REG - Clean Power Hydrogen - 2024 Interim Results
27/09/2024 07:00
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RNS Number : 8752F Clean Power Hydrogen 27 September 2024
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inside information as stipulated under the Market Abuse Regulations (EU) No.
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27 September 2024
Clean Power Hydrogen plc
("CPH2", the "Company" or the "Group)
Interim Results for the six months ended 30 June 2024
CPH2, the UK-based green hydrogen technology and manufacturing company that
has developed the IP-protected Membrane-Free Electrolyser ("MFE"), is pleased
to announce its unaudited results for the six months ended 30 June 2024.
Highlights
· On September 26th, the MFE110, the Company's first scaled membrane
free electrolyser, successfully completed the Factory Acceptance Test ("FAT"),
confirming the first customer acceptance and validation of CPH2's scaled
electrolyser technology.
· Successfully completing the FAT has proved the Company's thesis that
membrane-free technology is a viable and potentially highly competitive
alternative to PEM and Alkaline electrolysers.
· The successful FAT is a major commercial milestone, marking the
completion of the research & development phase on CPH2's pathway and moves
the Company to focus on the Commerciality Phase which is focused on the
MFE220, CPH2's flagship 1MW system.
· In June 2024, CPH2 was awarded a CE marking for the process of making
its electrolyser stacks, having received a Declaration of Conformity following
an independent assessment, from a Notified Body.
· In February 2024, CPH2 was awarded three ISO certifications
for Occupational Health and Safety (ISO 45001), Environmental Management
Systems (ISO 14001) and Quality Management Systems (ISO 9001).
Financial Highlights
· Cash and cash equivalents of £4m.
· Loss of £2.3m in the six months to June 2024.
· £1.8m spent on development work in the period.
Jon Duffy, CEO of CPH2, commented: "The last period, has been one of
tremendous growth, learnings and achievements. The FAT completion of the
MFE110 is the most significant milestone in CPH2's journey to market and marks
a turning point in the company's strategic direction towards
commercialisation.
The Commerciality Phase will focus on building the MFE220, our 1MW system to
our existing contracted customers as well as activating our licensees in
preparation for their manufacturing and scale.
I am very proud of our staff's dedication, professionalism and effort. We
maintained a disciplined engineering approach, prioritising the safety and
reliability of the technology in order to create a product that delivers a
modular solution to the hydrogen production market in a cost-effective,
scalable, reliable and long-lasting manner and in doing so have reached
commercialisation."
For more information, please contact:
Clean Power Hydrogen plc via Camarco
Jon Duffy, Chief Executive Officer
James Hobson, Chief Financial Officer
Cavendish Capital Markets Limited - NOMAD & Broker
Neil McDonald +44 (0)131 220 9771
Peter Lynch +44 (0)131 220 9772
Adam Rae +44 (0)131 220 9778
Camarco PR + 44(0) 20 3757 4980
Billy Clegg
Owen Roberts
Lily Pettifar
To find out more, please visit: https://www.cph2.com (https://www.cph2.com)
Overview of CPH2
CPH2 is the holding company of Clean Power Hydrogen Group Limited which has
almost a decade of dedicated research and product development experience. This
experience has resulted in the creation of simple, safe and sustainable
technology which is designed to deliver a modular solution to the hydrogen
production market in a cost-effective, scalable, reliable and long-lasting
manner. The Group's strategic objective is to deliver the lowest LCOH in the
market in relation to the production of green hydrogen. CPH2 is listed on the
AIM market and trades under the ticker LON:CPH2.
Chief Executive's Statement
Technology update
During the period, we were pleased to successfully complete Level 1 of the FAT for the MFE110 electrolyser. Level 1 verified that mechanical and electrical components were checked, confirmed that all documentation was in order, and that the MFE's design and build was aligned to the documentation and compliant to relevant safety standards.
Following the period-end we completed Level 2 and Level 3 of the FAT. Level 2,
which was witnessed by Lagan MEICA the Principal Contactor and Arup,
representative for Northern Ireland Water, verified the functionality of the
MFE110 electrolyser. The test included end-to-end checks of control loops,
electrical and mechanical plant, instrument calibration, and electrical
installations in accordance with requirements.
