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Quarterly Trading Update and Cashflow Report

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					25 July 2011


                                 Ceramic Fuel Cells Limited

                    Quarterly Trading Update and Cashflow Report


Ceramic Fuel Cells Limited (AIM / ASX: CFU) a leading developer of high efficiency and low
emission power products for homes and other buildings, today released its trading update and
quarterly cashflow report for the period ended 30 June 2011.

The cashflow report is available at www.cfcl.com.au.

A webcast interview       with   Managing    Director   Brendan   Dow    is   also   available   at
www.brr.com.au/cfu.


Highlights

      BlueGen orders received growing rapidly – 190 percent increase from last quarter
      Total of 206 BlueGen orders received at 25 July
      Order for 100 units from sanevo in Germany
      Follow on order for 25 units from Ausgrid in Australia
      BlueGen distributors appointed in Germany, the United Kingdom and The Netherlands
      Australian carbon price and clean energy funding announced to boost the deployment of
       low emissions technologies like fuel cells
      BlueGen passes technical review for MCS approval in the United Kingdom
      Real world operating data confirms world’s highest electrical efficiency
      BlueGen assembly plant operational in Germany
      New non-executive Directors boost marketing and financial skills and experience


1. BlueGen Sales

The Company’s first product is a modular power and heat generator called BlueGen ®, which uses
patented technology to convert natural gas into low emission power and hot water for homes and
other buildings. One BlueGen can provide about double the electricity needed each year by the
average home in Australia (and three times as much as the average home in Europe). Excess
power can be exported to the grid, plus BlueGen also provides hot water for an average family’s
needs.

BlueGen uses the Company’s Gennex® fuel cell module to achieve electrical efficiency of up to
60 percent – far higher than any other small scale power technology. The Company believes this
very high electrical efficiency will deliver significant value to BlueGen customers, and creates a
significant competitive advantage in the fast growing global market for small scale power
generation.

BlueGen can also modulate its power output whilst retaining very high efficiencies, making it an
ideal flexible mini power station for a future with significant renewable power generating assets.


                                                                                                 1
During the June quarter the Company continued to increase sales of BlueGen units to energy
companies and other foundation customers.

The Company is confident that there is a large sales potential for BlueGen in many global
markets. The Company has received inquiries from prospective BlueGen customers in Asia (in
particular China and India), the Middle East, South Africa, Central and Eastern Europe, Russia,
North America and South America, plus every State in Australia.

Management is focusing the Company’s current resources on building sales into markets where
the Company already has a presence – particularly Western Europe and Australia. As the
Company increases revenue and scale Management will look to take advantage of these
opportunities to enter new global markets. In particular the Company is working to modify
BlueGen to suit the very large North American market (discussed in section 5 below).

The market settings in Western Europe, particularly Germany and the United Kingdom, provide
support for the deployment of new energy technologies. Over the last few months energy policy
has evolved rapidly in several of these markets. Most notably, during the recent quarter, there
was strong public support (leading in some cases to firm Government policy) to phase out nuclear
power in Germany, Italy and Switzerland, meaning these markets will need significant additional
power generation from highly efficient sources. This creates a significant opportunity to deploy
low emission energy products. In addition, as countries come to rely more on intermittent
renewable power, they will require more flexible and controllable power generators, including
small scale distributed generation such as BlueGen.

As at 25 July 2011 the Company has received orders for 206 BlueGen units, from a total of 39
customers in nine countries.

Recent highlights include:

Sanevo orders 100 units

In July the Company’s first BlueGen distributor in Germany, sanevo placed an initial order for 100
BlueGen units to be delivered in the first year, with a target minimum order of 500 units for
delivery in the second year. This is the Company’s largest BlueGen order.

Other European sales

During the quarter the Company also secured further BlueGen orders from German energy
companies Stadtwerke Porta Westfalica and Stadtwerke Bochum, the Cologne University of
Applied Sciences Fachhochschule Köln, and a follow on order from energy utility GasTerra in the
Netherlands.

Ausgrid orders 25 units

In May the Company announced an order for 25 BlueGen units from Ausgrid (formerly Energy
Australia). The units will be installed in homes in Newcastle as part of Ausgrid’s ‘Smart Grid,
Smart City’ project.

The AUD 100 million project, funded by the Australian Government, is Australia’s largest smart
grid project. The project’s consortium includes CSIRO, IBM Australia, AGL, GE Energy,
TransGrid, Newcastle City Council and the New South Wales Government.

