REG - ITM Power PLC - Final Results
13/09/2021 07:00
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RNS Number : 4872L ITM Power PLC 13 September 2021
13 September 2021
ITM Power Plc
("ITM Power", the "Company" or the "Group")
Final Results for the Year to 30 April 2021
ITM Power (AIM: ITM), the energy storage and clean fuel group, announces final
results for the year ended 30 April 2021.
HIGHLIGHTS
Developments in the year:
· First full year of operating the strategic partnership with Linde
Engineering, which together with our investment in ITM Linde Electrolysis
(ILE) GmbH, allows ITM Power to focus on the manufacture of electrolysis
equipment for larger scale systems
· Sale of world's largest PEM electrolyser to Linde and sale of first
MW-scale electrolyser to Sumitomo for deployment in Japan, and a 4MW
electrolyser for the US market included within the backlog
· Commercial partnership agreement with Snam (one of the world's
leading energy infrastructure operators), including a £30m strategic
investment and an initial 100MW preferred supplier commitment to 2024
· Successful equity fund raise of £172m (including the Snam
investment) to accelerate development
· Completion of the worlds' first electrolyser Gigafactory, expected to
reach annual production capacity of 1,000MW per annum by end 2023 and official
opening by the Business & Energy Secretary, Kwasi Kwarteng
2021 results:
· Total Revenue & Project Grant Funding of £5.1m (2020: £5.4m)
down 6%, comprising:
o Sales revenue: £4.3m (2020: £3.3m) up 30%
o Collaborative grant income recognised: £0.8m (2020: £2.1m) down 63%
· Loss from operations £26.7m (2020: £29.4m), reduced by 9%
· Adjusted EBITDA loss £21.4m (2020: loss £18.1m), increased 18%
· Available cash balance of £176.1m at year-end (2020: £39.9m)
Current trading
09/2021 10/2020 % change
Work in Progress* £36m £16m +125%
Contracts backlog** £171m £119m +44%
Tender pipeline *** £378m £195m +94%
*Work in Progress Contracted backlog
**Contracts backlog Contracted backlog and contracts in the final stages of negotiation and
preferred supplier backlog
***Tender pipeline Quotations submitted in response to commercial tenders in the last 12 months
and now only reflecting the value to ITM Power
· Contracts backlog of £171m (2020: £119m) constituting 310MW of
electrolysers up 44% YoY
· £36m (2020: £16m) of contracted backlog (Work in Progress) up 125%
YoY representing 43MW of electrolysers
· 10MW of the backlog (Work in Progress) is the REFHYNE I project
recognised over time
· The balance of the backlog (Work in Progress) is expected to be
delivered in FY22
· Tender pipeline value to ITM Power of £378m (2020: £195m), up 94%
YoY
· Tender pipeline constitutes 1,011MW of potential electrolysis demand
· Installation of the 10MW REFHYNE I project completed, with expansion
by 100MW planned for REFHYNE II, at Shell's Rhineland Refinery
· Refuelling assets now grouped together under ITM Motive, with focus
shifting to larger scale refuelling projects for fleets, buses and trains to
increase profitability and provide a more appropriate structure for
sustainable growth of the network.
· Part of consortium awarded €5m for the OYSTER Project to Study
Offshore Green Hydrogen Production
Current Year Guidance
· Core stack module production to be in excess of 55MW
· Completed products volume to be between 33-50MW
· Revenue recognition depends on site access, travel restrictions, and
Micro-chip and steel availability
· Revenue will be heavily weighted to H2 2022
Graham Cooley, CEO, commented, "2021 has been another transformational year
for ITM Power. We attracted a strategic investor in Snam S.p.A., and through
our fund raise in October 2020 developed a platform to deliver to market our
next generation product, the 5MW Gigastack, two years earlier than previously
planned. We also moved into Bessemer Park, the world's largest PEM
electrolyser factory and commenced manufacturing there in January 2021. We
have seen national commitments to net zero accelerate, and I believe we are
very well placed, with our partner Linde, to address the rapidly growing
demand in the market."
For further information please visit www.itm-power.com
(http://www.itm-power.com) or contact:
ITM Power Plc +44 (0)114 551 1205
James Collins, Investor Relations
Investec Bank plc (Nominated Adviser and Broker) +44 (0)20 7597 5970
Jeremy Ellis / Chris Sim / Ben Griffiths
Tavistock (Financial PR and IR) +44 (0)20 7920 3150
Simon Hudson / David Cracknell / Tim Pearson
About ITM Power Plc
ITM Power Plc manufactures integrated hydrogen energy solutions for grid
balancing, energy storage and the production of renewable hydrogen for
transport, renewable heat and chemicals. ITM Power Plc was admitted to the AIM
market of the London Stock Exchange in 2004. In October 2019, the Company
announced the completion of a £58.8 million fundraising, including an
investment by Linde of £38 million, together with the formation of a joint
venture with Linde to focus on delivering renewable hydrogen to large-scale
industrial projects worldwide. ITM Power signed a deal to deploy a 10MW
electrolyser at Shell's Rhineland refinery. In November 2020, ITM Power
completed a £172m fundraising, including a £30m investment by Snam, one of
the world's leading energy infrastructure operators. ITM Power operates from
the world's largest electrolyser factory in Sheffield with a capacity of 1GW
(1,000MW) per annum. ITM Power received an order for the world's largest PEM
electrolyser of 24MW from Linde in January 2021. Other customers and partners
include Sumitomo, Ørsted, Phillips 66, Scottish Power, Siemens Gamesa,
Cadent, Northern Gas Networks, Gasunie, RWE, Engie, GNVert, National Express,
Toyota, Hyundai and Anglo American among others.
Chairman's Statement
The year to April 2021 was a further year of innovation and growth for the
Group, as the build of Bessemer Park, our new 1GW factory concluded, and the
Group started to win its first contracts through its joint venture with Linde
GmbH, ITM Linde Electrolysis GmbH. The partnership with Linde has enabled the
Group to concentrate more directly on its key manufacturing capabilities and
to develop a more comprehensive, solutions-led approach to an increasing
number of addressable markets, both in geography and application.
