Final Results

RNS Number : 4872L
ITM Power PLC
13 September 2021
 

13 September 2021

 

ITM Power Plc

("ITM Power", the "Company" or the "Group")

 

Final Results for the Year to 30 April 2021

 

ITM Power (AIM: ITM), the energy storage and clean fuel group, announces final results for the year ended 30 April 2021.

 

HIGHLIGHTS

 

Developments in the year:

· First full year of operating the strategic partnership with Linde Engineering, which together with our investment in ITM Linde Electrolysis (ILE) GmbH, allows ITM Power to focus 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, and a 4MW electrolyser for the US market included within the backlog

· 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 worlds' 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

 

2021 results:

· 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 £21.4m (2020: loss £18.1m), increased 18%

· Available cash balance of £176.1m at year-end (2020: £39.9m)

 

Current trading

 

· 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

 

Current Year Guidance

· Core stack module production to be in excess of 55MW

· Completed products volume to be between 33-50MW

· Revenue recognition depends on site access, travel restrictions, and Micro-chip and steel availability

· Revenue will be heavily weighted to H2 2022

 

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 developed 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."

 

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

 

 

About ITM Power Plc

ITM Power Plc manufactures integrated hydrogen energy solutions for grid balancing, energy storage and the production of renewable hydrogen for transport, renewable heat and chemicals. ITM Power Plc was admitted to the AIM market of the London Stock Exchange in 2004. In October 2019, the Company announced the completion of a £58.8 million fundraising, including an investment by Linde of £38 million, together with the formation of a joint venture with Linde to focus on delivering renewable hydrogen to large-scale industrial projects worldwide. ITM Power signed a deal to deploy a 10MW electrolyser at Shell's Rhineland refinery. In November 2020, ITM Power completed a £172m fundraising, including a £30m investment by Snam, one of the world's leading energy infrastructure operators. ITM Power operates from the world's largest electrolyser factory in Sheffield with a capacity of 1GW (1,000MW) per annum. ITM Power received an order for the world's largest PEM electrolyser of 24MW from Linde in January 2021. Other customers and partners include Sumitomo, Ørsted, Phillips 66, Scottish Power, Siemens Gamesa, Cadent, Northern Gas Networks, Gasunie, RWE, Engie, GNVert, National Express, Toyota, Hyundai and Anglo American among others.

 

Chairman'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 announced a £172m fund raise to accelerate the technology offering, both in terms of performance of existing products but also to accelerate the development of the 5MW Gigastack, in 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 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 February 19th, 2021 and declared its first Department of Energy "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.  This 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 Plc resulting from their hard work in 2020 and 2021.

 

Sir Roger Bone

Chairman

10 September 2021

 

 

REVIEW

 

Introduction

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.

 

Building a Global Presence

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 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.

 

Covid-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 previously, 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.

 

Marketing

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 begun to lift, 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 100MW 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.

 

Bessemer Park - Global Manufacturing HQ, Sheffield

The fit out of the 1GW (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.

 

Products and technology

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.

 

Working with Linde GmbH

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 contact 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.

 

Working with Snam 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.

 

Business environment

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 6GW 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 40GW 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.

 

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.

 

Power-to-Gas

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.

 

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.

 

The OYSTER Project to Study Offshore Green Hydrogen Production

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.

 

Clean Fuel

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.

 

ITM Motive: Owner-operator of refuelling stations

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 but still wholly owned subsidiary, ITM Motive. The strategy will be to focus on larger scale refuelling for fleets of vehicles while the public stations build their revenue. 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.

 

Larger vehicle refuelling

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.

 

'Green Hydrogen for Scotland' to help reach net zero targets

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.

 

H2OzBus Project - Deploying Hydrogen Fuel Cell Bus Fleets for Public Transport across Australia

  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.

 

Green Hydrogen Project in Herten, Germany with Linde Engineering

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.

 

Industrial

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.

 

Sale to Linde of World's Largest PEM Electrolyser  

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.

 

Planned 100MW expansion of the Shell refinery project  

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 matching 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.

