Final Results

RNS Number : 0226L

ITM Power PLC

26 July 2011

 



26 July 2011

ITM Power plc

("ITM Power" or the "Company")

Final Results

For the year ended 30 April 2011

ITM Power (AIM: ITM) the energy storage and clean fuel company is pleased to announce its results for the year ended 30 April 2011.

HIGHLIGHTS:

Products
•	Achievement of CE marking for the HPac, HFlame and HBox products
•	First product sale and field trial of HPac with the University of Birmingham
•	First HFlame field trial with Ametek Airtechnology Group Ltd
•	First sale of an HFuel production module to the University of Glamorgan
•	Post-period orders of £0.43m, to date, well ahead of expectations

HOST
•	Achievement of HFuel compliance with the Department for Transport
•	Achievement of Euro VI Emissions for the HICE Transit Vans used in the HOST programme
•	Commencement of HOST programme with 21 commercial partners
•	First four trials with London Stansted, DHL, AMEY and Volker Highways now completed
•	HFuel product achieved 100% availability and an average efficiency of 64%
•	HOST demonstrated that HFuel can be operated on-site and achieve 'parity with petrol' in the UK

Financials
•	Net cash-burn £4.8m (£4.9m 2010)
•	Cash at 30 April 2011 £12.2m (£16.9m 2010)
•	£1.09m of income from funding bodies booked in the period, of which £0.41m related to property, plant and equipment
•	Grants from Technology Strategy Board and Carbon Trust
•	A further £0.82m in grant funding has been secured

Technology Development
•	Achievement of the highest recorded power density for a PEM fuel cell MEA, in excess of 5.5 W/cm2 using oxygen and in excess of 2.1 W/cm2 using air
•	HydroGen platinum-free Alkaline Electrolyte PEM electrolyser technology has now been scaled up and incorporated into an HPac system and is showing good early performance

Corporate
•	Appointment of Company agent in Germany, the key early market for hydrogen technologies
•	Established ITM-Power GmbH, a wholly-owned subsidiary in July 2011
•	Appointment of The Rt. Hon. Lord Freeman PC as Non-Executive Director

Outlook
•	Outlook positive with early revenue streams developing
•	Adoption of hydrogen in many applications accelerating
•	Product orders of £0.43m in the three months since the year end
•	Good progress in developing commercial relationships in Germany

Prof Roger Putnam, Chairman of ITM Power commented:

"I am pleased to be reporting further significant progress made by the Company in the second half of the year. The list of highlights does not fully reflect the huge effort made by the management team and staff during the past 12 months. The technical and scientific achievements made this year are a clear demonstration of the skills and knowledge of the team.  Our first products were very well received at the Hannover Messe in April when the Company received a great deal of industry attention.  We are now building the resulting commercial relationships."

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

ITM Power plc Graham Cooley, CEO	0114 244 5111
Nomura Code Securities Limited Juliet Thompson / Dr Christopher Golden	020 7776 1200 www.nomuracode.com
Tavistock Communications Simon Hudson / Andrew Dunn	020 7920 3150

CHAIRMAN'S STATEMENT

I am pleased to report results for the year ended 30 April 2011 and to update shareholders on current developments at ITM Power.

Commercialisation

The substantial progress made is best illustrated by the sale of products (launched in April 2011), which have started well with £0.43m of orders.

Our commercialisation strategy is built on partnerships. We seek to develop traction with large commercial organisations that have the potential to buy our products in significant volumes. To access and engage with these organisations we develop grant funded projects, which also provides us with a short to medium term financial benefit so that we can achieve recurring profitability without the need to raise additional equity to fund the projects. Our announcements regarding grant funding are therefore driven by the corporate partners involved.

The HOST programme has begun very successfully with four trials completed. A number of business models are now being developed with our trial partners to take the relationships forward.

Financials

The net cash-burn for the year decreased from £4.9m to £4.8m despite the significant level of activity undertaken.  Underlying losses after adjusting for share based payment charges of £0.6m remained level at £5.1m. Capital expenditure for the year under review increased from £0.5m to £0.8m including several assets constructed as part of grant funded projects including the HOST trial refuelling unit.  During the year, the Company's cash and cash equivalents balance reduced from £16.9m to £12.2m. 

The Board

During the year there has been one change to the Board with the appointment of The Rt. Hon. Lord Freeman PC as Non-Executive Director following the death of Lord Walker. Lord Freeman is a member of the House of Lords, Chairman of Thales UK Advisory Board (and a Non-Executive Director of Thales S.A.) and Chairman of the Advisory Board of PricewaterhouseCoopers (UK).  During a distinguished political career, he was the Conservative MP for Kettering from 1983 to 1997 and served as the Parliamentary Secretary for the Departments of Health and Armed Forces and as Minister of State for Public Transport and Defence Procurement and concluded as Cabinet Minister for Public Services.  I welcome Lord Freeman to the Board and can report that his contribution is already proving invaluable.

