REG - Ceres Power Holdings - Interim results
22/09/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220922:nRSV2277Aa&default-theme=true
RNS Number : 2277A Ceres Power Holdings plc 22 September 2022
CWR.L
22 September 2022
Ceres Power Holdings plc
Interim results for the six months ended 30 June 2022
Continuing investment to enable multi-gigawatt manufacturing capacity globally
Horsham, UK: Ceres Power Holdings plc ("Ceres", the "Company") (AIM: CWR.L), a
global leader in fuel cell and electrochemical technology, announces its
interim results for the six months ended 30 June 2022.
Financial update
· Revenue and other operating income £9.9 million (H1 2021: £17.4
million)
· Gross profit of £5.3 million (H1 2021: £12.2 million) with
gross margin at 55% (H1 2021: 72%)
· Cash and investments of £221.6 million as at 30 June 2022 (31
December 2021: £249.6 million)
· Increased investment in research and development by 46% including
electrolysis technology for green hydrogen
Operational update
· Heads of Terms signed with Weichai and Bosch to establish a third
manufacturing facility for Ceres' solid oxide fuel cell (SOFC) technology in
China, worth £30 million to Ceres in near term license fees plus future
royalties
· Partnership established with Shell to utilise solid oxide
electrolyser cell (SOEC) technology to deliver high-efficiency, low-cost green
hydrogen
· Strong progress on the SOEC development programme with first
electrolyser cell module (ECM) on test
· Continued expansion of Ceres' highly skilled workforce to 523
employees at 30 June 2022 (31 December 2021: 489) including the arrival
of Eric Lakin as Chief Financial Officer and Deborah Grimason as General
Counsel and Company Secretary
Current trading and outlook
· Signature of definitive China joint venture agreements is
expected in Q4 this year. Establishment of the JV entities will follow
regulatory approvals in China and Europe, which are anticipated in early 2023
· Most of the £30 million licence fee revenue associated with the
China JVs will be recognised on establishment of the new JV entities in early
2023, whereas we had previously expected to recognise around half of these
fees in 2022. Based on this expected timing of JV signing and regulatory
clearances, it is now expected that revenue in the second half of 2022 will be
at similar levels to those in the first half, leading to full-year 2022
revenue lower than 2021 levels
· Correspondingly, H1 2023 revenue is expected to be at
significantly higher levels based on the expected recognition of most of the
£30 million licence fee revenue on establishment of the JV entities in early
2023
· In July, the stationary SOFC system being developed by our
partner Bosch was approved by the European Commission as one of the first
Important Projects of Common European Interest (IPCEI) aimed at developing an
integrated hydrogen economy in Europe, and is now eligible for state funding
· In August, Doosan Fuel Cell ("Doosan") raised further capital
confirming that half of the KRW70 billion (GBP 44 million) would be used to
build its plant in South Korea for the mass production of Ceres' SOFCs in
2024, to meet the rising demand from the hydrogen-energy market
· The Board remains committed to transition from the AIM market to
the Premium listing segment of the Main Market of the London Stock Exchange,
which is expected to follow signing of the China JV agreements.
Phil Caldwell, Chief Executive Officer of Ceres, said:
"Energy security and the transition to cleaner energy have never been so
important to the way we live. Ceres' role as a leading developer of clean
energy technology, enabling companies to decarbonise at scale and pace, means
we are well-positioned to play our part."
"The China joint ventures represent an important milestone in our ambitions
for Ceres' technology, not only in its mass deployment in systems and products
for the significant Chinese market, but also accelerating the delivery of
global manufacturing capacity.
"We are also growing the opportunity for Ceres with the investment in SOEC for
green hydrogen and our first commercial opportunity for SOEC was announced in
our partnership with Shell. These are steps towards our aim of establishing
multiple mass manufacturing facilities and generating significant royalty
revenue with multi-gigawatts of Ceres technology in production."
Financial Summary: Six months ended Six months ended 12 months ended 31 December 2021
30 June 2022 30 June 2021 Audited
Unaudited Unaudited
£'000 £'000 £'000
Total revenue and other operating income, comprising: 9,854 17,436 31,700
Licence fees 3,404 10,682 16,646
Engineering services revenue 4,206 2,669 6,777
Provision of technology hardware 2,077 3,759 7,353
Other operating income 167 326 924
Gross margin % 55% 72% 66%
Adjusted EBITDA loss(1) - Power SOFC(2) (10,216) (371) (4,492)
Adjusted EBITDA loss(1) - Hydrogen SOEC(2) (10,279) (4,144) (12,183)
Adjusted EBITDA loss(1) - total Group (20,495) (4,515) (16,675)
Operating loss (25,203) (7,602) (23,430)
Net cash used in operating activities (20,599) (13,170) (20,342)
Net cash and investments 221,625 262,889 249,584
1. Adjusted EBITDA loss is an Alternative Performance Measure, as defined and
reconciled to operating loss in the non-GAAP section at the end of this
report.
2. Adjusted EBITDA by segment is reconciled to operating loss in Note 3.
Analyst presentation
Ceres Power Holdings plc will be hosting a live webcast for analysts and
investors on 22 September 2022 at 09.30 BST. To register your interest in
participating, please go to:
https://www.investormeetcompany.com/ceres-power-holdings-plc/register-investor
(https://www.investormeetcompany.com/ceres-power-holdings-plc/register-investor)
.
For further information visit www.ceres.tech (http://www.ceres.tech) or
contact:
Ceres Power Holdings plc Tel: +44 (0)7932 023 283
Elizabeth Skerritt
Investec Bank PLC (NOMAD & Joint Broker) Tel: +44 (0)207 597 5970
Jeremy Ellis/ Patrick Robb/ Ben Griffiths
Berenberg (Joint Broker) Tel: +44 (0)203 207 7800
Ben Wright/ Mark Whitmore
FTI Consulting (PR Adviser) Tel: +44 (0)203 727 1000
Dwight Burden Email: ceres_power@fticonsulting.com (mailto:Ceres_power@fticonsulting.com)
About Ceres Power
Ceres is a world-leading developer of electrochemical technologies: fuel cells
for power generation, electrolysis for the creation of green hydrogen and
energy storage. Its asset-light, licensing model has seen it establish
partnerships with some of the world's largest engineering and technology
companies, such as Weichai in China, Bosch in Germany, Miura in Japan, and
Doosan in Korea, to develop systems and products that address climate change
for power generation, transportation, industry, data centres and everyday
living. Ceres is listed on the AIM market of the London Stock Exchange
("LSE") (AIM: CWR) and is classified by the LSE Green Economy Mark, which
recognises listed companies that derive more than 50% of their activity from
the green economy.
Chief Executive's Statement
Ceres' purpose is to develop the technologies that the world needs to
decarbonise and bring them to market at the scale and pace needed to help
global energy systems transition to a net zero carbon future.
We are proud to be a British business that exports technology globally through
collaborations with some of the world's most progressive companies building
manufacturing facilities in Germany, South Korea and now a third planned
factory in China. Our aim is to enable multi-gigawatts of capacity producing
hydrogen and fuel cell technologies to decarbonise the hard-to-abate sectors
of the energy system and in the process build a sustainable business that
delivers long-term benefits for our people and shareholders, our communities,
and our planet.
Iam pleased to report that in the first half of 2022 we have continued to
invest capital focused on scaling our technology for use in multiple
applications and geographies. We have accelerated the development of our fuel
cell business (SOFC) with global partners, enabling major expansion of our
electrolysis activities (SOEC) by signing a new partner in Shell, and
strengthening the management and wider Ceres team to address the substantial
market opportunities that exist for our clean energy technology.
The Group reported revenues and other income of £9.9 million for the first
six months of 2022 (H1 2021: £17.4 million), all related to the fuel cell
business. The decrease when compared with the prior period primarily reflects
the significant licence revenue recognised in H1 2021 on our contract with
Doosan and accordingly gross margins reduced to 55% (H1 2021: 72%), also
impacted by the higher proportion of licence fee revenue recognised in the
prior period. As we have stated in previous results announcements, gross
margin percentage will vary period on period based on timing and quantum of
licence revenue recognition within the overall revenue mix.
As noted in our recent Trading Update, the phasing of revenue in 2022 and
early 2023 is highly sensitive to the timing of the establishment of the China
JVs, where Ceres, Bosch and Weichai are making good progress towards
definitive agreements. The collaboration represents an important milestone in
Ceres' ambitions for the Chinese market and it is a critical part of
delivering global manufacturing capacity for our technology, with the
potential to establish one of the strongest partnerships in the global fuel
cell industry. We are confident that the JV agreements will be signed in Q4
but because of the various approvals required before the JVs themselves can be
established, it is therefore expected that initial licence fee revenue
recognition will be in the first half of 2023.
The world around us continues to transition towards a sustainable green
economy, driving increasing demand for clean energy technologies. The current
geopolitical instability in Europe has only served to push energy security
firmly up the political agenda and the rising costs of fossil fuels is adding
another tailwind to the urgency for decarbonisation of our energy system.
In July, the stationary power SOFC system being developed by our partner Bosch
was approved by the European Commission as one of the first Important Projects
of Common European Interest (IPCEI) aimed at developing an integrated hydrogen
economy in Europe. Bosch's SOFC programme is now eligible for state funding
on the basis of this approval under state aid law aimed at strengthening
innovative capacity, global competitiveness and creating new jobs in Germany.
In Germany, more than eight billion euros in funding is available for the
development of hydrogen and other green technologies.
In South Korea, the market has received a further boost from a new Clean
Hydrogen Portfolio Standards bill that passed in May 2022, stipulating that a
certain percentage of electricity provided by electric companies must be
produced from hydrogen. The existing portfolio standard has also been
amended so that by 2026, 25% of energy supplied in South Korea must derive
from renewable energy, with incremental increases every year thereafter.
