Ceres Annual Report 2023

Ceres is a leading developer of clean energy

technology, fuel cells for power generation

and electrolysers for green hydrogen.

Read more on pages 14–15

Cash, cash equivalents and

short‑term investments

£140.0m

Revenue

£22.3m

19.8

182.3

29.2

249.6

22.3 140.0

Strategic report

01 Financial highlights

02 Strategic roadmap

03 Investment case

04 At a glance

06 Chair’s statement

08 Chief Executive’s report

12 Technology

14 Our people

16 Business model

18 Sustainability

28 Stakeholder engagement

30 Strategy

31 KPIs

32 Chief Financial Officer’s statement

36 Principal Risks and Uncertainties

40 Viability statement

Corporate governance

44 Chair’s introduction to governance

45 Board of Directors

48 Executive Committee

49 Corporate governance report

55 Audit Committee report

59 Remuneration & Nomination

Committee report

63 Directors’ Remuneration Report

84 ESG Committee report

86 Directors’ report

Financial statements

91 Independent auditor’s report

98 Consolidated statement of profit and loss

and other comprehensive income

99 Consolidated statement of financial position

100 Consolidated cash flow statement

101 Consolidated statement of changes

in equity

102 Notes to the consolidated

financial statements

130 Company balance sheet

131 Company statement of changes in equity

132 Notes to the Company financial statements

136 Directors and advisers

1. Revenue in 2021 and 2022 has been restated as described in Note 1

to the financial statements.

Financial highlights

In this report

Strategic highlights

• Bosch’s ‘power units’ based on Ceres’ technology received European funding

of ~€160 million to support ramp up and mass production

• Doosan’s 50MW factory in South Korea has completed factory acceptance testing

and installation with commissioning on schedule for 2024

• Second generation stack design has passed critical design review, offering

improvements in performance and cost to licence partners

• First megawatt-scale electrolyser demonstrator successfully completed testing

in Germany and has arrived at partner Shell’s R&D centre in Bangalore, India

• Ended 2023 with a strong cash position and a growing pipeline of opportunities

to work with progressive partners

Read more on page 28

Ceres’ strategy to enable

a net zero future

02 Ceres Annual Report 2023

Investment case

Reasons to invest

We have established a leading technology position

in solid oxide fuel cell (“SOFC”) power systems, which

are being demonstrated at up to 85% efficiency

in multiple applications and geographies. Run in

reverse as an electrolyser, our proprietary technology

generates green hydrogen 25% more efficiently than

incumbent lower temperature technologies, such as

alkaline and proton exchange membranes (“PEM”).

We have committed £100 million to develop our solid

oxide electrolyser cell (“SOEC”) technology and to

demonstrate it at megawatt scale.

Read more about our technology on page 12

Leading global solid oxide platform technology

Ceres aims to achieve scale through strategic collaboration

with world-leading partners. To date our manufacturing

licence partners have committed more than €500 million

to manufacturing at scale. We have assembled one of

the strongest teams of scientists and engineers in the

global industry for power generation and green hydrogen

– complemented by a robust and talented management

team and Board of Directors.

Read more about our commercial value proposition on page 17

Strong commercial value proposition

Our licensing business model differentiates us from

vertically integrated companies, whereby we focus on our

strengths in electrochemical technology and innovation

and leverage the expertise of our partners to deliver

multi-gigawatts of manufacturing scale. We maintain a

strong cash and short-term investment balance to invest in

maintaining our technology leadership, enabling our licence

partners to succeed and ultimately to deliver clean energy

solutions at scale and pace.

Read more about our financial position on page 32

Solid financial position

Strategic report

03Ceres Annual Report 2023

At a glance

Ceres’ technology

enabled through

global partnerships

Its core cell technology enables high‑efficiency

energy conversion at low cost, and is able

to operate in either fuel cell or electrolyser

mode, providing a single platform to multiple

applications and markets.

250MW

Announced partner capacity

Zero

, SO

, NO

and particulate

emissions when Ceres fuel cell

stack operates on pure hydrogen

591

Employees

2022: 570 employees

Our scalable technology

Sustainability credentials

Solid oxide stack

Highly differentiated stack technology

platform with strong growing intellectual

property and distinct advantages of

robustness, efficiency and cost.

Solid oxide cell

Ceres’ core cell made with low cost

materials: a ceria ceramic electrolyte

and a stainless steel substrate

and interconnect.

04 Ceres Annual Report 2023

Ceres power

Leading technology position in solid oxide fuel cells

(“SOFC”) being demonstrated in multiple applications

and geographies through established global partnerships.

£21.5m

Revenue

(2022: £19.6m)

Ceres hydrogen

A differentiated solid oxide electrolyser cell (“SOEC”) for

hydrogen, with distinct advantages in efficiency, coupling

with high heat industrial processes.

£0.8m

Revenue

(2022: £0.2m)

Our technology offerings

Global reach with our partners

1. The adjustment in respect of 2022 is described in Note 1 to the financial statements.

Strategic report

05Ceres Annual Report 2023

Due to its efficiency and compatibility

with industrial temperatures, we believe

Ceres can become the de facto standard

for hydrogen production for green steel,

ammonia and synthetic fuels.”

Warren Finegold

Chair

Focused on building

a resilient and

commercial company

Highlights

• Graduation to the Main Market of the

London Stock Exchange in June 2023

• Significant allocation of resources

to support the increasing market

opportunity for green hydrogen

• First megawatt‑scale electrolyser

demonstrator passed validation and

safety inspection and has arrived at

Shell’s R&D centre in India

• Strengthening the knowledge and depth

of our Board with the addition of three

new members

06 Ceres Annual Report 2023

Chair’s statement

Dear Shareholders,

2023 proved to be a challenging year for Ceres and the wider

hydrogen sector as the economic backdrop of high inflation

and interest rates and sluggish growth outside North America

dampened business confidence. Companies involved in the

transition to net zero were also affected by a slowing in the

pace of climate change support from governments as they

sought to spread the investments needed over longer periods.

The interest in our solid oxide fuel cells (“SOFC”) was further

impacted by the continued high price of natural gas resulting

from the Ukraine war. This is the transitional fuel that our fuel

cells use until plentiful supplies of hydrogen become available.

As a result, our partners have also been developing their fuel

cell businesses more slowly and while the construction of

the Bosch and Doosan factories is on track, the launch of the

commercial products that will generate royalties is expected

to take longer. Despite our best efforts we were unable to

sign any significant new partners and complete the proposed

joint ventures with Bosch and Weichai in China, although our

relationship with our strategic partners remains strong.

The strategic decision we took in 2021 to raise capital to

invest in the development of our solid oxide electrolyser cell

(“SOEC”) business now looks to be well justified and we are

seeing growing demand for this technology to generate green

hydrogen. The International Energy Agency expects the global

demand for hydrogen to increase from 1GW to 3,300GW

globally

. We can already see the increasing opportunity within

the hydrogen industry based on the pipeline of interest in our

electrolysis technology and we were delighted to sign our first

dual electrolysis and fuel cell partnership with Delta Electronics

in early 2024. We anticipate continuing licence revenues from

new electrolyser partners, which will help to offset the delay

in SOFC royalties, and we expect additional royalties to flow

from SOEC manufacturing from 2027 onwards. Importantly,

our electrolysis technology is based on the same solid

oxide cell that is used in our fuel cells. It therefore provides a

significant additional market opportunity for our manufacturing

partners and should enhance their ability to produce at scale

and competitive cost.

Our technical progress in electrolysis has been very pleasing.

Ceres’ first megawatt-scale electrolyser demonstrator, which

began producing hydrogen this year at below 40kWh/kg has

arrived at Shell’s research and development (“R&D”) centre

in India, where further validation will take place. This will feed

into the design of the optimum architecture for 100MW+ scale

system installations, essential to accelerate commercialisation

and deliver green hydrogen at the scale and pace required to

reach net zero.

Due to its efficiency and compatibility with industrial

temperatures, we believe Ceres can become the de facto

standard for hydrogen production for green steel, ammonia

and synthetic fuels. Our technological progress was recognised

during 2023 by the S&P Global Platts Energy Award for

Commercial Technology of the Year and the prestigious

MacRobert Award for Engineering Innovation.

Strategy and execution

Ceres’ 20 years of experience in solid oxide technology

has produced a platform technology that is inherently cost

effective, robust and scalable. During our annual strategy

review, the Board has reaffirmed the opportunities within

the hydrogen market over the coming decades. For Ceres

to capitalise on this opportunity, we must move quickly and

refocus from being a technology company to a commercial

company. Accordingly, we are accelerating our SOEC

development, allocating more resources towards our SOEC

activities, whilst continuing to support our SOFC partners.

We will further strengthen our commercial team with

representatives in more markets pursuing opportunities in

both green hydrogen and power generation. We have set a

clear course to sign new licence partners that will convert into

a significant market share for solid oxide green hydrogen.

The Executive management has the Board’s full support and

confidence in building Ceres into an industry leader.

Board of Directors

This past year has seen several changes to our Board as

we welcomed three new members: Karen Bomba, Caroline

Brown and Nannan Sun. Karen brings 35 years of experience

in positioning innovative companies for growth internationally,

which is hugely valuable as Ceres expands its commercial

activities globally. Caroline will become the Chair of the Audit

Committee, utilising her multinational experience in the financial,

technological and industrial sectors. Nannan succeeded

Qinggui Hao as the Weichai representative on the Board;

she is responsible for product and technology research and

development having joined Weichai in 2015. I am pleased to

welcome our new Board members, each of whom bring diverse

backgrounds and experiences to complement our current

membership and to strengthen Ceres’ leadership.

My thanks go to Aidan Hughes, who will retire from the Board

at our AGM having served as a Director since 2015. Over

his nine-year tenure he has brought a wealth of financial and

operational experience and has chaired the Audit Committee

with great expertise and commitment. We all wish him well in

his future endeavours.

Sustainability

Sustainability is key to our purpose and as a growth

company, we are on a journey to ensure that long-term

sustainable business operations are embedded into

the Company in keeping with our commitment to our

stakeholders. In June 2023, Ceres graduated from the

Alternative Investment Market to the Main Market of the

London Stock Exchange. As such, this year’s sustainability

disclosures include our reporting for the first time against

the Task Force for Climate-Related Financial Disclosures

outlining the climate-related risks and opportunities facing

Ceres. This can be found on pages 22 to 27.

I am pleased to report that the Board-level ESG Committee,

of which I am a member, is working very effectively. It is

chaired by our Senior Independent Director Julia King with

participation from Trine Borum Bojsen and Phil Caldwell.

Together we work with leaders across the business to

develop and execute on our sustainability goals. For more

information on the Committee see page 84 of this report.

Thank you

Energy independence and reducing carbon emissions are both

high priorities for communities around the world. Our fuel cells

can create decentralised power generation with increased

efficiency and electrolysers can decarbonise hard-to-abate

sectors with no alternatives. This environment supports Ceres’

growth and highlights the potential for our clean energy technology.

While there is much yet to be done, it is also important to

celebrate our achievements in 2023. I would like to thank our

employees for their hard work and our shareholders for their

continued support and reiterate my confidence that 2024 will

be a year of significant progress for Ceres.

Warren Finegold

Chair

1. IEA (2023), Hydrogen, IEA, Paris. https://www.iea.org/reports/hydrogen-2156,

License: CC BY 4.0.

Strategic report

07Ceres Annual Report 2023

Future demand for electrolysis

for green hydrogen production

far exceeds supply, stimulating new

entrants into the market who need

access to the best technology and

can scale manufacturing through global

supply chains. This ideally positions

Ceres for growth as the only company

offering access to world-leading solid

oxide technology under licence.”

Phil Caldwell

Chief Executive Officer

Accelerating the pace

of development and

commercialisation

Highlights

• Next generation stack technology

released to deliver improvements

in performance and cost

• Market for green hydrogen is high

growth and predicted to be very

significant over time

• Focused on top line growth and on

managing cash and investment

• Culture founded in science, engineering

and individuals who are highly talented and

passionate about the Company’s purpose

08 Ceres Annual Report 2023

Chief Executive’s report

This past year was tough economically, and particularly for the

clean energy and hydrogen industries. The Hydrogen Council’s

December update pointed to “headwinds that have caused a

slower development of the global hydrogen industry than had

previously been expected”. Against the backdrop of increased

energy prices and high inflation, many companies delayed

investment decisions and share prices were significantly

impacted. Ceres was not immune from this wider trend.

We have positioned ourselves to emerge stronger from

the recent downturn in the industry. Amidst project delays,

regulatory uncertainty and higher financing costs, Ceres has

made careful decisions about where to deploy capital and

resources, and where to invest for growth based upon where

the biggest opportunities present themselves for the future of

our business in an evolving global market. In 2021 we made the

strategic decision to invest in solid oxide electrolyser cell (“SOEC”)

technology to access the market for green hydrogen and

significantly increase the addressable market for our technology

in addition to fuel cells. This has been the right decision for Ceres’

long-term strategy, as evidenced by the recent signing of our first

SOEC licence partner, and the challenge now is to accelerate our

SOEC development while also delivering on our existing solid

oxide fuel cell (“SOFC”) business.

Progress with fuel cells and existing licensee partners

We have built our business with a focus on our fuel cell

technology and on our existing licence partners. In 2023

together with our partner Doosan we completed the factory

acceptance testing of all equipment for the highly automated

factory at Saemangeum in South Korea. Commissioning is on

track to complete in the second half of 2024, and we expect

first production of SOFC systems and royalties to Ceres to

follow in 2025.

Our partnership with Bosch remains strong and we have

developed the next generation stack technology to support

scale up of their facility in Bamberg, Germany. Major equipment is

being installed in 2024 with support from significant European

grant funding of approximately €160 million. However,

timelines for products to market have not been supported by

the geopolitical backdrop in Europe with sentiment moving

away from reliance on gas and high energy prices impacting

the economic case. We expect production will be slower to

coincide with Bosch’s product launch which is still undergoing

development and validation of our second generation stack

technology in the field in 2024.

Our relationship with Weichai remains strong and they

are developing 75kW stationary power units based on the

Ceres technology targeting the distributed power market.

The planned three-way China joint venture (“JV”) has not

been concluded in 2023 despite the relationship between

Bosch, Weichai and Ceres remaining positive. It is now our

belief that the proposed JV is unlikely to be completed in its

current form. However, we are evaluating other options with

Weichai to address the Chinese market and we will provide

an update on our progress at the appropriate time.

Green hydrogen strategy

Over our 20 years of operation, we have made several

key strategic transitions as the market has evolved, going

from a domestic heat and power product company to a

licensing business for power systems and now with the

addition of SOEC providing electrolyser technology for

green hydrogen production.

License opportunities for SOFC have given us a great

foundation, and the market opportunity green hydrogen

produced by electrolysis is a high growth market that is

predicted to be significantly larger over time.

New licensee partners are now likely to come from the markets

for green hydrogen where we are seeing robust future demand

for our technology. Therefore, we are accelerating the pace of

development and commercialisation of SOEC, whilst ensuring

we maintain our leading position in SOFC markets.

Reflecting strong interest in our technology for green

hydrogen production, we were pleased to start the new year

by signing our first licence partner for both green hydrogen

and power generation with Delta Electronics in Taiwan, a

global leader in power electronics supplying the information

and communication technology industry and operating

manufacturing sites globally.

In January 2024, Ceres signed a global long-term

manufacturing collaboration and licence agreement

with Delta Electronics for both SOEC and SOFC

stack production.

Headquartered in Taiwan, Delta is a global leader in

power and thermal management solutions that employs

over 80,000 people across approximately 200 facilities

worldwide. Delta provides solutions to customers

worldwide, across a myriad of sectors including chemicals,

energy, transportation, steel and more, with strong

ambition for future scale up.

The agreement includes revenue of £43 million to

Ceres through technology transfer, development licence

fees and engineering services, of which approximately

half is expected to be recognised as revenue in 2024.

There is potential for additional revenue from the sale of

Ceres development stacks to Delta and the agreement

also includes royalty payments to Ceres on future

commercial production and sale to end customers by

Delta. Technology introduction and factory construction

will start from 2024 and the initial production by Delta

is expected to start by the end of 2026.

Strategic report

09Ceres Annual Report 2023

Image: Shadow ministers visiting our Manufacturing Innovation Centre in Redhill, Surrey.

We anticipate that licensing revenues from new partners

will offset near-term delays in fuel cell royalties and we have

confidence at this early stage of the year to approximately

double revenues in 2024, compared to 2023, based on existing

contracts. In addition to top line growth through near-term

licence revenues, we are also managing our cash, directing

more of our investment to growing our SOEC business

alongside SOFC. Through the licensing model, these in turn

translate into longer-term recurring revenues with royalties from

electrolyser manufacturing representing additional upside to

royalties from our SOFC business.

Market opportunity

We see China, Europe, South Korea and the wider Asian markets

being among the largest markets for power generation – areas

for which we have good coverage with our existing SOFC

licensees and further complemented by the addition of Delta.

Across the global market, we believe that green hydrogen

production from SOEC will play an essential role in industrial

decarbonisation in order to meet net zero. Hard-to-abate

industries such as green steel and ammonia will be the first to

develop followed by synthetic fuels.

Ceres’ SOEC technology offers distinct advantages of

efficiency when coupled with industrial processes where it can

utilise waste heat, and so naturally couples with the exothermic

Haber-Bosch process used globally to produce ammonia as well

as the heat-intensive requirements for steel production.

Many of the top ammonia and steel regions – India, Australia,

Europe, the Middle East and North America amongst them

– have announced green hydrogen strategies, and several

have gone further to publish derivative strategies for ammonia

and steel.

In fact, green steel is a product that in the coming years

will go a significant way to delivering a low carbon Ceres

stack. In a world where traceability is becoming ever more

important, soon all products will be measured on their “carbon

footprint” and we believe Ceres’ technology, which is made

from common steel and material sets, will have a significant

competitive advantage over technologies which utilise hard

to source rare earths and more expensive materials.

Our success depends on our ability

to be responsive to the changing

market and to mature from being a

technology-led organisation to one laser

focused on commercialisation with some

of the world’s leading manufacturing

companies. Hence, we are building on

the foundations of our SOFC business

and the experience gained in maturing

and scaling our technology, targeting

new partners and moving at pace to

capture the market.”

10 Ceres Annual Report 2023

Chief Executive’s report continued

What is clear is that the future demand for electrolysis for

green hydrogen exceeds supply, stimulating new entrants into

the market who need access to the best technology and can

scale manufacturing through global supply chains. This ideally

positions Ceres for growth as the only company offering

access to world-leading solid oxide technology under licence.

Ceres has moved to place commercial representatives in the

US, Asia, Europe and India over the past 18 months, and we

will continue to build commercial strength and credibility and

consider presence in other markets with the aim to sign new

licence partners that will convert longer term into a significant

share of the SOEC market for green hydrogen.

Foundation of research and innovation

Ceres has a culture that is founded on science, engineering

and individuals who are highly talented and passionate about

the Company’s purpose – to deliver clean energy for a clean

world. We would not be the business we are today without the

foundation of research and innovation generated over many

years by our industry-leading team.

Technology alone is not enough and our success depends

on our ability to be responsive to the changing market and to

mature from being a technology-led organisation to one laser

focused on commercialisation through global partnerships with

some of the world’s leading manufacturing companies. Hence,

we are building on the foundations of our SOFC business and

the experience gained in maturing and scaling our technology,

targeting new partners and moving at pace to capture

the market.

Deep expertise in solid oxide technology has allowed us to

prosecute an ambitious programme for hydrogen over the past

24 months, strengthening our conviction that SOEC offers

distinct advantages of efficiency and cost, with potential to

reduce capital and operational project costs to produce green

hydrogen by 25%.

Our first megawatt-scale electrolyser demonstrator has arrived

at our partner Shell’s R&D centre in Bangalore, India, where

in collaboration with Shell, we will validate the performance,

cost and operational functionality of the technology. Our

technology team is now focused on developing the next SOEC

product concept for a 4-5MW modularised system, which is

supporting further commercial discussions and will facilitate the

deployment of larger installations essential to meet the scale

challenge for the decarbonisation of industry.

The year ahead

Green hydrogen will not be a silver bullet, but it does have

an important role to play in the decarbonisation of industry,

where it can deliver obvious and economic advantages.

Advancements in electrolysis technology, manufacturing

economies of scale, design improvements and further reduction

in renewable power costs will all make electrolytic hydrogen

more viable.

Despite current disruptions in Europe, we believe that natural

gas will have a sustained role to play in the decarbonisation

of the global energy system, as China and Asia more broadly

transition away from dependence on coal. We have strong

power partners through Doosan, Weichai and now Delta in the

region and when it comes to manufacturing at scale, the Asian

economies excel.

We’ve made a strong start to 2024 with revenues expected to

be approximately double that of 2023. We are well positioned

for growth with new partnerships as a result of our investment

into SOEC for electrolysis. Our SOFC partners are continuing

to scale manufacturing and build global supply chains which can

service both our SOFC and SOEC markets.

At Ceres we continue to focus on the levers within our control:

careful capital allocation, investment in valuable skills and

building strong and sustainable partnerships that have ambition

to play a meaningful role in our future energy system.

I look forward to providing further updates on our progress over

the course of the year and, as ever, we thank you for your support.

Phil Caldwell

Chief Executive

Our technology team is now focused on

developing the next SOEC product concept

for a 4-5MW modularised system, which is

supporting further commercial discussions

and will facilitate the deployment of larger

installations essential to meet the scale

challenge for the decarbonisation of industry.”

Strategic report

11Ceres Annual Report 2023

Climate change is now, it’s not the

future. Ceres’ advancements in solid

oxide electrolysis technology underscore

our ability to drive fast, tangible progress

in the green hydrogen sector. We have

to take chances – and with the significant

expertise within our technology team

and our track record of building strong

collaborations with strategic partners

we have the ability to proactively

shape the future of clean energy.”

Caroline Hargrove CBE

Chief Technology Officer

Ceres has a technology platform for power and

green hydrogen that has been developed through

more than 20 years of innovation. Over the past two

years we have prosecuted an ambitious programme

for electrolysis, delivering green hydrogen at

<40kWh/kg or 25% more efficiently than incumbent

lower temperature technologies.

Technology

12 Ceres Annual Report 2023

Green hydrogen programme hits key milestone

Deep expertise in solid oxide technology has allowed Ceres

to prosecute an ambitious programme for green hydrogen, now

widely accepted as a credible route to decarbonise hard-to-abate

parts of the energy system that rely on fossil fuels today.

During 2023 we announced significant initial results from the

testing of our first 120kW electrolyser modules, providing

confidence that the technology can deliver green hydrogen

at <40kWh/kg, around 25% more efficiently than incumbent

lower temperature technologies, particularly when thermally

integrated with heat or steam.

Our first megawatt-scale electrolyser demonstrator was

commissioned in Germany before being shipped to our partner

Shell’s R&D centre in Bangalore, India. The programme will

test the demonstrator alongside other industrial processes

on-site with the aim to substantiate the performance, cost and

operational functionality of Ceres’ electrolysis technology.

To build a substantial and robust hydrogen ecosystem, it is

important to consider how the hydrogen will be used, how it

will be compressed, how it will be stored and what additional

infrastructure is needed. These are the sorts of questions

that the demonstrator and our partnership with Shell intend

to answer.

Next generation technology

Ceres’ core cell technology has matured dramatically in

the last ten years with significantly improved new versions

being offered to licence partners. Development efforts have

seen the power density of technology triple, degradation

rates become world class, life projections for products

increase significantly, electrical efficiency rise to greater than

60% and most importantly cost projections reduce to be

commercially competitive.

Our technology involves cell, stack and system-level

architecture and innovation happens in all three areas

– but ultimately it is underpinned by a need to improve

three factors: power density, lifetime and cost.

As with leading practice in the technology industry, research

and development sees us deploy a new generation of the

technology every two to three years.

During the year Ceres’ second generation design of stacks

passed critical design review, a key milestone which offers

significant improvements in performance and cost as partners

seek to scale up production. Importantly, the release of Ceres’

next generation stack technology also lays the foundation for

scale-up of electrolyser modules, which will now feed through

into feasibility studies for 100MW+ industrial systems underway

with industrial engineering partners.

Modular scale-up concept

Ceres is engaged across the hydrogen value chain to

activate the market for highly efficient solid oxide technology

in hard-to-abate, high temperature industrial processes, such

as the production of green steel, ammonia and synthetic fuels,

with the potential to reduce the overall capital and operational

project costs by 25%.

As well as our partnership with Shell, during the year we signed

a two-year collaboration with Linde Engineering and Bosch to

undertake an assessment of Ceres’ technology for large scale

industrial applications.

The International Energy Agency expects the amount of

electrolysis needed to meet the 2050 demands for green

hydrogen to increase by 3,000 times

and hence the Ceres

team is focused on the next SOEC product concept for a

4-5MW modularised system, which would facilitate larger

scale installations.

Alongside this, we are engaged with global engineering

firms to support the design and development of the optimum

architecture for 100MW+ scale system installations, essential

to accelerate commercialisation and to deliver green hydrogen

at the scale and pace required to reach net zero.

1. IEA (2023), Hydrogen, IEA, Paris. https://www.iea.org/reports/hydrogen-2156,

License: CC BY 4.0.

Modular scale-up concept

Industrial decarbonisation of green steel, green ammonia, synthetic fuels, chemicals, oil and gas.

Cell

30–150kW

Stack

10–50kW

Stack array

100–500kW

Module

4–5MW

Plant

100MW–GW

Strategic report

13Ceres Annual Report 2023

Our people

Despite the challenging global backdrop,

the urgency for climate action is growing.

At Ceres, we are as convinced as ever of

the need for collaboration across industry,

government and finance to drive the scale

and pace that is required for change. Our

strategic partnerships have progressed over

the years due to the collaborative approach

we take, and the Ceres team supports our

partners every step of the way to ensure

they succeed.”

Tony Cochrane

Chief Commercial Officer

Our partners come to Ceres for the technology,

and they stay for the people. With more than 400

technical experts focused on the research and

development of solid oxide cells, Ceres aims to

embed these critical electrochemical technologies

and achieve manufacturing scale through

collaboration with global partners.

Ceres Annual Report 202314

Which regions are leading the global race for

green hydrogen?

The most evolved regions for green hydrogen are those

that started the earliest, such as Europe where significant

interest for green hydrogen has been promoted through

incentive systems and resulted in project financing at sizeable

scale. For example, last summer our partner Bosch received

European funding of ~€160 million as an Important Project

of Common European Interest (“IPCEI”) to support the

development and mass production of its solid oxide fuel

cell product, utilising Ceres’ stack technology.

