TIDMCWR
RNS Number : 0970H
Ceres Power Holdings plc
11 March 2015
11 March 2015
Ceres Power Holdings plc
Interim results for the six months ended 31 December 2014
Ceres Power Holdings plc ("Ceres", "Ceres Power", "the Company"
or "the Group") announces its interim results for the six months
ended 31 December 2014.
Highlights:
-- Successful fundraising of GBP20 million from leading
institutional investors provides the balance sheet strength to
engage with commercial partners for the next stages of joint
development and commercialisation of the Ceres Steel Cell
technology
-- Deepening relationship with a global Japanese power system
company as Joint Development Agreement signed and underway with
first stages meeting performance targets
-- Achieved 40% improvement in power output of the technology -
further validating the route to affordable fuel cell products
-- Ongoing testing in South Korea nearing completion - meeting all targets
-- Further evaluation of the technology by several new Japanese
OEMs and potential manufacturing partners
-- Aidan Hughes, ex-Finance Director of the Sage Group plc,
appointed as Non-Executive Director and Chairman of Audit
Committee
-- James Falla appointed as COO to drive the delivery of both customer and internal programmes
Financial Highlights:
Six months Six months end
ended 31 December 31 December
2014 2013
(Unaudited) (Unaudited)
GBP'000 GBP'000
------------------- ---------------
Total revenue, comprising 133 895
- release of deferred revenue - 740
- underlying revenue (1) 133 155
Other operating income 294 177
Total underlying revenue and other
operating income 427 332
Operating costs (5,741) (4,867)
Operating loss (5,314) (3,795)
Equity free cash flow (2) (4,528) (2,863)
Net cash and short-term investments 22,735 12,576
(1 Underlying revenue is all revenue excluding the release of
deferred revenue to the income statement which relates to legacy
agreements)
(2 Equity free cash flow is the movement in net cash and cash
equivalents and short-term investments in the period, excluding
cash flows from financing activities)
Alan Aubrey, Chairman of Ceres Power, commented:
"I am very pleased with the company's progress, particularly the
significant technical advances made over the past six months. We
are well positioned for the future and I am confident that we will
soon see this progress further advancing our current commercial
opportunities."
Chairman's statement
The global energy markets continue to change significantly and
the traditional model of centralised power generation is gradually
being disrupted. A clear example of this is E.ON's recent decision
to split its business in two, spinning off its fossil fuel and
nuclear business to focus on renewables and distributed generation.
Johannes Teyssen, E.ON's CEO, said the traditional business model
for utilities has "broken apart" and cited the main reason for this
change as new technology, which has lowered the barrier of entry to
the energy market, undermining the traditional role of the
utility.
In the US, the Energy Information Administration expects
centralised generation to produce less power in 2015 than in 2007
despite significant economic growth, due to the impact of energy
efficiency and an increase in distributed generation. This
reduction is due to new technologies enabling a combination of
demand-side management and distributed generation, which is
predominantly from solar PV, whose cost has dropped significantly
with volume in recent years.
As the energy markets change, security of supply and the ability
to generate power in a highly efficient way from the reliable
existing gas infrastructure will drive the adoption of new
technologies such as fuel cells. Japan has seen rapid growth of
fuel cell systems generating power from natural gas. By the end of
2014 the number of installations of residential fuel cells in Japan
exceeded 138,000 in line with government targets to have 1 million
homes powered by fuel cells by 2020, rising to 5 million by
2030.
The recent drop in fuel prices has resulted in natural gas
prices falling in recent months in sync with oil prices and in most
regions this has widened the so-called spark gap between
electricity and gas prices, improving the economic payback for fuel
cells. The long term forecast from DECC in the UK and in other
countries suggests that this trend will continue regardless of fuel
price which will help drive the adoption of the technology. I am
convinced that distributed generation will continue to grow as
costs fall and the market opportunity for the Ceres Steel Cell is
as large as ever.