 

Electrolyser Sale to Linde for H2Pioneer in Austria

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 liquified 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 in which it has numerous existing customers worldwide but will be a new industry for ITM Power technology.

 

 

FINANCIAL REVIEW

 

Revenue Streams 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:

 

Product Sales

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.

 

Consulting Contracts

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.

 

Maintenance Contracts

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.

 

Fuel Sales (Own and Operate model)

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.

 

Grant Funding for Innovation and scale up

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.

 

Financial performance

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 accounting standard IFRS 15 Revenue from Contracts with Customers, which will keep our standard product sales in WIP until handover to the customer. 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 (£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.

 

Financial position

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 Plc 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 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 Plc 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 reduced 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 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: £4.3m). 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.

 

Key financials

A summary of the financial KPIs is set out in the table below:

 

 

2021

2020

2019

 

£m

£m

£m

Total Projects income, being sales and grants receivable

(as split below)

5.04

5.35

17.56

Of which: Sales Revenue

4.28

3.29

4.59

Of which: Grant recognised in the income statement

2.12

2.47

7.23

Of which: Grant recognised on the balance sheet *

(1.35)

(0.42)

5.74

Pre-tax loss

27.65

29.52

9.32

Adjusted EBITDA

(21.4)

(18.1)

(7.3)

Property, plant and equipment plus intangible assets

16.78

8.66

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.

 

Non-financial key performance indicators

 

 

FY 2021

FY 2020

FY 2019

FY 2018

FY 2017

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.

 

Events after the Balance Sheet Date

Post balance sheet, a new subsidiary was created to house the refuelling assets that were previously 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.

 

OUTLOOK

 

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.

 

 

CONSOLIDATED INCOME STATEMENT AND OTHER COMPREHENSIVE INCOME

 


Note

 

 

£'000

2021

 

£'000


 

 

£'000

2020

restated

£'000

Revenue

3


4,275



3,291

Direct costs


(12,145)



(10,839)


Grant income against direct costs

3

1,356



1,719





(10,789)



(9,120)








Gross loss



(6,514)



(5,829)








Operating costs







Research and development



(3,489)



(2,298)

Production and engineering



(8,839)



(13,919)

Sales and marketing



(1,436)



(1,386)

Administration expenses



(7,404)



(7,028)

Expected credit loss



(165)



15

Other income - government grants

3


1,190



1,049

Loss from operations



(26,657)



(29,396)








Share of loss of associate company



(595)



(3)

Investment income



83



90

Finance costs



(479)



(214)

Loss before tax



(27,648)



(29,523)








Tax



(49)



(38)








Loss for the year



(27,697)



(29,561)








OTHER TOTAL COMPREHENSIVE INCOME:

Items that may be reclassified subsequently to profit or loss

Foreign currency translation differences on foreign operations



(78)



50

Net other total comprehensive income



(78)



50








Total comprehensive loss for the year



(27,775)



(29,511)








Basic and diluted loss per share

5


(5.5p)



(7.4p)

 

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.

 

CONSOLIDATED BALANCE SHEET

 


Note


2021

£'000


2020

£'000

NON-CURRENT ASSETS






Investment in associate



259


346

Intangible assets



3,269


2,154

Right of use assets



6,399


6,520

Property, plant and equipment



13,514


6,501

Financial Asset at amortised cost



148


137

TOTAL NON-CURRENT ASSETS



23,589


15,658







CURRENT ASSETS






Inventories



6,418


4,432

Trade and other receivables



22,981


23,166

Cash and cash equivalents



176,078


39,919

TOTAL CURRENT ASSETS



205,477


67,517







CURRENT LIABILITIES






Trade and other payables



(12,857)


(14,013)

Provisions



(12,276)


(6,890)

Lease liability



(204)


(211)

TOTAL CURRENT LIABILITIES



(25,337)


(21,114)







NET CURRENT ASSETS



180,140


46,403







NON-CURRENT LIABILITIES






Lease liability



(6,282)


(6,315)







NET ASSETS



197,447


55,746







EQUITY






Called up share capital

6


27,533


23,664

Share premium account

6


302,248


137,236

Merger reserve

6


(1,973)


