TIDMITM
RNS Number : 6229J
ITM Power PLC
17 August 2023
17 August 2023
ITM Power PLC
("ITM Power" or the "Company")
Preliminary results
Gaining traction - Our journey to volume manufacturing and rapid
deployment
ITM Power (AIM:ITM) announces its final results for the year
ended 30 April 2023
HIGHLIGHTS
Final results summary
-- Revenue of GBP5.2m (FY22: GBP5.6m) significantly ahead of guidance of GBP2m
-- Adjusted EBITDA loss of GBP94.2m (FY22: GBP39.8m)* in line with the GBP85m to GBP95m guidance
-- Net cash at the year end of GBP283m (FY22: GBP366m) ahead of guidance of GBP245m to GBP270m
* Adjusted EBITDA is a non-statutory measure. The calculation
methodology is set out in Note 4
The financial performance for the year is in line with, or ahead
of, the expectations set at the year end trading update on 1 June
2023. Our 12-month plan, including stringent cash control in the
second half of the year, led to higher revenue and a stronger
balance sheet position compared to the revised guidance.
Strategic update: Good progress made against our 12-month
priorities plan
-- Product portfolio significantly simplified, concentrating on
our core product suite, with mature engineering processes and
robust product validation, preparing for manufacturing at scale
-- A rigorous approach to capital allocation and cost
management, including a significant reduction in headcount enabling
us to reinvest faster to professionalise important areas such as
engineering and manufacturing
-- Debottlenecking fabrication and testing by incremental
automation, expansion of our factory in Sheffield, and investment
into ITM Power Germany
Financial guidance for FY24
-- Revenue expected to increase to between GBP10m and GBP18m
from commercial projects in execution
-- Adjusted EBITDA loss improving with growing output/sales and
expected to be in the range of GBP45m to GBP55m
-- Net cash at year end expected to be in the range of GBP175m
to GBP200m after significant capital investment in capacity
expansion, including power supply upgrades
Commenting on the results, CEO Dennis Schulz said:
"I have been at ITM for just over half a year, joining the
company at a time of challenging operational and financial
performance, and it is encouraging to see the amount of progress we
have been making against our 12-month plan laid out in January
2023. The implementation, which is moving at pace, will strengthen
our operational and commercial capabilities, and steer a successful
path to becoming a highly efficient and reliable volume
manufacturing company.
Whilst some revenues related to product deployments have yet to
be recognised at customer site acceptance testing, I am very proud
that more products have left the ITM factory over the past six
months than in the previous 22 years of its history. This is a
testament to tangible progress on our transformation journey.
Our technology is state of the art and globally leading. We are
deploying our electrolysers for some of the largest and most
prominent green hydrogen projects under execution worldwide today.
These projects will serve as important reference plants and play a
crucial role in building confidence with customers for even larger
deployments in the future.
The big demand for green hydrogen lies yet ahead, and ITM will
be ready!"
For further information please visit www.itm-power.com or
contact:
ITM Power PLC
Justin Scarborough, Head of Investor
Relations
James Collins, Head of Corporate +44 (0)114 551 1080
Affairs +44 (0)114 551 1205
Investec Bank plc (Nominated
Adviser and Broker) +44 (0)20 7597 5970
James Rudd / Chris Sim / Ben Griffiths
There will be a presentation for investors at 0900h BST on the
Investor Meet Company platform. Investors can sign up to Investor
Meet Company for free and add to meet ITM POWER PLC via:
https://www.investormeetcompany.com/itm-power-plc/register-investor
.
About ITM Power PLC:
ITM Power was founded in 2000 and ITM Power PLC was admitted to
the AIM market of the London
Stock Exchange in 2004. Headquartered in Sheffield, England, ITM
Power designs and manufactures
electrolysers based on proton exchange membrane (PEM) technology
to produce green hydrogen, the
only net zero energy gas, using renewable electricity and
water.
STATEMENT FROM THE CHAIR OF THE BOARD
The past year has been one of significant change for the
Company. Our new CEO, Dennis Schulz, joined us in December 2022,
and he has brought a fresh perspective and a renewed focus, putting
into place a 12-month plan which is laying strong foundations for
our future growth aspirations.
Against a backdrop of an unacceptable operational and financial
performance for the year as a whole, our results are above or in
line with the guidance provided in January 2023 with a net cash
position at the year end of GBP283m and our balance sheet in a
healthy position.
Previously, we raised capital to pursue an expansion strategy
and in doing so underestimated the competencies and capabilities
required to scale up and to transition from an R&D company to a
volume manufacturer. As a consequence, we had set unrealistic
targets for project completion.
As a Board, we acted swiftly by appointing Dennis Schulz as our
new CEO and he promptly developed a 12-month plan to address the
underlying challenges of the Group. This included a three-step
strategy to simplify our product portfolio, reduce our expenditure
and debottleneck our manufacturing facilities. As part of this we
completed a restructuring of our organisation including reducing
our headcount. The re-sizing of our business was difficult, but
necessary from an operational and financial perspective and the
changes will support the long-term success of our business. Those
colleagues who remain in the business today are extremely
passionate about what they do. By having a clarity of purpose I
know that together we will achieve great things in the future and
the Board thanks our employees for their continued commitment and
support.
The macro picture
The world is in a race to net zero emissions by 2050. This means
that we need to reduce our greenhouse gas emissions to zero, or
close to zero, in order to avoid the worst effects of climate
change. Whilst the current global energy crisis poses a threat to
near-term economic prospects, it has strengthened the economic case
for accelerating the shift away from fossil fuels by driving
investments in renewables, energy efficiency and other clean energy
technologies.
One of the key technologies that will help us achieve net zero
is green hydrogen which can replace traditional grey hydrogen in
existing industrial applications in the near term as well as being
a substitute for a variety of fuels and feedstocks in the long
run.
Governments around the world are setting ambitious targets for
decarbonisation, and hydrogen is seen as a key part of the
solution. To address this, it is imperative that all of the
components of the value chain are synchronised with the build-up of
hydrogen supply and demand. It is clear that we are entering a
period of significant growth for the hydrogen industry and the
emergence of a global hydrogen marketplace is now inevitable.
We are well-positioned to capitalise on this growth opportunity.
We have a strong team, a leading technology, and a clear vision for
the future. We are confident that we can grow our business and make
a significant contribution to the global effort to decarbonise the
economy.
Environmental, social and governance (ESG) objectives
We are dedicated to delivering robust ESG performance out of a
desire to uphold ethical standards. The fact that we kept our MSCI
"AA" rating for a third consecutive year shows that the Company's
ESG practices are well aligned with shareholder interests, and we
are proud of this achievement. It also indicates that we are a
business that is setting the standard for how our sector manages
the biggest ESG risks and opportunities.
