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A N N U A L R E P O R T A N D F I N A N C I A L S TAT E M E N T S
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ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
WE ARE
POSITIONED AT
THE HEART OF
GLOBAL EFFORTS
TO DECARBONISE
FUEL AND ENERGY.
Dr Graham Cooley
ITM Power plc, CEO
REPORT AND
FINANCIAL
STATEMENTS
YEAR ENDED 30 APRIL 2017
This is a very exciting time for the energy industry, and ITM Power plc is
at the forefront of a market which will revolutionise air quality and energy
storage for future generations. As evidenced by the significant growth
in our pipeline, momentum in the hydrogen sector is continuing to
gather pace. Our market is growing rapidly and with larger systems,
compliant to operate all over the world, ITM Power plc is in a great
position to be a market leader.
Dr Graham Cooley
ITM Power plc, CEO
6
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
ShaPIng a rEnEwablE hydrOgEn fuTurE
SHAPING A
RENEWABLE
HYDROGEN
FUTURE
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
7
ShaPIng a rEnEwablE hydrOgEn fuTurE
In a world in which fossil fuel energy is becoming
ever more scarce and expensive, countries
are struggling to meet their carbon reduction
and air quality obligations, hydrogen solutions
have finally reached the top of energy agendas.
ITM Power plc, manufactures integrated hydrogen
energy solutions to enhance the utilisation of renewable
energy that would otherwise be wasted. These products
meet the requirements for grid balancing and energy
storage services, and for the production of clean fuel
for transport, renewable heat and chemicals.
Air quality regulations are
stimulating the need for hydrogen
as a clean fuel for clean transport
emissions, in city regions around
the world.
Energy storage provision has
started to become a mandatory
requirement in areas of the world
such as California; it is recognised
as an essential prerequisite for
renewable energy deployment.
Grid balancing and rapid
response demand-side
services are crucial for the
integration of high proportions
of renewable energy supply
on the electricity grid.
Energy security and fuel
security has risen to the top
of the geopolitical agenda.
Price volatility of fossil
fuels is driving an industrial
substitution to more sustainable
chemical processes.
Auto OEMs are rolling out Fuel
Cell Electric Vehicles (FCEVs)
that require a high purity hydrogen
fuel. Hyundai and Toyota have
commercial vehicles in production
with Honda being the latest
Company to also offer a FCEV.
Global Hydrogen Refuelling
Station infrastructure programmes
are underway with significant
deployment plans in place.
CONTENTS
About us
Officers and professional advisers
Highlights
Board of Directors
Strategic review
Statement of scope
Business model
Review of the business
Business environment
Key financials
Financial performance
Final results
Financial position
Outlook
Strategy and objectives
Corporate social responsibility
Going concern
10
11
12
14
16
18
19
24
26
30
31
34
36
37
38
44
45
46
46
46
47
48
50
54
58
59
60
63
64
66
67
69
Marketing activities
Hydrogen rally
Hydrogen fleet user workshop
Hannover Messe
Clean fuel
Solar hydrogen station
Shell hydrogen station
Hydrogen fuel agreement
European hydrogen refuelling
station deployment
Planning consent
Energy Storage
HyDeploy
Power-to-Gas energy storage
Central control room
Financial statements
10
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
abOuT uS
ABOUT US
ITM Power plc manufactures integrated hydrogen energy solutions,
which are rapid response and high pressure that meet the requirements
for grid balancing and energy storage services, and for the production
of clean fuel for transport, renewable heat and chemicals. ITM Power plc
was admitted to the AIM market of the London Stock Exchange in 2004
and raised its initial funding of £10m gross in its IPO. Further funding
rounds of £28.5m in 2006, £5.4m in 2012, £2m in 2013 and £10m
in 2014 have been completed. The Company received £4.9m as a
strategic investment from JCB in March 2015. The Company currently
has £35.46m of projects under contract or in the final stages of negotiation.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
11
OffICErS and PrOfESSIOnal adVISOrS
OFFICERS AND
PROFESSIONAL
ADVISORS
Directors
Sir R Bone
Dr S Bourne
Dr G Cooley
Lord R Freeman
P Hargreaves
R Pendlebury
Prof. R Putnam
Dr R Smith
REGISTRARS
Capita IRG plc
The Registry
34 Beckenham Road
Beckenham BR3 4TU
COMPANY SECRETARY
A Allen
REGISTERED OFFICE
22 Atlas Way, Sheffield,
South Yorkshire, S4 7QQ
NOMINATED ADVISOR
AND BROKER
Investec Bank plc
2 Gresham Street
London, EC2V 7QP
BANKERS
National Westminster Bank plc
Stamford Branch
52 High Street, Stamford
Lincolnshire, PE9 2BD
SOLICITORS
Burges Salmon LLP
One Glass Wharf
Bristol, BS2 0ZX
AUDITOR
Deloitte LLP, Statutory auditor
1 City Square, Park Row,
Leeds, LS1 2AL
PRESS AND INVESTOR
ENQUIRIES
Tavistock Communications Ltd
1 Cornhill, London
EC3V 3ND
12
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
hIghlIghTS
HIGHLIGHTS
COMMERCIAL PROGRESS IN YEAR
Clean fuel
• Launched first London HyFive refuelling station at the National Physical Laboratory,
Teddington, London
• Opened first hydrogen refuelling station with Shell in the UK and obtained planning
permission for three others
• £3.5m contract won to deploy a 3MW electrolyser system in the year ending 30 April 2018
Power-to-gas
• Contracted the £1.1m sale of 0.5MW electrolyser to National Grid under the HyDeploy
project for build in FY2019
• €1.5m sales contract to HDF, a multi-MW electricity storage solutions provider,
ITM Power plc’s first sale in France
• €0.7m electrolyser sale to global speciality gas company by competitive tender
renewable Chemistry
• £1.6m sale of 1.25MW electrolyser to major Engineering Procurement and Construction
(“EPC”) company
Commercial Progress since year End
• A further £4.12m of products under contract secured since year end (31 July 2016: £1.44m)
• £12.33m of contracts in final stages of negotiation (31 July 2016: £0.51m)
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
13
hIghlIghTS
KEY FINANCIAL RESULTS FOR
THE YEAR ENDED 30 APRIL 2017
• Total Revenue and Grant Funding of £9.23m
• Cash balances of £3.00m (2016: £3.34m),
(2016: £8.19m) up 13%, comprising:
down 10%; comprising
◦ Revenue – £2.42m (2016: £1.93m) up 25%
◦ £1.56m available cash (2016: £1.21m)
◦ Grant income – £4.16m (2016: £3.19m) up
◦ £1.44m restricted cash on guarantee
30%
(2016: £2.13m)
◦ Grants receivable for capital projects –
£2.65m (2016: £3.07m), down 14%
• Development costs of £0.15m capitalised
in the year (2016: £0.25)
• Increase in property, plant and equipment net
book value to £4.52m from £3.02m, up 50%
• Loss from operations £3.55m (2016: £4.36m),
down 19%
• A material uncertainty exists around going
concern as the Group remains in a growth
phase. Recognising the current need to
manage working capital carefully and
efficiently, ITM Power plc continues to
structure quotes to include up-front payment
with orders so that working capital is not
impacted adversely by increased activity
TECHNICAL ACHIEVEMENTS
• Winner of the Rushlight award for
improvement of the manufacturing process
• Development of an autonomous test facility
for ultra-high current density (cost reduction)
• New control room established in Sheffield
CORPORATE DEVELOPMENT
POST YEAR END
• Appointment of new Managing Director
of ITM Power plc GmbH, Calum McConnell
• £5.7m gross funding round secured
in January 2017 for working capital
to service existing pipeline
• Appointment of Investec Bank Plc as
Nominated advisor and sole broker
• Exhibited at All-Energy, the UK’s largest
renewable energy event, Glasgow,
10 and 11 May 2017
• Staff numbers increased by 4 full-time
equivalents (currently the Company
has 72 staff)
• Development work is tightly focused on
increasing electrolyser scale, improving
performance and cost reduction
14
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
bOard Of dIrECTOrS
BOARD OF
DIRECTORS
Dr Graham Cooley
Chief Executive Officer
(Age 53)
Dr Simon Bourne
Chief Technology Officer
(Age 42)
Dr R Smith
Executive Director
(Age 42)
Prof Roger Putnam
Non-Executive Chairman
(Age 71)
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
15
bOard Of dIrECTOrS
OUR RECENT TECHNICAL AND
COMMERCIAL ACHIEVEMENTS
ARE A CLEAR DEMONSTRATION
OF THE SKILLS AND KNOWLEDGE
OF THE ITM POWER TEAM.
Prof Roger Putnam
ITM Power plc, Non-Executive Chairman
Lord Roger Freeman
Non-Executive Director
(Age 75)
Robert Pendlebury
Non-Executive Director
(Age 75)
Sir Roger Bone
Non-Executive Director
(Age 73)
Peter Hargreaves
Non-Executive Director
(Age 70)
STRATEGIC
REVIEW
ITM Power plc continues to develop a burgeoning pipeline
of exciting projects that demonstrate that there is a large and
growing market for electrolyser technology. Our focus remains
ensuring that ITM Power plc is optimally positioned to deliver
its growing pipeline of established high efficiency products into
those markets. I would like to thank the staff this year for their
continued hard work as the Company takes its next steps
as a leading technology supplier.
Prof. Roger Putnam
ITM Power plc, Chairman
18
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
STraTEgIC rEVIEw
STATEMENT
OF SCOPE
This Strategic Report has been prepared solely
to provide additional information to shareholders
to assess the Group’s strategies and the potential
for those strategies to succeed.
The Strategic Report contains certain forward-
looking statements. These statements are made by
the Directors in good faith based on the information
available to them up to the time of their approval of
this report and such statements should be treated
with caution due to the inherent uncertainties,
including both economic and business risk factors,
underlying any such forward-looking information.
The Directors, in preparing this Strategic Report,
have complied with s414C of the Companies
Act 2006.
This Strategic Report has been prepared for the
Group as a whole and therefore gives greater
emphasis to those matters which are significant
to ITM Power plc and its subsidiary undertakings
when viewed as a whole.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
19
STraTEgIC rEVIEw
BUSINESS
MODEL
Summary
ITM Power plc designs and manufactures integrated
hydrogen energy systems for energy storage and
clean fuel production. The Group has a suite of
product platforms based on Proton Exchange
Membrane (PEM) technology tailored to the
requirements of its target markets. The overarching
principle is the capacity to take excess energy from
the power network, convert it into hydrogen and
deliver it either into a vehicle as a clean fuel or the
natural gas network as part of a Power-to-Gas
energy storage scheme, or for use in further
applications in the chemicals and plastics
industries, accessible due to cost savings
in equipment.
Of particular importance is the ability to respond
rapidly and to generate hydrogen at a pressure,
flow rate and purity appropriate to its application.
Power-to-Gas
Demand for energy storage solutions is being driven
by the increasing proportion of power from renewables
in electricity generation in many countries. This, in turn,
is being driven by emissions reduction targets set out
most recently in the COP21 Paris Agreement on climate
change. Whilst the agreement on climate change
is not legally binding, as evidenced by the U-turn of
the current US administration, the fact that India and
China continue to be a part of the climate agreement
suggests that this can still generate momentum where
previously there have been none. We believe that the
simplest and most cost effective solution to address
the need to store intermittent renewable power is
electrolysis with the hydrogen produced then used
either as clean fuel or injected into a gas grid. The
latter ‘Power-to-Gas’ option requires megawatt
scale electrolysers and ITM Power plc has pioneered
the development of such plant with announced
plans to manufacture scalable units of up to 100MW.
The Power-to-Gas model is a commercial proposition
which offers utility companies energy storage options
of a scale and duration relevant to the challenges
presented by growing deployment of renewable power
generation. The equipment provides grid balancing
services which consumes excess energy in the power
network converting it to hydrogen for injection into the
gas network. There are structured payments for both
grid balancing services and supply of hydrogen, which
helps decarbonize the gas network. These payments
are accessible for customers and incentives allow a
cheaper product for the seller of the hydrogen.
20
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
STraTEgIC rEVIEw
Clean fuels
The refuelling model is one that incorporates the work
of national hydrogen infrastructure initiatives to support
the growth of hydrogen as a transport fuel, both for use
in cars and buses initially, and with further transport
applications in the future. Automotive OEM’s (Original
Equipment Manufacturers) have invested significant
funds and developed electric power trains for over 20
years. The roll-out of Fuel Cell Electric Vehicles (FCEVs)
is underway, led by Toyota and closely followed by
Hyundai, and Honda. A hydrogen station produces
hydrogen on site via ITM Power plc’s rapid response
electrolyser system, and can refuel a fuel cell electric
car in three minutes, providing 300 to 420 miles of
clean emission driving, without compromise to
drivers’ normal refuelling routine.
Renewable chemistry
Refineries currently use hydrogen to improve the
quality of fractional distillation products and most
of this hydrogen is produced from steam-reforming.
15% of the total CO2 emissions from the European
refinery sector can be attributed to hydrogen
production. 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 plc’s
PEM electrolysers could provide an immediate
backup solution to prevent production downtime
and preserve security of hydrogen supply.
A further growth market for refuelling is in bus refuelling,
as air quality rises up the agenda for all cities, but
especially capital cities in Europe. The business
case for Fuel Cell Electric Buses (FCEB) was
published by the NewBusFuel consortium and
the outputs are compelling to any organizations
planning to introduce hydrogen fuel cell buses
into everyday transport service operations.
Inner city air quality is a major new driving force for
FCEB deployment, as air pollution is a major contributor
to poor health and early death in the UK, with the Royal
College of Physicians attributing up to 40,000 deaths
a year to exposure to outdoor air pollution. Experts
argue that for decades the issue has been under-
reported and the UK Government recently lost two
court cases over air quality. In Greater London, where
the statistics are the most detailed, studies show that
private diesel cars contribute 11% of NOx emissions,
but there are many other sources of pollution,
including buses, taxis, industry and building sites.
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 CO2 for each
tonne of liquid steel produced, equivalent to 5%
of the world’s anthropogenic CO2 emissions. The
substitution of hydrogen for carbon has the potential
to significantly reduce CO2 emissions, because
hydrogen is an excellent reducing agent and
produces only water as a by-product.
AT THE HEART
OF ALL OF THESE
APPLICATIONS
IS AN ITM POWER
ELECTROLYSER
SYSTEM.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
2121
STraTEgIC rEVIEw
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ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
STraTEgIC rEVIEw
Grant funding
The Group utilises funding from grant bodies to fulfil
two main objectives. The first is to contribute towards
the technical advancement of the electrolyser product
through offering greater efficiencies which manifest as
price reduction of the ITM Power plc systems. These
efficiencies are then demonstrated in pilot projects,
which pilot either first of kind in terms of size, or
deployment. The second objective of procuring grant
funding is to partner with global blue chip companies
such as Shell, BOC, National Grid and Toyota in order
to develop larger markets for ITM Power plc products.
The Group has been the beneficiary of funding from
EU bodies, which has helped accelerate research
activity but also infrastructure development. The
referendum result of 2016 regarding Brexit means
that there is a risk that this funding may be less
available in the short-term, although ITM Power plc has
had the most success bidding into the Horizon2020
funding pot that is available to non-EU members.
Nevertheless, the Group recognises this is a risk
and has strategies for mitigation in place which
are discussed within the principal risks and
uncertainties section later in this report.
Global markets
Markets for water electrolysis as a hydrogen
infrastructure solution continue to develop in the
UK, as showcased by the HyFive project and
subsequent H2ME and H2ME2 projects, together
with the UKH2Mobility initiative supported by the Office
of Low Emission Vehicles (“OLEV”). Similar initiatives
are also underway in France, Denmark, Germany,
Japan and the US. The market for Power-to-Gas is led
by Germany where ITM Power plc sold the first two
systems to inject hydrogen into the German distribution
network. The opportunities continue to develop in
Germany while spreading to other regions, for example
California, where energy storage is now mandated.
Two other developing markets are Scotland and
Australia, where large curtailed renewable resources
provide a compelling case for electrolysis. Other
markets exist and are maturing rapidly in India,
China and Korea, and whilst these markets appear
interesting, ITM Power plc will be operating a watching
brief for the near future.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
23
STraTEgIC rEVIEw
ITM Power plc has a model of locating agents in key
territories to position ITM Power plc as a world leading
developer and supplier of electrolyser products. Initial
market opportunities often begin with collaborative
projects with blue chip companies before leading
to sales and maintenance contracts of established,
CE-marked units. CE Marking is mandatory for
selling products within the EU. ITM Power plc has
five business development personnel ‘in the field’,
and has also established a strong after-sales support
team. Business development effort is focused in areas
where markets are more advanced. ITM Power plc
has active subsidiaries in Germany and the USA that
serve to generate local knowledge and partnerships,
grow operational and after-sales support, increase
opportunities for state grant funding, and provide
opportunities to operate within the local currency.
Future prospects and events
after the balance sheet date
ITM Power plc sees its route to increasing product and
maintenance sales as being through the increasing
deployment of its products in the key Power-to-Gas
energy storage, renewable chemistry and clean
fuel sectors. The Group is well represented in these
commercial sectors and territories where market
growth is now accelerating. The Group has an
established product platform that continues to
benefit from ongoing economies of scale and
efficiencies through process improvement activities
and technology improvements, to allow greater sales
advantage against competitors, as well as a route
to creating higher capacity equipment for larger
transport, Power-to-Gas and industrial applications.
There are no material events that have occurred
after the balance sheet date.
REVIEW OF
THE BUSINESS
ITM Power plc has a growing commercial pipeline of leading
refuelling and energy storage products to deliver to more
and more customers around the world, and is well placed
to continue it’s growth in a market that is becoming more
established. This is in no small part down to the dedication
of the staff over the last year.
Prof. Roger Putnam
ITM Power plc, Chairman
26
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
rEVIEw Of ThE buSInESS
BUSINESS
ENVIRONMENT
Today, ITM Power plc is a globally recognised expert
in hydrogen technologies with applications in clean
fuel for transport, energy storage and industry. We
believe that all of these markets will grow significantly
over the next few years based on the increasing drive
for improved air quality in inner cities worldwide, the
growth of renewables in the energy mix and the need
to decarbonise the production of hydrogen for industry.
