23 January 2012
Ceramic Fuel Cells Limited Quarterly Cashflow Report
Ceramic Fuel Cells Limited (AIM / ASX: CFU) a leading
developer of high efficiency and low emission power products
for homes and other buildings, today released its quarterly
cashflow report for the period ended 31 December 2011.
The cashflow report is
available at www.cfcl.com.au.
Highlights
• Orders doubled in the last six months - up to 614 units
• Current open order book stands at 477 units
• EON.UK orders 105 units
• German distributor has customer commitments for all of its first order of 100 BlueGens.
• First German Utility now promoting BlueGen to its customers
• External installation & support partners trained and operating in Europe and Australia
• Unit installation rate doubles from prior year
• MOU signed with global contract manufacturer Jabil Circuit (NYSE: JBL.US)
• German production facility now accredited for Microgeneration Certificate Scheme (MCS) -
units made in German plant can receive UK feed-in tariff
• Integrated CHP units from DeDietrich in France gains CE approval
• AUD 17.0m (GBP 11.4m) raised in new equity
• More industry awards - Banksia Award and Victorian Governor's Export Award
Order Book and Sales
Operational Review
The Company has now received commercial orders for a total of
614 units made up of 262 integrated mCHP products and 352
BlueGen® products. This represents a doubling of
the order book from June
2011.
During the December quarter the Company received orders for
106 units. This included a new order for 105 units from E.ON
UK, one of the UK's leading power and gas companies. In
placing this order E.ON has reaffirmed that it is committed
to working with CFCL to launch integrated power and
heating
products
for the UK
market. The
agreement
involves the
supply of
both the BlueGen modular
generators and the mCHP unit in development for the UK
market. Supply will commence in early
2012.
The Company's open order book currently stands at 477 units -
with the geographic split being
Germany 266, Netherlands 106, UK 101, and four units in other
markets.
The Company has been building its capacity to sell and
install units by working with its sales partners. As a result
sales of 67 units were completed within the half-year to 31
December 2011, which is equivalent to the total number of
units sold in the whole of the last fiscal year.
Germany
In July 2011 the Company appointed sanevo Lizenz-GmbH & Co.
KG (now renamed sanevo Blue Energy) as its first distributor
in Germany, with sanevo placing an initial order for 100
BlueGens. The Company has been working with sanevo to
finalise its market offering and establish its installation
and customer support capability.
Sanevo has recently confirmed that it has received customer
commitments for all of these 100
BlueGen units, which are expected to be delivered by the end
of June 2012. sanevo has a target minimum of 500 units for
delivery in its second year and a target of 2,000 BlueGens
over years three
and four.
Working with sanevo, Stadtwerke Aalen is now the first German
Utility to actively promote and support sales of BlueGen to
its customers, including by providing an incentive payment to
early BlueGen customers. Stadtwerke Aalen is the local
electricity and gas utility for the region of Aalen in
Southern Germany.
During the quarter the Company continued to work with EWE,
Germany's fifth largest utility, and its external contractors
as they accelerated the installation of integrated mCHP
systems. During the December quarter 20 units were installed.
A further 40 units are expected to be installed early in the
June quarter, under the first phase of EWE's 'Lighthouse
Project'. In the second phase of the project, a further 130
units are planned to be deployed later this year.
Netherlands
In July 2011 CFCL appointed Zestiq B.V. (now renamed
BlueGeneration) as its first BlueGen distributor in The
Netherlands. In September 2011 BlueGeneration placed an order
for 100 units for delivery over 12 months. The units will be
installed and maintained by the service company of the large
Dutch energy company Eneco.
In December BlueGeneration started its marketing programme,
focusing on small commercial customers. They expect to
receive their first customer orders shortly. BlueGeneration
is also working with several large Dutch energy companies on
larger scale projects for BlueGen deployment.
United Kingdom
In the United Kingdom the Company is working with E.ON UK,
one of the UK's largest energy retailers. In this
partnership, CFCL and E.ON are working to launch integrated
power and heating products for the UK market. In late
November E.ON UK placed an order for 105 units. Of these,
41
BlueGen generators will be deployed under the European Union
Fuel Cell and Hydrogen Joint Undertaking's Joint Technology
Initiative ("JTI") fuel cell demonstration programme. These
units will be installed in homes and other buildings in the
UK, Germany and The Netherlands, during early 2012. A further
four BlueGen units will be deployed by E.ON in demonstration
and commercial customer sites outside of this programme.
