TIDMCFU
RNS Number : 0826N
Ceramic Fuel Cells Limited
26 August 2011
Friday 26 August 2011
CERAMIC FUEL CELLS LIMITED
PRELIMINARY RESULTS
12 MONTHS ENDED 30 JUNE 2011
Ceramic Fuel Cells Limited, (AIM / ASX: CFU) a leading developer
of high efficiency and low emission electricity generation products
for homes and other buildings, today announces its preliminary
results for the year ended 30 June 2011.
The full results are available at www.cfcl.com.au.
Highlights in the period and year to date:
Building Sales
-- Orders for 206 BlueGen(R) units: moving from field trials to
commercial sales
-- Order for up to 200 integrated mCHP products confirmed
-- 16 energy utility customers
-- Plus commercial sales channels in four markets
BlueGen(R) Product Approvals
-- UK: first and only fuel cell product approved under MCS and
eligible for the UK Feed-in Tariff
-- Australia: approved for installation as an ordinary gas
appliance
Increasing Sales Revenue
-- 81 percent increase from last year, to AUD 3.6 million in
FY11
Manufacturing & Supply Chain
-- Volume plant operating in Germany
-- Unit costs falling
Sales
Supportive market settings in Western Europe
-- Energy policy is evolving quickly in 2011 in several
markets
-- Germany is phasing out nuclear power, creating a significant
opportunity for low emission energy products
-- More reliance on intermittent renewable power also increases
the need for flexible and controllable distributed power
generation
-- Ceramic Fuel Cells is focusing current resources to build
sales in existing markets
-- As revenue and scale grows, the Company will enter new
markets - e.g. North America
-- Large sales potential in many global markets: enquiries from
Asia (especially China), Middle East, South Africa, Central and
Eastern Europe, Russia, North America and South America
(Brazil)
BlueGen(R) sales
-- BlueGen modular power and heat generator provides power and
hot water
-- The Company continues to increase sales of BlueGen units to
energy companies and other foundation customers
-- Orders for 206 BlueGen units: up from 51 at the same time
last year
-- Highlights:
-- In July 2011 the Company's first BlueGen distributor in
Germany, sanevo Lizenz-GmbH & Co. KG (sanevo), placed an
initial order for 100 BlueGen units to be delivered in the first
year, with a target minimum order of 500 units for delivery in the
second year and a target of 2000 units over years three and four.
This is the Company's largest BlueGen order to date.
-- Follow on order for 25 units from Ausgrid in Australia, to be
installed in Newcastle as part of Australia's largest Smart Grid
project.
-- 39 customers in nine countries
BlueGen(R) Distribution
Ceramic Fuel Cells has made sales of BlueGen units directly to
early customers, but in larger volumes the Company's strategy is to
sell BlueGen units through a network of distributors and to
outsource the sale, installation and service of BlueGen units.
During the financial year the Company secured distribution
agreements in several important markets:
-- Germany: in July 2011 the Company appointed sanevo as its
first BlueGen distributor in Germany. Provided sanevo orders agreed
minimum numbers of BlueGen units during 2012 to 2014, sanevo has
exclusive rights to distribute BlueGen to commercial and
residential customers in the German States of Baden-Wurttemberg and
Bavaria, and in Austria. Ceramic Fuel Cells retains full rights to
sell BlueGen units to utilities and energy service companies. Based
in Offenbach, near Frankfurt, sanevo has gained experience and
reputation in marketing and selling innovative small scale power
and heating products in Germany through more than 120 qualified
sales partners.
-- The Netherlands: in July the Company also appointed Zestiq
B.V as its first BlueGen distributor in The Netherlands. Zestiq is
part of the consortium of innovative companies which in April
installed a BlueGen in a 17th century canal house "De Groene Bocht"
in the centre of Amsterdam. Zestiq and its partners will market and
sell BlueGen units to small commercial and residential customers in
The Netherlands. The units will be installed and maintained by the
service company of Eneco, Eneco Installatie Bedrijven.
-- United Kingdom: in May 2011 the Company appointed RES On-Site
Limited, part of the RES Group, as a non-exclusive distributor in
the United Kingdom. RES On-Site will target the commercial
microgeneration energy market throughout the UK. RES On-Site holds
MCS (Microgeneration Certification Scheme) installer accreditations
in a wide range of technologies and is adding the microCHP
accreditation to this and so will provide installation and
after-sales service for BlueGen products.
-- Australia: the Company is working with distributors Hills
Holdings Limited and Harvey Norman Commercial division, to market
BlueGen units to commercial customers such as Governments and
Councils, commercial buildings, hotels, property developers,
architects and schools and educational facilities.
BlueGen(R) Product Approvals
During the financial year the Company's operations and
engineering teams invested significant time and resources in having
BlueGen approved under regulatory regimes in several markets.
