May 2019
Thursday, 30 May 2019 08:33

Trading and Pipeline Update

ITM Power (AIM: ITM), the energy storage and clean fuel company, provides a trading update, which includes progress on the contracts pipeline and updates on some of the major projects currently underway.

Results
The delivery of completed projects increased significantly in the second half of the financial year to 30 April 2019 as expected. As a result, the total income under IFRS 15 is expected to be approximately £17m1 (unaudited) (£14.1m), an increase of over 20% year-on-year. The EBITDA2 (unaudited) loss from operations of approximately £6.7m (£4.9m) is in line with Board expectations. Total financial assets at the year-end were approximately £19.8m, comprising £5.2m of cash, £1.7m of cash on guarantee and deployed working capital (debtors less creditors) of £12.9m.

A cash movement of £10.4m for H2 FY2019 reflects a period of deploying working capital. This has involved procuring components for the delivery of 4 hydrogen refuelling stations (HRS) in the UK, the bus HRS in France, and also materials for the Shell 10MW Refhyne project. This increase in working capital is expected to partially unwind in H1 FY2020 as cash receipts are recognised from these projects.

Pipeline Numbers
The contracts backlog today stands at a record level of £45.1m, an increase since February 2019 of £9.4m (up 26%) comprising £29.0m of projects under contract and a further £16.1m of awards in the final stages of negotiation. The tender opportunity pipeline also stands at a record level of £330m, an increase since February 2019 of £90m (up 38%) comprising 46 active commercial tender responses over the last 12 months with an average project size of £7.2m (£6.5m) reflecting strong industrial demand for larger systems.

New accounting rules – IFRS 15
The Company has used IFRS 15, “Revenue from Contracts with Customers” for these results and for all subsequent periods. Under IFRS 15, revenue is recognised upon completion, rather than at stages of completion. The various products that the Company is in the process of building will be deployed in FY2020 and FY2021 and the revenue recognised respectively across the two accounting periods. This revenue recognition will have no effect on the Company’s cash position.

1 Includes sales revenue and grant income against both development projects and HRS sites in the UK
2 EBITDA includes grant income recognised on the income statement

Refuelling Stations
Refuelling station network availability was consistently above 98% as a result of the close collaboration with the Company’s partners Shell and Linde. On 7 May 2019, ITM Power announced the extension of the UK refuelling collaboration agreement with Shell, expanding on the original announced on 10 September 2015. The new agreement will run until 2024 and covers the refuelling of all types of hydrogen vehicles; from passenger cars to commercial vehicles, including buses, trucks, trains and ships.

Projects
The Company currently has a portfolio of 34 projects and a team of 10 dedicated project managers, including French and German speakers, who work closely with clients to support the delivery of projects to time and budget. Many of the projects are innovative in terms of technology, integration and deployment environments. A close working relationship with customers enables ITM Power to capture valuable learning and to develop leading best practice.

As an example, one of the Company’s electrolysers was deployed in an extreme thermal environment and is now being redeployed, under a commercial agreement, and is being analysed to gain data on deployments at operating temperatures above 40oC. ITM Power now has experience of deploying in a range of difficult real-world weather environments including extreme heat and dust, high winds, sea spray and freezing temperatures. This experience generates important and valuable data for system design and accurate tender assessment and costing.

Considerable compliance experience has been gained from deployments in industrial settings including supply critical chemical plants and industrial gas plants. Documentation, project management and health and safety processes in these industrial locations have all been important in delivering increased commercial advantage.

The 10MW Shell Refhyne project is progressing well and the ground-breaking ceremony will be on 25 June 2019 at Shell’s Rhineland Refinery in Germany. The Refhyne consortium has produced an information video, available at:  https://www.youtube.com/watch?v=tpPS62RTKd0

Resources
The Company currently employs 170 staff with recent recruitment focussed in the areas of production, standard product design, commissioning and after sales support. These increased resources will lead to an increased capability to meet the new orders expected from current market and pipeline trends. The Company has developed a number of options regarding the large factory move to most effectively accommodate the Company’s requirements including alternative sites. The move, to enable greater production and in particular testing capacity to keep pace with orders for the coming years, is expected to be completed in early 2020.

Outlook
The market for electrolysis is growing very strongly. Many international projects at the 100MW level have been announced by energy majors including: Energinet, Tennet, GasUnie, Tata Steel, Nouryon, RWE, BP, ONTRAS and the Northern Netherlands initiative. In the UK, the Committee on Climate
Change report “Net Zero” predicts (depending on load factor) between 6 GW (6,000 MW) and 17 GW (17,000 MW) of electrolyser capacity to be required in the UK by 2050.