Board changes
Denise Cockrem was appointed as a Non-Executive Director from
July 2022. Denise is Group Chief Financial Officer of
Ecclesiastical Insurance Office plc, a specialist insurance
provider that is part of the Benefact Group - a charity owned,
international family of financial services companies that exist to
donate profits to good causes. She joined Ecclesiastical Insurance
Office plc in August 2018 from Good Energy Group plc, an AIM-listed
renewable electricity company where she was Chief Financial
Officer.
Helen Baker stepped down as Company Secretary in September 2022
and we welcomed Vicky Williams into her role in November 2022.
Dr Graham Cooley stepped down from his role as CEO after 13
years in the post in December 2022. Graham was responsible for
leading the Company through a period of significant development and
he remains a sizeable and very supportive shareholder.
Dennis Schulz joined as CEO in December 2022. He brings a wealth
of experience from Linde Engineering which includes project
execution, strategy and a period as Chief Financial Officer and
Managing Director. More importantly, Dennis knows our senior
management and technology very well, having been directly involved
in our strategic relationship with Linde, and brings deep insight
into the green hydrogen market and our customer base.
Dr Rachel Smith stepped down from the Board on 30 January 2023.
With her knowledge, expertise and passion for the Company, Rachel
was pivotal in the delivery of several key strategic projects for a
number of years. On behalf of the Board, I would like to thank
Rachel for her continued commitment to ITM as she works with the
Company in her new role as Special Projects Director.
Katherine Roe has announced her intention not to seek
re-election to the Board at the 2023 AGM. The Board wishes to
express enormous gratitude to Katherine for her contribution over
the last three years, particularly with the development of our ESG
strategy and supporting the business during a period of significant
change. Katherine has been a valued member of the team and the
Board wishes her well in her future career. The Board will not be
replacing Katherine at this juncture, thereby reducing the number
of Non-Executive Directors from five to four. This is in line with
the change made to the number of Executive Directors which reduced
from four to three upon Dr Rachel Smith's departure from the Board
in early 2023. The Board is confident the balance of executives to
non-executives therefore remains appropriate for a company of our
size.
Looking ahead
Following the significant changes which we have made to our
business, we are confident that we are well-positioned to
capitalise on the significant opportunities in the green hydrogen
economy that lie ahead. We have a clear plan in place, a renewed
focus and a dedicated team that is committed to delivering results.
We will continue to invest in our core technology along with the
automation of our manufacturing processes, which will allow us to
stay ahead of the curve. The investments we are making today will
ensure that we can grow into a profitable business in the
future.
In closing, I would like to thank our shareholders, employees,
and customers for their continued support and confidence in our
business. We remain committed to delivering value to our
shareholders and creating a sustainable future for our Company.
Sir Roger Bone
Chair of the Board
CHIEF EXECUTIVE OFFICER'S STATEMENT
I have been at ITM for just over half a year and it is
encouraging to see the early progress we have been making against
our 12-month priorities plan laid out in January 2023. The
implementation, which is moving at pace, will strengthen our
operational and commercial capabilities. When I chose to join as
CEO, it was because I believe in ITM's core technology and in the
important role green hydrogen will play in the energy transition. I
welcomed the opportunity to help ITM steer a successful path from
the development of first-of-a-kind technology to becoming a highly
efficient and reliable technology and manufacturing company. I did
not underestimate the challenge to transform ITM into a mature
delivery organisation, but the majority of changes required are
about basics such as the organisational structure, accountability,
processes, controls and tools.
Whilst there is still a lot to accomplish at ITM, six months
into our 12-month plan, we should not overlook the significant
steps forward we have already made in such a short period of time.
Operational excellence, what we strive for, is a consistent way of
working that delivers on our goals, activating the entire
organisation to continuously get better every day at achieving our
purpose. It is about culture, about behaviours, mindsets, and daily
practices that are intrinsically linked to our purpose and values
as a company. By slowing down and focusing on doing things right
the first time, essentially prioritising quality over quantity, we
have already gained traction and speed. This shift in culture to
become a professional and credible organisation ready for volume
manufacturing has started taking effect. The transformation is
evident in our day-to-day behaviours already, and it is imperative
that we maintain this momentum. Whilst some revenues related to
product deployments have yet to be recognised at customer site
acceptance testing, I am very proud that more products have left
the ITM factory over the past six months than in the previous 22
years of its history.
Our PEM technology is state of the art and globally leading,
more on this later. We are deploying our electrolysers for some of
the largest and most prominent green hydrogen plants under
execution worldwide today such as for Linde in Leuna (24MW), for
Yara in Porsgrunn (24MW), and for RWE in Lingen (2x 100MW). These
projects will act as important reference plants and play a crucial
role in building confidence with customers for even larger
deployments in the future.
Over the past six months, we deliberately took a less active
approach to bidding for new projects as we did not want to overload
the Company at the same time as fixing important fundamentals which
were holding us back from scaling. This has coincided with what we
believe is a temporary slowdown of final investment decisions
(FIDs) being taken by customers, which has given us breathing space
to enact our 12-month plan without missing out on the growing
market demand for electrolysers. Given our progress, we have now
started to be more active in the market again, although we will
continue to be selective to ensure that we can deliver a robust and
reliable product on time and on budget, and that projects
contribute positively to our margin.
The market for green hydrogen
Climate change, decarbonisation and energy independence
imperatives continue to fuel the projected hydrogen demand.
Collectively, societies worldwide have decided to decarbonise their
industries, which, as one important pillar, requires the
synchronised build-up of a hydrogen economy. This endeavour is
underway in three dimensions and at very ambitious speed:
First, hydrogen production, preferably green based on renewable
energy and electrolysis, or blue as a bridging technology to
temporarily lower the carbon footprint of the installed capacity of
fossil-based hydrogen production, before eventually transitioning
to truly clean green hydrogen.
Second, hydrogen transport and storage infrastructure, mainly
via pipelines and caverns, also to unlock the energy grid balancing
potential of hydrogen.
Third, applications and use cases around combustion,
reconversion to electricity, e.g. for grid balancing or the
electrification of industrial processes, or onward processing to
ammonia or methanol for example. This build-up requires a vast
amount of capital to be deployed, and governments around the world
are trying to create environments which are conducive to
accelerated investment.
The International Energy Agency (IEA) sees an increased focus on
renewables, now being 30% higher than forecasted just a year ago.
This follows governments throwing additional policy weight behind
renewables over the past 12 months. They estimate that renewables
are set to account for more than 90% of global electricity
expansion over the next five years.
In its latest World Energy Transition Outlook, the International
Renewables Energy Agency (IRENA), stated that clean hydrogen
production needs to rise to 518 million tonnes (mt) per annum by
2050 from the current level of 0.7mt per annum. To achieve this
goal, IRENA estimates that the world would require 5,722GW of
electrolyser capacity which compares to its latest estimated
deployed capacity of just 0.5GW.