In the two years I have been involved with Ceres Power we have
laid the right foundations both technically and commercially for
the future success of the business. We are continuing to build the
management team around Phil Caldwell our CEO, including the recent
appointments of James Falla as Chief Operating Officer and Aidan
Hughes as Non-Executive Director. Aidan brings considerable
experience of growing technology companies, is a significant
addition to the Board and will chair the Audit Committee. James
Falla brings a clear track record of operational delivery,
particularly in Asia.
I am delighted with the progress made by Ceres Power and am
excited about the Company's prospects. We are well positioned for
the future and will soon begin to reap the benefits from the good
work that the team has put in over the past few years.
Alan Aubrey
Chairman
Chief Executive's statement
Over the past six months we have made significant progress
against our core strategy of being a technology provider of the
Ceres Steel Cell to leading power systems companies across
different applications and geographies. The execution of this
strategy has focused on three key areas:
i) giving ourselves a strong financial platform and commercial
pipeline for the business for the next few years,
ii) continuing to develop the core technology performance,
increasing power, efficiency and lifetime, and
iii) making sure we are able to scale the business in future,
both through process development in Horsham and working with
manufacturing partners in key regions such as Asia.
Commercial Progress
Considering the size of our target customers for the Steel Cell
and to give our existing partners confidence in the future of the
business, it was important that we gave the Company sufficient
funding to support our growth over the next few years. We achieved
this through the GBP20 million raise in the summer, which was
backed by leading institutional investors.
Since then we have continued to work with existing partners such
as KD Navien in South Korea and Cummins in North America and
brought in new customers with a particular focus on the Japanese
market. Of these three target markets we have made most progress in
Japan, where there is a drive to meet the target of installing 1
million fuel cell systems in homes by 2020 and 5 million by 2030.
In order to accomplish this, the power system companies need to
achieve a significant step down in cost without compromising
performance, hence their interest in the Ceres Steel Cell, a
low-cost and robust fuel cell technology.
In October 2014 we signed a Joint Development Agreement (JDA)
with a leading Japanese Power System company after a successful
period of testing of the technology both in the UK and Japan. This
validation, in the most advanced fuel cell market in the world, is
a huge endorsement of the Steel Cell technology. This non-exclusive
agreement has enabled both companies to start to combine their
respective engineering and R&D expertise with the aim of
producing a jointly developed Steel Cell SOFC stack for various
applications within the Japanese company's product portfolio. The
first results from this JDA have met the initial performance
targets and the two companies are currently discussing further
stages in extending the relationship further.
In order to support this activity we are also actively engaged
with manufacturing partners to look at the potential production of
the Steel Cell technology in Asia. Although this is still at an
early stage, we have had several organisations validating our
process methods and costs at our manufacturing facility in
Horsham.
Testing with KD Navien, South Korea's largest domestic boiler
manufacturer, has continued to progress well and is meeting all of
the required targets. We expect to conclude this in the next few
months and provide an update in due course. We also continue to
have a good relationship with US power giant Cummins exploring
different applications for the Steel Cell at higher power levels
for prime power applications, which is a rapidly growing
market.
Although progress to follow-on development programmes in the US
and South Korea has taken longer than originally expected, we
continue to grow the commercial pipeline, particularly in Japan.
Our near term focus for the remainder of this financial year will
be on securing next stage agreements in the Asian market.
Technology Progress
Over the past 6 months we have made significant technical
progress having increased our net electrical efficiency to 47%
which is equivalent to the highest performance achieved for SOFC in
the Japanese market and superior to the existing offerings from PEM
technology providers. Our target for the next period is to
demonstrate that our Steel Cell technology enables net efficiency
exceeding 50%, which would enhance the already significant benefit
to the residential consumer in terms of economic payback and also
enables prime power for commercial applications.
We have invested significantly in the technology team and test
infrastructure to further validate the reliability and performance
of the technology. We have already demonstrated the ability of the
Steel Cell to turn on and off in different conditions, which is
still a big issue for many SOFC companies and, in addressing steady
state performance we now consistently achieve degradation rates
equivalent to a 5-7 year stack life, which is the entry level
requirement for good economic payback.
