TIDMPPS
RNS Number : 7191Q
Proton Motor Power Systems PLC
23 June 2020
23 June 2020
Proton Motor Power Systems plc
("Proton" or the "Company")
Final results for the year 2019
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, announces its results for the
year ended 31 December 2019.
Highlights:
- The automated stack assembly machine from a EU funded project,
running to November 2020, was delivered in Q2 2019. The machine was
inaugurated in September 2019 by the Bavarian Minister for
Economics. This will further reduce our product cost and will allow
us to meet increasing demand and bring our technology quicker to
the market. With a degree of further investment in the machine,
annual stack production capacity can be increased to 30,000.
- Further strengthening our organisation capability within the
areas of manufacturing and sales applications.
- In 2019 deliveries of fuel cell systems were made within the
stationary and mobile market segments and also in the maritime
segment, as demand continues to increase and become more concrete
in all segments.
- In 2019 Proton Motor announced the conclusion of a Cooperation
agreement with MTSA Technopower B.V. to design, manufacture and
sell large power systems based on hydrogen fuel cell stacks,
ranging between 0.5 MW and 10 MW.
- In 2019 Proton Motor entered into a joint venture agreement
with Schäfer Elektronik GmbH whereby the two companies will
integrate Proton's larger industrial fuel cells with Schäfer's
power electronics, battery and hydrogen storage systems in one
integrated plug and play power unit. This unit will provide in
excess of 1 MW of power to supply electric vehicle charging
stations
- Inspite of the sales decrease the loss before non-cash
embedded derivative movements, was reduced by 19% from GBP9,608k to
GBP7,804k, as the result of favourable exchange rate movements and
cost discipline in line with budget monitoring.
- At the end of April 2020 Proton Motor had order backlog at
sales value amounting to GBP6.2m relating to deliveries to
customers partially in 2020 with the remainder in 2021.
- Following the year end, a further EUR7.2m loan facility has
been agreed to ensure operational financing into 2020.
- Ends -
For further information:
Proton Power Systems plc
Dr Faiz Nahab, CEO
Helmut Gierse, Chairman
Sebastian Goldner, COO/CTO
Roman Kotlarzewski, CFO Tel: +49 (0) 173 189
Manfred Limbrunner, Director Sales 0923
and Marketing www.protonpowersystems.com
-----------------------------
Shore Capital Tel: +44 (0) 20 7408
Nominated adviser and broker 4050
-----------------------------
Antonio Bossi / David Coaten www.shorecap.co.uk
-----------------------------
A copy of the audited annual report for the year ended 31
December 2019 will be made available on the company's website
(www.protonpowersystems.com) and will be posted to the
shareholders, together with a notice announcing the date of the of
the annual general meeting
Chairman's statement
We are pleased to report our results for the year ended 31
December 2019.
Overview:
Proton Motor Power Systems plc (formerly Proton Power Systems
plc) ("Proton Motor") has made further progress this year in
proving its technology, building on its strategic co-operations and
sales pipeline. Further investment in our manufacturing capability
has put us in a stronger strategic position to capitalise in the
marketplace and to deliver financial performance. We have
strengthened our organisation to be able to deliver complete power
supply solutions. A marked strengthening of industry and consumer
demand for alternative sources of energy has been evident in the
period under review. Proton Motor's technology offer is maturing to
be commensurate with this demand and is in line with the continuing
commercialisation process of the group. This is further evidenced
by the substantial order intake in Q1 2020; the potential sales
order pipeline is strong as at the date of this report, with Proton
Motor submitting quotes for potential order values of a magnitude
higher than that received in Q1 2019.
Highlights:
-- The automated stack assembly machine from a EU funded
project, running to November 2020, was delivered in Q2 2019. The
machine was inaugurated in September 2019 by the Bavarian Minister
for Economics. This will further reduce our product cost and will
allow us to meet increasing demand and bring our technology quicker
to the market. With a degree of further investment in the machine,
annual stack production capacity can be increased to 30,000.
-- Further strengthening our organisation capability within the
areas of manufacturing and sales applications.
-- In 2019 deliveries of fuel cell systems were made within the
stationary and mobile market segments and also in the maritime
segment, as demand continues to increase and become more concrete
in all segments.
-- In 2019 Proton Motor announced the conclusion of a
Cooperation agreement with MTSA Technopower B.V. to design,
manufacture and sell large power systems based on hydrogen fuel
cell stacks, ranging between 0.5 MW and 10 MW.
-- In 2019 Proton Motor entered into a joint venture agreement
with Schäfer Elektronik GmbH whereby the two companies will
integrate Proton's larger industrial fuel cells with Schäfer's
power electronics, battery and hydrogen storage systems in one
integrated plug and play power unit. This unit will provide in
excess of 1 MW of power to supply electric vehicle charging
stations
-- Inspite of the sales decrease the loss before non-cash
embedded derivative movements, was reduced by 19% from GBP9,608k to
GBP7,804k, as the result of favourable exchange rate movements and
cost discipline in line with budget monitoring.
-- At the end of April 2020 Proton Motor had order backlog at
sales value amounting to GBP6.2m relating to deliveries to
customers partially in 2020 with the remainder in 2021.
-- Following the year end, a further EUR7.2m loan facility has
been agreed to ensure operational financing into 2020.
