30th Aug 2007 07:00
Ceramic Fuel Cells Limited30 August 2007 30 August 2007 CERAMIC FUEL CELLS LIMITED PRELIMINARY RESULTS 12 MONTHS ENDED 30 JUNE 2007 Ceramic Fuel Cells Limited ("CFCL" or the "Company"), a global leader in fuelcell development, announces its preliminary results for the year ended 30 June2007. Highlights in the period and year to date Customers and Partners • Completed commercial partnering objectives in Europe through product development agreements with major utilities companies, E.ON UK, EWE, Gaz de France and Nuon and appliance partners, reaching 20 million customers in four key markets • Today announced fourth European appliance partner, Gledhill Water Storage, for UK market (see separate press release) • Successfully concluded field trials of CFCL units in real world conditions with three customers in Europe and Asia over periods of 18 months to two years • Shipped three NetGen(TM) units to product development partners Manufacturing • Secured site for large scale fuel cell plant on Nuon's industrial park in Heinsberg, Germany, with significant German government support • Secured site and installed equipment for a high quality ceramic powder plant in Merseyside, UK Technical • Developed new metal-ceramic fuel cell stacks with significant power improvements and new balance of plant components, with breakthrough efficiency gains • Launched Gennex(TM) fuel cell module at the Hannover Fair • Formed collaboration with FZ Julich, one of Europe's largest research institutions, to develop advanced fuel cell modelling and testing solutions Financial • Net operating cash outflow of A$15.3 million / £6.2 million (FY06: A$12.3 million / £4.9 million) • Net loss of A$19.7 million / £7.9 million (FY06: A$13.3 million / £5.3 million) • Total cash and financial assets at 30 June 2007 of A$60.3 million / £24.1 million (30 June 2006: A$86.1 million / £34.4 million) Brendan Dow, Managing Director of Ceramic Fuel Cells, said: "Ceramic Fuel Cells has had a fantastic year and we have delivered on all of themilestones set out at the time of the AIM flotation. We have proven thecapabilities of our fuel cell system with many thousands of hours of fieldtesting under our belts and are now concentrating on the pre-commercialisationphase. With a blue chip base of utility customers, access to 20 millioncustomers in four major European markets and the development of a volumemanufacturing plant underway, we are confident of continued succces in thecoming 12 months and we look forward to updating shareholders on progress." A presentation for analysts will be held today at 8.15 for 8.30am at the LondonStock Exchange. Please contact Julie Cordice at Hogarth on 020 7357 9477 fordetails. For further information please contact: Ceramic Fuel CellsAndrew Neilson Tel: +61 419 950 771 Email: [email protected] ----------------------------- Hogarth Partnership (PR for CFCL) Tel: +44 (0) 20 7357 9477 Nick Denton / Sarah MacLeod / SarahRichardson Libertas Capital (NOMAD for CFCL) Tel: +44 (0) 20 7569 9650 Aamir Quraishi / Andrew Hardy About CFCL Ceramic Fuel Cells Limited is a leading developer of solid oxide fuel cell(SOFC) technology which can provide reliable, energy efficient, high-quality,and low-emission electricity from widely available natural gas and renewablefuels. CFCL is developing SOFC products for small-scale on-site micro combinedheat and power (m-CHP) and distributed generation units that co-generateelectricity and heat for domestic use. Formed in 1992, CFCL is listed on theLondon Stock Exchange AIM market and the Australian Securities Exchange (codeCFU). www.cfcl.com.au Operational Review Customers and Partners Product Development Agreements During the year the Company signed agreements with leading European utilitycustomers and appliance partners to develop and deploy micro-combined heat andpower (m-CHP) units. These agreements give the Company access to over 20 milliongas and electricity customers across four European markets: Germany, France, theUK and Benelux. . The agreements are a significant achievement for the Company, validating ourmodel of working in '3 way' partnerships and allowing us to move from fieldtrials into product development and deployment towards commercial sales. Each project is a three way collaboration between CFCL, a utility customer andan appliance partner to design, develop, build and deploy fully integrated m-CHPunits for homes and small businesses in that market. CFCL will connect one ofits NetGen units to one of our appliance partner's high efficiency boilers toproduce an Alpha unit for the utility customer to test. The partners will thencreate a near-commercial Beta unit, where a CFCL fuel cell module is fullyintegrated with a boiler. These Beta units would be deployed by the utilitycustomer in larger numbers. The partners will also plan ahead for commercial products by setting keyperformance and price targets, outlining the scale and timing of volume ordersand defining how the units will be deployed, operated and maintained in eachmarket. France In December 2006 the Company signed a product development agreement