TIDMITM
RNS Number : 5376A
ITM Power PLC
30 May 2019
30 May 2019
ITM Power plc
("ITM Power", "the Company" or "the Group")
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 GBP17m(1) (unaudited) (GBP14.1m), an increase of over
20% year-on-year. The EBITDA(2) (unaudited) loss from operations of
approximately GBP6.7m (GBP4.9m) is in line with Board expectations.
Total financial assets at the year-end were approximately GBP19.8m,
comprising GBP5.2m of cash, GBP1.7m of cash on guarantee and
deployed working capital (debtors less creditors) of GBP12.9m.
(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
A cash movement of GBP10.4m 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
GBP45.1m, an increase since February 2019 of GBP9.4m (up 26%)
comprising GBP29.0m of projects under contract and a further
GBP16.1m of awards in the final stages of negotiation. The tender
opportunity pipeline also stands at a record level of GBP330m, an
increase since February 2019 of GBP90m (up 38%) comprising 46
active commercial tender responses over the last 12 months with an
average project size of GBP7.2m (GBP6.5m) 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.
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 40(o) C. 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
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, RWE, Engie, BOC Linde, Toyota,
Honda, Hyundai, Anglo American among others.
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
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