We now have four publicly accessible hydrogen
refuelling stations (HRS) in operation with a further
six under contract, positioned to take advantage of
the accelerating roll-out of commercial and passenger
fuel cell electric vehicles. With this market in its infancy,
these stations will initially incur losses, and will be
dependent on vehicle rollout for the stations to reach
profitability and positive cash flows in the medium to
long term. The Group will report hydrogen sales in the
April 2018 financial statements. In addition, we have
secured £5.2m in funding for our first Fuel Cell Electric
Bus (FCEB) refueller in Birmingham. We expect
the FCEB market to grow quickly, driven by air quality
legislation. In the UK, cities are now under increasing
pressure to improve air quality. Air pollution levels have
reached “very high” or “high” in eight regions and
London has been issued a final warning by the EU.
This is a global problem and the products and services
ITM Power plc is developing, particularly for the ‘return
to base’ FCEB market, will be exportable to multiple
locations worldwide.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
27
rEVIEw Of ThE buSInESS
ITM Power plc enjoys a unique position having supplied
the world’s first Proton Exchange Membrane (PEM)
Power-to-Gas electrolyser in 2014, which continued
throughout the financial year to inject hydrogen into the
German gas distribution network. The Group supplied
a second PEM Power-to-Gas system to RWE Group
Gmbh in the financial year ended April 2015, and
contracted in March 2016 to supply a third in Germany,
which remained in build and on schedule at year end.
The Group also contracted with National Grid as part of
the HyDeploy project for a 0.5MW electrolyser to inject
into a UK gas network for deployment in calendar year
2018.
Power-to-Gas
Proposals during the year from the EU include
energy storage involving the conversion of electricity
to another energy carrier, such as hydrogen. Ongoing
work includes investigating hydrogen/methane blends
and establishing admissible concentration levels for
hydrogen in natural gas grids across Europe. These
developments will enable Europe-wide deployment of
Power-to-Gas plant for injecting hydrogen into the gas
grid while offering balancing services to the electricity
grid. These balancing services can be an important
source of revenue for operators and ITM Power plc’s
rapid response 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.
28
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
rEVIEw Of ThE buSInESS
Clean fuel
ITM Power plc has won contracts to supply on-site
hydrogen generation equipment for refuelling in
the UK and the US, and more recently to France,
and is currently rolling out a network of ten hydrogen
refuelling stations in the UK of which four are now
open for public access.
ITM Power systems are now at a scale where a fleet
of thirty buses could be supported by one electrolyser
on a return to base principle and large schemes are
now being envisaged, for applications such as heavy
logistics, trains and ships. In the year, the Group was
awarded a £3.5m contract for its first hydrogen refuelling
station for buses which will be deployed in 2018.
Renewable chemistry
In the year, ITM Power plc won its first renewable
chemistry contract with a major EPC contractor and
the project was substantially completed within the year.
This plant will serve as reference plant for future bids
into the industry. The scale of hydrogen production
capacity required in the renewable chemistry market
means that this market will likely adopt the larger
scale, multi-MW systems.
ITM Power plc showcased a series of large scale
electrolyser configurations up to 100MW in size at
Hannover Messe 2017 in April this year, attracting
significant interest from potential customers worldwide.
THESE
DEVELOPMENTS
WILL ENABLE
EUROPE-WIDE
DEPLOYMENT OF
POWER-TO-GAS
PLANTS.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
29
rEVIEw Of ThE buSInESS
30
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
rEVIEw Of ThE buSInESS
KEY FINANCIALS
A summary of key financial performance indicators set out in the table below and discussed in this section.
2017
2016
2015
Total projects income, being sales and grants receivable
£9.23m
£8.19m
£5.06m
Of which: Sales revenue
£2.42m
£1.93m
£1.64m
Of which: Grant recognised in the income statement
£4.16m
£3.19m
£1.78m
Of which: Grant recognised on the balance sheet
(offsetting asset build)
£2.65m
£3.07m
£1.65m
New grant project awards*
£6.59m
£8.10m
£5.75m
Pre-tax loss
£3.55m
£4.36m
£5.71m
Projects under contract or in final stage of negotiation*
£35.46m
£16.32m
£10.46m
Non-current assets
Net assets
£4.90m
£3.28m
£2.546m
£13.07m
£11.64m
£10.34m
*Contracts can take a period longer than 12 months to unwind through the accounts. In the year ended 30 April 2017, income recognised
was £9.23m against a pipeline reported at the results announcement of £16.32m. Therefore, of the contracted pipeline, the Group delivered
on projects equivalent to 57%.
Projects under contract and in the final stage of negotiation are a non-statutory measure that the Board of Directors use to assess progress
and monitor the Group. Items under contract are contract projects that are being progressed. Projects in negotiation are added once the
Directors are 100% certain that a contract will get signed, and represents future pipeline. These numbers are reported via the regulatory
news service (RNS) with each announcement. The Directors do not make representations as to the timing of the revenue recognition
associated with the projects under contract or in the final stages of negotiation.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
31
rEVIEw Of ThE buSInESS
FINANCIAL
PERFORMANCE
The pre-tax loss for the year under review decreased
to £3.55m (2016: £4.36m) and net cash burn before
fund raise decreased to £5.85m (2016: £8.47m). 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 decrease in loss in the year being reported
can be attributed to three major factors – a concerted
development and engineering effort towards
product efficiencies through economies of scale and
standardisation; the increase in sales revenue and at
profitable margins, and the increased grant funding
received in the year on both new and existing projects.
Grant funding has specifically increased as the rate
of grant funding (the intervention rate, or percentage
reimbursed to the Group) has increased compared
with prior years, such that grant activity was
increasingly between 70% and 100% funded
in the year in review.
The cash burn decrease is a result of increased sales
activity in the year, along with an increased intervention
rate on grants that were completed in the year. The
Group was also the recipient of large grant claims
debtors from the prior year, and received in the current
year. The timing of grant receipts are often not aligned in
the same period as the expenditure. This cash outflow,
which is significantly greater than the losses in the year
shows the continued commitment of ITM Power plc 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.
Total projects income
£9.23m £8.19m £5.06m
Projects under contract
£35.46m £16.32m £10.46m
Net assets
£13.07m £11.64m £10.34m
32
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
rEVIEw Of ThE buSInESS
Revenue continues to be driven by sales to the
chemical industry, which is a newer application
identified for the Group’s products. There has also
been an increase year on year in consultancy, with
ITM Power plc a recognised expert in the field. The
Group is starting to find its’ consultancy services
are procured with a view to sourcing units in the
future in competitive tenders. ITM Power plc has a
strong record in competitive tenders and consider
the technical achievements made in the year will
make the Group even more competitive.
In the year, the Group capitalised development
costs of £0.15m (2016: £0.25m). This is for product
developments that will continue to keep the Group
at the forefront of PEM electrolysis and the Directors
see the continued product development as key to
building commercial traction.
Debtors have increased from £6.49m to £11.08m
at the year ends in 2016 and 2017 respectively.
This movement is dominated by prepayments
made to suppliers near year end to order
components for the existing pipeline and also
as deposits on dispensers for deployment as
part of the fleet of refuelling stations. Prepayments
and accrued income was £8.77m in 2017, up
£4.74m year on year (2016: £4.03m).
Creditors have increased from £1.76m to £6.67m
at the year ends in 2016 and 2017 respectively.
This movement is a result of an increase in
accruals and deferred income from £0.9m to £5.6m.
Revenue has increased as the Group gains
traction in the growing hydrogen market, but is
also representative of servicing a growing pipeline.
In the year, revenue growth was encouraging and
comprised largely of an electrolyser for the chemicals
industry, and part builds of a number of contracts
announced in the year, including for refuelling
applications in Germany. With the Group in a strong
pipeline development and delivery phase, it is likely
that the next period will continue to see a supply of
units to Europe despite the challenges in the current
political climate. The Group will continue to operate in
a high value, low volume environment too, which will
continue to influence the results over the next few years.
ITM Power plc are first and foremost a manufacturer,
and the majority of revenue comes from construction
contracts to design and build full hydrogen systems.
These systems can then be deployed in a number
of scenarios.
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Commentary on the year’s revenue
The sales order book at the year-end stood at £5.25m
(2016: £2.90m). This increase is representative of the
growing commercial pipeline and represents a large
Power-to-Gas unit, some smaller units, the sale of
a hydrogen refuelling station in France and the first
contract with National Grid.
The value of projects under contract at the time of
the report stood at £17.8m (2016: £16.32m). Projects
under contract represents the value of contracted
revenue and grant funding yet to be recognised by
ITM Power plc in the future. The Board believes this is
a more accurate reflection of the increase in activity
the Group has experienced in the year. The Board
recognises that not only do contracts need to continue
to be signed but also that delivery on these contracts
is a part of the picture that leads to a fully commercial
offering and a reduction in the Group’s proportionate
mix of grant funding as part of the pipeline.
Total collaborative project funding recognised in
the year was £6.81m of which £4.16m is recognised
on the income statement (2016: £6.26m, of which
£3.19m was recognised on the income statement).
This increase in asset builds supported through
project funding has allowed ITM Power plc to develop
a suite of hydrogen generation equipment that it
will own and operate as part of the collaborative
projects, allowing data and knowhow to be
incorporated into new generations of electrolysers.
In the year, three refuelling stations have been
opened to the public around London. Revenues from
refuelling will be reported separately in note 5 of the
financial statements from the year ended April 2018.
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FINAL RESULTS
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FINANCIAL
POSITION
At year end, ITM Power plc had £3.004m (2016:
£3.336m) of funds in the bank, and trade and
other receivables of £11.082m (2016: £6.487m),
totalling £14.086m (2016: £9.823m). The receivables
predominantly relate to trade debtors (while 2016 was
predominantly grant income debtors). ITM Power plc
also had amounts on guarantee that totalled £1.45m
(2016: £2.22m). Presently, the Group is required to
place amounts on guarantee as cash cover, which limits
working capital available to the Company mid-contract.
This limited the Group to £1.59m of available cash at
year end. As such, there is a material uncertainty over
the going concern assumption due to the risk around
the timing of cashflows. Recognising the current need
to manage working capital carefully and efficiently,
ITM Power plc continues to structure quotes to include
upfront payment with orders so that working capital is
not impacted adversely by increased activity.
At year end, the Group had trade creditors of £0.92m
against a prior year balance of £0.67m. This number
has predominantly increased due to the stage of
progress on contracts in the pipeline, but there has
been an increase in creditor days as better supplier
terms are negotiated. The Group also had accruals
and deferred income of £5.61m against a prior year
figure of £0.88m. This reflects both money received
up front for construction contracts and also accruals
for goods received that have not yet been invoiced.
ITM Power plc has seen an increase in fixed assets to
£4.899m from £3.276m in the prior year as the Group
engages in projects that create assets for the future.
This is a policy that will continue, especially with the
completion of H2ME and H2ME2 projects.
The assets built are the suite of refuelling stations in
the UK that will supply a growing hydrogen fuel sales
market. The total value of refuelling assets was £2.3m.
After an impairment review, the carrying value of one
refueller was reduced by £97,000 and a non-refuelling
asset was impaired by £3,000.
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ITM POWER IS NOW
IN A POSITION TO BE
COST COMPETITIVE
WITH OTHER FORMS
OF FUEL SOLUTIONS.
OUTLOOK
The Group has enjoyed a greater level of customer
engagement in the past year than at any other time
in its history. This was never more noticeable than at
the Hannover Messe in April 2017, where the Group
enjoyed the greatest footfall it had ever experienced
as it showcased its 100MW electrolyser plant. The
year ending 30 April 2017 also saw the Group deliver
a number of landmark events, including the deployment
and opening of the first ITM Power plc refuelling station
on a Shell forecourt, and of two further refuelling
stations in London, as well as successfully winning
a contract to build a 3MW bus refueller in the UK.
ITM Power plc is now in a position to be cost
competitive with other forms of electrolyser and
other hydrogen solutions, having hit the European
Horizon 2020 price target for MW scale electrolysers.
The Directors have disclosed as part of the going
concern statement that there is a current sensitivity
to the timing of sales and grant receipts. As always,
near term cash resources will continue to be closely
monitored and controlled due to the associated
working capital requirements of the Group in delivering
its growing order pipeline and winning new business.
The Board believes that in order for the Group to secure
the best chance of winning new business contracts,
the Group needs to be able to continue to demonstrate
to potential customers its suitability to be awarded
long-term contracts. A consequence of this is that
certain customers may continue to request that the
Group provide guarantees for contracts. A mitigating
action the Group is taking is to structure smaller stage
payments aligned with more frequent milestones.
With markets growing rapidly, and air quality in
particular being a major issue throughout 2017,
ITM Power plc look forward to developing further
contracts in the pipeline. The bulk of enquiries continue
to be for 0.3MW to 6MW, often including ancillary
hydrogen energy systems and after sales support
contracts. In addition, the Group is increasingly
receiving enquiries from multinational entities for
significantly larger platforms and for a broader
range of applications.
The Board look forward to reporting progress
as contracts are awarded, and to providing
an update at the AGM.
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STRATEGIES:
OBJECTIVES:
ITM Power plc is now firmly focussed on large scale
solutions. The current strategy is to use the existing,
operational Thüga and RWE projects as a reference
plant for Power-to-Gas sales.
Using the same initial platform, the Group will also
be able to show demonstrable success in the near
future of hydrogen, using the M1 Wind refueller and
HyFive stations as reference plant for further refuelling
stations. Similarly the Shell forecourt at Cobham
services and the 3MW bus refueller contract that
was won in the year will serve to demonstrate
ITM Power plc’s competitiveness and application
for electrolysers.
In the medium-term, the national mobility programmes,
in which ITM Power plc has positioned itself as a key
partner for refuelling through electrolysis, will drive
refuelling station sales.
ITM Power plc are currently positioned as a refueller of
hydrogen, and will also be able to gain market share
for hydrogen sales as vehicle adoptions accelerates.
The Group expects to start reporting on hydrogen sales
in the results for the year ending 30 April 2018.
ITM Power plc had immediate objectives in the prior
year in terms of product development and, in particular,
scale-up of proven electrolysis equipment.
Having successfully achieved these immediate
objectives are to generate more sales traction
at high volumes and higher capacity in order
to achieve penetration of larger markets.
Cash flow remains a key measure for the Board, with
the other key objective for ITM Power plc being the
achievement of a positive cash flow in the shortest
possible time, whilst maintaining the appropriate
working capital requirements. In the year in review,
cash flow for the year was an outflow of £0.332m
after the fund raise of £5.7m gross (2016: £3.240m
after £5.8m gross fund raise). With a sensitivity existing
around certain sales and grant receipts, continuing
to closely control cash resources will be a short-term
objective for the management.
Break-even is another measure for the Board and is
one of the key drivers in decisions to develop business.
STRATEGIES FOR ACHIEVING OUR OBJECTIVES
Product development, and in particular upscaling of product offering, will be achieved through securing
and utilising project funding. This serves the dual purpose of reducing cash outflow and creating strong
key partnerships within industry.
Short-term cash flow is aided but not totally mitigated by ITM Power plc quoting for sales with upfront payments,
which reduces reliance on working capital. This is dependent on the type of guarantees customers may require
the Group to offer, including cash cover for some guarantees, which does not help working capital at the outset.
Cash outflow is minimised through working with support from partners on the development of technology whilst
we are continuing to build a contract pipeline. Historically, it has taken two years for potential customers to move
through a learning curve and to reach the point of purchasing equipment, and we are
keeping this in mind as we build a larger pipeline.
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NON-FINANCIAL KEY
PERFORMANCE INDICATORS
FUEL DISPENSED (KG)
FUEL CONTRACTS SIGNED
1,043
0
14
1
2017
2016
Given the early stage of the refuelling market, no expectation has been set with regards to the KPI performance in
the current year but these KPIs will act as a baseline for future performance.
HYDROGEN PRODUCTION CAPACITY
UNDER CONTRACT IN KW
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PRINCIPLE RISKS AND UNCERTAINTIES
The principle and commercial risks to the Group are as follows:
Description
Impact
ITM Power plc does not achieve sufficient commercial success before existing competitors
or new entrants.
The current plans the Group has may not be realised, and ultimately the Group may
have to re-evaluate its forecasts.
Assessment of change
in risk year-on-year
There is greater commercial traction in the current year, both for ITM Power plc and some
of its competitors.
As the movement towards better air quality and renewable energy gathers momentum,
larger entrants could enter the market with greater resource than ITM Power plc.
Mitigation
The Board considers the knowhow and field experience owned by the Group creates
a significant barrier to entry for new competitors, and for existing competitors to threaten
the Group’s market position.
One protection for ITM Power plc continues to be the patents developed in house around
the core technology, and the knowhow gained through long-standing deployments
which cannot be gained quickly by a new entrant.
As product efficiency (producing more hydrogen from the same amount of plant) and
scale up (increasing product capacity within the same size unit) targets have been hit,
so to have price targets for customers, opening up a wider range of markets available
to ITM Power plc, reducing the risk of dependence on one market.
Description
ITM Power plc continues to be in a cash consumption phase.
Impact
There is a risk that the Group may face working capital and cash flow challenges
associated, especially with receipts often large and intermittent, both for sales contracts
but particularly for grants.
Assessment of change
in risk year-on-year
At year end there was less cash in the bank than in the prior year but equally there was
greater sales traction. Given the current uncertainty in the market place there is significant
uncertainty over the future cashflows both in terms of timing and value. Historically the
Group has had large upfront payments for new contracts. This creates a significant
working capital challenge, which has led to a material uncertainty over going concern.
This risk has increased since the prior year as the starting position was lower with pipeline
having grown, and with the greater demands being placed on working capital.
Mitigation
There are a number of options available to the Group, which include structuring sales
beneficially, and requiring money up front, or alternatively in recognition of a series of
more frequent milestones. There is an ongoing scheme of work to create greater
profitability within the products.
Historically, ITM Power plc have continued to meet obligations through equity fund raises.
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Description
Alternative technologies are adopted in preference to the Group’s technology.
Impact
The Group could struggle to gain market share or may find itself operating in a smaller
market than is currently anticipated.
Assessment of change
in risk year-on-year
For Power-to-Gas applications, the risk is considered diminished as the need to curtail
and harness renewables increases. This will lead to the increased demand for loads that
can offer demand side management, which is the fastest grid balancing service available.
ITM Power plc electrolysers are rapid response loads.
For refuelling applications, the advent of announcements from OLEV, and from car
manufacturers placing an emphasis on battery electric vehicles show that alternative
technologies do have traction and are nearer term than large scale hydrogen fuel cell
vehicle adoption. Therefore the Board consider the risk is consistent with prior years
with regards to refuelling.
Mitigation
The Board considers the technological proposition of the Group and through both review
and strong targeting considers the technology to be superior to that currently on the
market. Through targeted improvements in technology development the Board seeks
to retain that competitive advantage.