with Gaz deFrance and De Dietrich Thermique. Gaz de France is Europe's leading distributor of natural gas, with 11 millioncustomers in France. Gaz de France is also one of the world's top five suppliersof liquefied natural gas. The group operates in 30 countries, has more than53,000 staff and in 2005 had sales of €22.4 billion and net income of €1.7billion. Gaz de France has an active interest in distributed generation and isleading the EU-DEEP program, a €30M program to evaluate decentralised energysystems. De Dietrich Thermique is the largest provider of gas heating systems in France.Domestic CHP is a new strategic market for De Dietrich Thermique which has beenassessing fuel cell and other generator technologies for several years. DeDietrich Thermique also has an extensive network of installers throughoutFrance. The agreement covers the Alpha and Beta phases and is exclusive for the Frenchmarket. Good progress was made on the project during the year with thedevelopment of the Alpha unit expected to be completed in Q2 2008. Germany In March 2007 the Company signed a product development agreement with EWE andBruns Heiztechnik GmbH (Bruns), a specialist German boiler manufacturer. EWE ranks among Germany's largest energy services companies. In 2006, the EWEGroup employed around 5,800 people and recorded sales of €9.0 billion. EWE hasextensive experience in distributed generation, m-CHP and fuel cells. CFCL hasbeen working with EWE since July 2005 and EWE is currently completing fieldtrials with two of our fuel cell units Bruns has been making boiler systems for over 40 years. Employing over 200staff, the company develops and constructs tailor made boilers and storagesystems under various brand names as well as manufacturing products for thesolar thermal market. In this project one Alpha unit was built during the financial year and in June2007 was installed at the Bruns factory in Saterland, Germany. Work on the Betaphase is also due to start in early 2008 while the development of subsequentAlpha units, utilising the Company's NetGen+ units, is expected to be completedin Q2 2008. United Kingdom In July 2007 the Company signed an agreement with E.ON UK Ltd, the company thatruns Powergen, to develop products for the UK market. E.ON UK is the UK'slargest integrated power and gas company, generating and distributingelectricity, and retailing electricity and gas for approximately 8.5 millioncustomer accounts. E.ON UK employs 16,000 staff in the UK and is a leader in theimplementation of microgeneration technologies. E.ON UK is part of the E.ONgroup, the world's largest investor-owned power and gas company. In August 2007 the Company selected Gledhill Water Storage Ltd as its appliancepartner for the project (see separate announcement today). Development of the Alpha unit is scheduled to be completed in Q2 2008. E.ON UKhas agreed to discuss further co-operation in the subsequent development anddeployment of Beta CHP units as well as commercial targets for fuel cell m-CHPunits for the UK residential market. Benelux In July 2007, the Company signed an agreement with Nuon NV (Nuon) and DeDietrich-Remeha Group to develop units for The Netherlands and Belgium. Nuon is a leading energy company that serves over two million customers in theNetherlands, Belgium and Germany with electricity, gas, heating and relatedservices. CFCL is developing a large-scale fuel cell plant at the Oberbruchindustrial park in Heinsberg, Germany, which is owned and managed by Nuon. De Dietrich-Remeha Group is one of the largest boiler manufacturers in Europe.Besides Remeha, it includes De Dietrich Thermique, CFCL's appliance partner inFrance. The product development project for Benelux will build on this existingcollaboration. The parties have also agreed to define price and performance targets forcommercial m-CHP units and, if the project proceeds successfully, to placeagreed volume orders for commercial units. On the basis of these volume ordertargets, Nuon will be CFCL's exclusive utility partner in the Benelux region. Inthis project the Alpha unit is expected to be deployed in mid-2008. Securing these contracts was a significant achievement and implementing theseprojects will be a strong focus of the Company in 2007-08. Successful Field Trials The Company has successfully conducted field trials with customers todemonstrate our m-CHP technology in real world conditions. The field trialsprovided important data and experience of CFCL's products in use, leadingdirectly into our current product development projects and ongoing technicalimprovements. Four standalone field trial units, built by CFCL and incorporating the Company'sall-ceramic fuel cell stacks, were installed with commercial customers in threecountries - Germany, New Zealand and Austrialia - and ran for many thousands ofhours. EWE - Germany EWE has extensive experience in fuel cell technology and distributed generation.Two field trial units were commissioned in January 2006. One unit, installed atEWE training facilities in Oldenburg, was decommissioned in July 2007. The otherunit, installed in EWE's facilities in