TIDMITM
RNS Number : 6321O
ITM Power PLC
03 October 2019
3 October 2019
ITM Power plc
("ITM Power", "the Group" or the "Company")
Final Results
ITM Power (AIM: ITM), the energy storage and clean fuel company
is pleased to announce its final results for the year ended 30
April 2019. What follows is a preliminary announcement; the full
annual report and financial statements will be available
shortly.
HIGHLIGHTS
FINANCIAL:
-- Total Revenue & Grant Funding of GBP17.5m (2018:
GBP14.1m) up 25%, comprising:
o Sales revenue - GBP4.6m (2018: GBP3.3m) up 40%
o Grant income recognised on the income statement - GBP7.2m
(2018: GBP4.1m) up 75%
o Grant income recognised on the balance sheet - GBP5.7m (2018:
GBP6.7m), down 14%
-- Loss from operations GBP9.3m (2018: GBP6.5m) increased 44%,
EBITDA loss of GBP7.5m (2018: GBP4.8m) increased 56% as the Group
invests to significantly scale up facilities, resources and
production capacity
-- Available cash balance of GBP5.2m at year-end (2018:
GBP20.4m)
-- GBP52m minimum equity fundraising announced today, subject to
shareholder approval, including a:
- GBP38m cornerstone investment from new strategic partner Linde Engineering (part of Linde AG)
- GBP14m firm placing with certain existing and new institutional investors
- Open offer of up to approximately GBP6.8m
COMMERCIAL:
-- Formation of worldwide joint venture to market, tender and
sell green electrolytic hydrogen projects with Linde Engineering -
part of Linde AG, a world leading supplier of industrial, process
and specialty gases
-- Agreement to lease new premises in Sheffield for global
manufacturing headquarters with an electrolyser manufacturing
capacity of up to 1GW (1,000MW) per annum, the largest in the
world
-- Non-contracted tender opportunity pipeline increased to over
GBP379m (September 2017: GBP200m), illustrating the growth in the
global hydrogen economy
-- German presence expanded, first sales in Australia
CORPORATE:
-- Martin Green appointed as non-executive director, joining the
board on 16 September 2019
-- Lord Roger Freeman announces resignation as non-executive
director with effect from the publication of these financial
results
-- Appointment of Nicola Ham Edmonds, Head of Legal, as Company
Secretary on 16 September 2019
Clean Fuel
-- 15 wholly owned Hydrogen Refuelling Station (HRS) assets in
ITM Power's portfolio:
- eight fully open to the public, seven in various stages of construction
-- Awarded further GBP1.8m by OLEV to deliver another refuelling
station, part of a larger grant to put 57 new hydrogen cars on the
road in the next 12 months.
-- UK refuelling collaboration agreement with Shell extended to
2024 and to all hydrogen vehicle types
-- Hydrogen fuel contracts now 33 in total (2018: 20) with fuel
sales increased to 32 tonnes for the period (2018: 16 tonnes), up
100%
-- Two bus refuelling stations - Birmingham and Pau in France -
due to open this financial year
Power-to-Gas
-- Committee on Climate Change recommended a central role for
green hydrogen based power storage in its report to the UK
government
-- Official opening of BIG HIT (Building Innovative Green
Hydrogen Systems in an Isolated Territory) in Orkney provided a
reference blueprint for renewable hydrogen deployment for island
systems
-- Undertaking a feasibility study (Centurion) to deploy 100MW
Power-to-Gas (P2G) energy storage in Cheshire
-- Part of consortium awarded GBP14.9m over four years by Ofgem
to fund two decarbonised domestic heating trials in the north of
England (HyDeploy and HyDeploy 2) in the largest gas Network
Innovation Competition (NIC) project ever and the first to inject
green hydrogen into a UK gas grid
Industrial
-- EU 10MW refinery project with Shell in Germany is on schedule
and progressing well
-- Opportunity pipeline contains a growing number of industrial
projects as organisations seek to cut their carbon footprint -
focus is on refineries and steel making
-- Won BEIS competition to demonstrate delivery of bulk,
low-cost and zero carbon hydrogen through gigawatt scale PEM
electrolysis in partnership with Orsted
Graham Cooley, CEO, commented, "ITM Power continues to deliver
strong growth with revenues up 25% year on year. The Group has
benefited from the lessons learned in deploying units above 1MW for
the first time, including in harsh environments and difficult
operating conditions. This delivers significant competitive
advantage for future deployments as we scale up and standardise our
products. We've also been learning how to maximise value from our
growing portfolio of revenue generating assets in the shape of the
first real hydrogen refuelling network in the UK."