Over the summer, President Biden signed into law the Inflation Reduction Act,
which includes $369 billion of funding over 10 years to promote the transition
to cleaner energy. The largest investment commitment in clean energy in US
history, it includes various elements that specifically support hydrogen and
fuel cell businesses including tax credits for green hydrogen, credits for
renewable energy and biogas production, and financial support for companies
demonstrating technologies that can help decarbonise heavy industry,
agriculture, and shipping. These are all areas of the energy system where
Ceres' technology can play an important role, and we have seen an increase in
enquiries from the US and continue to explore opportunities with potential US
partners.
Ceres Power - fuel cells
Ceres has established a leading position in solid oxide fuel cell technology
that is being demonstrated in several applications through global partners.
Our focus now is meeting growing demand for higher-power systems and
broadening applications for use in hard-to-decarbonise sectors such as marine.
All revenues in the first half of the year are derived from the SOFC part of
the business. This recorded a gross profit of £5.3 million (H1 2021: £12.2
million), reflecting lower revenue following the significant revenue
recognised on the Doosan contract in the comparative period, and an increase
in adjusted EBITDA loss to £10.2 million (H1 2021: £0.4 million).
Investment in research and development for SOFC increased by 26% to £13.2
million (H1 2021: £10.5 million).
We continued to accelerate investment in the first half of the year in areas
such as research and development, capability of our CP2 pilot production
facility, and test stand capacity including signing and outsource agreement
with Horiba Mira. In line with our strategy, there will be continued
investment in SOFC to support future expansion. The level of losses or
future profitability of this part of the business will continue to be highly
influenced by the level of SOFC licence fee revenue recognised in each period,
until royalty revenue streams become material.
Our partners Bosch and Doosan are both targeting 2024 for the scale up of
manufacturing capabilities to 200MW and 50MW of SOFC capacity, respectively.
In August, Doosan raised approximately £44 million and confirmed that half
would be used to build a new plant in South Korea for the mass production of
solid oxide fuel cells to meet the rising demand from the hydrogen-energy
market.
The three-way collaboration in China with Weichai and Bosch would represent
our third manufacturing location following Germany and South Korea, and
another major step towards enabling multi-gigawatt capacity of our technology
globally.
Ceres Hydrogen - electrolysis
In SOEC, we are now investing in a potentially even larger addressable market
for electrolysis through a differentiated offering for hydrogen with distinct
advantages in efficiency, coupling with industrial processes that are high
emitters of carbon dioxide today. Our SOEC business showed an adjusted EBITDA
loss of £10.3 million (H1 2021: £4.1 million), reflecting increased research
and development activities, including the initial costs of producing our first
1MW demonstration unit. Investment in research and development for the SOEC
segment increased by 100% to £7.8 million (H1 2021: £3.9 million).
Ceres has committed £100 million for the further development of its SOEC
technology - with the aim of producing highly efficient, low-cost green
hydrogen. According to BloombergNEF's recent report, "Ukraine War Makes
Green Hydrogen Competitive", grey hydrogen produced from fossil fuels has
reached a levelised cost of $6.71/kg in the EMEA compared to $4.84-6.68/kg for
green hydrogen - nearly removing the premium for newer, cleaner technologies.
The International Energy Agency estimates the capacity of electrolysers needed
by 2050 at 3,585GW, compared to cumulative installations today of just 1GW. It
is no longer a question of credibility of the technology, but more a question
about the scale and pace of deployment.
Ceres aims to produce hydrogen at efficiencies around 20% greater than other
technologies, in the range of 85 - 90% where it is possible to make use of
waste heat in industrial processes to drive this higher efficiency. We are
making progress with our SOEC development programme and have our first
Electrolyser Cell Module (ECM) on test. We are making good progress on the
"first-of-a-kind" system build and will integrate the ECMs into the container
system to start testing in the early part of 2023.
In June 2022, we signed an agreement with Shell to deliver a megawatt scale
SOEC demonstrator in 2023. The system will be installed at Shell's research
and development technology centre in Bangalore, India, where the hydrogen
will be used in industrial processes on site. The testing programme is
intended to run for at least three years, forming the first stage of a
collaborative relationship. Shell and Ceres are building this partnership to
utilise SOEC technology to deliver high-efficiency, low-cost green hydrogen;
now widely viewed as a credible route to decarbonise hard-to-abate parts of
the energy system that rely on fossil fuels today.
Focused investment for the future
The underlying theme across both segments of the business for the first six
months of 2022 continues to be investing to drive innovation and future mass
market uptake for these technologies. Consistent with the capital raise in
2021, the investments we are making include both capital investments and
investment in strategic resources in both SOFC and SOEC capabilities. Overall,
our employee base grew as planned, with 523 people employed as at 30 June 2022
compared to 489 people as at 31 December 2021. Research and development costs
increased by 46% to £21.0 million compared to H1 2021 largely due to the
additional investment in SOEC.
Capitalised development costs in the period, which only relate to ongoing SOFC
development, increased to £2.9 million compared to £1.6 million for H1 2021
and we have capitalised a net £10.9 million to date (31 December 2021: £8.5
million). Amortisation of this to the income statement was consistent with the
prior period, with a charge of £0.5 million recorded (H1 2021: £0.6
million).
As planned, we have continued the expansion of our test capability to support
demand from our partners, and to cater for additional market opportunities
including SOEC and SOFC applications such as marine and alternative fuels. We
have also invested in expanding our manufacturing capacity for prototypes and
demonstrators for both SOFC and SOEC products. As a result, our investment in
property, plant and equipment increased to £5.5 million in H1 2022 (H1 2021:
£3.6 million) and depreciation charged increased to £2.6 million, compared
to £1.9 million in H1 2021. We expect this capital investment to accelerate
in the second half of 2022.
Overall, this focused "investment in the future" (R&D costs, capitalised
development and capital expenditure) increased by 56% to £25.7 million (H1
2021: £16.5 million). The £25.7 million comprises £17.3 million (H1 2021:
£11.3 million) in R&D (excluding depreciation, amortisation and
share-based payments), £5.5 million (H1 2021: £3.6 million) in capital
expenditure and £2.9 million (H1 2021: £1.6 million) in capitalised
development.
As a result of these investments and increased amortisation and depreciation,
the Group reported an increased operating loss of £25.2 million in H1 2022,
up from a loss of £7.6 million in H1 2021.
Strong financial position: the foundation for continued development and growth
The Group ended the period with a strong cash position of £221.6 million in
cash and investments as at 30 June 2022 (31 December 2021: £249.6 million),
with the decrease since 31 December 2021 reflecting the investment in the
period and is in line with our plans to invest for future growth following
last year's capital raise.
Equity free cash outflow (defined and reconciled to net cash from operating
activities at the end of this report) was £28.6 million (H1 2021: £18.7
million), being driven by net cash used in operating activities of £20.6
million (H1 2021: £13.2 million) reflecting the Group's operating loss in the
period, capital expenditure of £5.5 million (H1 2021: £3.6 million),
capitalised development of £2.9 million (H1 2021: £1.6 million) with the
balance from interest payments and exchange rate movements. Movements in
working capital included a £4.0 million increase in inventories (H1 2021:
£0.9 million) primarily reflecting a higher balance of fuel cell stacks being
held at the period end to satisfy customer demand for our technology
hardware.
Order Backlog (combining what was previously described as "Order book" and
"Pipeline") as at 30 June 2022 was £76.2 million (31 December 2021: £79.8
million).
Board and Management Changes
In early 2022 we strengthened our management team with the arrival of Eric
Lakin as Chief Financial Officer and Deborah Grimason as General Counsel
and Company Secretary. Both bring fresh perspective to our existing, talented
team and important experience from much larger listed businesses as we look to
transition from the AIM listing to the Premium listing segment of the Main
Market of the London Stock Exchange, which is expected to follow the signing
of the China joint venture agreements.
On the Board, we welcomed Trine Borum Bojsen as Non-executive Director who
brings over 25 years of experience from the renewable energy space. Trine
joins another of our Board Directors Julia King, Baroness Brown of Cambridge,
in supporting the ESG Committee as an adviser.
Strategic update
Ceres is a technology business, and our purpose is to develop the technologies
that the world needs to decarbonise and bring them to market at the scale and
pace needed to help global energy systems transition to a net zero carbon
future. We are making good progress in enabling scale production of our
technology globally with partners building manufacturing facilities in
Germany, South Korea and now a third planned factory in China. Our investment
in SOEC for green hydrogen and continued growth in SOFC for power systems
enables us to significantly increase the addressable market for our technology
and significantly grow the value of the business through future licenses and
royalties. Our aim is to enable multi-gigawatts of electrolysis and fuel cell
technologies to decarbonise the hard-to-abate sectors of the energy system and
in the process to build a sustainable business that delivers long-term
benefits for our people, shareholders, communities, and our planet.
Outlook
As explained in the "Current trading and outlook" section above, the expected
timing of the recognition of the up-front licence fee revenue in relation to
the establishment of the China JVs means that revenue in the second half of
2022 is expected to be at similar levels to the first half. However, we
expect strong revenue growth in 2023 as most of the £30 million licence fee
revenue would be recognised on establishment of the JVs.
We will continue to make use of our strong financial position in order to make
targeted investments in SOFC and SOEC capability in line with our plans to
grow the business and support the significant future demand for leading fuel
cell and electrolysis clean energy technology.
Philip Caldwell
Chief Executive Officer
About Ceres Power
Ceres is a world-leading developer of electrochemical technologies: fuel cells
for power generation, electrolysis for the creation of green hydrogen and
energy storage. Its asset-light, licensing model has seen it establish
partnerships with some of the world's largest engineering and technology
companies, such as Weichai in China, Bosch in Germany, Miura in Japan, and
Doosan in Korea, to develop systems and products that address climate change
for power generation, transportation, industry, data centres and everyday
living. Ceres is listed on the AIM market of the London Stock Exchange
("LSE") (AIM: CWR) and is classified by the LSE Green Economy Mark, which
recognises listed companies that derive more than 50% of their activity from
the green economy.
Chief Executive's Statement
Ceres' purpose is to develop the technologies that the world needs to
decarbonise and bring them to market at the scale and pace needed to help
global energy systems transition to a net zero carbon future.