The FAT process culminated in the completion of the final Level 3, which
verified the safe, successful startup, operation, performance, and shutdown of
the MFE110 unit. During the test, key metrics such as the unit's hydrogen and
oxygen output pressure, flow rate, and purity levels were recorded. All
metrics achieved the necessary thresholds, confirming that the unit can
function effectively.
The successful completion of the FAT validates our low cost, robust
technology, proving our electrolyser works at scale. I'd like to thank the
whole CPH2 team for their dedication and hard work as well as our shareholders
for their patience and commitment to our journey to deliver a simple, safe and
sustainable technology for the hydrogen sector.
During the period, the Company was also awarded CE marking for the process of
making its electrolyser stacks. The stacks, used in the MFE110 and to be used
in the MFE220, are a key component of the electrolysers made at the facility
in Doncaster as well as sold to license partners. The CE marking illustrates
that the Company manufactures the stacks within the EU directives and
harmonised standards.
We also continued focusing on improving our systems and standards during the
period, and announced the award of three ISO certifications for Occupational
Health and Safety (ISO 45001), Environmental Management Systems (ISO 14001)
and Quality Management Systems (ISO 9001).
Strategic update
With the MFE technology now proved at scale, we consider the R&D Phase of
CPH2 now completed, and a turning point in the Company's focus towards
commercialisation. The Commerciality Phase which we are now transitioning to
will consist of: delivering on our existing three MFE220 customer contracts;
activating the licensees and supporting them with finalised MFE220 designs,
instructions, procedures, training and procurement support; continued
technology and product improvement; and growing the commercial pipeline.
The deliverables through the Commerciality Phase will be focused on revenue
generation with commercial MFE electrolysers working on customer sites, and
licensees commencing manufacturing. The capabilities developed and activities
undertaken during the Commerciality Phase is expected to provide valuable
learnings in the subsequent Scale Phase.
Financial review
The Company has carefully managed its cash resources during the period,
ensuring cash is controlled and focused on supporting the build, commissioning
and testing of the MFE110. The Company incurred a loss of £2.3m for the
period ended 30 June 2024 (H1 2023: £1.6m). Administrative costs were
tightly controlled and broadly the same as H2 2023, though £0.5m higher than
the comparative period. The Company invested £1.8m in development costs (H1
2023: £1.3m) with the focus on supporting the MFE110. As at 30 June 2024 cash
and cash equivalents (including term deposits) were £4.0m, a reduction of
£4.4m from 31 December 2023.
Conclusion and Outlook
The last period has been one of growth, learnings and achievements. We
maintained a disciplined engineering approach, prioritising the safety and
reliability of the technology in order to create a product that delivers a
modular solution to the hydrogen production market in a cost-effective,
scalable, reliable and long-lasting manner. Successfully completing the FAT
has proved our thesis that membrane-free technology is a viable and
potentially highly competitive alternative to PEM and Alkaline electrolysers.
We have reached our largest milestone yet, and the commercialisation of the
MFE110 lays the foundation for the continued development of our flagship 1MW
system, the MFE220. We now turn our attention to the next phase of growth, our
Commerciality Phase, building on the positive momentum of our R&D Phase.
The energy transition and opportunity for hydrogen continues to grow and we
look forward to entering our next phase of growth with a commercialised
technology which provides a compelling, disruptive and attractive offering.
Thank you to all our staff who have helped us reach this moment in our journey
and to our shareholders for continuing the journey with us. We look forward to
updating the market with further progress in due course.