(1,973)

Foreign exchange reserve

6


83


161

Retained loss

6


(130,444)


(103,342)

TOTAL EQUITY



197,447


55,746

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

Note

Called up share capital

£'000

Share premium account

£'000

 

Merger reserve

£'000

Foreign exchange reserve

£'000

 

Retained loss

£'000

 

Total equity

£'000

 

 

 

 

 

 

 

 

At 1 May 2019

6

16,200

86,631

(1,973)

111

(74,760)

26,209

 

 

 

 

 

 

 

 

Transactions with Owners

 

 

 

 

 

 

 

Issue of shares

6

7,464

50,605

-

-

-

58,069

Credit to equity for share based payment

 

-

-

-

-

979

979

Total Transactions with Owners

 

7,464

50,605

-

-

979

59,048

 

 

 

 

 

 

 

 

Loss for the year

 

-

-

-

-

(29,561)

(29,561)

Other comprehensive income

6

-

-

-

50

-

50

Total comprehensive income

 

-

-

-

50

(29,561)

(29,511)

 

 

 

 

 

 

 

 

At 1 May 2020

6

23,664

137,236

(1,973)

161

(103,342)

55,746

 

 

 

 

 

 

 

 

Transactions with Owners

 

 

 

 

 

 

 

Issue of shares

6

3,869

165,012

-

-

-

168,881

Credit to equity for share based payment

 

-

-

-

-

595

595

Total Transactions with Owners

 

3,869

165,012

-

-

595

169,476

 

 

 

 

 

 

 

 

Loss for the year

 

-

-

-

-

(27,697)

(27,697)

Other comprehensive income

6

-

-

-

(78)

-

(78)

Total comprehensive income

 

-

-

-

(78)

(27,697)

(27,775)

 

 

 

 

 

 

 

 

At 30 April 2021

6

27,533

302,248

(1,973)

83

(130,444)

197,447

 

CONSOLIDATED CASH FLOW STATEMENT

 

 

 

Note

 

2021

£'000

 

2020

£'000

7

 

(20,141)

 

(12,040)

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Investment in associate

 

 

(535)

 

(349)

Purchases of property, plant and equipment

 

 

(14,422)

 

(8,986)

Finance asset (security deposit)

 

 

-

 

(137)

Capital Grants received against purchases of non-current assets

 

 

3,992

 

89

Proceeds on disposal of Property, Plant & Equipment

 

 

3

 

1

Payments for intangible assets

 

 

(1,524)

 

(1,771)

Interest received

 

 

83

 

90

Net cash used in investing activities

 

 

(12,403)

 

(11,063)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Issue of ordinary share capital

 

 

173,835

 

59,299

Costs associated with fund raise

 

 

(4,954)

 

(1,230)

Payment of lease liabilities

 

 

(156)

 

(236)

Net cash from financing activities

 

 

168,725

 

57,833

 

 

 

 

 

 

Increase in cash and cash equivalents

 

 

136,181

 

34,730

Cash and cash equivalents at the beginning of year

 

 

39,919

 

5,173

Effect of foreign exchange rate changes

 

 

(22)

 

16

Cash and cash equivalents at the end of year

 

 

176,078

 

39,919

 

 

 

 

 

 

 

NOTES

 

1.  GENERAL INFORMATION

ITM Power Plc is a public company incorporated in England and Wales under the Companies Act 2006.  The registered office is at 2 Bessemer Park, Shepcote Lane, Sheffield, South Yorkshire S9 1DZ.

 

The summary accounts set out above do not constitute statutory accounts as defined by Section 434 of the UK Companies Act 2006. The summarised consolidated balance sheet at 30 April 2021, the summarised consolidated income statement and other comprehensive income, the summarised consolidated statement of changes in equity and the summarised consolidated cash flow statement for the year then ended have been extracted from the Group's 2021 statutory financial statements upon which the auditor's opinion is unqualified and did not contain a statement under either sections 498(2) or 498(3) of the Companies Act 2006. The audit report for the year ended 30 April 2020 did not contain statements under sections 498(2) or 498(3) of the Companies Act 2006. The statutory financial statements for the year ended 30 April 2020 have been delivered to the Registrar of Companies. The 30 April 2021 accounts were approved by the directors on 10 September 2021, but have not yet been delivered to the Registrar of Companies.

