• Progress in ITM's commercialisation programme is on plan

   • Agreed terms, subject to contract, on a new 15,000sq ft production
    facility in Sheffield

   • Agreement signed with ABRO (Ministry of Defence) to field trial onboard
    vehicle electrolysers

   • Agreement signed with Hydrogen Engine Center Inc to develop
    non-polluting hydrogen energy systems

   • New joint development programme initiated for the use of hydrogen in
    vehicle engines with the University of Hertfordshire

   • Pre tax loss for the period in review increased from £0.91m to £1.42m in
    line with budget reflecting the increased level of development activity
    which has taken place in 2006

   • ITM's membrane technology as applied to electrolysers has now reached
    10,000 hours of operation without evidence of degradation. This lifetime
    exceeds the durability requirements of commercially viable systems

   • Successfully built and operated a completely platinum free 5kW solid
    polymer electrolyser stack, which reduces cost per kilowatt below the
    previously stated $164/kW

Stephen Massey, Chairman, commented: "The important scientific advances that we
have achieved to date have created substantial intellectual property which is
the most valuable asset in the Company. Our objectives over the next year are to
focus on successful field trials of our existing technology, to complete the
building of our production facilities and further expand our commercial
relationships.

Subject to completion of successful field trials, we anticipate entering
negotiations and plan rapid commercialisation using the new Sheffield facilities
to manufacture the initial commercial units. We anticipate product orders and
revenues to commence in early 2008.

ITM has made excellent progress and is now entering the commercial phase of its
development. I am looking forward to another exciting year for the Company."

For further information please contact:

Gemma Chandler
ITM Power Plc
Tel: +44 (0)1799 532 860
Mob:+44 (0)7921 057712
or visit www.itm-power.com

Chairman's statement:

I am pleased to report the interim results for the six months ended 31 October
2006 and update shareholders on new developments.

The Company has made significant progress since I last wrote to shareholders in
July in achieving all the technical milestones set out at that time, and moving
towards the commercial realisation of its technology. ITM is now entering into a
new phase of its development as a leading innovator of fuel cell and
electrolyser technologies as we seek to bring commercial products to market in a
realistic timeframe. The Company has agreed terms on a new facility in Sheffield
which will produce prototypes and small scale production in order to take ITM's
products to market next year.

The agreements signed with Hydrogen Engine Centre Inc and with ABRO (Ministry of
Defence) demonstrate the exciting potential of ITM's technology to the
automotive and power sectors. The development programme initiated with the
University of Hertfordshire will help determine the scale of the opportunity of
introducing hydrogen to enhance the performance of internal combustion vehicles.

Given the macro economic background of persistently high energy prices and the
threat of global warming, the practical implementation of this technology is
more urgently needed than ever.

Financials:

During the six months under review, pre-tax losses widened to £1.42m (31 October
2005: £0.91m), reflecting the budgeted increased level of development activity
during 2006. The increased activity has required additional technical staff,
equipment and space, the expenditure on which was in line with budget. At the
end of the period, activity further increased and extra staff and space were
added to the Sheffield facility, which will result in increased operating costs
during the second half of the financial year. This increase, which is also in
line with budget, will be mitigated by the receipt of the second tranche of
£0.30m grant awarded during the first half of the previous financial year by 
Yorkshire Forward.

In May 2006, the Company completed a successful secondary fundraising in which
it raised £29.41m before expenses. This capital has generated significant
interest income in the six months in review of £0.75m compared to £0.16m for the
same period in 2005.

Capital expenditure on facilities and test equipment reduced by 64% to £0.14m
(31 October 2005: £0.37m), we expect to increase capital expenditure in the
second half of the financial year due to further spend on the Company's
facilities in Sheffield to support projects already underway. At the end of the
period in review, net current assets had increased by 375% to £32.84m (31
October 2005: £6.89m), of which £32.66m was in cash and short term deposits,
which is considered a good position from which to achieve ITM's commercial
objectives.

The Board is not recommending payment of a dividend in accordance with the
dividend policy stated at the time of the IPO.

Commercial developments:

We have recently agreed terms, subject to contract, on a new 15,000sq ft
production facility in Sheffield. We expect it to be operational during the 1st
quarter 2008. This facility will enable production of electrolysers and fuel
cells and is in addition to our current research facility. We anticipate
starting small scale production of prototypes and low volume commercial
production during the first half of 2008. We believe the facility has scope for
future capacity expansion.

Since the period end, we have signed agreements with significant corporations to
provide a platform from which ITM and the two organisations can develop their
respective technologies:

   •In November 2006, ITM signed a Memorandum of Understanding with Hydrogen
    Engine Center Inc ("HEC"), a US company that designs, manufactures and
    distributes alternative fuel internal combustion engines for the industrial
    and power generation markets. The joint objective is to develop products for
    a non polluting grid independent energy system which can undergo early field
    trial testing. HEC anticipates that ITM can offer an assured supply of
    hydrogen using ITM's low cost electrolyser technology. ITM anticipates that
    HEC provides an early route to the provision of a complete system package
    using HEC's proven engine technology.

