In a recent update covering the past six months, Clean Power Hydrogen (CPH2.L) announced the successful operation of its MFE110 electrolyzer system, confirming its ability to efficiently produce distinct hydrogen and oxygen gases as anticipated, after a thorough series of tests and setup procedures.
Upon completion of the final evaluations, the MFE110 system is set to be relocated to a facility owned by Northern Ireland Water. Here, the commercial generation of hydrogen, along with medical-grade oxygen, is slated to commence following a series of site confirmations, integrations, and final setup activities.
Interim Results for the six months ended 30 June 2023
Clean Power Hydrogen plc (AIM: CPH2), the UK-based green hydrogen technology and manufacturing group that has developed the IP-protected Membrane-Free Electrolyser (“MFE“), is pleased to announce its unaudited results for the six months ended 30 June 2023.
Financial Highlights
- Cash position remains strong at £12.9m
- £1.3m investment on development work in the six months to June 2023
- Loss of £1.6m in the six months to June 2023
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Technology Highlights
- The MFE110, the Company’s first scaled membrane free electrolyser, is in the final stage of testing.
- Thorough testing of the MFE110 has identified upgrades and the Company has successfully redesigned the cryogenic system as well as validated the stack design.
- Results of the MFE110 have informed valuable enhancements to the MFE220 design as expected.
- Following the delivery of the MFE110, the Company will turn its focus to finalising the design and build programme of the MFE220, CPH2’s 1MW System.
- Applications now submitted to certifying bodies for CE marking, UKCA marking, NI CE marking.
Significant engineering milestones have been reached during the period and although delivery of the MFE110 has been delayed to ensure operational and safety compliance, delivery, commissioning and installation of the unit at our customer’s site will take place imminently.
The commissioning process has given valuable design and operability feedback which has resulted in further iterations of the MFE design. Â This redesign process has been done in a methodical and diligent manner and led to a number of components being reworked, re-engineered, and reordered, which in turn has had a knock-on impact on the commissioning schedule especially when new components have long lead times. However, the Company has largely finished this process and the improvement in the components and design means that CPH2 is more confident now in its ability to fully commercialise the product. The data and the learnings the team has accrued place the Company in a much stronger position to roll out the technology at CPH2’s own facilities and at licence holder facilities.
Commercially, CPH2 is in a strong position. The Group’s pipeline and order book is expected to increase once customers are able to verify having a working unit in operation in the field. In tandem, the Company is working with its licence partners to deliver the blueprints for their own production and hope to have these ready for late Q4 2023 or early Q1 2024. As a result of the delays the Company does not expect any significant income in FY2023.
Change of Name of Nominated Adviser and Broker
The Company also announces that Cenkos Securities, its Nominated Adviser and Broker, has changed its name to Cavendish Securities plc following completion of its own corporate merger.
For more information, please contact:
| Clean Power Hydrogen plc | via Camarco |
| Jon Duffy, Chief Executive Officer | |
| James Hobson, Chief Financial Officer | |
| Cavendish Securities plc – NOMAD & Broker | |
| Neil McDonald | +44 (0)131 220 9771 |
| Peter Lynch | +44 (0)131 220 9772 |
| Adam Rae | +44 (0)131 220 9778 |
| Camarco PR | + 44(0) 20 3757 4980 |
| Billy Clegg | |
| Owen Roberts | |
| Lily Pettifar |
To find out more, please visit:Â https://www.cph2.com
Overview of CPH2
CPH2 is the holding company of Clean Power Hydrogen Group Limited (“Clean Power“) which has almost a decade of dedicated research and product development experience. This experience has resulted in the creation of simple, safe and sustainable technology which is designed to deliver a modular solution to the hydrogen production market in a cost-effective, scalable, reliable and long-lasting manner. The Group’s strategic objective is to deliver the lowest LCOH in the market in relation to the production of green hydrogen. The Group’s MFE technology is already commercially available and demonstrating cost efficiencies and technological advantages. CPH2 is listed on the AIM market and trades under the ticker LON:CPH2.
Chief Executive’s Statement
Technology update
Work during the period has concentrated on completion of the MFE110 electrolysers, our 0.5 MW system being used to validate the technology at scale and verify the design, following which they will be shipped to customer sites for site validation.
The design of the MFE110 was completed in Q1 2023, following which the Company undertook the pre-commissioning and then commissioning of the system under the watchful eye of Paul Cassidy, our CTO who joined in March 2023.
The pre-commissioning and commissioning process is a necessary procedure to undertake in all engineering projects as it is the first time we are commissioning our groundbreaking technology at scale. The commissioning process has given valuable design and operability feedback which has resulted in further iterations of the MFE design. This design evolution has resulted in a longer commissioning process than first anticipated, however, we are confident that these iterations put the technology on a sound basis.
Every component and system – including each valve, gauge, pipe, electrical wire and pump – has been tested to ensure it is correctly installed and functioning according to its specification. Any components that were not working according to the design specification, or otherwise as expected, were reviewed by the engineering and research & development departments, who found a solution to resolve the issue. At times this resulted in a redesign of the component, which then were procured, for which in some cases incurred additional lead time.
The Company is executing a staged commissioning process testing firstly the stacks, then the stacks with the dryers, the cryogenics, and then finally bringing together the stacks, dryers, and cryogenics to have the complete system working together, successfully generating separated hydrogen and oxygen gases. This has given the Company the opportunity to make modifications before bringing the entire system online.
Over the last five months we have been working through this process in a methodical way, successfully resolving issues found, while ensuring that safety is paramount, which has resulted in an improvement to the unit operability, validation of stack design, and design improvements of the cryogenic system.