More recently, there has been a shift towards the US,

where the announcement of the Inflation Reduction Act

included $369 billion earmarked for energy and climate

change policy

, including some interesting incentives for

green hydrogen production.

Other regions are starting to surface, particularly where there

is the ability for strong renewables generation through wind

or solar assets such as in the Middle East, Australia and Chile.

They are not yet as evolved in terms of the projects that are

flowing, with the notable exception of Saudi Arabia, but they

will have significant generating capacity of green electrons

and ultimately the applications that use green hydrogen, for

delivery throughout the globe.

Overall, we believe that no one region will win. A project

happens in one location while stimulating commercial interest

in another. Localised incentive schemes are helping, but

increasingly our partners are looking to take global licences

that allow them to exploit economies of scale and address

the global market opportunity.

Who are the actors in the hydrogen value chain?

Across the hydrogen industry, our approach is to enable

companies that play across the value chain – from stack and

module manufacturers to system integrators, installers and end

users – to adopt and accelerate the path for Ceres’ technology.

Ceres is working with offtakers of green hydrogen such

as Shell, large project engineering companies like Atkins

and hydrogen integrators like Linde all the way through to

companies such as our most recent licence partner Delta, a

highly advanced manufacturing company with 80,000 people

and strong ambitions to lead Taiwan’s energy transition.

Ceres is at the very core of that electrolyser solution. We focus

on engineering the best possible cells and stacks, licensing

the ability to scale high-quality, high-volume stacks for the

electrolyser industry that ultimately feeds through to the

hydrogen offtakers.

The segmentation of market and everyone playing their role

efficiently and effectively is essentially how the licensing

model is structured and we believe will be the fastest route

to securing global decarbonisation.

Where will green hydrogen be deployed?

Industrial decarbonisation, or using green hydrogen to abate

the significant emissions generated by large industries such as

steel and ammonia production, is the focus of Ceres’ efforts.

Firstly, it has the potential to make a big impact on the global

carbon footprint. Steel for example is a product that accounts

for around 7% of global carbon emissions

. It is used heavily in

other industries such as car manufacturing and is under pressure

from its downstream customers to decarbonise. As well as

regulatory incentives, market incentives are starting to play

a strong role in deployment at scale.

Secondly, Ceres’ technology is uniquely suited to industrial

decarbonisation where its higher operating temperature

benefits from thermal integration, or removal of heat from

those industrial processes, back into our cells and stacks.

This allows us to offer the highest efficiency possible in

conversion of electrons into hydrogen.

Projects are big investments, sometimes much bigger than

one company’s balance sheet. To make a hydrogen project

bankable, technology, capital assets, offtake prices, regulatory

incentives and cost of capital all come into play. By having

technology that offers up to 25% efficiency improvement in

converting electricity to hydrogen, our technology contributes

significantly to the economics of operating the asset.

How does Ceres support this global scale up?

Our team is laser focused on ensuring that we have the best

technology and commercial offering available for existing and

potential licence partners. We will continue to acquire new

partners with the cost base we have and use our knowledge,

expertise and capability to continue to help our partners to

scale in markets at pace.

Delta Electronics global manufacturing licence for

SOEC and SOFC stack production

£43m

1. US Department of the Treasury (2022). Treasury announces

guidance on Inflation Reduction Act’s strong labour protections.

2. IRENA (2023). Towards a circular steel industry. International Renewable

Energy Agency. Abu Dhabi.

Strategic report

15Ceres Annual Report 2023

How our business model works

Ceres has an asset-light licensing business model that

combines engineering excellence with manufacturing

precision to build high quality clean technology. Ceres

licenses the cells and stack intellectual property (“IP”) to

manufacturing partners for mass production. Ceres also

licenses system IP, into which the stacks are integrated

and sold to end markets.

Ceres earns revenue by licensing its technology to new

partners, through engineering services, technology

hardware to support those partners develop factories

for mass production, and royalties. For every kW sold

to the end market, Ceres receives a royalty payment,

providing high-margin revenue.

Ceres maintains a strong R&D programme to preserve its

technological edge while our licence partners provide the

industrialisation and manufacturing skills and marketing

capabilities required to enter the rapidly evolving landscape

of clean energy.

Business model

Asset‑light licensing business model

Ceres maintains leading-edge solid oxide technology, electrolysis for green

hydrogen and fuel cells for power generation. By partnering with companies with

expertise in scaled manufacturing globally, together we bring the ingredients to

deliver an energy transition for a net zero future.

How we create value

Enable system partners to embed the

technology into as many applications

as possible.

Enable manufacturing partners to

establish global supply to meet

this demand.

Stay ahead on technology through

continuous innovation and investment

in R&D.

Read more on our technology on page 12

Our competences

Manufacturing

partner

OEM

customer

Sells consumer

products

Ceres licenses core

technology to partner

Ceres licenses system

technology to partner

Cell and stack IP

Licence fees

System IP

Licence and

engineering

service fees

Stack royalties £/kW sold System royalties £/kW sold

Stack supply to OEMs

16 Ceres Annual Report 2023

Read more on our Board engagement with stakeholders on page 28

Ceres’ value proposition

Highly competitive technology

Ceres’ unique, inherently reversible solid oxide

technology reduces cost while maximising

efficiency resulting in highly competitive total

cost of ownership. Utilising commonly found

materials, it can be mass produced with a

limited carbon footprint.

Access to untapped markets

Ceres offers cutting edge technology, with

distinctive advantages of temperature and

efficiency – ideally suited to delivering

clean, low cost and secure power systems

and supporting the decarbonisation of

hard-to-abate industrial sectors.

Accelerated market entry

Licensees can leapfrog into markets for power

and hydrogen without lengthy research and

development, supported by Ceres’ team

to implement localised supply chains, skills

and manufacturing.

Leveraging world-leading R&D resources

Licensees can leverage Ceres’ 20 years

of research and innovation in solid oxide

technology, instead focusing on their own

core business strengths in industrialisation,

mass production and commercialisation.

Strategic report

17Ceres Annual Report 2023

Sustainability

The ever growing effects of climate

change highlight the need to act quickly

to change our behaviours to preserve

our environment for future generations.

Ceres supports the transition to cleaner

energy with our fuel cell and electrolyser

technology. By building the sustainable

operations of our Company with

social and governance accountability,

Ceres can ensure we and our partners

maximise our net-positive effect towards

a cleaner world.”

Julia King

Non-Executive Director

Ceres recognises that operating sustainably

is not simply about preserving and improving

the environment in which we live, but it is also

about ensuring that we make a positive societal

contribution and maintain strong governance.

18 Ceres Annual Report 2023

Carbon emissions breakdown

This chart provides a visual breakdown of our Scope 1, 2 and 3 emissions sources. The percentages of each type

of emissions are based on 2022 data. Our in-depth Scope 3 emissions analysis for 2023 will be published in our

Sustainability Report later in the year.

Ceres is right at the heart of the energy transition,

expediting the delivery of green energy technology to

global partners to support their transition to a cleaner and

more sustainable future. Alongside the role our technology

plays in enabling the energy system to decarbonise, we

are equally committed to embedding sustainability into

our operations in line with our values. We have a formal

Board ESG Committee to monitor and develop the

vision and strategy for the Company in keeping with our

own expectations and those of our stakeholders. For

more information, see the ESG Committee Report on

page 84. The future skills, operational and governance

considerations that guide current decision-making

processes are being developed to be robust to an

uncertain future, but also to enable a better one.

Diversity and inclusion

We believe that having an open and inclusive culture

makes for a stronger, more diverse and welcoming

company, we call it DEBI for diversity, equity, belonging

and inclusion. Our diverse workforce with almost 600

employees includes a wide range of people from students

to brilliant scientists and engineers from around 40 countries.

We recognise that nurturing and developing our talent

is critical to support retention and success. We have

invested equivalent to £710 per employee in technical

training, leadership training and wellbeing programmes in

2023. We continually seek to improve the gender balance

within Ceres, where >34% of new recruits for 2023 were

women against a target of 30%. At 31 December 2023,

126 employees were female and 465 were male. For more

information, see our Gender Pay Report on our website.

Health and safety

In 2023, the Total Recordable Incident Rate (“TRIR”)

for the Group was 0.54 per 100 full-time employees,

from 0.18 the previous year. Ceres reported one injury

under the Reporting of Injuries, Diseases and Dangerous

Occurrences (“RIDDORs”) regulations year-on-year.

Targeting net zero

At Ceres we enable the decarbonisation of multiple

markets by developing highly differentiated technology

that scales through global partnerships. Most of our

emissions stem from our Scope 3 emissions, which are

insignificant compared to the emissions our technology

would displace if deployed globally, but Ceres continually

implements plans to reduce our impact across all facets

of the business.

In addition to the mandatory reporting on sustainability,

Ceres produces an extensive Sustainability Report,

providing insights into our sustainability strategy,

environmental and governance responsibilities and

commitment to social matters. The 2022 Sustainability

Report is available on the website.

Sustainability overview

* Using market-based emissions accounting, our Scope 2 emissions are nil, as our electricity is secured from 100% renewable sources with Renewable Energy

Guarantee of Origin (“REGO”) certificates.

Impact of abated

emissions from

future deployment

of our technology

Direct emissions

from owned or

controlled sources

Indirect emissions from

purchased electricity,

heat and cooling

92%

Scope 1

Scope 2*

Scope 3

Indirect upstream and

downstream value

chain emissions

Strategic report

19Ceres Annual Report 2023

• Create a Science Based Targets initiative

(“SBTi”) guided net zero strategy, setting

near-term emissions intensity targets.

• Task Force on Climate-Related Financial

Disclosures (“TCFD”) report including initial

physical and transition risk reporting.

• Audit Energy Savings Opportunity Scheme

(“ESOS”) compliance for energy management.

• Assess and reduce waste to landfill.

• Second annual Gallup 12 employee survey

rolled out in summer 2023.

• Maturing and reporting of ESG

KPIs in annual review of Executive

remuneration benchmarking.

• Refreshing of the materiality risk assessment.

• Second publication against the Sustainability

Accounting Standards Board framework.

• Embed circular economy concepts into

product design, recycling and reuse targets.

• Understand product impact in service

with cradle-to-grave and Scope 4

emissions analysis.

• Achieve CDP rating on climate change

and water security.

• Monitor the implications of the Taskforce for

Nature-related Financial Disclosure.

• Maintain a diverse and motivated workforce

with a culture of collaboration, focused on

our mission to deliver “clean energy for

a clean world”.

• Enhance our team’s skills for a green transition

through growth and training.

• Embed sustainability across our operations,

with consideration from design to

development through to production.

Tackling climate change is what drives us; we are committed to enabling a net zero world

through our technology. Our aim is to ensure our sustainability strategy keeps pace with this

ambition such that we maintain a sustainable business and make a positive impact on our

people, communities, partners and planet.

Our sustainability

progress and future goals

Science-based

climate action

Processes that

support nature

Governance enabling

the right decisions

A green transition that

works for people

Ceres’ ESG pillars

Goal

Secure new licence partners, targeting a leading market share of the global solid oxide industry.

Enabling significant carbon reduction versus alternative power and hydrogen production methods.

Current actions <1 year Future actions 1 – 3 years

Sustainability continued

20 Ceres Annual Report 2023

Emissions and energy reporting

While our technology will lead to huge carbon abatement and

carbon savings, we seek to understand our own direct and

indirect emissions relative to our global positive impact.

Below are our SECR emissions reporting for Scope 1, 2 and

limited Scope 3 emissions, calculated using the Greenhouse

Gas Protocol Accounting. Since 2020 we have been working

with a third party, Ricardo, to go above and beyond SECR

requirements to develop a more detailed understanding of

our Scope 3 emissions whilst ensuring the integrity of our

data and the analysis process. The calculation of the remaining

Scope 3 emissions to be published later in the year in our

Sustainability Report.

In 2022 as Ceres matures our emissions analysis, we began

to use a more detailed characterisation of emissions factors

by spend type, which superseded the earlier method of

spend-based estimation.

Our changes in carbon emissions for 2022 and 2023 are

therefore not directly comparable to prior years, but this

represents an important step in improving our methods of

data collection.

As we grow over the next few years our own emissions

will inevitably increase through the investment in extra

manufacturing and testing capacity. Nevertheless, we plan

to reduce our carbon intensity such as tCO

e/MW output.

We are developing a net zero strategy, guided by the Science

Based Targets initiative (“SBTi”) for a 1.5°C scenario future.

Our net zero strategy will identify improvements that can

be made throughout the business such as energy efficiency,

material sourcing and operations management to reduce our

carbon emissions. We will publish this strategy later this year.

2021 2022 2023

Disclosure Description

Energy

(kWh)

Emissions

(tCO

Energy

(kWh)

Emissions

(tCO

Energy

(kWh)

Emissions

(tCO

Scope 1

Direct

emissions

Fuel used in transport

and consumption of

natural gas

2,168,437 398

2,243,492 411 2,779,434 510

Scope 2

Indirect

emissions

Electricity used

for operations

(location-based

method for emissions)

5,481,294 1,164 6,340,242 1,226 6,526,984 1,352

Electricity purchased

and used for operations

(market-based method

for emissions)

5,481,294 Nil

6,340,242 Nil

6,526,984 Nil

Scope 3

Other

indirect

emissions

Fuel used in personal

vehicles for

business travel

50,014 12 69,931 17

104,616 25

Total Total SECR

carbon emissions

(market‑based)

7,699,744 410 8,653,665 428 9,411,034 535

Carbon

intensity

Total carbon emissions

for Scope 1, 2 and

limited Scope 3 per

£100k revenue

1.40

2.16

2.40

Footnotes: 1. CO

e calculated from fuel used in company vehicles, electricity purchased and natural gas consumed for ongoing operations, converted to tCO

e using

government-approved conversion factors. 2. Other gas use and emissions from test stands and international travel excluded. 3. Values updated relative to 2021 Annual

Report data as SECR reporting refined. Fuel used in personal vehicles previously reported as leased vehicles, thus sitting in Scope 1 instead of the correct Scope 3

emissions. 4. Scope 1 and 2 emissions from UK operations represent 100% (2022: 100%) and 100% (2022: 100%) of Scope 1 and 2 respectively, with no emissions

from overseas operations. 5. Starting from October 2020, we secured 100% renewable energy supply until September 2024, certified by TotalEnergies, which

assures our energy supply is backed by relevant Renewable Energy Guarantee of Origin (“REGO”) certificates. 6. Fuel used in personal vehicles for business travel

and downstream in-use emissions as of March 2024. 7. Adjustments to the 2021 and 2022 carbon intensities reflective of their update revenue.

SECR emissions

Streamlined Energy and Carbon Reporting (“SECR”) for the 12 months to December 2023

Strategic report

21Ceres Annual Report 2023

Aligning with

TCFD recommendations

The initial process has allowed us to identify potential risks and

opportunities that climate change presents to our business,

enabling us to prepare better for an uncertain future and ensure

that our business strategy is resilient to the significant transition

that will be required to achieve net zero.

In this report we have made climate-related financial

disclosures consistent with the TCFD’s recommendations and

Recommended Disclosures pursuant to Listing Rule 9.8.6R(8).

The following tables summarise our disclosures and refer to

where further detail on climate-related financial disclosures

can be found in this report or on our Company website.

In completing this report, we have used the TCFD guidance

material including the TCFD technical supplement on the use

of scenario analysis, the TCFD Guidance on Metrics, Targets,

and Transition Plans, and the TCFD Guidance for All Sectors

to cover the four pillars of recommended climate-related

financial disclosures.

The ESG Committee believes that we have reported in

compliance with eight of the eleven recommendations,

with 2(b), 4(a) and 4(c) being partially or non-compliant. We

require more detailed data collection and analysis to achieve

full compliance in our reporting. With the completion of our

net zero strategy and further evaluation of climate-related

scenarios and the associated financial planning, we intend to

move towards full compliance in the next two years. Each

of these recommendations is under development with the

intention of publication in future reporting.

Sustainability continued

Governance Strategy Risk Management Metrics and Targets

Recommended disclosures

a) Board’s oversight a) Identify climate-related risks

and opportunities

a) Risk identification and

assessing process

a) Climate-related metrics to

assess climate-related risks

and opportunities

b) Management’s role b) Impact on the organisation’s

businesses, strategy and

financial planning

b) Risk management process b) Scope 1, Scope 2 and,

if appropriate, Scope 3

greenhouse gas (GHG)

emissions and the related risks

c) Resilience of the

organisation’s strategy

c) Integration into the

organisation’s overall

risk management

c) Climate-related targets and

performance against targets

In 2023 Ceres commenced reporting against the

Task Force for Climate-Related Financial Disclosures

(“TCFD”) in line with our move to the Main Market

of the London Stock Exchange.

Compliant Partially compliant Non-compliant

22 Ceres Annual Report 2023

a. Describe the Board’s

oversight of climate-

related risks and

opportunities.

b. Describe management’s

role in assessing

and managing

climate-related risks

and opportunities.

The Board is responsible for the Group’s risk framework, which includes climate-related

risks and opportunities. We have taken steps to formalise the review of ESG risks and

actions by the establishment of an ESG Committee of the Board. It meets at least three

times a year and otherwise as required. The Chair reports formally to the Board after

each meeting (three times per year) on all matters within its duties and responsibilities.

For more information on the duties and responsibilities of the ESG Committee of the Board,

please see the ESG Committee Report on page 84. The Company’s Non Financial and

Sustainability Information Statement as required by Section 414CA and Section 414CB

of the Companies Act 2006 can be found on page 88 of the Directors’ Report.

In addition to the oversight provided by the Board, the Chief Executive Officer chairs an

Operational ESG Committee and is responsible for identifying, managing and mitigating ESG

risks, with support from other Operational ESG Committee members from across finance,

legal, operations, human resources and communications. It meets at least quarterly and the

Chair of the Operational ESG Committee also reports to the Board after each meeting to

ensure the Board is kept up to date with progress throughout the year. To align decision

making and ownership, ESG metrics are included in the KPIs to be met for Executive

remuneration. For more information on Executive Directors bonus metrics, see page 76.

Governance

Disclose Ceres’ governance around climate-related risks and opportunities.

a. Describe the climate-

related risks and

opportunities the

organisation has

identified over the short,

medium and long term.

b. Describe the impact

of climate-related risks

and opportunities

on the organisation’s

businesses, strategy

and financial planning.*

c. Describe the resilience

of the organisation’s

strategy, taking into

consideration different

climate-related

scenarios, including a

2°C or lower scenario.

Ceres’ ambition is to enable the world to transition to cleaner, more sustainable forms

of energy and in doing so make big savings in carbon emissions as our partners scale up

from the mid-2020s. The growing demand for clean energy technologies creates a strong

business opportunity for Ceres, but changing political landscapes and legislation may also

create market uncertainty and Ceres is alive to the potential for higher operating costs due

to the constraint on critical skills, resources and materials.

Alongside the role our technology plays in enabling the energy system to decarbonise,

Ceres seeks to act sustainably in decarbonising our own business. In 2023 we hosted

an Energy Savings Challenge, where scientists and engineers from across the business

brainstormed more than 40 initiatives to reduce energy consumption in our operations.

Eight of these have been implemented and the remainder have been recorded for potential

future action. Failure to meet stakeholder expectations on ESG obligations is considered a

reputational risk for the business. This is addressed through the Company’s strategic planning

and ESG priorities. In 2024, Ceres will publish a science-based carbon reduction pathway in

line with SBTi guidance.

The ESG Committee has assessed the potential severity of risks and the possible benefits of

the opportunities with the aim of minimising the impact of risks and addressing opportunities.

Given our focus on research and development, small operational footprint and licensing

business model, we do not believe Ceres has actual short-term climate-related risks.

Potential risks are likely to become meaningful over the medium (2030) and long-term

(2050) as Ceres’ partners scale operations globally. In our analysis, we used three climate

scenarios to model the resilience of the business against our identified potential risks. These

were analysed in agreement with our Corporate Risk Management process and were not

deemed material or requiring action to increase the resilience of our strategy at this time.

For further details on the climate-related risks and opportunities that may impact Ceres’

business, please refer to the scenario analysis on pages 26 to 27 of this report.

Strategy

Disclose the actual and potential impacts of climate-related risks and opportunities on the Company’s business,

strategy and financial planning, where such information is material.

* Not yet compliant in reporting for these metrics.

Strategic report

23Ceres Annual Report 2023

Sustainability continued

a. Describe the

organisation’s processes

for identifying and

assessing climate-

related risks.

b. Describe the

organisation’s

processes for managing

climate-related risks.

c. Describe how processes

for identifying,

assessing and managing

climate-related risks

are integrated into the

organisation’s overall

risk management.

Climate change is a key risk, and a cross-disciplinary ESG risk register has been compiled

by the Executive and management team. The register spans areas covering ESG issues,

with each focusing on a shifting landscape over various time periods. Each risk is assigned

a severity, probability of occurrence and impact on the business and Group with proposed

responses and analysis of post-mitigation severity.

The risk register is reviewed by the ESG Committee and significant risks referred to the

Audit Committee for inclusion in the Board-level risk register. All risks with a high impact are

raised to the Board and considered in step with the business, strategic and financial planning.

In addition, a materiality analysis is conducted by the ESG Committee every two years to

identify and prioritise material ESG issues through engagement with various stakeholders.

Existing and emerging regulatory requirements related to climate change are considered

in both our response as a business but also with regard to opportunities for the business.

For example, changing legislation on air quality and emissions is driving the move towards

the adoption of greener technology solutions.

Climate adaptation risks are also considered at a site level. Integrated Management Systems

(“IMS”) cover the business’ main sites, our Technology Innovation Centre in Horsham and

Manufacturing Innovation Centre in Redhill, and host ISO9001 and ISO14001 management

systems. Each site is audited externally or internally (every three years). We have also sought

to collaborate with the licensee partners and understand their mitigation and adaptation

plans for their key manufacturing sites for our technology.

With regard to the supply chain, sustainability risks (including natural and climate-related

hazards) are embedded into supplier risk assessments. This process enables the definition

of risk mitigation action plans with suppliers, as well as prioritising multi-sourcing strategies.

The Company continually monitors events and critical supplier locations to shorten reaction

time and minimise business impact.

Risk management

Disclose how Ceres identifies, assesses and manages climate-related risks.

a. Disclose the metrics

used by the organisation

to assess climate-

related risks and

opportunities in line

with its strategy and risk

management processes.*

b. Disclose Scope 1,

Scope 2 and, if

appropriate, Scope 3

GHG emissions, and

the related risks.

c. Describe the

targets used by the

organisation to manage

climate-related risks

and opportunities

and performance

against targets.*

Metrics to assess climate-related risks and opportunities include climate risk and environmental

profiling data including life cycle analysis, energy use and carbon emissions intensity. Each

year, Ceres discloses our greenhouse gas (“GHG”) emissions for Scope 1, 2 and limited

Scope 3 SECR emissions reporting. Starting in 2022 we have provided spend-based data

for additional Scope 3 emissions covering our full value chain. A full disclosure of Scope 3

emissions for 2022 is available in our sustainability report and our full Scope 3 emissions for

2023 will be published later this year in our Sustainability Report.

Ceres is targeting net zero, and to do so we are first improving our GHG emissions data

collection process and data quality. We engage with Ricardo Energy & Environment, which

verifies that our Scope 1, 2 and 3 data sources and calculations are robust, where we

currently use a manual process to collect, categorise and calculate our emissions using the

spend-based methodology in alignment with the Greenhouse Gas Protocol Accounting and

Reporting Standard and Scope 3 guidance documents and in accordance with ISO 14064-1.

To enable a successful net zero strategy, we will need to focus on high impact hotspots

of our emissions. As we improve our emissions calculation process and the granularity

of our data, we can create emissions reduction pathways such as the purchasing of green

steel to produce our fuel cells. Since our supply chain constitutes a large proportion of our

emissions, supply chain engagement and sustainable procurement will play a key role in

meeting these targets. In the future we will pair up more accurate and specific emissions

calculation methods with our ongoing life cycle assessment work, to identify more clearly

where emissions reductions can be achieved and to improve the accuracy of our reporting.

Metrics and targets

Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities,

where such information is material.

* Not yet compliant in reporting for these metrics.

24 Ceres Annual Report 2023

Scenario analysis

Ceres has analysed climate-related risks and opportunities that

may impact our business operations. In accordance with TCFD

guidelines, the risks are differentiated as transition or physical

risks, with impacts assessed across three different scenarios

over the medium and long term, to 2030 and 2050. This aligns

with our proposed approach to developing a net zero strategy

with guidance from the Science Based Targets initiative. Below

are the three possible temperature scenarios under assessment.

• 1.5°C scenario – Limiting global temperature to 1.5°C would

require strong policy implementation from governments to

enforce emissions reductions, with likely variation across

industries. This would result in swift adoption of new clean

technologies and significant penalties for non-compliance.

• 2.0°C scenario – This scenario would result in more

moderate adoption of new clean technologies, but would be

supported with greater use of carbon-removal technologies.

Legislation would be introduced early and become more

globally consistent and binding over time.

• +3.0°C scenario – The current policies of global

governments are not aggressive enough to adequately

limit global temperatures and are projected to result in

a global temperature increase of more than 3°C.

• This scenario is likely to result in significant physical risks,

with potentially greater impacts on global operations and

supply chains.

Ceres aims to embed our technology with global partners, who

then design and manufacture products and systems at scale for

various applications and geographies. From our base in the UK,

Ceres focuses on innovation and R&D, transferring technology

under licence. Hence, this first disclosure of scenario analysis

reflects this business model and small asset footprint, and

represents a high level assessment of the climate risks and

opportunities to Ceres as it stands today.

As partners adopt our clean energy technology and build

global capacity and scale, Ceres will seek to disclose our

climate-related risks and opportunities with greater detail and

accuracy. Scaling technology comes with an environmental

cost, likely to be reflected in our analysis of climate related risks,

but any increase in the environmental impact of Ceres’ own

footprint is likely to be significantly outweighed by the impact

our technology will have on the world’s ability to decarbonise.

