07:00 Thu 28 Jan 2021
ITM Power PLC - Half-year Report
ITM Power plc
("ITM Power", "the Group" or the "Company")
Half Year Results for the Period ended
ITM Power (AIM: ITM), the energy storage and clean fuel company, announces half year results for the six-month period ended
Commercial:
· Transformative
· Fundraise proceeds to accelerate the Company's technology and manufacturing strategies
· Partnership with Snam to develop projects with preferred supplier status for the first 100MW
· First major ILE project of 24MW in
· Collaboration with Orsted and Siemens Gamesa on the
Backlog and Pipeline:
·
· £434m+ (
o Total pipeline attributable to ITM Power:
Operational:
· Practical completion of the ITM Gigafactory at
· Production has commenced in the new factory
· ITM Motive division has agreed a fuel contract with National Express for 20 buses in Birmingham
· ITM Support division has developed its first partnership with Optimal in
· ITM Academy formed for training apprentices, staff and partners
Financial:
· Total income of
o Revenue of
o Grant income plus grants receivable for capital projects of
· Loss from operations
· Adjusted EBITDA Loss of
· Cash balance (excluding restricted balances) of
· Current cash of
· Cash burn* of
*Cash burn is a non-statutory measure. Please see the cash flow statement
Corporate:
·
·
· Formation of Environmental, Social & Governance (ESG) and Strategy sub-committees, both chaired by independent ITM Power NEDs
· CEO, Dr
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ITM Power plc |
+44 (0)114 263 7646 |
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Investec Bank plc (Nominated Adviser and Broker) |
+44 (0)20 7597 5970 |
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Tavistock (Financial PR and IR) |
+44 (0)20 7920 3150 |
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About ITM Power plc
ITM Power plc manufactures integrated hydrogen energy solutions for grid balancing, energy storage and the production of renewable hydrogen for transport, renewable heat and chemicals. ITM Power plc was admitted to the AIM market of the London Stock Exchange in 2004. In
CEO's Review
Backlog
The Company's backlog increased significantly with the incorporation of the Snam 100MW of preferred supplier orders for delivery by 2024/25. Discussions are progressing well with Snam on finalising these contracts. As of today, the total backlog stands at
Tender Opportunity Pipeline
The tender opportunity pipeline (TOP) continues to grow highlighting the significant increase in the adoption of green hydrogen worldwide. The value attributable to ITM-Power electrolysers of this pipeline has increased sharply despite tighter qualification criteria before ITM Power bids on a project and currently sits at
Financial Results
Total Income for the period was
The Gross loss was
The loss before tax for the half year was
In the past, the Company has been able to offset some overhead through grant income. This has diminished in the current period (
Development of Key Strategic Partnerships
During the period the Company has continued to develop strong partnerships for projects, including benefiting from the work with partners to find new innovations, new product improvements, and further routes to market. The Company has made announcements over the past year regarding its partnerships with Linde, Snam, Shell,
Linde: Working with Linde on the larger EPC projects allows the Company to focus on the element of a project where its technology and expertise adds the greatest value. The partnership with Linde continues to progress very well with strong collaboration at both management and at an operational level. The Company recently reviewed the first year of trading at ITM Linde Electrolysis Gmbh, in which a feasibility study was won, a 100MW and 20MW FEED study was undertaken as part of the Gigastack project for large applications in the Humber region, and most recently, a sale of a 24MW electrolyser was won in a competitive tender. The Company has also sold three smaller, standard units to Linde Gas (BOC) in the last twelve months, for deployment in
Snam: The Group has entered into a Commercial Partnership Agreement with Snam, under which the Group will be the preferred supplier for the first 100 Megawatts (MW) of PEM electrolysis projects ordered by Snam, which are intended to be deployed in the period 2021 to 2025. The Commercial Partnership also includes the potential for collaboration on a global pipeline of further projects. Since the partnership was agreed in
On
Ørsted: The Gigastack project has progressed well over the last year with the 100MW and 20MW FEED studies progressing to a conclusion. The Company was also pleased on announce on
Optimal
ITM Motive
ITM Motive is also working closely with Orsted to ensure the stations fully utilise their energy storage capacity to operate solely on offshore wind generated green electricity.