CFCL and the UK heating company Ideal Boilers ("Ideal") will
also develop up to 60 integrated mCHP units to be installed
in homes in the UK, Benelux and Germany under the JTI project
from late 2012. These units will be manufactured by
Ideal.
These activities are part of the continuing work between CFCL
and E.ON to develop a range of product configurations for
different UK market segments and customer requirements. Once
the Product Development Agreement with E.ON (signed in 2009)
is completed during 2012 the next stage in the parties'
collaboration is to negotiate and sign a Product Supply
Agreement for commercial products. This is subject to the
products performing as expected and to the parties agreeing
the commercial terms.
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France
In December CFCL's French appliance development partner DeDietrich Thermique received CE approval for the deployment of its integrated mCHP appliance called CERAMIS POWER. The first 20 units are expected to be deployed during 2012. The first units will be operated by GdF Suez, France's largest gas retailer, with more than ten million customers in France.
Australia
During the quarter the Company completed the supply and
installation of 25 BlueGen units to Ausgrid (a large
electricity network operator) for their AUD 100m 'Smart Grid,
Smart City' project in Newcastle, New South Wales. The
installation in homes was undertaken in November and December
by a team of local contractors trained by CFCL.
Along with the Victorian Government Office of Housing
project, under which 30 BlueGen units were installed, and
other sales, this brings the current number of BlueGen units
installed in Australia to 68.
In January 2012 Ausgrid released the results from the first
18 months of its 'Smart Home' project. In this project, a
family home in Sydney was equipped with a range of new energy
technologies, including a BlueGen unit, solar PV and an
electric car.
The results show that the BlueGen unit generated on average
28 kilowatt hours of electricity per day and the generation
from the solar PV system and solar pergola was 4 kilowatt
hours per day. Combined, the home generated more electricity
than it used. Compared to the average greenhouse emissions
from power supplied in NSW, the home saved 1.4 tonnes CO2-e
from its solar systems and
6.9 tonnes of CO2-e from the BlueGen unit.
Ausgrid energy efficiency expert Paul Myors said an analysis
of energy use and generation at the smart home showed it was
producing enough electricity to power two average households.
"The Smart Home in essence has become a fully functioning
power station," Mr Myors said. "The fuel cell used gas and
waste heat to produce most of the on-site power, but with 65
per cent less greenhouse gas impact than power sourced from
the grid."
Market Developments
The Company continues to see favourable market developments
occurring in Europe.
In Germany a number of federal states are considering market
introduction programs for fuel-cell based micro CHP systems.
The federal state of Saxony has announced a '1,000 Basement
Programme' to provide financial incentives for installing
fuel cell based micro CHP units. In late 2011 the state of
North Rhine Westphalia also announced plans to increase the
share of CHP electricity production to 25 percent, by
providing funding of EUR 250 million over several years to
support the deployment of local CHP systems. Similarly, a
number of regional utilities are also providing incentives to
their customers to install fuel cell micro CHP systems.
In the United Kingdom, in late August 2011 BlueGen was the
first (and currently the only) fuel cell product to receive
the UK Microgeneration Certificate Scheme ("MCS")
accreditation which enables access to the UK feed-in tariff.
This entitles the owner of the BlueGen to receive 10.5 pence
per kilowatt hour for all electricity generated and a further
3.1 pence per kilowatt hour for electricity exported to the
grid. The UK Government has recently reviewed the feed in
tariff for solar PV systems and in January announced that the
solar tariff would be reduced by 50 percent. This does not
apply to the tariff for mCHP systems.
In Australia there is currently no feed in tariff for fuel
cell units. In January 2012 the Victorian Government
announced a Victorian Competition and Efficiency Commission
(VCEC) review of feed in tariffs. The review will also
identify barriers to distributed renewable and low emission
generation in Victoria, including co-generation and
tri-generation. A final report from the review is due in June
2012. In 2009 VCEC conducted a similar review for the
previous Victorian Government, which formally recommended
that feed in tariff provisions be extended to cover a broader
range of low-emission technologies. The Company will be
making a submission to the new VCEC review. More information
on the review is available at www.vcec.vic.gov.au.
