Annual Report • Mar 12, 2019
Annual Report
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La Motte-Fanjas, March 12, 2019 at 5:45pm – McPhy (Euronext Paris Compartment C: MCPHY, FR0011742329), a specialist in hydrogen production and distribution equipment, is today announcing its results for 2018, which were approved by the company's Board of Directors.
We are determined to maintain this focus with clearly identified priorities: product development, strengthening our marketing in key areas, winning new markets and signing partnerships."
Pascal Mauberger, McPhy's Chairman and Chief Executive Officer, commented: "As announced, our results for 2018 were affected by delays in the finalization of several orders and by the extension of the duration of certain existing projects for our clients.
Our teams remain mobilized to continue building McPhy's technological leadership by launching new products such as the 'Augmented McLyzer' generation of electrolyzers, which will enable us to offer innovative solutions on a scale that matches our clients' needs. We have also signed an agreement for our first hydrogen bus fueling station in France, creating a flagship reference in mass mobility. In addition, the industrial and commercial partnership agreement with EDF signed in 2018 is now fully operational and is manifesting itself in joint tender bids.
The early months of 2019 have shown that our strategy is bearing fruit, with more than €5 million in orders received. This is why we are determined to maintain this focus on growth with clearly identified priorities: product development, strengthening our marketing in key areas, winning new markets and signing partnerships. We are convinced that this strategy will allow McPhy to continue to grow and maintain its leadership in the fast-expanding market for low-carbon hydrogen."
1 Press releases of 24 October 2018 and 22 January 2019
| (€ millions) | 2018 | 2017 | Change |
|---|---|---|---|
| Revenues | 8.0 | 10.1 | (21)% |
| Other income | 1.1 | 1.2 | (4)% |
| Income from ordinary activities | 9.1 | 11.3 | (19)% |
| Cost of purchases consumed | (4.6) | (5.7) | (20)% |
| Staff costs | (6.1) | (6.0) | 2% |
| External costs | (5.7) | (5.2) | 10% |
| Amortization, depreciation and provisions | (2.1) | (0.8) | 172% |
| Current operating income | (9.4) | (6.4) | 47% |
| Other operating income and expense | (0.0) | (0.1) | - |
| Operating income | (9.4) | (6.5) | 46% |
| Financial income/expense | (0.0) | (0.1) | - |
| Tax | (0.1) | (0.1) | - |
| Net income | (9.5) | (6.7) | 43% |
The increase in external costs and provisions was due to delays in the finalization of several orders, the extension of the duration of certain projects and additional costs incurred in the installation phases of these initial reference projects for McPhy. This resulted in an expected 47% drop in operating income in 2018 compared to 2017, to -€9.4 million.
The lessons learned on these first contracts have been factored in for contracts due to be delivered from 2019 on, and provisions have been made for additional costs to neutralize their impact on 2019 figures. Furthermore, despite the revenue decline, McPhy continued to strengthen its research and innovation efforts.
At December 31, 2018, McPhy had cash assets of €14.9 million, boosted by transactions to strengthen capital carried out in 2018.
December 2018: publication of the final text of the Renewable Energy Directive (RED II) in the Official Journal of the European Union. This Directive sets shared EU-wide targets for use of renewable energy. It also undertakes to increase renewable energy use to 32% of total energy consumption by 2030. The Directive thus opens up new prospects in markets for clean hydrogen in heavy industry.
McPhy maintains its strategy focused on three priorities: product development, strengthening its position in key regions and winning new markets, and the signature of strategic partnerships
• March 2018: the Group joins the Hydrogen Council. This unique global initiative aims to demonstrate the potential of hydrogen as a key solution in energy transition. Members of the Hydrogen Council have indicated their desire to step up investment in the development and marketing of hydrogen and fuel
cells. Their combined investment is currently estimated at €1.4 billion per year2 . McPhy is working with global groups on the 'scaling up' of the hydrogen economy.
• June 2018: McPhy signs an industrial and commercial partnership with EDF, a world leader in low-carbon energy, to develop low-carbon hydrogen in France and internationally. This partnership along with additional financial resources will help McPhy step up the pace of growth, strengthen the development of its sales team and conquer new markets. The partnership is now fully operational and has manifested itself in shared tender bids for bus filling stations of several hundred kg/day including electrolyzers, and platforms to supply hydrogen trains and river barges of more than 1 tonne/day.
