Interim Results

RNS Number : 9030Z

Proton Power Systems PLC

30 September 2009

 



Press Release

30 September 2009

Proton Power Systems plc

('Proton Power' or 'the Group')

Interim Results 

Proton Power Systems plc (AIM:PPS), a leading designer, developer and producer of fuel cells and fuel cell electric hybrid systems, today announces its interim results for the six months ended 30 June 2009.  

John Wall, Executive Chairman of Proton Power, commented: 'Proton is moving away from being an R&D focused company to an industrialised commercial provider of fuel cells and fuel cell systems for a wide range of applications.  The Group is now in a position to start volume production of its fuel cells.  We are taking an integrated approach which addresses our customers' demand for both the product and after-sales operation and maintenance service. With this approach and using our highly scalable fuel cells, we will be in a position in due course to offer large power system packages to original equipment manufacturers (OEMs), a vast market providing numerous opportunities for the Group.

'Further to Proton Power's £2.5 million of new share capital issued over the last 12 months and our share capital reorganisation, we are pleased to say that the Group is currently well funded. Thanks to the committed support of loyal shareholders such as our lead investor, Roundstone Properties, we have all the necessary capital to carry the business forward.'

Highlights:

●	Revenue: £289,000 (2008: £455,000)
●	Loss: £2,052,000 (2008: £1,286,000)
●	Share capital reorganisation approved and successfully implemented
●	Signed an exclusive, five-year framework collaboration agreement with Deutsche Mechatronics GmbH to enable immediate volume production capacity
●	Launched the world's first fuel cell triple-hybrid passenger city bus for Skoda Electric in Prague

Highlights since the period end:

●	Signed a partnership and exclusivity agreement with L-3 Communications
●	Launched the world's first fuel-cell driven street cleaning vehicle
●	Appointment of Christian Meyne as the new Chief Operating Officer of Proton Motor Fuel Cell GmbH

- Ends -

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
Stephanie Cuthbert / Monique Tsang	Tel: [phone]
[e-mail]	www.abchurch-group.com

  Chairman's and CEO's statement 

We are pleased to report our unaudited interim results for the half year ended 30 June 2009. 

Business development

Proton is in a phase of transition from a research and design focused company to an industrialised commercial provider of fuel cells and related technology. The business has made good progress in the last six months and has made changes to important positions within the Group bringing in experienced and qualified staff. The Group has also entered into new long-term agreements with contract manufacturers and suppliers. On 27 May 2009 Proton Motor signed a five-year collaboration agreement with Deutsche Mechatronics GmbH, a leading contract manufacturer to facilitate the volume production of the Group's fuel cell systems in Germany. We have also continued to invest in the Group's infrastructure, specifically our testing facilities. 

The Group has partnered with leading OEM companies and has developed new innovative products during the period including the world's first triple hybrid passenger bus with Skoda Electric and the Bucher Schoerlin street sweeper. The Group also continues to develop new innovative solutions for Auxiliary Power Units ('APU's') for small and large data centres, the market for which is showing strong growth. The Group remains focused and sees strong potential in the following areas:

●	maritime transport
●	passenger buses
●	light duty vehicles
●	materials handling
●	power modules for stationary backup power
●	range extender solutions for commercial vehicles

We have further developed our modular concept, which allows the use of similar modules in different applications. This will lead to the cost savings necessary to make fuel cells and fuel cell hybrid systems an economic alternative to traditional power systems, thereby increasing our opportunities for mass-market sales. 

We have also strengthened our sales team and can now service and support new blue chip customers which will be important OEM partners in the near future. Our partnership with L3 Communications in the USA has been renewed and strengthened to better address and support the North American market.

Financial overview

In the six months to 30 June 2009 revenue was £289,000 (2008: £455,000) which was in line with Group expectations. The out-come for the half year was a loss of £2,052,000 which was also in line with Group expectations and compares with a loss for the first half year in 2008 of £1,286,000.

