ITM POWER PLC INTERIM REPORT 2017 INTERIM REPORT FOR THE SIX MONTHS ENDED 31 OCTOBER 2017

Transcription

1 ITM POWER PLC INTERIM REPORT I T M P O W E R 17 INTERIM REPORT FOR THE SIX MONTHS ENDED 31 OCTOBER 2017

2 2 ITM POWER PLC INTERIM REPORT 2017

3 ITM POWER PLC INTERIM REPORT 2017 Contents 3 CONTENTS Company details About us Contact us Summary Chairman s statement CEO s review Consolidated statement of comprehensive income Consolidated statement of changes in equity Consolidated balance sheet Consolidated cash flow statement Cash burn Notes to condensed interim financial statements Basis of preparation of interim figures Revenue, other operating and investment income 2017 Regulatory news announcements

4 4 ITM POWER PLC INTERIM REPORT 2017 Contents Air quality regulations are stimulating the need for hydrogen as a clean fuel for clean transport emissions, in city regions around the world. Energy storage provision has started to become a mandatory requirement in areas of the world such as California; it is recognised as an essential prerequisite for renewable energy deployment. Grid balancing and rapid response demand-side services are crucial for the integration of high proportions of renewable energy supply on the electricity grid. Auto OEMs are rolling out Fuel Cell Electric Vehicles (FCEVs) that require a high purity hydrogen fuel. Hyundai and Toyota have commercial vehicles in production with Honda being the latest Company to also offer a FCEV. Global Hydrogen Refuelling Station infrastructure programmes are underway with significant deployment plans in place. Energy security and fuel security has risen to the top of the geopolitical agenda. Price volatility of fossil fuels is driving an industrial substitution to more sustainable chemical processes.

5 ITM POWER PLC INTERIM REPORT 2017 Company details 5 ABOUT US ITM Power manufactures integrated hydrogen energy solutions for grid balancing, energy storage and the production of green hydrogen for transport, renewable heat and chemicals. ITM Power was admitted to the AIM market of the London Stock Exchange in In September 2017, the Company announced the completion of a 29.4m working capital fundraise. The Company signed a forecourt siting agreement with Shell for hydrogen refuelling stations in September 2015 and subsequently a deal to deploy a 10MW electrolyser at Shell s Rhineland refinery. Additional customers include National Grid, RWE, Engie, BOC Linde, Toyota, Honda, Hyundai, Anglo American among others. The Company currently has 27.0m of projects under contract and a further 10.4m of contracts in the final stages of negotiation constituting a total of 37.4m, subject to exchange rate variations. COMPANY DETAILS CONTACT US ITM Power plc Andy Allen, CFO +44 (0) Investec Bank plc (Nominated Adviser and Broker) Corporate Finance: Jeremy Ellis / Jonathan Wynn Corporate Broking: Chris Sim / Rob Baker +44 (0) Tavistock (Financial PR and IR) Simon Hudson / James Collins +44 (0) ITM Power (AIM: ITM), the energy storage and clean fuel company, announces its half year results for the six month period ended 31 October Comparable figures, where stated, refer to the corresponding period in 2016 unless otherwise indicated.

6 6 ITM POWER PLC INTERIM REPORT 2017 Summary SUMMARY COMMERCIAL PROGRESS As at today, 27.0m ( 17.0m) of projects under contract and a further 10.4m (Jan-2017: 1.4m) of contracts in the final stages of negotiation constituting a total backlog of 37.4m (Jan-2017: 18.3m), up 103% year on year Tender opportunity pipeline has grown steadily and is now over 200m, reflecting strong industrial demand 10MW refinery hydrogen project with Shell to build the world s largest PEM electrolyser at the Rhineland refinery, Germany World s first tidal-powered hydrogen generated at European Marine Energy Centre (EMEC) in Orkney First hydrogen bus route in the Pau region of France 20 tonne/day (50MW) hydrogen refuelling station designs launched in Las Vegas in September A new total of 20 hydrogen fuel contracts OPERATIONAL DEVELOPMENTS New, larger factory premises identified and heads of terms agreed Expansion of the manufacturing and after sales support teams Creation of Australian subsidiary ITM Power Pty Ltd and appointment of Dr Neil Thompson as MD