Jon Duffy
Chief Executive Officer
Consolidated Statement of Comprehensive Income
FOR THE PERIOD ENDED 30 JUNE 2024
Note 6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended
31 December 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Administrative expenses (2,753) (2,260) (5,423)
Operating loss (2,753) (2,260) (5,423)
Finance income 113 163 345
Finance expense (22) (24) (49)
Loss before taxation (2,662) (2,121) (5,127)
Taxation 4 357 512 1,012
Loss for the financial period (2,305) (1,609) (4,115)
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences 9 12 9
Fair value decrease in respect of investments (254) (42) (438)
Total comprehensive expense for the period (2,550) (1,639) (4,544)
Basic and diluted earnings per share (pence) 5 (0.86) (0.60) (1.54)
The accompanying notes are an integral part of these condensed interim
consolidated financial statements.
Consolidated Statement of Financial Position
AS AT 30 JUNE 2024
Note 30 June 2024 30 June 31 December 2023
2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Assets
Non-current assets
Intangible assets 6 9,427 6,828 7,614
Property, plant and equipment 2,736 1,626 2,642
Fair value through OCI investments 7 805 1,455 1,059
Trade and other receivables 120 120 120
13,088 10,029 11,435
Current assets
Inventories 8 3,966 2,443 3,155
Trade and other receivables 9 1,650 2,304 1,449
Current asset investments - 8,000 6,000
Cash and cash equivalents 4,000 4,907 2,468
9,616 17,654 13,072
Total assets 22,704 27,683 24,507
Liabilities
Current liabilities
Trade and other payables (1,562) (717) (1,037)
Deferred income - (1,802) -
Lease liabilities (162) (124) (128)
(1,724) (2,643) (1,165)
Non-current liabilities
Deferred income (1,771) (630) (1,780)
Lease liabilities (672) (673) (609)
(2,443) (1,303) (2,389)
Total liabilities (4,167) (3,946) (3,554)
Net assets 18,537 23,737 20,953
Equity
Called up share capital 2,682 2,682 2,682
Share premium account 27,707 27,707 27,707
Merger reserve 3,702 3,702 3,702
Currency translation reserve 3 (3) (6)
Accumulated loss (15,557) (10,351) (13,132)
Total equity 18,537 23,737 20,953
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Consolidated Statement of Changes in Equity
FOR THE PERIOD ENDED 30 JUNE 2024
Called up share capital Share premium account Merger reserve Foreign currency reserve Accumulated loss Total
£'000 £'000 £'000 £'000 £'000 Equity
£'000
Balance as at 1 January 2023 2,654 27,638 3,702 (15) (8,808) 25,171
Loss for the financial year - - - - (4,115) (4,115)
Other comprehensive expense - - - 9 (438) (429)
Total comprehensive expense for the year - - - 9 (4,553) (4,544)
Share based payments - - - - 229 229
Issue of share capital 28 69 - - - 97
Total contributions by owners 2,682 27,707 3,702 (6) (13,132) 20,953
Balance as at 31 December 2023
Loss for the financial period - - - - (2,305) (2,305)
Other comprehensive expense - - - 9 (254) (245)
Total comprehensive expense for the period - - - 9 (2,559) (2,550)
Share based payments - - - - 134 134
Total contributions by owners - - - - 134 134
Balance as at 30 June 2024 2,682 27,707 3,702 3 (15,557) 18,537
Comparatives for the six months ended 30 June 2023 are provided separately
below:
Called up share capital Share premium account Merger reserve Foreign currency reserve Accumulated loss Total
£'000 £'000 £'000 £'000 £'000 Equity
£'000
Balance as at 1 January 2023 2,654 27,638 3,702 (15) (8,808) 25,171
Loss for the financial period - - - - (1,609) (1,609)
Other comprehensive expense - - - 12 (42) (30)
Total comprehensive expense for the year - - - 12 (1,651) (1,639)
Share based payments - - - - 108 108
Issue of share capital 28 69 - - - 97
Total contributions by owners 28 69 - - 108 205
Balance as at 30 June 2023 2,682 27,707 3,702 (3) (10,351) 23,737
Consolidated Cash Flow Statement
FOR THE PERIOD ENDED 30 JUNE 2024
6 months ended 30 June 2024 6 months ended 30 June 2023 Year ended
31 December 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flow from operating activities
Loss for the financial period (2,305) (1,609) (4,115)
)
Adjustment for:
Depreciation and amortisation 259 177 413
Share based payments 134 108 229
Foreign exchange 12 16 11
Net finance income (91) (139) (296)
Taxation credit (357) (512) (1,012)
Changes in working capital:
Increase in inventories (811) (80) (155)
Decrease/(increase) in trade and other receivables 156 1,273 2,116
(Decrease)/increase in trade and other payables 516 (194) (526)
Cash used in operations (2,487) (960) (3,335)
Income tax received - 174 686
Net cash used in operating activities (2,487) (786) (2,649)