During the year, the Group announced a £172m fund raise to accelerate the
technology offering, both in terms of performance of existing products but
also to accelerate the development of the 5MW Gigastack, in direct response to
market demand for larger systems. The opportunity pipeline has grown
significantly. New and larger systems, using the Gigastack, remain on track
for factory readiness in late 2022 and are already being bid into a growing
range of projects.
During the past year the Group made changes to the board, with Katherine Roe
joining the board, and leading both the Remuneration Committee and the ESG
Committee. In December 2020, Tom Rae also joined the board as nominee director
of JCB.
In May two important reports were published regarding the macro market
dynamics for hydrogen. The IEA (International Energy Agency) report "Net Zero
by 2050; A roadmap for the Global Energy Sector" stated that to get to net
zero by 2050 the world needs 322m Tonnes of electrolytic hydrogen and a global
electrolyser capacity of 3,585GW. The Aurora Energy report "HyMAR" identifies
a current pipeline of electrolysers of over 200GW, with 85% of the 200GW in
Europe.
National electrolyser targets increased from 40GW to 144GW in the year and the
EU announced its new net-zero law. China also declared net-zero by 2060. The
US re-joined the Paris Agreement on February 19th, 2021 and declared its first
Department of Energy "Earthshot" for Green Hydrogen on 7th June 2021.Global
demand for electrolysers from industry, to decarbonise production processes,
and from utilities and power companies, to store renewable energy, is
accelerating. This potential scale of demand originally underpinned the
Group's decision to invest in a step change in capacity at the new Bessemer
Park facility. In the event, the new 1GW per annum capacity is likely to be
fully utilised earlier than originally envisioned, as evidenced by tendering
activity and ITM Power's backlog of firm orders. As the drive to achieve net
zero targets continues, the market for large scale electrolysis equipment to
produce green hydrogen may well become supply constrained.
In closing, I would like to thank all shareholders, old and new, for their
support and to recognise the significant achievements of the staff at ITM
Power Plc resulting from their hard work in 2020 and 2021.
Sir Roger Bone
Chairman
10 September 2021
REVIEW
Introduction
ITM Power designs and manufactures integrated hydrogen energy systems based on
Proton Exchange Membrane (PEM) electrolyser technology and has a product
offering that is scalable above 100MW in size. Of particular importance is the
ability of the systems to respond rapidly and to generate hydrogen at a
pressure, flow rate and purity appropriate to its application.
ITM Power is a globally recognised expert in hydrogen technologies with the
overarching principle of taking renewable energy from the power network or
other directly coupled sources, converting it into green,
zero-carbon-footprint hydrogen and using it in one of three broad
applications, Power-to-Gas, Clean Fuels and Industrial Hydrogen. There has
been significant growth in demand for these applications in the market place
and the directors continued to believe that all of these markets will grow
further over the coming years based on the commitment by governments worldwide
to mitigate climate change, the growth of renewables in the energy mix and the
need to decarbonise industrial processes.
The directors believe that ITM Power remains uniquely well-placed to capture
material shares of each market.
Building a Global Presence
ITM Power has worked hard to build relationships globally by adding anchor
points - via our partnership with Linde and through collaborations - outside
of the UK market. This effort will put the Group in a good position to service
markets internationally both now and in the future.
One such partnership with Optimal will provide long-term commissioning,
operational and maintenance support, enhancing ITM Power's capabilities to
deploy skilled engineering resource and spare parts for its customers across
Australia. To ensure that ITM Power's customers continue to enjoy the benefits
of low cost and low carbon energy well into the future, Optimal will provide
nationwide service and support through its network of factory certified ASP's
(Authorised Service Personnel).
The provision of a 0.7MW HGas electrolyser system for use in a hydrogen
microgrid project in Tasmania supported by the Federal Government's Blue
Economy CRC programme will be the first deployment with Optimal and a platform
for training through ITM Power's Hydrogen Academy.
The sale of a 2.0MW electrolyser to Sumitomo Corporation will be used as an
important reference plant for further sales in Japan through our partnership
with Sumitomo. This will be the first MW scale electrolyser system ITM Power
has deployed in Japan. The HGas3SP product will undergo modification to ensure
hydrogen supply pressure is below 10 bar in order to comply with Japan's High
Pressure Gas Safety Act. ITM Power and Sumitomo are continuing their
collaboration in the areas of business development, local compliance and after
sales support to ensure a comprehensive green hydrogen offering in Japan.
Covid-19
Covid-19 has continued to have an impact on the normal operations of the
Group. Staff who can work from home have been doing so throughout the
financial year, supported through VPN access, Microsoft Teams, various
Sharepoint spaces dealing with wellness and mental health related topics and
more recently, an internal network space called Yammer that aims to provide a
community spirit to the workforce.
As reported previously, the factory was temporarily reduced to a skeleton
staff at the start of the 2020-21 financial year, with 29 production staff
furloughed under the government job retention scheme while changes were
implemented to ensure the premises were Covid-secure.
In early June, we began the process of returning people to the factory. This
required risk assessments of areas to make them suitable for work under new
social distancing rules, close liaison with shop floor personnel over
abilities to return to work and skillset requirements to further the
production process at the correct times, as well as return to work inductions
to explain the new PPE and location requirements for safe, effective working.
With Bessemer Park available for office use from the autumn and a transfer of
the factory after the Christmas break, we have additional flexibility and
space to enable staff to come into work safely, whilst ensuring numbers
remained manageable within social distancing guidelines. This has allowed us
to offer alternatives for people who have been struggling to work from home.
Management continued to monitor the effect of Covid-19 to deploy personnel
efficiently to project site works in order to minimise project delays,
utilising European and third party engineers in locations to which UK staff
could not travel.
Marketing
ITM Power has been developing a dedicated Training and Marketing suite
facility at the Bessemer Park Gigafactory, which will enable the business to
host our own marketing and training events, as well as provide a venue for
National and International conferences that align with ITM Power's
objectives. The Marketing suite can provide seating for over 100 attendees
and will become an important marketing resource as the world opens up again
post-Covid.
The business has hosted a number of visitors as the Covid restrictions have
begun to lift, including Mr Clive Betts, the Member of Parliament for
Sheffield South East and a delegation from Chile's Energy and Mining Ministry,
led by Minister Juan Carlos Jobet.
