Trading and Operations Update for the Full Year

9th June 2015
HFuel - Hydrogen Refuelling Stations

Customer engagement and sale size increasing

ITM Power (AIM: ITM), the energy storage and clean fuel company, announces an update on trading and operations for the period since its Half-Year Results announcement on 29th January 2015. The results for the year to 30th April 2015 will be announced at the end of July and are expected to be in line with projections at a pre-tax level. The Company currently has £12.91m of projects under contract and a further £2.80m of contracts in the final stages of negotiation. This reflects the successful conclusion of a number of negotiations. In March 2015, the Company received £4.9m as a strategic investment from JCB.

As the Company builds up more operating experience, project timetables will be forecast with greater clarity, which, in turn, will result in revenue forecasts becoming more accurate. ITM Power’s key strategic goal is to become cash flow positive in the shortest period possible and the Company has successfully prevented the cost base materially increasing despite revenues rising significantly over the last two years.

ITM Power has a rapidly developing pipeline of qualified quotes for its two principal products. These larger scale platforms are becoming the most prevalent source of income and also make up the bulk of enquiries the Company is now receiving.

Products in Build
As of today, the Company has fifteen products at its Sheffield headquarters either ready to ship, undergoing factory acceptance testing (FAT) or in manufacture, of which five are Hpac 40 products and ten are larger scale products. Product cost reduction is being achieved through both manufacturing efficiencies and reduced materials costs.

Power-to-Gas Large Stack Platform
The Company launched its new 1MW stack module at the Hannover Messe in April 2015. The module consists of three 350kW PEM stacks in a single, compact skid. The response from the market has been very encouraging and ITM Power is actively developing numerous projects with a view to deployment in both refuelling and energy storage applications.

The new stack is a significant strand in ITM Power’s development activity and will extend the Company’s reach to higher capacity applications, such as multi MW Power-to-Gas. The main advantages to the stack module are the ability to fit more electrolysis into a smaller footprint, an important consideration when addressing multi MW installations, and enabling plant simplification
through the use of fewer stacks in products. While developing this larger stack platform, the Company has benefitted from the operational experience of its previous stack platform which has been successfully exposed to very demanding Power-to-Gas applications.

Power-to-Gas in Germany
ITM Power now has two large scale Power-to-Gas plants operational in Germany, one with the Thüga Group and the other with RWE. These are the only Power-to-Gas projects utilising PEM electrolysis deployed in the world and reflects the Company’s focus on one of its target territories. ITM Power is delighted that it has both won these contracts and that they continue to provide
valuable field data.

ITM Power is also working closely with technical institutions in Germany where wider energy storage and renewable chemistry projects are underway at pilot scale using the Company’s HPac platform. German subsidiary, ITM Power GmbH, has now employed its first full time engineer, Jochen Ludwig (Dipl.-Ing TH), to help install, commission and service the Company’s equipment in Germany in addition to supporting business development activities. Jochen will work closely with the existing after sales support team headed by Dr Matt Lees, based in Sheffield.

The size of the German Power-to-Gas market is predicted to be 46GW in 2030 and between 115 to 170GW in 2050 as detailed in the recent EU report “Commercialisation of energy storage in Europe” which received contributions from 32 companies and organisations and supported by the European Commission.

Hydrogen Refuelling Station (HRS) Deployment
The nature of HRS projects are that costs, and in particular non-recurring engineering costs, are subsidised through project income that ultimately culminates in ITM Power retaining ownership and operation of completed units. This means that the assets in build will be of value to ITM Power in the future as sales demonstration projects and sources of metrics and information for continually improving the performance of plant.

ITM Power has a total HRS portfolio today of seven, comprising two deployed and five in build. Four further stations are under development.

ITM Power’s Nottingham HRS has been operating now for nearly three years (deployment announced 20th September 2012) and provides a small 350bar refueller on the Nottingham University site. ITM Power’s first commercial scale (80kg/day) refueller, sited less than two miles from Junction 33 on the M1 at The Advanced Manufacturing Park in Rotherham is due to open for
350bar refuelling in August 2015, with a launch event planned for 17th September. The launch event will give local businesses, fleet managers and potential end-users the chance to visit the station and learn more about ITM Power’s electrolysis and refuelling technologies. This station was co-funded by Innovate UK and will be upgraded to 700bar refuelling under the OLEV HRS upgrade scheme.

HyFIVE, an EU funded project (with OEM partners BMW, Daimler, Honda, Hyundai and Toyota), is to deploy three 700 bar stations in London. Two sites are now identified with planning applications granted. The first is at the National Physical Laboratory’s National Measurement Institute, a world leading centre of excellence located in Teddington close to the A316 and A308. Civil engineering on the site is due to start in June with the site opening to the public in autumn 2015.

