27 Feb 2015 07:00
27 February 2015
Intelligent Energy Holdings plc
Business update
Intelligent Energy ("IE"), the energy technology company, is pleased to announce the following business update.
Highlights
· Continued strong revenue momentum
o Approximately an eightfold increase in revenues for our fiscal Q1 2015 vs Q1 2014
o Sequential growth in revenue in each of the last five quarters
· Good progress on strategic initiatives
o Distributed Power & Generation ("DP&G"): agreement in principle on a ten-year circa £1bn long term power management contract
o Consumer Electronics ("CE"): acquisition of portable fuel cell and disposable fuel cartridge assets; Upp launched in UK retail Apple stores in late November 2014
o Motivedivision: continued progress on Joint Development Agreements with OEMs
· At the Group level, the Company remains confident of achieving its expectations for the year end 30 September 2015
Henri Winand, Chief Executive, commented:
"In the last twelve months, we have seen important progress across all three divisions of IE and we also completed our listing on the Main Market of the London Stock Exchange. At the Group level, the Company remains confident of achieving its expectations for the current year highlighting the benefits of the balanced portfolio approach which is an important characteristic of our business model."
"There is excellent momentum across IE. First quarter results demonstrate material growth and we are expecting strong sequential revenue growth for the rest of the year. Each of our divisions continues to move forward in capitalising on the significant growth opportunities we have identified."
"The Company has world class technology and IP, a growing number of commercial relationships and accelerating revenue momentum. With the context of broader industry adoption of hydrogen fuel cell technology globally, we remain confident in the outlook for Intelligent Energy."
Business update
IE has continued to focus on delivering its corporate strategy through the period, working toward the key objective of delivering sustainable shareholder value through the leverage of its world class technology and IP across its target end markets. Important commercial progress has been made toward this goal.
DP&G
Our DP&G division recently announced an agreement in principle with GTL, a provider of services and infrastructure to the Indian telecommunications sector, with regard to the long-term power management rights over a circa 26,000 telecom tower estate in India.
It is expected that this agreement (which is subject to both contract and financing) will secure circa £1bn of contracted revenue over the next decade. This agreement would be EBITDA and cash flow positive from the outset and would provide an important platform to introduce IE's world class distributed energy technology to other telecom providers. DP&G now has four customers under contract compared to three at the beginning of the year.
These activities are aligned with IE's model of:
· controlling distributed power assets at scale, as demonstrated with contracts with Ascend Telecom, Microqual and GTL
· optimising their operation, as already demonstrated with higher per site power availability for lower cost
· replacing generating assets where appropriate with IE's proprietary technology, as demonstrated with the latest first fuel cell deployment in India in December 2014
· generating additional power for additional customers, as illustrated by the announced collaboration with Hydro Industries
When these four activities are combined, it will lead to revenue and margin growth for each site.
IE is planning to hold an analyst and investor event in relation to IE's Indian operation in April 2015. Further details on this potential event will be circulated in due course.
Consumer Electronics
This division has seen a number of important developments in the period. The Consumer Electronics division launched its first generation Upp fuel cell charging device (Upp 1) on 19th November 2014 in Apple's retail stores in the UK. The retail launch provides important visibility and commercial credibility. It forms part of IE's testing of the consumer proposition that will assist in the introduction of embedded fuel cell and fuel technology, which is a considerable part of the medium term IE strategy.
We have today announced the strategically important acquisition of portable fuel cell and disposable fuel cartridge assets from Société Bic, for an initial cash consideration of $13m on closing and $2m in an escrow account at closing to be paid once the transition services are completed. The agreement includes a potential cash earn out up to $7m.
