31st Jan 2007 07:02
Ceramic Fuel Cells Limited31 January 2007 31 January 2007 CERAMIC FUEL CELLS LIMITED TRADING UPDATE FOR QUARTER ENDED 31 DECEMBER 2006 Ceramic Fuel Cells Limited ("CFCL" or the "Company"), a world leadingmanufacturer of solid oxide fuel cells for micro-combined heat and power (m-CHP)units, today announces its trading update and cashflow statement for the secondquarter ended 31 December 2006. Highlights of the quarter: • Signed an exclusive, three way agreement with Gaz de France and De Dietrich for the French residential market • Established site for volume manufacturing facility on Nuon industrial park in North Rhine Westphalia region of Germany • Continued to make system improvements to increase efficiency, reduce size and optimise balance of plant components of fuel cell units • Net operating cash outflow of A$4.8 million / £1.9 million (Q1: A$3.0 million / £1.2 million) • Net cash and financial assets at 31 December 2006 of A$75 million / £30 million Since the quarter end: • Secured a site in Merseyside, UK, for the production of ceramic powders Brendan Dow, Managing Director of Ceramic Fuel Cells, said: "The quarter ended 31 December saw significant progress towards the achievementof our business plan and further validation of our approach. The signing of anexclusive, three-way agreement with Gaz de France and boiler manufacturer DeDietrich addresses one of our key target markets and demonstrates our ability tomeet our strategic objectives on schedule. With the announcement of the proposeddevelopment of a fuel cell foundry also in the quarter, we are on track todeliver commercial volume units to customers in 2009. We look forward to furtherpositive developments in 2007." For further information please contact: Ceramic Fuel CellsAndrew Neilson Tel: +61 419 950 771Brendan Bilton Tel: +44 (0) 7798 554 191 Email: [email protected] ------------------------------ Hogarth Partnership Tel: +44 (0) 20 7357 9477Nick Denton / Sarah MacLeod Financial Review Net operating cash outflow for the second quarter was A$4.8 million, slightlyhigher than the previous quarter, largely due to higher product developmentcosts of building field trial units. Expenditure in the quarter also includedearly costs from the Heinsberg fuel cell foundry project. Capital expenditure was similar to the prior quarter and is expected to increasein coming quarters as the Company upgrades its Melbourne plant and commissionsits UK powder plant. Total cash and financial assets at the end of the quarter was A$75 million. Operational Review Product development agreement with Gaz de France and De Dietrich In December, the Company signed an exclusive, three-way agreement with Gaz deFrance, Europe's leading distributor of natural gas, and De Dietrich Thermique,the largest provider of gas heating systems to the French market, to develop afully integrated m-CHP for the French residential market, which is a majoraddressable market for the Company's technology. EWE partnership Work has continued under the Letter of Intent (LOI) signed with EWE in July 2005on a project to commercialise fuel cell based micro-CHP systems for the Germanresidential market. In June 2006, EWE signed a contract for ten NetGenTM units, in addition to thetwo field trial units commissioned in January 2006. Two of these NetGenTM unitswill be powered by CFCL's all-ceramic fuel cell stacks and eight will usemetal-ceramic stacks. The first NetGenTM unit has been delivered and the secondis planned to be delivered and commissioned in this quarter. During the firsthalf of 2007 CFCL will build the other eight units - based largely on theexisting NetGenTM units, with some modifications to suit the metal ceramicstacks and improved core balance of plant. The delivery schedule for these eightNetGenTM units will extend into the second half of 2007. CHP field trials continuing The Company is continuing the programme of field trials with customers to testthe Company's units and fuel cell stacks in real-world conditions. A significantfocus of the early trials was the reliability of the units and the control,safety and electronics systems, all of which met the Company's high performancestandards. With regards to electrical output, some of the electricity generatedhas been exported to the grid. The testing of power output levels and thereliability of the all-ceramic stacks has led to some key improvements which arenow incorporated in the new metal-ceramic cell technology. Field trials provide important data and experience of CFCL's products in use,enabling CFCL to continue to make technological improvements. Fuel Cell Foundry In December, CFCL announced its intention to develop a large-scale manufacturingfacility at the Oberbruch industrial park in Heinsberg, Germany, which is ownedand managed by Nuon, a leading Dutch energy company. The