Roger Putnam, Chairman, added, "I am pleased to report our plans
for expansion of staff and production capacity are on track. The
next year will be a period in which we transition to our much
larger new factory. We welcome the Committee for Climate Change
report's aspirations to make the UK zero emissions by 2050 and its
recognition that PEM electrolysis will be an integral part of the
new energy mix. As always, I would like to thank our staff for
another year of hard work and enthusiastic dedication to our
business ambition to help decarbonise the world's energy
markets."
For further information please visit www.itm-power.com or
contact:
+44 (0)114 244
ITM Power plc 5111
Graham Cooley, CEO
+44 (0)20 7597
Investec Bank plc (Nominated Adviser and Broker) 5970
Jeremy Ellis / Chris Sim
+44 (0)20 7920
Tavistock (Financial PR and IR) 3150
Simon Hudson / Nick Elwes / Barney Hayward
About ITM Power plc
ITM Power plc designs and manufactures integrated hydrogen
energy systems 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 GBP29.4m 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, Gasunie, RWE, Engie, BOC Linde, Toyota,
Honda, Hyundai, Anglo American among others.
CORPORATE UPDATE
ITM Power - Building a Global Presence
ITM Power has worked hard to build relationships globally by
adding anchor points outside of the UK market. This effort will put
the Company in a good position to service markets internationally
both now and in the future.
Expansion of Presence in the German Market
In December, the Group moved its German subsidiary, ITM Power
GmbH, into new larger premises in Hungen, north of Frankfurt to
accommodate both business development staff and a growing after
sales and technical support team. Key to operations in Germany will
be a store of strategic spares for projects in Germany and
throughout Europe.
The technical sales and project management teams in Sheffield
have also recruited German personnel to optimise customer support
to the German speaking market and to streamline the tendering
process and design team liaison with Germany.
First Four Sales in Australia
January 2019 saw the sale of four 250kW electrolyser systems
totalling 1MW to three different customers across Australia. In
March 2019, the Group announced that one customer was Toyota
Australia who aim to couple their 0.25MW rapid-response PEM
electrolyser with renewable energy to generate hydrogen on-site at
Toyota's facilities in Altona, Melbourne for refuelling fuel cell
electric vehicles, including the Toyota Mirai.
The territory throws up new challenges for compliance and
operation in extreme thermal environments but these deployments
represent an important step in entering this significant new
territory and will serve as reference plants for ITM Power
technology in both the mobility and industrial hydrogen sectors in
Australia.
BESSEMER PARK - Global Manufacturing HQ, Sheffield
In July 2019, the Company announced that it has signed an
agreement to lease new premises in Sheffield for its global
manufacturing headquarters. The manufacturing facility will have an
electrolyser manufacturing capacity of up to 1GW (1,000MW) per
annum, the largest in the world.
PLP Bessemer Park is a strategic location next to junction 34 of
the M1 and in close proximity to the Company's existing facilities.
ITM Power expects to occupy the building from Spring 2020 and
complete its own technical and industrial fit out and transition
the majority of its operations into PLP Bessemer Park by Summer
2020.
The requirement to expand production capacity has been led by
the continued growth in the Company's order pipeline. The new
headquarters will see ITM Power locate into a single building and
gain access to a five-fold increase in production space. Key to the
selection of the building was the proximity of the grid connection
to provide the substantial power supply required for ITM Power's
needs, using existing infrastructure near to the location.
BUSINESS ENVIRONMENT AND ANNUAL REVIEW OF THE BUSINESS
Power-to-Gas
Emissions reduction targets set out in the COP21 Paris Agreement
on climate change, as well as reports such as that of the Committee
for Climate Change from May 2019 have contributed to an increasing
proportion of power from renewables in electricity generation. The
ability to match this unscheduled intermittent supply with demand
becomes increasingly problematic. In fact, at the point when
deployment meets or exceeds 20% capacity, as already experienced in
many countries, grid balancing issues become more acute, often
leading to the curtailment of wind.