Cash flows from investing activities
Current asset investments disinvested 6,000 5,500 7,500
Purchase of property, plant and equipment (143) (388) (1,595)
Purchase of intangible assets (1,867) (1,384) (2,850)
Net cash generated from investing activities 3,990 3,728 3,055
Cash flows from financing activities
Issue of share capital (net of costs) - 97 97
Interest received 113 163 345
Interest paid (22) (24) (49)
Payment of lease liabilities (62) (61) (121)
Net cash generated from financing activities 29 175 272
Net increase in cash and cash equivalents 1,532 3,117 678
Cash and cash equivalents at the beginning of the period 2,468 1,790 1,790
Cash and cash equivalents at the end of the period 4,000 4,907 2,468
Notes to the Condensed Interim Financial Statements
FOR THE PERIOD ENDED 30 JUNE 2024
1 Corporate information
Clean Power Hydrogen plc is a public company incorporated in the United
Kingdom and listed on the Alternative Investment Market ("AIM"). The
registered address of the Company is Unit D Parkside Business Park, Spinners
Road, Doncaster, England, DN2 4BL. The principal activity of the Company is as
a holding company for subsidiaries engaged in the development of a patented
method of hydrogen and oxygen production together with the development of a
gas separation technique which enables hydrogen to be produced as 'Green
Hydrogen' and oxygen to medical grade purity.
2 Basis of preparation
This unaudited condensed interim consolidated financial statements for the six
months ended 30 June 2024 and 30 June 2023 has been prepared in accordance
with UK adopted international accounting standards ('IFRS') including IAS 34
'Interim Financial Reporting'.
The accounting policies applied by the Group include those as set out in the
consolidated financial statements for the Group for the year ended 31 December
2023 and are consistent with those to be used by the Group in its next
financial statements for the year ending 31 December 2024.
There are no new standards, interpretations and amendments which are not yet
effective in these financial statements, expected to have a material effect on
the Group's future financial statements.
The condensed interim consolidated financial statements does not contain all
of the information that is required to be disclosed in a full set of IFRS
financial statements. The condensed interim consolidated financial statements
for the six months ended 30 June 2024 and 30 June 2023 are unaudited and do
not constitute the Group or Company's statutory financial statements for those
periods.
The comparative financial information for the full year ended 31 December 2023
has, however, been derived from the audited statutory financial statements for
Clean Power Hydrogen plc for that period. A copy of those statutory financial
statements has been delivered to the Registrar of Companies. The auditor's
report on those accounts was unqualified and did not contain a statement under
section 498(2)-(3) of the Companies Act 2006.
These policies have been applied consistently to all periods presented, unless
otherwise stated.
The condensed interim consolidated financial statements have been prepared
under the historical cost convention with the exception of the fair values
applied in accounting for share based payments and investments. The condensed
interim consolidated financial statements and the notes to the financial
statements are presented in thousands of pounds sterling ('£'000'), the
functional and presentation currency of the Group, except where otherwise
indicated.
Going Concern
In assessing the Group's ability to operate as a going concern, the Board have
prepared cash flow forecasts for the period to 31 December 2025 in relation to
likely future cash flows for the foreseeable future. The forecast shows that
whilst the Group will be able to operate within the level of cash reserves
into 2025, further funding will be needed to continue in operational existence
for a period of 12 months from the date of approval of these financial
statements. In forming the conclusion that it is appropriate to prepare the
condensed consolidated financial statements on a going concern basis the
Directors have made the assumption that sufficient funding can be obtained
from new and existing investors. Although the Directors are confident that
sufficient funding will be obtained as required, there can be no guarantee
that such funding will be obtained and accordingly a material uncertainty
exists that may cast doubt on the Group's ability to continue as a going
concern.
