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01/02/2005
Voller Energy Group plc, the holding company of Voller Energy Limited ("Voller Energy"), a manufacturer of portable fuel cell systems for use as battery chargers and mobile generators, today announces the commencement of dealings of its Ordinary Shares on the AIM market (AIM) of the London Stock Exchange plc. Arden Partners Limited is acting as Nominated Adviser and Broker to the Company. The stock market EPIC is VLR.L. Admission and Placing Statistics
Reasons for Admission to AIM and use of proceeds of the Placing Stephen Voller, CEO of Voller Energy Group, said: “We are delighted that the flotation of the Group has been completed successfully and it is gratifying to witness such high levels of institutional demand. The listing will enable us to take Voller Energy Group to the next stage of its development and maximise the many opportunities for the Group within our designated markets.” For further information:
Introduction Voller Energy was established in 2002 to design, develop, manufacture and market a range of portable fuel cell systems for use as mobile generators and battery re-chargers. Voller Energy has three product groups: the VE100 (which includes the VE100 v2) fuel cell system, the VE1000 fuel cell system and the Battery Box. Voller Energy has received two Smart Awards from the Department of Trade and Industry to develop its technology and has filed four patent applications to protect its technology. In September 2003, Voller Energy launched the VE100 which was one of the world’s first hand-held portable fuel cell systems designed for commercial applications and using refillable hydrogen canisters as an energy source. The compact system is a self-contained portable power source that delivers “mains” voltages. This system provides clean energy without harmful fumes or greenhouse gases (“GHGs”), the only exhaust being water. Applications could include the operation of electrical appliances in remote or sensitive areas, back-up and emergency power and the recharging of batteries. Based on the VE100, the Group intends to develop one of the first power units to combine reformer technology with existing fuel cell technology. These reformers extract hydrogen from complex hydrocarbons such as propane or butane (e.g. LPG, Calor Gas or camping gas). The advantage of this approach is that fuel cells can then run on an accepted and reasonably priced fuel with an existing distribution infra-structure, without having to wait for the hydrogen infra-structure to emerge fully. This is particularly relevant to the Group’s target markets of leisure and building services. Fuel Cells Technology Market Recent research shows that the niche and portable markets that the Group is targeting are expected to be the first markets to adopt fuel cell technology and that, although the significance of these markets will diminish over time, they will continue to grow at a rapid rate through to 2015. The Opportunity Governments and lobbyists around the world are promoting the development of an accessible hydrogen supply infra-structure but it may be several years before this fully develops into a readily usable means of supplying hydrogen. In the meantime there are hydrocarbon based fuels on the market which can be used to provide the hydrogen that a fuel cell needs. A proportion of the proceeds from the Placing will be used to acquire the business and assets (including intellectual property and two key employees) of a German based company that has developed reformer technology. The Group will then continue the development of low cost reformer technology to convert the commonly found fuels, propane or butane or a combination of these gases, to hydrogen. This will accelerate the Group’s ability to supply a hydrocarbon, rather than a pure hydrogen-based solution, to the fuel cell market. It should be noted that it is only with the use of pure hydrogen that no GHGs are produced and that the use of hydrocarbons with reformer technology will lead to the production of some emissions. However the level of toxic emissions is significantly lower than those produced by conventional petrol fuelled generators. The control of GHG emissions has for some time been extremely important and environmental programs and government policies are in place to limit such emissions. The result of this is that a non-fossil fuel power generation is becoming more attractive and many companies are actively implementing environmental policies. The Group’s products initially address two principal markets:
