Energy Products
Global Markets
www.cerespower.com
Ceres Power Holdings plc 
Unit 18
Denvale Trade Park
Haslett Avenue East
Crawley
RH10 1SS
Phone: +44 (0)1293 400 404
Fax: +44 (0)1293 400 482
E-Mail: info@cerespower.com
Ceres Power Holdings plc
Annual Report 2007
Ceres Power Holdings plc Annual Report 2007 Contents
01	 	 Highlights
02	 	 Global	Challenges
03	 	 Alternative	Energy	Solutions		 04	 	 Chairman’s	Statement
06	 	 Chief	Executive’s	Review
08	 	 Product	Development
10		 Operational	Capability
12		 Market	Opportunities
14		 Value	Capture
16		 Directors	and	Senior	Management
18		 Corporate	Social	Responsibility	 19		 Corporate	Governance	Statement
20	 	 Directors’	Report
24			 Independent	Auditors’	Report
25			 	Consolidated	Profit	and	 	 Loss	Account
25	 	 Consolidated	Statement	of	Total		 	 	 Recognised	Gains	and	Losses
26			 	Consolidated	and	Company 	 Balance	Sheets
27	 	 Consolidated	Cash	Flow	Statement
28			 	Reconciliation	of	Movements	in	 Shareholders’	Funds
29	 	 Notes	to	the	Financial	Statements
IBC	Directors	and	Advisors
CERES POWER HOLDINGS PLC   ANNUAL	 REPORT	 2007
Ceres	Power	is	committed	to	providing	 alternative	energy	solutions	to	address	 	 the	global	challenges	of	reducing	emissions,	 increasing	fuel	efficiency	and	improving	 	 energy	security
Micro-generation
Creating electricity at the point of use is highly efficient 
compared with centralised power generation because 
transmission and heat losses are avoided. Ceres Power has 
demonstrated an industry-leading residential Combined 
Heat and Power (CHP) Unit capable of generating 
electricity and all of the hot water and central heating 
required for a typical UK home, without the need for a 
separate boiler. 
Directors
Philip Holbeche
1,2
Chairman
Peter Bance
1,2
Chief Executive Officer
Andrew Baker
1,2
Operations Director
Rex Vevers
1,2
Finance Director
Bob Flint
2 
Commercial Director
Nigel Brandon
2
 
Chief Scientist
Brian Count
1 
Non-Executive Director
John Gunn
1 
Non-Executive Director
Secretary 
Matthew Stride
Registered Office
Unit 18
Denvale Trade Park
Haslett Avenue East
Crawley 
RH10 1SS
Registered Number
5174075
1 Ceres Power Holdings plc
2 Ceres Power Limited
Solicitors
Taylor Wessing LLP
Carmelite
50 Victoria Embankment
Blackfriars
London
EC4Y 0DX
Registered Auditors
PricewaterhouseCoopers LLP
Abacus House
Castle Park
Cambridge 
CB3 0AN 
Bankers
National Westminster Bank plc
South Kensington Station Branch
PO Box 592
18 Cromwell Place
London
SW7 2LB
Nominated Advisor (NOMAD)
Morgan Stanley & Co International plc
25 Cabot Square
Canary Wharf
London
E14 4QA
Broker
Morgan Stanley Securities Limited
25 Cabot Square
Canary Wharf
London
E14 4QA
Registrar
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgwater Road
Bristol 
BS99 7NH
Directors and Advisors 0 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
•	 Integrated	wall-mountable	CHP	Unit	demonstrated
•	 	All	 milestones	 met	 on	 CHP	 programme	 with	 British	 Gas
•	 	Funded	contract	secured	with	EDF	Energy	Networks
•	 New	Product	Facility	fit-out	completed
•	 	Machinery	 for	 fuel	 cell	 manufacturing	 scale-up	 installed
•	 	Global	 supply	 chain	 established	 for	 balance	 of	 plant	 components
•	 	43%	increase	in	income	from	contracts
 	to	£  . m
•	 £  . m	in	cash	and	short	term	investments	at	30	June	2007
Significant advances form the basis of  
Ceres Power’s transition towards a high  
growth product business 
Highlights
	 Private	and	public	sector	contracts 02
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
Global Challenges
Increasing Greenhouse Gases
Power Generation Losses
Rising Energy Demand
	  64%
forecast	increase	in	CO
2
	emissions	 	 from	power	generation	by	2050
Source	–	IEA,	Energy	Technology	Perspectives,	2006
Global energy demand and CO
2
 emissions are predicted 
to more than double by 2050, with fossil fuels remaining 
the dominant source of energy. The challenge facing the 
world is to meet rising energy demand whilst moving to  
a low carbon economy. Meeting this global challenge  
will require a shift to new and improved technology  
in sectors such as power generation, transport and  
the built environment.
66%
of	the	fuel	burned	for	power	 	 generation	is	lost
Source	–	IEA,	Energy	Technology	Perspectives,	2006
According to the International Energy Agency, more 
efficient production and use of energy could be the single 
largest and most cost-effective contributor to reductions  
in CO
2
 emissions. The adoption of Combined Heat and 
Power (CHP), which utilises the thermal energy that is 
normally wasted, can significantly improve energy  
supply efficiency. 
$20	 trillion
cumulative	 investment	 required	 in	 	 energy	 supply	 infrastructure	 by	 2030
Source	–	World	Energy	Outlook,	2006
To meet the world’s growing energy demands, cumulative 
investment of over $20 trillion will be needed by 2030 
across the energy supply chain. The power sector will 
require $11 trillion of investment in new power generation 
plants and associated transmission and distribution 
systems. Micro-generation improves resource utilisation 
and lessens the need for investment in centralised power 
generation and grid infrastructure.  CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
03
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
Alternative Energy Solutions
Reducing Emissions
The generation of electricity and heat, for use primarily  
in domestic and commercial buildings and industry, 
represents 25% of all greenhouse gas emissions.  
Ceres micro-generation products have the potential  
to substantially reduce the carbon footprint of the 
built environment.
According to the World Business Council for Sustainable 
Development, buildings consume 40% of the world’s 
primary energy, making it the most energy-hungry sector. 
The use of a Ceres CHP Unit installed in a home is a 
compelling alternative to centralised generation with its 
associated transmission and heat losses.
A Ceres CHP Unit generating electricity and heat at  
the point of use would reduce the need for investment  
in centralised power stations and grid infrastructure.  
The high efficiency energy conversion of the fuel cell  
also improves energy security by reducing the overall  
use of scarce resources and by having the capability to 
operate on a range of conventional and alternative fuels.
Increasing Efficiency
Improving Energy Security 04
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
Company History
2001
Ceres	 Power	 founded	 2002
HQ	 established	 in	 Crawley,	 UK	 2003
Awarded	 Carbon	 Trust	 Innovator	 of	 the	 Year	 2004
AIM	 flotation	 raising	 £ 5m	 2005
CHP	 partnership	 established	 with	 British	 Gas
2006
 kW	 Stack	 designed	 and	 built	 2007
Wall-mountable	 CHP	 Unit	 demonstrated
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 has 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. The fit-out of a new Product 
Facility has been completed, and the planning 
of our first mass manufacturing facility  
(‘Mother Plant’) is under way. These various 
advances form the basis of Ceres Power’s 
transition towards becoming a high growth 
product business.
Our 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 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 hot water and central 
heating required for a typical UK home, 
thereby substantially reducing CO
2
 emissions 
through the 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, LPG, hydrogen and biofuels. With 
increasing political and industrial interest  
in the development of micro-generation,  
the widespread uptake of residential fuel  
cell CHP units would lessen the need for 
investment in power stations and electricity 
grid infrastructure.
EDF Energy Networks has awarded the Group a 
contract worth £0.6 million 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 has wide applicability in developed 
countries and in the 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. Detailed planning for the Mother 
Plant is currently being carried out. 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 Gordon Brown, the British 
Prime Minister, to our Crawley operations, 
where we outlined the potential benefits of the 
widespread uptake of our CHP products. CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
05
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
Financials
The Group delivered a strong financial 
performance during 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), which represents an increase of 43% 
over the previous year, and the first time that 
contract income has exceeded £1 million.
Investment in the Group’s capabilities  
is reflected in the increased operating 
expenditure (before share-based payments 
charges) which rose by 25% to £5,777,000. 
This was 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) and the reported loss was 
£4,866,000 (2006: restated £3,781,000). 
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: £3.0 million).
The Group has adopted the newly  
introduced accounting standard FRS 20, 
‘Share-based Payment’. This is in line  
with current reporting standards and has 
changed the Group’s accounting policy  
with respect to equity-settled share-based 
payments provided to employees under  
the Group’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. 
These charges had no impact on the Group’s 
cash flow or net assets.
People
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 plc.  
He provides valuable insights into the nature 
and workings of electricity markets, utility 
companies and government policy.
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 develop a satisfying and rewarding career.  
I wish to thank each of them for their important 
contributions to the enormous progress that 
has been achieved. 
Philip Holbeche
Chairman
Ceres	 Power	 	 is	 ” one	 of	 	 the	 most	 promising	 companies	 in	 the	 country”
Prime Minister
Gordon Brown 06
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
Chief Executive’s Review
The	 Group	 is	 focusing	 on	 time	 to	 market	 and	 building	 an	 operational	 capability	 to	 grow	 the	 business
Business Environment
The external environment for the Group is 
becoming increasingly favourable due to  
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. 
‘Micro-generation’, creating power at the  
point of use, is increasingly being seen  
as a compelling alternative to centralised 
generation. This is due to its inherent 
economic and environmental benefits, with 
high efficiency fuel cell technology now 
recognised as a potential key enabler.
Corporations in a range of industries across 
the Group’s supply chain are seeking  
new growth opportunities in this rapidly 
developing sector and are attempting  
to position themselves to thrive in an  
emerging decentralised energy world.
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 Combined Heat and 
Power (CHP) market applications based  
on the core Ceres fuel cell module. The 
compact, cost-effective and robust nature  
of this module, together with its ability to 
operate on mains natural gas and packaged 
fuels, provides an excellent platform for the 
development of a range of closely related 
products. The Group’s wall-mountable CHP 
design enables mass market access for  
on-grid and off-grid applications, both in  
the UK and overseas.