   •In December 2006, ITM signed a Memorandum of Understanding with ABRO, a 
    Trading Fund of the Ministry of Defence which maintains vehicles and 
    equipments owned and operated by the British Armed Forces, and in addition 
    offers a maintenance service to commercial organisations including Emergency 
    Services, Local Authorities and Airports. The joint objective of the parties 
    is to use ITM's technology to develop equipment which improves the capability 
    (fuel efficiency and/or pollution control) of diesel engines operating in 
    military and civilian environments. Field trial testing of the developed 
    equipment will begin in the first quarter of 2007.

Technical developments:

   •In July 2006, ITM initiated a joint development programme for the use of
    hydrogen in vehicle engines with The University of Hertfordshire. The
    programme includes the development of a Home Electrolyser Refuelling system
    that can create hydrogen fuel anywhere that has access to electricity and
    water. This important programme helps solve the requirement to build a new
    hydrogen refuelling infrastructure. The development of a Home Electrolyser
    Refuelling System and Bi-Fuel car is progressing satisfactorily and is on
    track to roll out a 10kW ITM electrolyser home refuelling device and a
    Bi-Fuel vehicle before the end of June 2007.

    In addition, ITM is investigating how the addition of hydrogen to the diesel
    combustion process can either reduce fuel consumption or pollutants and how 
    to provide the necessary on-board hydrogen generator system for diesel engines.
    Since the period in review and as a result of initial tests, the University has
    reported significant results indicating that the addition of hydrogen has a
    positive impact in the compression ignition combustion process. The Company has
    been advised by the University that it also expects significant improvements to
    be achieved to the emissions output from the engine.

   •In October 2006, ITM successfully achieved the following technical
    advances:

    Fuel Cells: The Company demonstrated the technology necessary to reduce the cost
    of fuel cells to $900/kW by increasing the power output of its cells to 360mW/
    cm2. ITM materials have now been successfully operated at powers in excess of
    this level. Consistent and repeatable performance at these power densities has
    been achieved.

    Electrolysers: ITM's long duration test of its unique low cost membrane
    technology as applied to electrolysers achieved 6,000 hours of operation on an
    intermittent test cycle without external evidence of degradation or loss of
    performance.

   •ITM successfully achieved its milestone objectives for the end of
    December 2006 on time and on budget. In summary the Company announced, that
    it had successfully operated a 5kW electrolyser stack based upon its Nickel/
    platinum technology using an intermittent (on-off) test cycle such as would
    be necessary if the device were to be used in conjunction with intermittent
    renewable or off-peak electricity supplies. This device has been
    independently costed at less than $250/kW notwithstanding the recent
    increases in the cost of platinum. ITM also operated a self pressuring
    electrolyser at 20bar, developed a dual liquid fuelled fuel cell including
    rapid refuelling system and further reduced the costs of the necessary
    technology to enable a Hydrogen Oxygen fuel cell to be manufactured for less
    than $700 per kW.

New Developments as at 31 January 2007:

ITM has now successfully built and operated a completely platinum free 5k/W
solid polymer electrolyser stack. The complete elimination of platinum reduces
our cost per kilowatt below the previously stated $164/kW (which included
Platinum on one side of the membrane).

The ongoing durability testing of our membranes in electrolysis mode shows no
external signs of degradation and we have now further increased durability from
previously mentioned 6,000 hours to in excess of 10,000 hours of operation in a
total test programme approaching 2 years. This lifetime substantially exceeds
the durability requirements of PEM membranes outlined by the automotive industry
and the Company believes it meets the lifetime requirements for commercially
viable systems.

In addition to the long-term durability testing of our membranes, all the
components, which would be in a non-platinum electrolyser cell, specifically
catalysts, membrane and support materials have exceeded 3,000 hours of
successful operation.

It is worth highlighting two of our long-term research programmes which may have
increasing importance over the next 12 months. These programmes have been
running since we became a public company in 2004 and are firstly, the organic
photovoltaic research programme which continues to suggest encouraging possible
solutions to the development of much lower cost photovoltaic systems by
eliminating silicon. Secondly, we have been modelling ways of combining
atmospheric carbon dioxide with electrolytic hydrogen to create liquid fuels.
These programmes are in addition to our electrolysis and fuel cell work but rely
on the same basic understanding of chemistry. We have filed patents in the above
developments.

Board and staff:

To enable further acceleration of ITM's development activity, we have recently
recruited a further 10 new staff to our technical and support team. We welcome
the new recruits to ITM and thank all of our staff for their hard work and
commitment during the last six months, especially those who were involved with
the completion of the milestones.

I would like to advise shareholders that I do not intend to seek re-election to
the Board at the AGM in September 2007, which will mark the completion of my
third year of office as your Non Executive Chairman. My executive
responsibilities and business interests outside the Company are such that it
will be increasingly difficult for me to devote the appropriate degree of
attention to the next phase of ITM's development. I will be working very closely
with the Board over the coming months to plan my succession.
Outlook:

The important scientific advances that we have achieved to date have created
substantial intellectual property which is the most valuable asset in the
Company. Our objectives over the next year are to focus on successful field
trials of our existing technology, to complete the building of our production
facilities and to expand our commercial relationships.

Subject to completion of successful field trials, we anticipate entering
negotiations and plan rapid commercialisation using the new Sheffield facilities
to manufacture initial commercial units. We anticipate product orders and
revenues to commence in early 2008.

ITM has made excellent progress and is now entering the commercial phase of its
development. I am looking forward to another exciting year for the Company.

Stephen Massey
Chairman
31 January 2007