REG - ITM Power PLC - Trading Update

ITM PowerAnnouncement

14/10/2021 16:45

RNS Number : 1488P
  
ITM Power PLC
  
14 October 2021
  
 

14 October 2021
 
ITM Power plc
("ITM", "ITM Power", the "Group" or the "Company")
 
Trading Update
 
Alongside the proposed placing announced separately today ITM Power, the energy storage and clean fuel company, announces, exceptionally, Q1 trading performance for the three months to 31 July 2021. This information is also included in the offering memorandum published in connection with the proposed placing and should be read alongside the announcement of the proposed placing.
 
· Revenue of £1.2m (Q1 2021: £0.3m), up 357%
· Loss from operations £6.3m (£5.6m), increased by 12%
· Adjusted EBITDA loss of £5.2m, (£5.1m), increased by 1%
· Cash balance of £170.8m (£33.8m) 
· Cash burn* of £5.3m (£8.0m), down 34%
*Cash burn is a non-statutory measure. Please see the note to the cash flow statement (Note 4)
 
For further information please visit www.itm-power.com or contact:
 



ITM Power plc


 




James Collins, Investor Relations
Justin Scarborough, Investor Relations


+44 (0)114 551 1205
+44 (0)114 551 1080




 


 




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. ITM Power signed a deal to deploy a 10MW electrolyser at Shell's Rhineland refinery in 2017. 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. 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.




 
Independent review report to ITM Power Plc 
Introduction
We have been engaged by the company to review the financial information in the first quarter financial report for the three months ended 31 July 2021 which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Consolidated Cash Flow Statement and the related explanatory notes. We have read the other information contained in the first quarter financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial information. 
Directors' responsibilities 
The financial report is the responsibility of, and has been approved by, the directors. The AIM rules of the London Stock Exchange require that the accounting policies and presentation applied to the financial information in the first quarter financial report are consistent with those which will be adopted in the annual accounts having regard to the accounting standards applicable for such accounts.
As disclosed in Note 3, the annual financial statements of the group are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The financial information in the financial report has been prepared in accordance with the basis of preparation in Note 1.
Our responsibility 
Our responsibility is to express to the company a conclusion on the financial information in the first quarter financial report based on our review. 
Scope of review 
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 
The impact of uncertainties arising from the UK exiting the European Union on our review 
Our review of the summary accounts in the financial report requires us to obtain an understanding of all relevant uncertainties, including those arising as a consequence of the effects of Brexit. Such reviews assess and challenge the reasonableness of estimates made by the directors and the related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the company's future prospects and performance.
Brexit is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty, with the full range of possible outcomes and their impacts unknown. We applied a standardised firm-wide approach in response to these uncertainties when assessing the company's future prospects and performance. However, no review of interim financial information should be expected to predict the unknowable factors or all possible future implications for a company associated with a course of action such as Brexit.
Conclusion 
Based on our review, nothing has come to our attention that causes us to believe that the financial information in the first quarter financial report for the three months ended 31 July 2021 is not prepared, in all material respects, in accordance with the basis of accounting described in Note 1. 
Use of our report
This report is made solely to the company in accordance with guidance contained in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the company those matters we are required to state to it in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusion we have formed.
 
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Sheffield
14 October 2021




 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME







Note


Three months to 31 July 2021 (unaudited)
£'000


Three months to 31 July 2020 (unaudited)
£'000


Year ended 30 April 2021 (audited)
£'000




Revenue


2


1,195  


261  


4,275


























Direct costs






(1,665)


(1,260)


(12,145)




Grant income against direct costs






-


168


1,356




Cost of sales






(1,665)


(1,092)


(10,789)


























Gross loss






(470)


(831)


(6,514)


























Operating costs




















Research and development






(1,297)


(1,172)


(3,489)




Production and engineering






(2,063)


(1,477)


(8,839)




Sales and marketing






(386)


(348)


(1,436)




Administration expenses






(2,120)


(1,855)


(7,404)




Expected credit risk






(3)


19


(165)




Other income - government grants






75


65


1,190




Loss from operations






(6,264)


(5,599)


(26,657)


























Share of profit / (loss) of associate company






81


(36)


(595)




Finance income






20


42


83  




Finance costs






(130)


(115)


