CWR.L 27 September 2024 Ceres Power Holdings plc
Interim results for the six months ended 30 June 2024 Strong growth in revenue and order intake, significant reduction in cash outflows
Ceres Power Holdings plc ("Ceres", the "Company") (CWR.L), a leading developer of clean energy technology, announces its results for the six month period ended 30 June 2024.
Financial highlights · Revenue increased 144% to £28.5 million (H1 2023: £11.7 million1) · Record order intake from signing new contracts of £46.9 million in H1, growing to £103.3 million since the start of the year to 31 August 2024 · Gross profit increased 217% to £22.9 million (H1 2023: £7.2 million1), and a gross margin of 80% (H1 2023: 62%1) reflecting impact of technology transfer to Delta · Adjusted EBITDA loss significantly reduced to £9.0 million (H1 2023: £23.5 million1), demonstrating the operational leverage of the business · Significantly reduced cash outflow of £13.9 million (H1 2023: £21.1 million) driving robust cash and short-term investments of £126.1 million (H1 2023: £161.2 million)
Commercial acceleration · Delta becomes new major licensing partner: a global long-term manufacturing collaboration with Delta Electronics in Taiwan for both solid oxide electrolysis cell ("SOEC") and solid oxide fuel cell ("SOFC") stack production was signed in January to drive revenues in 2024 and beyond. Initial production is expected by the end of 2026, with royalties expected to follow · Denso manufacturing licence continues strong business momentum: Since the end of the first half period, Ceres announced its second major manufacturing licence agreement of the year with Denso Corporation in Japan, incorporating licence fees, engineering services and hardware revenues over multiple years · Thermax deal signals market entry into attractive new region: A new systems licence partnership with Thermax takes Ceres into the dynamic and high-growth Indian market. It positions Ceres closer to end customers in India's hard-to-abate industrial markets such as green hydrogen, steel and ammonia production · Current SOFC manufacturing scale-ups progressing: Both Bosch and Doosan continue to implement their initial volume manufacturing capabilities, Doosan confirms mass manufacturing to start in 2025 · Electrolysis demonstrator programme progressing well: Megawatt scale electrolyser now being commissioned in India by Shell, which has signed a follow-on contract to design a 10MW pressurised SOEC module to produce green hydrogen · Accelerating customers to market: Ceres continues to work closely with AtkinsRéalis to develop optimal system architecture for 100MW+ electrolyser systems suitable for gigawatt-scale hydrogen plants, helping to accelerate customer time to market and drive future Ceres revenues
Outlook · Cost base optimisation: Following successful milestone achievements in our product development roadmap, and certain non-recurring investment programmes coming to an end, there is a natural reduction in investment requirements from historical peak levels. Consequently - in tandem with the implementation of a new organisational structure in September 2024 to ensure the business is optimised to accelerate its growth strategy - management is implementing a rationalisation of the cost base. This will reduce the overall expenditure by approximately 15% to sustain Ceres' competitive advantage and meet the needs of our partners, whilst also maintaining a strong financial footing · Upgraded revenue guidance for the year re-confirmed: In its July trading update the Company increased its revenue guidance for the year ending 31 December 2024 to the range of £50-60 million, based on the contracts secured to date
Phil Caldwell, Chief Executive Officer of Ceres, said: "We are delivering a record year at Ceres with two major manufacturing licence deals announced so far this year. This is testament to the hard work of our teams in developing our electrolysis technology, which is now gaining commercial traction as major global partners embrace our technology to accelerate their own ambitions to decarbonise the hard-to-abate industrial processes. We continue to broaden our SOEC capabilities, establishing an ecosystem of engineering services partners and system licensees to further support the demand for our electrolyser technology to end markets. "In parallel our engineering teams continue to work closely with our SOFC partners as they progress towards initial mass production volumes. The growing number of high-quality manufacturing partners implementing our technology at scale and pace demonstrates the effectiveness of our licensing business model in action. "Simply put, partners come to us because we offer the best overall technology solution for their needs."