7 ITM POWER PLC INTERIM REPORT 2017 Summary 7 FINANCIAL HIGHLIGHTS Total income of 4.4m (2016: 3.0m), up 47%, comprising: -- Revenue 1.7m (2016: 0.4m), up 325% -- Grant income plus grants receivable for capital projects 2.7m (2016: 2.6m), up 4% Increase in fixed assets to 5.5m (2016: 3.8m), up 139% Loss from operations 2.9m (2016: 2.3m), increased by 26% Cash balance of 27.3m at period end (2016: 1.7m) Debtors balances of 12.8m (2016: 9.2m), up 39% The six months under review have seen significant advances in all areas of ITM Power s business. The announcement of the deployment of the worlds largest PEM electrolyser at Shell s Rhineland refinery is a particularly important development seeing ITM Power enter the 10MW product class with a commercial product at scale. The Company s pipeline of deals has more than doubled since last year showing strong and consistent growth in both the refuelling and power-to-gas markets. Dr Graham Cooley ITM Power plc, CEO The Board is pleased with the result of the successful equity raise, which secured the working capital the Company needs to underpin the significant progress that has been achieved in growing the order pipeline of commercial sales. Our stronger financial position will help us to continue to strengthen our relationships with a number of major blue-chip companies as we progress our international business. With the establishment of our new company in Australia I welcome Neil Thompson to the development team. Prof. Roger Putnam ITM Power plc, Non-Executive Chairman

8 8 ITM POWER PLC INTERIM REPORT 2017 Chairman s statement CHAIRMAN S STATEMENT The half year under review and the months since the period end have seen considerable progress made by the Company towards converting interest into tenders, and more importantly, tenders into contracted backlog and commercial sales. Our opportunity pipeline is at a record level, which is more than double the level it was a year ago. The traction developed by ITM Power in global markets has continued to increase as governments and companies worldwide have begun to recognise the attractions of hydrogen, both as a fuel and as an energy storage medium. Our recently announced project with Shell is a significant step into the very large market of decarbonising industrial hydrogen. As a result of the fundraise, cash and short-term deposits at the period end were 27.3m ( 3.0m at 30 April 2017 and 1.7m at 31 October 2016). Debtor balances increased to 12.8m (2016: 9.2m) reflecting grants for capital projects yet to be received and the balances yet to be paid on projects underway at period end. The Board is not recommending the payment of a dividend for the period in accordance with our stated policy. The successful equity fund raise of 29.4m to finance a move to enlarged facilities and boost working capital has underpinned the significant progress in the order pipeline. On behalf of the Board, I would like to thank our shareholders for their support. Financial Results Revenue recognised for the period under review was 1.7m (2016: 0.4m). This was supplemented by grant income of 1.9m (2016: 1.6m) and 0.8m (2016: 1.0m) of grants receivable for capital projects, which impacts directly on the balance sheet. Due to recognising revenue on a long-term contracts basis, our revenue line depends on the stage of build of projects at the reference date. Effectively, the busier we are on project build, the more weighted we become to the most recent period. After increased staff costs associated with the higher volumes of manufacturing in the period, the loss before tax for the half year was 2.9m (2016: 2.3m).

9 ITM POWER PLC INTERIM REPORT 2017 Chairman s statement 9 Team In October, Peter Hargreaves, a Non-Executive Director since 2003, notified the Company of his intention to step down from the Board with effect from the half year end. On behalf of his Board colleagues, the staff of ITM Power and all of our shareholders, I would like to thank Peter for his help and support during his 16 year involvement with the Company. We would not be where we are today without him. I am delighted to welcome Dr Neil Thompson who joins us as the new Managing Director of ITM Power Pty Ltd in Australia. Neil s background includes engineering and commercial roles in the clean technology, aerospace and automotive industries across the Americas, Europe and the APAC region. Once again, the Board would like to record its appreciation of the hard work and fantastic commitment of the Company s staff, without which we would not be in the strong position globally that we are today. THE TRACTION DEVELOPED BY ITM POWER IN GLOBAL MARKETS HAS CONTINUED TO INCREASE Prof. Roger Putnam ITM Power plc, Non-Executive Chairman

10 10 ITM POWER PLC INTERIM REPORT 2017 Chairman s statement Outlook The second half of the financial year to end April 2018 looks set to be busier than ever when we will be beginning the process of relocating to new manufacturing premises in the South Yorkshire region which will give us the additional capacity necessary to manufacture large scale electrolysers of 10MW and beyond. In addition the ability to operate under one roof is expected to provide important operational and cost synergies. Our relationship with key blue-chip partners such as Shell, Toyota, National Grid, BOC Linde, RWE and Engie continue to strengthen, leading to an increasing number of significant opportunities. Our business is now global and we have new projects in France and Germany and the establishment of our new company in Australia should provide a strong footprint to generate further opportunities in the APAC region. Hydrogen technology is now receiving the attention it deserves in industrial processes, energy storage and refuelling. The second half is set to be very exciting, with ITM Power s products positioned as undoubted leaders in the world s PEM electrolyser markets for green hydrogen. I look forward to reporting to shareholders on the full year outcome in the summer. Prof. Roger Putnam ITM Power plc, Chairman 26 January 2018

