Final Results
ITM Power PLC
31 July 2007
31 July 2007
ITM Power Plc
('ITM' or 'the Company' or 'the Group')
Full Year Results for the year ended 30 April 2007
Highlights:
• Successfully completed all milestones set out for the year on schedule
• Significant progress has been made in the development of a 'home
refuelling' system using ITM's electrolyser technology
• Hydrogen fuelled vehicle has been successfully developed
• Design and construction of manufacturing facility is on plan
• Commercial partner discussions are underway
• Loss for the period in review, increased from £1.9m to £2.7m, in line
with Group's budget
• At year end, cash at the bank and on deposits of £31.8m
Stephen Massey, Chairman commented: 'ITM has made excellent progress in building
solid financial and technical foundations for the commercialisation of its
exciting and revolutionary technology. Considerable efforts have been made over
the last year to move towards the commercial realisation of ITM's technology
with the objective of maximising income potential by controlling key processes
for the use of hydrogen in sustainable energy systems.
The Company believes there are many applications for hydrogen. These include
zero carbon housing, hydrogen fuels for the automotive industry, back-up power
systems and energy storage using hydrogen for renewable energy systems.
Relationships with potential commercial partners are being developed and I
believe that we are in a good position to exploit market opportunities.'
For further information please contact:
Gemma Chandler
ITM Power Plc
Tel: + 44 (0) 1799 542 222
Mob: + 44 (0) 7921 057712
or visit www.itm-power.com
CHAIRMAN'S STATEMENT
I am pleased to report the full year results for the year ended 30 April 2007.
On behalf of the Board, I would like to thank our existing shareholders for
their continued support and welcome new shareholders that have invested in the
Company over the past year.
Review
ITM has made excellent progress in building solid financial and technical
foundations for the commercialisation of its exciting and revolutionary
technology. Considerable efforts have been made over the last year to move
towards the commercial realisation of ITM's technology with the objective of
maximising income potential by controlling key processes for the use of hydrogen
in sustainable energy systems.
The Company believes there are many applications for hydrogen. These include
zero carbon housing, hydrogen fuels for the automotive industry, back-up power
systems and energy storage using hydrogen for renewable energy systems.
Relationships with potential commercial partners are being developed and I
believe that we are in a good position to exploit market opportunities.
During the year in review, terms were agreed on a new manufacturing facility in
Sheffield. The design work for the new Sheffield site is now nearing completion
and preparation work has begun for the installation of the manufacturing
equipment. This plant will have an annual electrolyser production capability of
10 Megawatts which will be one of the largest electrolyser production
capabilities in the world. The Group is now designing the pre-production
prototype units which are anticipated to be produced next year. This is an
enormous undertaking for a relatively small company and brings our science,
engineering and production skills together for the first time. The dedication
and commitment to this project by our staff is humbling and no level of praise
is high enough. So far this programme is on time and budget.
ITM successfully completed all the milestones set out for the year on schedule.
In summary, the Company announced that it had successfully built and operated a
completely platinum free 5 kW solid polymer electrolyser stack. The complete
elimination of platinum reduces our stack cost per kilowatt below the previously
stated $164/kW (which included Platinum on one side of the membrane). The Group
also operated a self pressuring electrolyser at 20 bar. Since the period end,
the pressure test target of 75 bar (or 1125lb/sq inch), which was originally set
for December 2007 was achieved. This programme was accelerated to provide
important early technical information for the design of the 2008 factory
production units which are anticipated to combine both pressure and power
capabilities in a single unit.
The Group successfully made and operated a portable 2-liquid fuel cell, which
includes a fuel cassette able to be removed without loss of power; a so-called
'hot-swappable' function. This device also contains all the balance of plant and
output electronics. This device has been used in commercial presentations, and
we are continuing discussions with military organisations where the unique
attributes of the 2-liquid system, independence of the environment, and neutral
buoyancy for marine applications are of special interest.
The progress made in the Oxy-hydrogen fuel cell systems where performance
improvements have allowed ITM to reach its cost reduction targets, suggests that
the best use of limited company resources is to develop a working prototype of a
fuel cell using the $500/kW technology achieved in June 2007 (in accordance with
the production assumptions set out on 18 October 2006). This cost is
approximately 15% of the present price of solid polymer fuel cells, and has a
significant commercial value if it can be brought into production. In order to
maximise benefit to the Company, it has been decided to build a 100W stack
demonstrating this technology to advance product development and allow real life
performance and longevity testing of the stack and its balance of plant to be
undertaken prior to entering into commercial discussions. The Company has
therefore decided to substitute the production of a 100W Oxy-hydrogen fuel cell
stack for the existing 20W December 2007 milestone of a 2-liquid fuel cell.