Opportunities for the energy transition Scenario 2030 2050 Ceres’ opportunity

Policy incentives and capital

allocation for scaling of clean

energy technologies

Increased funding

from public sector and

investors to accelerate

scaling up of fuel cell and

hydrogen technologies

1 High High Ceres indirectly

benefits from global

partners accessing

government funding,

e.g. Bosch recently

received €160 million

of European support for

its SOFC manufacturing

2 Moderate High

3 Low Moderate

Technology revolution to

support the energy transition,

requiring huge amounts

of renewable energy and

green hydrogen

Prosecute our licensing

model to deliver clean

energy technology

that bridges molecules

and electrons

1 High High Green hydrogen

is predicted to

require 3,300GW

of electrolysis in

2050, representing

a $1.4 trillion market

2 Moderate Low

3 Low Moderate

1. IEA (2023), Hydrogen, IEA, Paris. https://www.iea.org/reports/hydrogen-2156, License: CC BY 4.0.

2. Deloitte News (2023), New Deloitte report: Emerging green hydrogen market set to help reshape global energy map by end of decade, creating US$1.4 trillion market

by 2050, News Deloitte report.

Assess the potential

climate-related risks and

opportunities that may

impact Ceres in alignment

with the TCFD guidance.

Identify the potential

impact of each risk and

opportunity under three

possible warming scenarios

using Ceres’ existing

Company risk register,

with the Operational ESG

Committee providing

perspective from

across operations.

Validate the potential

impact with the ESG

Committee of the Board

and update as needed.

Improve the robustness

of assessing potential

risks and opportunities

and integrate into the

risk management and

strategy as business

as usual. Build upon

understanding with

net zero strategy

development and

financial planning.

Process to date Next steps

* Not yet compliant in reporting for these metrics.

Strategic report

25Ceres Annual Report 2023

Risk Impact on Ceres’ business Scenario 2030 2050 Ceres’ actions

Transition risks

Policy

and legal

Increased regulations and

pricing on GHG emissions

Greater costs associated with emissions

reduction, monitoring and reporting obligations

• Pursue carbon abatement through SBTi guided carbon

reduction pathway

• Set clear strategy to reduce the carbon footprint of

our business

• Assess carbon intensity of supply chain through Scope 3

emissions assessment

Market

Global economic and

physical disruption

increasing cost and

availability of resources

Higher operating costs due to increased

price and reduced availability of critical skills,

resources and materials

• Engage with supply chain on climate-related and

sustainability risks

• Procurement strategy to ensure multiple sources

of key materials

• Integrate implication of climate change into development

of assets and partners

• Building our skills pipeline for a green energy future

Policy

and legal

Changing geopolitical

landscape and legislation

Incompatibility with our technology resulting

in reduced production and royalties or limited

opportunity for growth

• Continuing evaluation of global climate regulation and

policy landscape

• Monitoring of changes in global sustainability regulations

• Engagement with government to understand expectations

and directives

Reputation

Enhanced emission

reporting obligations

Lack of transparency and adherence could limit

access to financing while threatening a strong

and sustainable stakeholder base

• Transparent disclosure of ESG performance

• Include cost of carbon in forward financial planning

• Strong governance and investor relations communication

Technology

Uncertainty in market

signals due to cost

to transition to lower

emissions technologies

Slower than expected take up of new

technologies and decarbonisation due to macro

factors, cost concerns, security of supply, etc.

• Stay at the leading edge of innovation, with a focus on cost,

life and durability

• Flexible technology that meets emissions standards for multiple

applications and geographies

• Horizon scanning for further and future technologies beyond

solid oxide

Risk Impact on Ceres’ business Scenario 2030 2050 Ceres’ actions

Physical risks

Acute

Increasing frequency

of severe climate events

Impacts on production plants or their suppliers

thus resulting in lost royalties. Increased cost

of insurance for physical assets

• Strong business continuity planning

• Diversification of licence partners

• Diversification of applications and geographies

Chronic

Increasing temperatures

affecting working

environment and natural

resource availability

Increased capital and operations costs to

maintain product quality, e.g. water scarcity

and power supply disruptions

• Integrate implication of climate change into asset

and site resilience

• Collaboration with partners on development

of manufacturing sites

• Build strong and localised supply chains

Sustainability continued

Scenario analysis continued

26 Ceres Annual Report 2023

Risk Impact on Ceres’ business Scenario 2030 2050 Ceres’ actions

Transition risks

Policy

and legal

Increased regulations and

pricing on GHG emissions

Greater costs associated with emissions

reduction, monitoring and reporting obligations

• Pursue carbon abatement through SBTi guided carbon

reduction pathway

• Set clear strategy to reduce the carbon footprint of

our business

• Assess carbon intensity of supply chain through Scope 3

emissions assessment

Market

Global economic and

physical disruption

increasing cost and

availability of resources

Higher operating costs due to increased

price and reduced availability of critical skills,

resources and materials

• Engage with supply chain on climate-related and

sustainability risks

• Procurement strategy to ensure multiple sources

of key materials

• Integrate implication of climate change into development

of assets and partners

• Building our skills pipeline for a green energy future

Policy

and legal

Changing geopolitical

landscape and legislation

Incompatibility with our technology resulting

in reduced production and royalties or limited

opportunity for growth

• Continuing evaluation of global climate regulation and

policy landscape

• Monitoring of changes in global sustainability regulations

• Engagement with government to understand expectations

and directives

Reputation

Enhanced emission

reporting obligations

Lack of transparency and adherence could limit

access to financing while threatening a strong

and sustainable stakeholder base

• Transparent disclosure of ESG performance

• Include cost of carbon in forward financial planning

• Strong governance and investor relations communication

Technology

Uncertainty in market

signals due to cost

to transition to lower

emissions technologies

Slower than expected take up of new

technologies and decarbonisation due to macro

factors, cost concerns, security of supply, etc.

• Stay at the leading edge of innovation, with a focus on cost,

life and durability

• Flexible technology that meets emissions standards for multiple

applications and geographies

• Horizon scanning for further and future technologies beyond

solid oxide

Risk Impact on Ceres’ business Scenario 2030 2050 Ceres’ actions

Physical risks

Acute

Increasing frequency

of severe climate events

Impacts on production plants or their suppliers

thus resulting in lost royalties. Increased cost

of insurance for physical assets

• Strong business continuity planning

• Diversification of licence partners

• Diversification of applications and geographies

Chronic

Increasing temperatures

affecting working

environment and natural

resource availability

Increased capital and operations costs to

maintain product quality, e.g. water scarcity

and power supply disruptions

• Integrate implication of climate change into asset

and site resilience

• Collaboration with partners on development

of manufacturing sites

• Build strong and localised supply chains

Low financial risk

Moderate financial risk

High financial risks

Scenario 1:

Strong policy induction limits global

temperatures to 1.5°C

Scenario 2:

Moderate adoption of new

clean technologies results in

2°C temperature rise

Scenario 3:

Current policies of global governments

are not aggressive enough, resulting

in +3.0°C temperature rise

Legend for the climate-related

risks table:

For more insights into our sustainability

strategy, environmental and governance

responsibilities, and dedication to social

matters, read our 2022 Sustainability Report:

ceres.tech/sustainability

Strategic report

27Ceres Annual Report 2023

Stakeholder engagement

Stakeholder Priorities Engagement mechanisms 2023

Shareholders

Understand and have confidence in

the strategy, performance, culture

and governance

Build strong relationships and ensure

their views are heard

• Annual General Meeting

• RNS and press announcements

• Face-to-face meetings and calls

• Capital Markets Days and webcasts

• Digital channels

• Investor events

• Annual Report

Commercial – suppliers

and partners

Align to, understand and benefit from the

achievement of the strategy

Be part of an ecosystem to support the

achievement of the Company’s goals

• Regular engagement across the Company, including

commercial operations and technical programmes

• Company representatives located globally

• Independent surveys or discussions

• Use of the advanced supply chain verification

and tools

Internal – employees

A great place to work

Opportunities to progress their career

• Monthly All Hands meetings

• All-employee off-site events

• New-joiner lunch with CEO

• Employee share schemes

• Employee surveys and feedback

• Roundtable lunches with the Chair of the Board

• Employee Engagement Director

• Employee Forum Connect

Wider society

To see positive social and

environmental impacts

• Community initiatives, such as Reimagine in

collaboration with STEM Learning UK

• Website and public reporting

• ESG reporting and accountability

Industry

Participation and collaboration with

studies and technological advancements

• Participation in industry conferences

• Publication of white papers and thought leadership

• Membership of industry bodies and associations

• Collaborations with academic and research institutes

Regulators/legislators/

government

Compliance with all relevant legislation • Forums, meetings and conferences

• Board updates on relevant changes in legislation,

regulation, and best practice

• Retention of advisers and consultants

where appropriate

How we engage

Statement by the Directors with regard to their duties

under Section 172(1) of the Companies Act 2006 for the

year ended 31 December 2023.

Section 172(1) imposes a duty on Directors to act in a way

most likely to promote the success of the Company whilst

having regard to its many and varied stakeholders. The Board

is responsible for the long-term sustainable success of the

Company as a whole and inextricably linked to this success

are the views and needs of its stakeholders.

The Board believes that it has at all times acted in a way

that it considers, in good faith, would benefit the Company

as a whole. It has considered the views of stakeholders in its

decision making and has had regard to the need to foster the

Company’s business relationships with suppliers and other

commercial partners.

Engagement with different stakeholder groups is undertaken in

various ways. Our stakeholders, together with the mechanisms of

engagement used during the year and the ways in which the Board

has taken their views into account are set out on these pages.

28 Ceres Annual Report 2023

Main Market listing

As set out on these pages, the Board approved the Company’s

move up to the Main Market of the London Stock Exchange

which took effect on 29 June 2023.

Key stakeholders considered:

Strategy

The Board approved the refocussed strategy for the business

in the latter part of the year. Discussions covered all aspects

of strategic thinking including the impact on all stakeholders of

the business. Ensuring the business has a long-term sustainable

future safeguards the interests of all stakeholders.

Key stakeholders considered:

ESG targets into Executive remuneration

Shareholders wanted to see more ESG specific targets in

Executive remuneration packages. The Board approved the

new bonus targets for the Executive Directors and Executive

Committee members which included specific social and

environmental enablers. More information on the bonus

structure can be found in the Directors’ Remuneration Report

on pages 63 to 83. Including these targets created an additional

layer of accountability in terms of our environmental and social

goals and reflected the Company’s purpose appropriately.

Key stakeholders considered:

Code of Conduct & Business Ethics

The Board approved a refreshed Code of Conduct & Business

Ethics (the “Code”) in the latter part of the year. The Code

provides an overarching approach to compliant and safe

behaviour with clear signposting to relevant policies and

documents to help employees navigate their day-to-day

working lives. Employees have clarity on how they should

operate and who and where to go to for help and advice.

Key stakeholders considered:

Refreshed policies

In advance of the move up to the Main Market of the

London Stock Exchange, policies were reviewed and refreshed

to ensure they reflected best practice and set out a solid

foundation upon which the business could operate. Revised

policies approved during the year included Share Dealing;

Anti-Bribery and Corruption; Conflicts of Interest; Diversity,

Equity, Belonging and Inclusion; Tax; Charitable Giving and

Volunteering; Additional External Appointments; and Treasury.

The policies were published on the Company’s shared intranet

and clearly communicated to the business. All policies were

reviewed to ensure they communicated the key points in

a succinct and clear manner to enable employees to easily

understand the expectations placed upon them.

Key stakeholders considered:

Modern Slavery Statement

The Board again approved the Modern Slavery Statement

for 2023 which can be found on the Company’s website.

The Board remains firm that modern slavery in all its forms is

not to be tolerated and that the Company will not do business

with anyone it feels may not operate in the same way.

Key stakeholders considered:

Appointment of new Non-Executive Directors

As signposted in the 2022 Annual Report and Accounts, the

search for new Non-Executive Directors concluded during 2023

with the appointment of Caroline Brown and Karen Bomba

as independent Non-Executive Directors on 1 June 2023.

Both Directors bring a wealth of experience and diversity

to the Board and provide assurance to our shareholders and

other stakeholders that decisions made by the Board have

considered all viewpoints and impacts and are made in the

best interests of the Company.

Key stakeholders considered:

Key decisions and outcomes

“Our shareholders want us to ensure that the business

can continue to grow and create value in the long

term. Many of our shareholders believe in our purpose

as passionately as we do and the move up to the

Main Market presented the business on a wider stage

supporting growth and development opportunities. In a

similar way, our suppliers and partners want longevity

and certainty that their partnerships and agreements

will continue. We know that they want to see the

development and evolution of our technology to lead

us into the future of green energy. Securing investor

support and funding is key to achieving that goal.

“Our employees are key to the achievement of our

purpose and goals and ensuring they were fully cognisant

of the increased challenges the Main Market listing would

bring was crucial. The Board ensured not only that they

were kept up to date on the progress of the preparatory

work, but also that they had all the tools required to

operate in the new environment. Whilst the Company

had always been compliant with required legislation

and regulation, it was clear that the Company would be

subject to additional scrutiny after the listing. Policies and

procedures were reviewed and strengthened to ensure

the business complied with the latest requirements of

regulators and legislators.

“In terms of our industry peers, we knew that the

potential to develop partnerships to explore technological

advances would be strengthened by the additional

credibility that the listing would bring.

“The impact that the development and licensing of our

technology could have on wider society is clear to us

and demonstrated by our purpose, “clean energy for a

clean world”, and the benefits identified above clearly

enable us to work towards that purpose.”

Warren Finegold

Chair

Focus on Main Market listing

Strategic report

29Ceres Annual Report 2023

Strategy

A clear strategic vision

For more information on risks, please see page 36

Our strategy is to pioneer advanced technologies and embed them in the products of

world-class companies to meet their strategic imperative to transform to clean energy.

Our strategy is based on the three drivers below, with a goal to secure a leading market

share of the global solid oxide industry.

Execution at pace

We aim to support our manufacturing partners to

start mass production by 2024 onwards.

• Ceres has supported the development of three manufacturing

sites globally, in the UK, Germany and South Korea, with

Bosch and Doosan moving towards mass market launch.

• We continue to work with system partners in both fuel cells

and electrolysers to develop innovative products to bring

to market.

Links to KPIs

Links to risks

Commercial acceleration

We create commercial scale by generating more

demand though increasing commercial partnerships

and licences.

• We aim to secure manufacturing licence partners to address

multiple applications and markets.

• We engage with companies throughout the value chain to

drive demand for Ceres’ technology in both fuel cell and

hydrogen applications.

Links to KPIs

Links to risks

Licensing technology leadership

We maintain our technology leadership in both SOFC

and SOEC and drive further innovation.

• We continue to innovate our IP for both fuel cells and

electrolysers and release next generation stack technology.

• We engage in technology demonstrations and data-sharing

initiatives that offer evidence of the benefits of Ceres’ SOFC

and SOEC technology.

Links to KPIs

Links to risks

Links to KPIs

Revenue

Gross margin

Order backlog (at 31 December)

Announced manufacturing capacity

Partner programmes delivery

Demonstrate SOEC

Links to risks

Viability of Technology

Operational Capability

IP and Regulation

Long-term Value Proposition

Commercial Traction/

Partner Performance

Partner Scale Up/Supply Chain

Detrimental Partner Actions

Geopolitical

People and Capability

Future Funding and Liquidity

30 Ceres Annual Report 2023

KPIs

Links to strategy

Licensing technology leadership Execution at pace

Commercial acceleration

Our key performance indicators

£22.3m

19.8

29.2

22.3

£(42.4)m

(67. 3)

(41.5) 21

(42.4)

61%

Revenue

Gross margin

Cash outflow

(at 31 December)

Financial KPIs

Non‑financial KPIs

Description

Gross margin of 61% an

improvement on prior year margin

of 54%. These margins remain much

higher than industry norms due to

the licencing nature of Ceres’

business model.

Description

Revenue in line with the prior

year, with the majority arising from

existing partners Bosch and Doosan

through ongoing development

activities as we support them

with factory build and prepare

for commercial launch.

Description

“Cash outflow” relates to the

movement in cash and investments

excluding the equity fund raise

conducted in 2021.

Links to strategy:

3 3

Links to strategy: Links to strategy:

2023 performance

250MW.

Description

Announced stack manufacturing

capacity from our partners

2023 performance

Whilst stack factory construction at

Doosan and Bosch remains on track,

the launch of the commercial

products that will generate royalties

is expected to take longer.

Description

We aim to ensure that our

manufacturing partners start mass

production as planned.

2023 performance

The megawatt-scale electrolyser

successfully completed testing and

was shipped to Shell’s R&D centre

in Bangalore, India.

Description

The Ceres team is focused on the

next SOEC product concept for a

4-5MW modularised system, which

would facilitate larger scale installations.

Announced

manufacturing capacity

Partner

programmes delivery

Demonstrate SOEC

Links to strategy:

5422

6123

1. The adjustment in respect of 2022 and 2021 is described in Note 1 to the financial statements.

Strategic report

31Ceres Annual Report 2023

Chief Financial Officer’s statement

Ceres’ asset light business model

enables us to focus investment on

highly differentiated IP for our partners

to industrialise. We have significantly

reduced our cash outflow in 2023 whilst

maintaining targeted R&D spend in core

technology. Through existing licensees,

and new business opportunities in both

clean power and hydrogen markets,

Ceres is well positioned for growth

in 2024 and beyond.”

Eric Lakin

Chief Financial Officer

Reduced cash

outflow and

strong foundation

for growth phase

Highlights

• Revenue of £22.3 million

(2022: £19.8 million

)

• Gross profit of £13.6 million

(2022: £10.7 million), maintaining

sector‑leading gross margin at

61% (2022: 54%)

• Research and development

investment increased by 11% to

£54.0 million (2022: £48.5 million

consistent with strategy to drive

innovation and technology leadership

across solid oxide fuel cell and

electrolysis technology

• Strong cash and short‑term

investments position of £140.0 million

(2022: £182.3 million) with reduced cash

outflow through disciplined working

capital and cash management

1. The adjustment in respect of 2022 is described in Note 1

to the financial statements.

32 Ceres Annual Report 2023

£22.3m

Revenue

(2022: £19.8m)

61%

Gross margin

(2022: 54%)

£54.0m

Research and development costs

(2022: £48.5m)

£(50.3)m

Adjusted EBITDA loss

(2022: £(45.7)m)

£(42.4)m

Cash outflow (change in cash and

short‑term investments)

(2022: £(67.3) m)

£140.0m

Cash and short‑term investments

(2022: £182.3m)

Consolidated statement of profit and loss

for the year ended 31 December 2023

2023

£’000

2022

£’000

Restated

Revenue – restated

22,324 19,788

Cost of sales (8,770) (9,079)

Gross profit 13,554 10,709

Gross margin 61% 54%

Other operating income 3,665 1,332

Operating costs

(76,620) (66,054)

Operating loss (59,401) (54,013)

Finance income 7,079 2,830

Finance expense (1,287) (304)

Loss before taxation (53,609) (51,487)

Taxation (charge)/credit (399) 3,872

Loss for the financial year (54,008) (47,615)

1. The adjustment in respect of 2022 is described in Note 1 to the financial statements.

Introduction

2023 was a challenging year for Ceres with a demanding

macroeconomic background in which clean technology

companies have been particularly impacted. The financial

outcome for the year was not as we had originally expected,

with no top-line growth due to the absence of new licence

partners signed in the year including the planned China JV

with Weichai.

During 2023, we maintained a focused approach to

investments in solid oxide fuel cell and electrolysis

technology development including the design and build of

our first megawatt-scale electrolyser. Cash outflow improved

significantly in 2023 compared to the prior year, largely through

reductions in capital expenditure and working capital, as we

balance investments in R&D and capability with a disciplined

approach to cash management.

Reporting on the results

A number of prior period corrections were identified during

the audit, the main ones relating to the historical timing and

treatment of revenue recognition and foreign exchange

impact for long term contracts, the dilapidation provision and

capitalisation of relevant costs.

The total impact of all items is a decrease in net assets of

£3.6 million in 2022, with the majority being explained by a

reduction of revenue of £1.7 million in 2021 and £2.3 million

in 2022. These decreases in revenue are offset by increases

in revenue of £0.3 million in 2023 and £3.3 million increase

in the opening order backlog for 2024. Please see note 1

of the Financial Statements for further detail.

Revenue

The Group reported revenue of £22.3 million in 2023,

compared with £19.8 million

in the prior year. Most of the

revenue was from existing partners Bosch and Doosan through

ongoing development activities as we support them with

factory build and prepare for commercial launch. Revenue is

a combination of development licence revenue, engineering

services and the provision of technology hardware. £21.5 million

of the revenue in 2023 relates to SOFC (2022: £19.6 million

Our SOEC business segment recognised revenue in the year

of £0.8 million (2022: £0.2 million), the majority of which is

licence revenue from signing a collaboration with Bosch and

Linde announced in March 2023 to validate our electrolysis

technology. Revenue from the Shell test evaluation partnership

will commence once the demonstrator is commissioned at

Shell’s facility in Bangalore, India in 2024.

Gross margin

Gross profit of £13.6 million in the year (2022: £10.7 million)

increased when compared to the prior year due to the impact

of the high margin licence reallocation as documented above.

There was a similar level of revenue and revenue mix in

terms of engineering services and hardware. Consequently,

gross margins of 61% also improved compared to prior year

(2022: 54%). These margins remain much higher than industry

norms due to the licensing nature of Ceres’ business model.

Strategic report

33Ceres Annual Report 2023

Chief Financial Officer’s statement continued

Adjusted EBITDA

Adjusted EBITDA loss for 2023 increased to £50.3 million

(2022: £45.7 million

). Adjusted EBITDA is a non-statutory

measure and is detailed in the Alternative Performance

Measures section in this review. The increased loss is primarily

due to the increased operating costs explained above.

Reconciliation between operating loss and

Adjusted EBITDA

Management believes that presenting Adjusted EBITDA

loss allows for a more direct comparison of the Group’s

performance against its peers and provides a better

understanding of the underlying trading performance of the

Group by excluding non-recurring, irregular and one-off costs.

The Group currently defines Adjusted EBITDA loss as the

operating loss for the year excluding depreciation and

amortisation charges, share-based payment charges, unrealised

losses on forward contracts and exchange gains/losses.

Working capital movements

During 2023 working capital decreased by £10.0 million

(2022: increase of £3.0m

1,2

), which had a favourable impact to

reduce the cash outflow in 2023. The two largest components

of this was the reduction of Trade and other receivables by

£7.3 million, including significant invoice payments from partners

in January 2023, and a £2.9 million reduction in inventories

during the year that partly reflects the consumption of first

generation stacks, and an increased focus matching our pilot

plant production levels to partner demand. The net movement

of contract assets and contract liabilities was a decrease in net

liabilities of £1.1 million.

2023

£’000

2022

£’000

Restated

Operating loss – restated

(59,401) (54,013)

Depreciation and amortisation

9,126 7,244

Share-based payment charges 67 997

Exchange gains (232) (934)

Unrealised losses/(gains) on forward contracts 143 1,020

Adjusted EBITDA (50,297) (45,686)

1. The adjustment in respect of 2022 is described in Note 1 to the financial statements.

Other operating income

Other operating income increased significantly in the year to

£3.7 million (2022: £1.3 million), which reflects the level of R&D

Expenditure Credits (“RDEC”) claimed in the year compared to

the prior year. As of 2023 all Ceres’ R&D tax relief is in the form

of RDEC as Ceres no longer qualifies for SME R&D tax credit

schemes. In 2022, SME R&D tax credit was recognised within

the taxation credit.

Operating costs

Operating costs increased to £76.6 million (2022: £66.1 million

)

as Ceres increased investment in core technology to drive

future growth, including the second generation of stack and

a significant investment in the megawatt-scale electrolyser.

The largest category of spend is R&D, which increased to

£54.0 million (2022: £48.5 million

). The average number

of persons employed by the Group in the year increased to

590 (2022: 536). Now that we have critical mass of engineers,

scientists, electrochemists and other technical employees, we

don’t anticipate headcount increases in 2024.

Finance income and expense

Finance income increased significantly to £7.1 million

(2022: £2.8 million), which reflects improved interest rates on

our bank deposits and short-term investments in money market

funds in a higher interest rate environment. We maintain a

stringent treasury policy to balance appropriate market returns

with the security of funds including only high investment grade,

and diversification of, financial institutions. Finance expense

increased to £1.3 million (2022: £0.3 million) mostly due to

a foreign exchange losses of £0.8 million on currencies held

in non-sterling denominations (2022: gain of £0.2 million).

Taxation (charge)/credit

Taxation charge in 2023 of £0.4 million reflects payment of

withholding taxes from overseas earnings. This compares to

a taxation credit of £3.9 million in 2022, which represents SME

R&D tax credits, as described in the other operating income

section above.

Loss for the financial year

The Group posted a loss of £54.0 million (2022: £47.6 million

)

for the year, which reflects the increase in operating costs

and no taxation credit in 2023, partly offset by higher other

operating income and interest income compared to 2022.

34 Ceres Annual Report 2023

Total capital investments

Total capital investments comprises capital expenditure

(property, plant and equipment) and capitalised development

(intangible assets). In 2023, total capital investments declined

to £14.7 million (2022: £18.2 million) due to a combination of

reducing investment requirements for our Manufacturing

Innovation Centre in Redhill, a deferral of some test capacity

expansion from 2023 to 2024, and a prioritisation of spend

as we emphasised cash discipline during the year.

Cash outflow

Cash outflow (change in cash, cash equivalents and short-term

investments) was £42.4 million (2022: £67.3 million). This

improvement, despite the increase in the Adjusted EBITDA loss,

was driven by the reduction in working capital, reduced capital

investments and, to a lesser extent, increased finance income.

Cash, cash equivalents and short-term investments

The Group ends the financial year in a strong position

with £140.0 million in cash, cash equivalents and short-term

investments (2022: £182.3 million) to support future

investment as we drive revenue growth, manage costs and

expenditure in a disciplined way, and track towards profit and

cashflow break-even.

Outlook

We end 2023 with a strong financial position and continue to

invest across the business to build a sustainable competitive

advantage in highly differentiated solid oxide technology.

In the year I visited Bosch’s facilities in Bamberg and Stuttgart

to see the good progress being made on the industrialisation

of solid oxide fuel cells and the scale is truly impressive. As we

move into 2024, we expect revenues to approximately double

compared to 2023, based on current contracts with existing

partners and licensees including Bosch, Doosan, Weichai, Delta,

Shell, Linde and others. Signing additional licence contracts

in the year represents potential upside to this outlook, and

although the timing of these incremental opportunities is

uncertain, we are well-placed for future growth from both

existing and new partnership prospects.

Eric Lakin

Chief Financial Officer

1. The adjustment in respect of 2022 is described in Note 1 to the

financial statements.

2. The adjustments to working capital are described in the consolidated

cash flow statement.