The order from Ausgrid follows the company’s previous purchase of a BlueGen unit for its Smart
Home in the Sydney suburb of Newington. Since the unit was installed in August 2010 the
BlueGen at the Smart Home has been generating about twice as much electricity as the family
has been using to run their household appliances and charge an electric vehicle. Any excess
electricity generated by the BlueGen has been exported to the grid.



                                                                                                2
Order for 5 units in Adelaide

The Company has also received an order for five BlueGen units to be installed in a commercial
building in Adelaide, South Australia. The units will be installed as part of an energy efficiency
upgrade to the Quins building in Vincent Street, Port Adelaide.

Victorian Government units installed

In July the Company completed the installation of 30 BlueGen units with the Victorian
Government Office of Housing. Twenty units are installed in houses in Melbourne and ten are
installed in Shepparton in regional Victoria. The sites are currently having net meters installed to
allow power to be exported to the grid.

As part of the project, leading Australian energy retailer Origin Energy is providing the Office of
Housing clients with a one-for-one feed in tariff for the electricity generated by the BlueGen units.
This means that an Office of Housing tenant who exports power to the grid will get a credit on
their bill equal to the normal retail rate of electricity.

This project will provide a real world case study on how BlueGen units can save on energy bills
for homeowners. The Company looks forward to reporting on the results over the coming
months.


2. BlueGen Distribution

Ceramic Fuel Cells has made sales of BlueGen units directly to early customers, but in larger
volumes the Company’s strategy is to sell BlueGen units through a network of distributors and to
outsource the sale, installation and service of BlueGen units. During the quarter the Company
secured distribution agreements in several large and important markets.

Germany

As announced on 25 July the Company has appointed sanevo as its first BlueGen distributor in
Germany. As part of the agreement, sanevo has placed an initial order for 100 BlueGen units.

Sanevo has placed an initial order for 100 BlueGen units to be delivered in the first year, with a
target minimum order of 500 units for delivery in the second year and a target of 2000 units over
years three and four.

Provided sanevo orders these agreed minimum numbers of BlueGen units during 2012 to 2014,
sanevo has exclusive rights to distribute BlueGen to commercial and residential customers in the
German States of Baden-Württemberg and Bavaria, and in Austria. Ceramic Fuel Cells retains
full rights to sell BlueGen units to utilities and energy service companies.

Based in Offenbach, near Frankfurt, sanevo has gained experience and reputation in marketing
and selling innovative small scale power and heating products in Germany through more than
120 qualified sales partners.

Sanevo has partnered with SAG GmbH for SAG to provide installation and after-sales service for
BlueGen products. SAG is one of Germany’s largest independent service and system providers
for electricity, gas, water and telecommunications products and networks, with more than 8,300
staff and operations across Germany and Europe. With sales revenue of one billion euro, SAG
has more than 120 locations throughout Germany to provide a high level of service availability.

In April 2011 each of sanevo and SAG purchased a BlueGen unit for their own buildings.




                                                                                                   3
The Netherlands

In July the Company also appointed Zestiq B.V as its first BlueGen distributor in The Netherlands.
Zestiq is part of the consortium of innovative companies which in April installed a BlueGen in a
17th century canal house “De Groene Bocht” in the centre of Amsterdam.

Zestiq and its partners will market and sell BlueGen units to small commercial and residential
customers in The Netherlands. The units will be installed and maintained by the service
company of Eneco, Eneco Installatie Bedrijven.

The other members of the consortium include several leading energy companies in The
Netherlands: Liander is a distribution company with 2.9 million electricity customers and 2.1
million gas customers. GasTerra is an international natural gas trading company owned by
Royal Dutch Shell, Exxon Mobil and the Dutch Government. A BlueGen unit is also installed at
the home of a Director of GasTerra. The other consortium member, Eneco, currently provides
services for a range of heating and cooling technologies, including other small scale combined
heating and power products


United Kingdom

In May the Company appointed RES On-Site Limited, part of the RES Group, as a non-exclusive
distributor in the United Kingdom. RES On-Site will target the commercial microgeneration
energy market throughout the UK. RES On-Site holds MCS (Microgeneration Certification
Scheme) installer accreditations in a wide range of technologies and is adding the microCHP
accreditation to this and so will provide installation and after-sales service for BlueGen products.