In July 2011 the Australian Government announced that it will
establish a AUD 10 billion commercially oriented Clean Energy
Finance Corporation (CEFC) as part of its Clean Energy Future
Package. The objective of the CEFC is to encourage the
financing, commercialisation and deployment of renewable
3
energy, energy efficiency and low emissions technologies. In December the Company made a submission to the expert review panel advising the Government on the design and operation of the CEFC. The Company has also met with members of the expert review panel and the Government department responsible for setting up the CEFC. A copy of the Company's submission is available on the Company's website.
Manufacturing
The Company's German plant is now the main manufacturing site
for the production of fuel cell stacks and BlueGen systems.
During the quarter production and installation of units was
impacted by disruption to the Company's supply chain, arising
from the severe floods in Thailand. This event impacted many
global manufacturing companies. The factory of the supplier
of our metal castings was flooded by more than two meters of
water. They have now recommenced the supply of parts and
there has been no long term material impact on our production
capacity.
In response to the growing order book the Company has moved
over the last quarter to increase the size of orders being
placed on the supply chain. Previously we had been placing
orders that would purchase enough components to build in lots
of 100 BlueGens. To benefit from purchasing
economies-of-scale and to meet expected order growth we have
moved to ordering enough components to build 1,000 BlueGens.
This has resulted in unit cost savings of around 20 percent.
It has also resulted in higher working capital requirements
which are reflected in the cashflow for the period.
To assist in moving into higher volume production and to
further reduce unit costs, in November 2011 the Company
entered into a memorandum of understanding with Jabil Circuit
Inc (Jabil). Jabil is a global electronic manufacturing
service provider with 55 factories in 22 countries and annual
turnover of USD 16 billion. The first phase of co-operation
is for CFCL to source selected components from Jabil's
manufacturing operations. This phase is expected to commence
in early 2012. The second phase is for CFCL to source major
sub-assemblies from Jabil. The final phase is for Jabil to
assemble finished products as a contract manufacturer for
CFCL.
Product & Manufacturing Accreditation
As mentioned above, in August 2011 BlueGen became the first
fuel cell product to receive the MCS
certification for microgeneration and to be eligible for the
UK feed-in tariff.
The MCS accreditation process involves an extensive and
rigorous third party review of all the procedures involved in
manufacturing, installing and maintaining a microgeneration
product. As part of that review the Company's production
facilities in Melbourne, Australia were audited to ensure
compliance with the high manufacturing standards required.
During the December quarter the Company's plant in Heinsberg,
Germany also underwent this audit process and was similarly
successful in satisfying the manufacturing requirements.
Accordingly, the plant in Germany can now produce BlueGen
units that carry the MCS accreditation for use in the United
Kingdom.
The Company continues to make progress towards receiving
BlueGen product safety approval for the North American
market. This approvals process is rigorous and time
consuming, with many of the requirements for the North
American market being in addition to or different from the
European and Australian standards. During the December
quarter the Company, together with the certifying bodies in
North America and Europe, conducted an extensive range of
tests on the BlueGen, including for compliance to electrical
and gas safety standards in accordance with the USA fuel cell
standard. This work took up a significant amount of the
Company's engineering and product development resources,
including on-site visits and tests in North America and
Europe. These tests were successfully completed. The Company
is continuing to work on the remaining certification
requirements, whilst focusing most of its engineering
resources on supporting sales in the European market. The
Company now expects to achieve North American safety approval
by the end of June 2012.
China - Australia Joint Centre for Energy and Mining
Whilst the Company is currently focusing its resources on existing markets, mainly in Western Europe and Australia, it is also taking early steps to establish future global markets for its products, including in Asia. The Company has visited China as part of an invited clean energy delegation and has hosted return visits by Chinese energy companies in Melbourne.
4
The Company has also been invited to become a founding member of a new China - Australia Joint Centre and Alliance for Energy and Mining. This consortium comprises leading Chinese and Australian science and industry partners, including universities and Academy of Sciences' institutes and the CSIRO, plus three major Chinese energy companies - coal miner and power generator Huainan Mining Corporation, coal and construction group Yancon Group Co., Ltd., and one of the world's largest coal producers, Shenhua Corporation. Ceramic Fuel Cells is one of four Australian companies invited to join the group. The consortium intends to seek funding from respective Governments under the Australia - China Science and Research Fund scheme to develop new international collaborative approaches to energy and mining research. This collaboration is part of the Company's longer term planning and will have limited impact on the Company's resources in the short term. .
