Final Results

ITM Power PLC
31 July 2006


Embargoed until 0700hrs, 31 July 2006


                                 ITM POWER PLC

                            ('ITM' or 'the Company')


               Full Year Results for the year ended 30 April 2006


Highlights:


   •Successfully completed all milestones set out at the time of the IPO -
    achieved earlier than expected


   •Successfully tested its low cost membrane technology in excess of 3,500
    hours of operation without evidence of degradation. ITM's membrane
    technology has now reached 5,000 hours of operation without evidence of
    degradation.


   •Costs further reduced with the elimination of high cost platinum
    catalysts


   •Principal patents granted and IP portfolio increased


   •New demonstration facility at Sheffield laboratories


   •Raised £29.4m through placing of ordinary shares with institutional
    investors in May 2006


   •Loss for the year increased from £1.2m to £1.9m in line with budget


   •Capital expenditure increased due to the additional test equipment and
    expansion to our laboratories in Sheffield


   •New development programme initiated to develop an electrolyser refuelling
    system for use in bi-fuel hydrogen-petrol internal combustion engine powered
    cars


   •New objectives introduced in addition to milestones set out in January
    2006


   •Appointment of new non executive director and electrolyser business
    development officer


Stephen Massey, Chairman commented: 'Over the past two years, we have built a
solid foundation as a platform to underpin the route to commercialisation. We
remain on track to achieve the first of our new technical milestones by October
2006 and we will continue to progress with development plans within our target
markets. We also hope to announce further results on our hydrogen technologies
and remain focused with increasing emphasis on the commercialisation of ITM's
technology. I am confident that ITM is in a strong position to achieve its
business objectives through strong science, people and finances.'


For further information please contact:

Gemma Chandler                    Simon Hudson/ Clemmie Carr
ITM Power Plc                     Tavistock Communications
Tel: [phone]                Tel: [phone]
Mob: [phone]


or visit www.itm-power.com





Chairman's Statement

I am pleased to report the full year results for the year ended 30 April 2006.
On behalf of the Board, I would like to thank our existing shareholders for
their continued support and welcome the new shareholders resulting from the
placing in May 2006.


World Energy Review

Over the past year, concern about the ability of oil and other fossil fuels to
meet our increasing energy demands has doubled. In addition, evidence that
fossil fuels are perceived to be altering the global climate through greenhouse
gas emissions has also been widely recognised.


ITM believes that there is no primary energy shortage, but there is a technology
gap. The amount of energy mankind consumes in a day is roughly equivalent to 10
seconds of sunlight hitting the earth. In fact, renewable energy, which includes
wind, wave solar and hydro, is so abundant that it far exceeds our capabilities
to effectively use it. Historically, this enormous amount of renewable energy
has not been utilised because there has been no economic system for converting
it into a storable fuel. The solution lies in the development of a cost
effective sustainable energy system. To achieve this, issues of performance,
capital cost, running costs, efficiency and disposal costs all need to be
considered. Efficiency alone is not sufficient and we believe our technology
offers an overall cost effective and practical solution to these issues.


Financials

The operating loss for the year increased from £1.2m to £1.9m, in line with
budget. Capital expenditure increased due to the additional test equipment and
expansion of our laboratories in Sheffield. Additionally, we have strengthened
the scientific and technical team at our laboratories as well as strengthening
our management and corporate team at our head office in Cambridge.


At the year end, the Company held cash at the bank and on deposit of £5.4m.
Subsequent to the year end, the Company raised £29.4m through placing of
ordinary shares with institutional investors. The strengthened balance sheet
enables ITM to take the next steps on the road to commercialisation through
developing larger prototypes, conducting field trials, establishing agreements
with complementary third parties, while protecting the Company's intellectual
property.


ITM maintained tight control over cash expenditures during the year in review
and we will continue to monitor budgets carefully. Our costs will gradually
increase over the next year to support accelerated development and engineering
activity.


The Board is not recommending payment of a dividend in accordance with the
dividend policy stated at the time of the IPO.


