REG - Clean Power Hydrogen - Final Results
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RNS Number : 9323G Clean Power Hydrogen 01 May 2025
1 May 2025
Clean Power Hydrogen plc
("CPH2", the "Company" or the "Group)
Financial Results for the Financial Year ended 31 December 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 results for the year ended 31 December 2024.
Highlights
· Strong progress towards the commercial roll out of CPH2's MFE
technology, with the first customer acceptance and validation of the Company's
unique scaled electrolyser technology marking the transition from R&D to
the Commerciality Phase:
o Successfully completed the Factory Acceptance Test ("FAT") of the MFE110,
demonstrating the MFE technology works safely at scale.
o Delivered the MFE110 unit to Northern Ireland Water's site and
successfully completed Levels 1 and 2 of Site Acceptance Testing ("SAT") in Q1
2025, with Level 3, the final stage, expected in Q2 2025.
o Rigorous testing process of MFE110 provided valuable engineering insights
that have informed design enhancements for the flagship MFE220 (1MW) system.
· Signed a significant Licence Agreement with Hidrigin to manufacture
up to 2GW of MFE electrolysers over a 20-year period, alongside signing a
Sales Contract for the delivery of a MFE220 unit.
· Renewed contracts for MFE220 units with Northern Ireland Water
("NIW") and Fabrum Solutions, reaffirming customer confidence in the MFE
technology and solidifying CPH2's position for the next phase of growth.
· Strong progress on technology development including automatic
operation and shutdown of the electrolyser and significant strides in
enhancing the safety case of MFE technology.
· Awarded prestigious CE marking for the manufacture of the
electrolyser stacks and obtained component level CE marking for all
electrolyser components for the MFE220.
Financial Highlights
· Year-end cash and term deposits of £0.3m (2023: £8.5m). Post-year
end the Company successfully completed an equity fundraise, generating net
proceeds of £5.7m.
· The Company incurred a loss of £14.4m for the 2024 financial year
(2023: £4.1m) which reflects one-off impairments of £9.1m relating to
capitalised development costs, inventory and property, plant and equipment,
further discussed below.
Outlook
· Strategic appointment of Richard Scott as Chief Commercial Officer, a
new role bringing further expertise and specific commercial experience to the
team with a proven track record of scaling green energy projects to commercial
viability.
· On track to complete the final stage of the MFE110 SAT for NIW in Q2
2025, which will demonstrate MFE technology working at scale on a customer
site for the first time.
· Near term efforts are concentrated on completing the design, testing
and manufacture of the MFE220 unit, with FAT expected in H2 2025.
· Activation of CPH2's existing licensees is underway with
documentation shared with licensees as a precursor to the start of
manufacturing in line with the Company's two pronged strategy.
Jon Duffy, CEO of CPH2, commented: "2024 was a truly pivotal year for CPH2,
marking our transition into a new phase of commercialisation and ending the
year in the strongest position in the Company's history. Our team's ability to
overcome technical and engineering challenges has reinforced our confidence in
the scalability of our technology, culminating in the successful FAT of the
MFE110 in September - a historic milestone for CPH2.
With the commercial viability of our unique and differentiated technology
proven, we now find ourselves in a strong and enviable position, with a
monumental opportunity ahead. To support this next phase of growth, I'm
delighted to welcome Richard Scott as our new Chief Commercial Officer. His
recent appointment is well-timed to accelerate our commerciality phase,
driving licensee activation, building our contracted order book, and refining
our pipeline.
I want to extend my thanks to our dedicated team, shareholders, and partners
for their continued support. CPH2 is in the strongest position in its history.
We have a proven, differentiated technology, a growing market opportunity, and
a team deeply committed to our mission. I'm incredibly proud of what we've
achieved this year and look forward to this important next stage of
commercialisation to deliver a unique, industry-ready product that will
transform the energy landscape."
Annual Report
The Annual Report will be available on the Company' website today
(https://www.cph2.com (https://www.cph2.com/) ) and hard copies are expected
to be posted to Shareholders on 21 May 2025.
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
Owen Roberts
Kirsty Duff
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.
Chairman's Statement
I am delighted to present the Annual Report of Clean Power Hydrogen plc
("CPH2" or the "Company") for the year ended 31 December 2024.
It is no exaggeration to say that the past 12 months have comprised the most
important and historic moments for CPH2 since its inception as a company. From
the very beginning of our journey, CPH2's technology has been at the very
heart of what drives us towards our ambitious and ground-breaking goals. It
was therefore a momentous occasion for the Group, as its first scaled
Membrane-Free Electrolyser ("MFE") successfully completed its Factory
Acceptance Test for delivery to our customer, Northern Ireland Water. For
CPH2, this marked the move from an innovative designer, to having a third
party tested, commercially scaleable product ready to bring genuine change to
the global hydrogen market.