Board and Governance:
The Proton Motor group Board is functioning well and interacting
effectively with executive management contributing a good balance
of skills and experience. The corporate governance framework which
the group operates, including board leadership and effectiveness,
board remuneration, and internal control is based upon practices
which the board believes are proportionate to the size, risks,
complexity and operations of the business and is reflective of the
group's values. Of the two widely recognised formal codes, the
Board decided in 2018 to adhere to the Quoted Companies Alliance's
(QCA) Corporate Governance Code ("QCA Code") for small and mid-size
quoted companies (revised in April 2018 to meet the new
requirements of AIM Rule 26). Within the context of Corporate and
social responsibility t he Group has a continuing commitment to act
ethically, to comply with all relevant regulations, and to
contribute to economic development while improving the quality of
life of the workforce and their families as well as of the local
community and society at large. This is continuously monitored by
the Executive Management and evaluated annually by the Chairman, as
it is regarded that motivated and committed staff members will
provide maximum value to the Group's activities.
Finance:
-- A 7% decrease in sales in 2019 to GBP769k compared to 2018
sales of GBP822k. Sales in 2019 were made to the stationary and
mobile market segments and also include sales value of GBP107k in
the maritime market segment.
-- Inspite of the sales decrease the loss before non-cash
embedded derivative movements, was reduced by 19% from GBP9,608k to
GBP7,804k, as the result of favourable exchange rate movements and
cost discipline in line with budget monitoring.
-- At the end of April 2020 Proton Motor had order backlog at
sales value amounting to GBP6.2m relating to deliveries to
customers partially in 2020 with the remainder in 2021.
-- Following the year end, a further EUR7.2m loan facility has
been agreed to ensure operational financing into 2020.
-- Cash burn from operating activities increased by 15% to a
level of GBP6.4m in 2019, from GBP5.8m in 2018, including stocking
up on material for the incoming order intake, partially to be
delivered in 2020. Cash flow is our key financial performance
target and our objective is to achieve a positive cash flow in the
shortest time possible. Current contracts are quoted with up-front
payments reducing reliance on working capital as we continue to
invest in our manufacturing and development capability.
Outlook
In the year ahead we are focused on progressing the maturity of
the group technology offer, ramping up production capacity and
exploiting the current potential sales pipeline. The current
outlook at the end of 2019 looking into 2020 is more optimistic
than that as prevalent at the end of 2018.
I personally thank all our customers who believe in us, our team
of committed employees and our shareholders who have the vision to
invest in our mission.
Helmut Gierse 19 June 2020
Non-Executive Chairman
Consolidated income statement
for the year ended 31 December 2019
Note 2019 2018
GBP'000 GBP'000
Revenue 4 769 822
Cost of sales (1,185) (906)
---------------------------- ---- -------------------- --------------------
Gross loss (416) (84)
Other operating income 267 198
Administrative expenses (7,001) (5,129)
---------------------------- ---- -------------------- --------------------
Operating loss (7,150) (5,015)
Finance income 9 3 3
Finance costs 10 (657) (4,596)
---------------------------- ---- -------------------- --------------------
(Loss) for the year before
embedded derivatives (7,804) (9,608)
---------------------------- ---- -------------------- --------------------
Fair value loss on embedded
derivatives 22 (183,899) (19,891)
---------------------------- ---- -------------------- --------------------
Loss for the year before
tax 5 (191,703) (29,499)
Tax 8 - -
---------------------------- ---- -------------------- --------------------
Loss for the year after
tax (191,703) (29,499)
---------------------------- ---- -------------------- --------------------
Loss per share (expressed
as pence per share)
Basic 11 (29.5) (4.6)
---------------------------- ---- -------------------- --------------------
Diluted 11 (29.5) (4.6)
---------------------------- ---- -------------------- --------------------
Loss per share excluding
embedded derivative
(expressed as pence per
share)
Basic 11 (1.2) (1.5)
---------------------------- ---- -------------------- --------------------
Diluted 11 (1.2) (1.5)
---------------------------- ---- -------------------- --------------------
Consolidated statement of comprehensive income
for the year ended 31 December 2019
GBP'000 GBP'000
------------------------------------ --------- --------
Loss for the year (191,703) (29,499)
Other comprehensive income
/ (expense)
Items that may not be reclassified
to profit and loss
Exchange differences on
translating foreign operations (2) 1
-------------------------------------- --------- --------
Total other comprehensive
income / (expense) (2) 1
-------------------------------------- --------- --------
Total comprehensive expense
for the year (191,705) (29,498)
-------------------------------------- --------- --------
Attributable to owners of
the parent (191,705) (29,498)
-------------------------------------- --------- --------
Group and Company balance sheets
as at 31 December 2019
Group Company
Note 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 12 31 72 - -
Property, plant and equipment 13 1,406 1,203 - -
Right-of-use assets 14 478 -
Fixed asset investments 15 11 7 - -
1,926 1,282 - -
Current assets
Inventories 16 2,408 1,437 - -
Trade and other receivables 17 240 408 100 138
Cash and cash equivalents 18 1,028 841 2 1
3,676 2,686 102 139
Total assets 5,602 3,968 102 139
Liabilities
Current liabilities
Trade and other payables 19 3,049 1,768 164 202
Lease debt 20 188 - -
Borrowings 21 837 177 - -
4,074 1,945 164 202
Non-current liabilities
Lease debt 20 299 - - -
Borrowings 21 64,869 58,098 64,869 58,098
Embedded derivatives on
convertible interest 22 222,331 38,432 222,331 38,432
287,499 96,530 287,200 96,530
Total liabilities 291,573 98,475 287,364 96,732
Net liabilities (285,971) (94,507) (287,262) (96,593)
Equity
Equity attributable to equity
holders of the parent Company
Share capital 24 9,970 9,728 9,970 9,728
Share premium 18,704 18,382 18,704 18,382
Merger reserve 15,656 15,656 15,656 15,656
Reverse acquisition reserve (13,861) (13,861) - -
Share option reserve 968 1,262 968 1,262
Foreign translation reserve 10,437 9,891 - -