Review

I am pleased to report that during the year in review, ITM Power has
successfully completed all the milestones set out at the time of the IPO; these
were achieved earlier than expected. The major focus of our work was to
determine the cost and durability of electrolysers prior to embarking on
commercial negotiations. This was in order to assess commercial viability and to
file patents on the additional IP necessary to protect our core technologies.
ITM successfully tested its low cost membrane technology in excess of 3,500
hours of operation without evidence of degradation. Since the end of the
financial year we have surpassed 5,000 hours without degradation. Furthermore,
to add to these successes, ITM has further reduced costs with the elimination of
high cost platinum catalysts. Given low cost input electricity, these combined
technological advances can enable electrolysers to produce hydrogen cost
competitively with petrol in Europe. We are reviewing the best available
hydrogen storage systems that are compatible with our electrolysers.


During the past two years, ITM has devoted considerable effort to its
electrolyser programme, because it has become apparent to the Company that the
absence of a low cost, durable electrolyser is a major obstacle to the
implementation of a sustainable energy system. Electrolysers could
simultaneously address the availability and cost of hydrogen fuel as well as the
infrastructure that will enable the adoption of fuel cells.


Other significant research & development achievements arising during the year in
review include:


   •In September 2005, the European Patent Office formally allowed ITM's core
    patent application on electrochemical cells using hydrophilic polymers and
    the patents were granted on 21 December 2005. The application covers both
    low cost materials and novel manufacturing processes used separately or in a
    combination to produce membrane electrode assemblies for use in fuel cells
    and electrolysers.  The core patent has also been granted in Australia,
    Eurasia and South Africa.


    We have also increased our IP portfolio through 1 new patent granted and 7 new
    patents filed. We have a total of 19 active patent applications.


   •In November 2005, ITM announced it had filed patent applications on both
    the invention of a composite membrane of enhanced properties (including
    specifically an acid / alkaline laminate) and on the use of control grids to
    act directly and control the electrical activity within a fuel cell. This
    technology has the potential to improve the efficiency of both fuel cells
    and electrolysers and offers a unique route to controlling the output from
    fuel cells. Research on the composite membranes continues to yield
    encouraging results.


   •In April 2005, the BOC Foundation awarded ITM Power a grant and assisted
    in the establishment of a high-level expert research committee to
    investigate the application of the Company's electrolyser technology to
    optimise the capture and use of renewable energy sources such as wind and
    solar power. Both parties are pleased to continue the collaboration for a
    further year with the objective of continuing the work of defining test and
    evaluation procedures.


   •In October 2005, ITM announced that it had concluded an agreement with
    Heriot Watt University to fund research on the production of tertiary
    hydrocarbons by combining electrolytic hydrogen from renewable sources and
    carbon dioxide recovered from the atmosphere. Initial results indicated that
    it was possible to create hydrocarbons having molecular weights
    significantly greater than alcohol. ITM filed a patent application covering
    the use of 'renewable' hydrogen and 'waste' carbon dioxide to permanently
    sequester carbon dioxide in commercially valuable products e.g. bitumen.
    Preliminary results on the production of liquid hydrocarbons using
    electrolytic hydrogen appear very encouraging.


   •In April 2006, ITM built a demonstration facility at its Sheffield
    premises in which its electrolyser technology is used to convert renewable
    electricity into clean (carbon free) hydrogen. The hydrogen is stored and
    reconverted into:


(a) Low voltage electricity using an ITM fuel cell equipped with a proprietary
ITM electronic controller as would typically be required to drive electronic
equipment. A DVD player is used in our demonstration.


(b) Mains voltage electricity using a generator (modified by ITM to run on
hydrogen) which is demonstrated powering lighting, heating and refrigeration
equipment and small electric motors.


(c) Heat using a commercially available gas hob (modified by ITM to run on

hydrogen).


(d) Refrigeration using a commercially available gas fridge modified by ITM


These demonstrations represent a firm basis for seeking commercially viable
applications of ITM's technology because the relevant equipment is already well
established and in many cases is available 'off the shelf'.


Recent Developments

As the scientific work continues, we are also moving into the engineering and
development phase to produce devices suitable for field trial testing. ITM's
initial focus is to establish market led relationships that link energy
producers with consumers. We will work either independently or in third party
collaborations to develop prototypes and conduct field trials in preparation for
commercialisation. We intend to continue to expand and protect our intellectual
property base, including a growing portfolio of trade marks and designs. Our
objective is to maximise income potential by controlling key processes and
important aspects of the storage and use of sustainable energy.