Technology Progress
At the core of ITM Power is its technology. Using its in-house, best in class research and development facilities, the Company continues to execute its technology roadmap. Focus remains on reducing cost, increasing performance and enabling production capacity expansion to support our ambitious growth plan. We are ahead of schedule on the cost reduction roadmap and expect to achieve the stated target of
The development and verification of the next generation Gigastack platform is well underway. This is the heart of the larger 5MW modular offering which the Company has brought forward in response to market demand. Through its joint venture, ITM Linde Electrolysis, both parent companies are collaborating productively, pooling their resources and competencies to develop superior solutions for large scale electrolyser opportunities.
Standardisation and modularisation is central to ITM Power's product philosophy. This enables production efficiencies and procurement optimisation while maintaining a flexible offering to the market. Standard products simplify stock holding, reducing lead times and streamlining spare part provision for after sales support.
Gigafactory
The last 12 months have seen the opening of
People
The Company now employs over 218 staff across the
Health and Safety
COVID continues to have an impact on the normal operations of the Group. We continue to give our staff and customers' health and safety top priority and following government guidance and best practice have continued to successfully implement remote working facilities for all desk-based staff. Manufacturing staff and essential support functions are working across our
Working on customer sites has been hampered by national COVID travel and quarantine restrictions, We continue to work closely with all our customers to support plant in operation, and continue commissioning activities if it is safe and appropriate to do so.
Following the retirement of our previous Head of HSE, we have welcomed
Project Management
With the appointment of a Head of Projects,
Sustainability
The Board has formed an ESG (environmental, social and governance) Committee to assist the Company's commitment to be a sustainable business. The committee met for the first time on
The Committee is chaired by Non-Executive Director,
The formation of this new committee underscores and reaffirms ITM Power's commitment to become a leading global good citizen.
Outlook
Global energy markets are increasingly recognising the need for the use of green hydrogen within their industrial and pandemic recovery strategies. This year we have seen a large number of governments, industrial conglomerates and big corporations announce new plans or strategies to make hydrogen into a feasible option for the energy landscape in the decades to come.
These have included the EU hydrogen strategy, published in
ITM Power, with its joint venture ITM Linde Electrolysis GmbH is uniquely positioned to deliver on this opportunity, with the ability to scale up production at
Dr
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Results for the six months ended
|
Six months ended £'000 |
Six months ended £'000 |
Year ended £'000 |
Revenue |
178 |
2,438 |
3,291 |
Grant income against cost of sales |
310 |
689 |
1,719 |
Cost of sales |
(3,295) |
(5,649) |
(10,839) |
Gross loss |
(2,807) |
(2,522) |
(5,829) |
|
|
|
|
Operating costs |
|
|
|
Distribution expenses |
|
|
|
- Research and development |
(2,183) |
(1,087) |
(2,298) |
- Production and engineering |
(3,243) |
(4,318) |
(13,919) |
- Sales and marketing |
(660) |
(771) |
(1,386) |
|
(6,085) |
(6,176) |
(17,603) |
|
|
|
|
Administration expenses |
(3,278) |
(1,938) |
(7,028) |
IFRS 9 credit risk impairment |
- |
- |
15 |
Other operating income - grant income |
481 |
807 |
1,049 |
Loss from operations |
(11,689) |
(9,829) |
(29,396) |
|
|
|
|
Share of loss of associate company |
(129) |
- |
(3) |
Investment income |
54 |
- |
90 |
Interest expense |
(242) |
(10) |
(214) |
Loss before tax |
(12,006) |
(9,839) |
(29,523) |
Tax |
(6) |
25 |
(38) |
Loss for the period |
(12,012) |
(9,814) |
(29,561) |
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|
|
OTHER TOTAL COMPREHENSIVE INCOME: |
|
|
|
Foreign currency translation differences on foreign operations |
(13) |
30 |
50 |
Total comprehensive loss for the period |
(12,025) |
(9,874) |
(29,511) |
Loss per share |
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|
|
Basic and diluted |
(2.5p) |
(3.0p) |
(7.4p) |
Weighted average number of shares |
476,066,814 |
331,124,871 |
398,184,707 |
The loss per ordinary share and diluted loss per share are equal because share options are only included in the calculation of diluted earnings per share if their issue would decrease the net profit per share or increase the net loss per share.