We are proud to be a British business that exports technology globally through
collaborations with some of the world's most progressive companies building
manufacturing facilities in Germany, South Korea and now a third planned
factory in China. Our aim is to enable multi-gigawatts of capacity producing
hydrogen and fuel cell technologies to decarbonise the hard-to-abate sectors
of the energy system and in the process build a sustainable business that
delivers long-term benefits for our people and shareholders, our communities,
and our planet.
I am pleased to report that in the first half of 2022 we have continued to
invest capital focused on scaling our technology for use in multiple
applications and geographies. We have accelerated the development of our fuel
cell business (SOFC) with global partners, enabling major expansion of our
electrolysis activities (SOEC) by signing a new partner in Shell, and
strengthening the management and wider Ceres team to address the substantial
market opportunities that exist for our clean energy technology.
The Group reported revenues and other income of £9.9 million for the first
six months of 2022 (H1 2021: £17.4 million), all related to the fuel cell
business. The decrease when compared with the prior period primarily reflects
the significant licence revenue recognised in H1 2021 on our contract with
Doosan and accordingly gross margins reduced to 55% (H1 2021: 72%), also
impacted by the higher proportion of licence fee revenue recognised in the
prior period. As we have stated in previous results announcements, gross
margin percentage will vary period on period based on timing and quantum of
licence revenue recognition within the overall revenue mix.
As noted in our recent Trading Update, the phasing of revenue in 2022 and
early 2023 is highly sensitive to the timing of the establishment of the China
JVs, where Ceres, Bosch and Weichai are making good progress towards
definitive agreements. The collaboration represents an important milestone in
Ceres' ambitions for the Chinese market and it is a critical part of
delivering global manufacturing capacity for our technology, with the
potential to establish one of the strongest partnerships in the global fuel
cell industry. We are confident that the JV agreements will be signed in Q4
but because of the various approvals required before the JVs themselves can be
established, it is therefore expected that initial licence fee revenue
recognition will be in the first half of 2023.
The world around us continues to transition towards a sustainable green
economy, driving increasing demand for clean energy technologies. The current
geopolitical instability in Europe has only served to push energy security
firmly up the political agenda and the rising costs of fossil fuels is adding
another tailwind to the urgency for decarbonisation of our energy system.
In July, the stationary power SOFC system being developed by our partner Bosch
was approved by the European Commission as one of the first Important Projects
of Common European Interest (IPCEI) aimed at developing an integrated hydrogen
economy in Europe. Bosch's SOFC programme is now eligible for state funding
on the basis of this approval under state aid law aimed at strengthening
innovative capacity, global competitiveness and creating new jobs in Germany.
In Germany, more than eight billion euros in funding is available for the
development of hydrogen and other green technologies.
In South Korea, the market has received a further boost from a new Clean
Hydrogen Portfolio Standards bill that passed in May 2022, stipulating that a
certain percentage of electricity provided by electric companies must be
produced from hydrogen. The existing portfolio standard has also been
amended so that by 2026, 25% of energy supplied in South Korea must derive
from renewable energy, with incremental increases every year thereafter.
Over the summer, President Biden signed into law the Inflation Reduction Act,
which includes $369 billion of funding over 10 years to promote the transition
to cleaner energy. The largest investment commitment in clean energy in US
history, it includes various elements that specifically support hydrogen and
fuel cell businesses including tax credits for green hydrogen, credits for
renewable energy and biogas production, and financial support for companies
demonstrating technologies that can help decarbonise heavy industry,
agriculture, and shipping. These are all areas of the energy system where
Ceres' technology can play an important role, and we have seen an increase in
enquiries from the US and continue to explore opportunities with potential US
partners.
Ceres Power - fuel cells
Ceres has established a leading position in solid oxide fuel cell technology
that is being demonstrated in several applications through global partners.
Our focus now is meeting growing demand for higher-power systems and
broadening applications for use in hard-to-decarbonise sectors such as marine.
All revenues in the first half of the year are derived from the SOFC part of
the business. This recorded a gross profit of £5.3 million (H1 2021: £12.2
million), reflecting lower revenue following the significant revenue
recognised on the Doosan contract in the comparative period, and an increase
in adjusted EBITDA loss to £10.2 million (H1 2021: £0.4 million).
Investment in research and development for SOFC increased by 26% to £13.2
million (H1 2021: £10.5 million).
We continued to accelerate investment in the first half of the year in areas
such as research and development, capability of our CP2 pilot production
facility, and test stand capacity including signing and outsource agreement
with Horiba Mira. In line with our strategy, there will be continued
investment in SOFC to support future expansion. The level of losses or
future profitability of this part of the business will continue to be highly
influenced by the level of SOFC licence fee revenue recognised in each period,
until royalty revenue streams become material.
Our partners Bosch and Doosan are both targeting 2024 for the scale up of
manufacturing capabilities to 200MW and 50MW of SOFC capacity, respectively.
In August, Doosan raised approximately £44 million and confirmed that half
would be used to build a new plant in South Korea for the mass production of
solid oxide fuel cells to meet the rising demand from the hydrogen-energy
market.
The three-way collaboration in China with Weichai and Bosch would represent
our third manufacturing location following Germany and South Korea, and
another major step towards enabling multi-gigawatt capacity of our technology
globally.
Ceres Hydrogen - electrolysis
In SOEC, we are now investing in a potentially even larger addressable market
for electrolysis through a differentiated offering for hydrogen with distinct
advantages in efficiency, coupling with industrial processes that are high
emitters of carbon dioxide today. Our SOEC business showed an adjusted EBITDA
loss of £10.3 million (H1 2021: £4.1 million), reflecting increased research
and development activities, including the initial costs of producing our first
1MW demonstration unit. Investment in research and development for the SOEC
segment increased by 100% to £7.8 million (H1 2021: £3.9 million).
Ceres has committed £100 million for the further development of its SOEC
technology - with the aim of producing highly efficient, low-cost green
hydrogen. According to BloombergNEF's recent report, "Ukraine War Makes
Green Hydrogen Competitive", grey hydrogen produced from fossil fuels has
reached a levelised cost of $6.71/kg in the EMEA compared to $4.84-6.68/kg for
green hydrogen - nearly removing the premium for newer, cleaner technologies.
The International Energy Agency estimates the capacity of electrolysers needed
by 2050 at 3,585GW, compared to cumulative installations today of just 1GW. It
is no longer a question of credibility of the technology, but more a question
about the scale and pace of deployment.
Ceres aims to produce hydrogen at efficiencies around 20% greater than other
technologies, in the range of 85 - 90% where it is possible to make use of
waste heat in industrial processes to drive this higher efficiency. We are
making progress with our SOEC development programme and have our first
Electrolyser Cell Module (ECM) on test. We are making good progress on the
"first-of-a-kind" system build and will integrate the ECMs into the container
system to start testing in the early part of 2023.
In June 2022, we signed an agreement with Shell to deliver a megawatt scale
SOEC demonstrator in 2023. The system will be installed at Shell's research
and development technology centre in Bangalore, India, where the hydrogen
will be used in industrial processes on site. The testing programme is
intended to run for at least three years, forming the first stage of a
collaborative relationship. Shell and Ceres are building this partnership to
utilise SOEC technology to deliver high-efficiency, low-cost green hydrogen;
now widely viewed as a credible route to decarbonise hard-to-abate parts of
the energy system that rely on fossil fuels today.
Focused investment for the future
The underlying theme across both segments of the business for the first six
months of 2022 continues to be investing to drive innovation and future mass
market uptake for these technologies. Consistent with the capital raise in
2021, the investments we are making include both capital investments and
investment in strategic resources in both SOFC and SOEC capabilities. Overall,
our employee base grew as planned, with 523 people employed as at 30 June 2022
compared to 489 people as at 31 December 2021. Research and development costs
increased by 46% to £21.0 million compared to H1 2021 largely due to the
additional investment in SOEC.
Capitalised development costs in the period, which only relate to ongoing SOFC
development, increased to £2.9 million compared to £1.6 million for H1 2021
and we have capitalised a net £10.9 million to date (31 December 2021: £8.5
million). Amortisation of this to the income statement was consistent with the
prior period, with a charge of £0.5 million recorded (H1 2021: £0.6
million).
As planned, we have continued the expansion of our test capability to support
demand from our partners, and to cater for additional market opportunities
including SOEC and SOFC applications such as marine and alternative fuels. We
have also invested in expanding our manufacturing capacity for prototypes and
demonstrators for both SOFC and SOEC products. As a result, our investment in
property, plant and equipment increased to £5.5 million in H1 2022 (H1 2021:
£3.6 million) and depreciation charged increased to £2.6 million, compared
to £1.9 million in H1 2021. We expect this capital investment to accelerate
in the second half of 2022.
Overall, this focused "investment in the future" (R&D costs, capitalised
development and capital expenditure) increased by 56% to £25.7 million (H1
2021: £16.5 million). The £25.7 million comprises £17.3 million (H1 2021:
£11.3 million) in R&D (excluding depreciation, amortisation and
share-based payments), £5.5 million (H1 2021: £3.6 million) in capital
expenditure and £2.9 million (H1 2021: £1.6 million) in capitalised
development.
As a result of these investments and increased amortisation and depreciation,
the Group reported an increased operating loss of £25.2 million in H1 2022,
up from a loss of £7.6 million in H1 2021.
Strong financial position: the foundation for continued development and growth
The Group ended the period with a strong cash position of £221.6 million in
cash and investments as at 30 June 2022 (31 December 2021: £249.6 million),
with the decrease since 31 December 2021 reflecting the investment in the
period and is in line with our plans to invest for future growth following
last year's capital raise.
Equity free cash outflow (defined and reconciled to net cash from operating
activities at the end of this report) was £28.6 million (H1 2021: £18.7
million), being driven by net cash used in operating activities of £20.6
million (H1 2021: £13.2 million) reflecting the Group's operating loss in the
period, capital expenditure of £5.5 million (H1 2021: £3.6 million),
capitalised development of £2.9 million (H1 2021: £1.6 million) with the
balance from interest payments and exchange rate movements. Movements in
working capital included a £4.0 million increase in inventories (H1 2021:
£0.9 million) primarily reflecting a higher balance of fuel cell stacks being
held at the period end to satisfy customer demand for our technology
hardware.