The RES Group is a leading international renewable energy company with operations across
Europe, North America and Asia Pacific. To date the RES Group has delivered more than 5GW
of renewable energy projects worldwide. RES On-Site sells and installs a range of low emission
power and heating products for commercial, industrial and public sector customers, including
wind, biomass, solar PV and solar hot water.

Australia

The Company is continuing to work with its existing distributors, Hills Holdings Limited and
Harvey Norman Commercial division, to market BlueGen units to commercial customers, such as
Governments and Councils, commercial buildings, hotels, property developers and architects,
and schools and educational facilities.

During the quarter the Company received its first order from Harvey Norman Commercial division,
for a BlueGen unit to be installed in Sydney at the Ultimo TAFE centre for technical education.

The Company and neco have agreed to terminate neco’s distribution agreement from 1 July
2011. The Company has agreed to expand the distribution territory of each of Hills and Harvey
Norman Commercial to include Victoria.


Training for Installation and Service Partners

An important part of deploying the BlueGen product into the market is to ensure high-quality
installation and after sales service.

For early units Ceramic Fuel Cells provided all these services. In order to focus its engineering
resources, and reduce the support costs for commercial products, the Company is actively
transitioning towards just providing manufacturer’s technical support, with local distribution and
service partners providing installation and on-site maintenance services to customers.




                                                                                                  4
The Company has prepared comprehensive training materials and has conducted initial training
for European service partners in the Heinsberg factory. Further training will be conducted for
Australian service partners in Melbourne.


3. Integrated mCHP product

As previously announced, the Company has received an order for up to 200 integrated power
and heat generators from German energy service provider EWE. This is the largest order the
Company has received, with total revenue of up to EUR 4.9 million over two years.

The order was conditional on part of the project funding being provided by the German
government’s national hydrogen and fuel cell technology innovation program. In July the
German Government formally approved funding for the project.

In this project Ceramic Fuel Cells is supplying the core Gennex fuel cell module and related
components to its local manufacturing partner, Gebrüder Bruns Heiztechnik GmbH, which is
integrating the fuel cell module with a boiler into an integrated power and heating product for
supply to EWE. EWE will then install the units in homes in the Lower Saxony region in northern
Germany.

Based on an earlier letter of intent from the funding authority, EWE has already installed eight
integrated units into homes.

EWE plans to install a total of 55 units by 31 December 2011. Subject to these units meeting
agreed performance targets, EWE will then order a further 145 units for delivery in 2012.

This is a significant follow-on order from EWE, the Company’s longest standing utility customer.
EWE is one of the largest utilities in Germany, with 6,400 staff and revenues of EUR 5.8 billion.
Based in Northern Germany, EWE also has operations in other German states as well as Poland
and Turkey.

Apart from the project in Germany with EWE, the Company is also developing and deploying
integrated mCHP units in France and the UK.

In France, the Company is developing the next generation of an integrated mCHP unit for the
French market in partnership with BDR Thermea. This unit is currently undergoing testing for CE
approval, and will then be operated with GDF-Suez.

Similarly, the Company has also developed and will shortly deploy two integrated mCHP units in
the UK that represent the next generation of an integrated product for the UK market. This
development is being undertaken in partnership with E.ON UK.

In line with the Product Development Agreement signed in 2009, the Company and EON.UK are
in ongoing discussions about further opportunities to develop and supply mCHP products for the
UK market.


4. Australian Government’s Clean Energy Future Plan

On 10 July the Australian Federal Government released its Clean Energy Future plan. The plan
includes a range of policies designed to reduce Australia’s greenhouse gas emissions and drive
investment in new clean energy sources such as renewables and gas.

The centrepiece of the plan is the introduction of a carbon price – initially a fixed price of AUD 23
per tonne from July 2012 to 2015, then moving to a market-based emissions trading scheme.




                                                                                                   5
Ceramic Fuel Cells strongly supports the Government’s policy of putting a price on carbon to cut
Australia’s emissions and to reward energy efficiency.

We are pleased that the Government’s policy document recognizes that “Electricity generation
accounts for the largest share of Australia's current emissions, so Australia's transition to a low-
emission future requires a significant transformation in this sector.”

