Ceramic Fuel Cells Limited Quarterly Cashflow Report (4418D)

TIDMCFU

RNS Number : 4418D

Ceramic Fuel Cells Limited

29 January 2015

29 January 2015

Cashflow Report for the December Quarter

Ceramic Fuel Cells Limited (ASX/AIM: CFU), today released its quarterly cashflow report for the December 2014 quarter.

Summary of the Quarter

   --      Sales volume - 35 units sold this quarter. 

-- Formal confirmation of the increased German Federal support system has now been received. This will allow expansion into other German States not currently operating specific capital support arrangements and is a clear demonstration of Germany's long term environmental objectives.

-- In support of these additional market opportunities the company has further expanded its distribution and installation network in Germany. The company is now seeing a significant increase in enquiries through our distribution partners and installers. This endorses our strategy of utilising external sales and marketing resources to increase the efficiency of our operations.

-- In November 2014, the company successfully completed negotiations for the first fully funded BlueGEN programme in the UK. The order, for 70 BlueGENs for delivery in 2015, is covered by a contractual arrangement whereby the units are installed at no cost to the end user. This demonstrates a significant commercial opportunity and is both replicable and scalable.

-- Validation and introduction of improvements to the product that have clearly demonstrated a substantial increase in the life of the stack.

-- Fundraising - The Rights Issue completed in November 2014 raised $A1.8M (GBP1.0M) before costs.

-- In October 2014, the company received a tax rebate against its research and development activities totalling A$4.1M (GBP2.2M).

-- The company has successfully maintained its targeted reductions in operational costs. They continue to be managed at a level that is 25% below those of 10 months ago.

   --     Cash position at 31 December 2014 - A$3.8M (GBP2.0M). 

Operational Review

Overview

CFU makes small-scale generators that use proprietary fuel cell technology to convert natural gas into electricity and heat for homes and small commercial buildings. CFU has fully commercialised its technology into products, and in addition to selling these products to commercial customers in Europe, is focussing on the continuous improvement on the performance of the product, including the operational life of the fuel cell stack.

The research and product development team have validated and introduced improvements to the product that have clearly demonstrated a substantial increase in the life of the stack. The graph below represents such an improved stack performance in a BlueGEN operating at a site of CFU's key German customer, EWE. The blue shaded section in the graph is representative of the BlueGEN degradation band operating at 1.5kW before the implementation of the CFCL's patented solution. The red line illustrates the performance of the stack operating at EWE.

Please click link to see graph.

http://www.rns-pdf.londonstockexchange.com/rns/4418D_-2015-1-29.pdf

This stack is now in its linear phase of degradation and this data has been extrapolated to show the expected life to reach the same efficiency as the blue shaded section in the above graph. This extrapolation indicates a stack life of approximately 60,000 hours or close to 7 years. Further improvements are being validated to extend this life beyond the target of 10 years. This will allow further improvements in operational performance of the BlueGEN unit and subsequently provide an improvement in the overall commercial performance.

Market Developments and Sales

During the quarter 35 BlueGEN units were sold. This is greater than the last quarter and reflects the refocus of our sales resources towards project based schemes in the UK with much greater unit numbers, but longer development timescales. It has also taken time to successfully expand our distribution channels in Germany. Following the successful commercial development of the iPower project, the Board is confident that the contractual structure for such schemes has been proven and a number of additional targeted projects will be converted into orders in the near future.

As mentioned in previous announcements, the Company is actively pursuing strategic partnerships with a number of key organisations in Europe, Asia and North America. Discussions continue with potential partners to explore the development of different capacity units for specific international markets. The necessary funding to support the additional resources is being investigated. The Board acknowledges that our long term objectives may result in the Company developing and providing multiple products to the market.

A summary of the Company's sales performance by quarter since FY11 is as follows:

Please click link to see graph.

http://www.rns-pdf.londonstockexchange.com/rns/4418D_-2015-1-29.pdf

Monthly sales for the 18 months to 31 December 2014 were as follows:

Please click link to see graph.

http://www.rns-pdf.londonstockexchange.com/rns/4418D_-2015-1-29.pdf

Sales by geographical sales force for the 6 months to 31 December 2014 were as follows:

Please click link to see graph.

http://www.rns-pdf.londonstockexchange.com/rns/4418D_-2015-1-29.pdf

It is to be noted that the iPower units will only be recognised as sales once they are installed and commissioned, hence they are not included in the above graph.

Financial Review

December Quarter Cash Flows

Net operating cash inflow for the December quarter was A$1.1M (GBP0.6M). During the quarter, receipts from customers amounted to A$1.9M (GBP1.0M) and operating expense cash outflow was A$5.1M (GBP2.8M). The quarter's net operating cash outflow compares to the September 2014 quarter's net operating cash outflow of A$4.6M (GBP2.5M). Customer receipts in the December quarter were significantly higher than the September quarter due to the receipt of the deposit for the 70 unit iPower order. In addition, A$4.1M (GBP2.2M) was received as a taxation refund in October 2014.

The Board continues its pursuit of joint venture possibilities with partners who are willing to pay for the Company's technology or can add significant synergies to the Company's operations.

Net investing cash flow for the quarter was an outflow of A$96K (GBP52K). The majority of the outflow was for the acquisition of plant and equipment.

Net financing cash flow for the quarter was an inflow of A$1.2M (GBP0.7M). Of the gross amounts, A$1.8M (GBP1.0M) was received from the Rights Issue and A$0.2M (GBP0.1M) was received from the issue of shares under the Investor Agreement. The share issue expenses disclosed in the Appendix 4C relate mainly to the Rights Issue.

Cash on hand at 30 September 2014 was A$1.4M (GBP0.8M).

Cash on hand at 31 December 2014 was A$3.8M (GBP2.0M).

 
For more information please contact: 
 
         Ceramic Fuel Cells Limited 
            Clifford Ashby (CFO)  Tel.    : [phone] 
                                   Email   : [e-mail] 
             Bob Kennett (CEO)     Tel.    : [phone] 
                                   Email   : [e-mail] 
                 Arden Partners Plc (AIM Nomad) 
                  Steve Douglas 
                  Michael McNeilly Tel. : [phone] 
 
 

About Ceramic Fuel Cells Limited:

Ceramic Fuel Cells is a world leader in developing fuel cell technology to generate highly efficient and low-emission electricity from widely available natural gas. Ceramic Fuel Cells has deployed its BlueGEN gas-to-electricity generator to major utilities and other foundation customers in Germany, the United Kingdom, Switzerland, The Netherlands, Belgium, France, Italy, Poland, Australia, Japan, South Korea, China and the USA. Ceramic Fuel Cells is now focusing on markets in Germany, the United Kingdom and Benelux.

The company is listed on the London Stock Exchange AIM market and the Australian Securities Exchange (code CFU).

www.cfcl.com.au

www.bluegen.info

This information is provided by RNS

The company news service from the London Stock Exchange

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