This transaction is a significant step forward in the successful execution of Intelligent Energy's corporate strategy with regard to the embedding of its technology in portable consumer electronic devices. It brings a number of benefits - in particular it:
· materially enhances IE's current extensive portfolio of IP relating to fuel cells and disposable fuel cartridges
· provides IE with incremental, synergistic and valuable, high volume manufacturing and production IP, together with pilot production line technologies relating to both disposable fuel cartridges and planar fuel cells that can be used alongside IE's best in class fuel cell technology
· reduces both the time and the cost of developing production ready, embedded fuel cells and fuel cell cartridges
· provides additional, important knowledge and understanding of consumer markets
· strengthens the move to a business model based on the licensing of IE's fuel cell and fuel cartridge to industrial partners
The acquisition provides a step-change in what has always been the medium term objective and a major value driver - embedding our technology in consumer electronic devices - and this will be the commercial focus going forward.
The potential of this acquisition, which had been under negotiation for some time, combined with the previously disclosed contract yield manufacturing issues regarding the Upp metal hydride fuel cartridges, has led us to restrict the ramp to circa 30,000 Upp 1 units being commercially available. Once the acquisition has been completed, we will focus on the successful integration of our respective technologies. This will lead to a revised launch date for Upp 2 later in 2015 and the launch of disposable cartridges, scaling as previously expected, from the first half of 2016.
Motive division
The Motive division continues to perform in line with the Board expectations, as we deliver our strategy of partnering with large scale OEMs and embarking on Joint Development Agreements. All significant milestones set out in these agreements have been met. We are in commercial discussions with a number of additional OEMs, potentially leading to further separate royalty agreements with additional automotive OEMs.
We also note the number of high profile announcements from major OEMs relating to the deployment at scale of fuel cell vehicles. With world class technology and a number of land mark commercial relationships in place, we are uniquely positioned to capitalise on the increasing adoption of hydrogen fuel cell technology globally. Such positive developments in the sector have resulted in IE investigating the opportunity to pull forward commercial activities in conjunction with industrial partners relating to, for example, work on range extended vehicles.
Financial performance
The important commercial developments reported in the period have all contributed to the revenue in Q1 2014/15 being over eight times higher than the corresponding period in the prior year. Revenue has expanded on a quarter on quarter basis in each of the last five quarters.
The combination of the recent DP&G agreement in principle with GTL and the lower retail sales of the Upp will change the revenue mix for the year to 30 September 2015. At the Group level, the Company remains confident of achieving its expectations for the year end 30 September 2015.
Given the continued progress of our strategic initiatives, we continue to keep our funding structure and mix under review such that we can appropriately capitalise on the opportunities in each of our target markets whilst maintaining a robust capital position.
Corporate
IE is pleased to be able to announce the successful conclusion of an external search which resulted in the appointment of a full time Head of Investor Relations. More details on this appointment will be announced during March.
Furthermore, Intelligent Energy is delighted to announce the appointment of UBS Investment Bank as joint corporate broker and joint financial advisor. UBS will work alongside the Company's existing corporate broker. This appointment was effective on 26 February 2015.
Enquiries:
Intelligent Energy Holdings plc +44 (0)1509 271271
Dr. Henri Winand Chief Executive Officer
John Maguire Chief Financial Officer
Dr. Mark Lawson-Statham Director of Corporate Finance
Tulchan Communications +44 (0)207 353 4200
James Macey White
Victoria Huxster
intelligentenergy@tulchangroup.com
About Intelligent Energy
Intelligent Energy Holdings plc is an energy technology group which develops efficient and clean hydrogen fuel cell power systems for the global automotive, consumer electronics, distributed power and generation markets - from powering zero-emission vehicles to compact energy packs for mobile devices and stationary power units for the always-on infrastructure.
Working with international companies, Intelligent Energy aims to embed its technology in mass market applications to solve the challenges of continuous power and productivity, by creating everyday energy solutions to power people's lives. The Group's intellectual property and expertise is based around proprietary fuel cell technologies, which are the product of over 25 years of research and development. Its patent portfolio includes more than 400 patents granted (and over 600 patents pending) across more than 300 patent families. The Group also maintains a significant body of confidential know-how and trade secrets.
With its principal facility and headquarters in Loughborough, UK, the Company also has operations in India, Japan and Singapore, a commercial office in Silicon Valley, USA, and research facilities in Florida, USA. Intelligent Energy Holdings plc is listed on the London Stock Exchange (IEH: LN).
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