In addition to commissioning the Committee on Climate Change report “Net Zero”, the UK Government has also established, via the UK Offshore Wind Industry Council (OWIC), a new task force dedicated to finding innovative solutions to make the best use of electricity generated by renewable sources with a strong focus on electrolysis. The task force, which began work on 20 May, includes senior representatives from the Department for Business, Energy and Industrial Strategy (BEIS), the Scottish Government, the Committee on Climate Change, National Grid, ORE Catapult, Energy Systems Catapult, Atkins, Engineering and Physical Sciences Research Council, ITM Power, Good Energy, Shell, Equinor, Vattenfall and Ørsted.

Dr Graham Cooley, CEO, ITM Power plc. commented: “ITM Power is undoubtedly in the right place at the right time. This trading and pipeline update demonstrates the attractiveness of our products around the world and the hard work of our team. Total recognised revenue, our contracts backlog and quotations against tenders are all showing strong growth and the world outlook for green hydrogen demand and electrolysers is very encouraging.”

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

ITM Power plc Andy Allen, Finance Director, +44 (0)114 244 5111

Investec Bank plc (Nominated Adviser and Broker) Chris Sim / Jeremy Ellis, +44 (0)20 7597 5970

Tavistock (Financial PR and IR) Simon Hudson / Nick Elwes / Barney Hayward, +44 (0)20 7920 3150

About ITM Power plc:
ITM Power plc manufactures integrated hydrogen energy solutions for grid balancing, energy storage and the production of green hydrogen for transport, renewable heat and chemicals. ITM Power plc was admitted to the AIM market of the London Stock Exchange in 2004. In September 2017, the Company announced the completion of a £29.4m working capital fundraise. The Company signed a forecourt siting agreement with Shell for hydrogen refuelling stations in September 2015, which was extended in May 2019 to include buses, trucks, trains and ships, and subsequently a deal to deploy a 10MW electrolyser at Shell’s Rhineland refinery. The Company entered into a Strategic Partnership Agreement with Sumitomo Corporation in July 2018 for the development of multi-megawatt projects in Japan. Additional customers and partners include Ørsted, National Grid, Cadent, Northern Gas Networks, RWE, Engie, BOC Linde, Toyota, Honda, Hyundai, Anglo American among others.

Published in News

ITM Power (AIM: ITM), the energy storage and clean fuel company, is pleased to announce the extension of the UK refuelling collaboration agreement with Shell, which was originally announced on 10 September 2015. The new agreement will run until 2024, and covers the refuelling of all types of hydrogen vehicles; from passenger cars to commercial vehicles, including buses, trucks, trains and ships.

Current and planned Shell and ITM Power UK refuelling stations:
Currently ITM Power operates two hydrogen refuelling stations (HRS) at Shell service stations at both Shell Cobham on the M25 and Shell Beaconsfield on the M40. Four further HRS are funded. The HRS at Shell Gatwick is under construction and will be opened later this year; Shell Derby will also follow in 2019, with two further London stations also planned. The UK hydrogen refuelling station network has been jointly funded by the UK’s Office for Low Emission Vehicles and the Fuel Cells and Hydrogen Joint Undertaking.

Commenting on the agreement, Mike Copson, Shell Hydrogen said: “Shell has been working with ITM Power over the last three years to deliver hydrogen refuelling to our customers in the UK. The successes we have achieved at Shell Cobham and Shell Beaconsfield are a strong step toward making Hydrogen a convenient and viable fuel choice, and we look forward to continuing to expand the UK’s developing network.”

Dr Graham Cooley, CEO, ITM Power, commented: “We are delighted to announce our continued collaboration with Shell. We have been working together since 2015 and have developed a trusted partnership that forms a solid basis to expand in the UK and worldwide. I look forward to updating the market with further news as it arises.”

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

ITM Power plc Andy Allen, Finance Director +44 (0)114 244 5111
Investec Bank plc (Nominated Adviser and Broker) Chris Sim / Jeremy Ellis +44 (0)20 7597 5970
Tavistock (Financial PR and IR) Simon Hudson / Nick Elwes / Barney Hayward +44 (0)20 7920 3150

About ITM Power plc:
ITM Power manufactures integrated hydrogen energy solutions for grid balancing, energy storage and the production of green hydrogen for transport, renewable heat and chemicals. ITM Power was admitted to the AIM market of the London Stock Exchange in 2004. In September 2017 the Company announced the completion of a GBP29.4m working capital fundraise. The Company signed a forecourt siting agreement with Shell for hydrogen refuelling stations in September 2015 and subsequently a deal to deploy a 10MW electrolyser at Shell’s Rhineland refinery. The company entered into a Strategic Partnership Agreement with Sumitomo Corporation in July 2018 for the development of multimegawatt projects in Japan. Additional customers and partners include National Grid, Cadent, Northern Gas Networks, RWE, Engie, BOC Linde, Toyota, Honda, Hyundai, Anglo American among others.

