Half-Year Results

20th January 2011

Half-year results for the six
months ended 31 October 2010

ITM Power plc (AIM: ITM) the energy storage and clean fuel company announces its half-year results for the six months ended 31 October 2010.

Highlights

Operational

  • Product sales drive starts at 2011 Hannover Messe in April
    • HPac CE documentation submitted between June and December 2010
    • HPac CE mark imminent
    • HPac delivered to the University of Birmingham for trial
    • HFlame trial with Ametek
  • First HOST trial to commence 8 March 2011 at Stansted Airport
    • 21 commercial partners joined the HOST trials
    • Achievement of Euro VI Emissions for the HICE Transit Vans
  • TSB funded collaboration project with Ford Motor Company
  • MoU with BRE for the development of a zero carbon home
  • Record high power density Fuel Cell performance announced

Financial and Corporate

  • Appointment of Lord Freeman as Non-Executive Director
  • Grant funding of £536,000 accounted for in the period (2009: £108,000)
  • Pre-tax loss for the period was £3.0m (2009: £3.4m) and net cash burn of £2.3m (2009: £2.3m)
  • Cash and Short-Term investments at 31 October 2010 of £14.7m (2009: £19.5m)

Prof. Roger Putnam, Non-Executive Chairman of ITM Power commented: “When I last commented on the developments at ITM, we had just come through a very challenging period during which we had instituted, and implemented the conclusions of, a thorough review of the Company’s technology, potential markets and commercialisation strategy. I am pleased to be reporting now on the progress of that commercialisation and the first delivery of ITM products.

“The team have worked incredibly hard on achieving the CE marking of these early products and the HOST team have been highly successful in putting together the biggest trial of Hydrogen fuelled vehicles ever to have taken place in the UK. I look forward to reporting further progress at the conclusion of the second half of our financial year.”

For further information please visit www.itm-power.com or contact:

ITM Power plc
Graham Cooley, CEO
0114 244 5111

Panmure Gordon & Co.
Katherine Roe
020 7459 3600

Tavistock Communications
Simon Hudson / Andrew Dunn
020 7920 3150

Chairman’s Statement

I am pleased to report our interim results for the six months ended 31 October 2010 and update shareholders on the progress made to date and the outlook for our company.

Following the publication of our Annual Report for the year to 30 April 2010, we held a shareholder open day at the time of our AGM in September. The open day, held at our main facility in Sheffield, was very successful, attracting over 200 visitors from 9 different countries. The visitors represented potential customers, partners and suppliers as well as shareholders and the wider investment community. The day resulted in the international profile of the Company being enhanced and several follow up visits have taken place.

Financials

The pre-tax loss for the six months under review was reduced by 12% to £3.0m (2009: £3.4m) and was in line with budget. Total grant funds accounted for in the period were £536k (2009: £108k) with £201k of this being allocated against the cost of constructing the HFuel unit for the Hydrogen On Site Trials.

Interest rates continue to be depressed and risk remains a key factor in the investment of Company funds. The Company holds over 99% of its funds on deposits of varying terms with its bankers Nat West. Deposit rates are monitored regularly with funds being placed in the most beneficial interest bearing accounts. The Company cash and short-term deposit balances totalled £14.7m at the period end (£19.5m at 31 October 2009 and £16.9m at the last financial year end on 30 April 2010).

The Board is not recommending the payment of a dividend for the period, in accordance with our stated dividend policy.

Board & Staff

On 1 October 2010 Lord Roger Freeman PC was appointed as a Non-Executive Director of the Company. Lord Freeman brings a wealth of experience to the Board and I take this opportunity to welcome him to the Company and look forward to working with him in the coming months and years.

Our staff continue to work hard on the achievement of the deadlines and development goals that have been set and I would like to thank all of our employees for their contribution to the progress that has been made over the last six months.

Outlook

During the next six months I anticipate that the Company will be rolling out products into their relevant target markets with this process commencing at the Fuel Cell and Hydrogen Energy Association (formerly the National Hydrogen Association) in Washington in February and the Hannover Messe in April. The HOST programme will begin at London Stansted Airport on 8 March 2011 with our HFuel unit subsequently visiting 20 commercial partners throughout the year.

Professor Roger Putnam CBE
Non-Executive Chairman
20 January 2011

Chief Executive Officer’s Statement

ITM Power has been engaged in its transformation from a technology development company to a product company and 2011 will be the year that this process results in the first product revenues.

Progress with Products and Technology

CE marking is a key part of this process as is our ISO quality system. We had originally hoped to have CE marking in place for our first products by the end of calendar year 2010 and documentation was filed for HPac, (the largest of the initial product platforms) between June and December.

