Final Results

Ceres Power Holdings plc
25 September 2006


For immediate release 07:00, 25 September 2006

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

          Preliminary results for the twelve months ended 30 June 2006

Highlights: A year of progress

   • Income from private and public sector contracts up 71%

   • 1kW Compact lightweight fuel cell stack demonstrated

   • Residential CHP programme secured with British Gas

   • Third contract with BOC targeting off-grid applications

   • New facility secured for assembly of complete products

   • Plans for new 'mother plant' to mass manufacture core fuel cell
     components

   • Prestigious role in UK Government's Energy Review

   • Board and senior management team strengthened

   • £14 million in cash and short term investments at 30 June 2006


Philip Holbeche, Chairman, commented:

'I am very pleased with the significant progress Ceres Power has made towards
delivering cost-effective, efficient and reliable commercial solutions using our
advanced fuel cell technology. Further to our success in delivering a production
engineered 1kW fuel cell, the Company has continued to make significant
progress, both technically and commercially. Today's announcement regarding the
scale-up of our manufacturing capacity reinforces our confidence in our fuel
cell technology and the potential markets for our products.'

For further information contact:

Philip Holbeche, Chairman
Peter Bance, Chief Executive                                [phone]
Ceres Power

Patrick d'Ancona / Charlotte Kirkham                        [phone]
M: Communications

Alisdair Gayne                                              [phone]
Morgan Stanley





Chairman's Statement

Significant progress has been achieved across several key areas of the business
during the year ended 30 June 2006. The Group has extended its commercial
relationships with important partners, developed its platform technology for a
range of market applications, and grown its manufacturing capabilities.

In the past year we have had a number of important successes:

   • The Group has successfully demonstrated a 1kW fuel cell stack, a
     fundamental building block of micro-power generation products aimed at a
     variety of uses ranging from domestic Combined Heat and Power (CHP) to
     off-grid applications and auxiliary power units (APU) in the transport
     sector. This compact, lightweight stack design represents a critical
     milestone in the commercialisation of Ceres Power's technology.


   • A £2.7 million programme with Centrica (trading as 'British Gas'), part
     funded by the Department of Trade and Industry (DTI), was announced to
     develop CHP units for the UK residential market. Excellent progress has
     already been made on a wall-mountable design with mass market potential.


   • A third contract with BOC was secured to target off-grid applications
     internationally using fuels including liquefied petroleum gas (LPG). This
     new contract followed successful technical feasibility work.


   • Developing partnerships with Original Equipment Manufacturers (OEMs) with
     expertise in boiler and genset manufacturing that will be important in the
     assembly of final products utilising Ceres designed and manufactured fuel
     cells. We have also established a strong set of supply chain partnerships to
     deliver materials, components and process equipment on time and at
     competitive costs for volume production.


   • Continued expansion of our engineering resources to enable the successful
     integration of our fuel cell technology into complete products.

The Group has also made a considerable investment in its manufacturing
capabilities to maximise value, and retain control over its core technology.
Facilities have been commissioned for pilot-scale manufacture of fuel cells and
stacks. We have also separately announced today that a new facility has been
secured to design, build and test complete products. This new facility is
anticipated to be operational by mid-2007 and will be used to develop products
for the CHP, off-grid and APU markets. In addition, design work is underway for
the construction of a 'mother plant' for the mass production of core fuel cell
components. It is anticipated that this plant will be commissioned in the second
half of 2008.

Industry Leadership
Ceres Power has established a leading position in the fuel cell industry. This
position has been reinforced by its high profile with Government, its key roles
in the fuel cell community, its global supply chain partnerships, and the
backing of major financial institutions.

Ceres Power has played a significant role in putting fuel cells and micro-power
generation onto the UK's energy agenda. In the year of the UK's Energy Review,
Ceres Power represented the industry in the development of national energy
policy through membership of the Chancellor's Energy Research Partnership and
Chairmanship of the newly formed UK Fuel Cell Industry Association. Ceres Power
has also received direct support from national and regional bodies including the
DTI, the Carbon Trust and the South East England Development Agency (SEEDA).