As we successfully navigated a year full of both technical and corporate
challenges, we kept laser focused on our mission as a company to serve an
important role in the green hydrogen economy and present a solution in
reducing carbon intensity across industry. Green hydrogen as a solution to
carbon intensity remained very much on the global agenda in the year, marked
by increased production, substantial investments and technological
advancements. Nonetheless, the hydrogen industry faces persistent challenges
that require coordinated efforts from policymakers, industry stakeholders and
investors to realise hydrogen's full potential in the global energy
transition.
Closer to home, the UK marked a year of substantial progress with strategic
investments, policy updates and industry initiatives aimed at integrating
hydrogen into the nation's energy transition. The year culminated in the
Department for Energy Security & Net Zero's Hydrogen Strategy Update,
whereby the newly elected Government outlined its updated Hydrogen Strategy,
outlining key policy progress and future opportunities across areas such as
production, networks and storage, usage, regulatory frameworks and sector
development. We were pleased to be featured in the update, affirming our
important place within the UK's green hydrogen economy amongst our peers and
having our progress recognised by the UK Government.
Despite advancements in the year, as well as the newly established Labour
Government placing emphasis on accelerating the hydrogen economy in the UK
(including £2bn of funding for 11 new green hydrogen projects in the UK),
challenges persist; particularly regarding the high production costs of green
hydrogen and determining its most effective applications. Within this
environment, I truly believe CPH2 finds itself in an advantageous position,
having commercially tested technology, which can be rolled out with a short
lead time, and a huge number of applications. As we enter our Commerciality
Phase, I look forward to seeing CPH2 capitalise on its many strengths and
capture its many opportunities.
Board and senior management
As we successfully navigated a challenging but rewarding year as a listed
company, I extend my sincere gratitude for the dedication, insight and
leadership of my fellow Directors. Their commitment has been instrumental in
navigating challenges and seizing opportunities, ensuring our continued growth
and success. With no change in our composition, we retained an engaged Board,
who kept a focus on what sets CPH2 apart and the ambition that keeps us all
driven.
Perhaps one of the most important roles of the Board is the constant focus on
ensuring the financial health of the Company. As a pre-revenue company, it is
imperative that CPH2 remains a going concern and maintains a level of working
capital that allows it to operate effectively and fund its goals. It was
therefore testament to the team that, within a challenging equity capital
market environment, CPH2 raised gross proceeds of £6.4m through the
successful placing of new shares. This included participation from Directors,
senior management, institutions and retail holders alike.
Outlook
The significant progress CPH2 has achieved in the past year cannot be
understated and, through an often-laborious process of proving the
commerciality of our technology, we now sit in an enviable position with a
monumental opportunity ahead of us.
The dedication and tireless efforts of the team in advancing CPH2's MFE
technology over the past year have been truly impressive. Looking ahead, I am
confident that CPH2 is in an exceptionally strong position, poised to unlock
significant value. As we continue our journey towards full commercialisation
and beyond, I want to extend my sincere gratitude to everyone for their hard
work over the past year and to our shareholders for their unwavering support
throughout this period.
Christopher Train
Chair
Chief Executive's Review
Outlook
2024 has been a truly pivotal year for CPH2, marking our transition into a new
Commerciality Phase, and we ended the year in the strongest position in the
Company's history. It has been a year of technological breakthroughs,
significant milestones and continued progress as we advanced our unique MFE
technology and move closer to full-scale deployment.
As we commercialise our technology, we are confident that the ability to link
our technology to intermittent renewable power will be a true differentiator
and will set CPH2 apart in the green hydrogen market. We will continue to
concentrate on markets where there is already a large amount of curtailed
power (for example the island of Ireland) and work with project developers
that have a ready market for both green hydrogen and high-grade oxygen. We
have strategically located our current licences in such markets (KCA Deutag -
Germany, Hidrigin - Ireland, and Fabrum - New Zealand). These markets have
struggled to secure reliable competing technology given high costs of raw
materials (platinum group metals) and component failures through membrane
problems and degradation being a common theme. Many of these challenges that
have faced the green hydrogen sector do not, we believe, apply to CPH2, and it
is our belief that we can answer these challenges. We are in the process of
rolling out our full licence packs to our partners so they can start
production. (See Commercial Review below).
Now that our technology is proven at scale, we enter the Commerciality Phase
with key milestones to produce and deliver of our first commercial 1MW MFE220
units, activate our licensees and crystalise our commercial pipeline. We are
also turning our attention to engineering in efficiency gains and reducing
cost. We will invest in value engineering to ensure the MFE products are
designed for repeatable manufacture and assembly in the most cost-efficient
manner whilst ensuring that they are a true plug and play solution that are
easy to service and maintain. (See Technology Review below).
Our MFE220 will remain our core base product but we see the opportunity to
develop a larger MW system in the future that can be deployed singularly or in
multiples into larger projects.
The current geopolitical situation with tariffs being levied across the globe
plays into our licensing model. We view the US market as a huge opportunity
and are confident that, when the time is right, we can set up licensed
manufacturing plants within country to serve that market.
To spearhead the commercial engagement, we are delighted to have appointed
Richard Scott, the first Chief Commercial Officer ("CCO") for CPH2. Building
our contracted order book and securing potential new licences will be high on
his agenda.