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 continued progress on these activities  
will minimise business risk as we make the 
transition to volume manufacturing. 
Manufacturing: The Group is establishing  
its own mass manufacturing capability to 
produce fuel cells in volume, and is partnering 
with other companies for final assembly  
of CHP units. A Product Facility is being 
commissioned to validate key manufacturing 
processes ahead of the planned scale-up  
into the Mother Plant.
78%
of	all	residential	 	 boilers	sold	in	 Western	Europe	 	 are	wall-mounted
Source	–	BSRIA CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
07
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
Intellectual Property: The Group’s strategy 
is to register, protect and exploit its intellectual 
property (IP) 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. The portfolio covers 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 
companies which have millions of customers, 
the Group is building the necessary channels 
to get products to market in volume. We are 
delighted with the progress that has been 
achieved in our CHP programme with British 
Gas. A new relationship has also been 
established with EDF Energy Networks to 
address the market for energy security products. 
These residential CHP and energy security 
products have major potential in overseas 
markets which we plan to exploit over time  
as part of our global market entry strategy.
Business Operations
We have significantly de-risked the business 
over the past year by further developing 
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. During the last 
twelve months, the Group has:
 Demonstrated an industry-leading  
wall-mountable CHP Unit capable of 
generating electricity and all of the hot 
water and central heating required for  
a typical UK home
 Met all milestones for private and public 
contracts, delivering income in excess  
of £1 million
 Secured a funded contract with EDF 
Energy Networks to design and build 
energy security products 
 Established global supply chain relationships 
for all key balance of plant components 
 Secured and completed the fit-out of a 
dedicated Product Facility to validate fuel 
cell mass manufacturing processes 
•
•
•
•
•
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. 
Outlook
Building on the strong technical and 
commercial achievements of the past year,  
the Group is focusing on time to market and 
building an operational capability to grow the 
business. To deliver on these objectives and  
to secure emerging commercial opportunities, 
the priorities for 2008 are:
 Value engineer the CHP Unit, focusing  
on performance improvements and 
reductions in part-count, cost, size  
and weight
 Validate key mass manufacturing 
processes through statistical process  
trials in the Product Facility in preparation 
for volume scale-up
 Complete planning for the Mother Plant and 
secure an appropriate site for the facility 
 Deliver contract milestones under existing 
collaborative programmes with British Gas, 
EDF Energy Networks and other partners
 Grow revenues with existing partners and 
establish new market channel relationships
I look forward to reporting on further 
developments and progress during the
coming year.
Peter Bance
Chief Executive Officer
•
•
•
•
• 08
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
Product Development
Demonstration	 of	 an	 integrated	 wall-mountable	 CHP	 Unit	 represents	 a	 major	 technical	 milestone	 in	 the	 development	 of	 Ceres	 Power	 as	 a	 product	 business	 Cell
The unique Ceres fuel  
cell is comprised of thin 
electro-chemical layers 
deposited onto a stainless 
steel substrate. Its operating 
temperature range of  
500–600ºC is ideally  
suited to CHP applications. 
Stack
The fuel cell stack is a 
layered construction of cells 
separated by stainless steel 
interconnects which enable 
fuel and air to flow to either 
side of each fuel cell. The 
unique construction of 
welded sub-assemblies  
and gasket seals provides 
integrity and durability.
Module
The fuel cell module is an 
‘electro-chemical engine’ 
which generates electricity 
and heat from fuel and  
air. It is a compact and 
thermally integrated 
assembly, providing a 
common platform for a 
range of high efficiency 
products operating on  
a variety of fuels. 
CHP Product
An Integrated CHP consumer 
product includes, in addition 
to the fuel cell module, 
controls for operation, 
electronics for power 
conditioning, and balance  
of plant components for 
delivery of fuel and air. CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
0 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
Compact and Wall-Mountable
The compact fuel cell module, with its ability to run on mains  
natural gas and packaged fuels, provides a common platform  
for a range of on-grid and off-grid applications. The achievement  
of a wall-mountable CHP Unit reflects a series of design innovations 
by Ceres Power in order to meet market requirements for size  
and weight. 
The integrated CHP Unit is capable of generating electricity and  
all of the hot water and central heating required for a typical UK 
home, without the need for a separate boiler. The CHP Unit is 
designed to deliver substantial energy savings and reduced carbon 
emissions, when compared to high efficiency condensing boilers 
and grid-supplied electricity.
The wall-mountable CHP Unit has been designed for ease  
of installation and service, based on in-field experience. The 
requirements for lifting, mounting and connecting to mains  
services are similar to those for an existing domestic boiler.  
This means that global mass markets for boiler replacement  
and new build housing can be readily addressed. 
Integrated CHP Unit
Ease of Installation CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
 0
Achievement	 of	 major	 technical	 milestones	 reflects	 the	 substantial	 investment	 in	 product	 engineering	 and	 manufacturing	 resources	 and	 the	 Group’s	 expertise	 in	 ‘Design	 for	 Manufacture’
In order to satisfy demanding market requirements,  
Ceres Power has adopted a rigorous product development 
process based on established industry best practice for 
engineered products. At the core of this market-driven 
process is ‘Design for Manufacture’. This involves 
concurrent design and manufacturing activities across  
the entire supply chain. 
Engagement with supply chain partners at an early stage  
of the process ensures that development lead time to  
get product to market is minimised. Through continued 
investment in product engineering, manufacturing operations 
and the development of supply chain partnerships, the 
Group has established the necessary capabilities to create 
cost-effective products for a range of market applications. 
Operational Capability CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
 Product Engineering
Successful demonstrations of a fuel cell module and a 
wall-mountable Combined Heat and Power (CHP) Unit  
reflect the product engineering capabilities that have been 
established within Ceres Power. Advanced computer-aided 
engineering tools enable products, sub-systems and  
components to be modelled, and their performance to be 
predicted. This means that alternative concepts are rapidly 
developed into detailed designs and evaluated prior to the  
building and testing of prototypes, thereby minimising  
development lead time.
The Group has established a global supply chain of leading 
manufacturing companies for raw materials, components and 
process equipment. Ceres unique low temperature technology 
enables the use of proven cost-effective materials and processes 
for the manufacture of fuel cells and key balance of plant components. 
In-house product engineering and design for manufacture 
expertise, together with supply chain collaboration, helps ensure 
that Ceres products can meet demanding market requirements.
Ceres Power is commissioning a new Product Facility for the 
validation of fuel cell mass manufacturing processes and the 
assembly of prototype products for field trials. Assembly and 
testing processes for volume production of complete CHP 
products are also being developed with supply chain partners. 
Scale-up of manufacturing processes is an important  
de-risking activity prior to investment in a plant for volume 
production, and paves the way for rapid technology transfer  
and effective plant utilisation. 
Supply Chain
Manufacturing Operations CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
 2
Ceres Power is developing a core technology platform to 
address the global market drivers of emissions reductions, 
energy efficiency and energy security. Products addressing 
these drivers must also meet practical requirements such as 
the ability to run on existing fuels (e.g. natural gas, propane 
or LPG) and be compact, lightweight and robust. Ceres 
technology is designed to meet these challenges and 
provide a sustainable competitive advantage to the Group  
and its partners.
 
The Ceres fuel cell module provides an excellent platform for 
the development of a range of closely related products for 
global on-grid and off-grid applications including:
 Combined Heat and Power (CHP) products for boiler 
replacement in private residential and social housing 
segments, as well as installation in new homes, 
operating on mains natural gas or packaged fuels
 Portable products providing back-up power and prime 
power, as alternatives to generators and batteries, 
operating on packaged fuels including LPG, propane 
and butane 
 Products providing auxiliary power in transport sectors 
including automotive, marine and aerospace 
•
•
•
Market Opportunities
The	 global	 challenges	 of	 reducing	 emissions,	 increasing	 fuel	 efficiency	 and	 improving	 energy	 security	 are	 driving	 market	 opportunities	 for	 the	 application	 of	 Ceres	 fuel	 cell	 technology	 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
 3
Natural Gas CHP 
It has been estimated that there is an addressable market of 
14.5 million households in the UK for a natural gas fed CHP  
unit. In western Europe over 78% of all residential boilers sold  
are wall-mounted, representing a substantial opportunity for  
Ceres compact CHP design. Similar opportunities exist in Asia  
and North America to reduce the carbon footprint and energy 
costs of the built environment.
Many applications require quiet, clean, cost-effective electricity  
and heat but do not have access to mains natural gas. Ceres 
technology allows operation on widely available packaged fuels, 
such as LPG, propane and butane. Opportunities range across 
residential, commercial, leisure and transport markets.
Ceres technology can meet the need for reliable power, in 
circumstances where grid-supplied electricity is uneconomic or 
unreliable and conventional battery or generator systems are 
inadequate. Products providing reliable ‘on-site’ power from 
cylinder gas can be used for applications including uninterruptible 
power supplies, load-shedding solutions and remote power. These 
market offerings have wide applicability in developed countries and 
in the developing world.
Packaged Fuels
Energy Security CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
 4
Ceres	 Power	 is	 commercialising	 its	 unique	 technology	 	 through	 products	 designed	 to	 deliver	 real	 benefits	 to	 consumers	 and	 other	 stakeholders,	 thereby	 	 enabling	 the	 Group	 to	 capture	 significant	 value	 Energy Savings
A Ceres Combined Heat 
and Power (CHP) Unit has 
the potential to significantly 
reduce a typical residential 
energy bill. By efficiently 
utilising both the heat and 
power generated by the fuel 
cell directly in the home, 
overall efficiency of fossil fuel 
use can be improved from 
around 35% for centralised 
power generation to up to 
90% for residential CHP.
CO
2
 Emissions Reduction
When compared to existing 
residential boilers and  
grid-supplied electricity,  
a Ceres CHP product 
displacing up to 90% of the 
electricity currently drawn 
from the grid could reduce 
a typical home’s carbon 
footprint by up to 50%.
Energy Security
Through the widespread 
uptake of distributed 
generation solutions, 
dependence on imported 
fuels could be significantly 
reduced. Installing  
micro-generation products 
at or near the point of use 
also reduces the load on the 
grid and improves energy 
security for individual users.