About Shell:
Shell is a global group of energy and petrochemical companies with an average of 86,000 employees in more than 70 countries. We use advanced technologies and take an innovative approach to help build a sustainable energy future. In the UK, Shell has played a vital role in powering the industry, transport systems and homes for over 120 years. Over the past 20 years Shell has embarked on several initiatives to encourage the adoption of hydrogen electric energy as a transport fuel. In addition to two hydrogen sites in the UK, Shell is also a founding member of the UK North West Hydrogen Alliance.

About OLEV:
The Office for Low Emission Vehicles (OLEV) is a team working across government to support the early market for ultra-low emission vehicles (ULEV). We are providing over £900 million to position the UK at the global forefront of ULEV development, manufacture and use. This will contribute to economic growth and will help reduce greenhouse gas emissions and air pollution on our roads.

About FCHJU:
The Fuel Cells and Hydrogen Joint Undertaking is a unique public-private partnership supporting research, technological development and demonstration activities in fuel cell and hydrogen energy
technologies in Europe. Its aim is to accelerate the market introduction of these technologies, realising their potential as an instrument in achieving a carbon-lean energy system. The three members of the
FCH JU are the European commission; the fuel cell and hydrogen industries, represented by Hydrogen Europe; and the research community, represented by research grouping Hydrogen Europe Research.

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Published in News

Committee on Climate Change Report: Hydrogen to play a key role in reducing emissions

ITM Power (AIM: ITM), the energy storage and clean fuel company, is pleased to note the publication yesterday of the report of the Committee on Climate Change (“CCC”), requested by the UK, Scottish and Welsh Governments in light of the Paris Agreement and the Intergovernmental Panel on Climate Change’s Special Report in 2018. The report, “Net Zero – the UK’s Contribution to Stopping Global Warming” (“the Report”), states that the UK can end its contribution to global warming within 30 years by setting an ambitious new target to reduce its greenhouse gas emissions to zero by 2050. The Government is considering the report and is expected to adopt its recommendations.

At the very start of the Report, it highlights, in a detailed 48 page section, the vital role that hydrogen could play to achieve such a target. In Table 2.1 “Summary of net-zero implications for energy system infrastructure” the Report predicts (depending on load factor) between 6 GW (6,000 MW) and 17 GW (17,000 MW) of electrolyser capacity to be required in the UK by 2050. This implies an average build rate of up to 567MW of electrolysis per annum for 30 years.

The Report highlights the importance of hydrogen in enabling the UK to meet the targets: “The difference in the role for hydrogen in our Core scenario (that would broadly deliver the UK’s existing emissions targets) and our Further Ambition scenario (required for a net-zero emission target) is striking. Low-carbon hydrogen moves from being a useful option to a key enabler. Updates to policy alongside adoption of our recommended target should reflect that.”

The Report also covers the potential for hydrogen in reducing emissions in heating and cooking, the use in industry of green hydrogen, in fuel cell electric vehicles, in ports and in agriculture.

The announcement from the CCC is available here

The full report is available to download here

The Committee on Climate Change (the CCC) is an independent, statutory body established under the Climate Change Act 2008. Its purpose is to advise the UK Government and Devolved Administrations on emissions targets and report to Parliament on progress made in reducing greenhouse gas emissions and preparing for climate change.

ITM Power CEO, Dr Graham Cooley, said: “ITM Power welcomes the findings of this report, which  highlight the many benefits that clean production of hydrogen offers in eliminating carbon. We have the  experience and capability to help deliver the UK’s carbon reduction targets. Our products in energy  storage, industry and transportation sectors are already delivering benefits to forward thinking customers  in the UK and in many other parts of the world.”

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

ITM Power plc, Andy Allen, Finance Director, +44 (0)114 244 5111

Investec Bank plc (Nominated Adviser and Broker), Chris Sim / Jeremy Ellis, +44 (0)20 7597 5970

Tavistock (Financial PR and IR), Simon Hudson / Nick Elwes / Barney Hayward, +44 (0)20 7920 3150

About ITM Power plc
ITM Power manufactures integrated hydrogen energy solutions for grid balancing, energy storage and the production of green hydrogen for transport, renewable heat and chemicals. ITM Power was admitted to the AIM market of the London Stock Exchange in 2004. In September 2017 the Company announced the completion of a GBP29.4m working capital fundraise. The Company signed a forecourt siting agreement with Shell for hydrogen refuelling stations in September 2015 and subsequently a deal to deploy a 10MW electrolyser at Shell’s Rhineland refinery. The company entered into a Strategic Partnership Agreement with Sumitomo Corporation in July 2018 for the development of multi-megawatt projects in Japan. Additional customers and partners include National Grid, Cadent, Northern Gas Networks, RWE, Engie, BOC Linde, Toyota, Honda, Hyundai, Anglo American among others.
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Published in News

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+44 (0)114 244 5111

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ITM Power is a public limited company registered in England and Wales. Company Number 05059407