Itm Power Regulatory News (ITM)

19 July 2012

ITM Power plc

("ITM Power" or the "Company")

Final Results for the year ended 30 April 2012

ITM Power (AIM: ITM), the energy storage and clean fuel company, is pleased to announce final results for the year ended 30 April 2012.

INTRODUCTION

HIGHLIGHTS

Prof Roger Putnam, Chairman of ITM Power commented: "From a platform of commercially launched electrolyser products, ITM Power has successfully positioned itself to address the clear commercial opportunities within energy storage and clean fuel generation from renewable power. Our work to build key relationships has placed ITM Power at the heart of the two initiatives, UK H2Mobility and EcoIsland, which will define the deployment of hydrogen fuel and energy systems in the UK."

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

About ITM Power

ITM Power plc was admitted to the AIM market of the London Stock Exchange in 2004 and raised its initial funding of £10m gross in its IPO. A further funding round of £28.5m was completed in 2006. The Company has now made the transition from a research and development company to a product manufacturer and technology provider. The Company has both a strong base of intellectual property and engineering expertise for providing complete hydrogen solutions. The Company has been successful in developing strategic industry partnerships in the following projects:

·; 700bar Dispensing Collaboration in Germany

http://www.itm-power.com/news-item/700bar-dispensing-collaboration-in-germany/

·; Marks & Spencer Pilot Materials Handling Fuel Cell Project

http://www.itm-power.com/news-item/ms-agreement/

·; UKH2Mobility with leading auto OEM's, UK Gov't and industrial gas companies

http://www.itm-power.com/about-itm/partners/?id=49

·; EcoIsland with Toshiba, IBM, Cable & Wireless, SSE and Southern Water

http://www.itm-power.com/about-itm/partners/?id=46

·; Boeing Unmanned Aircraft System Refueller

http://www.itm-power.com/news-item/agreement-with-boeing/

·; Electrolyser Distribution with Horizon Fuel Cells

http://www.horizonfuelcell.com/fuel_solutions_hbox.htm

·; CREO with Ford, Jaguar Land Rover and Johnson Matthey

http://www.itm-power.com/about-itm/partners/?id=45

·; Exclusive European distribution rights for Materials Handling Fuel Cells

http://www.itm-power.com/news-item/exclusive-european-distribution-rights-for-materials-handling-fuel-cells/

·; Sale of Equipment to EADS

http://www.itm-power.com/news-item/sale-of-equipment-to-eads/

·; EU Grant Award for PEM Water Electrolysers Coupled to Renewable Power Sources

http://www.itm-power.com/news-item/eu-grant-award-for-pem-water-electrolysers-coupled-to-renewable-power-sources/

CHAIRMAN'S STATEMENT

I am pleased to announce final results for the year ended 30 April 2012 and to update shareholders on developments at our Group.

Business Environment

ITM Power is now participating in consortia that include very large multinational companies with which we are now establishing and strengthening working relationships. It also means that our expertise is now in demand from other companies seeking to enter the hydrogen space and, as a result, our participation in projects is being sought, rather than ITM Power having to spend time and effort fighting to join consortia.

We have now arrived at a tipping point, both for hydrogen and ITM Power, from which wide scale adoption and an acceleration in our own commercial traction will follow.

Financials

The pre-tax loss for the year under review increased to £6.5m (2011: £6.4m) and net cash burn increased to £5.6m (2011: £4.8m) in line with the increase in activity. Total grant funding recognised in the period was £985,000 and new grant project awards were £2,734,000 up very significantly from last year and a further £1,200,000 of EU grants are in negotiation.

Interest rates remain depressed and risk remains the key priority in the choice of the financial institutions in which the Group chooses to place its funds. The Group holds over 99% of its funds on deposit with its bankers, NatWest. Deposit rates are monitored regularly with funds being placed in the most beneficial interest-bearing accounts. The Group's cash and short-term deposit balances at 30 April 2012 totalled £6.6m (30 April 2011: £12.2m). The Board is not recommending the payment of a dividend for the period in accordance with our stated policy.