Infrastructure Costs
Large scale deployment of 
residential CHP products 
would reduce the need  
to invest in centralised 
generation plants and grid 
infrastructure. Increasing 
distributed generation 
capacity would also help 
meet electrical demands  
as power stations  
are decommissioned.
Value Capture CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
 5
Products
The Group is developing a product range based around a common 
core technology – the fuel cell module. The potential of the Group’s 
CHP units to deliver significant energy savings together with the 
wall-mountable format should enable mass market adoption at 
attractive prices. Significant revenue growth is expected from  
the sales of complete products, with key fuel cell components 
manufactured in-house.
The Group offers a range of services to channel partners including 
feasibility studies and product development activities. Successful 
delivery of project milestones and the completion of major 
contracts has resulted in income totalling in excess of £1 million 
during the year. Ceres Power has also identified the potential for 
future value capture through additional services relating to product 
life cycle management.
The strength of the Group’s IP portfolio should allow it to capture 
value by structuring relationships with partners, bounded by 
territory, market segment and time. The Group can grow its market 
presence through exploiting a patented platform technology 
common to a range of products that are ‘Powered by Ceres’ .
™
Services
Intellectual Property CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
 6
1 2
3
5
7
4
6
8
Directors and Senior Management CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
 7
	 Ceres	Power	Holdings	plc 	 2	 Ceres	Power	Limited
1. Philip Holbeche
1,2
Chairman
Philip has an economics degree and gained  
a masters degree from London Business School. 
He has held senior financial roles in industry, 
banking and venture capital, and has also built 
companies to flotation and trade sale. Philip was a 
founder of Ceres Power and has been Chairman 
since the Group’s inception.
3. Andrew Baker
1,2
Operations Director
Andrew holds a PhD in engineering from Imperial 
College London, and an MBA from Cranfield. He  
has held Board positions in the automotive and 
engineering services sectors and has extensive 
experience of developing and managing international 
manufacturing businesses. He was a director of 
Ricardo Consulting Engineers, responsible for the 
power generation business. Andrew joined Ceres 
Power in 2004 as Operations Director and is 
responsible for technology, product engineering  
and manufacturing.
5. Bob Flint
2
Commercial Director
Bob has a degree in engineering from  
Cambridge University, and an MBA from  
Imperial College London. He has spent 20  
years in the commercialisation of innovative 
technology through new services and products, 
venture creation and intellectual property licensing. 
Following a senior role at BAE Systems, Bob 
became Commercial Director of Ceres Power 
Limited in 2005.
7. John Gunn
1
Non-Executive Director
John specialises in financing for high growth 
companies and is a director of a number of 
engineering and high technology businesses. After 
training at Barclays Bank, he held senior executive 
positions in financial and investment companies. 
John became a director of Ceres Power in 2001.
2. Peter Bance
1,2
Chief Executive Officer
Peter gained a PhD in physics from Oxford 
University as a Rhodes Scholar. His experience  
at PA Consulting and Generics included building  
a successful corporate venturing practice across  
a range of international deals. Since joining Ceres 
Power as CEO in 2003, Peter has also been active 
in advising government on energy policy and is now 
Chairman of the UK’s Fuel Cell Industry Association.
4. Rex Vevers
1,2
Finance Director
Rex received an economics degree from 
Newcastle University before joining Arthur 
Andersen where he qualified as a Chartered 
Accountant. He then pursued an industrial career 
where he held financial director roles in sectors 
spanning technology, volume manufacturing  
and banking, gaining significant international 
experience in corporate finance. Following 
positions at the industrial group Pechiney and  
a global FMCG firm, Rex joined Ceres Power  
in 2006 as the Group’s Finance Director.
6. Nigel Brandon
2
Chief Scientist
Nigel obtained his PhD from Imperial College 
London, and spent 14 years with BP and  
Rolls-Royce in fuel cells and related R&D areas.  
He is now the Shell Professor of Sustainable 
Development in Energy at Imperial College.  
Nigel is a world-renowned figure in the fuel cell 
community, and a founder of Ceres Power Limited.
8. Brian Count
1
Non-Executive Director
Brian received a PhD in physics after graduating in 
mathematics from Cambridge University. He joined 
the UK’s Central Electricity Generation Board (CEGB) 
and rose to become Director of Power Generation in 
National Power. He was appointed Chief Executive 
Officer of Innogy plc, and subsequently Chief 
Executive of RWE Trading in Germany. Brian  
became a director of Ceres Power in 2007 . CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
 8
Sustainable Business Awards 
for the South East 2006
Corporate Social Responsibility
The	 Group’s	 policy	 is	 to	 act	 as	 a	 responsible	 corporate	 citizen	 in	 all	 aspects	 of	 its	 business	 and	 to	 operate	 	 in	 an	 ethical	 and	 socially	 responsible	 manner
Environment
Ceres Power is committed to operating its 
business in a sustainable way to reduce 
energy usage and increase materials  
recycling. The Group continues to improve  
its performance through the activities of  
the ‘Green Team’ and the education of its 
employees. Collection systems are in place  
to recycle waste paper, cardboard, cans and 
plastic bottles and photocopier/printer toner 
cartridges. The Group has installed a process 
water recirculation system, automatic lighting 
systems and high efficiency lighting and air 
conditioning systems. Schemes are also in 
place to encourage employees to commute 
using public transport and bicycles. The 
Group monitors and seeks to minimise  
staff business travel and wherever possible 
employees are required to travel by public 
transport and to minimise the use of air travel. 
During the year, the Group won two Sustainable 
Business Awards and received an Exceptional 
Development grant from the South East 
England Development Agency (SEEDA). The 
grant recognised the strategic importance of 
Ceres technology to the UK and its potential 
to address the long-term issues of emissions 
reductions, energy savings and fuel poverty 
in both private and public sector housing. 
Employees
Ceres Power recognises that attracting, 
developing, retaining and motivating skilled 
people is essential to its success. The Group 
is committed to offering equal opportunities  
to all employees irrespective of background. 
All employees are encouraged to maximise 
their potential through personal development, 
training programmes, and where appropriate 
support is offered to facilitate further studies. 
Individual training needs are linked to the 
achievement of agreed personal and business 
objectives and progress is monitored through 
annual individual appraisals. 
The Group has implemented remuneration 
policies that are designed to motivate and 
reward achievement. All employees have  
a financial interest in the Group through 
participation in a share option scheme. 
Participation in the Group’s pension, life 
insurance and childcare schemes is also 
available to all employees.
The Group encourages employee participation 
in the business and regular meetings are held 
to update employees on the performance of 
and outlook for the business. 
Health and Safety
The Group aims to achieve best practice in all 
areas of health and safety, recognising that the 
Board as a whole has responsibility to provide 
health and safety leadership throughout the 
Group. All staff are given basic health and safety 
induction upon commencing employment and 
training is given to ensure a continuing safe 
and healthy working environment for all 
employees. The Group continues to invest in 
risk assessments, implementing preventative 
measures and training. CERES POWER HOLDINGS PLC ANNUAL REPORT 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
 Corporate Governance Statement
Principles of Corporate Governance 
The Board of Directors recognises the importance of 
good corporate governance to enhance and protect 
shareholder value and seeks to comply with established best 
practice. The Company’s shares are listed on the Alternative 
Investment Market (AIM) of the London Stock Exchange and 
therefore the Company is not required to comply with all 
aspects of the Combined Code. This statement describes 
how the main principles of good governance set out in the 
Combined Code have been applied.
The Board of Directors
The Board comprises one Executive Chairman, three 
Executive Directors and two Non-Executive Directors. 
On 2 March 2007 Dr Count joined the Board as a 
Non-Executive Director and became Chairman of the 
Nomination & Governance and Remuneration Committees, 
replacing Mr Fitzgibbons. There is a clear division of 
responsibilities between the Chairman and Chief Executive. 
The Board considers that both of its Non-Executive 
Directors are independent of executive management and 
there are no relationships which could affect the exercise of 
their independent judgement. In reaching this decision, the 
Board has considered the beneficial interests of Mr Gunn in 
the shares of the Company and is satisfied that this does 
not affect his independence.
The Board meets regularly throughout the year, usually 
monthly, and all the necessary information (including 
management accounts and reports from Executive Directors 
and senior management) is supplied to the Directors on a 
timely basis to enable them to discharge their duties effectively. 
All the Directors have written letters of appointment and all 
Committees, as well as Directors, have access to independent 
professional advice, at the Group’s expense. 
Board Committees
The Board has appointed three Committees, each with 
written terms of reference, namely:
Audit Committee
The Committee comprises the two Non-Executive Directors, 
under the Chairmanship of Mr Gunn. The Committee reviews 
the Group’s interim and annual financial statements, internal 
control matters and the scope and effectiveness of the external 
audit. The Committee reviews the provision of non-audit 
services and monitors the auditors’ independence.
Remuneration Committee
The members of the Committee are the two  
Non-Executive Directors under the Chairmanship of  
Dr Count. The Committee determines the remuneration  
of the Executive Directors, including the award of share 
options. Non-Executive Directors’ fees are considered  
and agreed by the Board.
Nomination & Governance Committee
The members of the Committee are the two Non-Executive 
Directors under the Chairmanship of Dr Count. The 
Committee’s principal responsibilities are to maintain an 
effective corporate governance structure and to make 
recommendations on the appointment of new Directors.  
All Directors are subject to re-election by shareholders  
at the first annual general meeting following their initial 
appointment, and at each annual general meeting one-third 
of the Directors retire by rotation.
Communication with Shareholders 
The Board recognises the importance of effective 
communication with shareholders and values the dialogue 
with investors through meetings and results presentations. 
The Chief Executive and Finance Director meet regularly 
with key institutional shareholders. The annual general 
meeting provides an opportunity to communicate with other 
shareholders, who receive a business presentation and are 
given the opportunity to put questions to the Chairman and 
the other Directors.
Internal Controls
The Directors acknowledge their responsibility for ensuring 
that the Group maintains an adequate system of internal 
control, which is designed to safeguard the assets of the 
Group and to ensure the reliability of financial information. 
The Group’s internal control procedures include detailed 
budgets and working capital forecasts, full monthly 
management accounts and Board approval for all major 
expenditures. The Group currently does not have an internal 
audit function and the Directors believe that this is appropriate 
given the Group’s size and stage of development.