We recognise that the future is challenging but we have the technology, the
skill set, the right partners and an unwavering drive to meet our business
goals.
Technology
Our major milestone in 2024 was undoubtedly the successful completion of the
Factory Acceptance Test for our MFE110 in September, demonstrating the MFE
technology works successfully and safely at scale. This achievement represents
the largest technological advancement in CPH2's history and validates our
technology as a viable alternative to traditional PEM and Alkaline
electrolysers. The rigorous testing process, which began in June, involved
detailed verification of mechanical, electrical and functional specifications,
culminating in the successful passage of all performance and safety tests.
This accomplishment is a testament to the dedication and expertise of the
entire CPH2 team.
The testing process was independently witnessed by Lagan MEICA, the principal
contractor, and Arup, representing Northern Ireland Water, further reinforcing
the credibility of the process and our technology. In December 2024, we
shipped the MFE110 unit to Northern Ireland Water for installation in Belfast.
By early 2025, it successfully passed Levels 1 and 2 of the Site Acceptance
Testing ("SAT"), with Level 3 scheduled to follow in H1 2025. This is a key
step towards the first scaled production of high purity hydrogen and oxygen on
a customer site, marking a significant milestone in the commercialisation of
our technology. Our electrolyser will play a critical role in Northern Ireland
Water's efforts to decarbonise its operations and explore the transformative
potential of high purity oxygen in wastewater treatment.
The success of the MFE110 has provided valuable insights for the development
of our flagship MFE220. The lessons learned in 2024 have allowed us to refine
and enhance the design of the MFE220, making it safer, more efficient, and
fully automated while meeting industry-recognised Safety Integrity Levels
("SIL") ratings. Our team's ability to overcome technical and engineering
challenges has strengthened our confidence in the scalability of our
technology.
As further described in the Technology Review (below), during 2024 a
substantial amount of energy and resources has gone into fundamentally
improving the safety case of MFE technology, enhancing the proposition to
customers.
Another significant achievement was the awarding of the prestigious CE Marking
for the manufacture of CPH2's electrolyser stacks. This certification,
following an independent assessment by a Notified Body, underscores our
commitment to producing high-quality, safe products that meet the highest
standards.
Operational
In 2024, the Company made strong headway in building the operational
foundations required to support future build and scale-up, with a focus on
continuous improvement across key functions. We took important steps to
enhance internal processes across procurement, production planning, project
management and quality management, laying the groundwork for increased
efficiency and control.
The Company remains committed to upholding the highest standards of quality,
safety, and efficiency by aligning its operations with ISO (International
Organization for Standardization) best practices.
We achieved Fit4Hydrogen certification, a meaningful indicator of our growing
alignment with industry standards, and we delivered the first version of our
manufacturing pathway, which will continue to evolve in our commerciality
phase in preparation for scale.
Commercial update
We were delighted to achieve a new sale of an electrolyser as well as a
licence agreement with Hidrigin, an Irish solar development company with an
existing project in Lisheen, County of Cork and ambitious plans for expansion.
The licence agreement grants Hidrigin the right to manufacture up to 2GWs of
MFE electrolysers over a 20-year period.
The continued support from our customers has been instrumental to our success
in 2024. In November, we renewed contracts for the MFE220 with both Northern
Ireland Water and Fabrum Solutions. Northern Ireland Water's contract includes
the deployment of one MFE220 unit in Belfast, while Fabrum will receive two
MFE220 units in New Zealand. These renewed agreements further demonstrate
strong confidence in our technology and for the FAT of the MFE220 for Northern
Ireland Water is scheduled to take place in 2025. This re-commitment from our
customers solidifies our position for the next phase of growth.
As detailed in the Commercial Review (below), we see a strong near-term
opportunity on the island of Ireland, in the UK and in continental Europe.
People
As we continue to push the boundaries of green hydrogen production, our culture of innovation, passion, and inclusivity is at the core of everything we do and drives our success as we work together to achieve our vision.
The progress we have made in 2024 is a direct reflection of the hard work, commitment, and expertise of our entire team. In 2023, we focused on revamping our engineering capabilities, and in 2024, we have seen the fruits of that investment with the continued advancement of our technology.
We are particularly proud of the recognition received by two of our team members, Bridie Haxby and Qamar Khan, both of whom were shortlisted for prestigious Green Hydrogen Awards and for which Qamar Khan won Hydrogen Person of the Year. This recognition highlights the depth of expertise within our team and serves as a testament to their outstanding contributions to the green hydrogen sector.
Market
The green hydrogen sector experienced significant developments in the year,
marked by substantial investments, policy advancements, and technological
progress. The global green hydrogen market was valued at approximately $6.42bn
in 2023 and is projected to reach $84bn by 2029, reflecting the huge mid-term
opportunity within the sector in which we operate.
Investment decisions for hydrogen projects doubled in the year, with China
leading this surge. However, there were challenges on technology issues,
resulting in financing issues and unclear demand. These issues are expected
for any nascent industry and underlines the importance of the MFE technology
providing a solution to the technology challenges. With a market with such
huge potential as hydrogen, I am confident that seeing global full-scale
uptake of hydrogen within multiple industries is a question of "when" rather
than an "if".