Order Backlog (combining what was previously described as "Order book" and
"Pipeline") as at 30 June 2022 was £76.2 million (31 December 2021: £79.8
million).
Board and Management Changes
In early 2022 we strengthened our management team with the arrival of Eric
Lakin as Chief Financial Officer and Deborah Grimason as General Counsel
and Company Secretary. Both bring fresh perspective to our existing, talented
team and important experience from much larger listed businesses as we look to
transition from the AIM listing to the Premium listing segment of the Main
Market of the London Stock Exchange, which is expected to follow the signing
of the China joint venture agreements.
On the Board, we welcomed Trine Borum Bojsen as Non-executive Director who
brings over 25 years of experience from the renewable energy space. Trine
joins another of our Board Directors Julia King, Baroness Brown of Cambridge,
in supporting the ESG Committee as an adviser.
Strategic update
Ceres is a technology business, and our purpose is to develop the technologies
that the world needs to decarbonise and bring them to market at the scale and
pace needed to help global energy systems transition to a net zero carbon
future. We are making good progress in enabling scale production of our
technology globally with partners building manufacturing facilities in
Germany, South Korea and now a third planned factory in China. Our investment
in SOEC for green hydrogen and continued growth in SOFC for power systems
enables us to significantly increase the addressable market for our technology
and significantly grow the value of the business through future licenses and
royalties. Our aim is to enable multi-gigawatts of electrolysis and fuel cell
technologies to decarbonise the hard-to-abate sectors of the energy system and
in the process to build a sustainable business that delivers long-term
benefits for our people, shareholders, communities, and our planet.
Outlook
As explained in the "Current trading and outlook" section above, the expected
timing of the recognition of the up-front licence fee revenue in relation to
the establishment of the China JVs means that revenue in the second half of
2022 is expected to be at similar levels to the first half. However, we
expect strong revenue growth in 2023 as most of the £30 million licence fee
revenue would be recognised on establishment of the JVs.
We will continue to make use of our strong financial position in order to make
targeted investments in SOFC and SOEC capability in line with our plans to
grow the business and support the significant future demand for leading fuel
cell and electrolysis clean energy technology.
Philip Caldwell
Chief Executive Officer
About Ceres Power
Ceres is a world-leading developer of electrochemical technologies: fuel cells
for power generation, electrolysis for the creation of green hydrogen and
energy storage. Its asset-light, licensing model has seen it establish
partnerships with some of the world's largest engineering and technology
companies, such as Weichai in China, Bosch in Germany, Miura in Japan, and
Doosan in Korea, to develop systems and products that address climate change
for power generation, transportation, industry, data centres and everyday
living. Ceres is listed on the AIM market of the London Stock Exchange
("LSE") (AIM: CWR) and is classified by the LSE Green Economy Mark, which
recognises listed companies that derive more than 50% of their activity from
the green economy.
Chief Executive's Statement
Ceres' purpose is to develop the technologies that the world needs to
decarbonise and bring them to market at the scale and pace needed to help
global energy systems transition to a net zero carbon future.
We are proud to be a British business that exports technology globally through
collaborations with some of the world's most progressive companies building
manufacturing facilities in Germany, South Korea and now a third planned
factory in China. Our aim is to enable multi-gigawatts of capacity producing
hydrogen and fuel cell technologies to decarbonise the hard-to-abate sectors
of the energy system and in the process build a sustainable business that
delivers long-term benefits for our people and shareholders, our communities,
and our planet.
I am pleased to report that in the first half of 2022 we have continued to
invest capital focused on scaling our technology for use in multiple
applications and geographies. We have accelerated the development of our fuel
cell business (SOFC) with global partners, enabling major expansion of our
electrolysis activities (SOEC) by signing a new partner in Shell, and
strengthening the management and wider Ceres team to address the substantial
market opportunities that exist for our clean energy technology.
The Group reported revenues and other income of £9.9 million for the first
six months of 2022 (H1 2021: £17.4 million), all related to the fuel cell
business. The decrease when compared with the prior period primarily reflects
the significant licence revenue recognised in H1 2021 on our contract with
Doosan and accordingly gross margins reduced to 55% (H1 2021: 72%), also
impacted by the higher proportion of licence fee revenue recognised in the
prior period. As we have stated in previous results announcements, gross
margin percentage will vary period on period based on timing and quantum of
licence revenue recognition within the overall revenue mix.
As noted in our recent Trading Update, the phasing of revenue in 2022 and
early 2023 is highly sensitive to the timing of the establishment of the China
JVs, where Ceres, Bosch and Weichai are making good progress towards
definitive agreements. The collaboration represents an important milestone in
Ceres' ambitions for the Chinese market and it is a critical part of
delivering global manufacturing capacity for our technology, with the
potential to establish one of the strongest partnerships in the global fuel
cell industry. We are confident that the JV agreements will be signed in Q4
but because of the various approvals required before the JVs themselves can be
established, it is therefore expected that initial licence fee revenue
recognition will be in the first half of 2023.
The world around us continues to transition towards a sustainable green
economy, driving increasing demand for clean energy technologies. The current
geopolitical instability in Europe has only served to push energy security
firmly up the political agenda and the rising costs of fossil fuels is adding
another tailwind to the urgency for decarbonisation of our energy system.
In July, the stationary power SOFC system being developed by our partner Bosch
was approved by the European Commission as one of the first Important Projects
of Common European Interest (IPCEI) aimed at developing an integrated hydrogen
economy in Europe. Bosch's SOFC programme is now eligible for state funding
on the basis of this approval under state aid law aimed at strengthening
innovative capacity, global competitiveness and creating new jobs in Germany.
In Germany, more than eight billion euros in funding is available for the
development of hydrogen and other green technologies.
In South Korea, the market has received a further boost from a new Clean
Hydrogen Portfolio Standards bill that passed in May 2022, stipulating that a
certain percentage of electricity provided by electric companies must be
produced from hydrogen. The existing portfolio standard has also been
amended so that by 2026, 25% of energy supplied in South Korea must derive
from renewable energy, with incremental increases every year thereafter.
Over the summer, President Biden signed into law the Inflation Reduction Act,
which includes $369 billion of funding over 10 years to promote the transition
to cleaner energy. The largest investment commitment in clean energy in US
history, it includes various elements that specifically support hydrogen and
fuel cell businesses including tax credits for green hydrogen, credits for
renewable energy and biogas production, and financial support for companies
demonstrating technologies that can help decarbonise heavy industry,
agriculture, and shipping. These are all areas of the energy system where
Ceres' technology can play an important role, and we have seen an increase in
enquiries from the US and continue to explore opportunities with potential US
partners.
Ceres Power - fuel cells
Ceres has established a leading position in solid oxide fuel cell technology
that is being demonstrated in several applications through global partners.
Our focus now is meeting growing demand for higher-power systems and
broadening applications for use in hard-to-decarbonise sectors such as marine.
All revenues in the first half of the year are derived from the SOFC part of
the business. This recorded a gross profit of £5.3 million (H1 2021: £12.2
million), reflecting lower revenue following the significant revenue
recognised on the Doosan contract in the comparative period, and an increase
in adjusted EBITDA loss to £10.2 million (H1 2021: £0.4 million).
Investment in research and development for SOFC increased by 26% to £13.2
million (H1 2021: £10.5 million).
We continued to accelerate investment in the first half of the year in areas
such as research and development, capability of our CP2 pilot production
facility, and test stand capacity including signing and outsource agreement
with Horiba Mira. In line with our strategy, there will be continued
investment in SOFC to support future expansion. The level of losses or
future profitability of this part of the business will continue to be highly
influenced by the level of SOFC licence fee revenue recognised in each period,
until royalty revenue streams become material.
Our partners Bosch and Doosan are both targeting 2024 for the scale up of
manufacturing capabilities to 200MW and 50MW of SOFC capacity, respectively.
In August, Doosan raised approximately £44 million and confirmed that half
would be used to build a new plant in South Korea for the mass production of
solid oxide fuel cells to meet the rising demand from the hydrogen-energy
market.
The three-way collaboration in China with Weichai and Bosch would represent
our third manufacturing location following Germany and South Korea, and
another major step towards enabling multi-gigawatt capacity of our technology
globally.
Ceres Hydrogen - electrolysis
In SOEC, we are now investing in a potentially even larger addressable market
for electrolysis through a differentiated offering for hydrogen with distinct
advantages in efficiency, coupling with industrial processes that are high
emitters of carbon dioxide today. Our SOEC business showed an adjusted EBITDA
loss of £10.3 million (H1 2021: £4.1 million), reflecting increased research
and development activities, including the initial costs of producing our first
1MW demonstration unit. Investment in research and development for the SOEC
segment increased by 100% to £7.8 million (H1 2021: £3.9 million).
Ceres has committed £100 million for the further development of its SOEC
technology - with the aim of producing highly efficient, low-cost green
hydrogen. According to BloombergNEF's recent report, "Ukraine War Makes
Green Hydrogen Competitive", grey hydrogen produced from fossil fuels has
reached a levelised cost of $6.71/kg in the EMEA compared to $4.84-6.68/kg for
green hydrogen - nearly removing the premium for newer, cleaner technologies.
The International Energy Agency estimates the capacity of electrolysers needed
by 2050 at 3,585GW, compared to cumulative installations today of just 1GW. It
is no longer a question of credibility of the technology, but more a question
about the scale and pace of deployment.
Ceres aims to produce hydrogen at efficiencies around 20% greater than other
technologies, in the range of 85 - 90% where it is possible to make use of
waste heat in industrial processes to drive this higher efficiency. We are
making progress with our SOEC development programme and have our first
Electrolyser Cell Module (ECM) on test. We are making good progress on the
"first-of-a-kind" system build and will integrate the ECMs into the container
system to start testing in the early part of 2023.
