13.06.03

13.6.2003: Meldung: Stuart Energy Systems: Results For Quarter And Year Ended

Stuart Energy Reviews Results For Quarter And Year Ended March 31, 2003
Thursday June 12, 6:00 am ET

Delivers 7 of 8 Corporate Milestones

TORONTO---June 12, 2003--Stuart Energy Systems Corporation (TSX: HHO - News) today announced its consolidated financial results for the fourth quarter and fiscal year ended March 31, 2003.

"Fiscal 2003 was an exceptional year for Stuart Energy. We executed our strategy successfully and delivered on what we said we would by achieving 7 of our 8 challenging corporate milestones for fiscal 2003 - while making significant progress on the 8th. As we move through fiscal 2004, I am confident we will substantially accelerate our growth and progress on our path to sustained profitability," said Jon Slangerup, President and CEO of Stuart Energy.

"With the acquisition of Vandenborre Technologies, we entered fiscal 2004 as the undisputed world leader in the provision of onsite, electrolysis-based hydrogen infrastructure solutions for power generation, vehicle fueling and the industrial market. We had successive record quarters for sales revenue in Q3 and Q4, capping off a year where we achieved double-digit percentage growth in annual sales revenue. Even more encouraging, we started fiscal 2004 with the largest order backlog in our corporate history and management expects to achieve triple-digit percentage growth in annual sales revenue for fiscal 2004, while reducing cash burn by over 50%. We are focused on strong financial performance in fiscal 2004 as we move aggressively towards commercial sustainability."

For the fourth quarter, revenue from product sales and service increased 23.7% to $2.9 million, up from $2.3 million in the same period of the previous year. For fiscal 2003, revenue from product sales and service increased 10.4% to $6.5 million, up from $5.9 million in fiscal 2002, reversing a four-year decline in sales revenue. The Company achieved a 301.8% annual increase in revenue from the sale of transportation applications, which included the sale and installation of our Hydrogen Energy Stations, thereby capturing 60% of the market for hydrogen fueling stations in North America. In addition, revenues from aftermarket sales and service increased by 77.7% in fiscal 2003. These combined revenues offset an industrial market downturn experienced in the first two quarters of the fiscal year.

The net loss for fiscal 2003 increased by 17.6% to $34.1 million compared to a net loss of $29.0 million in fiscal 2002. As of March 31, 2003, the Company had cash and short-term investments of $66.3 million compared to $90.3 million at December 31, 2002 and $121.6 million at March 31, 2002. The net cash expenditures for fiscal 2003 include $10.2 million related to the acquisition of Vandenborre, $1.3 million for integration costs, $5.7 million for our retrofit program and $10.1 million in capital expenditures associated with manufacturing improvements and implementation of our Enterprise Resource Planning (ERP) system.

"Over the course of the year, we completed significant planned capital investments in our manufacturing facility and operational capabilities providing us with the ability to meet the anticipated growth in production volumes. For the year ahead, we anticipate stronger product revenue and, with the costs related to the planned capital investments, retrofit program and integration costs substantially behind us, we will reduce our cash burn significantly. We will recognize the synergies of the Vandenborre acquisition, dramatically cut our capital expenditures, and focus on growing sustained revenues from the power and transportation markets," said Mr. Slangerup.

In the fourth quarter, after receiving overwhelming shareholder approval, Stuart Energy acquired Vandenborre Technologies NV (Vandenborre) for approximately $9.5 million in cash and 7.3 million common shares of Stuart Energy. The acquisition of Vandenborre was consistent with Stuart Energy"s previously expressed commitment to develop, partner or acquire technology and product solutions that satisfy market requirements and advance the Company"s ambitious strategy for global growth. The combined Company leverages Vandenborre"s leading market position in Europe through its extensive sales channels, relationships with major merchant gas companies, and Stuart Energy"s leading market position in North America and Asia. In addition to providing Stuart Energy with a strong European platform for future growth, the acquisition consolidated impressive product, technology and intellectual property portfolios.

"We are on track to substantially complete the integration by the middle of fiscal 2004. We have consolidated and rationalized our facilities, workforce and technology platforms which is already resulting in improved operating and overhead costs. On the sales side, the positive impact of the acquisition to our order backlog and sales pipeline has been substantial and immediate," said Mr. Slangerup.

The Vandenborre acquisition has enabled the realization of operational and engineering benefits including the integration of the product and technology portfolio. This has generated immediate availability of commercial products, some of which will be delivered during the first quarter of fiscal 2004. Consolidation of product and technology roadmaps has resulted in lower product development risk and reduced development timelines. The integration of additional operational functions has identified significant material management opportunities.

Stuart Energy introduced the Hydrogen Energy Station (HES) product line with the announcement of several high-profile hydrogen infrastructure projects in major world markets. The HES is a turnkey, integrated hydrogen generation, compression, and storage station, capable of serving industrial, fueling and power generation applications. Stuart Energy delivered two Mobile HES vehicle-fueling systems to Ford Motor Company and the City of Chula Vista in California. Also in California, HES vehicle fueling stations were installed for each of the California Fuel Cell Partnership, of which Stuart Energy is an associate member, and for Toyota Motor Sales U.S.A. at their head office in Torrance.

In addition, Stuart Energy was selected to provide two HES vehicle fueling stations to be installed in Sweden, and, through the acquisition of Vandenborre, will also be providing the hydrogen generation equipment for hydrogen fueling stations to be installed in Barcelona and Amsterdam. With these projects, Stuart Energy will be providing the commercial hydrogen fueling infrastructure for three of the four identified electrolysis-based hydrogen fueling stations for the Clean Urban Transport Europe (CUTE) projects.