The achievement of these milestones has underpinned the Company's ability to
seek commercial collaborations as they begin to demonstrate ITM's electrolyser
and fuel cell equipment in real world environments. These include collaboration
with ABRO, a trading fund of the Ministry of Defence, to operate diesel engines
using a small addition of hydrogen from an on-board ITM electrolyser to the
existing diesel fuel and collaboration with Hydrogen Engine Center Inc to
develop products for a non polluting grid independent energy system which can
undergo field trial testing.
During the year, ITM joined the US Fuel Cell Council, an organisation dedicated
to commercialisation of fuel cells in the United States. The Company also joined
the US National Hydrogen Association and UK Hydrogen Association.
Recent Developments
Significant progress has been made in the development of a 'home refuelling'
system using an electrolyser to convert renewable or off peak electricity into
hydrogen. This device depends upon a 10kW electrolyser operating at pressures of
75 bar. The Company announced in June 2007 that a prototype electrolyser
operated at 10kW. In conjunction with the University of Hertfordshire, ITM has
modified a petrol engine Ford Focus to operate using pure hydrogen able to be
supplied by an ITM electrolyser before switching to petrol. An ITM self
pressuring electrolyser has now successfully fuelled this vehicle. The vehicle
has exceeded 25 miles on a single charge of hydrogen both when tested on a
rolling road, and during testing on public highways. Drivability in public road
conditions when using hydrogen has proved to be excellent.
ITM believes the hydrogen infrastructure has already been built because a low
cost electrolyser can produce hydrogen wherever water and electricity are
available. Furthermore, it is possible to inexpensively convert most petrol
engines to run on hydrogen. We believe these developments bring low cost
non-polluting transportation forward by many years.
As a separate programme, ITM has also installed a much smaller electrolyser
on-board a 3 litre diesel Range Rover. The trace amounts of hydrogen produced
are fed to the engine. This equipment has demonstrated that an ITM electrolyser
can operate successfully in the demanding environment of a moving vehicle, and
direct observations of reproducible reductions in the principal emissions have
been recorded while the electrolyser was active. However, the full commercial or
military implications of the results cannot be judged in advance of a research
programme such as that agreed with ABRO.
ITM has also been working on two long-term research programmes that rely on the
same basic understanding of chemistry to our electrolysis and fuel cell work.
The organic solar photovoltaic research programme continues to suggest
encouraging possible solutions to the development of much lower cost
photovoltaic systems by eliminating silicon. Secondly, we have begun to test
ways of combining gaseous carbon dioxide with electrolytic hydrogen to create
liquid fuels. Our initial small scale laboratory tests have been encouraging and
we have successfully achieved gas to liquid production in an electrochemical
cell based on our membrane technology. These are very early days and much
further work will be needed to confirm the commercial value of such a
development.
Financials
The loss for the year increased from £1.9 million to £2.7 million, in line with
the Group's budget. Capital expenditure in the year under review was £0.49
million most of which went to provide additional laboratory and test equipment
and further expansion to our laboratories in Sheffield. We further strengthened
the scientific and technical team at our laboratories as well as strengthening
our management and corporate team at our head office in Cambridge. Average
headcount for the year grew from 25 to 37 people.
At the year end, the Group held cash at the bank and on deposits of £31.8
million, following the successful raising of £29.4 million funds through a
Placing of ordinary shares with institutional investors in May 2006. The purpose
of the secondary fund raise was to obtain the financial resources necessary to
engineer, develop and commercialise ITM's first products. The Company earned
£1.58m in interest during the year from the investment of the funds and
continues to benefit from increasing deposit rates. The Group expects to spend
approximately £1million fitting out its new production facility.
ITM maintained tight control over cash expenditures during the year in review
and we will continue to monitor budgets carefully. Our costs will gradually
increase over the next year to support accelerated development and engineering
activity. Whilst staff costs remain the biggest single cost element, activity
with third parties will continue to increase as the Group works on development
of complete product solutions in line with our published milestones. Expenditure
on patents and IP protection also continues to be an important part of the cost
base.
