TIDMCWR
RNS Number : 5529O
Ceres Power Holdings plc
08 November 2016
8 November 2016
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Ceres Power Holdings plc
Final results for the year ended 30 June 2016
Ceres Power Holdings plc ("Ceres Power", the "Company" or the
"Group") (AIM: CWR.L) announces its final results for the year
ended 30 June 2016.
Financial Highlights:
Year Ended Year Ended
30 June 30 June
2016 2015
GBP'000 GBP'000
----------- -----------
Total revenue and other operating
income, comprising: 1,668 945
Revenue (1) 1,113 324
Other operating income 555 621
Operating loss (12,694) (11,722)
Equity free cash flow (2) (11,291) (9,084)
Net cash and short term investments
(3) 6,947 18,184
Commercial and operational highlights:
During the reporting period
-- Substantial commercial progress including agreements with
Honda R&D for power system applications and Nissan for range
extenders for Electric Vehicles
-- Excellent technical progress with increasing SteelCell
performance and manufacturing scale up
After the year end
-- First significant US commercial success with Cummins & US
Dept. of Energy to develop multi-kW systems for Data Centre and
commercial scale applications
-- UK residential field trials begun for home system application
with British Gas as part of European ene.field demonstration
programme
-- GBP20 million fundraising in October 2016 secures the Group's financial strength
-- Formal release of SteelCell version 4 to customers and continued performance improvements
______________________________________________________________
(1 Revenue includes the release of GBP0.6 million of deferred
revenue in respect of contracted work completed for British
Gas)
2 Equity free cash outflow (EFCF) is the net change in cash and
cash equivalents in the year (-GBP6.2 million) less net cash
generated from financing activities (GBP0.1 million) less the
movement in short term investments (GBP5.0 million)
(3 This does not include the net GBP19.4 million equity raised
since the year end at a placing)
Phil Caldwell, CEO, commented:
"I'm delighted with our progress this year, having secured three
new partnerships with world-leading customers operating in high
growth markets. This puts Ceres Power in an excellent position for
commercial growth in the year ahead as we develop these
relationships further and add new partners for our SteelCell
technology"
Alan Aubrey, Chairman, added:
"In October the Company successfully raised equity funding of
GBP20 million. We are looking forward to another year of
significant commercial progress as we continue to establish Ceres
Power as a leading player in the clean energy sector."
For further information contact:
Ceres Power Holdings plc Tel. +44 (0)1403 273 463
Dan Caesar, Communications Director
Zeus Capital Ltd (Nominated Adviser and Broker) Tel: +44 (0)20 3829 5000
Phil Walker/Andrew Jones/Hugh Kingsmill Moore
Tavistock Tel: +44 (0)20 7920 3150
Mike Bartlett/James Collins
www.cerespower.com
Chairman's statement
New technology is changing the way we heat and power our homes,
businesses and transportation. Alongside this, changing lifestyles
and circumstances are adding to the pressure on our energy system.
For example, our increasing reliance on data and cloud computing
now accounts for around 2% of the world's electrical power
generation, a figure set to rise significantly. Poor air quality in
cities is leading to a desire to reduce carbon and harmful
emissions and adopt cleaner, electric vehicles. Our desire to
comply with the COP21 Paris Agreement and meet targets on climate
change, is creating a need to decarbonise our heat and power
networks, and generate power more efficiently. All of which places
yet more demand on our ageing power grid.
The existing system of centralised energy generation is no
longer appropriate, and this represents a huge opportunity for a
business such as ours.
Last year we set out our Company strategy to broaden the
applications for the SteelCell. I am pleased to say that this year
we have shown very strong progress against this strategy, and are
working with leading power system OEMs on a number of these huge
market opportunities. Honda, Nissan and Cummins are market leaders
in their respective fields, and we are engaged with them all in
developing different applications using the SteelCell.
We now aim to move our partners on from the development stage,
and negotiate commercial terms for the production and
commercialisation of products using the SteelCell technology.
I am delighted to say that in October, the Company successfully
raised equity funding of GBP20 million from a combination of new
and existing institutional investors. This was essential in
providing us with the financial strength to engage with partners of
size and quality. It also provided further funding for maintaining
the leadership position of our SteelCell technology, and investing
further in its higher power development capability.