11 ITM POWER PLC INTERIM REPORT 2017 Chairman s statement 11

12 12 ITM POWER PLC INTERIM REPORT 2017 ceo s review CEO S REVIEW The strong growth in the opportunity pipeline reported in these results reflect the hydrogen and energy storage markets rapid growth worldwide and ITM Power s focus on developing commercial sales. Scale is now key and ITM Power is in a great market position with our larger footprint of compliant reference plant deployed all over the world. ITM Power is at the forefront of a market which is revolutionising air quality, energy storage and the decarbonisation of heavy industry. Products in Build and Order Backlog ITM Power continues to steadily process its order book. Today, the Company has work in progress which will constitute over 5MW of installed capacity that is either in build, undergoing factory acceptance testing, is ready for shipment or being commissioned in the field. The order backlog and opportunity pipeline clearly demonstrate a trend towards larger scale. The backlog is also reflective of the Company s focus on commercial sales. In order to accommodate the increased numbers and size of units in production, and the capacity for Factory Acceptance Testing, the company is planning to relocate to a larger facility accommodating all functions under one roof. Technology Progress ITM Power s technology development team continues its efforts towards lowering product costs, maximising durability and increasing efficiency. At the system level, the Company has used its modular system design effectively to supply customers with equipment optimised for its duty. Using this principle, systems up to 100MW in size have been developed utilising ITM Power s well proven technology. This strategy has enabled the Company to rapidly engage with large scale opportunities while minimising technical risk. After detailed and lengthy verification processes, ITM Power is now routinely offering electrolyser systems incorporating high current density PEM stacks. This has enabled ITM Power to reduce the number of stacks in any given system without compromising in efficiency or durability.

13 ITM POWER PLC INTERIM REPORT 2017 ceo s review 13 Industry Developments On 13 November, the Hydrogen Council published a first-of-a kind study detailing hydrogen s potential to be a key pillar of the energy transition. The study concluded that when deployed at scale, hydrogen could account for almost one-fifth of total final energy consumed by This would reduce annual CO 2 emissions by roughly six gigatons compared to today s levels, and contribute roughly 20% of the abatement required to limit global warming to two degrees Celsius. Marketing The Group s marketing efforts remain focused on engagement with multi-national companies that operate within the energy, transport and chemical sectors. Salesforce has become a key tool for the sales and marcomms teams with the industry contacts database now at over 28,000 contacts. ITM Power attends and presents at many industry specific trade fairs and conferences in the UK, mainland Europe and the United States. A regularly updated list of all the events the company will be attending can be found at itm-power.com/news-media/events ITM POWER IS NOW IN A POSITION TO BE COST COMPETITIVE WITH OTHER FORMS OF FUEL SOLUTIONS. Outlook Quotations, sales and the order pipeline are stronger than they have ever been. The traction with customers and partners that ITM Power achieves through its market leading PEM electrolyser technology combined with the additional balance sheet strength following the recent equity fund raising puts the group in a very strong position to deliver its future growth ambitions. The global growth in demand for hydrogen solutions in utility, petrochemical and refuelling markets is also very encouraging. I look forward to reporting on what will be a very active second half to the year, as well as reporting on the development of the opportunity pipeline at the announcement of the full year results. Dr Graham Cooley ITM Power plc, CEO 26 January 2018

14 14 ITM POWER PLC INTERIM REPORT 2017 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) Results for the six months ended 31 October 2017 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2017 Six months ended 31 October 2017 (unaudited) Six months ended 31 October 2016 (unaudited) Year ended 30 April 2017 (audited) 000s 000s 000s Revenue 1, ,415 Cost of sales (1,580) (313) (1,757) Gross Profit Operating Costs Research and development (957) (790) (2,023) Prototype production and engineering (1,586) (1,614) (2,615) Sales and marketing (673) (744) (1,528) Administration (1,739) (833) (2,202) Other operating income Grant income 1,920 1,616 4,160 Loss from operations (2,877) (2,274) (3,550) Investment revenues 2 Loss before tax (2,877) (2,272) (3,550) Tax (230) Loss for the period (2,529) (2,203) (3,780) Other total comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation differences on foreign operations (250) Total comprehensive loss for the period (2,395) (2,122) (4,030) Loss per share Basic and diluted (1.0p) (1.0p) (1.7p) Weighted average number of shares 250,613, ,892, ,513,007 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. The loss for the period is equal to the total comprehensive expense for the period. The accompanying notes form part of these financial statements.

