Interim results for the six months ended 31 December 2009

25th Mar '10 by omh

2 comments 3118 reads

Highlights:

· First international mains gas CHP programme secured with Bord Gáis in Ireland, including £1.6 million funding and volume call-off order for 16,000 CHP products
· Initial manufacturing operations commenced in Horsham fuel cell mass production facility
· Volume CHP boiler assembly agreement concluded with Daalderop BV
· Commercial field trial sites selected and instrumented with baseline data capture underway
· Successfully completed equity placing raising net £30m from new and existing shareholders including British Gas
· Strong balance sheet with £46.1m in net cash, short-term investments and financial assets at 31 December 2009

Since the period end:

· Commenced sheltered field trials of CHP products in UK houses under Beta phase
· Commercial field trial CHP units procurement completed and product builds underway
· CHP boiler assemblies being manufactured by Daalderop BV using volume processes
· 'CE' product certification process underway with regulatory bodies
· UK Government Feed-in Tariff announced to support mass deployment of fuel cell residential CHP
· Secured £1.2m in new grant funding to support investment in manufacturing capacity and expansion of CHP test infrastructure

Dr Brian Count, Chairman, commented:
“I am pleased to report that Ceres Power has made significant progress during the half year, in which it secured its first international mains gas CHP commercial programme, with Bord Gáis for the Irish market. The Group has commenced initial manufacturing operations from its Horsham fuel cell mass production facility and secured a volume CHP boiler assembly agreement with Daalderop. Sheltered field trials of Ceres Power’s CHP products are now underway in UK houses, as part of the transition to widespread deployment in consumers’ homes.”

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omh

25th Mar '10

First half operating losses up from up from £4.2m to £6m is a little worrying, though with £46m on the balance sheet they have cover to continue to (hopefully) profitability.

The Bord Gáis funding deal gives £100 per unit - but confuses me a little. Obviously not paid up front, as income total income for the period is considerably less than this; also obviously not payment in full for each unit. Anyone hazard a view on how this is structured?

Also good that the home trials are now underway and units are in production (albeit in low numbers). Ramp up to mass production is by no means imminent, but is closer. This time next year (Rodney)?

OMH

marben100

26th Mar '10

Overall, I'm happy with these results.

Progress has been a little slower than I would have hoped, with units only being deployed in occupied homes in the second half of this year, due to the requirement to obtained CE certification first. Nevertheless it is good to read that units have now been manufactured and deployed.

One interesting item buried in the report:

During the period, we have also continued to make progress in our core fuel cell technology with the stack operating at a heat to power ratio of less than 0.7.

This is extremely good and better than expectations, meaning than for each kW of electrical output only 0.7kW of heat will be produced as a byproduct. That's an extraordinary level of conversion efficiency.

I would not expect ramp-up to higher volume production to take very long because, AIUI, all production is now taking place using volume processes. It should simply be a matter of a) running bigger production batches; b) adding extra production lines to increase capacity. It is important to note that the high volume processes have already been designed & built - but clearly there's no point manufacturing in large volumes until the initial units have been cerified and validated.

The commercial field trials, due to start later this year, are expected to involve high hundreds to low thousands of units.

Cheers,

Mark

Interim results for the six months ended 31 December 2009

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Omh

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