For refuelling, the technology used in Battery Electric Vehicles is the same technology
that is found in Fuel Cell Electric Vehicles, with the exception of the energy storage device –
which in the case of a FCEV is in the form of a hydrogen tank. As such the Board welcome
the development of battery vehicles, whilst recognising the advantages of refuel time and
range of the Hydrogen vehicles.
Description
Energy policy changes could adversely affect the commercial and project traction
the Group has started to achieve.
Impact
The Group may find the technological demand for their product reduced.
Assessment of change
in risk year-on-year
This risk is considered consistent with prior years as the hydrogen agenda gathers pace.
Whilst the US policy seems ambivalent towards zero emissions, other countries continue
to place greater emphasis on this. ITM Power plc’s more global positioning decreases
the reliance on one particular country’s policies. Currently the Group has 5% of contract
pipeline in US$, and as such the impact of President Trump’s withdrawal of the US from
the COP21 climate agreement does not have an immediate impact on the Group, but
may impact the possibility of winning further business in the US.
Mitigation
The Board seeks to be led by commentators and industrial bodies as to the direction
of policy change. Currently, as global markets continue to rely ever-more-heavily on
the use of intermittent and fluctuating renewable energy sources, the case for energy
storage solutions continues to be strong.
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Description
Impact
Assessment of change
in risk year-on-year
Foreign currency fluctuations could adversely affect the profitability of certain contracts
by impacting the supply chain, sales cycle or valuation of receivables and payables.
The profitability of the Group could be affected if exchange rates fluctuate significantly
during the course of a contract
This risk has continued to be high, as was the case last year, as a result of the UK
referendum to Brexit. Whilst exchange rates are currently favourable to ITM Power plc
for exporting, this may not always be the case, and product costs may rise, or revenues
decrease. This has not been helped through the added uncertainty that followed the
results of the UK parliamentary elections in June 2017, and also rising inflation which
can also increase currency volatility.
Mitigation
Where possible, ITM Power plc operate a natural hedge, using currency accounts to
mitigate against immediate risks. The Group also consider the use of forward contracts
and will monitor exchange rates more closely in the future as the value of contracts
continues to grow.
Description
Regulatory changes could adversely affect the commercial success of the Group.
Impact
As the market for hydrogen systems develops, the regulatory structure gains
sophistication. The risk of falling behind developments could render products obsolete.
Assessment of change
in risk year-on-year
Similar to previous years.
Mitigation
Description
Impact
The Board considers regulatory issues, and particularly in the markets for automotive
and energy storage solutions find regulations continue to support the case for hydrogen
energy systems as a solution. The regulatory environment in which ITM Power plc operates
continues to evolve and the Board seeks to position ITM Power plc as a leading expert in
the field to shape and reliably inform best practice with regards to regulatory changes.
ITM Power have previously been well-funded by EU sponsored programmes and
the certainty of this pipeline may be impacted by the UK Referendum on Brexit.
It may be harder to win contracts from a source that has historically been a successful
strategy for ITM Power.
Assessment of change
in risk year-on-year
This risk increased significantly upon the announcement of the referendum result on
24th June 2016
Mitigation
The Group has a number of options, and are encouraged that near term forecasts are
not affected by this outcome. One option is to utilise the presence of an EU subsidiary
company (ITM Power GmbH) to apply for the same funds as before, with negligible
impact to project viability.
There are other precedents for accessing the same EU funding pot, but also to
broaden the scope of projects to ensure this potential risk is resolved.
The board of directors meet regularly to review specific and general risks that face the Group and
strives to position the Group in a way that any risks can be minimised and met, should the need arise.
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CORPORATE SOCIAL
RESPONSIBILITY
Health, safety and the environment
ITM Power plc’s products are designed to reduce the
carbon footprint of our customers’ energy generation
and distribution processes and, in particular, enhance
the utilisation of sources of renewable energy that
would otherwise be wasted.
We have engaged in a collaborative project to build
a pilot unit for fertiliser production from renewable
energy that will decarbonise fertiliser production,
which is responsible for a material proportion of
global greenhouse gas emissions.
In our production processes we adhere to the highest
standards of accreditation and have held ISO 14001
Environmental accreditation since 2009. We have
also held BS OHSAS 18001 Health and Safety
accreditation since 2009.
Social and community responsibilities
The Group encourages recycling and a care for
the environment in which we operate. We attempt
to recycle as much equipment as possible, either
by reselling research equipment for which we no
longer have use or by donating used computers
to schools and other projects.
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GOING
CONCERN
The Directors have prepared a cash flow forecast
(the “Forecast”) for the period ending 31 August 2018
(“The forecast period”). This forecast indicates that
the Company and Group would expect to remain
cash positive without the requirement for further
funding based on delivering existing pipeline, for
a period of at least 12 months from the date of
approval of these financial statements.
However, the forecast includes certain assumptions,
in particular in respect of the timing of contracted sales
and grant cash inflows. The timing of some receipts
depend upon actions outside of the control of the
Group and whilst the forecast has taken a prudent
approach to the timing of such receipts based on
historical data, this constitutes a material uncertainty.
The existence of a material uncertainty may cast
significant doubt about the Group’s ability to
continue as a going concern. Notwithstanding this
material uncertainty, the Directors have a reasonable
expectation that the Company and Group are a going
concern. The financial statements do not include the
adjustments that would result if the Group was unable
to continue as a going concern.
Approved by the Board and signed on its behalf by:
Dr. Simon Bourne
Director
Date: 24 August 2017
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MarkETIng aCTIVITIES
MARKETING
ACTIVITIES
HYDROGEN
RALLY
A Hydrogen Rally took place to the finishing line at
the CEME HRS from two locations, with journalists
and transport industry commentators, some of
whom became the first to make the 186 mile drive
from a wind hydrogen station in South Yorkshire
to the solar hydrogen station, demonstrating how
excess renewable energy can be used and stored
as hydrogen gas to refuel fuel cell electric vehicles
(FCEVs) in three minutes.
A second rally commenced at ITM Power plc’s
hydrogen station in Teddington, West London, crossing
central London to CEME and highlighting zero emission
driving across the capital’s low emission zone. In total
11 FCEVs took part, provided by automotive OEMs
Toyota, Hyundai and Symbio FCell Renault and vehicle
owners JCB, Anglo American, Johnson Matthey, Green
Tomato Cars and ITM Power plc.
HYDROGEN
FLEET USER
WORKSHOP
Following the Office for Low Emission Vehicles (OLEV)
announcement launching a £2m support scheme in
May 2016, ITM Power plc ran a series of hydrogen
workshops and Ride and Drive events. The workshops
were supported by Toyota, Hyundai, Arcola Energy,
Symbio FC and GreenTomatoCars. It offered fleet
operators the chance to learn more on Fuel Cell
Electric Vehicles and hydrogen refuelling.
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47
MarkETIng aCTIVITIES
HANNOVER
MESSE
24 – 28 April 2017
Now in the shows 70th year and attracting 225,000
visitors over the five days, the Hannover Messe was
another positive show for ITM Power plc. It received
the largest number of foreign visitors with China, the
Netherlands, India, and Poland, who were partner
country for 2017 being in the top percentage of visitors.
This year the Company exhibited a complete 2.2MW
PEM electrolyser system, which included the new MW
stack design as well as a smaller PEM electrolyser
system. Now in the 7th year of exhibiting, the stand
attracted the highest levels of interest to date with many
good leads which the Company will actively follow up.
The Company also gave a number of key presentations
during the show, including launching the 100MW
Electrolyser designs which highlighted the demand for
larger systems. Other presentations included a press
conference alongside BWM and the U.S Department
of Energy, a discussion on the International Partnership
for Hydrogen and Fuel Cells in the Economy panel,
a presentation on building a hydrogen refuelling
infrastructure in the UK and BIG HIT, Europe’s largest
integrated hydrogen system. All of the companies
presentations were very well attended and can be
viewed via the companies YouTube channel.
CLEAN
FUEL
HYDROGEN FUEL STATIONS
Hydrogen has the potential to become a clean and versatile
transport fuel for the future, and the Cobham hydrogen site
is one of the ways Shell is encouraging the use of alternative
fuels to contribute to the energy transition. This will provide
customers with hydrogen fuel cell electric vehicles the
ability to refuel simply and quickly, at one of the largest
petrol stations in the UK.
Matthew Tipper
future fuels at Shell, Vice President
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ClEan fuEl
SOLAR
HYDROGEN
STATION
The opening of the second HyFive hydrogen refuelling
station took place on 11th October 2016. The
station is located at The Centre for Engineering and
Manufacturing Excellence (CEME) site in Rainham.
The CEME campus is ideally located on the A13
one of the main East London arterial roads between
London City Airport and the M25, providing publically
accessible refuelling infrastructure to East London.
The CEME site has one of the largest arrays of photo
voltaic’s in the south of England, consisting of 717
panels designed to supply 115 kW’s, which provide
power to the station. This makes this station the first
of its kind in the UK.
The station was opened to the public by Bill Williams,
CEO of CEME and Prof Roger Putnam CBE, Chairman
of ITM Power plc. The opening was supported by
the automotive OEMs, who also presented and
participated in a Q&A session.
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ClEan fuEl
As London’s Centre for Engineering and
Manufacturing Excellence, CEME is very proud
to be able to offer a site for this hydrogen fuel
station and utilise our solar energy to make a fuel
for vehicles. It is perfectly located to offer a clean
hydrogen source for London and improve air
quality for London.
Bill Williams
CEME, CEO
This new facility demonstrates the growing
momentum in the development of a new hydrogen
fuel infrastructure in the UK. This is good news for
customers who are keen to adopt the new technology
and for the manufacturers of zero-emissions fuel cell
vehicles, such as our own Mirai saloon.
Paul Van der Burgh
Toyota (gb), President and Managing director
BOC is proud to continue to work with ITM Power
plc in the development of a hydrogen refuelling
network in the UK. This is the third deployment of
our innovative refuelling station technology with
ITM Power plc this year, with the installation at
CEME (Centre for Engineering and Manufacturing
Excellence) another milestone in making hydrogen
a truly accessible clean fuel in and around London.
Sue Graham Johnston
bOC uk, Ireland and africa, Managing director
IT IS PERFECTLY
LOCATED TO
OFFER A CLEAN
HYDROGEN SOURCE
FOR LONDON
AND IMPROVE
AIR QUALITY
FOR LONDON.
bill williams
CEME, CEO
5252
ClEan fuEl
ClEan fuEl
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
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53
ClEan fuEl
Arcola Energy is excited to have demonstrated the clean emission
“business as usual” journey across central London in a Symbio FCell
Kangoo. The route between ITM Power plc’s latest hydrogen refuelling
stations shows how commercial fleets can operate within and around
central London without compromise. This enables London and further
cities to meet their business, climate and air quality emissions and
presents a solution for improving air quality in direct competition
to the incumbent diesel powered vehicles.
Richard Kemp-Harper
arcola Energy, head of Innovation and business development
We are delighted to have another hydrogen fuel station open to support
our small fleet of hydrogen fuel cell electric vehicles. We have found the
stations easy to use and our customers really enjoy riding in a hydrogen
vehicle producing zero emissions.
Julia Thomas
green Tomato Cars, Managing director
We are extremely pleased to have launched the second of the
Company’s HyFive hydrogen refuelling stations in London providing
a link across the city for a range of hydrogen vehicles now available from
the auto OEMs. The hydrogen rally was a great way of demonstrating the
benefits of these vehicles for both longer commutes and throughout the
city. ITM Power plc is grateful for the co-operation of our HyFive partners
and for the funding support of FCHJU and OLEV.
Dr Graham Cooley
ITM Power plc, CEO
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ClEan fuEl
SHELL
HYDROGEN
STATION
Following the siting agreement which ITM
Power plc signed with Shell in 2015, the first
hydrogen station to be on a Shell forecourt
was opened in February 2017.
The hydrogen refuelling station is located at Cobham
services on the M25, the nation’s busiest refuelling
station. The station is ITM Power plc’s fourth public
hydrogen refuelling station to be opened in the UK.
It is the first of three hydrogen stations Shell plan to
open in the UK in 2017, all of which will be supplied
by ITM Power plc.
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ClEan fuEl
We welcome this new hydrogen fuelling station which
will be extremely useful for our two Mirai hydrogen
fuel cell private hire cars. The addition of a hydrogen
fuelling station south of London complements those
already in operation to the east and west of London,
boosting the capital’s hydrogen infrastructure. This
should encourage more companies to follow the
lead in adopting zero-emission hydrogen vehicles
which are good for people and for the environment.
Julia Thomas
green Tomato Cars, Managing director
We believe the journey to a low-carbon economy
requires a coordinated and collaborative approach
among organisations in the transport sector, including
providers of energy and transport vehicles, users
of transport vehicles, local authorities as well as
government. The Cobham retail site is a small but
significant first step toward developing infrastructure
needed for increased usage of hydrogen vehicles.
Sinead Lynch
Shell’s uk, Country Chair
While FCH JU project HyFive has already delivered
significant results and contributed to addressing
major EU challenges, we are very pleased to see
an important industry player joining the venture.
The opening of Shell’s first station in the UK occurs
one month after the Hydrogen Council announcement
at Davos, and reinforces the industrial commitment
towards decarbonisation.
Bart Biebuyck
fCh Ju, Executive director
ELECTROLYTIC
HYDROGEN IS
THE CLEANEST,
AND LOWEST
COST, RENEWABLE
FUEL AVAILABLE.
dr. graham Cooley
ITM Power plc, CEO
5656
ClEan fuEl
ClEan fuEl
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
57
57
ClEan fuEl
The opening of Shell’s first forecourt hydrogen refuelling station at
Cobham, the seventh hydrogen station in the country, is the result of
collaboration, cooperation and determination from government and
industry leaders to bring the benefits of sustainable ultra-low emission
transport to the UK. At Toyota, we are committed to playing a leading
role in environmental and technological advances in the automotive
industry, and this new station will help us to introduce more customers
to the benefits of our fuel cell vehicles, including our Mirai hydrogen
fuel cell car. We would like to congratulate the team involved on this
significant new project.
Paul Van der Burgh
Toyota (gb), President and Managing director
The opening of the hydrogen refuelling station at Shell Cobham
is a major milestone for the HyFive project and hydrogen refuelling
infrastructure in the UK. To have a hydrogen refuelling station at
a major service station by one of the busiest motorways in Europe
will provide further convenience to drivers of hydrogen fuel cell
cars, such as the Honda Clarity Fuel Cell.
Thomas Brachmann
honda r&d Europe (deutschland) gmbh,
automobile Powertrain and Material research Expert
ITM Power plc is pleased to partner with Shell to bring their first forecourt
hydrogen refuelling site to life. Electrolytic hydrogen is the cleanest,
and lowest cost, renewable fuel available for fuel cell electric vehicles.
We look forward to working with Shell to introduce additional hydrogen
stations on their forecourts in the UK in the near future.
Dr. Graham Cooley
ITM Power plc, CEO
58
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
ClEan fuEl
HYDROGEN FUEL
AGREEMENTS
ITM Power plc continue to attract companies who
are now adopting Fuel cell electric vehicles (FCEVs)
as part of their fleet.
Since signing its first hydrogen fuel agreement
with Toyota in 2015, the Company has agreements
in place with the following companies.
These agreements sees the price of hydrogen
to all customers using an ITM Power plc public
refuelling station set to £10/kg, which is the lowest
price hydrogen at any public refuelling station
in the UK.
EUROPEAN
HYDROGEN
REFUELLING
STATION
DEPLOYMENT
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
59
ClEan fuEl
A £35m project for the Hydrogen Mobility Europe 2
(H2ME2) programme funded by the Fuel Cells and
Hydrogen Joint Undertaking (FCHJU) under Horizon
2020 was launched in June 2016. ITM Power plc will
receive 5.06m from the project and will deploy three
new dual pressure Hydrogen Refuelling Station (HRS)
assets to expand the national refuelling network
in the UK.
Europe prepares to expand its hydrogen
refuelling infrastructure network and vehicle fleet.
An ambitious multi-country, multi-partner project
will demonstrate that hydrogen can support
Europe’s future transport demands.
DEPLOYMENT OF
1,195 HYDROGEN
VEHICLES, TREBLING
THE EXISTING
EUROPEAN FLEET.
60
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
ClEan fuEl
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
61
ClEan fuEl
PLANNING CONSENT
ITM Power plc has gained full planning permission at four sites comprising
Birmingham, Swindon and two sites in Sheffield. Additional sites have been
identified in London and around the M25; along the M1 Corridor including
Leeds; and along the M40 Corridor including Oxford and along the M4
including Bristol and Cardiff. The plans outlined have been put in place
prior to the UK Government’s Office of Low Emission Vehicles (OLEV)
announcing further grant incentives for hydrogen vehicles and
new refuelling infrastructure.
UK cities are now under increasing pressure to improve air quality.
Air pollution levels have reached “very high” or “high” in eight regions
across the UK and London has been issued a final warning by the EU.
We have made significant headway in planning further HRS deployments
on the M1, M4, M40 and particularly inside the M25 ahead of the
accelerating roll-out of commercial and passenger fuel cell electric
vehicles as a result of new air quality legislation.
Dr. Graham Cooley
ITM Power plc, CEO
ITM Power Open
ITM Power Planned
ITM Power Planning Consent
62
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
ClEan fuEl
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
63
EnErgy STOragE
ENERGY
STORAGE
These new EU directives are fundamentally important for
unlocking the potential of rapid response grid balancing using
electrolysis and for the deployment of Power-to-Gas energy
storage across Europe. The guarantee of origin scheme
also differentiates green hydrogen as a fuel for transport.
Dr. Simon Bourne
ITM Power plc, Chief Technology Officer
64
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
EnErgy STOragE
HYDEPLOY
In November 2016, ITM Power plc announced that it will
be supplying a 0.5MW electrolyser to a programme
to demonstrate the use of blended hydrogen in the
UK gas grid. The £6.8 million project, funded by
Ofgem is called HyDeploy and is led by National
Grid. It is a key enabling project which will establish
a framework for hydrogen gas-grid injection in the
UK and open up a new UK Power-to-Gas market.
The three year project will begin in 2017 and the
results will be used to inform a further public trial
of the use of hydrogen-blended natural gas in the
UK grid, with the intention of then rolling out the
use of hydrogen blends nationwide.
If the project is successful, this will enable hydrogen
to be blended with natural gas in gas networks across
the country. Potentially, the project could prevent
120 million tonnes of carbon reaching the
atmosphere by 2050.
