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Bosch & Weichai partnerships accelerate commercial growth

 

Ceres Power Holdings plc (AIM: CWR.L), a world leading developer of the SteelCell®, a low cost, next generation fuel cell technology, announces its half-yearly report for the six months ended 31 December 2018.

Financial Highlights

 

• Revenue and other income up 168% to £8.3m (H1 2017: £3.1m), driven by new licence fees
• Gross margin increased from 46% to 82% due to high margin licence fees
• Operating loss has halved from £6.2m to £3.0m
• Funded to cash flow breakeven: strong cash position of £78.4m at the period end (H1 2017: £13.2m)

Operational Highlights

• Strategic partnerships signed with Bosch and Weichai
• £30.5m contracted future revenues with significant license deals, leading to potential future royalties
• Field trials have begun with significant OEM of a first "go to market" multi-kW business-sector product
• Healthy pipeline with new partners at Evaluation stage
• 5th generation SteelCell® achieved key milestone of 60% net efficiency, twice that of conventional gas engine and greater than centralised megawatt-scale gas turbine

2019 Outlook

• Full year revenue and other operating income on track to more than double for fourth successive year to more than £15 million (2018: £7 million)
• On course to deliver target gross margins of greater than 50% due to our highly scalable licensing business model
• Demonstration of EV range extender concept with Weichai for its fuel cell electric vehicle ("FCEV") bus programme expected mid-2019
• Fit out for our new manufacturing facility underway and on track for use by end of 2019.  An £8m project with the creation of 60 new engineering roles in Surrey, UK

Phil Caldwell, CEO of Ceres Power said

"This has been another period of significant commercial and financial progress. Our Licence Agreements with both Robert Bosch and Weichai were key milestones and validate our strategy to secure initial license fees with major global OEM partners, with a view to generating royalties once products are launched. Both of these partnerships have the potential to transform Ceres and step change the scale of our business.

"Our work with Weichai will see the first EV bus with a Ceres-powered range extender demonstrated in China later this year, an exciting development with significant commercial potential.  We are also field testing a new small-scale stationary power system with a significant OEM, in addition to progressing development work with Robert Bosch and our other partners.

"We enter the second half of the year with a strong cash position, having successfully raised £78 million in 2018, and good momentum thanks to the growing awareness of the role that fuel cells can play in the future energy mix. The interest in our technology and the wide-ranging applications it has in power, transport and heating is now gaining real traction. We are well placed to deliver on our growth potential."

Financial Summary:

	Six months ended 31 December 2018 (unaudited) £'000	Six months ended 31 December 2017 (unaudited) £'000
Total revenue and other operating income, comprising:	8,266	3,082
Licence fees	5,124	-
Engineering services revenue	2,988	2,625
Other operating income	154	457
Gross margin %	82%	46%
Operating loss	(2,938)	(6,184)
Underlying equity free cash flow 1	(2,935)	(4,119)
Net cash and short-term investments	78,397	13,165

 ¹ Underlying equity free cash flow is the net change in cash and cash equivalents in the period of £16.3m (2017: £5m) excluding: -

• net cash generated from financing activities of £76.4m (2017: £0.1m);
• the movement in short term investments of negative £55.7m (2017: positive £9m), and;
• the investment cost for property, fit out costs and the equipment for the new manufacturing site of £1.5m (2017: £nil).

The prior year underlying equity free cash flow includes £1.9m received in respect of the group's R&D tax credit. The tax credit receivable in the current year of £2.1m was received in full just after these half year results in January 2019.

For further information please contact:

Ceres Power Holdings plc	+44 (0)1403 273 463
Phil Caldwell, CEO Richard Preston, CFO
Investec Bank plc - Nominated Adviser and Broker	+44 (0)20 7597 4000
Jeremy Ellis / Patrick Robb / Richard Short / Alexander Ruffman
Berenberg - Joint Broker	+44 (0)20 3207 7800
Ben Wright / Mark Whitmore
Powerscourt	+44 (0) 20 7250 1446
Peter Ogden / James White / Niall Walsh

Read the full RNS release.