23 Jul 2008 07:00
23 July 2008
Ceramic Fuel Cells Limited
("CFCL" or "the Company")
Business Update and Quarterly Cash Flow Report
Ceramic Fuel Cells Limited, (AIM / ASX: CFU) a leading developer of high efficiency and low emission microgeneration products for homes, today provides a business update together with its quarterly cash flow report for the period ended 30 June 2008.
Operational Review
Product development
The Company continues to make good progress with its product development projects in its five key markets. All of the Company's European appliance partners have now received NetGenPlusTM units for integration with high efficiency boilers to create new micro combined heat and power (mCHP) units for homes.
Leading Dutch energy company Nuon has placed an order for 50,000 mCHP units, on the achievement of agreed performance targets. These targets encompass physical weight and size, power and heat output, efficiency, lifetime, CO2 savings and selling price of the mCHP unit. The Company has made strong progress toward meeting key technical targets with recently announced advances in fuel cell stack efficiency and lifetime.
Since the start of the year the Company has installed five NetGenPlusTM units with its utility and appliance partners, in Germany, France and the United Kingdom. These NetGenPlus units are being tested and operated in real world conditions, connected to existing natural gas, water and telecommunications lines and the local electricity grids.
The Company also plans to ship a NetGenPlus unit in August to its Japanese partner Paloma.
CFCL is now designing and developing fully integrated mCHP units with its appliance partners. The Company expects to complete its first fully integrated units by the end of the year, before deploying larger numbers of units during 2009.
Manufacturing
In February 2008, CFCL announced that it is investing €12.4 million in the construction of a manufacturing plant in Heinsberg, Germany for the commercial production of its fuel cell systems. The plant will have an initial capacity of 10,000 units per year.
The project is on budget and on schedule for the plant to be operational by June 2009.
During the quarter the Company received full environmental and building permit approvals for the plant from the appropriate German government bodies. The Company also signed contracts and placed orders for the three largest cost pieces of equipment, comprising furnaces, ink skids and robotic assembly units.
UK Powder Plant
The Company continues to produce zirconia powder from its ceramic powder plant in Bromborough, Merseyside, UK. During the quarter the first shipment of 3YSZ powder from the Bromborough plant was received in Noble Park, Victoria. The powder passed all the Company's QC and powder characterisation tests and has been used to make the Company's fuel cells.
CFCL has also continued to supply powder samples to several potential customers. The Company believes the plant is capable of making a range of high quality powders for several large and growing markets. The Company also believes that in the medium term the plant and the associated intellectual property can provide a range of options to maximise shareholder value.
Technical
On 1st July 2008 the Company presented its latest technical advances at the 8th annual European Solid Oxide Fuel Cell Forum, in Lucerne, Switzerland, including:
a 50% increase in cell power density, from 350 mW/cm2 in June 2007 to 500 - 650 mW/cm2 in June 2008;
an increase in fuel cell stack lifetime. Degradation has reduced by 35%, from 1.53% / 1000 hours reported in February 2008 to less than 1% / 1000 hours, when operating a 1kW stack in a test station at 750oC on natural gas.
These results have been achieved through advances made in cells, glass technology, interconnect metals, protective coatings on metals and contact technology.
The Company continues to make improvements in efficiency and durability which are the key technical targets required for commercial fuel cell products.
Industry News
During the quarter there was a significant focus from policy makers on the benefits of small scale power generation and mCHP technologies.
In late June 2008, the UK Prime Minister Gordon Brown announced a new strategy for renewable and low carbon energy, including consultation on financial incentives such as feed-in tariffs for decentralised energy and microgeneration.
In July 2008, the German Government announced a target of boosting small scale CHP to 25 per cent of Germany's power by 2020. To reach this target, from September 2008 the German Government is introducing a subsidy of up to €1,550 per kW for mCHP units. The subsidy conditions are designed to reward mCHP units that can maximise electrical efficiency and operating hours. In Germany mCHP units already qualify for a feed in tariff of about €0.05 per kWh.
Whilst CFCL believes that its technology can create significant value for customers even without subsidies, the Company welcomes Government policies which boost the deployment of mCHP units.
Financial Review
Net operating cash outflow for the fourth quarter was A$4.3 million (£2.1 million), which was A$0.6 million (£0.3 million) higher than the previous quarter, due to increased working capital requirements. Final quarter expenditure on research and product development was lower than the prior quarter.
During the fourth quarter cash outflow from investing activities was A$1.3 million (£0.6 million). This largely related to building the Company's manufacturing plant in Heinsberg, Germany. Capital expenditure for the full year was A$6.9 million (£3.3 million). The forecast cost of the plant is in line with the budgeted cost of €12.4 million (A$20 million / £9.8 million) announced in February 2008.
Net operating cash outflow for the full financial year from 1 July 2007 to 30 June 2008 was A$17.3 million (£8.4 million), compared to A$15.3 million (£7.5 million) in the prior year. Spending increased as the Company built and shipped NetGenPlus units to its product development partners, commissioned its UK powder plant and began investing in its German manufacturing plant.
During the quarter the Company raised A$14.7 million (£7.0 million) before costs via a placing of new shares to UK and European institutional investors.
Total cash and financial assets at 30 June 2008 were A$43.3 million (£21.1 million).
ENDS
Managing Director Mr Brendan Dow discusses the quarterly review in a webcast interview and video available on www.brr.com.au/cfu.
For further information please contact:
| Ceramic Fuel Cells | |
| Andrew Neilson | Tel: +61 419 950 771 |
| Email: investor@cfcl.com.au | |
| Nomura Code Securities | Tel: +44 (0) 207 776 1200 |
| Juliet Thompson / Chris Golden | |
| Hogarth Partnership (PR for CFCL) Sarah MacLeod/Sarah Richardson /Vicky Watkins | Tel: +44 (0) 20 7357 9477 |
About CFCL
Ceramic Fuel Cells Limited is a world leader in developing solid oxide fuel cell (SOFC) technology to provide reliable, highly efficient and low-emission electricity from widely available natural gas and renewable fuels. CFCL is developing SOFC products for micro combined heat and power (m-CHP) and distributed generation units that generate electricity and heat for homes.
CFCL is developing m-CHP products with leading appliance partners and utility customers in Germany (EWE and Bruns Heiztechnik), France (Gaz de France and De Dietrich Thermique), the United Kingdom (E.On UK Ltd and Gledhill Water Storage Ltd), Holland (Nuon and Remeha), and Japan (Paloma). CFCL is listed on the London Stock Exchange AIM market and the Australian Securities Exchange (code CFU). www.cfcl.com.au