Ceres Power slices losses as Korean boiler partnership begins

1st Oct 2013 13:40

A year of restructuring at fuel cell maker Ceres Power has almost halved costs and trimmed losses.The AIM company, which appointed new Chief Executive Officer Phil Caldwell in September, has adopted a new business model and strategy to work with global original equipment manufacturers (OEMs) to develop end-user products based on the Ceres core technology. During the year to end-June the company lost £12.7m before tax, down from £17.9m the year before, on revenues more than doubled to £0.5m. Caldwell, who oversaw strong revenue growth in his previous role at fuel cell business Intelligent Energy, reported that the company's technology has improved in efficiency to greater than 50% Gross Electrical Efficiency LHV.He also updated on the commercial and technical partnership agreement Ceres signed with KD Navien, Korea's largest boiler manufacturer, post the period end.KD Navien have agreed to fund a partnership where the two companies will develop and commercialise a low-cost, natural-gas, fuel-cell micro-combined heat and power (micro CHP) boiler for the residential and commercial mass market in South Korea, as well as other strategic markets. Caldwell revealed that the next 12 months will see KDN evaluate Ceres' technology and the pair will begin the design phase for a new 1kW micro-CHP product.House broker N+1 Singer said it expected Ceres to secure similar tie-ups with other partners in different geographies over the next 12 months, helping de-risk the strategy, in particular in Japan where early-stage technology evaluations are taking place with potential partners.Chairman Alan Aubrey said: "The last year has seen the group make substantial progress against its new strategy in both commercial and technical respects following its successful restructuring and refinancing at the end of 2012. "Driven by our technical successes and cost leadership position Ceres is now gaining significant commercial traction and I believe it has truly global potential." N+1 Singer said it considered the new management team's implementation of the new OEM strategy had been a success so far. "The new strategy has also made Ceres into a leaner business; operating costs have reduced by 44% to £10.2m in full year 2013, without compromising the development of the core technology. "At the period end Ceres had £15.4m in cash, which is in line with our expectations, and gives it a healthy run way of 12-18 months under the current burn rate - and zero revenue assumptions over the period."Ceres shares, which have topped 200p in the last five years, were unmoved at 9.50p on Tuesday.OH