Delmenhorst, is scheduled to bedecommissioned in Q4 2007. EWE is now collaborating with CFCL to develop a m-CHPproduct for the German market, as described above. Powerco - New Zealand Powerco is one of New Zealand's largest gas and electricity distributors. Onefield trial unit was installed in 2005 in Wellington. This was the Company'sfirst commercial field trial and first trial outside Australia. The trial hasrecently been completed. szencorp - Australia szencorp is a leading Australian developer of energy-efficient commercialbuildings. One field trial unit was commissioned in January 2006 in szencorp'soffice building in Melbourne. This field trial continued during the 2007financial year and is due to complete in Q4 2007. The field trials have achieved important objectives, where each unit: •Passed local regulations, particularly safety approval (including European CE approval) and grid connection requirements •Was successfully connected to existing local infrastructure in each of the sites, including natural gas supply, water supply, the electricity grid and telecommunications lines •Successfully exported power to the local grid and generated heat •Was turned on and off many times (involving many successful thermal cycles of the fuel cell stacks) •Worked successfully with several different fuel cell stacks •Was remotely monitored and controlled over the internet. •Functioned in a variety of real operating conditions, for instance in cold and hot climates, and tolerating a range of inputs such as variable gas and water quality. In addition, in undertaking these field trials CFCL has generated valuableintellectual property by developing proprietary software to control the unit andintegrate various sub-systems. The trials have validated the Company's ongoing technical improvements, notablyin generating more power from the fuel cell stack (which is an important advancein the Company's metal-ceramic stack technology) and extending the reliabilityand lifetime of the fuel cell stacks. The knowledge gained by the Company during the field trials has contributeddirectly to our current product development projects with our customers andappliance partners. The trials have validated what utility customers want fromour units, particularly with regards to the ratio of power (high) to heat (low),maximum operating hours, and the capability for units to be deployed as part ofa distributed generation network. Manufacturing German Fuel Cell Plant In December 2006 the Company announced plans to develop a fuel cell plant at theOberbruch industrial park in Heinsberg, Germany, to provide for commercial-scaleproduction. The government of the State of North Rhine-Westphalia is supportingthe project with funding of up to €3.2 million. The Company has signed a lease over an existing building for phase one of theplant and has secured an option to buy 'greenfield' land for later expansion.Phase one of the plant is scheduled to begin production in early 2009. During 2007, the owner of the site, Nuon, conducted significant works at thesite, including refitting offices and refurbishing the external shell of theexisting building. These works will be completed in September 2007. In parallel, Nuon has also been assisting the Company to apply for localgovernment and planning permits. We have now received permission for the initialrefurbishment and expect to receive permission to commence the main facilitybuild in Q4 2007. The Company has formed a wholly owned German subsidiary and in May 2007 opened aHeinsberg project office with three local staff. During the year the Company continued to refine the project plans, including'freezing' the design of the plant. The Company also retained independentexperts from international consulting firm CEL to review and advise on thescope, timing and final cost of the project. The Company expects to update shareholders on the project in Q4 2007, includingthe capacity and costing of the plant. UK Powder plant The Company has developed a process for continuously producing high qualityzirconia powder, which is a key input into solid oxide fuel cells and many otherapplications. Part of this process is a patented reactor that allows the Companyto control the characteristics of the powder at a molecular level, therebycreating a very high quality product. During the financial year the Company built a plant in Bromborough inMerseyside, UK, to scale up this novel process, and recruited two seniormanagers to operate the plant. The Company secured the site in January 2007,began installing equipment in April and began commissioning the plant in August2007. The plant is scheduled to be making powders for the Company's internal usefrom October 2007. Melbourne facility During the year the Company upgraded its manufacturing plant and expanded itscapacity at Noble Park, Melbourne, to make the new metal-ceramic fuel cells andbalance of plant components for use in product development projects. Theseupgrades will also allow the Company to test and validate the manufacturingprocesses to be used in the fuel cell foundry in Germany prior to full-scaleinstallation. Some