Ceramic Fuel Cells Regulatory News (CFU)

30 April 2014

Cashflow Report for the March Quarter

Ceramic Fuel Cells Limited (AIM/ASX: CFU), today released its quarterly cashflow report for the nine month period ended 31 March 2014.

The Cashflow Report is available at www.cfcl.com.au

Summary of the Quarter

· Sales volume - 15 units sold this quarter, 139 units sold in the nine months ended 31 March 2014 (Full FY2013 - 147 units).

· Announcement of Fundraising - Equity placement of £3.36M (A$6.11M) and entered into a subscription agreement for a minimum US$3.00M (A$3.26M or £1.79M) and up to US$8.50M (A$9.24M to £5.08M) over the coming twelve months. Fundraising approved by shareholders at EGM held on 28 April 2014.

· Cash position at 31 March 2014 - A$2.29M (£1.26M).

· Announcement of an order for 100 BlueGEN units, for delivery within the next twelve months, from the German company, Avilos GmbH.

Operational Review

Introduction

CFU makes small scale generators that use proprietary fuel cell technology to convert natural gas into electricity and heat for homes and small commercial buildings. CFU has commercialised its technology into products, and in addition to selling these products to commercial customers in Europe, is focussing on developing a product that can undertake thermal cycling.

Market Developments and Sales

During the March quarter, 15 BlueGEN units were sold which was a disappointing result following the increase in sales momentum over the previous half-year. This led to the Company reviewing its sales and marketing strategy in March 2014, which resulted in it reducing its direct sales force in order to concentrate on larger, project based sales in both the UK and Europe. Development of these large scale projects is progressing and the Board is confident that a number of these targeted projects will be converted into orders in the near future.

Following a low sales period in the March quarters of FY2013 (9 units sold) and FY2014 (15 units sold), the Company has received feedback that indicates that the northern hemisphere mid-winter period is a poor time for sales of its product due to potential purchasers not wanting to disturb their heating or electrical systems during the coldest time of the year. The Company has experienced an increase in sales activity during April. The Company is also pleased to advise that it has received a signed Works Order for the delivery of the remaining 40 units to the Dutch island of Ameland, with half of these to be supplied in late May and the remainder in late June. In addition, on 3 March 2014, the Company announced it had received an order from Avilos for 100 units. Whilst delivery dates are still to be confirmed, the Company is confident the first of these will be delivered by the end of the financial year.

The Company remains in dialogue with Synergy International OÜ (SI), of Estonia, however until the situation is resolved no sales to SI have been taken into account when estimating future sales, production volumes and cash flow needs.

A summary of the Company's sales performance by quarter since FY11 is as follows:

Please click link to see graph

http://www.rns-pdf.londonstockexchange.com/rns/8511F_-2014-4-30.pdf 

Monthly sales for the 9 months to 31 March 2014 were as follows:

Please click link to see graph

http://www.rns-pdf.londonstockexchange.com/rns/8511F_-2014-4-30.pdf 

Sales by geographical region for the 9 months to 31 March 2014 were as follows:

Please click link to see graph

http://www.rns-pdf.londonstockexchange.com/rns/8511F_-2014-4-30.pdf 

During the March quarter the only customers who purchased more than one unit were: Jurgen Hohnen (4 units) and World Heat Limited (2 units).

Financial Review

March Quarter Cash Flows

Net operating cash outflow for the March quarter was A$8.06M (£4.43M). This compares to the December quarter's net operating cash outflow of A$1.22M (£0.67M) and the September 2013 quarter's outflow of A$6.00M (£3.30M). The December quarter's net operating cash flow was impacted by the receipt of a tax refund of A$4.02M (£2.21M) for research and development expenditure for FY2013, hence the operating cash outflow before the tax receipt was A$5.24M (£2.88M). It is anticipated that a research and development tax refund will be received for FY2014 in November 2014.

During March 2014 the Company undertook a review of its operations which led to a restructure in all countries in which it operates. This has led to a reduction in its work force and a lowering of its operational and production costs. The benefits of this restructure will be realised over the coming months. The Board continues its strategic review of the Company's financial and operational needs along with its pursuit of joint venture possibilities with partners who are willing to pay for the Company's technology or can add significant synergies to the Company's operations.

Net investing cash flow for the quarter was an outflow of A$0.03M (£0.02M). The outflow was for the acquisition of plant and equipment.

Net financing cash flow for the quarter was an inflow of A$1.50M (£0.83M). Of the amount, A$1.60M (£0.88M) was received in January from the Share Purchase Plan and Overseas Offer which closed on 20 December. During March the Company raised A$0.23M (£0.13M) from the issue of shares and A$0.27M (£0.15M) from the issue of convertible notes under the Investor Agreement announced on 24 March 2014. These amounts raised are before expenses. The capital raise expenses disclosed in the Appendix 4C cover the December Share Purchase Plan and Overseas Offer as well as most of the March Placement and Investor Agreement expenses.

Cash on hand at 31 December 2013 was A$9.03M (£4.97M).

Cash on hand at 31 March 2014 was A$2.29M (£1.26M).

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 now focusing on markets in Germany, the United Kingdom and Benelux.

The company is listed on the London Stock Exchange AIM market and the Australian Securities Exchange (code CFU).

www.cfcl.com.au

www.bluegen.info