The project will help towards the Government’s tough
‘decarbonisation’ targets. It has pledged to cut Britain’s
carbon dioxide emissions by 80% of 1990 levels by
2050. Heating accounts for one third of emissions.
Using Britain’s existing world-class gas network,
HyDeploy could pave the way for a clean, low carbon
gas grid, keeping homes warm and powering industry.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
65
EnErgy STOragE
THIS IS AN
EXTREMELY
EXCITING TIME
FOR THE ENERGY
INDUSTRY.
Martin alderson
northern gas networks, asset Management director
Ofgem’s decision to award National Grid £6.8m
recognises the important role for the UK’s world
class gas grid in delivering low carbon heat. We
believe introducing a hydrogen blend nationally
has the potential to save over 6 million tonnes
of carbon emissions every year.
David Parkin
national grid gas distribution,
director of network Strategy
Energy and sustainability is a key overarching
institutional priority for Keele University, and we
are delighted to be a partner in this important, highly
relevant and prestigious project. This collaborative
project tackles one of the major societal challenges
and has the potential to be highly impactful and lead
to a significant reduction in carbon emissions.
Professor Mark Ormerod
keele university, deputy Vice Chancellor
66
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
EnErgy STOragE
POWER-TO-GAS
ENERGY
STORAGE
The recent Winter Package of Directive proposals
from the EC includes energy storage involving the
conversion of electricity to another energy carrier,
such as hydrogen. Ongoing work by CEN/CENELEC
is investigating hydrogen/methane blends and
establishing admissible concentration levels for
hydrogen in natural gas grids across Europe. These
developments will enable Europe-wide deployment
of Power-to-Gas plant for injecting hydrogen into
the gas grid while offering balancing services to
the electricity grid.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
67
EnErgy STOragE
CENTRAL
CONTROL ROOM
ITM Power plc has recently established a state of the
art SCADA system based central control room in
Sheffield which enables each electrolyser deployment
and hydrogen refuelling station operations to be
monitored remotely from all across the globe.
Control room staff can monitor and analyse live
plant data to drive process improvements and help
our customers. The staff can also access and provide
the historical operational data required for external
bodies to help in setting up industry standards and
business development.
ITM POWER HAS
ABILITY TO MONITOR
ALL ELECTROLYSER
AND REFUELLING
STATIONS WHEREVER
THEY ARE IN
THE WORLD.
dr. Simon bourne
ITM Power plc, Chief Technology Officer
68
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
EnErgy STOragE
2017
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
69
69
ITM POWER | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017 | fInanCIalSTaTEMEnTS
fInanCIalSTaTEMEnTS
2017FINANCIAL
Year Ended 30 April 2017
STATEMENTS
70
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
fInanCIalSTaTEMEnTS
I WOULD LIKE TO
THANK THE STAFF
THIS YEAR FOR
THEIR CONTINUED
HARD WORK AS THE
COMPANY TAKES
ITS NEXT STEPS
AS A LEADING
TECHNOLOGY
SUPPLIER.
Prof. Roger Putnam
ITM Power, Chairman
72
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
dIrECTOrS’ rEPOrT
DIRECTORS’
REPORT
The Directors present their annual report and audited
financial statements on the affairs of ITM Power plc
(the “Company”) and its subsidiaries (the “Group”),
together with the financial statements and auditor’s
report, for the year ended 30 April 2017.
The Directors believe that the financial statements
are fair, balanced and understandable.
The following disclosures have been disclosed
in the Strategic Report and are cross-referenced
here: business review including KPIs, Principle risks
and uncertainties, and future prospects.
Research and development
During the year the Group incurred research
and development related costs of £2.023m
(2016 – £1.952m).
Dividends
The Directors do not recommend a dividend payment
for the year (2016 – £nil).
Capital structure
Details of the Group’s capital structure are provided
in notes 19 and 23 to the financial statements.
Directors
The following Directors served throughout the year
and subsequently, unless stated otherwise:
Sir R Bone
P Hargreaves
Dr. S Bourne
Prof. R Putnam
Dr. G Cooley
R Pendlebury
Lord R Freeman
Dr. R Smith
The Directors who served during the year and their interests in the shares of ITM Power plc
(including those of their spouse or civil partner and children under the age of 18) were as follows.
Ordinary shares of 5p each
at 30 april 2017 and as
at 24 august 2017
Ordinary shares of 5p each
at 30 april 2016
No
67,000
326,830
987,726
5,000
No
67,000
326,830
811,256
5,000
22,908,643
22,908,643
12,269
27,129
80,886
12,261
27,129
80,886
Sir R Bone
Dr S Bourne
Dr G Cooley
Lord R Freeman
P Hargreaves
R Pendlebury
Prof. R Putnam
Dr R Smith
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
73
dIrECTOrS’ rEPOrT
Charitable and political contributions
During the year, the Group made no charitable
or political donations (2016 – £Nil).
Substantial shareholdings
On 30 April 2017 the Company had been notified,
in accordance with chapter 5 of the Disclosure and
Transparency Rules, of the following voting rights
as a shareholder of the Company.
Directors’ indemnities
The Company has made qualifying third party
indemnity provisions for the benefit of its Directors,
which were made during a preceding year and
remain in force at the date of this report.
Supplier payment policy
The Group’s policy is to settle terms of payment with
suppliers when agreeing the terms of each transaction,
ensure that suppliers are made aware of the terms
of payment and abide by the terms of payment.
Trade creditors of the Group at 30 April 2017 were
equivalent to 105 (2016 – 34) days’ purchases, based
on the average daily amount invoiced by suppliers
during the year. This is a reflection of a large amount
of purchase invoices being invoiced towards year end
and in particular the impact of one high value project
nearing completion at year end. The Group did not
change its’ policy on creditor payments in the year.
However, due to the cash position of the Company
there was some working capital management in
place with existing creditors which has led to a
higher creditor days balance.
name of holder
JCB Research
Allianz Global Investors
P Hargreaves
Quilter Cheviot
Herald Investment Management
D J Highgate
Percentage of voting rights
and issued share capital
no. of
ordinary shares
12.4%
11.0%
9.1%
5.1%
3.6%
3.1%
30,970,365
27,499,989
22,908,643*
12,680,796
7,851,843
9,059,899
* of this total 3,439,000 are held by a discretionary trust on behalf of the shareholder.
74
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
dIrECTOrS’ rEPOrT
auditor
Each of the persons who is a Director at the date
of approval of this annual report confirms that:
• so far as the Director is aware, there is no relevant
audit information of which the Company’s auditor
is unaware; and
• the Director has taken all the steps that he ought to
have taken as a Director to make himself aware of
any relevant audit information and to establish that
the Company’s auditor is aware of that information.
This confirmation is given and should be interpreted
in accordance with the provisions of s418 of the
Companies Act 2006.
Deloitte LLP have expressed their willingness
to continue in office as auditor.
Approved by the Board and signed on its behalf by:
Dr. Simon Bourne
Director
Date: 24 August 2017
Disabled employees
Applications for employment by disabled persons
are always fully considered, bearing in mind the
aptitudes of the applicant concerned. In the event
of members of staff becoming disabled every effort
is made to ensure that their employment with the
Group continues and that appropriate training is
arranged. It is the policy of the Group that the training,
career development and promotion of disabled
persons should, as far as possible, be identical
to that of other employees.
Employee consultation
The Group places considerable value on the
involvement of its employees and has continued
to keep them informed on matters affecting them
as employees and on the various factors affecting
the performance of the Group. This is achieved
through formal and informal meetings. Employee
representatives are consulted regularly on a
wide range of matters affecting their current
and future interests.
key employment policies
We have consistently sought to recruit and retain the
best employees in our sector and this has contributed
to the advancement and successes of the products
we manufacture. We also recognise the importance
of employee retention and we offer our staff benefits
including childcare vouchers and a cycle purchase
scheme as well as formal training relevant to the
employee’s role. We believe this maintains high
levels of employee satisfaction and motivation.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
75
COrPOraTE gOVErnanCE rEPOrT
CORPORATE
GOVERNANCE
REPORT
Principles of corporate governance
ITM Power plc (the “Company”) is committed to high
standards of Corporate Governance. The Board is
accountable to the Company’s shareholders for good
governance in its management of the affairs of the
Group. The Directors acknowledge the importance
of the principles of corporate governance contained
in the UK Corporate Governance Code. As an AIM
quoted company, ITM Power plc is not obliged to
comply with the full requirements of the UK Corporate
Governance Code; however, the Board intends to
comply with its main provisions as far as reasonably
practicable having regard to the size of the Group.
The Board recognises the importance to shareholders
of Corporate Governance disclosure and to this end
the Company has developed a set of disclosures that
it feels are consistent with the Group’s size and the
constitution of the Board and intends to continue
to develop these disclosures as the Group grows.
The Directors intend to comply with Rule 21 of
the AIM Rules relating to Directors’ dealings as
applicable to AIM companies and will also take
all reasonable steps to ensure compliance by
the Group’s applicable employees.
The Board
The Board currently comprises the following members
who are also members of the following committees
of the Board:
director
role
remuneration
Committee
audit
Committee
nominations
Committee
Executive
Committee
Manufacturing
& Engineering
Committee
Dr S Bourne
Dr G Cooley
Dr R Smith
Chief Technology
Officer
Chief Executive
Officer
Executive
Director
The Rt Hon
Lord R Freeman
Non-Executive
Director
Mr P Hargreaves
Prof R Putnam
Sir R Bone
Mr R Pendlebury
Non-Executive
Director
Non-Executive
Chairman
Non-Executive
Director
Non-Executive
Director
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
76
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
COrPOraTE gOVErnanCE rEPOrT
Balance of the Board
ITM Power plc has a separate Chairman and Chief
Executive Officer, each having his own separate
responsibilities. The Chairman is responsible for
the effective working of the Board and the Chief
Executive Officer is responsible for all operational
matters and the financial performance of the Group.
The Board is balanced, both numerically and in
experience, with the intention that no individual or
small group of individuals should be able to dominate
decision-making. The Board has not appointed a
Senior Independent Director. However, any of the
Non-Executive Directors are available on request as
a conduit of communication to the Board in the event
that the Chairman and/or the Chief Executive Officer
are not appropriate conduits for shareholder
concerns and issues.
Matters reserved to the Board’s attention
The Board has a formal schedule of matters reserved
for its decision covering the following areas:
• Management structure and appointments;
• Strategic/Policy considerations;
• Material transactions;
• Finance; and
• General governance and capital matters.
Committees
The Board operates through clearly identified Board
committees to which it delegates certain powers.
These are the Remuneration Committee, the Audit
Committee, the Nominations Committee and the
Executive Committee. They are properly authorised
under the constitution of the Company to take
decisions and act on behalf of the Board within the
guidelines and delegations laid down by the Board.
The Board is kept fully informed of the work of these
committees and each committee has access and
support from the Company Secretary. Any issues
requiring resolution are referred to the full Board.
A summary of the operations of these Committees
is set out on the right.
The Remuneration Committee’s role is to determine
and recommend to the Board the terms and conditions
of service, the remuneration and grant of options to
Executive Directors under the EMI scheme adopted
by the Company.
The Audit Committee’s primary responsibilities are
to monitor the quality of internal control, ensuring that
the financial performance of the Company is properly
measured and reported on and for reviewing reports
from the Company’s auditor relating to its accounting
and internal controls in all cases having due regard
to the interests of the shareholders.
The Nominations Committee leads the process for
Board appointments. It vets and presents to the Board
potential new Directors, particularly Non-Executives.
All new appointees undergo a rigorous nomination
process before the Board agrees on their appointment.
The Executive Committee comprises Prof. Roger
Putnam as Chairman, Dr Graham Cooley (CEO),
Dr Rachel Smith and Dr Simon Bourne (CTO). The
Committee regularly meets to consider business
development, management issues and the financial
performance of the Company.
The Manufacturing and Engineering committee
comprises Robert Pendlebury, Simon Bourne and
technical staff from departments within the Company.
The primary responsibilities of the committee is
to review the Company’s product portfolio and
development plans and assess the cost composition
of the product portfolio and the suitability of existing
process to satisfy anticipated market developments.
A copy of the Terms of Reference for these committees
and the terms of appointment of each of the Non-
Executive Directors can be obtained by contacting
the Company Secretary at the Company’s Head Office.
In addition, the Board receives reports and
recommendations from time to time on matters,
which it considers significant to the Group.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
77
COrPOraTE gOVErnanCE rEPOrT
Board meetings
The Board scheduled 3 regular meetings in the year ended 30 April 2017 and two additional meetings
were convened when required. The table below shows the attendance of Directors at regular Board
meetings and at meetings of the Committees during the year.
The Board is supplied in a timely manner with information in a form and of a quality appropriate
to enable it to discharge its duties.
board
Meetings
remuneration
Committee
audit
Committee
Manufacturing
and Engineering
Committee
no. of meetings held
non-Executive directors
The Rt Hon Lord R Freeman
Mr P Hargreaves
Prof. R Putnam (Chairman)
Sir R Bone
Mr R Pendlebury
Executive directors
Dr S Bourne
Dr R Smith
Dr G Cooley
5
5
4
5
4
5
5
5
5
1
1
1
1
1
–
–
–
–
2
2
–
2
2
–
–
–
–
1
–
–
–
–
1
1
–
–
Board performance appraisal
With the full support of the Board, the Chairman
leads an evaluation of the performance of the Board
and its Committees on a yearly basis. The last review
concluded that the Board and its Committee are
currently effective and each Director continues
to demonstrate commitment to their role.
Re-election of Directors
New Directors are subject to election at the first
Annual General Meeting of the Company following
their appointment. In addition, all Directors who
have been in office for three years or more since
their election or last re-election are required to
submit themselves for re-election at the Annual
General Meeting of the Company. At each Annual
General Meeting of the Company all those Non-
Executive Directors who have been in office for
nine years or more since the date on which they
were originally elected as a Non-Executive Director
of the Company are required to retire from office,
but may stand for re-appointment.
78
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
COrPOraTE gOVErnanCE rEPOrT
Board independence
The Board recognises that Peter Hargreaves’
shareholding is a factor which, under the UK
Corporate Governance Code, may appear to impair
his independence. However, the Board considers
all the Non-Executive Directors to be independent in
character and judgement. Peter Hargreaves is viewed
as independent as he is not personally dependent
on the success of ITM Power plc for income, and is
therefore considered independent. The Non-Executive
Directors have provided excellent independent advice
and challenge throughout the year. In concluding that
all its Non-Executive Directors are independent the
Company considered, inter-alia, the fact that all of
the Non-Executive Directors are Directors of other
corporations and are not reliant on any shares or
share options they hold in, or income they receive
from, ITM Power plc.
Internal control and risk management
The Board is responsible for the Group’s system
of internal control. Such a system can only be
designed to manage rather than eliminate the risk
of failure to achieve business objectives and can
provide only reasonable, and not absolute, assurance
against material misstatement or loss. Whilst it
would not be practical for the Group, given its size,
to maintain a dedicated Internal Audit function the
Group maintains an open culture where control
weaknesses can be reported directly to senior
management at any point. The Group also has
in place the appropriate culture to deal with the
identification, assessment and management
of major business risks through the regular
communication of senior management.
Relations with shareholders
The Company values the views of shareholders
and recognises their interests in the Group’s
strategy and performance.
Overall responsibility for ensuring that there is
effective communication with investors and that
the Board understands the views of major shareholders
rests with the Chief Executive Officer, who makes
himself available to meet shareholders for this
purpose. Press coverage packs and analyst notes
are made available to the Board at each regular
Board meeting. The Chief Executive Officer is often
accompanied at investor presentations by either the
Chairman or the Chief Financial Officer. Shareholder
communication is mainly co-ordinated by the
Company’s Corporate Communications Consultants,
Tavistock Communications Limited. ITM Power plc
is committed to maintaining a good dialogue with
shareholders through proactively organising meetings
and presentations with fund managers, retail brokers
and analysts, as well as responding to a wide range
of enquiries. The Company also recognises the
importance of communicating appropriately any
significant company developments, this is done via
the Stock Exchange Regulatory News Service that
can be accessed through the Company’s new web site.
The Company reports to shareholders twice a
year. The report and accounts are available on
the Company’s website: www.itm-power.com.
All shareholders are encouraged to attend the
Company’s Annual General Meeting, at which the
Chairman and CEO give an account of the progress
of the business over the year and provides the
opportunity for shareholders to ask questions.
The Board attends the meeting and is available
to answer questions from shareholders present.
In all communications and events, care is taken to
ensure that no price sensitive information is released
and that any price sensitive information is released
to all shareholders at the same time in accordance
with AIM Rules.
Auditor independence
The Company seeks to ensure the independence
of its Auditor by limiting the non-audit work it performs.
The Company uses a range of advisors to give
specialist advice in relevant areas.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
79
dIrECTOrS’ rESPOnSIbIlITIES STaTEMEnT
DIRECTORS’
RESPONSIBILITIES
STATEMENT
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and enable them to
ensure that the financial statements comply with
the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence
for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance
and integrity of the corporate and financial information
included on the Company’s website. Legislation
in the United Kingdom governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions.
The Directors are responsible for preparing the
Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors are required to prepare the Group financial
statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union and have also chosen to prepare
the parent company financial statements under
IFRSs as adopted by the EU. Under company law
the Directors must not approve the accounts unless
they are satisfied that they give a true and fair view
of the state of affairs of the Company and of the profit
or loss of the Company for that period. In preparing
these financial statements, International Accounting
Standard 1 requires that Directors:
• properly select and apply accounting policies;
• present information, including accounting policies,
in a manner that provides relevant, reliable,
comparable and understandable information;
• provide additional disclosures when compliance
with the specific requirements in IFRSs are
insufficient to enable users to understand the
impact of particular transactions, other events
and conditions on the entity’s financial position
and financial performance; and
• make an assessment of the Company’s ability
to continue as a going concern.
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ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
dIrECTOrS’ rESPOnSIbIlITIES STaTEMEnT
responsibility statement
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance
with International Financial Reporting Standards
as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial
position and profit or loss of the Company and
the undertakings included in the consolidation
taken as a whole;
• the Strategic Report includes a fair review of the
development and performance of the business
and the position of the Company and the
undertakings included in the consolidation taken
as a whole, together with a description of the
principal risks and uncertainties that they face; and
• the Annual Report and financial statements,
taken as a whole, are fair, balanced and
understandable and provide the information
necessary for shareholders to assess the
Company’s performance, business model
and strategy.