All results presented above are derived from continuing operations.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Results for the six months ended
|
Called up share capital £'000 |
Share premium account £'000 |
Merger reserve £'000 |
Foreign Exchange reserve £'000 |
Retained loss £'000 |
Total Equity £'000 |
|
|
|
|
|
|
|
At |
23,664 |
137,236 |
(1,973) |
161 |
(103,342) |
55,746 |
Loss for the period |
- |
- |
- |
- |
(12,012) |
(12,012) |
Other comprehensive income for the period |
- |
- |
- |
(13) |
- |
(13) |
Total Comprehensive income for the period |
- |
- |
- |
(13) |
(12,012) |
(12,025) |
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Issue of share capital |
209 |
1,613 |
- |
- |
- |
1,822 |
Credit to equity for equity settled share-based payments |
- |
- |
- |
- |
141 |
141 |
At |
23,873 |
138,849 |
(1,973) |
148 |
(115,213) |
45,684 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
At |
16,200 |
86,631 |
(1,973) |
111 |
(74,760) |
26,209 |
Loss for the period |
- |
- |
- |
- |
(9,814) |
(9,814) |
Other comprehensive income for the period |
- |
- |
- |
30 |
- |
30 |
Total Comprehensive income for the period |
- |
- |
- |
30 |
(9,814) |
(9,784) |
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|
|
|
|
|
|
Issue of share capital |
7,353 |
50,443 |
- |
- |
- |
57,796 |
Credit to equity for equity settled share-based payments |
- |
- |
- |
- |
182 |
182 |
At |
23,553 |
137,074 |
(1,973) |
141 |
(84,392) |
74,403 |
The accompanying notes form part of these financial statements.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at
|
As at (unaudited) £'000 |
As at (unaudited) £'000 |
As at £'000 |
NON-CURRENT ASSETS |
|
|
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Investment in Associate |
360 |
- |
346 |
Intangible Assets |
2,752 |
1,056 |
2,154 |
Right of Use Assets |
6,165 |
798 |
6,520 |
Property, plant and equipment |
12,779 |
7,504 |
6,501 |
Financial Asset at amortised cost |
142 |
- |
137 |
|
22,198 |
9,358 |
15,658 |
|
|
|
|
CURRENT ASSETS |
|
|
|
Inventories |
6,110 |
3,519 |
4,432 |
Trade and other receivables |
18,458 |
23,239 |
23,166 |
Cash and cash equivalents |
25,940 |
56,878 |
39,919 |
TOTAL CURRENT ASSETS |
50,508 |
83,636 |
67,517 |
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|
|
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CURRENT LIABILITIES |
|
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Trade and other payables |
(11,822) |
(14,362) |
(14,013) |
Lease liability |
(164) |
(310) |
(211) |
Provisions |
(8,725) |
(3,435) |
(6,890) |
TOTAL CURRENT LIABILITIES |
(20,711) |
(18,107) |
(21,114) |
|
|
|
|
NET CURRENT ASSETS |
29,797 |
65,529 |
46,403 |
|
|
|
|
Long-term lease liability |
(6,311) |
(484) |
(6,315) |
|
|
|
|
NET ASSETS |
45,684 |
74,403 |
55,746 |
|
|
|
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EQUITY |
|
|
|
Called up share capital |
23,873 |
23,553 |
23,664 |
Share premium account |
138,849 |
137,074 |
137,236 |
Merger reserve |
(1,973) |
(1,973) |
(1,973) |
Foreign Exchange Reserve |
148 |
141 |
161 |
Retained loss |
(115,213) |
(84,392) |
(103,342) |
TOTAL EQUITY |
45,684 |
74,403 |
55,746 |
The accompanying notes form part of these financial statements.