of the equipment upgraded includes a new semi-continuous furnace, lasercutting equipment, robotic assembly equipment, QC equipment suitable forcontinuous operation, furnaces for metal coatings and automated dispensingequipment for advanced seals. The Company spent approximately A$3.1 million on capital equipment as part ofthis upgrade in line with budgets. Technical Developments During the year, we continued to make significant technical advances to improvethe performance of our fuel cells, in particular to increase reliability andstack life, while maintaining our focus on the development of technologies thatmeet the needs of the market. New Cells and Stacks In September 2006 the Company announced the development of its next generationof fuel cells, comprising square ceramic fuel cells, supported by metalinterconnect plates. These cells have demonstrated significant performance improvements, particularlyin power density, with electric efficiency of 50% and significantly better fuelutilisation of up to 85%. The fuel cell stacks are designed to produce 1kW ofelectricity and less than 0.5kW of heat. Importantly, the metal-ceramic stacks operate at about 720C, which is lower thanthe all-ceramic stacks, whilst still internally reforming the fuel withoutneeding expensive precious metal catalysts. Gennex(TM) During the financial year the Company also significantly improved several keycomponents that integrate the fuel cell stack into a m-CHP unit. Significantbreakthroughs include a 50% reduction in the size of the steam generator, a 40%reduction in the size of the size of the heat exchanger, and a 75% reduction inthe airflow through the system, all of which will contribute to a more compactcommercial system. The Company has integrated these improved balance of plant components, togetherwith the metal-ceramic stacks, into the Gennex(TM) fuel cell module, which waslaunched in April 2007 at the Hannover Fair, one of the largest industrial andenergy trade fairs in the world. These Gennex fuel cell modules are being integrated into Alpha and Beta units aspart of the product development projects. Julich Collaboration In April 2007 the Company signed an agreement with Julich Research Centre ofGermany (FZ Julich) to collaborate on researching and developing applicationsfor solid oxide fuel cell (SOFC) systems. CFCL will also award an annual studentprize for special achievements in fuel cell development. FZ Julich is one of the largest research institutions in Europe, with more than4,000 staff, students and researchers and an annual budget of more than €360million. FZ Julich has been carrying out R&D in SOFC systems since the mid1990s, including a strong focus on high-powered anode-supported cells. Research projects to be conducted under the framework agreement will includematerials development, such as high-performance metals, and accelerated lifetimetesting and modelling. Financial Review Revenue for the year from continuing operations was A$4.4 million, up 113% fromA$2 million last year. This was due to an increase in interest income of A$2.3million arising from the full year effect of investing funds raised on theCompany's admission to the London AIM market in March 2006. The net loss for the year of A$19.6 million was A$6.3 million higher than theprior year. The major reasons for the higher loss were a A$5.8 millionturnaround in the foreign exchange position on cash and investments, from a gainof A$2.9 million last year to a loss of A$2.9 million this year. Foreign exchange movements affect the Company's reported earnings because theCompany holds its cash in several currencies to cover forecast expenditure, butreports its income in Australian dollars. The turnaround this year was due tothe appreciation of the Australian dollar against the British Pound and theEuro. The Company does not currently hedge against foreign exchange movements,other than the 'natural' hedge of holding cash in the same currency as expectedexpenditure. An expansion in operational activities and expenditure (A$3.6 million) alsocontributed to the higher loss, partially offset by higher interest income(A$2.4 million). Three NetGen units were shipped during the financial year. Further productdevelopment units will be shipped during the second half of the calendar year. The net operating cash outflow for the full year was A$15.3 million, which washigher than FY06 (A$12.3 million) due to higher expenditure on productdevelopment, and planning work for the fuel cell manufacturing plant inHeinsberg, Germany. As expected, capital expenditure was higher than FY06 as the Company upgradedits Melbourne plant and built its UK powder plant. Capital expenditure for thefull year was A$7.5 million. The Company expects capital expenditure to continueto increase in the coming financial year as the Company completes the UK powderplant and continues work on the fuel cell plant in Heinsberg. Total cash and financial assets at the end of the year was A$60.3 million. Outlook 2007- 08 Over the 2008 financial year, the Company will continue to implement our focusedstrategy by leveraging our field