Capital contributions reserves 1,151 1,226 - -
Accumulated losses
At 1 January of respective
year (136,791) (106,728) (141,621) (111,141)
Loss for the year attributable
to the owners (191,705) (29,498) (190,939) (30,480)
Other changes in retained
earnings (500) (565) - -
Total equity (285,971) (94,507) (287,262) (96,593)
Group and Company statements of changes in equity
for the year ended 31 December 2019
Reverse Share Foreign Capital
Share Share Merger Acquisition Option Translation Contribution Accumulated Total
Group Capital Premium Reserve Reserve Reserve Reserve Reserves Losses Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2018 9,722 18,362 15,656 (13,862) 1,635 9,345 1,208 (106,728) (64,662)
Share based
payments - - - - (373) - - - (373)
Proceeds from
share issues 6 20 - - - - - - 26
Currency
translation
differences - - - 1 - 546 18 (565) -
Transactions
with owners 6 20 - 1 (373) 546 18 (565) (347)
Loss for the
year - - - - - - - (29,499) (29,499)
Other
comprehensive
income:
Currency
translation
differences - - - - - - - 1 1
Total
comprehensive
income for
the
year - - - - - - - (29,498) (29,498)
Balance at 31
December 2019 9,728 18,382 15,656 (13,861) 1,262 9,891 1,226 (136,791) (94,507)
Balance at 1
January 2019 9,728 18,382 15,656 (13,861) 1,262 9,891 1,226 (136,791) (94,507)
Share based
payments - - - - (294) - - - (294)
Proceeds from
share issues 242 322 - - - - - - 564
Currency
translation
differences - - - - 546 (75) (500) (29)
Transactions
with owners 242 322 - - (294) 546 (75) (500) 241
Loss for the
year - - - - - - - (191,703) (191,703)
Other
comprehensive
income:
Currency
translation
differences - - - - - - - (2) (2)
Total
comprehensive
income for
the
year - - - - - - - (191,705) (191,705)
Balance at 31
December 2019 9,970 18,704 15,656 (13,861) 968 10,437 1,151 (328,996) (285,971)
Statements of changes in equity - Company
Share
Share Share Merger Option Accumulated Total
Company Capital Premium Reserve Reserve Losses Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2018 9,722 18,362 15,656 1,635 (111,141) (65,766)
Share based payments - - - (373) - 117
Proceeds from share issues 6 20 - - - 26
-------- -------- -------- -------- ----------- -------------
Transactions with owners 6 20 - (373) - (347)
Loss for the year - - - - (30,480) (30,480)
Total comprehensive expense
for the year - - - - (30,480) (30,480)
-------- -------- -------- -------- ----------- -------------
Balance at 31 December 2018 9,728 18,382 15,656 1,262 (141,621) (96,593)
======== ======== ======== ======== =========== =============
Balance at 1 January 2019 9,728 18,382 15,656 1,262 (141,621) (96,593)
Share based payments - - - (294) - (294)
Proceeds from share issues 242 322 - - - 564
-------- -------- -------- -------- ----------- -------------
Transactions with owners 242 322 - (294) - 270
Loss for the year - - - - (190,939) (190,939)
Total comprehensive expense
for the year - - - - (190,939) (190,939)
-------- -------- -------- -------- ----------- -------------
Balance at 31 December 2019 9,970 18,704 15,656 968 (332,560) (287,262)
======== ======== ======== ======== =========== =============
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 GBP15,656,000 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 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
to the 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.
Group and Company statements of cash flows
for the year ended 31 December 2019
Group Company
Year ended 31 December Year ended 31 December
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Loss for the year (191,703) (29,499) (190,939) (30,480)
Adjustments for:
Depreciation and amortisation 462 249 - -
Loss on disposal of property,
plant and equipment 59 - -
Impairment of investment 7 - 6,622 6,257
Interest income (3) (3) (39) (36)
Interest expense 4,500 3,883 4,455 3,875
Share based payments (294) (373) (294) (373)
Movement in inventories (971) (523) - -
Movement in trade and other
receivables 168 6 38 (60)
Movement in trade and other
payables 1,281 (145) (38) 137
Movement in fair value of
embedded derivatives 183,899 19,891 183,899 19,891
Effect of foreign exchange
rates (3,843) 713 (3,843) 713
--------- --------------------- ---------------------- -----------------------
Net cash (used in) / generated
from operations (6,438) (5,801) (139) (76)
Interest paid - - - -
--------- --------------------- ---------------------- -----------------------
Net cash (used in) / generated
from operating activities (6,438) (5,801) (139) (76)
========= ===================== ====================== =======================
Cash flows from investing
activities
Capital contribution to
subsidiaries - - (6,622) (6,257)
Purchase of intangible assets (4) (29) - -
Purchase of property, plant
and equipment (579) (343) - -
Investment in associate
company (11) (7) - -
Interest received 3 3 39 36
--------- --------------------- ---------------------- -----------------------
Net cash used in investing
activities (591) (376) (6,583) (6,221)
========= ===================== ====================== =======================
Cash flows from financing
activities
Proceeds from issue of loan
instruments 6,158 6,257 6,158 6,257
Proceeds from issue of new
shares 564 26 564 26
New obligations of lease
debt 594 - -
Repayment of obligations
under lease debt (107) -
Repayment of short-term
borrowings - (49) - -
--------- --------------------- ---------------------- -----------------------
Net cash generated from
financing activities 7,209 6,234 6,722 6,283
========= ===================== ====================== =======================
Net increase/(decrease)
in cash and cash equivalents 180 57 0 (14)
Effect of foreign exchange
rates 7 (11) 1 11
Opening cash and cash
equivalents 841 795 1 4
--------- --------------------- ---------------------- -----------------------
Closing cash and cash
equivalents 1,028 841 2 1
========= ===================== ====================== =======================
Notes to the financial statements
1. General information
Proton 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: St Ann's Wharf, 112 Quayside, Newcastle upon
Tyne, NE1 3DX. The Company's initial public offering took place at
the Alternative Investment Market of the London Stock Exchange on
31 October 2006 and its shares are listed 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 Executive(1,3)
Helmut Gierse Chairman(2)
Sebastian Goldner Chief Technical Officer and Chief Operations
Officer
Roman Kotlarzewski Chief Financial Officer and Company Secretary(4,6)
Manfred Limbrunner Director Sales and Marketing(5)
(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 Audit Committee.
