Itm Power Regulatory News (ITM)

24 Jan 2005 07:00

ITM Power PLC24 January 2005 24 January 2005 ITM POWER PLC ('ITM Power' or 'the Company') Interim Results for the six months ended 31 October 2004 Highlights: •Admission to AIM on 11 June 2004 •Remaining on track to achieve the milestones laid out in the prospectus •Operating within the planned expenditure budget: operating loss after tax £0.5million compared to budgeted £1.2million •Significant cost reduction achieved by independent testing of the Mk III electrolyser •Patent portfolio strengthened •Range of interests available to ITM significantly extended •Liquid fuel •Alkaline based materials •Appointment of Lord Walker of Worcester to the Board •New R&D premises opened in Sheffield Stephen Massey, Chairman commented: "Since beginning operations as a publiccompany we have made good progress in expanding research and development,increasing the patent portfolio and developing exciting new prototype devices todemonstrate to potential licensees. This has been accomplished while maintainingtight control over our cash expenditure. We remain on track to achieving themilestones laid out in the Prospectus." For further information please contact: Jim Heathcote, Chief Executive Gemma Chandler or Simon HudsonITM Power PLC Tavistock CommunicationsTel: 01780 740574 Tel: 020 7920 3150 Chairman's statementI am delighted to welcome all new shareholders who have invested in the Companyin recent months, and I am pleased to report on the activities of the Companyduring the half year to 31st October 2004. On 11th June 2004 ITM gained admission to the AIM market of the London StockExchange and became the first UK fuel cell company to successfully float on apublic capital market. The Company raised £10 million before costs, and thisadditional equity capital is enabling the Company to expand research anddevelopment, increase the patent portfolio and develop exciting new prototypedevices to demonstrate to potential licensees. ResultsSince beginning operations as a public company we have made good progress in allthese activities while maintaining tight control over our cash expenditure.During the six months under review we have also managed to defer commitment tocertain expenditure without detriment to our technical progress, thus remainingon track to achieving the milestones laid out in the Prospectus. As a result wehave operated well within our planned expenditure budget, demonstrated by theafter tax loss of £0.5 million compared with a budgeted £1.2 million. Energy OverviewThe recent worrying rise in oil prices has raised the level of interest inalternative energy companies. There appears to be growing concern that theforecast global rise in demand for energy, especially from China, may outstriptotal production capabilities. Increasing attention is focused on thepossibility that we may be close to an historic peak in oil production and thatenergy prices on this basis are likely to remain high. Simultaneously, there is growing international concern that rising carbondioxide levels are altering the global climate. The Kyoto Protocol has recentlybeen ratified by the Russian Federation. Countries that have previously ratifiedthe Protocol have been trying to reduce emissions of greenhouse gases on avoluntary basis. They now all have a legally binding obligation to do so from 16February 2005. There is now increasing awareness that new sources of pollution free energy mustbe found. ITM's focus is to produce affordable materials and efficientproduction processes that will contribute to a sustainable, non-polluting energyeconomy based on hydrogen. ReviewOur objectives are to build on our scientific and technological capabilities,and to pursue early commercial revenue opportunities. I am pleased to reportthat substantial progress has been made in our technical development programmeand we are on course to achieve the milestones set out in the ITM prospectusrelating to flexible fuel cells, rigid fuel cells and electrolysers. In fact wehave exceeded objectives in a number of areas. In the last few months we have made a number of significant announcements: • Independent costings of our Mk III electrolyser showed significant cost reduction compared with Mk II, plus a doubling of power input. The Generics Group, an independent scientific consultancy, have estimated that in mass production it is possible to achieve $283 per kW. This represented an important step forward in our development plan; we believe that electrolysers can play a pivotal role in maximising the potential of transient renewable power generation systems. • We have formulated and produced a range of hydrophilic alkaline solid polymer electrolyte materials, which have now been operated in fuel cell mode. Alkaline electrochemistry opens the route to new lower cost catalysts, which promise