3 Segment reporting
IFRS 8, Operating Segments, requires operating segments to be identified on
the basis of internal reports that are regularly reviewed by the company's
chief operating decision maker. The chief operating decision maker is
considered to be the executive Directors.
The Group at this stage comprises only one operating segment for the
development and sale of equipment for the electrolytic production of clean
hydrogen and oxygen. This is monitored by the chief operating decision maker
and strategic decisions are made on the basis of adjusted segment operating
results.
4 Taxation
Tax credits in respect of research and development expenditure were recognised
when submitted and on receipt to date whilst experience of claims being
collated and accepted was gained. The credit for the period to June 2023
relates to the claim submitted for the year ended 31 December 2022. The credit
for the year ended 31 December 2023 relates to the claim submitted for the
year ended 31 December 2022 and an estimate for the claim for the year ended
31 December 2023. The credit for the six month period to June 2024 relates to
an estimate for this period.
5 Earnings per share
30 June 2024 30 June 31 December 2023
2023
Loss used in calculating earnings per share (£'000) (2,305) (1,609) (4,115)
Weighted average number of shares for basic EPS ('000) 268,184 266,422 267,313
Basic and diluted loss per share (pence) (0.86) (0.60) (1.54)
There is no dilutive effect on a loss. There are potentially dilutive options
in place over 17,388,981 ordinary shares at 30 June 2024.
6 Intangible fixed assets
Development costs Patents Software Total
£'000 £'000
£'000 £'000
Cost
At 1 January 2024 7,301 372 55 7,728
Additions 1,827 40 - 1,867
Exchange movements - (3) - (3)
At 30 June 2024 9,128 409 55 9,592
Accumulated depreciation
At 1 January 2024 - 79 35 114
Charge for the period - 44 7 51
At 30 June 2024 - 123 42 165
Net book amount
At 30 June 2024 9,128 286 13 9,427
At 31 December 2023 7,301 293 20 7,614
The development costs relate to the direct expenditure incurred on the
Group's membrane free electrolysis technology.
7 Investments held at fair value through other comprehensive income
£'000
As at 1 January 2024 1,059
Movement in fair value (254)
Fair value at 30 June 2024 805
The Company holds 1,412,429 ordinary £0.02 shares in ATOME PLC, representing
3.5% of its issued share capital. ATOME PLC is listed on AIM and is focused
on the production, marketing and distribution of green hydrogen and
ammonia. On the 25 September 2024, the fair value of the investment in
ATOME PLC was £1,109,000.
The fair value at 30 June 2024 is measured using the quoted price on the AIM
market at that date (a level 1 input using the price from an active market).
8 Inventories
30 June 2024 30 June 31 December 2023
2023
Group and Company £'000 £'000 £'000
Raw materials and consumables 3,754 1,692 3,155
Work in progress 212 751 -
3,966 2,443 3,155
No impairment of inventory has arisen.
Work in progress represents the costs incurred in the production of machines
for confirmed but not completed orders.
9 Trade and other receivables
30 June 2024 30 June 31 December 2023
2023
Current £'000 £'000 £'000
Trade receivables 80 81 82
Other receivables 204 849 231
Tax recoverable 857 512 500
Prepayments and accrued income 509 862 636
1,650 2,304 1,449
Non-current
Other receivables 120 120 120
There has been no significant revenue to 30 June 2024 and there have been no
impairment charges nor expected credit loss provisions made, as the credit
risk in respect of trade and other receivables is considered low. The
Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
£475,000 of other receivables and deferred income at 30 June 2023 related to
cash from a customer held in escrow subject to completion of the order.
10 Related party transactions
Directors remuneration during the 6 month period ended 30 June 2024 amounted
to £280,734 (6 month period ended 30 June 2023 : £337,317).
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