Ends
|
|
CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME For the six month period ended 30 June 2024 |
| | 30 June 2024 (unaudited) | 30 June 2023 Restated1 (unaudited) | 31 December 2023 (audited) |
| Note | £'000 | £'000 | £'000 |
| |
|
|
|
Revenue1 | 2 | 28,500 | 11,660 | 22,324 |
Cost of sales | | (5,613) | (4,443) | (8,770) |
Gross profit |
| 22,887 | 7,217 | 13,554 |
Other operating income2 | | 1,262 | 1,584 | 3,665 |
Operating costs1 | 3 | (37,906) | (37,067) | (76,620) |
Operating loss |
| (13,757) | (28,266) | (59,401) |
Finance income | 4 | 3,193 | 2,834 | 7,079 |
Finance expense | 4 | (248) | (723) | (1,287) |
Loss before taxation | | (10,812) | (26,155) | (53,609) |
Taxation (charge)/credit | 5 | (1,800) | (68) | (399) |
Loss for the financial period and total comprehensive loss | | (12,612) | (26,223) | (54,008) |
| |
|
|
|
Loss per £0.10 ordinary share expressed in pence per share: | |
| | |
Basic and diluted loss per share | 6 | (6.53)p | (13.63)p | (28.03)p |
| |
|
|
|
The accompanying notes are an integral part of these consolidated financial statements. 1 The restatement to 30 June 2023 is described in Note 1. 2 Other operating income relates to grant income and the Group's RDEC tax credit. |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2024 |
|
| 30 June 2024 (unaudited) | 30 June 2023 Restated1 (unaudited) | 31 December 2023 (audited) |
| Note | £'000 | £'000 | £'000 |
Assets | | | | |
Non-current assets | | | | |
Property, plant and equipment1 | 7 | 24,819 | 25,888 | 25,882 |
Right-of-use assets | 8 | 2,139 | 2,411 | 2,141 |
Intangible assets | 9 | 19,892 | 16,218 | 19,054 |
Investment in associate | | 2,236 | 2,398 | 2,350 |
Other receivables | 11 | 741 | 741 | 741 |
Total non-current assets | | 49,827 | 47,656 | 50,168 |
| |
|
|
|
Current assets | |
| | |
Inventories | 10 | 5,583 | 3,719 | 2,825 |
Contract assets1 | 2 | 2,861 | 573 | 1,575 |
Other current assets | 12 | 1,331 | 1,180 | 1,193 |
Derivative financial instruments | 16 | 60 | 508 | 8 |
Current tax receivable | | 770 | 7,553 | 771 |
Trade and other receivables | 11 | 11,128 | 13,022 | 9,876 |
Short-term investments1 | 13 | 62,649 | 109,153 | 90,249 |
Cash and cash equivalents1 | 13 | 63,443 | 52,077 | 49,707 |
Total current assets | | 147,825 | 187,785 | 156,204 |
| |
|
|
|
Liabilities | |
| | |
Current liabilities | |
| | |
Trade and other payables | 14 | (7,518) | (4,718) | (4,983) |
Contract liabilities1 | 2 | (7,017) | (7,835) | (7,469) |
Other current liabilities1 | 15 | (6,774) | (7,262) | (6,301) |
Derivative financial instruments | 16 | ꟷ | ꟷ | (99) |
Lease liabilities | 17 | (756) | (664) | (694) |
Provisions1 | 18 | (749) | (449) | (647) |
Total current liabilities | | (22,814) | (20,928) | (20,193) |
Net current assets | | 125,011 | 166,857 | 136,011 |
| |
|
|
|
Non-current liabilities | |
| | |
Lease liabilities | 17 | (1,851) | (2,243) | (1,902) |
Other non-current liabilities1 | 15 | (1,221) | (1,217) | (1,360) |
Provisions1 | 18 | (2,467) | (2,098) | (2,282) |
Total non-current liabilities | | (5,539) | (5,558) | (5,544) |
Net assets | | 169,299 | 208,955 | 180,635 |
| |
|
|
|
Equity attributable to the owners of the parent | |
| | |
Share capital | 19 | 19,343 | 19,272 | 19,297 |
Share premium | | 406,514 | 406,076 | 406,184 |
Capital redemption reserve | | 3,449 | 3,449 | 3,449 |
Merger reserve | | 7,463 | 7,463 | 7,463 |
Accumulated losses1 | | (267,470) | (227,305) | (255,758) |
Total equity | | 169,299 | 208,955 | 180,635 |
| |
|
|
|
The accompanying notes are an integral part of these consolidated financial statements. 1 The restatements to 30 June 2023 are described in Note 1. |
CONSOLIDATED CASH FLOW STATEMENT For the six month period ended 30 June 2024 |
| Note | 30 June 2024 (unaudited) | 30 June 2023 Restated1 (unaudited) | 31 December 2023 (audited) |
|
| £'000 | £'000 | £'000 |
Cash flows from operating activities |
|
|
|
|
Loss before taxation1 |
| (10,812) | (26,155) | (53,609) |
|
|
| | |
Adjustments for: |
|
| | |
Finance income | 4 | (3,193) | (2,834) | (7,079) |
Finance expense | 4 | 248 | 723 | 1,287 |
Depreciation of property, plant and equipment1 | 7 | 3,784 | 3,396 | 7,461 |
Depreciation of right-of-use assets | 8 | 358 | 303 | 641 |
Amortisation of intangible assets | 9 | 470 | 475 | 1,024 |
Net foreign exchange loss/(gains)1 | | 223 | 282 | (232) |
Net change in fair value of financial instruments | | (151) | (454) | 143 |
Profit on disposal of property, plant and equipment | | ꟷ | (21) | ꟷ |
Share-based payments charge | | 900 | 735 | 67 |
Operating cash flows before movements in working capital |
| (8,173) | (23,550) | (50,297) |
(Increase)/decrease in trade and other receivables1 | | (1,275) | 3,814 | 6,356 |
(Increase)/decrease in inventories | | (2,758) | 1,995 | 2,889 |
Increase in trade and other payables | | 2,276 | 2,407 | 1,847 |
Increase in contract assets1 | | (1,286) | (173) | (1,175) |
(Decrease)/increase in contract liabilities1 | | (452) | 472 | 106 |
Increase/(decrease) in provisions1 | | 248 | (526) | (536) |
Net cash used in operations |
| (11,420) | (15,561) | (40,810) |
Taxation (paid)/received | | (1,800) | (68) | 6,911 |
Net cash used in operating activities |
| (13,220) | (15,629) | (33,899) |
| |
|
|
|