The second tranche of the £2 million share subscription announced in September 2008 was received on 13 of January 2009.

In addition, the Company agreed with Roundstone Properties Limited to accept the surrender of its warrants over 30,000,000 Ordinary Shares issued in February 2009, exercisable at 5 pence per Ordinary Share in return for a convertible loan facility of up to £1.5 million from Roundstone Properties Limited .The Convertible Loan is repayable by 30 June 2012 and is convertible into 75,000,000 new Ordinary Shares, pro-rata, in the capital of the Company at a price of 2 pence per share. The conversion of the loan was subject to a share capital re-organisation and obtaining the approval of shareholders at the Company's Annual General Meeting held in July 2009. The share capital reorganisation was approved and the first tranche was converted into new ordinary shares in the capital of the Company in July 2009. Thereafter, the Convertible Loan may be converted into new shares at Roundstone Properties Limited's request. The Convertible Loan attracts no interest if settlement is made by way of the issue of new shares. However, if by mutual agreement part of the loan is repaid in cash rather than converted to shares at 2 pence per share, then this portion will attract interest equivalent to 10% per annum.

£0.5 million of the Convertible Loan was converted into new Proton shares after the period end, in July 2009.

Since the Annual General Meeting a further loan facility of €1.5m has been provided by Roundstone Properties Limited to fund the future growth of the Group. The term of the facility is three years from 30 July 2009 and interest is charged at 10% per annum and is to be settled by the issue of one share for every €0.02 in interest due.

People

On behalf of the Board we would like thank all our employees for their hard work and dedication to the Group. We would also like to welcome Dr. Christian Meyne as the new Chief Operating Officer of Proton Motor Fuel Cell GmbH and would like to take this opportunity to thank Benedikt Eska for his contribution as the outgoing Chief Operating Officer.

Outlook

We will continue to put resources into marketing our existing fuel cell solutions, although we will be focusing on supplying packages to OEM partners in the future. We have made strenuous efforts in marketing our products and we will further strengthen our sales team with experienced staff who have strong market experience and knowledge. The potential volume uptake of fuel cells in the different markets we are addressing is significant. Proton is working to produce systems to meet the individual requirements of each market to ensure we are able to take full advantage of the opportunities ahead.

We will also continue to develop our service team. After sales service capabilities are vital for the success of our business and are expected from our customers.

Industrialised manufacturing of our stacks and system will start in the second half of 2009. Our contract manufacturing partner Deutsche Mechatronics is currently assembling our stack as well as modules for our solutions. 

Despite the difficult global economic conditions, we continue to see growing interest and demand for clean tech solutions. Governments' initiatives worldwide support new technologies and now with the necessary funding. We expect the second half of 2009 to bring the first volume orders for our new products and solutions.

Looking to the near future, rising energy prices and the 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 systems and 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. Overall we are delighted about the progress we have seen so far and we are very confident that Proton will play a important role in the exciting hydrogen fuel cell technology.

Finally may we thank the Proton team and our advisors for their hard work and effort, and our customers and suppliers for their continued confidence and support.  Importantly, our further business growth would not have been possible without the loyal support of our major shareholders, such as Roundstone Properties. On behalf of our Board and staff we would like to thank them for their unrelenting commitment to the Group.

John Wall FCA Chairman

Thomas Melczer Chief Executive

  Consolidated income statement

	Note	Unaudited  6 months to  30 June  2009		Unaudited  6 months to  30 June  2008		Audited  Year to 31 December 2008
		£'000		£'000		£'000
Continuing operations
Revenue		289		455		1,093
Cost of sales		(1,567)		(1,050)		(2,514)
Gross loss		(1,278)		(595)		(1,421)
Other operating income		17		51		74
Administrative expenses	1	(794)		(696)		(1,416)
Operating loss		(2,055)		(1,240)		(2,763)
Finance income		3		12		26
Finance costs		-		(58)		(61)
Loss for the period attributable to equity holders of the parent		(2,052)		(1,286)		(2,798)
Loss per share (expressed as pence per share)
Basic	2	(2.5)		(3.5)		(5.4)
Diluted	2	(2.5)		(3.5)		(5.4)