 

2.  SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting

The summary accounts are based on the consolidated financial statements that have been prepared in accordance with international accounting standards, in conformity with the requirements of the Companies Act 2006.

 

They have been prepared under the assumption that the Group operates on a going concern basis and on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

 

Going Concern

The directors have prepared a cash flow forecast for the period ending 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.

3.  Revenue, OPERATING SEGMENTS & INCOME FROM GOVERNMENT GRANTS

All revenues are derived from continuing operations. An analysis of the Group's revenue is as follows:

 

 


2021

£'000



2020

£'000

Revenue from product sales recognised over time


1,697



2,256

Consulting contracts recognised over time


2,108



470

Maintenance contracts recognised at a point in time


112



48

Fuel Sales


153



367

Other (e.g. scrap sales)


205



150

Revenue in the Consolidated Income Statement


4,275



3,291

Grant income shown against cost of sales


1,356



1,719

Grant income (claims made for projects)

761



753


Other government grants (R&D claims)

404



252


Other government grants (Covid-19 furlough scheme)

25



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.

Segment Information

ITM Power Plc is organised internally to report to the Group's Chief Operating Decision Maker, the Chief Executive Officer, on the financial and operational performance of the Group as a whole. The Group's Chief Operating Decision Maker is ultimately responsible for entity-wide resource allocation decisions, evaluating performance on a group-wide basis and any elements within it on a combination of information from the executives in charge of the Group and Group financial information.

 

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:


2021

£'000

2020

£'000

Power-to-Gas

(of which product sales recognised over time £42,000)

210

 

332

 

Refuelling

(of which product sales recognised over time -£215,000)

(38)

 

1,247

 

Industrial

(of which product sales recognised over time £1,870,000)

1,870

1,147

Other

2,233

565

Revenue in the Consolidated Income Statement

4,275

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.

 

Geographical Analysis

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:

 

 

 

  2021

£'000

  2020

£'000

United Kingdom

2,505

828

Germany

(of which product sales recognised over time £1,893,000)

1,966

1,167

Rest of Europe

(of which product sales recognised over time -£196,000)

(196)

1,118

United States

-

178


4,275

3,291

 

Included in revenue are the following amounts, which each accounted for more than 10% of total revenue:

 

 


  2021

£'000

 

 2020

£'000

Customer A

Industrial

1,870

1,140

Customer B

Other

2,027

410

Customer C

Refuelling

<10%

854

 

4.    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;



2021

£'000

2020

£'000

Loss before interest and tax


(26,657)

(29,396)

Add back:




Depreciation


2,321

2,440

Impairment


1,713

5,588

Amortisation


274

197

Loss on disposal


173

473

Share based payment charge


799

2,625



(21,377)

(18,073)

5.  LOSS PER SHARE

The calculation of the basic and diluted earnings per share is based on the following data:



2021
£'000

2020
£'000

Loss for the purposes of basic and diluted loss per share being net loss attributable to owners of the Company


(27,697)

(29,561)





Number of shares




Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share


507,262,743

  398,184,707





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).

 

6.  CALLED UP SHARE CAPITAL AND RESERVES

 

 

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.

7.  notes to the cash flow statement



2021

£'000

2020

£'000

Loss from operations


(26,657)

(29,396)

Adjustments:




Depreciation


2,321

2,440

Share based payment


595

978

Loss on disposal


173

473

Impairment


1,712

5,588

Amortisation


274

197

Operating cash flows before movements in working capital


(21,582)

(19,720)

(Increase) in inventories


(1,987)

(2,525)

Decrease in receivables


185

7,964

Decrease in payables


(1,156)

(2,882)

Increase in provisions


4,857

5,285

Cash used in operations


(19,683)

(11,878)

Interest paid


(479)

(214)

Income taxes received


21

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.

-ends-

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