Investing activities | |
| | |
Proceeds received on disposal of property, plant and equipment | | ꟷ | 137 | 225 |
Purchase of property, plant and equipment1 | | (2,383) | (4,725) | (7,922) |
Capitalised development expenditure | | (1,308) | (3,415) | (6,800) |
Decrease/(increase) in short-term investments1 | | 25,220 | 1,990 | 21,168 |
Finance income received | | 5,573 | 2,227 | 5,616 |
Net cash generated/(used) in investing activities |
| 27,102 | (3,786) | 12,287 |
| |
|
|
|
Financing activities | |
| | |
Proceeds from issuance of ordinary shares | | 376 | 676 | 809 |
Repayment of lease liabilities | | (346) | (284) | (658) |
Interest paid | | (129) | (512) | (393) |
Net cash used by financing activities |
| (99) | (120) | (242) |
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
| 13,783 | (19,535) | (21,854) |
Exchange losses on cash and cash equivalents | | (47) | (172) | (223) |
Cash and cash equivalents at beginning of period | | 49,707 | 71,784 | 71,784 |
Cash and cash equivalents at end of period1 | 13 | 63,443 | 52,077 | 49,707 |
| |
| | |
The accompanying notes are an integral part of these consolidated financial statements. 1 The restatement to 30 June 2023 is described in Note 1. |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six month period ended 30 June 2024 |
| | Share capital | Share premium | Capital redemption reserve | Merger reserve | Accumulated losses | Total |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
At 1 January 2023 | | 19,209 | 405,463 | 3,449 | 7,463 | (201,817) | 233,767 |
| |
|
|
|
|
|
|
Comprehensive income | | | | | | | |
Loss for the financial period | | ꟷ | ꟷ | ꟷ | ꟷ | (26,223) | (26,223) |
Total comprehensive loss | | ꟷ | ꟷ | ꟷ | ꟷ | (26,223) | (26,223) |
| | | | | | | |
Transactions with owners | | | | | | | |
Issue of shares, net of costs | | 63 | 613 | ꟷ | ꟷ | ꟷ | 676 |
Share-based payments charge | | ꟷ | ꟷ | ꟷ | ꟷ | 735 | 735 |
Total transactions with owners | | 63 | 613 |
|
| 735 | 1,411 |
At 30 June 2023 (unaudited) | | 19,272 | 406,076 | 3,449 | 7,463 | (227,305) | 208,955 |
| | | | | | | |
Comprehensive income | | | | | | | |
Loss for the financial period | | ꟷ | ꟷ | ꟷ | ꟷ | (27,785) | (27,785) |
Total comprehensive loss | | ꟷ | ꟷ | ꟷ | ꟷ | (27,785) | (27,785) |
| |
|
|
|
|
|
|
Transactions with owners | | | | | | | |
Issue of shares, net of costs | | 25 | 108 | ꟷ | ꟷ | ꟷ | 133 |
Share-based payments charge | | ꟷ | ꟷ | ꟷ | ꟷ | (668) | (668) |
Total transactions with owners | | 25 | 108 | ꟷ | ꟷ | (668) | (535) |
At 31 December 2023 (audited) |
| 19,297 | 406,184 | 3,449 | 7,463 | (255,758) | 180,635 |
| |
|
|
|
|
|
|
Comprehensive income | | | | | | |
|
Loss for the financial period | | ꟷ | ꟷ | ꟷ | ꟷ | (12,612) | (12,612) |
Total comprehensive loss | | ꟷ | ꟷ | ꟷ | ꟷ | (12,612) | (12,612) |
| |
|
|
|
|
|
|
Transactions with owners | |
|
|
|
|
|
|
Issue of shares | | 46 | 330 | ꟷ | ꟷ | ꟷ | 376 |
Share-based payments charge | | ꟷ | ꟷ | ꟷ | ꟷ | 900 | 900 |
Total transactions with owners |
| 46 | 330 | ꟷ | ꟷ | 900 | 1,276 |
At 30 June 2024 (unaudited) | | 19,343 | 406,514 | 3,449 | 7,463 | (267,470) | 169,299 |
| |
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated financial statements. |
1. Basis of preparation The unaudited condensed consolidated financial statements have been prepared in accordance with UK-adopted International Accounting Standard 34 'Interim financial reporting' (IAS 34). They do not include all of the information required for full annual financial statements and should be read in conjunction with the annual financial statements for the year ended 31 December 2023 which were prepared in accordance with UK adopted international accounting standards. The condensed consolidated financial statements have been prepared on a historical cost basis except derivative financial instruments, which are stated at their fair value. The condensed consolidated financial information has been prepared in accordance with the recognition and measurement requirements of UK adopted international accounting standards and applicable law and regulations. The condensed consolidated financial statements are presented on a condensed basis as permitted by IAS 34 and therefore do not include all disclosures that would otherwise be required in a full set of financial statements. For legacy licence agreements there has been no changes to the Groups revenue accounting policy. To reflect the conditions present in its new licence agreement the Group has extended its revenue accounting policy, a summary of which includes: Revenue recognised at a point in time: Revenue recognised on right to use licences relating to the transfer of technology are measured on an observable stand-alone basis. Revenue recognised for the sale of technology hardware is recognised on a cost-plus basis. Revenue recognised over time: Engineering services and right to access licences are residually allocated and recognised using an input method. There have been no other changes to the Group's accounting policies, presentation and methods of computation for the unaudited condensed consolidated financial statements and are disclosed in the Group's last audited annual financial statements The financial information contained in the condensed