Key cashflow financial measures

2023

£’000

2022

£’000

Restated

Total capital investments (capital expenditure and capitalised development) 14,722 18,179

Working capital decrease/(increase)

1,2

10,023 (2,959)

Change in cash, cash equivalents and investments (42,364) (67,264)

Cash, cash equivalents and short-term investments 139,956 182,320

Strategic report

35Ceres Annual Report 2023

Principal Risks and Uncertainties

Risk Management Process

The Audit Committee plays a central role in the review of

the Group’s risk and internal control processes, supporting

the Board’s role in overseeing an enterprise-wide approach

to risk identification, management, and mitigation. However,

the Group’s risk management framework can only provide

reasonable, but not absolute, assurance that principal risks

are managed to an acceptable level. The Audit Committee

assists the Board in monitoring the effectiveness of our

risk management and internal control policies, procedures,

and systems.

It is the responsibility of the Executive Committee to

manage and mitigate the financial, reputational, operational

and regulatory risks facing the Company. These risks are

reviewed at Executive Committee meetings, and with senior

management and project teams across operations as a core

part of the day-to-day running of the business.

Risks are recorded in a risk register and are reviewed by

the Executive Directors bi-annually, with the current level

of inherent and mitigated risk levels assessed to determine

the appropriate further mitigating actions required to reduce

the risk to an acceptable level. Each risk has an assigned

Executive owner responsible for the mitigation and monitoring

of the risk through the year.

Risks which are determined to have a potentially material

impact on the Group’s viability are reported as principal risks.

Principal risks are reported and discussed regularly with the

Board, with changes highlighted to existing and emerging risks.

Principal Risks and Uncertainty Matrix

Following a review of principal risks during the year, it was

deemed appropriate to restructure the reported risks and

include four new risks from those included in last year’s

Annual Report, being: Takeover Bid, Geopolitical, People and

Capability, and Future Funding and Liquidity.

Beyond these, our business has other operational risks that

we manage as part of our daily operations, such as health

and safety, environmental, financial, commercial, legal, and

regulatory. Finance risks are discussed in Note 20 of the

financial statements.

To facilitate meaningful comparison of the relative importance

of the principal risks and uncertainties at a Group level, these

have been mapped onto a probability and impact matrix

shown below.

Principal risks and mitigation actions are set out in the table

on pages 37 to 39. Based on the risk management process

described above, these are the principal risks the Board believe

have the greatest potential to impact the Group’s future

viability. This summary is not intended to include all risks that

could ultimately impact our business and delivery of strategic

objectives, and the risks are presented in no particular order.

Risk heatmap

Viability of Technology

Operational Capability

IP and Regulation

Long-term Value Proposition

Commercial Traction / Partner Performance

Partner Scale Up / Supply Chain

Detrimental Partner Actions

Geopolitical

People and Capability

Future Funding and Liquidity

Probability

Impact

Very LikelyProbablePossibleUnlikelyRare

MajorModerateMinor

36 Ceres Annual Report 2023

1 2 3

5 6 7

4 8

Principal Risks There is a risk that…

Actions taken by

management/mitigations Change Link to strategy

Viability of

Technology

We will not be able to

develop and apply the

Group’s technology

successfully to

potential products at

the right cost point or

performance, in the

time frame anticipated.

Management is working to

achieve agreed performance

levels and cost points under

ongoing programmes, with full

resources and facilities deployed

to meet milestone requirements.

Investment into upgrade test

infrastructure continued in the

year with increased capacity

and capability.

During the year Ceres’

second-generation

design of stacks passed

critical design review,

a key milestone.

However, challenges

remain due to short

timescales and the

risk of late changes

driven by development

issues, delayed test

validation and maturing

manufacturing processes.

Execution at pace

Operational

Capability

The Company may be

unable to satisfy current

customer contracts

and demand, with an

increasingly complex

partner structure.

This may be due to lack

of organisational growth

management, testing

capacity, and short-term

manufacturing or

technical issues.

We have reinforced our

engineering and supply chain

teams and established additional

processes to support growth.

We have created partnerships in

engineering and testing to enable

scaling up more quickly.

We are continuing to expand

capacity and capability of our

facilities that support research and

development activities, developing

over time to support the move to

a digitalised business environment.

We are building up

the business to be in a

better position to meet

the challenges of our

customers’ expectations.

Execution at pace

IP and

Regulation

The Company’s

competitive advantage

could be at risk from:

successful challenges to

its patents; unauthorised

parties using the

Group’s technology

in their own products;

Ceres not harvesting

IP from partners; and

others infringing existing

Ceres intellectual

property rights (IPRs).

Also, a risk that the

Group will unwittingly

infringe valid IPRs of

others, which could limit

full commercialisation

of the technology.

We have internal procedures and

controls in place to capture and

exploit all intellectual property

(IP) as well as to protect, limit

and control disclosure to third

parties and partners. We are

implementing IP Centricity,

a programme with tools for

tracking and managing IP assets.

Contractual provisions with

partners and IP insurance provide

additional protection to the

Group for agreement, pursuit

and defence of IP.

We perform freedom-to-operate

searches to minimise this risk.

Continued progress

made to ensure we

are able to protect

and exploit our IP.

Licensing

technology

leadership

Trend directions:

Increasing Decreasing Unchanged

Strategic report

37Ceres Annual Report 2023

Principal Risks and Uncertainties continued

Principal Risks There is a risk that…

Actions taken by

management/mitigations Change

Link to

strategy

Long-term

Value

Proposition

The value proposition

of our technology may

become eroded or

irrelevant, impacting

on the Group’s future

profitability and growth

opportunities.

We may not be successful

in our research and

development efforts and

may not be able to create

new intellectual property.

We address different geographical

markets, which we believe will

decarbonise at different rates, and

we are broadening the applications

available, mitigating failure in a single

market or product.

We monitor competitor activity

and market developments to

identify partner and end-user

future requirements.

We have dedicated resources

for pursuing disruptive innovation,

and continue to develop our

university network.

Ceres’ first 1MW-scale electrolyser,

which began producing hydrogen this

year, has arrived at Shell’s research

and development centre in India,

where further validation will take place.

This will feed into the design of the

optimum architecture for 100MW+

scale systems installations, essential

to accelerate commercialisation and

deliver green hydrogen at the scale

and pace required to reach net zero.

Our diverse pipeline

of potential customers

continues to mitigate

the impact of individual

customers choosing not

to move forward.

Licensing

technology

leadership

Commercial

Traction /

Partner

Performance

Our partners may choose

not to use our technology

in their products or

go to market slower

than anticipated.

We may not be able

to continually attract

new partners.

We may be unable

to finalise a strategic

partnership to access

China markets.

We may be unable to

establish SOEC as a

credible technology,

in part due to the

competition risk.

We work in close partnership with

Doosan and Bosch to achieve the

2024 go-to-market timeline.

Our commercial progress is continuing

with expansion across regions and

applications, with the signing of Delta, our

first SOEC customer, in January 2024.

We plan to ensure SOEC leadership

through development, demonstrations,

and partnerships, with the first 1MW-

scale electrolyser validated and with

Shell in India in Q2 2024.

We have invested to expand our

commercial teams in key geographies,

to align with the greatest interest

and support for hydrogen and fuel

cell technologies.

The planned three-way

China JV has not been

concluded despite the

relationship between the

three parties remaining

strong. It is now our belief

that the proposed JV is

unlikely to be completed

in its current form.

Despite progress in the

development of SOEC

technology, we have

failed to sign a licencee

partner in the year.

However, Delta, our first

SOEC partner, signed in

January 2024.

Commercial

acceleration

Partner

Scale Up /

Supply Chain

We may not be able

to meet the timeframes

agreed with the partners

for the market launch

of the Company’s

technology, for example

due to supply chain

issues or, stack product

maturity not keeping up

with commercialisation,

or technology not

meeting requirements.

We continue to work in close

collaboration with partners in their

trials and early market launches.

Whilst stack factory

construction at Doosan

and Bosch remains on

track, the launch of the

commercial products

that will generate

royalties is expected

to take longer.

Execution

at pace

Trend directions:

Increasing Decreasing

Unchanged

38 Ceres Annual Report 2023

Principal Risks There is a risk that…

Actions taken by

management/mitigations Change

Link to

strategy

Detrimental

Partner

Actions

We may be the

subject of actions by

partners or third parties

including takeover bids,

which could result in

shareholder value being

negatively impacted.

We maintain close dialogue with

shareholders and partners.

We maintain an active defence strategy

which seeks to protect shareholder

value in the event of a takeover attempt.

Although Ceres retains

two key strategic

shareholders and an

active defence strategy,

market capitalisation has

materially reduced in the

year leading to higher

overall risk.

Geopolitical

The Company or our

partners may be unable

to conduct business in

certain geographies, or

supply chains become

disrupted due to warfare

or sanctions.

The company may come

under cyber-attack from

nation-state actors,

potentially compromising

our IP portfolio and

trade secrets.

Our supply chain is periodically

reviewed for at-risk supply based

on either sensitive location or single

source. Alternative or additional

suppliers are then sought and put

in place.

Doosan and Bosch have localised a

large proportion of the bill of materials,

further diversifying the supplier pool.

Investment in information security

continues, with external audits showing

year-on-year improvements.

Increased tensions in

partner territories in

Asia, with potential

future conflicts which

may disrupt their ability

to conduct business.

Increased supplier

diversity due to

internal efforts and the

localisation efforts of

Doosan and Bosch.

Commercial

acceleration

People and

Capability

A loss of key personnel or

inability to attract required

skillsets could negatively

impact our ability to

innovate and maintain a

competitive advantage.

Our organisation structure and skills

matrix are continually reviewed to

ensure we have the correct mix of skills

across all areas.

Succession planning is in place and

information capture/IP harvesting

continuously occurs to minimise the

impact of any individual leaving.

An employee share scheme is in

place with high take-up, and for key

personnel a long term incentivisation

plan is in place to support retention of

key personnel.

Other aspects of reward strategy are

periodically reviewed to ensure we are

competitive with the wider market.

Headcount has now

reached critical mass,

with the appropriate

coverage of skills in

place to minimise risk.

Licensing

technology

leadership

Funding

and Liquidity

A failure to acquire

new customers would

impact the forecast cash

position of the company,

potentially requiring

further external funding.

An equity fundraise

at a low share price

may negatively impact

shareholder value.

We have a continuous cycle of

cashflow monitoring, forecasting,

performance reporting and

scenario planning.

Proactive investor communications

and management strategy in place to

support the equity story for potential

future fund raising.

Although the cash

position remains strong,

2023 did not see the

planned intake of new

licensees, meaning

that the expected

inward cashflows have

been delayed

Trend directions:

Increasing

UnchangedDecreasing

Strategic report

39Ceres Annual Report 2023

Viability statement

In accordance with provision 31 of the UK Corporate

Governance Code 2018, the Directors have assessed the

future viability of the Group over a period longer than

12 months. The Directors believe a period of three years is

sufficient as a viability assessment period as it represents a

period in which management can make reasonable estimates

of future Group performance and financial position.

Viability assessment period

Considering the uncertainties inherent to the Group’s operations

as well as the medium-term planning, the Board concluded

that a viability assessment over a three-year period provides a

robust and realistic evaluation of the Group’s future performance.

The Directors have carried out this viability assessment over

a period of three years for the following reasons:

• It represents a balance between an appropriate need to

plan for the longer-term and uncertainties in financial projects

when considering a period of greater than three years;

• It is broadly in line with the timeframes of large collaboration

and licence agreements; and

• It is appropriate for the current stage of development

of the Group and gives an opportunity to reasonably

assess the decisions around the Group’s capital structure

and funding based on implementing its major strategic

objectives (described on page 30) and progress made

with collaboration partners.

Assessment of prospects

The Group’s viability assessment is built through integration

of the principal risks and uncertainties (described on pages

36 to 39) into a financial model with scenarios, based on

the elements of corporate planning and modelling process,

which includes:

• Annual budgeting and forecasting process incorporating

preparation of an annual budget for the following year,

which is reviewed and approved by the Board, and followed

up with periodic forecasts, which are monitored by senior

management and the Board; and

• Future planning based on a central three-year financial

projection, using management’s internal estimate of

contract intake formed on current expectations of the

outturn of existing contracts and reasonable expectation

of new licence and collaboration agreements.

The Directors regularly assess the Group’s prospects and

progress against the strategic objectives set out in its strategic

plan. The strategic plan is built around a base case scenario in

order for the Directors to assess both the Group’s liquidity and

solvency positions, along with adequacy of funding. Sensitivity

analysis of the base case assumptions underlying the plans is

also carried out. The plans are approved by the Directors and

financial budgets and KPIs are subsequently used to monitor

performance during the year via periodic reviews.

In its assessment of the Group’s prospects, the Board has

considered the following:

• The Group’s strategy and how it addresses expectations

of changing macro-economic environments;

• The Group financial position;

• The commercial viability of the Group’s technology and

commercial traction; and

• Competition, intellectual property exposures and the Group’s

regulatory environment.

40 Ceres Annual Report 2023

Scenarios modelled Links to principal risks

Scenario 1 – Core technology demand delayed

Ceres’ operations become subject to a material reduction in

short term demand for the technology either as a result of

the technology not performing to the expected levels or our

partners choosing not to use our technology in their products.

Stress test applied: Failure to acquire any new licence partners

in 2024 but from 2025 demand trends back towards target

of two new partners per year.

Financial impact: Reduced high margin licence revenue

recognition in 2024 when compared to base case budget.

The recoverability will be quick as the demand trends back

to target as licence revenue on signing new agreements is

recognised upfront on transfer of technology. Gross margin in

2024 would be below levels seen in 2023 but would improve

quickly in line with revenue. No cost saving mitigations would

be required as long term viability is not threatened under

this scenario.

Risk 1: Viability of Technology

Risk 2: Operational Capability

Risk 4: Long-term Value Proposition

Risk 5: Commercial Traction / Partner Performance

Scenario 2 – Commercialisation of Ceres’ technology

Timeframes for commercial product launch of Ceres’

technology with key partners is slower than expected or

materially disrupted. For example, the technology does not

translate to large scale production or partners are unable to

sell the planned production volumes.

Stress test applied: Royalty build-up projections delayed by

one year.

Financial impact: Revenues over the viability period would be

impacted, but not materially, as the Group’s expectation is that

royalty revenues are not material in this period of assessment.

High margin licence revenue would still be recognised as the

assumption would remain consistent with the Group’s base case

budget. There would be no cost saving mitigations required.

Risk 2: Operational Capability

Risk 4: Long-term Value Proposition

Risk 5: Commercial Traction / Partner Performance

Risk 6: Partner Scale Up / Supply Chain

Scenario 3 – Failure to fully execute SOEC strategy or limited addressable market

The market for SOEC is immature and the total addressable

market is based on a forecast. It could also unfold that the

market for green hydrogen may mature more slowly than

anticipated. Also, Ceres’ SOEC technology demonstrator

may fail to deliver on expected performance characteristics

(e.g., degradation rates). Both of these risks could impact the

timing of new SOEC license partners.

Stress test applied: Failure to acquire second SOEC licence

partners in 2024–2026

Financial impact: Impacts all periods within the viability

assessment, top line revenue will be £14–28 million down

per year when compared to Group’s base case budget.

Throughout the assessment period the Group’s adjusted

EBITDA is loss making. Discretionary spend would be cut in

to save 10–15% of operating costs. However, external funding

would not be required for the Group to remain viable.

Risk 1: Viability of Technology

Risk 2: Operational Capability

Risk 4: Long-term Value Proposition

Risk 5: Commercial Traction / Partner Performance

Assessment of viability

To assess the Group’s viability, different scenarios were modelled identified by considering the potential impact of individual

principal risks and possible combinations as shown below. In total, four severe but plausible individual scenarios have been created,

with the fifth collective scenario which considers the combined impact of scenarios 1–4 to model the absolute worst-case

scenario for the business. All the scenarios identified could, in theory, combine with varying levels of impact.

The Group’s principal risks and uncertainties, evaluation of the management of those risks and internal controls in place are

discussed on pages 36 to 39.

Strategic report

41Ceres Annual Report 2023

Scenarios modelled Links to principal risks

Scenario 4 – Breach of IP and confidence lost in Ceres

Ceres’ IP and/or trade secrets are breached or stolen, and

the perpetrator develops and markets products using our IP,

which could materially impact Ceres’ competitive advantage.

Stress test applied: No partners from 2025 as potential

partners consider the value proposition and competitive

advantage of Ceres to be undermined; additional costs from

defence and remedial actions.

Financial impact: 2024 will remain at budgeted levels however

no new licence partners for 2025 and 2026 would impact

revenue by £80–90 million with the impact to gross margin

being just as severe. The costs to defend Ceres’ competitive

advantage would be material and other costs saving measures

would be needed to keep the business from increasing

EBITDA losses.

Risk 1: Viability of Technology

Risk 3: IP and Regulation

Risk 4: Long-term Value Proposition

Combination of scenarios 1–4

This represents a severe downside scenario combining the above

risks and would represent a demand and operational shock.

Stress test applied: The Group’s reverse stress test where

the long term viability is no longer possible; no partners from

2024, royalties from existing partners, delayed, additional

costs from IP defence.

Financial impact: A highly unlikely worst-case scenario but

revenue, margin and EBITDA would be materially impacted,

revenue as much as £137 million down over the assessment

period when compared to base case budget. Discretionary

spend would need to be cut and external funding would be

sought in order for the business to remain viable.

All of the above

Risk 10: Funding and Liquidity

Conclusion on viability

The scenarios above are hypothetical and purposefully severe

in order to create outcomes that have the ability to threaten

the viability of the Group. It is considered unlikely, but not

impossible, that the occurrence of these risks could test the

future viability of the Group.

None of the scenarios modelled, including the more extreme

and unlikely aggregated scenario, were found to threaten

the viability of the Group over the period of assessment.

In assessing each of the scenarios mitigating actions were

taken into account including:

• Reducing discretionary operating spend and prioritising

spend critical to the success of SOEC

• Reducing non-committed capital expenditure

• Reducing development spend to the minimum required

to maintain the Group’s IP portfolio; and,

• Reviewing headcount, freezing recruitment and reducing

incentive based remuneration.

Based on the assessment of the current position of the

Group, the principal risks as set out on pages 36 to 39 and

the scenarios assessed above, the Directors confirm that

they have a reasonable expectation that the Group will

continue in operation and meet its liabilities as they fall due

through the three-year viability assessment period ending

31 December 2026.

Going Concern Statement

Based on the review of the Group’s cash and short-term

investments, forecast income and expenditure, performing

appropriate sensitivity and scenario analyses, and after

making appropriate enquiries, the Directors have a reasonable

expectation that the Group and Company have adequate

resources to progress their established strategy. Accordingly,

they continue to adopt the going concern basis in preparing

these financial statements. More detail can be found in the

financial statements on page 102.

Board approval

The Strategic Report set out on pages 1 to 42 has been

approved by the Board

Eric Lakin

Chief Financial Officer

Viability statement continued

42 Ceres Annual Report 2023

44 Chair’s introduction to governance

45 Board of Directors

48 Executive Committee

49 Corporate governance report

55 Audit Committee report

59 Remuneration & Nomination Committee report

63 Directors’ Remuneration Report

84 ESG Committee report

86 Directors’ report

Corporate

governance

43Ceres Annual Report 2023

The Board is committed to good governance.

The Company’s successful move up to the

premium listing on the Main Market of the

London Stock Exchange makes this more

important than ever before.”

Warren Finegold

Chair

Chair’s introduction to governance

Dear Shareholder,

On behalf of the Board I am pleased to present the

Corporate Governance Report for the financial year ended

31 December 2023.

This year was a milestone year for Ceres with a successful

move up to the Main Market of the London Stock Exchange.

An enormous amount of work was required to make the move

successfully and the Board and I would like to thank all involved

for their sterling efforts.

We have had several Board changes this year, not least we

said goodbye and thank you to Steve Callaghan, a long serving

member of the Board who made a significant contribution

during his time with the Company. He was succeeded as

Senior Independent Director by Julia King, whose wealth

of experience and sound perspective are proving invaluable.

In June we welcomed Caroline Brown and Karen Bomba to

the Board as Non-Executive Directors. Both have excellent

skills, attributes and experience and as members of the Audit

Committee and Remuneration & Nomination Committee

respectively they are strengthening our diversity of thought

and decision making significantly.

Finally, in September Weichai Power replaced its nominee

Non-Executive Director on the Board, Qinggui Hao, with

Nannan Sun. I would like to thank Qinggui for all his contributions

and we welcome Nannan’s substantial technical experience

as we move forward.

This year saw further development of the Employee

Engagement Director role, held by Trine Borum Bojsen.

The Board has been pleased to see the positive way in which

employees have welcomed the opportunity to air their views

to her and the positive actions that have been set out by

the business as a result of this engagement, coupled with the

staff engagement survey, are welcomed enormously. The

Board was pleased to meet employees informally and answer

questions at a successful “meet the Board” event this year

and looks forward to doing a similar event in 2024. The Board

also met with the senior leadership team to discuss the strategy

which was vital to ensure understanding and engagement as

we move forward.

The Board-level ESG Committee’s first year of operation

has seen a significant amount of work in the oversight and

development of the Task Force on Climate-related Financial

Disclosures and ESG reporting. The Board approved the

second Sustainability Report and the step-up in reporting and

disclosure has been significant. As the demands grow ever

larger in this arena it is imperative that the Board remains

committed to good governance and reporting.

The Board spent a significant amount of time on strategic

discussions in the latter part of the year, setting a refreshed

strategy that we believe will move the business forward and

create value for shareholders and other stakeholders. More

details on the strategy for the business are set out on pages

1 to 42.

The Board is always seeking to ensure it is cognisant of

shareholder views and during the year invited shareholders

to engage on any matters they wished to raise in a number

of forums. We look forward to strengthening this shareholder

engagement programme as we move forward into 2024.

Warren Finegold

Chair of the Board

12 April 2024

Governance highlights 2023

• Successful move up to the premium listing on the

Main Market of the London Stock Exchange

• Refreshed Company strategy

• Julia King succeeded Steve Callaghan as Senior

Independent Director

• Appointment of Caroline Brown and Karen Bomba

as Non-Executive Directors

• Thoroughly embedded Employee Engagement

Director role

• Nannan Sun joined as the nominated representative

Non-Executive Director for Weichai

• TCFD and ESG reporting has developed and evolved

• Engagement with shareholders on governance and

remuneration matters

44 Ceres Annual Report 2023

Philip Joseph Caldwell

Chief Executive Officer

Eric Daniel Lakin

Chief Financial Officer

Warren Alan Finegold

Chair of the Board

Board of Directors

Appointment date

2 September 2013

Nationality

British

Skills and experience

Phil was appointed Chief

Executive of Ceres in 2013.

Under his leadership Ceres

has grown into one of the

UK’s most valuable clean

technology companies.

Phil has been instrumental

in positioning Ceres as an

asset-light licensing business,

establishing partnerships with

global engineering giants

to meet the urgency for

low carbon power systems

and electrolysis for green

hydrogen. Phil has worked

in the fuel cell industry

for 20 years’, and 8 years’

at ICI in the Chlor-Alkali

Electrolyser Business. He has

a master’s degree in Chemical

Engineering from Imperial

College, an MBA from IESE

Barcelona and is a Sainsbury

Management Fellow.

Key strengths

Experienced plc CEO with

over ten years’ in the public

market. Commercialisation

of fuel cell and electrolysis

technology across multiple

markets and geographies;

strategic delivery; team

building and leadership.

Appointment date

10 January 2022

Nationality

British

Skills and experience

Eric joined Ceres as Chief

Financial Officer in January

2022, prior to which he was

at FTSE 100 engineering

group Smiths Group plc for

ten years’, latterly as CFO

of Smiths Interconnect.

Previously, Eric held roles in

operational and corporate

finance, strategy and M&A

through his career at Smiths

and prior roles in private

equity and finance, consulting

and industry. He has broad

international experience

including a secondment to the

US and a board position in a

joint venture in China. Eric is

a Chartered Management

Accountant and holds a

master’s in Engineering and

Information Sciences from the

University of Cambridge.

Key strengths

Operational and corporate

finance; strategy; mergers and

acquisitions; international; public

markets; and listed company

governance requirements.

Appointment date

1 March 2020

Nationality

British

Skills and experience

Warren joined the Board as an

independent Non-Executive

Director in March 2020 and

succeeded Alan Aubrey as

Chair in June 2020. He was

a member of the Vodafone

Group Executive Committee

for ten years’, serving

principally as Group Strategy

and Business Development

Director. Previously, he

was a Managing Director

of UBS Investment Bank,

where he held several senior

positions, most recently as

Head of the Technology

Team in Europe. Warren has

served on the boards of

UBM plc and Avast plc as

Senior Independent Director

and as a Non-Executive

Director of Inmarsat plc.

He has an MA in Philosophy,

Politics and Economics from

Oxford University and a

master’s degree in Business

Administration from London

Business School.

Key strengths

Global business development;

plc board experience; active

knowledge of governance

and regulatory matters;

strategy development;

capital markets; mergers

and acquisitions.

Audit Committee

Remuneration & Nomination Committee

ESG Committee

Disclosure Committee

Chair of Committee

Independent Non-Executive Director

Committee membership key

DE D

E D

Trine Borum Bojsen

Non-Executive Director

Appointment date:

15 March 2022

Nationality

Danish

Skills and experience

Trine joined the Board in

March 2022 and is the

Employee Engagement

Director. She is the Senior

Vice President of Europe

Renewables in Equinor with

profit and loss accountability

for origination, development,

construction and operation

of assets. Previously, Trine

was Chief Operating Officer

of Copenhagen Offshore

Partners, a leading provider

of project development,

construction management,

and operational management

services to offshore wind

projects worldwide. Prior

to that, Trine held senior

management posts at

Ørsted and also served on

a number of boards and

key committees within the

company. She is currently a

Non-Executive Director of

MacArtney A/S Denmark,

BeGreen A/S and Danske

Commodities A/S. Trine has

an M.Sc in Engineering from

the Technical University

of Denmark and a Board

Certificate from Copenhagen

Business School.

Key strengths

Renewables market

knowledge; technical

expertise; and stakeholder

relationship building.