The Government’s policy documents include detailed modelling on Australia’s energy future,
including the following points:
     A carbon price will drive a significant shift in electricity generation, away from high
        emissions coal-fired generators to renewables and low emissions gas-powered
        generators.
     Once the carbon price is introduced, there will be no new commercial-scale coal-fired
        power stations approved and commissioned in Australia, at least without carbon capture
        and storage (CCS).
     It will take until the 2030s to know if CCS is viable – and if it does not become viable, gas
        will provide significant additional generation.
     Investment of AUD 50-60 billion in new gas-fired power generation is required between
        now and 2050.
     Gas remains an important component of Australia's power generation, increasing by more
        than 200 per cent by 2050.
     Wholesale electricity prices are projected to increase by 40 per cent from 2013-17 and 38
        per cent from 2018-22. This is under the “core policy” scenario. Under a “high price”
        scenario prices go up by 78 per cent and 94 per cent.
     Household retail electricity prices will go up by 10 per cent from 2013-17 and 8 per cent
        from 2018-22 (or by 17 per cent and 21 per cent in the “high price” scenario).

Once a carbon price begins to increase wholesale power prices, and to drive the shift from coal to
gas-fired generation, the benefits of high efficiency electricity generation will become more
valuable, to energy utilities and to households and businesses.

The carbon price is forecast to drive very large investment in gas-fired generation; and the
Company’s products are the most efficient form of using gas to generate power close to where it
is used. The Company believes that as households and businesses continue to be hit by rising
electricity bills, on-site high efficiency generators like BlueGen will provide a compelling
alternative.

Apart from the carbon price, the Government’s policies released on 10 July also contain a large
increase in funding for clean energy, including:

      Clean Energy Finance Corporation: The Government will invest AUD 10 billion (over 5
       years from 2013-14) in a new commercially oriented Clean Energy Finance Corporation
       (CFEC). Five billion dollars will be invested in renewable energy, energy efficiency and
       clean technology. “The clean energy stream will invest more broadly; for example, in low-
       emissions cogeneration technology, but will still be able to invest in renewable energy”.
      Clean Technology Investment Program (AUD 800 million over seven years from 2011-
       12): Competitive grants (minimum grant size of AUD 25,000) for manufacturing
       businesses to invest in energy efficient capital equipment and low-emissions
       technologies, processes and products. Examples of where funding will be utilised include
       “investing in co-generation plants”.
      Low Carbon Communities (total funding of AUD 330 million over six years from
       2010-11): The expanded Low Carbon Communities fund will provide competitive grants
       for local councils and community organisations to undertake energy efficiency upgrades
       and retrofits to council and community use buildings. Examples of projects that could be
       funded under this stream include ”installation of cogeneration/trigeneration systems”.




                                                                                                  6
Ceramic Fuel Cells looks forward to the Federal Government implementing these policies, as well
as complementary measures, particularly a broad-ranging national energy efficiency scheme.

This would build on the work done by the Task Group on Energy efficiency in 2010, and on
existing policies for energy efficiency such as the AUD 1 billion Tax Breaks for Green Buildings
program, which provides tax incentives from July 2012 for commercial building owners to invest in
energy efficiency, including efficient on-site power and heating.


5. BlueGen Product Approvals and Feed in Tariffs

During the June quarter the Company’s operations and engineering teams invested significant
time and resources in having BlueGen approved under regulatory regimes in several markets.

Germany

BlueGen received full CE safety approval in April 2010. This allows BlueGen products to be
installed in homes and buildings in Europe. This is a full “type” approval for all BlueGen products
– it is not just a “prototype” approval for field trial units.

In Germany BlueGen was approved by BAFA in August 2010, meaning BlueGen customers are
eligible to receive a feed in tariff for electricity exported to the grid from BlueGen.

United Kingdom

In the United Kingdom the Government introduced a feed in tariff in April 2010. However to be
eligible for the feed in tariff, all microgeneration products must be certified under the
Microgeneration Certification Scheme (“MCS”).

The MCS accreditation process involves an extensive and rigorous third party review of all the
procedures involved in manufacturing, installing and maintaining a microgeneration product. In
many cases the MCS process requires additional procedures to be formalised, over and above
the thorough procedures already in place for CE safety approval.

Over the last 12 months the Company has invested a significant amount of resources into
meeting the MCS requirements. As part of the MCS process, more than 400 procedures have
been written, more than 200 pieces of equipment have been tested and calibrated, and 15 test
rigs have been built for quality control testing of subassemblies.

During the June quarter BRE Global, an independent, third-party approvals organisation,
completed the technical assessment of BlueGen and confirmed that the Company has met all of
the requirements under the MCS standard. BRE Global is awaiting accreditation from the United
Kingdom Accreditation Service (UKAS) under standard MCS015 in order to issue a certificate
under this standard to Ceramic Fuel Cells.