consolidated financial statements is unaudited and does not constitute statutory financial statements as defined by in Section 434 of the Companies Act 2006. The financial statements for the year ended 31 December 2023, on which the auditors gave an unqualified audit opinion, and did not draw attention to any matters by way of emphasis and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006, have been filed with the Registrar of Companies. The condensed consolidated financial information for the six months ended 30 June 2024 has been reviewed by the Company's Auditor, BDO LLP in accordance with International Standard of Review Engagements (UK) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. Going Concern The Group has reported a loss after tax for the six month period ended 30 June 2024 of £12.6 million (six months ended 30 June 2023: £26.2 million1) and net cash used in operating activities of £13.2 million (six months ended 30 June 2023: £15.6 million1). At 30 June 2024, the Group held cash and cash equivalents and investments of £126.1 million (31 December 2023: £140.0 million). The directors have prepared annual budgets and cash flow projections that extend to 31 December 2025, 15 months from the date of approval of this report. The decreased operating cash used in the year is a result of favourable movements in working capital and significant receipts from the new agreement signed with Delta in January 2024. Future projections include management's expectations of the disciplined investment in key R&D projects, new product development and capital investment. Projections also take into account the implementation of the new organisational structure and reduction in the overall cost basis of approximately 15%. Future cash inflows reflect management's expectations of revenue from existing and new licensee partners in both the power and green hydrogen markets. The projections were stress tested by applying different scenarios including removing expected cash inflows relating to agreements not yet signed leading to a loss of significant future revenue and potential further cost mitigations. In each case the projections demonstrated that the Group is expected to have sufficient cash reserves to meet its liabilities as they fall due and to continue as a going concern. For the above reasons, the Directors continue to adopt the going concern basis in preparing the condensed consolidated financial statements. Critical accounting judgements and key sources of estimation uncertainty In the application of the Group's accounting policies, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. In preparing the interim condensed consolidated financial statements, the areas where judgement has been exercised and the key estimation uncertainties were the same as those applied to the consolidated financial statements for the year ended 31 December 2023.
Prior period adjustments As a result of prior period adjustments made during the audit of the annual report for the year ended 31 December 2023, the opening 2023 financial position was impacted. Adjustments are noted below which have impacted the opening financial position and therefore impacted the unaudited six months period ended 30 June 2023. No new prior period adjustments outside the already identified adjustments during the 2023 audit have been made. Documented below are the implications of these adjustments on the comparative results, further information on prior period adjustments has been presented in the annual report for the year ended 31 December 2023. Revenue In respect of the consolidated statement of profit and loss for the period ended 30 June 2023, revenue has been increased by £0.4 million with a corresponding reduction to contract assets of £0.6 million and decrease to contract liabilities of £1.0 million.
Property, plant and equipment and non-current provisions The profit and loss for the six months ended 30 June 2023 was impacted by an increase in operating costs for depreciation by £0.1 million and there was a corresponding decrease to net assets as a result of the recognition of depreciation for the assets under construction recognised as fixed assets. There was no overall impact on the net cash used in operating activities or other cash flows, or recognised tax as a result of these adjustments.
Other current and non-current liabilities Other current liabilities as at 30 June 2023 have been restated to reflect the non-current nature of deferred RDEC income to be realised in more than one year, £1.2 million has been recognised as non-current liabilities. There was no impact on net assets, recognised tax or the consolidated statement of cash flows as a result of these adjustments.
Cash, cash equivalents and short-term investments Cash and cash equivalents and short-term investments were restated as a result of short-term investments incorrectly including cash balances at 30 June 2023 with a value of £7.9 million.
New standards and amendments applicable for the reporting period None of the standards and interpretations which apply for the first time to financial reporting periods commencing on or after 1 January 2024 materially impact the Group. The Group no longer presents segmental reporting information which is now consistent with the information the chief operating decision maker receives. This has changed since the 2023 annual report as a result of the combined SOFC and SOEC agreement signed by Delta. |