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
Results for the six months ended
|
Six months ended £'000 |
Six months ended £'000 |
Year ended £'000 |
|
|
|
|
Loss from operations |
(11,689) |
(9,830) |
(29,396) |
Adjustments: |
|
|
|
Depreciation of property, plant and equipment |
1,057 |
1,089 |
2,440 |
(Gain)/ Loss on disposal |
(1) |
92 |
473 |
Impairment |
- |
- |
5,588 |
Amortisation |
115 |
126 |
197 |
Share based payment |
141 |
182 |
978 |
Operating cash flows before movements in working capital |
(10,377) |
(8,341) |
(19,720) |
Increase in inventories |
(1,679) |
(1,614) |
(2,525) |
Decrease in receivables |
4,605 |
8,637 |
7,964 |
Decrease in payables |
(2,191) |
(3,215) |
(2,882) |
Increase in provisions |
1,836 |
2,624 |
5,285 |
Cash used in operations |
(7,806) |
(1,909) |
(11,878) |
Interest paid |
(242) |
(15) |
(214) |
Income taxes received |
103 |
52 |
52 |
Net cash used in operating activities |
(7,945) |
(1,872) |
(12,040) |
|
|
|
|
Investing activities |
|
|
|
Investment in Associate |
(136) |
- |
(349) |
Purchases of property, plant and equipment |
(10,329) |
(4,174) |
(8,986) |
Capital Grants received against purchases of non-current assets |
3,448 |
224 |
89 |
Finance Asset (Security deposit) |
- |
- |
(137) |
Proceeds from sale of plant & equipment |
1 |
224 |
1 |
Payments for intangible assets |
(794) |
(513) |
(1,771) |
Interest Received |
54 |
5 |
90 |
Net cash used in investing activities |
(7,756) |
(4,234) |
(11,063) |
|
|
|
|
Financing activities |
|
|
|
Proceeds from issue of shares |
1,822 |
58,822 |
59,299 |
Costs associated with fund raise |
- |
(1,026) |
(1,230) |
Payment of lease liabilities |
(73) |
- |
(236) |
Net cash from financing activities |
1,749 |
57,796 |
57,833 |
|
|
|
|
(Decrease)/ increase in cash and cash equivalents |
(13,952) |
51,690 |
34,730 |
Cash and cash equivalents at the beginning of the period |
39,919 |
5,173 |
5,173 |
Effect of foreign exchange rate changes |
(27) |
15 |
16 |
Cash and cash equivalents at the end of the period |
25,940 |
56,878 |
39,919 |
Cash Burn
Cash burn is a measure used by key management personnel to monitor the performance of the business.
|
Six months ended £'000 |
Six months ended £'000 |
Year ended £'000 |
(Decrease)/ increase in Cash and Cash equivalents per the cash flow statement |
(14,006) |
51,690 |
34,730 |
Effect of foreign exchange rates |
(27) |
15 |
16 |
Less share issue proceeds (net) |
- |
(57,796) |
(58,069) |
Cash Burn |
(14,033) |
(6,091) |
(23,323) |
The accompanying notes form part of these financial statements. The condensed Interim Financial Statements were approved by the board of Directors on
Notes to condensed interim financial statements
1. Basis of preparation of interim figures
The interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs) as adopted for use in the EU. While the financial information included in this interim announcement has been compiled in accordance with the recognition and measurement principles of IFRSs, this announcement does not itself contain sufficient information to comply with IFRSs. This interim financial information does not constitute statutory financial statements within the meaning of section 435 of the Companies Act 2006. The financial information for the six months periods ended
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted by the Group are as applied in the Group's latest audited financial statements.