(479)




Loss before tax






(6,293)


(5,708)


(27,648)




Tax






(10)


(3)


(49)




Loss for the period






(6,303)


(5,711)


(27,697)


























Other total comprehensive income:




















Foreign currency translation differences on foreign operations






(51)


(32)


(78)




Net other total comprehensive income






(51)


(32)


(78)


























Total comprehensive loss for the period






(6,354)


(5,743)


(27,775)


























Loss per share




















Basic and diluted 






(1.1p)


(1.2p)


(5.5p)




Weighted average number of shares






550,658,155


474,672,370


507,262,743



All results presented above are derived from continuing operations.
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 7,490,129 (Q1 2020: 9,042,055; YE 2021: 50,893,546).
 
CONSOLIDATED BALANCE SHEET







As at 31 July 2021
(unaudited)
£'000


As at 31 July 2020
(unaudited)
£'000


As at 30 April 2021 (audited)
£'000




Non-current assets
















Investment in associate


326


310


259




Intangible assets


3,352


2,407


3,269




Right of use assets


6,342


6,353


6,399




Property, plant and equipment


13,681


9,932


13,514




Financial asset at amortised cost


150


137


148




Total non-current assets


23,851


19,139


23,589






















Current assets
















Inventories


8,511


6,347


6,418




Trade and other receivables


23,933


21,229


22,981




Cash and cash equivalents


170,765


33,771


176,078




Total current assets


203,209


61,347


205,477






















Current liabilities
















Trade and other payables


(18,559)


(14,957)


(12,857)




Provisions


(10,677)


(7,122)


(12,276)




Lease liability


(88)


(119)


(204)




Total current liabilities


(29,324)


(22,198)


(25,337)






















Net current assets


173,885


39,149


180,140






















Non-current liabilities
















Lease liability


(6,468)


(6,393)


(6,282)






















Net assets


191,268


51,895


197,447






















Equity
















Called up share capital


27,533


23,873


27,533




Share premium account


302,248


138,849


302,248




Merger reserve


(1,973)


(1,973)


(1,973)




Foreign exchange reserve


32


129


83




Retained loss


(136,572)


(108,983)


(130,444)




Total Equity


191,268


51,895


197,447







 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 







Called up share capital
£'000


Share premium account
£'000


Merger reserve
£'000


Foreign Exchange reserve
£'000


Retained loss
£'000


Total
Equity
£'000


































At 1 May 2021


27,533


302,248


(1,973)


83


(130,444)


197,447


































Transactions with Owners




























Issue of shares


-


-


-


-


-


-




Credit to equity for share based payment


 
-


 
-


 
-


 
-


 
175


175




Total Transactions with Owners


-


-


-


-


175


175


































Loss for the period


-


-


-


-


(6,303)


(6,303)




Other comprehensive income 


-


-


-


(51)


-


(51)




Total comprehensive income 


-


-


-


(51)


(6,303)


(6,354)


































At 31 July 2021 (unaudited)  


27,533


302,248


(1,973)


32


(136,572)


191,268
































































At 1 May 2020


23,664


137,236


(1,973)


161


(103,342)


55,746


































Transactions with Owners




























Issue of shares


209


1,613


-


-


-


1,822




Credit to equity for share based payment


 
-


 
-


 
-


 
-


 
70


70




Total Transactions with Owners


209


1,613


-


-


70


1,892


































Loss for the period


-


-


-


-


(5,711)


(5,711)




Other comprehensive income 


-


-


-


(32)


-


(32)




Total comprehensive income 


-


-


-


(32)


(5,711)


(5,743)


































At 31 July 2020 (unaudited)  


23,873


138,849


(1,973)


129


(108,983)


51,895



 




 
 



 


Called up share capital
£'000


Share premium account
£'000


 
Merger reserve
£'000


Foreign exchange reserve
£'000


 
Retained loss
£'000


 
Total equity
£'000




 


 


 


 


 


 


 




At 1 May 2020


23,664


137,236


(1,973)


161


(103,342)


55,746




 


 


 


 


 


 


 




Transactions with Owners


 


 


 


 


 


 




Issue of shares


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


-


-


-


(78)


-


(78)




Total comprehensive income


-


-


-


(78)


(27,697)


(27,775)