The Directors, having reviewed the effectiveness of the 
system of internal controls, consider that the system 
operated effectively throughout the financial year and up  
to the  date that the financial statements were signed. CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
20
The directors present their report and the audited financial 
statements for the year ended 30 June 2007. 
Principal activity 
The principal activity of the Group throughout the year 
remained the development and commercial exploitation  
of micro-generation products based on solid oxide fuel  
cell technology. 
Review of the business and future developments
A detailed review of the significant developments and 
operating activities of the Group, as well as the future 
strategy, business environment and prospects for the Group 
are contained in the Chairman’s Statement as set out on 
pages 4 and 5 and the Chief Executive’s Review as set  
out on pages 6 and 7. A review of the Key Performance 
Indicators (KPIs) is contained in the Chairman’s Statement 
on pages 4 and 5. The directors believe that, given the 
Group’s current stage of development, the relevant KPIs  
are income
1
, operating expenditure and net cash outflow
2
.
Results and dividends 
The Group has adopted FRS 20, ‘Share-based Payment’. 
This resulted in a charge of £1,170,000 in the year and a 
prior year charge of £601,000. The loss for the financial  
year was £4,866,000 (2006: restated £3,781,000). The  
Group has net cash and short term investments of 
£11,142,000 (2006: £14,021,000). The net cash outflow  
from operating activities during the year was £3,894,000 
(2006: £3,613,000).
The directors do not recommend the payment of a dividend 
(2006: £nil).
Research and development activities
During the year the Group incurred expenditure of 
£4,922,000 (2006: restated £3,495,000) on research and 
development, all of which was written off to the profit and 
loss account.
Principal risks and uncertainties
The management of the business and the execution of the 
Group’s strategy are subject to a number of risks. These 
risks are formally reviewed by the Board and appropriate 
processes and controls are implemented to monitor and 
mitigate them. 
Directors’ Report
for the year ended 30 June 2007
The key business risks affecting the Group are set out below:
Value capture
The Group’s success will depend on its ability to build  
a portfolio of products, markets and services, establish 
appropriate manufacturing and supply chain capabilities, 
and extract value from business opportunities.
The Group’s business model involves revenue generation 
from sales of engineering services, products and intellectual 
property rights to capture value in the short, medium and 
long term. These activities are all undertaken within 
appropriate commercial arrangements. 
Intellectual property protection
The Group’s competitive advantage may be at risk from  
unauthorised parties attempting to copy or obtain and  
use the technology for incorporation into its own products. 
The Group is also at risk from losses and diversion of 
management effort as a result of potential litigation to 
defend and enforce its intellectual property rights.
The Group continues to invest heavily in the expansion and 
protection of its portfolio of intellectual property. Rigorous 
internal procedures and controls are in place to capture  
all intellectual property, prevent unauthorised disclosure  
to third parties, and to protect its rights in all dealings with 
supply chain partners. The management, protection and 
exploitation of the Group’s intellectual property is conducted 
through a separate wholly owned subsidiary, Ceres Intellectual 
Property Company Limited.
Market acceptance
The Group’s future revenues are highly dependent upon the 
development of mass markets for products incorporating 
the Group’s fuel cell technology. If mass markets fail to 
develop, or develop more slowly than anticipated, the Group 
may be unable to recover losses it will have incurred in  
the development of its products, and may never achieve 
profitability or positive cash flow.
The Group’s strategy of establishing specific channel 
partnerships, each with a defined market application and 
geographical focus, is intended to facilitate early adoption 
and to drive mass market uptake. 
Technology transfer
To commercialise its fuel cell technology the Group intends 
to focus on developing products for specific mass market 
applications including CHP, portable power generation and 
auxiliary power for transport. The Group’s future revenues 
will rely upon the successful application of its fuel cell 
technology to these product areas.
1  Income includes turnover, other operating income and interest receivable and 
similar income.
2  Net cash outflow is the sum of net cash outflow before use of liquid resources and 
financing and net cash inflow from financing. CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
21
The Group is focusing on developing products where the 
unique benefits of the Group’s fuel cell technology offer a 
real and sustainable competitive advantage over competing 
solutions. Commercial relationships have been, and will  
be, developed with major companies with direct access to 
well established channels to end-users for these products, 
enabling the Group to define precisely the requirements  
of the market, and thus accelerate and de-risk the route  
to market. The Group has developed an applications 
engineering capability to translate market requirements  
into compelling products. 
Supply chain
Mass manufacture of fuel cells and complete products 
depends on the Group’s supply chain for raw materials, 
balance of plant components and process equipment. If 
these suppliers are unable to meet the Group’s requirements 
for quality, quantity, lead-time and cost, then the Group may  
be unable to satisfy market demand, which will adversely 
affect the Group’s operating profitability and cash flow.
To mitigate these risks, the Group is building a supply chain 
based around multiple suppliers, within a contractual 
framework, supported by a programme of rigorous validation 
and in-house capture of core intellectual property.
Growth management
In order to grow the business significantly there will need  
to be substantial investment in managerial, operational, 
manufacturing and financial resources, together with the 
implementation of appropriate management information 
systems and controls. There is a risk that growth will be 
constrained by insufficient resources.
The directors are of the opinion that the existing resources 
and controls are appropriate for the current size and scale  
of the Group’s activities, and are planning for the next 
stages of growth.
Dependence on key personnel
The directors believe that the future success of the Group 
will depend upon the expertise and continued service of 
certain key personnel and also the Group’s ability to attract 
and retain suitable personnel in the future. 
The Group has attempted to minimise the loss of key 
personnel through mechanisms including succession 
planning, competitive remuneration packages and 
investment in training and development.
Disruption to operations 
The Group is highly dependent on its in-house research  
and development, testing and manufacturing facilities,  
IT and other critical systems. Any prolonged disruption  
or significant failures could disrupt the Group’s progress  
and adversely affect its reputation, business and financial 
condition. The Group has in place standby and disaster 
recovery plans.
Competition
The Group faces competition from both incumbent and 
alternative power generation technologies. Competitors  
and potential competitors, which may have substantially 
greater resources than those of the Group, could develop  
a technological breakthrough, and render the Group’s  
core technology obsolete or uncompetitive.
The Group has implemented mechanisms to review the 
competitive business environment and develop appropriate 
strategies in response to emerging threats. The Group 
strives to maintain its competitive advantage through the 
rigorous protection of its intellectual property, extending  
its core technology leadership and enabling mass market 
uptake by developing global channel partnerships.
Government regulation
There may be a change in government regulations or 
policies which could have an adverse effect on the Group’s 
activities. The Group is engaging actively in areas where 
regulation may affect its business. Proposals for changes  
to legislation would appear to be positive for the Group’s 
business prospects. 
Future litigation
The Group’s business and operations may be adversely 
affected by litigation arising from claims for product liability, 
environmental harm, intellectual property infringement, 
contractual disputes and other events. Any liability arising 
from such claims could result in substantial damages, 
significant delays in delivering products to market, and 
diversion of management time and resources. In addition,  
a well-publicised actual or perceived problem could 
adversely affect the perception of the Group’s products, 
which would materially impact upon its financial condition 
and operating results.
 
The Group has implemented procedures to identify, assess, 
manage and report on business risks. Where appropriate, 
the Group buys insurance protection to cover potential 
claims and the associated legal and other costs. 22
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
3
Directors
The directors of the Company, who served during the period, are as follows:
    
Mr  Philip Holbeche (Chairman) 
Dr  Peter Bance (Chief Executive Officer)  
Dr  Andrew Baker (Operations Director)
Mr    Rex Vevers (Finance Director) – appointed 1 September 2006    
Mr  John Gunn (Non-Executive Director)
Mr   Harry Fitzgibbons (Non-Executive Director) – resigned 1 March 2007
Dr   Brian Count (Non-Executive Director) – appointed 2 March 2007
Directors’ interests
The directors held the following interests in the shares of the Company:
        At 1 July  At 30 June 
        2006 2007 
Name       Type Number* Number
Mr Philip Holbeche     Ordinary shares of £0.05 each  716,400 716,400
Mr John Gunn
1
     Ordinary shares of £0.05 each  85,280 185,280
Dr Brian Count     Ordinary shares of £0.05 each  – 55,212
Note:
1 Mr John Gunn also has beneficial interests in 800,000 ordinary shares of £0.05 each held by Ludgate Investments Limited as at 30 June 2007 (2006: 700,000).
*  or at date of appointment, if later.
The directors held the following interests in options and warrants over shares of the Company:
 
  At 1 July   At 30 June    
  2006 Granted Exercised 2007 Exercise 
  Number* Number Number Number price  Exercise period
Mr Philip Holbeche       
Options (unapproved)  480,000 – – 480,000 £0.30  August 2003 – August 2013
Options (unapproved)  33,340 – – 33,340 £0.60  April 2004 – April 2014
Options (approved)  166,660 – – 166,660 £0.60  April 2004 – April 2014
Options (unapproved)  150,000 – – 150,000 £2.815  March 2006 – March 2016
  830,000 – – 830,000  
Dr Peter Bance       
Options (approved)  184,780 – – 184,780 £0.30  April 2003 – April 2013
Options (unapproved)  1,182,620 – – 1,182,620 £0.30  April 2003 – April 2013
Options (unapproved)  500,000 – – 500,000 £0.30  August 2003 – August 2013
Options (unapproved)  200,000 – – 200,000 £0.60  April 2004 – April 2014
Options (unapproved)  200,000 – – 200,000 £2.815  March 2006 – March 2016
  2,267,400 – – 2,267,400  
Dr Andrew Baker       
Options (approved)  141,664 – – 141,664 £0.60  August 2004 – August 2014
Options (unapproved)  116,670 – – 116,670 £0.60  August 2004 – August 2014
Options (unapproved)  41,666 – – 41,666 £0.965  July 2005 – July 2015
Options (unapproved)  150,000 – – 150,000 £2.815  March 2006 – March 2016
  450,000 – – 450,000  
Mr Rex Vevers       
Options (approved)  – 46,510 – 46,510 £2.15 September 2006 – September 2016
Options (unapproved)  – 228,490 – 228,490 £2.15 September 2006 – September 2016
  – 275,000 – 275,000  
Mr John Gunn       
Warrants
1
  122,500 – (122,500) – £0.408  January 2002 – January 2007
  122,500 – (122,500) –  
Note
1 Mr John Gunn no longer has beneficial interests in warrants held by Scheidegg (2006: 122,640).
*  or at date of appointment, if later.