trial experience into product developmentprojects, deploying Alpha units and beginning work on Beta units with ourEuropean utility customers and appliance partners. We will complete the upgrade of the Australian plant to deliver NetGen+ unitsand Gennex fuel cell modules to product development partners. In order to buildcapacity to meet future demand, a significant focus will be the construction ofthe fuel cell plant in Germany. We will also continue to build outsourcing andsupply chain partnerships to significantly increase manufacturing capacity andreduce costs. The Company will complete the commissioning of its UK powder plant and begin tomake zirconia powder for use in the Company's fuel cells. The Company will alsoidentify opportunities to use our proprietary processes and powder productionplant to make high quality ceramic powders for other applications. Finally, as stated previously, we believe that the Asian market holdssignificant future potential for our microgeneration technologies and during thecoming months will be seeking collaboration opportunities in the region. The 2007 financial year has seen CFCL achieve its most significant advancessince inception and as demand for alternative energy increases our confidence inthe future continues to grow. We look forward to updating shareholders onfurther progress during the forthcoming 12 months and beyond as we prepare forcommercialisation. ENDS Preliminary Income StatementsFor the year ended 30 June 2007 Consolidated Parent Note 2007 2006 2007 2006 $ $ $ $ Revenue from continuing 2 4,420,963 2,077,249 4,062,242 1,795,247operations Other income 3 5,392 208,092 5,392 302,800Research & Product (12,050,080) (10,765,691) (12,050,080) (10,765,691)DevelopmentGeneral & Administration (7,113,473) (5,618,265) (6,714,634) (5,618,265)Sales & Marketing (2,039,953) (1,247,137) (2,744,407) (453,314)Net foreign exchange gain/ (2,901,032) 2,850,898 (2,901,032) 2,850,898(loss)Borrowing costs - (822,481) - (822,481) -------- -------- -------- --------Profit/(loss) before income (19,678,183) (13,317,335) (20,342,519) (12,710,806)tax Income tax expense - - - - -------- -------- -------- --------Profit/(loss) for the year 6 (19,678,183) (13,317,335) (20,342,519) (12,710,806)attributable to members of Ceramic Fuel Cells Limited -------- -------- -------- -------- Cents CentsEarnings per share for profit/(loss) attributable to theordinary equity holders ofthe companyBasic and diluted earnings 8 (6.36) (7.64)per share The above preliminary income statements should be read in conjunction with theaccompanying notes. Preliminary Balance SheetsAs at 30 June 2007 Consolidated Parent Note 2007 2006 2007 2006 $ $ $ $ASSETS Current AssetsCash and cash equivalents 3,657,742 11,367,347 3,493,617 11,330,196Trade and other 379,070 110,859 269,859 104,277receivablesFinancial assets 4 8,641,403 30,087,872 8,641,403 30,087,872Other 205,061 269,200 171,114 258,848 --------- --------- --------- ---------Total Current Assets 12,883,276 41,835,278 12,575,993 41,781,193 --------- --------- --------- --------- Non-Current Assets Financial assets 4 48,067,849 44,661,266 48,067,849 44,661,266Other financial assets - - 4,677,378 807,882Plant and equipment 9,324,207 2,090,618 4,669,368 2,063,929Intangibles 1,000 1,000 1,000 1,000 --------- --------- --------- ---------Total Non-Current Assets 57,393,056 46,752,884 57,415,595 47,534,077 --------- --------- --------- --------- Total Assets 70,276,332 88,588,162 69,991,588 89,315,270 --------- --------- --------- --------- LIABILITIES Current LiabilitiesTrade and other payables 2,566,972 1,330,551 2,248,948 1,359,402Provisions 771,270 869,179 771,270 869,179Deferred revenue 370,879 537,984 103,339 149,649 --------- --------- --------- ---------Total Current Liabilities 3,709,121 2,737,714 3,123,557 2,378,230 --------- --------- --------- --------- Non-Current LiabilitiesProvisions 224,195 96,497 95,617 96,497 --------- --------- --------- ---------Total Non-Current 224,195 96,497 95,617 96,497Liabilities --------- --------- --------- --------- Total Liabilities 3,933,316 2,834,211 3,219,174 2,474,727 --------- --------- --------- --------- Net Assets 66,343,016 85,753,951 66,772,414 86,840,543 ========= ========= ========= ========= EQUITY Contributed equity 5 185,660,994 185,549,893 185,660,994 185,549,893Reserves 6 255,343 99,196 276,304 113,014Retained profits/(losses) 6 (119,573,321) (99,895,138) (119,164,884) (98,822,365) --------- --------- --------- --------- Total Equity 66,343,016 85,753,951 66,772,414 86,840,543 ========= ========= ========= ========= The above preliminary balance sheets should be read in conjunction with theaccompanying notes. Preliminary Statements of Changes in EquityFor the year ended 30 June 2007 Consolidated Parent Note 2007 2006 2007 2006 $ $ $ $ Total equity at the 85,753,951 7,829,352 86,840,543 8,295,596beginning of the year --------- --------- --------- ---------Changes in the fair value 6 (248,802) 77,815 (248,802) 77,815of financial assetsExchange differences on 6 (7,143) (13,818) - -translation of foreign operations --------- --------- --------- ---------Net