This responsibility statement was approved by
the Board of Directors on 24 August 2017 and
is signed on its behalf by:
Dr. Simon Bourne
Chief Technology Officer
Date: 24 August 2017
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
81
IndEPEndEnT audITOr’S rEPOrT TO ThE MEMbErS Of ITM POwEr PlC
INDEPENDENT AUDITOR’S
REPORT TO THE MEMBERS
OF ITM POWER PLC
We have audited the financial statements of ITM Power
plc for the year ended 30 April 2017 which comprise
consolidated income statement, consolidated and
company statements of changes in equity, consolidated
and company balance sheets, the consolidated and
the related notes 1 to 34. The financial reporting
framework that has been applied in the preparation of
the Group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as
adopted by the European Union. The financial reporting
framework that has been applied in the preparation of
the parent company financial statements is applicable
law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice),
including FRS 101 “Reduced Disclosure Framework”.
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the
Company and the Company’s members as a body,
for our audit work, for this report, or for the opinions
we have formed.
respective responsibilities of directors
and auditor
As explained more fully in the Directors’
Responsibilities Statement, the Directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a
true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in
accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the
amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the
financial statements are free from material
misstatement, whether caused by fraud or error.
This includes an assessment of: whether the
accounting policies are appropriate to the Group’s
and the parent company’s circumstances and have
been consistently applied and adequately disclosed;
the reasonableness of significant accounting estimates
made by the Directors; and the overall presentation
of the financial statements. In addition, we read all
the financial and non-financial information in the
annual report to identify material inconsistencies with
the audited financial statements and to identify any
information that is apparently materially incorrect
based on, or materially inconsistent with, the
knowledge acquired by us in the course of
performing the audit. If we become aware of any
apparent material misstatements or inconsistencies
we consider the implications for our report.
82
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
IndEPEndEnT audITOr’S rEPOrT TO ThE MEMbErS Of ITM POwEr PlC
Opinion on financial statements
In our opinion:
• the financial statements give a true and fair
view of the state of the Group’s and of the parent
company’s affairs as at 30 April 2017 and of the
Group’s and the parent company’s loss for the
year then ended;
• the Group financial statements have been properly
prepared in accordance with IFRSs as adopted
by the European Union;
• the parent company financial statements have
been properly prepared in accordance with
United Kingdom Generally Accepted
Accounting Practice; and
• the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
Emphasis of matter – going concern
In forming our opinion on the financial statements,
which is not modified, we have considered the
adequacy of the disclosure made in note 3 to the
financial statements concerning the Company’s
ability to continue as a going concern. The group
incurred a loss after tax of £3,780,000 for the year
ended 30 April 2017 (loss of £4,000,000 for the year
ended 30 April 2016). These conditions, along with
the other matters explained in note 3 to the financial
statements, indicate the existence of a material
uncertainty which may cast significant doubt about
the Company’s ability to continue as a going
concern. The financial statements do not include
the adjustments that would result if the Company
was unable to continue as a going concern
Separate opinion in relation to IfrSs
as issued by the IaSb
As explained in note 3 to the Group financial
statements, the Group in addition to applying
IFRSs as adopted by the European Union, has
also applied IFRSs as issued by the International
Accounting Standards Board (IASB).
In our opinion the Group financial statements
comply with IFRSs as issued by the IASB.
Opinion on other matter prescribed
by the companies act 2006
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the Strategic Report and
the Directors’ Report for the financial year for which
the financial statements are prepared is consistent
with the financial statements; and
• the Strategic Report and the Directors’ Report
has been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding
of the Company and its environment obtained in
the course of the audit, we have not identified any
material misstatements in the Strategic Report and
the Directors’ Report.
Matters on which we are required
to report by exception
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us
to report to you if, in our opinion:
• adequate accounting records have not been kept
by the parent company, or returns adequate for
our audit have not been received from branches
not visited by us; or
• the parent company financial statements are
not in agreement with the accounting records
and returns; or
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information
and explanations we require for our audit.
Matthew Hughes BSc (Hons) ACA
(Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Leeds, United Kingdom
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
83
COnSOlIdaTEd InCOME STaTEMEnT yEar EndEd 30 aPrIl 2017
CONSOLIDATED INCOME STATEMENT
YEAR ENDED 30 APRIL 2017
revenue
Cost of Sales
gross profit
Operating costs
Research and development
Prototype production and engineering
Sales and marketing
Administration
Other operating income
Grant income
loss from operations
Investment revenues
loss before tax
Tax
loss for the year
Other total comprehensive income:
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences on foreign operations
Net other total comprehensive income
Total comprehensive loss for the year
loss per share
Basic and diluted
note
5
2017
£’000s
2,415
(1,757)
658
2,023
(2,615)
(1,528)
(2,202)
2016
£’000s
1,930
(1,483)
447
(1,952)
(2,954)
(1,364)
(1,724)
5
6
–
8
–
4,160
3,188
(3,550)
(4,359)
–
–
(3,550)
(4,359)
(230)
359
(3,780)
(4,000)
(250)
(250)
(62)
(62)
(4,030)
(4,062)
9
(1.7p)
(2.0p)
All results presented above are derived from continuing operations and are attributable to owners of the Company.
84
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
COnSOlIdaTEd STaTEMEnT Of ChangES In EquITy yEar EndEd 30 aPrIl 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
YEAR ENDED 30 APRIL 2017
Called-
up share
capital
Share
premium
account
notes
19
9
19 19
£’000s
8,905
1,940
£’000s
54,738
3,413
–
–
–
–
–
–
Merger
reserve
£’000s
(1,973)
foreign
Exchange
reserve
retained
loss
£’000s
£’000s
116
(51,442)
Total
equity
£’000s
10,344
5,353
–
–
–
–
–
–
–
(4,000)
(4,000)
(62)
–
(62)
(62)
(4,000)
(4,062)
19
10,845
58,151
(1,973)
54
(55,442)
11,635
19
9
19
1,686
3,779
–
–
–
–
–
–
–
–
–
–
–
–
–
5,465
(3,780)
(3,780)
(250)
–
(250)
(250)
(3,780)
(4,030)
At 1 May 2015
Issue of shares
Loss for the year
Other
comprehensive
income for the year
Total comprehensive
income for the year
at 30 april 2016/
1 May 2016
Issue of shares
Loss for the year
Other
comprehensive
income for the year
Total comprehensive
income for the year
at 30 april 2017
19
12,531
61,930
(1,973)
(196)
(59,222)
13,070
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
85
COnSOlIdaTEd balanCE ShEET yEar EndEd 30 aPrIl 2017
CONSOLIDATED BALANCE SHEET
YEAR ENDED 30 APRIL 2017
non-current assets
Intangible assets
Property, plant and equipment
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Restricted cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
net current assets
net assets
Equity
Called-up share capital
Share premium account
Merger reserve
Foreign exchange reserve
Retained loss
Total equity
note
11
10
13
15
16
16
17
18
19
19
2017
£’000s
380
4,519
4,899
760
11,082
1,558
1,446
14,846
2016
£’000s
252
3,024
3,276
291
6,487
1,207
2,129
10,114
(6,666)
(1,755)
(9)
–
(6,675)
(1,755)
8,171
8,359
13,070
11,635
12,531
61,930
(1,973)
(196)
(59,222)
(13,070)
10,845
58,151
(1,973)
54
(55,442)
11,635
The financial statements of ITM Power plc, registered number 05059407, were approved by the Board of Directors
and authorised for issue on 24 August 2017.
Signed on behalf of the Board of Directors
Dr. Simon Bourne
Director
86
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
COnSOlIdaTEd CaSh flOw STaTEMEnTS yEar EndEd 30 aPrIl 2017
CONSOLIDATED CASH FLOW STATEMENTS
YEAR ENDED 30 APRIL 2017
net cash used in operating activities
Investing activities
Purchases of property, plant and equipment
Capital Grants received against purchases
of property plant and equipment
Proceeds on disposal of property, plant and equipment
Payments for intangible assets
net cash (used in)/from investing activities
financing activities
Issue of ordinary share capital
Costs associated with fund raise
net cash from financing activities
decrease/Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of year
note
20
2017
£’000s
(5,048)
2016
£’000s
(7,098)
(3,293)
(3,315)
2,646
4
(151)
(794)
5,732
(267)
5,465
(377)
3,336
45
3,004
2,148
–
(252)
(1,419)
5,819
(466)
5,353
(3,164)
6,576
(76)
3,336
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
87
nOTES TO ThE COnSOlIdaTEd fInanCIal STaTEMEnTS yEar EndEd 30 aPrIl 2017
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
YEAR ENDED 30 APRIL 2017
1. GENERAL INFORMATION
ITM Power plc is a company incorporated in England
and Wales under the Companies Act 2006. The
registered office is at 22 Atlas Way, Sheffield,
South Yorkshire S4 7QQ. The nature of the Group’s
operations and its principal activities are disclosed
in the Directors’ Report.
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.
2. ADOPTION OF NEW
AND REVISED INTERNATIONAL
FINANCIAL REPORTING
amendments to IfrSs that are
mandatorily effective for the current year
In the current year, the Group has applied a
number of 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 2016.
Their adoption has not had any material impact
on the disclosures or on the amounts reported
in these financial statements.
amendments to IaS 16 and IaS 38
Clarification of acceptable Methods
of depreciation and amortisation
The Group has adopted the amendments to IAS
16 and IAS 38 Clarification of Acceptable Methods
of Depreciation and Amortisation for the first time
in the current year. The amendments to IAS 16
prohibit entities from using a revenue-based
depreciation method for items of property, plant
and equipment. The amendments to IAS 38
introduce a rebuttable presumption that revenue
is not an appropriate basis for amortisation of an
intangible asset. This presumption can only be
rebutted in the following two limited circumstances:
a. when the intangible asset is expressed
as a measure of revenue; or
b. when it can be demonstrated that revenue
and consumption of the economic benefits
of the intangible asset are highly correlated.
As the Group already uses the straight-line method
for depreciation and amortisation for its property,
plant and equipment and intangible assets,
respectively, the adoption of these amendments
has had no impact on the Group’s consolidated
financial statements.
88
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
nOTES TO ThE COnSOlIdaTEd fInanCIal STaTEMEnTS yEar EndEd 30 aPrIl 2017
amendments to IaS 27 Equity Method
in Separate financial Statements
The Group has adopted the amendments to IAS 27
Equity Method in Separate Financial Statements for
the first time in the current year. The amendments
focus on separate financial statements and allow
the use of the equity method in such statements.
Specifically, the amendments allow an entity to
account for investments in subsidiaries, joint ventures
and associates in its separate financial statements:
a. at cost,
b.
in accordance with IFRS 9 (or IAS 39 for
entities that have not yet adopted IFRS 9), or
c. using the equity method as described in IAS 28
Investments in Associates and Joint Ventures.
The same accounting must be applied
to each category of investments.
The amendments also clarify that when a parent
ceases to be an investment entity, or becomes an
investment entity, it should account for the change
from the date when the change in status occurs.
The adoption of the amendments has had no impact
on the Company’s separate financial statements as
the Company accounts for investments in subsidiaries
and associates at cost and is not an investment entity.
annual improvements to IfrSs 2012-2014 Cycle
The Group has adopted the amendments to IFRSs
included in the Annual Improvements to IFRSs 2012-
2014 Cycle for the first time in the current year.
The amendments to IFRS 5 introduce specific
guidance in IFRS 5 for when an entity reclassifies
an asset (or disposal group) from held for sale to
held for distribution to owners (or vice versa). The
amendments clarify that such a change should be
considered as a continuation of the original plan of
disposal and hence requirements set out in IFRS 5
regarding the change of sale plan do not apply. The
amendments also clarifies the guidance for when
held-for-distribution accounting is discontinued.
The amendments to IFRS 7 provide additional
guidance to clarify whether a servicing contract
is continuing involvement in a transferred asset
for the purpose of the disclosures required in
relation to transferred assets.
The amendments to IAS 19 clarify that the rate used to
discount post-employment benefit obligations should
be determined by reference to market yields at the
end of the reporting period on high quality corporate
bonds. The assessment of the depth of a market for
high qualify corporate bonds should be at the currency
level (i.e. the same currency as the benefits are to be
paid). For currencies for which there is no deep market
in such high quality corporate bonds, the market yields
at the end of the reporting period on government bonds
denominated in that currency should be used instead.
The adoption of these amendments has had no effect
on the Group’s consolidated financial statements.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
89
nOTES TO ThE COnSOlIdaTEd fInanCIal STaTEMEnTS yEar EndEd 30 aPrIl 2017
new and revised IfrSs in issue
but not yet effective
At the date of authorisation of these financial
statements, the Group has not applied the following
new and revised IFRSs that have been issued but
are not yet effective and had not yet been adopted
by the EU:
IFRS 9
IFRS 15
Financial Instruments
Revenue from Contracts
with Customers
Leases
IFRS 16
IFRS 2 (amendments) Classification and
Measurement of
Share-based Payment
Transactions
Disclosure Initiative
IAS 7 (amendments)
IAS 12 (amendments) Recognition of Deferred Tax
Assets for Unrealised Losses
Sale or Contribution of Assets
Between an Investor and its
Associate or Joint Venture
IFRS 10 and IAS 28
(amendments)
3. SIGNIFICANT
ACCOUNTING POLICIES
basis of accounting
The financial statements have been prepared in
accordance with International Financial Reporting
Standards (IFRSs). The financial statements have
also been prepared in accordance with IFRSs
adopted by the European Union and therefore the
Group financial statements comply with Article 4
of the EU IAS Regulation.
The financial statements have been prepared on
the historical cost basis. Historical cost is generally
based on the fair value of the consideration given
in exchange for goods and services.
basis of consolidation
The consolidated financial statements incorporate
the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made
up to 30 April each year. Control is achieved when
the Company:
The Directors do not expect that the adoption of the
Standards listed above will have a material impact on
the financial statements of the Group in future periods,
except as noted below:
• has the power over the investee;
• is exposed, or has rights, to variable return
from its involvement with the investee; and
• has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls
an investee if facts and circumstances indicate that
there are changes to one or more of the three
elements of control listed above.
• IFRS 9 will impact both the measurement
and disclosures of financial instruments;
• IFRS 15 may have an impact on revenue
recognition and related disclosures; and
• IFRS 16 will impact on the reported assets,
liabilities, income statement and cash flows
of the Group. Furthermore, extensive disclosures
will be required by IFRS 16.
Beyond the information above, it is not practicable to
provide a reasonable estimate of the effect of these
standards until a detailed review has been completed.
90
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
nOTES TO ThE COnSOlIdaTEd fInanCIal STaTEMEnTS yEar EndEd 30 aPrIl 2017
When the Company has less than a majority of
the voting rights of an investee, it considers that
it has power over the investee when the voting
rights are sufficient to give it the practical ability
to direct the relevant activities of the investee
unilaterally. The Company considers all relevant
facts and circumstances in assessing whether
or not the Company’s voting rights in an investee
are sufficient to give it power, including:
• the size of the Company’s holding of voting
rights relative to the size and dispersion of
holdings of the other vote holders;
• potential voting rights held by the Company,
other vote holders or other parties;
• rights arising from other contractual
arrangements; and
• any additional facts and circumstances that
indicate that the Company has, or does not
have, the current ability to direct the relevant
activities at the time that decisions need to
be made, including voting patterns at previous
shareholders’ meetings.
Consolidation of a subsidiary begins when the
Company obtains control over the subsidiary and
ceases when the Company loses control of the
subsidiary. Specifically, the results of subsidiaries
acquired or disposed of during the year are included
in the consolidated income statement from the date
the Company gains control until the date when the
Company ceases to control the subsidiary.
Profit or loss and each component of other
comprehensive income are attributed to the owners
of the Company and to the non-controlling interests.
Total comprehensive income of the subsidiaries is
attributed to the owners of the Company and to the
non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
Where necessary, adjustments are made to the
financial statements of subsidiaries to bring the
accounting policies used into line with the Group’s
accounting policies.
All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions
between the members of the Group are eliminated
on consolidation.
The consolidated financial statements incorporate
the financial statements of the Company and entities
controlled by the Company (its subsidiaries) made
up to 30 April each year. Control is achieved where
the Company has the power to govern the financial
and operating policies of an investee entity so as to
obtain benefits from its activities.
going concern
The Directors have prepared a cash flow forecast
(the “Forecast”) for the period ending 31 August 2018
(“The forecast period”). This forecast indicates that
the Company and group would expect to remain cash
positive without the requirement for further funding
based on delivering existing pipeline, for a period of
at least 12 months from the date of approval of these
financial statements.
However, the forecast includes certain assumptions,
in particular in respect of the timing of contracted sales
and grant cash inflows. The timing of some receipts
depend upon actions outside of the control of the
Company and whilst the forecast has taken a prudent
approach to the timing of such receipts based on
historical data, this constitutes a material uncertainty.
The existence of a material uncertainty may cast
significant doubt about the Company’s ability to
continue as a going concern. Notwithstanding this
material uncertainty, the Directors have a reasonable
expectation that the Company and group are a going
concern. The financial statements do not include the
adjustments that would result if the Company was
unable to continue as a going concern.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
91
nOTES TO ThE COnSOlIdaTEd fInanCIal STaTEMEnTS yEar EndEd 30 aPrIl 2017
revenue recognition
Revenue is measured at the fair value of the
consideration received or receivable and represents
amounts receivable for goods and services provided
in the normal course of business, net of discounts,
VAT and other sales-related taxes.
Sale of goods
Revenue from the sale of goods is recognised
when all the following conditions are satisfied:
• the Group has transferred to the buyer the
significant risks and rewards of ownership
of the goods;
• the Group retains neither continuing managerial
involvement to the degree usually associated with
ownership nor effective control over the goods sold;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated
with the transaction will flow to the entity; and
• the costs incurred or to be incurred in respect
of the transaction can be measured reliably.
rendering of services
Revenue from a contract to provide services is
recognised by reference to the stage of completion
of the contract. The stage of completion of the
contract is determined as follows:
• installation fees are recognised by reference
to the stage of completion of the installation,
determined as the proportion of the total time
expected to install that has elapsed at the
balance sheet date;
• servicing fees included in the price of products
sold are recognised by reference to the proportion
of the total cost of providing the service for the
product sold, taking into account historical trends
in the number of services actually provided on
past goods sold; and
• revenue from time and material contracts is
recognised at the contractual rates as labour
hours are delivered and direct expenses incurred.
Construction contracts
When the outcome of a construction contract
can be estimated reliably, revenue and costs are
recognised by reference to the stage of completion
of the contract activity at the balance sheet date.