Closer to home, the UK made significant inroads in supporting the green
hydrogen industry. In December 2024, the Department for Energy Security and
Net Zero published its latest Hydrogen Strategy Update to the Market. We are
proud to have been included in this update, further validating the critical
role CPH2 plays in advancing the hydrogen sector. The update highlights
significant policy progress made throughout the year, bringing the UK closer
to its goal of a low-carbon hydrogen economy. This progress presents exciting
opportunities for the future, and we are proud to be part of this
transformative journey.
Summary
The MFE110 FAT was a key juncture to spring into the Commerciality Phase. Our
primary focus in 2025 will be on completing the design, testing and
manufacture of the MFE220, activating our licensees to facilitate further
market expansion, and ramping up our commercial pipeline, whilst completing
the MFE110 SAT on Northern Ireland Water's site.
I would like to extend my deepest gratitude to our dedicated team,
shareholders and partners for their continued support. As we navigate 2025, we
do so with a continued sense of great anticipation and excitement for the
opportunities ahead. We are well positioned to take meaningful strides toward
commercialisation, driven by the confidence in our technology and the trust of
our customers. With the support of our team and stakeholders, we look forward
to delivering a unique, industry-ready product that will transform the energy
landscape.
Jon Duffy
Chief Executive Officer
Technology Review
Introduction
2024 was a year of tangible progress within the technology function. Building
on the progress made in 2023 with the revamped engineering team, a systematic
methodology and analysis was followed. We resolved complex engineering issues
and adopted higher standards with regard to process, design, control and
safety. The result of this process led to the successful,
independently-witnessed FAT of the MFE110 in September 2024 at CPH2's
Doncaster test facility - the most significant technology milestone CPH2 has
ever achieved.
Achievements in pursuit of the MFE110 included development of a fully
automated control system, design development of key components in cryogenic
separation system, certification (Electrolysis Stack Component CE mark),
validating the safety case for operation of electrolyser with independent
parties and in early 2025 design finalisation of MFE220.
MFE110
A three-stage FAT was successfully completed at CPH2's test facility in
Doncaster followed by subsequent electrolyser testing to 25 October 2024. This
was signed off by Lagan MEICA Ltd and independently witnessed by ARUP.
All the major components of the MFE110 are of full commercial size and
accordingly the operation of the MFE110 has strong read across to the MFE220.
The testing demonstrated commercial stack performance at 100% capacity and
proof of the cryogenic gas separation step to produce qualified hydrogen and
oxygen. It also demonstrated fully automated operation and testing of
essential safety shutdown systems. Operational data was gathered on key unit
operations to de-risk and validate the technology and enable refinement of
design of the MFE220.
The success of the FAT was a validation of the engineering approach applied
since 2023, with further progress being made in developing the operational
team, procedures and methodologies for future deployment of the MFE220.
The unit was relocated to the customer site in Belfast in December 2024 and in
Q1 2025, Levels 1 and 2 SAT were achieved. We expect the final Level 3 SAT
with the next month. Operation in Belfast will demonstrate operation in a
commercial environment, which will be another significant milestone for CPH2.
MFE220
The Company is making solid progress on the flagship 1MW system, the MFE220.
The experience of the MFE110 completion to FAT, has helped the engineering
team in refining the components and overall design.
Stack operational performance was characterised from the MFE110 test data,
which has enabled design improvement to stack components to improve efficiency
and reliability. In addition, the container layout has evolved, incorporating
learnings from the MFE110 operation, for better operation and maintenance and
to minimise mechanical and electrical assembly work at the customer's site.
Further development of the cryogenic system design was undertaken to improve
the efficiency and capacity of the system. Work was carried out on thermal
modelling of the cryogenic system and heat exchanger which has resulted in a
revised heat exchanger design. Mechanical and thermal design of the heat
exchanger has been completed with two alternative vendors, and manufacture of
the heat exchanger has commenced.
With the modifications being made, the MFE220 bill of materials (a
comprehensive register of components, component specifications and
sub-assemblies) has been fully defined along with top level assembly drawings.
The unit is currently in assembly stage with FAT expected in H2 2025.
Safety case
We have made substantial progress in developing the safety case of MFE
technology, utilising the MFE110 as a proof statement. CPH2 has built a safety
case to demonstrate compliance from a health and safety perspective for
deployment of the electrolyser to a public utility. To meet the high
standards which such a facility requires, industry standard safety approaches
from the petrochemical industry were applied with the assistance and external
verification of independent safety experts and consultants.
For the Layer of Protection Analysis ("LOPA") which defines the Safety
Integrity Levels ("SIL") that we need to achieve for instrumented functions,
appropriate equipment was selected, and we conducted SIL verification
calculations with assistance of external parties to ensure that the
instrumented functions we have selected are consistent with values assumed in
the LOPA. This ensures compliance with internationally recognised IEC-61511
Functional Safety for the Process Industry.