As announced on March 5, 2019,3 McPhy has seen a positive start to 2019, with more than €5 million in orders received covering 4 projects:
These new projects increase to 21 the number of McFilling stations installed or currently being installed, together representing a daily potential of 64,500km in zero emission mobility;
These commercial successes demonstrate that the delayed orders initially anticipated in 2018 have now materialized, and that the Group's top-line business momentum is right on track.
Lastly, conditions in the hydrogen sector remain very strong and offer many new prospects. In France, the Programmation Pluriannuelle de l'Energie project9 has reaffirmed the key role to be played by hydrogen in meeting the huge challenges of energy transition: 24 applications have been submitted to Ademe10 under its first call for "Hydrogen ecosystems and mobility" projects. This call for projects was followed by a second one which opened
10 French environment and energy agency
2 How Hydrogen empowers the energy transition, Report, 2017, Hydrogen Council
3 Press release announcing a positive start to the year for McPhy
7 This project is supported by European Union funding via the European Innovation and Networks Executive Agency (INEA) as part of the Connecting Europe Facility - Transports (CEF-T) infrastructure program.
8 https://eadymob.normandie.fr
9 https://www.environnement-magazine.fr/energie/article/2019/02/18/123000/tribune-ppe-confirme-transition-energetique-fera-avec-hydrogene
up new prospects for clean hydrogen use in heavy industry released on February 25, 2019.
Lastly, the recent approval of the EU RED II Directive, setting shared targets for the European Union for consumption of renewable energy, has opened up new prospects for the market for clean hydrogen for use in heavy industry.
Against this background, McPhy has confirmed growth in its business backed by a qualified sales pipeline11 of €80 million.
2019 first half results – Thursday July 30, 2019 after market close
11Projects for which McPhy believes there is a greater than 50% chance of successful completion
| Assets(€ millions) | 2018 | 2017 |
|---|---|---|
| Goodwill | 2.5 | 2.5 |
| Other fixed assets | 2.6 | 3.2 |
| Other non-current assets | 0.4 | 0.3 |
| Non-current assets | 5.5 | 6.0 |
| Inventories | 2.2 | 2.5 |
| Trade and other receivables | 6.6 | 6.5 |
| Current income tax assets | 0.7 | 0.5 |
| Financial assets | - | 0.6 |
| Cash and cash equivalents | 14.9 | 4.4 |
| Current assets | 24.4 | 14.5 |
| Total Assets | 29.9 | 20.5 |
| Liabilities (€ millions) |
2018 | 2017 |
| Share capital | 1.8 | 1.3 |
| Issue Premium | 31.2 | 22.3 |
| Treasury shares | (0.1) | (0.1) |
| Retained earnings not distributed | (17.2) | (17.2) |
| Shareholders' equity | 15.7 | 6.4 |
| Provisions – share due in more than one year | 0.6 | 0.4 |
| Loans and financial debts – share due in more than one year |
5.2 | 4.4 |
| Other non-current liabilities | 0.5 | 0.4 |
| Non-current liabilities | 6.2 | 5.2 |
| Provisions – share due in less than one year | 0.8 | 0.2 |
| Loans and financial debts – share due in less than one year |
0.8 | 2.5 |
| Trade and other payables | 4.2 | 4.3 |
| Other current liabilities | 2.3 | 1.8 |
| Current Liabilities | 8.0 | 8.9 |
| Total shareholders' equity and liabilities | 29.9 | 20.5 |
12 Accounts currently under audit by the Board of Directors
In the framework of the energy transition, and as a leading supplier of hydrogen production, storage and distribution equipment, McPhy contributes to the deployment of clean hydrogen throughout the world.
Thanks to its wide range of products and services dedicated to the hydrogen energy, zero emission mobility and industrial hydrogen markets, McPhy provides turnkey solutions to its clients. These solutions are tailored to our client applications: renewable energy surplus storage and valorization, fuel cell car refueling, raw material for industrial sites.
As a designer, manufacturer and integrator of hydrogen equipment since 2008, McPhy has three development, engineering and production units based in Europe (France, Italy, Germany).
The company's international subsidiaries ensure a global sales coverage of McPhy's innovative hydrogen solutions.
McPhy is listed on NYSE Euronext Paris (Segment C, ISIN code: FR0011742329; ticker: MCPHY).
Nicolas Merigeau T. +33 (0)1 44 71 94 98 [email protected]
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