Power-to-Gas can meet the demand for long-term, large-scale
energy storage, converting surplus renewable energy into hydrogen
gas by rapid response electrolysis and subsequently injecting it
into the gas distribution network. These grid balancing services
can be an important source of revenue for operators and ITM Power's
rapid response Proton Exchange Membrane (PEM) technology allows
units to be turned on and off in under one second making them
eligible for the UK National Grid's Enhanced Frequency Response
Payments.
ITM Power enjoys a unique position having supplied the world's
first PEM Power-to-Gas electrolyser in 2014, and continues to
engage in a number of industry-leading strategic projects, which
include HyDeploy, Big Hit, and Centurion.
Clean Fuels
The transport sector is one of the largest users of fuel in the
world, and currently it is dependent on fossil fuels, which are
highly polluting and are becoming ever more scarce and
expensive.
Hydrogen is light and can be stored under pressure, making it
suitable for many vehicle types as it does not add further weight,
or use further energy when on board. Hydrogen can be made from just
water and renewable energy using an electrolyser, splitting the
water into hydrogen and oxygen, when used, the hydrogen returns to
water vapour.
A hydrogen station produces hydrogen on site via ITM Power's
rapid response electrolyser system, and can refuel a fuel cell
electric vehicle in minutes. Inner city air quality is a driving
force for Fuel Cell Electric Bus (FCEB) deployment, as air
pollution is a major contributor to poor health in the UK.
Extension of hydrogen refuelling for use in trains and boats is
also gaining traction.
On 11 September 2018 at the 'Zero Emission Vehicle Summit' in
Birmingham, Prime Minister Theresa May outlined the UK Government's
"Road to Zero Strategy" which includes funding of GBP1.5 billion
for ultra-low-emission vehicles by 2020. At the event, the Prime
Minister also announced more than GBP100 million of funding for
innovators in ultra-low-emission vehicles and hydrogen technology.
The Road to Zero Strategy is the most comprehensive plan globally -
mapping out in detail how the UK will reach its target for all new
cars and vans to be, effectively, zero emission by 2040 - and for
every car and van to be zero emission by 2050.
ITM Power has won contracts to supply on-site hydrogen
generation equipment for refuelling in the UK, France and the US.
It is currently rolling out a network of 14 hydrogen refuelling
stations in the UK of which seven are now fully open for public
access. In the year, the Group dispensed 32 tonnes of hydrogen from
its refuelling stations (2018: 16 tonnes).
Car Refuelling
In September 2018, the Group opened its seventh public access
hydrogen refuelling station (HRS) located at Johnson Matthey,
Swindon on the M4 corridor. The opening was supported by Toyota,
Hyundai and Honda. The station uses electricity via a renewable
energy contract and water to generate hydrogen on-site with no need
for deliveries. It is now open for public and private fleets
operating fuel cell electric vehicles
As the refuelling network continues to grow alongside growth in
deployment of vehicles, ITM Power has designed a mobile app which
lets users of our stations know where their nearest hydrogen
refuelling station is located, provides directions and other
details on how to refuel all from the convenience of their mobile
phone. A video has also been published which shows customers how to
refuel a Fuel Cell Electric Vehicle (FCEV). The video outlines the
full refuelling process, which is standardised from one station to
the next and takes you step by step, how to refuel at both 350bar
and 700bar hydrogen.
During the year, ITM Power became a partner in a EUR26 million
pan-European initiative, the ZEFER (Zero Emission Fleet vehicles
for European Roll-out) project. It will deploy 180 hydrogen fuel
cell electric vehicles as taxis, private-hire vehicles and police
cars in Paris, Brussels and London.
For ITM Power, the existence of this scheme will help to ensure
high utilisation of its early networks of hydrogen refuelling
stations. This improves the economics of operating the stations and
hence helps accelerate the commercialisation of hydrogen as a
zero-emission fuel.
Larger vehicle refuelling
ITM Power will deploy bus refuellers in Birmingham and Pau next
year. This will prove that ITM Power systems are now at a scale
where a fleet of buses can be supported by one electrolyser on a
return to base principle and other large schemes are likely to
follow, for applications such as heavy logistics, trains and
ships.