The Group contracted leading professional services firm WSP, to perform a
Quantitative Risk Analysis ("QRA") to meet the high levels required for a
public utility site which considered the CPH2 electrolyser and integration
with refueller using occupancy assumption at the customer site. The QRA
analysis successfully showed that risks were compliant to HSE
requirements. This has enabled CPH2 to safely operate the MFE110 at CPH2's
test facility and obtain authorisation for operating the unit at a customer
site. The work on developing the safety case has markedly improved our
technology and has informed the design of the MFE220.
Compliance and certification
As announced in June 2024, a CE mark under the Pressure Equipment Directive
("PED") was obtained for the CPH2 electrolyser stack by an independent
notified body and component level CE marking has now been obtained for all
electrolyser components for the MFE220. The global assessment of the MFE220
product for PED will be conducted after final electrolyser assembly.
Compliance relating to equipment and protective systems intended for use in
potentially explosive atmospheres (ATEX) has been verified by an independent
body for the MFE110 test unit and will be conducted for the MFE220 as part of
the commissioning process. This will allow CPH2 to give a CE mark indicating
conformity with the ATEX Directive.
Outlook
As we look ahead, our immediate focus is on completing the MFE110 SAT proving
technology operation in a commercial environment, while also completing the
first MFE220, which includes having a verified customer witnessed FAT, and
delivering to customer for SAT. This is an important milestone and first
deployment of our flagship commercial product.
Beyond the immediate milestones, there is significant scope to improve the
performance of the MFE220 while reducing the build costs. With the insights
gained, we see opportunities to further improve unit efficiency, which will be
explored. The first MFE220 has absorbed the cost of manufacturing first-time
components, and the schedule has been prioritised over component cost. Now
that a bill of materials has been established as a baseline, we see
significant opportunities to decrease this in engineering design and through
the supply chain.
The MFE220 1MW system is CPH2's market entry point, but there is scope to
scale the MFE technology and we plan to commence the design of a larger
product that can achieve improved economies of scale and a lower Levelised
Cost of Hydrogen.
Commercial Overview
The long-term market opportunity for hydrogen remains strong and the business
case for its application becomes more clearly defined. The advent of
artificial intelligence has dramatically increased the demand for data
centres, and as result the projected demand of green energy to power these
data centres is expected to double in the next five years according to the
International Energy Agency. Such increase in demand underscores the need for
electrolysers capable of efficiently converting variable green electricity to
hydrogen for long duration energy storage.
Our MFE technology is well positioned to be a market leader in this respect
with strong competitive advantages in directly coupling with variable
renewable energy sources combined with reliable operation.
The market is still in its early days, with projects often assisted by
government support or mandates. Despite the recent geopolitical challenges we
see strong continued support from the EU and UK. This was most recently
demonstrated on 7 April 2025, with the UK Government proceeding to shortlist
27 hydrogen projects in its Hydrogen Allocation Round 2, which is expected to
attract over £1bn private sector investment by 2029. Practical challenges
persist in green hydrogen projects, including immature technology being
deployed before it is fully proven, commissioning difficulties, reliability
issues with electrolysers or uncertain customer demand.
We believe that our proposition of reliable operation alongside a strong
safety case is a key competitive advantage and the investment and time in
getting the technology right will pay strong dividends in the future.
A near-term market opportunity
We see an exciting near-term opportunity in the island of Ireland. In Northern
Ireland, 43% of energy consumption is based on renewable sources and, in the
Republic of Ireland, it was 39% in March 2025. Both Governments are targeting
that 80% of energy will be provided by renewables by 2030, meaning that long
duration energy storage will be crucial in alleviating the cost of
curtailment.
We have strong links into both sides of the border, which we look to
crystalise in the Commerciality Phase. The sale of an MFE220 and the licence
agreement with Hidrigin establishes a manufacturing and operational presence
in Ireland via our partner, focusing on hydrogen production utilising solar
power for offtake including data centres. The Company's first customer was
Northern Ireland Water, and the MFE110 currently in Belfast will be the first
production of high purity hydrogen and oxygen being generated reliably from a
scaled electrolyser in Northern Ireland.
Global deployment through our licensees
Licensing our technology is a capital-light approach to scale enabling
geographical reach in a more accelerated pace. One of the less discussed
benefits from licensing is the ability to lever the sales teams of our
licensees who are more in tune with local opportunities and more tactical in
addressing local markets.
Kenera Energy Solutions, part of Helmerich & Payne (previously KCA
Deutag), our longstanding partner and strategic investor, has factory capacity
in Germany and Oman for MFE manufacturing. Fabrum Solutions, a well-known
leader in cryocooling technology based in New Zealand, also has rights to
manufacture and sell in Australia and New Zealand.
A key milestone in our Commerciality Phase is the activation of our existing
licensees, and documentation has begun to be shared with our licensees as a
precursor to them beginning to manufacture electrolysers.