Outlook

The advances made at ITM Power during the past year have been significant and we now have a company that is commercially focused and outward looking.  The reputation and awareness of ITM Power has grown considerably across the world and the Company continues to build commercial, government and academic relationships. The next twelve months will be critical for the commercial development of ITM Power and I am confident that we have a team that can achieve commercial success.

The outlook remains very positive with early revenue streams developing and the prospects for the adoption of hydrogen in many applications accelerating.  During the past year we have seen a significant change in attitudes towards the use of hydrogen in the energy generation and transport sectors although significant early adoption markets remain outside the UK.  The Company has made good progress in developing commercial connections in Germany, the most advanced European hydrogen market.  I look forward to reporting further positive developments in six months time.

Prof Roger Putnam CBE

Chairman

ITM Power plc

CEO's REVIEW

ITM Power has outperformed all of its forecasts and met all of its product launch targets. The short period of time that our products have been available only gives low-level forecast visibility but the initial traction is very encouraging. Hydrogen's role in both renewable energy storage and transport are becoming internationally recognised and ITM Power and its product offering now have global recognition.

Highlights
•	Post year-end order-book of £0.43m with a developing pipeline
•	£1.09m of income from funding bodies recognised in the year to 30 April 2011, of which £0.41m related to property, plant and equipment
•	A further £0.82m of grant income has been secured
•	Significant and continuing engagement with blue chip multinationals
•	HOST trials demonstrating hydrogen cost "parity with petrol"
•	A hugely successful awareness campaign

The Team

Once again, on behalf of the Board and shareholders, I would like to thank all of our people at ITM Power who have remained focused and dedicated over the past year.

We welcomed Phil Doran our German agent into our team and have established ITM Power GmbH in July 2011 to further develop the Company's interests in the rapidly emerging German market.

HOST Trials and Major Partnerships

At the time of writing this report the Group has successfully completed four of the HOST trials with very encouraging results. The HFuel product has achieved 100% availability and demonstrated that it can be operated onsite and achieve fuel costs at "parity with petrol" in the UK. A world leading conversion efficiency from grid connection to nozzle of 64% on average and a peak of 69% was achieved. This conversion efficiency significantly changes the perceived value of electrolytic hydrogen as an energy storage medium and transport fuel.

All the trial partners, to date, have been impressed with the results and a number of business models are being developed with our partners to take the relationships forward.

Product Sales

The Group is now focused on product sales, developing a pipeline of blue chip customers and building a sustainable product revenue stream.

Orders for electrolyser products have started well with £0.43m of orders taken since the year-end.  Although visibility of future order intake remains difficult to forecast accurately, we have raised our internal forecasts for the year. We are in the process of identifying the right distribution partners for ITM and discussions are ongoing with various interested parties.  Interestingly, we have found that sales of our smaller products to large companies and organisations have led to enquiries for larger numbers or higher capacity products.

We have a prospect list that is developing rapidly including many blue chip international companies and have found our best sales and marketing channel to be the Group's presence at technology events where we have the opportunity to develop a dialogue with potential customers and project partners. We have found that these early discussions lead to the ordering of a product for evaluation, validation or integration into a larger process or energy system. We believe that these early orders can, therefore, be viewed as the start of the development of long term customer relationships.

ITM Power is now focused on commercial income generation and we look forward to updating shareholders on progress with aggregated product sales figures at the time of the half year and full year statements.

Fuel Cell Development and Monetisation

We have seen significant industry interest in the Group's high power density fuel cell MEA.  Engagement with OEMs and potential manufacturing partners has been active and encouraging.  This engagement has, given the competitive environment in the global auto industry, been largely confidential to date.  Announcements regarding OEM engagement have therefore not been possible although we can confirm that we are at evaluation stage with a number of potential partners.

Grant Funding and Partnerships

In the year to 30 April 2011 we recognised £1.09m of income from funding bodies (of which £0.41m related to property, plant and equipment), well ahead of our internal forecast. For ITM Power, securing grant funding is an integral feature of our commercialisation strategy - developing partnerships with substantial commercial organisations.  The UK projects we have been involved in to date have seen ITM Power working with blue chip partners including Ford, Jaguar Land Rover, Johnson Matthey and E.ON as well as some of the country's most prestigious research facilities.  We are also achieving success in accessing larger EU funding streams and, as a consequence, developing European partnerships.  Grant funded projects include the sale of products, demonstrations and technology development that are not included in our sales figures or forecasts. 

In the current financial year we have already secured a further £0.82m in grant funding. 

Our target at ITM Power was to turn great technology into products that customers want to buy. The first evidence of this is £0.43m of product orders in four months. "From little acorns mighty oaks do grow."