Industrial
Refineries currently use hydrogen to improve the quality of
fractional distillation products and most of this hydrogen is
produced from steam-reforming but in order to comply with stringent
legislation and avoid fines, refineries need a cost effective green
hydrogen solution that reduces carbon emissions while allowing them
to maintain output.
In addition, natural gas reformers have long start-up times.
With their rapid start up times, ITM Power's PEM electrolysers
could provide an immediate backup solution to prevent production
downtime and preserve security of hydrogen supply.
Finally, in steel making, iron ore requires chemical reduction
before being used to produce steel; this is currently achieved
through the use of carbon, in the form of coal or coke. When
oxidised, this leads to emissions of about 2.2 tonnes of CO(2) for
each tonne of liquid steel produced. The substitution of hydrogen
for carbon has the potential to significantly reduce CO(2)
emissions, because hydrogen is an excellent reducing agent and
produces only water as a by-product.
The Company's flagship EU 10MW refinery project with Shell is
progressing well. The Group has established a dedicated project
office and ring-fenced staff to work exclusively on this
ground-breaking project. The initial design work has been completed
for the planning permit application submission in Q4 2018.
The Project Manager, Dr John Newton (formerly CIO at RWE
npower), is working closely with Shell and their chemical process
engineering sub-contractor in preparation for the detailed design
phase, to ensure the plant will conform with the stringent safety
and compliance requirements of a major refinery.
The project team are attending regular joint technical review
meetings at the refinery and will be hosting Shell and their
sub-contractor partners, for similar meetings in the dedicated
project office in Sheffield. The Refhyne consortium has recently
produced an information video, available at:
https://www.youtube.com/watch?v=tpPS62RTKd0
Financial Performance
ITM Power continues to be first and foremost a manufacturer,
with the majority of revenue coming from construction contracts to
build full hydrogen systems. Revenues in the year were mainly
generated across four build projects, providing electrolysers in
each of our three target markets. This year's revenue figures have
been affected by a transitional adjustment to the new IFRS 15
"Revenue from contracts with Customers" (resulting in an increase
of GBP0.638m). See Notes 2 and 3.
Meanwhile, consultancy income reduced from GBP0.14m in 2018 to
GBP0.07m. This is likely to be cyclical as consultancy services are
often procured with a view to sourcing units in competitive
tenders.
Fuel sales continue to increase from GBP0.16m in 2018 to
GBP0.37m as our refuelling stations begin to attract greater
volumes of customers and sales.
Total collaborative project funding recognised in the year was
GBP12.97m of which GBP7.23m is recognised on the income statement
(2018: GBP10.82m, of which GBP4.14m was recognised on the income
statement). Project funding has supported ITM Power in developing a
suite of hydrogen generation equipment that it will own and operate
as part of the collaborative projects, with data and knowhow to be
incorporated into new generations of electrolysers.
The pre-tax loss for the year under review increased to GBP9.32m
(2018: GBP6.48m). This can be attributed to similar factors as last
year; firstly, the impact of producing first-of-a-kind large scale
plant then installing it in new and varied situations; secondly,
increased costs of recruitment in the year as the Group continued
to grow in preparation for delivery of ITM Power's future order
book. The Company also recognised an impairment relating to a
historic prepayment having reached a commercial agreement with the
supplier. These costs will not be expected to recur once the move
to the new factory is completed as additional space and upgraded
power will allow for more rigorous factory testing of our larger
scale products prior to site delivery.
Net cash burn increased to GBP15.23m (2018: GBP9.55m before
fundraise). Cash burn is a non-statutory measure the directors use
to monitor the Group, and is calculated by deducting from the cash
flow the effects of any equity fund raise. The cash burn increase
is a result of up front expenditures required on our build projects
(including grant funded projects) in order to secure timely
deliveries of long lead-time components. This figure was
particularly high at the year-end given our focus on larger systems
and the timing of their design completion, procurement and
commencement of build.
Financial position
In the year, the Group capitalised development costs of GBP0.38m
(2018: GBP0.07m). This was for product developments that will
continue to keep the Group at the forefront of PEM electrolysis as
well as the design of standard products and internal procedures
that will facilitate our offering to the markets. The directors see
continued product development as key to building commercial
traction.