I am pleased to advise that as at the date of this report, the Company has reached the final stage of the commissioning process, which will be to generate separated hydrogen and oxygen gases of its first MFE110 electrolyser in the coming weeks, having already successfully generated mixed gas. Significant firsts have been achieved, and having successfully gone through nearly the whole commissioning process, confidence is high as we embark on the closing stage of commissioning.
The next stage of the process is achieving Factory Acceptance Testing which includes customer acceptance, upon which the first MFE110 will be shipped to the customer site.
The commissioning process has taken two months longer than expected but has been a crucial learning experience for the Company which has instilled the necessary disciplined approach which will prove valuable going forward. In addition, the successful proving of the technology at scale gives great confidence in the Company’s 1MW system, the MFE220.
Work has continued on completing the design of the MFE220, and the issues that were found and resolved in the commissioning process of the MFE110, is informing the MFE220’s development. We are expecting to complete the design and then begin building the unit in Q4 2023, with commissioning and customer delivery in the new year.
Commercial update
We have been working closely with our licence partners, as well as our customers and their respective engineering consultants, and appreciate the strong support we have received.
During the period we signed a 10-year licensing deal with Fabrum, an advanced energy company with deep expertise in cryogenics and an important customer of CPH2, alongside two MFE220 orders. The licensing deal allows Fabrum to manufacture membrane-free electrolysers in their factory in Christchurch, New Zealand as well as a non-exclusive sales licence for Australia and New Zealand. Under the agreement Fabrum will manufacture either upon a CPH2 order or their own sale. The MFE220s built by Fabrum will be in accordance with Australian & New Zealand standards, and upon completion of the design and compliance work, there will be a membrane free electrolyser ready for the Australian and New Zealand market. Fabrum has since secured its first customer order under the licencing agreement from Obayashi Construction Company.
Financial review
The Company has prudently and carefully managed its cash resources during the period, ensuring the cash spend is controlled and focused on our route to commercialization. We remain in a strong cash position with cash resources of £12.9m at 30 June 2023 (comprising term deposits of £8m and cash and cash equivalents of £4.9m), a reduction of £2.4m from 31 December 2022 when the cash resources of the Company were £15.3m. The Company incurred a loss of £1.6m for the six months ended 30 June 2023, an increase of £0.5m from the comparative period, but down from the loss of £2.3m incurred in H2 2022. The Company invested £1.3m in development work during the period.
Conclusion and Outlook
It has been a crucial time for the Company, and whilst we have had delays, strong strides have been made during the period in proving at scale the differentiated, groundbreaking membrane free electrolyser technology on the back of a disciplined engineering approach. Our key focus for the rest of the year is to complete and ship MFE110s, to have a scaled working electrolyser at a customer site, and to complete the design of the CPH2 1MW system, the MFE220, in line with our stated milestones. The enormous global hydrogen opportunity only continues to strengthen and we are confident that our technology provides a compelling, disruptive and attractive offering.
As we sit at the cusp of commercialising a truly ground-breaking technology in the hydrogen sector, I would like to thank to all our staff whose passion is inspiring and who have worked tirelessly to progress the technology and the Company.
Jon Duffy
Chief Executive Officer
Consolidated Statement of Comprehensive Income
FOR THE PERIOD ENDED 30 JUNE 2023
| Note | Â Â Â Â 6 months ended
30 June 2023 |
6 months ended
30 June 2022 |
Year ended
31 December 2022 |
|
| Unaudited | Unaudited | Audited | ||
| £’000 | £’000 | £’000 | ||
| Revenue | – | – | – | |
| Cost of sales | – | – | – | |
| Gross profit | – | – | – | |
| Other operating income | 2 | 2 | – | |
| Administrative expenses excluding exceptional items | (2,262) | (2,158) | (4,765) | |
| Exceptional net credit | 4 | – | 987 | 986 |
| Total administrative expenses | (2,262) | (1,171) | (3,779) | |
| Operating loss | (2,260) | (1,169) | (3,779) | |
| Finance income | 163 | 91 | 216 | |
| Finance expense | (24) | (28) | (55) | |
| Loss before taxation | (2,121) | (1,106) | (3,618) | |
| Taxation | 5 | 512 | – | 174 |
| Loss for the financial period | (1,609) | (1,106) | (3,444) | |
| Â
 |
 | |||
| Items that may be reclassified subsequently to profit or loss: | Â | |||
| Foreign currency translation differences | 12 | (9) | (19) | |
| Fair value decrease in respect of investments | (42) | – | (3) | |
| Total comprehensive expense for the period | (1,639) | (1,115) | (3,466) | |
| Â
Basic and diluted earnings per share (pence) |
6 |
Â
(0.60) |
(0.45) |
(1.35) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Consolidated Statement of Financial Position
AS AT 30 JUNE 2023
| Note | Â | Â Â Â Â 30 June 2023 | 30 June
2022 |
31 December 2022 | |
| Â | Unaudited | Unaudited | Audited | ||
|  | £’000 | £’000 | £’000 | ||
| Assets | Â | Â | |||
| Non-current assets | Â | Â | |||
| Intangible assets | 7 | Â | 6,828 | 1,527 | 5,476 |
| Property, plant and equipment | Â | 1,626 | 1,347 | 1,387 | |
| Fair value through OCI investments | 8 | Â | 1,455 | – | 1,497 |
| Trade and other receivables | Â | 120 | 120 | 120 | |
| Â | 10,029 | 2,994 | 8,480 | ||
| Current assets | Â | Â | |||
| Inventories | 9 | Â | 2,443 | 3,889 | 2,363 |
| Trade and other receivables | 10 | Â | 2,304 | 2,085 | 3,239 |
| Current asset investments |
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