The Board and Executive team has remained unchanged throughout
the year, as we now have a strong and balanced team with a range of
complementary skills. As a board, we aim to establish a governance
structure which provides effective control and oversight of the
business as it grows, to enhance shareholder value. This year, we
have taken further steps to comply as appropriate with the latest
guidelines for small and mid-cap companies - there are further
details in the corporate governance section of this year's annual
report.
I'd like to thank the Board and employees for their dedication
and hard work over the past year, in achieving our strategy and
getting the Company to such a strong position.
We are looking forward to another year of significant commercial
progress with existing and new partners as we continue to establish
Ceres Power as a leading player in the rapidly growing clean energy
sector.
Alan Aubrey
Chairman
Chief Executive's statement
The Company's substantial technical progress in recent years has
formed a solid foundation for the significant commercial headway we
have made this year. We have been able to show real progress in our
strategy of developing new applications for the SteelCell
technology, aimed at high growth markets such as transportation and
the commercial and light industrial sectors, in addition to our
residential offering.
Our vision of a fuel cell in every home and business can only
truly become a reality if we work with world-leading companies with
the engineering capability and market access to bring these
products to market. This year we have been able to engage with some
of these companies, which is a testament to the quality and
professionalism of the team at Ceres Power. Last year I stated that
our target was to have five OEMs working on development programmes
with the SteelCell technology within two years. We are on track to
meet this, with three significant relationships secured this year,
putting us on the path to commercialisation.
In January, we announced a relationship with Honda R&D for
joint development of a stack which could be used in a variety of
Honda's power system products. Honda produces over six million
power products a year and is a world leader in small generators and
engine technologies - developing one of the world's first micro-CHP
products, the Honda ECOWILL. Our two-year programme with Honda
comes after several years of testing and evaluating the SteelCell
technology in Japan, and I believe it is one of the strongest
endorsements to date of the quality of the technology and our
team.
In June, we announced our first multi-kW customer programme for
developing a higher power stack, with Nissan, one of the world's
leading electric vehicle (EV) manufacturers. Nissan has a target of
2020 for launching an electric vehicle with a fuel cell
range-extender that can run on biofuels. We are working with Nissan
UK to develop a 5-kW stack for such a range extender. This could
enable the same range and refuelling time as a conventional
combustion engine vehicle, but with significantly lower carbon and
emissions. We were approached by Nissan due to the SteelCell
technology's robustness for coping with the multiple cycling and
rapid start-ups required for automotive applications. This could
open a huge new market for the SteelCell, as pressure on diesel
emissions is leading to more regulation globally, and as the cost
of EV ownership continues to fall to the point where EV sales are
predicted to reach 25% of all vehicles sold by 2025.
In September 2016, we finalised a contract with Cummins - backed
by the US Department of Energy (DoE), and working with Pacific
Northwest National Laboratory, a US DoE laboratory and University
of Connecticut - to develop a multi-kW power system for use in data
centres and other commercial and light industrial applications.
This is our first significant entry into the US market and our
first development of a multi-kW system, which will build on
synergies from the Nissan stack programme. The market for power for
data centres and other commercial applications is growing rapidly.
Data centres already account for around 2% of global electricity
consumption. Cummins is one of the leaders in supplying back-up and
temporary power systems to this market, and is an ideal partner for
us.
We have had significant commercial success in markets where the
benefits of fuel cells are well understood, such as Asia and now
the US. Therefore it was really pleasing to have the opportunity to
join the Europe-wide field testing programme of residential micro
CHP units, with the ene.field programme in partnership with British
Gas. We have had a unit on test at British Gas over the past six
months, and joining the ene.field programme is a great opportunity
for us to show the maturity of the technology, and the benefits for
the UK market, to some of the leading OEMs. This will be the first
significant trial of residential fuel cells in the UK in recent
years, and is a key step in the development of robust products we
can deploy commercially with our OEM partners.
Since Tony Cochrane joined us as CCO, we've moved up a gear
commercially, adding strength regionally to our business
development teams. In addition to the programmes highlighted, over
the year we have run test programmes at stack and system level in
Japan, Korea and Europe. We continue to have a healthy pipeline of
new opportunities to secure at least a further two OEM development
programmes to meet our original target of five by the end of 2017.
Furthermore, by the end of 2018 our intention is to take at least
two of these OEM partners through to programmes where the SteelCell
is selected as the technology to take through to full commercial
product launch.