In June 2022, we signed an agreement with Shell to deliver a megawatt scale
SOEC demonstrator in 2023. The system will be installed at Shell's research
and development technology centre in Bangalore, India, where the hydrogen
will be used in industrial processes on site. The testing programme is
intended to run for at least three years, forming the first stage of a
collaborative relationship. Shell and Ceres are building this partnership to
utilise SOEC technology to deliver high-efficiency, low-cost green hydrogen;
now widely viewed as a credible route to decarbonise hard-to-abate parts of
the energy system that rely on fossil fuels today.
Focused investment for the future
The underlying theme across both segments of the business for the first six
months of 2022 continues to be investing to drive innovation and future mass
market uptake for these technologies. Consistent with the capital raise in
2021, the investments we are making include both capital investments and
investment in strategic resources in both SOFC and SOEC capabilities. Overall,
our employee base grew as planned, with 523 people employed as at 30 June 2022
compared to 489 people as at 31 December 2021. Research and development costs
increased by 46% to £21.0 million compared to H1 2021 largely due to the
additional investment in SOEC.
Capitalised development costs in the period, which only relate to ongoing SOFC
development, increased to £2.9 million compared to £1.6 million for H1 2021
and we have capitalised a net £10.9 million to date (31 December 2021: £8.5
million). Amortisation of this to the income statement was consistent with the
prior period, with a charge of £0.5 million recorded (H1 2021: £0.6
million).
As planned, we have continued the expansion of our test capability to support
demand from our partners, and to cater for additional market opportunities
including SOEC and SOFC applications such as marine and alternative fuels. We
have also invested in expanding our manufacturing capacity for prototypes and
demonstrators for both SOFC and SOEC products. As a result, our investment in
property, plant and equipment increased to £5.5 million in H1 2022 (H1 2021:
£3.6 million) and depreciation charged increased to £2.6 million, compared
to £1.9 million in H1 2021. We expect this capital investment to accelerate
in the second half of 2022.
Overall, this focused "investment in the future" (R&D costs, capitalised
development and capital expenditure) increased by 56% to £25.7 million (H1
2021: £16.5 million). The £25.7 million comprises £17.3 million (H1 2021:
£11.3 million) in R&D (excluding depreciation, amortisation and
share-based payments), £5.5 million (H1 2021: £3.6 million) in capital
expenditure and £2.9 million (H1 2021: £1.6 million) in capitalised
development.
As a result of these investments and increased amortisation and depreciation,
the Group reported an increased operating loss of £25.2 million in H1 2022,
up from a loss of £7.6 million in H1 2021.
Strong financial position: the foundation for continued development and growth
The Group ended the period with a strong cash position of £221.6 million in
cash and investments as at 30 June 2022 (31 December 2021: £249.6 million),
with the decrease since 31 December 2021 reflecting the investment in the
period and is in line with our plans to invest for future growth following
last year's capital raise.
Equity free cash outflow (defined and reconciled to net cash from operating
activities at the end of this report) was £28.6 million (H1 2021: £18.7
million), being driven by net cash used in operating activities of £20.6
million (H1 2021: £13.2 million) reflecting the Group's operating loss in the
period, capital expenditure of £5.5 million (H1 2021: £3.6 million),
capitalised development of £2.9 million (H1 2021: £1.6 million) with the
balance from interest payments and exchange rate movements. Movements in
working capital included a £4.0 million increase in inventories (H1 2021:
£0.9 million) primarily reflecting a higher balance of fuel cell stacks being
held at the period end to satisfy customer demand for our technology
hardware.
Order Backlog (combining what was previously described as "Order book" and
"Pipeline") as at 30 June 2022 was £76.2 million (31 December 2021: £79.8
million).
Board and Management Changes
In early 2022 we strengthened our management team with the arrival of Eric
Lakin as Chief Financial Officer and Deborah Grimason as General Counsel
and Company Secretary. Both bring fresh perspective to our existing, talented
team and important experience from much larger listed businesses as we look to
transition from the AIM listing to the Premium listing segment of the Main
Market of the London Stock Exchange, which is expected to follow the signing
of the China joint venture agreements.
On the Board, we welcomed Trine Borum Bojsen as Non-executive Director who
brings over 25 years of experience from the renewable energy space. Trine
joins another of our Board Directors Julia King, Baroness Brown of Cambridge,
in supporting the ESG Committee as an adviser.
Strategic update
Ceres is a technology business, and our purpose is to develop the technologies
that the world needs to decarbonise and bring them to market at the scale and
pace needed to help global energy systems transition to a net zero carbon
future. We are making good progress in enabling scale production of our
technology globally with partners building manufacturing facilities in
Germany, South Korea and now a third planned factory in China. Our investment
in SOEC for green hydrogen and continued growth in SOFC for power systems
enables us to significantly increase the addressable market for our technology
and significantly grow the value of the business through future licenses and
royalties. Our aim is to enable multi-gigawatts of electrolysis and fuel cell
technologies to decarbonise the hard-to-abate sectors of the energy system and
in the process to build a sustainable business that delivers long-term
benefits for our people, shareholders, communities, and our planet.
Outlook
As explained in the "Current trading and outlook" section above, the expected
timing of the recognition of the up-front licence fee revenue in relation to
the establishment of the China JVs means that revenue in the second half of
2022 is expected to be at similar levels to the first half. However, we
expect strong revenue growth in 2023 as most of the £30 million licence fee
revenue would be recognised on establishment of the JVs.
We will continue to make use of our strong financial position in order to make
targeted investments in SOFC and SOEC capability in line with our plans to
grow the business and support the significant future demand for leading fuel
cell and electrolysis clean energy technology.
Philip Caldwell
Chief Executive Officer
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME
For the six months ended 30 June 2022
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Revenue 2 9,687 17,110 30,776
Cost of sales (4,342) (4,866) (10,427)
Gross profit 5,345 12,244 20,349
Other operating income(1) 167 326 924
Operating costs 4 (30,715) (20,172) (44,703)
Operating loss (25,203) (7,602) (23,430)
Finance income 5 1,153 243 438
Finance expense 5 (143) (352) (380)
Loss before taxation (24,193) (7,711) (23,372)
Taxation credit 6 896 1,166 1,970
Loss for the financial period and total comprehensive loss (23,297) (6,545) (21,402)
Loss per £0.10 ordinary share expressed in pence per share:
Basic and diluted loss per share 7 (12.20)p (3.62)p (11.53)p
The accompanying notes are an integral part of these consolidated financial
statements.
(1) Other operating income relates to grant income.
(
)
( )
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
30 June 30 June 31 December
2022 2021 2021
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Assets
Non-current assets
Property, plant and equipment 8 21,092 16,688 18,141
Right-of-use assets 9 2,167 2,714 2,438
Intangible assets 10 10,882 5,939 8,478
Long-term investments 14 ꟷ 2,000 5,000
Investment in associate 460 ꟷ 500
Other receivables 12 741 741 741
Total non-current assets 35,342 28,082 35,298
Current assets
Inventories 11 7,149 2,988 3,145
Contract assets 2 5,314 5,626 7,331
Other current assets 13 1,024 975 1,133
Derivative financial instruments 17 703 845 1,073
Current tax receivable 4,416 4,659 3,531
Trade and other receivables 12 8,154 7,159 4,865
Short-term investments 14 114,177 95,733 93,129
Cash and cash equivalents 14 107,448 165,156 151,455
Total current assets 248,385 283,141 265,662
Liabilities
Current liabilities
Trade and other payables 15 (4,857) (2,502) (2,783)
Contract liabilities 2 (5,004) (3,773) (4,290)
Other current liabilities 16 (7,660) (3,959) (5,818)
Derivative financial instruments 17 (5) ꟷ ꟷ
Lease liabilities 18 (655) (622) (754)
Provisions 19 (1,495) (1,112) (1,579)
Total current liabilities (19,676) (11,968) (15,224)
Net current assets 228,709 271,173 250,438
Non-current liabilities
Lease liabilities 18 (1,971) (2,616) (2,285)
Provisions 19 (1,910) (1,642) (1,828)
Total non-current liabilities (3,881) (4,258) (4,113)
Net assets 260,170 294,997 281,623
Equity attributable to the owners of the parent
Share capital 20 19,157 19,041 19,073
Share premium 405,272 404,788 404,726
Capital redemption reserve 3,449 3,449 3,449
Merger reserve 7,463 7,463 7,463
Accumulated losses (175,171) (139,744) (153,088)
Total equity 260,170 294,997 281,623
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2022
Note 6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash flows from operating activities
Loss before taxation (24,193) (7,711) (23,372)
Adjustments for:
Finance income (1,153) (243) (438)
Finance expense 143 352 380
Depreciation of property, plant and equipment 2,578 1,930 4,215
Depreciation of right-of-use assets 271 265 541
Amortisation of intangible assets 542 556 1,004
Net foreign exchange losses/(gains) 153 63 (563)
Net change in fair value of financial instruments 375 (829) (1,057)
Share-based payments charge 1,214 1,102 2,615
Operating cash flows before movements in working capital (20,070) (4,515) (16,675)
(Increase)/decrease in trade and other receivables (3,117) (1,944) 22
Increase in inventories (4,004) (881) (1,038)
Increase in trade and other payables 3,900 2,164 2,832
Decrease/(increase) in contract assets 2,017 (4,762) (6,467)
Increase/(decrease) in contract liabilities 714 (3,732) (3,215)
(Decrease)/increase in provisions (39) 500 1,121
Net cash used in operations (20,599) (13,170) (23,420)
Taxation received ꟷ ꟷ 3,078
Net cash used in operating activities (20,599) (13,170) (20,342)
Investing activities
Purchase of property, plant and equipment (5,529) (3,639) (7,377)
Capitalised development expenditure (2,946) (1,586) (4,573)
Repayment of long-term investments 5,000 6,000 3,000
Acquisition of short-term investments (70,998) (52,502) (62,898)
Repayment of short-term investments 49,950 26,000 39,000
Finance income received 730 243 438
