Source - LSE Regulatory
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

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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