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ITM Power PLC - Half-year Report

RNS Number : 9307A
27 January 2020

27 January 2020


ITM Power plc

("ITM Power", "the Group" or the "Company")


Half Year Results for the Period ended 31 October 2019


ITM Power (AIM: ITM), the energy storage and clean fuel company, announces half year results for the six month period ended 31 October 2019. Comparable figures, where stated, refer to the corresponding period in 2018 unless otherwise indicated.



Formation of a Joint Venture with Linde Engineering, ITM Linde Electrolysis GmbH ("ILE") focusing on delivering green hydrogen to large scale industrial projects

Transformative £58.8m fundraise to:

facilitate move to Bessemer park

fund the continuing development of 5MW electrolyser module

initially fund the Joint Venture, ILE GmbH

provide balance sheet strength and flexibility



Lease for new 1GW factory signed, with Principal Contractor appointed for fitout on a 30 week programme

·    US Business development MoU with Iwatani Corporation America

·    As of today, the total backlog stands at £42.4m (2018: £33.6m) with £16.3m (2018: £23.2m) of projects under contract and a further £26.1m (2018: £10.4m) in the final stages of negotiation.

·    The qualified tender opportunity pipeline is now over £248m (2018: £240m), representing 37 projects with an average size of £6.7m.



Total income of £3.8m (£5.0m), down 24%, comprising:

o Revenue of £2.4m (£1.2m), up 100%

o Grant income plus grants receivable for capital projects of £1.4m (£3.8m), down 79%

Loss from operations £9.8m (£5.3m), increased by 85%

EBITDA Loss of £8.3m, (£4.5m), increased by 84%

Cash balance (excluding restricted balances) of £56.9m (£15.6m) at period end

Cash burn (excluding fundraise) of £6.2m (£4.8m), up 29%

Net working capital of £9.0m (£9.4m), down 4%



Sir Roger Bone steps up to Chairman following four years on the board

Martin Green joins the board as non-executive director

Juergen Nowicki appointed non-executive director, nominated by Linde

Appointment of Andreas Rupieper as MD of ITM Linde Electrolysis GmbH

Nicola Ham Edmonds appointed Company Secretary

Prof. Roger Putnam and Lord Roger Freeman retire from the board


Graham Cooley, CEO, commented: "The formation of the Joint Venture with Linde and the strategic investment that accompanied it is transformative for ITM Power. The deal allows ITM Power to concentrate on its core competence of developing and manufacturing electrolysis equipment. The Company is now able to offer a full turnkey solution at industrial scale with the EPC competence of a world leader in the hydrogen industry. The opportunity to bid up to 1GW per annum of electrolysis equipment from Bessemer Park gives the Company a powerful cost reduction trajectory. I am confident that ITM Power and our partner Linde have a world class offering."


Roger Bone, added: "I am delighted to take over from Roger Putnam as chairman of ITM Power and to oversee the integration of the Company's activities with Linde Engineering into a successful joint venture. I thank Roger for his contribution and commitment to the Company during his tenure and look forward to further developing our governance to drive ITM Power forward."


For further information please visit www.itm-power.com or contact:


ITM Power plc

(0)114 244 5111

Graham Cooley / Andy Allen




Investec Bank plc (Nominated Adviser and Broker)

(0)20 7597 5970

Jeremy Ellis / Chris Sim / Ben Griffiths / Tejas Padalkar




Tavistock (Financial PR and IR)

(0)20 7920 3150

Simon Hudson / Edward Lee / Barney Hayward



About ITM Power plc:

ITM Power plc manufactures integrated hydrogen energy solutions for grid balancing, energy storage and the production of green hydrogen for transport, renewable heat and chemicals. ITM Power plc was admitted to the AIM market of the London Stock Exchange in 2004.  In October 2019, the Company announced the completion of a £58.8 million fundraise, including a subscription by Linde of £38 million, together with the formation of a joint-venture with Linde to focus on delivering green hydrogen to large scale industrial projects worldwide.  ITM Power signed a forecourt siting agreement with Shell for hydrogen refuelling stations in September 2015, (which was extended in May 2019 to include buses, trucks, trains and ships) and in January 2018 a deal to deploy a 10MW electrolyser at Shell's Rhineland refinery. ITM Power announced the lease of the world's largest electrolyser factory in Sheffield with a capacity of 1GW (1,000MW) per annum in July 2019. Customers and partners include Sumitomo, Ørsted, National Grid, Cadent, Northern Gas Networks, Gasunie, RWE, Engie, BOC Linde, Toyota, Honda, Hyundai and Anglo American among others.



CEO's Review


The tender opportunity pipeline (TOP) continues to grow highlighting the growth in interest of green hydrogen worldwide. ITM Power has increasing commercial visibility of those projects which are viable, and ready, and is becoming increasingly selective about where it focuses its sales efforts, with an increasingly rigorous bidding criteria for projects. ITM Power is working closely with Linde to develop a joint bidding strategy appropriate to the opportunities arising, and appropriate for ITM Linde Electrolysis to bid. Going forward the TOP will begin to decrease as larger industrial tenders are bid by ITM Power as electrolyser-only sales, therefore excluding the EPC element (which will fall to Linde via the joint venture). The pipeline will now reflect the element of a solution that is specific to ITM Power, therefore allowing the Company to focus on the element of a project where its technology and expertise adds the greatest value.


Products Deployed in the Period

The opening, by HM King of the Netherlands, of the 1MW electrolyser at Gasunie represented an important milestone for the Group. The north Netherlands has a well-defined plan for the deployment of electrolysis and it is now becoming an important territory for the development of green hydrogen strategies.


The Company was also delighted to open its first bus refuelling station in Pau, France, and has worked closely with Linde to integrate the hydrogen production and bus refuelling equipment.