Awards
During the quarter the Company has also received further industry recognition and product distinction by winning the following two awards:
Banksia Environmental Foundation 'Clean Technology -Harnessing Opportunities' Award
The Banksia Environmental Foundation is an Australian not-for-profit organisation that promotes environmental excellence and sustainability. BlueGen was judged as a product that demonstrates leadership and innovation that use new approaches, technologies and/or energy systems for business and community benefit.
Governor of Victoria Export Awards 'Minerals and Energy Award'
The Governor of Victoria Export Awards recognises and honours exporters who have achieved sustainable export growth through innovation and commitment. These awards recognise the Company and BlueGen as industry leaders amongst key Victorian exporters.
Financial Review
Quarterly Cashflow
Net operating cash outflow for the December quarter was AUD
6.9m (GBP 4.6m) which was higher than last quarter
principally due to increased production and inventory
purchases of AUD 1.2m (GBP
0.8m).
Receipts from customers for the quarter were AUD 1.5m (GBP
1.0m) which was slightly higher than the first quarter
however; in the first weeks of January (after the end of the
December quarter) the Company received a further AUD 2.0m
(GBP 1.3m) from customers.
The overall net cashflow after investing and financing
activities for the December quarter was an inflow of AUD 9.7m
(GBP 6.5m). This inflow was principally due to the receipt of
AUD 17.0m (GBP
11.4m) from the equity issues undertaken in November and
December 2011. Associated with this were payments during the
quarter of AUD 0.3m (GBP 0.2m) relating to costs of the
equity raising.
Cash at 31 December 2011 was AUD 22.5m (GBP 15.1m).
The quarterly report is
also available on the Company's website at www.cfcl.com.au
5
For further information please contact:
Ceramic Fuel Cells
Andrew Neilson Tel: +613 9554 2300
Email: investor@cfcl.com.au
Nomura Code Securities (AIM Nomad) Tel: +44 (0) 207 776 1200
Juliet Thompson, Chris Golden
Australia Media enquiries
Richard Allen, Oxygen Financial Public Relations Tel: +613
9915 6341
Email: richard@oxygenpr.com.au
UK Media enquiries
Mark Way
Tel: +44 (0) 7786 116 991
Email: Mark.W@harvardamerica.com
German Media enquiries Tel: +49 (0) 69 9218 7454
Alex Seiler, Hering Schuppener Consulting Email : aseiler@heringschuppener.com
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 sold its BlueGen gas-to-electricity
generator to major utilities and other foundation customers
in Germany, the United Kingdom, Switzerland, The Netherlands,
Italy, Japan, Australia, and the USA. Ceramic Fuel Cells is
also developing fully integrated power and heating products
with leading energy companies E.ON UK in the United Kingdom,
GdF Suez in France and EWE in Germany.
Ceramic Fuel Cells has won five important awards in 2011: the
DuPont Design for a Sustainable Future Innovation Award, the
Microgeneration UK Technical Innovation Award; the Minerals
and Energy category at the Governor of Victoria Export
Awards; the Climate Alliance Limited Innovator of the Year
Award; and the Clean Technology - Harnessing Opportunities
Award, presented by the Banksia Foundation.
Ceramic Fuel Cells is listed on the London Stock Exchange AIM
market and the Australian Securities
Exchange (code CFU).
www.cfcl.com.au
6
Appendix 4C Quarterly report for entities
admitted on the basis of commitments
Appendix 4C Quarterly report for entities admitted on the basis of commitmentsRule 4.7B
Introduced 31/3/2000. Amended 30/9/2001
Name of entity
CERAMIC FUEL CELLS LIMITED
ABN Quarter ended ("current quarter")
82 055 736 671 31 DECEMBER 2011
Consolidated statement of cash flowsCash flows related to operating activities
1.1 Receipts from customers
1.2 Payments for
(a) staff costs 1
(b) advertising and marketing 2
(c) research and product development 3
(d) leased assets
(e) other working capital
1.3 Dividends received
1.4 Interest and other items of a similar nature received
1.5 Interest and other costs of finance paid
1.6 Income taxes paid
1.7 Other
- Net GST/VAT Received/(Paid)
- Sundry income received
Net operating cash flows
Notes
1. 'Staff costs' includes all labour and associated headcount costs, and therefore incorporates all Research
& Product Development (R&PD) 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 product development' costs includes all R&PD costs as defined in Note 1(e) to the Financial Statements for the year ended 30 June 2011, but excludes all R&PD staff costs (as per note 1 above).