There was also an increase in fixed assets to GBP5.7m from
GBP4.5m in the prior year, which relates to assets under
construction and shows the continued commitment of ITM Power to
being a refuelling system owner and operator as the industry grows
in the UK in order to gain market share and improve opportunities
for FCEV adoption. The total book value of refuelling assets was
GBP4.1m (2018:GBP2.5m).
At year end, ITM Power had current assets totalling GBP39.0m
(2018: GBP39.6m). Funds in the bank amounted to GBP6.9m (2018:
GBP22.0m), of which amounts on guarantee totalled GBP1.7m (2018:
GBP1.6m). The Group has previously been required to place amounts
on guarantee as cash cover, which limits working capital available
to the Group mid-contract. ITM Power continues to structure quotes
to include upfront payment with orders to limit the adverse impact
of increased activity on working capital.
Total receivables excluding restricted cash amounts have
increased from GBP16.9m (2018) to GBP30.2m. This movement is
dominated by pro forma and early stage payments made to suppliers
for stock items required in the next wave of units through
production. As systems in production become larger and more
sophisticated, the need to find new suppliers who can meet our
requirements for parts means that we are faced with higher volumes
of staged or up-front payments until a trading history can be
developed to assist our credit rating. Prepayments and accrued
income was GBP22.5m in 2019 (2018: GBP11.2m), up 102%.
Trade debtors at the end of years 2018 and 2019 predominantly
relate to grant income debtors.
Creditors have increased from GBP7.9m (2018) to GBP17.6m. This
movement is primarily a result of an increase in accruals and
deferred income from GBP6.4m to GBP13.9m, which reflects both money
received up front for construction contracts and grant income
receivable against payment of pro forma invoices. This latter
income is generated as grant claims are made against defrayed
costs, including any stage payments to suppliers. The income would
normally sit against the costs of the build to which it relates.
However, until the parts arrive and become incorporated in that
build, the grant income sits unmatched on the balance sheet.
At year end, the Group had trade creditors of GBP3.4m against a
prior year balance of GBP1.4m. This number has predominantly
increased due to the size and stage of progress on contracts.
CONSOLIDATED INCOME STATEMENT AND OTHER COMPREHENSIVE INCOME -
UNAUDITED
for the year ended 30 April 2019
2019 2018
GBP'000 GBP'000
Revenue 4,589 3,283
Direct costs (6,182) (3,438)
Grant income against direct
costs 427 -
Gross loss (1,166) (155)
Operating costs
Distribution expenses
* Research and Development (2,327) (1,792)
* Prototype production and engineering (6,202) (4,144)
* Sales and marketing (1,713) (1,455)
------- -------- ------- --------
(10,242) (7,391)
Administration expenses (4,738) (3,086)
Other operating income -
grant income 6,799 4,138
Loss from operations before
tax (9,347) (6,494)
Investment income 29 18
Loss before tax (9,318) (6,476)
Tax (133) 360
Loss for the year (9,451) (6,116)
-------- --------
OTHER TOTAL COMPREHENSIVE INCOME:
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
differences on foreign operations 40 267
-------- --------
Net other total comprehensive
income 40 267
-------- --------
Total comprehensive loss
for the year (9,411) (5,849)
======== ========
Loss per share
Basic and diluted (2.9p) (2.1p)
======== ========
All results presented above are derived from continuing
operations and are attributable to owners of the Company.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - UNAUDITED
Called Share Foreign
up share premium Merger exchange Retained Total
capital account reserve reserve loss equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 30 April 2017 12,531 61,930 (1,973) (196) (59,222) 13,070
Transactions with Owners
Issue of shares 3,669 24,701 - - - 28,370
--------- -------- --------- --------- --------- ---------
Total Transactions with
Owners 3,669 24,701 - - - 28,370
Loss for the year - - - - (6,116) (6,116)
Other comprehensive
income - - - 267 - 267
--------- -------- --------- --------- --------- ---------
Total comprehensive
income - - - 267 (6,116) (5,849)
At 30 April 2018 16,200 86,631 (1,973) 71 (65,338) 35,591
--------- -------- --------- --------- --------- ---------
Adjustment for IFRS15 - - - - (155) (155)
Adjusted balance at
1 May 2018 16,200 86,631 (1,973) 71 (65,493) 35,436