Directors’ Report continued CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
23
Substantial shareholders
The Company has been notified of the following holdings  
of 3% or more of the 59,830,944 ordinary shares of £0.05 
each of the Company on 26 October 2007:
 Number %
Fidelity
1
 6,567,783 10.98
Imperial Innovations LLP 4,177,505 6.98
Oppenheimer Funds, Inc. 3,281,790 5.49
Julius Baer Investment Management LLC 3,124,707 5.22
Continental Visions International 2,576,920 4.31
Lehman Brothers International (Europe) 1,794,203 3.00
1 Combined holdings of Fidelity International Limited and FMR Corporation.
Policy and practice on payment of creditors
It is the Group’s policy, in respect of all suppliers, to agree 
payment terms in advance of the supply of goods and 
services and to adhere to those payment terms. Trade 
creditors of the Group at the year end as a proportion of 
amounts invoiced by suppliers during the year represent 63 
days (2006: 38 days). Trade creditors of the Company at the 
year end as a proportion of amounts invoiced by suppliers 
during the year represent 55 days (2006: 100 days).
Statement of directors’ responsibilities in respect of 
the Annual Report and the financial statements
The directors are responsible for preparing the Annual 
Report and the financial statements in accordance with 
applicable law and regulations. 
Company law requires the directors to prepare financial 
statements for each financial year. The directors have 
elected to prepare the financial statements in accordance 
with United Kingdom Generally Accepted Accounting 
Practice (United Kingdom Accounting Standards and 
applicable law). The financial statements are required by  
law to give a true and fair view of the state of affairs of  
the Company and the Group and of the profit or loss  
of the Group for that period. 
In preparing those financial statements, the directors are 
required to:
select suitable accounting policies and then apply  
them consistently;
make judgements and estimates that are reasonable  
and prudent;
state whether applicable UK Accounting Standards  
have been followed, subject to any material departures 
disclosed and explained in the financial statements; and
prepare the financial statements on the going concern 
basis unless it is inappropriate to presume that the 
Company will continue in business, in which case there 
should be supporting assumptions or qualifications 
as necessary.
•
•
•
•
The directors confirm that they have complied with the 
above requirements in preparing the financial statements.
The directors are responsible for keeping proper accounting 
records that disclose with reasonable accuracy at any time 
the financial position of the Company and the Group and 
enable them to ensure that the financial statements comply 
with the Companies Act 1985. They are also responsible for 
safeguarding the assets of the Company and the Group and 
hence for taking reasonable steps for the prevention and 
detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity 
of the Company’s website. Legislation in the United Kingdom 
governing the preparation and dissemination of financial 
statements may differ from legislation in other jurisdictions.
Directors’ statement on disclosure of information  
to auditors
So far as each director is aware, there is no relevant audit 
information of which the Group’s auditors are unaware. Each 
director has taken all the steps he ought to have taken as a 
director in order to make himself aware of any relevant audit 
information and to establish that the Company’s auditors are 
aware of that information.
Auditors
The auditors, PricewaterhouseCoopers LLP, have indicated 
their willingness to continue in office and a resolution 
concerning their re-appointment will be proposed at the 
Annual General Meeting.
By order of the Board
Mr Philip Holbeche
Chairman CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
24
We have audited the Group and parent Company financial 
statements (the ‘financial statements’) of Ceres Power 
Holdings plc for the year ended 30 June 2007 which 
comprise the Consolidated Profit and Loss Account, the 
Consolidated Statement of Total Recognised Gains and 
Losses, the Consolidated and Company Balance Sheets, 
the Consolidated Cash Flow Statement, the Reconciliation 
of Movements in Shareholders’ Funds and the related notes. 
These financial statements have been prepared under the 
accounting policies set out therein.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report 
and the financial statements in accordance with applicable 
law and United Kingdom Accounting Standards (United 
Kingdom Generally Accepted Accounting Practice) are set 
out in the statement of directors’ responsibilities. 
Our responsibility is to audit the financial statements in 
accordance with relevant legal and regulatory requirements 
and International Standards on Auditing (UK and Ireland). This 
report, including the opinion, has been prepared for and only 
for the Company’s members as a body in accordance with 
Section 235 of the Companies Act 1985 and for no other 
purpose. We do not, in giving this opinion, accept or assume 
responsibility for any other purpose or to any other person to 
whom this report is shown or into whose hands it may come 
save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the financial 
statements give a true and fair view and are properly prepared 
in accordance with the Companies Act 1985. We report  
to you whether in our opinion, the information given in the 
Directors’ Report is consistent with the financial statements. 
The information given in the Directors’ Report includes that 
specific information presented in the Chairman’s Statement 
and the Chief Executive’s Review that is cross referenced 
from the Review of the business and future developments 
section of the Directors’ Report. 
We also report to you if, in our opinion, the Company has 
not kept proper accounting records, if we have not received 
all the information and explanations we require for our audit, 
or if information specified by law regarding directors’ 
remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report, 
and consider whether it is consistent with the audited financial 
statements. This other information comprises the Highlights, 
Global Challenges, Alternative Energy Solutions, Chairman’s 
Statement, Chief Executive’s Review, Product Development, 
Operational Capability, Market Opportunities, Value Capture, 
Directors and Senior Management, Corporate Social 
Responsibility, Corporate Governance Statement and  
the Directors’ Report. We consider the implications for our 
report if we become aware of any apparent misstatements  
or material inconsistencies with the financial statements.  
Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International 
Standards on Auditing (UK and Ireland) issued by the Auditing 
Practices Board. An audit includes examination, on a test 
basis, of evidence relevant to the amounts and disclosures in 
the financial statements. It also includes an assessment of the 
significant estimates and judgements made by the directors 
in the preparation of the financial statements, and of whether 
the accounting policies are appropriate to the Company’s  
and the Group’s circumstances, consistently applied  
and adequately disclosed.
We planned and performed our audit so as to obtain all the 
information and explanations which we considered necessary 
in order to provide us with sufficient evidence to give 
reasonable assurance that the financial statements are free 
from material misstatement, whether caused by fraud or 
other irregularity or error. In forming our opinion we also 
evaluated the overall adequacy of the presentation of 
information in the financial statements.
Opinion
In our opinion:
the financial statements give a true and fair view, in 
accordance with United Kingdom Generally Accepted 
Accounting Practice, of the state of the Group’s and  
the parent Company’s affairs as at 30 June 2007 and  
of the Group’s loss and cash flows for the year ended  
30 June 2007; 
the financial statements have been properly prepared  
in accordance with the Companies Act 1985; and 
the information given in the Directors’ Report is consistent 
with the financial statement for the year then ended.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Cambridge
26 October 2007
•
•
•
Independent Auditors’ Report to the Members 
of Ceres Power Holdings plc CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
25
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
        2007 2006 
         (as restated) 
       Note £’000 £’000
Turnover       2 98 110
Research and development costs        (4,922) (3,495)
Administrative expenses        (2,025) (1,740)
Other operating income       4 970 636
Operating loss before share-based payments       (4,709) (3,888)
Share-based payments charge       18 (1,170) (601)
Operating loss        (5,879) (4,489)
Interest receivable and similar income       3 597 630
Loss on ordinary activities before taxation       4 (5,282) (3,859)
Tax credit on loss on ordinary activities        7 416 78
Loss for the financial year       19 (4,866) (3,781)
Loss per £0.05 ordinary share   
– basic and diluted       8 (8.24)p (6.63)p
All amounts included in the profit and loss accounts relate to continuing operations.
There is no difference between the loss on ordinary activities before taxation and the loss for the financial year as stated 
above, and their historical cost equivalents.
Consolidated Statement of Total Recognised 
Gains and Losses
for the year ended 30 June 2007
        2007 2006 
         (as restated) 
        £’000 £’000
Loss for the financial year        (4,866) (3,781)
Total recognised losses for the financial year        (4,866) (3,781)
Prior year adjustment – share based payements charge       (601)
Total recognised losses since last Annual Report       (5,467)
Consolidated Profit and Loss Account
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            Group  Company 
      2007 2006 2007 2006 
         (as restated) 
     Note £’000 £’000 £’000 £’000
Fixed assets     
Tangible assets     10 1,842 1,870 – –
Investments     11 – – 3,345 2,504
      1,842 1,870 3,345 2,504
Current assets     
Debtors: amounts falling due after more than one year    12 53 53 5,784 2,499
Debtors: amounts falling due within one year     12 628 554 13 20
Short term investments      9,500 11,900 9,500 11,500
Cash at bank and in hand      1,642 2,121 987 1,646
      11,823 14,628 16,284 15,665
Creditors: amounts falling due within one year     13 (788) (438) (74) (114)
Net current assets      11,035 14,190 16,210 15,551
Total assets less current liabilities      12,877 16,060 19,555 18,055
Creditors: amounts falling due after more than one year     14 – – (432) (224)
Net assets       12,877 16,060 19,123 17,831
Capital and reserves     
Called up share capital     17 2,981 2,925 2,981 2,925
Share premium account     19 15,594 15,137 15,594 15,137
Other reserve     19 7,463 7,463 – –
Profit and loss account     19 (13,161) (9,465) 548 (231)
Total shareholders’ funds       12,877 16,060 19,123 17,831
The financial statements on pages 25 to 39 were approved by the Board of Directors on 26 October 2007 and were signed 
on its behalf by:
Mr Philip Holbeche  Dr Peter Bance
Chairman   Chief Executive Officer
Consolidated and Company Balance Sheets
as at 30 June 2007 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
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CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
        2007 2006 
       Note £’000 £’000
Net cash outflow from operating activities       20 (3,894) (3,613)
Returns on investments   
Interest received        597 630
Net cash inflow from returns on investments        597 630
Taxation   
Research and development tax credits received       494 –
Capital expenditure   
Purchase of tangible fixed assets        (577) (1,099)
Net cash outflow for capital expenditure        (577) (1,099)
Net cash outflow before use of liquid resources and financing      (3,380) (4,082)
Management of liquid resources   
Decrease in short term deposits with banks       21 2,400 3,700
Financing   
Issue of ordinary share capital       17 501 1,009
Net expenses of share issue        – 50
Net cash inflow from financing        501 1,059
(Decrease)/increase in net cash       21 (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       21 11,142 14,021
Consolidated Cash Flow Statement
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Reconciliation of Movements  
in Shareholders’ Funds
        2007 2006 
         (as restated) 
        £’000 £’000
Loss for the financial year        (4,866) (3,781)
Proceeds of issue of ordinary share capital        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 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
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1. Accounting policies
The financial statements have been prepared on the going 
concern basis, under the historical cost convention and in 
accordance with the Companies Act 1985 and applicable 
accounting standards in the United Kingdom. A summary  
of the more important accounting policies, which have  
been reviewed by the Board of Directors in accordance  
with Financial Reporting Standard (‘FRS’) 18, ‘Accounting 
policies’, and which have been applied consistently except 
where noted, is set out below.
