Proton Motor Power Systems plc (AIM: PPS), the designer and producer of hydrogen fuel cells and hydrogen fuel cell electric hybrid systems, announces its unaudited interim results for the six months ended to 30 June 2023 (the “Period” or “H1 2023”).
Operational Highlights
– Delivery of 19 fuel cell systems from across the Company’s product range to customers
– Strengthened the board with the appointment of Mr. Ali Naini as a Non-Executive Director
– New 13,500m² production facility expected to support scale up of product production capacity:
o 15-year lease signed
o Good progress made in planning the transfer of manufacturing and development activities to the new site
Financial Highlights
– Order intake of £1.4m (H1 2022: £1.5m)
– Total order book at the Period end of £3.7m, including repeat orders from existing customers and income from maintenance agreements
– Sales of £929k (H1 2022: £980k)
– Generated a positive gross margin
– Increased existing loan facilities with principal shareholders by approximately €14.5m
Dr. Faiz Nahab, CEO of Proton Motor, commented:
“Activity during the period has been focused on continuing to position Proton Motor to be able to take advantage of the expected growth in demand for fuel cells, as the public and political will grows towards the transition to a decarbonised energy system. Part of that focus has been on ensuring the Company is well placed to scale production to meet demand, while there’s also been a drive to grow and develop sales and marketing channels to support the delivery of more near-term opportunities and access to future demand. Having invested in products that we know are market-leading, turning our attention to scaling-up production and sales is a natural next step.”
For further information:
Proton Motor Power Systems Plc
Dr Faiz Nahab, CEO
Roman Kotlarzewski, CFO
+49 (0) 173 189 0923
Allenby Capital Limited
Nominated Adviser & Broker
James Reeve / Vivek Bhardwaj
+44 (0) 20 3328 5656
Celicourt Communications
PR Adviser
Mark Antelme / Philip Dennis
+44 (0) 20 7770 6424
About Proton Motor
Proton Motor has 25 years of experience in Power Solutions using CleanTech technologies such as hydrogen fuel cells, fuel cell and hybrid systems with a zero carbon footprint. Based in Puchheim near Munich, Proton Motor develops and produces standard products as well as customised solutions. The focus of Proton Motor is on stationary solutions, as well as mobile, marine and rail applications. The product portfolio consists of base-fuel cell systems, standard, as well as customised systems.
Proton Motor Fuel Cell GmbH is a wholly owned subsidiary of Proton Motor Power Systems plc. The Company has been quoted on the AIM market of the London Stock Exchange since October 2006 (code: PPS).
Chairman’s report
Introduction
We are pleased to report our unaudited results for the six months ended 30 June 2023. During the period, the Company has continued to make good progress in positioning itself to take advantage of the expected growth in demand for fuel cells, as part of the solution towards decarbonising the world energy systems, on the back of growing public, political and commercial momentum.
The real focus of activity has been to ensure the Company is well placed to be able to scale production and take advantage of near and longer-term opportunities by further improving access to market. In support of this, and the future development of the business, the Company has also sought to strengthen its Board with the appointment of Mr. Ali Naini as a Non-Executive Director.
Operations
In October 2022, the Company announced that it signed a fifteen-year lease agreement for 13,500m² modern premises. This new facility is anticipated to contribute towards enhanced and efficient production throughflows. In addition, this new facility is anticipated to substantially expand the Company’s manufacturing, testing and development capacity.
The facility is located in the town of Fuerstenfeldbruck, less than 12 kilometres from Proton Motor’s existing operations, and is contained within the Munich metropolitan region. Good progress is being made on the coordination and planning for the transfer of operations to the new facility, which is expected to be operational in 2024. This process is being supported by a rent-free period of 10.5 months from April 2023.
The new premises comprise over 13,500m² of useable space, of which over 10,500 m² can be dedicated to production, testing and development with the remainder of the space being devoted to office usage. This represents a seven-fold increase in the amount of space available for production when compared to the Company’s current premises.
During the first half of the year, the Company saw the team broadly stabilise, after a period of growth that is complementary to the increase in space now available to the Company. In addition to the focus on scaling operations, there was also an increased focus on the development of sales channels and market access for the Company’s range of products.
Proton Motor is fortunate in that it has built close and trusted relationships with a wide range of blue-chip organisations during the build and test phase of its products, which have and will continue to offer market opportunity. As a result, the Company already benefits from repeat orders, based on the confidence these businesses have in the products being offered. Nonetheless, the Company recognises the need to develop wider market access and during the period this resulted in several ‘letters of intent’ being signed and the development of framework agreements aimed at supporting near and longer-term sales.
Alongside these company specific initiatives to drive sales, there is also a recognition across the industry that the ultimate driver of fuel cell adoption will be regulatory. Though it is not possible to say with absolute certainty when the inflection point driving this adoption will be reached, the increase in momentum of regulation and growth in substantive commercial conversations would suggest we are now much nearer that point. This is evidenced by Proton Motor’s early-stage discussions with existing customers concerning potential future orders of fuel cell systems
Finance
Proton Motor received orders for £1.4m in the first half year of the year, including several repeat orders from existing customers. Repeat orders allow better planning of production material purchases on more favourable terms, which management expects will lead to an improvement in margins.
Sales in H1 2023 were £929k (H1 2022: £980k), arising from the 2022 and H1 2023 order intake. These sales were primarily generated in the stationary sector. £2.3m was invested in the development programme and our workforce has increased to 115 (H1 2022: 108) full time employees. In line with demand, we have added staff resources predominantly in the areas of production and product development.
Excluding the impact of exchange differences, the operating loss in the first half of 2023 was £6.1m (H1 2022: £4.9m). This was in line with our budgeted expectations and resulted from further investments in product development, production and staff in addition to manufacturing infrastructure.
£239k was invested in equipment and infrastructure during the period (H1 2022: £213k).
The new facility’s lease has been capitalised in line with IFRS 16 and is accounted for as a right of use asset.
Cash burn from operating activities increased during the Period to £6.8m (H1 2022: £4.8m), reflecting the increased level of activity to deliver our sales pipeline and from further investment. Current contracts are quoted with up-front payments, which reduces reliance on working capital and allows the Company to continue to invest in its manufacturing capability. The cash position as at 30 June 2023 was £2.7m (30 June 2022: £2.2m).
We were very pleased with the continued support of our principal shareholders with whom we agreed to increase the existing financing facilities by €14.5 million to ensure operational financing for the Company into 2024. The principal and interest on these additional facilities is not convertible and interest is charged at EURIBOR +3%.
I personally would like to thank all our customers who continue to believe in us, our committed employees and our shareholders who have the vision to invest in our mission.
Current trading and outlook
It is evident that the awareness of hydrogen as an alternative clean energy source for the future is increasing to a considerable extent both amongst the public as well as within industry, and that the demand for associated technologies, including fuel cells, will also increase substantially.
As such, the Company will continue to invest in positioning itself to take advantage of that growth as it builds, through near-term and longer-term opportunities, through a proven product, that can be scaled and readily has access to the market through a variety of different channels.
Helmut Gierse
Non-Executive Chairman
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