Since the period end, I am very pleased to note that, in early
test results, we have also increased the overall power density by
greater than 40% through a variety of both mechanical and material
improvements to cell and stack design and will bring these forward
from R&D to customer programmes later this year. This excellent
progress by our scientists and engineers was achieved ahead of time
against our internal roadmap and will have a direct and positive
impact on the cost of Ceres Steel Cell products.
Our focus on the core technology has shown there is significant
upside in performance still to come. This year we intend to
increase efficiency still further and also start advanced
engineering programmes to show applicability of the technology to
larger scale power generation, such as for the data centre and
prime power markets.
The Steel Cell is a disruptive technology compared with that
used by existing fuel cell offerings in Japan and the US markets
and we are consistently demonstrating the potential of this
technology both internally and at customer sites. The combination
of increasing overall efficiency, cell power and low degradation
rates all contribute to an improved economic payback for the end
user at an affordable price point.
Manufacturing and Operations
Having established high standards of technical performance, we
are demonstrating our ability to live up to the low cost promise of
the technology in high volume to our potential OEM partners. There
is considerable value in licensing the manufacturing of the Steel
Cell in the future and we have started to have exploratory
discussions with several companies capable of making the Steel Cell
in high volume for the Asian market.
We are now working on optimising our processes for volume,
reducing processing time and costs. The work with ASM Assembly
Systems (formerly DEK) is a good example of this and is backed by
Innovate UK (formerly the Technology Strategy Board) in a GBP0.7
million funded project to take high-speed PV printing machines from
the solar industry and adapt them for our fuel cell
manufacture.
I am also very pleased to welcome James Falla to the business as
COO. In the next phase of Ceres' growth, execution and delivery are
crucial. James brings expertise in international operational
delivery from the automotive sector such as establishing and
running manufacturing facilities in Asia.
Financial
Although we have not yet seen commercial progress coming through
to significant revenue, total underlying revenue and other
operating income has increased to GBP0.43m (2013: GBP0.33m). This
is due to an increase of UK Government grants recognised from
GBP0.18m to GBP0.29m while underlying revenue remained broadly
flat. The underlying revenue position is flat predominantly due to
progress taking longer than anticipated to reach follow-on
agreements in the US and South Korea. Overall revenue has declined
to GBP0.13m (2013: GBP0.90m) as in 2013 the Group released GBP0.74m
of deferred revenue to the income statement (deferred revenue being
cash received relating to a contract but not recognised as revenue)
due to the ending of a legacy product and supply agreement with
Bord Gais Eirann.
The Group's operating loss increased as planned to GBP5.31m in
2014 (2013: GBP3.80m). This was driven by the reduction in total
revenue, as detailed above, as well as the planned-for increase of
GBP0.87m in recurring operating costs to GBP5.74m in the period
(2013: GBP4.87m). This increase in recurring operating costs is due
to the continued rebase and focus on development and
'productionisation' of the technology, which reflects an increased
average number of employees in the period and the drive to improve
the Company's test and manufacturing capability.
Ceres ends the calendar year 2014 with GBP22.74m in cash and
cash equivalents and short-term investments, having started the
period with GBP7.70m. This movement in funds was influenced by cash
inflows from financing activities of GBP19.56m, being net funds
received from the equity fundraise in July 2014 (2013: GBPnil), and
equity free cash outflow (EFCF) in the period of GBP4.53m (2013:
2.86m). The EFCF was principally a reflection of net cash used in
operations of GBP3.92m (2013: GBP3.71m), an increase of GBP0.21m as
the business has grown, and investment in property, plant and
equipment of GBP0.85m (2013: GBP0.18m) as the Company has invested
in expanding its test facilities. Since the period end the Company
received GBP1.05m of income tax credit relating to the financial
year ended 30 June 2014 (2013: the Company received GBP1.0m income
tax credit during the period).