income/(expense) (255,945) 63,997 (248,802) 77,815recognized in equity Profit/(loss) for the year (19,678,183) (13,317,335) (20,342,519) (12,710,806) --------- --------- --------- --------- Total recognized income/ (19,934,128) (13,253,338) (20,591,321) (12,632,991)(expense) for the year --------- --------- --------- --------- Transactions with equityholders in their capacityas equity holders:Contributions of equity 5 111,101 91,142,738 111,101 91,142,738(net of transaction costs)Employee share options 6 412,092 35,199 412,092 35,199 --------- --------- --------- --------- 523,193 91,177,937 523,193 91,177,937 --------- --------- --------- --------- Total equity at the end of 66,343,016 85,753,951 66,772,414 86,840,543the year --------- --------- --------- --------- Total recognized income/(expense) for the year is entirely attributable tomembers of Ceramic Fuel Cells Limited. The above preliminary statements of changes in equity should be read inconjunction with the accompanying notes. Preliminary Cash Flow StatementsFor the year ended 30 June 2007 Consolidated Parent 2007 2006 2007 2006 $ $ $ $ Cash Flows from OperatingActivitiesReceipts from customers 1,159,875 1,775,818 921,874 1,106,853(inclusive of goods &services tax)Payments to suppliers and (20,176,309) (15,856,923) (18,759,746) (14,811,021)employees (inclusive of goods &services tax) --------- --------- --------- --------- (19,016,434) (14,081,105) (17,837,872) (13,704,168)Interest received 3,676,413 1,604,607 3,674,301 1,603,235Other revenue 5,392 41,007 5,392 41,007Grant revenue - 150,000 - 150,000Interest paid - (525) - (525) --------- --------- --------- ---------Net cash inflow (outflow) (15,334,629) (12,286,016) (14,158,179) (11,910,451)from operating activities --------- --------- --------- --------- Cash Flows from InvestingActivitiesLoans to subsidiaries - - (5,948,390) (399,498) Proceeds from sale of 227 72,355 227 72,355plant and equipmentPayments for plant and (7,501,417) (705,969) (2,856,451) (705,969)equipment --------- --------- --------- ---------Net cash inflow (outflow) (7,501,190) (633,614) (8,804,614) (1,033,112)from investing activities --------- --------- --------- --------- Cash Flows from FinancingActivitiesNet proceeds from/ 15,666,047 (74,249,845) 15,666,047 (74,249,845)(payments for) financialassetsProceeds from issue of - 91,366,499 - 91,366,499sharesShare issue costs (30,566) (7,593,713) (30,566) (7,593,713) Repayment of borrowings - (283,881) - (283,881) Interest paid on - (12,065) - (12,065)borrowingsProceeds from issuing - 8,200,000 - 8,200,000convertible notesConvertible note issue - (531,815) - (531,815)costsInterest paid on - (516,126) - (516,126)convertible notes --------- --------- --------- ---------Net cash inflow from 15,635,481 16,379,054 15,635,481 16,379,054financing activities --------- --------- --------- --------- Net increase (decrease) in (7,200,338) 3,459,424 (7,327,312) 3,435,491cash and cash equivalentsCash and cash equivalents 11,367,347 5,470,018 11,330,196 5,456,800at the beginning of thefinancial yearEffects of exchange rate (509,267) 2,437,905 (509,267) 2,437,905changes on cash and cash equivalents --------- --------- --------- ---------Cash and cash equivalents 3,657,742 11,367,347 3,493,617 11,330,196at the end of the year ========= ========= ========= ========= The above preliminary cash flow statements should be read in conjunction withthe accompanying notes. Notes to the Preliminary Financial StatementsYear ended 30 June 2007 Note 1. Summary of Significant Accounting Policies There have been no material changes in the company's application of itssignificant accounting policies as presented in the company's consolidatedfinancial statements for the year ended 30 June 2006. Readers of this reportshould refer to Note 1, Summary of Significant Accounting Policies, in theaforementioned financial statements for details of these accounting policies. Consolidated Parent 2007 2006 2007 2006 $ $ $ $Note 2. Revenue From continuing operationsSales revenueField trial income 402,535 391,704 45,926 111,074Licensing income 32,577 89,277 32,577 89,277 --------- -------- -------- -------- 435,112 480,981 78,503 200,351Other revenueInterest 3,985,851 1,596,268 3,983,739 1,594,896 --------- -------- -------- --------Total revenue from continuing 4,420,963 2,077,249 4,062,242 1,795,247operations --------- -------- -------- -------- Note 3. Other Income Net gain on disposal of plant and - 17,085 - 17,085equipmentExport Market Development Grant - 150,000 - 150,000(see below)Sundry income 5,392 41,007 5,392 135,715 --------- -------- -------- --------Total other income 5,392 208,092 5,392 302,800 --------- -------- -------- -------- Export Market Development Grant---------------------------------There are no unfulfilled conditions or other contingencies attaching to these grants. The Group did not benefit from any other forms of government assistance. Note 4. Financial Assets - Investments Current assetsFinancial assets 8,641,403 30,087,872 8,641,403 30,087,872Non-current assetsFinancial assets 48,067,849 44,661,266 48,067,849 