RNS Number:6093D
Ceres Power Holdings plc
11 September 2007

11 September 2007

                            Ceres Power Holdings plc

                    ('Ceres', 'Ceres Power' or 'the Group')

              Preliminary results for the year ended 30 June 2007

Ceres Power Holdings plc announces its preliminary results for the year ended 30
June 2007.


   *Integrated wall-mountable CHP Unit demonstrated
   *All milestones met on the CHP programme with British Gas
   *#0.6m contract secured with EDF Energy Networks for on-site power
   *New Product Facility fit-out completed
   *Machinery for cell manufacturing scale-up installed and being
   *Established supply chain for key balance of plant with global
   *Brian Count, ex-Innogy plc CEO, appointed Non-Executive Director
   *43% increase in income from private and public sector contracts to #1.1m
   *#11.1m in cash and short term investments

Results Summary

                                                 2007            2006
                                            Unaudited       Unaudited

                                                        (as restated)

                                                #'000           #'000
Turnover                                           98             110
Other operating income                            970             636
*Operating loss                                (4,709)         (3,888)
Interest income                                   597             630
*Adjusted Loss for the financial year          (3,696)         (3,180)
**Adjusted loss per share                       (6.26)p         (5.58)p
Net cash outflow                               (2,879)         (3,023)

* calculated before share-based payments charge (operating loss and loss for the
financial year including share-based payments are #5,879,000 (2006: #4,489,000)
and #4,866,000 (2006: #3,781,000) respectively)

** Adjusted loss per share calculated before share-based payments charge (see
note 4 to the preliminary financial information)

Philip Holbeche, Chairman, commented:

'I am delighted to report that the Group has successfully demonstrated an
integrated wall-mountable Combined Heat and Power (CHP) Unit that is capable of
generating electricity and all of the central heating and hot water requirements
of a typical home. Achievement of this important milestone is not only a
significant step forward in the commercialisation of our unique technology but
also represents an industry-leading position. We are now focusing on value
engineering of the CHP Unit and the scale-up of core manufacturing processes'

For further information contact:

Philip Holbeche, Chairman
Peter Bance, Chief Executive                                +44 (0) 1293 400 404
Ceres Power

Patrick d'Ancona / Charlotte Kirkham                        +44 (0) 207 153 1531
M: Communications

Chairman's Statement

Business Transition

There has been major progress in all aspects of the business during the year.
The Group has made substantial technical advances and expanded its commercial
relationships. The platform technology has been developed from a 1kW stack, to a
Fuel Cell Module suitable for a range of market applications including an
integrated wall-mountable Combined Heat and Power (CHP) Unit. A new Product
Facility is completing its commissioning, and planning is under way for a major
new plant (the 'Mother Plant') to manufacture fuel cells in substantial volumes.
These various advances form the basis of Ceres Power's transition towards
becoming a product business.

The relationship with British Gas has continued to develop, with all milestones
achieved to date on the residential CHP programme. The most recent announcement
of the demonstration of an integrated wall-mountable CHP Unit, with the Ceres
Fuel Cell Module at its heart, has shown that the Group has the capabilities
required to design and build a product appropriate for the UK and overseas
markets. The integrated CHP Unit runs off mains natural gas and utilises
existing water, gas and electricity connections, ensuring that it will be
straightforward to install. The focus is now on value engineering the CHP Unit
and the scale-up of core manufacturing processes.

The CHP Unit is capable of generating electricity and all of the central heating
and hot water requirements of a typical home, substantially reducing carbon
dioxide emissions through the much more efficient use of resources. The fuel
cell technology at the core of the Unit can deliver high efficiency operation on
multiple fuels, including mains natural gas, bottled gas/LPG, hydrogen, methane
and biofuels. With increasing political and industrial interest in the
development of micro-power generation options, the widespread uptake of
residential fuel cell CHP units would greatly lessen the need for investment in
power stations and the electricity grid infrastructure.

EDF Energy Networks has awarded the Group a #0.6 million contract to design,
build and evaluate energy security products for the UK residential market. The
programme is expected to deliver initial prototype units for evaluation in 2008
and 2009. The product is designed to provide reliable back-up electricity from
cylinder gas and it has wide applicability in the developed world and the
affluent developing world.

The physical expansion of the Group continued with the completion of a new
Product Facility on the Crawley site. The facility will enable us to validate
volume manufacturing processes before transfer to a mass manufacturing fuel cell
plant on a separate site and to build prototype products for field trials.
Planning for the 'Mother Plant' is being carried out currently and it is
expected that commissioning of this new facility will begin in 2008 and that it
will become operational during 2009.

