Ceres Power – Half Year Results
08 Mar 2017
New partners, new markets and a growing international presence – INCLUDING FIRST PRODUCT LAUNCH PARTNER
Ceres Power Holdings plc (“Ceres Power”, the “Company” or the “Group”) (AIM: CWR.L), a world leading developer of low cost, next generation fuel cell technology, announces its half-yearly results for the six months ended 31 December 2016.
Highlights
· New commercial partners including first ‘go-to-market’ agreement:
o Two new development agreements signed in the period, bringing total to four including with Honda, Nissan, Cummins and a further global OEM
o First ‘go-to-market’ agreement signed with global OEM to develop and launch highly efficient combined heat and power (“CHP”) product for business markets
· Strong revenue and pipeline: Revenue and other operating income for first half year tripled to £1.5 million (FH1 2016: £0.5m). Aiming for full year to at least double. Order book of £4.8 million as at 31 December 2016 and 3 new evaluation agreements underway with potential future partners.
· First significant US commercial success with global power leader Cummins & the US Department of Energy to develop an energy system for Data Centre and commercial scale applications
· New market opportunities enabled by rapid progress in SteelCell™ technology. The improvements in efficiency, robustness and power density have opened up new high growth power markets in commercial/business sectors
· Successful fundraise: £20m placing enables continued investment in business and technology
Financial Highlights:
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Six months ended 31 December 2016 (unaudited) |
Six months ended 31 December 2015 (unaudited) |
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|
£’000 |
£’000 |
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Total revenue and other operating income, comprising: |
1,551 |
453 |
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Revenue 1 |
1,026 |
235 |
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Other operating income |
525 |
218 |
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|
|
|
|
Operating loss |
(6,242) |
(6,235) |
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Equity free cash flow 2 |
(4,176) |
(5,431) |
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Net cash and short term investments |
22,174 |
12,753 |
1 2016 revenue includes the release of £0.4 million of deferred revenue in respect of contracted work completed for British Gas (2015: £0.1m)
2 Equity free cash outflow (EFCF) is the net change in cash and cash equivalents in the year (£0.2 million) less net cash generated from financing activities (£19.4 million) plus the movement in short term investments (-£15.0 million)
Phil Caldwell, CEO of Ceres Power said: “Ceres Power is on track for an excellent year, driven by new commercial partnerships, the rapid progress of our technology and our first ‘go-to market’ agreement bringing us closer to a first product launch. We said we would sign five partners by the end of 2017 and with four to date we are on track to do just that, plus we have three new evaluation agreements and a strong pipeline with a series of international prospective partners.
With a forward order book of £4.8 million and a successful fundraising secured, we are in a strong position to capitalise on significant market opportunities. As the world wrestles with the growing challenge of a decarbonising and decentralising energy system, our proven SteelCell™ technology, and our work with global power specialists, shows Ceres Power is capable of providing a cheaper, cleaner, distributed alternative to centralised power generation.”
For further information please contact:
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Ceres Power Holdings plc |
+44 (0)1403 273 463 |
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Zeus Capital (Nominated Adviser and Broker) |
+44 (0) 20 3829 5000 |
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Powerscourt |
+44 (0) 20 7250 1446 |
About Ceres Power
Ceres Power is a world leader in low cost, next generation fuel cell technology for use in distributed power products that reduce operating costs, lower CO2, SOx and NOx emissions, increase efficiency and improve energy security. The Ceres Power unique patented SteelCell™ technology generates power from widely available fuels at high efficiency and is manufactured using standard processing equipment and conventional materials such as steel, meaning that it can be mass produced at an affordable price for domestic and business use. Ceres Power offer its partners the opportunity to develop power systems and products using its unique SteelCell technology and know-how, combined with the opportunity to supply the SteelCell™ in volume through its manufacturing partners. For further information please visit: http://www.cerespower.com/
Chief Executive’s statement
Ceres Power is well positioned to continue to execute its strategy as an enabling technology provider for the world’s leading power systems companies. The SteelCell™ technology and the Company’s expertise have a growing, global reputation and we are on target for an extremely successful year.
The market opportunity – enabling a decarbonised and decentralised energy system
· Climate change and the need for clean air, reinforced by the Paris COP21 agreement and leading global corporates, is maintaining the momentum towards cleaner distributed power generation
· The inexorable growth of the Electric Vehicle and Data Centre sectors will increase the demand for electricity and, coupled with increasing wind and solar generation, will destabilise the centralised power generation model
· Advancements in Ceres Power’s SteelCell™ technology have opened up sector opportunities beyond Residential to include the fast-growing Data Centre, Electric Vehicle and Business sectors
· SteelCell™ is a significantly superior alternative to conventional gas and diesel engines as it produces close to zero SOx and NOx emissions at a higher efficiency
We are working towards a vision of embedding our cutting-edge SteelCell™ technology into world-leading products within the Home, Business, Data Centre and Electric Vehicle markets. Ceres Power has traditionally been focussed on micro-CHP in the Residential market, however significant progress has enabled SteelCell™ to rapidly establish itself as a leader in markets where higher power output is required, significantly expanding the business opportunity.