Consolidated statement of comprehensive income

		Unaudited  6 months to  30 June  2009		Unaudited  6 months to  30 June  2008		Audited  Year to 31 December 2008
		£'000		£'000		£'000
Loss for the period		(2,052)		(1,286)		(2,798)
Other comprehensive income
Exchange differences on translating foreign operations		(109)		25		187
Other comprehensive income		(109)		25		187
Total comprehensive income for the period		(2,161)		(1,261)		(2,611)
Attributable to equity holders of the parent		(2,161)		(1,261)		(2,611)

  Consolidated balance sheet

		Unaudited  At 30 June 2009		Unaudited  At 30 June 2008		Audited  At 31 December 2008
		£'000		£'000		£'000
Assets
Non-current assets
Intangible assets		679		698		783
Property, plant and equipment		539		216		362
		1,218		914		1,145
Current assets
Inventories		100		107		137
Trade and other receivables		252		728		270
Cash and cash equivalents		705		1,563		772
		1,057		2,398		1,179
Total assets		2,275		3,312		2,324
Liabilities
Current liabilities
Short-term borrowings		-		678		-
Trade and other payables		2,410		940		1,348
Total Liabilities		2,410		1,618		1,348
Net (liabilities) / assets		(135)		1,694		976
Equity
Equity attributable to equity holders of the parent company
Share capital		4,100		3,070		3,570
Share premium account		6,803		5,925		6,275
Merger reserve		15,656		15,656		15,656
Reverse acquisition reserve		(13,862)		(13,862)		(13,862)
Share based payment reserve		338		564		346
Foreign translation reserve		419		(130)		(304)
Capital contributions		1,156		1,076		1,324
Retained earnings		(14,745)		(10,605)		(12,029)
Total equity		(135)		1,694		976

  Consolidated statement of changes in equity

	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 2008	1,570	4,735	15,656	(13,862)	430	44	1,002	(9,444)	131
Share based payments credit	-	-	-	-	134	-	-	-	134
Proceeds from share issues	1,500	1,500	-	-	-	-	-	-	3,000
Share issue costs	-	(310)	-	-	-	-	-	-	(310)
Transactions with owners	1,500	1,190	-	-	134	-	-	-	2,824
Loss for the period	-	-	-	-	-	-	-	(1,286)	(1,286)
Other comprehensive income:
Currency translation differences	-	-	-	-	-	(174)	74	125	25
Total comprehensive income for the period	-	-	-	-	-	(174)	74	(1,161)	(1,261)
Balance at 30 June 2008	3,070	5,925	15,656	(13,862)	564	(130)	1,076	(10,605)	1,694
Balance at 1 July 2008	3,070	5,925	15,656	(13,862)	564	(130)	1,076	(10,605)	1,694
Share based payments credit	-	-	-	-	(218)	-	-	-	(218)
Proceeds from share issues	500	500	-	-	-	-	-	-	1,000
Share issue costs	-	(150)	-	-	-	-	-	-	(150)
Transactions with owners	500	350	-	-	(218)	-	-	-	632
Loss for the period	-	-	-	-	-	-	-	(1,512)	(1,512)
Other comprehensive income:
Currency translation differences	-	-	-	-	-	(174)	248	88	162
Total comprehensive income for the period	-	-	-	-	-	(174)	248	(1,424)	(1,350)
				-
Balance at 31 December 2008	3,570	6,275	15,656	(13,862)	346	(304)	1,324	(12,029)	976
Balance at 1 January 2009	3,570	6,275	15,656	(13,862)	346	(304)	1,324	(12,029)	976
Share based payments credit	-	-	-	-	(8)	-	-	-	(8)
Proceeds from share issues	530	530	-	-	-	-	-	-	1,060
Share issue costs	-	(2)	-	-	-	-	-	-	(2)
Transactions with owners	530	528	-	-	(8)	-	-	-	1,050
Loss for the period	-	-	-	-	-	-	-	(2,052)	(2,052)
Other comprehensive income:
Currency translation differences	-	-	-	-	-	723	(168)	(664)	(109)
Total comprehensive income for the period	-	-	-	-	-	723	(168)	(2,716)	(2,161)
Balance at 30 June 2009	4,100	6,803	15,656	(13,862)	338	419	1,156	(14,745)	(135)

