I T M
P
WO
R
E
PLC
A N N UA L R E P O R T
F O R T H E Y E A R E N D E D 30 A PR I L 2021
Company Registration Number: 05059407
W W W. I T M P O W E R .C O M
2 B E S S E M E R PA R K , S H E F F I E L D, S 9 1 D Z ,
U N I T E D K I N G D O M
+ 4 4 (0)114 24 4 5111
I T M A N N U A L R E P O R T 2 0 2 1
B E S S E M E R P A R K
I T M A N N U A L R E P O R T 2 0 2 1
I T M A N N U A L R E P O R T 2 0 2 1
ANNUAL REPORT FOR ITM POWER
THE YEAR ENDED 30 APRIL 2021
OFFICERS AND PROFESSIONAL ADVISORS
HIGHLIGHTS
STRATEGIC REPORT
DIRECTORS’ REPORT
CORPORATE GOVERNANCE REPORT
REMUNERATION COMMITTEE REPORT
AUDIT COMMITTEE REPORT
INDEPENDENT AUDITOR’S REPORT
CONSOLIDATED INCOME STATEMENT AND OTHER
COMPREHENSIVE INCOME
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED CASH FLOW STATEMENT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
COMPANY STATEMENT OF CHANGES IN EQUITY
COMPANY BALANCE SHEET
NOTES TO THE COMPANY FINANCIAL STATEMENTS
PAGE
3
4
8
29
32
42
56
59
68
68
69
69
70
98
98
99
OFFIC ER S AND
PROFES SIONAL
ADVISOR S
D I R E C T O R S
Sir R Bone
Dr S Bourne
Dr G Cooley
Dr R Smith
Mr A Allen
Mr T Rae (Appointed 3 December 2020)
Mr M Green
Mr J Nowicki
Mrs K Roe (Appointed 6 May 2020)
Mr R Pendlebury (Resigned 31 July 2020)
C O M P A N Y S E C R E TA R Y
Ms N Ham Edmonds
R E G I S T E R E D O F F I C E
2 Bessemer Park
Shepcote Lane
Sheffield
South Yorkshire
S9 1DZ
N O M I N AT E D
R E G I S T R A R S
A D V I S O R A N D B R O K E R
Link Asset Management
The Registry
34 Beckenham Road
Beckenham
BR3 4TU
B A N K E R S
National Westminster Bank plc
1 Cathedral Square
Peterborough
Lincolnshire
PE1 1XH
S TAT U T O R Y A U D I T O R
Grant Thornton UK LLP
1 Holly Street
Sheffield
S1 2GT
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
S O L I C I T O R S
Burges Salmon LLP
One Glass Wharf
Bristol
BS2 0ZX
P R E S S A N D
I N V E S T O R E N Q U I R I E S
Tavistock Communications Limited
1 Cornhill
London
EC3V 3ND
W H I T E L E E
I T M A N N U A L R E P O R T 2 0 2 1
H I G H L I G H T S
D E V E L O P M E N T S I N
T H E L A S T 12 M O N T H S
First full year of operating the strategic partnership with Linde,
which together with our investment in ITM Linde Electrolysis (ILE) GmbH,
allows ITM Power to focus exclusively on the manufacture of electrolysis
equipment for larger scale systems
Sale of world’s largest PEM electrolyser to Linde and sale of first
MW-scale electrolyser to Sumitomo for deployment in Japan
Commercial partnership agreement with Snam (one of the world’s
leading energy infrastructure operators), including a £30m strategic
investment and an initial 100MW preferred supplier commitment
to 2024
Successful equity fund raise of £172m (including the Snam investment)
to accelerate development
Completion of the world's first electrolyser Gigafactory, expected to
reach annual production capacity of 1,000MW per annum by end 2023
and official opening by the Business & Energy Secretary, Kwasi Kwarteng
Contracts backlog of £171m (2020: £119m) constituting 310MW
of electrolysers up 44% YoY
£36m (2020: £16m) of contracted backlog (Work in Progress) up 125%
YoY representing 43MW of electrolysers
10MW of the backlog (Work in Progress) is the REFHYNE I project
recognised over time
The balance of the backlog (Work in Progress) is expected to be delivered
in FY22
Tender pipeline value to ITM Power of £378m (2020: £195m),
up 94% YoY
Tender pipeline constitutes 1,011MW of potential electrolysis demand
Installation of the 10MW REFHYNE I project completed, with expansion
by 100MW planned for REFHYNE II, at Shell’s Rhineland Refinery
Refuelling assets now grouped together under ITM Motive, with focus
shifting to larger scale refuelling projects for fleets, buses and trains
to increase profitability and provide a more appropriate structure for
sustainable growth of the network
Part of consortium awarded €5m for the OYSTER Project to Study
Offshore Green Hydrogen Production
2021 FINANC IAL
RESULT S
Total Revenue & Project Grant Funding of £5.1m (2020: £5.4m) down 6%, comprising:
Sales revenue: £4.3m (2020: £3.3m) up 30%
Collaborative grant income recognised: £0.8m (2020: £2.1m) down 63%
Loss from operations £26.7m (2020: £29.4m), reduced by 9%
Adjusted EBITDA loss (see note 6) £21.4m (2020: loss £18.1m), increased 18%
Available cash balance of £176.1m at year-end (2020: £39.9m)
RE VIEW OF OPER ATIONS
I T M P O W E R -
B U I L D I N G A G L O B A L P R E S E N C E
ITM Power has worked hard to build relationships globally
by adding anchor points - via our partnership with Linde and
through collaborations - outside of the UK market. This effort
will put the Group in a good position to service markets
internationally both now and in the future.
One such partnership with Optimal Group Australia will provide
long-term commissioning, operational and maintenance
support, enhancing ITM Power’s capabilities to deploy skilled
engineering resource and spare parts for its customers across
Australia. To ensure that ITM Power’s customers continue
to enjoy the benefits of low cost and low carbon energy well
into the future, Optimal will provide nationwide service and
support through its network of factory certified ASP’s
(Authorised Service Personnel).
The provision of a 0.7MW HGas electrolyser system for use
in a hydrogen microgrid project in Tasmania supported by the
Federal Government’s Blue Economy CRC programme will be
the first deployment with Optimal and a platform for training
(through ITM Power’s Hydrogen Academy).
The sale of a 2.0MW electrolyser to Sumitomo Corporation will
be used as an important reference plant for further sales in
Japan through our partnership with Sumitomo. This will be the
first MW scale electrolyser system ITM Power has deployed
in Japan. The HGas3SP product will undergo modification
to ensure hydrogen supply pressure is below 10 bar in order
to comply with Japan’s High Pressure Gas Safety Act.
ITM Power and Sumitomo are continuing their collaboration
in the areas of business development, local compliance and
after sales support to ensure a comprehensive green hydrogen
offering in Japan.
Graham Cooley, CEO, commented
“
2021 has been another
transformational year for ITM Power.
We attracted a strategic investor
in Snam S.p.A., and through our fund
raise in October 2020 gave ourselves
a platform to deliver to market our
next generation product, the 5MW
Gigastack, two years earlier than
previously planned. We also moved
into Bessemer Park, the world’s largest
PEM electrolyser factory and
commenced manufacturing there in
January 2021. We have seen national
commitments to net zero accelerate,
and I believe we are very well placed,
with our partner Linde, to address the
rapidly growing demand in the market.
“
I T M A N N U A L R E P O R T 2 0 2 1
C HAIRMAN ’S
STATEMENT
The year to April 2021 was a further year of innovation
and growth for the Group, as the build of Bessemer Park,
our new 1GW factory concluded, and the Group started
to win its first contracts through its joint venture with
Linde GmbH, ITM Linde Electrolysis GmbH. The partnership
with Linde has enabled the Group to concentrate more
directly on its key manufacturing capabilities, and to
develop a more comprehensive, solutions-led approach
to an increasing number of addressable markets,
both in geography and application.
During the year, the Group completed a £172m fund raise
to accelerate the technology offering, both in terms of
performance of the existing products but also to accelerate
the development of the 5MW Gigastack, in a direct response
to market demand for larger systems. The opportunity
pipeline has grown significantly. New and larger systems,
using the Gigastack, remain on track for factory readiness
in late 2022 and are already being bid into a growing range
of projects.
During the past year the Group made changes to the board,
with Katherine Roe joining the board, and leading both
the Remuneration Committee and the ESG Committee.
In December 2020, Tom Rae also joined the board as
nominee director of JCB.
In May two important reports were published regarding
the macro market dynamics for hydrogen. The IEA
(International Energy Agency) report “Net Zero by 2050;
A roadmap for the Global Energy Sector” stated that
to get to net zero by 2050 the world needs 322m Tonnes
of electrolytic hydrogen and a global electrolyser capacity
of 3,585GW’ The Aurora Energy report “HyMAR” identifies
a current pipeline of electrolysers of over 200GW with
85% of the 200GW is in Europe.
National electrolyser targets increased from 40GW to
144GW in the year and the EU announced its new net-zero
law. China also declared net-zero by 2060. The US re-joined
the Paris Agreement on Feb 19th, 2021 and declared
its first DOE “Earthshot” for Green Hydrogen on 7th June
2021. Global demand for electrolysers from industry,
to decarbonise production processes, and from utilities
and power companies, to store renewable energy,
is accelerating.
S I R R O G E R B O N E A N D J U A N C A R L O S
J O B E T, M I N I S T E R F O R E N E R G Y A N D
M I N I N G I N C H I L E
C H A I R M A N ' S S T A T E M E N T
The potential scale of demand originally underpinned the
Group's decision to invest in a step change in capacity at
the new Bessemer Park facility. In the event, the new 1GW
per annum capacity is likely to be fully utilised earlier than
originally envisioned, as evidenced by tendering activity
and ITM Power’s backlog of firm orders. As the drive to
achieve net zero targets continues, the market for large
scale electrolysis equipment to produce green hydrogen
may well become supply constrained.
In closing, I would like to thank all shareholders, old and
new, for their support and to recognise the significant
achievements of the staff at ITM Power resulting from
their hard work in 2020 and 2021.
SIR ROGER BONE
Chairman
I T M A N N U A L R E P O R T 2 0 2 1
CORPOR ATE
UPDATE
MARKE TING
UPDATE
C O R P O R A T E A N D
M A R K E T I N G U P D A T E S
ITM Power has been developing a dedicated Training
and Marketing suite facility at the Bessemer Park
Gigafactory, which will enable the business to host our
own marketing and training events, as well as provide
a venue for National and International conferences that
align with ITM Power’s objectives. The Marketing suite
can provide seating for over 100 attendees and will
become an important marketing resource as the world
opens up again post-Covid.
The business has hosted a number of visitors as the Covid
restrictions have started to be lifted, including Mr Clive
Betts, the Member of Parliament for Sheffield South East
and a delegation from Chile’s Energy and Mining Ministry,
led by Minister Juan Carlos Jobet.
The Group has been active in supporting the Gigastack
project and developing communications alongside BEIS,
Ørsted and Phillips 66 Limited. The project won the
Humber Renewables Award for Innovation in March 2021,
and published a project update in May this year, with the
final report due in September 2021.
This year the Covid restrictions have continued, and
exhibitions including the Hannover Messe, normally a key
event in ITM Power's calendar and the source of much
interest for our technology, have been cancelled or limited
to online activities. The Group continues to send out
regular communications via a newsletter and we have
a growing number of sign-ups to receive the news from
ITM Power.
C O V I D -19
Covid-19 has continued to have an impact on the normal
operations of the Group. Staff who can work from home
have been doing so throughout the financial year,
supported through VPN access, Microsoft Teams,
various sharepoint spaces dealing with wellness and
mental health related topics and more recently,
an internal network space called Yammer that aims
to provide a community spirit to the workforce.
As reported in our previous financial statements,
the factory was temporarily reduced to a skeleton staff
at the start of the 2020-21 financial year, with 29
production staff furloughed under the government job
retention scheme while changes were implemented to
ensure the premises were Covid-secure.
In early June, we began the process of returning people
to the factory. This required risk assessments of areas to
make them suitable for work under new social distancing
rules, close liaison with shop floor personnel over abilities
to return to work and skillset requirements to further the
production process at the correct times, as well as return
to work inductions to explain the new PPE and location
requirements for safe, effective working.
With Bessemer Park available for office use from the
autumn and a transfer of the factory after the Christmas
break, we have additional flexibility and space to enable
staff to come into work safely, whilst ensuring numbers
remained manageable within social distancing guidelines.
This has allowed us to offer alternatives for people who
have been struggling to work from home.
Management continued to monitor the effect of Covid-19
to deploy personnel efficiently to project site works
in order to minimise project delays, utilising European
and third party engineers in locations to which UK staff
could not travel. A contingent liability has been disclosed
in note 28 to the accounts concerning the delays caused
by different national Covid strategies and rules,
and how this may impact our resources across our
ongoing projects.
Further information about how the Group has
supported its workforce can be found in the Corporate
Governance Report.
K W A S I K W A R T E N G M P
A T B E S S E M E R P A R K
B E S S E M E R P A R K –
G L O B A L M A N U F A C T U R I N G H Q , S H E F F I E L D
The fit out of the 1,000MW per annum Gigafactory
at Bessemer Park reached ‘Practical Completion’ –
the handover to the Group by the contractors of the
completed building – in January 2021, having suffered
only a minor delay from the Covid-19 pandemic.
The completed fit out included an expansion of the
existing offices, enlargement of the stack manufacturing
and production areas and a dedicated ATEX rated space
for factory acceptance testing of products, all coupled
with the necessary 5MW power supply on site.
The Gigafactory also houses the 24-hour remote and
technical monitoring centre that will support ITM
Power’s after-sales service proposition, the Marketing
centre, Technology centre and component stores.
The site, just off J34 of the M1 in Sheffield will welcome
visitors in the near future, with the creation of
the conferencing facility, as well as a Hydrogen Academy
to support the training of apprentices, local engineers
and customers, together with facilities for site visits
by customers, shareholders and other stakeholders.
The ITM Power Gigafactory delivers a blueprint for
a high capacity, semi-automated PEM electrolyser
manufacturing facility, which can be readily replicated
elsewhere, enabling a local facility to be planned and
rapidly deployed in response to large order volumes.
The factory was officially opened by the Rt Hon Kwasi
Kwarteng, Secretary of State for Business, Energy and
the Environment on 17 August 2021 as he launched the
UK Government’s Hydrogen Strategy.
Business & Energy Secretary Kwasi Kwarteng:
“
Hydrogen has the potential to provide
a third of the UK’s energy in the future.
Our first-ever Hydrogen Strategy sets
out how we will back this technology,
ramp up domestic production and
create a new, British industry that
will thrive over the next decade
and beyond.
ITM Power is at the forefront of
manufacturing green hydrogen and
its world-leading technologies are
already playing an important role
in cutting emissions as the UK moves
away from fossil fuels, helping us
meet our climate commitments, while
creating thousands of high-quality jobs
and unlocking billions-of-pounds of
private investment.
“
I T M A N N U A L R E P O R T 2 0 2 1
PRODUC T S AND
TEC HNOLOGY
P R O D U C T S A N D
T E C H N O L O G Y
B E S S E M E R P A R K
S I R R O G E R B O N E A N D
J U A N C A R L O S J O B E T
A T B E S S E M E R P A R K
ITM Power continues to place strategic focus on the
development of its technology. The opening of Bessemer
Park earlier this year saw the Product Development
and Technology teams relocate into the new Technology
Centre. The additional space provides an excellent
location to build on the Group’s 20 years of experience
and accelerate key development activities.
The ITM Power technology roadmap is focused
on reducing cost, increasing efficiency and expanding
production capacity of our electrolyser stacks and
products. Particular emphasis has been placed
on verification of improvements at the stack level.
These have included improved membrane materials,
ultra-low catalyst loadings and in-house component
preparation. The now co-located technology and
production teams work closely together as new
manufacturing machines are adopted by the business
to underpin production capacity ramp up and prepare
for the larger 5MW Gigastack platform.
Product cost reduction is an important focus area for
ITM Power. Last year the Group presented a full system
price reduction plan including a target to halve the average
product price within five years. The strategy to achieve
these improvements is centred on standardisation
and modularisation of the product offering alongside
fully leveraging global buying power of partners and
an integrated technology roadmap. The single biggest gains
are available from the PEM stack and the power conversion
systems. ITM Power has brought key stack preparation
processes in-house with the move to Bessemer Park.
Together with semi-automation and in-line quality
assurance, this has achieved both cost reduction and
capacity expansion for the stack platform.
Another focus area has been continued reduction
of precious metal loading. Over the last 10 years,
the use of precious metals within ITM Power stacks has
reduced by over 80%. This core competency and vertical
integration enabled ITM Power to achieve the 2030
EU target of 0.4mg/W for precious metal loading for
electrolysers in 2019 and significant further progress
has been made since then. As a manufacturer of its own
catalyst inks, ITM Power has been working on the
reduction, recycling and reuse of precious metal catalyst
loading for 20 years. As part of the Group’s existing cost
reduction plan, these developments will be rolled out
in phases, subject to ITM Power’s well-established
verification process. This long running activity makes
an important contribution to cost reduction and provides
some insulation against the risk of supply constraints
in the precious metal supply chain.
OVER THE
LAST 10 YEARS,
THE USE
OF PRECIOUS
METALS WITHIN
ITM POWER
STACKS HAS
REDUCED
BY OVER 80%
I T M A N N U A L R E P O R T 2 0 2 1
S T R A T E G I C R E P O R T
STR ATEGIC
REPORT
S TAT EMEN T OF S COPE
The purpose of the Strategic Report is to inform the
members as to how the directors have performed
in their duty to promote the success of the Group.
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, which underly any such
forward-looking information.
This Strategic Report has been prepared for the Group
as a whole and therefore gives greater emphasis to those
matters that are significant to ITM Power and its subsidiary
undertakings when viewed as a whole.
I T M A N N U A L R E P O R T 2 0 2 1
D R G R A H A M C O O L E Y W I T H K W A S I K W A R T E N G M P
BUSINES S
MODEL
I N T R O D U C T I O N
ITM Power designs and manufactures integrated hydrogen energy
systems based on Proton Exchange Membrane (PEM) electrolyser
technology and has a product offering that is scalable above
100MW in size. Of particular importance is the ability of the
systems to respond rapidly and to generate hydrogen at
a pressure, flow rate and purity appropriate to its application.
ITM Power is a globally recognised expert in hydrogen
technologies with the overarching principle of taking renewable
energy from the power network or other directly coupled sources,
converting it into green, zero-carbon-footprint hydrogen and
using it in one of three broad applications – Power to Gas,
Clean Fuels and Industrial Hydrogen. There has been significant
growth in demand for these applications in the market place and
the directors continued to believe that all of these markets will
grow further over the coming years based on the commitment
by governments worldwide to mitigate climate change, the growth
of renewables in the energy mix and the need to decarbonise
industrial processes.
The directors believe that ITM Power remains uniquely
well-placed to capture material shares of each market.
W O R K I N G W I T H
S N A M S . P. A .
As part of the strategic fund raise in October 2020, Snam invested
£30 million in ITM Power, and entered into a Commercial
Partnership Agreement between the businesses, which included
preferred supplier status for the first 100MW of Snam’s PEM
electrolyser orders for delivery by 2024/2025.
The Commercial Partnership Agreement also includes the potential
for collaboration on a global pipeline of further projects. Since the
partnership was agreed in October 2020, initial discussions have
taken place between ITM Power and Snam to establish best
practices for working and partnering on projects.
SNAM have also taken positions on the Technology Management
Committee and Strategic Advisory Committee within the ITM
Power business.
S T R A T E G I C R E P O R T
W O R K I N G W I T H
L I N D E G M B H
Following on from Linde GmbH’s strategic investment in ITM
Power and the establishment of ITM Linde Electrolysis GmbH,
in which ITM Power holds a 50% stake, work has continued
to develop and embed the strategic partnership with Linde.
This partnership allows each company to focus on its core
competencies, with ITM Power to focus solely on its prime
source of competitive advantage – the efficient manufacture
and supply of best in class PEM electrolysers, while Linde will
provide its world leading EPC services to offer best-available
hydrogen solutions to customers.
This partnership is now starting to bear fruits, with the signing
in January 2021, of the first contract under the partnership,
to build, own and operate the world’s largest PEM electrolyser
plant at the Leuna Chemical Complex in Germany. This new
24-megawatt electrolyser, supplied by ITM Power will produce
green hydrogen for industrial customers through Linde’s
existing pipeline network. In addition, Linde will distribute
liquefied green hydrogen to refuelling stations and other
industrial customers in the region. The total green hydrogen
to be produced from the electrolyser system could fuel
approximately 600 fuel cell buses driving 40 million kilometres
and save up to 40,000 tons of carbon dioxide exhaust
emissions per year.
THE PIPELINE
OF POTENTIAL
PROJECTS COMING
THROUGH THE
JOINT VENTURE
CONTINUES TO
GROW AND THE
RELATIONSHIP
WITH LINDE
CONTINUES TO
STRENGTHEN
AT ALL LEVELS
I T M A N N U A L R E P O R T 2 0 2 1
BUSINES S ENVIRONMENT & ANNUAL RE VIE W
OF THE BUSINES S
S T R A T E G I C R E P O R T
E U R O P E A N C O M M I S S I O N A N N O U N C E S H Y D R O G E N
S T R AT E G Y, E N E R G Y S Y S T E M S I N T E G R AT I O N
S T R AT E G Y A N D C L E A N H Y D R O G E N A L L I A N C E
In July 2020, the European Commission announced its EU Hydrogen Strategy and its Energy
Systems Integration Strategy. The announcement prioritised the development of renewable
hydrogen, produced using mainly wind and solar energy and went on to state:
From 2020 to 2024, we will support the installation of at least 6 gigawatts
of renewable hydrogen electrolysers in the EU, and the production of up to one
million tonnes of renewable hydrogen.
From 2025 to 2030, hydrogen needs to become an intrinsic part of our integrated
energy system, with at least 40 gigawatts of renewable hydrogen electrolysers
and the production of up to ten million tonnes of renewable hydrogen in the EU.
From 2030 to 2050, renewable hydrogen technologies should reach maturity
and be deployed at large scale across all hard-to-decarbonise sectors.
To help deliver on this Strategy, the Commission has launched the European Clean Hydrogen
Alliance, which aims to build up an investment pipeline for scaled-up production and support
demand for clean hydrogen in the EU.
RenewableUK CEO Hugh McNeal:
“
Green hydrogen has a key role to play alongside
renewables in the transition to a net zero energy system.
RenewableUK and our members see enormous potential
for renewable hydrogen in the decarbonisation of industry,
heating, heavy transport and shipping, as well as offering
a large-scale energy storage solution. Renewable hydrogen
is set to be a game-changer for decarbonising our economy
and, with the right policies in place, the UK can be
a world-leader in this market.
“
B E S S E M E R P A R K
In August 2021, the UK government set out its own Hydrogen Strategy to drive forward a green
industrial revolution and meet their ambition for 5 GW of low-carbon hydrogen production
capacity by 2030. The Strategy sets out a policy landscape to identify priorities and support
mechanisms for rolling out green hydrogen production in the UK. It includes a Hydrogen
Business Model designed to overcome the cost gap between low-carbon hydrogen and fossil
fuels and a Net Zero Hydrogen Fund for the commercial deployment of new low-carbon
hydrogen production plants across the UK.
I T M A N N U A L R E P O R T 2 0 2 1
POWER-TO - GA S
As governments and supra-national bodies continue
to legislate for the reduction of emissions following the
COP21 Paris Agreement on climate change, planting up
with renewable generation has increased the need for
energy storage to address the challenge of intermittency.
Battery technology cannot achieve this at the scale
required. Thus, the offshore wind and gas sectors have
started to advocate green hydrogen as the means for
sustaining their long-term business models.
Power-to-Gas can meet the demand for long-term,
large-scale energy storage, converting surplus renewable
energy into hydrogen gas by rapid response electrolysis
and subsequently injecting it into the gas distribution
network. These grid balancing services can be an
important source of revenue for operators and ITM
Power’s rapid response Proton Exchange Membrane
(PEM) technology allows units to be turned on and off
in under one second making them eligible for the UK
National Grid’s Enhanced Frequency Response Payments.
T HE OYS T ER
PROJEC T
T H E O Y S T E R P R O J E C T T O
S T U D Y O F F S H O R E G R E E N
H Y D R O G E N P R O D U C T I O N
The Fuel Cells and Hydrogen 2 Joint Undertaking
(FCH2-JU), a public private partnership of the European
Commission, has made an award of €5m to investigate
the feasibility and potential of combining an offshore
wind turbine directly with an electrolyser and transporting
renewable hydrogen to shore.
To realise the potential of offshore hydrogen production,
there is a need for compact electrolysis systems that
can withstand harsh offshore environments and have
minimal maintenance requirements while still meeting
cost and performance targets that will allow production
of low-cost hydrogen. The project will provide a major
advance towards this aim. The electrolyser system will
be designed to be integrated with a single offshore wind
turbine, and to follow the turbine’s production profile.
Furthermore, the electrolyser system will integrate
desalination and water treatment processes, making
it possible to use seawater as a feedstock for the
electrolysis process.
The OYSTER project partners share a vision of hydrogen
being produced from offshore wind at a cost that is
competitive with natural gas (with a realistic carbon tax),
thus unlocking bulk markets for green hydrogen making
a meaningful impact on CO2 emissions, and facilitating the
transition to a fully renewable energy system in Europe.
This project is a key first step on the path to developing
a commercial offshore hydrogen production industry
and will demonstrate innovative solutions with significant
potential in Europe and beyond.
The project is planned to start in 2021 and run to the
end of 2024, over which time the consortium will develop
and test a megawatt-scale fully marinised electrolyser
in a shoreside pilot trial. ITM Power is responsible for
the development of the electrolyser system and the
electrolyser trials, while Ørsted will lead the offshore
deployment analysis, the feasibility study of future
physical offshore electrolyser deployments, and support
ITM Power in the design of the electrolyser system for
marinisation and testing. Siemens Gamesa Renewable
Energy and Element Energy are providing technical
and project expertise.
S T R A T E G I C R E P O R T
Anders Christian Nordstrøm, Vice President and Head
of Ørsted’s hydrogen activities:
To create a world that runs entirely
on green energy, we need to electrify
as much as we can. However, some
sectors cannot decarbonise through
electrification and that’s where
renewable hydrogen could play
a significant role. Offshore hydrogen
production could be a future,
supplemental way of getting large
amounts of energy generated from
offshore wind power to shore.
As the largest offshore wind
company in the world, we’re of
course keen to better understand
what it will take to produce
renewable hydrogen offshore as
a potential future supplement to
production of renewable electricity.
Having pioneered the offshore wind
industry, we know that thorough
analysis and testing are required
before deploying new technologies
at sea.
I T M A N N U A L R E P O R T 2 0 2 1
ITM POWER ENJOYS
A UNIQUE POSITION
HAVING SUPPLIED
THE WORLD’S FIRST
PEM POWER-TO-GAS
ELECTROLYSER
IN 2014,
AND CONTINUES
TO ENGAGE IN
A NUMBER OF
INDUSTRY-LEADING
STRATEGIC
PROJECTS
““ B U S I N E S S E N V I R O N M E N T & A N N U A L R E V I E W
O F T H E B U S I N E S S
S T R A T E G I C R E P O R T
C L E A N F U E L
L A R G E R V E H I C L E R E F U E L L I N G
Within the transport sector, a renewed focus has been
placed on the development of zero-emission heavy
vehicles, where fleets need to be refuelled with large
amounts of hydrogen on a regular basis. ITM Power
has won contracts to supply on-site hydrogen generation
equipment for refuelling in the UK, France, the US
and Australia.
I T M R E F U E L L I N G S I T E
The transport sector is one of the largest users of fuel
in the world, and currently it is dependent on fossil fuels,
which are highly polluting and are becoming ever scarcer
and more expensive. Hydrogen fuel is generated on site
by ITM Power’s rapid response electrolyser system,
using renewable electricity and water with a full tank
of fuel dispensed within a matter of minutes at the station
where it is generated. This means a zero-carbon footprint
and no use of further transport infrastructure.
Hydrogen is light and can be stored under pressure,
making it suitable for many vehicle types as it does not add
further weight, or use further energy when on board.
An additional benefit of hydrogen is its role in supporting
the drive for cleaner air, especially important in densely
populated cities. When hydrogen fuel cell electric vehicles
are driven, the only emission is water vapour and
each three-minute car refuel provides a range of up
to 400 miles.
O W N E R - O P E R AT O R O F R E F U E L L I N G S TAT I O N S
ITM Power continue to roll out a network of hydrogen
refuelling stations in the UK and was proud to play a part
in the support of key workers during the Covid-19
lockdowns. In the year, the Group dispensed 14 tonnes
of hydrogen from its refuelling stations (2020: 31 tonnes).
The Group recently completed work on its ninth UK public
access hydrogen refuelling station (HRS) at Tyseley Energy
Park in Birmingham. This is due to be joined by a bus
refueller in the coming months.
Post year-end plans were announced to group ITM Power’s
refuelling station portfolio into a separate subsidiary,
ITM Motive. The strategy will be to focus on larger scale
refuelling for fleets of vehicles while the public stations
build their revenue. ITM Motive continues to work closely
with its partners across the entire supply chain and is
particularly excited to see OEMs bringing new vehicles to
the market including the MK2 Mirai this year, several bus
options, and coming early next year trucks from Hyzon
and panel vans from a range of manufacturers including
Vauxhall in the UK. The availability of a wide range
of vehicle options should lead to a significant growth
in the market.
‘G R E E N H Y D R O G E N
F O R S C O T L A N D ’
T O H E L P R E A C H
N E T Z E R O TA R G E Ts
A pioneering strategic partnership has been established
to create new green hydrogen production facilities with
clusters of refuelling stations across Scotland.
These clusters will allow Scotland’s abundant renewable
power generation capacity to be converted to hydrogen
for use by vehicles, supporting efforts to achieve net zero
by 2045. ‘Green Hydrogen for Scotland’ will offer
an end-to-end market solution for reducing vehicle
emissions through the provision of green hydrogen.
The partnership’s first project, ‘Green Hydrogen
for Glasgow’, is designed to provide carbon-free transport
and clean air for communities across the city, which wants
to become the first net-zero city in the UK. A planning
application has now been made for a proposed green
hydrogen production facility located on the outskirts
of the city at ScottishPower Renewables’ Whitelee Wind
Farm, the UK’s largest onshore wind farm. This will be
operated by BOC, using wind and solar energy to power
a 20MW electrolyser, delivered by ITM Power.
This represents a doubling in the electrolyser scale capacity
originally envisaged and is in response to market demand.
The project aims to supply hydrogen to the commercial
market within the next two years.
This project also supports the Scottish Government’s
decarbonisation targets and Glasgow City Council’s
commitment to creating a zero emissions vehicle fleet,
using only electric and hydrogen-powered vehicles
by the end of 2029.
Lindsay McQuade, CEO of ScottishPower Renewables:
By working with industry leaders
ITM Power and BOC to bring our
collective expertise together,
we will maximise the potential
of this new technology to offer fleet
operators and industry a packaged
solution that brings all of the pieces
of the jigsaw together – production,
distribution, supply. All they have
to do is provide the vehicles.
We have a huge opportunity here
to bring net zero ever closer for the
benefit of everyone and support
a better future, quicker – and we
will make it happen.
King Willem Alexander opens HyStock, where ITM Power Plc supplied the electrolyser to Gasunie
W H I T E L E E W I N D F A R M
I T M A N N U A L R E P O R T 2 0 2 1
““
B U S I N E S S E N V I R O N M E N T & A N N U A L R E V I E W
O F T H E B U S I N E S S
H2O Z B U S P R O J E C T -
D E P L O Y I N G H Y D R O G E N
F U E L C E L L B U S F L E E T S
F O R P U B L I C T R A N S P O R T
A C R O S S A U S T R A L I A
In May 2020, ITM Power announced the formation of the
H2OzBus Project and the signing of a memorandum
of understanding with strategic partners. The project will
focus on infrastructure requirements and detailed plans for
an initial deployment of 100 hydrogen fuel cell electric
buses in up to 10 central hub locations across Australia
where interest and demand for fuel cell buses has already
been identified. This aligns well with ARENA’s (Australian
Renewable Energy Agency) key investment priorities
in Accelerating Hydrogen and Decarbonising Industry.
The key expertise of each partner and their proposed
roles in the project are: ITM Power and BOC will provide
the hydrogen production and refuelling infrastructure;
Ballard Power Systems will supply the fuel cell system to be
integrated into the electric buses supplied by supporting
bus manufacturers; Transit Systems, will maintain and
operate the vehicles as part of their daily urban transit
operations (or within a strategically located project
managed by Transit Systems), and: Palisade Investment
Partners will assist in providing funding and strategic
financial oversight, for the project.
Roger Lloyd, Managing Director & CEO of Palisade
Investment Partners:
“
Palisade believes green hydrogen
will play an important role in the
further decarbonisation of our
economy, providing an alternate
fuel source and an energy storage
mechanism. We are an active
investor in renewable energy and
transportation and are delighted
to work with industry leading
partners and the Government
on the H2OzBus project.