The Group has been active in supporting the 100MW Gigastack project and
developing communications alongside BEIS, Ørsted and Phillips 66 Limited. The
project won the Humber Renewables Award for Innovation in March 2021, and
published a project update in May this year, with the final report due in
September 2021.
This year the Covid restrictions have continued, and exhibitions including the
Hannover Messe, normally a key event in ITM Power's calendar and the source of
much interest for our technology have been cancelled or limited to online
activities.
The Group continues to send out regular communications via a newsletter and we
have a growing number of sign-ups to receive the news from ITM Power.
Bessemer Park - Global Manufacturing HQ, Sheffield
The fit out of the 1GW (1,000MW) per annum Gigafactory at Bessemer Park
reached 'Practical Completion' - the handover to the Group by the contractors
of the completed building - in January 2021, having suffered only a minor
delay from the Covid-19 pandemic. The completed fit out included an expansion
of the existing offices, enlargement of the stack manufacturing and production
areas and a dedicated ATEX rated space for factory acceptance testing of
products, all coupled with the necessary 5MW power supply on site.
The Gigafactory also houses the 24-hour remote and technical monitoring centre
that will support ITM Power's after-sales service proposition, the Marketing
centre, Technology centre and component stores. The site, just off J34 of the
M1 in Sheffield will welcome visitors in the near future, with the creation of
the conferencing facility, as well as a Hydrogen Academy to support the
training of apprentices, local engineers and customers, together with
facilities for site visits by customers, shareholders and other stakeholders.
The ITM Power Gigafactory delivers a blueprint for a high capacity,
semi-automated PEM electrolyser manufacturing facility, which can be readily
replicated elsewhere, enabling a local facility to be planned and rapidly
deployed in response to large order volumes.
The factory was officially opened by the Rt Hon Kwasi Kwarteng, Secretary of
State for Business, Energy and the Environment on 17 August 2021 as he
launched the UK Government's Hydrogen Strategy.
Products and technology
ITM Power continues to place strategic focus on the development of its
technology. The opening of Bessemer Park earlier this year saw the Product
Development and Technology teams relocate into the new Technology Centre. The
additional space provides an excellent location to build on the Group's 20
years of experience and accelerate key development activities.
The ITM Power technology roadmap is focused on reducing cost, increasing
efficiency and expanding production capacity of our electrolyser stacks and
products. Particular emphasis has been placed on verification of improvements
at the stack level. These have included improved membrane materials,
ultra-low catalyst loadings and in-house component preparation. The now
co-located technology and production teams work closely together as new
manufacturing machines are adopted by the business to underpin production
capacity ramp up and prepare for the larger 5MW Gigastack platform.
Product cost reduction is an important focus area for ITM Power. Last year
the Group presented a full system price reduction plan including a target to
halve the average product price within five years. The strategy to achieve
these improvements is centred on standardisation and modularisation of the
product offering alongside fully leveraging global buying power of partners
and an integrated technology roadmap. The single biggest gains are
available from the PEM stack and the power conversion systems. ITM Power has
brought key stack preparation processes in-house with the move to Bessemer
Park. Together with semi-automation and in-line quality assurance, this has
achieved both cost reduction and capacity expansion for the stack platform.
Another focus area has been continued reduction of precious metal
loading. Over the last 10 years, the use of precious metals within ITM
Power stacks has reduced by over 80%. This core competency and vertical
integration enabled ITM Power to achieve the 2030 EU target of 0.4mg/W for
precious metal loading for electrolysers in 2019 and significant further
progress has been made since then. As a manufacturer of its own catalyst inks,
ITM Power has been working on the reduction, recycling and reuse of precious
metal catalyst loading for 20 years. As part of the Group's existing cost
reduction plan, these developments will be rolled out in phases, subject to
ITM Power's well-established verification process. This long running activity
makes an important contribution to cost reduction and provides some insulation
against the risk of supply constraints in the precious metal supply chain.
Working with Linde GmbH
Following on from Linde GmbH's strategic investment in ITM Power and the
establishment of ITM Linde Electrolysis GmbH, in which ITM Power holds a 50%
stake, work has continued to develop and embed the strategic partnership with
Linde. This partnership allows each company to focus on its core competencies,
with ITM Power to focus solely on its prime source of competitive advantage -
the efficient manufacture and supply of best in class PEM electrolysers, while
Linde will provide its world leading EPC services to offer best-available
hydrogen solutions to customers.
This partnership is now starting to bear fruits, with the signing in January
2021, of the first contact under the partnership, to build, own and operate
the world's largest PEM electrolyser plant at the Leuna Chemical Complex in
Germany. This new 24-megawatt electrolyser, supplied by ITM Power will produce
green hydrogen for industrial customers through Linde's existing pipeline
network. In addition, Linde will distribute liquefied green hydrogen to
refuelling stations and other industrial customers in the region. The total
green hydrogen to be produced from the electrolyser system could fuel
approximately 600 fuel cell buses driving 40 million kilometres and save up to
40,000 tons of carbon dioxide exhaust emissions per year.
The pipeline of potential projects coming through the joint venture continues
to grow and the relationship with Linde continues to strengthen at all levels.
Working with Snam S.p.A.
As part of the strategic fund raise in October 2020, Snam invested £30
million in ITM Power, and entered into a Commercial Partnership Agreement
between the businesses, which included preferred supplier status for the first
100MW of Snam's PEM electrolyser orders for delivery by 2024/2025.
The Commercial Partnership Agreement also includes the potential for
collaboration on a global pipeline of further projects. Since the partnership
was agreed in October 2020, initial discussions have taken place between ITM
Power and Snam to establish best practices for working and partnering on
projects. SNAM have also taken positions on the Technology Management
Committee and Strategic Advisory Committee within the ITM Power business.
Business environment
In July 2020, the European Commission announced its EU Hydrogen Strategy and
its Energy Systems Integration Strategy. The announcement prioritised the
development of renewable hydrogen, produced using mainly wind and solar energy
and went on to state:
· From 2020 to 2024, we will support the installation of at least 6GW
of renewable hydrogen electrolysers in the EU, and the production of up to one
million tonnes of renewable hydrogen.