Changes in accounting standards
The Group has adopted FRS 20, ‘Share-based Payment’.  
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 vesting period 
based on the Group’s estimate of options that will eventually 
vest. The charge is then credited back to reserves. 
The adoption of FRS 20 constitutes a change in accounting 
policy. The previous policy was to apply the provisions of 
Urgent Issues Task Force (‘UITF’) Abstract 17 ‘Employee 
Share Schemes’ whereby the Group made charges to the 
profit and loss account when options in the parent Company 
were granted to employees of the Group, the charge being 
the estimated market value of the shares at the date of grant 
less the exercise price of the options. Where options were 
granted with no performance conditions the charge was 
recognised immediately. Where options were granted with 
performance conditions the charge was recognised over the 
performance period and was then reversed through reserves.
The effect of this change in accounting policy was to 
increase the share-based payments charge from £nil to 
£1,170,000 for the year ended 30 June 2007 and from 
£4,000 to £601,000 for the year ended 30 June 2006.  
This change has not affected the Group’s cash flow or  
net assets in either year. 
The Company has applied UITF Abstract 44,  
‘FRS20 – Group and Treasury Share Transactions’.  
The parent Company has granted rights over its equity 
instruments to the employees of Ceres Power Limited in the 
years ended 30 June 2006 and 30 June 2007 and there is a 
corresponding increase recognised in the investment in the 
subsidiary in those years (see note 11).
Basis of consolidation
The consolidated financial statements include the financial 
statements of Ceres Power Holdings plc and all of its 
subsidiary undertakings, made up to 30 June 2007.
Notes to the Financial Statements
for the year ended 30 June 2007
The financial statements of Ceres Power Limited have been 
consolidated under merger accounting rules. The financial 
statements of Ceres Intellectual Property Company Limited 
have been consolidated under acquisition accounting rules.
Intra-group transactions, profits/losses and balances are 
eliminated in full on consolidation. 
Tangible fixed assets
The cost of tangible fixed assets is their purchase cost, 
together with any incidental costs of acquisition. Depreciation 
is calculated so as to write off the cost of tangible fixed assets, 
less their estimated residual values, on a straight-line basis over 
the expected useful economic lives of the assets concerned. 
The principal annual rates used for this purpose are:
  
  %
Leasehold improvements    10
Plant and machinery   33
Computer equipment  33
Fixtures and fittings  33 
Assets under construction represent the cost of purchasing, 
constructing and installing tangible fixed assets ahead of 
their productive use. The category is temporary, pending 
completion of the assets and their transfer to the appropriate 
and permanent category of tangible fixed assets. As such, 
no depreciation is charged on assets under construction.
Fixed asset investments
The investment in Ceres Power Limited is accounted  
for under merger accounting principles and is shown  
at the nominal value of shares issued as consideration  
for the undertaking less any amount written off to reflect  
a permanent diminution in value. The investment in Ceres 
Intellectual Property Company Limited is stated at cost less 
any amount written off to reflect a permanent diminution  
in value. 
Short term investments
Short term investments comprise bank deposits which are 
not repayable on demand. Movements in such investments 
are included under ‘Management of liquid resources’ in the 
Group’s cash flow statement.
Deferred taxation
The Group applies FRS 19, ‘Deferred tax’, which requires 
provision to be made in respect of timing differences 
between the treatment of certain items for accounting and 
tax purposes. Deferred tax assets are recognised only to 
the extent that they are regarded as recoverable. Deferred 
tax assets and liabilities are not discounted. CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
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1. Accounting policies continued
Foreign currencies
Transactions in foreign currencies are translated at the 
exchange rate ruling at the date of the transaction or, where 
forward foreign currency contracts have been taken out,  
at contractual rates. Monetary assets and liabilities are 
retranslated at the rates of exchange ruling at the balance 
sheet date or at a forward contractual rate if applicable. 
Exchange gains and losses are taken to the profit and loss 
account for the period.
Pension scheme arrangements
The Group operates a defined contribution pension scheme 
for employees. The assets of the scheme are held separately 
from those of the Group. The pension costs charged represent 
contributions paid by the Group to individual pension plans 
and are charged to the profit and loss account as they 
become payable.
In addition, a stakeholder pension scheme is also available 
to employees.
Turnover
Revenue, which excludes value added tax and other sales 
taxes, represents the invoiced value of services supplied. 
Amounts received or receivable under development 
agreements are recognised as revenue when earned. 
Amounts received or receivable in respect of milestone 
payments under agreements are recognised as revenue 
when the specific conditions in the agreement have been 
met. All costs relating to these development programmes 
are recorded as research and development expenditure.  
As revenue represents contributions towards costs incurred, 
no amounts have been allocated to cost of sales.
Government grants
Revenue grants are credited to the profit and loss account 
(as other operating income) on a case-by-case basis. For 
revenue grants with no technical milestones, and where 
recovery is assured, the revenue is recognised on an 
accruals basis in order to match the associated expenditure 
with the grant income. For revenue grants with technical 
milestones, revenue is recognised only when the relevant 
milestone has been achieved and the associated cash has 
been received. 
Research and development expenditure
Expenditure on research and development is written off to 
the profit and loss account as incurred. 
 
Operating leases
Costs in respect of operating leases are charged to the profit 
and loss account on a straight-line basis over the lease term.
Lease incentives
Benefits received and receivable as an incentive to sign an 
operating lease are spread on a straight-line basis over the 
lease term, or if shorter than the full lease term, over the 
period to the review date on which the rent is first expected 
to be adjusted to the prevailing market rate. Accordingly, any 
incentive received to sign a lease is included in other creditors 
and will be credited to the profit and loss account over the 
appropriate period.
2. Turnover and segmental information
Turnover comprises revenues from development agreements. 
All turnover is derived from the principal activities of the 
Group. The Group carries out one class of business and all 
turnover during the year originated in the United Kingdom.
Notes to the Financial Statements continued CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
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3. Interest receivable and similar income
        2007 2006 
        £’000 £’000
Interest receivable on short term investments        597 630
4. Loss on ordinary activities before taxation
        2007 2006 
         (as restated) 
        £’000 £’000
Loss on ordinary activities before taxation is stated after charging/(crediting):  
Depreciation on tangible owned fixed assets        674 494
Loss on disposal of fixed assets        – 1
Operating lease rentals:  
– plant and machinery        3 3
– buildings        129 80
Auditors’ remuneration:  
Audit services  
– remuneration receivable by the Company’s auditors for the auditing of the accounts    10 8
Other services  
– auditing of accounts of associates of the Company pursuant to legislation     26 20
– other fees relating to taxation (Company 2007: £1,000, 2006: £10,000)     22 15
– other fees (Company 2007: £4,000, 2006: £3,000)       23 7
Other operating income – grant income        (970) (636)
Share-based payments charge        1,170 601
5. Employees and directors
The average monthly number of persons (including executive directors) employed by the Group and the Company during 
the year was:
   Group  Company
      2007 2006 2007 2006 
      Number Number Number Number
By activity:    
Research and development      40 29 – 1
Administration      12 8 2 2
      52 37 2 3
   Group  Company
      2007 2006 2007 2006 
      £’000 £’000 £’000 £’000
Staff costs (for the above persons):    
Wages and salaries      2,489 1,900 421 502
Social security costs       249 343 38 183
Other pension costs      204 66 36 15
      2,942 2,309 495 700
Directors’ emoluments
        2007 2006 
        £’000 £’000
Aggregate emoluments        871 685
Company contributions to defined contribution pension schemes      80 23
Aggregate gains made on the exercise of share options and warrants      – 2,100
        951 2,808
        2007 2006 
Highest paid director        £’000 £’000
Aggregate emoluments        191 188
Company contributions to defined contribution pension schemes      17 7
Aggregate gains made on the exercise of share options and warrants      – 1,008
        208 1,203
Six directors (2006: five directors) have retirement benefits accruing under defined contribution pension schemes. CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
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6. Pensions
The Group operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the 
Group in independently administered funds. The pension cost charge represents contributions payable by the Group to the 
funds and amounted to £203,771 (2006: £66,297). A total of £37,193 was payable to the funds at the year end (2006: £nil).
7. Tax credit on loss on ordinary activities
        2007 2006 
Current tax        £’000 £’000
Tax credit on loss on ordinary activities in respect of previous periods      416 78
Total current tax credit        416 78
No corporation tax liability has arisen during the year (2006: £nil) due to the losses incurred. A tax credit has arisen as a 
result of the tax losses being surrendered in respect of research and development expenditure in prior years.
The tax result for the year is different from the standard rate of corporation tax in the United Kingdom of 19% (2006: 19%). 
The differences are explained below: 
        2007 2006 
        £’000 £’000
Loss on ordinary activities before taxation        (5,282) (3,859)
Loss on ordinary activities multiplied by the UK tax rate of 19% (2006: 19%)     (1,004) (733)
Effects of:         
Losses carried forward        814 1,034
Expenses not deductible for tax purposes and deductions on exercise of share options    166 (354)
Accelerated capital allowances and other timing differences      24 53
Adjustment in respect of prior years        416 78
Total current tax credit        416 78
8. Loss per share
Basic and diluted loss per £0.05 ordinary share are calculated by dividing the loss for the financial year attributable  
to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. 