“
G R E E N H Y D R O G E N
P R O J E C T I N H E R T E N ,
G E R M A N Y W I T H L I N D E
E N G I N E E R I N G
Linde Engineering announced its successful bid for the
design and construction of an integrated hydrogen
refuelling station and electrolysis plant for AGR in Herten,
confirming that ITM Power is the preferred supplier of the
electrolysis equipment envisioned by the project.
The project is receiving funding from the German Federal
Ministry of Transport and Digital Infrastructure.
The electrolysers will have an annual capacity of around
440,000 kg of hydrogen with electricity coming from AGR’s
waste-to-energy thermal power plant, where municipal
and commercial waste with a biogenic content of around
50 percent serves as the primary fuel source. The planned
refuelling station will be able to fill vehicles at 350 bar and
700 bar and therefore will be suitable for both cars and
trucks, including AGR’s own fleet of waste trucks.
Through the thermal recycling of local waste and its
conversion into hydrogen, the undertaking is a successful
example of the circular economy in action, providing an
important reference site for the municipality market.
S T R A T E G I C R E P O R T
Joachim Ronge, Chairman of AGR’s Management Board:
“
For years we have been pursuing
a strategy of high energy recovery
in connection with disposal security
and climate protection.
After increasing district heat supply
starting in 2019, we have been making
further steps toward more climate
protection by producing hydrogen
together with other companies.
Thermal waste treatment offers
excellent conditions to implement this
technology to decarbonize logistics:
Waste collection vehicles deliver waste
with biogenic content, and the energy
it contains is transformed into
hydrogen. The waste collection vehicles
are then refuelled with the resulting
green hydrogen.
“
I T M A N N U A L R E P O R T 2 0 2 1
INDUS TRIAL
Many industries use hydrogen as part of their production
processes. Today, almost all of this hydrogen is made
by steam reformation of methane (natural gas), a highly
carbon intensive method. Three industries dominate
carbon emissions from the use of hydrogen: ammonia
production, steel making and the Group’s prime target,
refineries. Refineries currently use hydrogen to improve
the quality of fractional distillation products and most
of this hydrogen is produced from steam-reformation
but in order to comply with stringent legislation and
avoid fines, refineries need a cost-effective green
hydrogen solution that reduces carbon emissions
while allowing them to maintain output.
In addition, natural gas reformers have long start-up times.
With their rapid start up times, ITM Power’s PEM
electrolysers could provide an immediate backup solution
to prevent production downtime and preserve security
of hydrogen supply.
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.
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.
S A L E T O L I N D E
O F W O R L D ’ S L A R G E S T
P E M E L E C T R O LY S E R s
In January 2021, Linde announced that it will build,
own and operate the world’s largest PEM electrolyser
plant at the Leuna Chemical Complex in Germany.
This new 24-megawatt electrolyser will be supplied
by ITM Power to produce green hydrogen for industrial
customers through Linde’s existing pipeline network.
In addition, Linde will distribute liquefied green hydrogen
to refuelling stations and other industrial customers in the
region.The total green hydrogen to be produced could fuel
approximately 600 fuel cell buses driving 40 million
kilometres and save up to 40,000 tons of carbon dioxide
exhaust emissions per year.
Jens Waldeck, President Region Europe West, Linde:
“
Clean hydrogen is a cornerstone
of the German and EU strategies
to address the challenge of climate
change. It is part of the solution
to help reduce carbon dioxide
emissions across many industries,
including chemicals and refining.
This project shows that
electrolyser capacity continues
to scale up and it is a stepping
stone towards even larger plants.
“
S T R A T E G I C R E P O R T
I T M A N N U A L R E P O R T 2 0 2 1
“
P L A N N E D 10 0 M W
E X PA N S I O N O F
T H E S H E L L R E F I N E R Y
P R O J E C T
In February, Shell announced plans to increase the
capacity of the ITM Power PEM electrolysis plant
by 100MW at its Rhineland Refinery in Germany.
Shell’s partners for the Refhyne II electrolysis project
are ITM Power, ITM Linde Electrolysis and Linde.
Subject to finalising contracts and securing some
match funding, the partners will work with the Shell
to effect this upgrade.
Shell intends to manufacture sustainable aviation fuels
in the Wesseling section of the Rhineland Refinery.
To this end, the company wants to set up a first
commercial Bio Power-to-Liquid plant. The synthetically
produced kerosene is intended to help reduce airlines’
CO2 footprint. Construction of this facility could start
in 2022, pending final investment decisions. Both the
electrolyser upgrade and the synthetic kerosene projects
are integral parts of the planned transformation of the
site into the “Shell Energy and Chemicals Park Rhineland”.
Dr. Fabian Ziegler, CEO of Shell Deutschland Oil
“
We will only be able to maintain
mobility in the future if it is made
more sustainable and vehicles on
the road, on water and in the air
can significantly reduce emissions.
To make this possible, the product
portfolio of the area will and must
change significantly. As a partner
to business, politics and society
in the Rheinische Revier, Shell would
like to drive its change.
“
S T R A T E G I C R E P O R T
E L E C T R O LY S E R S A L E
T O L I N D E F O R H2P O W E R
I N A U S T R I A
One of the main goals of the H2Pioneer project is
demonstrating the production of green hydrogen on-site
to be used in semiconductor production, mostly replacing
the supply of liquefied hydrogen delivered in trailers.
An HGas3SP (2MW) electrolyser system will produce green
hydrogen, which after further purification by Linde will be
ultra-pure and suitable for semiconductor manufacture.
The use of electrolysis simplifies downstream hydrogen
purification and minimises delivery logistics while helping
to reduce carbon dioxide emissions from the hydrogen
supply chain. This is an industry that Linde understands
very well and for which it has numerous existing
customers worldwide but will be a new industry for ITM
Power technology.
THE USE OF
ELECTROLYSIS
SIMPLIFIES
DOWNSTREAM
HYDROGEN
PURIFICATION
AND MINIMISES
DELIVERY LOGISTICS
WHILE HELPING
TO REDUCE
CARBON DIOXIDE
EMISSIONS FROM
THE HYDROGEN
SUPPLY CHAIN
I T M A N N U A L R E P O R T 2 0 2 1
S T R A T E G I C R E P O R T
I T M A N N U A L R E P O R T 2 0 2 1
RE VENUE S TRE AM S
FOR THE GROUP
As well as having potential revenue streams from three large application
markets, there are a variety of ways in which the Group can generate
revenue globally:
P R O D U C T S A L E S
ITM Power positions itself as a provider of PEM electrolyser systems,
selling to a range of customers and target markets globally. The Group
offers standard containerised and modular large-scale solutions based
around core technology.
C O N S U LT I N G C O N T R A C T S
Many system contracts that are bespoke are preceded by a design
study or a Front-End Engineering Design (FEED) contract that defines
solutions to customer specifications.
M A I N T E N A N C E C O N T R A C T S
ITM Power offers warranties on systems alongside remote support
and maintenance contracts. The Group expects to generate a growing
long-term income stream from these activities as system
deployments continue.
F U E L & O T H E R S A L E S
The Group has been the beneficiary of funding from UK and EU bodies,
which has helped accelerate infrastructure development for the provision
of hydrogen to fleets and individual users from our Hydrogen Refuelling
Stations (owner-operator model). These sales are retail in nature,
occurring at a point in time. Other income may be received and
accounted in a similar way e.g. scrap sales.
G R A N T F U N D I N G F O R I N N O V AT I O N A N D S C A L E U P
The Group utilises funding from grant bodies to contribute towards
research and the technical advancement of its electrolyser products
through generating greater efficiencies and cost reductions for
ITM Power systems.
FINANC IAL
PERFORMANC E
S T R A T E G I C R E P O R T
Sales revenues in the year were largely generated from
product sales and consultancy. This was predominantly
from two major projects, the REFHYNE I electrolyser build
and the design and proof of concept project commissioned
by BEIS.
Whilst the investment partnership with Linde has started
to generate new contracts, the revenues and cost of sales
from these have not yet materialised, owing to the
accounting treatment under IFRS 15 Revenue from
Contracts with Customers which will keep our standard
product sales in WIP until handover to the customer,
marking the completion of the performance obligation.
Thus, the gross margin is still heavily influenced by legacy
projects and the challenging EPC scope of the works
contracted, particularly when hampered further by
Covid-19 restrictions.
Fuel sales also suffered through Covid-19 lockdowns,
generating only £0.2m (2020: £0.4m), despite continuing to
provide hydrogen road fuel to emergency service workers.
New collaborative project funding recognised in the
year was £0.8m. This has funded research and data
collection projects.
The pre-tax loss for the year under review decreased
to £27.6m (2020: £29.5m). The prior year contained the
significant impairment of our refuelling assets but despite
the continuing growth of the workforce, costs have also
been kept in check this year through a combination
of reduced expenditure during Covid-19 lockdowns and
through closure of our previous properties, leading to
a consolidation of related service expenditure that will
continue into the new financial year.
Net cash burn increased to £32.7m before fund raise
(2020: £23.3m). Cash burn is a non-statutory measure
the directors use to monitor the Group, and is calculated
by deducting from annual cash flow (£136.2m) the effects
of any equity fund raise after costs (£168.9m). A key factor
in this movement is that we have continued to invest in
our future, as illustrated by the increase in the investment
activities section of the cashflow statement from £11.1m
in 2020 to £12.4m in the current financial year. Within this
cash burn figure, there was the completion of our new
building and the fit-out of the factory, from which we have
been operating since January.
I T M A N N U A L R E P O R T 2 0 2 1
FINANC IAL
POSITION
KE Y
FINANC IAL S
A summary of the financial KPIs discussed throughout the annual report is set out in the table below:
S T R A T E G I C R E P O R T
and accrued project income. The effort to reduce the
number of prepaid suppliers will continue into the new
financial year but has been aided by an improved credit
rating and a review of our approved supplier base.
Prepayments totalled £6.5m (2020: £13.3m), down 51%.
Trade debtors in the prior year predominantly related
to grant income debtors, whereas in the current year it is
purely made up of commercial customers (2021: £5.5m
and 2020: £5.3m). At year end, the Group had trade
creditors of £1.2m against a prior year balance of £2.5m.
Overall, creditors have decreased from £14.0m (2020)
to £12.9m. The figure continues to be dominated by
deferred income (£9.0m in the current year and £9.2m
in 2020), which for the most part this year reflects money
received up front on contracts. This is partly due to the
timing of contracts as we embarked on the next wave
of commercial contracts but also point in time revenue
recognition now that we have moved on to standard
product sales (see revenue policy note explaining the
treatment under IFRS 15).
In the year, the Group capitalised development costs
of £1.5m (2020: £1.6m). This was for design of standard
products that will facilitate our offering to the markets
and developments to adapt our core technologies for
new potential uses. The directors see continued product
development as key to building commercial traction.
There was an increase in fixed assets (excluding right
of use assets) to £13.5m from £6.5m in the prior year.
The uplift relates to the leasehold improvements at our
new premises and the kitting out of all the new areas,
including labs, factory, test bays and offices.
At year end, ITM Power had current assets totalling
£205.5m (2020: £67.5m). Funds in the bank totalled
£177.1m (2020: £41.0m), of which there were amounts
on guarantee (restricted cash) of £1.0m (2020: £1.1m).
The Group has previously been required to place amounts
on guarantee as cash cover, which limits working capital
available to the Group mid-contract. ITM Power continues
to structure quotes to obtain sufficient monies up front
to limit the adverse impact of increased activity on
working capital.
Total receivables excluding restricted cash amounts
have decreased from £22.1m (2020) to £21.9m.
However, this balance is no longer dominated by pro
forma and early stage payments made to suppliers for
stock items required in the next wave of units through
production. Instead the balance is split fairly evenly
between trade debtors, prepayments, accrued income
TOTAL PROJECTS INCOME, BEING SALES AND GRANTS
RECEIVABLE (AS SPLIT BELOW)
OF WHICH: SALES REVENUE
OF WHICH: GRANT RECOGNISED IN THE INCOME STATEMENT
OF WHICH: GRANT RECOGNISED ON THE BALANCE SHEET*
(1.35)
(0.42)
PRE TAX LOSS
ADJUSTED EBITDA
27.65
29.52
(21.4)
(18.1)
PROPERTY, PLANT AND EQUIPMENT PLUS INTANGIBLE ASSETS
16.78
8.66
2021
£m
2020
£m
2019
£m
5.04
5.35
17.56
4.28
2.12
3.29
2.47
4.59
7.23
5.74
9.32
(7.3)
6.41
NET ASSETS
197.44
55.75
26.21
*Grant income recognised on the balance sheet includes grant income recognised against the cost of assets acquired and the
movement on grant income receivable for assets paid on pro-forma terms but not yet delivered.
I T M A N N U A L R E P O R T 2 0 2 1
NON - FINANC IAL KE Y
PERFORMANC E INDIC ATOR S
S T R A T E G I C R E P O R T
S T R A T E G I C R E P O R T
E VENT S AF TER THE
BAL ANC E SHEE T DATE
Post balance sheet, a new subsidiary was created
to house the refuelling assets that had previously
sat within ITM Power (Trading) Limited. ITM Motive
Limited will own and operate the UK refuelling stations
in order to drive their profitability. It is a 100% owned
subsidiary so there will be no material impact on the
consolidated accounts.
FY 2021
FY 2020
FY 2019
FY 2018
FY 2017
OUTLOOK
FUEL DISPENSED (KG)
14,452
30,707
31,984
13,036
1,043
FUEL CONTRACTS SIGNED
40
36
33
20
14
No expectations have been set with regards to KPI but prior years provide a baseline.
Fuel dispensed has been affected by the Covid-19 lockdowns in the year with people working from home and not travelling
to events or meetings.
The number of new fuel contracts will become a less important measure of the growth of the market for ITM Power.
This is due to an increase in the number of vehicles on the road but under the umbrella of existing customer contracts and
the uptake of private users rather than businesses. New contracts in the current year were mainly foreign one-off users.
Against a rapidly growing market backdrop ITM Power has
made strong progress in the period, laying the foundations
to deliver turnkey solutions that include the Group’s
manufactured products to markets as a result of partnering
with world-class EPC provider Linde. The near-term outlook
is positive as the record backlog reflects the demand for
larger systems, as well as the strength of partnerships with
major blue-chip companies.
Post year end, the creation of ITM Motive Ltd -still a
100%-owned subsidiary- allows the Group to focus on both
its core manufacturing model and the own/operate model
for refuelling assets. ITM Support is also developing into
a revenue-generating business unit that will add a further
offer to customers.
The Board looks forward to reporting progress as contracts
are awarded, and to providing an update at the AGM
in September.
I T M A N N U A L R E P O R T 2 0 2 1
I T M A N N U A L R E P O R T 2 0 2 1
S TR ATEGY
AND OB JEC TIVES
I T M P O W E R H A S T H E F O L L O W I N G
N E A R A N D M I D -T E R M O B J E C T I V E S:
N E W T E R R I T O R I E S
ITM Power has continued to expand its activities in Europe,
with continued investment in its German Subsidiary and partnerships
with Linde GmbH and SNAM S.p.A. In addition to this, ITM Power PTY
Ltd is well positioned to take advantage of significant potential
opportunities that arise across Australia.
We also continue to monitor the global Hydrogen market and will
be well positioned in order to take advantage of market growth
as these opportunities arise. We assess the requirement for further
investment in new regions and will do so based on strategic business
reviews as required.
P R O D U C T S C A L E U P A N D C O S T O P T I M I S AT I O N
Our R&D activities continue to focus on the scale-up of systems
and our ability to do this at lower costs and long with improved
efficiencies and the standardisation of our product range.
C A S H F L O W
The Board are committed to the Group becoming cash-generative
in the mid-term. In the short-term, funds received from the strategic
fund raise will continue to support the ongoing rollout of the
business plan.
G R O W I N G P I P E L I N E A N D D E L I V E R Y
O F C O N T R A C T E D O R D E R S A N N U A L LY
The Group need to grow the contracted pipeline in the near term
as it signals the revenue that the Group will deliver in the forthcoming
periods. As such, pipeline development and then project delivery
remain key objectives for the Board. However, care has been taken
over the past year to ensure that projects are not undertaken solely
for their revenues but with due consideration to their fit with the
other business objectives.
S T R A T E G I C R E P O R T
S T R AT E G I E S F O R A C H I E V I N G
O U R O B J E C T I V E S
The Group has a model of locating agents in key territories to position
ITM Power as a world leading developer and supplier of electrolyser
products. The Group has subsidiaries in Germany, the US (California),
and Australia, with sales representatives also covering France and
Benelux. This is augmented by the growing business development
experience and resources within ITM Linde Electrolysis GmbH and
with the wider Linde network.
Product development, and in particular upscaling of product offering,
continues to be achieved through securing and utilising project
funding along with funding secure through the strategic fund raise.
Utilising project funding serves the dual purpose of reducing cash
outflow and creating strong key partnerships within industry.
ITM Power has also been developing a suite of standard products
that can meet many customer requirements, as well as further
developing the concept of modular systems that can facilitate
multi-MW solutions.
In the medium term, national recovery strategies and announced
commitments to achieve net zero by many countries will enable
ITM Power to fill its factory, and address a demand-led market.
It will also seek to generate recurring revenue from after sale services
and world class remote technical support.
I T M A N N U A L R E P O R T 2 0 2 1
PRINC IPAL RI SK S
AND UNC ERTAINTIES
O U R A P P R O A C H T O R I S K
The Board is responsible for the risk framework and aims to ensure that the Group’s ability
to achieve its objectives outweighs its risk exposure. However, the Group’s risk management
programme can only provide reasonable, but not absolute, assurance that principal risks are
managed to an acceptable level.
There are a number of risks and uncertainties that have the potential
to impact the execution of the Group’s strategy, as well as its
short-term results. There are a number of measures taken to review
and manage risks.
The Executive Directors are responsible for identifying, managing and mitigating the risks
to the Company. The Executive Directors review the risks facing the Company at executive
committee meetings and with senior management across operations as a core part of day
to day operations of the business.
There is a monthly review process to assess the risk register at corporate level and projects
specific risks are reviewed at project level.
The Audit Committee undertake several activities:
Reviews the processes and controls for ensuring material
business risks are identified and managed appropriately
Reviews the risk register periodically in detail
Undertake deep dives with senior managers directly on key
risks areas
S T R A T E G I C R E P O R T
T E C H N O L O G Y A N D I P
DESCRIPTION AND IMPACT
Alternative technologies are adopted in preference to the Group’s technology.
The Group could struggle to gain market share or may find itself operating
in a smaller market than is currently anticipated.
CHANGE YEAR ON YEAR
DECREASING
The roadmap to cost parity and outperformance with other forms of hydrogen
is accelerating, with the Group achieving cost reductions in products.
MITIGATION
ITM’s technology continues to be considered superior to other technology
currently on the market.
Through continual analysis of the competitive landscape and targeted
improvements in technology development ITM seeks to retain that
competitive advantage.
The Group has placed emphasis on technology acceleration throughout 2021
to continue to offer best electrolyser performance and have recruited further
experienced hires to support the acceleration. Further team expansion is
planned including for product validation.
DESCRIPTION AND IMPACT
Loss of intellectual property rights and/or competitive advantage in
technology: working an increasing range of partners together with additional
staff mean that there is greater risk of inappropriate information sharing,
risking the protection of ITM Power trade secrets and proprietary technology.
The Board reviews the risk register and received reports from the Chair of the
Audit Committee.
CHANGE YEAR ON YEAR
INCREASING
The following pages set out a summary of our principal risks based on the findings of our most
recent board review. The Directors have carried out a robust assessment of these principal risks.
However, this summary is not intended to include all risks that could ultimately impact our
business and the risks are presented in no particular order.
Beyond our principal risks, ITM Power faces other operational risks that we manage as part
of our daily routines, such as employee health, safety and wellbeing, and commercial risk
commensurate with the profile of the business.
MITIGATION
The profile of the partnerships and geographic locations where the Group
intends to do business is the same as the prior year. The number of employees
has increased. The number of customers who whilst under NDA receive
information about ITM products is increasing.
The Group has an agreed IP management policy. This includes processes
so that contractual confidentiality provisions are usually in place before sharing
information with prospective customers, suppliers and partners.
Further secure file sharing practices are employed to provide technical
mitigation. The Group has an ongoing training plan for staff to support this aim.
The Group has a long-standing Patent and IP management committee who
proactively review risks to IP and advise the Group accordingly.
P R I N C I P A L R I S K S A N D U N C E R T A I N T I E S
I T M A N N U A L R E P O R T 2 0 2 1
P R I N C I P A L R I S K S
A N D U N C E R T A I N T I E S
S T R A T E G I C R E P O R T
M A R K E T S A N D T R A C T I O N , G R O W T H T R A J E C T O R Y
M A R K E T S A N D T R A C T I O N , G R O W T H T R A J E C T O R Y
DESCRIPTION AND IMPACT
The growth plans include offering standard products to more territories.
As such, there are risks of compliance, contract risk, H&S and managing
a global operation from the Sheffield HQ
DESCRIPTION AND IMPACT
CHANGE YEAR ON YEAR
STATIC
As the business increases its capacity and delivery of products, it will
have a greater reliance on third parties for installation and maintenance
of kit, including a reliance on the expertise of its partners. Poor selection /
management of suppliers & sub-contractors could lead to supply of
sub-standard products or services. This could also lead to contractual risk,
HSE risk and reputational risk for if those suppliers do not have appropriate
and effective compliance processes in place to manage those.
MITIGATION
The Group has worked with Linde to increase resourcing and accelerate
homologation for products and to reduce compliance risk. ITM Power has
also employed staff who have experience of managing larger operations,
as well as planned an integration project for global systems scalability.
ITM Power has increased its compliance function size and agreed
a prioritised plan for homologation.
DESCRIPTION AND IMPACT
The demand for electrolyser products hydrogen exceeds the Group's
ability to match supply, giving other competitors advantage who have larger
supply capacity or who can ramp up faster.
CHANGE YEAR ON YEAR
INCREASING
Global demand continues to grow faster than expected. The Group is still
relatively small including its management team.
MITIGATION
The Group has sufficient working capital for a second gigawatt scale facility.
The Group continues to develop semi-automation [and plan for increasing
automation for new facilities]. The management team review plans for
automation and increased capacity proactively. The Group has increased its
senior management team and continues to look at organisational development
to plan for continued growth.
CHANGE YEAR ON YEAR
STATIC
MITIGATION
Having employed new Heads of Quality, HSE and Procurement and enhanced
the procurement team as well as working with Linde, ITM Power has been
able to improve its quality processes for managing existing supply chain and
improve its due diligence and quality management for new suppliers.
DESCRIPTION AND IMPACT
ITM Power relies on third parties to supply raw materials and components
for manufacture of its products. Failure in the supply chain (to meet demand,
quality and compliance requirements) could lead to ITM Power being unable
to meet demand and/or quality, HSE or other risks or increased costs.
ITM Power relies on some sole suppliers in certain areas and in-demand
raw materials.
CHANGE YEAR ON YEAR
STATIC
Whilst demand is increasing, ITM’s supplier management processes continue
to develop.
MITIGATION
ITM Power is developing a strategy for long-term management of rare raw
materials. This includes a product development map with reduction of rare
materials showing maintaining product performance in test. Supply chain
management is improving through new Heads of Quality, HSE and Procurement
and enhanced the procurement and improved its quality processes for
sourcing and managing existing and new suppliers. This includes increasing
and developing additional suppliers and/or bringing production of core parts
in-house.
P R I N C I P A L R I S K S A N D U N C E R T A I N T I E S
P R I N C I P A L R I S K S A N D U N C E R T A I N T I E S
I T M A N N U A L R E P O R T 2 0 2 1
P R I N C I P A L R I S K S
A N D U N C E R T A I N T I E S
S T R A T E G I C R E P O R T
L E G A L A N D S TAT U T O R Y
L E G A L A N D S TAT U T O R Y
DESCRIPTION AND IMPACT
ITM Power undertake the supply of product to complex commercial projects.
Such projects include risks of delay and cost overruns.
CHANGE YEAR ON YEAR
DECREASING
MITIGATION
ITM Power delivers larger projects with its associate, ILE, and no longer
undertakes EPC work. Projects are increasing in scale and commercial
requirements are increasing but the ITM component will remain standard.
ITM Power’s joint venture with Linde means EPC work is delivered
by a world-class EPC contractor. ITM Power has increased its project
management function scale, processes and capacity. Regular reporting
identifies challenges early.
DESCRIPTION AND IMPACT
With the rapidly maturing market, the Group is being required to commit
to levels of performance and quality for its products now whilst they are still
in the prototyping phase. The risk is that the technology may not meet
contract expectations when beyond prototyping phase and leave the Group
with remedial work to correct products.
CHANGE YEAR ON YEAR
INCREASING
MITIGATION
The need to provide a mature offer to large scale solutions has accelerated
in the last year as the market seeks to deploy X(X)L opportunities which would
be appropriate for the ITM Power GEP platform. The ITM Power GEP platform
is now being bid into sales tenders, whilst at the same time is expected to be
a complete product in 2022.
The Group has implemented a more robust contractual approval process,
including with Linde for joint venture contracts. It continues to develop
and improve its product testing regime at its facilities and develop Reliability,
Accessibility and Maintainability analysis to mitigate the likelihood of
this occurring.
DESCRIPTION AND IMPACT
With more product in the field, as well as more and larger product
being handled by the Group, there is the risk of either product liability claims
or a Health and Safety (HSE) incident occurring, which could result in disruption
to operations, financial loss, regulatory intervention, or damage
to our reputation.
CHANGE YEAR ON YEAR
STATIC
MITIGATION
The increase in product, creating a perceived greater risk, has been offset
through investment in the HSE team at ITM Power, as well as increasing the
size of the compliance team to address the need to deploy in many markets.
The Group has appointed a new Head of HSE. It continues to periodically
review its HSE management system in place and has also implemented
a series of training events for all staff both as part of a drive for
a safer culture, but also as part of the Group's core values and academy
initiatives. Product validation team expansion is under development.
Further development of standardised robust product testing is underway
as products become standardised.
I T M A N N U A L R E P O R T 2 0 2 1
P R I N C I P A L R I S K S
A N D U N C E R T A I N T I E S
S T R A T E G I C R E P O R T
I T - C Y B E R AT TA C K S
P E O P L E
DESCRIPTION AND IMPACT
We rely on a diverse IT landscape, using both internal and external systems,
including some systems that are outside our direct control with a diversified
employee location base during Covid. These systems are potentially vulnerable
to cyber threats.
As a result, we could experience disruption to operations, financial loss,
regulatory intervention, or damage to our reputation.
CHANGE YEAR ON YEAR
INCREASING
MITIGATION
The size of the workforce, the introduction of hybrid working and the
increasing number of products, coupled with increasingly sophisticated
options for attackers, mean that this risk has increased in the period.
The Group has in place good practice normal processes and systems to manage
cyber risk. This includes proactive monitoring of risks, updating processes,
firewall protection, multi-factor authentication, penetration testing and
back-up systems. ITM Power launched a Cyber Academy for all employees
to increase awareness of the risks to the Group. We routinely test the systems
for penetration and weakness and review products on the market to ensure
the overall system protection in place remains appropriate and proportionate.
DESCRIPTION AND IMPACT
Key Man Risk: The Group has an executive team (and experience senior
leadership team) with many years’ experience in the business. The impact
of a departure of any member of staff could disrupt the operational activities
of the business, as well as destabilising the share price.
CHANGE YEAR ON YEAR
STATIC
MITIGATION
The Board has a fully established succession plan as part of the ongoing board
evaluation, which is reviewed annually.
I T M A N N U A L R E P O R T 2 0 2 1
CORPOR ATE SOC IAL
RESPON SIBILIT Y
B E S S E M E R P A R K
ITM Power’s products are being continually developed
to meet and maintain our own and our customers
high standards; in providing the global marketplace
with a sustainable alternative energy solution,
creating a reduction in the global carbon footprint and
a reductionin global greenhouse gas emissions.
The continued growth period and more detailed customer
demands has seen the management systems grow and
become structurally sounder this year; we recertified our
accreditation to ISO 14001 2015 and 18001 2007 with
our current accreditation body and continue with the UKAS
accreditation program targeted for Q3 2021, to incorporate
all operations within the Group.
The management systems are being reviewed throughout
the business to ensure that ITM are ready for the business
expansion in the new facility as part of the accreditation
process, identifying both systems and people development
opportunities as we develop lean processes to exceed
customer expectations.
Our commitment to source our products and services
locally where possible has seen ITM Power develop
a supplier control program that assists and develops our
supply chain with Health, Safety and Environmental goals
and objectives.
Our global commitment to supply chain promotes and
develops ITM Power’s ethics towards Health, Safety and
Environmental factors within the global supply chain.
Last year we established a program for full recycling of
all waste materials where possible, controlled with AATF’s
and environmentally aware recycling partners. We will
be working with a charity partner from our local area
to support the furnishing of Bessemer Park. The Group
also set up a charity committee to match funds raised
by employees for charitable causes.
S T R A T E G I C R E P O R T
D I S A B I L I T I E S
E M P L O Y E E W E L L B E I N G
ITM Power are committed to promoting equal opportunity
for all staff and job applicants. We aim to create a working
environment in which all individuals are able to make best
use of their skills, free from discrimination or harassment,
and in which all decisions are based on merit. The measures
we take to implement the principles of non-discrimination
are supported by best-practice employment and legislative
driven guidance.
We positively encourage applications from suitably
qualified and eligible candidates regardless of disability,
and we aim to ensure no job applicant receives less
favourable treatment. Individuals are treated on the basis
of their relevant merits, abilities and capabilities for
the role in question.
In the event an existing employee is or becomes disabled
whilst employed by ITM Power, all efforts would be made
by the Group to support the employee and their continued
service. We would consult with relevant qualified medical
advisers, occupational health professionals and where
possible make necessary reasonable adjustments.
Non-discrimination and equality of opportunity applies
equally to the treatment of former employees, visitors,
clients, customers and suppliers by members of our current
workforce. We do not tolerate any discriminatory practice.
E M P L O Y E E C O N S U LTAT I O N
ITM Power are committed to providing information and
clear guidance on all matters affecting employees in their
work. Employees are updated frequently regarding any
factors affecting the performance of the Group. The Group
places considerable value on involvement of its employees
and actively encourages participation through working
groups, committees and an open-door policy on raising
concerns or providing feedback to senior managers.
ITM Power has no formal requirement to consult
with its workforce (other than specific scenarios driven
by legislation). When required, employee representatives
would be utilised to consult on a wide range of matters
affecting current and future employee interests.
Informal meetings, Group-wide emails, a SharePoint
IT system, an internal newsletter and suggestions through
our Yammer communications channel all drive different
forms of engagement.
ITM Power employees have access to an Employee
Assistance Programme (EAP) run by Health Assured.
The Employee Assistance Programme is a wide range
of services that employees can access without cost
but with total confidentiality.
Health Assured offers:
Unlimited access to a helpline
Face to face or telephone-based counselling
Legal information
Bereavement support
Medical information
CBT online
K E Y E M P L O Y M E N T P O L I C I E S
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 have high levels of employee
retention and work hard to ensure this remains the case,
ensuring employees have access to regular feedback and
support from their line manager. Aside from statutory
employee benefits, we are constantly reviewing salaries
to ensure we remain competitive in the marketplace
to attract and retain the valued skills we have within the
business. Supplementary benefits include: a share save
scheme, a cycle to work scheme, child care vouchers and
an employee discounts platform.
All employees are given appropriate access to training
to enable them to fully and safely perform their roles,
and to progress within the organisation. ITM Academy
launches in 2021 which will bring all aspects of learning
and development within the ITM Group under a central
strategy to promote individual and business growth.
All employment policies are accessed via our employee
handbook, and these are consistently reviewed to ensure
not just compliance and relevance but also employee
engagement and the overall employee value proposition.
C O R P O R A T E S O C I A L R E S P O N S I B I L I T Y
I T M A N N U A L R E P O R T 2 0 2 1
ITM ANNUAL REPORT 2021
S172
S TATEMENT
The Directors are required by the Companies Act 2006 to act in the
way they consider, in good faith, would be most likely to promote
success of the Group for the benefit of its shareholders as a whole
and in doing so are required to have regard for the following:
The likely long-term consequences of any decision;
The interests of the Group’s employees;
The need to foster the Group’s business relationships with
suppliers, customers and others;
The impact of the Group’s operations on the community
and the environment;
The desirability of the Group maintaining a reputation
for high standards of business conduct; and the need to act
fairly as between shareholders of the Group.
The Corporate Governance Report sets out how the Group approaches
corporate governance as a whole. The Group applies the ten principles
of the QCA Code in support of its growth and this is set out on the
Group’s website, and in the Corporate Governance Report on page 32
of this report.
The Group’s activities, strategy and future prospects are discussed
in the Strategic Report, beginning on page 8. The Directors are fully
committed to effective engagement with all key stakeholders.
S TA K E H O L D E R S
The Board considers its major stakeholders to be its employees,
its suppliers, customers, partners, and shareholders. When making
decisions, the interests of these stakeholders is considered both
formally and informally as part of the Board’s group discussions,
depending on the likely impact of these decisions.
E M P L O Y E E S
The Board has a good relationship with the Group’s employees.
The Board maintains constructive dialogue with employees through
the Executive Directors, and through various visits to meet senior
management throughout the year. In support of the organisational
development of the organisation a Head of HR was appointed
in the year ended 30 April 2020 who has grown the HR team to 6
at the date of this report.