Since the year end, we have initiated a development programme in one of our
target markets. ITM announced on 5 July 2006 it had agreed to commission The
University of Hertfordshire to develop a refuelling system for bi-fuel
hydrogen-petrol internal combustion engine powered cars. A low cost ITM
electrolyser will be applied to provide the hydrogen refuelling system. The
vehicle will be able to operate using hydrogen before automatically switching to
petrol. Half of all cars in the USA travel only 25 miles a day (Source:
Scientific American, April 2006), for that reason, we have decided to set a
range of 25 miles running on hydrogen as an initial objective for the vehicle.


In addition to our commercial plans we have expanded the scope of our work and
have introduced new objectives in addition to those milestones set out in
January 2006.


Milestones set out in January 2006:

   •Electrolyser:  a 5kW electrolyser stack for delivery by December 2006
                   (designed for assembly into 20kW modules)

   •Electrolyser: a 25kW electrolyser stack for delivery by December 2007
                   (designed for assembly into 100kW modules)

   •Fuel Cell:    a 4W fuel cell prototype module together with the rapid
                   refueling cartridge and output power conditioning electronics
                   necessary to operate electronic devices by December 2006
   •Fuel Cell:    a 20W, 2-liquid fuel cell stack engineered to

                  •pre-production standard, including fuel supply cassette

                  •and interface electronics, by December 2007

   •Production    the development of 'production ready' cell modules made
    Process

                  •by a fully engineered 'one-step' production route for 
                   delivery by December 2007
 

Additional objectives now include:


Pressure


Hydrogen storage will always be an issue due to the large volumes of gas needed
to compete with liquid fuels. Increasing the pressure of a gas reduces its
volume. I am pleased to report that we have begun testing our electrolysers with
the initial objective of achieving an electrolyser operating pressure of 75 bar
by the end of 2007. This would be compatible with gas mains pressure. ITM's
objective is to achieve this in the following stages:

Objective date                         Target Pressure
December 2006                          20 bar
June 2007                              50 bar
December 2007                          75 bar


Fuel cells


It has always been the belief of ITM that unless hydrogen fuel was readily
available, the adoption of solid polymer fuel cells would be severely limited.
Following the success of our electrolyser programme, we now propose to apply the
same design philosophy to fuel cells. We have begun development work using our
low cost materials and processes with the objective of developing low cost and
durable hydrogen / oxygen fuel cells. The availability of a low cost
electrolyser and low cost fuel cell will represent a valuable commercial
opportunity.


The 250W hydrogen/oxygen fuel cell that was completed in December 2005 (as a
part of the IPO milestone objectives set in June 2004) achieved a power density
of 160mW/cm2. On the basis of this power density this device was costed at
approximately $2000/kW which was considered to be uncompetitive.


Fuel cell capital costs can be reduced by a number of routes including increased
power density. We now plan to demonstrate fuel cell operation with a power
density of 360mW/cm2 by the end of October 2006. The technology which will be
developed in this fuel cell programme will be costed on the basis of production
volumes for a 10kW device, but only demonstrated in smaller devices between 100W
and 500W. The October 2006 device will reflect an equivalent cost of $900/kW.


Our future objectives are to apply the wide range of technological options
available to ITM to achieve high power production devices with the following
cost base:

Objective date                   Target Device Costing
                                 ($/kW)
December 2006                     700
June 2007                         500
December 2007                     250


Board and Staff

In August 2005, Gervas Steele resigned from the Board as a non-executive
director to pursue other business interests. In January 2006, John Wreford
retired from the Board as Finance Director. Marcus Scott joined ITM in November
2005 as Chief Financial Officer to undertake the financial planning and Company
Secretariat duties of the Company.


I am delighted to welcome Roger Putnam to the Board as non executive director.
Roger joined the Board on 15 May 2006. He is the former Chairman of Ford of
Britain, and currently President of the Society of Motor Manufacturers and
Traders and a member of the Government's Energy Review Partnership. Roger's
wealth of experience in management, sales and marketing within global businesses
and his relationships within government and industry is already proving
invaluable to ITM.