Corporate governance

45Ceres Annual Report 2023

William Tudor Brown

Non-Executive Director

Caroline Brown

Non-Executive Director

Karen Bomba

Non-Executive Director

Uwe Klaus Glock

Non-Executive Director

Board of Directors continued

Appointment date

1 April 2021

Nationality

British

Skills and experience

Tudor joined the Board in

April 2021. He is one of the

founding members of ARM

Holdings plc, where until

2012 he was on the board

of directors and President

of ARM Holdings plc. Tudor

sits as an independent Non-

Executive Director and as

Chair of the Compensation

Committee on the boards

of Lenovo Group, listed on

Hong Kong Stock Exchange,

and on the board of Marvell

Semiconductor, listed on

Nasdaq. Tudor received

an MA degree in Electrical

Sciences from the University

of Cambridge. He is a Fellow of

the Institution of Engineering

and Technology and a Fellow

of the Royal Academy of

Engineering. He was awarded

an MBE in 2013.

Key strengths

Technology; global

industry; and licensing.

Appointment date

1 June 2023

Nationality

British and Irish

Skills and experience

Caroline joined the Board on

1 June 2023 and has over 20

years’ main board experience

as a non-executive director.

She is currently Chair of Audit

and Risk at FTSE 250 IP

Group plc, a Non-Executive

Director of CAB Payment

Holdings plc, a board member

of FTSE small-cap Luceco plc

and a member of the global

partnership council of Clifford

Chance LLP. Caroline has

delivered business strategy

across EMEA, the Americas,

India and the Far East in

commercial leadership roles

for FTSE 100 groups, mid-cap

companies and innovative

small and medium-sized

enterprises. Her early career

was in corporate finance

with BAML (New York),

UBS and HSBC advising

global corporations and

governments. Caroline has

a First in Natural Sciences

and a PhD in Chemistry

from the University of

Cambridge and is a Fellow

of the Chartered Institute of

Management Accountants.

Key strengths

Strategy development;

commercial experience;

finance; plc board experience.

Appointment date

1 June 2023

Nationality

American

Skills and experience

Karen joined the Board

on 1 June 2023. She has

37 years’ of experience in

the engineering industry,

most recently at Smiths

Group where she was

latterly President of Smiths

Interconnect until 2020.

Previously, Karen spent her

career in various technical and

managerial roles at Northrop,

Hitco Carbon Composites

(SGL), Zoltek Companies

and Safran Group SA, where

she was CEO of Messier-

Bugatti USA, Chair and Chief

Executive of Labinal (now

Safran Electrical and Power)

and President and CEO of

Morpho Detection. She is

currently a Non-Executive

Director of Ultra Electronics

UK Holdings Ltd and of

Wärtsilä Oyj Abp. Karen

has a Bachelor of Science

in Mechanical Engineering

from Rensselaer Polytechnic

Institute, USA, and a

Certificate of Financing and

Deploying Clean Energy at

the Yale School of Business

and the Environment.

Key strengths

Technology; global industry;

transformation; strategic

development; and plc

board experience.

Appointment date

18 June 2020

Nationality

German

Skills and experience

Uwe joined Ceres in

June 2020 following the

relationship agreement signed

with Bosch and is the Bosch-

nominated Non-Executive

Director. He is a member of

the Board of Management

of Bosch Thermotechnik

GmbH, the commercial and

residential building equipment

and systems division that

encompasses Worcester

Bosch in the UK. In addition

Uwe sits on two advisory

boards around the HVAC

industry. Uwe brings over

40 years’ of experience from

across Bosch and holds a

leading position in the wider

German and European

energy and building industry.

He was President of the

German Heating Association

(BDH) until the end of 2022

when he stepped down and

remains Vice President of the

German Building Technology

Association (VdZ). Uwe

completed his Study of

Business Administration at

the Business Management

Academy, Stuttgart.

Key strengths

Bosch experience; and

German and European energy

and building industries.

Committee membership key

Audit Committee

Remuneration & Nomination Committee

ESG Committee

Disclosure Committee

Chair of Committee

I I I

Independent Non-Executive Director

46 Ceres Annual Report 2023

Aidan John Hughes

Non-Executive Director

Julia Elizabeth King

Non-Executive Director

Appointment date

9 February 2015

Nationality

British

Skills and experience

Aidan joined Ceres in February

2015 as Non-Executive

Director and Chair of the

Audit Committee. He has

over 25 years’ of senior

finance experience in a

variety of listed companies,

including as Finance Director

at the Sage Group Plc from

1993 to 2000 and as a

Director of Communisis Plc

from 2001 to 2004. Between

2004 and 2018 he was Non-

Executive Director of Dialog

Semiconductors plc, where,

during his tenure he chaired its

Audit Committee. He is also

an investor and adviser to a

number of private technology

and media companies. Aidan

is a Fellow of the Institute

of Chartered Accountants

in England and Wales.

Key strengths

Listed company experience;

corporate governance; and

risk management.

Appointment date

17 June 2021

Nationality

British

Skills and experience

Julia joined the Board as an

independent Non-Executive

Director in June 2021. Julia

is an engineer with extensive

experience across industry,

academia and government

and a focus on climate

change and the low carbon

economy. She has held senior

roles at Rolls-Royce plc, the

University of Cambridge,

Imperial College and as

Vice Chancellor and Chief

Executive of Aston University.

She is currently Chair of

The Carbon Trust, STEM

Learning Limited and Frontier

IP plc; a Non-Executive

Director of Ørsted; Chair of

the Adaptation Committee

of the Climate Change

Committee; and completed

a term as a member of the

BEIS Hydrogen Advisory

Council. Julia is a Fellow

of the Royal Academy of

Engineering, the Royal Society

and the Academy of Medical

Sciences, and was awarded

a DBE for services to higher

education and technology.

She sits in the House of Lords

as the Baroness Brown of

Cambridge where she chairs

the Science and Technology

Select Committee.

Key strengths

Industry knowledge;

academic knowledge; and

climate change expertise.

A E

Nannan Sun

Non-Executive Director

Appointment date

27 September 2023

Nationality

Chinese

Skills and experience

Nannan joined Ceres in

September 2023 and is

the Weichai nominated

Non-Executive Director

as part of the strategic

collaboration agreement with

Weichai. Nannan is a senior

engineer with a doctorate in

Engineering from Shandong

University and is currently

the Assistant President of

Weichai Power and President

of the Future Technology

Institute of Weichai Power.

Nannan is responsible for

product and technology

research and development

having joined Weichai Power

in July 2015 and has served

as the Vice President of

the Scientific Research

Institute, the President of

the Science and Technology

Research Institute, and

the Vice President of

the Future Technology

Research Institute.

Key strengths

Relationship with

Weichai; Chinese market

knowledge; and technology.

Board of Directors: tenure

Board of Directors: gender

<1 year: 3 Directors

>1 year: 2 Directors

>2 years: 2 Directors

>3 years: 2 Directors

>8 years: 1 Director

>10 years: 1 Director

Male: 6 54%

Female: 5 45%

I I

Corporate governance

47Ceres Annual Report 2023

Executive Committee

Tony Cochrane

Chief Commercial Officer

Deborah Grimason

General Counsel and Company Secretary

Mark Garrett

Chief Operating Officer

Caroline Hargrove

Chief Technology Officer

Tony joined Ceres in August 2015.

Previously, he was at Ballard Power

Systems for 17 years’, where he held

leadership positions in manufacturing,

product engineering, technology

strategy and strategic marketing. Most

recently Tony was Commercial Director

for Dantherm Power A/S and Director

of Product Line Management at Ballard,

where he built the stationary power

business globally. Tony is a registered

Professional Engineer and a Certified

Professional Accountant. He holds a

BSCE in Mechanical Engineering from

Queen’s University, Canada, and an MBA

from Cornell University in the US.

Deborah joined Ceres in January 2022

and brings a wealth of experience

gained across a wide range of industries

encompassing management of all

legal affairs, corporate governance

and compliance. Deborah spent the

past eight years operating as General

Counsel and Company Secretary at

Travis Perkins plc and more recently at

V.Group. Prior to these roles, she held

senior legal and company secretarial

positions at Lafarge, The BOC Group,

Nokia and Royal Mail.

Mark joined Ceres in August 2020.

Prior to this he was at Ricardo plc for

22 years’, holding a variety of leadership

positions including Chief Operating and

Chief Strategy Officer roles. Mark has

considerable experience in bringing

new products to market, operational

performance and IP-based innovation

in the transport and energy sectors.

Mark is Non-Executive Chair of SBD

Automotive Limited, an automotive

sector consultancy, and is a Fellow of

the Institution of Mechanical Engineers

and the Royal Academy of Engineering.

Caroline joined Ceres in 2021 as

Chief Technology Officer following

three years as a Non-Executive

Director of the Company. She was

previously CTO of Babylon Health,

and a founding member of McLaren

Applied Technologies which was set

up to exploit McLaren technology and

expertise in new markets. She worked

in a range of sectors from motorsport

to health, elite sports, manufacturing

and energy. She started her career as

a lecturer in Engineering at Cambridge,

followed by various roles in McLaren F1,

mainly focused on the development of

simulations and the first F1 simulator.

Caroline is also a Fellow of the Royal

Academy of Engineering, was Visiting

Professor at Oxford from 2015 to 2018

and holds a PhD in Applied Mechanics.

In 2020, she received a CBE for

services to engineering.

Mark Selby

Chief Growth Officer

Michelle Traynor

Chief People Officer

Mark joined the Company in January

2006 and has played a pivotal role in

establishing the Company as a global

technology leader in the fuel cell and

electrolysis industry. Mark previously

worked as the Company’s Chief

Technology Officer and Chief Innovation

Officer and is now Chief Growth Officer.

As Chief Growth Officer, Mark focuses

his efforts on driving business growth by

identifying new market opportunities,

developing strategic partnerships, and

driving the activity required to realise

them. Mark has degrees in Electronics,

Dynamics and Control Systems awarded

by the University of Leeds. He is a

Chartered Engineer and Fellow of the

Royal Academy of Engineering.

Michelle joined Ceres in 2019 and is

responsible for all aspects of the people

strategy to support the ongoing growth

of the business. With over 25 years’

experience gained across technology,

manufacturing and professional services,

her skillset encompasses all aspects of

HR and expands beyond this into wider

business operations. Prior to Ceres, she

was Chief Operating Officer for ASB

Law, having initially joined as Head of

Human Resources and Development.

Michelle is a chartered member of the

CIPD and holds a master’s degree in

Personnel Management.

48 Ceres Annual Report 2023

Corporate governance report

A robust corporate governance framework

enables us to make decisions effectively

and adapt quickly when required.

The Board supports a solid foundation

of governance to ensure it, and the

business, can develop and respond to

the demands of day-to-day operation.”

Reporting Code

Until the Company’s move up to the Main Market of the

London Stock Exchange (the “Main Market”), which was

effective on 29 June 2023, it was listed on the Alternative

Investment Market (“AIM”) and had therefore applied the

Quoted Companies Alliance Corporate Governance Code

and not the Corporate Governance Code 2018 (the “Code”).

However, it had been preparing to ensure the application of the

principles and provisions of the Code in readiness for the move

up to the Main Market. As such, and since 29 June 2023, the

Company has fully complied with the Code (more information

can be found on page 51).

The Company is also preparing to meet the requirements of the

new Corporate Governance Code 2024 which will apply to

accounting periods beginning on or after 1 January 2025, with the

exception of Provision 29 which is applicable for accounting periods

beginning on or after 1 January 2026. The new requirements will be

reviewed and appropriate steps taken to ensure compliance.

The Company is also subject to the Listing Rules, the Disclosure

Guidance and Transparency Rules, the UK City Code on

Takeovers and Mergers and the Companies Act 2006.

The Board of Directors

The Board of Directors (the “Board” or “Directors”) sets the

purpose, vision and strategy for the Company and ensures

that the culture, key to the Company’s longevity and success,

is aligned. It approves the business plan and budget, monitors

performance and ensures that the necessary resources

are in place to support the achievement of the Company’s

strategic objectives. Ensuring the long-term sustainability of

the Company and creating value for shareholders and other

stakeholders is critical to its role.

During the year the Board undertook its annual strategic review

in conjunction with the Executive Committee. More details on

the Company’s strategy can be found in the Strategic Report

on pages 1 to 42.

The Board ensures that there is a robust system of internal

controls and a risk management framework within which the

Company can operate safely and effectively, enabling it to take

advantage of opportunities and to identify and mitigate risks.

More information on the risk management framework can be

found on pages 36 to 39 and on internal controls in the Audit

Committee Report on pages 55 to 58.

Succession planning for key management and Board roles is

imperative to ensure that the balance of skills and experience

is maintained and that the Company has a robust and diverse

pipeline of talent to safeguard its future. More information can

be found in the Remuneration & Nomination Committee Report

on pages 59 to 62.

The Non-Executive Directors perform a critical role, holding

management to account and providing strategic guidance and

constructive challenge. More details on all the Directors, along

with the key skills and knowledge they bring to their roles, are

set out on pages 45 to 47.

Division of responsibilities

The roles and responsibilities of the Chair, Chief Executive

Officer, Senior Independent Director and Company

Secretary are set out on the Company’s website at:

www.ceres.tech/about-us/corporate-governance/

The Chair leads the Board and is responsible for its

effectiveness in directing the Company. The Chair is supported

by the Company Secretary to ensure that the Board has all the

necessary information and resources it needs, in the format it

requires and in a timely manner to operate efficiently and make

well informed decisions. A forward plan for the current and

following year ensures that the Board and its Committees are

covering critical topics in a timely manner.

The Senior Independent Director (“SID”) provides a sounding board

to the Chair as well as the other Non-Executive Directors and acts

as an intermediary between them and shareholders if required.

The Chair, Chief Executive Officer and Company Secretary

meet regularly outside of the formal meeting schedule to

plan meeting agendas, discuss strategy, performance and

current issues. These informal meetings allow transparency and

openness which encourages constructive and objective critical

debate in meetings. The Chair also meets with members of the

Executive Committee throughout the year.

The Board operates under its schedule of Matters Reserved to

the Board which ensures that significant decisions are always

taken at the right level and with the appropriate amount of

scrutiny and challenge. Underneath this schedule sits the

Delegation of Authority Policy which further sets out the

approval levels for the day-to-day operation of the business.

Both documents are kept under review to ensure that they

remain current and appropriate and are updated as required.

The schedule of Matters Reserved to the Board is available

to view on our website at:

www.ceres.tech/about-us/corporate-governance/

In order to discharge its responsibilities effectively and in a

timely manner the Board discharges certain responsibilities

through Committees of the Board which comprise the Audit

Committee; the Remuneration & Nomination Committee;

the ESG Committee; and the Disclosure Committee. More

information on these Committees can be found in their specific

reports and in this Corporate Governance Report.

The framework of governance within which the Board and

Executive Committee operate is set out on page 53 of this report.

Terms of Reference for all the Committees of the Board can

be found on our website at:

www.ceres.tech/about-us/corporate-governance

Disclosure Committee

The assessment of the existence of inside information and

determining whether disclosure to the market is required

is in the first instance a PLC Board matter. However, if the

discussion of such a matter by the full Board would be

inappropriate due to a conflict of interest, or on occasions

where the Board cannot be convened sufficiently rapidly, the

Disclosure Committee assumes this responsibility. In any event

it meets at least annually to ensure that the procedures and

controls in place relating to the identification and management

of inside information are sufficient.

Membership of the Disclosure Committee comprises the Chief

Executive Officer, Chief Financial Officer, General Counsel and

Company Secretary, and Chair of the Board. The Committee

met three times during 2023.

The Terms of Reference for the Disclosure Committee can be

found at:

www.ceres.tech/about-us/corporate-governance

Corporate governance

49Ceres Annual Report 2023

Meetings

The Board met nine times in 2023 (including for an off-site

strategy meeting). The attendance of each Director is set

out in the chart below. Meetings are held both in person and

virtually and any Director unable to attend is invited to submit

their views and comments on the papers circulated to the

Chair of the Board (or the Committee Chair) who ensures

these are reflected in the Board (or Committee) discussions

and decision making.

In-person meetings are held at various locations throughout the

year to enable Directors to use their time efficiently and include

meetings at the Company’s offices in Horsham which enables

the Board to interact and engage with colleagues more easily.

Board meeting agendas are carefully constructed to ensure

that there is sufficient time for considered debate and

challenge and that appropriate time is spent on key matters

such as strategy and performance. The Board receives reports

at each meeting from the Chief Executive and other Executive

Committee members on specific areas of operation and

performance which capture the activities of the Executive

Committee and the Steering Committees (the governance

framework is illustrated on page 53). More information about

the activities of the Board during the year can be found on

page 54 of this report and also in the Stakeholder Engagement

section on page 28.

After every Board meeting has concluded, the Chair meets

with the Non-Executive Directors to discuss the operation of

the Board and the performance of the Executive Directors and

senior management. The Chief Executive Officer joins these

meetings at their conclusion to receive feedback.

Attendance table

Member

Board/Committee

Trine

Borum

Bojsen

Karen

Bomba

Caroline

Brown

Tudor

Brown

Phil

Caldwell

Steve

Callaghan

Warren

Finegold

Uwe

Glock

Qinggui

Hao

Aidan

Hughes

Julia

King

Eric

Lakin

Nannan

Sun

PLC Board

Restricted PLC Board

— — —

Audit Committee

— — — — — — — — —

Remuneration &

Nomination Committee

— — — — — — — —

ESG Committee

— — — — — — — — —

1. Steve Callaghan stepped down from the Board and Committees with effect from the close of the Annual General Meeting on 18 May 2023.

2. Karen Bomba joined the Board and Remuneration & Nomination Committee with effect from 1 June 2023.

3. Caroline Brown joined the Board and Audit Committee with effect from 1 June 2023.

4. Qinggui Hao stepped down from the Board with effect from 27 September 2023.

5. Nannan Sun joined the Board with effect from 27 September 2023.

Board performance evaluation

As in the previous year, the Board performance evaluation for

2023 was an internally facilitated process, led by the Company

Secretary, with the next externally facilitated evaluation due

to be undertaken in 2024. Questionnaires were designed to

capture and build on the feedback from the previous year, to

test whether outcomes from actions taken had been sufficient,

and to highlight areas for further improvement. Committee

specific evaluations were also issued for 2023, considered

particularly important to ensure that the new Committee

structure implemented at the end of 2022 had resulted in the

desired increase in efficacy.

Topic areas were consistent with the previous evaluation and

included questions on the effectiveness of members of the

Board and Committees. Responses were collated and fed back

to each Committee and the Board in an anonymised format

together with a final update on the completed agreed actions

which had come out of the 2022 evaluation. The Board had

previously reviewed the progress against actions agreed from

the 2022 evaluation at the half year to ensure it remained

focussed on improvement.

The outcome of the 2023 evaluation demonstrated a desire to

build on training opportunities and briefings provided during the

year and a continuous review of the scheduling and efficient

use of time of the Board and Committees during the year.

The Board is cognisant of the need to ensure not only that

Board and Committee members’ time is used effectively, but

also to ensure that the Executive Directors are able to direct

and guide the business whilst also providing useful and timely

information to the Board.

There was general agreement that the strengthening of the

Board with the additional appointments during the year had

already seen increased diversity of thought and discussion at

meetings and this was expected to grow as the Board matured.

A set of actions was agreed by the Board to address any areas

where improvements had been identified and these would be

monitored by the Board throughout 2024.

The Senior Independent Director met with each of the

Non-Executive Directors and the two Executive Directors

individually without the Chair present in the latter part of

the year to assess and evaluate the Chair’s performance.

(The nominated Director for Weichai was not included in this

process since Nannan Sun was new to the role.) Meetings

covered a range of topics including how Board meetings are

run, engagement with investors and other stakeholders, and

engagement with the Executive team. The SID briefed the

Chair on the outcome of the evaluation and some of the

points raised were discussed by the Chair at the meeting

of the Non-Executive Directors in December.

Corporate governance report continued

50 Ceres Annual Report 2023

Board performance evaluation continued

The evaluation of the Chair concluded that meetings

were effectively run by a well-prepared Chair. The Chair’s

non-adversarial manner and ability to deal effectively with

conflicting views were highlighted as was the inclusive and

respectful atmosphere at meetings, with all members feeling

free to express their views and confirming that they were

invited to do so. The very mature state of the governance

was also noted.

In addition to the performance evaluation questionnaires,

Board members were also asked to complete a Board skills

assessment. This process was designed to highlight the current

strengths and weaknesses in terms of key business areas which

could then be addressed through training opportunities and

considered when ensuring that the composition of the Board

and its skills were appropriate.

The outcome of the skills assessment was fed back to the

Remuneration & Nomination Committee and it was agreed that

the breadth of relevant skills across the Board was appropriate

for the business.

Stakeholder engagement

The Board is accountable to the Company’s shareholders and

seeks ways to engage with them to fully understand their

views. Regular communication through the various channels

of the Regulatory News Service, media, face-to-face meetings,

investor roadshows and conferences, press interviews and the

Annual General Meeting ensures that shareholders are kept

informed of the progress of the Company. The Company’s

website is kept up to date with all announcements and

Annual Reports.

Trine Borum Bojsen is the Board’s designated Employee

Engagement Director and throughout the year has met

with colleagues across the business in dedicated employee

engagement sessions at both the Horsham and Redhill sites

and at Connect meetings (the employee forum). In addition

a “meet the Board” session was held for employees at the

Horsham site in March which allowed the Board to meet people

in a more informal setting and answer questions. The ESG

Committee and the Board received the results of the annual

employee engagement survey which ensured they were cognisant

of the issues which really mattered to employees at Ceres.

The Company engages with all its stakeholders in many

different ways and more information on how it has done so

during 2023, along with how Board decisions have taken into

account stakeholder views, can be found in the Stakeholder

Engagement (S172 Statement) section on page 28 of the

Strategic Report.

The Board welcomes shareholder attendance and participation

at its Annual General Meeting in 2024 and all Directors and

Committee Chairs will be available to answer questions.

Culture and values

Maintaining a culture rooted in the values of Ceres remains

a priority for the Board and it ensures that these values

are at the heart of business strategy and decision making.

(The Company’s values are set out on page 2.) The Executive

Committee is responsible for ensuring these values are

demonstrated to the employees on a day-to-day basis and the

implementation of policies and procedures, including a refresh

of the Company’s Code of Conduct & Business Ethics during

2023, helps to embed the desired attitudes and behaviours

throughout the business.

Compliance with the UK Corporate Governance Code 2018

The Company has applied the principles of the Financial Reporting Council’s (“FRC”) UK Corporate Governance Code 2018

and complied with the provisions since 29 June 2023 to 31 December 2023. The full text of the UK Corporate Governance

Code 2018 can be found on the FRC’s website at www.frc.org.uk. The following table sets out the principles of UK Corporate

Governance Code 2018 and signposts the location of supporting information within this report, and on our Company website

at https://www.ceres.tech/about-us/corporate-governance/

Board effectiveness

Pages 44–54

Purpose, values, strategy and culture

Pages 1–42 and 44–54

Board decision making

Pages 28–29 and 44–54

Engagement with stakeholders

Pages 28–29 and 44–54

Oversight of workplace policies and practices

Page 44–54; 55–58; 86–89; and Company website

Role of the Chair

Pages 44–54 and Company website

Independence and division of responsibilities

Pages 44–54 and Company website

External commitments and conflicts of interest

Pages 44–54

Board resources

Pages 44–54

Appointments to the Board and succession planning

Pages 44–54 and 59–62

Board composition and length of tenure

Pages 44–54 and 59–62

Board evaluation

Pages 44–54; 55–58; 59–62; and 84–85

Financial reporting, external and internal audit –

independence and effectiveness

Pages 98–135 and 55–58

Fair, balanced and understandable assessment

Pages 55–58 and 86–89

Risk management and internal controls

Pages 36–39 and 55–58

Remuneration policies and practices;

executive remuneration

Pages 63–83

Remuneration Policy

Pages 63–83

Independent judgement and discretion

Pages 59–62 and 63–83

Corporate governance

51Ceres Annual Report 2023

Culture and values continued

The Board undertakes a deep dive into an operational area

at most of its meetings and the HR deep dive undertaken

during the year further enabled the Board to obtain a clear

understanding of the ways in which culture is monitored and

maintained and to ensure that engagement and motivation of

employees is effective. One of the key mechanisms is through

the annual engagement survey and both the Board and the

ESG Committee review the results of this survey. Increased

engagement and positive feedback demonstrated a healthy

culture and the Board is keen to ensure this is maintained and

strengthened. Ensuring the culture of the business aligns with

the Company’s strategy is imperative to the achievement of

the strategic objectives and through discussions the Board

regularly seeks assurance from the Executive Committee that

the Company culture is nurtured sufficiently.

Trine Borum Bojsen, as Employee Engagement Director, has

further enabled a triangulation of feedback to the Board that

the business maintains a healthy culture through face-to-face

meetings with employees across the business and a collation

and reporting back of findings to the ESG Committee and

the Board. This, together with the input from the Chair of the

employee group Connect at ESG Committee meetings, gave

the Board assurance that the values of the Company were

being demonstrated and embodied across the Company.

Speaking up

The Company’s Speak Up Policy enables employees and third

parties (which includes consultants, contractors, and casual and

agency workers) to report any concerns that they do not feel

they can raise with their Line Manager to a restricted access

email address. Concerns can be dealt with anonymously if

the reporter wishes, and any parties concerned in the report

are removed from the investigation process. Concerns are

investigated thoroughly and the Audit Committee receives an

annual report on key themes, outcomes and actions identified.

Board independence (excluding the Chair)

Independent: 60%

Non-independent: 40%

The Board reviews interests on an ongoing basis but also

formally reviews annually the Interests Register to ensure its

assessments of independence remain current.

The Board has concluded that all the Non-Executive Directors

(including the Chair) are independent in compliance with the

Code with the exception of Uwe Glock and Nannan Sun (until

27 September 2023, Qinggui Hao) who, as nominee Directors

of Bosch and Weichai Power respectively, represent major

shareholders of the Company. Therefore, in compliance with

Code requirements, at least half the Board (not counting the

Chair) are considered independent.

In compliance with the Code, Aidan Hughes will step down from

the Board at the conclusion of the Annual General Meeting in

2024, having served as a Director since 2015.

Steve Callaghan stepped down from the Board at the Company’s

Annual General Meeting on 18 May 2023. Despite his tenure

exceeding the nine-year threshold, and as reported in the 2022

Annual Report, Steve was deemed independent until he stepped

down due to his independence of character and objectivity.

The Non-Executive Directors do not receive any remuneration

other than their fees and reimbursement for expenses incurred.

They do not participate in any share option, bonus or pension

arrangement. More details on the Non-Executive Directors’ fees

are set out in the Directors’ Remuneration Report.