 


 


 


 


 


 


 




At 30 April 2021 (audited)


27,533


302,248


(1,973)


83


(130,444)


197,447




 


 


 


 


 


 


 







 
CONSOLIDATED CASH FLOW STATEMENT
 



 
 


Note


Three months to 31 July 2021 (unaudited)
£'000


Three months to 31 July 2020 (unaudited)
£'000


Year ended 30 April 2021 (audited)
£'000


























Net cash used in operating activities


4


(4,275)


(3,836)


(20,141)


























Investing activities




















Investment in associate






-


-


(535)




Purchases of property, plant and equipment






(680)


(4,002)


(14,422)




Capital Grants received against purchases of non-current assets






25


190


3,992




Proceeds on disposal of plant & equipment






-


1


3




Payments for intangible assets






(271)


(355)


(1,524)




Interest received






17


42


83




Net cash used in investing activities






(909)


(4,124)


(12,403)


























Financing activities




















Issue of ordinary share capital






-


1,822


173,835




Costs associated with fund raise






-


-


(4,954)




Payment of lease liabilities






(28)


(37)


(156)




Net cash from financing activities






(28)


1,785


168,725


























(Decrease)/ increase in cash and cash equivalents






(5,212)


(6,175)


136,181




Cash and cash equivalents at the beginning of period






176,078


39,919


39,919




Effect of foreign exchange rate changes






(101)


27


(22)




Cash and cash equivalents at the end of period






170,765


33,771


176,078







 
Notes to the summary accounts
 
1. Basis of preparation of interim figures
These interim summary accounts have been prepared using accounting policies consistent with International Accounting Standards, in conformity with the requirements of the Companies Act 2006. Whilst the financial information has been compiled in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRSs), it does not contain sufficient information to comply with IFRSs. This interim financial information does not constitute statutory financial statements within the meaning of section 435 of the Companies Act 2006. 
 
The financial information has been prepared on the historical cost basis. The principal accounting policies adopted by the Group are as applied in the Group's latest audited financial statements. 
 
The information relating to the year ended 30 April 2021 has been extracted from the Group's published financial statements for that year, which contain an unqualified audit report that does not draw attention to any matters of emphasis, and did not contain statements under section 498(2) and 498(3) of the Companies Act 2006 and which have been filed with the Registrar of Companies.
 
Going Concern
The directors have prepared a cash flow forecast for the period ending 31 October 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 summary accounts.
 
By the end of the period analysed, the Group will still hold a large proportion of the monies from the fund raise in October 2020. 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 summary accounts.
 
The interim summary accounts have therefore been prepared on a going concern basis.
 




 
2. Revenue and other operating income



An analysis of the Group's revenue is as follows:


Q1 2021
£'000


Q1 2020
£'000


FY 2021
£'000




Revenue from product sales recognised over time


454


105


1,697




Revenue from product sales recognised at point in time


672


-


-




Consulting contracts recognised over time


28


79


2,108




Maintenance contracts recognised at point in time


-


33


112




Fuel sales


41


45


153




Other


-


-


205




Revenue in the Consolidated Income Statement


1,195


261


4,275






















Grant income shown against cost of sales


-


168


1,356






















Grant income (claims made for projects)


19


12


761




Other government grants (R&D claims)


56


28


404




Other government grants (Covid-19 furlough scheme)


-


25


25








75


65


1,190






















Grant income in the Consolidated Income Statement


75


245


2,546


























1,270


506


6,821



 
Revenues from major products and services
The Group's revenues from its major products and services were as follows:







Q1 2021
£'000


Q1 2020
£'000


FY 2021
£'000




Power-to gas 
(of which product sales recognised over time £25,000)


27


79


210




Refuelling 
(of which product sales recognised over time £nil)


709


138


(38)




Chemical Industry 
(of which product sales recognised over time £429,000)


430


(5)


1,870




Other


29


49


2,233








1,195


261


4,275







 
GEOGRAPHIC ANALYSIS OF REVENUE
A geographical analysis of the Group's revenue is set out below:







Q1 2021
£'000


Q1 2020
£'000


FY 2021
£'000




United Kingdom 
(of which product sales recognised over time £nil)


69


125


2,505




Rest of Europe 
(of which product sales recognised over time £454,000)