I am also delighted to welcome Professor Marcus Newborough to the Company,
Marcus was appointed after the period in review, as Electrolyser Business
Development Officer. Marcus's experience and skill in interfacing between
multiple energy systems and electrolysers will be invaluable in the strategic
planning and commercialisation of ITM's electrolyser technology.


We are currently recruiting and strengthening the technical team in Sheffield
and building a new commercial team in Cambridge.


I would like to take this opportunity to welcome the new members of staff to ITM
and thank all our staff for their hard work during the year.


Outlook

Over the past two years, we have built a solid foundation as a platform to
underpin the route to commercialisation. We remain on track to achieve the first
of our new technical milestones by October 2006 and we will continue to progress
with development plans within our target markets. We also hope to announce
further results on our hydrogen technologies and remain focused with increasing
emphasis on the commercialisation of ITM's technology. I am confident that ITM
is in a strong position to achieve its business objectives through strong
science, people and finances.


Stephen Massey

Chairman

31 July 2006



CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 30 April 2006

                                              Note     Year ended     Year ended
                                                    30 April 2006  30 April 2005
                                                      (audited)      (audited)
                                                              £              £

Administrative expenses - research and
development                                          (1,608,044)      (930,525)
- share option charges                                        -       (175,000)
- other                                                (901,462)      (745,938)
                                                       --------        -------

                                                     (2,509,506)    (1,851,463)

Other operating income                                  361,678        241,306
                                                        --------        -------

OPERATING LOSS                                       (2,147,828)    (1,610,157)

Interest receivable - bank interest                     290,212        346,461
                                                        --------        -------

LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION          (1,857,616)    (1,263,696)

Tax on loss on ordinary activities             1            208         58,108
                                                        --------        -------

LOSS FOR THE FINANCIAL YEAR                          (1,857,408)    (1,205,588)
                                                        ========        =======

LOSS PER ORDINARY SHARE
Basic and diluted                              2           (2.0p)         (1.3p)
                                                        ========        =======



All activities derive from continuing operations.


There are no recognised gains or losses for the current financial year or
preceding financial year other than as stated above. Therefore no statement of
total recognised gains and losses are presented in this financial information.



CONSOLIDATED BALANCE SHEET
Year ended 30 April 2006

                                          Note     Year ended         Year ended
                                                30 April 2006      30 April 2005
                                                  (audited)          (audited)
                                                          £                  £

FIXED ASSETS
Tangible assets                                     827,402            396,481
                                                   --------            -------

CURRENT ASSETS
Debtors                                             594,203            464,500
Investments - cash on deposit                     5,400,000          7,550,000
Cash at bank and in hand                             62,564            193,469
                                                   --------            -------

                                                  6,056,767          8,207,969
                                                   --------            -------
CREDITORS: amounts falling due                     (293,440)          (161,799)
within one year
                                                   --------            -------

NET CURRENT ASSETS                                5,763,327          8,046,170
                                                   --------            -------

TOTAL ASSETS LESS CURRENT LIABILITIES,
BEING NET ASSETS                                  6,590,729          8,442,651
                                                   ========            =======

CAPITAL AND RESERVES
Called up share capital                    3      4,598,513          4,593,713
Share premium account                      3      8,103,536          8,102,850
Merger reserve                             3     (1,972,820)        (1,972,820)
Profit and loss account                    3     (4,138,500)        (2,281,092)
                                                   --------            -------

EQUITY SHAREHOLDERS' FUNDS                 3      6,590,729          8,442,651
                                                   ========            =======





CONSOLIDATED CASH FLOW STATEMENT

Year ended 30 April 2006


                                              Note     Year ended     Year ended
                                                    30 April 2006  30 April 2005
                                                      (audited)      (audited)
                                                              £              £

Net cash outflow from operating activities     4     (1,910,873)    (1,355,823)

Returns on investments and servicing of
finance                                                 189,832        121,503

Taxation                                                 58,316         43,555

Capital expenditure and financial
investment                                             (641,660)      (383,212)
                                                        --------        -------

Net cash outflow before management of
liquid resources and financing                       (2,304,385)    (1,573,977)

Management of liquid resources                        2,150,000     (7,274,524)

Financing                                                 5,486      9,126,563
                                                        --------        -------

(Decrease) increase in cash                    5       (148,899)       278,062
                                                        ========        =======


NOTES TO THE FINANCIAL INFORMATION

1. tax on loss on ordinary activities

In 2005, tax receivable arose from research and development tax credits claimed.
For 2006, the group did not qualify to claim these tax credits.