further cost reduction potential and promote improved catalysis. • We successfully tested fuel cells that operate using liquid fuels introduced directly into the cell. This has significance for small portable electronic devices and opens a large field of potential licensees not included in our original revenue model. We are grateful to the Department of Trade and Industry for their ongoing support for this programme. • We filed three further patent applications covering - photo-electric devices; further novel materials for use in fuel cells and electrolysers; key technological elements important to the application of our proprietary manufacturing process for membrane electrode assembly (MEA) and cell stacks. Board and StaffWe have strengthened the Board with the appointment of Lord Walker of Worcester,a former Secretary of State for Energy, who has joined as a non-executivedirector. He brings a wealth of business experience together with an extensivenetwork of worldwide contacts. We have also completed a successful recruitment process and a further sixscientists have joined our technical team. The new people have integrated welland in November we moved into larger premises in Sheffield to provide the extraspace needed for the expansion of our activities. ITM is in a pre-commercial revenue phase and our current corporate goals arefocused on the attainment of technical milestones and the maintenance of tightfinancial controls. I am very satisfied with the progress that is being made,and I would like to take this opportunity to thank all our employees for theirhard work and commitment and our investors for their support. Stephen MasseyChairman24 January 2005 PROFORMA CONSOLIDATED PROFIT AND LOSS ACCOUNTResults for the six months ended 31 October 2004 Six months Six months ended 31 ended 31 Year ended 30 October 2004 October 2003 April 2004 (unaudited) (unaudited) (audited) £ £ £ Administrative expenses- Research and development (355,368) (291,753) (579,893)- Other (374,781) (140,969) (281,543) ------------------------------------------- (730,149) (432,722) (861,436)Other operating income 30,000 72,757 210,049 ------------------------------------------- Operating loss (700,149) (359,965) (651,387) Interest receivable and similar income 161,441 7,576 12,366 ------------------------------------------- Loss on ordinary activitiesbefore taxation (538,708) (352,389) (639,021) Tax on loss on ordinary activities 24,000 26,000 43,579 ------------------------------------------- Loss on ordinary activities after taxation,being retained loss for the financial period (514,708) (326,389) (595,442) =========================================== Loss per shareBasic and diluted (0.6p) (0.5p) (0.8p) =========================================== There are no recognised gains or losses for the current financial period andpreceding financial periods other than as stated in the profit and loss account. PROFORMA CONSOLIDATED BALANCE SHEETResults for the six months ended 31 October 2004 As at 31 As at 31 As at 30 October 2004 October 2003 April 2004 (unaudited) (unaudited) (audited) £ £ £FIXED ASSETSTangible assets 128,223 90,761 75,540 -------------------------------------------- CURRENT ASSETSDebtors 371,452 131,618 189,984Investments -short term deposits 8,601,308 390,211 275,476Cash at bank and in hand 40,177 23,508 526 -------------------------------------------- 9,012,937 545,337 465,986 -------------------------------------------- CREDITORS:amounts falling due within one year (182,630) (100,369) (194,850) -------------------------------------------- NET CURRENT ASSETS 8,830,307 444,968 271,136 -------------------------------------------- TOTAL ASSETS LESS CURRENT LIABILITIES, BEING NET ASSETS 8,958,530 535,729 346,676 ============================================ CAPITAL AND RESERVESCalled up share capital 4,593,712 3,500,000 3,570,000Share premium account 8,102,850 - -Merger reserve (1,972,820) (1,982,820) (1,972,820)Profit and loss account (1,765,212) (981,451) (1,250,504) ---------------------------------------------- EQUITY SHAREHOLDERS' FUNDS 8,958,530 535,729 346,676 ============================================ PROFORMA CONSOLIDATED CASH FLOW STATEMENTResults for six months ended 31 October 2004 Six months Six months ended 31 ended 31 Year ended 30 October 2004 October 2003 April 2004 (unaudited) (unaudited) (audited) £ £ £ Net cash outflow from operations (692,904) (274,090) (653,876) --------------------------------------------- Returns on investments and servicing of finance Interest received 55,233 7,576 12,366 --------------------------------------------- Taxation Research and development tax credit - 7,869 82,460 --------------------------------------------- Capital expenditure and financial investment Purchase of tangible fixed assets (38,289) (4,280) (6,711) --------------------------------------------- Net