Corporate governance report continued

52 Ceres Annual Report 2023

Accountability

Reporting

Governance framework

Shareholders and other stakeholders

The owners of the Company and those with an interest in its long-term sustainable success.

PLC Board

Restricted PLC Board

Promotes the long-term sustainable success of the Company

Sets purpose, values, culture and strategy

Oversees and monitors delivery of the strategy through systems of internal control and risk management

Decisions take into account Director responsibilities under S172 of the Companies Act 2006

Audit

Committee

Oversees and

receives reports on

financial reporting,

risk management,

internal controls

and the activities of

external and internal

audit functions

Remuneration

& Nomination

Committee

Sets Remuneration

Policy for Chair,

Executive Directors

and Senior

Management; reviews

composition and skills

and recommends

appointments to

the Board

ESG

Committee

Oversight and

monitoring of

environmental and

social strategies

and actions of the

Company and related

governance activities

and publications

Disclosure

Committee

Assesses the

existence of inside

information and

whether disclosure to

the market is required

(in the absence of

the PLC Board); and

ensures procedures

and controls in place

Steering Committees

Commercial Steering Committee

Oversees and approves commercial project routemap, aligned with the strategy

Technology Steering Committee

Oversees and approves technology project routemap aligned with the strategy

Product Steering Committee

Oversees and approves new product introduction programmes aligned with the strategy

Intellectual Property (“IP”) Operational Committee

Implementation and execution of IP strategy, policy, protocols and training

More information on the members of the Committees of the Board can be found on pages 45 to 47

More information on the activities of the Board can be found on page 54

More information on how the Board has considered and engaged with its stakeholders can be found

in the S172 Statement on pages 28 to 29

Operational ESG Committee

Environmental and social plans and actions and

related governance activity

Reporting and publications; policies and

procedures; and ESG risk management

Executive Committee

Weekly meetings – operational matters

Risk review meetings

Quarterly business reviews

Assessment and monitoring of performance and

progress; and identifies necessary adjustments

Strategy meetings

Strategy review and proposal to PLC Board

More information on the members of the Executive

Committee can be found on page 48

Corporate governance

53Ceres Annual Report 2023

• Development of strategy sessions at Board meetings

• Performed annual strategic review

• Off-site strategy meeting – refreshed strategy

Strategy

• Operational reports at each Board meeting

• CEO report at each Board meeting

• Deep dives undertaken during the year: finance and investor relations; operations; commercial;

technology; intellectual property; and Human Resources

Performance

• CFO report at each Board meeting

• Budget review

• Business plan review

• Approved final and interim financial results and Annual Report and Accounts

Finance

• Reviewed and approved risk register and principal risks

• Set risk appetite

• Oversaw appointment of Grant Thornton UK LLP as outsourced internal audit and risk provider

Risk

Management

• Approved Sustainability Report

• Received reports from the Employee Engagement Director

• Reviewed shareholder engagement plan

• Reports from ESG Committee

ESG

• Approved move from Alternative Investment Market to the Main Market of the London Stock Exchange

• Committee reports after each Committee meeting

• Reviewed progress against Board performance evaluation actions and results and proposed actions

• Approved insurance renewal; refreshed policies, including the revised Code of Conduct and Business

Ethics, approved Notice of Annual General Meeting

• Reviewed Interests Register; and Matters Reserved to the Board

Governance

Board activities 2023

Conflicts of interest

The Company operates a Conflicts of Interest Policy and

in addition, specifically for Board members, an Additional

External Appointments Policy. The Conflicts of Interest Policy

is provided to all employees on induction with training provided

which must be refreshed annually.

Under the Additional External Appointments Policy Directors

are required to seek approval from the Board prior to accepting

any external appointments. The Board holds an Interests

declarations of potential conflicts of interest with any item on a

meeting agenda are stated at the start of each meeting of the

Board and its Committees. Where such a conflict is deemed

to arise, the Director concerned is not party to the discussions

and decision making.

Whilst the majority of business is conducted by the entire

Board, an additional Restricted Board meeting is held without

the non-independent Non-Executive Directors present,

covering items for which they would be conflicted.

Internal controls and risk management

Ensuring the Company has a sound and robust system of

internal controls and a risk management framework that

enables the effective management of risk is a key responsibility

of the Board. The Board has delegated responsibility of the

oversight of internal controls to the Audit Committee and more

information on the work of the Committee can be found on

pages 55 to 58.

During the year the Company appointed Grant Thornton UK

LLP as an outsourced provider of internal audit and risk. Grant

Thornton UK LLP has no other connection to any of the

Directors of the Company. The Board reviews the risk register

regularly and this year undertook a process to identify and set

its risk appetite for the business. More information on the risk

management framework can be found on pages 36 to 39.

Board support

All Directors have access to the Company Secretary for

support and advice on governance matters. They have the

right to seek independent legal or other professional advice

at the Company’s expense in the furtherance of their duties.

Newly appointed Directors are provided with a tailored

induction which includes a briefing on their responsibilities

and duties as a Director by the Company Secretary and

role specific meetings and introductions to the business.

Formal and ad hoc training, conferences and seminar

opportunities are offered to all Directors and specific briefing

sessions were undertaken during the year on areas identified

which included remuneration and ESG. Directors are briefed

on current developments, best practice and governance and

regulatory issues throughout the year.

Corporate governance report continued

54 Ceres Annual Report 2023

Audit Committee report

Committee membership

Aidan Hughes (Committee Chair)

Caroline Brown

Tudor Brown

Introduction

I am pleased to present the Audit Committee (the “Committee”)

Report for the year ended 31 December 2023.

In the year that Ceres achieved a major milestone in moving

up to the Main Market of the London Stock Exchange, the

Audit Committee has ensured that the internal systems,

controls and processes remain fit for purpose and suitably

robust. In the latter part of the year, the new internal audit

team (more about this later in this report) has been invaluable

and the Committee looks forward to the development of the

internal audit framework which will support and underpin the

systems of internal control and risk management.

Committee composition

The Committee comprises three Independent Non-Executive

Directors. Until May 2023, when he stood down from the

Board, Steve Callaghan was a member and I thank him for his

commitment and effort until his departure. Caroline Brown

became a member of the Committee on her appointment to

the Company in June 2023 and we welcome her extensive

audit, risk and financial experience, crucial to the continuity

of the Committee particularly as I will step down from the

Board at the 2024 Annual General Meeting in compliance

with tenure best practice. In December 2023, the Board also

appointed Karen Bomba to the Committee with effect from

2024 and we look forward to benefitting from her knowledge

and experience.

The Committee as a whole has recent and relevant financial

experience and also specifically of the fuel cell and engineering

sectors. More details on the skills and experience of the

Committee members can be found on pages 45 to 47.

The Executive Directors, finance team members, and internal

and external audit teams all attend meetings as required.

Role of the Committee

The Committee’s role is to support the Board in the oversight

of financial and internal controls, financial reporting, and risk

management. Its main duties include:

• monitoring the integrity of the financial statements of the

Company including significant financial reporting judgements;

• reviewing the Company’s systems of internal controls

(including financial, operational, compliance and risk management);

• reviewing the arrangements for speaking up in confidence;

procedures for detecting fraud and bribery; and any actions

to be taken on non-compliance;

• reviewing the internal audit function and effectiveness and

approving the internal audit plan;

• reviewing and monitoring the effectiveness of the

external auditor; satisfying itself of the independence and

objectiveness; and approving the terms of engagement and

remuneration; and

• approving and monitoring the operation of the Company’s

Non-Audit Fees Policy.

55Ceres Annual Report 2023

Corporate governance

Internal audit and risk management

Until early 2023, the internal audit function was undertaken by

a Company employee, who subsequently left the business. The

Committee, alongside the Chief Financial Officer, consequently

undertook to review the most effective mechanism for internal

audit, particularly in the context of the intended move up to

the Main Market of the London Stock Exchange which would

bring additional scrutiny. It was concluded that an outsourced

provider of an internal audit function was the best solution for

the near to medium term as this would provide a breadth of

expertise and knowledge which would prove invaluable to the

business as it matures. As a result of a tender process Grant

Thornton LLP was selected as the Company’s internal audit

provider and commenced in the second half of the year, also

reviewing the risk management framework and facilitating

the development and conclusion for 2023 of the Board’s risk

appetite. Grant Thornton LLP has no other connection to the

Company or any of its individual Directors. More information

on the risk management framework is detailed on pages 36

to 39.

The internal audit plan for 2023 had been approved by the

Committee at the end of 2022. The refreshed plan for 2024

was to be reviewed for approval by the Committee at its

meeting in early 2024.

Internal controls

The Committee monitors financial and operational internal

controls, reviewing and approving policies and strategies during

the year including the Tax Policy and strategy; the Treasury

Policy; non-audit fees; the annual health & safety report; the

Anti-Bribery & Corruption Policy; and an annual report on

Speak Up. The Committee also monitored the follow-up and

completion of actions arising from the Financial Position and

Prospects Procedures process undertaken for the move up

to the Main Market of the London Stock Exchange.

The Committee aims to ensure the integrity of the financial

statements made by the Company and to safeguard the assets

of the Company. The Directors reviewed the effectiveness

of the system of material internal financial, operational and

compliance controls during 2023, receiving assurance reports

throughout the year and at the year end. No material or

significant control deficiencies were identified and mitigation

actions for any other potential issues are continuing.

Significant financial reporting matters

A number of prior period corrections were identified during

the audit, the main ones relating to the historical timing and

treatment of revenue recognition and foreign exchange

impact for long term contracts, the dilapidation provision

and capitalisation of relevant costs.

The main impact is a reduction of revenue in 2021 and 2022,

with offsetting increases of revenue in 2023 and 2024. Please

see note 1 of the Financial Statements for further detail.

During the year, the Committee received and considered

reports from the Chief Financial Officer in respect of the

Group’s material accounting judgements and estimates, and

subsequently approved the disclosure set out in note 1 to the

Group’s financial statements.

The Committee considered the following significant financial

reporting matters, estimates and judgements, amongst others,

when approving the Group financial statements for the year

ended 31 December 2023:

Recommended for

approval final and interim

financial results and

related statements

Approved external

audit Fees

Reviewed risk

& uncertainties &

risk framework

Recommended for

approval Annual Report

and Accounts 2022

Monitored the operation

of the Non-Audit

Fees Policy and

received reports

Reviewed and

monitored operation

of the Treasury Policy

Reviewed Terms of Reference and

Committee performance

Recommended for

approval Tax Policy

and strategy

Reviewed annual

health & safety and

Speak Up reports

Reviewed external

audit plans

Recommended for

approval Anti-Bribery

& Corruption Policy

Reviewed Going Concern

and Viability Statements

Recommended

the appointment of

outsourced internal

audit provider

Key activities 2023

The Committee met four times during the year ended 31 December 2023 and attendance by members is set out on page 50

of the Corporate Governance Report.

The key activities undertaken by the Committee are set out in the following chart:

Audit Committee report continued

56 Ceres Annual Report 2023

Revenue recognition in respect of existing

customer contracts

During the year, the Group recognised revenue of £22.3

million (2022 restated: £19.8 million) relating to commercial and

development contracts with customers. Further details are set

out in note 2 to the Group financial statements.

The Group’s material contracts generally involve the provision

of a number of services typically including engineering services,

access to or sale of technology hardware and licences. Significant

judgement is required at contract inception to allocate revenue

and value the different performance obligations. Significant

financial reporting matters were identified and documented

earlier in this report.

In addition, during the year, the Committee has reviewed

management’s ongoing judgements applied to recognising

revenue for the significant Doosan and Bosch collaboration

agreements. This included a review of estimates used for

percentage completion based on forecast labour hours to

complete. Subsequently, and as referred to earlier in this report,

adjustments have been identified and documented in note 1 to

the financial statements.

Intangible assets (capitalised development costs)

The Group began capitalising development costs as internally

generated assets from 2019 in accordance with IAS 38. Since

then the Group has reviewed and assessed all customer and

internal development programme expenditure to ascertain

whether it is appropriate to capitalise development costs

under IAS 38.

The assessment process requires significant judgement to be

applied by management in respect of identifying whether a

particular project has passed the relevant milestone gate and

commercial net present value criteria to begin capitalisation,

confirming when development activities are completed

and therefore ceasing capitalisation of costs, in assessing

appropriate periods of amortisation and considering the

need for any impairments.

The Committee reviewed and agreed the Group’s accounting

policy with respect to the capitalisation of development costs.

The Committee reviewed management reports summarising

the treatment of capitalised costs during the year, together with

reviewing reporting from the external auditor on the subject,

and is satisfied that the accounting treatment and disclosure of

capitalised development costs are appropriate. In addition, the

Committee considered management’s approach of continuing

to expense SOEC-related costs and agreed with its assessment

that the relevant threshold to capitalise costs has not yet

been met due to the uncertainty around future commercial

uptake. As at 31 December 2023, Ceres had signed no

SOEC licencees.

Further details setting out the accounting policies relating to

capitalised development costs, and the amounts capitalised

during the period, are provided in note 12 to the Group

financial statements.

Provisions relating to warranty and dilapidations

As at 31 December 2023, the Group held provisions

of £2.3 million (2022 restated: £2.1 million) for property

dilapidations and £0.6 million (2022: £0.9 million) for warranties.

The Committee reviewed the approach for assessing these

provisions with management, noting that professional advisers

updated the assessment of the dilapidations provision for

2023. Significant financial reporting matters were identified and

documented earlier in this report.

The warranty provision consists of constructive obligations and

the Committee reviewed management’s assessment of the

provision, which was based on past performance, customer

expectations and a weighting of outcomes.

Further details around provisions are set out in note 22 to the

Group financial statements.

Valuation of inventory

As at 31 December 2023, the Group had £2.8 million

(2022: £5.7 million) of inventory, relating to raw materials,

work in progress and finished goods. During the fourth quarter

of 2023 the Group determined inventory relating to the next

generation of Ceres’ solid oxide technology had met the

criteria for recognition as set out in IAS 2 Inventories and could

therefore be recognised on the Statement of Financial Position.

The valuation of inventory requires certain judgements and

estimates to be made in respect of net realisable value and

classification. The Committee reviewed these judgements

and estimates and is satisfied that the valuation of inventory

as at 31 December 2023 is appropriate. Further details

around inventory are set out in note 14 to the Group

financial statements.

Annual Report and Accounts for the year ended

31 December 2023

Since the end of the financial year, the Committee has

reviewed the contents of the Annual Report and Accounts

(which includes TCFD) considering whether the information

provided enables an assessment of the Group’s position and

performance, business model and strategy. The Committee

(and subsequently the Board), assessed the report with the

following factors in mind:

• Fair – No omission of important or sensitive elements

• Balanced – Consistent throughout; balance of statutory

and adjusted measures

• Understandable – well set out; clear and cohesive

The statement made by the Board is set out on page 89 of the

Directors’ Report.

External audit

BDO LLP was reappointed as the Company’s external auditor at

the Annual General Meeting of the Company held in May 2023

to hold office until the 2024 Annual General Meeting. BDO

LLP was first appointed at the Company’s Annual General

Meeting on 4 December 2019 and the Company became a

Public Interest Entity (“PIE”) on 29 June 2023 on its move

up to the Main Market of the London Stock Exchange.

Therefore, in compliance with the Competition and Markets

Authority’s Statutory Audit Service for Large Companies

Market Investigation (Mandatory Use of Competitive Tender

Processes and Audit Committee Responsibilities) Order 2014

(the “CMA Order”), and the Companies Act 2006, the next

mandatory tender process for the external auditor services will

be undertaken ahead of the audit year ending 2033 (ten years

from the first appointment) and the audit partner rotation will

be due in 2028.

The Company does not currently plan to tender for the

provision of external audit services earlier as it believes

that the continuity of provider and its understanding of the

business are beneficial. Annual reviews of the effectiveness and

independence are and will continue to be undertaken to ensure

that the auditor continues to be independent and appropriate.

The Company is in full compliance with the CMA Order which

details the mandatory use of competitive tender processes

for the provision of statutory audit services.

Corporate governance

57Ceres Annual Report 2023

External audit continued

Prior to every Committee meeting the Chair of the Committee

meets with the external audit partner to discuss any issues

arising. The Committee meets with the external auditor

regularly without management present and specifically at

the time of the interim and full year results to ensure that its

independence is maintained and to enable the Committee

to discuss any matters directly with the auditor.

At the end of the year the Committee undertook a thorough

review of the effectiveness and objectivity of BDO LLP in

compliance with the requirements of the Financial Reporting

Council’s (“FRC”) Audit Minimum Standard. In discussion with

the external auditor at audit closing meetings, directly with the

Committee Chair and with the Committee as a whole, it was

determined that all potential risks to audit quality had been

suitably identified and addressed, that the controls used by the

auditor to address these potential risks were satisfactory and

that there were no concerning actions as a result of internal and

external inspections of the audit firm. The Committee received

assurance from the auditor on the actions taken at the firm as

a result of the FRC’s quality audit (the outcome of which the

Audit Committee reviewed).

The Committee discussed with the management team

how the audit had been conducted and confirmed that

interaction between the auditor and teams had been

appropriate and proportionate.

The Committee reviewed and agreed the management

letter and the work undertaken by the auditor both at the

year end and the interim results to ensure that it reflected an

understanding of the business and its strategy. It was informed

of any instances of challenge by the auditor and how these

were resolved with management to reach a satisfactory outcome.

The Committee ensures each time it receives the interim or

year-end plan from the auditor that the internal teams are

resourced appropriately to respond and also that the auditor’s

team has the appropriate knowledge and skills to assess the

business. It assesses whether the audit plan has been met and

discusses any areas for concern or improvement which may

be suggested by either the auditor or the Company.

Non-audit fees

The Committee monitored the implementation of the

Non-Audit Fees Policy which aligns with the FRC’s Revised

Ethical Standard published in December 2019.

The Committee previously approved BDO LLP to provide

reporting accountant services to the Company in relation

to the Group’s successful move to the Main Market.

The Committee considered the impact on the independence

of the external auditor and was satisfied that the appropriate

safeguards were in place to maintain its independence.

Further, the Committee was satisfied that the provision of

such a service was permitted under the Ethical Standard and

was one off in nature. The fees paid to the external auditors

include amounts relating to the review of the interim accounts

for the six months to 30 June 2023. The fees paid are set

out on page 109 of the notes to the financial statements.

Committee performance evaluation

In the latter part of the year the Committee undertook a

Committee performance evaluation designed to test the

effectiveness of the Committee throughout the year. The

evaluation took the form of an anonymous questionnaire to

members of the Committee. Collated results were received

at the December meeting and demonstrated that members

felt that the Committee had operated effectively throughout

the year and that whilst risk assessment in the period between

the internal audit manager’s departure and the incoming Grant

Thornton LLP had continued, it was expected that this would

evolve swiftly now that they were in post. The Committee

concluded that its members had the necessary skills and

experience to continue to perform effectively.

Aidan Hughes

Committee Chair

12 April 2024

Audit Committee report continued

58 Ceres Annual Report 2023

Introduction

I am pleased to present the Remuneration & Nomination

Committee (the “Committee”) Report for the year ended

31 December 2023.

The first full year of the Committee operating as a combined

Remuneration & Nomination Committee has worked well.

Items for discussion relating to remuneration and nomination

are regularly linked and we have found this an efficient use

of our Committee members’ time.

The Committee has had a busy year with the conclusion of the

Non-Executive Director search, and a rigorous review of the

Company’s Remuneration Policy. Ensuring the Remuneration

Policy is aligned with our strategy and is appropriate for the

Company’s position in the market is crucial to effectively

attract, motivate and retain talent. In the latter part of 2023

we reached out to our top shareholders and the proxy voting

agencies to invite them to engage on our draft Remuneration

Policy to enable us to consider and, if appropriate, include

their feedback.

Committee composition

Membership of the Committee comprises four Non-Executive

Directors. Until he stepped down from the Board at the

Company’s Annual General Meeting on 18 May 2023, this

included Steve Callaghan and I would like to thank Steve for

his valuable input. On her appointment from 1 June 2023,

Karen Bomba joined the Committee and we welcome her

extensive experience and perspective.

The Chair of the Board is also a member of the Committee

in order to ensure nomination matters have the required

input and leadership. The Chair of the Board was considered

independent on appointment to the Committee and does not

chair the Committee at any time.

No Director is involved in any discussion or decision relating

to their own remuneration and the Chair is not involved in

any discussions relating to their succession.

Other Directors and individuals such as the Chief People Officer

and external advisers are invited to attend meetings as required.

Role of the Committee

The Committee has a dual role such that it covers both

the requirements of a Remuneration Committee and

also those of a Nomination Committee. The Committee

governs all aspects of the Chair, Executive Directors

and Executive Committee members’ remuneration and

reward arrangements and advises on employee benefit

structures for the Company. It is responsible for reviewing

the composition and structure of the Board and for

identifying and recommending candidates for Executive

and Non-Executive Director appointments. The Terms of

Reference for the Committee are available on our website at:

www.ceres.tech/about-us/corporate-governance

Remuneration & Nomination Committee report

Committee membership

Tudor Brown (Committee Chair)

Julia King

Warren Finegold

Karen Bomba

59Ceres Annual Report 2023

Corporate governance

Committee activities 2023

Reviewed and refreshed Remuneration Policy

Recommended renewal of the Chair

of the Board’s term of office

Approved 2022 bonus outcome

Recommended replacement SID

Approved Directors’ Remuneration Report 2022

Recommended two new Non-Executive Directors and

replacement nominee Non-Executive Director

Approved 2023 bonus targets

Reviewed share plans

Reviewed Non-Executive Director Independence/

Interests Register

Approved 2023 LTIP awards

Recommended approval of Gender Pay Report

Approved Sharesave grant 2023

Reviewed stakeholder engagement plans

Annual salary review

Reviewed Committee Terms of Reference and performance

Succession planning

The Committee met five times during the year ended

31 December 2023 and attendance is shown on the table

on page 50 of the Corporate Governance Report.

The chart above shows the key activities undertaken by

the Committee during the year and more information on

the remuneration aspects can be found in the Directors’

Remuneration Report and the Remuneration Policy on

pages 63 to 83.

Remuneration Nomination

As detailed in the 2022 Annual Report, the Non-Executive

Director search process we conducted specifically sought skills

pertinent to an Audit Committee member in order to replace

the outgoing member (Steve Callaghan) and more specifically

to plan for the succession of Aidan Hughes as Chair of the

Audit Committee. An additional Non-Executive was sought to

bring additional skills and experience to the Board as a whole

and to assist with an ever increasing workload for the Board.

The process undertaken for the recruitment and appointment

is set out on page 61.

Russell Reynolds Associates conducted the search process

which identified possible candidates based on criteria set by the

Board. (Whilst Russell Reynolds had been engaged in the past

for previous candidate searches, they had no other connection

to the Company or any of its individual Directors.) Once a

shortlist had been identified by the Committee, candidates met

with the Chair of the Board prior to a final selection of suitable

candidates who met with Board members prior to a final

recommendation for appointment being made.

Succession planning

The Committee reviewed succession plans during the year

for Board and Executive Committee roles to ensure that the

future of the business was safeguarded, and that sufficient

effort and attention was being paid to the leaders of the

future. Encouraging and developing a diverse pipeline of talent

is key to the long-term sustainability of the Company and is

inextricably linked with the attraction and retention of talent.

(More information on the Remuneration Policy can be found

on pages 63 to 83).

Remuneration advisers

As reported in 2022, the Committee engaged WTW as

its remuneration adviser in the latter part of 2022. WTW

has no other connection with the Company or any of its

individual Directors.

Nomination matters

Board composition

The Board comprises 11 Directors, six of whom are considered

independent (excluding the Chair). Steve Callaghan was our

Senior Independent Director until he stepped down from

the Board at the Company’s 2023 Annual General Meeting

whereupon Julia King was appointed to the position. Caroline

Brown and Karen Bomba’s appointments became effective on

1 June 2023 and they joined not only as Board members but

as members of the Audit Committee and this Remuneration

& Nomination Committee respectively. Commencing in

January 2024, in preparation for Aidan Hughes’ departure

in May 2024, Karen Bomba also becomes a member of the

Audit Committee.

Remuneration & Nomination Committee report continued

60 Ceres Annual Report 2023

Board sets desired criteria for skills and experience

Search firm engaged

Draft specifications produced and provided to Remuneration & Nomination Committee

Long list presented to Remuneration & Nomination Committee

Shortlisted candidates meet with Chair of the Board

Suitable candidates meet other identified members of the Board

Candidate selected based on merit and criteria and recommended

by the Remuneration & Nomination Committee to the Board

Board approval of appointment

Appointment confirmed and announced

Tailored induction process commences

The tenure of each Board member is set out in the chart on

page 47 and is monitored carefully to ensure suitable plans are

in place for the renewal and recruitment required to ensure the

continuity of the Board.

As mentioned in the Corporate Governance Report, this year

as part of the Board performance evaluation process Board

members were asked to complete a skills assessment to help

to identify any skills gaps or areas we could seek to strengthen

in the future. The outcome of this assessment was collated

and reported to the Committee in the latter part of the year

and can be found below. Work will continue into 2024 to

monitor and strengthen any areas where Board members

have requested further support.

Member

Experience

Karen

Bomba

Trine

Borum

Bojsen

Caroline

Brown

Tudor

Brown

Warren

Finegold

Uwe

Glock

Aidan

Hughes

Julia

King

Phil

Caldwell

Eric

Lakin

Nannan

Sun

Senior leadership

Industry

Global

Financial

Innovation and technology

Public company and corporate governance

Government relations and regulatory

Risk management

Environmental and sustainability

Executive compensation

Key: No experience Some experience Considerable experience

Corporate governance

61Ceres Annual Report 2023

Gender balance and ethnicity

The Board believes strongly that diversity of thought is crucial

to effective decision making and that diversity in all its forms is

beneficial in the composition of the Board. The gender balance

of the Board is set out on page 47 and whilst a nominal target

is not the Board’s motivation for recruitment, it is a welcome

outcome of suitable appointments to the Board. The current

gender balance meets the Financial Conduct Authority’s

(“FCA’s”) target of at least 40% women on boards.

Julia King was appointed as the Senior Independent Director

(“SID”) succeeding Steve Callaghan in May 2023. Julia’s

extensive experience was deemed to be invaluable in

approaching the role which requires an ability to balance views

and act as an intermediary both to other Directors and to

shareholders if required. This appointment further complies

with the FCA’s target for at least one of the senior roles on the

Board to be held by a woman (Chair, CEO, CFO or SID) which

was met on her appointment to the role on 18 May 2023.

