2024 Interim Results

596/2014 which is part of UK law by virtue of the European Union (withdrawal) Act 2018.

Clean Power Hydrogen plc

("CPH2", the "Company" or the "Group)

Interim Results for the six months ended 30 June 2024

CPH2, the UK-based green hydrogen technology and manufacturing company that has developed the IP-protected Membrane-Free Electrolyser ("MFE"), is pleased to announce its unaudited results for the six months ended 30 June 2024.

Highlights

• On September 26th, the MFE110, the Company's first scaled membrane free electrolyser, successfully completed the Factory Acceptance Test ("FAT"), confirming the first customer acceptance and validation of CPH2's scaled electrolyser technology.
• Successfully completing the FAT has proved the Company's thesis that membrane-free technology is a viable and potentially highly competitive alternative to PEM and Alkaline electrolysers.
• The successful FAT is a major commercial milestone, marking the completion of the research & development phase on CPH2's pathway and moves the Company to focus on the Commerciality Phase which is focused on the MFE220, CPH2's flagship 1MW system.
• In June 2024, CPH2 was awarded a CE marking for the process of making its electrolyser stacks, having received a Declaration of Conformity following an independent assessment, from a Notified Body.
• In February 2024, CPH2 was awarded three ISO certifications for Occupational Health and Safety (ISO 45001), Environmental Management Systems (ISO 14001) and Quality Management Systems (ISO 9001).

Financial Highlights

• Cash and cash equivalents of £4m.
• Loss of £2.3m in the six months to June 2024.
• £1.8m spent on development work in the period.

Jon Duffy, CEO of CPH2, commented: "The last period, has been one of tremendous growth, learnings and achievements. The FAT completion of the MFE110 is the most significant milestone in CPH2's journey to market and marks a turning point in the company's strategic direction towards commercialisation.

The Commerciality Phase will focus on building the MFE220, our 1MW system to our existing contracted customers as well as activating our licensees in preparation for their manufacturing and scale.

I am very proud of our staff's dedication, professionalism and effort. We maintained a disciplined engineering approach, prioritising the safety and reliability of the technology in order to create a product that delivers a modular solution to the hydrogen production market in a cost-effective, scalable, reliable and long-lasting manner and in doing so have reached commercialisation."

Chief Executive's Statement

Technology update

During the period, we were pleased to successfully complete Level 1 of the FAT for the MFE110 electrolyser. Level 1 verified that mechanical and electrical components were checked, confirmed that all documentation was in order, and that the MFE's design and build was aligned to the documentation and compliant to relevant safety standards.

Following the period-end we completed Level 2 and Level 3 of the FAT. Level 2, which was witnessed by Lagan MEICA the Principal Contactor and Arup, representative for Northern Ireland Water, verified the functionality of the MFE110 electrolyser. The test included end-to-end checks of control loops, electrical and mechanical plant, instrument calibration, and electrical installations in accordance with requirements.

The FAT process culminated in the completion of the final Level 3, which verified the safe, successful startup, operation, performance, and shutdown of the MFE110 unit. During the test, key metrics such as the unit's hydrogen and oxygen output pressure, flow rate, and purity levels were recorded. All metrics achieved the necessary thresholds, confirming that the unit can function effectively.

The successful completion of the FAT validates our low cost, robust technology, proving our electrolyser works at scale. I'd like to thank the whole CPH2 team for their dedication and hard work as well as our shareholders for their patience and commitment to our journey to deliver a simple, safe and sustainable technology for the hydrogen sector.

During the period, the Company was also awarded CE marking for the process of making its electrolyser stacks. The stacks, used in the MFE110 and to be used in the MFE220, are a key component of the electrolysers made at the facility in Doncaster as well as sold to license partners. The CE marking illustrates that the Company manufactures the stacks within the EU directives and harmonised standards.

We also continued focusing on improving our systems and standards during the period, and announced the award of three ISO certifications for Occupational Health and Safety (ISO 45001), Environmental Management Systems (ISO 14001) and Quality Management Systems (ISO 9001).

Strategic update

With the MFE technology now proved at scale, we consider the R&D Phase of CPH2 now completed, and a turning point in the Company's focus towards commercialisation. The Commerciality Phase which we are now transitioning to will consist of: delivering on our existing three MFE220 customer contracts; activating the licensees and supporting them with finalised MFE220 designs, instructions, procedures, training and procurement support; continued technology and product improvement; and growing the commercial pipeline.

The deliverables through the Commerciality Phase will be focused on revenue generation with commercial MFE electrolysers working on customer sites, and licensees commencing manufacturing. The capabilities developed and activities undertaken during the Commerciality Phase is expected to provide valuable learnings in the subsequent Scale Phase.

Financial review

The Company has carefully managed its cash resources during the period, ensuring cash is controlled and focused on supporting the build, commissioning and testing of the MFE110. The Company incurred a loss of £2.3m for the period ended 30 June 2024 (H1 2023: £1.6m). Administrative costs were tightly controlled and broadly the same as H2 2023, though £0.5m higher than the comparative period. The Company invested £1.8m in development costs (H1 2023: £1.3m) with the focus on supporting the MFE110. As at 30 June 2024 cash and cash equivalents (including term deposits) were £4.0m, a reduction of £4.4m from 31 December 2023.

Conclusion and Outlook

The last period has been one of growth, learnings and achievements. We maintained a disciplined engineering approach, prioritising the safety and reliability of the technology in order to create a product that delivers a modular solution to the hydrogen production market in a cost-effective, scalable, reliable and long-lasting manner. Successfully completing the FAT has proved our thesis that membrane-free technology is a viable and potentially highly competitive alternative to PEM and Alkaline electrolysers.