(6) Member of the Nominations Committee.
2. Summary of significant accounting policies
The Board approved this announcement on 19 June 2020. The
financial information included in this announcement does not
constitute the Group's statutory accounts for the years ended 31
December 2019 or 31 December 2018. Statutory accounts for the year
ended 31 December 2018 have been delivered to Companies House. The
statutory accounts for the year ended 31 December 2019 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 International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB) as
adopted by the European Union and with those parts of the Companies
Act 2006 applicable to those companies under IFRS.
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 investor, Roundstone
Properties Limited ("Roundstone") to meet its day-to-day working
capital requirements.
On 8 April 2019 it was announced that Roundstone Properties Ltd,
a company controlled by the Nahab family, has transferred all its
596,279,682 shares held in Proton Power Systems plc to SFN
Cleantech Investment Ltd. ("SFN"). Additionally Roundstone
Properties Ltd has transferred to SFN Cleantech Investment Ltd all
loans receivable from the Company. As both entities Roundstone
Properties Ltd and SFN Cleantech Investment Ltd are controlled by
the Nahab family, there has been, therefore, no change in ultimate
control.
The Group has loans with SFN of EUR2.4m and EUR16.6m. The
redemption dates of this loan were extended by SFN in May 2019 as
follows:
-- EUR2.4m to 31 December 2020
-- EUR16.6m to 31 December 2020
Subsequent to the 2019 year end it was agreed that the loan
facility of EUR16.6m would be increased by a further EUR3.6m to
EUR20.2m.
The Group also has a loan facility with Mr. Falih Nahab of
EUR41.2m, of which EUR37.7m were drawn down at the year end.
Subsequent to the 2019 year end it was agreed that this loan
facility would be increased by a further EUR3.6m to EUR44.7m.
The repayment date for all loans is to be extended to 31
December 2021. As such the loans are held as non-current borrowings
in the financial statements.
Cash flow forecasts demonstrate that the committed facilities
from Mr Falih Nahab enable the Company and the group to meet its
cash requirements for the period up to June 2021. 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 Mr Falih Nahab withdrawing this
support. Mr Falih Nahab, is a private individual based in Jordan
and as such is unable to produce financial information to support
his ability to fund the debt facility. Mr Falih Nahab is a related
party.
Due to the lack of available financial information, the
Directors are unable to confirm that Falih Nahab has the ability to
provide such support. This condition indicates the existence of a
material uncertainty which may cast significant doubt upon the
Group and the Company's ability to continue as a going concern.
However, the Directors firmly believe that the Group and Company
remain a going concern on the grounds that Falih Nahab has
supported the Group and the Company in recent years and that
funding has been agreed by 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.
Impairment of goodwill
The carrying value of goodwill must be assessed for impairment
annually, or more frequently if there are indications that goodwill
might be impaired. This requires an estimation of the value in use
of the cash generating units to which goodwill is allocated. Value
in use is dependent on estimations of future cash flows from the
cash generating unit and the use of an appropriate discount rate to
discount those cash flows to their present value.
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 Group uses valuation techniques to measure the fair value of
these financial instruments. 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.
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 Group uses valuation techniques to measure the fair value of
these financial instruments. 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 GBP31k (2018: GBP72k) and the carrying amount of
group property, plant & equipment at the reporting date was
GBP1,406k (2018: GBP1,203k).
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 GBP266k (2018:
GBP167k).
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
2019 2018
GBP'000 GBP'000
Germany 389 365
Rest of Europe 142 387
Rest of the World 238 70
769 822
Sales to Alitkan and Danmedics represented 46.1% of the Group's
revenue in 2019 (2018: Deutsche Bahn Baugruppe and Devinn s.r.o
40.0%).
The results as reviewed by the CODM for the only identified
segment are as presented in the financial statements with the
exception of the revaluation loss (2018: loss) on the fair value of
the embedded derivative of GBP183,898,909 (2018: GBP19,891,207) and
the associated impact on the balance sheet.