· From 2025 to 2030, hydrogen needs to become an intrinsic part of our
integrated energy system, with at least 40GW of renewable hydrogen
electrolysers and the production of up to ten million tonnes of renewable
hydrogen in the EU.
· From 2030 to 2050, renewable hydrogen technologies should reach
maturity and be deployed at large scale across all hard-to-decarbonise
sectors.
To help deliver on this Strategy, the Commission has launched the European
Clean Hydrogen Alliance, which aims to build up an investment pipeline for
scaled-up production and support demand for clean hydrogen in the EU.
In August 2021, the UK government set out its own Hydrogen Strategy to drive
forward a green industrial revolution and meet their ambition for 5 GW of
low-carbon hydrogen production capacity by 2030. The Strategy sets out a
policy landscape to identify priorities and support mechanisms for rolling out
green hydrogen production in the UK. It includes a Hydrogen Business Model
designed to overcome the cost gap between low-carbon hydrogen and fossil fuels
and a Net Zero Hydrogen Fund for the commercial deployment of new low-carbon
hydrogen production plants across the UK.
Power-to-Gas
As governments and supra-national bodies continue to legislate for the
reduction of emissions following the COP21 Paris Agreement on climate change,
planting up with renewable generation has increased the need for energy
storage to address the challenge of intermittency. Battery technology cannot
achieve this at the scale required. Thus, the offshore wind and gas sectors
have started to advocate green hydrogen as the means for sustaining their
long-term business models.
Power-to-Gas can meet the demand for long-term, large-scale energy storage,
converting surplus renewable energy into hydrogen gas by rapid response
electrolysis and subsequently injecting it into the gas distribution network.
These grid balancing services can be an important source of revenue for
operators and ITM Power's rapid response Proton Exchange Membrane (PEM)
technology allows units to be turned on and off in under one second making
them eligible for the UK National Grid's Enhanced Frequency Response Payments.
ITM Power enjoys a unique position having supplied the world's first PEM
Power-to-Gas electrolyser in 2014, and continues to engage in a number of
industry-leading strategic projects.
The OYSTER Project to Study Offshore Green Hydrogen Production
The Fuel Cells and Hydrogen 2 Joint Undertaking (FCH2-JU), a public private
partnership of the European Commission, has made an award of €5m to
investigate the feasibility and potential of combining an offshore wind
turbine directly with an electrolyser and transporting renewable hydrogen to
shore.
To realise the potential of offshore hydrogen production, there is a need for
compact electrolysis systems that can withstand harsh offshore environments
and have minimal maintenance requirements while still meeting cost and
performance targets that will allow production of low-cost hydrogen. The
project will provide a major advance towards this aim. The electrolyser system
will be designed to be integrated with a single offshore wind turbine, and to
follow the turbine's production profile. Furthermore, the electrolyser system
will integrate desalination and water treatment processes, making it possible
to use seawater as a feedstock for the electrolysis process.
The OYSTER project partners share a vision of hydrogen being produced from
offshore wind at a cost that is competitive with natural gas (with a realistic
carbon tax), thus unlocking bulk markets for green hydrogen making a
meaningful impact on CO(2) emissions, and facilitating the transition to a
fully renewable energy system in Europe. This project is a key first step on
the path to developing a commercial offshore hydrogen production industry and
will demonstrate innovative solutions with significant potential in Europe and
beyond.
The project is planned to start in 2021 and run to the end of 2024, over which
time the consortium will develop and test a megawatt-scale fully marinised
electrolyser in a shoreside pilot trial. ITM Power is responsible for the
development of the electrolyser system and the electrolyser trials, while
Ørsted will lead the offshore deployment analysis, the feasibility study of
future physical offshore electrolyser deployments, and support ITM Power in
the design of the electrolyser system for marinisation and testing. Siemens
Gamesa Renewable Energy and Element Energy are providing technical and project
expertise.
Clean Fuel
The transport sector is one of the largest users of fuel in the world, and
currently it is dependent on fossil fuels, which are highly polluting and are
becoming ever scarcer and more expensive. Hydrogen fuel is generated on site
by ITM Power's rapid response electrolyser system, using renewable electricity
and water with a full tank of fuel dispensed within a matter of minutes at the
station where it is generated. This means a zero-carbon footprint and no use
of further transport infrastructure.
Hydrogen is light and can be stored under pressure, making it suitable for
many vehicle types as it does not add further weight, or use further energy
when on board. An additional benefit of hydrogen is its role in supporting the
drive for cleaner air, especially important in densely populated cities. When
hydrogen fuel cell electric vehicles are driven, the only emission is water
vapour and each three-minute car refuel provides a range of up to 400 miles.
ITM Motive: Owner-operator of refuelling stations
ITM Power continue to roll out a network of hydrogen refuelling stations in
the UK and was proud to play a part in the support of key workers during the
Covid-19 lockdowns. In the year, the Group dispensed 14 tonnes of hydrogen
from its refuelling stations (2020: 31 tonnes).
The Group recently completed work on its ninth UK public access hydrogen
refuelling station (HRS) at Tyseley Energy Park in Birmingham. This is due to
be joined by a bus refueller in the coming months.
Post year-end plans were announced to group ITM Power's refuelling station
portfolio into a separate but still wholly owned subsidiary, ITM Motive. The
strategy will be to focus on larger scale refuelling for fleets of vehicles
while the public stations build their revenue. Motive continues to work
closely with its partners across the entire supply chain and is particularly
excited to see OEMs bringing new vehicles to the market including the MK2
Mirai this year, several bus options, and coming early next year trucks from
Hyzon and panel vans from a range of manufacturers including Vauxhall in the
UK. The availability of a wide range of vehicle options should lead to a
significant growth in the market.
Larger vehicle refuelling
Within the transport sector, a renewed focus has been placed on the
development of zero-emission heavy vehicles, where fleets need to be refuelled
with large amounts of hydrogen on a regular basis. ITM Power has won
contracts to supply on-site hydrogen generation equipment for refuelling in
the UK, France, the US and Australia.