The Board is not recommending payment of a dividend in accordance with the
dividend policy stated at the time of the IPO.
Board and Staff
In my interim statement in January 2007, I stated that I would not be seeking
re-election to the Board of ITM in September. We have now concluded a succession
planning process and we are close to finalising an appointment.
I hope to be in a position to announce my successor at the AGM in September with
a view to him taking office in January 2008. The Board has requested that I
remain in office until that time in order to facilitate a smooth transition.
Consequently, l will be standing for re-election as Chairman for an interim
basis until the end of December 2007.
We are continuing to recruit and strengthen our capabilities throughout the
Company. We have hired a production manager for our new factory and are
currently recruiting additional scientists, production technicians and members
for our commercial team.
I would like to welcome new members of staff to ITM and thank all our staff for
their tremendous dedication and commitment during the year.
Outlook
Before the end of the calendar year the Company plans to publicly demonstrate
both the Bi-fuel Ford Focus and refuelling system using electrolyser prototypes
that will closely resemble the initial systems to be manufactured. This will be
a very exciting and important step forward because ITM's technology will become
visible and the benefits of our advances will become more easily understood.
We will continue to expand our commercial relationships over the coming months
and prepare the Group for first orders and sales.
Stephen Massey
Chairman
31 July 2007
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 30 April 2007
Note 2007 2006 (restated
as shown in
note 1)
£ £
Administrative expenses
- research and development (3,373,672) (1,608,044)
- share based payments 1 (18,798) (2,300)
- other (1,263,034) (901,462)
---------- ----------
(4,655,504) (2,511,806)
Other operating income 330,393 361,678
---------- ----------
OPERATING LOSS (4,325,111) (2,150,128)
Interest receivable - bank
interest 1,583,533 290,212
---------- ----------
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION (2,741,578) (1,859,916)
Tax on loss on ordinary
activities - 208
---------- ----------
LOSS FOR THE FINANCIAL YEAR (2,741,578) (1,859,708)
========== ==========
LOSS PER ORDINARY SHARE
Basic and diluted 2 (2.7p) (2.0p)
========== ==========
All activities derive from continuing operations.
There are no recognised gains or losses for the current financial year or
preceding financial year other than as stated above. Therefore no statement of
total recognised gains and losses are presented in these financial statements.
Comparative figures for 2006 have been restated to include share-based payments
in accordance with FRS20 as detailed in note 1.
CONSOLIDATED BALANCE SHEET
30 April 2007
Note 2007 2006
£ £
FIXED ASSETS
Tangible assets 989,700 827,402
----------- ----------
CURRENT ASSETS
Debtors 188,740 594,203
Investments - cash on deposit 31,650,000 5,400,000
Cash at bank and in hand 183,026 62,564
----------- ----------
32,021,766 6,056,767
CREDITORS: amounts falling due (476,867) (293,440)
within one year ----------- ----------
NET CURRENT ASSETS 31,544,899 5,763,327
----------- ----------
TOTAL ASSETS LESS CURRENT LIABILITIES, BEING
NET ASSETS 32,534,599 6,590,729
=========== ==========
CAPITAL AND RESERVES
Called up share capital 5,097,937 4,598,513
Share premium account 3 36,270,762 8,103,536
Merger reserve 3 (1,972,820) (1,972,820)
Profit and loss account 3 (6,861,280) (4,138,500)
----------- ----------
SHAREHOLDERS' FUNDS 4 32,534,599 6,590,729
=========== ==========
CONSOLIDATED CASH FLOW STATEMENT
30 APRIL 2007
2007 2006
Note £ £
Net cash outflow from operating activities 5 (3,374,869) (1,910,873)
Returns on investments and servicing of 1,583,533 189,832
finance
Taxation - 58,316
Capital expenditure and financial investment (486,858) (641,660)
---------- ----------
Net cash outflow before management of liquid
resources and financing (2,278,194) (2,304,385)
Management of liquid resources 6 (26,250,000) 2,150,000
Financing 28,666,650 5,486
---------- ----------
Increase (decrease) in cash 6 138,456 (148,899)
========== ==========
NOTES TO THE FINANCIAL STATEMENTS
Year ended 30 April 2007
1. PRIOR YEAR RESTATEMENT - adoption of financial reporting standard 20
In the current year, the Group has adopted FRS 20 'Share-based payments' which
has resulted in a change to the Group's accounting policy for share based
compensation arrangements and has affected the amounts reported for the current
and prior year.