15 ITM POWER PLC INTERIM REPORT 2017 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) Results for the six months ended 31 October CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2017 Calledup share capital Share premium account Merger reserve Foreign Exchange reserve Retained loss Total equity 000s 000s 000s 000s 000s 000s 2016 At 1 May ,845 58,151 (1,973) 54 (55,442) 11,635 Loss for the period (2,203) (2,203) Other comprehensive income for the period Total comprehensive income for the period (2,203) (2,122) Issue of share capital Credit to equity for equity settled share based payments At 31 October 2016 (unaudited) 10,845 58,151 (1,973) 135 (57,645) 9, At 1 May ,531 61,930 (1,973) (196) (59,222) 13,070 Loss for the period (2,529) (2,529) Other comprehensive income for the period Total comprehensive income for the period (2,529) (2,395) Issue of share capital 3,669 24,767 28,436 Credit to equity for equity settled share based payments At 31 October 2017 (unaudited) 16,200 86,697 (1,973) (62) (61,751) 39,111 The accompanying notes form part of these financial statements.

16 16 ITM POWER PLC INTERIM REPORT 2017 CONSOLIDATED BALANCE SHEET (UNAUDITED) 31 October 2017 CONSOLIDATED BALANCE SHEET (UNAUDITED) 31 OCTOBER 2017 As at 31 October 2017 (unaudited) As at 31 October 2016 (unaudited) As at 30 April 2017 (audited) 000s 000s 000s Non current assets Development Costs Property, plant and equipment 5,137 3,447 4,519 5,467 3,799 4,899 Current assets Inventories Trade and other receivables 12,834 9,195 11,082 Cash and cash equivalents 26,190 1,315 1,558 Restricted cash and cash equivalents 1, ,446 Total current assets 40,890 11,365 14,846 Current liabilities Trade and other payables (6,479) (5,651) (6,666) Provisions (767) (9) Total current liabilities (7,245) (5,651) (6,675) Net current assets 33,644 5,714 8,171 Net assets 39,111 9,513 13,070 Equity Called up share capital 16,200 10,845 12,531 Share premium account 86,697 58,151 61,930 Merger reserve (1,973) (1,973) (1,973) Foreign Exchange Reserve (62) 131 (196) Retained loss (61,751) (57,645) (59,222) Total equity 39,111 9,513 13,070 The accompanying notes form part of these financial statements.

17 ITM POWER PLC INTERIM REPORT 2017 CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) Results for the six months ended 31 October CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED) RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2017 Six months ended 31 October 2017 (unaudited) Six months ended 31 October 2016 (unaudited) Year ended 30 April 2017 (audited) 000s 000s 000s Loss from operations (2,877) (2,274) (3,550) Adjustments Depreciation of property, plant and equipment ,181 Loss on disposal Fixed asset impairment Amortisation Operating cash flows before movements in working capital (2,056) (1,837) (2,224) Decrease / (Increase) in inventories 11 (154) (469) (Increase) in receivables (1,493) (2,803) (5,363) Increase in payables 1,984 3,838 2,747 Increase in provisions Cash used in operations (796) (956) (5,300) Income taxes received Net cash used in operating activities (607) (704) (5,048) Investing activities Interest received 2 Purchases of property, plant and equipment (3,574) (839) (647) Proceeds from sale of plant & equipment 3 4 Payments for intangible assets (100) (151) Net cash (used in) investing activities (3,574) (934) (1,419) Financing activities Proceeds from issue of shares 29,359 5,732 Costs associated with fund raise (921) (267) Net cash from financing activities 28,438 5,465 Increase / (decrease) in cash and cash equivalents 24,257 (1,638) (377) Cash and cash equivalents at the beginning of the period 3,004 3,336 3,336 Effect of foreign exchange rate changes Cash and cash equivalents at the end of the period 27,307 1,725 3,004

