Original
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. +44 (0)1403 273 463

Zeus Capital Ltd (Nominated Adviser and Broker)

 

Phil Walker/Andrew Jones/Hugh Kingsmill Moore

 

Tel: +44 (0)20 3829 5000

Tavistock

 

Mike Bartlett/James Collins

 

Tel: +44 (0)20 7920 3150

 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 -


This information is provided by RNS
The company news service from the London Stock Exchange
 
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