Final Results

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 30 June 2016	Year Ended 30 June 2015
	£'000	£'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

·     £20 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 £0.6 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 (-£6.2 million) less net cash generated from financing activities (£0.1 million) less the movement in short term investments (£5.0 million)}

^{3     This does not include the net £19.4 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 £20 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 Dan Caesar, Communications Director	Tel. [phone]
Zeus Capital Ltd (Nominated Adviser and Broker) Phil Walker/Andrew Jones/Hugh Kingsmill Moore	Tel: [phone]
Tavistock Mike Bartlett/James Collins	Tel: [phone]

 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 £20 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 £1.7 million (2015: £0.9 million). Of this, £1.1 million was customer revenue (2015: £0.3 million) and £0.6 million was other income, primarily from government grants (2015: £0.5 million). £0.6 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 £11.3 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 £2 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 £19.4 million to the Group's cash and short term investments, which at 30 June 2016 was £6.9 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 ended 30 June 2016		Year ended 30 June 2015
	Note		£'000		£'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 £0.01 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 2016			30 June 2015
	Note	£'000			£'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 ended 30 June 2016		Year ended 30 June 2015
	Note		£'000		£'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 account		Capital redemption reserve		Other reserve		Accumulated losses		Total
		£'000		£'000		£'000		£'000		£'000		£'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 £19.4 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 ended 30 June 2016		Year ended 30 June 2015
			£'000		£'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 30 June 2016		Year ended 30 June 2015
		£'000		£'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 £0.01 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 £0.01 ordinary shares as at 30 June 2016 (772,537,841 ordinary shares of £0.01 each at 30 June 2015).

During the period 5,320,000 ordinary shares of £0.01 each were issued on the exercise of employee share options.

5. Cash used in operations

		Year ended 30 June 2016		Year ended 30 June 2015
		£'000		£'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 ended 30 June 2016		Year ended 30 June 2015
			£'000		£'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 £20 million gross through the issue of 228,603,083 ordinary shares.

- ENDS -

 

END

 

 

FR FSEEFWFMSEEF