The Company has a Diversity, Equality, Belonging and Inclusion

Policy which the Board reviewed and approved during the

year. The Board supports and demonstrates a culture of

inclusion and welcomes diversity throughout the business

recognising the benefits and strengths that come with different

backgrounds and perspectives.

In compliance with Listing Rule 9.8.6R the following tables set

out the disclosed gender balance and ethnicity of our Board

members and Executive Committee team as at the year

ended 31 December 2023. Data was collated via a restricted

questionnaire to each Director and Executive Committee

member with options consistent with those set out in the tables

below (including an option to decline in compliance with the

UK General Data Protection Regulation). An acknowledgement

that the data provided would be published in this report and

provided to the Parker Review was also included. The data

collated confirmed that the Board, as at 31 December 2023,

met the target set by the Parker Review of at least one

Director from a minority ethnic background.

Number of

Board members

Percentage of

the Board

Number of senior

positions on the Board

(CEO, CFO, SID and Chair)

Number in

Executive

Management*

Percentage

of Executive

Management

Women 5 45.5% 1 3 37.5%

Men 6 54.5% 3 5 62.5%

Other categories 0 0.0% 0 0 0.0%

Prefer not to say 0 0.0% 0 0 0.0%

Number of

Board members

Percentage of

the Board

Number of senior

positions on the Board

(CEO, CFO, SID and Chair)

Number in

Executive

Management

Percentage of

Executive

Management

Asian/Asian British 1 9.1% 0 0 0.0%

Black/African/Caribbean/Black British 0 0.0% 0 0 0.0%

Mixed/multiple ethnic groups 1 9.1% 0 0 0.0%

Other ethnic group, including Arab 0 0.0% 0 0 0.0%

White British or other White

(including minority White groups) 9 81.8% 4 8 100.0%

Not specified/prefer not to say 0 0.0% 0 0 0.0%

* Executive Management includes the CEO and CFO.

With reference to the Parker Review, the business will review

and consider ethnicity targets for its Senior Management team

during 2024 which it will aim to achieve by 2027.

Director induction and onboarding

Incoming Directors undertake a tailored induction programme

which includes briefings on their duties as a Director, the listed

company environment, and Company specific policies, and

procedures and Board pack software. A series of one-to-one

meetings with Board members and Executive Committee

members along with on-site visits and tours are undertaken

to ensure new Directors have a thorough understanding of the

business. Whilst inductions are designed to cover all necessary

aspects for a new Director, requests for additional meetings or

information are met wherever possible.

Director re-election

All Directors are subject to annual re-election at the Company’s

Annual General Meeting in compliance with the Corporate

Governance Code 2018 and the Company’s Articles of

Association. By the date of the 2024 Annual General Meeting

which will take place in May, Aidan Hughes, the Chair of the

Audit Committee, will have exceeded the nine-year best

practice term for a Non-Executive Director and consequently

will not stand for re-election. Aidan will step down from the

Board at the conclusion of the Annual General Meeting.

All other Directors will stand for re-election, with new Directors

Caroline Brown, Karen Bomba and Nannan Sun standing for

their first election. Details of the skills, experience and specific

strengths each Director brings to the Board are set out on

pages 45 to 47.

Committee performance evaluation

At the end of the year the Committee undertook an evaluation

which, amongst other aspects, was designed to test the

effectiveness of the amalgamation of the remuneration and

nomination elements. The Committee received the outcome

of the evaluation at its December meeting and it concluded

that the Committee considered that the new formation had

worked effectively during the year and that Committee

members had the appropriate skills and experience to fulfil

their duties for the Committee.

Tudor Brown

Committee Chair

12 April 2024

Remuneration & Nomination Committee report continued

62 Ceres Annual Report 2023

Statement by the Chair of the Remuneration

& Nomination Committee

Dear Shareholders,

As Chair of the Remuneration & Nomination Committee

(the “Committee”), I am pleased to present our 2023 Directors’

Remuneration Report on behalf of the Board.

The report is divided into the following sections:

Chair’s statement Pages 63 to 65

Remuneration at a glance Pages 66 to 67

Remuneration Policy Report Pages 68 to 74

Annual Report on Remuneration Pages 75 to 83

Please refer to pages 59 to 62 for details of the composition

and focus of the Committee during 2023.

Business context and Company performance

As covered elsewhere within the Annual Report, 2023

was a challenging but significant year for repositioning the

business for future success. Ceres continued to invest in the

development and demonstration of its electrolysis technology

whilst maintaining a focus on ensuring existing partners were

supported to continue progress towards start of production

and commercialisation of our fuel cell technology for power

generation. The financial result, whilst in line with last year,

fell short of target and this is reflected in the remuneration

outcomes for 2023. Following a thorough strategy review

Ceres set out its mission to accelerate entry into the

hydrogen market.

Notable achievements for 2023 were:

• revenues of £22.3 million (£19.8 million in 2022);

• gross margins of 61% (54% in 2022);

• Bosch received European funding of €160 million for

‘power units’ based on Ceres’ technology;

• successful demonstration of a 1MW-scale electrolyser;

• Doosan factory commissioning commencement;

• successful testing of new generation stack for

commercialisation, offering improvements in cost

and performance; and

• move to the premium (FTSE) market of the London

Stock Exchange.

Directors’ Remuneration Report

Tudor Brown (Committee Chair)

Remuneration & Nomination Committee

Corporate governance

63Ceres Annual Report 2023

Statement by the Chair of the Remuneration & Nomination Committee continued

Review of Remuneration Policy

In preparation for the move to the premium (FTSE) market,

the Committee conducted a detailed review of our existing

Remuneration Policy (the “Policy”) in conjunction with our

external remuneration advisers (WTW).

Our appetite for growth remains strong and with our

sector-leading gross margins and our operational and

strategic momentum, we continuously look to strengthen

the work with our licence partners and build commercial scale.

To drive growth, it is natural for technology businesses to pay

a modest base salary and comparably high variable incentives.

Ceres remains committed to ensuring executive pay aligns

with delivering the growth envisioned, and ultimately value

to shareholders, through leveraging a high-variable, low-fixed

compensation structure.

We, therefore, reviewed our remuneration approach in light of

the above principles as well as the current market conditions,

with an objective to align our compensation more closely

with that of Main Market peers over time whilst upholding

our remuneration philosophy.

Benchmarking undertaken against the FTSE 250 Index as

well as a smaller group of comparable market peers, showed

that the current remuneration levels of our Executive Directors

are significantly lower, both in terms of fixed pay and total

compensation. Our proposed approach aims to continue to

our growth philosophy in our remuneration arrangements, begin

a journey to position pay at the right level for senior executives

whilst recognising market expectations, and reflect the

shareholder experience over the recent share price volatility.

Despite being below the benchmark, considering the share price performance of the Company, and in keeping with the

overarching principle of driving and rewarding a high growth strategy, for this Policy period, a small number of changes were put

forward as follows:

Remuneration Policy element Description of proposed change

Incentives

Reductions to the Policy maximum for the annual bonus (from 225% to 200% of base salary)

and long-term incentive plan (from 300% to 250% of salary) to closer align with FTSE market

peers. Target as a percentage of maximum annual bonus is also reduced to be more in line with

FTSE peers.

Shareholding guidelines

Increase to the minimum shareholding guideline to align with FTSE practice and introduction

of post-cessation shareholding guidelines for our Executive Directors.

Salary increases

A modest increase for the Executive Directors in 2024, in line with the wider workforce, with a

view to more substantial increments in subsequent years when financial performance improves.

Shareholder engagement

We engaged with our major shareholders (representing >60%

of shareholdings) and advisory bodies during December 2023

to provide an overview of the proposed changes and seek

their feedback. The feedback received was both favourable

and constructive. We noted the request for holistic and detailed

rationale in our publicly disclosed documents.

In conjunction with the review of the Policy, a review of the

existing Long-Term Incentive Plan (“LTIP”) was conducted.

The Committee will be seeking to draw up a new LTIP plan

for 2026 which will be put to shareholder vote at the AGM

in 2025.

The changes to our Policy are detailed on pages 68 to

74. We will be seeking shareholder support for the new

Policy at our Annual General Meeting (“AGM”) in May

2024. Further details on the Resolution can be found in the

Notice of Annual General Meeting on the Company’s website.

Wider workforce remuneration

The overarching remuneration arrangements for the wider

workforce are reviewed by the Committee and taken into

account when considering the remuneration arrangements

for the Executive Directors and Executive Management team.

Feedback is received by the Committee via employee

engagement sessions along with the annual employee

survey and considered against emerging trends and best

practice as shared by the Chief People Officer and external

compensation advisers.

We reviewed the performance measures and outcomes

associated with the contractual and discretionary bonus

schemes to ensure alignment with our strategy, Company

performance, remuneration philosophy and the approach

to awards at Executive Director level.

The Committee also reviewed the quantum and timing of

broader workforce salary awards, closely monitoring the impact

of rising inflation as well as Company performance. Salary

awards for 2023 were implemented in a tiered bottom-up

approach applied to the different levels within the organisation,

ranging from 8% at the lower quartile down to 2% at the

Senior Leader level with the Executive Directors and Executive

Management team receiving no increase in 2023.

For 2024, a Company budget has been set of 6%, with a

Company-wide increase of 3% applied in January 2024 to be

followed by a further review in July 2024, which represents

the timing of annual salary reviews in future years. This was

communicated out to managers and employees, with feedback

sought via managers, during January 2024.

All permanent employees are offered the opportunity to

become shareholders of Company through participation in

the employee Sharesave scheme (UK-based employees only)

and the LTIP where appropriate.

Directors’ Remuneration Report continued

64 Ceres Annual Report 2023

Share price performance

Our share price saw continuing decline during 2023, consistent with the Solactive Hydrogen Economy Index, of which Ceres is a

participant (see relative TSR chart below for 2023), and representative of the ongoing volatile and uncertain economic backdrop

faced in the market in general. This had a significant impact on the LTIP vesting position for the 2021 – 2023 LTIP scheme.

165%

145%

125%

105%

85%

65%

45%

06 Feb 2302 Jan 23 13 Mar 23 17 Apr 23 22 May 23 26 Jun 23 31 Jul 23 04 Sep 23 09 Oct 23

13 Nov 23 18 Dec 23

SolactiveCeres FTSE 250

The Committee did consider whether a reduction to the

LTIP grant level for the 2024 – 2026 LTIP scheme would be

prudent but concluded from its discussions that the Executive

Management team had taken appropriate action to adjust the

strategy and minimise the risks arising from the impact of the

broader economic conditions.

Remuneration decisions

The Committee carefully considered remuneration decisions

and outcomes to ensure they reflected the Company

performance, and the Committee did not seek to use its

discretion to adjust the formulaic bonus and LTIP outcomes

for 2023, with its decisions summarised below.

Salary

Having implemented a pay freeze for the Executive Directors in

2023, a 6% salary increase was applied to Phil Caldwell (CEO)

and Eric Lakin (CFO) for 2024. This was determined based on

the benchmarking exercise completed as against the Company

performance for 2023, recognising the need to adjust base pay

and seek alignment with the wider workforce.

2023 bonus awards

When determining the bonus outturns, the Committee

considered the formulaic outcome of the corporate key

performance indicators along with the wider business and

individual impact and performance in 2023, incorporating

ESG achievements.

In considering the overall financial and operational performance

of the Company, the Committee determined an annual bonus

award of 44% of maximum for Phil Caldwell and 42.8% of

maximum for Eric Lakin (equivalent to 66% and 64% of base

salary respectively) was appropriate.

2021 LTIP awards

The 2021 LTIP measuring performance in the 2021 – 2023

period, did not vest due to lower than targeted revenue

growth, a decline in share price and a delay to partner

production schedules.

Chair and Non-Executive Director fees

The Committee considered the fees for the Chair and

Non-Executive Directors in 2023 as proposed by the

Executive Directors, with an increase to £180,000 per annum

being applied to the Chair (Warren Finegold) upon listing on the

FTSE premium market to recognise the expanded reporting

and governance responsibilities of our Board. No increase in

fees was applied to rest of the Non-Executive Directors in

2023 and no further increases are planned for 2024.

2024 bonus and LTIP criteria

The Committee intends to adopt a similar approach to the

framework of the bonus scorecard and LTIP performance

criteria in 2024, with the main change being the reduction

of the target threshold vesting level to 60% (down from 70%).

Full details of these awards will be shared in the 2024 and

2026 Remuneration Reports respectively.

Closing remarks

On behalf of the Committee, I would like to thank shareholders

for their engagement on remuneration matters over the past

year and look forward to continuing the dialogue during 2024,

especially in the context of implementing the new Policy being

presented for approval at the AGM.

Tudor Brown

Chair of the Remuneration & Nomination Committee

12 April 2024

Corporate governance

65Ceres Annual Report 2023

Remuneration at a glance (audited)

Overview of Executive Director remuneration in 2023

Single figure remuneration at a glance

£100,000 £200,000 £300,000 £400,000 £500,000 £600,000 £700,0000

Phil Caldwell (CEO) Total: £593,232

Total: £484,689

Eric Lakin (CFO)

Base salary Taxable benefits (Nil) Pension Bonus LTI P (N i l)

Variable pay

2023 annual bonus awards

Phil Caldwell

£231,000

(44.0%

of maximum)

Eric Lakin

£176,550

(42.8%

of maximum)

Long-Term Incentive Plan

(2021–2023 LTIP vesting outcome)

Phil Caldwell

£0

Eric Lakin

N/A

Measures Weighting Achievement

Cumulative income 40% Below minimum

threshold

Share price 35% Below minimum

threshold

Partner progress 25% Below minimum

threshold

Fixed pay and shareholding

Actual salary

Phil Caldwell (CEO)

£334,056

( 0 %)

Eric Lakin (CFO)

£275,000

( 0 %)

Pension

Phil Caldwell (CEO)

£28,107 (8%)

Eric Lakin (CFO)

£23,139 (8%)

The maximum annual pension contribution/cash allowance for

Executive Directors is in line with the rate for all employees at

up to 8% in the UK.

Shareholding

Target levels, %

of base salary

Actual levels, %

of base salary

(at 31.12.23)

CEO 150% 729%

CFO 100% 9%

1. Eric Lakin received a premium listing incentive of £10,000 as a result of Ceres successfully moving to the premium (FTSE) market of the London Stock Exchange.

2. Phil Caldwell’s base pay rate for 2023 of £350,000 was adjusted to take account of a month’s sabbatical during August 2023.

3. Phil Caldwell’s bonus award for 2023 was calculated using his base pay rate.

Directors’ Remuneration Report continued

66 Ceres Annual Report 2023

Variable pay

Target annual bonus (% of base salary)

Target

Maximum

Phil Caldwell

90%

150%

Eric Lakin

90%

150%

Bonus scorecard

LTIP target awards (% of base salary)

Target

Maximum

Phil Caldwell

150%

250%

Eric Lakin

120%

200%

Performance Criteria

Remuneration at a glance (audited)

Overview of Executive Director remuneration in 2024

Fixed pay and shareholding

Base salary

Phil Caldwell (CEO)

£372,000

( 6 %)

Eric Lakin (CFO)

£292,000

( 6 %)

Pension

Phil Caldwell (CEO)

£29,760 (8%)

Eric Lakin (CFO)

£23,360 (8%)

The maximum annual pension contribution/cash allowance for

Executive Directors is in line with the rate for all employees at

up to 8% in the UK.

Shareholding

Target levels, % of

base salary

Actual levels, %

of base salary

(at 20.02.24)

CEO 200% 729%

CFO 150% 9%

Financial: 35%

Commercial scale: 35%

Product development: 15%

Partner success: 10%

ESG: 5%

Order intake: 30%

Revenue: 30%

Product development: 25%

Relative TSR: 10%

Net zero progress: 5%

Corporate governance

67Ceres Annual Report 2023

Executive Directors’ Remuneration Policy

Changes to Remuneration Policy and its implementation

The table below summarises the main proposed changes to the Executive Directors’ Remuneration Policy (the “Policy”), the

intended changes to implementation of the Policy in 2024 and the rationale for each change.

Shareholders are being asked to approve the new Policy at our Annual General Meeting in May 2024 which is intended to apply

for the next three years.

Component Proposed changes to policy Implementation in 2024 Rationale for the change

Base salary

No change. CEO: £372,000 (increase of 6%).

CFO: £292,000 (increase of 6%).

Increase for CEO and CFO in line

with the wider workforce.

Recognition that a modest pay rise

in line with the wider workforce

is warranted given Company

performance in 2024, but that

current base pay levels remain

below par and will require future

adjustments to be competitive.

Annual bonus

Maximum of 200% of salary

(decrease from 225%).

60% target bonus as a percentage

of maximum (decrease from 70%).

Measures and weightings:

commercial and financial measures

will account for 70% of weighting.

Strategic and ESG measures will

account for 30%.

Details on targets, and performance

against them, will be fully disclosed

in the DRR for the year-ending

31 December 2024.

Policy maximum for the annual

bonus as well as target as a

percentage of maximum reduced

to align more closely with FTSE

peers, whilst still focused on

supporting high growth strategy.

Long-Term

Incentive

Plan (“LTIP”)

Maximum of 250% of salary

(decrease from 300%).

Measures and weightings to

incorporate cumulative revenue

and order intake; key business, ESG

and technology milestones; and

relative share price performance.

Details on targets, and performance

against them, will be fully disclosed

in the DRR for the year-ending

31 December 2026.

Policy maximum for the LTIP

reduced to align more closely with

FTSE peers, whilst still focused on

supporting high growth strategy.

Shareholding

guidelines

Increase to minimum

shareholding guideline.

Introduction of post-cessation

shareholding guidelines.

In employment:

CEO: 200% of salary.

Other Executive Directors: 150%.

Post-employment

(newly introduced):

CEO: 200% of salary.

Other Executive Directors: 150%.

Increase to the minimum

shareholding guideline

to align with FTSE peers

and shareholder interests.

68 Ceres Annual Report 2023

Directors’ Remuneration Report continued

Executive Directors’ Remuneration Policy continued

Remuneration Policy

The remuneration of the Executive Directors comprises base salary, participation in an annual bonus plan, a Long Term Incentive

Plan, along with a range of benefits aligned with the wider Company as set out in the table below:

Executive Directors’ Remuneration Policy – fixed remuneration

Component Purpose Operation Opportunity

Performance

metrics

Base salary

To provide appropriate

remuneration based on

role remit and contribution

to leadership and

Company strategy.

Salaries are reviewed at

least annually and take

into account a range of

factors, including:

• market competitiveness

for Executives in

companies of a similar size

and industry sector;

• size and scope of the role;

• skills and experience

of the individual;

• performance of the Group

and of the individual;

• wider market and

economic conditions; and

• internal relativities,

including the level of

increases being made

across Ceres.

There is no defined

maximum salary.

The Committee’s normal

approach is to initially

consider salary increases

in line with the rest of

the Company.

Higher increases may be

made if the Committee

considers it appropriate,

for example to reflect:

• shortfall to market;

• an increase in the scale,

scope, or responsibility

of the individual’s role;

• development of the

individual within the role;

• significant market

movement; and

• where the organisation

has undergone

significant change.

None.

Pension

To provide an opportunity

for Executives and

employees to build up

income on retirement.

Executives participate in

the Group Personal Pension

(“GPP”) plan, or a similar

cash allowance is provided

for those exceeding HMRC

pension allowances.

In certain jurisdictions,

more bespoke pension

arrangements may

be provided. In such

circumstances, the

Committee will give

appropriate consideration to

local employment legislation,

market practices and the

cost of the arrangement.

The maximum annual

pension contribution/cash

allowance for Executive

Directors is in line with the

rate for all employees at up

to 8% in the UK.

Non-UK-based Executive

Directors will be aligned

with local market rates.

None.

Benefits

To provide market

competitive

employee benefits.

Benefits are reviewed and

benchmarked periodically

to ensure they remain

affordable and competitive.

Benefits include, but are not

limited to, health-related

benefits, Sharesave scheme

and insurances.

Where relevant, additional

benefits may be offered

if considered appropriate

and reasonable by

the Committee, such

as assistance with the

costs of relocation.

There is no

defined maximum.

Benefits plans are set at

reasonable levels in order

to be market competitive

for their local jurisdiction

and are dependent on

individual circumstances.

While the Committee has

not set an overall level

of benefit provision, the

Committee keeps the

benefit policy and benefit

levels under review.

None.

Corporate governance

69Ceres Annual Report 2023

Executive Directors’ Remuneration Policy continued

Remuneration Policy continued

Executive Directors’ Remuneration Policy – variable remuneration

Component Purpose Operation Opportunity Performance metrics

Annual

bonus

To incentivise and

reward strong

performance

against annual

business goals

and objectives.

The Committee will

set performance

metrics, weightings

and targets at the

start of each year.

The Committee

considers the extent

to which these have

been achieved and

determines the

award level, after

the year-end.

Recovery and

withholding provisions

apply to awards earned.

The bonus is paid in

cash at the end of the

relevant financial year.

The annual bonus is

subject to malus and

clawback provision.

The maximum award is

200% of salary. Target

and threshold levels are

set at 60% and 25% of

maximum, respectively.

Using a weighted scorecard approach,

performance is measured against

agreed metrics. Whilst not an

exclusive list, examples can include

covering financial performance,

commercial scale, licensee success,

technological advancement, and other

strategic and ESG measures.

No bonuses are paid for below

threshold performance. The

Committee may award any amount

between zero and 100% of the

maximum opportunity.

The Committee retains the discretion

to adjust the bonus if it considers

that the formulaic outcome does

not reflect underlying business

performance or the experience

of shareholders.

Long-Term

Incentive

Plan

(“ LTIP”)

To engage and

motivate Executive

Directors to

deliver on KPIs

that support

the long-term

Company strategy

in order to deliver

long-term returns

to shareholders.

An annual award of

Ceres Power Holdings

plc shares, is granted

annually and subject

to performance criteria

over a three-year

performance period.

An additional holding

period of two years

applies post vesting.

The performance

period normally starts

at the beginning of the

financial year in which

the date of grant falls.

Award levels and

performance conditions

are reviewed before

each award cycle

to ensure that they

remain appropriate.

Dividends (or

equivalents) may

be paid on vesting.

Unvested awards are

subject to a malus

provision and vested

awards are subject

to clawback.

The annual maximum

is 250% of salary.

Threshold performance

results in 25%

vesting, rising to

100% vesting for

maximum performance.

The vesting of awards is linked to

agreed performance criteria which

may include, but is not limited to:

• financial performance;

• licensee success;

• key business and technology

milestones; and

• relative share price performance.

Metric weightings and targets may

vary from year to year.

For each performance element,

achievement of the threshold

performance level will result in no

more than 25% of the maximum

award paying out. For achievement

of the maximum performance level,

100% of the maximum pays out.

Normally, there is straight-line vesting

between these points.

The Committee shall determine the

extent to which the performance

measures have been met. The

Committee has discretion to amend

the performance criteria in exceptional

circumstances if it considers it

appropriate to do so with appropriate

justification and disclosure.

The Committee (acting fairly and

reasonably) has the ability to exercise

discretion in adjusting the formulaic

outcome of incentives to ensure

the outcome is reflective of the

performance of the Company and

the individual over the period.

70 Ceres Annual Report 2023

Directors’ Remuneration Report continued

Executive Directors’ Remuneration Policy continued

Other elements of Executive Director Remuneration Policy

Component Purpose Operation Opportunity Performance metrics

Shareholding

guidelines

To ensure sustained

alignment between the

interests of the Executive

Directors and shareholders.

CEO: 200% of salary.

Other Executive Directors: 150%.

There is an expectation that this

shareholding requirement will be

built over a period of five years.

None. None.

Post-

employment

shareholding

guidelines

To ensure there is an

appropriate amount of

“tail risk” for Executive

Directors post cessation

of employment.

CEO: 200% of salary.

Other Executive Directors: 150%.

Expected to hold shares of value equal

to the minimum shareholding requirement

for two years post-departure from

the Company.

In cases where the individual has not

had sufficient time to build up their

share ownership to meet the minimum

shareholding requirement prior to their

departure from the Company, the post-

employment shareholding requirement

will be based on their actual level of

shareholding on departure.

The Committee has discretion

to vary or waive part or all of

the post-employment shareholding

requirement in exceptional circumstances.

None. None.

Malus and

clawback

The Committee in its absolute discretion may apply malus and/or clawback at any time prior to the vesting

of an award that could reduce, cancel or impose further conditions and/or apply claw back at any time within

three years of payment to receive back some or all of the vesting awards or paid bonus.

Whilst not an exhaustive list, malus and/or clawback would apply to variable pay in certain specified

circumstances including:

• misconduct;

• material misstatement or restatement of financial results affecting the assessment of a performance

condition; or

• where there has been an error or inaccuracy relating to the calculation or determination of variable pay.

Executive

Director

service

agreements

All Executive Directors have service agreements that terminate on six months’ notice.

Service contracts for new Executive Directors should not contain terms that are materially different from those

summarised in this section or contained in the Policy.

• Notice or contract periods should be one year or less.

• The Company may terminate the contract at any time with immediate effect and pay a sum in lieu of notice.

• The Company has the right to place Executive Directors on garden leave.

• The Company may terminate the contract summarily in particular defined circumstances without further

payment, such as gross misconduct.

Corporate governance

71Ceres Annual Report 2023

Component Purpose Operation Opportunity Performance metrics

Approach to

recruitment

remuneration

for Executive

Directors

Typically, new Executive Directors’ ongoing remuneration will be set in a manner consistent with the

Remuneration Policy.

When a new Executive Director is recruited, the Committee may make an award to buy out variable

remuneration arrangements forfeited on leaving a previous employer (accounting for form of award, value

forfeit, performance conditions and time over which the award would have vested).

Consistent with the UK Corporate Governance Code, the Committee would intend to pay no more than it

believes is necessary to secure the required talent.

The maximum level of variable pay that may be awarded to new Executive Directors (excluding buy-out

arrangements) in respect of their recruitment will be in line with the maximum level of variable pay as outlined

in the Remuneration Policy.

The Committee will ensure such awards are linked to the achievement of appropriate and challenging

performance measures.

Appropriate and reasonable costs and support would be covered if the recruitment requires relocation

of the individual.

Principles of

payment for

loss of office

for Executive

Directors

The Company’s approach to determining payment for loss of office will normally be guided by the

following principles:

• The Committee shall seek to apply the principle of mitigation where possible, as well as seeking to find an

outcome that is in the best interests of the Company and shareholders as a whole, taking into account the

specific circumstances.