Summary
We have made good technical and commercial progress over the
past six months, continuing to hit our key technical performance
milestones and bringing through more companies to evaluate our
technology. I am confident that we will start to see this reflected
in commercial progress this year, as more partners evaluate the
technology and we continue to demonstrate increasing performance
against our roadmap. In the remainder of this year we expect to
continue our investment in development and see more OEMs moving
into next stage agreements.
Ceres is well positioned to become one of the leading companies
in the fuel cell sector and the level of interest in our unique
Steel Cell technology from the world's leading power system and
manufacturing companies shows that we have a significant business
opportunity.
Phil Caldwell
Chief Executive Officer
For further information contact:
Ceres Power Holdings plc Tel. +44 (0)1403 273 463
Phil Caldwell, CEO
Richard Preston, CFO
N+1 Singer (Nominated Adviser and Broker) Tel: +44 (0) 20 7496 3000
Ben Wright / Alex Wright
Tavistock Communications Tel: +44 (0) 20 7920 3150
Mike Bartlett/James Collins
www.cerespower.com
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2014
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2014 (Unaudited) 2013 (Unaudited) 2014 (Audited)
Note GBP'000 GBP'000 GBP'000
Revenue 133 895 1,224
Operating costs 2 (5,741) (4,867) (10,393)
Other operating income 294 177 581
Operating loss (5,314) (3,795) (8,588)
Interest receivable 58 42 73
Loss before income tax (5,256) (3,753) (8,515)
Income tax credit 550 400 1,122
Loss for the financial
period / year and total
comprehensive loss (4,706) (3,353) (7,393)
================== ================== ================
Losses per GBP0.05 ordinary
share expressed in pence
per share:
Basic and diluted loss
per share 3 (0.64)p (0.62)p (1.38)p
The accompanying notes are an integral part of these interim
financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2014
31 December 31 December 30 June
2014 (Unaudited) 2013 (Unaudited) 2014 (Audited)
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 1,998 1,771 1,657
Other receivables 53 53 58
------------------ ------------------ ----------------
Total non-current assets 2,051 1,824 1,715
Current assets
Trade and other receivables 885 642 1,219
Current tax receivable 1,550 444 1,166
Short-term investments 6 12,000 - -
Cash and cash equivalents 6 10,735 12,576 7,699
------------------ ------------------ ----------------
Total current assets 25,170 13,662 10,084
Liabilities
Current liabilities
Trade and other payables (1,317) (1,585) (1,143)
Provisions for other liabilities
and charges (326) - (242)
------------------ ------------------ ----------------
Total current liabilities (1,643) (1,585) (1,385)
------------------ ------------------ ----------------
Net current assets 23,527 12,077 8,699
Non-current liabilities
Other payables (1,146) (1,157) (1,175)
Provisions for other liabilities
and charges (966) (1,107) (1,166)
------------------ ------------------ ----------------
Total non-current liabilities (2,112) (2,264) (2,341)
Net assets 23,466 11,637 8,073
================== ================== ================
Equity
Share capital 4 7,725 5,369 5,369
Share premium account 90,115 72,907 72,907
Capital redemption reserve 3,449 3,449 3,449
Other reserve 7,463 7,463 7,463
Profit and loss account (deficit) (85,286) (77,551) (81,115)
Total equity 23,466 11,637 8,073
================== ================== ================
The interim financial statements were approved by the Board of
Directors on
10 March 2014 and were signed on its behalf by:
Philip Caldwell Richard Preston
Director Director
The accompanying notes are an integral part of these interim
financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2014
Profit
Share Capital and loss
Share premium redemption Other account
capital account reserve reserve (deficit) Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2013 8,817 72,906 - 7,463 (74,578) 14,608
Comprehensive
loss
Loss for the period - - - - (3,353) (3,353)
------------- ------------- -------------- ------------- ------------- -------------
Total comprehensive
loss - - - - (3,353) (3,353)
