11.11.03

11.11.2003: Meldung: Stuart Energy Corp.: Results for Quarter Ended September 30, 2003

Stuart Energy Announces Results for Quarter Ended September 30, 2003
Monday November 10, 7:30 am ET

TORONTO-- Nov. 10, 2003--Stuart Energy Systems Corporation (TSX: HHO - News) announced today its unaudited consolidated financial results for the second quarter ended September 30, 2003. Total sales revenue for the quarter increased to $3.8 million, a significant improvement from $357,000 in the second quarter of fiscal 2003, and a 26% increase from $3.0 million in the first quarter of fiscal 2004. Sales of Hydrogen Energy Station (HES) products for vehicle fueling and power generation systems generated $2.3 million in revenue, representing 60% of the total sales revenue for the current quarter. The balance of the revenue was derived from the sale of industrial HES products and after market sales and support.

"This is our fourth consecutive quarter of record sales revenue," commented Jon Slangerup, President and CEO of Stuart Energy. "In the first half of fiscal 2004 we have achieved sales revenue of $6.9 million, already outstripping total sales revenue for all of fiscal 2003. Enhanced by the acquisition of Vandenborre Technologies in February 2003, the strength of our sales revenue performance in the first half of the year is consistent with our commitment to achieve triple-digit revenue growth for this fiscal year."

The net loss for the second quarter was $7.9 million or $0.28 per share compared to $8.8 million or $0.42 per share for the same quarter of fiscal 2003, representing an 11% improvement. Cost of product sales and service in the second quarter exceeded revenue by $2.1 million. This compares to $1.7 million in the same quarter of last year, which had significantly lower revenue. Net cash outflows were $7.3 million during the second quarter, a 34% improvement from $11.0 million in the same period a year ago, and a 27% improvement from $10 million in the previous quarter of this year. On September 30, 2003, the Company had cash, cash equivalents and marketable securities on hand of $49.0 million.

"At the start of this fiscal year, we set an aggressive cash utilization target of approximately $23 million, which represents a 50% reduction over last year"s cash utilization, excluding the Vandenborre acquisition. We have been successful in reducing cash utilization from $22.4 million in the first half of last fiscal year to $17.3 million during the first half of this year, although we are a larger organization today because of the acquisition. However, in the second quarter, we realized lower than expected sales margins combined with increased working capital requirements, which caused us to exceed our planned cash utilization for the first half of the year. While we are making significant progress and expect to continue such improvements in the second half, it is unlikely that we will achieve our cash utilization objective for this year," commented Mr. Slangerup.

The Company has taken steps that have improved cash utilization during the second quarter including reduced capital expenditures and overhead costs in Canada. Also, during the second half of the fiscal year, the Company plans to implement additional cost reduction measures, including strategic sourcing, product standardization and further reductions in operating and overhead costs.

Hydrogen Energy Station Update
In mid-August, most of Ontario and large parts of northeastern United States experienced the largest power failure in decades. As the lights went out, Stuart Energy"s HESfp restored power to its critical operations within eight seconds. The system used its stored hydrogen to run the 120 kW power module that provided clean back-up power to the Company"s critical systems, including computer network, telecommunication systems, elevators, fire and security systems and emergency lighting. "The recent power outages in the United States, Canada and Europe underscore the pressing need for reliable back-up power sources. Our integrated, multi-purpose HESfp addresses this need by delivering clean, secure and distributed energy," said Mr. Slangerup. The HESfp provides emission-free hydrogen for vehicle fuel and power generation.

Also in the quarter, the Company delivered HESfp modules to strategic partner Cheung Kong Infrastructure Holdings (CKI) in Hong Kong. Stuart Energy and CKI continue to work with local Hong Kong authorities to establish codes and standards for hydrogen fueling and power generation, with a view to marketing HES systems in the Asia-Pacific region. The establishment of hydrogen codes and standards remains a critical pacing item to the market adoption of HES products.

"We continue to view the commercialization of H2ICE solutions as an important strategic accelerator to our business model and a bridge to the future of fuel cells. There is a growing global interest in H2ICE solutions, including H2ICE power generators and hybrid electric vehicles," commented Mr. Slangerup. "These applications are becoming an early market opportunity for the Company"s HES products."