S T R A T E G I C R E P O R T
E M P L O Y E E S (C O N T I N U E D)
T H E W I D E R C O M M U N I T Y
Appropriate remuneration and incentive schemes
including bonuses and Long Term Incentives are
maintained to align employees’ objectives with those
of the Group. The Group has increased its employee
engagement through a new intranet, it has an employee
newsletter, employee engagement initiatives, through ITM
Nurture, a social engagement programme including
a significantly active charity committee raising money
for employee-nominated charities including Sheffield
Children’s hospital, and a social committee to ensure
employees feel they are contributing to the progress
of the Group. ITM Academy has been launched to create
a centre for learning and development.
S U P P L I E R S
The Board ensures that the Group works hard to maintain
good relationships with its suppliers. This is achieved
by contracting on reasonable business terms and making
payments on time. We consider suppliers to be partners
whereby the right relationship can create growth for both
companies. We meet with our significant suppliers
regularly and where required audit their activities
to ensure that components for our products are delivered
to the quality standards we require and in timely and
cost-efficient manner. We also have supplier development
programs to improve the standards and relationship set
including through applying ITM’s Supplier Code of
Conduct. We aim to offer fair contracts with longer term
visibility to provide stability to their business in return for
competitive pricing. These principles ensure that the
Group’s and our significant suppliers’ interests are aligned.
C U S T O M E R S A N D P A R T N E R S
The Executive Directors meet major existing and
prospective customers and encourage a dialogue with
them and with the territory business development team
as appropriate. This year, this has been primarily online
but engagement has continued in breadth and depth.
The Executive Directors maintain a close dialogue with
all partners to the business, such as Linde, Snam, Shell,
Ørsted, and others and ensure that expectation in ongoing
and prospective projects are being met.
The Board recognises that the Group has a duty to be
a good corporate citizen and is conscious that its business
processes minimise harm to the environment, and that
it contributes as far as is practicable to the local
communities in which it operates. As such, it established
an ESG committee this year and published its first ESG
report so that it can continue to hold itself to the highest
standards for the purposes of ESG.
The Board recognizes the importance of maintaining
high standards of business conduct. The Group operates
appropriate policies on business ethics and provides
mechanisms for whistle blowing and complaints, which
are reviewed annually by the audit committee as part
of a rolling programme.
S H A R E H O L D E R S
The Company values the views of shareholders and
recognises their interests in the Group’s strategy
and performance. The Board endeavours to maintain
good relationships with its shareholders and treat them
equally. It maintains a number of ways in which
shareholders can get in touch with the Company,
seeks to send out newsletters monthly to all stakeholders
including shareholders, and the Chief Executive ensures
a consistent dialogue with shareholders through
presentations and webinars.
In 2020, ITM Power strengthened its investor relations
management through the appointment of its first Head
of Investor Relations. Shareholder communication
is coordinated by its Head of Investor Relations together
with Investec (NOMAD) and Corporate Communications
Consultants, Tavistock Communications Limited.
ITM Power 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.
In 2020, Covid-19 prevented the Company from presenting
its results to shareholders in person. The Company held
its Annual General Meeting and two Extraordinary General
Meetings virtually. It utilised a specialist shareholder
platform to maximise attendance at the events.
The AGM and the EGM were well attended with nearly
400 meeting attendees.
I T M A N N U A L R E P O R T 2 0 2 1
S TR ATEGIC
DEC I SION - MAKING
The principal decision taken in the year was the decision to raise
working capital through a firm placing and open offer including
investment in the Company by Snam, to deliver a new business plan
to accelerate the Group's products and operations. The table below
illustrates how the Board considered different appropriate
stakeholders in recommending the investment.
E M P L O Y E E S
The Board considered the impact on employees of the investment
and the acceleration plan, and the possibility of growth within the
Group. This has been borne out since with the creation of over
80 new roles within the Group.
The Board considered the placing and open offer, including the Snam
investment to put the Group on a stronger, longer term footing
to give employees greater assurance for the future of the Group.
The executive team gave a presentation virtually to the workforce
shortly after the announcement and encouraged engagement
to understand the impact of the investment.
C U S T O M E R S A N D P A R T N E R S
In recommending the investment, the Board considered that the
business would be stronger and quicker to the market with new
products, allowing greater assurance for new and existing customers
and partners. This included working capital to semi-automate the
facility, meeting increasing demand.
S H A R E H O L D E R S
The Board considered the impact of the investment on other
shareholders, and aimed to ensure a fair price was reached so
that the recommendation to shareholders was positive. The Board
ensured that major non-institutional shareholders were consulted
through the roadshow and that all existing investors could participate
through an open offer.
A part of the agreement with Snam was the preferred supplier status
for 100MW of PEM electrolysis deals in Italy. This enabled the Board
to demonstrate that the deal was not only financial but also create
value operationally, both in terms of creating demand for the new
gigafactory, Bessemer Park, and future revenue growth.
After the formal business of the EGM, the Chief Executive presented
via webinar and answered questions raised online by shareholders
during the event.
S T R A T E G I C R E P O R T
The Board understands the importance of its role in embedding
the right culture in the Group. This was reflected during the year
through the steps taken by the Board to agree a new Code of Ethics
and anti-fraud and bribery framework. This is to maintain the
ethical values at the foundations of the Group through the Group’s
rapid growth.
E M P L O Y E E S
The Board wanted to provide a clear framework, a communication
and engagement plan, training and support to help ITM staff do the
right thing. This includes a clear Speaking Up Policy, a training plan
for the Code of Ethics and a department-led approach to identifying
and setting KPIs to manage anti-fraud and bribery risk. Ethical values
and culture need to be led by the Board and all members of the Board
enthusiastically support the new Code of Ethics.
The new framework includes Compliance Champions, volunteer
employees across the business to ensure that the ethical values
are led by ITM team members as well as ITM leaders.
C U S T O M E R S A N D P A R T N E R S
Establishing a Code of Ethics that is available on the ITM website for
all ITM stakeholders helps give confidence to customers and partners
that ITM Power can be trusted to deliver and that our values are built
on transparent, fair, honest and sustainable working practices.
ITM Power wants to give confidence that we don’t just follow the
rules but hold ourselves to high standards in everything we do.
S U P P L I E R S
Paying suppliers on time and working with suppliers on fair terms
gives suppliers confidence to work with us. The Code of Ethics
demonstrates to suppliers that ITM Power holds itself to high
standards when working with suppliers at the same time as
demanding high ethical standards from our suppliers through our
Supplier Code of Conduct.
S H A R E H O L D E R S
The Board considers that a robust framework is essential as the
Group grows. The Code of Ethics is intended to give shareholders
confidence that good controls are in place. This is because we believe
that a culture of doing the right thing is essential for a positive culture
for productivity and employee retention, driving shareholder value
as well as minimising the risk of compliance issues that may adversely
affect shareholder value.
I T M A N N U A L R E P O R T 2 0 2 1
GOING
CONC ERN
S T R A T E G I C R E P O R T
The directors have prepared a cash flow forecast for the
period ending 30 September 2022. This forecast indicates
that the Group and parent company would expect to
remain cash positive without the requirement for further
fund raising based on delivering the existing pipeline,
for a period of at least 12 months from the date of
approval of these financial statements.
By the end of the period analysed, the Group will still hold
a large proportion of the monies from the fund raise in the
year. This should give the business sufficient funds to trade
for the next three years if the business continued to
operate in a similar way beyond the forecast period.
With the uncertainty created for the economy by Covid-19,
this cash flow forecast has also been stress tested.
As a worst-case scenario, if all payments had to continue
as forecast while receipts were not received at all,
the business would remain cash positive for the full
twelve months from the date of approval of these
financial statements.
The accounts have therefore been prepared on a going
concern basis.
Approved by the Board and signed on its behalf by:
ANDY ALLEN
Director
Date: 10 September 2021
THE GROUP AND
PARENT COMPANY
WOULD EXPECT TO
REMAIN CASH
POSITIVE WITHOUT
THE REQUIREMENT
FOR FURTHER
FUNDRAISING [...]
FOR A PERIOD OF
AT LEAST
12 MONTHS
I T M A N N U A L R E P O R T 2 0 2 1
S I R R O G E R B O N E A N D D R G R A H A M C O O L E Y
DIREC TOR ’S
REPORT
The directors present their annual report and audited
financial statements on the affairs of ITM Power
(the “Company”) and its subsidiaries (the “Group”),
together with the financial statements and auditor’s
report, for the year ended 30 April 2021.
The directors believe that the financial statements
are fair, balanced and understandable.
The following disclosures have been made in the
Strategic Report and are cross-referenced here:
business review including KPIs, Principal risks and
uncertainties, and future prospects.
I T M A N N U A L R E P O R T 2 0 2 1
BR ANC HES OUT SIDE
THE UK
B R A N C H E S O U T S I D E T H E U K
The Group has subsidiary companies, in Germany, the United States and Australia.
C A P I TA L S T R U C T U R E
Details of the Group’s capital structure are provided in notes 23 and 31 to the financial statements.
S U B S TA N T I A L S H A R E H O L D I N G S
On 30 April 2021 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:
N A M E O F
H O L D E R
P E R C E N TA G E O F
V O T I N G R I G H T S
A N D I S S U E D
S H A R E D C A P I TA L
N O O F O R D I N A R Y
S H A R E S
LINDE PLC
JCB RESEARCH
MR. PETER
K HARGREAVES
D I V I D E N D S
17.25%
9.6%
5.2%
95,000,000
52,865,764
28,621,793
The directors do not recommend a dividend payment for the year (2020: £nil). The losses for the year are transferred
to reserves.
R E S E A R C H A N D D E V E L O P M E N T
During the year the Group incurred research and development related costs of £3.48m (2020: £2.30m). A description
of the activities undertaken can be found under the heading of “Products and Technology” within the Strategic Report.
C H A R I TA B L E A N D P O L I T I C A L C O N T R I B U T I O N S
During the year, the Group made charitable donations of £6,693
(2020: £371). The Group made no political donations in either year.
S U P P L I E R P AY M E N T P O L I C Y
The Group’s policy is to settle terms of payment with suppliers when
agreeing each transaction, ensuring that suppliers are made aware
of the Group’s terms of payment and abide by those terms.
At 30 April 2021, the trade creditors balance equated to -27 days
(2020: -217 days), based on daily total costs excluding payroll,
and including the pro forma payments made to suppliers up front.
We have been working to reduce the number of pro forma invoices
received from suppliers this year. Wherever possible we have been
asking for staged payment or actual invoices rather than pro formas,
making use of an improved credit rating to request new credit
accounts and narrowing down the supplier base in order to try
to build better relationships.
F I N A N C I A L R I S K M A N A G E M E N T
O B J E C T I V E S A N D P O L I C I E S
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 foreign
exchange rates.
The Group also receives and spends money in different currencies.
Significantly, contracts are often in the currency of the customer.
As such, the Group 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. Management will look to use forward contracts
as a means of mitigating exposure to exchange rate volatility
on long-term contracts.
The Group seeks to minimise the effects of these risks and others
discussed in note 29. 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 treasury activities are reported quarterly to the Group’s Board.
D I R E C T O R ' S R E P O R T
I T M A N N U A L R E P O R T 2 0 2 1
D I R E C T O R ' S R E P O R T
F U T U R E D E V E L O P M E N T S A N D P O S T B A L A N C E
S H E E T E V E N T S
Moving into the new financial year, a new subsidiary was created to
house the refuelling assets that had previously sat within ITM Power
(Trading) Limited. ITM Motive Limited will own and operate the UK
refuelling stations in order to drive their profitability. It is a 100%
owned subsidiary so there will be no material impact on the
consolidated accounts.
A U D I T O R
Grant Thornton UK LLP have expressed their willingness to continue
in office as auditor. In accordance with Section 489 (4) of the
Companies Act 2006, a resolution to reappoint Grant Thornton UK
LLP will be proposed at the Annual General Meeting.
D I R E C T O R S
The following Directors served throughout the year and subsequently,
unless stated otherwise:
Sir R Bone
Dr G Cooley
Dr S Bourne
Dr R Smith
Mr A Allen
Mr R Pendlebury (resigned 31 July 2020)
Mr M Green
Mrs K Roe (appointed 6 May 2020)
Mr J Nowicki
Mr T Rae (appointed 3 December 2020)
D I R E C T O R S ’ R E S P O N S I B I L I T I E S S TAT E M E N T
The directors are responsible for preparing the Strategic Report and Directors’ 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 have
to prepare the financial statements in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006, and have elected to prepare parent
company financial statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards and applicable law), including FRS
101 ‘Reduced Disclosure Framework’.
Under company law the directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company
and Group for that period. In preparing these financial statements, the directors are required to:
Select suitable accounting policies and then apply them consistently;
Make judgements and accounting estimates that are reasonable and prudent;
State whether applicable international accounting standards in conformity
with the requirements of the Companies Act 2006 have been followed, subject
to any material departures disclosed and explained in the financial statements;
Prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to
show and explain the Group's transactions and disclose with reasonable accuracy at any time
the financial position of the Group 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 Group and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
D I R E C T O R S ’ I N D E M N I T I E S
The directors confirm that:
The Group 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.
So far as each director is aware, there is no relevant audit information of which
the Group’s auditor is unaware; and
The directors have taken all the steps that they ought to have taken as
directors in order to make themselves aware of any relevant audit information
and to establish that the Group's auditor is aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and
financial information included on the Group's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Approved by the Board and signed on its behalf by:
ANDY ALLEN
Director
10 September 2021
I T M A N N U A L R E P O R T 2 0 2 1
C O R P O R A T E G O V E R N A N C E R E P O R T
CORPOR ATE
GOVERNANC E
REPORT
I T M A N N U A L R E P O R T 2 0 2 1
CORPOR ATE
GOVERNANC E REPORT
DEAR SHAREHOLDER,
At ITM Power, we are proud of putting values and ethics
at the heart of what we do. Our mission is to help the
world reach net zero through the power of green
hydrogen. This underpins the Group as a sustainable,
dynamic business, continuing to deliver shareholder
and stakeholder value in the long term.
ITM Power is committed to excellent corporate governance
and aims to be best in class in the AIM Top 50.
Good governance is vital for our organisation as we scale
up to meet increasing global demand for green hydrogen.
This year, we launched our first ESG strategy and report,
“Sustainable Energy, Engineered Sustainably”.
This represents a major step-change in our ambitions
as a business. We wish to ensure that long-term growth
sustains rather than harms people and the environment,
as well as delivering best value for shareholders. As we set
out in that report, our aim is to invest in governance
processes that ensure that we achieve those objectives.
Our ESG Strategy sets out key focus areas
for ITM Power in terms of governance:
this includes:
Ensuring employee and customer health
and safety
Driving a culture of ethical behaviour through
ITM’s new Code of Ethics and the roll-out
of a new, global, comprehensive internal
programme on anti-fraud and bribery
Ensuring our supply chain meets our Supplier
Code of Conduct requirements including
on human rights and avoiding exploitative
work practices
Data security, risk management, tax
and compliance
Instilling the right culture creates the right work-place
environment for our staff, and a business that delivers.
The Board has established a Group-wide Code of Ethics
as a key part of making sure that the ethical values that
are integral to the Group are maintained through as we
grow and expand. The Board is committed to ensuring that
our ethical principles are understood and lived by every
leader and every employee.
Those ethical principles are:
Always safety first
Always act in accordance with laws and regulations
Always act with integrity to deliver excellence
Always committed to work well together
Always respectful
Good governance also means looking after our employees.
I’m proud of how the Group has been able to support
its staff through the difficulties of Covid-19 and lockdowns.
We have made sure staff received full pay, were able to
work at home where possible, were able to have flexibility
to deal with childcare and home schooling and have had
fully paid time off for Covid-related quarantine, symptoms,
testing and illness. We also understand the impact that this
last year has had on mental health for many. To support
our staff we have provide access to an Employee Assistance
Programme and created wellbeing champions. We have
launched ITM Academy to provide a centre of learning and
development from a formal induction programme, health
and safety training, apprenticeships to technical skill
development and leadership and management skills.
2021 has seen the launch of ITM Nurture, to capture the
social engagement and charitable activities of the Group.
Led by an employee committee, this has brought together
ITM team members to raise money for local charities,
including the Sheffield Children’s Hospital. I look forward
to sharing more of the activities of ITM Nurture over the
coming months and years.
Finally, the Board continues to consider the most
appropriate code for ITM Power based on its development,
sector and size remains The Quoted Companies Alliance
Corporate Governance Code 2018 (the “QCA Code”).
The QCA Code provides a flexible, principle-based model
that will allow the execution of the Group’s corporate
governance principles to evolve with the business as
it grows rapidly to meet the demands of our customers.
SIR ROGER BONE
Chairman
C O R P O R A T E G O V E R N A N C E R E P O R T
BOARD
COMPOSITION:
E XPERIENCE, SKIL L S AND
C APABIL I T IE S OF T HE BOARD
Maintaining the right composition of the Board is essential. The Board was strengthened in the
year ended 30 April 2021, with the addition of Katherine Roe, CEO of Wentworth Resources plc,
who brings significant expertise and Tom Rae, who brings 25 years’ global supply chain
management experience supporting ITM Power’s continuing growth into a Group that needs
to be ready to deliver in increasing global markets.
The Board is satisfied that the members of the Board possess the right balance of skills,
experience, personal qualities and capabilities to support delivery of the Group’s strategy and
as required by the QCA Code. However, given the ambitions of the Group, rapidity of growth
and scale of the market demand, the composition of the Board remains under active review.
The Group 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.
An induction programme is undertaken for new directors to on-board directors and provide
them with full information on the Group's operations and performance. All members
of the Board are given access and support for continuing development to ensure their effective
stewardship of the Group.
I T M A N N U A L R E P O R T 2 0 2 1
DIREC TOR
BIOGR APHIES
SIR ROGER BONE
Non-Executive Director
Sir Roger was President of Boeing UK from 2005
to 2014. He is the Chairman of Over-C Ltd, a small high
tech company in the telecoms sector, and was senior
independent director of Foreign and Colonial
Investment Trust plc until May 2021. As well
as chairing ITM Power, Sir Roger also chairs ITM
Motive Ltd, a wholly owned subsidiary company.
He was a non-executive director and trustee of the
National Centre for Universities and Business (NCUB)
from 2013 to 2019, and was one of the Prime
Minister’s honorary Ambassadors for British business
from 2009 to 2015.
He was British Ambassador to Brazil from 1999 to
2004 and to Sweden from 1995 to 1999, and prior
to that an Assistant Under-Secretary of State in the
Foreign and Commonwealth Office. He was a Trustee
of the Royal United Services Institute, the London
based think tank, from 2013 to 2020 and is an
honorary fellow of the Institution of Engineering
Designers. He was educated at Oxford University
and holds an honorary doctorate in engineering
from Sheffield University.
DR GRAHAM COOLEY
Chief Executive Officer (CEO)
Dr Graham Cooley joined ITM Power as CEO in 2009.
ITM Power was the first hydrogen related company to
be listed on the London Stock Market, and has been
developing electrolyser equipment for over 20 years.
Graham started his career in the power sector in 1989,
joining the CEGB and becoming Business Development
Manager at National Power plc and then International
Power plc, developing energy storage and new
generation technologies.
Before joining ITM Power Graham was CEO of
Sensortec Ltd, founding CEO of Metalysis Ltd,
a spin out of Cambridge University and founding
CEO of Antenova Ltd.
Graham has a PhD in physics, an MBA and is a Fellow
of the Institute of Metals, Minerals and Mining
(FIMMM). Graham also sits on a number of industry
bodies, and is a member of the UK Government’s
Hydrogen Advisory Council.
MARTIN GREEN
Non-Executive Director
Martin Green had a 30 year plus career with Johnson
Matthey plc until March 2019, most recently as Group
Strategy Director. In this role he was responsible for
a portfolio of growth businesses, strategy development
and implementation, including M&A. As Director of
Battery Technologies Martin made £120m of acquisitions
and took the division from a standing start to an annual
turnover of £150m in four years.
A chemistry graduate, Martin has particular expertise
and experience in battery, fuel cell and hydrogen
technologies as well as strategic corporate development.
JUERGEN NOWICKI
Non-Executive Director
Juergen is Executive Vice President of Linde plc and
CEO of Linde Engineering. Prior to this, he was Senior
Vice President, Commercial, of Linde Engineering.
He joined Linde in 1991 as Internal Auditor and
subsequently held different positions in Finance
& Controlling. In 2002, he was appointed CFO of
Linde Gas North America, USA, and was named Head
of Finance & Control for The Linde Group in 2006.
He assumed his role as Managing Director of Linde
Engineering in 2011 and was appointed Speaker
of the Board of Linde Engineering in 2015.
Juergen holds a master’s degree in Industrial
Engineering from the Technical University
of Karlsruhe, Germany.
C O R P O R A T E G O V E R N A N C E R E P O R T
TOM RAE
Non-Executive Director
Tom was Group Director of Purchasing & Supply
Chain and a member of the Group Executive
Committee at JCB until late 2019 when he set up his
own consultancy practice. He began his career with
Uniroyal Ltd, advancing to Manufacturing Manager
in 1989. In 1992, Tom moved to Germany to join
Continental AG and was active in manufacturing JV
projects in Russia, Brazil and India before moving
to the UK in 1997 to lead Conti’s UK manufacturing
and sales operations.
In 2002, Tom returned to Germany as SVP of
Procurement, Continental AG until 2007 when
he joined Japan’s NSG Group as CPO; as a member
of the Executive Committee Tom split his time
between the UK and Japan. He holds a BSc in
chemistry and an MBA.
KATHERINE ROE
Non-Executive Director
Katherine is CEO of Wentworth Resources plc, an AIM
listed leading Tanzanian-focused natural domestic gas
producer. She is currently a non-executive director
and Audit Committee Chair of Longboat Energy plc.
Katherine joined Wentworth in 2014 and was
responsible for corporate development and investor
relations before becoming CFO in 2018 and CEO
in 2019. Before joining Wentworth, Katherine had
a 14-year plus career in investment banking and
corporate finance, initially with Morgan Stanley
and subsequently with Panmure Gordon where
she was a Director within Investment Banking and
headed up the energy team from 2010 to 2014.
D R G R A H A M C O O L E Y
I T M A N N U A L R E P O R T 2 0 2 1
D I R E C T O R
B I O G R A P H I E S
C O R P O R A T E G O V E R N A N C E R E P O R T
D R S I M O N B O U R N E , D R R A C H E L S M I T H A N D M R A N D Y A L L E N
DR SIMON BOURNE
Chief Technology Officer (CTO)
DR RACHEL SMITH
Executive Director
MR ANDY ALLEN
Finance Director (CFO)
Dr Simon Bourne joined ITM Power in 2002 and has
been one of the leading technologists involved in the
development of the Group's core technology.
As Chief Technology Officer, Simon is responsible for
Research & Development, Product Development, Sales
and After Sales functions. Having been instrumental
in the design and realisation of the Group's electrolyser
platform, Simon was responsible for the realisation
of two flagship projects; the world’s first PEM
Power-to-Gas system deployed in Frankfurt in 2013
and Europe’s largest (10MW) PEM electrolyser
deployed at Shell’s Energy and Chemicals Park
Rheinland in Wesseling, Germany.
Before joining ITM Power, Simon was Project Engineer
with Sonatest Plc and a Researcher with the Ministry
of Defence. Simon has a BSc Hons in Materials Science
(UMIST) and a PhD (Cranfield).
Dr Rachel Smith joined ITM Power at its incorporation
in 2002. Starting as a research scientist Rachel has
a solid background in ITM materials and their use
in electrochemical cells.
She has worked on and managed various externally
funded projects and now acts as director responsible
for Project Management, Grant Funding, HR and HSE.
Rachel also manages ITM’s patent and trademark
portfolio and leads its IP Committee. Rachel is the
Board’s champion for health and safety.
Rachel has a BSc Hons in Environmental Science
(Leicester), MSc in Energy Conservation (Cranfield)
and an EngD (Cranfield).
Mr Andy Allen qualified as a chartered accountant
in Sheffield in 2007, and has an extensive background
in auditing manufacturing companies in South
Yorkshire. Andy joined ITM Power in 2011 as Financial
Controller before becoming CFO in 2015.
THE BOARD IS
SATISFIED THAT
THE MEMBERS
OF THE BOARD
POSSESS THE RIGHT
BALANCE OF SKILLS,
EXPERIENCE,
PERSONAL QUALITIES
AND CAPABILITIES
TO SUPPORT
DELIVERY OF THE
GROUP’S STRATEGY
AND AS REQUIRED
BY THE QCA CODE
I T M A N N U A L R E P O R T 2 0 2 1
THE
BOARD
The Board membership and committee membership is as follows:
MEMBER
C O R P O R A T E G O V E R N A N C E R E P O R T
E
E
T
T
I
M
M
O
C
N
O
T
A
R
E
N
U
M
E
R
E
E
T
T
I
M
M
O
C
T
I
D
U
A
E
E
T
T
I
M
M
O
C
S
N
O
I
I
T
A
N
M
O
N
E
E
T
T
I
M
M
O
C
S
E
R
U
S
O
L
C
S
I
D
E
E
T
T
I
M
M
O
C
E
C
N
A
N
R
E
V
O
G
&
L
A
I
C
O
S
,
T
N
E
M
N
O
R
I
V
N
E
E
E
T
T
I
M
M
O
C
E
V
I
T
U
C
E
X
E
T
N
E
M
E
G
A
N
A
M
Y
G
O
L
O
N
H
C
E
T
E
E
T
T
I
M
M
O
C
Y
R
O
S
I
V
D
A
C
I
G
E
T
A
R
T
S
E
E
T
T
I
M
M
O
C
BOARD
INDEPENDENC E
The Board considers all the Non-Executive Directors to be independent in character
and judgement. 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 Group 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.
DIRECTOR
ROLE
Dr S Bourne
Chief Technology Officer
Dr G Cooley
Chief Executive Officer
Dr R Smith
Executive Director
Mr A Allen
Executive Director
Sir R Bone
Non-Executive Director
Mr T Rae
Non-Executive Director
Mr J Nowicki
Non-Executive Director
Mr M Green
Non-Executive Director
Mrs K Roe
Non-Executive Director
In addition, the Technology Management Committee has a representative from Snam, Marco Chiesa and the Strategic
Advisory Committee has a representative from Snam, Cosma Panzacchi.
I T M A N N U A L R E P O R T 2 0 2 1
GOOD GOVERNANC E:
INTERNAL CONTROL AND
RI SK MANAGEMENT
NON - FINANC IAL
CONTROL S
C O R P O R A T E G O V E R N A N C E R E P O R T
The Board is responsible for reviewing and approving overall Group strategy, the corporate
objectives, the financial strategy, the annual budget, capital fundraising and for structure of the
Group. The Board receives financial reports at each regular Board meeting, tracking budget and
forecasts. Operational, detailed ongoing tracking of financial performance is undertaken by the
Executive Committee. In accordance with good practice, the Board delegates to the Audit
Committee responsibility for monitoring the integrity of the financial reporting of the Group and
ensuring that the internal financial controls are sufficiently robust and appropriate.
The Group’s Financial Controller oversees budgeting, cash flow forecasts and financial
statements and the operation of the Group’s financial systems as well as managing the
engagement with ITM Power’s auditors. In the year ended 30 April 2021, the Finance team
has been expanded to include additional staff to focus on internal controls and financial
system transformation.
There are procedures in place for budgeting, forecasting and financial planning, for monitoring
and reporting to the Board the performance against those budgets, forecasts and plans, and for
projecting expected performance over the financial year.
The Board considers that the internal controls in place are appropriate for the size, complexity
and risk profile of the Group but given the rapid growth of ITM Power, this remains under
active review.
The Board periodically review the internal controls, led by the Audit Committee. The Board
consider risks facing the Group in its decision making and periodically reviews the top corporate
risks identified through the risk register process. The Audit Committee reviews key areas
of financial controls throughout the year.
The Board recognises that maintaining sound controls
and discipline is critical to managing the risks to ITM Power’s
strategy. The Board has ultimate responsibility for the
Group’s system of internal control and for reviewing its
effectiveness. The Audit Committee regularly reviews
the risk management procedures and key corporate risks.
It undertakes in depth assessments of core risk areas
throughout the year. The Executive Committee has
operational responsibility for managing risk and ensuring
the internal controls remain appropriate, with day to day
responsibility with the Finance Director. Further detail on
risk management and risks is set out in the Principal Risks
and Uncertainties section of the Strategic Report.
Close management of the day-to-day activities of the Group
by the Executive Directors and detailed monthly reporting
of performance against corporate objectives, project
schedules, budget, risks and expected performance and
operational needs are a key part of the internal
management and control system.
In the financial year ended 30 April 2021, ITM Power has
also made further senior appointments to support its
business plan and address the resulting operational needs
and risks. This includes a new Head of HR, new Head
of Quality, a new Head of Health and Safety, a new Head
of After-Sales Support, a new Head of Investor Relations
and a new Managing Director for its Motive division.
I T M A N N U A L R E P O R T 2 0 2 1
C O R P O R A T E G O V E R N A N C E R E P O R T
DE ALINGS
POLIC Y
The Group has a dealing policy and dealing code that applies to all employees. This enables the
Group and directors to comply with Rule 21 of the AIM Rules relating to directors’ and
appropriate employee dealings as applicable to AIM companies. All employees are provided with
access to the dealing policy and dealing code and have access to the Company Secretary in the
event of any questions.
GOOD GOVERNANC E:
DEC I SION S AT
THE RIGHT LE VEL S
T he B oard approves the
over all f inancial authorities
within the or ganisation.
It reser ves decision making
in the following areas:
Executive management structure and appointments;
Strategic/Policy considerations;
Material transactions;
Health, Safety and Environmental Strategy
Finance; and
General governance and capital matters.
I T M A N N U A L R E P O R T 2 0 2 1
BOARD
MEE TINGS
Board members devote the time needed to their role. This includes attending Board
and committee meetings and being available for shareholders at the General Meetings
of the Group. The Board scheduled 6 regular meetings in the year ended 30 April
2021, with additional meetings convened when required. The table below shows the
attendance of Directors at regular Board meetings and at meetings of the Committees
during the year. This year these meetings moved online and virtual meetings were
held in addition to regular communication and updates to ensure good communication
continued throughout the period.
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.
E
E
T
T
I
M
M
O
C
T
I
D
U
A
E
L
P
I
C
N
I
R
P
N
O
I
T
A
R
E
N
U
M
E
R
E
E
T
T
I
M
M
O
C
E
E
T
T
I
M
M
O
C
G
S
E
T
N
E
M
E
G
A
N
A
M
Y
G
O
L
O
N
H
C
E
T
E
E
T
T
I
M
M
O
C
6
6
6
6
3
6
2
6
5
6
6
6
6
6
-
-
-
-
-
-
-
6
5
5
5
-
-
4
-
-
-
4
4
3
-
-
-
-
3
-
-
3
3
-
4
-
-
4
1
-
3
4
-
-
-
NO. OF MEETINGS HELD
Non-Executive Directors
Sir R Bone (Chairman)
Mr M Green
Mr J Nowicki
Mr T Rae
Mrs K Roe
Mr R Pendlebury (retired)
Executive Directors
Dr S Bourne
Dr R Smith
Dr G Cooley
Mr A Allen
C O R P O R A T E G O V E R N A N C E R E P O R T
A N D Y A L L E N
RE- ELEC TION
OF DIREC TOR S
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.
I T M A N N U A L R E P O R T 2 0 2 1
COMMIT TEES
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, the Environment
Social and Governance Committee, the Strategic Advisory
Committee, the Technology Management 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 to 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 below.
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. Further details of the work of the
Remuneration Committee is set out in the Director’s
Remuneration Report from the Chair of the Remuneration
Committee in this report. EY have provided independent
advice to the Remuneration Committee as set out in the
Director’s Remuneration Report.
The Audit Committee’s primary responsibilities are to
monitor the quality of internal control, ensuring that the
financial performance of the Group is properly measured
and reported on and for reviewing reports from the
Group’s auditor relating to its accounting and internal
controls in all cases having due regard to the interests of
the shareholders. Further details of the work of the Audit
Committee is set out in the report from the Chair of the
Audit Committee.
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.
C O R P O R A T E G O V E R N A N C E R E P O R T
The Executive Committee regularly meets to consider
business development, technology development,
project performance, the financial performance of the
Group and other management issues.
The Technology Management Committee’s primary
responsibilities are to review the Group's product
portfolio and development plans and the suitability
of portfolio, manufacturing capacity and planned
developments to satisfy anticipated market developments
and meet the Group's technology goals to be best-in-class.
The Environment Social and Governance Committee
was established in early 2021 to lead the delivery
of the Group's ESG strategy. It is responsible for the
Group's short and long term ESG objectives and reporting
of key metrics, and it ensures that all ESG-related policies
remain compliant with relevant laws and good corporate
governance. In preparing its first formal ESG strategy and
report, the ESG Committee has received independent
advice from GoodBusiness.
The Board has constituted a Strategic Advisory Committee
that met for the first time in the first quarter of the
new financial year ending 30 April 2022. This will comprise
four directors, Martin Green, Jürgen Nowicki, Tom Rae,
Dr Rachel Smith and Cosma Panzacchi, a representative
from Snam SpA. The Strategic Advisory Committee has
been set up to advise the Board on key business
development matters.