--------- -------- --------- --------- --------- ---------
Loss for the year - - - - (9,451) (9,451)
Other comprehensive
income - - - 40 - 40
--------- -------- --------- --------- --------- ---------
Total comprehensive
income - - - 40 (9,451) (9,411)
Credit to equity for
share based payment - - - - 184 184
At 30 April 2019 16,200 86,631 (1,973) 111 (74,760) 26,209
========= ======== ========= ========= ========= =========
CONSOLIDATED BALANCE SHEET - UNAUDITED
2019 2018
GBP'000 GBP'000
NON CURRENT ASSETS
Intangible Assets 669 355
Property, plant and equipment 5,742 4,454
-------- --------
6,411 4,809
-------- --------
CURRENT ASSETS
Inventories 1,906 655
Trade and other receivables 31,903 18,500
Cash and cash equivalents 5,173 20,403
--------
TOTAL CURRENT ASSETS 38,982 39,558
-------- --------
CURRENT LIABILITIES
Trade and other payables (17,579) (7,928)
Provisions (1,605) (848)
--------
TOTAL CURRENT LIABILITIES (19,184) (8,776)
-------- --------
NET CURRENT ASSETS 19,798 30,782
-------- --------
NET ASSETS 26,209 35,591
======== ========
EQUITY
Called up share capital 16,200 16,200
Share premium account 86,631 86,631
Merger reserve (1,973) (1,973)
Foreign exchange reserve 111 71
Retained loss (74,760) (65,338)
-------- --------
TOTAL EQUITY 26,209 35,591
======== ========
CONSOLIDATED CASH FLOW STATEMENT -UNAUDITED
2019 2018
GBP'000 GBP'000
Net cash used in operating activities (11,774) (8,005)
-------- --------
Investing activities
Purchases of property, plant and
equipment (4,125) (8,622)
Capital Grants received against
purchases of property plant and
equipment 1,073 7,130
Proceeds on disposal of Property,
Plant & Equipment - 1
Payments for intangible assets (436) (76)
--------
Net cash used in investing activities (3,488) (1,567)
-------- --------
Financing activities
Issue of ordinary share capital - 29,358
Costs associated with fund raise - (988)
Interest received 30 18
Interest paid (1) -
--------
Net cash from financing activities 29 28,388
--------
(Decrease)/ increase in cash and
cash equivalents (15,233) 18,816
Cash and cash equivalents at the
beginning of year 20,403 1,558
Effect of foreign exchange rate
changes 3 29
-------- --------
Cash and cash equivalents at the
end of year 5,173 20,403
======== ========
NOTES
1. GENERAL INFORMATION
ITM Power plc is a Public company incorporated in England and
Wales under the Companies Act 2006. The registered office is at 22
Atlas Way, Sheffield, South Yorkshire S4 7QQ.
These financial statements are presented in pounds sterling
which is also the functional currency because that is the currency
of the primary economic environment in which the Group
operates.
The unaudited summary accounts set out above do not constitute
statutory accounts as defined by Section 434 of the UK Companies
Act 2006..
2. adoption of new and revised standards
Amendments to IFRSs that are mandatorily effective for the
current year
In the current year, the Group has applied the following
amendments to IFRSs issued by the International Accounting
Standards Board (IASB) that are mandatorily effective for an
accounting period that begins on or after 1 January 2018.
IFRS 15 Revenue from Contracts with Customers
Revenue Recognition under new financial standard IFRS 15
'Revenue from Contracts with Customers'
In May 2014, the International Accounting Standards Board (IASB)
jointly with US Financial Accounting Standards Board (FASB)
published IFRS 15 'Revenue from Contracts with Customers' to
replace IAS 11 'Construction Contracts' for annual reporting
periods commencing on or after January 2018. IFRS 15 provides a
single, principles based 5-step model to be applied to all sales
contracts. It is based on the transfer of control of goods and
services to customers and replaces the separate models for goods,
services and construction contracts previously included in IAS 11
Construction Contracts and IAS 18 Revenue. The Group has adopted
the new standard using the modified retrospective method, with the
cumulative effect of initial application recognised as an
adjustment to the opening balance of retained earnings at 1 May
2018.
As ITM Power Plc's projects are complex, long-term construction
contracts, Management consider that the new standard is likely to
have a material impact on the presentation of its revenues in
future periods but the timing of such an impact is uncertain and
can only be judged in the nearer term once contracts are known. A
detailed description of how our contracts are treated under the new
rules can be found in Note 3 to the financial statements.
