Ceres Power Holdings Plc (LON:CWR) has released a pre-close trading update confirming the business is on track financially, commercially and operationally at the interim stage of the year. Revenue and other operating income in H118 is expected to be up 80% yoy at c. £3.0m (HY17: £1.6m). FY18 forecasts assumes yoy growth in revenue of c.45% to £6.0m (FY17: £4.1m), indicating the business is on track to at least meet current year estimates. The good performance in the early part of the year follows on from the FY17 results which showed the business making material progress yoy. Importantly, Ceres has announced a further Technology Assessment Agreement with a new leading Global OEM as well as stating that it is in the final stages of agreements with other commercial partners. We leave forecasts unchanged but the commercial developments alluded to in today’s statement are a positive indicator for future revenue growth.
Positive news flow and commercial progress as the business achieves its stated short-term milestones: Today’s statement reports that Ceres has again moved forward commercially with the announcement of a new Technology Assessment Agreement (TAA) with a global OEM. The OEM will assess Ceres’ SteelCellTM technology for combined heat and power applications. If this proves successful it should lead to a Joint Development Agreement which would generate additional revenue. In addition to the TAA, Ceres has continued to meet milestones with its existing partners including Honda, Nissan and Cummins. It is also on course to begin field trials in 2018 with its unnamed partner, post completing the technology transfer enabling It to develop a multi-kW CHP product. Further positive news flow should be expected as additional TAAs and JDAs are signed.
Financial performance good and on target to meet FY18 expectations: The FY17 results (announced 4th October) showed revenue increasing 140% to £4.1m resulting in a better than expected performance in the EBITDA loss of £10.3m, a £1.2m improvement on FY16. Today’s update indicates that the business has continued to move forward since June with c. £3.0m of revenue in the first half. With the potential for further positive news flow in H2 confidence in current FY18 revenue forecasts of £6.0m is increasing.
Balance sheet in good shape: At the end of FY17 Ceres Power Holdings Plc had £17.2m of net cash on its balance sheet, post the c.£20.0m fund raising from new and existing shareholders in October of last year. The good financial performance in H1 underpins our current year forecast of net cash of £7.9m.