In accordance with the transitional provisions, FRS 20 has been applied to all
grants of equity instruments after 7 November 2002 that were unvested on 1 May
2006.
This change in accounting policy has had the following impact on the financial
statements.
2006
£
PROFIT AND LOSS ACCOUNT
Administrative expenses as previously stated 2,509,506
FRS 20 'Share-based payment' charge 2,300
----------
Administrative expenses as restated 2,511,806
==========
2. LOSS PER ORDINARY SHARE
The calculations of earnings per share are based on the following losses and
number of shares:
Basic and diluted
2007 2006 (as
restated)
£ £
Retained loss for the financial period (2,741,578) (1,859,708)
========== ==========
Weighted average number of ordinary shares for
basic loss per share 101,060,568 91,899,614
========== ==========
FRS 14 requires presentation of diluted earnings per share when a company could
be called upon to issue shares that would decrease net profit or increase net
loss per share. For a loss making company with outstanding share options, the
net loss per share would be decreased by the exercise of options, and hence no
adjustment has been made to the diluted loss per share as presented.
3. RESERVES
GROUP Share premium Merger reserve Profit and loss Total
account account
£ £ £ £
At 1 May 2006 8,103,536 (1,972,820) (4,138,500) 1,992,216
Retained
loss for the year - - (2,741,578) (2,741,578)
Shares
issued in the year 28,167,226 - - 28,167,226
(net of expenses)
Share based payments - - 18,798 18,798
------------ ------------ ------------ ------------
At 30 April 2007 36,270,762 (1,972,820) (6,861,280) 27,436,662
============ ============ ============ ============
4. RECONCILIATION OF MOVEMENTS IN GROUP SHAREHOLDERS' FUNDS
2007 2006
(as restated)
£ £
Loss for the year (2,741,578) (1,859,708)
Share based payments 18,798 2,300
New shares issued (net of expenses) 28,666,650 5,486
---------- ----------
Addition to (reduction in) shareholders' funds 25,943,870 (1,851,922)
Opening shareholders' funds 6,590,729 8,442,651
---------- ----------
Closing shareholders' funds 32,534,599 6,590,729
========== ==========
5. RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOWS
2007 2006
(as restated)
£ £
Operating loss (4,325,111) (2,150,128)
Depreciation charge 316,614 210,739
Loss on disposal of fixed assets 7,946 -
Decrease (increase) in debtors 405,463 (87,431)
Increase in creditors 201,421 113,647
Share based payments 18,798 2,300
----------- ----------
Net cash outflow from operating activities (3,374,869) (1,910,873)
=========== ==========
6. ANALYSIS AND RECONCILIATION OF NET FUNDS
1 May Cash 30 April
2006 flow 2007
£ £ £
Cash at bank and in hand 62,564 120,462 183,026
Bank overdraft (17,994) 17,994 -
--------
138,456
Current asset investments 5,400,000 26,250,000 31,650,000
--------- ---------- ----------
Net funds 5,444,570 26,388,456 31,833,026
========= ========== ==========
2007 2006
£ £
Increase (decrease) in cash in the year 138,456 (148,899)
Cash outflow (inflow) from increase (decrease) in
liquid resources 26,250,000 (2,150,000)
---------- ----------
Change in net funds resulting from cash flows 26,388,456 (2,298,899)
Net funds at beginning of year 5,444,570 7,743,469
---------- ----------
Net funds at end of year 31,833,026 5,444,570
========== ==========
7. FINANCIAL INFORMATION
The financial information set out in the announcement does not constitute
statutory financial statements for the years ended 30 April 2006 or 30 April
2007 within the meaning of section 240 of the Companies Act 1985, but is derived
from these statutory accounts, which have been reported on by the Company's
auditors. Statutory accounts for the year ended 30 April 2006 have been
delivered to the Registrar of Companies and those for 2007 will be delivered
following the Company's Annual General Meeting. The auditors have reported on
those accounts; their reports were unqualified and did not contain adverse
statements under section 237(2) or (3) of the Companies Act.
The financial information is prepared on the basis of accounting policies as
stated in the previous year, amended for the adoption of FRS (20) (see note 1).
Copies of the announcement will be available for collection from the Company's
head office at Mill House, Royston Road, Wendens Ambo, Saffron Walden, CB11 4JX.
This information is provided by RNS
The company news service from the London Stock Exchange