ITM Power plc has announced its intention to raise £25 million (before expenses) through a placing of 62,500,000 New Ordinary Shares of 5 pence each in the capital of the Company (the Firm Placed Shares), with certain existing and new institutional investors (the Firm Placing). In addition the Company intends to raise up to c.£4.4 million through an open offer (the Open Offer) of 10,896,225 New Ordinary Shares (the Open Offer Shares). The fundraising is principally to provide working capital to support the delivery of the contract backlog and opportunity pipeline.
As of 19th September 2017, ITM Power had £20 million worth of projects under contract and a further £16.7 million in the later stages of negotiation, thus £36.7 million in total. In addition, the Group has an opportunity pipeline of £180 million of commercial sales, which consists of over 50 separate projects across all three of the Group’s end markets.
The majority of these projects provide for a portion of the project cost to be paid by the client to the Company up front, with the corresponding balance of the income typically received towards the end of the contract. This results in a working capital shortfall during the middle and later stages of the contract term, when cash is used in the build phase as well as final commissioning and user testing.
The Directors intend to use the proceeds of the Firm Placing and the Open Offer to provide working capital to support the delivery of the contract backlog and opportunity pipeline as well as moving to new larger facilities that will consolidate the Group’s two current sites. This is expected to facilitate annual production capacity of around 300 MW. The Group will also seek the installation of an enlarged grid connection of up to 5 MW, in order to be able to test larger scale electrolysers.
The immediate objective in terms of product development is to continue the focus on the scale-up of proven electrolysis equipment, targeting penetration of larger markets. Product development, and in particular upscaling of product offering, is proposed to be achieved through securing and utilising project funding.
“We are delighted to disclose our £180 million opportunity pipeline of highly qualified tenders, which sits behind our growing backlog of contracted orders” said Graham Cooley, Chief Executive Officer of ITM Power plc. “This demonstrates significant traction for ITM Power’s products and the growing momentum in the hydrogen energy market overall. The £25 million placing and up to c.£4.4 million open offer considerably strengthens our balance sheet and should provide enhanced confidence to our customers on ITM Power’s ability to deliver future orders at increased scale. It should also enable us to unlock further efficiencies in our supply chain. We look forward to updating the market as opportunities are converted from pipeline to contracted sales, as we near our target of positive cashflow generation.”
ITM Power specialise in the manufacture of integrated hydrogen energy systems. The company was founded in June 2001 and was the first United Kingdom-based fuel cell company to go public. ITM Power operates out of two premises in Sheffield, UK with further offices in Germany, France the USA and Canada.
Image: ITM Power hydrogen station at Shell service station Cobham, UK
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