government of the Stateof North Rhine-Westphalia is supporting the project with funding of €3.2million. Work on the volume manufacturing plant will run in two phases. CFCL has signed alease for the existing building for phase 1, and secured an option to buy the 'greenfield' land for phase 2. Since the agreement was signed, work has begun toobtain environmental approvals and to prepare the existing building. The Company will continue to update shareholders on progress during the year. Powder plant Since the quarter end, the Company has secured a site on an industrial park inBromborough, Merseyside, UK, for the development of a ceramic powder plant. TheCompany has ordered equipment and is currently reviewing tenders frominstallation contractors, with equipment installation due in March,commissioning in the second calendar quarter and first powders available for useby September 2007. One of the objectives set out at the Company's flotation on Aim in March 2006was to build a plant to make high quality ceramic powders as a key input for theCompany's fuel cells, using the Company's proprietary processes. To validate thedesign and to reduce the installation and scale up risk of the plant, theCompany built a demonstration plant in Melbourne which has successfully producedzirconia powder to the correct specifications. To lead the development of the plant the Company has appointed Mr Phil Wilkinsonas operations manager of the UK plant. Mr Wilkinson has significant experiencein managing the production of high temperature ceramic fibres. For 20 years hewas part of the Thermal Ceramics group at Morgan Crucible, working at thecompany's ceramic fibre manufacturing and converting facility in the UK. AtCeramic Fuel Cells, Mr Wilkinson will report to Chief Operations Officer JohnRajoo. Melbourne facility The Company is currently upgrading its manufacturing plant and expanding itscapacity at Noble Park, Melbourne, to make the new metal-ceramic fuel cells andbalance of plant components. These upgrades will allow the Company to test andvalidate the manufacturing processes to be used in the fuel cell foundry inGermany prior to full-scale installation. Some of the equipment being upgraded includes a new continuous furnace, lasercutting equipment, QC equipment suitable for continuous operation, furnaces formetal coatings and automated dispensing equipment for advanced seals. Upgradeworks are scheduled to complete by the end of March 2007. Commercial Performance and Cost Since the Company announced the new anode supported cells in September 2006,test results for single cells are promising and confirm that the cells performaccording to our design and specification. Test results have shown stableoperation and power output, with degradation rates of less than 3% per 1,000hours on a test of more than 4,000 hours, and improved rates of less than 1% per1,000 hours on a later test of more than 1,500 hours. The Company has made and tested a metal-ceramic stack comprising 24 layer sets(ie a metal window frame housing 4 ceramic cells). The Company plans to make twoto three 1kW metal-ceramic stacks per week from April 2007. These initial stackswill comprise 54 layer sets, with stack dimensions of 200mm long by 170mm wideby 140mm high, for a volume of 4.8 litres - about 20% lower than the Company's1kW all-ceramic stacks. The Company's modeling indicates that significantreductions in the height of the final 1kW stack are possible, to 18 layer sets,or a volume of just over 2 litres. The Company has also optimised the balance of plant components, with initialpositive test results, validating the significant efficiency gains and designgoals. The new 1kW stacks and balance of plant components will be integratedinto NetGenTM units to be delivered to customers during the calendar 2007 year. ENDS About CFCL Ceramic Fuel Cells Limited is a world leader in developing solid oxide fuel cell(SOFC) technology to provide reliable, energy efficient, high-quality, andlow-emission electricity from widely available natural gas and renewable fuels.Ceramic Fuel Cells is developing SOFC products for small-scale on-site microcombined heat and power (m-CHP) and distributed generation units thatco-generate electricity and heat for domestic use. CFCL was formed in 1992 and is publicly listed on both the London Stock ExchangeAIM market and the Australian Stock Exchange (code CFU). www.cfcl.com.au Rule 4.7B Appendix 4C Quarterly report for entities admitted on the basis of commitments Introduced 31/3/2000. Amended 30/9/2001 Name of entityCERAMIC FUEL CELLS LIMITED ABN Quarter ended ("current quarter")82 055 736 671 31 DECEMBER 2006 Consolidated statement of cash flows Current quarter Year to dateCash flows related to operating (6 months)activities $A'000 $A'000 1.1 Receipts from customers 14 144 1.2 Payments for (a) staff costs(1) (2,481) (4,948) (b) advertising and marketing (2) (190) (414) (c) research and development (3) (1,562) (2,338) (d) leased assets - - (e) other working capital (1,635) (2,459)1.3 Dividends received - -1.4 Interest and other items of a similar nature received 678 1,6801.5 Interest and other costs of finance paid - -1.6 Income taxes paid - -1.7 Other - Net GST Received/(Paid) 294 455 - Export Market Development Grant received - - - Sundry income received 4 4 Net operating cash flows (4,878) (7,876) Notes (1) 'Staff costs' includes all company labour and associated headcount costs, and therefore incorporates all Research & Development (R&D) staff, Sales & Marketing (S&M) staff and General & Administrative (G&A) staff.