The European Green Deal is the EU's strategy for a
climate-neutral, clean and circular economy by 2050, which
recognises the need for transformative policies. The REPowerEU plan
published in May 2022 foresees significant investment in renewables
as well as clean technology manufacturing. The EU's ambition is to
produce 10mt and to import 10mt of green hydrogen by 2030. In March
2023, the European Commission proposed the Net-Zero Industry Act to
ramp up manufacturing of clean technologies, including green
hydrogen. At the same time the Commission announced the new
European Hydrogen Bank (EHB), which amongst other things will
provide financing mechanisms to help create the domestic market for
green hydrogen. In total, the EU estimates that investments of
EUR335bn to EUR471bn are required to achieve 10mt of green hydrogen
production.
In the UK, the Government's Hydrogen Strategy is aiming for 10GW
of clean hydrogen production by 2030 with at least half of it being
green hydrogen. The hydrogen net zero investment roadmap includes a
number of elements, among them a Net Zero Hydrogen Fund, worth up
to GBP240m to support the development and deployment of new low
carbon hydrogen production, a Production Business Model to ensure
long-term revenue support and a Low Carbon Hydrogen Standard to
enable market access and certainty for end use.
In the US, the government has enacted two laws, the
Infrastructure Investment Jobs Act (IIJA) of 2021 and the Inflation
Reduction Act (IRA) of 2022, to boost infrastructure development.
The IIJA has budgeted $1.2trn for infrastructure spending, of which
$550bn are dedicated to creating new infrastructure, and the IRA
has earmarked $370bn for energy-related spending. The IRA is a game
changer aimed to support the decarbonisation of the US economy and
to develop a domestic clean-technology supply chain.
But how do these huge numbers translate into real business
scale-up? Looking at electrolyser manufacturers alone, growing by a
factor higher than 100x in just a few years requires laser-sharp
focus and discipline. It also requires our suppliers to scale with
us. Every step of the value chain needs substantial investments and
risk-taking to grow at this pace. Therefore, to take uncertainty
out of the equation as much as possible, we require commercial
projects to scale with as well as continued government support and
funding, all of which are critical enablers, together with stable
regulatory frameworks and quick grant decisions. Ultimately, only
building real physical plants will make the hydrogen economy and
energy transition real.
There are, however, a number of obstacles which have delayed
customer projects reaching a Final Investment Decision (FID). These
obstacles comprise current peak electricity prices, with
electricity cost being the key determinator for the production cost
of green hydrogen, inflation leading to rising project and capital
cost, and uncertainty regarding regulatory frameworks which are
partly still evolving, as well as delayed funding decisions by
governments due to bureaucratic hurdles. As a result, projects are
piling up, as industries continue to face increasing carbon
taxation and ever tighter regulatory limits for carbon emissions.
For ITM, this slowdown of investments, which we believe is
temporary, came at the right time to give us the breathing space
required to focus on implementing our 12-month plan to solidify our
foundations as a company, while integrating closer with and
advancing our supply chain, all of which is required for true
upscaling of volumes and global expansion.
In summary, the global green hydrogen market and electrolyser
demand are expected to see strong growth in the coming years,
driven by the need to decarbonise, favourable government policies,
increasing investments, and use cases in a wide range of
industries. It is now certain that green hydrogen will play a
significant role in the energy mix of the future, and we expect to
see continued momentum in this market in the years to come.
Update on our 12-month priorities plan
As ITM is transitioning to a volume manufacturer, we are now six
months into our 12-month plan announced in January 2023 to solidify
our foundations and have made substantial progress in our three
focus areas:
1. concentrate on a standardised core product suite for
repeatable and reliable volume manufacturing;
2. improve capital discipline by a stringent cost reduction
programme in the short-term, and by introducing professional
processes for the future; and
3. debottleneck and ramp up fabrication and testing, and invest into incremental automation.
In parallel, we are delivering against our project commitments,
thereby completing important reference plants.
Products
When I joined, ITM had a product portfolio that was too wide and
the services we provided to support older generation technologies
were disruptive to our manufacturing process and became too
costly.
We have now rationalised our portfolio so that we can
concentrate our efforts on our core products, namely our
state-of-the-art MEP30 stack platform and our Plug & Play
containers. We have discontinued design work for older product
iterations, and limited our activities to fulfilling remaining
contractual commitments and warranty obligations. This takes
account of the fact that we deem our MEP30 stack to be the most
advanced PEM technology on the market today.
Let me pick just three of various features which make our
technology superior. First, our stack is operating at by far the
highest current density in the market, which reduces material use,
size and ultimately cost substantially. ITM has already exceeded
the EU's 2030 target of 2.5 A/cm(2) in 2019. Second, our technology
has market-leading conversion efficiency at levelised current
densities to any competitor, which reduces operational cost for the
end customer. This is because there is an inverse relationship
between current density and conversion efficiency. Third, our
technology has the lowest reported precious metal loading, which
reduces cost and relieves potential future supply chain
constraints. Over the last 10 years, ITM have already been able to
reduce precious metal loading by 80%, and we are continuing to
reduce it even further. Since 2019, we have been meeting the EU's
2030 target of 0.4mg/W.
Today, once a product design is signed off, there will be no
ongoing iterations to that design and the product will be
manufactured to the exact design specifications, with standardised
engineering processes and will be delivered to our customers as per
contractual agreements.
Research and development will continue to play a crucial role in
ITM's future but any new product generation will only be deployed
once it has gone through strict design, engineering, assembly,
testing and validation processes.
Capital discipline and cost reduction
One of the first actions I took after assuming office in
December 2022 was to tighten control over ITM's capital spend.
Decisions on the use of our shareholders' capital have to align
with our strategy and be scrutinised for appropriateness and
effectiveness.
The headcount reduction that we announced in January 2023 was
successfully completed before year end, with the outcome greater
than the 25% FTE reduction we had originally planned. This allowed
us to reinvest the incremental cost savings back into the business
and to selectively rehire for qualification and experience. We were
able to continue business operations without disruption whilst also
providing adequate care and support for all employees placed at
risk during the restructure process.
One core element of our 12-month priorities plan is a very
detailed list of process, control and tool improvements spanning
the entire organisation, to professionalise our operations and make
us a highly focused delivery company. By implementing these
improvements, we will avoid inventory and project losses as
experienced during FY23. Among various improvements, this includes
the following which we have already achieved.
We have effectively professionalised our engineering
capabilities and processes. Following a structured design Failure
Mode and Effects Analysis (FMEA), the engineering is now completed
and frozen. Changes are properly controlled and only released in
well-managed versions for procurement and manufacturing, and only
after robust validation. Our strengthened compliance and validation
team plays an important role in challenging and accompanying this
process.
The right selection of reliable and high-quality suppliers, and
close integration with them, are important enablers to scale our
operations. Previously, at times, procured components and parts
were not of sufficient quality. We have therefore been tightening
our purchasing specifications, have strengthened our standard terms
and conditions, and are improving supplier oversight, quality
assurance and control.