Dr Graham Cooley

Chief Executive Officer

ITM Power plc

CONSOLIDATED INCOME STATEMENT

For the year ended 30 April 2011

	2011   £'000	2010   £'000
Revenue	8	-
Cost of sales	(6)	-
Gross profit	2	-
Operating costs
- Research and development	(3,356)	(3,531)
- Prototype production and engineering	(1,404)	(1,316)
- Sales and marketing	(514)	(389)
- Administration	(1,956)	(1,665)
Other operating income -      grant income	615	139
-       other income	61	-
Loss from operations	(6,552)	(6,762)
Interest receivable	155	203
Interest payable	-	(1)
Loss before tax	(6,397)	(6,560)
Tax	625	1,509
Loss for the year, being total comprehensive expense for the year	(5,772)	(5,051)
Loss per share
Basic and diluted	(5.4p)	(5.0p)
Weighted average number of ordinary shares	106,868,812	102,409,137

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

As at 30 April 2011

	Called up  share  capital £'000	Share  premium  account £'000	Merger   reserve  £'000	Retained   loss  £'000	Total equity  £'000
At 1 May 2009	5,105	36,272	(1,973)	(15,917)	23,487
Issue of shares	37	5	-	-	42
Charge to equity for share based payments	-	-	-	(15)	(15)
Loss, being total comprehensive expense for the year	-	-	-	(5,051)	(5,051)
At 30 April 2010	5,142	36,277	(1,973)	(20,983)	18,463
At 1 May 2010	5,142	36,277	(1,973)	(20,983)	18,463
Issue of shares	387	55	-	-	442
Credit to equity for share based payments	-	-	-	631	631
Loss, being total comprehensive expense for the year	-	-	-	(5,772)	(5,772)
At 30 April 2011	5,529	36,332	(1,973)	(26,124)	13,764

CONSOLIDATED BALANCE SHEET

As at 30 April 2011

	2011  £'000	2010  £'000
NON CURRENT ASSETS
Property, plant and equipment	1,426	1,364
CURRENT ASSETS
Inventories	-	12
Trade and other receivables	1,155	733
Cash and cash equivalents	12,159	16,932
TOTAL CURRENT ASSETS	13,314	17,677
CURRENT LIABILITIES
Trade and other payables	(976)	(578)
NET CURRENT ASSETS	12,338	17,099
NET ASSETS	13,764	18,463
EQUITY
Called up share capital	5,529	5,142
Share premium account	36,332	36,277
Merger reserve	(1,973)	(1,973)
Retained loss	(26,124)	(20,983)
TOTAL EQUITY	13,764	18,463

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 April 2011

	2011  £'000	2010  £'000
Net cash used in operating activities	(4,588)	(4,627)
Investing activities
Interest received	155	203
Interest paid	-	(1)
Proceeds on disposal of property, plant and equipment	-	11
Purchases of property, plant and equipment	(1,193)	(490)
Grants received relating to property, plant and equipment	411	-
Net cash used in investing activities	(627)	(277)
Financing activities
Issue of ordinary share capital	442	42
Net cash from financing activities	442	42
Decrease in cash and cash equivalents	(4,773)	(4,862)
Cash and cash equivalents at the beginning of year	16,932	21,794
Cash and cash equivalents at the end of year	12,159	16,932

NOTES TO THE FINANCIAL STATEMENTS

Year ended 30 April 2011

1.  BASIS OF ACCOUNTING

The preliminary announcement is based on the financial statements which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Groupy expects to publish full financial statements that comply with IFRS in August 2011.

The going concern basis has been adopted in preparing the financial statements. In reaching their conclusion regarding going concern, the Directors have considered the risks and uncertainties, prepared and examined the cost budgets for the coming year and reviewed the level of cash balances and concluded that the going concern basis of preparation remains appropriate.

The financial information is prepared on the basis of the accounting policies as shown on the Company's website, www.itm-power.com 

Copies of the financial statements/annual report will be available for collection from the Company's registered office at 22 Atlas Way, Sheffield, S4 7QQ.

2.  NOTES TO THE CASH FLOW STATEMENT

	2011  £'000	2010  £'000
Operating loss	(6,552)	(6,762)
Adjustments for property, plant and equipment:
- Depreciation	704	722
- Loss on disposal	16	223
Share-based payments charge (credit)	631	(15)
Operating cash flows before movements in working capital	(5,201)	(5,832)
Decrease in inventories	12	58
Increase in receivables	(197)	(5)
Increase in payables	398	129
Cash used in operations	(4,988)	(5,650)
Income taxes received	400	1,023
Net cash used in operating activities	(4,588)	(4,627)

3.  FINANCIAL INFORMATION

The financial information set out in the announcement does not constitute statutory financial statements for the years ended 30 April 2010 or 30 April 2011, but is derived from these statutory accounts, which have been reported on by the Group's auditor. Statutory accounts for the year ended 30 April 2010 have been delivered to the Registrar of Companies and those for 2011 will be delivered following the Group's Annual General Meeting. The financial statements were approved by the Board of Directors on 25 July 2011. The auditor has reported on those accounts; their reports were unqualified and did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

 

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