New licence fees have driven revenues and the gross margin for Ceres Power (CWR) at the half-year mark, but given where the "next generation" fuel cell developer is on the road towards full commercial exploitation, we shouldn’t read too much into the figures. Of more significance is the continued switch to revenue generated by customers, as opposed to external grants.
Management anticipates that licence fees will continue to provide a "significant proportion" of future revenues until royalties begin, though the blue-sky element of investments in eco-friendly motoring was put into sharp relief a day prior to these results, when it was announced that Beijing was slashing subsidies for electric vehicles. Most green industries rely on a degree of public support, so the move by China – the world’s largest EV market – demonstrates the inherent risk in backing nascent or early-stage industries – regardless of the commercial advantages of the company’s fifth generation SteelCell technologies.
Nevertheless, management was justified in trumpeting new licence deals with Robert Bosch in Germany and Weichai Power, a leading Chinese engine manufacturer. The latter collaboration includes a licence agreement that will result in technology transfer payments of up to £30m and ongoing future royalties to Ceres.
Investec is expecting adjusted pre-tax losses to continue for the foreseeable future, and expects a loss of £8.4m in FY2019 and £7.8m in FY2020.
| CERES POWER HOLDINGS (CWR) | ||||
| ORD PRICE: | 150p | MARKET VALUE: | £ 228m | |
| TOUCH: | 144.1-150p | 12-MONTH HIGH: | 210p | LOW: 100p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 57p | NET CASH: | £78.4m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 2.63 | -6.14 | -5.12 | nil |
| 2018 | 8.11 | -2.81 | -1.44 | nil |
| % change | +209 | - | - | - |
| Ex-div: | na | |||
| Payment: | na |