A comparison of this year's revenues under old and new rules can
be seen below. To clarify, the income in 2019 under both standards
would have been similar but the financial statements as prepared
include income of GBP638,000 in both the 2018 and 2019 years.
2019 2019
Under old Under new
IAS 11 & IFRS 15
18
GBP'000
GBP'000
Revenue from construction contracts 3,750 3,746
Consulting services 74 67
Maintenance services 49 66
Fuel Sales 373 373
Other 337 337
---------- ----------
Revenue in the Consolidated Income Statement 4,583 4,589
The potential impact has been limited in the current year due to
the Group being in a phase of developing technology and markets,
where many of our contracts continue to be "first-of-a-kind"
bespoke projects. However, as more repeat business or similar
projects are undertaken, revenue recognition is likely to become
further aligned with recognition upon transfer.
The Group see a particular sensitivity around the timings of a
transfer of ownership to a customer, in that the amount of revenue
recognised may differ significantly between two financial periods
depending on how many performance obligations are fulfilled before
the end of each financial period. This will require extra
disclosure year on year to enable appropriate comparison between
financial years.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting
The annual accounts have been prepared in accordance with
International Financial Reporting Standards (IFRSs), as adopted by
the European Union.
The financial statements have been prepared under the assumption
that the Group operates on a going concern basis and on the
historical cost basis. Historical cost is generally based on the
fair value of the consideration given in exchange for goods and
services.
Going concern
The directors have prepared a cash flow forecast for the period
ending 31 October 2020. This forecast indicates that the Group and
parent company would not 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 financial statements.
The Group and parent company has commenced a fundraise and has
to date received subscription agreements of GBP52m which indicates
that this will be successful. The Group and parent company cannot
issue the shares and formally raise the funds until the fund raise
is approved at the forthcoming EGM on 22 October 2019. The
directors are very confident that approval will be received. The
funds raised are expected to be sufficient to enable the Group and
parent company to continue to trade in line with its forecasts.
Until the fund raise is complete, this represents a material
uncertainty.
The existence of a material uncertainty may cast significant
doubt about the Group and parent company's ability to continue as a
going concern. Notwithstanding this material uncertainty, the
directors have a reasonable expectation that the Group and parent
company are a going concern. The financial statements do not
include the adjustments that would result if the Group and parent
company was unable to continue as a going concern.
The accounts have therefore been prepared on a going concern
basis.
Revenue recognition
Product sales
ITM Power Plc undertakes product sales that involve the
manufacture, installation and commissioning of an electrolyser
system over a period of several months. Such systems are usually
quoted to a customer as a single value but may be split into agreed
payment milestones in order to facilitate cash flow. Any ancillary
requests will be treated as separate performance obligations if
costs can be separately identified and the revenue value is also
quoted separately, but the main objective, to provide a working
system for use in a specific application, is viewed as a single
performance obligation.
Under IFRS15, a performance obligation is satisfied over time if
one of the following criteria is met:
a) the customer simultaneously receives and consumes the
benefits provided by the seller's performance as the seller
performs;
b) the seller's performance creates or enhances an asset that
the customer controls as the asset is created or enhanced; or
c) the seller's performance does not create an asset with an
alternative use to the seller and the seller has an enforceable
right to payment for performance completed to date.
4. LOSS PER SHARE
The calculation of the basic and diluted earnings per share is
based on the following data:
2019 2018
GBP'000 GBP'000
Loss for the purposes of basic and diluted
loss per share being net loss attributable
to owners of the Company (9,451) (6,116)
Number of shares
Weighted average number of ordinary shares
for the purposes of basic and diluted earnings
per share 324,009,397 287,311,287
Loss per share 2.9p 2.1p
=============== ===============
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.
5. CALLED UP SHARE CAPITAL AND RESERVES
2019 2018
GBP'000 GBP'000
Called up, allotted and fully paid:
324,009,397 (2018: 324,009,397) ordinary shares
of 5p each 16,200 16,200
======== ========
Authorised Share capital:
324,009,397 (2018: 324,009,397) ordinary shares
of 5p each 16,200 16,200
-ends-
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GUBDGCDGBGCX
(END) Dow Jones Newswires
October 03, 2019 02:01 ET (06:01 GMT)
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