Market Potential

There are a number of factors affecting growth in the power systems market, including:

• ongoing depletion of fossil fuel reserves. Hydrogen has the potential to replace these finite resources.
• current and future air quality regulation surrounding environmentally harmful emissions, in particular, CO2 reduction targets.
• growing industry and consumer demand for alternative sources of energy.
• energy security concerns and needs.
• the potential long term competitiveness of the transportation industry.

The Group has identified two initial market segments in which the advantages of electric fuel cell hybrid systems will lead to economic benefits for the end user: forklift trucks and buses.

Forklift Trucks
In 2003, batteries for use in forklift trucks generated more than US$1.5 billion in worldwide sales. In 2004, the global market for sales of material handling vehicles was in excess of approximately 700,000 units and it is anticipated that the battery powered forklifts' share of the material handling market will steadily increase. The Group believes that fuel cell conversion could be applicable to approximately 20 per cent of this market. Thus, consequently, this battery powered segment offers an immediately addressable market for electric fuel cell hybrid systems.

Buses
Global bus production has reached approximately 240,000 units per annum. The Group believes that one of the first markets where an electric fuel cell hybrid system could achieve significant penetration is the local bus sector - those buses operating in built up areas and moving relatively short distances from base. Approximately 25 per cent of this market could be addressed by a fuel cell solution with an average cost per application of approximately €25,000 and a total market value of approximately €1.5 billion per annum.

Prospects

Proton Power System’s principal objective is to establish a volume manufacturing facility based upon solid sales orders. This should enable the Group to achieve an economically viable unit cost for its fuel cell hybrid systems. Proton Power Systems aims to continue to develop both new and existing relationships, and enhance its ability to take advantage of new opportunities as they arise. Initially, the Group will invest in increased operational and sales infrastructure appropriate to its ongoing growth. The advanced stage of commercialisation of its technology, coupled with the Group’s existing partnerships, should allow the business to firmly establish itself as a leading global fuel cell system provider.