-- Germany: BlueGen received full CE safety approval in April
2010. This allows BlueGen products to be installed in homes and
buildings in Europe. This is a full "type" approval for all BlueGen
products - not just a "prototype" approval for field trial units.
In Germany BlueGen was approved by BAFA in August 2010, meaning
BlueGen customers are eligible to receive the CHP bonus payable on
all electricity generated by BlueGen.
-- United Kingdom: the Government introduced a feed in tariff in
April 2010. To be eligible for the feed in tariff, all
microgeneration products must be certified under the
Microgeneration Certification Scheme ("MCS").
During the June quarter BRE Global, an independent, third-party
approvals organisation, completed the technical assessment of
BlueGen and confirmed that the Company has met all of the
requirements under the MCS standard.
On 25 August the Company announced that BlueGen has received
final MCS product and factory accreditation. BlueGen is the first
fuel cell product to receive MCS certification and be eligible for
the UK feed in tariff.
BlueGen customers are now able to use their BlueGen to export
electricity into the national grid and earn revenue during the
process. The feed in tariffs are 10.5 pence per kilowatt hour of
electricity generated, plus an additional 3.1 pence per kilowatt
hour of electricity exported to the grid.
-- Australia: in August 2011 BlueGen was certified by the
Australian Gas Association (AGA) for installation as a gas
appliance in Australia. After rigorous testing and evaluation for
compliance, AGA has certified the BlueGen to a new safety standard
for fuel cell appliances. BlueGen is the first product to comply
with this new standard in Australia.
BlueGen is now certified as a "Type A" gas appliance, which
allows BlueGen units to be installed by a licensed and trained
plumber / gasfitter as for any other typical gas appliance in
Australia. BlueGen has also been certified for both indoor and
outdoor installations. Previously the installation of BlueGen was
restricted as a "Type B" appliance, meaning that the respective
State Technical Regulator was required to inspect and approve each
installation.
In Australia there is currently no feed in tariff for fuel cell
products. The Company is continuing to lobby State Governments on
this, and in the meantime BlueGen is being marketed to commercial
customers who can use all the power on-site.
-- North America: the Company is working towards receiving
safety approval for a version of BlueGen modified to meet North
American requirements. The Company is making good progress and
approval is expected by the end of the year.
Integrated mCHP product (power, hot water and space heating)
In parallel with the BlueGen product, the Company's Gennex(R)
fuel cell module is also used in integrated micro combined heat and
power (mCHP) units in Germany, France and the United Kingdom. In
these products, Ceramic Fuel Cells supplies the core Gennex fuel
cell module and related components to a local appliance
manufacturing partner, which integrates the fuel cell module with a
boiler into an integrated product to provide power, hot water and
space heating for homes.
The Company has received an order for up to 200 mCHP units from
German energy service provider EWE. This is the largest order the
Company has received, with total revenue of up to EUR 4.9 million
over two years. EWE plans to install a total of 55 integrated units
by 31 December 2011. Subject to these units meeting agreed
performance targets, and to further funding approval from the
German Government, the Company expects EWE will then order a
further 145 units for delivery in 2012.
In France, the Company is developing the next generation of an
integrated mCHP unit for the French market in partnership with BDR
Thermea. This unit is undergoing testing for CE approval, and will
then be operated with GDF-Suez.
The Company has also developed and will shortly deploy two
integrated mCHP units in the UK that represent the next generation
of an integrated product for the UK market. This development is
being undertaken in partnership with E.ON UK. In December 2010 E.ON
UK also ordered three BlueGen units. The Company is in ongoing
discussions with E.ON UK about further sales and the next stage of
product deployment.
Product Performance
As at 25 August 2011, 90 BlueGen and integrated mCHP units are
installed at sites in Europe, Japan, USA and Australia. In
aggregate, these units have been operating for more than 300,000
hours (the equivalent of more than 34 years of collective
operation).
All of these BlueGen and integrated units have achieved starting
electrical efficiency of 60 percent or more, demonstrating
repeatable high performance in many different real world
conditions. Over time the electrical efficiency gradually reduces
and the thermal output of the fuel cell stack increases. Electrical
efficiency is also affected by how the BlueGen unit is operated:
efficiency will be lower if the power output of the unit is
modulated or reduced.
The Company is taking several steps to mitigate the risk of
variable product performance in early BlueGen units. As part of the
BlueGen-net system, the Company has developed a sophisticated
on-line system for monitoring the performance of each BlueGen unit
and integrated mCHP product. This system automatically detects when
the unit is performing outside pre-set parameters and allows the
Company's product support engineers to remotely diagnose faults and
in some cases correct faults remotely, without the cost of a site
visit. Through this system the Company is building up a rich
database on the real world performance of the units, which feeds
back into ongoing improvements in the design, manufacturing and
installation of the products.