5. Loss for the year before tax
2019 2018
GBP'000 GBP'000
Loss on ordinary activities before taxation is
stated
after charging
Depreciation and amortisation 462 249
Hire of other assets - operating leases 176 379
Pension contributions 66 61
Change in fair value of embedded derivatives 183,899 19,891
Foreign exchange losses - 713
after crediting
Amortisation of grants from public bodies (155) (19)
Foreign exchange gains (3,843) -
======= =======
6. Auditors' remuneration
2019 2018
GBP'000 GBP'000
Audit services
Fees payable to the Company's auditor for the audit
of the parent Company and consolidated financial
statements 35 35
Fees payable to the Company's auditor and its associates
for other services:
Other services 7 4
42 39
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:
2019 2018
Development and construction 53 48
Administration and sales 26 22
79 70
The aggregate payroll costs of these persons were as
follows:
Group
2019 2018
GBP'000 GBP'000
Wages and salaries 3,385 2,979
Share based payments (294) (373)
Social security costs 658 603
Other pension costs 66 65
3,815 3,274
There are no staff, or direct wages specific to the Company.
Share based payments charge to the non-executive Directors of the
Company is GBP27,000 (2018: GBP26,000)
Share based payments
The Group has incurred an expense in respect of shares and share
options during the year issued to employees as follows:
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Share options (294) (373) (294) (373)
Shares 27 26 27 26
(267) (347) (267) (347)
Details of share options granted during 2019 are disclosed in
the Directors' report on page 12. The cost of these options to the
Group is being charged over a two year period from the date of
grant at which point they become exercisable.
At 31 December 2019 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:
2019 2018
Weighted Weighted
average average
exercise exercise
Number price Number price
000's GBP 000's GBP
Opening balance 69,862 0.192 76,375 0.324
Granted 300 0.080 - -
Exercised (2,750) (0.036) - -
Forfeited (17,677) (0.007) (6,513) (0.128)
Closing balance 49,735 0.229 69,862 0.192
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 5 months (2018:5 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 measurement
of fair value.
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: 2019 2018
GBP'000 GBP'000
Tax reconciliation
Loss before tax (191,703) (29,499)
Expected tax credit at 19% (2017: 20%) (36,424) (5,605)
Effects of different tax rates on foreign subsidiaries (443) (317)
Expenses not deductible for tax purposes 736 3,105
Tax losses carried forward 36,131 2,817
Tax charge - -
9. Finance income
Group
2019 2018
GBP'000 GBP'000
Interest 3 3
3 3
10. Finance costs
Group
2019 2018
GBP'000 GBP'000
Interest 4,500 3,883
Exchange loss on shareholder loans (3,843) 713
------- -------
657 4,596
======= =======
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
convertible debt; however, these have not been included in the
calculation of loss per share because they are anti-dilutive for
these periods.
11. Loss per share 2019 2018
Basic Diluted Basic Diluted
GBP'000 GBP'000 GBP'000 GBP'000
Loss before embedded derivative (7,804) (7,804) (9,608) (9,608)
--------- --------- ------------------ -------------------
Fair value loss on embedded derivatives (183,899) (183,899) (19,891) (19,891)
Loss attributable to equity holders
of the Company (191,703) (191,703) (29,499) (29,499)
--------- --------- ------------------ -------------------
Weighted average number of Ordinary
shares in issue (thousands) 649,802 649,802 641,214 641,214
Effect of dilutive potential Ordinary
shares from share options and convertible
debt (thousands) - - - -
Adjusted weighted average number
of Ordinary shares 649,802 649,802 641,214 641,214
Pence per Pence per Pence per Pence per
share share share share
Loss per share (pence per share) (29.5) (29.5) (4.6) (4.6)
Loss per share before embedded derivatives
(pence per share) (1.2) (1.2) (1.5) (1.5)
===== ===== ===== =====
12. Intangible assets - Group
Copyrights,
trademarks
and other
intellectual
property Development
Goodwill rights costs Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2018 2,126 207 - 2,333
Exchange differences - 4 - 4
Additions - 29 - 29
Transfers - - - -
Disposals - - - -
-
-------- ------------- ----------- -------
At 31 December 2018 2,126 240 - 2,366
At 1 January 2019 2,126 240 - 2,366
Exchange differences - (15) (15)
Additions - 4 4
Transfers - - - -
Disposals - - - -
-
-------- ------------- ----------- -------
At 31 December 2019 2,126 229 - 2,355
Accumulated Amortisation
At 1 January 2018 2,126 118 - 2,244
Exchange differences - 3 - 3
Charged in year - 47 - 47
Disposals - - - -
At 31 December 2018 2,126 168 - 2,294
At 1 January 2019 2,126 168 - 2,294
Exchange differences - (10) - (10)
Charged in year - 40 - 40
Disposals - - - -
At 31 December 2019 2,126 198 - 2,324
Net book value
At 31 December 2019 - 31 - 31
At 31 December 2018 - 72 - 72
At 1 January 2018 - 89 - 89
Self-developed intangible assets in the amount of GBP4,000
(2018: GBP29,000) are recognised in the reporting year, because the
prerequisites of IAS 38 have been fulfilled.
Amortisation and impairment charges are recognised within
administrative expenses.
As self-developed intangible assets are not material to the
Group financial statements no impairment test has been
performed.
There are no individually significant intangible assets.
The company does not hold any intangible assets.