In September, the Company successfully achieved, on schedule, the second of three milestones in its project with Cheung Kong Infrastructure Holdings Limited (CKI) of Hong Kong to develop and supply hydrogen back-up power systems for the Hong Kong and Asia Pacific marketplace. The milestone was achieved with the demonstration and initial testing of the alpha-prototype. The alpha was subsequently installed and demonstrated as an operating back-up power system as well as hydrogen fueling station in February at Stuart Energy"s Toronto facility. This station provides six hours of clean backup power to critical systems in the event of a power failure. In addition, the station is capable of supporting the hydrogen fueling needs of a small fleet of hydrogen-powered vehicles.

To communicate these capabilities, the integrated and multi-purpose station has been branded a Hydrogen Energy Station for fueling and power generation - or HES-fp. Based on the success of the alpha prototype and the successful demonstration of the HES-fp, CKI expanded the scope of the beta-system to be installed in Hong Kong to include hydrogen fueling capabilities. The Company expects to demonstrate the beta HES-fp in Hong Kong later in the year.

As announced last year, Stuart Energy partnered with Ford Power Products to provide the hydrogen internal combustion engines (ICEs) for the HES power module, with Ballard Power Systems selected by Ford as the co-developers of genset products. Ballard"s recent announcement to exit the ICE genset market resulted in Stuart Energy and Ford engaging Generac Power Systems as the supplier for our integrated gensets. Generac uses a number of Ford engines in their current commercial product offerings, including the Ford 6.8L Triton natural gas engine. This is the same engine model that Ford has successfully proven to run on hydrogen. Stuart Energy is committed to providing power modules as an option on its HES products and expects to demonstrate the new power module in its beta installation in Hong Kong and other commercial installations in key markets this year.

In September 2002, Stuart Energy announced its strategic alliance with Hamilton Sundstrand Space Systems Inc. (HSSSI), a division of United Technologies, to jointly develop and market integrated hydrogen generation products based on Proton Exchange Membrane (PEM) water electrolysis technology. Less than three months after announcing the alliance, Stuart Energy and HSSSI, in December 2002 completed a jointly-developed prototype hydrogen fueling system, which was fully integrated by Stuart Energy and incorporated HSSSI"s PEM stack to produce pure hydrogen for vehicle fueling and power applications. Through this partnership, Stuart Energy is the only hydrogen infrastructure company with access to both leading alkaline-based and leading PEM-based water electrolysis technologies.

Also in September 2002, Stuart Energy announced that it was granted a U.S. patent for its intelligent HES-f (Hydrogen Energy Station with fueling module) technology. This patent gives Stuart Energy exclusive rights to develop and market on-site electrolysis-based HES-f stations, including alkaline and PEM, where information is exchanged between station components and the user. For example, information exchange can range from fueling a vehicle with a "smart card" to controlling production and supply of hydrogen for the station. The intelligent interaction between components of a hydrogen station and the user is essential to providing a convenient and familiar experience for the customer.

During fiscal 2002 Stuart Energy completed the implementation of Phase II of its company-wide ERP system. This system in addition to manufacturing initiatives such as introducing a modular build structure contributed to a 50% reduction in manufacturing lead-time. In addition, the shipment of the replacement components associated with the retrofit program was completed on schedule.

Review of Fiscal 2003 Milestones

Form new strategic partnerships to accelerate commercialization of hydrogen infrastructure solutions for global markets. - ACHIEVED - Acquired Vandenborre Technologies; formed a strategic alliance with Hamilton Sundstrand; partnered with Toyota.
Expand sales and customer support capabilities in the United States, Europe and Asia- Pacific. - ACHIEVED - Strengthened U.S. sales and customer support capabilities; established European presence through Vandenborre acquisition; secured customer support capabilities in Hong Kong.
Demonstrate and gain customer approval of alpha prototype hydrogen back-up power system installed at our Toronto facility. - ACHIEVED - Alpha system successfully demonstrated and tested; approved by Cheung Kong Infrastructure Holdings.
Install and demonstrate beta prototype hydrogen backup power system at customer site in Hong Kong. - NOT ACHIEVED - The scope of the beta prototype was expanded to add vehicle- fueling capabilities at the request of our customer. The beta prototype system was assembled and initially tested at our Toronto facility but due to technical issues with the power generation module a delay was experienced. The beta unit is expected to be installed and demonstrated at the customer site in Hong Kong later this year.
Announce additional high profile hydrogen infrastructure projects in major world markets. - ACHIEVED - Delivered HESs to Toyota, California Fuel Cell Partnership, Ford, City of Chula Vista. Announced orders for HESs to Sydkraft and three CUTE projects: Stockholm, Amsterdam and Barcelona.
Demonstrate next generation technology to further improve product cost, size and performance. - ACHIEVED - Acquired pressurized electrolysis technology through Vandenborre acquisition, minimizing development risk and accelerating time to commercialization.
Complete implementation of ERP system to support lean manufacturing and total quality management. - ACHIEVED - Successfully completed implementation of our ERP system.
Achieve double-digit percentage growth in annual sales revenue. - ACHIEVED - Achieved sales revenues of $6.5M representing an increase of 10.4% from fiscal 2002.

Milestones for Fiscal 2004

Achieve triple-digit percentage growth in annual sales revenue.
Achieve a 50% reduction in net cash burn excluding acquisition costs.
Accelerate market demand for our hydrogen infrastructure solutions by engaging significant hydrogen internal combustion engine initiatives.
Engage strategic partnership relating to renewable hydrogen projects.
Secure initial orders for commercialized Hydrogen Energy Stations in each of our three target markets: North America, Europe and Asia-Pacific.
Complete integration of Vandenborre Technologies.
Introduce next generation Hydrogen Energy Station product line.

About Stuart Energy

Stuart Energy Systems Corporation (TSX: HHO - News) is a 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

Source: Stuart Energy Systems Inc.
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