Ceres Power Holdings Plc (LON:CWR) industry leading solid state fuel cell is now nearing the point of commercialisation, with four major industrial OEMs signed up to work in partnership to develop the technology. Ceres should increasingly be viewed and judged on progress made in monetising its technology with the business benchmarked against financial, commercial and operational milestones as much as technological ones. The efficacy of Ceres’ SteelCellTM has been proven and, whilst still early days in respect of commercial sales, progress is tangible each time Ceres reports. This is evidenced by today’s FY17 results which are materially ahead yoy, and marginally against estimates, and with material commercial progress in the form of two Joint Development Agreements. Revenue of £4.1m was 140% ahead of the £1.7m reported in FY16 and marginally of estimates. Loss at the EBITDA level improved £1.3m to £10.3m and net cash was £17.2m at the end of the year.
Highlight of FY17 results is the commercial progress made as the business nears to achieving its stated short-term milestones: Today’s results report that Ceres has again moved forward commercially with two Joint Development Agreements in the year. One with Cummins Inc, a major US provider of supplier of back-up and temporary power to the data centre market. The other was a Joint Development License Agreement with an unnamed OEM to produce a multi kW combined heat and power product to target the Commercial market. This latter deal was important, being the first go-to-market partnership announced by Ceres. The business is nearing the commercial milestones it set itself in December 2015. Four major JDAs have been signed with a fifth expected before the calendar year end of 2017 and a further launch programme announced prior to the end of calendar 2018 would mean the management had delivered on its stated goals. We caveat that revenue estimates do not include anything from the full commercialisation of programmes as they will take time to come through.
Financial performance improving: The £4.1m of reported revenue shows a 140% increase yoy and was ahead of our £4.0m estimate. This resulted in a better than expected performance in the EBITDA loss of £10.3m, a £1.2m improvement on FY16. With revenue expected to increase c.50% in FY18 to £6.0m we expect the financial performance to continue to improve. Net cash stood at £17.2m at the period end.
Successful share placing underpins the balance sheet and further investment into the business: Ceres raised c. £20.0m from new and existing shareholders in October of last year. This will underpin continued investment in the business as it moves into the next phase of its development.
