Hydrogen is increasingly being talked up as part of the solution to our climate change conundrum and fuel cell specialist Ceres Power (CWR) is hoping to play a key role in a clean energy future. Its ‘solid oxide fuel cell’ – known as the ‘SteelCell’ – is capable of running on hydrogen and the company is also investing to make its technology suitable for electrolysis – splitting water into hydrogen and oxygen using electricity.
Revenue is generated via two streams – engineering services to adapt the SteelCell for particular applications, and fees from licensing out its technology. While upfront license payments dropped by over a fifth in the year to 30 June, to £5.8m, this was more than offset by engineering revenue jumping by two-thirds to £13.1m. On the back of a 73 per cent margin, Ceres’ gross profit therefore increased by a fifth to £13.8m. As its partners ramp up production, the company is aiming for most of its revenue to eventually come from licensing.
In the meantime, as it continues to invest in growth – such as a new manufacturing facility – operating losses widened to £10.1m, versus £7.9m a year earlier. Moving forward, Ceres’ financial year will end in December and house broker Investec expects a £14.6m operating loss in 2020, ticking down to £13.4m in 2021.
Thanks to £49m-worth of equity investments from German engineering giant Bosch and Chinese engine maker Weichai, Ceres is sitting on £108m of cash and short-term investments and has no long or short-term borrowings.
| CERES POWER (CWR) | ||||
| ORD PRICE: | 541p | MARKET VALUE: | £ 927m | |
| TOUCH: | 536-543p | 12-MONTH HIGH: | 674p | LOW: 203p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 75p | NET CASH: | £103m | |
| Year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 1.11 | -12.6 | -1.35 | nil |
| 2017 | 3.12 | -11.4 | -1.00 | nil |
| 2018 | 6.33 | -11.9 | -9.78 | nil |
| 2019 | 15.3 | -7.37 | -3.43 | nil |
| 2020 | 18.9 | -9.69 | -4.60 | nil |
| % change | +24 | - | - | - |
| Ex-div: | na | |||
| Payment: | na |