Board and Staff

I am delighted to welcome our new (non-statutory) Director of Engineering Dr Charles Johnstone to the company; Charles brings a wealth of experience in taking compliant products through to manufacturing and he joins ITM at an exciting and critical time. Our staff has again made a huge effort to rise to the challenges set before them with great enthusiasm. I would like to thank all of our people for their contribution to the advances made particularly in the area of product compliance.

Outlook

From a platform of commercially launched electrolyser products, ITM has successfully positioned itself to address the clear commercial opportunities within energy storage and clean fuel generation from renewable power. The important work of building key relationships has placed ITM Power at the heart of the two initiatives, UK H2Mobility and EcoIsland, which will define deployment of hydrogen fuel and energy systems in the UK.

On top of this, we have gathered hard evidence of HFuel reliability from the gruelling HOST trial programme and the achievement of approval for operation in Germany. Together with the development of a larger stack platform for MW scale systems, these achievements - discussed in more detail in the Chief Executive's Review below - demonstrates that the Company has done everything in its power to both enable and unlock these expanding hydrogen markets.

This work continues and combined with a building pipeline of technology advances and partnerships, I am more positive than ever that ITM Power's future is a bright one.

Prof Roger Putnam CBE

Chairman

18 July 2012

CEO's REVIEW

ITM Power is now part of the two critical projects that will advance the roll-out of hydrogen infrastructure in the UK, EcoIsland and the H2Mobility program. Our efforts to bring to the market energy storage units that produce clean fuel for transport are now leading to many productive relationships.

Clean Fuel

HFuel the Company's transportable hydrogen refuelling system has achieved CE compliance and a permit to operate in Germany. This represents important progress, enabling commercial sales of such systems to commence in the EU. HFuel has undergone a rigorous assessment and inspection by TÜV SÜD in both the UK and Germany, including an audit of safety documentation and compliance with relevant European Directives and the strict German Merkblaat standard. TÜV SÜD has issued its Expert Report enabling us to gain approval to operate and ultimately sell the HFuel refuelling platform in Germany. We also operated HFuel in the Ride and Drive area of the Hannover Messe and the All-Energy show in Aberdeen, refuelling the Honda Clarity, the Hyundai iX35 FC-SUV and the HyCologne fuel cell bus.

UK H2Mobility

In January 2012 ITM announced its participation in the UKH2Mobility initiative, the new Government and cross industry programme to make hydrogen powered travel in the UK a reality. The ground breaking project will ensure the UK is well positioned for the commercial roll-out of hydrogen fuel cell electric vehicles. The new programme brings together three Government Departments and industrial participants from the utility, gas, infrastructure and global car manufacturing sectors. The group will evaluate the potential for hydrogen as a fuel for Ultra Low Carbon Vehicles in the UK before developing an action plan for an anticipated roll-out to consumers in 2014/15.

EcoIsland

The EcoIsland project brings together within a single island energy system a critical mass of smart energy technologies to demonstrate how a future energy system can be configured.

With renewable generation including wind, solar, tidal and geothermal the island will need to match supply and demand using battery energy storage, hydrogen energy storage and demand side management. These technologies will be coordinated centrally by smart grid technologies supplied by IBM, Cable & Wireless, SSE and Toshiba.

ITM Power is the hydrogen fuel partner and will supply hydrogen refuelling equipment controlled by smart grid technology to optimize both renewable energy storage and the provision of fuel to both fuel cell vehicles and Hydrogen Internal Combustion Engine commercial vehicles. The intention is that the island will also be a showcase for advanced low emission hydrogen vehicles being launched from 2013.

Materials Handling Vehicles

We successfully completed the UK's first hydrogen powered materials handling trial with supermarket chain Marks & Spencer. The six week trial saw the Company's HFuel system together with four fuel cell powered manual handling vehicles deployed at the Prologis Distribution Centre in Bradford.

ITM Power has signed an agreement with Infintium Fuel Cells under which ITM has exclusive import rights for the European market, enabling ITM to offer a full turnkey solution to the materials handling sector.