We had selected HPac as the first product to submit as it required approval against the full range of applicable Directives and provides useful feedback to the process for our other products including HFuel. Many of these cautious UK notification bodies have not worked with hydrogen before and so we have now established a process and network which should in the future reduce process time. Clarification of elements of CE compliance has been somewhat extended. However, we are confident that HPac will receive official confirmation of conformity imminently.

The other products are also well along the certification process with documentation required for mandatory Notified Body approval already submitted. In addition to preparation for CE Marking, we have redesigned a number of components and production systems for the products resulting in lower overall costs of manufacture. We also had our first ISO renewal audit which was successful against 19001, 14001 and 18001.

Product, stack and membrane testing particularly for efficiency and longevity have been a key focus for the technology team. Our three test laboratories are producing consistent and impressive results. Over 250,000 cumulative hours of testing has been acquired since June 2009. Extensive reliability and warranty testing has also been undertaken and is on-going.

In November the Company reported record fuel cell performance achieved using its membrane material in the laboratory. Power densities up to 5.5W/cm2 at 10A/cm2 have been recorded when using hydrogen and oxygen gases; a performance which is a step-change from the current state of the art offering significant cost reduction potential. This and other data was used to win a grant from the Carbon Trust to demonstrate performance with hydrogen and air, targeting deployment in the automotive sector. ITM are engaging candidate commercial users to establish an appropriate onward development path towards this growing application.

Market Entry

The product sales process is the next challenge for the Company. We begin the sales push at Hannover with a high profile display of the two largest of our product range, HFuel and HPac. Both these products will be sold using a direct sales model and we hope to take our first orders at the show.

Key to achieving a marketable product has been the continuous improvement applied to the products for cost and manufacturability. Reliable supply chains and sub-assembly manufacturing partnerships have been established to increase our capability to respond to large order volumes.

Grant funding has been a new and important funding stream and partnering exercise for the Company over the last six months. The Carbon Trust grant for the partnering and development of ITM Power’s high power density fuel cell was particularly noteworthy and has the potential to attract a significant global partner.

We have been very successful at gaining funding from UK grant bodies and are now looking to larger funding and partnerships in the EU/USA. Our existing grant programmes are progressing very well and have contributed usefully to our technical development while establishing vital links with top university departments and collaborating companies.

HFuel was launched at ITM Power in September, an event attended by numerous visitors. This extremely successful event was instrumental in attracting the 21 partners who have now signed up to the HOST trials which will commence in March this year.

The World is Changing

I am delighted to report that clean fuel and energy storage are finally receiving the attention they deserve from politicians and the media in the UK.

In the last quarter, the Minister for Energy, Charles Hendry, has specifically referred supportively to green energy storage and hydrogen on two occasions in the House of Commons. The Minister for Science, David Willetts, has also made the case in official speeches. We continue to meet with leading politicians and policymakers.

Just before Christmas, the Government’s Electricity Market Reform Consultation acknowledged in ten separate references the need for renewable energy storage and demand side management and ITM Power will provide a full consultation response. This followed the publication, in November, of the policy paper, ‘Rescuing Renewables’, by the leading Conservative think tank, The Bow Group, which made the case for green energy storage and carried a foreword by Deputy London Mayor, Kit Malthouse.

We continue to enjoy strong and high profile media coverage with numerous articles in the national and regional media in 2010, the most recent of which was in The Sunday Times’ ‘Green Pioneers’ column on Boxing Day, which was devoted to ITM.

The Future

Following the clear commitments to hydrogen fuel made in both Germany and USA, hydrogen vehicles are coming, and in meaningful numbers. The need for hydrogen infrastructure has never been greater and ITM will be using the HOST trials to demonstrate its capability to supply and operate plant able to seed early stage installation with capacity for further expansion. The ability to generate green hydrogen via electrolysis also offers opportunities to ‘green-up’ pre-installed hydrogen infrastructure with renewable-tied plant.

We anticipate bidding into the subsequent stage of the Next Energy project towards the build of an alpha prototype home hydrogen refueller. The present phase has been very successful and benefited from input from eight OEM’s during the design process.

With CE marks, first product revenues, a broad range of field trials, shows in Germany and the USA, 2011 will be a transformational year for ITM Power. I am confident that the uptake of Hydrogen will continue to gain momentum and that, with our range of energy storage and clean fuel products, the Company is extremely well positioned.

Dr Graham Cooley
Chief Executive Officer
20 January 2011



Rebecca Markillie
Marketing & Communications
E: rlm@itm-power.com
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