2. Revenue The Group's revenue is disaggregated by geographical market, major product/service lines, and timing of revenue recognition: Geographical market |
| 30 June 2024 (unaudited) | 30 June 2023 Restated1 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Europe2 | 5,423 | 6,800 | 12,394 |
Asia2 | 22,979 | 4,669 | 9,589 |
North America | 98 | 191 | 341 |
| 28,500 | 11,660 | 22,324 |
For the six month period ended 30 June 2024, the Group has identified three major customers (defined as customers that individually contributed more than 10% of the Group's total revenue) that accounted for approximately 67%, 15% and 11% of the Group's total revenue recognised in the period (30 June 2023: two customer at 54% and 40% and 31 December 2023: two major customers that accounted for approximately 51% and 39% of the Group's total revenue recognised for that year). Major product/service lines |
| 30 June 2024 (unaudited) | 30 June 2023 Restated1 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Engineering services | 5,065 | 5,679 | 10,220 |
Provision of technology hardware | 3,209 | 3,165 | 5,726 |
Licence fees2 | 20,226 | 2,816 | 6,378 |
| 28,500 | 11,660 | 22,324 |
Timing of transfer of goods and services |
| 30 June 2024 (unaudited) | 30 June 2023 Restated1 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Products and services transferred at a point in time | 19,756 | 3,973 | 6,544 |
Products and services transferred over time | 8,744 | 7,687 | 15,780 |
| 28,500 | 11,660 | 22,324 |
The contract-related assets and liabilities are as follows: |
|
| 30 June 2024 (unaudited) | 30 June 2023 Restated1 (unaudited) | 31 December 2023 (audited) |
|
| £'000 | £'000 | £'000 |
Trade receivables | 11 | 4,424 | 7,309 | 3,422 |
Contract assets - accrued income | | 2,861 | 573 | 1,575 |
Total contract related assets |
| 7,285 | 7,882 | 4,997 |
|
|
| | |
Contract liabilities - deferred income |
| (7,017) | (7,835) | (7,469) |
1 The restatement to 30 June 2023 is described in Note 1. 2 The adjustments as described in Note 1 have impacted 2023 licences revenue in both Europe and Asia. |
3. Operating costs |
Operating costs can be analysed as follows: | 30 June 2024 (unaudited) | 30 June 2023 Restated1 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Research and development costs | 23,255 | 26,790 | 54,034 |
Administrative expenses | 9,138 | 8,821 | 17,681 |
Commercial (sales and marketing) | 5,513 | 1,456 | 4,905 |
| 37,906 | 37,067 | 76,620 |
1 The restatement to 30 June 2023 is described in Note 1. |
4. Finance income and expenses |
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Interest income on cash, cash equivalents and investments | 3,193 | 2,834 | 7,079 |
|
| | |
Interest paid | ꟷ | ꟷ | (99) |
Interest on lease liability | (127) | (128) | (248) |
Unwinding of discount on provisions | (40) | (39) | (89) |
Other finance costs | ꟷ | ꟷ | (46) |
Foreign exchange loss on cash, cash equivalents and short-term deposits | (81) | (556) | (805) |
Interest expense | (248) | (723) | (1,287) |
5. Taxation No corporation tax liability has arisen during the period (30 June 2023 and 31 December 2023: £nil) due to the losses incurred. A tax charge has arisen as a result of foreign withholding taxes suffered. The RDEC regime continues to be accessible and has been recognised within other operating income. |
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Foreign tax suffered | 1,800 | 2 | 334 |
Adjustment in respect of prior periods | ꟷ | 66 | 65 |
| 1,800 | 68 | 399 |
6. Loss per share |
| 30 June 2024 (unaudited) | 30 June 2023 Restated1 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Loss for the financial period attributable to shareholders1 | (12,612) | (26,223) | (54,008) |
Weighted average number of shares in issue | 193,052,759 | 192,442,672 | 192,651,782 |
Loss per £0.10 ordinary share (basic and diluted) | (6.53)p | (13.63)p | (28.03)p |
1 The restatement to 30 June 2023 is described in Note 1. |
7. Property, plant and equipment |
| Leasehold improvements £'000 | Plant and machinery |
Computer equipment |
Fixtures and fittings £'000 | Assets under construction £'000 |
Total £'000 |
Cost |
|
|
|
|
|
|
At 1 January 20231 | 7,134 | 26,229 | 1,935 | 276 | 7,080 | 42,654 |
Additions | 1,318 | 3,647 | 164 | 115 | 1,937 | 7,181 |
Transfers | 511 | 2,009 | ꟷ | ꟷ | (2,520) | ꟷ |
Disposal | (150) | (568) | (57) | ꟷ | (68) | (843) |
At 31 December 2023 (audited) | 8,813 | 31,317 | 2,042 | 391 | 6,429 | 48,992 |
| | | | | | |
Additions | 337 | 1,354 | ꟷ | ꟷ | 1,063 | 2,754 |
Transfers | 51 | 260 | ꟷ | ꟷ | (311) | ꟷ |
Disposals | (225) | (194) | (102) | (6) | (33) | (560) |
At 30 June 2024 (unaudited) | 8,976 | 32,737 | 1,940 | 385 | 7,148 | 51,186 |
| | | | | | |
Accumulated depreciation | | | | | | |
At 1 January 20231 | 2,730 | 11,901 | 1,403 | 233 | ꟷ | 16,267 |
Charge for the year | 1,264 | 5,783 | 379 | 35 | ꟷ | 7,461 |
Depreciation on disposals | (150) | (411) | (57) | ꟷ | ꟷ | (618) |
At 31 December 2023 (audited) | 3,844 | 17,273 | 1,725 | 268 | ꟷ | 23,110 |
