Ceramic Fuel Cells Regulatory News (CFU)

22 Jan 2010 07:00

22 January 2010 

Ceramic Fuel Cells Limited

Quarterly Cashflow Report and Trading Update

Ceramic Fuel Cells Limited (AIM / ASX: CFU) a leading developer of high efficiency and low emission power products for homes, today released its quarterly cashflow report for the period ended 31 December 2009.

Operational Review

Integrated mCHP

During the December quarter the Company achieved its target of installing complete integrated power and heating (mCHP) units. The first integrated units were installed with appliance partners in Germany, the United Kingdom and France before Christmas.  This follows the successful completion of field trials of semi-integrated units in 2008-09.

In these partnerships Ceramic Fuel Cells supplies its Gennex fuel cell modules to appliance partners, which integrate them with high efficiency boilers into single units which convert natural gas into power, hot water and space heating for homes. These units are highly efficient and have low emissions.

The functionality and performance of the integrated units will be tested to the requirements of a commercial product. The Company plans to build and deploy an increasing number of units with its partners during 2010-11.

BlueGen

In parallel with the integrated mCHP product, the Company has developed a modular product called BlueGen. BlueGen uses the same Gennex fuel cell module to generate power and heat for hot water. It is ideal for customers and markets that do not need space heating, or already have an adequate space heating solution. One BlueGen unit can provide about double the power the average home needs - excess power can be exported to the grid - plus hot water for an average family's needs.

During the quarter the Company received its first orders for BlueGen units.

VicUrban, the Victorian Government's sustainable urban development agency, will install three BlueGen units in high profile housing development sites in Melbourne. The first unit was installed before Christmas at VicUrban's 'Aurora' development in Melbourne's north. The Company is currently finalising safety approvals and arrangements to connect the unit to the power grid and begin generating and exporting power from the unit. Origin Energy, one of the largest energy retailers in Australia, has also joined in the demonstration project as VicUrban's selected energy retailer. Origin Energy will buy back excess electricity generated by the VicUrban BlueGen units. 

Another leading energy retailer, Energy Australia, has also ordered a BlueGen unit for a showcase sustainability house in the Sydney suburb of Newington. The Company expects to deliver the BlueGen unit to Energy Australia by the end of March.  

In November the Company appointed Neco, one of Australia's leading green retailers, to distribute BlueGen units in Australia. The non-exclusive agreement gives Neco the right to market, sell, install and service BlueGen units throughout Australia. Neco is currently preparing its BlueGen product offering and a range of purchase options. The Company is also working with Neco to establish the BlueGen product service and support infrastructure.

In November the Company also received an order for a BlueGen unit from Paloma in Japan. Paloma is a leading global home heating manufacturer and owner of the Rheem, Solahart and Raypak brands. The BlueGen unit will be installed in Paloma's warehouse and sales office in Sapporo, Japan, by the end of March.

The Company expects to receive European 'CE' product certification for BlueGen by the end of March. Local approvals in Australia and other markets will follow the 'CE' approval.

The Company has received very strong interest from prospective BlueGen customers and sales partners in many markets around the world. The Company's current focus is to sell BlueGen products in markets where it already operates or has experience - mainly Europe, Australia, and Japan. As the BlueGen product matures, the Company will expand into other large global markets..

German manufacturing plant

In early October the Company officially opened its high volume manufacturing plant, one of the first in the world for the volume production of solid oxide fuel cell stacks. The manufacturing plant is located in an existing 4,200m2 building in the Industriepark Oberbruch, 40 minutes' drive from Dusseldorf in the North Rhine-Westphalia region of Germany.

The plant was officially opened by Dr Jens Baganz, State Secretary for the Ministry of Economic Affairs and Energy of the State of North Rhine-Westphalia, before more than 100 guests, including Government representatives and key customers, suppliers, investors and media.

At the opening of the plant the equipment, including state-of-the-art robotic assembly machines, was commissioned and operational. During the quarter the Company continued a detailed 'technology transfer' process, to ensure the German manufacturing equipment and processes match the specific fuel cell stack design requirements of the Melbourne development team. The German plant is producing early fuel cell stacks to validate this technology transfer process, before ramping up production to meet expected orders in the next few months.

Financial Review

Underlying net operating cash outflow for the December quarter was A$3.7m (£2m) which is in line with last quarter. In December the Company received a regional development grant of A$2.2m (£1.2m) from the Government of North Rhine Westphalia in Germany, bringing the final net operating cash outflow for the quarter down to A$1.5m (£0.84m).

Receipts from customers were up by A$0.6m (£0.3) reflecting the progress being made on the projects with European utilities and appliance partners to develop integrated m-CHP products. This increase in cash was offset by payments relating to inventory build up in preparation for the manufacture and sale of BlueGen units in 2010.

During the quarter cash outflow from investing activities was A$2.0m (£1.1m) for payments relating to the Company's manufacturing plant in Germany.

Cash inflows from financing activities during the quarter totalled A$2.4m (£1.3m). In December the Company concluded a sale-and-leaseback transaction on certain equipment at the Heinsberg plant with the Commerzbank Group.  This resulted in a net cash inflow of A$2.5m (£1.4m).

Cash at the end of the quarter was A$24.1m (£13.5m).

The quarterly cashflow report is available on the Company's website at www.cfcl.com.au. 

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About Ceramic Fuel Cells Limited:

Ceramic Fuel Cells Limited is a world leader in developing solid oxide fuel cell technology to provide highly efficient and low-emission electricity from widely available natural gas. The company is developing micro combined heat and power and distributed generation units that generate electricity and heat for homes and other buildings. Ceramic Fuel Cells is developing products with leading appliance partners and utility customers in Germany, France, the United Kingdom and Japan. In 2009 the company launched its BlueGen gas-to-electricity product. Ceramic Fuel Cells is headquartered in Melbourne, and has operations in the UK and Germany. The company is listed on the London Stock Exchange AIM market and the Australian Securities Exchange (code CFU).

www.cfcl.com.au