Once final certification is received BlueGen customers will be able to benefit from the UK
government’s Feed in Tariff financial incentive scheme. The Company is continuing to work
closely with BRE Global and UKAS to finalise the certification, which will allow BlueGen
customers to be eligible for the UK feed in tariff.

Australia

In Australia BlueGen is currently approved for installation as a “Type B” gas appliance. This
means each installation is inspected and approved by a gas safety regulator. Over the past few
months the Company has been working with the Australian regulators for BlueGen to be
approved as a “Type A” appliance, which will allow BlueGen to be installed by a licensed and
trained plumber and gasfitter, as for any other domestic gas appliance. The Company will keep
shareholders informed as this work develops.


                                                                                                 7
Unlike Germany or the UK (or France or The Netherlands), in Australia there is no feed in tariff for
fuel cell products. Typically feed in tariff schemes, which vary by State, are only available for
small scale solar PV products. Several States have recently reviewed and reduced the solar feed
in tariffs.

The Company believes the defensible policy rationale for feed in tariffs is to correct market
failures, by allowing households and small businesses to participate in the energy market and to
be paid a fair and reasonable rate for the electricity they export back to the power grid. This
policy rationale (as distinct from subsidising particular technologies) applies equally to small scale
low emissions technologies like fuel cells.

The Company is continuing to lobby State Governments on this. In the meantime in Australia the
Company is marketing BlueGen to customers who can use all the power on-site.

North America

Finally, in the US market, the Company is working towards receiving safety approval for a version
of BlueGen modified to meet North American requirements. The Company is making good
progress and approval is expected by the end of the year.


6. Marketing

Over the last year the Company has invested in additional resources and product related
marketing activities, in order to support the deployment of products and increase sales. Some of
these activities include:
     To be launched shortly, a new ‘global’ multi-language BlueGen website informing
       potential customers about the benefits of BlueGen and showcasing real-life examples;
     Providing existing customers remote monitoring and performance reporting capabilities
       through the BlueGen-net web-based portal – available online at www.bluegen.net; and
     Developing new marketing collateral and interactive tools promoting the features &
       benefits of BlueGen for the Company’s strategic markets.

The Company’s BlueGen product has been recognised by several international awards. In May
2011, BlueGen won both the 2010-11 ‘CEO Award’ – DuPont Australia and New Zealand’s most
prestigious innovation award – as well as the ‘Design for a Sustainable Future’ award, one of
seven categories at the biennial DuPont Australia & New Zealand Innovation Awards.

In June the Company also won the Microgeneration UK 2011 Technical Innovation Award for its
BlueGen product. Microgeneration UK 2011 – which brings together policymakers, investors,
suppliers and customers – celebrates the best of the UK microgeneration industry. It is run by
Micropower Council, the British Photovoltaic Association and the British Heating and Hot Water
Industry Council.


7. BlueGen Performance

As at 25 July 2011, 86 BlueGen and integrated mCHP units are installed at sites in Europe,
Japan, USA and Australia. In aggregate, these units have been operating for more than 270,000
hours (the equivalent of more than 30 years of collective operation).

The earliest installed units have been operating for more than 10,000 hours or 14 months.

All of these BlueGen units have achieved starting electrical efficiency of 60 percent or more,
demonstrating robust and repeatable performance in many different real world conditions.




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Over time the electrical efficiency reduces and the thermal output of the fuel cell stack increases.
Electrical efficiency is also affected by how the customer wishes to operate the BlueGen unit:
efficiency will be lower if the customer modulates the output of the unit or operates the unit at a
lower power level.

The Company is continuing to improve the lifetime of the fuel cell stack towards the commercial
target of 4-5 years and the robustness of the stack, including ‘cycling’ the unit on and off, to
deliver performance required by commercial customers.


8. Manufacturing and Supply Chain

As previously announced, the Company has entered into a volume supply agreement with HC
Starck for the supply of fuel cell components. During the June quarter the Company has been
working with HC Starck to ensure that they can increase their production capacity to meet our
forecast demand for cells, whilst maintaining our high quality standards. Recently this has been a
constraint on the Company’s ability to build fuel cell stacks however the Company is confident
that HC Starck’s planned investment in additional production capacity will meet the Company’s
future demand requirements.