The Company also continues to make progress to improve the
lifetime and robustness of the fuel cell system, including
'cycling' the unit on and off, and this work will continue in order
to deliver a consistent and commercially acceptable level of
performance.
Marketing
The Company has invested in additional resources and product
related marketing activities to support the deployment of products
and increase sales.
-- www.bluegen.info: a new 'global' multi-language BlueGen
website informing potential customers about the benefits of BlueGen
and showcasing real-life examples;
-- www.bluegen.net: providing existing customers remote
monitoring and performance reporting capabilities through a
web-based portal; and
-- Developing new marketing collateral and interactive tools
promoting the features and benefits of BlueGen for the Company's
strategic markets.
The Company's BlueGen product has recently been recognised by
several international awards:
-- In May 2011, BlueGen won both the 2010-11 'CEO Award' -
DuPont Australia and New Zealand's most prestigious innovation
award - as well as the 'Design for a Sustainable Future' award, one
of seven categories at the biennial DuPont Australia & New
Zealand Innovation Awards.
-- In June 2011 the Company also won the Microgeneration UK 2011
Technical Innovation Award for its BlueGen product.
Manufacturing and Supply Chain
During the financial year the Company entered into a volume
supply agreement with HC Starck for the supply of fuel cell
components. Over the last few months the Company has been working
with HC Starck to ensure that they can increase their production
capacity to meet our forecast demand for cells, whilst maintaining
our high quality standards. As part of this work the Company has
assigned several of its senior technical staff to work at HC
Starck's plant in Germany, to help them meet the required cell
performance standards. This work is continuing.
The Company is also in ongoing discussions with HC Starck about
the investment required by them to increase production capacity to
meet the Company's future demand requirements. In order to mitigate
the risk of relying on a single supplier of cells, the Company
continues to make fuel cell components at its pilot manufacturing
site in Melbourne.
During the year the Company has also focused on reducing the
unit costs of the BlueGen product. The costs of components used to
make BlueGen units are sensitive to economies of scale. In
recognition of this, the Company is seeking to move from ordering
components in lots of 100, to lots of 1,000 in order to reduce unit
costs. This is expected to reduce the current BlueGen product cost
by approximately 20 per cent. Increasing economies of scale are not
without some risk as many processes are required to change to
accommodate volume increases, however the Company works closely
with its supply chain partners to mitigate this risk.
The Company is increasing production of fuel cell stacks and the
assembly of BlueGen units at the Company's plant in Heinsberg,
Germany. We have commenced hiring additional staff to ramp up
production there and are putting in place appropriate senior
management to manage these increasing production levels.
During June 2011 the Heinsberg plant was audited and certified
by Kiwa Gastec under the CE Surveillance Audit programme. The
objective of this programme is to ensure that the Company is
manufacturing the BlueGen product in compliance with the CE
approval previously granted.
New Directors
The Board recently appointed two additional non-executive
directors to add financial and operational expertise as the Company
scales up its operations.
In May the Board appointed German-based Dr Roman Dudenhausen,
who has extensive experience in strategic advice, marketing and
innovation in the German energy industry. Based in Essen, Dr
Dudenhausen is CEO and co-founder of conenergy ag, a leading
independent service provider to the German energy Industry. Dr
Dudenhausen is also a director of electric vehicle maker mia
electric Gmbh.
In early July the Board also appointed Ms Janine Hoey as a
non-executive director and member of the Audit Committee. Ms Hoey
has had extensive experience in commercial, operations and finance
roles in the clean energy and airline industries over the last 20
years. Based in Melbourne, Ms Hoey currently holds an executive
role with Pacific Hydro Pty Ltd as the General Manager Group
Operations and Commercial.
Financial Results
Year to 30 June 2011 (unaudited FY11 results)
-- Revenue from Operations: AUD 3.6 million (increase of 81
percent from FY10)
-- Net operating cash outflow: AUD 19.2 million (increase of 10
percent from FY10)
-- Operating costs: AUD 27 million (increase of 25 percent from
FY10)
-- Net loss: AUD 21.1 million (increase of 8 percent from
FY10)
-- Cash balance at 30 June 2011: AUD 19 million
Revenue
The Group's business revenues increased during the period by 81
percent to AUD 3,681K (GBP 2,293K). Revenue in the current year is
derived primarily from the sale of BlueGen and integrated mCHP
units whereas last year the majority of revenue was derived from
payments from partners under product development agreements.
The number of units recognised in revenue this year was 61
compared to 9 units last year.
Other Income
Other Income in the current year was AUD 4,284K (GBP 2,669K).
This primarily related to funds received by the Company in the
settlement of a legal action taken against the Group's former
treasury advisor.