13. Property, plant and equipment - Group
Leasehold Technical Office Self-constructed
property equipment & other plant &
improvements & machinery equipment machinery Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2018 542 779 326 311 1,958
Exchange differences 8 12 6 5 31
Additions 14 22 53 254 343
Transfers - 113 - (113) -
Disposals - - - - -
At 31 December 2018 564 926 385 457 2,332
At 1 January 2019 564 926 385 457 2,332
Exchange differences (34) (57) (23) (29) (143)
Additions 27 27 340 185 579
Transfers 87 283 - (370) -
Disposals - - - (59) (59)
At 31 December 2019 644 1,179 702 184 2,709
Accumulated Depreciation
At 1 January 2018 260 497 153 - 910
Exchange differences 5 9 3 - 17
Charge for year 56 94 52 - 202
Disposals - - - - -
At 31 December 2018 321 600 208 - 1,129
At 1 January 2019 321 600 208 - 1,129
Exchange differences (18) (37) (13) - (68)
Charge for year 62 101 79 - 242
Disposals - - - - -
At 31 December 2019 362 664 274 - 1,303
Net book value
At 31 December 2019 279 515 428 184 1,406
At 31 December 2018 243 326 177 457 1,203
At 1 January 2018 282 282 173 311 1,048
The company does not hold any property, plant and equipment.
14. Right-of-use assets - Group
Land and Plant and
buildings machinery Total
GBP'000 GBP'000 GBP'000
Cost
At 1 January 2019 - - -
Initial recognition of IFRS
16 - on transition 584 10 594
Initial recognition of IFRS
16 - in the year - 64 64
At 31 December 2019 584 74 658
Accumulated Depreciation
At 1 January 2019 - - -
Charge for year 167 13 180
At 31 December 2019 167 13 180
Net book value
At 31 December 2019 417 61 478
At 1 January 2019 - - -
The company does not hold any right-of-use assets.
15. Fixed asset investments
2019 2018
Group GBP'000 GBP'000
Shares in associate undertaking
Cost
At beginning of year 7 -
Additions 11 7
At end of year 18 7
Impairment
At beginning of year - -
Charge for the year 7 -
At end of year 7 -
Net book value
At end of year 11 7
In Q3 2019 Proton signed a joint venture agreement to establish
Nexus-e GmbH, a company registered in Achern, Germany. Proton owns
50.00% of the share capital of Nexus-e GmbH.
2019 2018
Company GBP'000 GBP'000
Shares in Group undertaking
Cost
At beginning of year 75,990 69,733
Additions 6,622 6,257
At end of year 82,612 75,990
Impairment
At beginning of year 75,990 69,733
Charge for the year 6,622 6,257
At end of year 82,612 75,990
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 GBP6,622,000
(2018: GBP6,257,000) the Board has determined the recoverable
amount on a value in use basis using a discounted cash flow
model.
16. Inventories
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Finished goods 97 48 - -
Work in progress 452 48 - -
Consumable stores - - - -
Raw materials 1,859 1,341 - -
2,408 1,437 - -
The cost of goods sold during 2019 is GBP1,185,000 (2018:
GBP906,000). It includes GBP266,000 impairment loss for slow moving
finished goods and goods anticipated to be sold at a loss (2018:
GBP167,000).
17. Trade and other receivables
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 32 143 - -
Other receivables 182 212 1 11
Amounts due from Group companies - - 88 117
Prepayments and accrued income 26 53 11 10
240 408 100 138
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair values.
In addition some of the unimpaired trade receivables are past
due as at the reporting date. The age of financial assets past due
but not impaired is as follows:
Group
2019 2018
GBP'000 GBP'000
Not more than three months (all
denominated in Euros) - 2
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
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 1,028 841 2 1
1,028 841 2 1
The Directors consider that the carrying amount of cash and cash
equivalents approximates to their fair values.
19. Trade and other payables
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 472 235 - -
Other payables 1,937 1,140 1 6
Amounts due to Group companies - - 94 126
Accruals and deferred income 640 393 69 70
3,049 1,768 164 202
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 2019
(see Note 2). Whilst the Company implemented the accounting
standard using the Cumulative retrospective approach which does not
require comparatives to be restated the below fully details the
effect of IFRS 16 on the Company's lease debt.
A summary of the lease debt maturity is shown below:
Group
Total
Principal Interest 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Less than 1 year 213 25 188 -
Between 2 and 5 years 323 24 299 -
Over 5 years - - - -
536 49 487 -
========= ======== ======= =======
The carrying value of assets held under lease within
right-of-use assets is GBP478k (2018: Nil due to IFRS 16 not being
applied until 1 Jan 19). The balances relate to the Benzstrasse 7,
Puchheim, Germany property lease and a number of vehicle leases
held in Proton Motor Fuel Cell GmbH.
21. Borrowings
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Bank overdraft 837 177 - -
Loans
Current - - - -
Non-current 64,869 58,098 64,869 58,098
Current and total borrowings 65,706 58,275 64,869 58,098
Included within non-current borrowings as at year end are
amounts of GBP23,079k (2018: GBP23,013k) due to SFN Cleantech
Investment Limited which includes a principal loan of EUR16.6m
(2018: EUR16.6m) and accrued interest thereon. The principal loan
attracts interest of 10% per annum and is unsecured. SFN Cleantech
Investment Limited has the option to convert the accrued interest
at any time into Ordinary shares in the parent company at varying
rates per share. Subsequent to the year end it was agreed to extend
this loan facility by a further EUR3.6m, from EUR16.6m to
EUR20.2m.