This is normally measured by the proportion that
contract costs incurred for work performed to date
bear to the estimated total contract costs, except
where this would not be representative of the stage
of completion. Variations in contract work, claims
and incentive payments are included to the extent
that the amount can be measured reliably and its
receipt is considered probable.
Where the outcome of a construction contract
cannot be estimated reliably, contract revenue is
recognised to the extent of contract costs incurred
where it is probable they will be recoverable. Contract
costs are recognised as expenses in the period in
which they are incurred.
When it is probable that total contract costs will
exceed total contract revenue, the expected loss
is recognised as an expense immediately.
When contract costs incurred to date plus recognised
profits less recognised losses exceed progress billings,
the surplus is shown as amounts due from customers
for contract work. For contracts where progress billings
exceed contract costs incurred to date plus recognised
profits less recognised losses, the surplus is shown
as the amounts due to customers for contract work.
Amounts received before the related work is performed
are included in the consolidated balance sheet, as
a liability, as advances received. Amounts billed for
work performed but not yet paid by the customer are
included in the consolidated balance sheet under
trade and other receivables.
grants
Government and other grants are included in other
operating income in the period that the expenditure
to which they relate is incurred, unless relating to
property, plant and equipment.
Government and other grants relating to property,
plant and equipment are netted against the cost
of the assets acquired.
92
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
nOTES TO ThE COnSOlIdaTEd fInanCIal STaTEMEnTS yEar EndEd 30 aPrIl 2017
leasing
Rentals payable under operating leases are charged
to the income statement on a straight-line basis over
the term of the relevant lease.
foreign currencies
The individual financial statements of each group
company are presented in the currency of the
primary economic environment in which it operates
(its functional currency). For the purpose of the
consolidated financial statements, the results and
financial position of each group company are
expressed in pounds sterling, which is the functional
currency of the Company, and the presentation
currency for the consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the
entity’s functional currency (foreign currencies) are
recognised at the rates of exchange prevailing on the
dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried
at fair value that are denominated in foreign currencies
are translated at the rates prevailing at the date when
the fair value was determined. Non-monetary items
that are measured in terms of historical cost in a
foreign currency are not retranslated.
Exchange differences are recognised in profit or
loss in the period in which they arise except for:
• exchange differences on foreign currency
borrowings relating to assets under construction
for future productive use, which are included in
the cost of those assets when they are regarded
as an adjustment to interest costs on those
foreign currency borrowings;
• exchange differences on transactions entered
into to hedge certain foreign currency risks
(see below under financial instruments/hedge
accounting); and
• exchange differences on monetary items receivable
from or payable to a foreign operation for which
settlement is neither planned nor likely to occur
(therefore forming part of the net investment in the
foreign operation), which are recognised initially in
other comprehensive income and reclassified from
equity to profit or loss on disposal or partial disposal
of the net investment.
For the purpose of presenting consolidated financial
statements, the assets and liabilities of the Group’s
foreign operations are translated at exchange rates
prevailing on the balance sheet date. Income and
expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate
significantly during that period, in which case the
exchange rates at the date of transactions are used.
Exchange differences arising, if any, are recognised
in other comprehensive income and accumulated
in equity (attributed to non-controlling interests
as appropriate).
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Taxation
The tax expense represents the sum of the tax
currently payable and deferred tax.
The tax currently payable is based on taxable
profit for the year. Taxable profit differs from net
profit as reported in the income statement because
it excludes items of income or expense that are
taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
The Group’s liability for current tax is calculated
using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Research and development tax credits are
recognised on an accruals basis.
Deferred tax is the tax expected to be payable or
recoverable on differences between the carrying
amounts of assets and liabilities in the financial
statements and the corresponding tax bases used
in the computation of taxable profit, and is accounted
for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable
profits will be available against which deductible
temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial
recognition (other than in a business combination)
of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable
temporary differences arising on investments in
subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control
the reversal of the temporary difference and it is
probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed
at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the
asset to be recovered.
Deferred tax is calculated at the tax rates that are
expected to apply in the period when the liability is
settled or the asset is realised. Deferred tax is charged
or credited in the income statement, except when
it relates to items charged or credited directly to
equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when
there is a legally enforceable right to set off current
tax assets against current tax liabilities, and when
they relate to income taxes levied by the same
taxation authority, and the Group intends to settle
its current tax assets and liabilities on a net basis.
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Internally-generated intangible assets –
research and development expenditure
Expenditure on research activities is recognised
as an expense in the period in which it is incurred,
except where the costs of activities are considered
development for the purposes of capitalising
development costs.
An internally generated intangible asset arising from
the Group’s product development is recognised only
if all of the following conditions are met:
• an asset is created that can be identified
(such as software and new processes);
• it is probable that the asset created will
generate future economic benefits;
• the development cost of the asset can
be measured reliably; and
• the technical feasibility of the product
can be demonstrated.
Internally generated intangible assets are amortised
on a straight-line basis over their useful lives. Where no
internally generated intangible asset can be recognised,
development expenditure is recognised as an expense
in the period in which it is incurred. It is considered that
the useful economic lives of internally generated assets
is four years, in line with expected product life cycles as
the Company develops new products.
Property, plant and equipment
Leasehold improvements, laboratory and test
equipment, production plant and equipment,
computer equipment and office furniture and fittings
are stated at cost less accumulated depreciation
and any recognised impairment loss.
Depreciation is charged so as to write off the
cost of assets, other than land and properties
under construction, over their estimated useful
lives, using the straight-line method, on the
following bases:
leasehold improvements
4 years or the remainder of the lease term, if shorter
laboratory and test equipment
4 to 6 years
Production plant and equipment
4 years
Computer equipment
3 years
Office furniture and fittings
4 years
The gain or loss arising on the disposal or retirement
of an asset is determined as the difference between
the sales proceeds and the carrying amount of the
asset and is recognised in income.
Assets in the course of construction are carried
at cost, less any recognised impairment loss.
Depreciation of these assets, on the same basis
as other property assets, commences when
the assets are ready for their intended use.
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Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the
carrying amounts of its tangible and intangible assets
to determine whether there is any indication that those
assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not
generate cash flows that are independent from other
assets, the Group estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
Inventories
Inventories are stated at the lower of cost and net
realisable value. Cost comprises direct materials
and, where applicable, direct labour costs and those
overheads that have been incurred in bringing the
inventories to their present location and condition.
Cost is calculated using the “first in first out” (FIFO)
method. Net realisable value represents the estimated
selling price less all estimated costs of completion
and costs to be incurred in marketing, selling
and distribution.
Recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that
reflects current market assessments of the time value
of money and the risks specific to the asset for which
the estimates of future cash flows have not been
adjusted. If the recoverable amount of an asset (or
cash-generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised as an
expense immediately, unless the relevant asset is
carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses,
the carrying amount of the asset (cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount
does not exceed the carrying amount that would
have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior
years. A reversal of an impairment loss is recognised as
income immediately, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
The useful economic life of the intangible assets will
be four (4) years from the point of it first being used,
and it will be amortised on a straight line basis.
At the balance sheet date, an impairment review was
undertaken and an impairment charge of £100,000
was recognised in the year.
financial instruments
Financial assets and financial liabilities are recognised
in the Group’s balance sheet when the Group becomes
a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are
directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value
through profit or loss) are added to or deducted
from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition
of financial assets or financial liabilities at fair value
through profit or loss are recognised immediately
in profit or loss.
Trade and other receivables
Trade and other receivables that have fixed or
determinable payments that are not quoted in
an active market are classified as receivables.
Receivables are measured at amortised cost
using the effective interest method, less any
impairment. Interest income is recognised by
applying the effective interest rate, except for
short-term receivables when the recognition
of interest would be immaterial.
Trade receivables do not carry any interest and are
stated at their nominal value. Appropriate allowances
for estimated irrecoverable amounts are recognised
in profit or loss when there is objective evidence that
the asset is impaired.
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Impairment of financial assets
Financial assets are assessed for indicators of
impairment at each balance sheet date. Financial
assets are impaired where there is objective evidence
that, as a result of one or more events that occurred
after the initial recognition of the financial asset, the
estimated future cash flows of the investment have
been impacted.
Investments – short-term deposits
Short-term deposit investments comprise short-term
highly liquid investments that are readily convertible
to a known amount of cash and are subject to an
insignificant risk of change in value.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand
and on demand deposits, and other short-term
highly liquid investments that are readily convertible
to a known amount of cash and are subject to
an insignificant risk of change in value.
financial liabilities and equity
Financial liabilities and equity instruments are
classified according to the substance of the
contractual arrangements entered into. An
equity instrument is any contract that evidences
a residual interest in the assets of the Group
after deducting all of its liabilities.
Trade payables
Trade payables are not interest bearing
and are stated at their nominal value.
Equity instruments
Equity instruments issued by the Company
are recorded at the proceeds received, net
of direct issue costs.
Provisions
Provisions are recognised when the Group has a
present obligation (legal or constructive) as a result
of a past event, and it is probable that the Group will
be required to settle that obligation, and that a reliable
estimate can be made of the amount of that obligation.
Provisions are measured at the Directors’ best estimate
of the expenditure required to settle the obligation at
the balance sheet date, and are discounted to present
value where the effect is material.
Share-based payments
The Group has applied the requirements of IFRS
2 Share-based Payments. In accordance with the
transitional provisions, IFRS 2 has been applied to
all grants of equity instruments after 7 November
2002 that were unvested as of 1 May 2006, which
was the Group’s date of transition to IFRS.
The Group issues equity-settled share-based payments
to certain employees. Equity-settled share-based
payments are measured at fair value at the date of
grant. The fair value determined at the grant date of the
equity-settled share-based payments is expensed on
a straight-line basis over the vesting period, based on
the Group’s estimate of shares that will eventually vest.
Fair value is measured using a Black-Scholes options
pricing model.
Pension costs
The Group operates a defined contribution
pension scheme. The amount charged to the
income statement in respect of pension costs
is the contributions actually payable in the year.
Differences between the contributions actually
payable and those paid are shown as accruals
or prepayments in the consolidated balance sheet.
warranties
Provisions for the expected cost of warranty
obligations under local sale of goods legislation
are recognised at the date of sale of the relevant
products, at the Directors’ best estimate of the
expenditure required to settle the Group’s obligation.
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4. CRITICAL ACCOUNTING
JUDGEMENTS AND KEY SOURCES
OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies,
which are described in note 3, the Directors are
required to make judgements, estimates and
assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions
are based on historical experience and other factors
that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are
reviewed on an on-going basis. Revisions to
accounting estimates are recognised in the period
in which the estimate is revised if the revision affects
only that period, or in the period of the revision and
future periods if the revision affects both current
and future periods.
Critical judgements in applying
the group’s accounting policies
The following are the critical judgements, apart
from those involving estimations (which are dealt
with separately below), that the Directors have made
in the process of applying the Group’s accounting
policies and that have the most significant effect on
the amounts recognised in the financial statements.
going concern
The Directors are required to assess whether it
is appropriate to prepare the financial statements
on a going concern basis. Their assessment of the
going concern basis is set out in note 3.
recoverability of internally-generated
intangible asset
During the year, management reconsidered the
recoverability of its internally-generated intangible
asset which is included in its balance sheet at £380k.
Customer reaction to our up-coming technologies
has confirmed management’s previous estimates
of anticipated revenues from the project.
However, as the technology has moved on through
our continued progress, earlier capitalisations of
development costs have been considered to be
impaired. Mid-stage capitalisations are now being
used in our commercial products so have been
amortised throughout the current year.
Carrying value of assets under construction
The Group has a portfolio of assets under
construction, which are reviewed for impairment
based on what other units have sold for commercially.
However, as there is an element of differentiation
between units this requires an area of judgement.
At the year end, the management of the Company
reviewed the assets and decided that there was
no impairment.
useful lives of property, plant and equipment
As described above, the Group reviews the
estimated useful lives of property, plant and
equipment at the end of each reporting period.
During the current year, the Directors have reaffirmed
their belief in the useful lives of our asset categories.
However, as the Company receives more data from
us of systems in the field, and in line with current
quoting behaviour, a useful economic life for the
shortest-life components (excluding consumables)
is now considered ten (10) years. The company has
not reflected this in the treatment of property
plant and equipment but had this adjustment been
made, losses would have decreased by £260,000.
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recoverability of debtors
ITM Power plc has a debtor of £456k that is
long overdue regarding a contract for the
delivery of a refuelling unit in California.
In 2014, ITM Power plc commissioned and paid
towards the construction of refuelling equipment. At
the year end, this equipment is still in ITM Power plc’s
possession. At this stage, the Directors believe some of
the debtor is recoverable, either through a novation of
the current contract or alternatively through selling the
unit into the US market.
However, due to the passage of time, the Directors
have considered the likely value of any recoverable
debt, and as such, a provision equalling £138,000
has been made in the current year financial statements. key sources of estimation uncertainty
In the application of the Group’s accounting policies,
which are described in note 3, the Directors are
required to make judgements, estimates and
assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions
are based on historical experience and other factors
that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period
in which the estimate is revised if the revision affects
only that period, or in the period of the revision and
future periods if the revision affects both current
and future periods.
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Impairment of assets
The Group tests the net recoverable amounts of
assets when there are indicators of impairment.
The recoverable amounts of non-current and intangible
assets are derived from value in use calculations. The
key assumptions for the value in use calculations are
those regarding the discount rates, growth rates and
expected changes to hydrogen selling prices and
direct costs (electricity) during the period.
The Group has conducted a sensitivity analysis on the
impairment test of each group of units carrying value.
A cut in the growth rate by 24 percentage points would
cause the carrying value of the refuelling sites to equal
its recoverable amount.
The cost of capital rate is one of the most sensitive
judgements for the Company, with particular sensitivity
around BIG HIT and HyFive assets, with a 1% increase
in the discount rate leading to an impairment.
These assumptions have been revised in the year in
light of the announcements of funding from the Office
for Low Emission Vehicles and the current economic
environment, and is the first year that a review of the
refuelling assets of the Company has been
undertaken, as it is the first year of deployment.
Management estimates discount rates that reflect
current market assessments of the time value of
money and the risks specific to the Group of units.
The Group does not have any debt, and so discount
rates are based on an equity model only. The growth
rates are based on specific known industry growth
forecasts and the management’s understanding of
a likely growth curve in adoption of fuel cell electric
vehicles. Growth in the hydrogen refuelling industry
is predicted to be faster than in previous years as
initiatives from OLEV and the Fuel Cell and Hydrogen
Joint Undertaking introduce new fleets of vehicles
for hydrogen.
Changes in selling prices and direct costs are based
on past practices (albeit limited) and expectations
of future changes in the market. It is anticipated that
sales volumes will increase significantly over the next
one to five years as the Group’s strategy to open
new refuelling stations, aligned with rollout of more
vehicles – both more in number and more models –
is recognised.
The Group prepares cash flow forecasts derived
from the most recent financial budgets approved by
management for the next five years and extrapolates
cash flows for the following five years based on
an estimated growth rate of 80%. This rate does
not exceed the average long-term growth rate
for the relevant markets.
The rate used to discount the forecast cash flows
for refuelling stations 30.0%.
At 30 April 2017, before impairment testing, a carrying
value of £2.332m was allocated to the refuelling units,
of which £1.89m was associated with the HyFive
refuelling stations.
This cash generating unit’s main customers will be
hydrogen fleet owners, including taxi companies and
high duty cycle operators, defined as travelling up to
62,000 miles per annum. As such, the Group consider
a strong growth in hydrogen sales in the next five years.
The Group has considered its cash flow forecasts for
this CGU. The hydrogen refuelling CGU has therefore
been subject to no impairment loss.
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5. REVENUE, OTHER OPERATING INCOME AND INVESTMENT INCOME
An analysis of the Group’s revenue is as follows:
Continuing operations
Revenue from construction contracts
Consulting services
Maintenance services
Other
revenue in the consolidated income statement
Grant income
An analysis of the Group’s revenue, by major product, is as follows:
Continuing operations
Power-to-Gas contracts
Refuelling contracts
Chemical industry
Other
revenue in the consolidated income statement
Grant income
2017
£’000s
2,086
237
59
33
2,415
4,161
6,576
2017
£’000s
553
428
1,290
144
2,415
4,161
6,576
2016
£’000s
1,703
67
50
110
1,930
3,188
5,118
2016
£’000s
1,788
48
–
94
1,930
3,188
5,118
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All revenues are derived from continuing operations.
ITM Power plc is organised internally to report to the Group’s Chief Operating Decision Maker, the Chief Executive
Officer, on the financial and operational performance of the Group as a whole. The Group’s Chief Operating
Decision Maker is ultimately responsible for entity-wide resource allocation decisions, evaluating performance
on a group-wide basis and any elements within it on a combination of information from the executives in charge
of the Group and Group financial information.
As a consequence of the above factors the Group has one operating and reportable segment in accordance
with IFRS 8 Operating Segments.
geographic analysis
Revenues are generated in the United Kingdom, the United States, Germany and in other parts of Europe.
The United Kingdom is the Group’s country of domicile but the Group also has subsidiary trading companies
in the United States and Germany. All non-current assets were domiciled in the United Kingdom, with the
exception of one hydrogen refuelling station in California (net book value £245k).