Expenses
Research and Product Development expenses were AUD 15,127K (GBP
9,424K) which includes the manufactured cost of units that were
recognised in revenue and also a provision for warranty claims.
Expenditure on R&PD project activities increased during the
year by AUD 1,589K (GBP 990K) with a focus on increasing the
performance and lifetime of the fuel cell stack.
General and Administration expenses were AUD 10,281K (GBP
6,405K) which was an increase of AUD 1,362K (GBP 849K) over last
year. This increase arose primarily from an increase in
depreciation and amortisation charge of AUD 1,100K (GBP 685K)
relating to the commencement of production in the German plant from
the start of the year. In addition to this the expense relating to
the employee share scheme increased by AUD 228K (GBP 142K).
Sales and marketing expenses were AUD 1,640K (GBP 1,022K) which
was AUD 694K (GBP 432K) lower than last year. Sales and support
activities were restructured during the year to focus on the
German, Netherlands and UK markets.
A foreign exchange loss on translation of AUD 2,094K (GBP
1,305K) arose during the year relating to the translation of cash
balances held in foreign currencies back to Australian dollars. The
Australian dollar appreciated 17.7 percent against the pound
sterling and 6.1 percent against the euro across the year.
Net Loss After Tax
The net loss for the year was AUD 21,176K (GBP 13,193K), an
increase of AUD 1,525K (GBP 950K) over the prior year.
The main reasons for the increased loss are outlined above and
can be summarised as:
GBP
AUD ('000) Equivalent
Higher sales revenue 1,648 1,027
Higher sundry income
principally from a
legal settlement 4,030 2,511
Reduced foreign exchange
loss on
translation in the
current year 1,262 786
Offset by:
Increased operating
expenses 5,538 3,450
Impairment charge
recovered last year 2,927 1,824
The net loss represents a loss of 1.82 cents per share (1.13
pence) compared to 1.91 cents (1.19 pence) last year.
Cashflow and Balance Sheet
The Group's net cash outflow from operations for the year was
AUD 19,300K (GBP 12,024K), an increase of 12 percent over last
year. As the Group commences the commercial rollout of its BlueGen
product its level of working capital requirement is increasing.
Inventory at year end has increased from AUD 1,081K (GBP 673K) in
the prior year to AUD 5,131K (GBP 3,197) this year as a result of
holding component parts to produce BlueGen units (and holding fully
completed units).
Cash outflow from investing activities was AUD 1,360K (GBP 847K)
which was AUD 2,519K (GBP 1,569K) lower than last year. This
reduction reflects the completion of the building programme at the
plant in Germany.
Cash inlow from financing activities amounted to AUD 28,962K
(GBP 18,043K). This arose from the issue of equity that raised a
net AUD 28,886K (GBP 17,996K).
At 30 June 2011 the Group had cash of AUD 19,057K (GBP 11,873K)
which was held on deposit with banks. Of this amount AUD 3,204K
(GBP 1,996K) was pledged as security for bank guarantees and is
unavailable for use by the CFCL Group.
ENDS
For further information please contact:
Ceramic Fuel Cells
Andrew Neilson Tel: +613 9554 2300
Email: investor@cfcl.com.au
Nomura Code Securities (AIM Tel: +44 (0) 207 776
Nomad) 1200
Juliet Thompson, Chris Golden
Australia Media enquiries
Richard Allen, Oxygen Financial Tel: +613 9915 6341
Public Relations
UK Media enquiries Tel: +44 (0) 7786 116
Mark Way 991
Email: Mark.W@harvardamerica.com
German Media enquiries Tel: +49 (0) 69 9218
7454
Alex Seiler, Hering Schuppener Email : aseiler@heringschuppener.com
Consulting
About Ceramic Fuel Cells Limited:
Ceramic Fuel Cells Limited is a world leader in developing fuel
cell technology to generate highly efficient and low-emission
electricity from widely available natural gas.
Ceramic Fuel Cells is developing fully integrated power and
heating products with leading energy companies E.ON UK in the
United Kingdom, GdF Suez in France and EWE in Germany.
Ceramic Fuel Cells has also sold more than 200 BlueGen
gas-to-electricity generators to major utilities and other
foundation customers in Germany, the United Kingdom, Switzerland,
The Netherlands, Italy, Japan, Australia and the USA.
Ceramic Fuel Cells recently won the 2010-11 DuPont Design for a
Sustainable Future innovation award and the Microgeneration UK 2011
Technical Innovation Award. The company is listed on the London
Stock Exchange AIM market and the Australian Securities Exchange
(code CFU).
Register to receive email alerts of CFCL announcements and
industry news, at www.cfcl.com.au/register
More information is available at www.bluegen.info
This information is provided by RNS
The company news service from the London Stock Exchange
END
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