Also included within non-current borrowings as at year end are
amounts of GBP2,183k (2018: GBP2,279k) due to SFN Cleantech
Investment Limited which includes a principal loan of EUR2.3m
(2018: EUR2.3m) and accrued interest thereon. The principal loan
attracts interest of LIBOR+2% per annum and is unsecured. 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 GBP40,006k (2018: GBP32,806k) due to Mr Falih Nahab,
a brother of Dr Faiz Nahab, a director of the Company. This balance
includes principal loan advances of EUR41.1m (2018: EUR30.3m) and
accrued interest thereon. The principal loan attracts interest of
10% per annum and is unsecured. Mr Falih Nahab has the option to
convert the accrued interest at any time into Ordinary shares in
the parent company at varying rates per share. Subsequent to the
year end it was agreed to extend this loan facility by a further
EUR3.6m, from EUR41.1m to EUR44.7m.
All loans were repayable on 31 December 2020, however subsequent
to the year end the redemption dates of all loans were extended to
31 December 2021. As such the loans are held as non-current
borrowings. The loans are also now secured on the assets of the
Group.
These instruments were classified as a debt host instrument with
an embedded derivative being the conversion feature. The embedded
derivative has been fair valued and the residual value of the
instrument had been recognised as debt. The debt has subsequently
been measured at amortised cost.
22. Embedded derivatives on convertible interest
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Embedded derivatives on convertible
interest 222,331 38,432 222,331 38,432
The embedded derivatives relate to the conversion features
attached to convertible interest as disclosed under note 21. The
derivatives are initially recognised at fair value and fair valued
at each subsequent accounting reference date. The annual
movement on the embedded derivatives is a non-cash expense or
income, without any requirement to settle a liability, in order to
comply with relevant accounting regulations.
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 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.
23. 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 GBP19,507,000 (2018: GBP17,728,000)
in respect of losses amounting to GBP6,805,000 (2018: GBP6,961,000)
and EUR78,729,000 (2018: EUR70,370,000).
24. Share capital
The share capital of Proton Motor Power Systems plc consists of
fully paid Ordinary shares with a par value of GBP0.01 (2018:
GBP0.01) and Deferred Ordinary shares with a par value of GBP0.01
(2018: GBP0.01). 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.
On 4 February 2019 336,060 Ordinary shares of 1p each were
issued each at a price of 8.00p per share in settlement of a
Director's annual fee for the period ended 31 January 2019.
The number of shares in issue at the balance sheet date is
669,008,288 (2018: 644,882,228) Ordinary shares of 1p each (2018:
1p each) and 327,963,452 (2018: 327,963,452) Deferred Ordinary
shares of 1p each (2018: 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.
2019 2018
Deferred Deferred
Ordinary ordinary Ordinary ordinary
shares shares shares shares
No. No. No. No.
'000 GBP'000 '000 GBP'000 '000 GBP'000 '000 GBP'000
Shares authorised, issued and
fully paid
At the beginning of the year 644,882 6,448 327,963 3,280 644,268 6,442 327,963 3,280
Share issue 24,126 242 - - 614 6 - -
669,008 6,690 327,963 3,280 644,882 6,448 327,963 3,280
25. 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:
2019 2018
Land and Land and
buildings Other buildings Other
Group GBP'000 GBP'000 GBP'000 GBP'000
Operating leases payable:
Within one year 22 95 294 113
In the second to fifth years inclusive - 11 518 26
After more than five years - - - -
22 106 812 139
26. Related party transactions
During the year ended 31 December 2019 the Group and Company
entered into the following related party transactions:
Group Company
Year ended 31 December Year ended 31 December
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
(Expenses) / Income
SFN Cleantech Investment Limited
effective loan interest (1,446) (1,467) (1,446) (1,467)
Falih Nahab effective loan interest (2,972) (2,370) (2,972) (2,370)
SFN Cleantech Investment Limited
other loan interest (37) (38) (37) (38)
At 31 December 2019 the Group and Company had the following
balances with related parties:
Group Company
Year ended 31 December Year ended 31 December
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Amounts due (to) / from
SFN Cleantech Investment Limited
borrowings and embedded derivatives
(see Notes 21 and 22) (131,629) (43,188) (131,629) (43,188)
SFN Cleantech Investment Limited
bank guarantee (270) (288) - -
Dr Faiz Nahab bank guarantee (846) (451) - -
SFN Cleantech Investment Limited
loans to SPower GmbH (2,294) (2,279) - -
Falih Nahab borrowings and embedded
derivatives (See Notes 21 & 22) (153,388) (51,063) (153,388) (51,063)
During the year the Company made capital contributions to Proton
Motor Fuel Cells GmbH of GBP6,622,000 (2018: GBP6,257,000) and to
SPower GmbH of GBPnil (2018: GBPnil).
27. Risk management objectives and policies
The Group's activities expose it to a variety of financial
risks:
-- foreign exchange risk (note 28);
-- credit risk (note 29); and
-- liquidity risk (note 30).
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.
28. 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
2019 2018
EUR'000 GBP'000 EUR'000 GBP'000
Financial assets 1,748 1,479 1,650 1,488
Financial liabilities (324,763) (274,873) (112,381) (101,335)
Short-term exposure (323,015) (273,394) (110,731) (99,847)
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 +/- 13.20% change of the Sterling/Euro
exchange rate for the year ended at 31 December 2019 (2018: 6.87%).
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 13.20% (2018:
6.87%) then this would have had the following impact:
Year ended Year ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Net result for the year (36,088) (6,860)
------------ ------------
Equity (36,088) (6,860)
============ ============
If the Euro had weakened against Sterling by 13.20% (2018:
6.87%) then this would have had the following impact:
Year ended Year ended
31 December 31 December
2019 2018
GBP'000 GBP'000
Net result for the year 36,088 6,860
------------ ------------
Equity 36,008 6,860
============ ============
Exposures to foreign exchange rates vary during the year
depending on the value of Euro denominated loans. Nonetheless, the
analysis above is considered to be representative of Group's
exposure to currency risk.