The necessary relationships for getting products to global mass markets are
being forged with channel partners, including major utilities and OEMs. Leading
international companies have also been attracted into supply chain partnerships
with Ceres Power in which they are committing significant resources to deliver
commercial solutions.

Ceres Power's developing relationships with Centrica and BOC illustrate the
breadth of market opportunities being addressed by the Group and the calibre of
our supply chain partners. These opportunities span residential and industrial
sectors, the use of mains natural gas and packaged fuels, and on-grid and
off-grid applications. Building on initial commercial engagements, major
programmes have been secured targeting specific market applications.

Financial
The financial performance of the Group for the year was in line with our
forecasts.

Income for the year ended 30 June 2006 totalled £1.4 million, of which interest
on cash balances provided £630,000, income from development contracts, financed
by the public sector, was £636,000, and revenue from commercial contracts was
£110,000. This represents a 71% increase in income from public and private
sector contracts compared to the prior year.

The Group's commitment to investing in the business to extend its capabilities
is clear from the 34% increase in research and development costs to £3.1
million. This is due to the recruitment of further experienced personnel and the
depreciation of additional equipment associated with the expansion of existing
facilities. Administrative expenses rose by 21% to £1.5 million, due primarily
to costs associated with our growing intellectual property (IP) portfolio and
commercial staff.

Capital expenditure of £1.1 million represents an increase of 127% over the
prior year, a significant investment in the Group's in-house product engineering
and manufacturing capabilities.

The Group's liquidity position continues to be robust with £14.0 million in cash
and short term investments as at 30 June 2006. The net cash outflow for the year
was £3.0 million, the result of operating activities, interest received, capital
expenditure, and the exercise of warrants and options.

People
Ceres Power is proud to have assembled a group of talented, highly motivated
people.
The appointment of Bob Flint as the company's new Commercial Director reflects a
growing pipeline of opportunities. Rex Vevers has recently joined the business
as Finance Director and brings extensive international deal-making experience in
addition to financial expertise.

Every one of our employees is a valued member of the team and has a stake in the
business. I would like to thank each of them for their important contributions
to our continuing success.


Philip Holbeche

Chairman



Chief Executive's Review

Alternative energy is a developing worldwide industry with major commercial
potential and is attracting strong government backing. Since the formation of
Ceres Power in 2001, we have consistently focused on developing compelling
solutions to meet real market needs. Ceres Power has used its technology
leadership and operational excellence to develop a unique platform technology
which can satisfy a range of market applications. Simultaneously we have
developed and established partnerships with multinational corporations that
provide us with invaluable insight into end-user requirements and direct access
to mass markets.

With the successful demonstration of the 1kW stack the Group is now focused on
refining product designs and validating manufacturing processes and assembly
methods ahead of transfer to volume manufacturing to accelerate the
commercialisation of the technology.

Business Model

The Group's value stems from its wealth of intellectual property (IP) and its
ability to exploit this commercially across a range of market sectors. The
developing IP portfolio covers materials, product designs and manufacturing
processes. The Group continues to place great emphasis on the protection,
exploitation and management of its rapidly expanding IP portfolio. Considerable
time and resources have been expended in developing a set of capabilities and
assets that are well protected, difficult to replicate, and represent a
substantial competitive barrier to entry.

The Group's IP extends well beyond legally protected patents and trademarks, and
includes know-how surrounding materials formulations, proprietary product
designs and manufacturing processes. We are also building brand value through
increasing awareness of the benefits derived from micro-power generation
solutions 'Powered by Ceres'TM.

Our IP supports three complementary income streams to maximise the Group's value
potential over the short, medium and long term.