The Directors believe that to exploit the full potential of the market for fuel cells, readily available fuels, such as propane and butane, will be more appropriate at this stage of development of the Group’s products. Given the expected rapid growth in demand for clean, efficient and portable power supply products, the Directors believe that the Group is ideally situated to entrench itself as an industry leader and to participate in the significant growth opportunities that fuel cells will offer in the coming years. Importantly, the Group has developed technology to allow it to remain independent of any one fuel cell manufacturer, enabling it to switch to best of breed components as they become available. In addition, the Directors believe that the Group’s products will appeal to a diverse customer base focussed on specific commercial markets. The Voller Product Range Portable fuel cell generators The Group has also developed a micro-controller for use with a number of different manufacturers’ fuel cell stacks. Voller Energy believes that only small changes to the Group’s control system will be required to run cell stacks from new and emerging suppliers. The micro-controller continually monitors the fuel cell stack output and then adjusts the air and water pumps and air flow fans, whilst monitoring several temperature and gas sensors. Additionally the electric current limits in the power conversion electronics are adjusted to optimise the output from the stack. The VE1000 will be a larger version of the VE100 and will incorporate a larger stack and electronic conversion equipment. Most of the features that are currently available in the VE100 will be incorporated in the VE1000. The inbuilt remotely operated test and diagnostics system developed for the VE100 will also feature in the VE1000 and other future products so that maintenance and repair costs can be minimised. Hydrogen canisters
Battery Box Suitably packaged versions of this product could provide a low cost short term solution to providing limited mains power for remote working. Powered by internal batteries, the Battery Box can be recharged to provide immediate mains power on remote and inaccessible sites. The Group is currently in the process of developing a larger, heavy-duty version of this product with more capacity for the professional tradesman market. Target Markets The Group's main objective is to be one of the first to take fuel cell technology to a mass market by combining reformer technology with its fuel cell systems, allowing power generation from hydrocarbon products. The Group’s commercial development programme comprises the production of three product lines: two fuel cell systems based on the same underlying technology (the VE100 v2 and the VE1000) and a simpler battery-based product (the Battery Box) to establish the Group’s routes to market. The VE100 v2 and the Battery Box are expected to provide early revenue and profit streams in the Group’s development. The Directors believe that there are numerous applications for the use of fuel cell products and as the technology develops and is accepted, the opportunity will continue to grow. In the short term, the Group has identified a number of global market sectors where the Directors believe that the Group’s technology can significantly enhance existing portable power source applications. Temporary Buildings The construction industry uses a large number of steel cabins or temporary buildings. Most of these cabins require electrical power for kitchens, lighting, office equipment, heating or hot water. Currently, most use generators to provide the power. These generators are generally noisy and produce toxic fumes and therefore have to be kept outside. This means both the generator and the fuel they use are prone to theft. Further, the cabins are increasingly measured on their environmental credentials and the emissions that the generators emit are perceived to be unattractive. Working with Speedy Hire plc, which is one of the largest suppliers of cabins for hire in the UK, Voller Energy is proposing to develop an environmentally friendly system, incorporating the VE1000, which will be housed within the cabin for security and will charge a bank of batteries to provide the required power. It is proposed that surplus heat from the fuel cell will be used to provide water heating. Yachts The internal battery-charging feature of the VE100 v2 enables it to be readily adapted for applications where battery charging is required. For example, yachts of up to approximately 45 feet in length have a 12 volt circuit that is powered by conventional lead acid batteries. Charging these batteries at sea or at remote moorings is a constant problem, unless the main engine is in use. A variant of the VE100 v2 could be used on such yachts which would incorporate reformer technology, as most boats already have LPG on board for cooking. Once installed, the fuel cell system will act as a ‘fit and forget’ battery charger that automatically senses when the battery voltage falls to a preset level and then recharges the battery back up to its optimum level. The Directors expect that the basic fuel cell system will be ready for initial trials during 2005 and the reformer technology will be incorporated in the design during 2006. Working with a boating equipment manufacturer, the Directors estimate that the global yacht market, comprising new vessels of 30 feet to 45 feet in length, is approximately 7,000 units per annum. With a retro-fit market of up to 7 years, this equates to an initial potential market size for the Group’s fuel cell and battery recharging technology of up to 50,000 yachts. Recreational vehicles Recreational vehicles (RVs) are a significant potential market, particularly in North America. Most have LPG or BBQ gas on board for cooking. The electrical equipment on board a RV can be powered on a campsite with mains power. However, when the RV is parked away from a mains power source, gasoline or diesel generators have to be carried on board to provide the necessary power. The Directors believe that consumers would pay a premium for