Over the last year the Company has also focused on reducing the unit costs of the BlueGen
product. The costs of components used to make BlueGen units are sensitive to economies of
scale. In recognition of this, the Company is seeking to move from ordering components in lots of
100, to lots of 1,000 in order to reduce unit costs. This is expected to reduce the current BlueGen
product cost by approximately 20 per cent.

The Company is increasing production of fuel cell stacks and the assembly of BlueGen units at
the Company’s plant in Heinsberg, Germany. We have commenced hiring additional staff to
ramp up production there and are putting in place appropriate senior management to manage
these increasing production levels.

As reported in previous updates, in order to further increase the volume of fuel cell stack
production the Company intends to use larger furnaces already installed at the Heinsberg plant.
During the June quarter the Company has worked with the furnace supplier to finalise changes
needed to ensure the furnaces will produce fuel cell stacks in larger volumes at acceptable quality
standards. The Company is implementing these changes with the supplier. These large scale
furnaces are not currently constraining production.

During June the Heinsberg plant was audited and certified by Kiwa Gastec under the CE
Surveillance Audit programme. The objective of this programme is to ensure that the Company is
manufacturing the BlueGen product in compliance with the CE approval previously granted.


9. New Directors

The Board has recently appointed two additional non-executive directors to add financial and
operational expertise as the Company scales up its operations.

In May the Board appointed German-based Dr Roman Dudenhausen, who has extensive
experience in strategic advice, marketing and innovation in the German energy industry.

Based in Essen, Dr Dudenhausen is CEO and co-founder of conenergy ag, a leading
independent service provider to the German energy Industry. The conenergy group includes
energate, the leading energy information company in the German energy market. conenergy is
also co-host of E-World, the largest energy fair in Europe. In addition conenergy is co-founder of
electric car manufacturer mia electric Gmbh. Dr Dudenhausen is also a director of electric
vehicle maker mia electric Gmbh.



                                                                                                  9
In early July the Board also appointed Ms Janine Hoey as a non-executive director and member
of the Audit Committee. Ms Hoey has had extensive experience in commercial, operations and
finance roles in the clean energy and airline industries over the last 20 years.

Based in Melbourne, Ms Hoey currently holds an executive role with Pacific Hydro Pty Ltd as the
General Manager Group Operations and Commercial Pacific Hydro is an Australian company
and one of the world's leading clean energy independent power producers, with nearly 2,000
megawatts of hydro power and wind farm projects at varying stages of development, construction
and operation in Australia, Chile and Brazil.


10. Financial Review

Receipts from customers for the June quarter were AUD 1.2m (GBP 0.8m). This represents an
increase from last quarter by AUD 0.8m (GBP 0.5m).

Net operating cash outflow for the June quarter was AUD 4.1m (GBP 2.7m) which was lower than
last quarter due to higher receipts from customers and a lower level of inventory purchases.

The net cash outflow after operating, investing and financing activities for the June quarter was
AUD 5.6m (GBP 3.7m).

For the full year to 30 June 2011 receipts from customers were AUD 3.3m (GBP 2.2m), which
was AUD 1.7m (GBP 1.1m) higher than last financial year. Total cash inflow for the year was
AUD 6.4m (GBP 4.3m) which included net receipts from shares issued during the year of AUD
28.9m (GBP 19.2m).

Cash at 30 June 2011 was AUD 19.1m (GBP 12.7m).

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




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For further information please contact:

Ceramic Fuel Cells
Andrew Neilson                                      Tel: +613 9554 2300
                                                    Email: investor@cfcl.com.au

Nomura Code Securities (AIM Nomad)                  Tel: +44 (0) 207 776 1200
Juliet Thompson, Chris Golden

Australia Media enquiries
Richard Allen, Oxygen Financial Public Relations    Tel: +613 9915 6341


UK Media enquiries                                  Tel: +44 (0) 7786 116 991
Mark Way                                            Email: Mark.W@harvardamerica.com



About Ceramic Fuel Cells Limited:

Ceramic Fuel Cells Limited 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 is developing fully integrated power and heating products with leading energy
companies E.ON UK in the United Kingdom, GdF Suez in France and EWE in Germany.

Ceramic Fuel Cells has also sold more than 200 BlueGen gas-to-electricity generators to major
utilities and other foundation customers in Germany, the United Kingdom, Switzerland, The
Netherlands, Italy, Japan, Australia and the USA.

Ceramic Fuel Cells recently won the 2010-11 DuPont Design for a Sustainable Future innovation
award and the Microgeneration UK 2011 Technical Innovation Award. The company is listed on the
London Stock Exchange AIM market and the Australian Securities Exchange (code CFU).