Own manufacture
CPH2 has four contracted sales for 1MW MFE220 electrolysers, the first of
which is to Northern Ireland Water. We expect to complete the FAT in the
second half of 2025 with the Site Acceptance Test in H1 2026, which is when
the revenue will be recognised. The FAT of the MFE220 will be another historic
milestone for the Company, being the first CPH2 1MW electrolyser completed and
operational.
Our commercial pipeline demonstrates opportunities within reach across a range
of geographies, including the island of Ireland, the UK and continental
Europe. A key goal in the Commerciality Phase is to grow and crystalise the
commercial pipeline, particularly around the island of Ireland. We are
delighted that Richard Scott will be joining CPH2 as Chief Commercial Officer
whose appointment is well timed to drive and refine our commercial
opportunity, including pursuing new licensees in regions in which we do not
yet have coverage.
Outlook
The Commerciality Phase covering 2025 and into 2026 and is an important period
with a strong focus on our route to market, defining where we deliver our
first commercial system, generate first revenues, activate our licensees
whilst growing and crystalise our commercial pipeline. We are excited by the
appointment of Richard Scott as we continue our drive and energy are
channelled towards this Commerciality Phase.
Financial Review
Introduction
2024 was a formative year for the Company. Achieving the FAT of the MFE110 and
proving the MFE technology works at scale was an important juncture in the
Company's journey to fully exploiting its unique and disruptive technology.
This technology milestone was a catalyst to conclude the new sales contract
and licence agreement with Hidrigin. Following this, the Company embarked on
and successfully completed an equity fundraise, receiving gross proceeds of
£6.4m (£5.7m net proceeds). During the year, CPH2's capital allocation was
focused on activities necessary for the delivery of the MFE110 while tightly
controlling expenditure on all other activities.
Review of financial statements
The Company incurred a loss of £14.4m for the 2024 financial year (2023:
£4.1m) which reflects one-off impairments of £9.1m relating to capitalised
development costs, inventory and property, plant and equipment, further
discussed below.
Other operating income
A prior year grant of £0.3m previously, treated as deferred revenue, has been
recognised as other operating income during the year in line with the
impairment of costs associated with that grant. Refer to impairment of
capitalised development costs discussed below.
Administrative expenses
For the 2024 financial year, administrative expenses were £5.7m (2023:
£5.4m). The increase was mainly due to staff costs (an increase of £0.4m
year-on-year) as more expenditure was incurred on overtime and temporary staff
in the pursuit of the MFE110 FAT. All overheads were tightly controlled during
the year.
Onerous contract
Subsequent to the renegotiation in October 2024 of a sales contract for the
delivery of an electrolyser, the Group has reviewed the revised economic
benefits against expected costs and has determined that the sale contract
meets the criteria of an onerous contract under IAS 37 Provisions, Contingent
Liabilities and Contingent Assets. Accordingly, £0.9m of inventory relating
to the project was impaired and a provision for future losses of £0.5m was
recognised. The Board believes that first delivery of a commercial 1MW system
(MFE220) is important in demonstrating the competitive advantages of the MFE
technology to the market and will assist in crystallising the commercial
pipeline. Therefore, strategically the benefits from completing the sales
contract outweigh the financial loss associated with its delivery.
Impairments and stock write downs
Impairments of £9.1m have been recognised for the year ended 31 December
2024. The successful operation and FAT of the MFE110 in September 2024 was an
independently verified final proof of the design, build and procedures
required for the MFE technology to work at scale. This new and verified
knowledge is considered the technical basis for all scaled MFE electrolysers
going forward, surpassing previous understanding and work undertaken, which in
turn highlights potential replication and redundancy of prior activities.
Accordingly, the Group has reviewed the development costs that have been
capitalised up to 31 December 2024 and identified that £5.6m representing
prior period activities does not have value going forward, which accordingly
has been impaired. Demonstrator equipment held within property, plant and
equipment is not expected to be completed and, accordingly, a further
impairment of £1.1m was recognised.
The successful operation of the MFE110 has also informed the design
modifications of the MFE220, CPH2's 1MW commercial system. Due to the changes
in design, certain components historically purchased and held in inventory are
no longer applicable to the electrolyser builds going forward, resulting in an
inventory write-down for obsolete stock of £1.5m. In addition, inventory of
£0.9m relating to an onerous contract (discussed above) has been impaired,
being above the net realisable value.
Taxation
R&D tax credits accrued for the financial year were £0.5m reflecting
£0.1m received from amending a prior year claim and a £0.4m accrual for the
2024 R&D tax credit. The comparative financial year was the first year in
which the Group recognised R&D tax credits on an accrual basis and as such
the taxation credit of £1.0m reflected an accrual of £0.5m R&D tax
credit for the 2023 financial year and the receipt of £0.5m R&D tax
credit relating to the 2022 financial year.
Capitalised development costs
Capitalised development costs incurred during the year was £2.7m (2023:
£2.6m). This reflects the focused effort on the MFE110 leading up to the
Factory Acceptance Test as well as continued design effort on the MFE220
system. As discussed above, an impairment of £5.6m was recognised for
capitalised development costs. As at 31 December 2024 the recognised capital
development costs was £4.3m (2023: £7.3m).