Also during the quarter, Stuart Energy announced the unveiling of Sweden"s first hydrogen fueling station for Sydkraft, a major Northern European energy provider. Sydkraft purchased a Stuart Energy HESf to provide a blend of hydrogen and natural gas to the City of Malmo"s bus fleet. Sydkraft currently supplies natural gas to Malmo"s bus fleet.

With regard to the Company"s Clean Urban Transport Europe (CUTE) projects, Stuart Energy delivered a turn-key HESf, complete with hydrogen generation, compression, storage and dispensing, to Stockholm, Sweden. To date, the Company has also delivered HES hydrogen generation modules for CUTE"s Amsterdam, Barcelona and Porto sites.

Operations
Stuart Energy has made significant progress in standardizing the HES product platform using IMET® technology. The Company has also progressed with the implementation of its Enterprise Resource Planning (ERP) system at its Belgian facility in support of product standardization. The ERP system will enable access to real time data for co-ordinating efficient operational and management decision making in multiple locations.

"We have initiated a multi-phase product standardization plan and are on track to complete standardization of all HES modules by the end of the fourth quarter," commented Peter Wressell, Chief Operating Officer of Stuart Energy. "While there are front-end costs associated with product standardization around our IMET® technology, we believe that it is essential in reducing costs in the near term while giving us the ability to offer a wide range of product configurations."
Strategic Alliances

During the quarter, the Company signed a preferred supplier agreement for on-site water electrolysis hydrogen generation equipment with Linde Gas. Linde Gas is a division of Linde AG, a world leading industrial gas supplier based in Germany. This agreement is in addition to existing preferred supplier agreements with other leading industrial gas companies: Air Products, Air Liquide, and BOC Gas. This expands Stuart Energy"s access to global industrial markets, with Linde marketing and selling the product worldwide under the HYDROSS® brand name.

Also during the second quarter, Stuart Energy and Dynetek Industries announced the signing of a strategic alliance agreement relating to the supply of Dynetek"s stationary hydrogen storage systems for Stuart Energy"s HES product line. The agreement formalizes and extends the existing relationship between the two companies, providing a strong platform for continued work on product pricing and certifications. Dynetek designs, produces and markets lightweight, advanced hydrogen storage tanks for use in vehicles and ground storage systems.

Board of Directors
At its recent Annual General Meeting, Stuart Energy announced changes to its Board of Directors. After co-founding Stuart Energy and serving as Chairman of the Board of Directors for 55 years, Alexander K. Stuart, retired in September. Mr. Stuart"s extensive experience established him as a recognized authority on hydrogen and its applications. He has received lifetime achievement awards from both the National Hydrogen Association and the Canadian Hydrogen Association, as well as the Order of Canada for his work as an environmentalist, hydrogen expert and exporter. Mr. Stuart has been appointed as Chairman Emeritus and will continue to provide his industry knowledge and guidance to Stuart Energy.

Mr. Stuart is succeeded as Chairman by Dr. Hugo Vandenborre, founder of Vandenborre Technologies, which was acquired by Stuart Energy in February 2003. Dr. Vandenborre developed the IMET® cell stack, a leading edge pressurized hydrogen generation technology. Dr. Vandenborre is a founding member of HYNET, the European Hydrogen Energy Thematic Network. He has served on various advisory committees of the Commission of the European Union and in 2002 was appointed as member of the "High Level Group" to advise the European Commission President, Romano Prodi, on hydrogen and fuel cells.

In addition, Mr. Douglas Alexander, C.A., was elected to the Board of Directors and appointed as Chairman of the Audit Committee of the Board of Directors. Mr. Alexander has over sixteen years experience as a chief financial officer with various Canadian public companies.

About Stuart Energy
Stuart Energy Systems Corporation (TSX: HHO - News) is the world leading developer and supplier of integrated hydrogen solutions that use the Company"s proprietary hydrogen generation water electrolysis technology with products from corporate partners to serve existing and emerging markets for power generation, transportation and industry. The Company"s website address is http://www.stuartenergy.com
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