Engineering Services: These services, offered as project-based contracts,
include feasibility studies, turnkey product developments, and subsequent
product lifecycle management. They provide Ceres with business development
opportunities to secure IP deals and product sales, whilst generating revenues
in their own right. A growing pipeline of opportunities across market segments
and geographies has now been established to allow the Group to pursue a balanced
portfolio and drive growth.

Products: Sales will be generated for mass market applications under commercial
agreements with channel partners and established OEMs. Ceres Power will have the
ability to manufacture fuel cell components and supply complete systems.
Component standardisation across many market applications allows rapid revenue
growth whilst minimising internal costs.

IP Rights: The strength of the Group's IP portfolio should allow it to offer
preferred market positions to channel partners in return for a combination of
up-front payment, ongoing revenues and equity participation in joint ventures.
IP Rights are likely to be bounded by territory, market application and time.

The Group's revenue profile is likely to be characterised initially by
engineering services contracts, with subsequent product sales increasing and
ultimately dominating. The income from IP rights may be significant in value in
the short, medium and long term. In the medium term we would envisage that the
majority of the Group's income will stem from the successful commercialisation
of the technology and sale of products in the CHP, off-grid and APU sectors.

In anticipation of expected product volumes, Ceres Power has commenced planning
of manufacturing scale-up involving materials, process equipment, and quality
systems. The in-house capability to manufacture fuel cell components in large
numbers will be matched with a capacity for product assembly by OEM partners.

Outlook

Our focus over the next twelve months is to:

   • Commission the new facility by mid 2007 to design, build and test
     complete products for mass field trials.


   • Complete the design and determine the location of a 'mother plant' to
     enable mass production of core fuel cell components in financial year 2008/
     9.


   • Progress the delivery of programmes with existing partners and develop
     further relationships with key OEMs and supply chain partners.

I look forward to reporting during the coming year on further developments and
continuing progress.

Peter Bance

Chief Executive Officer


CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30 June 2006

                                                             2006        2005
                                                 Note       £'000       £'000

Turnover                                                      110          71
Research and development costs                             (3,104)     (2,324)
Administrative expenses                                    (1,534)     (1,272)
Other operating income                                        636         366
Operating loss                                             (3,892)     (3,159)
Interest receivable and similar income                        630         508
Loss on ordinary activities before taxation                (3,262)     (2,651)
Tax credit on loss on ordinary activities                      78           -
Loss for the financial year                         6      (3,184)     (2,651)

Loss per £0.05 ordinary share
- basic and diluted                                 3       (5.58)p     (5.28)p



CONSOLIDATED BALANCE SHEET
as at 30 June 2006

                                                                 2006     2005
                                                        Note    £'000    £'000
Fixed assets
Tangible assets                                                 1,870    1,302

Current assets
Debtors: amounts falling due after more than one year              53       53
Debtors: amounts falling due within one year                      554      263
Short term investments                                         11,900   15,600
Cash at bank and in hand                                        2,121    1,444
                                                               14,628   17,360
Creditors: amounts falling due within one year                   (438)    (471)
Net current assets                                             14,190   16,889
Total assets less current liabilities                          16,060   18,191
Creditors: amounts falling due after more than one year             -      (10)
Net assets                                                     16,060   18,181

Capital and reserves
Called up share capital                                    4    2,925    2,804
Share premium account                                          15,137   14,199
Other reserve                                                   7,463    7,463
Profit and loss account                                        (9,465)  (6,285)
Equity shareholders' funds                                 6   16,060   18,181




CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30 June 2006

                                                                2006      2005
                                                       Note    £'000     £'000
Net cash outflow from operating activities                5   (3,613)   (2,629)
Returns on investments and servicing of finance
Interest received                                                630       508
Net cash inflow from returns on investments and
servicing                                                        630       508
of finance
Taxation                                                           -         -