The Board also has a Disclosure Committee that meets
periodically to consider matters relating to its obligations
to make regulatory disclosures required in law and under
the rules of the AIM exchange.
The Board has sought advice where necessary, from
Investec, the Company’s NOMAD, for the placing of the
fundraising exercise undertaken in the year ending 30 April
2021. In addition, the Board has access to Nicola Ham
Edmonds as Company Secretary and Head of Legal and,
where appropriate, external counsel.
I T M A N N U A L R E P O R T 2 0 2 1
QC A CODE
COMPLIANC E
C O R P O R A T E G O V E R N A N C E R E P O R T
P R I N C I P L E
H O W I S T H E D I S C L O S U R E
R E Q U I R E M E N T M E T ?
ITM Power has reviewed the ten principles of the QCA code and considers that it complies with it as set out in this Annual
Report and on its website:
https://www.itm-power.com/corporate-governance.com
PRINCIPLE 6:
Ensure that between the Directors have the necessary
up to date experience, skills and capabilities
P R I N C I P L E
H O W I S T H E D I S C L O S U R E
R E Q U I R E M E N T M E T ?
PRINCIPLE 7:
Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement
PRINCIPLE 1:
Establish a strategy and business model which
promotes long term value for shareholders
In the Strategic Report of the Annual Report
and on the ITM Power website.
PRINCIPLE 2:
Seek to understand and meet shareholder needs
and expectations
On the ITM Power website.
PRINCIPLE 3:
Take into account wider stakeholder and social
responsibilities and their implication for long term
success
PRINCIPLE 4:
In the section 172 statement of the Annual Report
and on the ITM Power website.
Embed effective risk management, considering
both opportunities and threats, throughout
the organisation
On the ITM Power website and in this corporate
governance report and the Principal Risks and
Uncertainties section of this report.
PRINCIPLE 5:
Maintaining the Board as a well-functioning,
balanced team led by the Chair
On the ITM Power website and in this corporate
governance report.
PRINCIPLE 8:
Promote a culture that is based on ethical values
and behaviours
PRINCIPLE 9:
Maintain governance structures and processes
that are fit for purpose and support good decision
-making by the Board
PRINCIPLE 10:
Communicate how the Company is governed
and is performing by maintaining a dialogue with
shareholders and other relevant stakeholders
The Board is satisfied that the members of the Board
possess an appropriate balance of skills, experience,
personal qualities and capabilities as required by
the QCA Code. The Chair of the Group undertook
a formal Board evaluation in early 2020 which
considered the composition of the Board, including the
diversity and gender balance. Further details are
provided on the ITM Power website and in the director
biography section of this report.
With the full support of the Board, the Chairman leads
an evaluation of the performance of the Board and its
committees approximately every 18 months. The last
review took place in early 2020 concluded that the
Board and its committees are currently effective and
each Director continues to demonstrate commitment
to their role. The Board plans a further evaluation
within the year ending 2022.
The Board measures the performance of the Executive
Directors against key performance indicators.
Further information is set out in the Remuneration
Committee report. Each committee evaluates its
performance annually.
On the ITM Power website, this corporate
governance report and in the ESG Report on the
ITM Power website.
On the ITM Power website.
On the ITM Power website and in this corporate
governance report.
I T M A N N U A L R E P O R T 2 0 2 1
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
REMUNER ATION
COMMIT TEE
REPORT
I T M A N N U A L R E P O R T 2 0 2 1
REMUNER ATION
COMMIT TEE REPORT
DEAR SHAREHOLDER,
On behalf of the Board, I am pleased to present the Directors’ Remuneration Report for the
year-ended 30 April 2021.
I was appointed Chair of the Remuneration Committee on 1 July 2020 and have continued the
Remuneration Committee’s focus to ensure that remuneration is fair, appropriately rewards
performance and aligns the interests of the Executive Directors with those of shareholders.
It is also paramount that the Remuneration Committee ensures the Group retains key talent
at the executive level.
This report is split into three sections: the Remuneration Committee Chair Statement;
Remuneration Policy Report, including how it will be applied to the coming year, and the Annual
Report on Remuneration which provides details of the remuneration earned by Directors for
performance in this financial year.
For the first time this report will be put to an advisory vote of shareholders at the upcoming
AGM and I look forward to engaging with investors in this regard.
A summary of the key matters considered by the Committee during the year and since the year
end in respect of the year ended 2020/21 is as follows:
Reviewed the 2020 executive director pay benchmarking results provided by
Ernst & Young who were retained to provide independent remuneration advice
to the Committee. From this, the Committee determined to accelerate the
agreed salary increase from a three-year to a two-year period. An increase to
the fees of the Chairman and independent Non-Executive directors was also
agreed based upon this benchmarking exercise;
In relation the annual bonus, the Committee determined that 50% of the agreed
performance targets had been achieved. The Committee also agreed that an
additional exceptional bonus, equivalent to 33% of base salary, should be paid
to the Executive Directors in the year, to reflect the successful achievement of
the £172 million shareholder fundraising exercise in October 2020 and the
creation of a strategic partnership with Italian based Snam, a material
development towards the future success of our business;
A new LTIP Scheme was approved by the Board in October 2020, under which all
future LTIP awards will be made. Grants made under the new LTIP in 2020 vest
after three years and are subject to performance conditions associated with
As a result of this comprehensive review, the Committee is satisfied that the remuneration
shareholder return, financial performance and ESG targets over that period. The
structure and outcomes in respect of the incentives and remuneration during the financial year
Committee believes that this, together with new director shareholding
under review are appropriate, fair and adequate to retain key talent.
guidelines introduced during the year, ensures that Executive Director interest
continues to become more aligned to long term shareholder values;
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
The Committee approved the introduction of a Group-wide Buy as You Earn
share scheme, as the Board is keen to ensure that all of the Group’s workforce,
regardless of position, have the ability to be rewarded for their part in the
growth and success of the business; and
For the bonus attributable for the year ended 30 April 2022, the Committee
agreed to adjust the proportion associated with financial performance
objectives in order to allow for the introduction of measurable ESG and Health
and Safety targets.
As a result of this comprehensive review, the Committee is satisfied that the remuneration
structure and outcomes in respect of the incentives and remuneration during the financial year
under review are appropriate, fair and adequate to retain key talent.
On behalf of the Board, I would like to thank shareholders for their continuing support.
KATHERINE ROE
Chair, Remuneration Committee
COMMITTEE MEMBERS
DURING 2020/21
Katherine Roe (Chair from 1 July 2020)
Martin Green
Roger Bone (Chair until 30 June 2020)
I T M A N N U A L R E P O R T 2 0 2 1
MAIN ROLES AND
RESPON SIBILITIES
OF THE COMMIT TEE
Determine and agree with the Board the framework or broad
policy for the remuneration of the Group's Chair and the
Executive Directors;
Ensuring such remuneration supports the Group's strategy
and promotes long term sustainable success;
Approve the design of, and determine targets for, any performance
related pay schemes operated by the Group and approve the
total annual payments made under such schemes;
Review the design of all share incentive plans for approval by the
Board and determine each year whether awards will be made to
Executive Directors and other senior executives and the performance
targets to be used;
Review the formal policy for shareholding requirements;
Ensure that contractual terms on termination for the Executive
Directors, and any payments made, are fair to the individual, and the
Company, that failure is not rewarded and that the duty to mitigate
loss is fully recognised;
Assess annually the remuneration trends across the Group; and
Be responsible for the appointment and selection for any
remuneration consultants who advise the Committee.
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
REMUNER ATION
POLIC Y PRINC IPLES
The Group’s remuneration policy has been reviewed to ensure
that overall remuneration is set at a competitive level against the
Group’s peer group thus enabling the Group to attract and retain
high-calibre employees with the requisite skill-sets required
to execute the Group's strategy. To support the Group's strategy
and promote long¬term sustainable success, the Remuneration
Committee takes into account all factors to:
Ensure executive remuneration is aligned to the Group's purpose
and values, clearly linked to the successful delivery of the Group's
long-term strategy, and that enable the use of discretion to override
formulaic outcomes and to adjust sums or awards under appropriate
specified circumstances;
Attract, retain and motivate the executive management of the Group
without inappropriate financial burden on the Group; and
Consider the requirements for clarity, transparency, risk mitigation,
predictability, proportionality and alignment to culture.
I T M A N N U A L R E P O R T 2 0 2 1
REMUNER ATION
POLIC Y
E X E C U T I V E D I R E C T O R B A S E S A L A R Y
P E R F O R M A N C E R E L AT E D B O N U S E S
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
PURPOSE AND LINK
TO STRATEGY
OPERATION
To ensure the Group is able to recruit and retain high-calibre executives.
Salaries are set by the Committee considering a number of factors, including
market rates, benchmarking to peers, as well as the individual Director’s
experience, responsibilities and performance.
Salaries are paid monthly in arrears by bank transfer and are normally
reviewed annually.
P E N S I O N P R O V I S I O N
PURPOSE AND LINK
TO STRATEGY
Retirement benefits are regarded as an important element of the Group’s
basic benefits package to attract and retain talent.
OPERATION
Membership of the Group’s defined contribution, or similar pension scheme,
or in agreed circumstances, a cash allowance in lieu of pension.
Where Executive Directors are members of the Group’s pension scheme,
they receive a pension contribution of 5% of base salary, or such other
amount in line with that available to the majority of the UK general workforce.
B E N E F I T S
PURPOSE AND LINK
TO STRATEGY
To provide competitive cost-effective benefits to assist in attracting and
retaining the employees across the Group.
OPERATION
Benefits may include private medical insurance, sick pay, a fully expensed
car (or equivalent cash allowance), disability and life assurance cover.
All employees benefit from life assurance of four times salary.
Some benefits may be provided in the case of relocation, such as removal
expenses, and in the case of international relocation might also include such
items as cost of accommodation, children’s schooling, home leave,
tax equalisation and professional advice etc.
The Group has the ability to reimburse the tax payable (grossed up) on any
business expenses captured as taxable benefits.
PURPOSE AND LINK
TO STRATEGY
The purpose of the annual bonus is to incentivise the Executive Directors,
members of the Executive team and senior management to deliver strategic
and financial success, as well as long-term growth to the benefit of the Group
and its shareholders.
OPERATION
Measures and targets for the annual bonus for the Executive Directors are
set annually by the Committee, to ensure they are fairly rewarded for their
contribution to the success of the Group.
Performance criteria include the financial targets of the Group as agreed
by the Committee and specific annual targets based on clear and measurable
objectives that underpin, and are key to achievement of, the Group’s strategy,
with particular emphasis on forward-looking objectives relating
to technology, business development and ESG factors.
All bonus payments are at the ultimate discretion of the Committee and
the Committee retains an overriding ability to ensure that overall bonus
payments reflect its view of corporate performance during the year when
determining the final bonus amount to be awarded.
The Committee retains the ability in exceptional circumstances to adjust
the targets and/or set different measures and alter weightings for the annual
bonus if certain events occur, such as a material divestment of a Group
business, which cause it to determine they are no longer appropriate and
a change is required to ensure that they achieve their original purpose
and are not materially less difficult to satisfy.
The maximum level of performance related bonus for the CEO is capped
at 100% of base salary, with the other Executive Directors capped at 60%
of base salary.
Bonuses are paid in cash following the year-end.
I T M A N N U A L R E P O R T 2 0 2 1
E X E C U T I V E D I R E C T O R
P O L I C Y
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
LT I P
N O N - E X E C U T I V E D I R E C T O R F E E S
PURPOSE AND LINK
TO STRATEGY
The objectives of the LTIP are to align the long-term interests of shareholders
and management and reward achievement of long-term, stretching targets.
To attract and retain the calibre of Executive Directors and senior management
required to implement and realise the Group’s long-term strategy. The LTIP is
intended to align the Executive Directors interests with the long-term interests
of shareholders.
OPERATION
The new LTIP was approved by the Board in October 2020 and replaced
all existing LTIP schemes for future awards.
There remain options to be exercised under historical schemes, details of
which are set out later in this report.
Any awards granted are subject to a three-year vesting period and stretching
performance targets.
All vesting is at the ultimate discretion of the Committee and the Committee
retains an overriding ability to ensure that vesting reflects its view of corporate
performance of the set period.
The Committee retains the ability in exceptional circumstances to adjust
the targets and/or set different measures and alter weightings if certain events
occur, such as a material divestment of a Group business, which cause
it to determine they are no longer appropriate and a change is required to
ensure that they achieve their original purpose and are not materially less
difficult to satisfy.
PURPOSE AND LINK
TO STRATEGY
To ensure the Group is able to attract and retain experienced and skilled
Non-Executive Directors able to advise and assist with establishing and
monitoring the strategic objectives.
OPERATION
The remuneration of the Chairman and the Non-Executive Directors is payable
in cash fees.
They are not eligible to participate in bonus or share incentive schemes.
Their services do not qualify for pension or other benefits.
Expenses incurred for advice in respect of UK tax returns for non-UK NEDs may
be reimbursed.
Fees are paid monthly and reasonable expenses are reimbursed where
appropriate. Tax may be reimbursed if these expenses are determined
to be a taxable benefit.
No Non-Executive Director is involved in decisions setting their remuneration.
Fees for the Chairman are determined by the Remuneration Committee.
Base fees for other Non- Executive Directors, as well as any supplementary
fee paid to Committee Chairs to reflect their additional responsibilities,
are determined by the Chief Executive and Chair of the Board.
The Board has regard to the level of fees paid to Non-Executive Directors
of comparator companies similar to the Group and the time commitment
and responsibilities of the role. A benchmarking exercise has been undertaken
since the end of the financial year.
Any director representing a shareholder on the board receives a fee from
the shareholder and not the Group.
I T M A N N U A L R E P O R T 2 0 2 1
S H A R E O W N E R S H I P G U I D E L I N E S / R E Q U I R E M E N T S
PURPOSE AND LINK
TO STRATEGY
Executive Directors are required to build and maintain a shareholding in the
Company as this represents the best way to align their interests with those
of shareholders. Levels are set in relation to earnings and according to the
post held in the Group. Non-Executive Directors are encouraged to build and
maintain a shareholding.
OPERATION
The expectation is that Executive Directors will build up to these levels over
a period of time, usually five years, through retaining shares received under
the Group’s incentive arrangements, net of sales to settle tax and/or shares
purchased in their own right.
There is no maximum; however, Executive Directors are required to build
and maintain a minimum shareholding equivalent to 100% of salary.
Newly appointed Executive Directors would normally be required to
achieve the required shareholding within a five-year period of appointment
to the Board.
D I F F E R E N C E S I N T H E P O L I C Y F O R E X E C U T I V E
D I R E C T O R S R E L AT I V E T O T H E B R O A D E R
E M P L O Y E E P O P U L AT I O N
The Policy for the Executive Directors is informed by the
structure operated for the broader employee population.
Pay levels and components vary by organisational level
but the broad themes and philosophy remain consistent
across the Group:
Salaries are reviewed annually with regard to the
same factors as those set out in the Policy table
for Executive Directors;
All staff can be considered for awards under the LTIP
and BAYE schemes. This is intended to encourage share
ownership in the Company and align the management
team and all staff with the strategic business plan; and
Eligibility for and provision of benefits and allowances
varies by level and local market practice
S E R V I C E C O N T R A C T S A N D C H A N G E
O F C O N T R O L P R O V I S I O N S
Each Executive Director has a signed service contract that
terminates on 12 months’ notice.
The Directors’ service contracts are available to view
at the Company’s registered office and prior to each AGM
at the venue for the meeting.
The contracts contain restrictive covenants for periods
of up to six months post-employment relating to
non-competition and non-solicitation of the Group’s
customers, suppliers and employees and indefinitely
with respect to confidential information. In addition,
they provide for the Group to own any intellectual
property rights created by the Directors in the course
of their employment.
T E R M I N AT I O N O F E M P L O Y M E N T
Each Executive Director’s service agreement includes
the right of the Group to terminate the agreement
and make a payment of basic salary in lieu of the
notice period.
There are no contractual rights to additional compensation
at termination.
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
I T M A N N U A L R E P O R T 2 0 2 1
IMPLEMENTATION OF DIREC TOR
REMUNER ATION POLIC Y FOR 2021/22
E X E C U T I V E D I R E C T O R S
E X E C U T I V E D I R E C T O R S
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
BASE SALARY
Base salary reviews for the Executive Directors and senior management were
undertaken in June 2021.
ANNUAL BONUS
BENCHMARKING -
EXECUTIVE DIRECTORS
A benchmarking exercise was conducted in June 2021 which reconfirmed
the output of the benchmarking conducted in 2020, showing that executive
remuneration is positioned below the lower quartile of comparably-sized
organisations.
During its deliberations, the Committee recognised:
That shareholders would expect care and discretion to be used
in judging to what extent, and over what timeframe, adjustments
should be made, with longer timeframes expected for more
substantial increases;
Its strategy as set out at the start of this report including the need
to ensure its policy remains competitive and retains key talent; and
The performance of the management team and the transformative
year including the £172 million shareholder fundraising exercise
in October 2020, the creation of a strategic partnership with
Italian based Snam and the resultant share price appreciation
and value creation for shareholders.
Consequently, the Remuneration Committee agreed to accelerate the
planned salary increases from a three-year to a two-year period.
Base salaries for the Executive Directors with effect from 1 July 2021 are
as follows:
ANDY ALLEN
SIMON BOURNE
GRAHAM COOLEY
RACHEL SMITH
£300,000
£300,000
£420,000
£230,000
The Remuneration Committee will undertake a further benchmarking
exercise in June 2022. As per the remuneration policy, salaries will be set by
reference to a number of factors including market benchmarking, experience,
scope of responsibilities and individual performance.
Performance metrics have been agreed with the Executive Directors for their
FY2021/22 annual bonus targets under the following classifications (note the
performance targets have been deemed commercially sensitive and will be
retrospectively disclosed in next year’s remuneration report):
Financial including revenue and overhead targets;
Business development;
Strategic development including production and procurement
capability; and
ESG and Health & Safety targets.
Total bonus opportunities remain capped as set out in the policy table above.
LTIP
During the year it is intended to grant LTIP awards to the Executive Directors
(as well as all other eligible staff). Any awards granted will vest after three
years and will be subject performance conditions related to TSR (60%),
Financial (20%) and ESG (20%) targets.
BENEFITS AND PENSION
CONTRIBUTION
The Executive Directors will receive the range of Group benefits and pension
contribution in line with the Remuneration Policy.
I T M A N N U A L R E P O R T 2 0 2 1
N O N - E X E C U T I V E D I R E C T O R S
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
APPLIC ATION OF
REMUNER ATION POLIC Y FOR 2021/22
S I N G L E T O TA L R E M U N E R AT I O N F I G U R E F O R
T H E E X E C U T I V E D I R E C T O R S F O R F Y 2020/21
FEES
The FY2021/22 fees for the Non-Executive Directors were reviewed during
June 2021 as part of the benchmarking exercise.
F I X E D
R E M U N E R AT I O N
P E R F O R M A N C E
R E L AT E D
BENCHMARKING -
NON-EXECUTIVE
DIRECTORS
An updated exercise was undertaken in relation to the fees for the
Non-Executive Directors, using the same comparator group as in
the previous year.
Following the exercise, it was considered appropriate to increase the base fee
to £51,000 to match the lower quartile of the market. The additional fee of
£10,000 for chairing each of the Board’s four Committees was not adjusted.
The base fee change was made with effect from 1 July 2021.
BENCHMARKING –
CHAIRMAN’S FEE
An updated exercise was undertaken in relation to the Chairman’s fee,
using the same comparator group as in the previous year.
Following the exercise, it was considered appropriate to increase the fee
to reflect the lower quartile, as well as the additional chairmanship of the
ITM Motive subsidiary board. The Chairman’s fee was therefore changed
to £150,000 with effect from 1 July 2021.
BENEFITS
Non-Executive Directors do not receive any benefits.
)
£
(
Y
R
A
L
A
S
E
S
A
B
)
£
(
N
O
I
S
N
E
P
D
E
X
I
F
L
A
T
O
T
)
£
(
S
U
N
O
B
)
£
(
S
P
I
T
L
E
C
N
A
M
R
O
F
R
E
P
D
E
T
A
L
E
R
N
O
I
T
A
R
E
N
U
M
E
R
L
A
T
O
T
)
£
(
N
O
I
T
A
R
E
N
U
M
E
R
L
A
T
O
T
)
£
(
155,925
7,796
163,721
82,640
907,921
990,561
1,154,282
230,360
11,518
241,878
145,127
3,196,994
3,342,121
3,583,999
299,833
28,000
327,833
248,861
4,211,672
4,460,533
4,788,366
155,736
7,787
163,523
82,540
1,048,475
1,131,015
1,294,538
ANDY
ALLEN
SIMON
BOURNE
GRAHAM
COOLEY
RACHEL
SMITH
Full base salary refers to the salary set for the year before salary exchange and upon which the bonus calculations were
based. The pension figure represents the value of the Group’s contribution (excluding salary exchange) to the individual’s
pension scheme and/or the cash value of payments in lieu of pension contribution. Benefits currently consist of life cover
only so no monetary value is presented here.
The annual bonus is the cash value of the annual bonus and exceptional bonus due to be paid in respect of the year.
The LTIPs amount represents the value received by the directors in relation to any options exercised under the EMI
Scheme 2010 and Unapproved Share Option Scheme 2010 in the year.
I T M A N N U A L R E P O R T 2 0 2 1
P E N S I O N
During the year, the Group paid Andy Allen, Simon Bourne and Rachel Smith equivalent of 5% of base salary.
Graham Cooley received £28,000 cash in lieu of pension. The Group has a contracted agreement with Graham Cooley
that this payment relieves the Group of any liability for pension provision on their behalf.
A N N U A L B O N U S
For the 2020/21 financial year, the maximum bonus opportunity and actual outcomes for the Executive Directors,
as determined by the Committee were as follows based upon a range of financial and operational performance
and strategic targets:
PERFORMANCE MEASURE
WEIGHTING
(% OF POTENTIAL MAXIMUM BONUS)
ACTUAL PAYOUT %
E X C E P T I O N A L B O N U S
The Committee determined than an additional exceptional
bonus, equivalent to 33% of base salary, should be paid
to the Executive Directors in the year. This amounted
to payments of £51,455, £76,019, £98,945 and £51,393 for
Andy Allen, Simon Bourne, Graham Cooley and Rachel Smith
respectively.
These awards reflect the successful achievement of the £172
million shareholder fundraising exercise in October 2020
and the creation of a strategic partnership with Italian based
Snam, one of the world's leading energy infrastructure
companies. This partnership also secured a 100MW
preferred supplier pipeline for the Group.
SALES IN THE YEAR
GROSS MARGIN
BUSINESS DEVELOPMENT
COST MANAGEMENT
CASH MANAGEMENT
OPERATIONAL MANAGEMENT
STRATEGIC – MOTIVE SEPARATION
TOTAL
15
10
10
20
25
15
5
100
5
0
7
5
18
10
5
50
Based upon the 50% pay out achievement set out above, the directors received the following bonus as a percentage
of base salary:
DIRECTOR
ANDY ALLEN
SIMON BOURNE
GRAHAM COOLEY
RACHEL SMITH
MAXIMUM POTENTIAL
% OF BASE SALARY
ACTUAL % ACHIEVED
VALUE OF BONUS
ACHIEVED (£)
40
60
100
40
20
30
50
20
31,185
69,108
149,917
31,147
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
I T M A N N U A L R E P O R T 2 0 2 1
LT I P s
E M I S C H E M E 2010
The EMI Scheme 2010 was introduced on 29 January 2010. Options granted under the scheme vest in three equal
instalments on the first, second and third anniversaries of the grant and exercisable up to the tenth anniversary of the
date of grant. There are no performance conditions attached to the exercising of the options.
All outstanding options for all directors were exercised on the 9 June 2020.
Detailed assumptions used in calculating the fair value of the options are outlined in note 8 of the consolidated
financial statements.
Interests of the directors under the EMI Scheme 2010 at 1 May 2020 and 30 April 2021 are set out below:
S
N
O
I
T
P
O
F
O
R
E
B
M
U
N
0
2
0
2
Y
A
M
1
T
A
D
E
S
I
C
R
E
X
E
S
N
O
I
T
P
O
R
A
E
Y
N
I
S
N
O
I
T
P
O
F
O
R
E
B
M
U
N
1
2
0
2
L
I
R
P
A
0
3
T
A
E
C
I
R
P
E
S
I
C
R
E
X
E
E
L
B
A
S
I
C
R
E
X
E
S
N
O
I
T
P
O
H
C
I
H
W
T
A
E
T
A
D
E
T
A
D
Y
R
I
P
X
E
S
N
O
I
T
P
O
T
N
A
R
G
F
O
E
T
A
D
DIRECTOR
23.11.2011
16,666
16,666
ANDY ALLEN
23.11.2011
16,666
16,666
SIMON BOURNE
23.11.2011
16,668
16,668
24.01.2011
123,596
123,596
01.08.2012
100,000
100,000
GRAHAM COOLEY
19.07.2012
250,000
250,000
-
-
-
-
-
-
55p
22.03.2012
23.01.2021
55p
22.03.2013
23.01.2021
55p
22.03.2014
23.01.2021
67p
24.01.2014
23.01.2021
50p
01.08.2015
31.07.2022
50p
19.07.2015
18.07.2022
TOTAL
523,596
523,596
-
No new options were granted and no options lapsed in the year.
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.
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
U N A P P R O V E D S H A R E
O P T I O N S C H E M E 2010
The Unapproved Share Option Scheme 2010 was introduced
on 29 January 2010. Options granted under the scheme for
years prior to 2019 vest in three equal instalments on the
first, second and third anniversaries of the grant and
exercisable up to the tenth anniversary of the date of grant.
Options granted in 2019 vest on the third anniversary of the
date of grant and are exercisable up to the tenth anniversary
of the date of grant. No further awards will be granted
under this plan.
There are no performance conditions attached to the
exercising of the options.
Detailed assumptions used in calculating the fair value
of the options are outlined in note 8 of the consolidated
financial statements.
I T M A N N U A L R E P O R T 2 0 2 1
Interests of the directors under the Unapproved Share Option Scheme 2010 at 1 May 2020 and 30 April 2021 are set out below:
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
S
N
O
I
T
P
O
F
O
R
E
B
M
U
N
0
2
0
2
Y
A
M
1
T
A
D
E
S
I
C
R
E
X
E
S
N
O
I
T
P
O
R
A
E
Y
N
I
S
N
O
I
T
P
O
F
O
R
E
B
M
U
N
1
2
0
2
L
I
R
P
A
0
3
T
A
E
C
I
R
P
E
S
I
C
R
E
X
E
H
C
I
H
W
T
A
E
T
A
D
E
L
B
A
S
I
C
R
E
X
E
S
N
O
I
T
P
O
E
T
A
D
Y
R
I
P
X
E
S
N
O
I
T
P
O
T
N
A
R
G
F
O
E
T
A
D
S
N
O
I
T
P
O
F
O
R
E
B
M
U
N
0
2
0
2
Y
A
M
1
T
A
D
E
S
I
C
R
E
X
E
S
N
O
I
T
P
O
R
A
E
Y
N
I
S
N
O
I
T
P
O
F
O
R
E
B
M
U
N
1
2
0
2
L
I
R
P
A
0
3
T
A
E
L
B
A
S
I
C
R
E
X
E
S
N
O
I
T
P
O
H
C
I
H
W
T
A
E
T
A
D
E
C
I
R
P
E
S
I
C
R
E
X
E
E
T
A
D
Y
R
I
P
X
E
S
N
O
I
T
P
O
T
N
A
R
G
F
O
E
T
A
D
DIRECTOR
14.08.2018
333,333
333,333
-
30p
14.08.2019
13.08.2028
24.01.2011
800,000
800,000
333,333
30p
14.08.2020
13.08.2028
06.08.2014
750,000
750,000
-
-
67p
24.01.2014
23.01.2021
27p
06.08.2015
05.08.2024
DIRECTOR
ANDY ALLEN
14.08.2018
333,333
14.08.2018
333,334
24.10.2019
47,250
-
-
-
24.01.2011
276,404
276,404
06.08.2014
250,00
250,000
333,334
30p
14.08.2021
13.08.2028
47,250
48p
23.10.2022
23.10.2029
-
-
-
67p
24.01.2014
23.01.2021
27p
06.08.2017
05.08.2024
30p
14.08.2019
05.08.2024
SIMON BOURNE
14.08.2018
583,333
583,333
14.08.2018
583,333
14.08.2018
583,334
24.10.2019
159,750
-
-
-
583,333
30p
14.08.2020
13.08.2028
583,334
30p
14.08.2021
13.08.2028
159,750
48p
23.10.2022
23.10.2029
GRAHAM COOLEY
14.08.2018
1,000,000
14.08.2018
1,000,000
14.08.2018
1,000,000
24.10.2019
307,500
-
-
-
-
1,000,000
30p
14.08.2019
13.08.2028
1,000,000
30p
14.08.2020
13.08.2028
1,000,000
30p
14.08.2021
13.08.2028
307,500
48p
23.10.2022
23.10.2029
14.08.2018
416,666
416,666
-
30p
14.08.2019
13.08.2028
RACHEL SMITH
14.08.2018
416,667
14.08.2018
416,667
24.10.2019
72,000
-
-
-
416,667
30p
14.08.2020
13.08.2028
416,667
30p
14.08.2021
13.08.2028
72,000
48p
23.10.2022
23.10.2029
TOTAL
9,662,904
3,409,736
6,253,168
No new options were granted and no options lapsed in the year.
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.
I T M A N N U A L R E P O R T 2 0 2 1
U N A P P R O V E D S H A R E
O P T I O N S C H E M E 2020
The Unapproved Share Option Scheme 2020 was introduced on 23 October 2020 and replaced both the EMI Scheme
2010 and Unapproved Share Option Scheme 2010.
No consideration is payable for the grant of the awards, which are structured as nominal cost options. The grant in 2020
was provided with an option exercise price of £0.05 per ordinary share. The number of ordinary shares granted under
the award in 2020 was calculated using a share price of 270.5 pence, being the average mid-market quotation as derived
from AIM for the last 5 days of trading prior to close on 21 October 2020.
The vesting of an award is subject to the satisfaction of performance conditions which have been set by the Remuneration
Committee. The awards are subject to a three-year vesting period and to the achievement of the performance conditions
and the participant being either a director, employee or contributor to the Group, or a good leaver at that time.
The performance conditions applying to 2020 grant relate to the performance of the Company's shareholder return
with that of the performance of the AIM 50 Index over the applicable performance period.
Detailed assumptions used in calculating the fair value of the options are outlined in note 8 of the consolidated
financial statements.
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
Interests of the directors under the Unapproved Share Option Scheme 2020 at 1 May 2020 and 30 April 2021 are set
out below:
T
N
A
R
G
F
O
E
T
A
D
22.10.2020
13.11.2020
22.10.2020
13.11.2020
22.10.2020
13.11.2020
22.10.2020
13.11.2020
DIRECTOR
ANDY ALLEN
SIMON BOURNE
GRAHAM COOLEY
RACHEL SMITH
TOTAL
S
N
O
I
T
P
O
F
O
R
E
B
M
U
N
0
2
0
2
Y
A
M
1
T
A
D
E
T
N
A
R
G
S
N
O
I
T
P
O
R
A
E
Y
N
I
S
N
O
I
T
P
O
F
O
R
E
B
M
U
N
1
2
0
2
L
I
R
P
A
0
3
T
A
E
C
I
R
P
E
S
I
C
R
E
X
E
E
T
A
D
G
N
I
T
S
E
V
E
T
A
D
Y
R
I
P
X
E
S
N
O
I
T
P
O
-
-
-
-
-
-
-
-
-
52,478
52,478
5p
22.10.2023
22.10.2030
45,919
45,919
5p
22.10.2023
13.11.2030
52,415
52,415
48,863
48,863
100,912
100,912
88,298
88,298
77,530
77,530
67,839
67,839
534,254
534,254
5p
5p
5p
5p
5p
5p
22.10.2023
22.10.2030
22.10.2023
13.11.2030
22.10.2023
22.10.2030
22.10.2023
13.11.2030
22.10.2023
22.10.2030
22.10.2023
13.11.2030
No options were exercised or lapsed in the year.
I T M A N N U A L R E P O R T 2 0 2 1
B U Y A S Y O U E A R N
S C H E M E 2020
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
S I N G L E T O TA L R E M U N E R AT I O N
F I G U R E F O R T H E N O N - E X E C U T I V E
D I R E C T O R S
The Group launched a Buy As You Earn scheme across its workforce in October 2020. Under the scheme participants
can buy up to £150 of ordinary shares per month, with the Group matching the purchase on a one-for-one basis.
An annual top up is also permitted, subject to a maximum contribution of £1,800 in each tax year.
Shares acquired are held by a BAYE Trust until a request is received to withdraw them or a participant leaves employment.
Interests of the directors under the Buy As You Earn Scheme 2020 at 30 April 2021 are set out below:
DIRECTOR
NUMBER OF SHARES
PURCHASED IN THE YEAR
NUMBER OF SHARES
AWARDED BY GROUP UNDER
MATCHING RULE
TOTAL SHARES HELD
IN BAYE TRUST
ANDY ALLEN
SIMON BOURNE
GRAHAM COOLEY
RACHEL SMITH
367
367
367
367
367
367
367
367
734
734
734
734
NON-EXECUTIVE DIRECTOR FEE 2020/21 (£)
ROGER BONE
MARTIN GREEN
JUERGEN NOWICKI
TOM RAE
KATHERINE ROE
ROBERT PENDLEBURY
82,500
53,333
-
-
52,814
-
Shareholder nominated Non-executive directors do not receive any fees from the Group.