Industry Leadership

The Group continues to play a leading role in placing fuel cells and
micro-generation on the UK's energy agenda. We were extremely pleased to welcome
the current British Prime Minister Gordon Brown to our Crawley operations in
March 2007, when we were able to outline the potential benefits of widespread
uptake of our CHP products.


The Group delivered a strong financial performance for the year. Income for the
year ended 30 June 2007 totalled #1.67 million (2006: #1.38 million) of which
interest on cash balances provided #597,000 (2006: #630,000). Income from
private and public sector contracts totalled #1,068,000 (2006: #746,000), an
increase of 43% over the prior year, and the first time that contract revenues
have exceeded #1 million.

The scaling-up of the capabilities of the Group is reflected in the increased
operating expenditure (before share-based payments charges) which rose by 25% to
#5,777,000, as a result of the recruitment of experienced personnel and the
depreciation of additional equipment. The adjusted loss for the year (before
share-based payments charges) increased by 16% to #3,696,000 (2006: #3,180,000).

The Group's liquidity position continues to be robust with #11.1 million in cash
and short term investments as at 30 June 2007. The net cash outflow for the year
was #2.9 million (2006: #3 million).

The Group has adopted the newly introduced accounting standard FRS 20,
'Share-based Payment', in line with current reporting standards and has changed
its accounting policy with respect to equity-settled share-based payments
provided to employees under the Company's share option scheme. This has resulted
in a charge of #1,170,000 in the current year and a prior year charge of
#601,000 for the year ended 30 June 2006. This charge has no impact on the
Group's cash flow or net assets.


Ceres Power has continued to build its experienced and highly motivated team,
with a recent focus on personnel with manufacturing expertise to build
production capability.

In addition, we were extremely pleased to welcome Brian Count as a non-executive
director of the Group in March 2007. Dr Count was Managing Director of National
Power in the UK and Chief Executive of Innogy and he provides insights into the
nature and working of electricity markets, utility companies and government

The philosophy of the Group has always been to consider every employee as a
valued member of the team, with an equity stake in the business and with the
opportunity to build a satisfying and rewarding career. I wish to thank each of
them for their important contributions to the enormous progress that has been

Philip Holbeche

Chief Executive's Review

Business Environment

The external environment for Ceres' products is becoming increasingly favourable
as a result of a number of powerful drivers. Heightened consumer awareness of
environmental issues coupled with higher energy bills are beginning to affect
real spending decisions. Governments are implementing a wide range of regulatory
and fiscal incentives on regional, national and international levels to
encourage changes to current models of energy provision and to stimulate the
uptake of more efficient and environmentally-friendly alternatives. Creating
power at the point of use, or so-called 'micro-generation', is increasingly
being seen as a compelling alternative to centralised generation, due to the
inherent economic and environmental benefits, with high-efficiency fuel cell
technology now recognised as a potentially key enabler. Corporations in a range
of industries across the Group's supply chain are looking for new growth
opportunities in this rapidly developing sector and attempting to position
themselves to thrive in this emerging decentralised energy world.

The Group is now well placed to commercialise its patented technology. Through
the deployment of energy saving, low emission and cost-effective products the
Group will have the ability to address a number of the key challenges facing
consumers, businesses and governments worldwide.

Business strategy

The Group's business strategy remains driven by global market opportunities for
alternative energy products which can reduce carbon emissions and address the
issues of energy savings, energy security and fuel poverty.

Products - Our product strategy is to focus on the development of CHP market
applications based on the core Ceres' Fuel Cell Module. The compactness,
cost-effectiveness and robustness of this module, together with its ability to
operate on mains gas and cylinder fuels, provides an excellent platform for

development of a range of closely related products for on-grid and off-grid
applications both in the UK and overseas markets.

Supply Chain - Development of strong supply chain partnerships is a vital
element of the Group's strategy. A key focus of our commercial activities
continues to be securing upstream relationships with volume suppliers of raw
materials, balance of plant components and machines for manufacturing. We are
confident that progress on these activities, with initial engagements secured
with major companies, will minimise production risk as we make the transition to
volume manufacturing.

Manufacturing - The Group plans to establish its own mass manufacturing
capability to produce the core fuel cells in volume and is partnering with other
companies for the final assembly of CHP products. The Group is commissioning its
Product Facility to produce limited numbers of complete prototypes and validate
key manufacturing processes ahead of the planned scale-up into the volume fuel
cell manufacturing plant.

Intellectual Property - The Group's strategy is to register, protect and exploit
its intellectual property assets which form the basis of its unique technology
and product range. A significant IP portfolio has been developed in the form of
patents, trademarks and know-how, covering a range of innovations spanning
materials, product designs and manufacturing processes. Our background IP has
enabled us to enter into supply chain and market channel relationships from a
position of strength and so pave the way to maximise value capture.