We have also made good progress on the way we manufacture our
products following the design FMEA, our progress on automation,
which I elaborate more on later, and driven by an unambiguous
"quality over quantity" culture. These improvements have already
led to significantly higher pass rates in factory testing which in
turn lowers retesting costs, supports the debottlenecking of our
test facilities, and causes fewer interruptions to serial
manufacturing due to avoided stack re-assembly. Also,
consequentially, our production and project delivery schedules
become more predictable.
Sales and project execution governance has been strengthened
around the focus on standard products as opposed to customised
solutions, which was one of the reasons for previous cost and
schedule underestimation and resulting project overruns. We have
reviewed and concluded on acceptable contract terms, liability and
warranty profiles. Furthermore, we are working on improving our
cost estimation, scheduling and risk management processes and
capabilities. We are also continuing to enhance our competencies by
hiring senior industry professionals in areas critical for project
delivery.
By having signed the Heads of Terms for the sale of Motive, we
aim to complete the transaction still within this calendar year.
This will free up GBP28m of pre-committed capital investment to be
re-purposed to our core business.
Debottlenecking
We have made good progress in this area in a short space of
time. In March, we announced the expansion of our testing capacity
at Bessemer Park, initially by 50% from 5.0 to 7.5 megavolt-amperes
(MVA) which is already available. This will be followed by a
further fourfold increase to 30 MVA by the end of 2024.
In April, we announced the decision to expand our facilities at
Bessemer Park in Sheffield, to make space for R&D and product
validation including science labs and first-of-a-kind product
testing facilities. This will also allow us to optimise our factory
layout for stack fabrication from a layout which evolved over time
to one that is geared up for automation and serial production. It
also provides increased fabrication space for higher stack volumes,
allowing ITM to grow output in line with commercial projects. We
plan to take over our new facilities in Q4 2023 for interior
fit-out.
We also announced a significant expansion in Germany. ITM Power
Germany will officially open its doors in Linden, north of
Frankfurt, in October 2023. This expansion further strengthens our
position as a leading manufacturer of large-scale electrolysers for
projects in Germany and wider Europe. In its initial fit-out, our
facilities will have sizable office space, and a warehouse with
special equipment for storing our stacks in lightweight skids ready
for quick deployment as aftersales spares. This allows us to
minimise response time to customers, in turn maximising value from
the use of our products. It will also house facilities for repair
and maintenance, as well as for training of customers and partners.
This expansion will not only support responsive aftersales in the
heart of the EU as our core market today, but will also be home for
various business functions that are enablers for ITM's accelerated
growth, including our global business development function, our
industrial Internet of Things (IoT) team, various engineering
disciplines, aftersales technicians, field engineers, procurement
and other functions. As we are scaling our operations, this is a
major step in gearing up for an increasing degree of local content
creation in the EU.
Manufacturing automation plays an important role in reducing
human error, improving precision, optimising build quality and
consistency, reducing manufacturing costs, accelerating output and
reducing delivery lead times. We have made good progress against
our automation roadmap and are incrementally introducing automation
in a controlled way, after new equipment and new processes have
been validated.
Over recent months we have automated or semi-automated a number
of manufacturing processes. Among them a customised press, capable
of operation at 20 tonnes of pressure, with micron-level accuracy.
This enables the thickness of critical components to be measured
under compression and for precision build. Advanced laser scanning
now allows us to inspect every electrode structure for surface
conditions at micron level. We developed a resistance welding
machine in-house to assemble stack components with the highest
precision. Our new automated catalyst ink mixing produces
consistent pastes for our catalyst coated membranes, increasing
both quality and volume. Another improvement is our new use of
fully integrated guided stack assembly which supports our
technicians to avoid rework and increase productivity. This
advanced sensor, laser-scanning projection and camera system
provides build oversight and documents each step so that we can
quickly identify, diagnose and remediate potential build errors.
Our automation roadmap foresees many further improvements, which
will continue to drive down build time and improve build quality
and consistency. As we continue to implement these advancements, we
are entering a new era of manufacturing at ITM.
Outlook
We are well on track to deliver our 12-month priorities plan
which will lay strong foundations for ITM's continued growth. The
green hydrogen market is still in its early stage, but evolving
rapidly.
With vastly increased confidence with regards to our capability
to deliver products at volume, we are now taking a much more active
approach to sales. For this purpose, we are currently building up a
new global business development function in our new Linden
facilities of ITM Power Germany right in the heart of our core
market, the EU.
As ITM is increasingly deploying stacks into the field in
commercial projects today, a rapidly growing amount of real-world
performance data will enable us to drive advancements in the areas
of core technology and product improvements, development of new
business models around remote monitoring/operations and predictive
maintenance, as well as commercial certainty around tightened
system performance guarantees. These activities will be led by our
Data and Industrial IoT team which we are now building up.
Whilst we will retain our strong presence in Sheffield, ITM will
expand towards an increasingly global footprint, thereby tapping
into important growth markets and unlocking access to new talent
pools.
The big demand for green hydrogen lies yet ahead, and ITM will
be ready!
Dennis Schulz
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REVIEW
The financial outcome in FY23 was not as we had originally
expected. Following the arrival of Dennis Schulz as our new CEO, a
detailed review of the business was undertaken which resulted in
the announcement of our 12-month priorities plan in January. One of
the three components of the plan was the focus around our cost and
capital discipline and we announced our intention to stop the
excessive financial outflows through a stringent short-term cost
reduction programme which addressed the key costs, together with a
more rigorous approach to capital investment.
The first step was the headcount reduction which was completed
before the end of the financial year. We have also undertaken a
detailed review of other cost areas which culminated in provisions
being taken for inventory and contract losses, reflecting both
actual costs to incur and uncertainty in project execution. In
addition, we undertook a detailed review of our warranty provision
policy on first-of-a-kind (FOAK) technology deployed in the
field.
Today, we are in a much better place. Our overheads have been
right-sized for the business needs of today, we have greater
clarity regarding our costs, and our balance sheet remains strong.
However, there remains more to do in the months ahead.
During the year we introduced a new Enterprise Resource Planning
(ERP) system, which includes the ongoing adoption of Microsoft
Dynamics into our financial processes replacing a number of legacy
systems. Having begun to lay the foundations for growth, we will
continue to advance our competencies and capabilities across the
Company and ensure that controls across all areas of the business
continue to be reviewed and improved. This in turn will further
enhance our cost management and capital disciplines.
Key financials
A summary of the Group's key financials is set out in the table
below:
Year to 30 2023 2022 2021
April GBPm GBPm GBPm
------------------- ------- ------ ------
Revenue 5.2 5.6 4.3
------- ------ ------
Gross loss (79.1) (23.5) (6.5)
------- ------ ------
Pre-tax loss (101.2) (46.7) (27.6)
------- ------ ------
Adjusted EBITDA(1) (94.2) (39.8) (21.4)
------- ------ ------
Property, plant
and equipment
plus intangible
assets 31.9 24.7 16.8
------- ------ ------
Inventory (raw
materials) 18.3 24.3 3.9
------- ------ ------
Inventory Work
in progress
(WIP) 40.5 7.9 2.5
------- ------ ------
Net cash 282.6 365.9 176.1
------- ------ ------
Net assets 295.5 395.0 197.4
------------------- ------- ------ ------
1 Adjusted EBITDA in a non-statutory measure. The calculation
method is shown in Note 4.