I T M A N N U A L R E P O R T 2 0 2 1
S TAT E M E N T O F
D I R E C T O R ' S S H A R E H O L D I N G S
R E M U N E R AT I O N C O M M I T T E E
S U P P O R T A N D A D V I S E R S
R E M U N E R A T I O N
C O M M I T T E E R E P O R T
The directors who served during the year and their interests in the shares of ITM Power (including those of their
spouse or civil partner and children under the age of 18) were as follows:
DIRECTOR
Y
L
L
A
I
C
I
F
E
N
E
B
S
E
R
A
H
S
L
A
T
O
T
1
2
0
2
L
I
R
P
A
0
3
T
A
D
E
N
W
O
0
3
T
A
S
A
S
E
R
A
H
S
F
O
E
U
L
A
V
)
£
(
1
2
0
2
L
I
R
P
A
ANDY ALLEN
ROGER BONE
47,156
245,446
279,986
1,457,327
SIMON BOURNE
79,767
415,187
Y
R
A
L
A
S
E
S
A
B
F
O
%
157
-
180
GRAHAM COOLEY
706,382
3,676,718
1,226
MARTIN GREEN
55,319
287,935
JUERGEN NOWICKI
TOM RAE
-
-
-
-
KATHERINE ROE
7,659
39,865
RACHEL SMITH
70,461
366,749
ROBERT PENDLEBURY
-
-
-
-
-
-
235
-
0
3
T
A
D
E
N
W
O
Y
L
L
A
I
C
I
F
E
N
E
B
S
E
R
A
H
S
L
A
T
O
T
0
2
0
2
L
I
R
P
A
25,000
258,710
349,462
1,137,726
40,000
-
-
-
80,886
112,209
?
T
E
M
S
E
N
I
L
E
D
I
U
G
G
N
I
D
L
O
H
E
R
A
H
S
Yes
n/a
Yes
Yes
n/a
n/a
n/a
n/a
Yes
-
Tom Rae was appointed as the JCB nominee Non-Executive Director with effect from 3 December 2020
Katherine Roe was appointed as a Non-Executive Director with effect from 6 May 2020
Robert Pendlebury retired with effect from 31 July 2020
The Company Secretary acted as secretary to the
Committee. Other directors attended Committee meetings
at the invitation of the Committee and as appropriate.
The Committee engaged the services of Ernst and Young LLP
(‘EY’) to provide professional advice on remuneration
matters. EY received £86,950 (2020: £11,400) in respect of
those services and included Executive Director
remuneration benchmarking, support on the LTIP and BAYE
share schemes and general guidance on remuneration
matters. EY adheres to the Remuneration Consultant
Group’s Code of Conduct which seeks to clarify the scope
and conduct of the role of executive remuneration
consultants when advising UK listed companies. The
Committee is satisfied that the advice EY provided was
objective and independent.
M I S C E L L A N E O U S
D I S C L O S U R E S
The Group provides limited Directors’ and Officers’
liability insurance, at a cost of approximately £57,500
exclusive of VAT for the insurance year which runs
until 29 September 2021.
As a company listed on AIM, the Company is not required
to comply with Schedule 8 of the Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations
2008 as amended (the “Regulations”), nor is it required
to comply with the principles relating to directors’
remuneration in the UK Corporate Governance Code.
The Company follows the requirements of the QCA code.
The Remuneration Committee’s terms of reference
are available upon request from the registered office.
This report has not been audited. It should be read in
conjunction with details of Directors’ remuneration in note
8, which forms part of the audited financial statements.
This report was approved by the Remuneration Committee
and authorised for issue on 10 September 2021 and was
signed on its behalf by:
Katherine Roe
Remuneration Committee Chair
I T M A N N U A L R E P O R T 2 0 2 1
A U D I T C O M M I T T E E R E P O R T
AUDIT
COMMIT TEE
REPORT
I T M A N N U A L R E P O R T 2 0 2 1
AUDIT COMMIT TEE
REPORT
S U M M A R Y O F R O L E
The Audit Committee’s primary role is to ensure the integrity
of the financial reporting of the Group and to undertake assurance
activities relating to internal controls. The Audit Committee acts
in accordance with its terms of reference available on the ITM
Power website.
S U M M A R Y O F S I G N I F I C A N T I S S U E S C O N S I D E R E D
The Audit Committee follows an agreed work plan to focus on matters
as set out in its terms of references with specific regard to the Annual
Report and Accounts. It considers Group financial disclosures and
accounting matters, including the impact and treatment of key
accounting standards. It tracks key control recommendations and
improvement opportunities identified by either the external auditor
or the management team.
Other areas to which the Audit Committee paid specific regard in the
year are noted below:
Audit planning and process
Appropriateness of setting up an internal audit function
Reviewing the Audit Committee terms of reference
Reviewing the Risk Register
Key legal contractual matters
Management of key business risks including IP and
cyber-security.
A review of the new anti-fraud and bribery policies for the
group including its whistle-blowing policy (known as its
Speak Up Policy)
A review of the treasury management policies and processes
for the Group
A review of financial authorities for the Group.
A summary of the areas in which the Audit Committee were required
to exercise significant judgement is noted below, all of which are
further disclosed within notes 2-4 of the Annual Report and Accounts:
Contract accounting, including consideration of
contract balances and loss provisions
Capitalisation of Development Costs
Impairment of non-current assets
Recoverability of grant debtors
Deferred Tax Asset
A S S E S S I N G T H E E X T E R N A L A U D I T O R ,
A P P R O A C H O N A P P O I N T M E N T/
R E A P P O I N T M E N T A N D P O L I C Y O N
A U D I T O R R O TAT I O N
There are no contractual restrictions on the choice of the
external auditor.
The Audit Committee reviews the auditor’s performance
and independence annually based on feedback from the
management team and the Committee. It reviews annual
fees to ensure they are in line with market rates and
reflect performance. The Committee also closely monitors
the nature and level of any non-audit services provided,
with a policy that such work is both minimised and that
where any work is undertaken, it is approved by the Audit
Committee. Such work may only proceed exceptionally
and must exclude involvement in making any business
judgments that need to be made concerning the nature
of work undertaken to help safeguard the auditor’s
independence. Details of fees paid/payable to the auditors
are set out in note 7. The only non-audit services provided
in the year ended 30 April 2021 were related to limited
assurance procedures as part of the publication of the
interim results.
The Audit Committee terms of reference require it to make
an annual recommendation to the Board. The Audit
Committee looks at auditor rotation as part of the review
process. Auditor rotation is typically considered at least
every five years, unless the annual performance review
identifies earlier reason to rotate. Ahead of the planned
retirement of the lead auditor for Grant Thornton,
the Audit Committee has agreed that a new auditor was
brought in to undertake the audit of the year ending
30 April 2021.
Finally, the Audit Committee gave due consideration
to the adequacy of its whistleblowing procedures
and the ongoing engagement of Grant Thornton,
their independence, associated remuneration and
non-audit fees.
Our Auditors, Grant Thornton UK LLP, have been in place
since the financial year 2017/2018.
A U D I T C O M M I T T E E R E P O R T
A S S E S S I N G T H AT T H E R I S K A N D C O N T R O L
F R A M E W O R K A N D P R O C E S S E S A R E
O P E R AT I N G P R O P E R LY
A key role of the Audit Committee is to monitor the
effectiveness of the internal control environment which
includes consideration of the Group’s internal control and
risk management policies and systems, their effectiveness
and the requirements for an internal audit function in the
context of the Group’s overall risk management system.
The external audit function plays an important part
in assessing the effectiveness of financial reporting and
internal controls. In turn, the effectiveness and quality
of the external audit is of key importance, including
ensuring that sufficient weight is given to new areas
of compliance, such as International Financial Reporting
Standards (“IFRS”) and existing areas of risk as is
deemed appropriate.
H O W I N T E R N A L A S S U R A N C E I S G A I N E D
As the Audit Committee considered that the Group has
not been at the stage where it is appropriate to have an
internal audit function, the Audit Committee planned extra
levels of assurance in specifically identified areas in the
financial year and will continue to do so through the Audit
Committee’s work cycle.
This is primarily undertaken by the Audit Committee
members meeting with senior management team
members responsible for the relevant areas of the Group’s
operations to carry out in-depth reviews of the identified
risk areas. The outcomes of these activities are discussed
at the Audit Committee and, where appropriate
recommendations made to the management team.
This is considered appropriate for the relative size
and complexity of the Group’s activities.
In the year ended 30 April 2021, the Audit Committee
reviewed the need for an internal audit function. The Audit
Committee agreed with the Group's recommendation
that it was now appropriate to begin work to set up
an internal audit function during the year ended 30 April
2022. The Audit Committee is satisfied that the Group
controls are operating such that a separate internal audit
function is not required earlier.
MARTIN GREEN
Chairman, Audit Committee
I T M A N N U A L R E P O R T 2 0 2 1
A U D I T C O M M I T T E E R E P O R T
M E M B E R S O F T H E A U D I T C O M M I T T E E
The current members of the Audit Committee are Martin Green
(Chair) and Sir Roger Bone.
The Board of ITM Power consider that there is a broad range
of financial expertise in the members of the Audit Committee.
Martin Green was Managing Director of Johnson Matthey Battery
Systems and Group Strategy Director of Johnson Matthey plc with
P&L responsibility for a portfolio of Johnson Matthey business.
Sir Roger Bone has extensive experience including as a Non-Executive
Director of the F&C Investment Trust, which has a total asset portfolio
of over £4bn, and where he served as the Senior Independent
Non-Executive Director and a member of the Audit Committee,
until he stepped down from the Board in May 2021. Both members
of Audit Committee bring extensive financial expertise together
with a breadth of skills in line with the requirements of the QCA
guidance on Audit Committees.
N U M B E R O F M E E T I N G S H E L D
The Audit Committee met six times during the year ended 30 April
2021 together with a further three meetings time post-year end.
All members of Audit Committee attended each meeting.
R E S P O N S I B I L I T I E S O F T H E C O M M I T T E E
The Committee is responsible for the following activities:
Reviewing the effectiveness of the Group’s financial
reporting, internal control policies and procedures for the
identification, assessment and reporting of risk;
Monitoring the integrity of the Group’s financial statements;
Reviewing the provision of pension arrangements
for employees;
Keep under review the effectiveness of the Groups internal
controls and risk management systems;
Reviewing the Group’s whistleblowing, fraud and
bribery procedures
Agreeing the scope of the auditors’ annual audit programme
and reviewing the output;
Keeping the relationship with the auditors under review,
assessing the effectiveness of the audit process; and
Developing and implementing policy on the engagement
of the auditors to supply non-audit services.
The external auditors have unrestricted access to the Chairman
of the Audit Committee. Audit Committee meetings are also attended
by the external Auditor where appropriate and, by invitation,
the Chief Executive Officer, Finance Director, Group Financial
Controller and other members of senior management.
S I R R O G E R B O N E
I T M A N N U A L R E P O R T 2 0 2 1
I N D E P E N D E N T A U D I T O R ' S R E P O R T
INDEPENDENT
AUDITOR'S
REPORT
I T M A N N U A L R E P O R T 2 0 2 1
I N D E P E N D E N T A U D I T O R ’ S
R E P O R T T O T H E M E M B E R S
O F I T M P O W E R
OPINION
BASIS FOR OPINION
Our opinion on the financial statements is unmodified.
We have audited the financial statements of ITM Power
(the ‘parent company’) and its subsidiaries (the ‘group’) for
the year ended 30 April 2021 which comprise Consolidated
Income Statement and Other Comprehensive Income,
Consolidated Balance Sheet, Consolidated Statement
of Changes in Equity, Consolidated Cash Flow Statement,
Company Statement of Changes in Equity, Company
Balance Sheet and notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been applied
in their preparation is applicable law and international
accounting standards in conformity with the requirements
of the Companies Act 2006. 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, including Financial
Reporting Standard 101 ‘Reduced Disclosure Framework’
(United Kingdom Generally Accepted Accounting Practice).
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 2021 and of the
group’s loss for the year then ended;
• The group financial statements have been
properly prepared in accordance with
International Accounting Standards in conformity
with the requirements of the Companies Act 2006;
• 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.
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further
described in the ‘Auditor’s responsibilities for the audit
of the financial statements’ section of our report. We are
independent of the group and the parent company in
accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We are responsible for concluding on the appropriateness
of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the group’s
and the parent company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our report to the
related disclosures in the financial statements or, if such
disclosures are inadequate, to modify the auditor’s
opinion. Our conclusions are based on the audit evidence
obtained up to the date of our report. However, future
events or conditions may cause the group or the parent
company to cease to continue as a going concern.
Our evaluation of the directors’ assessment of the group’s
and the parent company’s ability to continue to adopt
the going concern basis of accounting included evaluation
of management’s cashflow forecast to September 2022,
along with challenge and assessment of the inputs into
the forecast.
We evaluated management’s reverse stress test to check
the extent of overspend required to eliminate all
headroom in the base forecast, as well as the available
mitigations to avoid such a scenario occurring.
We inspected capital and lease commitments entered into
and costs expected to be incurred to check that these have
been appropriately incorporated into the forecasts and
that there was sufficient cash in hand to cover these costs
for the going concern period.
We assessed the projected cash flows in management’s
forecasts for the going concern assessment period by
reference to our expectations formed from the audit work
performed on contracts and by comparing forecast cash
costs to those incurred in previous years. We have
confirmed the cash held by the group at 30 April 2021
and compared this to the cash requirements indicated
in management’s forecasts, noting that the balance held
is significantly higher than forecasted costs.
In our evaluation of the directors’ conclusions, we
considered the inherent risks associated with the group’s
and the parent company’s business model including
effects arising from macro-economic uncertainties such as
Brexit and Covid-19, we assessed and challenged the
reasonableness of estimates made by the directors and
the related disclosures and analysed how those risks might
affect the group’s and the parent company’s financial
resources or ability to continue operations over the going
concern period.
Based on the work we have performed, we have not
identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast
significant doubt on the group’s and the parent company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements
are authorised for issue.
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate.
The responsibilities of the directors with respect to going
concern are described in the ‘Responsibilities of directors
for the financial statements’ section of this report.
I N D E P E N D E N T A U D I T O R ' S R E P O R T
I T M A N N U A L R E P O R T 2 0 2 1
OUR APPROACH TO THE AUDIT
KEY AUDIT MATTERS
I N D E P E N D E N T A U D I T O R ' S R E P O R T
Materiality
Key audit
matters
Scoping
OVERVIEW OF OUR AUDIT APPROACH
O V E R A L L M AT E R I A L I T Y
Group: £1,034,000, which represents 3.75% of the group's loss
before taxation.
Parent company: £967,000, which represents 0.5% of the
parent company's gross assets
K E Y A U D I T M AT T E R S W E R E I D E N T I F I E D A S
• Inappropriate recognition of revenue -
Same as previous year;
• Inappropriate recognition of grant income -
Same as previous year; and
• Incomplete recognition of the loss provision
in relation to contract accounting - Same as
previous year
Our auditor’s report for the year ended 30 April 2020 included
one key audit matter that has not been reported as a key audit
matter in our current year’s report. This relates to the use
of the going concern assumption when preparing the financial
statements which has been removed as there is significant
headroom in cash reserves held when compared to costs
expected to be incurred.
Scoping has been determined to ensure appropriate coverage
of the significant risks as well as coverage of the key results in
the financial statements:
• Revenue 98% (2020: 94%)
• Loss before tax 94% (2020: 96%)
• Total assets 95% (2020: 95%)
There have been no changes in scope from the prior year. As the
finance function for the group is based in the UK, the audit
of the group has been performed by the primary team.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
DESCRIPTION
AUDIT
RESPONSE
KAM
DISCLOSURES
KEY OBSERVATIONS
/ OUR RESULTS
In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the audit.
Parent only -
Investments
Going concern
Inappropriate
recognition
of grant income
Incomplete recognition of
the loss provision in relation
to contract accounting
Intangible
assets
Management override
of controls
GRAPH KEY
HIGH
L
A
I
C
N
A
N
I
F
L
A
I
T
N
E
T
O
P
T
C
A
P
M
I
T
N
E
M
E
T
A
T
S
Share based
payments
Inventory
Trade and grant
receivables
EXTENT OF MANAGEMENT JUDGEMENT
Inappropriate
recognition
of revenue
HIGH
Key audit
matter
Significant
risk
Other risk
I T M A N N U A L R E P O R T 2 0 2 1
KE Y AUDIT
MAT TER - GROUP
INAPPROPRIATE RECOGNITION OF REVENUE
HOW OUR SCOPE ADDRESSED THE MATTER - GROUP
RELEVANT DISCLOSURES IN THE ANNUAL REPORT
AND ACCOUNTS 2021
OUR RESULTS
K E Y A U D I T M A T T E R - G R O U P
We identified the inclusion of fraudulent
transactions within revenue, including completeness
of deferred income, as one of the most significant
assessed risks of material misstatement.
Revenue recorded in the financial statements
is £4,275,000 (2020: £3,291,000).
There is a significant risk of fraudulent reporting
due to the judgemental nature of assessing revenue
recognised, using the ‘over time’ principles in with
IFRS 15 ‘Revenue from Contracts with Customers’.
Management’s assessment includes a number
of estimates:
• Estimated total contract costs;
In responding to the key audit matter, we performed the following
audit procedures:
• Assessing whether the group’s accounting policies for
revenue from product sales and consultancy contracts
were in accordance with the financial reporting
framework, including IFRS 15;
• Tested a sample of contracts to original signed
contractual agreements or terms to confirm these
support management’s categorisation of the
contract as ‘over time’ or not;
• Performed procedures over management’s contract
forecast models, testing mathematical accuracy and
agreeing amounts and terms to underlying contracts;
• Estimated stage of completion derived from
• For a sample of contracts we recalculated revenue
the total contract costs; and
• Forecasted margin which is also derived
from total contract costs.
recognised over time using the input method of costs
incurred to date as a percentage of total expected costs.
We tested a sample of those costs incurred to date
to supporting evidence;
• We challenged management’s estimate of total expected
costs to assess whether revenue had been properly
recognised. We did this by comparing costs expected with
post year end results and testing a sample of forecasted
costs to supporting evidence such as purchase orders
and supplier quotations;
• We made enquires of the individual project managers
to obtain an understanding of the current progress of the
contract and to understand their process and methods
for estimating costs to complete;
• For deferred contract income, we recalculated the
deferred income balance and agreed inputs to supporting
evidence, such as invoices raised and cash received.
We also reviewed contracts in place and tested those
with no deferred contract income to determine if the
liability is complete; and
• We recalculated accrued income in respect of revenue
from Product sales and Consulting contracts, based on
revenue recognised to date and progress billings.
GRAPH KEY
Key audit
matter
Significant
risk
Other risk
• Financial statements: Note 5, Revenue, Operating
Segments & Income from Government Grants
• Financial statements: Note 4, Critical accounting
judgements and key sources of estimation
uncertainty
Based on our audit work addressing the risk of improper
recognition of revenue, we are satisfied that the
assumptions made by management in recognising
revenue were appropriate and in accordance with,
the financial reporting framework, including IFRS 15,
and we did not identify any material misstatements
in the revenue recognised.
I T M A N N U A L R E P O R T 2 0 2 1
INAPPROPRIATE RECOGNITION OF GRANT INCOME
HOW OUR SCOPE ADDRESSED THE MATTER - GROUP
RELEVANT DISCLOSURES IN THE ANNUAL REPORT
AND ACCOUNTS 2021
OUR RESULTS
K E Y A U D I T M A T T E R - G R O U P
We identified the inclusion of fraudulent transactions
within grant income, including existence and valuation
of accrued grant income and completeness of deferred
grant income, as one of the most significant assessed
risks of material misstatement.
Grant income recorded in the financial statements
is £2,546,000 (2020: £2,768,000).
ITM Power present grant income as a reduction in cost
of sales and/or admin costs. There is a significant risk
of fraudulent reporting due to the judgemental nature
of assessing grant income recognised under IAS 20
‘Accounting for Government Grants and Disclosure
of Government Assistance’ and inappropriate application
of the contract terms. The following judgements
are applied by management in the recognition of
grant income:
• Interpretation of the contract to assess the
costs that are reclaimable; and
• Assessment of the amount that can be
recognised as accrued grant income which
is based on when the terms of the grant
income contract have been met.
In responding to the key audit matter, we performed the
following audit procedures:
• Assessed whether the group’s accounting
policies for grant income are in accordance
with International Accounting Standard IAS 20;
• For a sample of grant income, we agreed the
terms to the signed contractual agreement,
agreed the funding level to grant agreements
and recalculated the amounts recognised,
deferred, or accrued based on actual costs
incurred to date and, where appropriate,
claims submitted;
• Tested whether the costs associated with grant
income recorded to date are accurate and
appropriately allocated to the correct grant
project to challenge the validity of the claim
and recognition;
• To test the validity of the submitted claims,
we tested a sample of amounts receivable
under grant claims agreeing the terms
to the signed contractual agreement
and agreed the funding level to grant
agreements. This included accrued income
in relation to grant income and the grant
receivable balance;
• We tested a sample of accrued grant income
to subsequent invoice and cash receipt
in order to determine if the income was
genuine. We also documented our
understanding of the claim submission
process; and
• For deferred grant income, we recalculated
the deferred income balance and agreed inputs
to supporting evidence, such as invoices raised
and cash received.
• Financial statements: Note 5, Revenue,
Operating Segments & Income from
Government Grants
• Financial statements: Note 4, Critical accounting
judgements and key sources of estimation
uncertainty
Based on our audit work addressing the risk of improper
recognition of grant income, we are satisfied that
the assumptions made by management in recognising
income from government grants were appropriate,
and in accordance with, the financial reporting
framework, including IAS 20.
INCOMPLETE RECOGNITION OF THE LOSS PROVISION
IN RELATION TO CONTRACT ACCOUNTING
HOW OUR SCOPE ADDRESSED THE MATTER - GROUP
We identified incomplete recognition of the loss
provision in relation to contract accounting as one of the
most significant assessed risks of material misstatement
due to error. This is because of the judgement needed to
assess the contract provisions.
Loss provision provided in the financial statements is
£4,820,000 (2020: £3,645,000).
To date, the majority of contracts that ITM Power have
entered into have been loss making. There is a significant
level of judgment in calculating future expected costs
on the contracts as the contracts are bespoke in nature.
The impact of incorrect assessment of these costs is the
potential for immediate recognition of future losses.
As these are typically multi-year projects, the estimate
around forecasting losses is sensitive and has the
potential for material error.
In responding to the key audit matter, we performed the
following audit procedures:
• We obtained management's schedule of contract
loss provisions;
• We identified on-going contracts at the year end
where no loss provision was recognised and
challenged whether this was appropriate by
testing material costs to complete and comparing
to contracted revenue amounts;
• We made enquiries of the specific project
managers to obtain an understanding of their
process and methods of estimating costs
to complete. We looked for indicators of
management bias in their assumptions and
corroborated estimates based on prior
experience to historic data;
• We obtained post year end schedules for total
expected costs to identify whether the costs
used in assessing contract losses were
appropriate. We did this by assessing if the
forecast costs to complete had increased
significantly and where they did, corroborating
management’s explanations for the changes;
• We compared the total expected costs by contract
from the year end to the previous year end,
obtaining explanations for movements in order
to test the historical accuracy of forecasting;
• We obtained supporting evidence, such as
purchase orders and supplier quotations for
a sample of forecast costs to complete; and
• We assessed and challenged the appropriateness
of the financial statement disclosures.
I T M A N N U A L R E P O R T 2 0 2 1
RELEVANT DISCLOSURES IN THE ANNUAL REPORT
AND ACCOUNTS 2021
KEY OBSERVATIONS
KEY AUDIT MATTER - GROUP
HOW OUR SCOPE ADDRESSED THE MATTER - GROUP
• Financial statements: Note 21, Provisions
• Financial statements: Note 4, Critical accounting
judgements and key sources of estimation
uncertainty
When assessing contract costs incurred post year end,
we identified a minority of contracts where additional
costs had been incurred which were not forecast.
Management have subsequently recalculated forecast
contract costs and the resulting loss provision.
Based on our audit work addressing the risk of
incomplete recognition of the loss provision, we are
satisfied that assumptions made by management in
recording the loss provision are appropriate, and its
recognition is in accordance with the financial reporting
framework, including IAS 37 ‘Provisions, Contingent
Liabilities and Contingent Assets’ and IFRS 15.
K E Y A U D I T M A T T E R - G R O U P
I T M A N N U A L R E P O R T 2 0 2 1
K E Y A U D I T M A T T E R - G R O U P
O U R A P P L I C AT I O N O F M AT E R I A L I T Y
MATERIALITY MEASURE
GROUP
PARENT COMPANY
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion
in the auditor’s report.
Materiality was determined as follows:
MATERIALITY MEASURE
GROUP
PARENT COMPANY
MATERIALITY FOR
FINANCIAL STATEMENTS
AS A WHOLE
We define materiality as the magnitude of misstatement in the financial statements
that, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of the users of these financial statements. We use materiality in
determining the nature, timing and extent of our audit work.
SIGNIFICANT
JUDGEMENTS MADE
BY AUDITOR IN
DETERMINING THE
PERFORMANCE
MATERIALITY
SPECIFIC MATERIALITY
In determining materiality, we made
the following significant judgements:
In determining materiality, we made
the following significant judgements.
Prior experience of misstatements that
were subsequently corrected.
Prior experience of misstatements that
were subsequently corrected.
General industry risk and the group
specific risk due to the speed of change
of the industry.
General industry risk and the group
specific risk due to the speed of change
of the industry.
We determine specific materiality for one or more particular classes of transactions,
account balances or disclosures for which misstatements of lesser amounts than
materiality for the financial statements as a whole could reasonably be expected to
influence the economic decisions of users taken on the basis of the financial statements.
MATERIALITY THRESHOLD
£1,034,000 which is 3.75% of loss before
tax.
£967,000 which is 0.5% of gross assets.
SPECIFIC MATERIALITY
We determined a lower level of specific
materiality for Related party transactions.
We determined a lower level of specific
materiality for Related party transactions.
SIGNIFICANT
JUDGEMENTS MADE
BY AUDITOR IN
DETERMINING THE
MATERIALITY
In determining materiality, we made the
following significant judgements:
In determining materiality, we made
the following significant judgements:
The primary objective of the parent
company is to hold the investments
in the group undertakings, as well
as to provide financing.
Materiality for the current year is higher
than the level that we determined for
the year ended 30 April 2020 to reflect
the increase in assets held.
The shareholder perception that the
value of the group is derived from
the potential of the products being
developed and the value that can be
derived from these assets;
The primary objective of the group
is development and sale of the products
being developed, with the capacity
and production methods along with
trading results being a key focus of
management; and
Materiality for the current year is higher
than the level that we determined for the
year ended 30 April 2020 to reflect the
increase in absolute loss realised in 2021.
PERFORMANCE
MATERIALITY USED TO
DRIVE THE EXTENT OF
OUR TESTING
We set performance materiality at an amount less than materiality for the financial
statements as a whole to reduce to an appropriately low level the probability that
the aggregate of uncorrected and undetected misstatements exceeds materiality
for the financial statements as a whole.
COMMUNICATION OF
MISSTATEMENTS TO THE
AUDIT COMMITTEE
THRESHOLD FOR
COMMUNICATION
We determine a threshold for reporting unadjusted differences to the audit committee.
£51,000 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
£48,000 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for
potential uncorrected misstatements.
OVERALL MATERIALITY - GROUP
OVERALL MATERIALITY - PARENT COMPANY
Loss before tax
£27,648,000
PM
£620,000
60%
TFPUM
£414,000
40%
Gross assets
Gross assets
£192,197,000
£190,000,000
PM
£580,000
60%
TFPUM
£387,000
40%
FSM
£1,034,000
3.75%
FSM
£967,000
0.5%
PERFORMANCE
MATERIALITY THRESHOLD
£620,000 which is 60% of financial
statement materiality.
£580,000 which is 60% of financial
statement materiality.
FSM: Financial statements materiality
PM: Performance materiality
TFPUM: Tolerance for potential uncorrected misstatements
I T M A N N U A L R E P O R T 2 0 2 1
A N O V E R V I E W O F T H E S C O P E O F O U R A U D I T
O T H E R I N F O R M AT I O N
We performed a risk-based audit that requires an understanding of the group’s and the parent company’s business
and in particular matters related to:
U N D E R S TA N D I N G T H E G R O U P, I T S C O M P O N E N T S , A N D T H E I R E N V I R O N M E N T S ,
I N C L U D I N G G R O U P - W I D E C O N T R O L S
• The engagement team obtained an understanding of the group and its environment, including group-wide controls,
and assessed the risks of material misstatement at the group level;
• The engagement team obtained an understanding of the effect of the group organizational structure on the scope
of the audit, for example, the level of centralisation of the group control function and the use of service organizations.
I D E N T I F Y I N G S I G N I F I C A N T C O M P O N E N T S
• The engagement team evaluated the identified components to assess their significance and determined the planned
audit response based on a measure of materiality. Significance was determined as a percentage of the group’s total
assets, revenues and profit before taxation and qualitative factors, such as component’s specific nature
or circumstances were also considered.
P E R F O R M A N C E O F O U R A U D I T
• All three KAM’s were addressed with the audit of the full and specific scope locations. There were no KAM’s that
related directly to the parent company, ITM Power Plc;
• Specific procedures were primarily designed to audit the KAM’s but additional procedures were performed on cash
balances as well;
• The engagement team performed audit procedures across all components in line with the scope described.
There were no component teams engaged to support the primary team.
AUDIT APPROACH
NUMBER OF
COMPONENTS
% COVERAGE
REVENUE
% COVERAGE LOSS
BEFORE TAX
AUDIT OF FINANCIAL INFORMATION
AUDIT OF SIGNIFICANT ACCOUNT
BALANCES / TRANSACTIONS
ANALYTICAL PROCEDURES
TOTAL
2
1
3
6
98
0
2
100
91
3
6
100
The directors are responsible for the other information.
The other information comprises the information included
in the annual report and financial statements, other than
the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information
is materially inconsistent with the financial statements
or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements,
we are required to determine whether there is a material
misstatement in the financial statements or a material
misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required
to report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies
Act 2006 is unmodified.
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
have been prepared in accordance with applicable
legal requirements.
M AT T E R O N W H I C H W E A R E R E Q U I R E D T O
R E P O R T U N D E R T H E C O M P A N I E S A C T 20 0 6
In the light of the knowledge and understanding of the
group and the parent company and its environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the
directors’ report.
K E Y A U D I T M A T T E R - G R O U P
I T M A N N U A L R E P O R T 2 0 2 1
M AT T E R S O N W H I C H W E A R E R E Q U I R E D
T O R E P O R T B Y E X C E P T I O N
A U D I T O R ’ S R E S P O N S I B I L I T I E S F O R T H E A U D I T
O F T H E F I N A N C I A L S TAT E M E N T S
We have nothing to report in respect of the following
matters in relation to which 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.
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our auditor’s report.
R E S P O N S I B I L I T I E S O F D I R E C T O R S F O R T H E
F I N A N C I A L S TAT E M E N T S
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, and for such internal control as the
directors determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or
to cease operations, or have no realistic alternative but
to do so.
E X P L A N AT I O N A S T O W H AT E X T E N T T H E A U D I T
W A S C O N S I D E R E D C A P A B L E O F D E T E C T I N G
I R R E G U L A R I T I E S , I N C L U D I N G F R A U D
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above,
to detect material misstatements in respect of irregularities,
including fraud. Owing to the inherent limitations of an
audit, there is an unavoidable risk that material
misstatements in the financial statements may not be
detected, even though the audit is properly planned and
performed in accordance with the ISAs (UK).
The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
• We obtained an understanding of the legal and
regulatory frameworks that are applicable
to the group and determined that the most
significant are those related to the reporting
frameworks (International Accounting Standards
in conformity with the requirements of the
Companies Act 2006, United Kingdom Generally
Accepted Accounting Practice, and the Companies
Act 2006),as well as the relevant tax regulations,
health and safety law, employments law and data
protection laws.
K E Y A U D I T M A T T E R - G R O U P
• We assessed the susceptibility of the group's
financial statements to material misstatement,
including how fraud might occur, by evaluating
management's incentives and opportunities for
manipulation of the financial statements.
This included the evaluation of the risk of
management override of controls. We determined
that the principal risks were in relation to:
Journal entries that increased revenues or that
reclassified costs from the income statement
to the balance sheet;
Potential management bias in determining
accounting estimates, especially in relation to their
assessment of the valuation of intangible assets;
Transactions with related parties.
• Assessment of the appropriateness of the
collective competence and capabilities
of the engagement team including consideration
of the engagement team's:
Understanding of, and practical experience
with audit engagements of a similar nature
and complexity through appropriate training
and participation
Knowledge of the industry in which the
client operates
Understanding of the legal and regulatory
requirements specific to the entity including:
The provisions of the applicable legislation
The regulators rules and related guidance,
including guidance issued by relevant
authorities that interprets those rules
The applicable statutory provisions
• Team communications in respect of potential
non-compliance with laws and regulations
and fraud included the potential for fraud
in revenue recognition through manipulation
of deferred income.