The loss for the financial year ended 30 June 2007 was £4,866,683 (2006: restated £3,781,156) and the weighted average 
number of £0.05 ordinary shares in issue during the year ended 30 June 2007 was 59,057,064 (2006: 57,039,938).
9. Result for the parent company
The directors have taken advantage of the exemption available under section 230 of the Companies Act 1985 and have  
not presented a profit and loss account for the parent Company. The parent Company’s result for the year was a loss  
of £391,000 (2006: restated £601,000).
10. Tangible fixed assets
    Leasehold Plant and Computer Fixtures and Assets under 
    improvements machinery equipment fittings construction Total 
Group    £’000 £’000 £’000 £’000 £’000 £’000
Cost      
At 1 July 2006    1,017 1,367 247 53 283 2,967
Additions    217 312 74 9 34 646
Reclassification    5 307 5 – (317) –
At 30 June 2007    1,239 1,986 326 62 – 3,613
      
Depreciation      
At 1 July 2006    246 720 102 29 – 1,097
Charge for the year    110 466 82 16 – 674
At 30 June 2007    356 1,186 184 45 – 1,771
      
Net book value      
At 30 June 2007    883 800 142 17 – 1,842
At 30 June 2006    771 647 145 24 283 1,870
The Company has no tangible fixed assets.
Notes to the Financial Statements continued CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
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11. Fixed asset investments
In subsidiary companies:
        Company Company 
        2007 2006 
         (as restated) 
Cost and net book value        £’000 £’000
At 1 July 2006        2,504 2,088
Additions        – –
Capital contributions arising from FRS 20 share-based payments charge     841 416
At 30 June 2007        3,345 2,504
The capital contributions arising from the FRS 20 share-based charge are due to the Company granting share options to 
the employees of Ceres Power Limited. Application of UITF Abstract 44 results in a corresponding increase in investment  
in the subsidiary.
The Company’s investments comprise interests in Group undertakings, details of which are shown below:
   Proportion of nominal value of  
Name of undertaking Country of incorporation Description of shares held shares held by the Company
Ceres Power Limited England and Wales £0.001 ordinary shares 100%
Ceres Intellectual Property Company Limited England and Wales £1.00 ordinary share 100%
The principal activity of Ceres Power Limited is the development of micro-generation products based on solid oxide fuel  
cell technology. The principal activity of Ceres Intellectual Property Company Limited is the administration of registered 
intellectual property developed within the Group. The results of Ceres Power Limited and Ceres Intellectual Property 
Company Limited are included within the consolidated financial statements. 
12. Debtors
      Group  Company
      2007 2006 2007 2006 
      £’000 £’000 £’000 £’000
Amounts falling due within one year:    
Trade debtors      65 35 – –
Prepayments and accrued income      450 382 13 13
Other debtors      113 59 – 7
Corporation tax receivable      – 78 – –
      628 554 13 20
Amounts falling due after more than one year:    
Prepayments      53 53 – –
Amounts owed by Group undertakings      – – 5,784 2,499
      681 607 5,797 2,519
The amounts owed by Group undertakings comprise inter-company loans and recharges. No specific repayment or interest 
terms are associated with these amounts. 
 
13. Creditors: amounts falling due within one year
     Group  Company
      2007 2006 2007 2006 
      £’000 £’000 £’000 £’000
Trade creditors      502 335 19 75
Other taxation and social security payable      76 – 12 –
Other creditors      42 10 2 –
Accruals      168 93 41 39
      788 438 74 114 CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
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34
14. Creditors: amounts falling due after more than one year
     Group  Company
      2007 2006 2007 2006 
      £’000 £’000 £’000 £’000
Amounts owed to subsidiary undertakings      – – 432 224
      – – 432 224
The amounts owed to subsidiary undertakings are unpaid inter-company charges which are expected to be paid within  
one to two years. No interest is charged on these balances.
15. Financial instruments
The financial risks faced by the Group include interest rate risk, foreign currency risk and liquidity risk. The Board reviews 
and agrees policies for managing each of these risks.
The Group’s main objective in using financial instruments is to maximise the return whilst minimising the risk by placing 
funds in low risk cash deposits with financial institutions.
The Group seeks to minimise its exposure to fluctuations in exchange rates by taking out forward currency contracts
to hedge against foreign currency denominated purchase commitments. The Group does not currently use derivative 
instruments to manage its interest rate risk although it continues to monitor the need for such instruments on an
ongoing basis.
 
The balance sheet positions at 30 June 2007 and 30 June 2006 are not representative of the positions throughout the 
periods as cash and short term investments fluctuate considerably depending on when fundraising activities have occurred.
Debtors and creditors have been excluded from all the following disclosures, other than the currency risk disclosures.
Interest rate risk profile of the Group’s financial assets and liabilities
     At 30 June 2007 At 30 June 2006
    Cash at   Cash at 
    bank and  Short term  bank and  Short term  
    in hand deposits Total in hand deposits Total 
Currency    £’000 £’000 £’000 £’000 £’000 £’000
Sterling    1,642 9,500 11,142 2,121 11,900 14,021
      
Floating rate    1,642 – 1,642 2,121 – 2,121
Fixed rate    – 9,500 9,500 – 11,900 11,900
    1,642 9,500 11,142 2,121 11,900 14,021
The fixed rate short term deposits in Sterling were placed with banks for between one week and three months and earned 
interest of between 4.00% and 5.82% (2006: 3.62% and 4.37%). Floating rate cash deposits earned interest based on 
relevant UK LIBOR equivalents.
Borrowing facilities
The Group had no undrawn committed borrowing facilities available during the period covered by the financial statements.
Fair values of financial assets and financial liabilities
The following table provides a comparison by category of the carrying amounts and the fair values of the Group’s financial 
assets and financial liabilities at 30 June 2007. Fair value is the amount at which a financial instrument could be exchanged 
in an arm’s length transaction between informed and willing parties, other than a forced or liquidation sale and excludes 
accrued interest. Where available, market values have been used to determine fair values.
There is no difference between the fair value and the carrying value of cash at bank and in hand and short term deposits. 
Carrying value approximates to fair value because of the short maturity periods of these financial instruments.
Notes to the Financial Statements continued CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
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15. Financial instruments continued
Set out below the table is a summary of the methods and assumptions used for each category of financial instruments.
Primary financial instruments held or issued to finance the Group’s operations
      At 30 June 2007  At 30 June 2006
      Book value Fair value Book value Fair value 
      £’000 £’000  £’000 £’000
Derivative financial instruments held to hedge the currency exposure
on expected future purchases:    
United States Dollar      41 40 – –
Euro      105 104 – –
Forward foreign currency contracts      146 144 – –
Summary of methods and assumptions
Forward foreign currency contracts
The Group’s policy is, where practicable, to enter into forward currency contracts for substantially all foreign currency 
commitments immediately those purchase commitments are made. At the year ended 30 June 2007, 77% (2006: nil%) of 
foreign currency purchase commitments were hedged by foreign currency contracts. Fair value is based on the market 
price of comparable instruments at the balance sheet date.
Currency exposures
The table below shows the extent to which the Group companies have monetary assets and liabilities in currencies other 
than their functional currency. Foreign exchange differences on the retranslation of these assets and liabilities are taken to 
the profit and loss account of the Group companies and the Group.
        United States  
        Dollar Euro 
Foreign currency monetary assets at 30 June 2007        £’000 £’000
Functional currency of Group company:  
Sterling        52 20
        United States  
        Dollar Euro 
Foreign currency monetary assets at 30 June 2006        £’000 £’000
Functional currency of Group company:  
Sterling        – –
Financial instruments held for trading purposes
The Group does not trade in financial instruments. 36
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16. Provisions for liabilities and charges
Deferred taxation
Potential deferred tax assets have not been recognised but are set out below:
    Group  Company
      2007 2006 2007 2006 
       (as restated)  (as restated) 
      £’000 £’000 £’000 £’000
Tax effect of timing differences because of:    
Difference between capital allowances and depreciation     15 33 – –
Deductions on exercise of share options      (484) (161) (144) (52)
Losses carried forward      (4,144) (2,094) (381) (248)
Other short term timing differences      (10) – – –
      (4,623) (2,222) (525) (300)
The deferred tax assets have not been recognised as the directors consider that it is unlikely that a corporation tax liability 
will arise in the foreseeable future.
17. Called up share capital
   2007  2006
      Number £’000 Number £’000
Authorised    
Ordinary shares of £0.05 each      100,000,000 5,000 100,000,000 5,000
Allotted, called up and fully paid    
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 non-executive director 
services. The value of the shares on the days of issue totalled £11,798.
Certain investors have received warrants, at no additional cost, as part of their investment in Ceres Power Limited.  
On 3 September 2004, warrants originally granted over ordinary shares in Ceres Power Limited were surrendered in 
exchange for the grant of warrants over ordinary shares in the Company on identical terms. The number of warrants  
which remain outstanding at 30 June 2007 are:
       Number of Exercise Exercise 
Date granted       warrants price (pence) period
18 December 2003       201,416 70p 5 years
The warrants are exercisable during a five year period from the date of grant. On exercise, each warrant entitles the holder 
to one £0.05 ordinary share in the Company.
18. Share options
The Company has issued share options under a share option scheme for directors and employees, under which approved 
and unapproved share options were granted, prior to the flotation of the Company in November 2004. The Company 
adopted the ‘Ceres Power Holdings Limited 2004 Employees’ Share Option Scheme’ at the time of flotation, and it is 
intended that options will only be granted under this scheme in the future.
Under this scheme, directors and employees hold options to subscribe for £0.05 ordinary shares in Ceres Power Holdings plc at 
prices ranging from £0.23 to the closing mid-market price on the day preceding the most recent share option grant. All options 
are equity-settled. The vesting period for all options is three years. If the options remain unexercised after a period of ten years 
from the date of the grant, the options expire. Options may lapse if the employee leaves the Group before the options vest.
During the year the Group recognised a total expense relating to employee share-based payments under the equity-settled 
share option plans of £1,170,000 (2006: £601,000).