Net cash used in investing activities (23,793) (25,484) (32,410)
Financing activities
Proceeds from issuance of ordinary shares 630 181,502 181,472
Net expenses from issuance of ordinary shares ꟷ (2,572) (2,572)
Cash paid on behalf of employees on the sale of share options ꟷ (7,490) (7,490)
Repayment of lease liabilities (413) (207) (405)
Interest paid (103) (315) (316)
Net cash generated from financing activities 114 170,918 170,689
Net (decrease)/increase in cash and cash equivalents (44,278) 132,264 117,937
Exchange gains/(losses) on cash and cash equivalents 271 (63) 563
Cash and cash equivalents at beginning of period 151,455 32,955 32,955
Cash and cash equivalents at end of period 14 107,448 165,156 151,455
The accompanying notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2022
Share capital Share premium Capital redemption reserve Merger reserve Accumulated losses Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 (audited) 17,217 227,682 3,449 7,463 (134,301) 121,510
Comprehensive income
Loss for the financial year ꟷ ꟷ ꟷ ꟷ (21,402) (21,402)
Total comprehensive loss (21,402) (21,402)
Transactions with owners
Issue of shares, net of costs 1,856 177,044 ꟷ ꟷ ꟷ 178,900
Share-based payments charge ꟷ ꟷ ꟷ ꟷ 2,615 2,615
Total transactions with owners 1,856 177,044 ꟷ ꟷ 2,615 181,515
At 31 December 2021 (audited) 19,073 404,726 3,449 7,463 (153,088) 281,623
Comprehensive income
Loss for the financial period ꟷ ꟷ ꟷ ꟷ (23,297) (23,297)
Total comprehensive loss ꟷ ꟷ ꟷ ꟷ (23,297) (23,297)
Transactions with owners
Issue of shares, net of costs 84 546 ꟷ ꟷ ꟷ 630
Share-based payments charge ꟷ ꟷ ꟷ ꟷ 1,214 1,214
Total transactions with owners 84 546 ꟷ ꟷ 1,214 1,844
At 30 June 2022 (Unaudited) 19,157 405,272 3,449 7,463 (175,171) 260,170
Comparatives for the six months ended 30 June 2021 are provided separately
below:
Share capital Share premium Capital redemption reserve Merger reserve Accumulated losses Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 (audited) 17,217 227,682 3,449 7,463 (134,301) 121,510
Comprehensive income
Loss for the financial period ꟷ ꟷ ꟷ ꟷ (6,545) (6,545)
Total comprehensive loss (6,545) (6,545)
Transactions with owners
Issue of shares, net of costs 1,824 177,106 ꟷ ꟷ ꟷ 178,930
Share-based payments charge ꟷ ꟷ ꟷ ꟷ 1,102 1,102
Total transactions with owners 1,824 177,106 ꟷ ꟷ 1,102 180,032
At 30 June 2021 (unaudited) 19,041 404,788 3,449 7,463 (139,744) 294,997
Notes to the financial statements for the six months ended 30 June 2022
1. Basis of preparation
The interim financial statements have been prepared in accordance with the
requirements of the AIM Rules for Companies. They do not include all of the
information required for full annual financial statements and should be read
in conjunction with the annual financial statements for the year ended 31
December 2021 which were prepared in accordance with international accounting
standards in conformity with the requirements of the Companies Act 2006. The
interim financial statements have been prepared on a historical cost basis
except that derivative financial instruments, which are stated at their fair
value.
The interim financial information has been prepared in accordance with the
recognition and measurement requirements of UK adopted international
accounting standards and applicable law and regulations. The same accounting
policies, presentation and methods of computation are followed in the interim
financial statements as were applied in the Group's latest annual audited
financial statements. While the financial figures included in this half-yearly
report have been computed in accordance with international accounting
standards applicable to interim periods, this half-yearly report does not
contain sufficient information to constitute an interim financial report as
that term is defined in IAS 34.
The financial information contained in the interim financial statements is
unaudited and does not constitute statutory financial statements as defined by
in Section 434 of the Companies Act 2006. The financial statements for the
year ended 31 December 2021, on which the auditors gave an unqualified audit
opinion, and did not draw attention to any matters by way of emphasis, and did
not contain a statement under 498(2) or 498(3) of the Companies Act 2006, have
been filed with the Registrar of Companies.
The consolidated interim financial information for the six months ended 30
June 2022 has been reviewed by the Company's Auditor, BDO LLP in accordance
with International Standard of Review Engagements 2410, Review of Interim
Financial Information Performed by the Independent Auditor of the Entity.
Going Concern
The Group has reported a loss after tax for the six months period ended 30
June 2022 of £23.3m (six months ended 30 June 2021: £6.5m) and net cash used
in operating activities of £20.6m (six months ended 30 June 2021: £13.2m).
At 30 June 2022, the Group held cash and cash equivalents and investments of
£221.6m (31 December 2021: £249.6m). The directors have prepared annual
budgets and cash flow projections that extend 15 months from the date of
approval of this report. These projections include management's expectations
of the cash flows associated with the Group's future investment in R&D
projects and expansion of manufacturing and testing capacity, together with
contracted and anticipated customer contracts and the planned investment in
the China collaboration with Bosch and Weichai. The projections were stress
tested by applying different scenarios including the loss of significant
future revenue and continued adverse macroeconomic factors. In each case the
projections demonstrated that the Group would have sufficient cash reserves to
meet its liabilities as they fall due and to continue as a going concern. For
the above reasons, the directors continue to adopt the going concern basis in
preparing the financial statements.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, management is required
to make judgements, estimates and assumptions about the carrying amounts of
assets and liabilities that are not readily apparent from other sources.
In preparing the interim consolidated financial statements, the areas where
judgement has been exercised remain consistent with those applied to the
annual report and accounts for the year ended 31 December 2021.
New standards and amendments applicable for the reporting period
The Group has adopted all standards, interpretations amended or newly issued
by the IASB that were effective in the period. Their adoption has not had any
material effect on the consolidated financial statements.
2. Revenue
The Group's revenue is disaggregated by geographical market, major
product/service lines, and timing of revenue recognition:
Geographical market
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Europe 4,051 3,855 7,676
Asia 5,404 12,995 22,748
North America 211 20 109
Rest of World 21 240 243
9,687 17,110 30,776
For the six months ended 30 June 2022, the Group has identified two major
customers (defined as customers that individually contributed more than 10% of
the Group's total revenue) that accounted for approximately 44% and 39% of the
Group's total revenue recognised in the period (6 months ended 30 June 2021:
two major customers that accounted for approximately 65% and 23% of the
Group's total revenue for that period and 12 months ended 31 December 2021:
three major customers that accounted for approximately 59%, 25% and 11% of the
Group's total revenue recognised for that year).
Major product/service lines
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Engineering services 4,206 2,669 6,777
Provision of technology hardware 2,077 3,759 7,353
Licenses 3,404 10,682 16,646
9,687 17,110 30,776
Timing of transfer of goods and services
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Products and services transferred at a point in time 1,887 11,732 15,326
Products and services transferred over time 7,800 5,378 15,450
9,687 17,110 30,776
2. Revenue (continued)
Amounts transferred at a point in time during the prior periods included the
recognition of significant license income in the first half of 2021 related to
a major contract.
The contract-related assets and liabilities are as follows:
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Trade receivables 12 4,651 3,618 2,612
Contract assets - accrued income 5,314 5,626 7,010
Contract assets - deferred costs ꟷ ꟷ 321
Total contract assets 5,314 5,626 7,331
Contract liabilities - deferred income (5,004) (3,773) (4,290)
3. Segmental analysis
In accordance with IFRS 8 the method applied to identify reporting segments is
based on internal management reporting information that is regularly reviewed
by the chief operating decision maker, which the Group considers to be the
Executive team. The Group's internal segmental reporting continues to
separately reflect results down to adjusted EBITDA level from its Power (SOFC)
and Hydrogen (SOEC) divisions.
Power - SOFC Hydrogen - SOEC Consolidated
Six months ended 30 June 2022 (Unaudited) £'000 £'000 £'000
Revenue (external) 9,687 ꟷ 9,687
Cost of sales (4,342) ꟷ (4,342)
Gross profit 5,345 ꟷ 5,345
Other operating income 167 ꟷ 167
Operating costs (excluding adjusting items) (15,728) (10,279) (26,007)
Adjusted EBITDA(1) (10,216) (10,279) (20,495)
Adjusting items:
Depreciation & amortisation (3,391)
Share-based payment charge (1,214)
Unrealised foreign exchange losses 271
Fair value adjustment (374)
Operating loss (25,203)
Finance income 1,153
Finance expense (143)
Loss before taxation (24,193)
Taxation credit 896
Loss for the financial period (23,297)
3. Segmental analysis (continued) Power - SOFC Hydrogen - SOEC Consolidated
Six months ended 30 June 2021 (unaudited) £'000 £'000 £'000
Revenue (external) 17,110 ꟷ 17,110
Cost of sales (4,866) ꟷ (4,866)
Gross profit 12,244 ꟷ 12,244
Other operating income 326 ꟷ 326
Operating costs (excluding adjusting items) (12,941) (4,144) (17,085)
Adjusted EBITDA(1) (371) (4,144) (4,515)
Adjusting items:
Depreciation & amortisation (2,751)
Share-based payment charge (1,102)
Unrealised foreign exchange losses (63)
Fair value adjustment 829
Operating loss (7,602)
Finance income 243
Finance expense (352)
Loss before taxation (7,711)
Taxation credit 1,166
Loss for the financial period (6,545)
Power - SOFC Hydrogen - SOEC Consolidated
12 months ended 31 December 2021 (audited) £'000 £'000 £'000
Revenue (external) 30,776 ꟷ 30,776
Cost of sales (10,427) ꟷ (10,427)
Gross profit 20,349 ꟷ 20,349
Other operating income 924 ꟷ 924
Operating costs (excluding adjusting items) (25,765) (12,183) (37,948)
Adjusted EBITDA(1) (4,492) (12,183) (16,675)
Adjusting items:
Depreciation & amortisation (5,760)
Share-based payment charge (2,615)
Unrealised foreign exchange losses 563
Fair value adjustment 1,057
Operating loss (23,430)
Finance income 438
Finance expense (380)
Loss before taxation (23,372)
Taxation credit 1,970
Loss for the financial period (21,402)
(1)Adjusted EBITDA is an alternative performance measure, as defined at the
end of this report.