a quiet, clean, 'fit and forget' portable fuel cell system permanently installed in an RV that would be capable of running from the existing cooking gas supply. Power tools The Group initially intends to target the providers of power tools to the tool hire market. The market for cordless power tools is currently showing considerable growth and these tools require their batteries recharging using either mains power or a generator. The Group plans to establish its presence in this market in the short term through the provision of the Battery Box as an affordable cordless tool battery charger. In addition, when the VE100 v2 with a reformer becomes available, it will offer significant weight and size advantages over conventional petrol fuelled generators in circumstances where such generators cannot be used or mains power is not available. Military The military market is attractive because of its size and critical needs. Currently a typical army ground battalion uses up to twenty different types of battery. Recharging these batteries is a constant problem when away from a vehicle or fixed power supply. In 2003, the US Department of Defence spent approximately US$130 million on fuel cell related research and development. Potentially, fuel cells are much more efficient for battery charging than conventional petrol fuelled generators because fuel cells produce direct current (“DC”) electricity that is needed to charge batteries where conventional petrol fuelled generators produce alternating current (“AC”) electrical current that has to be then converted to DC. Apart from the heat, exhaust emissions and noise of a generator, the rotating machinery and its associated electronics produce radio emissions that are also detectable. Manufacturing All the components for both the VE100 v2 and the Battery Box are bought in by the Group and the Group does not intend to manufacture any of these components in the future. These components, most of which are proprietary and therefore have to be manufactured by sub-contractors to exact specifications, are currently sourced in Europe and the US. The Directors believe that the costs of these components will fall significantly when the Group’s products are launched to a mass market as the Group benefits from the unit savings associated with larger production runs. The Directors believe that the Group can achieve significant cost savings by sourcing components from manufacturers based in China and other traditionally low cost base manufacturing countries. The design, software development, assembly and testing of the Group’s products will continue to be carried out by the Group. The Directors believe that these functions have to remain in-house to ensure that the quality and security of the Group’s products is maintained. Technology Micro-controller The micro-controller continually monitors the fuel cell stack output and then adjusts the air and water pumps and air flow fans. Whilst monitoring several temperature and gas sensors, the micro-controller adjusts the electrical current limits in the power conversion electronics. This control is crucial to optimise the output from the stack. The micro-controller has a number of in-built features, including:
Hydrocarbon reforming Voller Energy has entered into a conditional agreement to acquire certain assets (including intellectual property) from a German based company which develops and owns reforming technology (further details of which are provided in the Prospectus). Voller Energy believes that this reforming technology will enable the Group to market its fuel cell products to a mass market. Completion of this acquisition is conditional upon Admission. The process for the reforming of hydrocarbons such as butane and propane is in laboratory demonstration form and shows great promise for a future low-cost reformer. Voller Energy believes that the Group can provide the commercial and engineering skills to turn this technology into a commercial product within the next two years. Intellectual property Routes to Market The VE100 product routes to market are: Distribution network The Group acknowledges that as the market develops for fuel cell products, the type of Voller Energy’s distributors will change. The introduction of reformers means that future distributors may not have to be familiar with handling stored hydrogen. Further, Voller Energy envisages that international OEMs will increasingly be dealt with directly, and sales through distributors will reduce accordingly. Construction market Leisure market Military market Directors The biographical details of the Board of Directors are as follows: John Ernest Brown FCCA, aged 60, Non-executive Chairman Stephen David Voller, aged 45, Chief Executive Officer Richard Michael Clarke, aged 54, Chief Operating Officer Colin Peter Bonsey FCA, aged 58, Finance Director David Alan Cranston CBE, aged 59, Non-executive Director David Charles Port, aged 57, Non-executive Director Terms defined in the Prospectus have the same meaning in this press release. Copies of the Prospectus will be available free of charge to the public at the offices of Pinsent Masons, Dashwood House, 69 Old Broad Street, London EC2M 1NR, during normal business hours on any weekday (Saturdays and public holidays excepted) until 26 February 2005.
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