'Green Hydrogen for Scotland' to help reach net zero targets
A pioneering strategic partnership has been established to create new green
hydrogen production facilities with clusters of refuelling stations across
Scotland. These clusters will allow Scotland's abundant renewable power
generation capacity to be converted to hydrogen for use by vehicles,
supporting efforts to achieve net zero by 2045. 'Green Hydrogen for
Scotland' will offer an end-to-end market solution for reducing vehicle
emissions through the provision of green hydrogen.
The partnership's first project, 'Green Hydrogen for Glasgow', is designed to
provide carbon-free transport and clean air for communities across the city,
which wants to become the first net-zero city in the UK. A planning
application has now been made for a proposed green hydrogen production
facility located on the outskirts of the city at ScottishPower Renewables'
Whitelee Wind Farm, the UK's largest onshore wind farm. This will be operated
by BOC, using wind and solar energy to power a 20MW electrolyser, delivered by
ITM Power. This represents a doubling in the electrolyser scale capacity
originally envisaged and is in response to market demand. The project aims to
supply hydrogen to the commercial market within the next two years.
This project also supports the Scottish Government's decarbonisation targets
and Glasgow City Council's commitment to creating a zero emissions vehicle
fleet, using only electric and hydrogen-powered vehicles by the end of 2029.
H2OzBus Project - Deploying Hydrogen Fuel Cell Bus Fleets for Public Transport
across Australia
In May 2020, ITM Power announced the formation of the H2OzBus Project and
the signing of a memorandum of understanding with strategic partners. The
project will focus on infrastructure requirements and detailed plans for an
initial deployment of 100 hydrogen fuel cell electric buses in up to 10
central hub locations across Australia where interest and demand for fuel cell
buses has already been identified. This aligns well with ARENA's (Australian
Renewable Energy Agency) key investment priorities in Accelerating Hydrogen
and Decarbonising Industry.
The key expertise of each partner and their proposed roles in the project are:
ITM Power and BOC will provide the hydrogen production and refuelling
infrastructure; Ballard Power Systems will supply the fuel cell system to be
integrated into the electric buses supplied by supporting bus manufacturers;
Transit Systems, will maintain and operate the vehicles as part of their daily
urban transit operations (or within a strategically located project managed by
Transit Systems), and: Palisade Investment Partners will assist in providing
funding and strategic financial oversight, for the project.
Green Hydrogen Project in Herten, Germany with Linde Engineering
Linde Engineering announced its successful bid for the design and construction
of an integrated hydrogen refuelling station and electrolysis plant for AGR in
Herten, confirming that ITM Power is the preferred supplier of the
electrolysis equipment envisioned by the project.
The project is receiving funding from the German Federal Ministry of Transport
and Digital Infrastructure.
The electrolysers will have an annual capacity of around 440,000 kg of
hydrogen with electricity coming from AGR's waste-to-energy thermal power
plant, where municipal and commercial waste with a biogenic content of around
50 percent serves as the primary fuel source. The planned refuelling station
will be able to fill vehicles at 350 bar and 700 bar and therefore will be
suitable for both cars and trucks, including AGR's own fleet of waste trucks.
Through the thermal recycling of local waste and its conversion into hydrogen,
the undertaking is a successful example of the circular economy in action,
providing an important reference site for the municipality market.
Industrial
Many industries use hydrogen as part of their production processes. Today,
almost all of this hydrogen is made by steam reformation of methane (natural
gas), a highly carbon intensive method. Three industries dominate carbon
emissions from the use of hydrogen: ammonia production, steel making and the
Group's prime target, refineries. Refineries currently use hydrogen to improve
the quality of fractional distillation products and most of this hydrogen is
produced from steam-reformation but in order to comply with stringent
legislation and avoid fines, refineries need a cost-effective green hydrogen
solution that reduces carbon emissions while allowing them to maintain output.
In addition, natural gas reformers have long start-up times. With their rapid
start up times, ITM Power's PEM electrolysers could provide an immediate
backup solution to prevent production downtime and preserve security of
hydrogen supply.
In steel making, iron ore requires chemical reduction before being used to
produce steel; this is currently achieved through the use of carbon, in the
form of coal or coke. When oxidised, this leads to emissions of about 2.2
tonnes of CO(2) for each tonne of liquid steel produced. The substitution of
hydrogen for carbon has the potential to significantly reduce CO(2) emissions,
because hydrogen is an excellent reducing agent and produces only water as a
by-product.
Sale to Linde of World's Largest PEM Electrolyser
In January 2021, Linde announced that it will build, own and operate the
world's largest PEM electrolyser plant at the Leuna Chemical Complex in
Germany. This new 24-megawatt electrolyser will be supplied by ITM Power to
produce green hydrogen for industrial customers through Linde's existing
pipeline network. In addition, Linde will distribute liquefied green
hydrogen to refuelling stations and other industrial customers in the
region. The total green hydrogen to be produced could fuel approximately 600
fuel cell buses driving 40 million kilometres and save up to 40,000 tons of
carbon dioxide exhaust emissions per year.
Planned 100MW expansion of the Shell refinery project
In February, Shell announced plans to increase the capacity of the ITM Power
PEM electrolysis plant by 100MW at its Rhineland Refinery in Germany.
Shell's partners for the REFHYNE II electrolysis project are ITM Power, ITM
Linde Electrolysis and Linde. Subject to finalising contracts and securing
some matching funding, the partners will work with the Shell to effect this
upgrade.
Shell intends to manufacture sustainable aviation fuels in the Wesseling
section of the Rhineland Refinery. To this end, the company wants to set up a
first commercial Bio Power-to-Liquid plant. The synthetically produced
kerosene is intended to help reduce airlines' CO2 footprint. Construction of
this facility could start in 2022, pending final investment decisions. Both
the electrolyser upgrade and the synthetic kerosene projects are integral
parts of the planned transformation of the site into the "Shell Energy and
Chemicals Park Rhineland.
Electrolyser Sale to Linde for H2Pioneer in Austria
One of the main goals of the H2Pioneer project is demonstrating the production
of green hydrogen on-site to be used in semiconductor production, mostly
replacing the supply of liquified hydrogen delivered in trailers. An HGas3SP
(2MW) electrolyser system will produce green hydrogen, which after further
purification by Linde will be ultra-pure and suitable for semiconductor
manufacture. The use of electrolysis simplifies downstream hydrogen
purification and minimises delivery logistics while helping to reduce carbon
dioxide emissions from the hydrogen supply chain. This is an industry that
Linde understands very well and in which it has numerous existing customers
worldwide but will be a new industry for ITM Power technology.