Channels to Market - By partnering with large energy companies with millions of
customers, the Group is building the channels to get product to market in
volume. We are pleased with the progress that has been achieved in our CHP
programme with British Gas and we were delighted to announce a new relationship
with EDF Energy Networks to design, build and evaluate home energy security
products. Both these product variants also have major potential in overseas
markets which we plan to exploit over time as part of our global market entry

Business Operations

Over the past year we have significantly de-risked the business by developing
significant product and manufacturing capabilities. The Group has also achieved
meaningful growth in income from contracts as a result of securing further
commercial agreements and delivering on government programmes. The key
achievements over the last twelve months have included:

   *Designed, built and demonstrated an industry-leading natural gas fed
integrated wall-mountable combined heat and power unit capable of generating
electricity and all of the central heating and hot water requirements of a
typical UK home
   *Met all technical and commercial milestones for private and public
contracts, delivering income in excess of #1 million
   *Secured a funded contract with EDF Energy Networks worth #600,000 to
design and build energy security products for the UK residential market
   *Established supply chain relationships for all key balance of plant
components with well-established volume manufacturers in Europe and the USA
from industries including automotive and white goods
   *Secured and fitted-out a dedicated Product Facility to scale-up fuel cell
manufacturing processes for mass production with all key machinery
successfully installed and being commissioned

We continue to invest in our operational capabilities to minimise development
lead time, cost, and technical risk and to maximise the potential for value
capture as part of our product commercialisation path.


Building on the strong technical and commercial achievements of the past year,
the Group is focusing on accelerating time to market and building an operational
capability to scale the business. To deliver on this objective and secure the
emerging commercial opportunities, the priorities for 2008 are as follows:

   *Value engineering of the CHP Unit, focusing on part count and cost
reductions, performance improvements and optimisation of the product
ergonomics in terms of size and weight
   *Validation of key mass manufacturing processes through statistical
process trials in the Product Facility in preparation for volume scale-up
   *Completion of planning for the 'mother plant' and securing an appropriate
site for the facility
   *Delivery of contract milestones under existing collaborative programmes
with British Gas, EDF and other partners
   *Grow revenues with existing partners and establish new market channel

I look forward to reporting on further developments and progress over the coming

Peter Bance

Chief Executive Officer


for the year ended 30 June 2007

                                                 2007       2006
                                     Note   Unaudited  Unaudited

                                                #'000  restated)

Turnover                                          98         110
Research and development costs                (4,922)     (3,495)
Administrative expenses                       (2,025)     (1,740)
Other operating income                           970         636

Operating loss before share-based             (4,709)     (3,888)
Share-based payments charge                   (1,170)       (601)

Operating loss                                (5,879)     (4,489)
Interest receivable and similar                  597         630
Loss on ordinary activities before            (5,282)     (3,859)
Tax credit on loss on ordinary                   416          78
Loss for the financial year            7      (4,866)     (3,781)

Loss per #0.05 ordinary share
- basic and diluted                    4       (8.24)p     (6.63)p


as at 30 June 2007

                                            2007      2006
                                       Unaudited Unaudited

                                  Note     #'000     #'000
Fixed assets
Tangible assets                            1,842     1,870

Current assets
Debtors: amounts falling due                  53        53
after more than one year
Debtors: amounts falling due                 628       554
within one year
Short term investments             8       9,500    11,900
Cash at bank and in hand                   1,642     2,121
                                          11,823    14,628
Creditors: amounts falling due              (788)     (438)
within one year
Net current assets                        11,035    14,190
Total assets less current                 12,877    16,060
Net assets                                12,877    16,060

Capital and reserves
Called up share capital            5       2,981     2,925
Share premium account                     15,594    15,137
Other reserve                              7,463     7,463
Profit and loss account                  (13,161)   (9,465)
Shareholders' funds                7      12,877    16,060


for the year ended 30 June 2007
                                                        2007       2006
                                           Note    Unaudited  Unaudited

                                                       #'000      #'000
Net cash outflow from operating activities   6        (3,894)    (3,613)
Returns on investments
Interest received                                        597        630
Net cash inflow from returns on                          597        630
Taxation                                                 494          -
Capital expenditure
Purchase of tangible fixed assets                       (577)    (1,099)
Net cash outflow for capital expenditure                (577)    (1,099)
Net cash outflow before management of                 (3,380)    (4,082)
liquid resources and financing
Management of liquid resources
Decrease in short term deposits with banks             2,400      3,700
Issue of ordinary share capital              5           501      1,009
Net expenses of share issue                                -         50
Net cash inflow from financing                           501      1,059
(Decrease) / increase in net cash                       (479)       677
Reconciliation to net funds
Opening net funds                                     14,021     17,044
(Decrease) / increase in net cash                       (479)       677
(Decrease) in short term deposits                     (2,400)    (3,700)
Closing net funds                                     11,142     14,021

Notes to the preliminary announcement

1. Basis of preparation

These preliminary results do not constitute statutory financial statements
within the meaning of Section 240 of the Companies Act 1985.