• In assessing the potential risks of material
misstatement, we obtained an understanding of:
The entity's operations, including the nature
of its revenue sources, products and services
and of its objectives and strategies to understand
the classes of transactions, account balances,
expected financial statement disclosures
and business risks that may result in risks
of material misstatement.
The applicable statutory provisions
The entity's control environment, including the
adequacy of the training to inform staff of
the relevant legislation, rules and other regulations
of the regulator, the adequacy of procedures
for authorisation of transactions, internal review
procedures over the entity's compliance with
regulatory requirements, the authority of,
and procedures to ensure that possible breaches
of requirements are appropriately investigated
and reported.
U S E O F O U R R E P O R T
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.
DAVID WHITE
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Sheffield
10 September 2021
I T M A N N U A L R E P O R T 2 0 2 1
CONSOLIDATED INCOME
STATEMENT AND OTHER
COMPREHENSIVE INCOME
CONSOLIDATED
BAL ANC E SHEE T
C O N S O L I D A T E D I N C O M E
NOTE
2021
£’000
2020
£’000
REVENUE
Direct costs
Grant income against direct costs
COST OF SALES
GROSS LOSS
OPERATING COSTS
Research and development
Production and engineering
Sales and marketing
Administration expenses
Expected credit loss
Other income - government grants
LOSS FROM OPERATIONS
Share of loss of associate company
Finance income
Finance costs
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
Basic and diluted loss per share
2021
NOTE
£’000
£’000
£’000
2020
RESTATED
£’000
5
5
(12,145)
1,356
4,275
3,291
(10,839)
1,719
(10,789)
(6,514)
(3,489)
(8,839)
(1,436)
(7,404)
(165)
1,190
(26,657)
(595)
83
(479)
(27,648)
(49)
(27,697)
(78)
(78)
(27,775)
(5.5p)
5
6
12
9
9
10
11
(9,120)
(5,829)
(2,298)
(13,919)
(1,385)
(7,028)
15
1,049
(29,396)
(3)
90
(214)
(29,523)
(38)
(29,561)
50
50
(29,511)
(7.4p)
NON-CURRENT ASSETS
Investment in associate
Intangible assets
Right of use assets
Property, plant and equipment
Financial asset at amortised cost
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL CURRENT ASSETS
CURRENT LIABILITES
Trade and other payables
Provisions
Lease liability
TOTAL CURRENT LIABILITIES
NET CURRENT ASSETS
NON-CURRENT LIABLITIES
Lease liability
NET ASSETS
EQUITY
Called up share capital
Share premium account
Merger reserve
Foreign exchange reserve
Retained loss
TOTAL EQUITY
12
13
14
15
29
16
18
19
20
21
22
10
22
23
23
23
23
23
259
3,269
6,399
13,514
148
23,589
6,418
22,981
176,078
205,477
(12,857)
(12,276)
(204)
(25,337)
180,140
(6,282)
197,447
27,533
302,248
(1,973)
83
(130,444)
197,447
346
2,154
6,520
6,501
137
15,658
4,432
23,166
39,919
67,517
(14,013)
(6,890)
(211)
(21,114)
46,403
(6,315)
55,746
23,664
137,236
(1,973)
161
(103,342)
55,746
Research and development, Production and engineering,
Sales and marketing were included as “distribution costs”
in the previous year. These have been presented as
individual functions in the current year and therefore
restated in the comparative.
All results presented above are derived from continuing
operations and are attributable to owners of the Company.
The financial statements of ITM Power Plc, registered number 05059407, were approved by the Board of Directors
and authorised for issue on 10 September 2021. Signed on behalf of the Board of Directors:
ANDY ALLEN
Director
I T M A N N U A L R E P O R T 2 0 2 1
CONSOLIDATED STATEMENT
OF C HANGES IN EQUIT Y
CONSOLIDATED C A SH
FLOW STATEMENT
C O N S O L I D A T E D S T A T E M E N T
O F C H A N G E S I N E Q U I T Y
CALLED
UP SHARE
CAPITAL
£’000
SHARE
PREMIUM
ACCOUNT
£’000
MERGER
RESERVE
£’000
FOREIGN
EXCHANGE
RESERVE
£’000
NOTE
RETAINED
LOSS
£’000
TOTAL
EQUITY
£’000
NOTE
2021
£’000
2020
£’000
AT 1 MAY 2019
23
16,200
86,631
(1,973)
111
(74,760)
26,209
NET CASH USED IN OPERATING ACTIVITIES
25
(20,141)
(12,040)
TRANSACTIONS
WITH OWNERS
Issue of shares
23
7,464
50,605
Credit to equity for
share based payment
TOTAL TRANSACTIONS
WITH OWNERS
Loss for the year
Other comprehensive
income
23
TOTAL
COMPREHENSIVE
INCOME
-
-
7,464
50,605
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50
50
979
979
979
59,048
(29,561)
(29,561)
-
50
(29,561)
(29,511)
AT 1 MAY 2020
23
23,664
137,236
(1,973)
161
(103,342)
55,746
INVESTING ACTIVITIES
Investment in associate
-
58,069
Purchases of property, plant and equipment
Finance asset (security deposit)
Capital Grants received against purchases of non-current assets
Proceeds on disposal of Property, Plant & Equipment
Payments for intangible assets
Interest received
NET CASH USED IN INVESTING ACTIVITIES
FINANCING ACTIVITIES
Issue of ordinary share capital
Costs associated with fund raise
Payment of lease liabilities
(535)
(14,422)
-
3,992
3
(1,524)
(349)
(8,986)
(137)
89
1
(1,771)
83
90
(12,403)
(11,063)
173,835
(4,954)
(156)
168,725
59,299
(1,230)
(236)
57,833
26
TRANSACTIONS
WITH OWNERS
Issue of shares
23
3,869
165,012
Credit to equity for
share based payment
TOTAL
TRANSACTIONS
WITH OWNERS
Loss for the year
Other comprehensive
income
23
TOTAL
COMPREHENSIVE
INCOME
-
-
3,869
165,012
-
-
-
-
-
-
-
-
-
-
-
-
168,881
NET CASH FROM FINANCING ACTIVITIES
-
-
-
-
-
168,881
INCREASE IN CASH AND CASH EQUIVALENTS
136,181
34,730
595
595
595
169,476
(27,697)
(27,697)
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF YEAR
Effect of foreign exchange rate changes
CASH AND CASH EQUIVALENTS AT THE END OF YEAR
39,919
5,173
(22)
176,078
16
39,919
(78)
(78)
-
(78)
(27,697)
(27,775)
AT 30 APRIL 2021
23
27,533
302, 248
(1,973)
83
(130,444)
197,447
I T M A N N U A L R E P O R T 2 0 2 1
NOTES TO THE CONSOLIDATED
FINANC IAL STATEMENT S
1. G E N E R A L I N F O R M AT I O N
N E W A N D R E V I S E D I F R S S I N I S S U E B U T
N O T Y E T E F F E C T I V E
ITM Power Plc is a public company incorporated in England
and Wales under the Companies Act 2006. The registered
office is at 2 Bessemer Park, Shepcote Lane, Sheffield,
South Yorkshire S9 1DZ. The entity is a parent and 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.
A D O P T I O N O F N E W
A N D R E V I S E D S TA N D A R D S
A M E N D M E N T S T O I F R S S T H AT A R E
M A N D AT O R I LY E F F E C T I V E F O R T H E
C U R R E N T Y E A R .
In the current year, the Group has applied the following
amendments to IFRSs issued by the International
Accounting Standards Board (IASB) that are mandatorily
effective for an accounting period that begins on or after
1 January 2020:
• Amendments to References to the Conceptual
Framework in IFRS Standards
• IFRS 3 Amendments to the definition of a business
• IAS 1 and IAS 8 Amendments to the definition
of material to align with the Revised Conceptual
Framework
• IFRS 9, IAS 39 and IFRS 7 amendments in Interest
Rate Benchmark Reform when accounting
for hedging
These standards have not had a material impact on the
entity in the current reporting period.
Certain new accounting standards and interpretations
have been published that are not mandatory for 30 April
2021 reporting periods and have not been early adopted
by the Group. These standards are neither expected
to have a material impact on the entity in the current
or future reporting periods nor on foreseeable future
transactions:
• IFRS 16 Amendment for Covid-19 related Rent
Concessions (effective for periods beginning on or
after 1 June 2020)
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4
and IFRS 16 for Interest Rate Benchmark
reform-phase 2 (effective for periods beginning
on or after 1 January 2021)
• IFRS 16 Amendment for Covid-19 related Rent
Concessions beyond 30 June 2021 (effective for
periods beginning on or after 1 April 2021)
• IFRS 3 Amendments to references to the
Conceptual Framework Current (effective for
periods beginning on or after 1 January 2022)
• IAS 16 Amendments to Property, Plant and
Equipment – Proceeds before intended Use
Current (effective for periods beginning on or
after 1 January 2022)
• IAS 37 Amendments to Onerous Contracts-Cost of
Fulfilling a Contract (effective for periods beginning
on or after 1 January 2022)
• Annual Improvements to IFRS Standards
2018-2020 (effective for periods beginning on
or after 1 January 2022)
• IAS 1 Classification of Liabilities as Current or
Non-Current (effective for periods beginning
on or after 1 January 2023)
• IAS 1 and IFRS Practice Statement 2 Disclosure
of Accounting Policies from significant to material
(effective for periods beginning on or after
1 January 2023)
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
• IAS 8 Amendments to Definition of Accounting
Estimates (effective for periods beginning on or
after 1 January 2023)
• IAS 12 Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
(effective for periods beginning on or after
1 January 2023)
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:
3.
S I G N I F I C A N T
A C C O U N T I N G P O L I C I E S
B A S I S O F A C C O U N T I N G
The consolidated financial statements have been prepared
in accordance with International Accounting Standards,
in conformity with the requirements of the Companies
Act 2006.
The financial statements have been prepared under the
assumption that the Group operates on a going concern
basis and on the historical cost basis. Historical cost is
generally based on the fair value of the consideration
given in exchange for goods and services.
B A S I S O F C O N S O L I D AT I O N
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:
• has 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 affect
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.
• 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 ceases to have 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.
Total comprehensive income of the subsidiaries is attributed
to the owners of the Company.
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 intragroup assets and liabilities, equity, income,
expenses and cash flows relating to transactions between
the members of the Group are eliminated on consolidation.
I T M A N N U A L R E P O R T 2 0 2 1
3.
S I G N I F I C A N T
A C C O U N T I N G P O L I C I E S
(C O N T I N U E D)
G O I N G C O N C E R N
The directors have prepared a cash flow forecast for the
period ending 30 September 2022. This forecast indicates
that the Group and parent company would expect
to remain cash positive without the requirement for
further fund raising based on delivering the existing
pipeline, for a period of at least 12 months from the date
of approval of these financial statements.
By the end of the period analysed, the Group will still
hold a large proportion of the monies from the fund raise
in the year. This should give the business sufficient funds
to trade for the next three years if the business continued
to operate in a similar way beyond the forecast period.
With the uncertainty created for the economy by
Covid-19, this cash flow forecast has also been stress
tested. As a worst-case scenario, if all payments had
to continue as forecast while receipts were not received
at all, the business would remain cash positive for the
full twelve months from the date of approval of these
financial statements.
The accounts have therefore been prepared on a going
concern basis.
R E V E N U E R E C O G N I T I O N
PRODUCT SALES
ITM Power undertakes product sales that involve the
manufacture, installation and commissioning of an
electrolyser system over a period of several months.
Such systems are usually quoted to a customer as a single
value but may be split into agreed payment milestones
in order to facilitate cash flow. Any ancillary requests will
be treated as separate performance obligations if costs
can be separately identified and the revenue value is also
quoted separately, but the main objective, to provide
a working system for use in a specific application,
is viewed as a single performance obligation.
Under IFRS15, a performance obligation is satisfied over
time if one of the following criteria is met:
a)
b)
c)
the customer simultaneously receives and
consumes the benefits provided by the seller’s
performance as the seller performs;
the seller’s performance creates or enhances
an asset that the customer controls as the asset
is created or enhanced; or
the seller’s performance does not create an asset
with an alternative use to the seller and the seller
has an enforceable right to payment for
performance completed to date
Revenue from product sales, which do not meet the
first two criteria, will therefore be treated differently
depending on whether the product is standard
or bespoke in reference to point (c) above:
• Revenue from standard products will be recognised
only when the performance obligation has been
fulfilled and ownership of the goods has
transferred, which is typically at point of delivery
or site acceptance, whichever is the official
handover of control of the goods to the immediate
customer. This is due to the “transferability” of
such products and their components up until
handover, so the asset generated has an alternative
use to the Group up to the point of handover.
• During the product build and until the performance
obligation has been met, income will be reflected
in the balance sheet as either accrued or deferred
income depending on progress billings and
advances received from customers.
• Costs incurred on projects to date will not be
included in the statement of comprehensive
income but will be accumulated on the balance
sheet as work in progress (as they are considered
recoverable) and transferred to cost of sales
once the revenue applicable to those costs
can be recognised in the accounts. Should costs
exceed anticipated revenues, a provision will be
recognised and the excess costs expensed with
immediate effect.
• Bespoke contracts by their nature do not create
an asset with an alternative use to the Group;
some have traceability requirements attached
to them that would prevent them being diverted
during production whilst others are simply bespoke
to the customer’s requirements and therefore
would not meet the needs of, or be easily converted
for use on, another project. There is also
an enforceable right to payment for performance
completed to date if the contract is terminated
by the customer for reasons other than ITM Power's
failure to perform as promised.
Revenues for bespoke contracts will therefore be
recognised over time according to how much of the
performance obligation has been satisfied. This is
measured using the input method, comparing the extent
of inputs (labour and material costs) towards satisfying
the performance obligation with the expected total inputs
required. Any changes in expectation are reflected in the
total inputs figure as they become known. The progress
percentage obtained is then applied to the revenue
associated with that performance obligation.
Management view this as a much more reliable measure
of progress towards completion of the performance
obligation than the output method as, despite contracting
with milestone payments, these are not reliable measures
of progress or value to the customer but instead have
been designed to aid cash flow.
ITM Power supply units with a standard 12-month
warranty, which covers the equipment against any fault
due to manufacturing defects. Any repairs made under
this warranty will be completed free of charge.
Where possible, diagnosis will be performed via remote
connection in order to minimise the disruption to
customers. The warranty period starts from the date the
performance obligations under Site Acceptance Testing
is deemed to have been passed.
Unless an extended warranty is specifically purchased
under the sales contract and thus, together with its
maintenance obligations, creates a separate performance
obligation under that contract, warranty provisions will
continue to be treated under IAS 37 as they are by nature
an assurance warranty.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
Parts that are replaced due to being at their end of life are
not included. Expected lifetimes of individual parts will be
provided in a detailed maintenance plan during the design
phase of the project. Out-of-warranty repairs and part
replacements will be charged to the customer. It should
be noted that a maintenance contract is mandatory for the
duration of any warranty period and will form a separate
performance obligation. After the warranty period, it is
recommended that a maintenance package is continued
(see maintenance contracts below).
ITM Power’s standard contract wording limits the right
of rejection once a customer has accepted the unit under
either factory acceptance testing (for ex-works) or site
acceptance testing. Up until that time, contractual
obligations would protect our right to recognise revenues
for work performed to date, which include a reasonably
attributable profit margin. Remedies would instead exist
in a separate claim for damages.
MAINTENANCE CONTRACTS
Maintenance contracts typically involve two scheduled
annual visits. Therefore, revenue is recognised in two
instalments against the costs of those visits, i.e. when each
performance obligation is met. However, where remote
support forms part of the contract, revenue for this
performance obligation will be recognised over time as
the customer simultaneously receives and consumes the
benefits of such a service, and criteria (a) under IFRS15 is
met as referred to above.
CONSULTING CONTRACTS
Where the IFRS 15 criteria for recognition over time
are met (in this case that the customer simultaneously
receives and consumes the benefits of the service),
revenue will be recognised over time. For those contracts
where these criteria are not met, revenue will be
recognised on completion of the contract.
FUEL SALES OR SALES OF SCRAP/SPARES
Sales are recognised immediately upon completion of the
performance obligation, being the transfer of ownership
of the goods.
I T M A N N U A L R E P O R T 2 0 2 1
3.
S I G N I F I C A N T
A C C O U N T I N G P O L I C I E S
(C O N T I N U E D)
G R A N T S
Government and other grants are included in other operating
income in the period that the related expenditure is incurred,
unless relating to property, plant and equipment when they
are netted against the cost of the assets acquired on the
balance sheet.
Grants have stage payments, which can include up-front
payments to ITM Power. Where pre-finance has been
received at the start of the grant and continues to exceed
expenditure incurred to date, the surplus is shown as
deferred income and is included in the consolidated balance
sheet as a liability. When expenditure incurred to date
exceeds receipts from the grant body, the surplus is shown
as accrued income until such time that it can be claimed.
Such balances are reviewed for recoverability, ensuring that
the costs incurred met the conditions of the grant for
recognition of grant income and such recognition of income
does not exceed the maximum value of the award.
In specific instances where grant income subsidises a sale,
grant income can be recognised against appropriate
expenditure on agreed projects and shown as receivable
from the time of the expense. This means that grant income
can be recognised against stage payments made on larger
items. Thus, a further category of grant income receivable
against pro forma payments has been established within
deferred income on the balance sheet to allow for
a difference in treatment in grant-subsidised sales.
Once the items have been received, this grant income will
come to be shown as “grant income against direct costs”
in profit and loss.
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 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).
F O R E I G N C U R R E N C I E S
TA X AT I O N
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 Group, and the presentation currency for
the consolidated financial statements. The financial
statements are presented in round thousands.
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.
The resulting tax charge, where applicable, is shown
within the tax line of the income statement.
Research and development tax credits are recognised
on an accruals basis, and are reported in the income
statement. By their nature, they are similar to grant
funding and are presented amongst other income.
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.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
I N V E S T M E N T I N A S S O C I AT E S
An associate is an entity over which the Group has
significant influence but that is neither a subsidiary nor
an interest in a joint venture. Significant influence is the
power to participate in the financial and operational
policy decisions of the investee but is not control or joint
control over those policies. Investments in associates are
accounted for using the equity method.
An investment in associate is initially recognised at cost
and adjusted thereafter to recognise the Group’s share of
the profit or loss and other comprehensive income of the
associate, adjusted where necessary to ensure consistency
with the accounting policies of the Group. When the
Group’s share of losses of an associate exceeds the
Group’s interest in that associate, the Group discontinues
recognition of its share of further losses. Additional losses
are then recognised only to the extent that the Group
has incurred legal or constructive obligations or made
payments on behalf of the associate.
As per IAS 28, the investment in an associate will be
subject to impairment review only with objective
evidence of impairment from observable data as a result
of one or more events adversely impacting the expected
future cashflows and where such impact can be reliably
estimated. Any such impairment will reduce the carrying
value of the investment and be recognised immediately in
profit or loss to the extent that it relates to the investment
by the Group.
Unrealised gains and losses on transactions between the
Group and its associates and joint ventures are eliminated
to the extent of the Group’s interest in those entities.
Where unrealised losses are eliminated, the underlying
asset is also tested for impairment.
I N TA N G I B L E A S S E T S - S O F T W A R E
Software purchased from external companies has been
recognised at cost under the heading of intangible assets.
Amortisation is charged so as to write off the cost
of assets over an estimated useful life of three years
(in-line with the Group policy for computer equipment),
using the straight-line method. This is recognised in
Administration expenses.
I T M A N N U A L R E P O R T 2 0 2 1
3.
S I G N I F I C A N T
A C C O U N T I N G P O L I C I E S
(C O N T I N U E D)
I N T E R N A L LY- G E N E R AT E D I N TA N G I B L E A S S E T S -
R E S E A R C H A N D D E V E L O P M E N T E X P E N D I T U R E .
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 can be demonstrated:
• The technical feasibility of completing the intangible
asset so that it can be made available for use
or sale;
• The intention to complete the intangible asset
to use or sell it;
• The availability of adequate technical, financial
and other resources to complete the development
and to use or sell the intangible asset
• An asset is created that can be separately identified
for use or sale;
• It is probable that the asset created will generate
future economic benefits; and
• The development cost of the asset can be
measured reliably.
Once completed, Development Costs transfer into the
category of Know-how. As these assets form the basis
of the Group’s product range (being the development of
new processes, standard products or new product features
that improve the capacity or efficiency of the electrolysers)
amortisation is recognised on a straight-line basis in
Research and development costs over their useful lives,
considered to be four years, in line with expected product
life cycles. Each asset is assessed on an annual basis to
ensure that it still meets the criteria and will still contribute
to the Company’s products. If not, an impairment will be
recognised. Where no internally-generated intangible asset
can be recognised, development expenditure is recognised
as an expense in the period in which it is incurred.
R I G H T O F U S E A S S E T S
P R O P E R T Y, P L A N T A N D E Q U I P M E N T (C T D)
Right of use assets are recognised at the total value of
the minimum lease payments (i.e. initial measurement
of the lease liability) plus any deposit or lease payments
made at or before the commencement date, less any lease
incentives. The company creates a separate asset under
leasehold improvements for the initial direct costs incurred
in establishing the lease but also for any dilapidations costs
to restore a property to the condition required by the
landlord at the end of the lease.
Depreciation of right of use assets will be recognised over
the lease term in production or administration expenses
depending on the asset.
P R O P E R T Y, P L A N T A N D E Q U I P M E N T
Leasehold improvements, laboratory & test equipment,
production plant & equipment, computer equipment
and office furniture & fittings are stated at cost
less accumulated depreciation and any recognised
impairment loss.
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 complete and ready for
their intended use.
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:
CATEGORY
PERIOD
LABORATORY AND
TEST EQUIPMENT
4 years
PRODUCTION
PLANT AND
EQUIPMENT
COMPUTER
EQUIPMENT
4 years
3 years
RECOGNITION
IN PROFIT
AND LOSS
Research and
development
costs
Production and
engineering costs
Administration
expenses
OFFICE FURNITURE
AND FITTINGS
4 years
Administration
expenses
LEASEHOLD
IMPROVEMENTS
Administration
expenses
4 years
or the
remainder
of the
lease term
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.
I M P A I R M E N T O F TA N G I B L E A N D
I N TA N G I B L E A S S E T S
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 each asset (or
cash-generating unit) is estimated to determine the extent
of the impairment loss.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
The recoverable amounts of non-current assets are
derived from value-in-use calculations. 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 group of units.
If the recoverable amount of an asset is estimated to be
less than its carrying amount, the carrying amount is
reduced to its recoverable amount. An impairment loss is
recognised immediately in profit and loss. Where an
impairment loss subsequently reverses, the carrying
amount of the asset 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 in prior years. A reversal of an impairment loss
is recognised immediately in profit or loss. The value of
any impairment (or its reversal) is recognised within the
same cost line that the depreciation or amortisation would
normally appear in.
I N V E N T O R I E S
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.
I T M A N N U A L R E P O R T 2 0 2 1
3.
S I G N I F I C A N T
A C C O U N T I N G P O L I C I E S
(C O N T I N U E D)
F I N A N C I A L A S S E T S
At initial recognition, the Group measures a financial asset
at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs that
are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at fair
value through profit or loss are expensed in profit or loss.
Subsequent measurement of financial assets depends on
the Group’s business model for managing the asset and
the cash flow characteristics of the asset. There are three
measurement categories of which the Group holds
financial instruments:
AMORTISED COST
Assets that are held for collection of contractual cash
flows where those cash flows represent solely payments
of principal and interest are measured at amortised cost.
A gain or loss on a debt investment that is subsequently
measured at amortised cost and is not part of a hedging
relationship is recognised in profit or loss when the asset
is derecognised or impaired. Interest income from these
financial assets is included in finance income using the
effective interest rate method.
FAIR VALUE THROUGH PROFIT OR LOSS
Assets that do not meet the criteria for amortised cost
or Fair Value through Other Comprehensive Income
(FVOCI) are measured at fair value through profit or loss.
A gain or loss on a debt investment that is subsequently
measured at fair value through profit or loss and is not
part of a hedging relationship is recognised in profit
or loss and presented net in the profit or loss statement
within other gains/(losses) in the period in which it arises.
Interest received from these financial assets is included
in investment income.
IMPAIRMENT
L E A S E S
E Q U I T Y I N S T R U M E N T S
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
The Group assesses, on a forward-looking basis,
the expected credit losses associated with its assets
carried at amortised cost. The impairment methodology
applied depends on whether there has been a significant
increase in credit risk in trade receivables and contract
assets (accrued sales income). For trade receivables only,
the company applies the simplified approach permitted
by IFRS 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables.
C A S H A N D C A S H E Q U I V A L E N T S
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.
F I N A N C I A L L I A B I L I T I E S
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the company
becomes a party to the contractual provisions of the
instrument. Financial liabilities are recorded initially at
fair value, net of direct issue costs, and are subsequently
recorded at amortised cost using the effective interest
method, with interest-related charges recognised as an
expense in finance cost in the income statement.
Finance charges are charged to the income statement
on an accruals basis using the effective interest method
and are added to the carrying amount of the instrument
to the extent that they are not settled in the period
in which they arise. A financial liability is derecognised only
when the obligation is extinguished, that is, when the
obligation is discharged or cancelled or expires.
D E R I V AT I V E F I N A N C I A L I N S T R U M E N T S
The Group enters into derivative financial instruments
to manage its exposure to foreign exchange rate risk.
These are not deemed to be effective hedging instruments
to be matched off against a related asset or liability but
rather as stand-alone financial assets or liabilities at fair
value through profit and loss. Within the financial
statements, therefore, this portfolio of contracts will be
shown as either an asset or liability on the balance sheet,
with a corresponding gain or loss through the income
statement, depending on how the contractual rate of
exchange compares with the year-end rate.
At inception of a contract, the Group assesses whether
it conveys the right to control the use of an identified
asset -and obtain substantially all of the economic benefits
from use of the asset- for a period of time in exchange
for consideration. In this instance the contract should
be accounted as a lease.
The Group recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-use
asset is recognised at cost and is subsequently depreciated
using the straight-line method over the lease term.
The lease liability is initially measured at the present
value of the lease payments and discounted using the
interest rate implicit in the lease or, if that rate cannot
be determined, the Group’s incremental borrowing rate
or best estimate of the same. The lease liability continues
to be measured at amortised cost using the effective
interest method. It is remeasured when there is a change
in the future lease payments. When the lease liability
is remeasured in this way, a corresponding adjustment
is made to the carrying amount of the right-of-use asset.
The Group has elected not to recognise right-of-use
assets and lease liabilities for leases of less than 12 months
and leases of low value assets. These largely relate
to short-term rentals of equipment to undertake our field
activities. The Group recognises the lease payments
associated with these leases, together with any property
service charges and storage fees, as an expense on
a straight-line basis over the lease term (see note 6).
P R O V I S I O N S
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.
An equity instrument is any contract that evidences
a residual interest in the assets of the Group after
deducting all of its liabilities. Equity instruments issued
by the Group are recorded at the proceeds received,
net of direct issue costs.
S H A R E - B A S E D P AY M E N T S
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 in profit or loss on
a straight-line basis over the vesting period, based on the
Group’s estimate of shares that will eventually vest.
The group also recognises a provision for Employer’s
National Insurance Contributions (NIC) that becomes
payable on the exercise of share options granted under
the Group’s non-tax advantaged share plans, to the extent
that the liability has not been transferred to the employees.
Where a liability is due, the provision has been calculated
using the intrinsic value of the share option which is the
difference between the Group’s share price at the balance
sheet date and the exercise price. The actual amount
of Employer’s NIC that will be payable will be determined
on the difference between the exercise price and Group’s
share price at the date of exercise. For share options that
have not vested, the provision for Employer’s NIC is
calculated on the same basis and is accrued over the
vesting period.
For option grants prior to 2020, the Group has agreed
that settlement of the Employer’s NIC liability arising
on gains made on the exercise of unapproved share
options be capped at the exercise price of the options.
Any excess liability for Employer’s NIC would be recovered
from the option holder. For option grants from 2020,
the employees have agreed to pay any Employer’s NIC
liability that is due on exercise of their options.
W A R R A N T I E S
P E N S I O N C O S T S
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.
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.
I T M A N N U A L R E P O R T 2 0 2 1
4.
C R I T I C A L A C C O U N T I N G
J U D G E M E N T S A N D K E Y
S O U R C E S O F
E S T I M AT I O N U N C ER TA I N T Y
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.
C R I T I C A L J U D G E M E N T S I N A P P LY I N G T H E
G R O U P ’ S A C C O U N T I N G P O L I C I E S
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.
CONTRACT ACCOUNTING, INCLUDING CONSIDERATION
OF CONTRACT BALANCES AND LOSS PROVISIONS
Management have assessed sales contracts in accordance
with the 5-step principle laid out by IFRS 15 to confirm
whether a contract should be recognised over time or at
a point in time. Contract balances are reviewed to ensure
that they reflect the status of the project and that
amounts remain recoverable. Rolling forecasts of costs to
complete the performance obligation are also maintained
so that onerous contracts can be recognised and provided
for at the point where costs are predicted to exceed the
expected income. See notes 5 and 17.
CAPITALISATION OF DEVELOPMENT COSTS
The Group undertakes a number of internal projects for
the advancement of our core technology, the design of
our standard products and improved efficiencies around
our business. Whilst these will be timebound and involve
specific groups of staff, time and costs can easily be
tracked through our reporting and accounting systems.
Management must decide at what point such efforts
become development work that will result in future
economic benefits to the Group and thus, at which point
they meet the criteria for capitalisation. See note 13.
IMPAIRMENT OF NON-CURRENT ASSETS
In the case of there being a trigger for a review of
impairment, the Group performs a review on the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication of impairment at the
Balance Sheet date.
The Group particularly tests the net recoverable amounts
of its internally-generated assets held (or previously held)
in assets under construction to ensure that the costs of
their production have not over-run their operational or
commercial value. Typically, assets under construction are
grouped under the same cash generating unit (CGU) where
they are funded by the same grant, but once deployed and
opened to the public, each hydrogen refuelling station is
considered as a separate CGU.
One such trigger for impairment review, which has
occurred in the current year, is that the Group was loss
making and another was the impact of the Covid-19
lockdown on the number of vehicles on the roads
requiring refuelling. This is the fifth year that a review of
the refuelling assets of the company has been undertaken,
with the financial year ended April 2017 being the first
year of deployment.
As part of a strategic review in June 2020, a Managing
Director was appointed to the Motive division to establish
a strategy for refuelling in the UK. As such, it was deemed
that a critical volume of hydrogen output was needed
for the stations to be cash generative. The first-generation
stations deployed by ITM do not meet these minimum
volume requirements. As such the Group has fully
impaired the remaining value of the assets, including
a further £851,000 in the current year.
This year’s impairment review therefore largely focussed
on the sole refuelling station that will facilitate sales not
only to the general public but also to buses, as this model
of station is deemed to be more commercial than its
predecessors. The impairment review suggested that
cashflows would be positive throughout the life of the
station, with the initial investment (including both monies
already expensed and forecast costs to complete)
being covered within the first four years of operation.
For this reason, no further impairment has been
undertaken on this asset. For the time being though,
management has maintained the impairment that was
placed on the asset in the prior year until the volume
of refuelling events can be more reliably ascertained
when the station becomes fully operational.
Post year-end the assets in use were transferred into
a new 100% owned subsidiary, and assets under
construction will be transferred upon completion. As the
majority of the stations are sited in strategic locations
with important partners, and an obligation exists within
funding arrangements to continue to operate for a period
of time, the fleet of refuelling stations will continue to
offer hydrogen before upgrades can be planned in the
future to meet the critical capacity required of the new
business model.
Impairment of £862,000 was also recognised for a unit
that will now no longer be put to public use but instead
retained as an internal training aid.
During the year, management reconsidered the
recoverability of its internally-generated intangible asset
which is included in its balance sheet at £3.2m (2020:
£2.1m). Most of the development projects currently
capitalised here, and being amortised, relate to
technologies being used in our current sales and so remain
relevant. Further capitalisations during the year relate to
continuing design work for standard products and
advancements or efficiencies that should allow the Group
to improve its offering and gain interest in new markets.
RECOVERABILITY OF GRANT DEBTORS
Accrued grant income is specifically reviewed to ensure
spend continues within the parameters of the grants and
the value of the grant award is unchanged. In the case of
grants awarded by the EU, following Brexit all grants that
are contracted continue to be considered recoverable.
DEFERRED TAX ASSET
As in previous years, the Group has not recognised
a deferred tax asset for its historical losses, mentioned in
note 10. This is due to the fact that the Group has forecast
further losses over the coming 13 months and likely for the
next few years. This decision will continue to be reviewed
as we approach break-even or become profit-making and
in light of any changes to tax legislation that might arise
to limit the losses that can be utilised.
K E Y S O U R C E S O F E S T I M AT I O N U N C E R TA I N T Y
PROVISIONS
Note 21 gives details of the amounts currently recognised
under four different categories of provision.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
Management have particularly considered the following:
Warranty provisions are based on Management’s current
best estimate of the potential costs involved in diagnosing
and correcting faults and the likelihood of such faults
occurring within the first year of operation of a unit.