FINANCIAL REVIEW
Revenue Streams for the Group
As well as having potential revenue streams from three large application
markets, there are a variety of ways in which the Group can generate revenue
globally:
Product Sales
ITM Power positions itself as a provider of PEM electrolyser systems, selling
to a range of customers and target markets globally. The Group offers standard
containerised and modular large-scale solutions based around core technology.
Consulting Contracts
Many system contracts that are bespoke are preceded by a design study or a
Front-End Engineering Design (FEED) contract that defines solutions to
customer specifications.
Maintenance Contracts
ITM Power offers warranties on systems alongside remote support and
maintenance contracts. The Group expects to generate a growing long-term
income stream from these activities as system deployments continue.
Fuel Sales (Own and Operate model)
The Group has been the beneficiary of funding from UK and EU bodies, which has
helped accelerate infrastructure development for the provision of hydrogen to
fleets and individual users.
Grant Funding for Innovation and scale up
The Group utilises funding from grant bodies to contribute towards research
and the technical advancement of its electrolyser products through generating
greater efficiencies and cost reductions for ITM Power systems.
Financial performance
Sales revenues in the year were largely generated from product sales and
consultancy. This was predominantly from two major projects, the REFHYNE I
electrolyser build and the design and proof of concept project commissioned by
BEIS.
Whilst the investment partnership with Linde has started to generate new
contracts, the revenues and cost of sales from these have not yet
materialised, owing to the accounting treatment under accounting standard IFRS
15 Revenue from Contracts with Customers, which will keep our standard product
sales in WIP until handover to the customer. Thus, the gross margin is still
heavily influenced by legacy projects and the challenging EPC scope of the
works contracted, particularly when hampered further by Covid-19 restrictions.
Fuel sales also suffered through Covid-19 lockdowns, generating only £0.2m
(2020: £0.4m), despite continuing to provide hydrogen road fuel to emergency
service workers.
New collaborative project funding recognised in the year was £0.8m. This has
funded research and data collection projects.
The pre-tax loss for the year under review decreased to £27.6m (2020:
£29.5m). The prior year contained the significant impairment of our
refuelling assets but despite the continuing growth of the workforce, costs
have also been kept in check this year through a combination of reduced
expenditure during Covid-19 lockdowns and through closure of our previous
properties, leading to a consolidation of related service expenditure that
will continue into the new financial year.
Net cash burn increased to £32.7m before fund raise (2020: £23.3m). Cash
burn is a non-statutory measure the directors use to monitor the Group, and is
calculated by deducting from annual cash flow (£136.2m) the effects of any
equity fund raise (£168.9m). A key factor in this movement is that we have
continued to invest in our future, as illustrated by the increase in the
investment activities section of the cashflow statement from £11.1m in 2020
to £12.4m in the current financial year. Within this cash burn figure, there
was the completion of our new building and the fit-out of the factory, from
which we have been operating since January.
Financial position
In the year, the Group capitalised development costs of £1.5m (2020: £1.6m).
This was for design of standard products that will facilitate our offering to
the markets and developments to adapt our core technologies for new potential
uses. The directors see continued product development as key to building
commercial traction.
There was an increase in fixed assets (excluding right of use assets) to
£13.5m from £6.5m in the prior year. The uplift relates to the leasehold
improvements at our new premises and the kitting out of all the new areas,
including labs, factory, test bays and offices.
At year end, ITM Power Plc had current assets totalling £205.5m (2020:
£67.5m). Funds in the bank totalled £177.1m (2020: £41.0m), of which there
were amounts on guarantee of £1.0m (2020: £1.1m). The Group has previously
been required to place amounts on guarantee as cash cover, which limits
working capital available to the Group mid-contract. ITM Power Plc continues
to structure quotes to obtain sufficient monies up front to limit the adverse
impact of increased activity on working capital.
Total receivables excluding restricted cash amounts have reduced from £22.1m
(2020) to £21.9m. However, this balance is no longer dominated by pro forma
and early stage payments made to suppliers for stock items required in the
next wave of units through production. Instead the balance is split fairly
evenly between trade debtors, prepayments and accrued project income. The
effort to reduce the number of prepaid suppliers will continue into the new
financial year but has been aided by an improved credit rating and a review of
our approved supplier base. Prepayments totalled £6.5m (2020: £13.3m), down
51%.
Trade debtors in the prior year predominantly related to grant income debtors,
whereas in the current year it is purely made up of commercial customers
(2021: £5.5m and 2020: £4.3m). At year end, the Group had trade creditors of
£1.2m against a prior year balance of £2.5m.
Overall, creditors have decreased from £14.0m (2020) to £12.9m. The figure
continues to be dominated by deferred income (£9.0m in the current year and
£9.2m in 2020), which for the most part this year reflects money received up
front on contracts. This is partly due to the timing of contracts as we
embarked on the next wave of commercial contracts but also point in time
revenue recognition now that we have moved on to standard product sales.
Key financials
A summary of the financial KPIs is set out in the table below:
2021 2020 2019
£m £m £m
Total Projects income, being sales and grants receivable 5.04 5.35 17.56
(as split below)
Of which: Sales Revenue 4.28 3.29 4.59
Of which: Grant recognised in the income statement 2.12 2.47 7.23
Of which: Grant recognised on the balance sheet * (1.35) (0.42) 5.74
Pre-tax loss 27.65 29.52 9.32
Adjusted EBITDA (21.4) (18.1) (7.3)
Property, plant and equipment plus intangible assets 16.78 8.66 6.41
Net Assets 197.44 55.75 26.21
*Grant income recognised on the balance sheet includes grant income recognised
against the cost of assets acquired and the movement on grant income
receivable for assets paid on pro-forma terms but not yet delivered.