------------- ------------- -------------- ------------- ------------- -------------
Transactions with
owners
Issue of shares,
net of costs 1 1 - - - 2
Cancellation of
deferred shares,
net of costs (3,449) - 3,449 - - -
Share-based payments
charge - - - - 380 380
------------- ------------- -------------- ------------- ------------- -------------
Total transactions
with owners (3,448) - 3,449 - 380 382
------------- ------------- -------------- ------------- ------------- -------------
At 31 December
2013 5,369 72,907 3,449 7,463 (77,551) 11,637
------------- ------------- ------------- ------------- -------------
Comprehensive
loss
Loss for the period - - - - (4,040) (4,040)
Total comprehensive
loss - - - - (4,040) (4,040)
------------- ------------- -------------- ------------- ------------- -------------
Transactions with
owners
Share-based payments
charge - - - - 476 476
Total transactions
with owners - - - - 476 476
------------- ------------- -------------- ------------- ------------- -------------
At 30 June 2014 5,369 72,907 3,449 7,463 (81,115) 8,073
------------- ------------- -------------- ------------- ------------- -------------
Comprehensive
loss
Loss for the period - - - - (4,706) (4,706)
------------- ------------- -------------- ------------- ------------- -------------
Total comprehensive
loss - - - - (4,706) (4,706)
------------- ------------- -------------- ------------- ------------- -------------
Transactions with
owners Issue of
shares, net of
costs 2,356 17,208 - - - 19,564
Share-based payments
charge - - - - 535 535
Total transactions
with owners 2,356 17,208 - - 535 20,099
------------- ------------- -------------- ------------- ------------- -------------
At 31 December
2014 7,725 90,115 3,449 7,463 (85,286) 23,466
------------- ------------- -------------- ------------- ------------- -------------
The accompanying notes are an integral part of these interim
financial statements.
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 December 2014
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2014 (Unaudited) 2013 (Unaudited) 2014 (Audited)
Note GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Cash used in operations 5 (3,917) (3,710) (8,252)
Income tax received 166 1,000 1,000
------------------ ------------------ ----------------
Net cash used in operating
activities (3,751) (2,710) (7,252)
------------------ ------------------ ----------------
Cash flows from investing
activities
Purchase of property, plant
and equipment (848) (184) (520)
Movement in short-term investments (12,000) 6,207 6,207
Finance income received 53 31 75
------------------ ------------------ ----------------
Net cash (used in) / generated
from investing activities (12,795) 6,054 5,762
------------------ ------------------ ----------------
Cash flows from financing
activities
Proceeds from issuance of
ordinary shares 20,035 2 2
Expenses of shares issued (471) - -
------------------ ------------------ ----------------
Net cash generated from financing
activities 19,564 2 2
------------------ ------------------ ----------------
Net increase/(decrease) in
cash and cash equivalents 3,018 3,346 (1,488)
Exchange gains/(losses) on
cash and cash equivalents 18 - (43)
------------------ ------------------ ----------------
3,036 3,346 (1,531)
Cash and cash equivalents
at beginning of period 7,699 9,230 9,230
------------------ ------------------ ----------------
Cash and cash equivalents
at end of period 10,735 12,576 7,699
------------------ ------------------ ----------------
Reconciliation to net funds
Opening net funds 7,699 15,437 15,437
Net increase/(decrease) in cash
and cash equivalents 3,036 3,346 (1,531)
Increase/(decrease) in short-term
investments 12,000 (6,207) (6,207)
Closing net funds (note 6) 22,735 12,576 7,699
------- -------- --------
The accompanying notes are an integral part of these interim
financial statements.
Notes to the interim financial statements for the six months
ended 31 December 2014
1 Basis of preparation
The financial information has been prepared in accordance with
all IFRS and IFRS Interpretations Committee ("IFRIC")
interpretations that had been published by 31 December 2014 as
endorsed by the European Union (EU).