Technology and Operations
Our significant commercial progress this year was made possible
by the commitment of the Technology and Operation teams, under the
leadership of Mark Selby, CTO, and James Falla, COO.
We achieved a key milestone with the recent release to customers
of our latest version of the SteelCell technology, version 4. This
has reduced manufacturing costs by removing processing steps and
through improved use of materials, and also by making high-speed
production possible.
Version 4 also brings in more performance enhancements from
R&D and Engineering, which further improve robustness and
lifetime.
In January, we announced the successful installation of our
high-speed print line, which has increased print-cycle processing
speed by a factor of ten. The success was made possible through
backing from an Innovate UK grant.
At a system level, our engineering teams have achieved a
significant milestone with the release of the latest system
architecture of the SteelGen. This is being tested for home use by
British Gas, in the Europe-wide ene.field programme. Field testing
will bring us real world operating experience of the technology and
help us understand and demonstrate the savings anticipated in
homes. Although we don't intend to make and sell the complete power
system units, this is a key step in securing OEM partners, by
helping them understand the maturity and suitability of the
technology for deployment in homes.
Additionally, at a multi-kW level we have built for the first
time a 5kW stack module and continue to test it in-house. This
feeds into the work we will do for Nissan, Cummins and other
multi-kW partners.
In the coming year, our R&D investment and efforts will
focus on further improving lifetime and reliability, working
closely with our customers to develop methodologies to predict
technology lifetime. This will increase confidence in the
robustness and readiness of the technology to be deployed, thus
reducing testing and development times for commercial launch
programmes.
Financial
As described above, our strategy for entering commercial
partnerships is becoming a reality and, for the financial year
ended 30 June 2016, this translated into revenue and other income
of GBP1.7 million (2015: GBP0.9 million). Of this, GBP1.1 million
was customer revenue (2015: GBP0.3 million) and GBP0.6 million was
other income, primarily from government grants (2015: GBP0.5
million). GBP0.6 million of revenue was due to the release of
deferred revenue as we demonstrated our prototype residential
system at British Gas during the second half of the year. We have
invested in people and capabilities to support our strategy of
developing high power systems. This year's equity free cash outflow
of GBP11.3 million will be the peak, as we anticipate seeing an
increasing contribution from commercial programmes offsetting our
operating costs.
We expect to continue to grow top line revenue and other
operating income as we bring through more pipeline opportunities.
Thanks to recently signed commercial agreements, today our customer
and government grant order book is already over GBP2 million.
As we increase our number of customers, and they progress from
evaluation to product development and then to commercial launch, we
anticipate each progression will increase the revenue contribution,
reducing our underlying cash burn year on year towards break
even.
The successful fundraising approved by shareholders on 14
October 2016 for the placing of 228.6 million shares has
contributed GBP19.4 million to the Group's cash and short term
investments, which at 30 June 2016 was GBP6.9 million. This stands
us in good stead for the next few years, during which we plan to
further our commercial opportunities.
People
Due to the quality of our OEM partners, it is important we
attract and retain talented people to work with them. We have hired
some key individuals this year, and continue to attract exceptional
people. We have added to the commercial, engineering and programme
delivery sides of the business to support our growing number of
customer programmes.
I'd personally like to thank everyone at Ceres Power for their
dedication and hard work over the past year, and I look forward to
an exciting year ahead.
Outlook
This is an exciting stage in the Company's growth. We are
targeting five global engineering companies as customers in joint
development agreements by the end of 2017 and aiming to be in two
launch programmes with OEM partners by the end of 2018. We have
made good progress towards these objectives and I am looking
forward to being able to announce further commercial progress in
the year ahead.
Phil Caldwell
Chief Executive Officer
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER
COMPREHENSIVE INCOME
For the year ended 30 June 2016
Year Year
ended ended
30 June 30 June
2016 2015
Note GBP'000 GBP'000
Revenue 1,113 324
Cost of sales (336) (191)
Gross profit 777 133
Other operating income 555 621
Operating costs 2 (14,026) (12,476)
Operating loss (12,694) (11,722)
Finance income 77 110
Loss before taxation (12,617) (11,612)
Taxation credit 2,157 1,571
Loss for the financial year
and total comprehensive
loss (10,460) (10,041)
========= =========
Losses per GBP0.01 ordinary
share expressed in pence
per share:
Basic and diluted loss per
share 3 (1.35)p (1.33)p
All activities relate to the Group's continuing operations and
the loss for the financial year is fully attributable to the owners
of the parent.