Cash
Cash and term deposits as at 31 December 2024 was £0.3m (2023: £8.5m). On 8
January 2025, the Company received £5.7m net proceeds following the
completion of an equity fundraise.
Operating expenditure was carefully managed throughout the year. Operating net
spend was £5.9m (2023: £2.6m), up by £3.3m. This is increase is mainly due
to changes in working capital, including an unusually high VAT claim of £1.6m
accrued as at 31 December 2022 and received in 2023.
The net cash inflow from investing activities of £3.7m (2023: £3.0m)
reflects the utilisation of term deposits (£6m) and sale of investments
(£0.7m) to support the Company's activities, less cash spend on development
work and patent applications of £2.8m (2023: £2.8m).
Going concern
On the 18 December 2024, CPH2 launched an equity fundraise seeking £6m in
investment to support the Company in achieving its next milestones. The
fundraise successfully completed on 8 January 2025, raising £6.4m gross
proceeds (£5.7m net proceeds), supported by new and existing investors.
Upon reviewing the financial forecasts and carefully considering a number of
scenarios, it has been determined by the Directors that further funds will be
required in order to remain a going concern. The Group is focused on actively
seeking new potential pools of funding sources, making strong progress
achieving its short-term objectives to significantly enhance shareholder value
whilst remaining focused on capital efficiency. After careful consideration,
the Directors have a reasonable expectation that further funds required during
the going concern period will be obtained in order for the Company to remain
as a going concern for the foreseeable future. Accordingly, the financial
statements for the year ended 31 December 2024 have been prepared on a going
concern basis; however, the Board recognises that material uncertainty exists
which may cast doubt on the Group's ability to continue as a going concern.
Refer to note 1 to financial statements for further information.
Outlook
With the completion of the MFE110 FAT in September 2024, the Company has moved
into a Commerciality Phase where activities are focused towards milestones
specifically focused on tangible commercial progress. This includes
completion, testing and delivery of the Company's first commercial product,
the MFE220 1MW system, which is due to be Factory Acceptance Tested in H2
2025. CPH2 will also be focused on activating the Company's existing licensees
in line with its asset-light commercial strategy, while crystallising and
expanding its commercial pipeline. Conscious of CPH2's limited resources,
these activities will be undertaken in a capital efficient manner, keeping
costs tightly controlled.
James Hobson
Chief Financial Officer
Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2024
Note 2024 2023
£'000 £'000
Other operating income 4 334 -
Administrative expenses 4 (5,704) (5,423)
Impairment losses 4 (9,124) -
Onerous contract losses 4 (538) -
Operating loss 4 (15,032) (5,423)
Finance income 7 134 345
Finance expense 7 (47) (49)
Loss before taxation (14,945) (5,127)
Taxation 8 508 1,012
Loss for the financial year (14,437) (4,115)
Other comprehensive expense
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences 19 9
Fair value decrease in respect of investments (355) (438)
Total comprehensive expense for the year (14,773) (4,544)
Basic and diluted earnings per share (pence) 9 (5.37) (1.54)
Consolidated Statement of Financial Position
AS AT 31 DECEMBER 2024
Note 31 December 2024 31 December 2023
£'000 £'000
Assets
Non-current assets
Intangible assets 10 4,608 7,614
Property, plant and equipment 11 1,535 2,642
Fair value through OCI investments 13 - 1,059
Other receivables 16 120 120
6,263 11,435
Current assets
Inventories 15 1,614 3,155
Trade and other receivables 16 1,476 1,449
Current asset investments 14 - 6,000
Cash and cash equivalents 327 2,468
3,417 13,072
Total assets 9,680 24,507
Liabilities
Current liabilities
Trade and other payables 17 (1,275) (1,037)
Lease liabilities 18 (198) (128)
(1,473) (1,165)
Non-current liabilities
Deferred income 17 (1,166) (1,780)
Lease liabilities 18 (626) (609)
(1,792) (2,389)
Total liabilities (3,265) (3,554)
Net assets 6,415 20,953
Equity
Called up share capital 21 2,697 2,682
Share premium account 21 27,745 27,707
Merger reserve 21 3,702 3,702
Currency translation reserve 13 (6)
Accumulated loss (27,742) (13,132)
Total equity 6,415 20,953
Consolidated Statement of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2024
Called up share capital Share premium account Merger reserve Foreign currency reserve Accumulated loss
£'000 £'000 £'000 £'000 £'000 Total
equity
£'000
Balance as at 31 December 2022 2,654 27,638 3,702 (15) (8,808) 25,171
Loss for the financial year - - - - (4,115) (4,115)
Other comprehensive expense (note 13) - - - 9 (438) (429)
Total comprehensive expense for the year - - - 9 (4,553) (4,544)
Share based payments (note 23) - - - - 229 229
Issue of share capital (note 22) 28 69 - - - 97
Balance as at 31 December 2023 2,682 27,707 3,702 (6) (13,132) 20,953
Loss for the financial year - - - - (14,437) (14,437)
Other comprehensive expense (note 13) - - - 19 (355) (336)
Total comprehensive expense for the year - - - 19 (14,792) (14,773)
Share based payments (note 23) - - - - 182 182
Issue of share capital (note 22) 15 38 - - - 53
Balance as at 31 December 2024 2,697 27,745 3,702 13 (27,742) 6,415
Consolidated Cash Flow Statement
FOR THE YEAR ENDED 31 DECEMBER 2024
2024 2023
Note £'000 £'000
Cash flow from operating activities
Loss for the financial year (14,437) (4,115)