| | | | | | |
Charge for the period | 782 | 2,845 | 132 | 25 | ꟷ | 3,784 |
Depreciation on disposals | (225) | (194) | (102) | (6) | ꟷ | (527) |
At 30 June 2024 (unaudited) | 4,401 | 19,924 | 1,755 | 287 | ꟷ | 26,367 |
| | | | | | |
Net book value | | | | | | |
At 30 June 2024 (unaudited) | 4,575 | 12,813 | 185 | 98 | 7,148 | 24,819 |
At 31 December 2023 (audited) | 4,969 | 14,044 | 317 | 123 | 6,429 | 25,882 |
1 The opening balances in the cost and accumulated depreciation have been impacted by prior year restatements as described in Note 1 and disclosed in the 2023 annual report' |
'Assets under construction' represents the cost of purchasing, constructing and installing property, plant and equipment ahead of their productive use. The category is temporary, pending completion of the assets and their transfer to the appropriate and permanent category of property, plant and equipment. As such, no depreciation is charged on assets under construction. Assets under construction consist entirely of plant and machinery that will be used in the manufacturing, development and testing of fuel cells. |
8. Right of use assets |
| Land and Buildings | Computer equipment | Electric vehicles | Total |
| £'000 | £'000 | £'000 | £'000 |
Cost |
| | | |
At 1 January 2023 | 4,523 | 43 | ꟷ | 4,566 |
Additions | 168 | ꟷ | ꟷ | 168 |
Adjustment to lease term | (33) | ꟷ | ꟷ | (33) |
At 31 December 2023 (audited) | 4,658 | 43 | ꟷ | 4,701 |
|
|
|
|
|
Additions | ꟷ | ꟷ | 211 | 211 |
Adjustment to lease term | 145 | ꟷ | ꟷ | 145 |
At 30 June 2024 (unaudited) | 4,803 | 43 | 211 | 5,057 |
|
|
| | |
Accumulated depreciation |
|
| | |
At 1 January 2023 | 1,895 | 24 | ꟷ | 1,919 |
Charge for the year | 627 | 14 | ꟷ | 641 |
At 31 December 2023 (audited) | 2,522 | 38 | ꟷ | 2,560 |
|
|
|
|
|
Charge for the period | 334 | 5 | 19 | 358 |
At 30 June 2024 (unaudited) | 2,856 | 43 | 19 | 2,918 |
|
| | | |
Net book value |
|
|
|
|
At 30 June 2024 (unaudited) | 1,947 | ꟷ | 192 | 2,139 |
At 31 December 2023 (audited) | 2,136 | 5 | ꟷ | 2,141 |
The lease liabilities are detailed in Note 17. |
9. Intangible assets |
| Internally developed intangibles £'000 | Customer and internal development programmes £'000 |
Perpetual software licences £'000 | Patent costs |
Total £'000 |
Cost | | | | | |
At 1 January 2023 | 411 | 13,747 | 525 | 852 | 15,535 |
Additions | ꟷ | 6,443 | ꟷ | 357 | 6,800 |
At 31 December 2023 (audited) | 411 | 20,190 | 525 | 1,209 | 22,335 |
| | | | | |
Additions | ꟷ | 1,207 | 18 | 83 | 1,308 |
At 30 June 2024 (unaudited) | 411 | 21,397 | 543 | 1,292 | 23,643 |
| | | | | |
Accumulated amortisation | | | | | |
At 1 January 2023 | 246 | 1,786 | 148 | 77 | 2,257 |
Charge for the year | 82 | 728 | 137 | 77 | 1,024 |
At 31 December 2023 (audited) | 328 | 2,514 | 285 | 154 | 3,281 |
| | | | | |
Charge for the period | 41 | 299 | 72 | 58 | 470 |
At 30 June 2024 (unaudited) | 369 | 2,813 | 357 | 212 | 3,751 |
| | | | | |
Net book value | | | | | |
At 30 June 2024 (unaudited) | 42 | 18,584 | 186 | 1,080 | 19,892 |
At 31 December 2023 (audited) | 83 | 17,676 | 240 | 1,055 | 19,054 |
The customer and internal development intangible primarily relates to the design, development and configuration of the Company's core fuel cell and system technology. Amortisation of capitalised development commences once the development is complete and is available for use. |
10. Inventories |
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Raw materials | 2,429 | 975 | 1,648 |
Work in progress | 1,394 | 1,423 | 787 |
Finished goods | 1,760 | 1,321 | 390 |
Total inventory | 5,583 | 3,719 | 2,825 |
Inventories have increased which reflects the recognition of the second generation of stack technology during the period and the associated raw materials and work in progress. |
11. Trade and other receivables |
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) |
Current: | £'000 | £'000 | £'000 |
Trade receivables | 4,424 | 7,309 | 3,422 |
VAT receivable | 1,395 | 656 | 2,273 |
RDEC receivable | 5,269 | 4,822 | 4,008 |
Other receivables | 40 | 235 | 172 |
| 11,128 | 13,022 | 9,876 |
Non-current: |
| | |
Other receivables | 741 | 741 | 741 |
12. Other current assets |
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Prepayments | 1,331 | 1,180 | 1,193 |
|
|
|
|
13. Net cash and cash equivalents, short-term and long-term investments |
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Cash at bank and in hand | 15,354 | 12,904 | 7,063 |
Money market funds | 48,089 | 39,173 | 42,644 |
Cash and cash equivalents | 63,443 | 52,077 | 49,707 |
|
| | |
Short-term investments | 62,649 | 109,153 | 90,249 |
Cash and cash equivalents and investments | 126,092 | 161,230 | 139,956 |
The Group typically places surplus funds into pooled money market funds with same day access and bank deposits with durations of up to 24 months. The Group's treasury policy restricts investments in short-term sterling money market funds to those which carry short-term credit ratings of at least two of AAAm (Standard & Poor's), Aaa-mf (Moody's) and AAAmmf (Fitch) and deposits with banks with minimum long-term rating of A-/A3/A and short-term rating of A-2/P-2/F-1 for banks which the UK Government holds less than 10% ordinary equity. |
14. Trade and other payables |
