Translation Reserve	Capital Contribution Reserve	Retained Earnings	Total Equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2007	1,570	4,735	15,656	(13,862)	147	30	916	(7,007)	2,185
Loss for the period	-	-	-	-	-	-	-	(951)	(951)
Currency translation differences	-	-	-	-	-	(4)	-	-	(4)
Total recognised income and expenses for the period	-	-	-	-	-	(4)	-	(951)	(955)
Share based payments credit	-	-	-	-	148	-	-	-	148
Balance at 30 June 2007	1,570	4,735	15,656	(13,862)	295	26	916	(7,958)	1,378
Balance at 1 July 2007	1,570	4,735	15,656	(13,862)	295	26	916	(7,958)	1,378
Loss for the period	-	-	-	-	-	-	-	(1,418)	(1,418)
Currency translation differences	-	-	-	-	-	18	86	(68)	36
Total recognised income and expense for the year	-	-	-	-	-	18	86	(1,486)	(1,382)
Share based payments credit	-	-	-	-	135	-	-	-	135
Balance at 31 December 2007	1,570	4,735	15,656	(13,862)	430	44	1,002	(9,444)	131
Balance at 1 January 2008	1,570	4,735	15,656	(13,862)	430	44	1,002	(9,444)	131
Loss for the period	-	-	-	-	-	-	-	(1,286)	(1,286)
Currency translation differences	-	-	-	-	-	(174)	74	125	25
Total recognised income and expense for the year	-	-	-	-	-	(174)	74	(1,161)	(1,261)
Share based payments credit	-	-	-	-	134	-	-	-	134
Proceeds from share issues	1,500	1,500	-	-	-	-	-	-	3,000
Share issue costs	-	(310)	-	-	-	-	-	-	(310)
Balance at 30 June 2008	3,070	5,925	15,656	(13,862)	564	(130)	1,076	(10,605)	1,694

Share premium account

On 28 May 2008 the Company issued 30,000,000 shares at 10p, generating £3,000,000. Costs directly associated with the issue of the new shares totalled £310,000 and have been set off against the premium generated on issue of new shares. The new shares were admitted to trading on the Alternative Investment Market of the London Stock Exchange on 28 May 2008.

Merger reserve

The merger reserve of £15,656,000 arises as a result of the acquisition of Proton Motor Fuel Cell GmbH during 2006. The merger reserve represents the difference between the nominal value of the share capital issued by the Company and their fair value at 31 October 2006, the date of the acquisition.

Reverse acquisition reserve

The reverse acquisition reserve arises as a result of the method of accounting for the acquisition of Proton Motor Fuel Cell GmbH by the Company. In accordance with IFRSs the acquisition has been accounted for as a reverse acquisition.

  Consolidated cash flow statement

	Note	Unaudited  6 months to  30 June 2008		Unaudited  6 months to  30 June 2007		Audited  Year to 31 December 2007
		£'000		£'000		£'000
Cash flows from operating activities
Net cash used in operations	5	(1,249)		(705)		(1,486)
Interest received		9		50		86
Interest paid		(60)		(10)		(64)
Net cash used in operating activities		(1,300)		(665)		(1,464)
Cash flows from investing activities
Purchase of intangible assets		(302)		(149)		(422)
Purchase of tangible assets		(53)		(23)		(150)
Net cash used in investing activities		(355)		(172)		(572)
Cash flows from financing activities
Proceeds from issue of share capital		2,690		-		-
Increase in loan balances		-		1,000		1,000
Loan repayments		(154)		(24)		(168)
Net cash generated from financing activities		2,536		976		832
Net increase/ (decrease) in cash and cash equivalents		881		139		(1,204)
Opening cash and cash equivalents		682		1,886		1,886
Closing cash and cash equivalents		1,563		2,025		682

  Notes to the interim report

1.    Basis of preparation

The 31 December 2007 consolidated financial statements of Proton Power Systems plc were prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with those parts of the Companies Act 1985 applicable to those companies under IFRS under the historical cost convention. There have been no changes to the accounting policies set out in the 2007 statutory accounts and these have been applied in preparing the interim financial information. The consolidated financial information has been prepared under the historical cost convention 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 dependant on its ability to raise cash to fund its operations from existing and potential shareholders and the debt market.

In preparing the consolidated financial information, Proton Motor Fuel Cell GmbH has been deemed to be the acquirer and the Company, the legal parent, has been deemed to be the acquiree. Under IFRS 3 'Business Combinations', the acquisition of Proton Motor Fuel Cell GmbH by the Company has been accounted for as a reverse acquisition and the consolidated IFRS financial information of the Company is therefore a continuation of the financial information of Proton Motor Fuel Cell GmbH.

The interim financial statements are unaudited and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2007 has been derived from the published statutory accounts. A copy of the full accounts for that period, on which the auditors issued an unqualified report that did not contain statements under Section 237 (2) or (3) of the Companies Act 1985, has been delivered to the Registrar of Companies.

2.    Share based payments

The Group has incurred an expense in respect of share options and shares issued to employees as follows:

	Unaudited  6 months to  30 June 2008		Unaudited  6 months to  30 June 2007		Audited  Year to 31 December 2007
	£'000		£'000		£'000
Share options	134		109		245
Shares	-		39		38
	134		148		283

3.    Taxation

Due to losses within the Group, no expenses for tax on income were required in either the current or prior periods.

Notes to the interim report (continued)

4.    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 period.

Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares, share options, however these have not been included in the calculation of loss per share because they are anti dilutive for these periods. 

	Unaudited  6 months to  30 June 2008		Unaudited  6 months to  30 June 2007 (adjusted)		Audited  Year to  31 December 2007 (adjusted)
	Basic	Diluted	Basic	Diluted	Basic	Diluted
	£'000	£'000	£'000	£'000	£'000	£'000
Loss attributable to equity holders of the Company	(1,286)	(1,286)	(951)	(951)	(2,369)	(2,369)
Weighted average number of ordinary shares in issue (thousands)	36,965	36,965	31,391	31,391	31,391	31,391
Shares issuable (weighted) - share options (thousands)	-	1,138	-	1,184	-	1,261
Adjustment	-	(1,138)	-	(1,184)	-	(1,261)
Adjusted weighted average number of ordinary shares	36,965	36,965	31,391	31,391	31,391	31,391
	Pence per share	Pence per share	Pence per share	Pence per share	Pence per share	Pence per share
Loss per share (pence per share)	(3.5)	(3.5)	(3.0)	(3.0)	(7.6)	(7.6)

The adjustment to the weighted average number of shares used in the calculation of diluted loss per share reflects share options in issue where the exercise price exceeds the average market price of shares in the period.

5.    Cash generated from operating activities

	Unaudited  6 months to  30 June 2008		Unaudited  6 months to  30 June 2007		Audited  Year to 31 December 2007
	£'000		£'000		£'000
Loss for the period	(1,286)		(951)		(2,369)
Adjustments for:
Depreciation and amortisation	63		24		197
Interest income including loan waivers	(12)		(50)		(89)
Interest expense	58		16		69
Share based payments	134		148		283
Operating loss before changes in net working capital	(1,043)		(813)		(1,909)
Inventories	1		6		(87)
Receivables	210		209		25
Payables	(417)		(107)		485
Net cash used in operations	(1,249)		(705)		(1,486)

-ENDS-

 

END

 

 

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