Non-financial key performance indicators
FY 2021 FY 2020 FY 2019 FY 2018 FY 2017
Fuel Dispensed (kg) 14,452 30,707 31,984 13,036 1,043
Fuel Contracts signed 40 36 33 20 14
No expectations have been set with regards to KPI but prior years provide a
baseline. Fuel dispensed has been affected by the Covid-19 lockdowns in the
year with people working from home and not travelling to events or meetings.
The number of new fuel contracts will become a less important measure of the
growth of the market for ITM Power. This is due to an increase in the number
of vehicles on the road but under the umbrella of existing customer contracts
and the uptake of private users rather than businesses. New contracts in the
current year were mainly foreign one-off users.
Events after the Balance Sheet Date
Post balance sheet, a new subsidiary was created to house the refuelling
assets that were previously within ITM Power (Trading) Limited. ITM Motive
Limited will own and operate the UK refuelling stations in order to drive
their profitability. It is a 100% owned subsidiary so there will be no
material impact on the consolidated accounts.
OUTLOOK
Against a rapidly growing market backdrop ITM Power has made strong progress
in the period, laying the foundations to deliver turnkey solutions that
include the Group's manufactured products to markets as a result of partnering
with world-class EPC provider Linde. The near-term outlook is positive as the
record backlog reflects the demand for larger systems, as well as the strength
of partnerships with major blue-chip companies.
Post year end, the creation of ITM Motive Ltd -still a 100%-owned subsidiary-
allows the Group to focus on both its core manufacturing model and the
own/operate model for refuelling assets. ITM Support is also developing into a
revenue-generating business unit that will add a further offer to customers.
The Board looks forward to reporting progress as contracts are awarded, and to
providing an update at the AGM in September.
CONSOLIDATED INCOME STATEMENT AND OTHER COMPREHENSIVE INCOME
Note 2021 2020
restated
£'000 £'000 £'000 £'000
Revenue 3 4,275 3,291
Direct costs (12,145) (10,839)
Grant income against direct costs 3 1,356 1,719
(10,789) (9,120)
Gross loss (6,514) (5,829)
Operating costs
Research and development (3,489) (2,298)
Production and engineering (8,839) (13,919)
Sales and marketing (1,436) (1,386)
Administration expenses (7,404) (7,028)
Expected credit loss (165) 15
Other income - government grants 3 1,190 1,049
Loss from operations (26,657) (29,396)
Share of loss of associate company (595) (3)
Investment income 83 90
Finance costs (479) (214)
Loss before tax (27,648) (29,523)
Tax (49) (38)
Loss for the year (27,697) (29,561)
OTHER TOTAL COMPREHENSIVE INCOME:
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences on foreign operations (78) 50
Net other total comprehensive income (78) 50
Total comprehensive loss for the year (27,775) (29,511)
Basic and diluted loss per share 5 (5.5p) (7.4p)
Research and development, Production and engineering, Sales and marketing were
included as "Distribution costs" in the previous year. These have been
presented as individual functions in the current year and therefore restated
in the comparative.
All results presented above are derived from continuing operations and are
attributable to owners of the Company.
CONSOLIDATED BALANCE SHEET
Note 2021 2020
£'000 £'000
NON-CURRENT ASSETS
Investment in associate 259 346
Intangible assets 3,269 2,154
Right of use assets 6,399 6,520
Property, plant and equipment 13,514 6,501
Financial Asset at amortised cost 148 137
TOTAL NON-CURRENT ASSETS 23,589 15,658
CURRENT ASSETS
Inventories 6,418 4,432
Trade and other receivables 22,981 23,166
Cash and cash equivalents 176,078 39,919
TOTAL CURRENT ASSETS 205,477 67,517
CURRENT LIABILITIES
Trade and other payables (12,857) (14,013)
Provisions (12,276) (6,890)
Lease liability (204) (211)
TOTAL CURRENT LIABILITIES (25,337) (21,114)
NET CURRENT ASSETS 180,140 46,403
NON-CURRENT LIABILITIES
Lease liability (6,282) (6,315)
NET ASSETS 197,447 55,746
EQUITY
Called up share capital 6 27,533 23,664
Share premium account 6 302,248 137,236
Merger reserve 6 (1,973) (1,973)
Foreign exchange reserve 6 83 161
Retained loss 6 (130,444) (103,342)
TOTAL EQUITY 197,447 55,746
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Note Called up share capital Share premium account Foreign exchange reserve
£'000 £'000 Merger reserve £'000 Retained loss Total equity
£'000 £'000 £'000
At 1 May 2019 6 16,200 86,631 (1,973) 111 (74,760) 26,209
Transactions with Owners
Issue of shares 6 7,464 50,605 - - - 58,069
Credit to equity for share based payment - - - - 979 979
Total Transactions with Owners 7,464 50,605 - - 979 59,048
Loss for the year - - - - (29,561) (29,561)
Other comprehensive income 6 - - - 50 - 50
Total comprehensive income - - - 50 (29,561) (29,511)
At 1 May 2020 6 23,664 137,236 (1,973) 161 (103,342) 55,746
Transactions with Owners
Issue of shares 6 3,869 165,012 - - - 168,881
Credit to equity for share based payment - - - - 595 595
Total Transactions with Owners 3,869 165,012 - - 595 169,476
Loss for the year - - - - (27,697) (27,697)
Other comprehensive income 6 - - - (78) - (78)
Total comprehensive income - - - (78) (27,697) (27,775)
At 30 April 2021 6 27,533 302,248 (1,973) 83 (130,444) 197,447
CONSOLIDATED CASH FLOW STATEMENT
2021 2020
Note £'000 £'000
Net cash used in operating activities 7 (20,141) (12,040)
Investing activities
Investment in associate (535) (349)
Purchases of property, plant and equipment (14,422) (8,986)
Finance asset (security deposit) - (137)
Capital Grants received against purchases of non-current assets 3,992 89
Proceeds on disposal of Property, Plant & Equipment 3 1
Payments for intangible assets (1,524) (1,771)
Interest received 83 90
Net cash used in investing activities (12,403) (11,063)
Financing activities
Issue of ordinary share capital 173,835 59,299
Costs associated with fund raise (4,954) (1,230)
Payment of lease liabilities (156) (236)
Net cash from financing activities 168,725 57,833
Increase in cash and cash equivalents 136,181 34,730
Cash and cash equivalents at the beginning of year 39,919 5,173
Effect of foreign exchange rate changes (22) 16
Cash and cash equivalents at the end of year 176,078 39,919
NOTES
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, Shepcote
Lane, 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 2021, 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 2021
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 2020 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 2020 have been
delivered to the Registrar of Companies. The 30 April 2021 accounts were
approved by the directors on 10 September 2021, 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 international accounting standards, in
conformity with the requirements of the Companies Act 2006.