        Register to receive email alerts of CFCL announcements and industry news, at
                                   www.cfcl.com.au/register




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                                                                                                  Appendix 4C
                                                                                  Quarterly report for entities
                                                                         admitted on the basis of commitments


                                                                                                                 Rule 4.7B

                                                Appendix 4C
                                                  Quarterly report
                                                for entities admitted
                                            on the basis of commitments
  Introduced 31/3/2000. Amended 30/9/2001




  Name of entity

   CERAMIC FUEL CELLS LIMITED

  ABN                                                                  Quarter ended (“current quarter”)

   82 055 736 671                                                       30 JUNE 2011

  Consolidated statement of cash flows
                                                                   Current quarter               Year to date
Cash flows related to operating activities                                                       (12 months)
                                                                       $A’000                      $A’000
1.1     Receipts from customers                                                   1,232                         3,349

1.2     Payments for
                  (a) staff costs 1                                             (2,921)                    (10,368)
                  (b) advertising and marketing 2                                 (149)                       (406)
                  (c) research and product development 3                          (698)                     (2,768)
                  (d) leased assets                                                   -                           -
                  (e) other working capital                                     (1,830)                    (12,114)
1.3     Dividends received                                                            -                           -
1.4     Interest and other items of a similar nature
        received                                                                      -                             -
1.5     Interest and other costs of finance paid                                   (25)                         (111)
1.6     Income taxes paid                                                             -                             -
1.7     Other
        - Net GST/VAT Received/(Paid)                                                234                        1,182
        - Sundry income received                                                      28                        4,040

        Net operating cash flows                                                (4,129)                    (17,196)


  Notes
      1.     ‘Staff costs’ includes all labour and associated headcount costs, and therefore incorporates all Research
             & Product Development (R&PD) staff, Sales & Marketing (S&M) staff and General & Administrative
             (G&A) staff.
       2.    ‘Advertising and marketing’ excludes all S&M staff costs (as per note 1 above).
       3.    ‘Research and product development’ costs includes all R&PD costs as defined in Note 1(e) to the
             Financial Statements for the year ended 30 June 2010, but excludes all R&PD staff costs (as per note 1
             above).




  Ceramic Fuel Cells Limited – Quarterly Cash Flow Report for the quarter ended 30 June 2011                     Page 1
                                                                                                        Appendix 4C
                                                                                        Quarterly report for entities
                                                                               admitted on the basis of commitments


                                                                         Current quarter                Year to date
                                                                                                        (12 months)
                                                                             $A’000                       $A’000
1.8         Net operating cash flows (carried forward)                                 (4,129)                     (17,196)


            Cash flows related to investing activities
1.9         Payment for acquisition of:
            (a) businesses (item 5)                                                          -                            -
            (b) equity investments                                                           -                            -
            (c) intellectual property                                                        -                            -
            (d) physical non-current assets                                              (706)                      (2,085)
            (e) other non-current assets                                                     -                            -
1.10        Proceeds from disposal of:
            (a) businesses (item 5)                                                           -                            -
            (b) equity investments                                                            -                            -
            (c) intellectual property                                                         -                            -
            (d) physical non-current assets                                                   -                            -
            (e) other non-current assets                                                      -                            -
1.11        Loans to other entities                                                           -                            -
1.12        Loans repaid by other entities                                                    -                            -
1.13        Other – Security deposits decreased (increased)                                (14)                         (64)
            Net investing cash flows                                                     (720)                      (2,149)

1.14        Total operating and investing cash flows                                   (4,849)                     (19,345)


            Cash flows related to financing activities
1.15        Proceeds from issues of shares                                                    -                      30,217
1.16        Proceeds from sale of forfeited shares                                            -                           -
1.17        Proceeds from borrowings                                                          -                           -
1.18        Repayment of borrowings                                                        (64)                       (256)
1.19        Dividends paid                                                                    -                           -
1.20        Other - Financial assets: Net proceeds/(Net
            payments) 1                                                                  (741)                      (3,204)
            Other - Share issue costs                                                     (17)                      (1,331)
            Other - Interest received                                                       57                          332

            Net financing cash flows                                                     (765)                       25,758

            Net increase (decrease) in cash held                                       (5,614)                         6,413

1.21        Cash at beginning of quarter/year to date                                  21,796                        11,474
1.22        Exchange rate adjustments on foreign currency
            cash balances                                                                (329)                      (2,034)
1.23        Cash at end of quarter                                                     15,853                        15,853

Funds held in Financial Assets 2                                                        3,204                          3,204
Total Cash and Financial Assets                                                        19,057                        19,057
1.    The net proceeds from/(payments for) the disposal and purchase of the company’s investments are at item 1.20
2.    ‘Funds held in Financial Assets’ are amounts pledged as security, for bank guarantees given, and so are unavailable for use
      by the CFCL Group.