The accompanying notes are an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
30 June 30 June
2016 2015
Note GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 2,309 2,080
Total non-current assets 2,309 2,080
Current assets
Trade and other receivables 1,109 982
Derivative financial instrument 28 -
Current tax receivable 1,997 1,519
Short-term investments 6 1,000 6,000
Cash and cash equivalents 6 5,947 12,184
--------- ---------
Total current assets 10,081 20,685
Liabilities
Current liabilities
Trade and other payables (2,121) (1,708)
Derivative financial instrument (7) -
Provisions for other liabilities
and charges (78) (305)
--------- ---------
Total current liabilities (2,206) (2,013)
--------- ---------
Net current assets 7,875 18,672
Non-current liabilities
Accruals and deferred income (31) (1,121)
Provisions for other liabilities
and charges (866) (950)
--------- ---------
Total non-current liabilities (897) (2,071)
Net assets 9,287 18,681
========= =========
Equity
Share capital 4 7,779 7,725
Share premium account 90,120 90,120
Capital redemption reserve 3,449 3,449
Other reserve 7,463 7,463
Accumulated losses (99,524) (90,076)
Total equity 9,287 18,681
========= =========
The accompanying notes are an integral part of these
consolidated financial statements.
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2016
Year Year
ended ended
30 June 30 June
2016 2015
Note GBP'000 GBP'000
Cash flows from operating
activities
Cash used in operations 5 (11,773) (9,182)
Taxation received 1,679 1,218
--------- ---------
Net cash used in operating
activities (10,094) (7,964)
--------- ---------
Cash flows from investing
activities
Purchase of property, plant
and equipment (1,302) (1,243)
Movement in short-term investments 5,000 (6,000)
Finance income received 77 110
--------- ---------
Net cash generated from/(used
in) investing activities 3,775 (7,133)
--------- ---------
Cash flows from financing
activities
Proceeds from issuance of
ordinary shares 54 20,035
Net expenses from of issuance
of ordinary shares - (466)
--------- ---------
Net cash generated from financing
activities 54 19,569
--------- ---------
Net (decrease)/increase in
cash and cash equivalents (6,265) 4,472
Exchange gains on cash and
cash equivalents 28 13
--------- ---------
(6,237) 4,485
Cash and cash equivalents
at beginning of year 12,184 7,699
--------- ---------
Cash and cash equivalents
at end of year 5,947 12,184
--------- ---------
The accompanying notes are an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2016
Share Capital
Share premium redemption Other Accumulated
capital account reserve reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July
2014 5,369 72,907 3,449 7,463 (81,115) 8,073
Comprehensive
income
Loss for the
financial
year - - - - (10,041) (10,041)
--------- --------- ------------- --------- ------------ ---------
Total comprehensive
loss - - - - (10,041) (10,041)
--------- --------- ------------- --------- ------------ ---------
Transactions
with owners
Issue of shares,
net of costs 2,356 17,213 - - - 19,569
Share-based
payments charge - - - - 1,080 1,080
--------- --------- ------------- --------- ------------ ---------
Total transactions
with owners 2,356 17,213 - - 1,080 20,649
--------- --------- ------------- --------- ------------ ---------
At 30 June
2015 7,725 90,120 3,449 7,463 (90,076) 18,681
--------- --------- --------- ------------ ---------
Comprehensive
income
Loss for the
financial
year - - - - (10,460) (10,460)
Total comprehensive
loss - - - - (10,460) (10,460)
--------- --------- ------------- --------- ------------ ---------
Transactions
with owners
Issue of shares,
net of costs 54 - - - - 54
Share-based
payments charge - - - - 1,012 1,012
Total transactions
with owners 54 - - - 1,012 1,066
--------- --------- ------------- --------- ------------ ---------
At 30 June
2016 7,779 90,120 3,449 7,463 (99,524) 9,287
--------- --------- ------------- --------- ------------ ---------
The accompanying notes are an integral part of these
consolidated financial statements.