The agreement will also facilitate the development of a European customer base in the rapidly expanding materials handling market where traditional battery and engine technology is being replaced by fuel cells powered by hydrogen. Infintium Fuel Cells will work closely with ITM to gain CE marking for its systems that can be fitted to all classes of pallet and fork lift trucks as well as airport baggage handling and utility vehicles. ITM Power will contribute its experience of gaining CE conformity for hydrogen systems to accelerate commercial availability.

Infintium Fuel Cells are currently working with several major US retailers and distributors to gain supply chain qualification. Our close collaboration with Infintium should also allow access to their portfolio of US customers with a view to introducing them to our green hydrogen generation and refuelling solutions.

We can now offer a full turnkey solution to the materials handling sector, including on-site hydrogen generation, refuelling and fuel cell systems. The successful trials of the Company's HFuel product platform, together with measured operational benefits of fuel cell powered materials handling vehicles, has enabled ITM Power to begin to engage with potential retail, distribution and logistics customers. We offer, today, a tailored, integrated solution - including modelling, on-site trials, supply of equipment and maintenance contracts.

Aerospace

We signed an Equipment Development and Lease Agreement with Boeing for the development, assembly and field trials of an off-grid refuelling station for Unmanned Aircraft Systems. During the last few years these systems have seen sustained growth, mainly through the development and maturing of military applications and followed by wide recognition of their possibilities in civilian applications which include: border control, coastguard, law enforcement, pipeline and power line monitoring, earth and environmental observations, communications and many more. These systems can potentially offer lower cost and investment risk as well as low infrastructure requirements for tactical intelligence, surveillance and reconnaissance (ISAR).

ITM has also sold a hydrogen generation system to the European Aeronautic Defense and Space Company (EADS) for use by its research arm Innovation Works in its Energy and Propulsion laboratory.

Energy Storage

The UK quotient of renewable energy generation is due to go up significantly over the next decade and this will dramatically increase the unpredictability of supply. Coupled with existing curtailment traffic and distribution network bottlenecks, this presents a significant technical and financial challenge. This is true throughout Europe, where energy storage is now seen as essential.

At the Hannover Messe, from 23-27 April and All-Energy in Aberdeen from 23-24 May, ITM Power launched our new high pressure and high volume stack that forms the basis of its Megawatt Scale energy storage plant. The hydrogen production plant is packaged in a single 20ft standard ISO container and is a 1MW load that can be demand side managed by power companies with a response time of one second for both turn on and turn off. The hydrogen produced can be used for both vehicle refuelling and direct injection of hydrogen into the gas grid. Injecting hydrogen into the gas grid is a simple and pragmatic form of energy storage that also de-carbonises the gas grid in question.

The new electrolyser stack is self-pressurising to 80bar which means it can be used to inject hydrogen directly into the high or low pressure gas grid without the need for additional compression plant. If the hydrogen production unit is used for vehicle refuelling, the amount of energy required for compression is reduced. If 350bar refuelling is being used then the high pressure electrolysis removes the need for one stage of mechanical compression which reduces cost.

The 1MW container produces approximately 400kg/day of hydrogen if run continuously. The design is a modular system which can be used to build larger energy storage facilities. This gives us a portfolio of modular refuelling products in the range from 5kg/day to 400kg/day.

The Grid Gas Project

We are collaborating in a partnership which includes the Scottish Hydrogen Fuel Cell Association and Kiwa Gastec at CRE on the £164k feasibility study. The project aims to investigate the technical, financial and operational feasibility of injecting hydrogen gas, generated from electrolysis fed from excess renewables, into the UK gas networks. This will include preliminary logistical research, system research, the creation of a generation model and the simulation of hydrogen production at a single wind farm.

Scotland is a key location for renewable energy having some of the best wind resources in the world. The deployment of energy storage is now seen as key to the effective utilisation of renewable energy plant and will be a critical component of the future energy grid. Our electrolysis plant will be a vital component in linking electricity generated from renewable energy sources to the gas grid and the transport fuel infrastructure. ITM Power has opened an office in Aberdeen to access this vital market and has signed a Cooperation Agreement with Logan Energy Limited for project development and tendering in Scotland. The two companies will jointly tender for hydrogen energy storage and clean fuel projects in Scotland and Logan Energy will undertake all project management and after sales support for any plant installed under the agreement, maximising the local supply chain for Scottish projects.