Ceramic Fuel Cells Limited - Quarterly Cash Flow Report for the quarter ended 31 December 2011 Page 1
Appendix 4C Quarterly report for entities
admitted on the basis of commitments
Current quarter $A'000 | Year to date (6 months) $A'000 | |
1.8 Net operating cash flows (carried forward) | (6,903) | (12,418) |
Cash flows related to investing activities 1.9 Payment for acquisition of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (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 - Security deposits decreased (increased) Net investing cash flows 1.14 Total operating and investing cash flows | - - - (90) - - - - - - - - 2 | - - - (470) - - - - - - - - 4 |
Cash flows related to investing activities 1.9 Payment for acquisition of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (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 - Security deposits decreased (increased) Net investing cash flows 1.14 Total operating and investing cash flows | (88) | (466) |
Cash flows related to investing activities 1.9 Payment for acquisition of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (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 - Security deposits decreased (increased) Net investing cash flows 1.14 Total operating and investing cash flows | (6,991) | (12,884) |
Cash flows related to financing activities 1.15 Proceeds from issues of shares 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 Other - Share issue costs Other - Interest received Net financing cash flows | 16,988 - - (58) - - (308) 45 | 16,988 - - (126) - - (308) 147 |
Cash flows related to financing activities 1.15 Proceeds from issues of shares 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 Other - Share issue costs Other - Interest received Net financing cash flows | 16,667 | 16,701 |
Net increase (decrease) in cash held 1.21 Cash at beginning of quarter/year to date 1.22 Exchange rate adjustments on foreign currency cash balances 1.23 Cash at end of quarter 2 | 9,676 13,774 (922) | 3,817 19,057 (346) |
Net increase (decrease) in cash held 1.21 Cash at beginning of quarter/year to date 1.22 Exchange rate adjustments on foreign currency cash balances 1.23 Cash at end of quarter 2 | 22,528 | 22,528 |
1. The net proceeds from/(payments for) the disposal and purchase of the company's investments are at item 1.20
2. 'Cash at end of quarter' includes A$3,067,184 pledged as security for bank guarantees, and so is unavailable for use by the
Group.
Ceramic Fuel Cells Limited - Quarterly Cash Flow Report for the quarter ended 31 December 2011 Page 2
Appendix 4C Quarterly report for entities
admitted on the basis of commitments
Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entitiesCurrent quarter
$A'000
1.24 Aggregate amount of payments to the parties included in item 1.2 144
1.25 Aggregate amount of loans to the parties included in item 1.11 -
1.26 Explanation necessary for an understanding of the transactions
Item 1.24 - Directors' fees.
Non-cash financing and investing activities2.1 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 availableAdd notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).
3.1 Loan facilities
3.2 Credit standby arrangements
Ceramic Fuel Cells Limited - Quarterly Cash Flow Report for the quarter ended 31 December 2011 Page 3
Appendix 4C Quarterly report for entities
admitted on the basis of commitments
Reconciliation of cashReconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.
1. 'Cash at end of quarter' as at 30 September 2011 includes A$3,268,808 pledged as security for bank guarantees, and so is unavailable for use by the Group.
Acquisitions and disposals of business entities5.1 Name of entity
5.2 Place of incorporation or registration
5.3 Consideration for acquisition or disposal
5.4 Total net assets
5.5 Nature of business
Compliance statement1 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.
Sign here: ....................................... Date: 23 January 2012
Print name: Janine Hoey
Director
Ceramic Fuel Cells Limited - Quarterly Cash Flow Report for the quarter ended 31 December 2011 Page 4
Appendix 4C Quarterly report for entities
admitted on the basis of commitments
Notes1. 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.
Ceramic Fuel Cells Limited - Quarterly Cash Flow Report for the quarter ended 31 December 2011 Page 5
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