Non-financial key performance indicators (KPIs)
We also use certain non-financial performance indicators to
consider our performance over time. During the year, MW in WIP
increased to 285MW (FY22: 75MW). Revenue was recognised against 5MW
of deliveries (FY22: 11MW). The Board also regularly reviews other
non-financial performance criteria including production throughput,
testing and validation performance and labour utilisation. As the
Group matures to a volume manufacturer, it is likely that we will
refresh our non-financial KPIs to reflect the evolved business.
Financial performance
The principal ways in which we generate revenue and income are
through product sales, consulting contracts (FEED and feasibility
studies), maintenance contracts and grant funding.
Revenue
Revenue for the period was GBP5.2m (FY22: GBP5.6m). This
consists of a partially delivered cube project, a Plug & Play
project which was accelerated ahead of guidance, as well as
maintenance and consultancy revenue.
Gross margin
The gross loss was GBP79.1m (FY22: GBP23.5m) reflecting
increased losses on inventory and customer contracts, and an
assessment of warranty commitments.
Costs recognised in the period relating to inventory were
GBP22.6m, constituting a GBP7.5m write-off, and a provision
movement of GBP15.1m. The losses originate from continued
iterations of product designs during manufacturing, together with
some manufactured products being considered obsolete.
Contract loss provisions relate to a number of factors including
acceleration measures for delayed projects, additional on-site
engineering works, increased energy and labour costs due to
under-estimated stack testing times and future costings updated for
inflation. Net contract loss provisions increased by GBP30.1m, with
GBP44.8m created and GBP14.7m utilised in the period. The total
contract loss provision at the period end stood at GBP42.6m.
The warranty provision increased by a net GBP0.9m in the period
with GBP3.2m created during the year, offset by the utilisation of
GBP2.3m. The balance at period end was GBP3.9m. This includes all
projects delivered at period end but excludes those not yet
delivered. The warranty costs of projects not yet delivered are
presented as contract loss provision.
Operating costs
Operating costs rose by 20% to GBP26.2m (FY22: GBP21.8m). Within
this, staff and employment costs rose from GBP4.3m to GBP11.4m,
reflecting an increase in use of contractor resources and a
reduction in recovery of labour costs from inventory. The headcount
reduction which was announced in January 2023 was completed by the
end of the period, and the benefit of this will be reflected in the
FY24 accounts.
Consultancy and consumable costs fell by 54% to GBP5.1m (FY22:
GBP11.2m), whilst depreciation and amortisation was relatively
stable at GBP4.0m (FY22: GBP3.2m).
The impairment charge of GBP4.5m (FY22: GBPnil) relates to the
write off of discontinued product development (GBP3.1m) and
tangible assets in relation to discontinued site expansion plans
(GBP1.4m) where activities ceased as part of the 12-month
priorities plan.
Government grants which constitute claims against individual
projects or research and development (R&D) claims totalled
GBP1.6m (FY22: GBP0.6m), with GBP1.4m receivable in relation to
R&D tax reclaims (FY22: GBP0.3m).
Adjusted EBITDA(1)
The Company posted an adjusted EBITDA loss of GBP94.2m (FY22:
GBP39.8m) for the period. Adjusted EBITDA is a non-statutory
measure and is detailed in Note 4. The loss before tax was
GBP101.2m (FY22: GBP46.7m) and the basic and diluted loss per share
was 16.5p (FY22: 8.1p).
1.Adjusted EBITDA is a primary measure used across the business
to provide a consistent measure of trading performance. The
adjustment to EBITDA removes certain non-cash items, such as
share-based payments, to provide a key metric to the users of the
financial statements as it represents a useful milestone that is
reflective of the performance of the business resulting from
movements in revenue, gross margin and the cash costs of the
business. We have set out below how we calculate adjusted EBITDA
(see also Note 4 for more information).
2023 2022
GBP000 GBP000
--------------------- --------- --------
Loss from operations (103,713) (44,736)
--------- --------
Add back:
--------- --------
Depreciation 3,006 2,340
--------- --------
Impairment 4,469 -
--------- --------
Amortisation 942 849
--------- --------
Loss on disposal 64 -
--------- --------
Fair value loss on
loan notes - 344
--------- --------
Share-based payment
charge (420) 1,429
--------- --------
Exceptional costs
of restructure 1,436 -
--------------------- --------- --------
Adjusted EBITDA (94,216) (39,774)
--------------------- --------- --------
Capital expenditure
Capital expenditure totalled GBP15.1m in the period (FY22:
GBP11.3m), with GBP8.6m invested in capital projects (FY22:
GBP4.2m), namely Bessemer Park improvements and machinery, and
GBP6.5m (FY22: GBP6.9m) in intangible assets primarily in respect
of continued product development.
Working capital
The working capital outflow during the year was GBP8.9m (FY22:
GBP6.9m outflow), with inventories increasing by GBP26.6m, offset
by both a reduction in receivables of GBP5.9m and an increase in
payables of GBP11.8m.
Cash
Net cash at the year end was GBP283m (FY22: GBP366m) benefitting
later in the year from the rigorous approach to costs and capital
disciplines which was announced at the time of our interim results
in January.
Financial position: positioned for the future
Current assets decreased to GBP362.9m (FY22: GBP423.6m)
principally reflecting a reduction in year-end net cash of GBP83.3m
with year-end cash of GBP282.6m (FY22: GBP365.9m), partly offset by
an increase in inventories to GBP58.8m (FY22: GBP32.2m) as the
Group stocked up on raw materials to deliver its order pipeline and
saw work-in-progress increase ahead of the delivery of the Leuna,
Yara and other projects.
Trade and other receivables were GBP19.7m (FY22: GBP25.5m)
reflecting a GBP4.1m decrease in prepayments, primarily in relation
to prepayments for inventory on the balance sheet. Trade and other
payables increased to GBP46.1m (FY22: GBP34.3m), driven by an
increase of GBP14.1m in deferred sales income principally in
relation to the timings of payments from customers on projects to
be delivered.
Fixed assets increased to GBP39.5m (FY22: GBP34.5m) reflecting a
GBP4.9m rise in property, plant and equipment and GBP2.4m of
additional intangible assets. Investments in associates and joint
ventures reduced to GBP0.4m (FY22: GBP1.7m), reflecting the booking
of losses in these associates and joint ventures against their
holding value.
Events after the balance sheet date
At the time of our interim results update, we stated that we
were exploring options for the future of our joint venture Motive
Fuels Ltd. We have now signed Heads of Terms for the sale of the
company. The 50/50 JV between ITM and Vitol was established in
March 2022 to develop and roll out hydrogen refuelling stations in
the UK. The vision of the JV partners was one of building a
significant UK refuelling business, with GBP30m committed by each
party as seed funding. However, one of the three priorities of our
12-month plan is increased cost and capital discipline.