Notes to the financial statements for the year ended 30 June
2016
1. Basis of preparation
The consolidated financial statements of the Group have been
prepared on a going concern basis, in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union, the IFRS Interpretations Committee (IFRS-IC) interpretations
and those parts of the Companies Act 2006 applicable to companies
reporting under IFRS. The consolidated financial statements have
been prepared on a historical cost basis except that the following
assets and liabilities are stated at their fair value: derivative
financial instruments and financial instruments classified as fair
value through the profit or loss.
The financial information contained in this final announcement
does not constitute statutory financial statements as defined by in
Section 434 of the Companies Act 2006. The financial information
has been extracted from the financial statements for the year ended
30 June 2016 which have been approved by the Board of Directors,
and the comparative figures for the year ended 30 June 2015 are
based on the financial statements for that year.
The financial statements for 2015 have been delivered to the
Registrar of Companies and the 2016 financial statements will be
delivered after the Annual General Meeting.
The Auditor has reported on both sets of accounts without
qualification, did not draw attention to any matters by way of
emphasis without qualifying their report, and did not contain a
statement under Section 498(2) or 498(3) of the Companies Act
2006.
The accounting policies adopted are consistent with those of the
financial statements for the year ended 30 June 2015, as described
in those financial statements.
After having made appropriate enquiries and in light of the
placing which raised GBP19.4 million net of expenses in October
2016, the Directors have a reasonable expectation that the Group
and Company have adequate resources to progress their established
strategy for the foreseeable future. Accordingly, the Directors
continue to adopt the going concern basis in preparing these
financial statements.
2. Operating costs
Operating costs are split
as follows:
Year
Year ended ended
30 June 30 June
2016 2015
GBP'000 GBP'000
Research and development costs 10,588 9,146
Administrative expenses 3,714 3,330
----------- ---------
14,302 12,476
Reversal of provision relating
to onerous lease and property
dilapidations (276) -
----------- ---------
14,026 12,476
=========== =========
Notes to the financial statements for the year ended 30 June
2016 (continued)
3. Loss per share
Year ended Year ended
30 June 30 June
2016 2015
GBP'000 GBP'000
Loss for the financial year
attributable to shareholders (10,460) (10,041)
============ ============
Weighted average number of
shares in issue 773,999,046 753,164,756
============ ============
Loss per GBP0.01 ordinary share
(basic & diluted) (1.35)p (1.33)p
============ ============
4. Share capital
Ceres Power Holdings plc has called-up share capital totalling
777,857,841 GBP0.01 ordinary shares as at 30 June 2016 (772,537,841
ordinary shares of GBP0.01 each at 30 June 2015).
During the period 5,320,000 ordinary shares of GBP0.01 each were
issued on the exercise of employee share options.
5. Cash used in operations
Year ended Year ended
30 June 30 June
2016 2015
GBP'000 GBP'000
Loss before taxation (12,617) (11,612)
Adjustments for:
Other finance income (77) (110)
Depreciation of property, plant
and equipment 1,178 926
Share-based payments 1,012 1,080
Net foreign exchange gains (49) (13)
Operating cash flows before
movements in working capital (10,553) (9,729)
(Increase)/decrease in trade
and other receivables (134) 308
(Decrease)/increase in trade
and other payables (775) 150
(Decrease)/increase in provisions (311) 89
----------- -----------
(Increase)/decrease in working
capital (1,220) 547
Cash used in operations (11,773) (9,182)
=========== ===========
Notes to the financial statements for the year ended 30 June
2016 (continued)
6. Net cash, short-term investments and financial assets
Year
Year ended ended
30 June 30 June
2016 2015
GBP'000 GBP'000
Cash at bank and in hand 805 1,135
Money market funds 5,142 11,049
Cash and cash equivalents 5,947 12,184
Short-term investments (bank
deposits > 3 months) 1,000 6,000
----------- ---------
6,947 18,184
----------- ---------
The Group typically places surplus funds into pooled money
market funds and bank deposits with durations of up to 12 months.
The Group's treasury policy restricts investments in short-term
sterling money market funds to those which carry short-term credit
ratings of at least two of AAAm (Standard & Poor's), Aaa/MR1+
(Moody's) and AAA V1+ (Fitch) and deposits with banks with minimum
long-term rating of A/A-/A3 and short-term rating of F-1/A-2/P-2
for banks which the UK Government holds less than 10% ordinary
equity.
7. Post balance sheet events
During October 2016 the Company completed a placing which raised
GBP20 million gross through the issue of 228,603,083 ordinary
shares.
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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