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Overview
ITM Power Plc (ITM) is a renewable energy company. It designs and manufactures hydrogen energy systems, used for energy storage and clean fuel production. The group develops equipment to convert renewable energy into a clean fuel that can be captured for use in residential, transport, and industrial applications; and a variety of materials that facilitates the decrease in the hydrogen production cost. ITM Power's significant products include HFuel, HGas and HPAC.
Trading Update
The delivery of completed projects surged significantly in the H1 FY2019 as expected. As a result, the total income (IFRS 15) was supposed to be around £17 million, a surge of over 20 per cent against the last year same period data. The EBITDA loss from operations of around £6.7 million was in line with the company Board expectations. Total financial assets at the end of the financial year 2019 were around £19.8 million, including cash on the guarantee of £1.7 million, working capital of £12.9 million, and cash balance amounting to £5.2 million.
A cash movement was £10.4 million in H2 FY19, due to the period of deploying working capital primarily for - procuring gears for the delivery of four HRS (hydrogen refuelling stations) in the United Kingdom, materials for the Shell 10MW Refhyne project and the bus HRS in France. In H1 FY20, such working capital enhancements are expected to slow down partially, due to the cash receipts being recognised from the projects.
Pipeline Numbers Update
The backlog of contracts stood at a high level of £45.1 million, a surge of 26 per cent from February 2019 of £9.4 million. The tender prospects pipeline stood at £330 million, up by 38 per cent from February 2019 data of £90 million. Over the last twelve months, the active commercial tender responses were 46 with an average project size of £7.2 million, driven by the solid industrial demand for more significant systems.
The group presently had a portfolio of the thirty-four projects and a team of ten dedicated project managers with German and French speakers, who works directly with the customers for timely delivery of projects and within the defined budget guidelines.
Share Price Performance
 Daily Chart as at June-03-19, before the market closed (Source: Thomson Reuters)
On June 03, 2019, at the time of writing (before the market closed, at 12:41 pm GMT), ITM shares were trading at GBX 35.2, up by 2.62 per cent against the previous day closing price. Stock's 52 weeks High and Low is GBX 37.22/GBX 18.50. At the time of writing, the share was quoting 7.86 per cent lower than the 52w High and 85.41 per cent higher than the 52w low. The groupâs stock beta was 0.48, reflecting lower volatility of the stock against the benchmark index.
Stock's average traded volume for 5 days was 1,620,559.40; 30 days - 998,774.07 and 90 days â 718,916.24. The average traded volume for 5 days increased by 62.25 per cent against the 30 days average traded volume. The outstanding market capitalisation was around £110.92 million.
Conclusion
The market for electrolysis is rising at a rapid pace. At the 100MW level, many global projects have been broadcast by energy majors including GasUnie, Energinet, Tata Steel, BP, the Northern Netherlands initiative, ONTRAS, RWE, Tennet, and Nouryon. The Committee on Climate Change report "Net Zero" predicts between 6 GW and 17 GW of electrolyser capacity to be needed in the United Kingdom by 2050. The company has a new task force for discovering an advanced solution to utilize the use of electricity made by renewable sources with a focus on electrolysis.