United Kingdom
Germany
Italy
Rest of Europe
North America
2017
£’000s
238
672
1,290
117
98
2,415
2016
£’000s
1,853
72
–
5
–
1,930
Included in revenue are the following amounts, which each accounted for more than 10% of total revenue:
Customer A £1,290,000 Customer B £401,311 (2016: Customer A £1,703,000)
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6. LOSS FOR THE YEAR
loss for the year has been arrived at after charging (crediting)
Net foreign exchange (gains)/losses
Depreciation of property, plant and equipment
Impairment of non-current assets
Amortisation of intangibles
Impairment of intangibles
Research and development costs
Loss on disposal of property, plant and equipment
rentals under operating leases: land and buildings
Land and buildings
Government grants receivable
Staff costs (see note 7)
Cost of inventories recognised as an expense
2017
£’000s
(441)
1,181
100
20
3
1,923
22
223
(4,161)
4,123
187
The following amounts payable to the group’s auditor have been charged within the loss before tax:
Fees payable to the Company’s auditor for
The audit of the Company’s annual accounts
The audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
Other services pursuant to legislation
Interim agreed upon procedures/review work
Tax services – Tax compliance
Total non-audit fees
30
25
55
8
11
19
2016
£’000s
42
619
–
–
–
1,951
70
189
(3,188)
3,825
108
30
25
55
19
11
30
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7. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
name of
director
fees/basic
salary
benefits
in kind
annual
bonuses
Pension
contributions
2017
2016
£’000s
£’000s
£’000s
£’000s
£’000s
£’000s
Executive
Dr S Bourne
Dr G Cooley
Dr R Smith
non-executive
P Hargreaves
Prof. R Putnam
Lord Freeman
B Pendlebury
R Bone
aggregate
emoluments
157
185
95
45
130
35
–
35
682
–
–
–
–
–
_
–
–
–
90
176
–
–
–
–
–
–
8
28
5
–
–
–
–
–
266
41
255
389
100
45
130
35
–
35
989
188
323
92
45
150
35
–
35
868
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ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
nOTES TO ThE COnSOlIdaTEd fInanCIal STaTEMEnTS yEar EndEd 30 aPrIl 2017
Details of options for Directors who served during the year are as follows:
name of
director
Scheme
1 May 2015
number
granted
30 april
2016
number
Exercise
price £’000
date
from which
exercisable
Expiry date
Dr S Bourne
Dr S Bourne
Dr S Bourne
Dr S Bourne
Dr S Bourne
Dr G Cooley
Dr G Cooley
Dr G Cooley
Dr G Cooley
Dr G Cooley
Dr G Cooley
Prof. R
Putnam
Prof. R
Putnam
Lord R
Freeman
Dr R Smith
EMI
200,000
02/02/2010
200,000
18p
02/02/2014
02/02/2020
EMI
123,596
24/01/2011
123,596
67p
24/01/2011
23/01/2021
Unapproved
276,404
24/01/2011
276,404
67p
24/01/2011
23/01/2021
Unapproved
100,000
01/08/2012
100,000
50p
06/08/2015
05/08/2024
Unapproved
250,000
06/08/2015
250,000
26p
01/08/2012
31/07/2022
Unapproved
200,000
29/06/2009
200,000
18p
29/06/2012
29/06/2019
Unapproved
360,000
02/02/2010
360,000
18p
02/02/2014
02/02/2020
EMI
640,000
02/02/2010
640,000
18p
02/02/2014
02/02/2020
Unapproved
800,000
24/01/2011
800,000
67p
24/01/2011
23/01/2021
Unapproved
250,000
19/07/2012
250,000
50p
19/07/2012
18/07/2022
Unapproved
750,000
06/08/2015
750,000
26p
06/08/2015
05/08/2024
Unapproved
50,000
23/11/2009
50,000
20p
23/11/2010
23/11/2019
Unapproved
100,000
24/01/2011
100,000
67p
24/01/2011
23/01/2021
Unapproved
50,000
08/08/2011
50,000
31p
08/08/2012
07/08/2021
EMI
100,000
29/04/2010
100,000
24p
29/04/2013
29/04/2020
On 29 January 2010 the Group introduced a new EMI and Unapproved Share Option Scheme to be applied to all
subsequent issues of share options. Under the scheme rules the exercise price is deemed to be the mid-market
price of shares on the London Stock Exchange AIM market at the close of trading on the day before the grant of
the share options. Share options vest in three equal instalments on the first, second and third anniversaries of
the grant and are exercisable up to the tenth anniversary of the grant.
There were no LTIP awards granted or vested in the year for Directors.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
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directors’ emoluments
Aggregate emoluments
Money purchase pension contributions
2017
£’000s
948
41
989
Three Directors were members of money purchase schemes during the year (2016 – 2).
remuneration of the highest paid director
Aggregate emoluments
Money purchase pension contributions
361
28
389
2016
£’000s
828
40
868
295
28
323
average number of persons employed
number
number
Research and development
Prototype production and engineering
Sales and marketing
Administration
Staff costs during the year (including directors)
Wages and salaries
Social security costs
Other pension costs
17
32
9
10
68
£’000s
3,562
391
170
4,123
17
32
7
10
66
£’000s
3,306
354
165
3,825
As at 30 April 2017 pension contributions of £23,000 (2016 : £20,000 ) due in respect of the current year had
not been paid over to the scheme.
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8. TAX
uk corporation tax
Tax (charge)/credit in the year
Prior year adjustment
2017
£’000s
–
(230)
(230)
Corporation tax is calculated at 19.9% (2016: 20%) of the estimated taxable profit for the year.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
The charge for the year can be reconciled to the income statement as follows:
loss before tax
Loss before tax
Tax on loss at blended standard UK corporation tax rate of 19.9% (2016 – 20.0%)
factors affecting credit for the year
Factors affecting credit for the year:
Expenses not deductible for tax purposes
Depreciation in excess of capital allowances
Research and development enhanced relief
Adjustments in respect of prior years
Utilisation of brought forward losses
Unrelieved tax losses carried forward
Tax (charge)/credit for the year
2017
£’000s
(3,550)
706
(10)
(243)
–
(230)
–
(453)
(230)
2016
£’000s
359
–
359
2016
£’000s
(4,359)
872
(21)
(114)
359
–
–
(737)
359
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factors affecting future tax charges
The company has tax losses available to carry forward against future taxable profits, subject to agreement
with the HM Revenue & Customs.
A net deferred tax asset of £10.2374m (2016 : £11.526m) has not been recognised as there is insufficient
evidence that the asset would be recoverable in the foreseeable future. The net unrecognised deferred
tax asset comprises a deferred tax asset of £8.317m (2016 : £9.329m) in respect of accumulated tax losses
and £2.057m (2016 : £2.176m) in respect of decelerated capital allowances. The unrecognised deferred tax
asset would be recoverable to the extent that the Company generates sufficient taxable profits in the future.
The Finance Act 2015 included provisions to reduce the rate of UK corporation tax to 19% with effect from
1 April 2017. The Finance Act 2016 included provisions to further reduce the rate of UK corporation tax
to 17% with effect from 1 April 2020. Deferred taxation is measured at tax rates that are expected to apply
in the periods in which temporary timing differences are expected to reserve based on tax rates and laws
that have been enacted or substantively enacted at the balance sheet date. Accordingly 17% has been
applied when calculating deferred tax assets and liabilities as at 31 March 2017.
9. LOSS PER SHARE
The calculation of the basic and diluted earnings per share is based on the following data:
2017
£’000
2016
£’000
loss
Loss for the purposes of basic and diluted loss per share
being net loss attributable to owners of the Company
(3,780)
(4,000)
number of shares
Weighted average number of ordinary shares for the
purposes of basic and diluted earnings per share
Loss per Share
222,513,007
184,566,326
1.7p
2.0p
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 or increase the net
loss per share.
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10. PROPERTY, PLANT AND EQUIPMENT
Production
plant and
equipment
laboratory
and test
equipment
Computer
equipment
Office
furniture and
fittings
leasehold
improvements
assets in the
course of
construction
Total
£’000s
£’000s
£’000s
£’000s
£’000s
£’000s
£’000s
1,623
1,260
288
590
(89)
2,412
229
1,962
(96)
4,507
315
–
(1)
1,574
67
–
(129)
1,512
1,249
1,017
(19)
326
1,556
(93)
731
–
8
(1)
178
1,194
(106)
110
–
–
435
57
–
(1)
491
118
–
(1)
608
394
(1)
31
424
(1)
59
–
–
201
4
–
(2)
203
–
–
(2)
201
196
(2)
4
198
(2)
2
–
–
1,410
464
–
–
1,874
921
–
–
1,797
6,726
39
1,167
(590)
–
–
(93)
1,246
7,800
1,475
2,810
(1,962)
–
–
(228)
2,795
759
10,382
1,324
–
80
1,404
–
279
–
–
–
–
–
–
–
–
4,180
(23)
619
4,776
(202)
1,181
100
100
–
8
2,202
1,198
482
198
1,683
100
5,863
856
2,305
380
314
67
126
5
3
470
1,246
3,024
1,112
659
4,519
Cost
At 1
May 2015
Additions
Transfers
Disposals
At 1
May 2016
Additions
Transfers
Disposals
at 30
april 2017
depreciation
At 1
May 2015
Disposals
Charge for
the year
At 1
May 2016
Disposals
Charge for
the year
Impairment
Foreign
exchange
at 30
april 2017
net book value
at 30 april
2016
at 30 april
2017
* All non-current assets are located in the United Kingdom
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11. OTHER INTANGIBLE ASSETS
Capitalised development costs
At 1 May 2015
Additions from internal development
At 1 May 2016
Additions from internal development
at 30 april 2017
amortisation
At 1 May 2015 and 2016
Impairment
Charge for the year
at 30 april 2016
Carrying amount
At 30 April 2016
At 30 April 2017
Capitalised
development costs
£’000s
–
252
252
151
403
–
3
20
23
252
380
The amortisation period for development costs incurred on the Group’s stack development is four years.
110
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12. SUBSIDIARIES
A list of investments in subsidiaries, including the name, country of incorporation and proportion
of ownership interest is given in note 30 to the Company’s separate financial statements.
13. INVENTORIES
Raw materials
Work in progress
2017
£’000s
342
418
760
2016
£’000s
(restated)*
111
180
291
*Balance has been restated as the increase of raw materials purchased in 2017 has led to classification
of inventory to assist understanding of stock held that is not contract-related.
14. CONSTRUCTION CONTRACTS
Contracts in progress at the balance sheet date:
Amounts due from contract customers included
in trade and other receivables
Contract costs incurred plus recognised profits
less recognised losses to date
Less: progress billings
2017
£’000s
779
2,215
(2,734)
(519)
2016
£’000s
58
1,703
(1,802)
(99)
At 30 April 2017, retentions held by customers for contract work amounted to £33k (2016: £60k).
Advances received from customers for contract work amounted to £510k (2016: £66k).
At 30 April 2017, no amounts (2016: £Nil) included in trade and other receivables and arising
from construction contracts are due for settlement after more than 12 months.
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15. TRADE AND OTHER RECEIVABLES
Trade and other receivables
Amount receivable for the sale of goods
Amounts due from construction contract customers (note 14)
Amounts receivable under grant claims
Allowance for doubtful debts
Other receivables
Corporation tax
Prepayments and accrued income
2017
£’000s
61
779
1,133
(166)
317
191
8,767
11,082
Trade receivables disclosed above are classified as loans and receivables and are therefore measured
at amortised cost. Their ageing is analysed as follows:
Less than 30 days
31-60 days
61-90 days
91-120 days
Greater than 120 days
2017
£’000s
78
319
86
5
1,484
1,972
2016
£’000s
16
58
1,726
(29)
15
669
4,032
6,487
2016
£’000s
896
100
1
24
779
1,800
There were receivables totalling £1,318k (2016 : £784k) that were overdue but considered fully recoverable.
Of these £994k has already been received post year-end and the remaining sum relates to the overdue contract
in ITM Power plc described in note 3 – Recoverability of Debtors, for which a partial provision has been made.
Movement in the allowance for doubtful debts
Balance at the beginning of the year
Impairment losses recognised
Amounts written off during the year as uncollectible
Impairment losses reversed
2017
£’000s
(29)
(166)
26
3
(166)
2016
£’000s
–
(29)
–
–
(29)
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16. CASH AND CASH EQUIVALENTS
Cash and cash equivalents
Restricted cash and cash equivalents
2017
£’000s
1,558
1,446
3,004
2016
£’000s
1,207
2,129
3,336
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of three
months or less. The Directors consider that the carrying amount of these assets approximates to their fair value.
Restricted Cash and Cash equivalents are held on guarantee for construction contracts and will be released
upon the completion of certain milestones, which are either technical or time-bound.
17. TRADE AND OTHER PAYABLES
Trade and other payables
Trade payables
Other taxation and social security
Other creditors
Accruals and deferred income
2017
£’000s
923
126
7
5,610
6,666
2016
£’000s
665
197
14
879
1,755
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
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18. PROVISIONS
warranty provision
Balance at 1 May 2015
Release of unused provision
Balance at 1 May 2016
Additional provision in year
balance at 30 april 2017
The warranty provision represents management’s best estimate of the Group’s liability under 12-month
warranties granted on products, based on historical knowledge of the products and their components.
19. CALLED UP SHARE CAPITAL AND RESERVES
Called up, allotted and fully paid:
250,613,176 (2016 : 216,892,973) ordinary shares of 5p each
Authorised Share capital:
256,350,790 (2016 : 222,630,587) ordinary shares of 5p each
2017
£’000s
12,531
12,818
£’000s
(108)
108
–
(9)
(9)
2016
£’000s
10,845
11,131
During the year the Company issued 33,720,203 ordinary shares of 5p each for a consideration of £5,732,435.
The effect on the share premium account is shown below:
Share premium balance at start of year
Issue of shares
Expenses associated with issue of shares
Share premium balance at end of year
2017
£’000s
58,151
4,046
(267)
61,930
2016
£’000s
54,738
3,879
(466)
58,151
The merger reserve arose on the acquisition of ITM Power (Research) Ltd in 2004.
The foreign exchange reserve arises upon consolidation of the foreign subsidiaries in the Group, and accounts
for the difference created by translation of the income statement at average rate compared with the year-end
rate used on the balance sheet. The Group’s other reserve is retained earnings which represents cumulative
profits or losses, net of dividends paid and other adjustments.
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20. NOTES TO THE CASH FLOW STATEMENT
Loss from operations
adjustments for property, plant and equipment
Depreciation
Loss on disposal
Impairment of assets under construction
Amortisation
Operating cash flows before movements in working capital
(Increase)/Decrease in inventories
Increase in receivables
Increase/(Decrease) in payables
Increase/(Decrease) in provisions
Cash used in operations
Income taxes received
net cash used in operating activities
2017
£’000s
(3,550)
1,181
22
100
23
(2,224)
(469)
(5,363)
2,747
9
(5,300)
252
(5,048)
2016
£’000s
(4,359)
619
67
–
–
(3,673)
221
(1,998)
(1,540)
(108)
(7,098)
–
(7,098)
21. CAPITAL COMMITMENTS
The Group had no capital commitments at the balance sheet date (2016 : none).
22. OPERATING LEASE COMMITMENTS
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments
under non-cancellable operating leases, which fall due as follows:
land and buildings
Within one year
Between two and five years
2017
£’000s
229
559
2016
£’000s
162
605
Operating lease payments represent rentals payable by the Group for certain of its office and laboratory
properties and refuelling stations. Leases are negotiated for an average of 5 years and rentals are fixed
for an average of 4 years.
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23. SHARED-BASED PAYMENTS
Equity-settled share option scheme
The Group operates a number of share option schemes to provide employees and third parties with the
opportunity to acquire a proprietary interest in the Company as an incentive to attract and retain their
services as follows:
• Enterprise Management Incentive (EMI) options;
• Non EMI or “unapproved” options in lieu of payment for services; and
• Options under HM Revenue & Customs approved Save As You Earn scheme.
2017
number
weighted
average
exercise
price
2016
number
weighted
average
exercise
price
Outstanding at the beginning of the year
5,737,614
32p
5,737,614
32p
Granted during the year
Exercised during the year
Expired during the year
Outstanding at the end of the year
Exercisable at the end of the year
–
–
(280,867)
5,456,747
5,456,747
–
–
54p
32p
32p
–
–
–
5,737,614
5,737,614
–
–
–
32p
32p
All of the Company’s share option plans were issued after 7 November 2002. In accordance with IFRS 2,
only those options that had not fully vested by 1 May 2006, being the Group’s date of transition to IFRS,
were included in the calculations.
The options outstanding at 30 April 2017 had a weighted average exercise price of 32p and a weighted
average remaining contractual life of 2 years.
Fair value is measured by use of the Black-Scholes option pricing model. The expected life used in the
model has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
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The assumptions for the Black-Scholes model are as follows:
weighted averages
Share price
Exercise price
Expected volatility
Expected life
Risk-free rate
2017
£’000s
32p
32p
46%
2 years
4%
2016
£’000s
32p
32p
46%
2 years
4%
Expected volatility is the annual standard deviation of the share price. The expected life used in the model has
been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions
and behavioural considerations.
The Group has recognised share-based payment expense in the income statement for the year of £Nil
(2016 : £Nil).
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24. FINANCIAL INSTRUMENTS
Capital risk management
The Group raised sufficient cash through issuing one class of ordinary shares to provide the Company with
the means to fulfil the existing pipeline.
The current capital risk management objective is to ensure that the existing pipeline can be delivered without
the need for further financing.
The group manages cash balances in dollars, euros and pound sterling, with natural hedges occurring for
most transactions. The group also have money placed on guarantee that can require cash cover, which it
considers to be an externally imposed capital requirement.
During the year the Group was not required to comply with any externally imposed capital requirements,
with the exception of placing on guarantee contract amounts for projects.
The capital risk management landscape has not materially changed in the last year for the Group.
Externally imposed capital requirement
The Group is not subject to externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition,
the basis of measurement and the basis on which income and expenses are recognised, in respect of each
class of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements.
Categories of financial instruments
financial assets
2017
£’000s
2016
£’000s
Cash balances, loans and receivables
5,128
5,136
The Group’s financial assets consist of cash and receivables. The latter are largely due from grant bodies and
large organisations with a strong credit history. ITM Power plc do not consider there to be undue risk associated
with receivables.
Categories of financial instruments
financial liabilities
Amortised cost
2017
£’000s
2016
£’000s
1,056
877
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fair value measurements
As at 30 April 2017, the Group had no financial
instruments that were measured at fair value through
profit or loss (2016 : none). The carrying value of all
financial instruments at 30 April 2017 and 30 April
2016 approximated to their fair value. Accordingly,
no fair value hierarchy table has been presented.
financial risk management objectives and policies
The Group’s finance function monitors and manages
the financial risks relating to the operations of the
Group. The Group’s activities expose it primarily
to the financial risks of changes in interest rates.
The Group also receives and spends money in
different currencies. Significantly, contracts are often in
the currency of the customer. As such, the Company
has exposure to foreign exchange variation. This is
naturally hedged where possible by paying for supplies
in the currencies in which they are invoiced, but this
does not eliminate exposure.
The Group seeks to minimise the effects of these
risks. The Group’s policies approved by the Board
of Directors provide written principles on interest rate
risk and the investment of excess liquidity. Compliance
with policies and exposure limits is reviewed on a
continuous basis. The Group does not currently
enter into or trade financial instruments, including
derivative financial instruments.
The treasury activities are reported
quarterly to the Group’s Board.
Credit risk management
Credit risk refers to the risk that a counter party
will default on its contractual obligations resulting
in financial loss to the Group. The Group has adopted
a policy of only dealing with creditworthy counterparties.