4. Operating costs
Operating costs can be analysed as follows:
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Research and development costs 20,997 14,402 31,290
Administrative expenses 7,695 4,775 11,245
Commercial 2,023 995 2,168
30,715 20,172 44,703
5. Finance income and expenses
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Interest received 730 243 438
Foreign exchange gain on cash, cash equivalents and short-term deposits 423 ꟷ
ꟷ
Finance income 1,153 243 438
Interest on lease liability (103) (204) (316)
Unwinding of discount on provisions (37) (32) (64)
Other finance costs (3) (5) ꟷ
Foreign exchange loss on cash, cash equivalents and short-term deposits ꟷ (111) ꟷ
Interest expense (143) (352) (380)
6. Taxation
No corporation tax liability has arisen during the period (6 months ended 30
June 2021 and 12 months ended 31 December 2021: £nil) due to the losses
incurred. A tax credit has arisen as a result of the tax losses being
surrendered in respect of research and development expenditure.
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
UK corporation tax (2,022) (1,535) (2,917)
Foreign tax suffered 240 369 973
Adjustment in respect of prior periods 886 ꟷ (26)
(896) (1,166) (1,970)
7. Loss per share
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Loss for the financial period attributable to shareholders (23,297) (6,545) (21,402)
Weighted average number of shares in issue 190,972,969 180,783,345 185,689,432
Loss per £0.10 ordinary share (basic and diluted) (12.20)p (3.62)p (11.53)p
8. Property, plant and equipment
Leasehold improvements Assets under construction
£'000 Plant and machinery Computer equipment Fixtures and fittings £'000 Motor vehicles
£'000
£'000
£'000 £'000 Total
£'000
Cost
At 1 January 2021 5,883 21,409 2,061 314 756 12 30,435
Additions 1,529 3,521 502 34 1,791 ꟷ 7,377
Transfers ꟷ 572 ꟷ ꟷ (572) ꟷ ꟷ
At 31 December 2021 (audited) 7,412 25,502 2,563 348 1,975 12 37,812
Additions 238 2,437 169 ꟷ 2,685 ꟷ 5,529
Transfers 22 264 ꟷ ꟷ (286) ꟷ ꟷ
At 30 June 2022 (unaudited) 7,672 28,203 2,732 348 4,374 12 43,341
Accumulated depreciation
At 1 January 2021 2,712 11,196 1,398 149 ꟷ 1 15,456
Charge for the year 646 3,089 392 83 ꟷ 5 4,215
At 31 December 2021 (audited) 3,358 14,285 1,790 232 ꟷ 6 19,671
Charge for the period 442 1,872 226 37 ꟷ 1 2,578
At 30 June 2022 (unaudited) 3,800 16,157 2,016 269 ꟷ 7 22,249
Net book value
At 30 June 2022 (unaudited) 3,872 12,046 716 79 4,374 5 21,092
At 31 December 2021 (audited) 4,054 11,217 773 116 1,975 6 18,141
'Assets under construction' represents the cost of purchasing, constructing
and installing property, plant and equipment ahead of their productive use.
The category is temporary, pending completion of the assets and their transfer
to the appropriate and permanent category of property, plant and equipment. As
such, no depreciation is charged on assets under construction.
Assets under construction consist entirely of plant and machinery that will be
used in the manufacturing, development and testing of fuel cells.
8. Property, plant and equipment (continued)
Comparatives for the six months ended 30 June 2021 are provided separately
below:
Unaudited Leasehold improvements Assets under construction
£'000 Plant and machinery Computer equipment Fixtures and fittings £'000 Motor vehicles
£'000
£'000
£'000 £'000 Total
£'000
Cost
At 1 January 2021 5,883 21,409 2,061 314 756 12 30,435
Additions 863 1,466 316 28 966 ꟷ 3,639
Transfers ꟷ 572 ꟷ ꟷ (572) ꟷ ꟷ
At 30 June 2021 6,746 23,447 2,377 342 1,150 12 34,074
Accumulated depreciation
At 1 January 2021 2,712 11,196 1,398 149 ꟷ 1 15,456
Charge for the period 268 1,444 169 46 ꟷ 3 1,930
At 30 June 2021 2,980 12,640 1,567 195 ꟷ 4 17,386
Net book value
At 30 June 2021 3,766 10,807 810 147 1,150 8 16,688
9. Right of use assets
Land and Buildings Computer equipment Total
£'000 £'000 £'000
Cost
At 1 January 2021 4,729 18 4,747
Additions ꟷ 43 43
Adjustment to lease term (1,035) ꟷ (1,035)
Disposals ꟷ (18) (18)
At 31 December 2021 (audited) 3,694 43 3,737
At 30 June 2022 (unaudited) 3,694 43 3,737
Accumulated depreciation
At 1 January 2021 766 10 776
Charge for the year 523 18 541
Disposals ꟷ (18) (18)
At 31 December 2021 (audited) 1,289 10 1,299
Charge for the period 264 7 271
At 30 June 2022 (unaudited) 1,553 17 1,570
Net book value
At 30 June 2022 (unaudited) 2,141 26 2,167
At 31 December 2021 (audited) 2,405 33 2,438
9. Right of use assets (continued)
Comparatives for the six months ended 30 June 2021 are provided separately
below:
Unaudited Land and Buildings Computer equipment Total
£'000 £'000 £'000
Cost
At 1 January 2021 4,729 18 4,747
Additions ꟷ 43 43
Adjustment of lease term (1,035) ꟷ (1,035)
Disposals ꟷ (18) (18)
At 30 June 2021 3,694 43 3,737
Accumulated depreciation
At 1 January 2021 766 10 776
Charge for the period 254 11 265
Disposals ꟷ (18) (18)
At 30 June 2021 1,020 3 1,023
Net book value
At 30 June 2021 2,674 40 2,714
During the six-month period ended 30 June 2021, the Group revised the expected
term on one of its property leases, recognising an adjustment of £1,035,000
to reduce the right of use asset.
10. Intangible assets
Internal developments in relation to manufacturing site Customer and internal development programmes Patent costs
£'000
£'000 £'000 Total
£'000
Perpetual software licences
£'000
Cost
At 1 January 2021 411 4,424 ꟷ 295 5,130
Additions ꟷ 3,983 252 338 4,573
At 31 December 2021 (audited) 411 8,407 252 633 9,703
Additions ꟷ 2,709 151 86 2,946
At 30 June 2022 (unaudited) 411 11,116 403 719 12,649
Accumulated amortisation
At 1 January 2021 82 139 ꟷ ꟷ 221
Charge for the year 82 899 23 ꟷ 1,004
At 31 December 2021 (audited) 164 1,038 23 ꟷ 1,225
Charge for the period 41 377 56 68 542
At 30 June 2022 (unaudited) 205 1,415 79 68 1,767
Net book value
At 30 June 2022 (unaudited) 206 9,701 324 651 10,882
At 31 December 2021 (audited) 247 7,369 229 633 8,478
The customer and internal development intangible primarily relates to the
design, development and configuration of the Company's core fuel cell and
system technology. Amortisation of capitalised development commences once the
development is complete and is available for use.
Comparatives for the six months ended 30 June 2021 are provided separately
below:
Unaudited Internal developments in relation to manufacturing site Customer and internal development programmes
£'000 £'000 Total
£'000
Patent costs
£'000
Cost
At 1 January 2021 411 4,424 295 5,130
Additions ꟷ 1,403 183 1,586
At 30 June 2021 411 5,827 478 6,716
Accumulated amortisation
At 1 January 2021 82 139 ꟷ 211
Charge for the period 41 515 ꟷ 566
At 30 June 2021 123 654 ꟷ 777
Net book value
At 30 June 2021 288 5,173 478 5,939
11. Inventories
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Raw materials 1,381 1,162 1,299
Work in progress 1,186 977 969
Finished goods 4,582 849 877
Total inventory 7,149 2,988 3,145
Inventories have increased in line with the continued improvement in
manufacturing capacity in the period and to ensure the Group can satisfy
existing and anticipated customer demand for technology hardware.
12. Trade and other receivables
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
Current: £'000 £'000 £'000
Trade receivables 4,651 3,618 2,612
Other receivables 3,503 3,541 2,253
8,154 7,159 4,865
Non-current:
Other receivables 741 741 741
Included within other current receivables is the research and development tax
credit of £1,551,000 (30 June 2021: £502,000; 31 December 2021:
£1,304,000).
13. Other current assets
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Prepayments 880 651 673
Accrued interest ꟷ 232 322
Accrued grant income 144 92 138
1,024 975 1,133
14. Net cash and cash equivalents, short-term and long-term investments
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash at bank and in hand 6,601 3,424 4,957
Money market funds 100,847 161,732 146,498
Cash and cash equivalents 107,448 165,156 151,455
Short-term investments(1) 114,177 95,733 93,129
Long-term investments ꟷ 2,000 5,000
Cash and cash equivalents and investments 221,625 262,889 249,584
( )
(1) Short-term investments comprise bank deposits with a maturity greater than
3 months but less than 12 months.
The Group typically places surplus funds into pooled money market funds with
same day access and bank deposits with durations of up to 24 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-mf (Moody's) and AAAmmf (Fitch) and deposits
with banks with minimum long-term rating of A-/A3/A and short-term rating of
A-2/P-2/F-1 for banks which the UK Government holds less than 10% ordinary
equity.