The planned transaction will allow ITM to redirect GBP28m of
pre-committed cash to our core business, and to focus on becoming a
volume manufacturer of state-of-the-art electrolysers. Motive Fuels
Ltd, via ITM, was the recipient of grant funding to support the
rollout of refuelling stations in the UK. As part of the
transaction, a contingent liability may materialise for ITM in the
future against the performance obligations in the grants.
Outlook and financial guidance for FY24
We start the new financial year in a strong financial position
and, whilst our near-term focus is on the completion of our
12-month plan, we expect good sales momentum, with investment in
our people, our processes and our assets. The guidance for FY24
is:
Revenue in the range of GBP10m to GBP18m
Revenue will be largely impacted by sales of Plug & Play
containers which have a shortened sales and deployment timeline
compared to larger plant projects. Under our revenue recognition
policy, there is a dependency on site readiness for our larger
projects as these are recognised on site acceptance testing
(SAT).
Adjusted EBITDA loss of GBP45m to GBP55m
We expect to realise the benefits of improved testing times and
improved first time pass through rates during factory acceptance
testing. Close and prudent management of our in-flight projects and
control of inventory will be required to ensure that the
unacceptable project and inventory losses experienced during FY23
are not repeated. Our route to reducing losses further will be
built on profitable sales and volume growth.
Net cash at year end between GBP175m and GBP200m
Continued investment in the capability of the organisation will
be needed as we transition into a volume manufacturer. Investments
of GBP24-30m will be made to expand our facilities in Sheffield as
well as the previously announced upgrade to our power supply to
support increased testing capacity.
We will also invest into the development of our technology,
supporting our automation roadmap which will drive efficiencies
into our manufacturing processes.
Andy Allen
Chief Financial Officer
CONSOLIDATED INCOME STATEMENT AND OTHER COMPREHENSIVE INCOME
Note 2023 2022
GBP000 GBP000 RestatedGBP000 Restated
GBP000
Revenue 3 5,229 5,627
Cost of sales (84,294) (29,104)
Gross loss (79,065) (23,477)
Administrative expenses (26,222) (21,819)
Other income - government
grants 3 1,574 560
Loss from operations (103,713) (44,736)
Share of loss of associate
companies and joint ventures (1,567) (10)
Finance income 4,652 325
Finance costs (541) (532)
Loss on deemed disposal of
subsidiary - (1,710)
Loss before tax (101,169) (46,663)
Tax (32) (31)
Loss for the year (101,201) (46,694)
--------- ---------
OTHER TOTAL COMPREHENSIVE
INCOME:
Items that may be reclassified
subsequently to profit or
loss
Foreign currency translation
differences on foreign operations 160 (71)
-------- --------- ---------------- ---------
Net other total comprehensive
income 160 (71)
Total comprehensive loss
for the year (101,041) (46,765)
========= =========
Basic and diluted loss per
share 5 (16.5p) (8.1p)
========= =========
All results presented above are derived from continuing
operations and are attributable to owners of the Company.
In the prior year, Operating costs previously presented as
Research and development, Production and engineering, Sales and
marketing, Administration expenses and Expected credit loss have
been aggregated into Administrative expenses to present costs by
function.
CONSOLIDATED BALANCE SHEET
Note 2023 2022
GBP000 GBP000
NON-CURRENT ASSETS
Investments in associate and joint
venture 379 1,662
Loan notes - 1,548
Intangible assets 11,475 9,081
Right of use assets 6,934 6,454
Property, plant and equipment 20,489 15,637
Financial asset at amortised cost 174 161
--------- ---------
TOTAL NON-CURRENT ASSETS 39,451 34,543
--------- ---------
CURRENT ASSETS
Inventories 58,840 32,198
Trade and other receivables 19,657 25,542
Cash and cash equivalents 282,557 365,882
--------- ---------
361,054 423,622
Assets held for Sale 1,814 -
TOTAL CURRENT ASSETS 362,868 423,622
CURRENT LIABILITIES
Trade and other payables (46,081) (34,296)
Provisions 6 (17,893) (15,207)
Lease liability (943) (626)
--------- ---------
TOTAL CURRENT LIABILITIES (64,917) (50,129)
--------- ---------
NET CURRENT ASSETS 297,951 373,493
--------- ---------
NON-CURRENT LIABILITIES
Lease liability (6,866) (6,522)
Provisions 6 (35,028) (6,561)
--------- ---------
TOTAL NON-CURRENT LIABILITIES (41,894) (13,083)
--------- ---------
NET ASSETS 295,508 394,953
========= =========
EQUITY
Called up share capital 7 30,823 30,658
Share premium account 7 542,593 542,323
Merger reserve 7 (1,973) (1,973)
Foreign exchange reserve 7 172 12
Retained loss 7 (276,107) (176,067)
--------- ---------
TOTAL EQUITY 295,508 394,953
========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Note Called up Share premium Foreign
share capital account Merger exchange Retained loss Total equity
GBP000 GBP000 reserve reserve GBP000 GBP000
GBP000 GBP000
At 1 May 2021 27,533 302,248 (1,973) 83 (130,444) 197,447
Transactions
with owners 7
Issue of shares 3,125 240,075 - - - 243,200
Credit to
equity for
share-based
payment - - - - 1,071 1,071
Total
transactions
with owners 3,125 240,075 - - 1,071 244,271
Loss for the
year - - - - (46,694) (46,694)
Other
comprehensive
loss - - - (71) - (71)
-------------- -------------- -------------- -------------- --------------- --------------
Total
comprehensive
loss - - - (71) (46,694) (46,765)
At 1 May 2022 30,658 542,323 (1,973) 12 (176,067) 394,953
============== ============== ============== ============== =============== ==============
Transactions
with owners
Issue of shares 7 165 270 - - - 435
Credit to
equity for
share-based
payment - - - - 1,161 1,161
Total
transactions
with owners 165 270 - - 1,161 1,596
Loss for the
year - - - - (101,201) (101,201)
Other
comprehensive
income - - - 160 - 160
-------------- -------------- -------------- -------------- --------------- --------------
Total
comprehensive
loss - - - 160 (101,201) (101,041)
At 30 April
2023 30,823 542,593 (1,973) 172 (276,107) 295,508
============== ============== ============== ============== =============== ==============
CONSOLIDATED CASH FLOW STATEMENT
2023 2022
Note GBP000 GBP000
Net cash used in operating activities 8 (72,554) (38,155)
-------- --------
Investing activities
Investment in joint venture / associate (472) (1,838)
Cash flows arising from loss of control
of subsidiary - (993)
Loan notes (loan to joint venture) - (1,899)
Purchases of property, plant and equipment (8,553) (4,119)
Capital grants received against purchases
of non-current assets 124 150
Proceeds on disposal of property, plant
and equipment - 352
Payments for intangible assets (6,562) (7,036)
Interest received 4,562 304
--------
Net cash used in investing activities (10,901) (15,079)
-------- --------
Financing activities
Issue of ordinary share capital 1,048 250,000
Costs associated with previous equity
raise (612) (6,800)
Payment of lease liabilities (531) (69)
--------
Net cash (used in)/from financing activities (95) 243,131
-------- --------
(Decrease)/Increase in cash and cash
equivalents (83,550) 189,897
Cash and cash equivalents at the beginning
of year 365,882 176,078
Effect of foreign exchange rate changes 225 (93)
-------- --------
Cash and cash equivalents at the end
of year 282,557 365,882
======== ========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
ITM Power PLC is a public company incorporated in England and
Wales under the Companies Act 2006. The registered office is at 2
Bessemer Park, Sheffield, South Yorkshire S9 1DZ.