Small products (HBox Solar, HPac 10 and HPac 40)

We signed a supply and distribution agreement with Horizon Fuel Cell Technologies covering ITM Power's small electolyser range. The agreement gives Horizon exclusive rights to sell ITM Power products in the ASEAN nations plus India, Pakistan and Bangladesh and non-exclusive rights to sell ITM Power products in other markets where Horizon has developed a marketing network, including the USA. Horizon will market our product range exclusively, complementing Horizon's market evolution into product applications that require on-site hydrogen supply.

Horizon was founded in Singapore in 2003 and has expanded through five international subsidiaries, including a new subsidiary in the United States. Starting commercialisation with micro-fuel cell products while preparing for larger and more complex applications, Horizon emerged as the world's largest volume producer of commercial sub-kilowatt fuel cell products, serving retail and OEM customers in over 65 countries. Its focus on commercialisation enabled the start of Horizon-branded market development teams in 35 countries, all of which can now also offer ITM Power solutions to increase sales of the company's hydrogen fuel cell solutions. In Singapore, Horizon is also developing the world's lightest fuel cell power systems to target the aerospace and defence industries.

The Future

Hydrogen's time is coming. Around the world it is now at the top of energy agendas. The roll-out of systems and infrastructure is no longer if but when. ITM Power's ambition is to use the platform and visibility we have created to participate in this build to the fullest extent possible.

We have the right products to address what will become in our view very large markets: HFuel for renewable coupled refuelling, the Megawatt Scale stack for demand side energy storage management to address energy storage for intermittent renewable energy output and our smaller products that can produce smaller amounts of hydrogen from renewable for light industrial and domestic markets. The showcase projects in the UK - UKH2Mobility Mobility and EcoIsland - will provide a world class marketing platform. I look forward to reporting on what promises to be an exciting year for ITM Power.

Dr Graham Cooley

Chief Executive Officer

18 July 2012

CONSOLIDATED INCOME STATEMENT

Results for the year ended 30 April 2012

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Results for the year ended 30 April 2012

CONSOLIDATED BALANCE SHEET

As at 30 April 2012

CONSOLIDATED CASH FLOW STATEMENT

Results for the year ended 30 April 2012

NOTES TO THE FINANCIAL STATEMENTS

Year ended 30 April 2012

1. BASIS OF ACCOUNTING

The preliminary announcement is based on the financial statements which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Group expects to publish full financial statements that comply with IFRS in July 2012.

The directors have prepared a business plan, which includes forecasts for a period to 31 October 2013 and beyond, which take account of the risks and uncertainties described above as well as the continuing uncertain macro-economic outlook.

These forecasts include a number of key assumptions, including the anticipated level of sales and the level of grant funding. In addition, the forecasts show that the group and company need to secure additional funding to capitalise on the opportunities described in the Chief executive officer's statement.

Consequently, ITM is currently undertaking an equity fund raising process in order to raise the required level of additional funding, £5 million of which has been underwritten.

The directors have a reasonable expectation that the amount that has been underwritten, together with the existing cash reserves, would provide ITM with sufficient cash to enable the Group and Company to meet their liabilities as they fall due for a period of at least 12 months from the date of approval of this report.

Accordingly, they have prepared these financial statements on the going concern basis.

The financial information is prepared on the basis of the accounting policies as shown on the Company's website, www.itm-power.com 

Copies of the financial statements/annual report will be available on the Company's web site and for collection from the Company's registered office at 22 Atlas Way, Sheffield, S4 7QQ.

2. notes to the cash flow statement

3. FINANCIAL INFORMATION

The financial information set out in the announcement does not constitute statutory financial statements for the years ended 30 April 2011 or 30 April 2012, but is derived from these statutory accounts, which have been reported on by the Group's auditor. Statutory accounts for the year ended 30 April 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Group's Annual General Meeting. The financial statements were approved by the Board of Directors on 18 July 2012. The auditor has reported on those accounts; their reports were unqualified and did not draw attention to any matters by way of emphasis and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

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