15. Trade and other payables
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
Current: £'000 £'000 £'000
Trade payables 4,537 2,334 2,425
Other payables 320 168 358
4,857 2,502 2,783
16. Other current liabilities
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Accruals 6,767 2,822 4,803
Deferred grant income 893 1,137 1,015
7,660 3,959 5,818
17. Derivative financial instruments
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Financial assets measured at fair value through profit or loss
Forward exchange contracts 241 230 321
Non-deliverable forward contracts 462 615 752
Total derivative assets 703 845 1,073
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Financial liabilities measured at fair value through profit or loss
Forward exchange contracts (5) ꟷ ꟷ
Total derivative liabilities (5) ꟷ ꟷ
In 2020, the Group entered into a non-deliverable forward (NDF) to hedge its
exposure to Korean Won (KRW) with respect to a major customer contract. As at
30 June 2022, the unrealised fair value gain was £462,000 (31 December 2021:
£752,000). The Group also had a number of forward exchange contracts in place
to hedge expected transactions in other currencies including EUR and CAD, with
an unrealised total gain of £236,000 as at 30 June 2022 (31 December 2021:
£321,000). All derivative financial instruments are measured using techniques
consistent with level 2 of the fair value hierarchy.
18. Lease liabilities
30 June 2022 30 June 2021 31 December 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
At the start of the period 3,039 4,445 4,445
New finance leases recognised ꟷ 42 41
Lease payments (516) (411) (721)
Interest expense 103 204 316
Early settlement ꟷ (7) ꟷ
Adjustment to lease term ꟷ (1,035) (1,042)
At the end of the period 2,626 3,238 3,039
Current 655 622 754
Non-current 1,971 2,616 2,285
Total at the end of the period 2,626 3,238 3,039
19. Provisions
Property Dilapidations Total
Warranties Contract Losses
£'000 £'000 £'000 £'000
At 1 January 2021 1,610 418 194 2,222
Movements in the Consolidated Statement of Profit and Loss:
Amounts used ꟷ (404) (175) (579)
Unwinding of discount 64 ꟷ ꟷ 64
Increase in provision 154 1,239 307 1,700
At 31 December 2021 (audited) 1,828 1,253 326 3,407
Movements in the Consolidated Statement of Profit and Loss:
Amounts used ꟷ ꟷ (138) (138)
Unused amounts reversed ꟷ ꟷ (124) (124)
Unwinding of discount 37 ꟷ ꟷ 37
Increase in provision 45 178 ꟷ 223
At 30 June 2022 (unaudited) 1,910 1,431 64 3,405
Current ꟷ 1,431 64 1,495
Non-current 1,910 ꟷ ꟷ 1,910
At 30 June 2022 (unaudited) 1,910 1,431 64 3,405
Current ꟷ 1,253 326 1,579
Non-current 1,828 ꟷ ꟷ 1,828
At 31 December 2021 (audited) 1,828 1,253 326 3,407
Comparatives for the six months ended 30 June 2021 are provided separately
below:
Unaudited Property Dilapidations Total
Warranties Contract Losses
£'000 £'000 £'000 £'000
At 1 January 2021 1,610 418 194 2,222
Movements in the Consolidated Statement of Profit and Loss:
Amounts used ꟷ (13) (75) (88)
Unwinding of the discount 32 ꟷ ꟷ 32
Increase in provision ꟷ 371 217 588
At 30 June 2021 1,642 776 336 2,754
Current ꟷ 776 336 1,112
Non-current 1,642 ꟷ ꟷ 1,642
At 30 June 2021 1,642 776 336 2,754
20. Share capital
2022 (unaudited) 2021 (audited)
Number of £0.10 £'000 Number of £0.10
Ordinary
Ordinary
shares
shares £'000
Allotted and fully paid
At 1 January 2022 / 1 January 2021 190,729,638 19,073 172,171,527 17,217
Allotted £0.10 Ordinary shares on exercise of employee share options 844,978 84 1,490,531 149
Allotted £0.10 Ordinary shares on cash placing (see below) ꟷ ꟷ 17,067,580 1,707
At 30 June 2022 / 31 December 2021 191,574,616 19,157 190,729,638 19,073
On 17 March 2021 the Group announced a fundraise that would allot 17,067,580
new ordinary shares of £0.10 each in the Company, for a total gross cash
consideration of £180,916,340. In conjunction with the placing, 12,967,629
shares were allotted on 17 March 2021 which included Bosch and certain
Directors of the Company subscribing for 3,649,150 and 24,376 shares
respectively. On 19 May 2021 Weichai subscribed for and were allotted the
remaining 4,099,951 shares.
During the six months ended 30 June 2022, 844,978 ordinary £0.10 shares were
allotted for cash consideration of £627,427 on the exercise of employee share
options (six months ended 30 June 2021: 1,172,153 ordinary £0.10 shares were
allotted for cash consideration of £585,762; year ended 31 December 2021:
1,490,531 ordinary £0.10 shares were allotted for cash consideration of
£705,636).
Comparatives for the six months ended 30 June 2021 are provided separately
below:
2021 (unaudited)
Number of £0.10
Ordinary
shares £'000
Allotted and fully paid
At 1 January 2021 172,171,527 17,217
Allotted £0.10 Ordinary shares on exercise of employee share options 1,172,153 117
Allotted £0.10 Ordinary shares on cash placing 17,067,580 1,707
At 30 June 2021 190,411,260 19,041
Reserves
The Consolidated Statement of Financial Position includes a merger reserve and
a capital redemption reserve. The merger reserve represents a reserve arising
on consolidation using book value accounting for the acquisition of Ceres
Power Limited at 1 July 2004. The reserve represents the difference between
the book value and the nominal value of the shares issued by the Company to
acquire Ceres Power Limited. The capital redemption reserve was created in the
year ended 30 June 2014 when 86,215,662 deferred ordinary shares of £0.04
each were cancelled.
21. Capital commitments
Capital expenditure that has been contracted for but has not been provided for
in the financial statements amounts to £8,131,000 as at 30 June 2022 (as at
30 June 2021: £1,232,000 and as at 31 December 2021: £8,086,000), in respect
of the acquisition of property, plant and equipment.
22. Related party transactions
As at 30 June 2022 and as at 31 December 2021, the Group's related parties
were its Directors and RFC Power Ltd. As at 30 June 2021, the Group's related
parties were its Directors.
During the six months ended 30 June 2022, one Director exercised and retained
7,109 share options under the Company's employee share save scheme and one
Director exercised and sold 14,218 share options under the Company's employee
share save scheme. There were no other transactions between the Company and
the Directors during the period.
During the year ended 31 December 2021 and period ending 30 June 2021 one
Director exercised and retained 8,491 share options under the Company's
employee share save scheme. There were no other transactions between the
Company and the Directors during the year ended 31 December 2021.
Transactions between the Group and RFC Power Ltd, being an associated entity
of the Group, comprised engineering consultancy services provided by the Group
to RFC Power for the value of £0.3m (12 months ended 31 December 2021:
£0.1m) in return for equity share capital.
Non-GAAP Alternative Performance Measures (unaudited)
Reconciliation between operating loss and Adjusted EBITDA
Management believes that presenting Adjusted EBITDA loss allows for a more
direct comparison of the Group's performance against its peers and provides a
better understanding of the underlying performance of the Group by excluding
non-recurring, irregular and one-off costs. The Group currently defines
Adjusted EBITDA loss as the operating loss for the period excluding
depreciation and amortisation charges, share-based payment charges, unrealised
losses on forward contracts and exchange gains/losses.
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2022 31 Dec 2021
£'000 £'000 £'000
Operating loss (25,203) (7,602) (23,430)
Depreciation and amortisation 3,391 2,751 5,760
Share-based payment charges 1,214 1,102 2,615
Unrealised losses/(gains) on forward contracts 374 (829) (1,057)
Exchange (gains)/losses (271) 63 (563)
Adjusted EBITDA (20,495) (4,515) (16,675)
Reconciliation between net cash from operating activities and equity-free cash
flow
The Group defines equity-free cash flow as net cash from operating activities
plus capital expenditure and adjusted for interest payments and receipts and
exchange rate movements. The table below reconciles net cash from operating
activities to equity-free cash flow for each period.
6 months ended 6 months ended 12 months ended
30 June 2022 30 June 2022 31 Dec 2021
£'000 £'000 £'000
Net cash from operating activities (20,599) (13,170) (20,342)
Capital expenditure (total) (8,475) (5,225) (11,950)
Interest and lease payments (net) 214 (279) (283)
Exchange rate movements 271 (63) 563
Equity-free cash flow (28,589) (18,737) (32,012)
INDEPENDENT REVIEW REPORT TO Ceres power holdings plc
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that interim financial statements in the half-yearly financial report
for the six months ended 30 June 2022 is not prepared, in all material
respects, in accordance with the requirements of the London Stock Exchange AIM
Rules for Companies.
We have been engaged by the company to review the interim financial statements
in the half-yearly financial report for the six months ended 30 June 2022
which comprises the Consolidated Statement of Profit and Loss and Other
Comprehensive Income, Consolidated Statement of Financial Position,
Consolidated Cash Flow Statement and the Consolidated Statement of Changes in
Equity and the Notes to the financial statements for the six months ended 30
June 2022.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in note one, the annual financial statements of the Group are
prepared in accordance with UK adopted international accounting standards. The
interim financial statements included in this half-yearly financial report has
been prepared in accordance with the requirements of the London Stock Exchange
AIM Rules for Companies.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the Group to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the requirements of the London Stock Exchange AIM Rules for
Companies which require that the half-yearly report be presented and prepared
in a form consistent with that which will be adopted in the Company's annual
accounts having regard to the accounting standards applicable to such annual
accounts.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the interim financial statements in the half-yearly
financial report. Our conclusion, including our Conclusions Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the rules of the London
Stock Exchange AIM Rules for Companies for no other purpose. No person is
entitled to rely on this report unless such a person is a person entitled to
rely upon this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior written
consent. Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly disclaim any
and all such liability.
BDO LLP
Chartered Accountants
Guildford, UK
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR BFLLLLKLZBBLRecent news on Ceres Power Holdings
See all newsREG - Ceres Power Holdings - Total Voting Rights
AnnouncementREG - Ceres Power Holdings - Notice of AGM & Publication of Annual Report
AnnouncementREG - Ceres Power Holdings - Notification of major holdings
AnnouncementREG - Ceres Power Holdings - Final results for the year ended 31 December 2023
AnnouncementREG - Ceres Power Holdings - Updated timing of Full Year Results
Announcement