  Share premium account

Costs directly associated with the issue of the new shares have been set off against the premium generated on issue of new shares.

Merger reserve

The merger reserve of £15,656,000 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 IFRS 3 the acquisition has been accounted for as a reverse acquisition.

Share option reserve

The Group operates an equity settled share-based compensation scheme. The fair value of the employee services received for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference fair value of the options granted. At each balance sheet date the Company revises its estimate of the number of options that are expected to vest. The original expense and revisions of the original estimates are reflected in the income statement with a corresponding adjustment to equity. The share option reserve represents the balance of that equity.

  Consolidated statement of cash flows

		Unaudited  6 months to  30 June 2009		Unaudited  6 months to  30 June 2008		Audited  Year to 31 December 2008
		£'000		£'000		£'000
Cash flows from operating activities
Loss for the period		(2,052)		(1,286)		(2,798)
Adjustments for:
Depreciation and amortisation		321		63		489
Interest income including loan waivers		(3)		(12)		(26)
Interest expense		-		58		60
Share based payments		(8)		134		(84)
Movement in inventories		37		1		(26)
Movement in trade and other receivables		18		210		661
Movement in trade payables		(547)		(417)		(53)
Net cash used in operations		(2,234)		(1,249)		(1,777)
Interest paid		-		(60)		(65)
Net cash used in operating activities		(2,234)		(1,309)		(1,842)
Cash flows from investing activities
Purchase of intangible assets		(178)		(302)		(643)
Purchase of property, plant and equipment		(216)		(53)		(162)
Interest received		3		9		28
Net cash used in investing activities		(391)		(346)		(777)
Cash flows from financing activities
Proceeds from issue of share capital		1,058		2,690		3,540
Loan repayments		-		(154)		(831)
Loan received		1,500		-		-
Net cash generated from financing activities		2,558		2,536		2,709
Net (decrease) / increase in cash and cash equivalents		(67)		881		90
Opening cash and cash equivalents		772		682		682
Closing cash and cash equivalents		705		1,563		772

  Notes to the interim report

1.  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 2009		Unaudited  6 months to  30 June 2008		Audited  Year to 31 December 2008
	£'000		£'000		£'000
Share options	(8)		134		102

2.  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 2009		Unaudited 6 months to 30 June 2008		Audited Year to 31 December 2008
	Basic	Diluted	Basic	Diluted	Basic	Diluted
	£'000	£'000	£'000	£'000	£'000	£'000
Loss attributable to equity holders of the Company	(2,052)	(2,052)	(1,286)	(1,286)	(2,798)	(2,798)
Weighted average number of ordinary shares in issue (thousands)	81,991	81,991	36,965	36,965	51,418	51,418
Shares issuable (weighted) - share options (thousands)	-	2,815	-	1,138	-	1,124
Adjustment	-	(2,815)	-	(1,138)	-	(1,124)
Adjusted weighted average number of ordinary shares	81,991	81,991	36,965	36,965	52,542	52,542
	Pence per share	Pence per share	Pence per share	Pence per share	Pence per share	Pence per share
Loss per share (pence per share)	(2.5)	(2.5)	(3.5)	(3.5)	(5.4)	(5.4)

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.

 

END

 

 

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