cash outflow before management of liquid resources and financing (675,960) (262,925) (565,761) -------------------------------------------- Management of liquid resources Cash (placed)withdrawn from term deposits (8,325,832) 285,231 399,966 -------------------------------------------- Financing Issue of ordinary share capital (net of expenses) 9,126,562 - 80,000 -------------------------------------------- Increase (decrease) in cash 124,770 22,306 (85,795) ============================================ 1. Corporate restructuring During the period the Group carried out a corporate restructuring consisting of the introduction of a new holding company incorporated on 1 March 2004 under the name Quayshelfco 1070 PLC. On 4 May 2004, its name was changed to ITM Power Plc. On 29 April 2004 ITM Power Plc acquired the entire share capital of ITM Fuel Cells Limited in exchange for the issue of shares to shareholders on a seventy for one basis. The restructuring represented a change in the identity of the holding company rather than an acquisition of the business. Consequently, the restructuring has been accounted for using merger accounting principles. Therefore, although ITM Power Plc did not become the parent company of the Group until 29 April 2004, the Group financial information is presented as if the companies had always been part of the same group. In accordance with Sections 131 and 133 of the Companies Act 1985, ITM Power Plc has taken no account of any premium on the shares issued to acquire ITM Fuel Cells Limited and has recorded the cost of the investment at the nominal value of the shares issued. The resulting difference on consolidation has been debited to a merger reserve. 2. Loss per share The loss per ordinary share and diluted loss per share are equal because share options are only included in the calculation of diluted earnings per share if their issue would decrease the net profit per share or increase the net loss per share. The calculation is based on information in the table shown below. Six months Six months ended 31 ended 31 Year ended October October 30 Apri 2004 2003 2004 (unaudited) (unaudited) (audited) £ £ £ Loss (£) (514,708) (326,389) (595,442) Weighted average number of shares 87,253,433 70,000,000 70,176,438 3. Reserves and reconciliation of movement in shareholders' funds Called up Share Merger Profit Shareholders' share premium reserve and loss funds capital account account £ £ £ £ £ At 1 May 2004 3,570,000 - (1,972,820) (1,250,504) 346,676 Issue of shares 1,023,712 9,003,388 - - 10,027,100Share issue costs - (900,538) - - (900,538)Retained loss for the period - - - (514,708) (514,708) ----------------------------------------------------------------At 31 October 2004 4,593,712 8,102,850 (1,972,820) (1,765,212) 8,958,530 ================================================================ 4. Basis of interim figures These interim financials do not constitute statutory financial statements within the meaning of section 240 of the Companies Act 1985. The results for the six months ended 31 October 2004 and 31 October 2003 have been extracted from the management accounts of ITM Power Plc and ITM Fuels Cells Limited. The accounting policies that have been applied to these interim figures are consistent with those applied in the preceding annual accounts of ITM Fuel Cells Limited. The information relating to the year ended 30 April 2004 is an extract from the audited financial statements for that year on which the auditors gave an unqualified audit report and did not contain a statement under s237(2) of the Companies Act 1985. A copy of those financial statements has been filed with the Registrar of Companies. INDEPENDENT REVIEW REPORT TO ITM Power Plc IntroductionWe have been instructed by the company to review the financial information forthe six months ended 31 October 2004 which comprises the profit and lossaccount, the balance sheet, the cash flow statement and related notes 1 to 4. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company, in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare also responsible for ensuring that the accounting policies and presentationapplied to the interim figures are consistent with those applied in preparingthe preceding annual accounts except where any changes, and the reasons forthem, are disclosed. Review work performedWe conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with United Kingdom auditing standards and thereforeprovides a lower level of assurance than an audit. Accordingly, we do notexpress an audit opinion on the financial information. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 October 2004. Deloitte & Touche LLPChartered AccountantsCambridge24 January 2005 This information is provided by RNS The company news service from the London Stock Exchange