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) |
Current: | £'000 | £'000 | £'000 |
Trade payables | 6,633 | 4,349 | 3,624 |
Other payables | 885 | 369 | 1,359 |
| 7,518 | 4,718 | 4,983 |
15. Other current liabilities |
| 30 June 2024 (unaudited) | 30 June 2023 Restated1 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
Current: |
| | |
Accruals | 6,530 | 7,018 | 5,933 |
Deferred income1 | 244 | 244 | 368 |
| 6,774 | 7,262 | 6,301 |
Non-current: |
| | |
Deferred income1 | 1,221 | 1,217 | 1,360 |
1 The restatement to 30 June 2023 is described in Note 1. |
16. Derivative financial instruments |
| Fair value hierarchy | Carrying amount 30 June 2024 (unaudited) £'000 | Fair value 30 June 2024 (unaudited) £'000 | Carrying amount 31 December 2023 (audited) £'000 | Fair value 31 December 2023 (audited) £'000 |
Financial assets measured at fair value through profit or loss | |
|
| | |
Forward exchange contracts | Level 2 | ꟷ | ꟷ | 1 | 1 |
Currency swap contract | Level 2 | 60 | 60 | 7 | 7 |
Total derivative assets | | 60 | 60 | 8 | 8 |
| |
|
|
|
|
Financial liabilities measured at fair value through profit or loss | |
|
| | |
Forward exchange contracts | | ꟷ | ꟷ | (99) | (99) |
Total derivative liabilities | | ꟷ | ꟷ | (99) | (99) |
| |
|
| | |
17. Lease liabilities |
| 30 June 2024 (unaudited) | 30 June 2023 (unaudited) | 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
| | |
|
At the start of the period | 2,596 | 3,124 | 3,124 |
New finance leases recognised | 211 | 67 | 66 |
Lease payments | (472) | (412) | (906) |
Interest expense | 127 | 128 | 248 |
Adjustment to lease term | 145 | ꟷ | 64 |
At the end of the period | 2,607 | 2,907 | 2,596 |
| | | |
Current | 756 | 664 | 694 |
Non-current | 1,851 | 2,243 | 1,902 |
Total at the end of the period | 2,607 | 2,907 | 2,596 |
|
|
|
|
18. Provisions |
|
| Property Dilapidations |
|
Warranties |
|
Contract Losses |
| Total |
|
| £'000 | | £'000 |
| £'000 |
| £'000 |
At 1 January 2023 |
| 2,105 | | 875 | | 54 | | 3,034 |
Movements in the Consolidated Statement of Profit and Loss: |
| | | | | | | |
Unused amounts reversed |
| ꟷ | | (553) | | (10) | | (563) |
Unwinding of discount |
| 89 | | ꟷ | | ꟷ | | 89 |
Increase in provision |
| 88 | | 281 | | ꟷ | | 369 |
At 31 December 2023 (audited) |
| 2,282 | | 603 | | 44 | | 2,929 |
Movements in the Consolidated Statement of Profit and Loss: |
| | | | | | | |
Unwinding of discount |
| 40 |
| ꟷ |
| ꟷ |
| 40 |
Change in provision |
| 145 |
| 102 |
| ꟷ |
| 247 |
At 30 June 2024 (unaudited) |
| 2,467 |
| 705 |
| 44 |
| 3,216 |
|
|
|
|
|
|
|
|
|
Current |
| ꟷ |
| 705 |
| 44 |
| 749 |
Non-current |
| 2,467 |
| ꟷ |
| ꟷ |
| 2,467 |
At 30 June 2024 (unaudited) |
| 2,467 |
| 705 |
| 44 |
| 3,216 |
|
|
|
|
|
|
|
|
|
Current |
| ꟷ | | 603 | | 44 | | 647 |
Non-current |
| 2,282 | | ꟷ | | ꟷ | | 2,282 |
At 31 December 2023 (audited) |
| 2,282 | | 603 | | 44 | | 2,929 |
|
| Property Dilapidations |
|
Warranties |
|
Contract Losses |
| Total |
|
| £'000 | | £'000 |
| £'000 |
| £'000 |
At 1 January 2023 |
| 2,105 | | 875 | | 54 | | 3,034 |
Movements in the Consolidated Statement of Profit and Loss: |
| | | | | | | |
Unused amounts reversed |
| ꟷ | | (567) | | ꟷ | | (567) |
Unwinding of discount |
| 39 | | ꟷ | | ꟷ | | 39 |
Change in provision |
| (46) | | 87 | | ꟷ | | 41 |
At 30 June 2023 (unaudited) |
| 2,098 | | 395 | | 54 | | 2,547 |
|
|
|
|
|
|
|
|
|
Current |
| ꟷ | | 395 | | 54 | | 449 |
Non-current |
| 2,098 | | ꟷ | | ꟷ | | 2,098 |
At 30 June 2023 (unaudited) |
| 2,098 | | 395 | | 54 | | 2,547 |
|
|
|
|
|
|
|
|
|
19. Share capital |
|
| 30 June 2024 (unaudited) |
| 31 December 2023 (audited) | ||
|
| Number of £0.10 | £'000 |
| Number of £0.10 |
£'000 |
Allotted and fully paid | | | | | | |
At 1 January | | 192,968,096 | 19,297 | | 192,086,775 | 19,209 |
Allotted £0.10 Ordinary shares on exercise of employee share options | | 458,414 | 46 | | 881,321 | 88 |
At 30 June 2024 / 31 December 2023 |
| 193,426,510 | 19,343 |
| 192,968,096 | 19,297 |
During the six month period ended 30 June 2024, 458,414 ordinary £0.10 shares were allotted for cash consideration of £376,000 on the exercise of employee share options (six months ended 30 June 2023: 630,205 ordinary £0.10 shares were allotted for cash consideration of £676,000 and 31 December 2023: 881,321 ordinary £0.10 shares were allotted for cash consideration of £809,000). |
|
|
|
| 30 June 2023 (unaudited) | ||
|
|
|
|
| Number of £0.10 |
£'000 |
Allotted and fully paid | | | | | | |
At 1 January 2023 | |
|
| | 192,086,775 | 19,209 |
Allotted £0.10 Ordinary shares on exercise of employee share options | |
|
| | 630,205 | 63 |
At 30 June 2023 |
|
|
|
| 192,716,980 | 19,272 |
Reserves The Consolidated Statement of Financial Position includes a merger reserve and a capital redemption reserve. The merger reserve represents a reserve arising on consolidation using book value accounting for the acquisition of Ceres Power Limited at 1 July 2004. The reserve represents the difference between the book value and the nominal value of the shares issued by the Company to acquire Ceres Power Limited. The capital redemption reserve was created in the year ended 30 June 2014 when 86,215,662 deferred ordinary shares of £0.04 each were cancelled.