We have reached our largest milestone yet, and the commercialisation of the MFE110 lays the foundation for the continued development of our flagship 1MW system, the MFE220. We now turn our attention to the next phase of growth, our Commerciality Phase, building on the positive momentum of our R&D Phase.

The energy transition and opportunity for hydrogen continues to grow and we look forward to entering our next phase of growth with a commercialised technology which provides a compelling, disruptive and attractive offering.

Thank you to all our staff who have helped us reach this moment in our journey and to our shareholders for continuing the journey with us. We look forward to updating the market with further progress in due course.

Jon Duffy

Chief Executive Officer

Consolidated Statement of Comprehensive Income

FOR THE PERIOD ENDED 30 JUNE 2024

Items that may be reclassified subsequently to profit or loss:

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Consolidated Statement of Financial Position

AS AT 30 JUNE 2024

The accompanying notes are an integral part of these condensed consolidated financial statements.

Consolidated Statement of Changes in Equity

FOR THE PERIOD ENDED 30 JUNE 2024

Comparatives for the six months ended 30 June 2023 are provided separately below:

Notes to the Condensed Interim Financial Statements

FOR THE PERIOD ENDED 30 JUNE 2024

1 Corporate information

Clean Power Hydrogen plc is a public company incorporated in the United Kingdom and listed on the Alternative Investment Market ("AIM"). The registered address of the Company is Unit D Parkside Business Park, Spinners Road, Doncaster, England, DN2 4BL. The principal activity of the Company is as a holding company for subsidiaries engaged in the development of a patented method of hydrogen and oxygen production together with the development of a gas separation technique which enables hydrogen to be produced as 'Green Hydrogen' and oxygen to medical grade purity.

2 Basis of preparation

This unaudited condensed interim consolidated financial statements for the six months ended 30 June 2024 and 30 June 2023 has been prepared in accordance with UK adopted international accounting standards ('IFRS') including IAS 34 'Interim Financial Reporting'.

The accounting policies applied by the Group include those as set out in the consolidated financial statements for the Group for the year ended 31 December 2023 and are consistent with those to be used by the Group in its next financial statements for the year ending 31 December 2024.

The condensed interim consolidated financial statements does not contain all of the information that is required to be disclosed in a full set of IFRS financial statements. The condensed interim consolidated financial statements for the six months ended 30 June 2024 and 30 June 2023 are unaudited and do not constitute the Group or Company's statutory financial statements for those periods.

The comparative financial information for the full year ended 31 December 2023 has, however, been derived from the audited statutory financial statements for Clean Power Hydrogen plc for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

These policies have been applied consistently to all periods presented, unless otherwise stated.

The condensed interim consolidated financial statements have been prepared under the historical cost convention with the exception of the fair values applied in accounting for share based payments and investments. The condensed interim consolidated financial statements and the notes to the financial statements are presented in thousands of pounds sterling ('£'000'), the functional and presentation currency of the Group, except where otherwise indicated.

Going Concern

In assessing the Group's ability to operate as a going concern, the Board have prepared cash flow forecasts for the period to 31 December 2025 in relation to likely future cash flows for the foreseeable future. The forecast shows that whilst the Group will be able to operate within the level of cash reserves into 2025, further funding will be needed to continue in operational existence for a period of 12 months from the date of approval of these financial statements. In forming the conclusion that it is appropriate to prepare the condensed consolidated financial statements on a going concern basis the Directors have made the assumption that sufficient funding can be obtained from new and existing investors. Although the Directors are confident that sufficient funding will be obtained as required, there can be no guarantee that such funding will be obtained and accordingly a material uncertainty exists that may cast doubt on the Group's ability to continue as a going concern.

3 Segment reporting

IFRS 8, Operating Segments, requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the company's chief operating decision maker. The chief operating decision maker is considered to be the executive Directors.

The Group at this stage comprises only one operating segment for the development and sale of equipment for the electrolytic production of clean hydrogen and oxygen. This is monitored by the chief operating decision maker and strategic decisions are made on the basis of adjusted segment operating results.

4 Taxation

Tax credits in respect of research and development expenditure were recognised when submitted and on receipt to date whilst experience of claims being collated and accepted was gained. The credit for the period to June 2023 relates to the claim submitted for the year ended 31 December 2022. The credit for the year ended 31 December 2023 relates to the claim submitted for the year ended 31 December 2022 and an estimate for the claim for the year ended 31 December 2023. The credit for the six month period to June 2024 relates to an estimate for this period.

5 Earnings per share

There is no dilutive effect on a loss. There are potentially dilutive options in place over 17,388,981 ordinary shares at 30 June 2024.

6 Intangible fixed assets

The development costs relate to the direct expenditure incurred on the Group's membrane free electrolysis technology.

7 Investments held at fair value through other comprehensive income

£'000

The Company holds 1,412,429 ordinary £0.02 shares in ATOME PLC, representing 3.5% of its issued share capital. ATOME PLC is listed on AIM and is focused on the production, marketing and distribution of green hydrogen and ammonia. On the 25 September 2024, the fair value of the investment in ATOME PLC was £1,109,000.

The fair value at 30 June 2024 is measured using the quoted price on the AIM market at that date (a level 1 input using the price from an active market).

8 Inventories

No impairment of inventory has arisen.

Work in progress represents the costs incurred in the production of machines for confirmed but not completed orders.

9 Trade and other receivables

There has been no significant revenue to 30 June 2024 and there have been no impairment charges nor expected credit loss provisions made, as the credit risk in respect of trade and other receivables is considered low. The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.

£475,000 of other receivables and deferred income at 30 June 2023 related to cash from a customer held in escrow subject to completion of the order.

10 Related party transactions

Directors remuneration during the 6 month period ended 30 June 2024 amounted to £280,734 (6 month period ended 30 June 2023 : £337,317).