The second site is at Imperial West, Imperial College London’s major new campus in White City, a regeneration area close to the A40 and accessible from all major transport hubs. The HRS is being built in our Sheffield facility and ground works are planned for August, enabling commissioning over the coming months, with the site opening to the public in autumn 2015. Siting activities continue for the third HyFIVE site to complement the Imperial and NPL cluster. All three sites will also benefit from the OLEV HRS upgrade fund, and will provide “pay at pump” hydrogen refuelling for the first time in the UK.

H2ME, another EU project and launched in June 2015, will deploy a further two HRS in London and ITM Power has a global fuel retailer partner to provide these two sites. Locations will be chosen to complement London’s existing facilities and will be in line with FCEV OEM vehicle deployment plans. Public opening is planned for summer 2016. The Company would welcome approaches from land owners for a further four stations in London.

Technology Progress
ITM Power’s Development team, focused on lowering product costs, maximising durability and increasing efficiency, has made significant progress. Cost savings have been achieved through standardisation, simplification and in-house processing. Growing evidence of durability has been achieved using the Company’s suite of test stands which include over 100 single cell electrolyser
tests, 16 commercial scale stack tests and four large scale stack tests. These improvements have been realised in parallel to increasing the hydrogen output of stacks by 50% and highlight the success of ITM Power’s development programme.

ITM Power’s electrolyser stack materials have surpassed the 30,000 operational hours landmark, with an average degradation rate below two millionths of a volt per hour per cell. This gives a predicted lifetime of over 100,000 hours of high efficiency operation, which equates to a 20 year lifetime at 60% usage or 12 years of continuous operation before materials need to be changed. In addition, internal stack tests have performed over 30,000 rapid response operations (from zero to 100% in less than one second) without any additional degradation. To allow for the Company’s water electrolysers absorbing renewable energy under extreme conditions, tests at 300% of normal operating power have surpassed a 12,000 hours operational mark with a degradation rate below two millionths of a volt per hour.

This data further reinforce the Company’s core technology and is testament to the heavy emphasis given to extensive laboratory testing. Coupled with the rapidly growing quantity of data acquired from equipment in the field, ITM Power is in a very strong position.

ITM Power is now playing a leading role in shaping hydrogen deployment worldwide through input to regulations, codes and standards. In the UK, this includes involvement with the British Compressed Gases Association, the Energy Institute and the Association for Petroleum and Explosives Administration in the development of regulations and standards to facilitate hydrogen
fuelling being co-located with petrol dispensing on forecourts. At an international level, ITM Power serves as a UK Expert to a number of International Standards Organisation committees as well as the Comité Européen de Normalisation, preparing standards to be harmonised to the European Directive on the deployment of alternative fuels infrastructure. In addition to achieving CE marks for deployment of electrolyser systems in Europe, the Companyhas also completed a series of tests towards compliance for deployment in North America.

The Company’s marketing efforts are focused on engagement with multi-national companies which operate within the energy and transport sectors. In addition, ITM Power attends and presents at, increasingly by invitation, many industry specific trade fairs and conferences in the UK, mainland Europe and the United States.

In April 2015 the Company attended the “Hydrogen and Fuel Cells Group Exhibit” at the Hannover Messe and launched the enhanced product range. ITM Power is also organising a webinar targeted at the US market entitled “Utility Scale Power-to-Gas Energy Storage and Grid Balancing” to be held on 23rd June. This webinar will be chaired by Alan Lloyd, former Chairman of the Californian Air Resources Board and will be presented by Dr. Graham Cooley, CEO of ITM Power, to an audience of utility companies and will include a Q&A and discussion session at the end.

Investor Presentations
ITM Power hosted an institutional investors’ visit to Sheffield on 19th May which consisted of a company presentation, a tour of the manufacturing facility and a visit to the ITM Power hydrogen fuel station at the Advanced Manufacturing Park, where guests took the opportunity to drive the Hyundai ix35 fuel cell vehicle. The day’s presentation can be viewed on the Company’s website.
Additional investor presentations will take place in New York at the end of June.

Graham Cooley, CEO, ITM Power PLC, commented: “This update reflects a very busy time for the Company. Customer engagement with our energy storage and grid balancing products and with our hydrogen refuellers is at an all-time high. The project and quotation pipeline as a result has been steadily growing in both applications. ITM Power enjoys a strong foothold in Germany with its PEM Power-to-Gas technology and is building a valuable portfolio of refuelling stations in the UK centred on London, which will provide strong commercial experience in the manufacture, deployment and operation of Hydrogen Refuelling Stations.”

Rebecca Markillie
Marketing & Communications
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