The results for the year to 30 June 2007 have not been audited. The statutory
accounts and auditors' report for the year ended 30 June 2007 have not yet been
signed by the directors or the auditors respectively. The results for the year
ended 30 June 2006 have been extracted from the statutory financial statements
for that year, that have been filed with the Registrar of Companies and upon
which the auditors have reported without qualification.

2. Principal accounting policies

These preliminary results for the year ended 30 June 2007 have been prepared in
accordance with the accounting policies set out in the statutory financial
statements of Ceres Power Holdings plc for the year ended 30 June 2006, with the
exception of the adoption of Financial Reporting Standard (FRS) 20, 'Share-based
Payment'. The adoption of FRS 20, constitutes a change in accounting policy.
Therefore, the impact has been reflected as a prior year adjustment in
accordance with FRS 20. Note 3 sets out the effect of adopting FRS 20.

3.       FRS 20 Share-based Payments

The Group is required to adopt FRS 20, 'Share-based Payment', for the first time
for accounting periods commencing on or after 1 January 2006. In accordance with
the transitional provisions of FRS 20, the Group is required to recognise an
expense in respect of options granted after 7 November 2002 that were unvested
as of 1 January 2006. This expense, which is calculated by reference to the fair
value of the options granted, is recognised on a straight line basis over the

performance period based on the Group's estimate of options that will eventually
vest. The charge is then credited back to reserves. The adoption of this
Standard has no effect on the Group's cash flow or net assets.

Comparative figures for the year to 30 June 2006 have been restated to apply the
provisions of FRS 20, increasing expenses and the loss for the year as shown
                                                 2007       2006
                                            Unaudited  Unaudited

                                                #'000      #'000
Loss for the financial year                    (4,866)    (3,781)
Share-based payments charge                     1,170        601
Adjusted loss for the financial year           (3,696)    (3,180)
before FRS 20 Share-based Payments

4. Loss per share
                                                  2007       2006
                                             Unaudited  Unaudited

                                                 #'000      #'000

Loss per #0.05 ordinary share
Loss for the financial year                     (4,866)    (3,781)
Share-based payments charge                      1,170        601

Adjusted loss for the year before               (3,696)    (3,180)
FRS 20 Share-based payments

Weighted average number of shares           59,057,064  57,039,938
in issue

Basic and diluted loss per share                 (8.24)p    (6.63)p
Adjusted basic and diluted loss                  (6.26)p    (5.58)p
per share before FRS 20
Share-based payments

5. Called up share capital

                                           2007                    2006
                                    Number      #'000      Number        #'000
Ordinary shares of #0.05 each    100,000,000    5,000    100,000,000     5,000

Allotted, called up and fully
Ordinary shares of #0.05 each     59,618,027    2,981     58,504,885     2,925

Between 11 October 2006 and 29 June 2007, the Company issued 205,525 ordinary
shares of #0.05 each on the exercise of employee share options for cash
consideration of #83,746.

Between 18 July 2006 and 20 June 2007, 902,405 ordinary shares of #0.05 each
were issued on the exercise of warrants for cash consideration of #417,023.

During the year, a total of 5,212 ordinary shares of #0.05 each were issued as
remuneration for services provided by a non-executive director. The value of the
shares on the day of issue totalled #11,798.

6. Net cash outflow from operating activities

Reconciliation of operating loss to net cash outflow from operating activities:
                                                 2007       2006
                                            Unaudited  Unaudited
                                                #'000      #'000
Operating loss                                 (5,879)    (4,489)
Depreciation charge                               674        494
Loss on disposal of fixed assets                    -          1
Share-based payments charge                     1,170        601
Share-based remuneration for services              12          -
(Increase) in debtors                            (129)      (213)
Increase / (decrease) in creditors                258         (7)
Net cash outflow from operating activities     (3,894)    (3,613)

7. Reconciliation of movements in shareholders' funds

                                                 2007       2006
                                            Unaudited  Unaudited

                                                #'000      #'000
Loss for the financial year                    (4,866)    (3,781)
Proceeds of issue of ordinary share               513      1,009
Share-based payments charge                     1,170        601
Share issue costs                                   -         50
Net change in shareholders' funds              (3,183)    (2,121)
Opening shareholders' funds                    16,060     18,181
Closing shareholders' funds                    12,877     16,060

8. Short term investments

Short term investments comprise cash deposits at bank.

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