454


136


1,770




Australia
(of which product sales recognised over time £nil)


672


-


-








1,195


261


4,275



 
The following accounted for more than 10% of total revenue:
 



 


Q1 2021


 


Q1 2020


 


FY 2021




 


£'000


 


£'000


 


£'000




Customer A


430


 


<10%


 


1,870




Customer B


676


 


-


 


-




Customer C


<10%


 


92


 


<10%




Customer D


<10%


 


49


 


2,027




Customer E


-


 


30


 


<10%



 
3. 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:







Three months ended 31 July 2021
£'000


Three months ended 31 July 2020
£'000


Year ended 30 April 2021 
£'000




Loss from operations


(6,264)


(5,599)


(26,657)




Add back:
















Depreciation


668


561


2,321




Impairment


-


-


1,713




Amortisation


163


57


274




(Gain)/ loss on disposal


-


(1)


173




Share based payment charge / (credit)


233


(166)


799








(5,200)


(5,148)


(21,377)







 
4. Notes to the Cashflow Statement



 
 


Three months to 31 July 2021 (unaudited)
£'000


Three months to 31 July 2020 (unaudited)
£'000


Year ended 30 April 2021 (audited)
£'000






















Loss from operations


(6,264)


(5,599)


(26,657)




Adjustments:
















Depreciation of property, plant and equipment


668


561


2,321




(Gain)/ loss on disposal


-


(1)


173




Impairment 


-


-


1,712




Amortisation


163


57


274




Share based payment (as seen through equity)


175


70


595




Operating cash flows before movements in working capital


(5,258)


(4,912)


(21,582)




Increase in inventories


(2,093)


(1,915)


(1,987)




Decrease in receivables


(898)


4,760


185




Decrease in payables


5,703


(1,886)


(1,156)




Increase in provisions


(1,599)


232


4,857




Cash used in operations


(4,145)


(3,721)


(19,683)




Interest paid


(130)


(115)


(479)




Income taxes received


-


-


21




Net cash used in operating activities


(4,275)


(3,836)


(20,141)



 
Cash Burn
Cash burn is a measure used by key management personnel to monitor the performance of the business.
 



 
 


Three months to 31 July 2021 (unaudited)
£'000


Three months to 31 July 2020 (unaudited)
£'000


Year ended 30 April 2021 (audited)
£'000




(Decrease)/ increase in Cash and Cash equivalents per the cash flow statement


(5,212)


(6,175)


 
136,181




Effect of foreign exchange rates


(101)


27


(22)




Less share issue proceeds (net)


-


(1,822)


(168,881)




Cash Burn


(5,313)


(7,970)


(32,722)



 
5. Related Parties
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. All related party transactions which were not intra group have been conducted at arms' length.
 
In the period, sales of hydrogen fuel to JCB Research (a corporate shareholder, represented on the Board by T Rae) totalled £nil (Q1 2020: £39; YE 2021: £141). The balance outstanding at the period-end was £260 (Q1 2020: £678; YE 2021: £260), which is deemed as being fully recoverable.
 
During the period purchases from Linde/BOC Group, represented on the Board by J Nowicki, totalled £0.2m (Q1 2020: £0.2m; YE 2021: £3.5m) with £nil outstanding for payment at period-end (Q1 2020: £nil; YE 2021 £0.3m). Furthermore, an amount of £0.6m brought forward from the year-end relates to stage payments made for goods not yet received (Q1 2020: £4.0m). Sales to Linde/BOC group in the period were £nil (Q1 2020: £0.3m; YE 2021: £0.4m) with £nil outstanding (Q1 2020: £nil; YE 2021: £13,684).
 
There were also stage payments of £3.8m (Q1 2020: £nil; YE 2021: £2.1m), which remained outstanding from ITM Linde Electrolysis GmbH at period end (amounts listed in comparative periods were also received post period ends). These were the only sales / purchase transactions made with that entity in the period. During the 2021 financial year, ITM Power engaged ILE for consultancy work equating to £0.8m, of which £0.2m remained unpaid at year-end. No such services were purchased from them in either Q1 period and nothing remained outstanding at the end of those periods. 
 
6.  Post Balance Sheet Events
There are no significant changes post balance sheet.
 
-ends-

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