44,661,266 --------- -------- -------- -------- 56,709,252 74,749,138 56,709,252 74,749,138 --------- -------- -------- -------- Investments include the following (170,987) 77,815 (170,987) 77,815revaluation surplus/(deficit)(transferred to equity) as atreporting date: Unlisted securities---------------------Interest-bearing securitiesdenominated in:Australian dollars 12,050,768 29,346,490 12,050,768 29,346,490European euros 28,498,086 - 28,498,086 -UK pounds sterling 16,160,398 45,402,648 16,160,398 45,402,648 --------- -------- -------- -------- 56,709,252 74,749,138 56,709,252 74,749,138 --------- -------- -------- -------- Notes to the Preliminary Financial Statements Year ended 30 June 2007(continued) Note 5. Contributed Equity (a) Share capital The share capital account of Ceramic Fuel Cells Limited (the company) consistsof 309,741,670 fully paid up, ordinary shares as at 30 June 2007. (b) Movements in ordinary share capital Movements in ordinary share capital of the company during the past two yearswere as follows: Date Details Number of shares Issue Amount price $ 1-7-2005 Opening balance 110,136,448 94,407,155 11-8-2005 Conversion of notes 380,000 $0.50 190,000 15-8-2005 Conversion of notes 380,000 $0.50 190,000 17-8-2005 Conversion of notes 1,000,000 $0.50 500,000 30-8-2005 Conversion of notes 200,000 $0.50 100,000 13-9-2005 Conversion of notes 400,000 $0.50 200,000 11-10-2005 Conversion of notes 60,000 $0.50 30,000 21-10-2005 Conversion of notes 100,000 $0.50 50,000 3-11-2005 Conversion of notes 40,000 $0.50 20,000 5-12-2005 Conversion of notes 100,000 $0.50 50,000 31-1-2006 Conversion of notes 20,000 $0.50 10,000 21-2-2006 Conversion of notes 60,000 $0.50 30,000 22-2-2006 Conversion of notes 300,000 $0.50 150,000 2-3-2006 London AIM listing and raising 175,000,000 $0.50 87,500,000 3-3-2006 Conversion of notes 460,000 $0.50 230,000 14-3-2006 Conversion of notes 2,000,000 $0.50 1,000,000 14-3-2006 Issued for services rendered 236,111 $0.60 141,667 20-3-2006 Conversion of notes 120,000 $0.50 60,000 23-3-2006 Australian private placement 7,733,000 $0.50 3,866,500 27-3-2006 Conversion of notes 2,640,000 $0.50 1,320,000 5-4-2006 Conversion of notes 460,000 $0.50 230,000 13-4-2006 Conversion of notes 20,000 $0.50 10,000 10-5-2006 Conversion of notes 500,000 $0.50 250,000 16-5-2006 Conversion of notes 2,040,000 $0.50 1,020,000 30-5-2006 Conversion of notes 300,000 $0.50 150,000 5-6-2006 Conversion of notes 560,000 $0.50 280,000 9-6-2006 Conversion of notes 4,200,000 $0.50 2,100,000 21-6-2006 Conversion of notes 60,000 $0.50 30,000 Less: Convertible note transaction costs - (238,050) (net of interest accretion) Less: Transaction costs arising on - (8,327,378) share issues --------- --------- 30-6-2006 Balance 309,505,559 185,549,893 2-3-2007 Issued for services rendered 236,111 $0.60 141,667 Less: Transaction costs arising on - (30,566) share issues 30-6-2007 Balance 309,741,670 185,660,994 --------- --------- (c) Ordinary shares Ordinary shares entitle the holder to participate in dividends, and the proceedson winding up of the company, in proportion to the number of and amounts paid onthe shares held. On a show of hands every holder of ordinary shares present at a meeting of thecompany, either personally or by duly authorised representative, proxy orattorney, is entitled to one vote, and upon a poll each share is entitled to onevote. (d) Share options Options over shares in Ceramic Fuel Cells Limited have been granted under theCFCL Share Option Plan, originally approved by shareholders at the annualgeneral meeting of the company held on 26 November 1999. This plan has beenreplaced by a Directors and Employees Benefits Plan approved by shareholders on28 November 2006. Under each plan, all full time and part time permanentemployees, including directors but excluding casual and short-term contractemployees, may be offered options upon successful completion of their employmentprobationary period. Any offer of options is at the Board's discretion and noindividual has a contractual right to receive any guaranteed benefit. Notes to the Preliminary Financial Statements Year ended 30 June 2007(continued) (d) Share options (continued) The terms of each grant of options affecting remuneration in the previous, thisor future reporting periods are as follows: Grant date Date vested and potentially Expiry date Exercise Value per exercisable price option at grant date 12 Oct 2005 The options cannot be exercised 11 Oct 2015 $0.58 $0.36 before 12 Oct 2008. The right to exercise between 12 Oct 2008 and 11 Oct 2015 will depend upon achievement of compound share price growth (from the date of grant) of the underlying shares9 Aug 2006 The options cannot be exercised 8 Aug 2016 $0.61 $0.38 before 9 Aug 200724 Aug 2006 The options cannot be exercised 23 Aug 2016 $0.59 $0.37 before 24 Aug 200726 Oct 2006 The options vested and were 26 Oct 2010 $0.2799 $0.54 exercisable on 27 Oct 2006 Details of options over ordinary shares in the company provided as remunerationto directors and other key management personnel of the Group are set out below.When exercisable, each option is convertible into one ordinary share of CeramicFuel Cells Limited. Name Number of options Number of options granted during vested during the the year year 2007 2006 2007 2006Directors of Ceramic FuelCells LimitedB L Dow 200,000 - 200,000 - Other key management personnelB Bilton 150,000 - - -K Foger 71,200 44,500 - -P R McDonell 71,200 44,500 - -A D Neilson 71,200 44,500 - -J C Rajoo 71,200 43,500 - -N A Sherburn 71,200 44,500 - - 1. No options were provided to M Atkinson or T M Rowe as they were ineligible, having not been previously employed by the Group for a period of at least 12 months. 