The summary accounts set out above do not constitute statutory
accounts as defined by Section 434 of the UK Companies Act 2006.
The summarised consolidated balance sheet at 30 April 2023, the
summarised consolidated income statement and other comprehensive
income, the summarised consolidated statement of changes in equity
and the summarised consolidated cash flow statement for the year
then ended have been extracted from the Group's 2023 statutory
financial statements upon which the auditor's opinion is
unqualified and did not contain a statement under either sections
498(2) or 498(3) of the Companies Act 2006. The audit report for
the year ended 30 April 2022 did not contain statements under
sections 498(2) or 498(3) of the Companies Act 2006. The statutory
financial statements for the year ended 30 April 2022 have been
delivered to the Registrar of Companies. The 30 April 2023 accounts
were approved by the directors on 16 August 2023 but have not yet
been delivered to the Registrar of Companies.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
The summary accounts are based on the consolidated financial
statements that have been prepared in accordance with UK-adopted
international accounting standards and with the requirements of the
Companies Act 2006 as applicable to companies reporting under those
standards.
They have been prepared on the historical cost basis except for
the remeasurement of certain financial instruments to fair value.
The principal accounting policies adopted are the same as those set
out in Note 3 to the consolidated financial statements except as
noted below.
Going Concern
The Directors have prepared a cash flow forecast for the period
from the balance sheet date until 31 August 2024. This forecast
indicates that the Group would expect to remain cash positive
without the requirement for further fundraising based on delivering
the existing pipeline.
By the end of the period analysed, the Group is forecast to hold
significant cash reserves. This should give the business sufficient
funds to trade for the going concern period if the business
continues according to its medium-term business plan.
The business continues in a cash outflow position, using funding
generated from previous fundraises. As such, this cash flow
forecast was stress-tested, both for a worst-case scenario of no
receipts and inflationary pressures on utilities and purchases. In
all the scenarios tested, the business would remain cash positive
for the 12 months from the date of approval of these financial
statements.
The accounts have therefore been prepared on a going concern
basis.
3. Revenue, OPERATING SEGMENTS AND INCOME FROM GOVERNMENT GRANTS
All revenues are derived from continuing operations. An analysis
of the Group's revenue is as follows:
2023 2022
GBP000 GBP000
Revenue from product sales recognised
over time - 808
Revenue from product sales recognised
at a point in time 4,099 1,231
Consulting contracts recognised over
time 636 2,948
Maintenance contracts recognised at
a point in time 250 43
Fuel sales 244 229
Other (e.g. scrap sales) - 368
------- -------
Revenue in the Consolidated Income
Statement 5,229 5,627
Grant income (claims made for projects) 155 271
Other government grants (R&D claims) 1,419 289
Other income - government grants 1,574 560
6,803 6,187
======= =======
At 30 April 2023, the aggregate amount of the transaction price
allocated to remaining performance obligations of continuing build
contracts was GBP87.7m (2022: GBP42.0m). The Group expects to
recognise 32% of this within one year, with the remaining 68%
expected the following year.
Segment information
ITM Power PLC is organised internally to report to the Group's
Chief Operating Decision Maker, the Chief Executive Officer, on the
financial and operational performance of the Group as a whole. The
Group's Chief Operating Decision Maker is ultimately responsible
for Group-wide resource allocation decisions, evaluating
performance on a Group-wide basis and any elements within it on a
combination of information from the executives in charge of the
Group and Group financial information.
Management has previously identified three target markets for
our products (Power, Transport, and Industry). Revenue reporting
has begun to look at these three sectors to assess the
commerciality of those sales. However, decisions for resourcing
cannot be made by reference to these segments. The Group operates a
single factory in the UK that builds units for use across all
sectors. It would be hard to assign overhead costs to particular
product segments as builds all occur in that one facility and can
run concurrently. Similarly, fixed assets and suppliers' balances
cannot be assigned to the production of one specific segment. For
overhead costs and net asset resources, therefore, decisions are
taken on a Group basis.
An analysis of the Group's revenue, by major product (or
customer group), is as follows:
2023 2022
GBP000 GBP000
Power 126 207
Transport 2,717 1,704
Industry 1,750 507
Other 636 3,209
------- -------
Revenue in the Consolidated Income Statement 5,229 5,627
======= =======
The Other category contained a large consultancy project in the
prior year, involving design and FEED studies for larger scale
product manufacture. This consultancy embarked on a new phase in
the current year.
Geographical analysis
The United Kingdom is the Group's country of domicile but the
Group also has subsidiary companies in the United States, Germany
and Australia. All non-current tangible assets were domiciled in
the United Kingdom (NBV: GBP20.5m) or Germany (NBV: GBP0.02m). All
intangible assets were domiciled in the United Kingdom. Revenues
have been generated as follows:
2023 2022
GBP000 GBP000
United Kingdom 699 3,359
Germany 1,750 770
Rest of Europe 188 246
United States 244 22
Australia 2,348 1,230
5,229 5,627
=============== ===============
Included in revenue are the following amounts, which each
accounted for more than 10% of total revenue:
2023 2022
GBP000 GBP000
Customer A Industrial 1,750 n/a
Customer B Other 636 2,840
Customer C Refuelling n/a 673
Customer D Refuelling 2,348 n/a
Except where extended warranties have been purchased and treated
as separate performance obligations for the purpose of IFRS 15
Revenue from Contracts with Customers, warranty commitments are
disclosed in Note 6.
4. CALCULATION OF ADJUSTED EBITDA
In reporting EBITDA, Management uses the metric of adjusted
EBITDA, removing the effect of non-repeating costs that are not
directly linked to the trading performance of the business in the
year under review:
2023 2022
GBP000 GBP000
Loss from operations (103,713) (44,736)
Add back:
Depreciation 3,006 2,340
Amortisation 942 849
Fair value loss on loan notes - 344
Loss on disposal of non-current assets 64 -
Impairment 4,469 -
Non-underlying share-based payment (credit)/charge
(Note 26) (420) 1,429
Exceptional costs of restructure 1,436 -
----------- ----------
(94,216) (39,774)
=========== ==========
The exceptional costs of restructure refer to redundancy costs
that largely sit within the staff costs in administrative expenses.