These assumptions are built upon historical data of units
in the field so are likely to be reviewed and revised
as more information becomes available with a higher
quantity of machines in operation. If it becomes known
that additional work is required, then the provision
is immediately extended.
A provision for onerous contracts (contract losses) has
been recognised in line with the requirements of IAS 37,
given the expected costs to complete legacy projects
exceeding the headroom in contracted sales values.
Cost forecasts produced by Project Managers are
monitored on a monthly basis to ensure that such
potential losses are recognised immediately in the
accounts. As quotes are finalised with suppliers these
estimates may fluctuate but the provision will be adjusted
accordingly and ultimately used to off-set the future costs
of the project as it nears completion. Furthermore, the
Group uses software to track the risks and opportunities
of each project. This gives a potential cost and risk rating
for active risks and has been reviewed by management
at year end in order to determine if any additional
contingency should be recognised on projects.
A sensitivity analysis was performed on the current
provision and future forecast costs. If forecasted costs
were to increase by 10%, the provision would need
to increase by £1.8m (2020: £0.9m).
A leasehold property provision was recognised in prior
years for dilapidations work in relation to our previous
premises for handover to the landlords. The amount was
calculated by a value per square metre and adjusted based
on assessment of the first premises that we were due
to leave. As we near vacation of properties, the provision
is flexed on a property by property basis to reflect best
estimates of dilapidations work to be completed.
Additionally this year, an estimate for reinstatement
works at Bessemer Park has been provided by the
Employers Agent retained by the Company for the fit-out
of the factory. They have provided this information using
an estimated 2.5% inflation but the further calculation of
present value requires the use of a discount factor.
The Group has selected a discount factor of 7.5% as this
falls between the risk free rate for a fifteen year
government bond and a full WACC rate that would
incorporate the effects of tax etc. that are not relevant
to this scenario. It also aligns the dilapidations with the
incremental borrowing rate used on both the deposit and
lease of Bessemer Park. This provided us with a provision
of £530,000.
I T M A N N U A L R E P O R T 2 0 2 1
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
5.
R E V E N U E, O P E R AT I N G
S E G M E N T S & I N C O M E F R O M
G O V E R N M E N T G R A N T S
All revenues are derived from continuing operations.
An analysis of the Group’s revenue is as follows:
Revenue from product sales recognised over time
Consulting contracts recognised over time
Maintenance contracts recognised at a point in time
Fuel Sales
Other (e.g. scrap sales)
REVENUE IN THE CONSOLIDATED INCOME STATEMENT
2021
£’000
1,697
2,108
112
153
205
4,275
2020
£’000
2,256
470
48
367
150
3,291
Grant income shown against cost of sales
1,356
1,719
Grant income (claims made for projects)
Other government grants (R&D claims)
Other government grants (Covid-19 furlough scheme)
761
404
25
753
252
44
1,190
1,049
6,821
6,059
At 30 April 2021, the aggregate amount of the transaction price allocated to remaining performance obligations
of continuing build contracts was £16.7m (2020: £3.8m). The Group expects to recognise the remaining performance
obligations within one year.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
S E G M E N T I N F O R M AT I O N
ITM Power 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.
Management has previously identified three target markets for our products (Power-to-Gas, Refuelling, and Industrial).
Revenue reporting has begun to look at these three sectors to assess the commerciality of those sales.
However, decisions for resourcing etc. cannot be made by reference to these segments. The Group operates a single
factory that builds units for use across all sectors. It would be hard to assign overhead costs to particular product
segments as builds all occur in that one facility and can run concurrently. Similarly, fixed assets and suppliers’ balances
cannot be assigned to the production of one specific segment. For overhead costs and net asset resources,
therefore, decisions are taken on a group basis.
An analysis of the Group’s revenue, by major product (or customer group), is as follows:
POWER-TO-GAS
(of which product sales recognised
over time £42,000)
REFUELLING
(of which product sales recognised
over time -£215,000)
INDUSTRIAL
(of which product sales recognised
over time £1,870,000)
OTHER
REVENUE IN THE CONSOLIDATED INCOME STATEMENT
2021
£’000
2020
£’000
210
332
(38)
1,247
1,870
2,233
4,275
1,147
565
3,291
The negative sales revenue on refuelling was caused by the effects of foreign exchange as well as actual and forecast
overruns (affecting stage of completion) on the product sale therein.
I T M A N N U A L R E P O R T 2 0 2 1
5.
R E V E N U E, O P E R AT I N G
S E G M E N T S & I N C O M E F R O M
G O V E R N M E N T G R A N T S
(C O N T I N U E D)
G E O G R A P H I C A L A N A LY S I S
The United Kingdom is the Group’s country of domicile but the Group also has subsidiary trading companies in the
United States, Germany and Australia. All non-current assets were domiciled in the United Kingdom, with the exception
of one hydrogen refuelling station in California (net book value £Nil, 2020: £Nil) and assets relating to our German
office (net book value £60,000, 2020: £31,000). Revenues have been generated as follows:
UNITED KINGDOM
GERMANY
(of which product sales recognised
over time £1,893,000)
REST OF EUROPE
(of which product sales recognised
over time -£196,000)
UNITED STATES
Included in revenue are the following amounts,
which each accounted for more than 10% of total revenue:
CUSTOMER A
CUSTOMER B
CUSTOMER C
INDUSTRIAL
OTHER
REFUELLING
2021
£’000
2,505
2020
£’000
828
1,966
1,167
(196)
-
4,275
2021
£’000
1,870
2,027
<10%
1,118
178
3,291
2020
£’000
1,140
410
854
Except where extended warranties have been purchased and treated as separate performance obligations for
the purpose of IFRS 15 Revenue from Customers, warranty commitments are covered under IAS 37 Provisions
and are therefore accounted under note 21.
6.
L O S S F O R T H E Y E A R
Loss for the year has been arrived at after charging/ (crediting):
Net foreign exchange (gains)
Shared based payment charge (note 24)
Depreciation of property, plant and equipment
Impairment of non-current assets
Amortisation of intangibles
Research and non-capitalised Development costs
Expected credit loss (debtors)
Expected credit loss (prepaid suppliers)
Loss on disposal of property, plant and equipment
RENTALS UNDER SHORT-TERM LEASES:
•
Land and buildings
• Other equipment
Government grants receivable
Staff costs (note 8)
Cost of inventories recognised as an expense
Movement on aged stock provision
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
2021
£’000
2020
£’000
(53)
799
2,321
1,713
274
3,489
(3)
168
173
8
142
(184)
2,625
2,440
5,588
197
2,298
(15)
-
473
83
413
(2,546)
(2,768)
11,434
4,241
845
8,642
4,326
108
I T M A N N U A L R E P O R T 2 0 2 1
6.
L O S S F O R T H E Y E A R
(C O N T I N U E D)
7.
A U D I T O R S ’
R E M U N E R AT I O N
Whilst costs have been shown on the income statement by function within the company, the following table shows costs
grouped by nature:
The following amounts were payable to the Group’s auditor and have been charged within the loss before tax:
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
DIRECT COSTS
Materials
Labour
Other bought in items
Warranty
TOTAL DIRECT COSTS
OPERATING COSTS
Staff & employment costs
Consultancy & consumables
Building overheads
Depreciation
Amortisation
Impairment
Other
2021
£’000
4,241
707
6,987
210
2020
£’000
4,624
923
5,181
111
12,145
10,839
9,594
5,666
1,650
2,321
274
1,713
115
8,831
5,655
2,097
2,447
197
5,588
(199)
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 (audit related services)
TOTAL NON-AUDIT FEES
2021
£’000
2020
£’000
120
33
153
13
13
60
30
90
13
13
In addition to last year’s reported audit figures an additional amount was agreed and paid of £70,000, making the total
payable £160,000.
TOTAL OPERATING COSTS
21,333
24,616
CALCULATION OF ADJUSTED EBITDA
In reporting EBITDA, management use the metric of adjusted EBITDA, to better reflect underlying performance
and remove the effect of the following items;
Loss from operations
ADD BACK:
Depreciation
Impairment
Amortisation
Loss on disposal
Share based payment charge (note 24)
2021
£’000
2020
£’000
(26,657)
(29,396)
2,321
1,713
274
173
799
2,440
5,588
197
473
2,625
(21,377)
(18,073)
I T M A N N U A L R E P O R T 2 0 2 1
8 . R E M U N E R AT I O N O F
D I R E C T O R S A N D E M P L O Y E E S
The amount shown for M Green is net of the pay accrued in the prior year and shown in the table below.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
FEES/BASIC
SALARY
£’000
ANNUAL
BONUSES
£’000
TOTAL
EXCLUDING
PENSION
£’000
PENSION
CONTRIBUTIONS
£’000
TOTAL
£’000
2020-21
EXECUTIVE
DIRECTORS
Dr S Bourne
Dr G Cooley
Dr R Smith
A Allen
NON-EXECUTIVE
DIRECTORS
R Bone
M Green
K Roe
B Pendlebury
J Nowicki
T Rae
AGGREGATE
EMOLUMENTS
EMPLOYERS NI
SHARE BASED
PAYMENT EXPENSE
IN RESPECT OF
DIRECTORS
TOTAL COSTS FOR
DIRECTORS AND
KEY MANAGEMENT
PERSONNEL
FEES/BASIC
SALARY
£’000
ANNUAL
BONUSES
£’000
TOTAL
EXCLUDING
PENSION
£’000
PENSION
CONTRIBUTIONS
£’000
TOTAL
£’000
214
311
144
135
83
52
53
-
-
-
121
189
68
66
-
-
-
-
-
-
335
500
212
201
83
52
53
-
-
-
20
-
13
22
-
-
-
-
-
-
992
444
1,436
55
355
500
225
223
83
52
53
-
-
-
1,491
169
549
2,209
2019-20
EXECUTIVE
DIRECTORS
Dr S Bourne
Dr G Cooley
Dr S Smith
A Allen
NON-EXECUTIVE
DIRECTORS
Prof R Putnam
Lord Freeman
B Pendlebury
R Bone
M Green
J Nowicki
AGGREGATE
EMOLUMENTS
EMPLOYERS NI
SHARE BASED
PAYMENT EXPENSE
IN RESPECT OF
DIRECTORS
TOTAL COSTS FOR
DIRECTORS AND
KEY MANAGEMENT
PERSONNEL
178
214
118
102
192
19
-
58
30
-
56
109
25
17
-
-
-
-
-
-
234
323
143
119
192
19
-
58
30
-
9
23
11
18
-
-
-
-
-
-
911
207
1,118
61
243
346
154
137
192
19
-
58
30
-
1,179
167
2,611
3,957
I T M A N N U A L R E P O R T 2 0 2 1
Four directors were members of money purchase schemes during the year (2020: 4).
8 . R E M U N E R AT I O N O F
D I R E C T O R S A N D E M P L O Y E E S
(C O N T I N U E D)
SHARE OPTIONS SCHEME
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.
Details of options for directors who served during the year are as follows:
NAME OF
DIRECTOR
SCHEME
NUMBER GRANT DATE
1 MAY 2020
30 APRIL
2021
NUMBER
EXERCISE
PRICE
£’000
DATE FROM
WHICH
EXERCISABLE EXPIRY DATE
Dr S Bourne
EMI
123,596
24/01/2011
Dr S Bourne
Unapproved
276,404
24/01/2011
Dr S Bourne
EMI
100,000
01/08/2012
Dr S Bourne
Unapproved
250,000
06/08/2014
Dr S Bourne
Unapproved
583,333
14/08/2018
-
-
-
-
-
Dr S Bourne
Unapproved
583,333
14/08/2018
583,333
Dr S Bourne
Unapproved
583,334
14/08/2018
583,334
Dr S Bourne
Unapproved
159,750
24/10/2019
159,750
Dr G Cooley
Unapproved
800,000
24/01/2011
Dr G Cooley
EMI
250,000
19/07/2012
Dr G Cooley
Unapproved
750,000
06/08/2014
-
-
-
67p
67p
50p
27p
30p
30p
30p
48p
67p
50p
27p
24/01/2015
23/01/2021
24/01/2014
23/01/2021
01/08/2015
31/07/2022
01/08/2017
05/08/2024
14/08/2019
13/08/2028
14/08/2020
13/08/2028
14/08/2021
13/08/2028
23/10/2022
23/10/2029
24/01/2014
23/01/2021
19/07/2015
18/07/2022
06/08/2015
05/08/2024
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
NAME OF
DIRECTOR
SCHEME
1 MAY
2020
NUMBER
GRANT
DATE
30 APRIL
2021
NUMBER
EXERCISE
PRICE
£’000
DATE FROM
WHICH
EXERCISABLE
EXPIRY
DATE
Dr G Cooley
Unapproved
1,000,000
14/08/2018
1,000,000
Dr G Cooley
Unapproved
1,000,000
14/08/2018
1,000,000
Dr G Cooley
Unapproved
1,000,000
14/08/2018
1,000,000
Dr G Cooley
Unapproved
307,500
24/10/2019
307,500
Dr R Smith
Unapproved
416,666
14/08/2018
-
Dr R Smith
Unapproved
416,667
14/08/2018
416,667
Dr R Smith
Unapproved
416,667
14/08/2018
416,667
Dr R Smith
Unapproved
72,000
24/10/2019
72,000
A Allen
A Allen
A Allen
EMI
EMI
EMI
16,666
23/03/2011
16,666
23/03/2011
16,668
23/03/2011
A Allen
Unapproved
333,333
14/08/2018
-
-
-
-
A Allen
Unapproved
333,333
14/08/2018
333,333
A Allen
Unapproved
333,334
14/08/2018
333,334
A Allen
Unapproved
47,250
24/10/2019
47,250
30p
30p
30p
48p
30p
30p
30p
48p
55p
55p
55p
30p
30p
30p
48p
14/08/2019
13/08/2028
14/08/2020
13/08/2028
14/08/2021
13/08/2028
23/10/2022
23/10/2029
14/08/2019
13/08/2028
14/08/2020
13/08/2028
14/08/2021
13/08/2028
23/10/2022
23/10/2029
22/03/2012
22/03/2021
22/03/2013
22/03/2021
22/03/2014
22/03/2021
14/08/2019
13/08/2028
14/08/2020
13/08/2028
14/08/2021
13/08/2028
23/10/2022
23/10/2029
I T M A N N U A L R E P O R T 2 0 2 1
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
8 . R E M U N E R AT I O N O F
D I R E C T O R S A N D E M P L O Y E E S
(C O N T I N U E D)
The following LTIP awards were granted in the year for directors:
NAME OF
DIRECTOR
SCHEME
OPTIONS
AT 30 APRIL
2021
GRANT
DATE
LAST
VESTING
DATE
EXPIRY
DATE
EXERCISE
PRICE
A Allen
A Allen
Unapproved
52,478
22/10/2020
22/10/2023
22/10/2030
Unapproved
45,919
13/11/2020
22/10/2023
13/11/2030
Dr G Cooley
Unapproved
100,912
22/10/2020
22/10/2023
22/10/2030
Dr G Cooley
Unapproved
88,298
13/11/2020
22/10/2023
13/11/2030
Dr R Smith
Unapproved
77,530
22/10/2020
22/10/2023
22/10/2030
Dr R Smith
Unapproved
67,839
13/11/2020
22/10/2023
13/11/2030
Dr S Bourne
Unapproved
52,415
22/10/2020
22/10/2023
22/10/2030
Dr S Bourne
Unapproved
48,863
13/11/2020
22/10/2023
13/11/2030
5p
5p
5p
5p
5p
5p
5p
5p
Gains made by directors exercising share options in the year:
DIRECTOR
TYPE OF
SHARE OPTION
NUMBER
OF SHARES
EXERCISED
EXERCISE
PRICE
MARKET PRICE
AT DATE
OF EXERCISE
GAIN MADE
£’000
S Bourne
EMI
S Bourne
Unapproved
S Bourne
EMI
S Bourne
Unapproved
S Bourne
Unapproved
G Cooley
Unapproved
G Cooley
EMI
G Cooley
Unapproved
R Smith
Unapproved
A Allen
A Allen
EMI
Unapproved
123,596
276,404
100,000
250,000
583,333
800,000
250,000
750,000
416,666
50,000
333,333
67p
67p
50p
27p
30p
67p
50p
27p
30p
55p
30p
283.05p
283.05p
283.05p
283.05p
283.05p
283.05p
283.05p
283.05p
283.05p
283.05p
283.05p
267.3
597.9
233.2
641.4
1,476.1
1,730.4
582.6
1,924.1
1,054.4
114.3
798.9
I T M A N N U A L R E P O R T 2 0 2 1
8 . R E M U N E R AT I O N O F
D I R E C T O R S A N D E M P L O Y E E S
(C O N T I N U E D)
REMUNERATION OF THE HIGHEST PAID DIRECTOR
Aggregate emoluments
Money purchase pension contributions
2021
£’000
500
-
500
2020
£’000
323
23
346
9.
F I N A N C E I N C O M E
A N D C O S T S
FINANCE INCOME
Interest received on cash deposits
FINANCE COST
Interest paid
Lease liability interest paid
Gains made by the highest paid director exercising share options in the year were £4.2m (2020: £0.4m)
MONTHLY AVERAGE NUMBER OF PERSONS EMPLOYED
2021
NUMBER
2020
NUMBER
NET FINANCE COSTS
• Research and development
•
•
Production and engineering
Sales and marketing
• Administration
STAFF COSTS DURING THE YEAR (INCLUDING DIRECTORS)
Wages and salaries
Social security costs
Other pension costs
Share based payment expense
Less: staff costs capitalised in development costs
STAFF COSTS EXPENSED IN THE YEAR
54
113
13
30
210
2021
£’000
8,687
1,988
759
799
12,233
(1,430)
10,803
28
116
12
22
178
2020
£’000
7,208
821
613
2,625
11,267
(1,690)
9,577
As at 30 April 2021 pension contributions of £72,000 (2020: £52,000) due in respect of the current year had not been paid
over to the scheme. These were paid over in the following month and within statutory deadlines
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
2021
£’000
83
(60)
(419)
(479)
(396)
2020
£’000
90
(11)
(203)
(214)
(124)
I T M A N N U A L R E P O R T 2 0 2 1
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
10. TA X
CURRENT TAXATION
Tax charge in the year
Tax charge relating to prior years
2021
£’000
25
24
49
2020
£’000
12
26
38
11. L O S S P E R S H A R E
The calculation of the basic and diluted earnings per share is based on the following data:
Loss for the purposes of basic and diluted loss per share being
net loss attributable to owners of the Company
NUMBER OF SHARES
2021
£’000
2020
£’000
(27,697)
(29,561)
Corporation tax is calculated at 19% (2020: 19%). 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:
Weighted average number of ordinary shares for the purposes
of basic and diluted earnings per share
507,262,743
398,184,707
Loss before tax
TAX ON LOSS AT 19% (2020: 19%)
Factors affecting (charge)/credit for the year:
Expenses not deductible for tax purposes
Fixed asset differences
Tax charge on current year RDEC claim
Adjustments in respect of prior years
Unrelieved tax losses carried forward
TAX CHARGE FOR THE YEAR
2021
£'000
2020
£'000
(27,648)
(29,523)
(5,253)
(5,609)
204
1,510
25
24
3,539
49
542
1,649
12
26
3,418
38
F A C T O R S A F F E C T I N G F U T U R E TA X C H A R G E S
The Group has tax losses of approximately £65.6m (2020: £47.8m) available to carry forward against future taxable profits,
subject to agreement with HM Revenue & Customs. Deferred tax would have been calculated at the new rate of 25%
following substantive enactment in May 2021. However, a deferred tax asset has not been recognised so this change
is immaterial to the current financial statements.
Loss per share
5.5p
7.4p
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. The number of potentially dilutive shares
not included in the calculation above due to being anti-dilutive in the years presented were 50,893,546 (2020: 85,329,719).
12. I N V E S T M E N T S
A list of investments in subsidiaries, including the name, country of incorporation and proportion of ownership interest
is given in note 6 to the Company’s separate financial statements.
Below we provide information regarding the performance of the investment in associate within the year:
Cost brought forward
Additions
Foreign exchange adjustment
50% share of loss recognised in the year
2021
£’000
346
535
(27)
(595)
259
2020
£’000
-
344
5
(3)
346
I T M A N N U A L R E P O R T 2 0 2 1
12. I N V E S T M E N T S
(C O N T I N U E D)
13.
I N TA N G I B L E A S S E T S
The amount shown in the Consolidated Balance Sheet relates to the establishment and incorporation in the year of ITM
Linde Engineering GmbH (incorporated in Germany, with registered office: Bodenbacher Str. 80, 01277 Dresden,
Germany). Interest in the new company is split 50:50 with Linde Engineering GmbH, although control is deemed to lie with
Linde for the purposes of consolidation as they appoint the Managing Director. ITM Power has significant influence in the
company due to its representation on the Board.
The investment is therefore an equity-accounted investment in associate but will be subject to impairment review. In the
current year, no such impairment was deemed necessary.
Key financial data of ITM Linde Electrolysis (ILE):
Non-current assets
Current Assets
Current liabilities
Revenue
Loss from continuing operations
30 April 2021
£’000
30 April 2020
£’000
14
3,145
(2,658)
1,018
(1,193)
-
640
-
-
(6)
Balance Sheet figures were translated from euros using year-end exchange rate of 1.16 (2020: 1.12). Revenue and loss figures
were translated using an average exchange rate of 1.12 (2020: 1.14).
During the year, besides the transfer of further investment, ITM Power continues to pay for the hosting of ILE’s website.
ITM Power engaged ILE for consultancy work equating to £0.8m during the year, of which £0.2m remained unpaid
at year-end. Sales of £2.1m were billed to ILE and were outstanding at year-end. Further cash injections are planned
over the next few months, equating to €750,000 by each party.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
SOFTWARE
£’000
KNOW-HOW
£’000
DEVELOPMENT COSTS
£’000
TOTAL
£’000
Cost at 1 May 2019
Transfers
Additions
Grant received
Cost at 1 May 2020
Transfers
Additions
Grant received
59
-
81
-
140
-
-
-
559
66
-
-
625
2,170
-
-
Cost at 30 April 2021
140
2,795
Amortisation at 1 May 2019
Charge for the year
Amortisation at 1 May 2020
Charge for the year
Amortisation at 30 April 2021
Carrying amount
at 30 April 2021
Carrying amount
at 30 April 2020
6
36
42
46
88
52
98
240
161
401
228
629
2,166
224
297
(66)
915
-
1,690
1,771
(89)
(89)
1,832
2,597
(2,170)
1,524
(135)
1,051
-
-
-
-
-
-
1,524
(135)
3,986
246
197
443
274
717
1,051
3,269
1,832
2,154
The amortisation period for externally purchased software
has been set at three years (in line with our policy for
computer equipment).
Development costs are generated internally by
development of our stack technology, unit designs and
processes. They are built up over a period of time but
capitalisation ceases once the asset comes into use and
is transferred to the Know-how category, where they
will amortise over four years.
Within the Know-how category is the design of our
10MW standard product. This transferred in towards
the year-end with a value of £1.69m (2020: £1.1m
included within development costs) and combines
not only the design of our first modular system but
also the working-practice templates for larger system
development and deployment in locations under
stricter HSEQ/ regulatory controls, such as refineries.
I T M A N N U A L R E P O R T 2 0 2 1
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
The Group currently holds right of use assets in both the UK (4 properties, 12 vehicles and office equipment) and Germany
(1 property and 3 vehicles).
Right of Use assets are depreciated over their lease term. An impairment was recognised in the prior year, in accordance
with IAS 36 Impairment of Assets, for the remaining leases on buildings that we were preparing to quit when we moved
to Bessemer Park. This involved three separate properties that housed our UK workforce and reduced their carrying value
so as not to be depreciating them beyond March 2021.
In the current year, the leasehold property additions include the provision for Bessemer Park dilapidations.
14. R I G H T O F U S E A S S E T S
LEASEHOLD
PROPERTY
£’000
LEASED
VEHICLES
£’000
OFFICE
EQUIPMENT
£’000
TOTAL
£’000
Cost at 1 May 2019
(on transition to IFRS 16)
Additions
Cost at 1 May 2020
Additions
Disposals
COST AT 30 APRIL 2021
Depreciation at 1 May 2019
Charge for the year
Impairment
Depreciation at 1 May 2020
Charge for the year
Disposals
DEPRECIATION AT 30 APRIL 2021
NET BOOK VALUE AT 30 APRIL 2021
NET BOOK VALUE AT 30 APRIL 2020
1,014
6,058
7,072
544
(179)
7,437
-
475
133
608
698
(159)
1,147
6,290
6,464
72
22
94
52
(2)
144
-
38
-
38
45
(2)
81
63
56
-
-
-
48
-
48
-
-
-
-
2
-
2
46
-
1,086
6,080
7,166
644
(181)
7,629
-
513
133
646
745
(161)
1,230
6,399
6,520
I T M A N N U A L R E P O R T 2 0 2 1
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
15. P R O P E R T Y, P L A N T A N D E Q U I P M E N T
PRODUCTION PLANT
& EQUIPMENT
£’000
LABORATORY &
TEST EQUIPMENT
£’000
COMPUTER
EQUIPMENT
£’000
OFFICE FURNITURE
& FITTINGS
£’000
LEASEHOLD
IMPROVEMENTS
£’000
ASSETS IN THE COURSE
OF CONSTRUCTION
£’000
COST AT 1 MAY 2019
Additions
Transfers
Disposals
Foreign Exchange
COST AT 1 MAY 2020
Additions
Grant income
Transfers
Disposals
Foreign Exchange
COST AT 30 APRIL 2021
DEPRECIATION AT 1 MAY 2019
Disposals
Charge for the year
Impairment
Foreign Exchange
DEPRECIATION AT 1 MAY 2020
Disposals
Charge for the year
Impairment
Foreign Exchange
DEPRECIATION AT 30 APRIL 2021
NET BOOK VALUE AT 30 APRIL 2021
NET BOOK VALUE AT 30 APRIL 2020
4,799
178
950
(484)
23
5,466
893
1,657
(437)
-
7,579
3,478
(400)
989
910
20
4,997
(268)
325
841
(1)
5,894
1,685
469
1,903
156
-
(66)
-
1,993
309
-
(45)
-
2,257
1,552
(53)
175
-
-
1,674
(44)
191
-
-
1,821
436
319
789
129
-
(1)
(1)
916
376
-
(9)
-
1,283
649
(1)
99
-
-
747
(5)
140
-
-
882
401
169
207
6
-
-
-
213
244
-
(135)
-
322
191
-
6
-
-
197
(126)
39
-
-
110
212
16
3,579
4,006
-
-
-
7,585
7,463
-
(1,534)
-
13,514
2,698
-
658
151
-
3,507
(1,533)
881
-
-
2,855
10,659
4,078
3,033
4,103
(950)
(383)
42
5,845
5,140
(3,857)
(1,657)
-
(84)
5,387
-
-
-
4,394
-
4,394
-
-
872
-
5,266
121
1,450
TOTAL
£’000
14,310
8,578
-
(934)
64
22,018
14,425
(3,857)
-
(2,160)
(84)
30,342
8,568
(454)
1,927
5,455
20
15,516
(1,976)
1,576
1,713
(1)
16,828
13,514
6,501
I T M A N N U A L R E P O R T 2 0 2 1
16.
I N V E N T O R I E S
Raw Materials
Work in progress
2021
£’000
3,879
2,539
6,418
Inventories have been stated after a provision for impairment of aged-stock of £1.3m (2020: £0.4m).
17. C O N T R A C T B A L A N C E S & P E R F O R M A N C E O B L I G AT I O N S
Contract revenue recognised through release from deferred income
Release from transitional adjustment
2021
£’000
1,538
-
1,538
2020
£’000
3,277
1,155
4,432
2020
£’000
484
10
494
In 2019, ITM Power elected to transition to the new standard IFRS 15 Revenue from Customers using the modified
retrospective method. This meant that retained earnings were adjusted by an amount that would have increased
deferred income brought forward. In 2020, the last of those projects completed and thus the remaining adjustment
was released and shown separately.
Contracts with customers in progress at the balance sheet date:
Amounts due from contract customers included in trade and other receivables
Contract assets (accrued income)
Contract liabilities (deferred income)
Balance sheet position of sales contracts
2021
£’000
2020
£’000
5,727
873
1,067
735
(6,740)
(3,050)
(140)
(1,248)
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
The contract position will change according to the number or size of contracts in progress at the year-end as well as the
status of payment milestones towards those contracts. The Group will continue to structure payment milestones in order
to cover the up-front costs of materials for cash flow purposes. The variance between these and the performance obligations
for revenue recognition under IFRS 15 (typically acceptance of the product by the customer for all standard products),
will cause increasing values to remain in deferred income for longer.
18 . T R A D E A N D O T H E R R E C E I VA B L E S
Amount receivable for the sale of goods
Amounts due from construction contract
customers (note 17)
Amounts receivable under grant claims
Impairment for credit risk
Total trade receivables
Restricted cash balances
Other receivables
R&D relief claims receivable
Prepayments
Amounts recoverable from employees
Accrued Sales income
Accrued Grant income
2021
£’000
100
5,432
-
(59)
2021
£’000
5,473
1,050
503
550
6,526
3,183
873
4,823
22,981
2020
£’000
45
1,067
4,273
(62)
2020
£’000
5,323
1,083
869
317
13,289
-
735
1,550
23,166
I T M A N N U A L R E P O R T 2 0 2 1
18 . T R A D E A N D O T H E R R E C E I VA B L E S
(C O N T I N U E D)
19. C A S H A N D C A S H E Q U I VA L E N T S
Grant receivables are no longer held within Trade Receivables but remain within Accrued Grant income until received.
Prepayments include amounts paid up-front by way of pro forma and stage payments to suppliers for the long-lead time
items required on our build projects.
Amounts recoverable from employees relates to the employer’s national insurance on share options where, under the terms
of the offer, staff will cover this cost upon exercise.
Restricted cash balances refer to monies received from customers that are currently sat on bank guarantee until specific
performance milestones are met on product sales contracts.
Trade receivables are measured at amortised cost.
Their ageing is analysed as follows:
Cash and cash equivalents
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.
20. T R A D E A N D O T H E R PAYA B L E S
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
2021
£’000
2020
£’000
176,078
39,919
Less than 30 days
31-60 days
61-90 days
Greater than 91 days
M O V E M E N T I N T H E A L L O W A N C E F O R D O U B T F U L D E B T S
2021
£’000
4,955
220
245
112
2020
£’000
3,713
95
777
800
5,532
5,385
Trade payables
Other taxation and social security
Other creditors
Forward contracts
Accruals
Deferred Sales income
Deferred Grant income
2021
£’000
2020
£’000
Grant income received against pro-forma
Brought forward balance at 1 May
Impairment losses recognised
Movement on credit risk provision
Amounts written off during the year as uncollectible
BALANCE AT 30 APRIL
62
-
(3)
-
59
77
-
(15)
-
62
The movement on the doubtful debts provision in the year related the IFRS 9 credit risk provision that recognises a potential
loss of 1% on the company’s trade debtor and accrued sales income balances.
2021
£’000
1,191
511
-
8
2,112
6,740
1,751
544
2020
£’000
2,507
272
33
-
1,957
3,050
305
5,889
12,857
14,013
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
I T M A N N U A L R E P O R T 2 0 2 1
21. P R O V I S I O N S
WARRANTY
£’000
LEASEHOLD
PROPERTY
PROVISION
£’000
PROVISION
FOR
CONTRACT
LOSSES
£’000
EMPLOYERS'
NATIONAL
INSURANCE
PROVISION
£'000
OTHER
PROVISIONS
£'000
TOTAL
PROVISIONS
£’000
(750)
(855)
-
-
-
-
-
(873)
(3,645)
(1,647)
870
10
-
-
-
-
(750)
(848)
(3,645)
(1,647)
-
-
-
-
-
(1,605)
(6,165)
870
10
(6,890)
(584)
(210)
(2,574)
(3,871)
(677)
(7,916)
140
170
252
1,399
9
-
560
-
-
-
2,351
179
(1,024)
(797)
(4,820)
(4,958)
(677)
(12,276)
2019-20
Balance at
1 May 2019
Provision
created in
the year
Use of the
provision
Release in
the year
Balance at
1 May 2020
Provision
created in
the year
Use of the
provision
Release in
the year
Balance
at 30 April
2021
The leasehold property provision represented management’s best estimate for the dilapidations work that may be required
to return our old factory, office and laboratory buildings to the landlords at the end of their lease term. During the year we
vacated one of those properties, incurring fewer costs than anticipated. We also started the dilapidations work on a second
property with costs forecast to exceed the provision so an additional amount was added to the provision. The third property
carries a potential break clause in April 2022. During the year, we completed our adaptation works at Bessemer Park and so
have recognised a dilapidations provision at a discounted value. This is for the present value of the cost of works quoted by
our Employers Agent for stripping the work back to the original condition at handover from the landlords. The discounting
will amortise over the remaining 14 years of the lease.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
The warranty provision represents management’s best estimate of the Group’s liability under warranties granted on
products, based on historical knowledge of the products and their components. As with any product warranty, there is an
inherent uncertainty around the likelihood and timing of a fault occurring that would trigger further work or part
replacement. Warranties are usually granted for a period of one year, although two-year warranties are the standard within
some jurisdictions.