The majority of our customer demand is now for larger power systems than our residential scale product offering, and to proportionately address these high value markets, we have started developing larger cells and stacks.
With a strong start to 2017, the Company is ready to capitalise commercially by securing more key partners, as well as progressing our existing relationships.
Commercial Progress
· First ‘go-to-market’ agreement signed to develop and launch a highly efficient Combined Heat and Power product to target the business sector
· First significant US success with agreement to develop a power system for data centres and commercial scale applications
· Field trials progressing well as part of the EU-funded ene.field programme
In the Autumn, Ceres Power announced its key development role in a recently selected US Department of Energy programme which was awarded to global power leader, Cummins Inc. Together, Ceres Power and Cummins will work closely to develop a power system targeting high electrical efficiency of 60% and scalable to meet multiple distributed power applications. The initial target application will be the fast-growing Data Centre market, this power system will be applicable to other commercial scale uses.
Before the end of 2016, Ceres Power announced a joint development licence agreement to develop and launch a multi-kW CHP product its SteelCell™ technology with a leading global OEM. This is Ceres Power’s fourth partnership signed and most notably its first ‘go-to-market’ agreement with the explicit intention of developing and launching a product to the business sector on an ambitious schedule. This is a highly significant step.
Furthermore, field trials, as part of the EU-funded ene.field programme in UK homes, demonstrate the growing maturity of this technology and underpin the reputation of the SteelCell™ with our OEM customers.
As a result of this commercial progress, our order book has increased to £4.8m as of 31 December 2016.
Rapid technological progress highlights Ceres Power expertise
With a well-established R&D roadmap, real progress with the performance of the technology continues to be made. The most recent milestone saw the latest iteration of the SteelCell™ platform (version 4) released to customers on time and budget, reinforcing the Company’s reputation for successfully executing against its technology timelines.
Higher power density and fast start-up timescales have been proven, making the SteelCell™ increasingly commercially attractive in a growing number of markets. The technology is well-suited as a range extender for the Electric Vehicle market and the net electrical efficiencies now being delivered see Ceres Power developing solutions for the Data Centre market.
The core technology is increasingly applicable to customers that require a higher power output and we are now increasing cell size and optimising stack design to meet their requirements.
Adding operational capability to position ourselves for commercialization
We have seen a significant increase in customer demand for the SteelCell™ technology over the past 6 months, particularly for high power applications. This increased demand for our existing SteelCell™ technology combined with the development of larger cells and stacks for new applications has led to the need for further investment in our manufacturing and test capability.
In the near term, additional demand is being met by increasing manufacturing capacity in Horsham through the addition of a 3rd shift pattern along with bringing through improvements to key process steps. Beyond this, we are beginning to explore a number of options for further manufacturing scale-up.
Financial progress
As highlighted above, the multiple customer programmes won in the past 12 months are driving our revenues forward. Compared to the same period last year, we have tripled revenue and other operating income to £1.5 million. We expect this uplift to continue into the full year, where we aim to at least double our revenue and other operating income. It is encouraging that this is being achieved across a growing portfolio of customer programmes.
Our equity free cash outflow of £4.2 million in the period was less than the prior period (£5.4m), mostly due to the Group receiving its R&D tax credit of £2.2m in full (prior period received £0.8m, part of the R&D tax credit, in the period). Even though we are investing in people and in making the technology more suitable for customers that require a higher power output, as we highlighted in last year’s annual report, we expect both our operating loss and our equity free cash outflow for the full year to decrease from the prior year.
We were very pleased with our £20m fundraise in the period, especially given the uncertain economic conditions in the last 6 months. At 31 December 2016, the Group had cash and cash equivalents of over £22 million and this financial strength, at a key stage for the Company as we negotiate long term partnerships with a number of the world’s leading companies, gives us the runway to further embed our SteelCell™ in customer development and ‘go-to-market’ programmes.
Outlook
Our vision is to embed our cutting-edge SteelCell™ technology into world-leading products within the Home, Business, Data Centre and Electric Vehicle markets.
The leadership team committed itself to signing five global engineering companies as customers in joint development agreements by the end of 2017 and being in two launch programmes with OEM partners by the end of 2018. With four joint development agreements and one launch programme already signed, Ceres Power is ahead of its stated schedule. We expect to secure further commercial partners in due course and to make further progress with our existing partners.
We anticipate that the commercial progress we are making will further drive revenues in the second half of FY 2016/17 and into FY 2017/18.
Ceres Power has a committed, experienced team and we would like to offer our thanks for their continued efforts which we believe will translate into even greater commercial progress over the next 12 months.
Philip Caldwell
Chief Executive Officer