This interim report, which comprises the consolidated statement
of comprehensive income, the consolidated statement of financial
position, the consolidated statement of changes in equity, the
consolidated cash flow statement and the related notes, is
unaudited and does not constitute audited accounts within the
meaning of the Companies Act 2006. The accounts for the year ended
30 June 2014, on which the auditors gave an unqualified audit
opinion, have been filed with the Registrar of Companies.
The accounting policies adopted are consistent with those of the
financial statements for the year ended 30 June 2014, as described
in those financial statements. As at the date of signing the
interim financial statements, there are no new Standards likely to
affect the financial statements for the year ending 30 June
2015.
The Company is continuing to develop and commercialise its core
Steel Cell fuel cell system technology. The Company raises finance
for its activities in discrete tranches and further funding will be
raised as and when required.
The directors prepare annual budgets and cash flow projections
that extend beyond 12 months from the date of this report. On the
basis of these forecasts, the directors believe that the going
concern basis is appropriate for the preparation of the financial
statements.
2. Operating costs
Operating costs are split as follows:
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2014 (Unaudited) 2013 (Unaudited) 2014 (Audited)
GBP'000 GBP'000 GBP'000
Research and development costs 4,056 3,366 7,403
Administrative expenses 1,685 1,501 2,990
------------------ ------------------ ----------------
5,741 4,867 10,393
================== ================== ================
3. Loss per share
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2014 (Unaudited) 2013 (Unaudited) 2014 (Audited)
GBP'000 GBP'000 GBP'000
Loss for the financial period
/ year attributable to shareholders (4,706) (3,353) (7,393)
================== ================== ================
Weighted average number of
shares in issue 735,388,547 536,831,794 536,831,883
================== ================== ================
Loss per GBP0.01 ordinary
share (basic & diluted) (0.64)p (0.62)p (1.38)p
================== ================== ================
4. Share capital
Ceres Power Holdings plc has called-up share capital totalling
772,537,841 GBP0.01 ordinary shares as at 31 December 2014
(536,831,973 ordinary shares of GBP0.01 each at 30 June 2014, as
disclosed in the statutory financial statements of Ceres Power
Holdings plc for the year ended 30 June 2014).
During the period 235,705,868 ordinary shares of GBP0.01 each
were issued as a placing on AIM for cash consideration of
GBP20,035,000. Expenses of the issue were GBP471,000.
5. Cash used in operations
Six months Six months
ended 31 ended 31 Year ended
December December 30 June
2014 (Unaudited) 2013 (Unaudited) 2014 (Audited)
GBP'000 GBP'000 GBP'000
Loss before income tax (5,256) (3,753) (8,515)
Adjustments for:
Other finance income (58) (42) (73)
Depreciation of property, plant
and equipment 486 597 1,069
Share-based payments charge 535 380 856
Operating cash flows before
movements in working capital (4,293) (2,818) (6,663)
Decrease/(increase) in trade
and other receivables 344 (179) (773)
Increase/(decrease) in trade
and other payables 148 (527) (670)
Decrease in provisions (116) (186) (146)
------------------ ------------------ ----------------
Decrease/(increase) in working
capital 376 (892) (1,589)
Cash used in operations (3,917) (3,710) (8,252)
================== ================== ================
6. Net cash and cash equivalents and short-term investments
31 December 31 December 30 June
2014 (Unaudited) 2013 (Unaudited) 2014 (Audited)
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 1,256 1,843 982
Short-term bank deposits less
than 3 months 5,029 9,021 -
Money market funds 4,450 1,712 6,717
Cash and cash equivalents 10,735 12,576 7,699
Short-term investments (bank
deposits greater than 3 months) 12,000 - -
------------------ ------------------ ----------------
22,735 12,576 7,699
------------------ ------------------ ----------------
The Group typically places surplus funds into pooled money
market funds and bank deposits with durations of up to twelve
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 having a 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 25% ordinary equity.
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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