The network of ITM Power owned refuelling stations continues to grow in the UK with the opening of our Gatwick station, on a Shell forecourt. The total amount of hydrogen dispensed in the UK from Jan-Dec 2019: 17,483 kg (£176,151) and 16,611 kg ($299,833) in the USA over the same period.


Products in Build and Order Backlog

ITM Power continues to steadily process its order book. The Group's current focus is the build of the Shell Refhyne project, consisting of five 2MW standard modules that represent an important reference plant for other quotes and deployments. In terms of the project programme, the module build is expected to complete in April 2020 with testing ongoing into the summer, which is in line with the planned timescale for the project.


Financial Results

Total Income for the period was £3.8m (£5.0m), down 24%. Revenue recognised for the period under review was £2.4m (£1.2m), up 100%. This was supplemented by grant income of £0.8m ( £2.5m) and £0.4m (£1.3m) of grants receivable for capital projects, which impacts the balance sheet by subsidising the build of assets that ITM Power owns and operates to generate income. The Company expects the trajectory towards an improved mix of revenue relative to grant income to continue as its works through the current and future backlog.


The loss before tax for the half year was £9.8m (£5.2m). This figure continues to be affected by certain legacy projects, including that of the Shell Refhyne project, resulting primarily from facing first-of-a-kind deployment challenges. These challenges have been recognised by the board: the creation of the joint venture with a global, world leading EPC partner will diminish the Group's exposure to future deployment risk, and allow ITM to focus further on developing its world-leading standard products.


Overhead costs were largely in line with expectations for the year. However, in the past the Company has been able to offset some overhead through grant income. This has diminished in the current period (£0.8m vs £3.8m) as remaining EU grants have started to reach a conclusion. Whilst there are new, UK, grant schemes becoming available, the company's last major award of EU funds was for the Refhyne project, awarded in 2016 (and contracted in 2017). Whilst the company's future will increasingly be made up of revenue through sales (and there has been a 100% year on year increase for H1), the reduction in grant income has been steeper than anticipated. The company shall continue to seek support via grant funding when this aligns with the product and technology development roadmaps.


Adjusting Post Balance Sheet Event

Since the period end the Company has received price indications for installation and commissioning on the Refhyne project which are likely to be higher than originally anticipated. The tender process is continuing, with hopes that additional clarifications of works will bring costs down from the outline estimates received to date. A provision for loss which has been reflected in the statements under cost of sales, at £1.9m, representing 16% of the total contract value. The overrun reflects ITM's learning in being able to accurately estimate the cost of installation of a major project in an international refinery. Going forward, ITM Power will be conducting these projects through ITM Linde Electrolysis GmbH and the lead contracts will benefit from the estimating, quotation and EPC delivery skills of Linde Engineering.


Cash and short-term deposits at the period end were £56.9m (£5.2m at 30 April 2019 and £15.6m at 31 October 2018). This reflects the receipt of proceeds from the equity raise completed in October 2019. Debtor balances increased to £23.2m (£19.3m) reflecting pro forma and stage payments made with suppliers. In the second half of the year, cash burn shall increase as the work on Bessemer Park progresses.


New Site: Bessemer Park

The new premises continue to progress, with the developers handing over the landlord's completed build phase in November, just after this period end. The Company is now focused on adapting the site to meet its requirements. It is anticipated that the first area of works will be the installation of an upgraded 5MW power connection to facilitate the on-site testing of larger electrolysers, which will support the Group's capability to deliver large scale projects. The Clegg Group Ltd has been appointed to complete the fit out. The development will also include an extension to the existing offices and manufacturing and production areas, as well as a test room for factory acceptance testing of products. The programme of works at the factory is planned for completion by Q3 2020, and is designed to enable the company to reach a capacity of 1GW within three years.


Technology Progress

Technology progress in the year has focused on product standardisation with the Company concentrating on its 2MW standard offering, and its scalability to larger projects, as well as developing the concept for the 5MW stack module for the next generation of ITM Power electrolysis product.



The Hannover Messe in April continues to be the company's flagship event, and ITM Power will attend again in 2020. ITM Power will also attend the Tokyo EXPO in February 2020 with Sumitomo. The Company continues to issue a newsletter to people who sign up and has launched a new website. A regularly updated list of all the events the Company will be attending can be found at http://www.itm-power.com/news-media/events



The Company now employs over 190 staff across the UK, USA, France, Germany and Australia, and is well placed with the skills mix to respond to the changing market for larger electrolyser systems. The company has been focussed on production, project delivery and after-sales support recruitment. Once again, the Board would like to recognise the commitment of all staff as we continue to be in a strong position, with strong industrial partners globally, and the capability to increase volume and production in the new site.



Global energy markets are increasingly recognising the need for the use of green hydrogen as an energy storage medium and as a transport fuel, chemical fuel and for renewable heat. A number of developed economies, including the Netherlands, Denmark, Germany, Australia, Korea, Japan, China, and the UK have all developed hydrogen roadmaps. In the UK, the Commission for Climate Change (CC) Net Zero - Technical Report (published on 2 May 2019) indicates that the UK will need between 6 and 17GW of electrolysis to achieve its target of net zero by 2050. ITM Power, with its joint venture ITM Linde Electrolysis GmbH is very well positioned to capitalise on this opportunity. Following the successful fundraising in October 2019, the Company also has the balance sheet strength required to take on the challenge of large scale industrial electrolysis.


Dr Graham Cooley

Chief Executive Officer

27 January 2019




Results for the six months ended 31 October 2019


Quick facts: ITM Power PLC

Price: 137

Market: AIM
Market Cap: £648.26 m

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Six months ended 31 October 2019 (unaudited)


Six months ended 31 October 2018 (unaudited)


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