20. Events after the balance sheet date Since the end of the first half period, Ceres announced its second major manufacturing licence agreement of the year with Denso Corporation and announced a systems licence partnership with Thermax. Since the end of the period, management has reviewed roles and responsibilities across the company to ensure the business is optimised to accelerate its growth strategy and has implemented a new organisational structure to take it forward. The proposed changes will result in a headcount reduction of approximately 15% in Q4 2024, and also a reduction in the overall cost base by a similar level. Eric Lakin will step down as CFO and from the Board to be replaced by Stuart Paynter, effective on 1 October 2024. 21. Capital commitments Capital expenditure that has been contracted for but has not been provided for in the financial statements amounts to £1,076,000 as at 30 June 2024 (as at 30 June 2023: £7,710,000 and 31 December 2023: £5,671,000), in respect of the acquisition of property, plant and equipment. The reduction compared to December 2023 is due to termination of a contract to install test assets.
22. Related party transactions As at 30 June 2024, 30 June 2023 and 31 December 2023, the Group's related parties were its Directors and RFC Power Limited. During the six months to 30 June 2024 one Director exercised 380,424 share options under the Ceres Power Holdings plc 2004 Employees' Share Option Scheme. The following Directors exercised share options in the year to 31 December 2023: |
Date of exercise | Director | Type of options | Total number of options exercised | Weighted average exercise price | Total gain on exercise | Number of shares retained |
30 March 2023 | Phil Caldwell | LTIP | 200,000 | £3.463 | £672,600 | 200,000 |
04 May 2023 | Phil Caldwell | Sharesave | 4,610 | £1.952 | £6,602 | 4,610 |
07 July 2023 | Mark Selby | 2004 ESS | 2,063 | £2.825 | £4,066 | 2,063 |
12 July 2023 | Michelle Traynor | Sharesave | 1,844 | £1.952 | £2,003 | 1,844 |
10 August 2023 | Clarissa de Jager | Sharesave | 7,377 | £1.952 | £10,284 | 7,377 |
03 October 2023 | Phil Caldwell | 2004 ESS | 11,859 | £3.204 | £27,869 | 11,859 |
During the year ended 31 December 2023 two Directors sold 141,313 2004 Employee Shareholder Status (ESS) shares in Ceres Power Intermediate Holdings Ltd and received 92,864 Ceres Power Holdings plc shares in consideration in addition to the linked ESS options as set out in the table above. During the six months ended 30 June 2023, one Director exercised and retained 200,000 share options under the Company's Long Term Incentive Plan and also exercised and retained 4,610 share options under the Company's employee share save scheme. Transactions between the Group and RFC Power Limited, being an associated entity of the Group, comprised engineering consultancy services provided by the Group to RFC Power Limited for the value of £410,000 (30 June 2023: £271,000 31 December 2023: £574,000). Reconciliation between operating loss and Adjusted EBITDA Management believes that presenting Adjusted EBITDA loss allows for a more direct comparison of the Group's performance against its peers and provides a better understanding of the underlying performance of the Group by excluding non-recurring, irregular and one-off costs. The Group currently defines Adjusted EBITDA loss as the operating loss for the period excluding depreciation and amortisation charges, share-based payment charges, unrealised losses on forward contracts and exchange gains/losses.
|
| 30 June 2024 (unaudited) £'000 | 30 June 2023 Restated1 (unaudited) £'000 | 31 December 2023 (audited) £'000 |
Operating loss1 | (13,757) | (28,266) | (59,401) |
Depreciation and amortisation | 4,612 | 4,174 | 9,126 |
Depreciation absorbed as part of inventory | (869) | ꟷ | ꟷ |
EBITDA | (10,014) | (24,092) | (50,275) |
|
| | |
Share-based payment charges | 900 | 736 | 67 |
Unrealised (gains)/losses on forward contracts | (151) | (454) | 143 |
Exchange losses/(gains) | 223 | 282 | (232) |
Adjusted EBITDA | (9,042) | (23,528) | (50,297) |
| | | |
1 The restatement to 30 June 2023 is described in Note 1. |
Principal Risks and Uncertainties The Directors have reviewed the principal risks and uncertainties that could have a material impact on the Group's performance and have concluded that there has been a material change from those described in the Ceres Annual Report 2023, which can be found on the Company's website. The new principal risk identified is a cyber risk. The Directors have also determined that the risk of detrimental partner actions has reduced to no longer be considered a principal risk. The principal risks and uncertainties are summarised below:
|
INDEPENDENT REVIEW REPORT TO CERES POWER HOLDINGS PLC
Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 which comprises the Consolidated Statement of Profit and Loss and Other Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Cash Flow Statement, the Consolidated Statement of Changes in Equity and the Notes to the financial statements for the six months ended 30 June 2024. Basis for conclusion We conducted our review in accordance with Revised International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410 (Revised)"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. As disclosed in note one, the annual financial statements of the group are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting. Conclusions relating to going concern Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410 (Revised), however future events or conditions may cause the group to cease to continue as a going concern. Responsibilities of directors The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the review of the financial information In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report. Use of our report Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
BDO LLP Chartered Accountants London, UK 26 September 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). |
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.