Capital expenditure
Purchase of tangible fixed assets                             (1,099)     (338)
Net cash outflow for capital expenditure                      (1,099)     (338)
Net cash outflow before use of liquid resources and
financing                                                     (4,082)   (2,459)
Management of liquid resources
Decrease / (increase) in short term deposits with              3,700   (11,200)
banks
Financing
Issue of ordinary share capital                                1,009    16,312
Net expenses of share issue                               4       50    (1,400)
Net cash inflow from financing                                 1,059    14,912
Increase in net cash                                             677     1,253

Reconciliation to net funds
Opening net funds                                             17,044     4,591
Increase in net cash                                             677     1,253
Movement in short term deposits                               (3,700)   11,200
Closing net funds                                             14,021    17,044




Notes to the preliminary announcement

1. Basis of preparation

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

The results for the year to 30 June 2005 have been extracted from the statutory
financial statements for that year, that have been filed with the Registrar of
Companies and upon which the auditors have reported without qualification. The
preliminary results have been drawn from the statutory financial statements for
the year to 30 June 2006, which have been approved by the Board of Directors and
on which the auditors have reported without qualification, and which have not
yet been delivered to the Registrar of Companies. The financial statements will
be delivered to the Registrar of Companies following the Annual General Meeting.


2. Principal accounting policies

These preliminary results for the year ended 30 June 2006 have been prepared in
accordance with the accounting policies set out in the statutory financial
statements for the year ended 30 June 2005 except as set out below.

Government grants
Revenue grants are credited to the profit and loss account (as other operating
income) on a case-by-case basis. Previously, grant income was only recognised
when the cash had been received, the associated expenditure had been incurred
and the Directors believed that it was remote that the amounts would need to be
repaid. However, the accounting policy has been amended to remove the
requirement for the cash to be received on those grants where recovery is
assured and where there are no technical milestones, in order to match the
associated expenditure with the grant income, as the Directors consider this
treatment to be more appropriate for those grants. The effect on the prior year
is not material and therefore no prior year adjustment has been made.


3. 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 2006 is £3,183,874 (2005:
£2,650,602) and the weighted average number of £0.05 ordinary shares in issue
during the year ended 30 June 2006 is 57,039,938 (2005: 50,232,830).


4. Called up share capital

                                                    2006                  2005
                                     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 not paid
Ordinary shares of £0.05 each                  -       -         4,000       -
Allotted, called up and fully paid
Ordinary shares of £0.05 each         58,504,885   2,925    56,072,293   2,804
                                      58,504,885   2,925    56,076,293   2,804

Between 13 July 2005 and 26 June 2006, the Company issued 1,378,240 ordinary
shares of £0.05 each on the exercise of employee share options for cash
consideration of £441,465.

Between 25 November 2005 and 2 June 2006, the Company issued 1,050,352 ordinary
shares of £0.05 each on the exercise of warrants for cash consideration of
£567,302.

No issue costs have been incurred with respect to the above transactions.
However, an amount of £49,806 has been credited to the share premium account in
respect of VAT reclaimed in the period relating to share issue costs in prior
periods.


5. Net cash outflow from operating activities

Reconciliation of operating loss to net cash outflow from operating activities:

                                                             2006         2005
                                                            £'000        £'000
Operating loss                                             (3,892)      (3,159)
Depreciation charge                                           494          346
Loss on disposal of fixed assets                                1            -
Share option compensation charge                                4           20
(Increase) in debtors                                        (213)         (67)
(Decrease) / increase in creditors                             (7)         231
Net cash outflow from operating activities                 (3,613)      (2,629)


6. Reconciliation of movements in shareholders' funds

                                                             2006        2005
                                                            £'000       £'000
Loss for the financial year                                (3,184)     (2,651)
Proceeds of issue of ordinary share capital                 1,009      16,315
Share issue costs                                              50      (1,400)
Share option compensation charge                                4          20
                                                           --------    --------
Net change in shareholders' funds                          (2,121)     12,284
Opening shareholders' funds                                18,181       5,897
Closing shareholders' funds                                16,060      18,181




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