2. No options were exercised during the year ended 30 June 2007. The assessed fair value at grant date of options granted to the individuals isallocated equally over the period from grant date to vesting date. Fair values at grant date are determined using a trinomial lattice optionpricing model that takes into account the exercise price, the term of theoption, the share price at grant date, an expected price volatility range of theunderlying share, any share market-based performance conditions applying to theexercise of the option, the restrictions on exercise applied by the Group'sSecurities Trading Policy, an allowance for expected early exercise, theexpected dividend yield and the risk-free rate for the term of the option. Notes to the Preliminary Financial Statements Year ended 30 June 2007(continued) Consolidated Parent 2007 2006 2007 2006 $ $ $ $ Note 6. Reserves and Retained Profits/(Losses) (a) ReservesInvestments revaluation (170,987) 77,815 (170,987) 77,815reserveShare-based payments reserve 447,291 35,199 447,291 35,199Foreign currency translation (20,961) (13,818) - -reserve --------- --------- --------- --------Total reserves 255,343 99,196 276,304 113,014 --------- --------- --------- -------- Investments revaluationreserveBalance at 1 July 77,815 - 77,815 -Revaluation - gross (248,802) 77,815 (248,802) 77,815 --------- --------- --------- --------Balance at 30 June (170,987) 77,815 (170,987) 77,815 --------- --------- --------- -------- Share-based payments reserveBalance at 1 July 35,199 - 35,199 -Option expense 412,092 35,199 412,092 35,199 --------- --------- --------- --------Balance at 30 June 447,291 35,199 447,291 35,199 --------- --------- --------- -------- Foreign currency translationreserveBalance at 1 July (13,818) - - -Currency translation (7,143) (13,818) - -differences arising during the year --------- --------- --------- --------Balance at 30 June (20,961) (13,818) - - --------- --------- --------- -------- (b) Retained profits/(losses)Movements in retainedprofits/(losses) were asfollows:Balance at 1 July (99,895,138) (86,577,803) (98,822,365) (86,111,559)Net profit/(loss) for the (19,678,183) (13,317,335) (20,342,519) (12,710,806)year --------- --------- --------- --------Balance at 30 June (119,573,321) (99,895,138) (119,164,884) (98,822,365) --------- --------- --------- -------- Note 7. Contingent Liability The consolidated entity has the following contingent liability: R&D Start Grant Under an agreement with the Industry Research and Development Board (IR&D Board)acting on behalf of the Australian federal government, the company received a$15 million grant under the R&D Start Grant programme. The company has receivedthe full amount of the grant. The agreement runs until 2009 and imposes certainobligations upon the company. If the company was to breach the agreement orbecome insolvent, the IR&D Board may elect to terminate the agreement. In theevent of such a termination, or in other specific circumstances, the agreementprovides that the IR&D Board may choose to require the repayment of any or allof the grant with or without interest. At the end of the year the maximum amount of this liability would have been$22.7 million (2006 - $21.4 million). Notes to the Preliminary Financial StatementsYear ended 30 June 2007(continued) Consolidated 2007 2006 Note 8. Earnings Per Share Cents CentsBasic and diluted earnings per share (6.36) (7.64) Number NumberWeighted average number of shares Weighted average number of shares used as the 309,583,185 174,392,301denominator in calculating basic and diluted earnings per share $ $Earnings used in calculating basic and diluted earnings per share Profit/(loss) attributable to the ordinary equity (19,678,183) (13,317,335)holders of the company Note 9. Events Occurring After the Balance Sheet Date At 30 June 2007 the company had $56 million invested in a variety of highlyrated, money market securities and had no exposure to the USA sub-prime market.During August 2007 the financial markets experienced significant volatility,particularly in debt securities. This volatility has impacted global financialmarkets such that, at the date of this report, some securities are unable to bepriced on a meaningful fair value basis. The directors believe that this is atemporary situation and that, upon return to more normal market liquidity, therewill be no material impairment of the value of the portfolio of securities. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ceramic Fuel Cells