(2) 'Advertising and marketing' excludes all S&M staff costs (as per note 1 above).(3) 'Research and development' costs includes all R&D costs as defined in Note 1 (e) to the Financial Statements for the year ended 30 June 2006, but excludes all R&D staff costs (as per note 1 above). Current quarter Year to date (6 months) $A'000 $A'000 1.8 Net operating cash flows (carried forward) (4,878) (7,876) Cash flows related to investing activities1.9 Payment for acquisition of: (a) businesses (item 5) - - (b) equity investments - - (c) intellectual property - - (d) physical non-current assets (1,561) (2,974) (e) other non-current assets - - 1.10 Proceeds from disposal of: (a) businesses (item 5) - - (b) equity investments - - (c) intellectual property - - (d) physical non-current assets - - (e) other non-current assets - - 1.11 Loans to other entities - -1.12 Loans repaid by other entities - -1.13 Other - - Net investing cash flows (1,561) (2,974) 1.14 Total operating and investing cash flows (6,439) (10,850) Cash flows related to financing activities1.15 Proceeds from issues of shares, options, etc. - -1.16 Proceeds from sale of forfeited shares - -1.17 Proceeds from borrowings - -1.18 Repayment of borrowings - -1.19 Dividends paid - -1.20 Other - Financial assets: Net proceeds/(Net payments) (1) 6,279 3,184 Other - Share issue costs (31) (31) Net financing cash flows (6,248) 3,153 Net increase (decrease) in cash held (191) (7,697) 1.21 Cash at beginning of quarter/year to date 3,780 11,3671.22 Exchange rate adjustments on foreign currency cash balances (276) (357) 1.23 Cash at end of quarter 3,313 3,313 Funds held in Financial Assets 71,763 71,763 Total Cash and Financial Assets 75,076 75,076 (1) The net proceeds/(payments) from the disposal and purchase of the company's investments are at item 1.20. Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the relatedentities Current quarter $A'000 1.24 Aggregate amount of payments to the parties included in item 1.2 92 1.25 Aggregate amount of loans to the parties included in item 1.11 - 1.26 Explanation necessary for an understanding of the transactions Directors' fees. Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows -------------------------------------------- NIL -------------------------------------------- 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest -------------------------------------------- NIL -------------------------------------------- Financing facilities available Add notes as necessary for an understanding of the position. (See AASB 1026paragraph 12.2). Amount available Amount used $A'000 $A'000 3.1 Loan facilities - -3.2 Credit standby arrangements - - Reconciliation of cash Reconciliation of cash at the end of the Current quarter Previous quarterquarter (as shown in the consolidated $A'000 $A'000statement of cash flows) to the related items in the accounts is as follows. 4.1 Cash on hand and at bank 3129 5954.2 Deposits at call - 3,0014.3 Bank overdraft - -4.4 Other 184 184 - Security deposits Total: cash at end of quarter (item 1.23) 3,313 3,780 Financial Assets 71,763 78,406Total Cash and Financial Assets at end of quarter 75,076 82,186 Acquisitions and disposals of business entities Acquisitions Disposals (Item 1.9(a)) (Item 1.10(a)) 5.1 Name of entity Not applicable Not applicable5.2 Place of incorporation or registration5.3 Consideration for acquisition or disposal5.4 Total net assets5.5 Nature of business Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX. 2 This statement does give a true and fair view of the matters disclosed. David Carruthers Date: 30 January 2007Director Notes (1) The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. (2) The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below. • 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss • 9.2 - itemised disclosure relating to acquisitions • 9.4 - itemised disclosure relating to disposals • 12.1(a) - policy for classification of cash items • 12.3 - disclosure of restrictions on use of cash • 13.1 - comparative information (3) Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Ceramic Fuel Cells