Adjustment for:
Depreciation and amortisation 10,11 532 413
Impairment losses 4 9,124 -
Onerous contract losses 4 538 -
Profit on disposal (8) -
Share based payments 22 182 229
Foreign exchange 29 11
Net finance income 7 (87) (296)
Taxation credit 8 (508) (1,012)
Changes in working capital:
Increase in inventories (824) (155)
(Increase)/decrease in trade and other receivables 16 (127) 2,116
Decrease in trade and other payables (914) (526)
Cash used in operations (6,500) (3,335)
Income tax received 608 686
Net cash used in operating activities (5,892) (2,649)
Cash flows from investing activities
Current asset investments withdrawn 14 6,000 7,500
Purchase of property, plant and equipment 11 (241) (1,595)
Proceeds from sale of plant and equipment 22 -
Purchase of intangible assets 10 (2,752) (2,850)
Proceeds from sale of investments 13 704 -
Net cash generated from investing activities 3,733 3,055
Cash flows from financing activities
Issue of share capital (net of costs) 21 53 97
Interest received 7 134 345
Interest paid 7 (47) (49)
Payment of lease liabilities 19 (122) (121)
Net cash generated from financing activities 18 272
Net (decrease)/increase in cash and cash equivalents (2,141) 678
Cash and cash equivalents at the beginning of the year 2,468 1,790
Cash and cash equivalents at the end of the year 327 2,468
Notes to the Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2024
1 Summary of significant accounting policies and general information
Clean Power Hydrogen plc is a public company incorporated in the United
Kingdom and quoted 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.
The Group financial statements have been prepared in accordance with
UK-adopted International Accounting Standards ("IFRS") and in accordance with
the requirements of the Companies Act 2006.
The parent company financial statements have been prepared under applicable
United Kingdom Accounting Standards (FRS 101 "Reduced Disclosure Framework").
The principal accounting policies applied in the preparation of these
consolidated and separate financial statements are set out below.
These policies have been consistently applied to all the years presented,
unless otherwise stated.
The financial statements are drawn up in Sterling, the functional currency of
the company and the Group. The level of rounding for the financial statements
is the nearest thousand pounds.
The preparation of financial statements requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in
the process of applying the accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, are disclosed in note 2.
Exemptions
FRS 101 allows a qualifying entity certain disclosure exemptions, subject to
certain conditions, which have been complied with, and the Company has taken
advantage of the following exemptions:
· IAS 7 Statement of Cash Flows;
· IFRS 7 Financial Instruments Disclosures;
· IAS 24 Key Management Remuneration.
Basis of consolidation and merger accounting
The Company was incorporated on 19 August 2021 with one £0.01 ordinary share
and on 1 February 2022, became the Group parent company when it issued
185,267,700 £0.01 ordinary shares in exchange for all the ordinary shares in
its subsidiary Clean Power Hydrogen Group ("CPHGL"). In addition, warrants and
options over ordinary shares in CPHGL were converted, on equivalent terms, to
warrants and options over 26,911,940 shares in the Company. This was
considered not to be a business combination within the scope of IFRS 3. This
was a key judgement, and as a transaction where there was no change in the
shareholders or holdings, is accordingly accounted for using merger accounting
with no change in the book values of assets and liabilities and no fair value
accounting applied.
The consolidated financial statements present the results of the Company and
its subsidiaries ("the Group") as if they have always formed a single group.
Intercompany transactions and balances between Group companies are therefore
eliminated in full. The share capital presented is that of Clean Power
Hydrogen plc with the difference on elimination of CPHGL's capital being shown
as a merger reserve.
Subsidiaries are all entities over which the Group has control. The Group
controls an entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
Going concern
The Board has determined that the period to consider a going concern
assessment is 12 months from the date of approval of the financial statements.
In assessing the Group's ability to operate as a going concern, the Board have
prepared cash flow forecasts for the period to 30 June 2026 on likely future
operations and have undertaken sensitivity tests on the key assumptions
particularly in relation to new sales orders (deposits), timing of anticipated
milestones, as well as considering potential coordinated actions (including
cost reductions) designed to reduce cash burn in the event that any possible
scenarios have a negative cash flow effect.
The forecast shows that whilst the Group will be able to operate within the
level of cash reserves into the second half of 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. The Group has taken steps to
improve its ability to obtain further funds including making strong progress
on company milestones, enabling access to new pools of funds hitherto
untapped, seeking grant funding in alignment with the Company's activities and
refining the investment case of the Company.
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
and Company's ability to continue as a going concern.
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