     Ceramic Fuel Cells Limited – Quarterly Cash Flow Report for the quarter ended 30 June 2011                        Page 2
                                                                                                   Appendix 4C
                                                                                   Quarterly report for entities
                                                                          admitted on the basis of commitments




  Payments to directors of the entity and associates of the directors
  Payments to related entities of the entity and associates of the related entities
                                                                                                 Current quarter
                                                                                                    $A'000

1.24      Aggregate amount of payments to the parties included in item 1.2                                         147


1.25      Aggregate amount of loans to the parties included in item 1.11                                             -


1.26      Explanation necessary for an understanding of the transactions

          Item 1.24 - Directors’ fees.




  Non-cash financing and investing activities
2.1    Details of financing and investing transactions which have had a material effect on consolidated
       assets and liabilities but did not involve cash flows

       NIL



2.2    Details of outlays made by other entities to establish or increase their share in businesses in which the
       reporting entity has an interest

       NIL




  Financing facilities available
  Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

                                                                  Amount available                 Amount used
                                                                     $A’000                          $A’000
3.1    Loan facilities                                                                  -                                -

3.2    Credit standby arrangements                                                      -                                -




  Ceramic Fuel Cells Limited – Quarterly Cash Flow Report for the quarter ended 30 June 2011                       Page 3
                                                                                                 Appendix 4C
                                                                                 Quarterly report for entities
                                                                        admitted on the basis of commitments


Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown          Current quarter          Previous quarter
in the consolidated statement of cash flows) to the related            $A’000                    $A’000
items in the accounts is as follows.
4.1    Cash on hand and at bank                                                 12,803                   18,796

4.2    Bank term deposits (up to 3 months duration)                              3,050                    3,000

4.3    Bank overdraft                                                                 -                         -

4.4    Other
                                                                                      -                         -
       Total: cash at end of quarter (item 1.23)                                15,853                   21,796


Financial Assets (Bank term deposits pledged as security)                        3,204                    2,462

Total Cash and Financial Assets at end of quarter                               19,057                   24,258




Acquisitions and disposals of business entities
                                        Acquisitions                      Disposals
                                        (Item 1.9(a))                     (Item 1.10(a))
5.1    Name of entity                   Not applicable                    Not applicable
5.2    Place of incorporation
       or registration
5.3    Consideration for
       acquisition or disposal
5.4    Total net assets

5.5    Nature of business



Compliance statement

1     This statement has been prepared under accounting policies which comply with accounting
      standards as defined in the Corporations Act (except to the extent that information is not
      required because of note 2) or other standards acceptable to ASX.

2     This statement does give a true and fair view of the matters disclosed.




Sign here:        .......................................   Date:   25 July 2011

Print name:       John Dempsey
                  Director



Ceramic Fuel Cells Limited – Quarterly Cash Flow Report for the quarter ended 30 June 2011                 Page 4
                                                                                                Appendix 4C
                                                                                Quarterly report for entities
                                                                       admitted on the basis of commitments



Notes

1.       The quarterly report provides a basis for informing the market how the entity’s activities have
         been financed for the past quarter and the effect on its cash position. An entity wanting to
         disclose additional information is encouraged to do so, in a note or notes attached to this
         report.

2.       The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this
         report except for the paragraphs of the Standard set out below.

                   6.2     - reconciliation of cash flows arising from operating activities to
                              operating profit or loss
                   9.2     - itemised disclosure relating to acquisitions
                   9.4     - itemised disclosure relating to disposals
                   12.1(a) - policy for classification of cash items
                   12.3 - disclosure of restrictions on use of cash
                   13.1 - comparative information

3.       Accounting Standards. ASX will accept, for example, the use of International Accounting
         Standards for foreign entities. If the standards used do not address a topic, the Australian
         standard on that topic (if any) must be complied with.




Ceramic Fuel Cells Limited – Quarterly Cash Flow Report for the quarter ended 30 June 2011           Page 5

				
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