Management removed these in the adjusted EBITDA calculation due to
their one-off nature that would otherwise distort the true
operational figures.
5. LOSS PER SHARE
The calculation of the basic and diluted earnings per share is
based on the following data:
2023 2022
GBP000 GBP000
Loss for the purposes of basic and diluted
loss per share being net loss attributable
to owners of the Company (101,201) (46,694)
Number of shares
Weighted average number of ordinary shares
for the purposes of basic and diluted earnings
per share 614,683,780 576,699,822
Loss per share 16.5p 8.1p
================ ===============
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. The number of potentially dilutive shares not
included in the calculation above due to being anti-dilutive in the
years presented was 5,999,019 (2022: 45,064,658).
6. provisions
Leasehold Provision
property for contract Employer's Total
provision Warranty losses Other provisions NIC provision provisions
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 May
2021 (1,024) (797) (4,820) (677) (4,958) (12,276)
Provision created
in the year (36) (2,163) (15,052) (1,330) - (18,581)
Use of the provision 206 18 7,379 509 - 8,112
Release in the year - 4 - 168 805 977
---------- -------- ------------- ---------------- -------------- -----------
Balance at 1 May
2022 (854) (2,938) (12,493) (1,330) (4,153) (21,768)
Provision created
in the year (42) (3,219) (44,810) (4,059) - (52,130)
Use of the provision - 2,303 14,674 1,615 18,591
Release in the year - - - 63 2,323 2, 386
---------- -------- ------------- ---------------- -------------- -----------
Balance at 30 April
2023 (896) (3,854) (42,630) (5,326) (215) (52,921)
---------- -------- ------------- ---------------- -------------- -----------
In the balance sheet:
Expected within
12 months
(current) - (676) (12,437) (4,565) (215) (17,893)
Expected after 12
months
(non-current) (896) (3,178) (30,193) (761) - (35,028)
========== ======== ============= ================ ============== ===========
The leasehold property provision represents management's best
estimate for the dilapidations work that may be required to return
our leased buildings to the landlords at the end of the lease term.
In a prior year we recognised a dilapidations provision for the
present value of the cost of works quoted by our Employer's Agent
for stripping Bessemer Park back to the original condition at
handover from the landlords. The discounting will continue to
amortise over the remaining 12 years of the lease.
The warranty provision represents management's best estimate of
the Group's liability under warranties granted on products, based
on knowledge of the products and their components gained both
through internal testing and monitoring of equipment in the field.
As with any product warranty, there is an inherent uncertainty
around the likelihood and timing of a fault occurring that would
trigger further work or part replacement. Warranties are usually
granted for a period of one year, although two-year warranties are
the standard within some jurisdictions.
The provision for contract losses is created when it becomes
known that a commercial contract has become onerous. Project
Managers provide rolling spend forecasts, updating these as quotes
are obtained. They also maintain risk registers that highlight the
impact of delays and circumstances on the potential cost of a
project. The provision is therefore based on best estimates and
information known at the time to ensure the expected losses are
recognised immediately through profit and loss. The effects of
discounting on non-current balances were not deemed to be material.
The increase on the provision in the current year is due to a
number of factors including changes of scope to projects,
additional on-site engineering works, increased energy and labour
costs due to extended stack testing times and updating costs for
the effects of inflation since the original quote to the customer.
The increase in the year is allocated against 13 projects. This
provision will be used to offset the costs of the project as it
reaches completion in future periods. Contract loss provisions are
recognised as greater than one year based on the expected
completion of the contract. Work in progress is only assigned to a
contract at the point of delivery as products are generally
fungible until that point.
Provision is also made at the point when project forecasts
suggest that the contractual clauses for liquidated damages might
be triggered. The other provisions category relates to potential
liquidated damages for overruns on contracts with customers. It
also includes amounts payable to contracted parties for potential
non-performance on contracts.
There is a provision for Employer's NIC due on share options as
they exercise.
7. CALLED UP SHARE CAPITAL AND RESERVES
Called up, allotted and fully paid (ordinary Number of
shares of 5p each) shares GBP000
At 1 May 2022 613,158,155 30,658
Share options exercised 3,307,500 165
At 30 April 2023 616,465,655 30,823
Holders of ordinary shares have voting rights at General
Meetings in proportion with their shareholding.
The share premium account represents the amount paid in excess
of the nominal value when shares are issued.
The merger reserve arose on the acquisition of ITM Power
(Research) Limited in 2004.
The foreign exchange reserve arises upon consolidation of the
foreign subsidiaries in the Group, and accounts for the difference
created by translation of the income statement at average rate
compared with the year-end rate used on the balance sheet as well
as the effect of the change in exchange rates on opening and
closing balances.
The Group's other reserve is retained earnings which represents
cumulative profits or losses, net of any dividends paid and other
adjustments.
8. notes to the cash flow statement
2023 2022
GBP000 GBP000
Loss from operations (103,713) (44,736)
Adjustments:
Depreciation 3,006 2,340
Share-based payment (through equity) 1,161 1,071
Foreign exchange on intercompany transactions (137) (43)
Fair value adjustment and expected credit
loss on loan notes - 359
Loss on disposal 64 -
Impairment 4,469 -
Amortisation 942 849
Operating cash flows before movements in
working capital (94,208) (40,160)
Increase in inventories (26,642) (25,780)
Decrease/(Increase) in receivables 5,852 (2,550)
Increase in payables 11,787 21,437
Increase in provisions 31,152 9,492
Cash used in operations (72,059) (37,561)
Interest paid (495) (532)
Income taxes (paid) - (62)
--------- --------
Net cash used in operating activities (72,554) (38,155)
========= ========
9 . POST BALANCE SHEET EVENTS
At the time of our interim results update, we stated that we
were exploring options for the future of our joint venture Motive
Fuels Ltd. We have now signed Heads of Terms for the sale of the
company. The 50/50 JV between ITM and Vitol was established in
March 2022 to develop and roll out hydrogen refuelling stations in
the UK. The vision of the JV partners was one of building a
significant UK refuelling business, with GBP30m committed by each
party as seed funding. However, one of the three priorities of our
12-month plan is increased cost and capital discipline. The planned
transaction will allow ITM to redirect GBP28m of pre-committed cash
to our core business, and to focus on becoming a volume
manufacturer of state-of-the-art electrolysers. Motive Fuels Ltd,
via ITM, was the recipient of grant funding to support the rollout
of refuelling stations in the UK. As part of the transaction, a
contingent liability may materialise for ITM in the future against
the performance obligations in the grants.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR UBVSROKUWARR
(END) Dow Jones Newswires
August 17, 2023 02:00 ET (06:00 GMT)
Itm Power (AQSE:ITM.GB)
Historical Stock Chart
Von Okt 2024 bis Nov 2024
Itm Power (AQSE:ITM.GB)
Historical Stock Chart
Von Nov 2023 bis Nov 2024