Notes to the Financial Statements continued CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
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18. Share Options continued
Movements in the total number of share options outstanding and their relative weighted average exercise price are as follows:
      2007  2006
       Weighted  Weighted 
          average  average 
      Number exercise Number exercise 
Group      (000) price (000) price
Outstanding at 1 July 2006      5,836 £0.74 6,323 £0.37
Granted      525 £2.32 1,105 £2.26
Exercised      (205) £0.41 (1,382) £0.32
Lapsed      – – (210) £0.31
Outstanding at 30 June 2007      6,156 £0.89 5,836 £0.74
Exercisable       4,889 £0.55 4,364 £0.37
The weighted average fair value of options granted in the year was £743,785 (2006: £1,599,941). The weighted average 
share price at the date of exercise during the year was £2.16 (2006: £2.15).
      2007  2006
       Weighted  Weighted 
          average  average 
      Number exercise Number exercise 
Company      (000) price (000) price
Outstanding at 1 July 2006      3,097 £0.62 2,997 £0.34
Granted      – – 350 £2.82
Exercised      – – (250) £0.30
Lapsed      – – – –
Outstanding at 30 June 2007       3,097 £0.62 3,097 £0.62
Exercisable       2,864 £0.44 2,747 £0.34
No share options were granted during the year. The weighted average fair value of options granted during the prior year was 
£680,791. No share options were exercised during the year. The weighted average share price at the date of exercise during 
the prior year was £3.15.
The range of exercise prices for options outstanding at the end of the year is as follows:
     2007  2006
      Weighted  Weighted  
         average  average 
Group      exercise Number exercise Number 
Expiry date – 30 June      price (000) price (000)
2012      £0.23 293 £0.23 295
2013      £0.29 1,589 £0.29 1,659
2014      £0.41 2,228 £0.41 2,352
2015      £0.79 433 £0.79 434
2016      £2.28 1,089 £2.27 1,097
2017      £2.32 525 – –
The options outstanding at the end of the year have a weighted average contractual life of 6.87 years (2006: 7.62 years).
     2007  2006
      Weighted  Weighted  
         average  average 
Company      exercise Number exercise Number 
Expiry date – 30 June      price (000) price (000)
2013      £0.30 1,367 £0.30 1,367
2014      £0.39 1,380 £0.39 1,380
2016      £2.82 350 £2.82 350
The options outstanding at the end of the year have a weighted average contractual life of 6.38 years (2006: 7.38 years). 38
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
18. Share options continued
Fair values were measured by use of the Black-Scholes pricing model. The inputs to the model were as follows:
   
  2007 2006 
Grant date 10 July 2006 to 29 May 2007 1 July 2005 to 29 June 2006
Share price at date of grant and exercise price £2.15–£2.87 £0.97–£3.34
Expected volatility (%) 57–69% 57–69%
Expected option life (years) 5–7 5–7
Average risk-free interest rate (%) 4.17–5.50% 4.11–4.67%
Expected dividend yield nil nil
The exercise price of an option is the closing mid-market share price at the date of grant. The expected life of the options  
is based on the best estimate of the average number of years expected from grant to exercise. The expected volatility is 
based on historic volatility over the last seven years of comparable listed companies. The risk-free rate of return is the yield 
on zero-coupon UK government bonds of a term consistent with the expected option life.
19. Reserves
       Share  Profit and 
       premium Other loss account 
       account reserve (as restated) 
Group       £’000 £’000 £’000
At 1 July 2006       15,137 7,463 (9,465)
Premium on shares issued:   
– Exercise of share options       73 – –
– Exercise of warrant rights       372 – –
– Share-based remuneration for services       12 – –
Loss for the financial year       – – (4,866)
Share-based payments charge       – – 1,170
At 30 June 2007       15,594 7,463 (13,161)
The other reserve represents a reserve arising on consolidation, being the share capital and share premium account 
balances of Ceres Power Limited at 1 July 2004 less the nominal value of the shares issued by the Company to acquire 
these shares, reflecting the position as if the merger had occurred on 1 July 2004. 
        Share  Profit and 
        premium loss account 
        account (as restated) 
Company        £’000 £’000
At 1 July 2006 (as previously stated)        15,137 (647)
Prior year adjustment: Capital contributions arising from FRS 20 share-based payments charge   – 416
At 1 July 2006 (as restated)        15,137 (231)
Premium on shares issued:  
– Exercise of share options        73 –
– Exercise of warrant rights        372 –
– Share-based remuneration for services        12 –
Loss for the financial year        – (391)
Share-based payments charge        – 1,170
At 30 June 2007        15,594 548
Notes to the Financial Statements continued CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
39
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
CERES POWER HOLDINGS PLC ANNUAL REPORT 2007  
20. Net cash outflow from operating activities
Reconciliation of operating loss to net cash outflow from operating activities:
        2007 2006 
         (as restated) 
        £’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)
21. Reconciliation of movements in net funds
       At 1 July  At 30 June 
       2006 Cashflow 2007 
       £’000 £’000 £’000
Cash at bank and in hand       2,121 (479) 1,642
Short term investments       11,900 (2,400) 9,500
       14,021 (2,879) 11,142
22. Operating lease commitments
At 30 June 2007, the Group had annual commitments under non-cancellable operating leases as follows:
    At 30 June 2007  At 30 June 2006
      Land and  Land and  
      buildings Other buildings Other 
      £’000 £’000 £’000 £’000
Leases expiring:    
Between two and five years inclusive      – 3 – 3
After five years      135 – 90 –
      135 3 90 3
23. Contingent liabilities
During the period, the Group recognised grant income in respect of research and development activities of £970,185  
(2006: £636,064) (see note 4) in accordance with the Group’s accounting policy. The grants may be required to be repaid  
if the Group does not meet subsequent reporting requirements and technical milestones specified in the grant offer letters. 
In addition, £523,400 (2006: £416,200) of grant income, or an element thereof, may require repayment if the Group 
generates revenue (net of expenses and reasonable overheads) from the patent created from the grant. In such case,  
the Group may be liable to pay back the grant at a rate of 5% of the net revenue generated in any one year, The directors  
of the Group believe it is unlikely that any of the grants received will need to be repaid in the foreseeable future.
24. Capital commitments
Capital expenditure that has been contracted for but has not been provided for in the financial statements amounts to 
£164,945 as at 30 June 2007 (2006: £21,000).
25. Related party transactions
Imperial College and its technology transfer company, Imperial Innovations LLP, are related parties by virtue of their 
significant shareholding in Ceres Power Holdings plc. During the year, a total of £6,495 (2006: £15,100) was payable to 
Imperial College (and its subsidiaries) in respect of tuition fees and equipment usage. Of these amounts, £nil (2006: £7,855) 
remains outstanding at 30 June 2007.
The Carbon Trust is no longer a related party following the sale of its shareholding during the year. In the prior year  
The Carbon Trust was a related party by virtue of its shareholding. During the prior year the Group received £23,200  
of grant income from The Carbon Trust.
The Company has taken advantage of the exemption available to parent companies under FRS 8, ‘Related Party Disclosures’, 
not to disclose transactions and balances between Group entities which have been eliminated on consolidation.  CERES POWER HOLDINGS PLC ANNUAL REPORT 2007
40
Notes Contents
01	 	 Highlights
02	 	 Global	Challenges
03	 	 Alternative	Energy	Solutions		 04	 	 Chairman’s	Statement
06	 	 Chief	Executive’s	Review
08	 	 Product	Development
10		 Operational	Capability
12		 Market	Opportunities
14		 Value	Capture
16		 Directors	and	Senior	Management
18		 Corporate	Social	Responsibility	 19		 Corporate	Governance	Statement
20	 	 Directors’	Report
24			 Independent	Auditors’	Report
25			 	Consolidated	Profit	and	 	 Loss	Account
25	 	 Consolidated	Statement	of	Total		 	 	 Recognised	Gains	and	Losses
26			 	Consolidated	and	Company 	 Balance	Sheets
27	 	 Consolidated	Cash	Flow	Statement
28			 	Reconciliation	of	Movements	in	 Shareholders’	Funds
29	 	 Notes	to	the	Financial	Statements
IBC	Directors	and	Advisors
CERES POWER HOLDINGS PLC   ANNUAL	 REPORT	 2007
Ceres	Power	is	committed	to	providing	 alternative	energy	solutions	to	address	 	 the	global	challenges	of	reducing	emissions,	 increasing	fuel	efficiency	and	improving	 	 energy	security
Micro-generation
Creating electricity at the point of use is highly efficient 
compared with centralised power generation because 
transmission and heat losses are avoided. Ceres Power has 
demonstrated an industry-leading residential Combined 
Heat and Power (CHP) Unit capable of generating 
electricity and all of the hot water and central heating 
required for a typical UK home, without the need for a 
separate boiler. 
Directors
Philip Holbeche
1,2
Chairman
Peter Bance
1,2
Chief Executive Officer
Andrew Baker
1,2
Operations Director
Rex Vevers
1,2
Finance Director
Bob Flint
2 
Commercial Director
Nigel Brandon
2
 
Chief Scientist
Brian Count
1 
Non-Executive Director
John Gunn
1 
Non-Executive Director
Secretary 
Matthew Stride
Registered Office
Unit 18
Denvale Trade Park
Haslett Avenue East
Crawley 
RH10 1SS
Registered Number
5174075
1 Ceres Power Holdings plc
2 Ceres Power Limited
Solicitors
Taylor Wessing LLP
Carmelite
50 Victoria Embankment
Blackfriars
London
EC4Y 0DX
Registered Auditors
PricewaterhouseCoopers LLP
Abacus House
Castle Park
Cambridge 
CB3 0AN 
Bankers
National Westminster Bank plc
South Kensington Station Branch
PO Box 592
18 Cromwell Place
London
SW7 2LB
Nominated Advisor (NOMAD)
Morgan Stanley & Co International plc
25 Cabot Square
Canary Wharf
London
E14 4QA
Broker
Morgan Stanley Securities Limited
25 Cabot Square
Canary Wharf
London
E14 4QA
Registrar
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgwater Road
Bristol 
BS99 7NH
Directors and Advisors Energy Products
Global Markets
www.cerespower.com
Ceres Power Holdings plc 
Unit 18
Denvale Trade Park
Haslett Avenue East
Crawley
RH10 1SS
Phone: +44 (0)1293 400 404
Fax: +44 (0)1293 400 482
E-Mail: info@cerespower.com
Ceres Power Holdings plc
Annual Report 2007
Ceres Power Holdings plc Annual Report 2007