Going concern
The Directors have prepared a cash flow forecast (the "Forecast") for the period to
The Directors have a reasonable expectation that the Company and Group can continue to meet their liabilities as they fall due, for a period of not less than twelve months from the date of approval of this condensed set of financial statements.
Accordingly, the financial statements have been prepared on a going concern basis.
Note on a Change in Accounting Policy
The Group makes R&D claims as part of its annual submissions to the tax authorities and recently started to make RDEC claims to benefit from enhanced relief or tax credits (as appropriate). The Group has chosen to present R&D claims within other income, as they are similar in nature to grant funding. This leaves the tax line of the accounts solely for the purposes of reporting corporation tax. This change was reflected in a revised accounting policy in the 2020 year-end financial statements. Application was made prospectively so the half-year
2. Revenue and other operating income
An analysis of the Group's revenue is as follows: |
H1 2020 £'000 |
H1 2019 £'000 |
Continuing operations |
|
|
Revenue from construction contracts |
(73) |
1,687 |
Consulting services |
130 |
392 |
Maintenance services |
42 |
30 |
Fuel sales |
79 |
237 |
Other |
- |
92 |
Revenue in the Consolidated Income Statement |
178 |
2,438 |
Grant income shown against cost of sales |
310 |
689 |
Grant income (claims made for projects) |
425 |
807 |
Other government grants (R&D claims) |
56 |
- |
|
969 |
3,934 |
As revenue is recognised over time on custom build projects, some construction contracts have incurred negative revenues in the period. Developments on the projects, including Brexit and continued Covid-19 delays or safety measures, have led to additional costs being forecast, which reduce the stage of completion and therefore the percentage of revenue that can be recognised.
Revenues from major products and services
The Group's revenues from its major products and services were as follows:
|
H1 2020 £'000 |
H1 2019 £'000 |
Power-to gas (of which product sales recognised over time |
91 |
233 |
Refuelling (of which product sales recognised over time - |
(86) |
908 |
Chemical Industry (of which product sales recognised over time |
80 |
822 |
Other |
93 |
475 |
|
178 |
2,438 |
GEOGRAPHIC ANALYSIS OF REVENUE
A geographical analysis of the Group's revenue is set out below:
|
H1 2020 £'000 |
H1 2019 £'000 |
(of which product sales recognised over time |
212 |
583 |
Germany (of which product sales recognised over time |
113 |
832 |
Rest of (of which product sales recognised over time - |
(147) |
868 |
|
- |
155 |
|
178 |
2,438 |
The following accounted for more than 10% of total revenue:
|
H1 2020 |
|
H1 2019 |
|
£'000 |
|
£'000 |
Customer A |
<10% |
|
666 |
Customer B |
80 |
|
815 |
Customer C |
90 |
|
378 |
Customer D |
19 |
|
<10% |
Customer E |
41 |
|
<10% |
Customer F |
35 |
|
<10% |
3. Calculation of Adjusted EBITDA
In reporting EBITDA, management use the metric of adjusted EBITDA, to better reflect underlying performance and remove the effect of the following items:
|
Six months ended £'000 |
Six months ended £'000 |
Year ended £'000 |
Loss before interest and tax |
(11,818) |
(9,829) |
(29,396) |
Add back: |
|
|
|
Depreciation |
1,057 |
1,317 |
2,440 |
Impairment |
- |
- |
5,588 |
Amortisation |
115 |
126 |
197 |
(Gain)/ Loss on disposal |
(1) |
92 |
473 |
Share based payment charge |
228 |
182 |
2,625 |
|
(10,419) |
(8,112) |
(18,073) |
4. Bessemer investment / capital commitment
Approximately
5. Equity Issued
The increase in share capital and share premium reserves in the period was the result of share options exercised. In the comparative period movements on these reserves related to a fund raise.
6. Post Balance Sheet Events
Post balance sheet, the Company entered into a strategic partnership with Snam and raised
-ends-
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