29. Credit risk analysis
Credit risk is managed on a Group basis. Credit risk arises from
cash and deposits with banks, as well as credit exposures to
customers, including outstanding receivables and committed
transactions. For banks and financial institutions, only
independently rated parties with a minimum rating of 'A' are
accepted. If customers are independently rated, these ratings are
used. Otherwise, if there is no independent rating, risk control
assesses the credit quality of the customer, taking into account
its financial position, past experience and other factors.
Individual risk limits are set based on internal or external
ratings in accordance with limits set by the Board.
No credit limits were exceeded during the reporting period, and
management does not expect any losses from non-performance by these
counterparties. The Directors do not consider there to be any
significant concentrations of credit risk.
The Group's maximum exposure to credit risk is limited to the
carrying amount of financial assets recognised at the balance sheet
date, as summarised below:
Group Company
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 1,028 841 2 1
Trade and other receivables 240 408 12 21
Short-term exposure 1,268 1,249 14 22
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.
30. 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 2019, the Group's liabilities have contractual
maturities which are summarised below:
Within 6 to 12 1 to 5
6 months months years
GBP'000 GBP'000 GBP'000
Trade payables 472 - -
Other short term financial liabilities 2,577 - -
Lease debt - 188 299
Borrowings and embedded derivatives
on convertible loans 837 - 64,869
This compares to the maturity of the Group's financial
liabilities in the previous reporting period as follows:
Within 6 to 12 1 to 5
6 months months years
GBP'000 GBP'000 GBP'000
Trade payables 235 - -
Other short term financial liabilities 1,533 - -
Borrowings and embedded derivatives
on convertible loans 177 - 58,098
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.
31. Financial instruments
The assets of the Group and Company are categorised as
follows:
As at 31 December 2019 Group Company
Non-financial Non-financial
assets assets
/ financial / financial
assets assets
not in not in
scope scope
Loans of IAS Loans of IAS
and receivables 39 Total and receivables 39 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Intangible assets - 31 31 - - -
Property, plant and equipment - 1,406 1,406 - - -
Right-of-use assets - 478 478 - - -
Fixed asset investments - 11 11 - - -
Inventories - 2,408 2,408 - - -
Trade and other receivables 240 - 240 100 - 102
Cash and cash equivalents 1,028 - 1,028 2 - 2
1,268 4,334 5,602 104 - 104
================ ============= ======= ================ ============= =======
As at 31 December 2018 Group Company
Non-financial Non-financial
assets assets
/ financial / financial
assets assets
not in not in
scope scope
Loans of IAS Loans of IAS
and receivables 39 Total and receivables 39 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Intangible assets - 72 72 - - -
Property, plant and equipment - 1,203 1,203 - - -
Investment in subsidiary - 7 7 - - -
Inventories - 1,437 1,437 - - -
Trade and other receivables 408 - 408 138 - 138
Cash and cash equivalents 841 - 841 1 - 1
---------------- ------------- ------- ---------------- ------------- -------
1,249 2,719 3,968 139 - 139
================ ============= ======= ================ ============= =======
The liabilities of the Group and Company are categorised as
follows:
As at 31
December
2019 Group Company
Financial Financial
liabilities liabilities
valued valued
at fair Liabilities at fair Liabilities
Financial value not within Financial value not within
liabilities through the scope liabilities through the scope
at amortised the income of IAS at amortised the income of IAS
cost statement 39 Total cost statement 39 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and
other
payables 3,049 - - 3,049 165 - - 165
Borrowings 65,706 - - 65,706 65,706 - - 65,706
Embedded
derivatives
on
convertible
loans - 222,331 - 222,331 - 222,331 - 222,331
68,755 222,331 - 291,086 65,871 222,331 - 288,202
============ ============ =========== ======= ============= ================ =========== =======
As at 31
December
2018 Group Company
Financial Financial
liabilities liabilities
valued valued
at fair Liabilities at fair Liabilities
Financial value not within Financial value not within
liabilities through the scope liabilities through the scope
at amortised the income of IAS at amortised the income of IAS
cost statement 39 Total cost statement 39 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and
other
payables 1,768 - - 1,768 202 - - 202
Borrowings 58,275 - - 58,275 58,098 - - 58,098
Embedded
derivatives
on
convertible
loans 38,432 - 38,432 - 38,432 - 38,432
60,043 38,432 - 98,475 58,300 38,432 - 96,732
============ ============ =========== ======= ============= ================ =========== =======
Fair values
Management believe that the fair value of trade and other
payables and borrowings is approximately equal to book value.
IFRS 13 sets out a three-tier hierarchy for financial assets and
liabilities valued at fair value. These are as follows:
-- Level 1 - quoted prices (unadjusted) in active markets for
identical assets and liabilities;
-- Level 2 - inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly or
indirectly; and
-- Level 3 - unobservable inputs for the asset or liability.
The embedded derivatives fall within the fair value hierarchy
level 2.
32. 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
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Total liabilities 291,573 98,475 287,364 96,732
Less: cash and cash equivalents (1,028) (841) (2) (1)
Adjusted net debt 290,545 97,634 287,362 96,731
33. 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR KKBBPKBKBFAB
(END) Dow Jones Newswires
June 23, 2020 02:00 ET (06:00 GMT)
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