Included within warranties is the cost of extensive refurbishment of a system due to extreme weather conditions. The effect
of removing this one unit from the provision would be:
Balance at 1 May 2019
Provision created in the year
Use of the provision
Release in the year
Balance at 1 May 2020
Provision created in the year
Use of the provision
Release in the year
Balance at 30 April 2021
WARRANTY
£’000
(409)
(65)
9
10
(455)
(210)
20
9
(636)
The movement on the doubtful debts provision in the year related the IFRS 9 credit risk provision that recognises
a potential loss of 1% on the company’s trade debtor and accrued sales income balances.
The provision for contract losses is created when it becomes known that a commercial contract has become onerous.
Project Managers provide rolling spend forecasts, updating these as quotes are obtained. The provision is therefore based
on best estimates and information known at the time to ensure the expected losses are recognised immediately through
profit and loss. This provision will be used to off-set the costs of the project as it reaches completion in future periods.
This is expected to unwind within the next financial year.
The provision for employer’s national insurance due on share options as they exercise (see share-based payment note 24).
The other provisions category relates to a provision for breach of contract by a supplier and for potential late penalties
on a project.
I T M A N N U A L R E P O R T 2 0 2 1
22. L E A S E L I A B I L I T I E S
The following table describes the types of right of use asset owned by the Group and shows the movements on lease
liabilities within the year:
2021
Brought forward at 1 May 2020
Adjustments
Additions
Interest Applied
Payments made
AT 30 APRIL 2021
SPLIT:
Within 1 year
2-5 years (inclusive)
Over 5 years
LESS:
Future finance charges
PRESENT VALUE OF LEASE OBLIGATIONS
IN THE BALANCE SHEET:
Due within 12 months (current)
Due after 12 months (non-current)
LEASEHOLD
PROPERTY
£’000
OFFICE
EQUIPMENT
£’000
MOTOR
VEHICLES
£’000
6,492
15
-
454
(573)
6,388
430
3,169
6,711
(3,922)
6,388
168
6,220
-
-
48
-
(4)
44
11
41
-
(8)
44
8
36
34
1
52
1
(34)
54
30
27
-
(3)
54
28
26
TOTAL
£’000
6,526
16
100
455
(611)
6,486
471
3,237
6,711
(3,933)
6,486
204
6,282
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
2020
Existing contracts at 1 May 2019
Adjustments
Additions
Interest Applied
Payments made
AT 30 APRIL 2020
SPLIT:
Within 1 year
2-5 years (inclusive)
Over 5 years
LESS:
Future finance charges
PRESENT VALUE OF LEASE OBLIGATIONS
IN THE BALANCE SHEET:
Due within 12 months (current)
Due after 12 months (non-current)
LEASEHOLD
PROPERTY
£’000
OFFICE
EQUIPMENT
£’000
MOTOR
VEHICLES
£’000
TOTAL
£’000
800
117
5,776
199
(400)
6,492
564
2,747
7,557
(4,376)
6,492
184
6,308
-
-
-
-
-
-
-
-
-
-
-
-
-
50
-
19
4
(39)
34
27
9
-
(2)
34
27
7
850
117
5,795
203
(439)
6,526
591
2,756
7,557
(4,378)
6,526
211
6,315
I T M A N N U A L R E P O R T 2 0 2 1
22. L E A S E L I A B I L I T I E S
(C O N T I N U E D)
Adjustments refers to contracts that have changed
their length of duration or their value during the year
e.g. following a rent review or a change in decision
regarding potential break clauses. The interest charge
appears with other interest at the bottom of the
income statement and is the only value described
above that affects profit or loss. Each liability is
matched by a corresponding right of use asset,
upon which depreciation is also charged to the income
statement (see note 14). The two amounts together
replace the previous accounting treatment
of expensing rentals payments.
Total lease payments for capitalised leases and
short-term leases was £762,000 (2020: £935,000).
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
23. C A L L E D U P S H A R E
C A P I TA L A N D R E S E R V E S
2021
£’000
2020
£’000
CALLED UP, ALLOTTED AND FULLY PAID:
550,658,155 (2020: 473,277,926) ordinary shares of 5p each
27,533
23,664
AUTHORISED SHARE CAPITAL:
550,658,155 (2020: 473,277,926) ordinary shares of 5p each
27,533
23,664
Holders of ordinary shares have voting rights at Annual General Meetings and Extraordinary General Meetings in proportion
with their shareholding.
The share premium account can move when shares are sold and represents the amount paid in excess of the nominal value
when shares are issued.
The merger reserve arose on the acquisition of ITM Power (Research) Limited 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 as well as the effect of the change in exchange rates on opening and closing balances.
The Group’s other reserve is retained earnings which represents cumulative profits or losses, net of any dividends
paid and other adjustments.
I T M A N N U A L R E P O R T 2 0 2 1
24. S H A R E - B A S E D PAY M E N T S
E Q U I T Y- S E T T L E D S H A R E O P T I O N S C H E M E
The Group operates a number of share schemes to provide employees and third parties
with the opportunity to acquire a proprietary interest in the Group as an incentive to attract
and retain their services as follows:
An all-employee Share Incentive Plan (referred to as the BAYE scheme)
Enterprise Management Incentive (EMI) options; and
Non EMI or “unapproved” options in lieu of payment for services.
S H A R E I N C E N T I V E P L A N
In FY21, the group implemented a new Share Incentive Plan (referred to as the BAYE scheme),
which is available to all employees. Employees can contribute up to £150 per month to acquire
partnership shares, which are purchased or allotted in monthly accumulation periods.
The Group currently matches employee contributions on a one-for-one basis to acquire
matching shares.
At 30 April 2021 the trustees of the SIP held 25,679 ordinary shares in ITM Power, of which
25,518 have been conditionally awarded to employees and 161 remain unallocated.
The group recognised a charge of £75,000 in relation to this scheme in 2021 (2020: £nil).
E M I & N O N - E M I S H A R E O P T I O N P L A N S
In 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 over a period
of 3-5years and are exercisable up to the tenth anniversary of the grant. The last of the EMI
share options were exercised in the current financial year. These were replaced by a new
non-EMI scheme in 2020. A more comprehensive description of the different schemes can
be found within the Remuneration Committee Report.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
Movements within the year on the share option plans (including both the EMI and non EMI options) were as follows:
NUMBER
2021
WEIGHTED
AVERAGE
EXERCISE
PRICE
Outstanding at the beginning of the year
10,486,500
Granted during the year
Exercised during the year
Expired during the year
1,275,172
(4,183,333)
(76,485)
OUTSTANDING AT THE END OF THE YEAR
7,501,854
EXERCISABLE AT THE END OF THE YEAR
3,333,333
36p
5p
44p
5p
27p
30p
NUMBER
12,316,745
586,500
(2,213,338)
(203,407)
10,486,500
5,233,332
2020
WEIGHTED
AVERAGE
EXERCISE
PRICE
33p
48p
23p
18p
36p
41p
The options outstanding at 30 April 2021 had a weighted average exercise price of 27p and a weighted average remaining
contractual life of 5 years.
The fair value of options issued in the current year was measured using a Monte Carlo options pricing model. This is a change
from our previous measure (the Black Scholes model) as the more recent issue of share options included a TSR performance
condition. Thus, IFRS 2 requires the use of a model that can take into account the likelihood of the performance condition
being achieved.
The assumptions used in the models are as follows:
WEIGHTED AVERAGES
Share price
Exercise price
Expected volatility
Expected life
Risk-free rate
2021
2020
256p
5p
84.7%
3 years
-0.06%
41p
41p
81.9%
5 years
2.18%
I T M A N N U A L R E P O R T 2 0 2 1
24. S H A R E - B A S E D PAY M E N T S
(C O N T I N U E D)
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. Expected volatility was determined
by calculating the historical volatility of the Company’s shares over a period in line with the expected term of the
options. The expected dividend impact used is 0% as participants are entitled to dividend equivalents.
The Group has recognised a share-based payment expense in the income statement for the year, made up of three elements:
Share based payment expense (as seen through equity)
Purchase of partnership shares under the BAYE scheme
Provision for employers’ national insurance on potential gain
2021
£’000
595
75
129
799
2020
£’000
978
-
1,647
2,625
For options granted prior to 2020, the Group have elected to pay employer’s National Insurance on gains made on unapproved
share options exercise, to be capped at the proceeds the Group would receive from the exercise. Any further Employer’s
National Insurance would be recovered from the exercising party. For options granted from 2020, the Group have agreed
to transfer the employer’s National Insurance liability to the employee share option holders.
25. N O T E S T O T H E C A S H F L O W S TAT E M E N T
Loss from operations
ADJUSTMENTS:
Depreciation
Share based payment
Loss on disposal
Impairment
Amortisation
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
2021
£’000
(26,657)
2,321
595
173
1,712
274
2020
£’000
(29,396)
2,440
978
473
5,588
197
OPERATING CASH FLOWS BEFORE MOVEMENTS
IN WORKING CAPITAL
(21,582)
(19,720)
(INCREASE) IN INVENTORIES
DECREASE IN RECEIVABLES
DECREASE IN PAYABLES
INCREASE IN PROVISIONS
CASH USED IN OPERATIONS
Interest paid
Income taxes received
(1,987)
185
(1,156)
4,857
(19,683)
(479)
21
(2,525)
7,964
(2,882)
5,285
(11,878)
(214)
52
NET CASH USED IN OPERATING ACTIVITIES
(20,141)
(12,040)
The movement on provisions has been adjusted by £530,000 as the Bessemer Park dilapidations provision has been posted
against right of use assets and therefore no adjustment to the income statement for this non-cash item is required.
I T M A N N U A L R E P O R T 2 0 2 1
26. N E T C A S H R E C O N C I L I AT I O N
NET DEBT AS AT 1 MAY 2019
Recognised on adoption of IFRS 16
Adjusted
Cashflows
Acquisition -leases
Other changes -interest expense
Foreign exchange adjustments
LEASE
LIABILITIES
£’000
-
(850)
(117)
439
(5,795)
(203)
-
CASH
£’000
5,173
-
-
34,730
-
-
16
NET DEBT AS AT 1 MAY 2020
(6,526)
39,919
TOTAL
£’000
5,173
(850)
(117)
35,169
(5,795)
(203)
16
33,393
(16)
Adjusted
Cashflows
Acquisition -leases
Other changes -interest expense
(16)
611
(100)
(455)
-
136,181
136,792
-
(22)
(100)
(477)
NET CASH AS AT 30 APRIL 2020
(6,486)
176,078
169,592
27. C A P I TA L C O M M I T M E N T S
The Group had capital commitments of £1.1m at the Balance Sheet date (2020: £7.9m, of which £4.7m related
to Bessemer Park).
28 . C O N T I N G E N T L I A B I L I T Y
R E C E I P T O F G O V E R N M E N T G R A N T S
The Group participates in a number of grant funded
projects. Income is recognised in the accounts as
receivable based on the grant contract and the levels of
expenditure incurred on the project. It is claimed
periodically according to a timetable laid down by each
coordinator. The claims are audited before any money is
awarded. However, grants are ultimately funded by
government or EU institutions and can be subject to
further scrutiny at later dates. This leaves grant income in
the accounts subject to potential recall.
Management do not know which grants will be subject to
such audit nor the time that they are likely to arise and as
such would be unable to quantify the potential financial
impact of any subsequent recall of funds. To the best of
their knowledge, claims are made for expenditure agreed
ahead of any project undertaking and in accordance with
grant procedure.
C O V I D -1 9 E F F E C T O N P R O J E C T S
The Group has been in regular contact with customers
regarding the Force Majeure situation arising as a result of
the pandemic and national lockdowns. However, given the
unknown timings surrounding the lifting of travel bans and
the different quarantine arrangements that each country
might impose, it is still not clear how long some of our
projects may be affected and whether late penalties within
contracts will be enforced given the circumstances.
One such provision has been made within Other Provisions.
At the current time, no further penalties have been raised
by customers.
29. F I N A N C I A L I N S T R U M E N T S
C A P I TA L R I S K M A N A G E M E N T
The current capital risk management objective is to ensure
that the existing pipeline continues to be delivered in line
with cash management expectations.
The Group manages cash balances in dollars, euros and
pound sterling, with natural hedges occurring for most
transactions. The Group keeps under review the need
for other hedging opportunities with regards to Capital
Risk Management.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
The capital risk management landscape has not
materially changed in the last year for the Group.
Larger cash reserves gained through the fund raise
have led management to put some of the funds
on fixed-term deposit to generate interest. The funds
have also been split between different banking
institutions. Given the Covid-19 situation,
more frequent credit checks have been performed
and bank guarantees sought from some suppliers
where up-front payments were made.
E X T E R N A L LY I M P O S E D C A P I TA L
R E Q U I R E M E N T
The Group also have bank guarantees 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 as bank guarantees.
I T M A N N U A L R E P O R T 2 0 2 1
29. F I N A N C I A L I N S T R U M E N T S
(C O N T I N U E D)
C AT E G O R I E S O F F I N A N C I A L I N S T R U M E N T S
FINANCIAL ASSETS – AMORTISED COST
Financial asset at amortised cost
Cash and cash equivalents
Trade debtors (excluding IFRS 9 impairment)
Restricted cash balances
Other receivables
Accrued Sales income
Accrued Grant income
2021
£’000
148
176,078
5,532
1,050
455
541
4,823
188,627
2020
£’000
137
39,919
5,385
1,083
869
735
1,550
49,678
The financial asset at amortised cost sits under non-current assets in the balance sheet and relates to the security deposit
on our new leasehold property. The rest of 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. Accrued income amounts are included
as financial assets as they relate to contractual agreements that will result in future cash inflows. ITM Power do not
consider there to be undue risk associated with receivables.
FINANCIAL LIABILITIES - AMORTISED COST
Trade payables
Other creditors
Accruals
Lease liabilities
2021
£’000
1,191
-
2,112
6,486
9,789
2020
£’000
2,507
33
1,957
6,526
11,023
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed
repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the Group can be required to pay.
2021
Trade and other payables
Lease liabilities
2020
Trade and other payables
Lease liabilities
WITHIN
1 YEAR
£’000
2-5 YEARS
(INCLUSIVE)
£’000
OVER
5 YEARS
£'000
TOTAL
NET PAYABLE
3,303
473
3,776
4,497
591
5,088
-
3,236
3,236
-
2,756
2,756
-
6,711
6,711
-
7,557
7,557
3,303
10,420
13,723
4,497
10,904
15,401
I T M A N N U A L R E P O R T 2 0 2 1
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
29. F I N A N C I A L I N S T R U M E N T S
(C O N T I N U E D)
F A I R V A L U E T H R O U G H P R O F I T A N D L O S S
As at 30 April 2021, the Group held foreign currency
forward contracts that were measured at fair value
through profit or loss (2020: none). The figure shown
in note 20 represents the difference between their
contract value and the exchange rates at the balance
sheet date. These financial instruments would sit within
level 2 of a fair value hierarchy, being derived from other
inputs -other than quoted prices in active markets-
that are observable. However, as they are the only
financial instruments measured by fair value, no fair
value hierarchy table has been presented.
The carrying value of all other financial instruments
at 30 April 2021 and 30 April 2020 approximated to their
fair value.
F I N A N C I A L R I S K M A N A G E M E N T O B J E C T I V E S
A N D P O L I C I E S
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. Management may look to use
forward contracts as a means of mitigating exposure
to exchange rate volatility on long-term contracts.
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 treasury activities are reported to the Group’s Board
as required.
C R E D I T R I S K M A N A G E M E N T
F O R E I G N C U R R E N C Y R I S K M A N A G E M E N T
Credit risk refers to the risk that a counterparty 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. Sales invoices
are expected to be paid within 30 – 60 days under our
usual contractual terms.
At the year-end there were receivables totalling £0.4m
(2020: £1.6m) that were overdue but considered fully
recoverable. Of this, £0.1m relates to temporary contractual
retentions. For comparison, it should be noted that grant
claims are no longer held in trade receivables but
represented £1.03m of the previous year’s balance. Most of
our sales income is subject to contractual terms and
therefore largely protected from default. Other less material
sales are followed up monthly and only written off once all
internal efforts have been exhausted for their recovery.
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.
L I Q U I D I T Y A N D I N T E R E S T R I S K M A N A G E M E N T
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.
At year end, the Group did not hedge its exposure of foreign investments held in foreign currencies.
The table below shows the Group’s currency exposure at year end. 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 trade (transactions with both suppliers and customers)
in a variety of locations and denominated in currencies other than the functional currency of the operating unit
excluding intercompany balances.
F O R E I G N C U R R E N C Y R I S K M A N A G E M E N T
These exposures were as follows:
LIABILITIES
ASSETS
2021
£’000
1,504
32
-
9
2020
£’000
91
100
-
-
2021
£’000
4,175
596
-
285
2020
£’000
12,754
1,016
68
1
1,545
191
5,056
13,839
(i)
(ii)
(iii)
(iv)
This is mainly attributable to the exposure to outstanding Euro to Pound Sterling receivables and payables in the
Group at the balance sheet date.
This is mainly attributable to the exposure to outstanding US Dollar to Pound Sterling receivables and payables
at the balance sheet date.
This is mainly attributable to the exposure to outstanding Swedish Kroner to Pound Sterling receivables and
payables at the balance sheet date.
This is mainly attributable to the exposure to outstanding Australian Dollar to Pound Sterling receivables and
payables at the balance sheet date.
EUR
USD
SEK
AUD
(i)
(ii)
(iii)
(iv)
I T M A N N U A L R E P O R T 2 0 2 1
29. F I N A N C I A L I N S T R U M E N T S
(C O N T I N U E D)
F O R E I G N C U R R E N C Y S E N S I T I V I T Y A N A LY S I S
The table below assumes an increase/decrease of 10% change of the Euro to Pound Sterling exchange, the US Dollar
to Pound Sterling exchange rate and the Australian Dollar to Pound Sterling exchange rate.
The sensitivity analysis is based on the subsidiaries’ profit or loss for the year.
EURO impact
USD impact
AUD impact
2021
£’000
2020
£’000
2021
£’000
2020
£’000
2021
£’000
2020
£’000
Profit or loss
70
93
61
34
37
46
If interest rates had been 1% higher/lower and all other variables had remained constant, loss for the year would have
decreased/increased by £168,000 (2020: £173,000).
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.
N O T E S T O T H E C O N S O L I D A T E D
F I N A N C I A L S T A T E M E N T S
30. T R A N S A C T I O N S W I T H
R E L AT E D PA R T I E S
32. E V E N T S A F T E R T H E
B A L A N C E S H E E T D AT E
Post balance sheet, a new subsidiary was created
to house the refuelling assets that had previously sat
within ITM Power (Trading) Limited. ITM Motive
Limited will be the own and operate the UK refuelling
stations in order to drive their profitability. It is a 100%
owned subsidiary so there will be no material impact
on the consolidated accounts.
Transactions between the Company and its subsidiaries,
which are related parties, have been eliminated on
consolidation and are not disclosed in this note. All related
party transactions which were not intra group have been
conducted at arms’ length.
In the year, sales of hydrogen fuel to JCB Research
(a corporate shareholder, represented on the Board by
T Rae) totalled £141 (2020: £631). The balance outstanding
at the year-end was £260 (2020: £631), which is deemed
as being fully recoverable.
During the year purchases from Linde/BOC Group,
represented on the Board by J Nowicki, totalled £3.5m
(2020: £1.3m) with £255,867 outstanding for payment
at year-end (2020: £2,427). Furthermore, an amount
of £0.6m relates to stage payments made for goods included
in AUC but not yet received. There were also sales of £0.4m
of which only £13,684 remained outstanding at year end
(2020: £2,997 outstanding at the year-end).
Balances with ITM Linde Electrolysis GmbH are shown in
note 12 Investments. These were also the only transactions
made with that entity in the year.
The remuneration of the directors, who are the key
management personnel of the Group, is shown in note 8.
F A I R V A L U E O F F I N A N C I A L I N S T R U M E N T S
Carrying amounts of financial instruments are a reasonable approximation of the fair values of those instruments.
31. C O N T R O L L I N G PA R T Y
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.
I T M A N N U A L R E P O R T 2 0 2 1
COMPANY STATEMENT
OF C HANGES IN EQUIT Y
COMPANY
BAL ANC E SHEE T
CALLED UP
SHARE CAPITAL
£’000
SHARE
PREMIUM
ACCOUNT
£’000
16,200
7,464
-
-
23,664
3,869
-
-
86,631
50,605
-
-
137,236
165,012
-
-
RETAINED
LOSS
£’000
(100,896)
-
1,058
TOTAL
EQUITY
£’000
1,935
58,069
1,058
(24,943)
(24,943)
(124,781)
-
595
36,119
168,881
595
(16,928)
(16,928)
27,533
302,248
(141,117)
188,667
AT 1 MAY 2019
Issue of shares
Credit to equity for
share-based payment
Loss for the year &
comprehensive loss
AT 1 MAY 2020
Issue of shares
Credit to equity for share-based
payment
Loss for the year &
comprehensive loss
AT 30 APRIL 2021
FIXED ASSETS
Tangible assets
Intangible assets
Investments
CURRENT ASSETS
Debtors
Cash at bank and in hand
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade and other payables
Provisions
NET CURRENT ASSETS
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Share premium account
Profit and loss reserve
SHAREHOLDERS’ FUNDS
NOTE
2021
£’000
2020
£’000
4
5
6
7
8
9
10
10
10
8
8
37,508
37,524
2,117
152,556
154,673
(611)
(2,919)
(3,530)
5
15
28,674
28,694
375
8,641
9,016
(597)
(994)
(1,591)
151,143
7,425
188,667
36,119
27,533
23,664
302,248
137,236
(141,114)
(124,781)
188,667
36,119
The Company reported a loss for the financial year ended 30 April 2021 of £16.9m (2020: £24.9m).
The financial statements of ITM Power Plc, registered number 05059407, were approved by the
Board of Directors and authorised for issue 10 September 2021.
Signed on behalf of the Board of Directors
ANDY ALLEN
Director
I T M A N N U A L R E P O R T 2 0 2 1
NOTES TO THE COMPANY
FINANC IAL STATEMENT S
1.
S I G N I F I C A N T
A C C O U N T I N G P O L I C I E S
B A S I S O F P R E P A R AT I O N
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,
financial statements have been prepared in accordance
with FRS 101 (Financial Reporting Standard 101)
‘Reduced Disclosure Framework’ as issued by the Financial
Reporting Council.
As permitted by FRS 101, the company has taken
advantage of the disclosure exemptions available
under that standard in relation to share-based payments,
financial instruments, capital management, presentation
of comparative information in respect of non-current
assets, presentation of a cash-flow statement and certain
related party transactions.
Where required, equivalent disclosures are given in the
consolidated financial statements.
In accordance with S408 of the Companies Act 2006,
the company has taken the exemption from presenting
the parent company’s individual profit and loss account.
The financial statements have been prepared on the
historical cost basis except for the re-measurement
of certain financial instruments to fair value. The principal
accounting policies adopted are the same as those set out
in note 3 to the consolidated financial statements except
as noted below.
TA N G I B L E F I X E D A S S E T S
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 basis:
Computer equipment
3 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.
I M P A I R M E N T O F TA N G I B L E A N D
I N TA N G I B L E A S S E T S
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.
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.
I N V E S T M E N T S
Balances are stated at cost less a provision for any
permanent impairment in value.
Investments are considered for any potential impairment
under the IAS 36 Impairment of Assets. Given that the
subsidiaries are in the early stages of commercial trade
and that the parent company continues to support its
subsidiaries as they build up trade, all investments have
been compared with their net asset value and where that
does not provide any immediate prospect of repayment,
especially if assets are not sufficiently liquid, investment
values are impaired down to nil value.
During the prior year, the Company invested in ITM Linde
Electrolysis GmbH (ILE), which is owned equally by both
investors (50% shares), although control is deemed to lie
with Linde for the purposes of consolidation as they
appoint the Managing Director, who also has the casting
vote. ITM Power has significant influence due its
representation on the Board. As such, ITM Power accounts
for this investment in associate using the equity method.
This means that the investment is originally recognised at
cost, with subsequent movements to reflect ITM Power’s
share of the profit or loss after the date of acquisition.
This share of the profit or loss is recognised in the ITM
Power’s profit or loss. Should any adjustments be
necessary for changes in proportionate interest arising
from changes in ILE’s other comprehensive income,
ITM Power’s share of those changes would be recognised
in the other comprehensive income. Any distributions
received will reduce the carrying amount of
the investment.
S H A R E O P T I O N C H A R G E S
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 24 of the Group financial statements.
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 (other than for market-based
performance conditions). 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.
N O T E S T O T H E C O M P A N Y
F I N A N C I A L S T A T E M E N T S
P E N S I O N C O S T S
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.
2. C R I T I C A L A C C O U N T I N G
J U D G E M E N T S A N D K E Y
S O U R C E S O F E S T I M AT I O N
U N C E R TA I N T Y
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.
I T M A N N U A L R E P O R T 2 0 2 1
2. C R I T I C A L A C C O U N T I N G J U D G E M E N T S
A N D K E Y S O U R C E S O F E S T I M AT I O N
U N C E R TA I N T Y (C O N T I N U E D)
4.
TA N G I B L E F I X E D A S S E T S
5.
I N TA N G I B L E A S S E T S
COMPUTER
EQUIPMENT
£’000
SOFTWARE
£’000
N O T E S T O T H E C O M P A N Y
F I N A N C I A L S T A T E M E N T S
K E Y S O U R C E S O F E S T I M AT I O N U N C E R TA I N T Y
R E C O V E R A B I L I T Y O F I N V E S T M E N T
The Group tests the net recoverable amounts of assets
annually for impairment, or more frequently if there are
indicators of impairment. During the year, management
considered the recoverability of its investment in subsidiary
companies, which are disclosed in note 6. The subsidiaries
continue to trade, but currently are trading at a loss,
which is seen as temporary by management.
3.
S TA F F N U M B E R S A N D C O S T S
Monthly average number of persons employed
STAFF COSTS DURING THE YEAR
(INCLUDING DIRECTORS)
Wages and salaries
Social security costs
Other pension costs
REMUNERATION OF THE HIGHEST
PAID DIRECTOR
Aggregate emoluments
Money purchase pension contributions
Under IFRS 9 Financial Instruments, most of the company
loans or subsidiary investments have been impaired to nil.
With a net asset positions at the year-end, largely held
in cash, the investment in ITM Power (Trading) Limited
was partially impaired, and the associate investment
in ITM Linde Engineering GmbH was left un-impaired.
2021
NUMBER
6
2021
NUMBER
£’000
1,007
131
34
1,172
2021
NUMBER
£’000
500
-
500
2020
NUMBER
5
2020
NUMBER
£’000
828
128
47
1,003
2020
NUMBER
£’000
323
23
346
As at 30 April 2021 pension contributions of £2,000 (2020: £2,000) due in respect of the current year had not been paid over
to the scheme. These were paid over in the following month and within statutory deadlines.
COST
At 1 May 2020
ADDITIONS
At 30 April 2021
DEPRECIATION
At 1 May 2020
Charge for the year
At 30 April 2021
NET BOOK VALUE
At 30 April 2020
At 30 April 2021
COST
At 1 May 2020
Additions
At 30 April 2021
AMORTISATION
At 1 May 2020
Charge for the year
At 30 April 2021
CARRYING AMOUNT
At 30 April 2020
At 30 April 2021
197
8
205
192
5
197
5
8
22
-
22
7
7
14
15
8
The amortisation period for externally purchased software
has been set at three years (in line with our policy for
computer equipment).
I T M A N N U A L R E P O R T 2 0 2 1
6.
I N V E S T M E N T S
LOANS TO
SUBSIDAIARY
UNDERTAKINGS
£’000
INVESTMENT IN
SUBSIDAIARY
UNDERTAKINGS
£’000
INVESTMENT IN
ASSOCIATE
£’000
COST
At 1 May 2020
Additions
Foreign exchange
Share options granted
to subsidiary employees
50% share of profit or loss
Transfers
At 30 April 2021
PROVISIONS FOR
IMPAIRMENT
At 1 May 2020
Movement in year
Transfers
At 30 April 2021
NET BOOK VALUE
At 30 April 2020
At 30 April 2021
26,823
20,546
-
-
-
(36,278)
11,091
26,823
5,358
(21,090)
11,091
-
-
112,695
-
-
354
-
36,278
149,327
84,367
6,621
21,090
112,078
28,328
37,249
346
535
(27)
-
(595)
-
259
-
-
-
-
346
259
TOTAL
£’000
139,864
21,081
(27)
354
(595)
-
160,677
111,190
11,979
-
123,169
28,674
37,508
N O T E S T O T H E C O M P A N Y
F I N A N C I A L S T A T E M E N T S
Interest is charged annually upon intercompany loan
balances at a rate of 1% over the Bank of England base
rate. During the year, previous intercompany debt has
been converted into equity in the following amounts:
ITM Power (Trading) Limited holds 100% of the ordinary
share capital 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.
SUBSIDIARY
COMPANY
AMOUNT CONVERTED
£’000
All of the above are registered at 2 Bessemer Park,
Shepcote Lane, Sheffield, South Yorkshire, S9 1DZ.
ITM Power GmbH
ITM Power (Trading)
Limited
3,579
32,699
36,278
As in previous years, a provision for credit losses (IFRS 9)
has been made in recognition that the subsidiaries are
loss-making and therefore unlikely to be able to pay their
debt to the parent company in the near-term.
A further impairment of the investments has also been
undertaken in line with IAS 36 Impairment of Assets.
The recoverable amount was estimated based on fair
value less costs to sell. The book value remaining on
investment in subsidiary undertakings reflects the net
assets available within ITM Power (Trading) Limited and
ITM Power GmbH at the year-end, to the extent to which
they are deemed to be sufficiently highly liquid e.g. cash.
The Company 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 holds 100% of the ordinary share capital
of ITM Power (Newco) Limited, a company which is
incorporated in England and Wales and its principal
activity is the retail sale of automotive fuel in specialised
stores. The company was incorporated in March and
remained dormant up until the year-end in anticipation
of activity during the next financial year.
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 was dormant during
the year.
The Company holds 100% of the ordinary share capital
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: Am Muehlgraben 6, 35410 Hungen,
Germany.
The Company holds 100% of the ordinary share capital
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: 2 Bessemer Park, Shepcote Lane,
Sheffield, S9 1DZ.
The Company holds 100% of the ordinary share capital of
ITM Power Pty Limited, a company which is incorporated
in Australia and its principal activity is that of the sale
of electrolysis equipment and hydrogen storage solutions.
Registered office: Unit 2 Level 1, 32 Main Street, Samford
Village, Queensland, Australia 4520.
The Company holds 100% of the ordinary share capital
of Orkney Hydrogen Trading Limited, 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: Suite 2, Ground Floor, Orchard
Brae House, 30 Queensferry Road, Edinburgh, EH4 2HS
The investment in associate is discussed in more detail
in note 12 to the consolidated financial statements but
relates to the investment in ITM Linde Electrolysis GmbH.
The Company holds 50% of the ordinary share capital
of ITM Linde Electrolysis GmbH, a company which is
incorporated in Germany and its principal activity is that
of the sale of large-scale electrolyser solutions. This was
a new investment in the year with Linde Engineering
GmbH. Both parties have an equal share of the company,
although control is deemed to lie with Linde for the
purposes of consolidation as they appoint the Managing
Director. ITM Power does have significant influence
however, with representation on the Board of Directors,
and as such it is being equity accounted as an investment
in associate in these statements. Registered office:
Bodenbacher Str. 80, 01277 Dresden, Germany.
I T M A N N U A L R E P O R T 2 0 2 1
7.
D E B T O R S: A M O U N T S
F A L L I N G D U E W I T H I N
O N E Y E A R
Prepayments
Amounts recoverable from employees
Other debtors
2021
£’000
318
1,771
28
2,117
2020
£’000
314
-
61
375
9.
P R O V I S I O N S
BALANCE AT 30 APRIL 2020
Provision created in the year
Use of the provision
Release in the year
BALANCE AT 30 APRIL 2021
N O T E S T O T H E C O M P A N Y
F I N A N C I A L S T A T E M E N T S
EMPLOYERS NATIONAL
INSURANCE ON SHARE OPTIONS
2020
£’000
(994)
(2,217)
292
-
(2,919)
The amounts recoverable from employees relate to the extent that employers’ national insurance can be recovered when
share options are exercised and will off-set the provision in note 9.
8.
T R A D E A N D O T H E R
PAYA B L E S
Trade creditors
Payroll creditors
Accruals and deferred income
10. S H A R E C A P I TA L
& R E S E R V E S
The movements on share capital and share premium accounts are disclosed in note 23 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.
2021
£’000
119
33
459
611
2020
£’000
228
21
348
597
11. R E L AT E D PA R T Y
T R A N S A C T I O N S
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.
The balance with ITM Linde Electrolysis GmbH is shown under Investment in associate in note 6 and the transactions making
up that amount are described more fully in note 12 to the consolidated financial statements. These were the only
transactions made with that entity in the year.
I T M A N N U A L R E P O R T 2 0 2 1
I T M
P
WO
R
E
PLC
A N N UA L R E P O R T
F O R T H E Y E A R E N D E D 30 A PR I L 2021
Company Registration Number: 05059407
Designed by
+44 (0) 115 88 00 181
ginger-root.co.uk