18 18 ITM POWER PLC INTERIM REPORT 2017 Cash burn CASH BURN Cash burn is a measure used by key management personnel to monitor the performance of the business. Six months ended 31 October 2017 (unaudited) Six months ended 31 October 2016 (unaudited) Year ended 30 April 2017 (audited) 000s 000s 000s Increase / (Decrease) in Cash and Cash equivalents per the cash flow statement 24,257 (1,638) (377) Effect of foreign exchange rates Less share issue proceeds (29,359) (5,732) Cash Burn (5,056) (1,611) (6,064) The accompanying notes form part of these financial statements. The condensed Interim Financial Statements were approved by the Board of Directors on: 26 January 2018

19 ITM POWER PLC INTERIM REPORT 2017 Notes to condensed interim financial statements 19 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 document 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 The financial information for the six months ended 31 October 2017 have not been subject to an interim review. The information relating to the year ended 30 April 2017 has been extracted from the Group s published financial statements for that year, which contain an unqualified audit report that does not draw attention to any matters of emphasis, and did not contain statements under section 498(2) and 498(3) of the Companies Act 2006 and which have been filed with the Registrar of Companies. The Group s condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The principle accounting policies adopted by the group are as applied in the Group s latest annual audited financial statements. The financial statements have been prepared on the historical cost basis. The principle 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 31 January 2018 (the Forecast Period ). The Forecast includes proceeds from the equity fund raise completed in October 2017 less expenses relating to the fundraise, together with a number of assumptions, including the level of projected sales and grant income, the timing of which is inherently uncertain. 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.

20 20 ITM POWER PLC INTERIM REPORT 2017 Notes to condensed interim financial statements 2. REVENUE, OTHER OPERATING AND INVESTMENT INCOME In 2017, the following accounted for more than 10% of total revenue (2016: no single customer contract): Customer A 456,672 Customer B 438,572 Customer C 232,915 Customer D 278,229 An analysis of the Group s revenue is a follows: s 000s Continuing operations Revenue from construction contracts 1, Consulting services Maintenance services Fuel sales 63 4 Other 23 8 Revenue in the Consolidated Income Statement 1, Grant income 1,920 1,616 Investment income 2 3,659 2,023 Revenues from major production and services Power-to gas Refuelling Chemical Industry 679 Other 23 8 Consolidated revenue (excluding investment revenue) 1, Geographic analysis of revenue United Kingdom Germany Italy 439 Rest of Europe 53 2 North America ,

21 ITM POWER PLC INTERIM REPORT Regulatory news announcements REGULATORY NEWS ANNOUNCEMENTS 2017 RNS Directorate Change Executive Changes 25/10/2017 RNS Second Price Monitoring Extn Company Announcement General 23/10/2017 RNS Price Monitoring Extension Company Announcement General 23/10/2017 RNS Holding(s) in Company Holding(s) in Company 20/10/2017 RNS Result of General Meeting and Open Offer Company Announcement General 18/10/2017 RNS Circular and Investor Presentation Company Announcement General 03/10/2017 RNS Timetable for Proposed Placing and Open Offer Company Announcement General 29/09/2017 RNS Proposed Placing and Open Offer Company Announcement General 29/09/2017 RNS Sale of 1.1MW Power-to-Gas Plant to EnergyStock Company Announcement General 19/09/2017 RNS 10MW Refinery Hydrogen Project with Shell Company Announcement General 01/09/2017 RNS-R First Hydrogen Bus route in France Company Announcement General 01/09/2017 RNS Final Results Results and Trading Reports 25/08/2017 RNS-R UK Hydrogen for Transport Programme Company Announcement General 21/08/2017 RNS Notice of Results Advance Notice of Results 17/08/2017 RNS Launch of Large Scale HRS, Pipeline Increase Company Announcement General 07/08/2017 RNS Re Government Air Quality Plan, Pipeline Increase Company Announcement General 26/07/2017 RNS-R ITM Power Signs Fuel Contract with Honda (UK) Company Announcement General 11/07/2017 RNS Change of Adviser Executive Changes 29/06/2017 RNS Contract & Hydrogen Bus Refuelling Stations Update Company Announcement General 05/06/2017 RNS RNS-R

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23 WE ARE POSITIONED AT THE HEART OF GLOBAL EFFORTS TO DECARBONISE FUEL AND ENERGY Dr Graham Cooley ITM Power plc, CEO

24 24 ITM POWER PLC INTERIM REPORT Regulatory news announcements I T M P O W E R (0) ITM Power plc 22 Atlas Way Sheffield S4 7QQ