2. loss per ordinAry share

The calculations of earnings per share are based on the following losses and
number of shares:
                                                                       Basic and
                                                                         diluted
                                               Year ended             Year ended
                                            30 April 2006          30 April 2005
                                              (audited)               (audited)
                                                      £                       £

Retained loss for the financial period       (1,857,408)            (1,205,588)
                                               ========                =======

Weighted average number of ordinary shares
for basic loss per share                     91,899,614             89,501,418
                                               ========                =======



FRS 14 requires presentation of diluted earnings per share when a company could
be called upon to issue shares that would decrease net profit or increase net
loss per share. For a loss making company with outstanding share options, the
net loss per share would be decreased by the exercise of options, and hence no
adjustment has been made to the diluted loss per share as presented.


3. RESERVES AND RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS

          Called up share Share premium  Merger reserve Profit and loss  Shareholders'
                  capital       account                         account         funds
                      £             £               £               £               £

At 1 May 
2005          4,593,713     8,102,850      (1,972,820)     (2,281,092)     8,442,651
Retained
loss for the
year                  -             -               -      (1,857,408)    (1,857,408)

Shares issued
in the year       4,800           686               -               -          5,486
(net of
Expenses)
               --------      --------        --------        --------     ----------
At 30
April         4,598,513     8,103,536      (1,972,820)     (4,138,500)     6,590,729
2006           ========      ========        ========        ========     ==========

4. RECONCILIATION OF OPERATING LOSS TO OPERATING CASH FLOWS

                                                    Year ended       Year ended
                                                 30 April 2006    30 April 2005
                                                      (audited)        (audited)
                                                             £                £

Operating loss                                    (2,147,828)      (1,610,157)
Depreciation Charge                                  210,739           73,610
Loss on disposal of fixed assets                           -           10,455
Increase in debtors                                  (87,431)         (35,004)
Increase in creditors                                113,647           30,273
UITF 17 charge                                             -          175,000
                                                     ---------        ---------
Net cash outflow from operating activities        (1,910,873)      (1,355,823)
                                                     =========        =========

5. ANALYSIS AND RECONCILIATION OF NET FUNDS

                                1 May 2005         Cash flow       30 April 2006
                                       £                 £                   £

Cash at bank and in hand         193,469          (130,905)             62,564
Bank overdraft                         -           (17,994)            (17,994)
                                                   --------

                                                  (148,899)
Current asset investments      7,550,000        (2,150,000)          5,400,000
                               ---------          --------           ---------
Net funds                      7,743,469        (2,298,899)          5,444,570
                               =========          ========           =========


                                                     Year ended       Year ended
                                                  30 April 2006    30 April 2005
                                                    (audited)        (audited)
                                                            £                £

(Decrease) increase in cash in the year              (148,899)         278,062
Cash (inflow) outflow from (decrease) increase
in liquid resources                                (2,150,000)       7,274,524
                                                    ---------        ---------

Change in net funds resulting from cash flows      (2,298,899)       7,552,586
Net funds at beginning of year                      7,743,469          190,883
                                                    ---------        ---------
Net funds at end of year                            5,444,570        7,743,469
                                                    =========        =========



6. FINANCIAL INFORMATION


The financial information set out in the announcement does not constitute
statutory financial statements for the years ended 30 April 2005 or 30 April
2006 within the meaning of section 240 of the Companies Act 1985, but is derived
from these statutory accounts, which have been reported on by the Company's
auditors. Statutory accounts for the year ended 30 April 2005 have been
delivered to the Registrar of Companies and those for 2006 will be delivered
following the Company's Annual General Meeting. The auditors have reported on
those accounts; their reports were unqualified and did not contain adverse
statements under section 237(2) or (3) of the Companies Act.


The financial information is prepared on the basis of accounting policies as
stated in the previous year.


Copies of the announcement will be available for collection from the Company's
head office at Orkney House, Great Chesterford Court, Great Chesterford, Saffron
Walden, CB10 1PF.





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