The credit risk of liquid funds (cash, cash equivalents
and short-term deposits) is limited because the
counterparties are banks with high credit-ratings
assigned by international credit-rating agencies.
liquidity and interest risk management
The Group is exposed to the interest rate risks
associated with its holdings of cash and cash
equivalents and short term deposits.
Ultimate responsibility for liquidity risk management
rests with the board of directors, which regularly
monitors the Group’s short, medium and long-term
funding, and liquidity management requirements.
The Group manages liquidity risk by maintaining
adequate reserves and banking facilities, by
continuously monitoring forecast and actual
cash flows and matching the maturity profiles
of financial assets and liabilities.
The company, in the early stages of commercialisation,
are on occasion subject to challenging
foreign currency risk management
The Group does not hedge its exposure of foreign
investments held in foreign currencies. The monetary
assets and liabilities of the Group are only held in
the functional currencies of the Group.
The table opposite shows the Group’s currency
exposure. Such exposure comprises the monetary
assets and monetary liabilities that are not denominated
in the functional currency of the operating unit involved.
The Group’s exposure to currency risk predominately
arises on borrowings denominated in currencies other
than the functional currency of the operating unit
excluding intercompany balances. At 30 April 2017,
these exposures were as follows:
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EUR
USD
SEK
liabilities
assets
2017
£’000
20
13
–
33
2016
£’000
62
41
–
103
2017
£’000
1,628
51
23
2016
£’000
1,779
4
28
1,702
1,811
foreign currency sensitivity analysis
The table below assumes an increase/decrease of 10% change of the Euro to Pound Sterling exchange rate
and a decrease/increase of 10% change of the US Dollar to Pound Sterling exchange rate. The sensitivity
analysis is based on the subsidiaries’ profit or loss for the year and the net assets or net liabilities held at
the balance sheet date, excluding inter-company balances and intangible assets held at the date of acquisition
of the Group by ITM Power plc.
Profit or loss
EurO impact
uSd impact
2017
£’000
12
2016
£’000
16(i)
2017
£’000
99
2016
£’000
20(ii)
i) This is mainly attributable to the exposure outstanding on Euro to Pound Sterling receivables and payables
in the Group at the balance sheet date.
(ii) This is mainly attributable to the exposure to outstanding US Dollars to Pound Sterling receivables
and payables at the balance sheet date.
If interest rates had been 1% higher/lower and all other variables had remained constant, loss for the
year would have decreased/increased by £111,000 (2016 : £36,000).
The Group’s financial liabilities consist of trade and other payables as shown on the balance sheet.
No interest is paid on these balances and all amounts are due within 3 months.
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fair value of financial instruments
Carrying amounts of financial instruments are a reasonable approximation of the fair values of those instruments.
25. TRANSACTIONS WITH RELATED PARTIES
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated
on consolidation and are not disclosed in this note.
Sales of hydrogen fuel to JCB Research in the year totalled £68.39 (2016: £nil).
The remuneration of the Directors, who are the key management personnel of the Group, is shown in note 7.
The Company operates a defined contribution pension scheme that is administered by Hargreaves Lansdown.
Peter Hargreaves is a shareholder in Hargreaves Lansdown.
26. CONTROLLING PARTY
As at the date of these accounts neither the Directors together, nor any individual shareholder, owned more than
50% of the issued share capital of the Company and hence, in the opinion of the Directors, there is no controlling
party at this date.
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121
COMPany STaTEMEnT Of ChangES In EquITy yEar EndEd 30 aPrIl 2017
COMPANY STATEMENT
OF CHANGES IN EQUITY
YEAR ENDED 30 APRIL 2017
Called up share
capital
£’000
Share premium
account
£’000
retained loss
£’000
Total equity
£’000
£’000s
8,905
1,940
–
£’000s
54,738
3,413
£’000s
(13,863)
–
£’000s
49,780
5,353
–
(25,735)
(25,735)
At 1 May 2015
Issue of shares
Loss for the year, which
equals comprehensive losses
at 30 april 2016
10,845
58,151
(39,598)
29,398
At 1 May 2016
Issue of shares
Loss for the year, which
equals comprehensive losses
10,845
1,686
–
58,151
3,779
(39,598)
–
29,398
5,465
–
(10,109)
(10,109)
at 30 april 2017
12,531
61,930
(49,707)
24,754
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COMPany balanCE ShEET yEar EndEd 30 aPrIl 2017
COMPANY BALANCE SHEET
YEAR ENDED 30 APRIL 2017
fixed assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: Amounts falling due within one year
Net current assets
Total assets less current liabilities, being net assets
Capital and reserves
Called-up share capital
Share premium account
Profit and loss account
Shareholders’ funds
note
29
30
31
32
33
2017
£’000s
13
24,612
24,625
259
115
374
(245)
129
2016
£’000s
21
28,859
28,880
111
769
880
(362)
518
24,754
29,398
12,531
61,930
(49,707)
24,754
10,845
58,151
(39,598)
29,398
The Company reported a loss for the financial year ended 30 April 2017 of £10.1m (2016: £25.7m).
The financial statements of ITM Power plc, registered number 05059407, were approved by the Board of Directors
and authorised for issue on 24 August 2017.
Signed on behalf of the Board of Directors
Dr. Rachel Smith
ITM Power plc, Executive Director
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27. SIGNIFICANT ACCOUNTING POLICIES
The separate financial statements of the Company
are presented as required by the Companies Act
2006. The Company meets the definition of a
qualifying entity under FRS 100 (Financial Reporting
Standard 100) issued by the Financial Reporting
Council. Accordingly, in the year ended 30 April 2017
the Company has decided to adopt FRS 101 early
and has undergone transition from reporting under
IFRSs adopted by the European Union to FRS 101
as issued by the Financial Reporting Council.
Accordingly, the financial statements have therefore
been prepared in accordance with FRS 101 (Financial
Reporting Standard 101) ‘Reduced Disclosure
Framework’ as issued by the Financial Reporting
Council. This transition is not considered to have
had a material effect on the financial statements.
As permitted by FRS 101, the Company has taken
advantage of the disclosure exemptions available
under that standard in relation to share-based
payment, financial instruments, capital management,
presentation of comparative information in respect of
certain assets, presentation of a cash-flow statement
and certain related party transactions.
Where required, equivalent disclosures are given
in the consolidated financial statements.
The financial statements have been prepared on
the historical cost basis except for the re-measurement
of certain financial instruments to fair value. The
principle accounting policies adopted are the same
as those set out in note 3 to the consolidated financial
statements except as noted below.
Investments in subsidiaries and associates are
stated at cost less, where appropriate, provisions
for impairment.
Tangible fixed assets
Tangible fixed assets are stated at cost less
accumulated depreciation and any recognised
impairment loss.
Depreciation is charged so as to write off the
cost, over their estimated useful lives, using the
straight-line method, on the following bases:
Leasehold improvements
4 years or the remainder of the lease term, if shorter
Computer equipment
3 years
Office furniture and fittings
4 years
The gain or loss arising on the disposal or retirement
of an asset is determined as the difference between
the sales proceeds and the carrying amount of the
asset and is recognised in income.
Impairment of tangible and intangible assets
At each balance sheet date, the Company reviews the
carrying amounts of its tangible assets to determine
whether there is any indication that those assets have
suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss
(if any). Where the asset does not generate cash flows
that are independent from other assets, the Company
estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less
costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate
that reflects current market assessments of the
time value of money and the risks specific to the
asset for which the estimates of future cash flows
have not been adjusted.
124
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
COMPany balanCE ShEET yEar EndEd 30 aPrIl 2017
If the recoverable amount of an asset (or cash-
generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised as an
expense immediately, unless the relevant asset is
carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
Share option charges
Equity-settled share-based payments to employees
and others providing similar services are measured
at the fair value of the equity instruments at the grant
date. The fair value excludes the effect of non-market-
based vesting conditions. Details regarding the
determination of the fair value of equity-settled
share-based transactions are set out in note 23.
Where an impairment loss subsequently reverses,
the carrying amount of the asset (cash-generating unit)
is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount
does not exceed the carrying amount that would
have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior
years. A reversal of an impairment loss is recognised as
income immediately, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based
on the Group’s estimate of equity instruments that
will eventually vest. At each balance sheet date, the
Group revises its estimate of the number of equity
instruments expected to vest as a result of the effect
of non-market-based vesting conditions. The impact
of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative
expense reflects the revised estimate, with a
corresponding adjustment to equity reserves.
Investments
These are stated at cost less a provision for
any permanent impairment in value.
Pension costs
The Company operates a defined contribution pension
scheme. The amount charged to the profit and loss
account in respect of pension costs is the contributions
actually payable in the year. Differences between
contributions payable and contributions actually
paid are shown as either accruals or prepayments
in the balance sheet.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
125
COMPany balanCE ShEET yEar EndEd 30 aPrIl 2017
28. CRITICAL ACCOUNTING JUDGEMENTS
AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The Directors are required to make judgements, estimates and assumptions about the carrying amounts
of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if the revision affects both current and future periods.
There were no critical judgements that the Directors have made in the process of applying the Company’s
accounting policies.
key Sources of Estimation uncertainty
Recoverability of investment
The Group tests the net recoverable amounts of assets annually for impairment, or more frequently if there
are indications that goodwill might be impaired.
During the year, management reconsidered the recoverability of its investment in subsidiary companies
which are disclosed in note 30. The subsidiaries continue to trade, but currently are trading at a loss, which
is seen as temporary by management. However, in considering each subsidiary as a cash generating unit,
the Company prepares cash flow forecasts derived from the most recent financial budgets approved by
management for the next five years and extrapolates cash flows for the following five years based on an
estimated growth rate of 80%. This rate does not exceed the average long-term growth rate for
the relevant markets.
126
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
COMPany balanCE ShEET yEar EndEd 30 aPrIl 2017
29. TANGIBLE FIXED ASSETS
Cost
At 1 May 2016
Additions
Disposals
at 30 april 2017
deprecation
At 1 May 2016
Charge for the year
Disposals
at 30 april 2017
net book value
at 30 april 2017
at 30 april 2016
Computer
equipment
Office
furniture
and fittings
leasehold
improvements
Total
£’000s
£’000s
£’000s
£’000s
178
8
–
186
157
16
–
173
13
21
12
–
–
12
12
–
–
12
–
–
10
–
–
10
10
–
–
10
–
–
200
8
–
208
179
16
–
195
13
21
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
127
COMPany balanCE ShEET yEar EndEd 30 aPrIl 2017
loans to
subsidiary
undertakings
Shares in
subsidiary
undertakings
Total
£’000s
£’000s
£’000s
56,098
5,222
61,320
30,832
9,469
40,301
21,019
25,266
3,593
–
3,593
–
–
–
3,593
3,593
59,691
5,221
64,913
30,832
9,469
40,301
24,831
28,859
30. INVESTMENTS
Cost
At 1 May 2016
Additions
at 30 april 2017
Provisions for impairment
At 1 May 2016
Movement in year
At 30 April 2017
net book value
at 30 april 2017
at 30 april 2016
128
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
COMPany balanCE ShEET yEar EndEd 30 aPrIl 2017
The Company holds 100% of the ordinary share capital of ITM Power (Research) Limited, a company which
is incorporated in England and Wales and its principal activity is the research and development of scientific
and engineering projects.
The Company also holds 100% of the ordinary share capital of ITM Power (Trading) Limited, a company
which is incorporated in England and Wales and its principal activity is the development and manufacturing
of prototype products.
The Company also holds 100% of the ordinary share of ITM Energy Ltd, a company which is incorporated in
England and its principal activity is that of the sale of hydrogen. The Company was dormant during the year.
The Company also holds 100% of the ordinary share of ITM Fuel Ltd, a company which is incorporated in
England and its principal activity is that of the sale of hydrogen. The Company was dormant during the year.
ITM Power (Trading) Ltd holds 100% of the ordinary share of ITM Motive, a company which is incorporated
in England and its principal activity is that of the production of drivetrains for use with Hydrogen. The
Company was dormant during the year.
All of the above are registered at 22 Atlas Way, Sheffield, South Yorkshire, S4 7QQ.
The Company also holds 100% of the ordinary share of ITM Power GmbH, a company which is incorporated
in Germany and its principal activity is that of the sale of electrolysis equipment and hydrogen storage solutions.
Registered office: Postfach 1152, 35301 Grünberg, Mragowo Strasse 15, 35305 Grünberg, Germany
The Company also holds 100% of the ordinary share of ITM Power Inc, a company which is incorporated in
California and its principal activity is that of the sale of electrolysis equipment and hydrogen storage solutions.
Registered office: 155 N Riverview Dr, Suite 101, Anaheim, CA 92808.
The Company also holds 100% of the ordinary share of ITM Power ApS, a company which is incorporated in
Denmark and its principal activity is that of the sale of electrolysis equipment and hydrogen storage solutions.
The Company was dormant during the year. Registered office: H.C. Andersens Boulevard 12, 1553 Copenhagen.
The Company also holds 100% of the ordinary share of Orkney Hydrogen Trading Ltd, a company which is
incorporated in Scotland and its principal activity is that of the sale of hydrogen. The Company was dormant
during the year. Registered office: Cirrus Building 6 International Avenue, Abz Business Park Dyce Drive, Dyce,
Aberdeen, Aberdeenshire, United Kingdom, AB21 0BH.
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
129
COMPany balanCE ShEET yEar EndEd 30 aPrIl 2017
31. DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Categories of financial instruments
Other debtors
Prepayments
2017
£’000s
156
103
259
32. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Categories of financial instruments
Trade creditors
Payroll creditors
VAT creditors
Accruals and deferred income
2017
£’000s
21
16
–
208
245
2016
£’000s
13
98
111
2016
£’000s
64
16
84
198
362
33. SHARE CAPITAL AND RESERVES
The movements on share capital and share premium accounts are disclosed in note 19 to the consolidated
financial statements.
The Company’s other reserve is the profit and loss reserve which represents cumulative profits or losses,
net of dividends paid and other adjustments.
34. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption included in FRS101 “Related Party Disclosures” for wholly
owned subsidiaries not to disclose transactions with entities that are part of the Group qualifying as related parties.
130
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
2016 rEgulaTOry nEwS annOunCEMEnTS
2016 REGULATORY NEWS
ANNOUNCEMENTS
2016
RNS-R
Thuga Group Power-to-Gas Operational Update
Company Announcement - General
13/06/2016
RNS
RNS
RNS
RNS
RNS
RNS
European Hydrogen Refuelling Stations Project
Company Announcement - General
14/06/2016
Update on Pipeline
Company Announcement - General
24/06/2016
Refuelling Station sale to Hydrogène de France
Mergers, Acquisitions and Disposals
29/06/2016
Final Results
Results and Trading Reports
29/07/2016
Price Monitoring Extension
Company Announcement - General
01/08/2016
Second Price Monitoring Extn
Company Announcement - General
01/08/2016
RNS-R
Fuel Contract with Commercial Group
Company Announcement - General
23/08/2016
RNS-R
ITM Power plc signs Fuel Contract with Arcola Energy
Company Announcement - General
26/08/2016
RNS
RNS
RNS
Appointment of new MD to German subsidiary
Company Announcement - General
07/09/2016
Result of AGM
Results and Trading Reports
15/09/2016
Price Monitoring Extension
Company Announcement - General
16/09/2016
RNS-R
Upgrade to M1 Hydrogen Refuelling Station
Company Announcement - General
22/09/2016
RNS-R
Hydrogen Vehicle Rally, Solar HRS Launch in London
Company Announcement - General
11/10/2016
RNS-R
Fuel Contract with Arval
Company Announcement - General
14/10/2016
RNS
Price Monitoring Extension
Company Announcement - General
21/10/2016
RNS-R
Fuel Contract with Hyundai Motor UK
Company Announcement - General
04/11/2016
RNS-R
Fuel Contract with Europcar
Company Announcement - General
14/11/2016
RNS
Sale of 1.25 MW Electrolyser
Company Announcement - General
18/11/2016
RNS-R
Shell Hydrogen Refuelling Stations Update
Company Announcement - General
18/11/2016
RNS-R
Fuel Contract with Anglo American
Company Announcement - General
23/11/2016
RNS
Ofgem Funding for UK Power-to-Gas
Company Announcement - General
30/11/2016
RNS-R
EU Directives to Drive Power-to-Gas Energy Storage
Company Announcement - General
01/12/2016
RNS-R
100MW electrolyser designs to launch at Hannover
Company Announcement - General
12/12/2016
ITM POWER PLC | ANNUAL REPORT AND FINANCIAL STATEMENTS 2017
131
2017 rEgulaTOry nEwS annOunCEMEnTS
2017 REGULATORY NEWS
ANNOUNCEMENTS
2017
RNS
RNS
RNS
RNS
RNS
RNS
RNS
RNS
RNS
RNS
RNS
Euro 0.7 million Electrolyser Sale
Company Announcement - General
11/01/2017
Proposed Accelerated Bookbuild
Company Announcement - General
26/01/2017
Half Year Results
Results and Trading Reports
26/01/2017
Close of Accelerated Bookbuild
Company Announcement - General
26/01/2017
Confirmation of Successful £5.7 million Fundraise
Company Announcement - General
26/01/2017
Posting of Circular
Company Announcement - General
27/01/2017
Price Monitoring Extension
Company Announcement - General
02/02/2017
Second Price Monitoring Extn
Company Announcement - General
02/02/2017
Result of General Meeting and TVR
Company Announcement - General
16/02/2017
Director/PDMR Shareholding
Company Announcement - General
17/02/2017
Holding(s) in Company
Holding(s) in Company
20/02/2017
RNS-R
First Hydrogen Refuelling Station with Shell Opens
Company Announcement - General
22/02/2017
RNS-R
Align Research ITM Power plc update note release
Company Announcement - General
28/02/2017
RNS-R
HRS Update
Company Announcement - General
13/03/2017
RNS-R
New OLEV Funding
Company Announcement - General
20/03/2017
RNS
RNS
RNS
RNS
£0.73m Electrolyser Sale
Price Monitoring Extension
Company Announcement - General
27/03/2017
Company Announcement - General
28/03/2017
Second Price Monitoring Extn
Company Announcement - General
28/03/2017
ITM Power plc Secures £3.5m 3MW Electrolyser
Contract
Company Announcement - General
03/04/2017
RNS
Contract and Operations Update
Company Announcement - General
18/04/2017
RNS
RNS Reach
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+44 (0) 114 244 5111 www.itm-power.com
ITM Power plc | 22 Atlas Way | Sheffield | S4 7QQ