They have been prepared under the assumption that the Group operates on a
going concern basis and on the historical cost basis. Historical cost is
generally based on the fair value of the consideration given in exchange for
goods and services.
Going Concern
The directors have prepared a cash flow forecast for the period ending 30
September 2022. This forecast indicates that the Group and parent company
would expect to remain cash positive without the requirement for further fund
raising based on delivering the existing pipeline, for a period of at least 12
months from the date of approval of these financial statements.
By the end of the period analysed, the Group will still hold a large
proportion of the monies from the fund raise in the year. This should give the
business sufficient funds to trade for the next three years if the business
continued to operate in a similar way beyond the forecast period.
With the uncertainty created for the economy by Covid-19, this cash flow
forecast has also been stress tested. As a worst-case scenario, if all
payments had to continue as forecast while receipts were not received at all,
the business would remain cash positive for the full twelve 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 & INCOME FROM GOVERNMENT GRANTS
All revenues are derived from continuing operations. An analysis of the
Group's revenue is as follows:
2021 2020
£'000 £'000
Revenue from product sales recognised over time 1,697 2,256
Consulting contracts recognised over time 2,108 470
Maintenance contracts recognised at a point in time 112 48
Fuel Sales 153 367
Other (e.g. scrap sales) 205 150
Revenue in the Consolidated Income Statement 4,275 3,291
Grant income shown against cost of sales 1,356 1,719
Grant income (claims made for projects) 761 753
Other government grants (R&D claims) 404 252
Other government grants (Covid-19 furlough scheme) 25 44
1,190 1,049
6,821 6,059
At 30 April 2021, the aggregate amount of the transaction price allocated to
remaining performance obligations of continuing build contracts was £16.7m
(2020: £3.8m). The Group expects to recognise the remaining performance
obligations within one 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 entity-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-to-Gas, Refuelling, and Industrial). Revenue reporting has begun to
look at these three sectors to assess the commerciality of those sales.
However, decisions for resourcing etc. cannot be made by reference to these
segments. The Group operates a single factory 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:
2021 2020
£'000 £'000
Power-to-Gas 210 332
(of which product sales recognised over time £42,000)
Refuelling (38) 1,247
(of which product sales recognised over time -£215,000)
Industrial 1,870 1,147
(of which product sales recognised over time £1,870,000)
Other 2,233 565
Revenue in the Consolidated Income Statement 4,275 3,291
The negative sales revenue on refuelling was caused by the effects of foreign
exchange as well as actual and forecast overruns (affecting stage of
completion) on the product sale therein.
Geographical Analysis
The United Kingdom is the Group's country of domicile but the Group also has
subsidiary trading companies in the United States, Germany and Australia. All
non-current assets were domiciled in the United Kingdom, with the exception of
one hydrogen refuelling station in California (net book value £Nil, 2020:
£Nil) and assets relating to our German office (net book value £60,000,
2020: £31,000). Revenues have been generated as follows:
2021 2020
£'000 £'000
United Kingdom 2,505 828
Germany 1,966 1,167
(of which product sales recognised over time £1,893,000)
Rest of Europe (196) 1,118
(of which product sales recognised over time -£196,000)
United States - 178
4,275 3,291
Included in revenue are the following amounts, which each accounted for more
than 10% of total revenue:
2021
£'000 2020
£'000
Customer A Industrial 1,870 1,140
Customer B Other 2,027 410
Customer C Refuelling <10% 854
4. CALCULATION OF ADJUSTED EBITDA
In reporting EBITDA, management use the metric of adjusted EBITDA, to better
reflect underlying performance and remove the effect of the following items;
2021 2020
£'000 £'000
Loss before interest and tax (26,657) (29,396)
Add back:
Depreciation 2,321 2,440
Impairment 1,713 5,588
Amortisation 274 197
Loss on disposal 173 473
Share based payment charge 799 2,625
(21,377) (18,073)
5. LOSS PER SHARE
The calculation of the basic and diluted earnings per share is based on the
following data:
2021 2020
£'000
£'000
Loss for the purposes of basic and diluted loss per share being net loss (27,697) (29,561)
attributable to owners of the Company
Number of shares
Weighted average number of ordinary shares for the purposes of basic and 507,262,743 398,184,707
diluted earnings per share
Loss per share 5.5p 7.4p
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 were 50,893,546 (2020: 85,329,719).
6. CALLED UP SHARE CAPITAL AND RESERVES
2021 2020
£'000 £'000
Called up, allotted and fully paid:
550,658,155 (2020: 473,277,926) ordinary shares of 5p each 27,533 23,664
Authorised Share capital:
550,658,155 (2020: 473,277,926) ordinary shares of 5p each 27,533 23,664
Holders of ordinary shares have voting rights at Annual General Meetings and
Extraordinary General Meetings in proportion with their shareholding.
The share premium account can move when shares are sold and 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.
7. notes to the cash flow statement
2021 2020
£'000 £'000
Loss from operations (26,657) (29,396)
Adjustments:
Depreciation 2,321 2,440
Share based payment 595 978
Loss on disposal 173 473
Impairment 1,712 5,588
Amortisation 274 197
Operating cash flows before movements in working capital (21,582) (19,720)
(Increase) in inventories (1,987) (2,525)
Decrease in receivables 185 7,964
Decrease in payables (1,156) (2,882)
Increase in provisions 4,857 5,285
Cash used in operations (19,683) (11,878)
Interest paid (479) (214)
Income taxes received 21 52
Net cash used in operating activities (20,141) (12,040)
The movement on provisions has been adjusted by £530,000 as the Bessemer Park
dilapidations provision has been posted against Right of Use Assets and
therefore no adjustment to the income statement for this non-cash item is
required.
-ends-
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