• Relevant contractual obligations, as set out above, shall be observed or taken into account.

• The Committee reserves the right to make additional exit payments where such payments are made in good

faith to satisfy an existing legal obligation (or by way of damages for breach of any such obligation) or to

settle or compromise any claim or costs arising in connection with the employment of an Executive Director

or its termination, or to make a modest provision in respect of legal costs and/or outplacement fees.

• No awards should vest where an individual has been dismissed for cause.

• The treatment of outstanding variable remuneration shall be as determined by the relevant plan rules.

• Any payments for loss of office shall only be made to the extent that such payments are consistent with

this Policy.

Executive Directors’ Remuneration Policy continued

Other elements of Executive Director Remuneration Policy continued

72 Ceres Annual Report 2023

Directors’ Remuneration Report continued

Fixed pay Annual bonus

Long-Term incentive plans

Fixed pay Annual bonus Long-Term incentive plans

Minimum

£401,760

100%

Minimum

£315,360

100%

Target

£1,406,160

29%

32%

40%

Target

£1,016,160

31%

34%

Maximum

19%

36%

45%

£2,075,760

Maximum (including share price growth)

16%

29%

55%

£2,540,760

Maximum

21%

39%

£1,483,360

Maximum (including share price growth)

18%

33%

49%

£1,775,360

Phil Caldwell

Eric Lakin

The table below outlines the assumptions associated with the scenario charts above.

Performance scenario Details of assumptions

Minimum (fixed

remuneration)

• Comprised of base salary, benefits and pension, i.e. fixed remuneration. There is no bonus award

and no vesting under the LTIP

• Base salary with effect from 1 January 2024

• Benefits as they applied on 31 December 2023 and are set out in the single figure table in the

Annual Report on Remuneration

• Pension equivalent to 8% of base salary

Target

• Comprised of fixed remuneration, annual bonus and vesting under the LTIP

• For on-target performance, it assumes payment of 60% of the maximum opportunity for the

annual bonus award (120% for the CEO and 120% for the CFO)

• For on-target performance, it assumes payment of 60% of the maximum opportunity for the

vesting of the LTIP (150% for the CEO and 120% for the CFO)

Maximum

• Comprised of fixed remuneration, annual bonus and vesting under the LTIP

• For maximum performance, it assumes payment of 100% of the maximum opportunity for the

annual bonus award (200% for the CEO and 200% for the CFO)

• For maximum performance, it assumes payment of 100% of the maximum opportunity for the

vesting of the LTIP (250% for the CEO and 200% for the CFO)

Maximum + 50% increase

in share price

• Comprised of fixed remuneration, annual bonus and vesting under the LTIP

• For maximum performance, it assumes payment of 100% of the maximum opportunity

for the annual bonus award (200% for the CEO and 200% for the CFO)

• For maximum performance, it assumes payment of 100% of the maximum opportunity

for the vesting of the LTIP plus an assumption of 50% share price appreciation during the

performance period

Corporate governance

73Ceres Annual Report 2023

Executive Directors’ Remuneration Policy continued

Scenario charts

Executive Directors’ Remuneration Policy continued

Non-Executive Directors’ Remuneration Policy

Component Operation Opportunity Performance metrics

To attract and retain

Non-Executive Directors

of a high calibre that

have the expertise,

responsibility, and the time

commitment to be able to

contribute to an effective

Board and deliver

long-term sustainable

shareholder value

Fees are normally reviewed on an annual

basis and amended to reflect market

positioning and any change in responsibilities

on a needed basis.

Directors have formal letters of appointment

that can be terminated on one month’s

written notice by either side.

The Committee recommends the

remuneration of the Chair to the Board.

Fees paid to Non-Executive Directors are

determined by the Executive Directors and

approved by the Board as a whole.

The Chair and Non-Executive Directors

receive no other pay or benefits, except

for reimbursement of expenses, and do not

participate in incentive plans.

The Company covers the costs of attending

meetings and Non-Executive Directors may

be reimbursed for any business expenses

incurred in fulfilling their roles.

The Chair is paid a single fee

for all responsibilities.

The Non-Executive Directors

are paid a basic fee which

encompasses membership

of one Board Committee.

Committee Chairs and those

having other additional

responsibilities may be paid

an additional fee.

None.

Remuneration in wider context

When reviewing Executive remuneration, the Committee takes into consideration our wider workforce, to ensure that our total

reward offering is compelling and aligned to our business performance, whilst supporting a culture that is inclusive and in which

our people feel valued.

The Committee also takes into account the principles of the UK Corporate Governance Code and the factors outlined within

Provision 40 as described below:

Area Our philosophy and approach

Clarity and simplicity

Our remuneration principles and arrangements for the Executive Directors’ are set out clearly

in our Remuneration Policy and are closely aligned with the wider workforce arrangements,

particularly with regard to the fixed pay elements. All employees are eligible to participate in a

discretionary bonus scheme and are invited to invest in the long-term success of the business

through our employee Sharesave scheme or Long-Term Incentive Plan. The committee will

continue to consult with shareholders and employees to ensure our remuneration principles

and arrangements are understood and supported.

Risk

We operate minimum shareholding requirements, a post-vesting holding arrangement and malus

and clawback provisions to manage risk and ensure strong alignment to business performance

and shareholder interests.

Predictability and

proportionality

Our Remuneration Policy is based on the principles of modest base pay and defines clear maximum

limits for variable based pay, with pay-outs under these elements being subject to meeting clear

performance criteria which align to our business strategy and publicly stated ambitions.

Alignment to culture

Ceres’ purpose, strategy and values continue to be directly reflected in our Remuneration Policy

and the performance criteria set under the annual bonus and long-term incentive schemes.

74 Ceres Annual Report 2023

Directors’ Remuneration Report continued

Annual Report on Remuneration (audited)

Total remuneration for Executive Directors

The table below sets out a single figure for the total remuneration received by the Executive Directors for the year ended

31 December 2023.

Phil Caldwell (CEO) Eric Lakin (CFO)

2023

(£’000)

2022

(£’000)

2023

(£’000)

2022

(£’000)

Salary

334 350 275 275

Taxable benefits

— — — —

Pension 28 29 23 23

Total fixed remuneration 362 379 298 298

Annual bonus 231 184 177 144

LTIP

— 240 — —

Total variable remuneration 231 424 177 144

Total remuneration 593 803 475 442

1. Phil Caldwell’s salary adjustment for 2023 incorporates a month’s sabbatical taken during August 2023 based at 50% pay. His full-time equivalent salary remained at

£350,000 per annum.

2. The only taxable benefit offered to the Executive Directors relates to a health care cash plan at single level cover, in line with the wider workforce, equating to £67.92.

3. LTIP: the amounts reported for 2023 relate to the 2021 LTIP scheme which did not vest. The amounts reported for 2022 relate to the 2019 LTIP which vested on

10 October 2022, at a market price of £3.37. The value of the LTIP is calculated as a product of the number of shares of the original award multiplied by the vesting

percentage and the market price of ordinary shares at the vesting date.

The following sections provide further detail on the figures in the above table, including the underlying calculations and

assumptions and the Committee’s performance assessments for variable remuneration.

Base salary

When reviewing Executive Director salaries, in line with our Policy, the Committee will take into account a range of factors, including:

• market competitiveness for Executives in companies of a similar size and industry sector;

• size and scope of the role;

• skills and experience of the individual;

• performance of the Group and of the individual;

• wider market and economic conditions; and

• internal relativities, including the level of increases being made across Ceres.

The Committee opted to freeze Executive Directors’ base pay in 2023 to allow for a greater base pay award for the wider

workforce which ranged from 2% for senior management through to 8% at the lower levels of the organisation.

Corporate governance

75Ceres Annual Report 2023

Annual Report on Remuneration (audited) continued

Total remuneration for Executive Directors continued

2023 annual bonus

The annual bonus is intended to reward the delivery of short-term targets derived from the business plan and annual budget.

The Committee reviewed performance against the corporate key performance indicators (“KPIs”) which form the basis of the

scorecard for the annual bonus.

In assessing performance, the Committee uses a formulaic approach to reviewing outcomes and deliverables against the KPIs

set at the start of the year. The Committee then considers the wider macroeconomic environment to assess the extent to which

this may have affected outcomes.

Measure Description

Weighting

(CEO/CFO)

Min Threshold

(25%)

Target

(70%)

Max

(100%) Result Achievement

Commercial

scale (25%)

Order intake 12.5% £25m £40m £50m £17m 0%

New partners 12.5% Expansion of

licence

1 licensee 2 licensees None 0%

Financial

performance

(20%)

Revenue 14% £30m £42m £50m £22m 0%

Gross margin 6% 58% 66% 68% 61% 36%

Licensees to

succeed (25%)

Bosch progress to start

of production

15% See note A Target 70%

Doosan progress to start

of production

10% See note B Target 70%

Technology

development

(10%)

SOEC container

commissioned

5% See note C Min-Target 48%

Cell feature development 5% See note D Target 70%

Key enablers

(20%)

Develop roadmap

to net zero

5%/2.5% See note E Target 70%

TCFD assessment 5%/2.5% See note F Max. 100%

Engagement score 10%/5% 70% 76% 80% 80% 100%

Personal objectives 0%/10% 25% 70% 100% 80% 80%

Overall bonus scorecard outcome CEO: 44%

CFO: 42.8%

Notes:

A. Key milestone for assessing Bosch progress to start of production related to the testing of new stacks by the end of the year (min. threshold = stacks built and ready

to be tested; target = stack tests underway by end Q4; max = stack tests underway in Q3).

B. Key milestone for assessing Doosan progress to start of production related to progress of its factory build and commissioning (min. threshold = factory machines

pre-acceptance test completed by year end; target = factory machines installed by year end; max. = factory machines installed and commissioned by year end).

C. Key measure for assessing success of the SOEC container related to system commissioning and efficiency (min threshold = container commissioned by year end +

system efficiency of >77%; target = container commissioned by end Q3 + system efficiency of >80%; max. = container commissioned by end Q2 + system efficiency

of >80%). The container was successfully commissioned during Q4 and delivered system efficiencies of 83%.

D. Key measure for assessing success of our cell feature development programme related to the proportion of features reaching technology readiness level 4 by year

end (min. threshold = minimum viable specs by year end; target = 80% of features at TRL4 by year end; max. = 100% of features at TRL4 by year end). 80% of cell

development features achieved TRL4 by the end of the year.

E. Key milestone for assessing our progress in developing our roadmap to net zero related to our net zero strategy readiness (min. threshold = net zero strategy

workshops held and reduction options identified; target = target reduction strategies and scenarios identified; max. = net zero strategy published).

F. Key measure for assessing our performance against the Task Force on Climate-related Financial Disclosures (“TCFD”) related to the number of disclosure

recommendations fully met (min. threshold = 4 out of 11; target = 6 out of 11; max. = 7 or more). Our 2023 Sustainability Report addressed 7 out of 11

disclosure requirements.

The Committee did not seek to exercise its discretion to alter the outcome of the formulaic result of the bonus scorecard

assessment and outcome. Accordingly, based on the individual weightings applied to each member of the Executive Management

team, the Committee determined the final bonus outcome to be 44% of maximum for Phil Caldwell, resulting in a bonus award

of £231,000, and 42.8% for Eric Lakin, resulting in an award of £176,550. Full bonus awards are payable in cash in March 2024.

76 Ceres Annual Report 2023

Directors’ Remuneration Report continued

Annual Report on Remuneration (audited) continued

Total remuneration for Executive Directors continued

Long-Term Incentive Plan vesting: 2021 LTIP

In December 2020, Phil Caldwell was granted a conditional share award under the 2021 LTIP of 250% of salary. Eric Lakin was

not an Executive Director at the time and as such did not receive an award under this scheme.

In determining the vesting outcome, the Committee considered Ceres’ performance over the three-year period from 1 January 2021

to 31 December 2023, based on the following performance criteria:

• Absolute share price: at the time of setting the performance criteria Ceres’ share price was fluctuating in a range of

£10-£12. The Committee sought to set performance criteria that would maintain this strong position and therefore set a

minimum threshold (25% pay-out) at £8.70 and a maximum threshold (100% pay-out) at £14. In the intervening period the

macroeconomic environment changed considerably; Ceres’s share price saw a dramatic decline, albeit consistent with the

market and industry peers, which meant that the share price criteria was not met.

• Cumulative income: the target for cumulative income was set by the Committee based on the five-year business plan for

2021 onwards, which saw a minimum threshold of £100 million and a maximum threshold of >£132 million. The delay to the

formation of the China joint venture and the lack of any significant new licence partners meant that the cumulative income

criteria was not met.

• Partner progress: whilst good progress has been made with regard to the build of partner production facilities, a delay to partner

production schedules meant that the partner progress performance criteria was not met. Equally, whilst the Company is pleased

to have secured it’s first SOEC licence partner, this was secured just outside the stated performance period.

The table below illustrates the nil vesting outcome of the 2021 LTIP scheme.

Performance condition

Percent of the award based

on performance condition Result during performance period Weighting x achievement

Share price

The percentage of the shares

subject to an award will vest at

the end of the vesting period

as follows:

• 100% if the Share Price

equals or exceeds £14.00;

• 20% if the share price is

£8.70; and pro rata on a

straight line basis if the share

price is between £8.70 and

£14.00; and

• 0% if the share price is less

than £8.70.

35% The weighted average closing middle

market price of shares in the period

of three months ending on the last

dealing day of the performance period

was: £2.04.

This resulted in an achievement level

of 0%.

Cumulative income

Achievement of cumulative

income in the three years

from 1 January 2021 to

31 December 2023 of

greater than £132 million.

40% Cumulative income of £75 million

(2021 = £31.7 million; 2022 =

£22.4 million; 2023 = circa £21 million).

This resulted in an achievement level

of 0%.

Partner progress

Two manufacturing partners

remain on track for scale

production of >100 MW

cumulative in 2024 and

a first SOEC licensee has

been secured.

25% Scale production capacity not met and

SOEC licensee not secured within the

performance period.

This resulted in an achievement level

of 0%.

Overall LTIP performance criteria outcome 0%

A. As defined in the Award Certificate – the weighted average closing middle market price of shares in the period of three months ending on the last dealing day of the

performance period.

B. Income is defined as the sum of revenue and grant income in the annual financial statements.

Corporate governance

77Ceres Annual Report 2023

Annual Report on Remuneration (audited) continued

Total remuneration for Executive Directors continued

2023 LTIP

In 2023, the Executive Directors were granted conditional share awards under the LTIP as set out in the table below.

Scheme type

Type of

interest

awarded

End of

performance

period Target award

Minimum

performance

(% of shares

awarded)

Maximum

performance

(% of shares

of target award)

LTI P Performance

31 December 2025 Phil Caldwell: 227,273 London-listed ordinary

shares, equivalent to 2.5 x base salary.

Eric Lakin: 142,857 London-listed ordinary

shares, equivalent to 2.0 x base salary.

0 100%

A. The awards were based on the three-month weighted market share price leading up to the date of the grant (4 May 2023) for ordinary shares (£3.95).

The measures and weightings applying to the 2023 LTIP awards were:

Performance criteria Minimum threshold (25%) Target threshold (70%) Maximum threshold (100%) Weighting

Cumulative revenue and other income

£m 25%

Order intake £m 25%

Partner production capacity

MW 25%

Relative TSR

Median TSR 62.5 %ile Upper quartile 25%

A. Other income includes grant income but excludes R&D expenditure credits).

B. Partner production capacity is based on total committed and publicly declared licensee partner capacity (fuel cell equivalent) by the end of the performance period.

C. Relative total shareholder return of the Company (“TSR”) will be measured on a 50:50 ratio relative to the TSR performance of the FTSE 250 Index (excluding

investment funds and financial services businesses) and the Solactive (Factset) Hydrogen Economy (NTF Index), of which Ceres is a constituent member.

Vesting under each performance criteria is assessed independently, with the vesting outcome ranging from 0% to 100% of maximum

and applied on a pro rata straight-line basis between the minimum and target threshold and the target and maximum threshold.

Disclosing the threshold values for cumulative revenue and other income as well as order intake could be construed to constitute

financial guidance, which is not the Company’s intention, and is considered to be commercially sensitive. Likewise, partner

production capacity is equally deemed commercially sensitive. Full details of the performance criteria will be disclosed following

the end of the performance period, in the 2025 Directors’ Remuneration Report.

Non-Executive Directors’ remuneration (audited)

The table below sets out the remuneration receivable by the Non-Executive Directors in respect of the year ended 31 December 2023,

alongside comparative figures for the prior year.

31 Dec 2023

(£)

31 Dec 2022

(£)

Non-Executive Directors

Warren Finegold 150,000 120,000

Aidan Hughes 70,000 70,000

William Tudor Brown

78,000 60,000

Julia King

73,571 55,000

Trine Borum Bojsen

61,308 44,417

Caroline Brown

32,083 —

Karen Bomba

32,083 —

Uwe Glock 55,000 55,000

Nannan Sun

13,750 —

Former Non-Executive Directors

Steve Callaghan

52,500 70,000

Qinggui Hao

41,250 55,000

1. William Tudor Brown was paid £60,000 for the year ended 31 December 2022. Following his appointment as Chair of the Remuneration Committee on 15 March 2022

(which would become the Remuneration & Nomination Committee with effect from 2 November 2022), an additional £10,000 remuneration, taking his annual fee to

£70,000, was applicable from that date. The additional remuneration of £8,000 was paid in March 2023.

2. Julia King was paid £55,000 for the year ended 31 December 2022. Following her appointment to the Tech and Ops Committee on 15 March 2022, an additional

£5,000 remuneration, taking her annual total to £60,000, was applicable from that date. On 2 November 2022 Julia was further appointed as Chair of the ESG

Committee, resulting in an additional £5,000 remuneration, increasing her annual fee to £65,000. The additional remuneration of £4,821 was paid in March 2023.

In June 2023, Julia took over from Steve Callaghan as Senior Independent Director, increasing her annual fee to £70,000.

3. The remuneration paid to Trine Borum Bojsen accrued from her appointment on 15 March 2022. On 28 September 2022, Trine was appointed as Employee

Engagement Director on behalf of the Board, resulting in her annual remuneration rising an additional £5,000. The additional remuneration relating to the period

from 28 September 2022 to 31 December 2022, of £1,308 was paid in March 2023.

4. Caroline Brown and Karen Bomba joined the Board on 1 June 2023.

5. Qinggui Hao stepped down as the Weichai strategic representative on the Board on 27 September 2023 and was replaced by Nannan Sun with effect from the same date.

6. Steve Callaghan stepped down from the Board on 18 May 2023.

78 Ceres Annual Report 2023

Directors’ Remuneration Report continued

Annual Report on Remuneration (audited) continued

Total remuneration for Executive Directors continued

Non-Executive Directors’ fees for 2024

The Non-Executive Directors’ fee structure for 2024 is set out in the table below. No fee increases have been proposed from

2023 to 2024. Fees for the Non-Executive Directors (other than the Chair of the Board) are determined by the Chair and the

Executive Directors. The fee structure is reviewed, but not necessarily increased on an annual basis.

Position 2024 2023

Chair of the Board £180,000 £180,000

Board fee (incorporating membership of one Committee) £55,000 £55,000

Senior Independent Director £10,000 £10,000

Committee Chair £10,000 £10,000

Additional Committee membership £5,000 £5,000

Directors’ shareholdings (audited)

Minimum shareholding requirements

The CEO and CFO are each required to build up to a minimum shareholding requirement (“MSR”) of 200% and 150% respectively,

within five years of their appointment. The MSRs for 2023 are set out below. Shares that count towards the MSR are ordinary

shares beneficially held by the Executive Director and their connected persons and share awards are that are not subject to

further performance conditions. Share awards included are the LTIP performance shares and the employee save as you earn

(“SAYE”) shares.

A further post-employment shareholding requirement applies to Executive Directors. For two years following cessation of

employment, Executive Directors are required to hold shares to the same MSR that applied during employment; or, in cases where

the individual has not had sufficient time to build up shares to meet their guideline, the actual level of shareholding at cessation.

Directors’ share interests

Ordinary

shares held at

31 December 2023

Vested and

exercisable

Unvested and

subject to

performance

conditions

Value of shares

counted towards

MSR as a % of

base pay

Executive Directors

Phil Caldwell 365,888 1,035,695 357,740 729%

Eric Lakin 12,178 264,614 9%

Non-Executive Directors

Warren Finegold

10,004

William Tudor Brown 15,000

Aidan Hughes 31,520

Uwe Glock 8,000

Karen Bomba

1. Warren Finegold acquired a further 20,052 shares on 1 February 2024 taking his total shareholding to 30,056.

2. Karen Bomba acquired 12,121 shares on 29 January 2024.

Corporate governance

79Ceres Annual Report 2023

Annual Report on Remuneration (audited) continued

Directors’ shareholdings (audited) continued

Executive Directors’ share plan interests

The following table sets out the Executive Directors’ interests in Ordinary Shares under the Company’s share plans.

Phil Caldwell 31 Dec 2022 Granted Exercised Lapsed 31 Dec 2023 Exercise price Exercise period

Options 123,313 (11,859) (111,454) 0.85 Nov 2019 – Nov 2023

Options

(unapproved) 80,424 80,424 0.85 Jul 2017 – Jul 2024

Options

(unapproved) 100,000 100,000 0.85 Jul 2018 – Jul 2024

Options

(unapproved) 100,000 100,000 0.85 July 2019 – Jul 2024

Options

(unapproved) 100,000 100,000 0.85 Jul 2020 – Jul 2024

SAYE (approved) 4,610 (4,610) 1.95 Feb 2023 – Jul 2023

SAYE (approved) 1,510 1,510 5.96 Jun 2025 – Dec 2025

SAYE (approved) 2,877 2,877 3.13 Jun 2026 – Dec 2026

LTI P 558,593 (200,000) 358,593 0.10 Sep 2019 – Sep 2026

LTI P 87,000 87,000 0.10 Oct 2020 – Oct 2027

LTI P 138,530 138,530 0.10 Oct 2021 – Oct 2028

LTI P 71,148 71,148 0.10 Oct 2022 – Oct 2029

LTI P 114,107 (114,107) 0.10 Dec 2023 – Dec 2030

LTI P 126,080 126,080 0.10 Mar 2025 – Mar 2032

LTI P 227,273 227,273 0.10 May 2026 – May 2033

1,605,315 230,150 (216,469) (225,561) 1,393,435

Eric Lakin 31 Dec 2022 Granted Exercised Lapsed 31 Dec 2023 Exercise price Exercise period

SAYE (approved) 3,020 (3,020) — 5.96 Jun 2025 – Dec 2025

SAYE (approved) — 2,877 2,877 3.13 Jun 2026 – Dec 2026

LTI P 118,880 118,880 0.10 Mar 2025 – Mar 2032

LTI P — 142,857 142,857 0.10 May 2026 – May 2033

121,900 145,734 (3,020) 264,614

Loss of office payments to Directors

There were no payments for loss of office made to Executive Directors during the year.

CEO to employee pay ratio (Option B methodology)

The table below shows the CEO pay ratios for 2023 using method B (gender pay gap methodology) relative to the 2022 pay ratios.

The pay ratios set out below were calculated using the Company’s gender pay data based on employees as at 5 April 2023.

Year Method

25th percentile

pay ratio

50th percentile

pay ratio

75th percentile

pay ratio

2023 B 13.0 10.2 7.5

2022 B 18.3 15.7 8.2

Method B was selected as it made use of robust readily available data reported as part of our gender pay reporting requirements.

Total pay was calculated for a sample of employees at each quartile in order to ensure that the three identified employees were

suitably representative of their quartile. A full-time equivalent total pay figure was calculated for each identified employee within

their respective quartile using the single figure methodology.

The CEO pay ratio figures for 2023 reduced from 2022 due to the freeze applied to Executive Directors’ pay in 2023 and the

nil vesting of the 2021 LTIP. The Committee is comfortable that the pay ratios are consistent with the pay, reward and progression

policies of the Company.

The following table sets out the base salary and total pay figures for the employees identified at each quartile.

Year Element of pay

25th percentile

employee

Median

employee

75th percentile

employee

2023 Base salary (FTE) £29,160 £48,500 £62,100

Total pay (FTE) £41,717 1 £52,974 £71,962

1. Total pay at the 25th percentile includes shift overtime payments only available to these individuals.

Directors’ Remuneration Report continued

80 Ceres Annual Report 2023

Annual Report on Remuneration (audited) continued

Directors’ shareholdings (audited) continued

Historic TSR performance and CEO remuneration (unaudited)

The graph below compares the TSR performance of a share of Ceres over the past 10 years with the TSR of the FTSE 250

index, the FTSE Small Cap Index and the FTSE AIM 100, rebased to 100 at the start of the period. Since the move to the Main

Market in June 2023, the Committee consider the FTSE 250 and FTSE small cap indices appropriate reference points for

the share price performance of the company. Before moving to the Main Market, Ceres was a constituent of the AIM market,

performance against the FTSE AIM 100 index over this period of time is provided as additional reference.

TSR of Ceres Power vs the FTSE 250 Index, FTSE Small Cap Index and FTSE AIM 100 Index

£1,200

£1,000

£800

£600

£400

£200

£0

20142013 2015 2016 2017 2018 2019 2020 2021

2022 2023

FTSE 250 IndexCeres Power Holdings PLC FTSE Small Cap Index

£1,100

£900

£700

£500

£300

£100

£1,300

£1,400

£1,500

FTSE AIM 100 Index

The table below shows the historic single total figure of remuneration for Phil Caldwell, who was appointed CEO on

2 September 2013 (£’000).

Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Total remuneration 180 230 290 305 320 424 566 503 563 583

Bonus (% of max) 80% 90% 98% 86% 84% 43% 35% 44%

LTIP (% of max)

86% 100% 100% 44% 0%

1. The LTIP scheme was established in 2016 and first vested in 2019.

Annual percentage change in remuneration of Directors and employees

The table below shows the annual percentage change in remuneration during 2023 for the Executive and Non-Executive Directors

relative to Ceres employees. Salaries and pension increases from 2022 for employees are calculated based on average employee

numbers after removing Directors. Bonus represents the actual increase less Directors.

2023 change (%) Salary/fee Pension Bonus

Employees 13% 14% 30%

Executive Directors

Phil Caldwell 0% 0% 26%

Eric Lakin 0% 0% 22%

Non-Executive Directors

Warren Finegold

25% — —

Aidan Hughes 0% — —

William Tudor Brown

30% — —

Julia King

34% — —

Trine Borum Bojsen

38% — —

Caroline Brown

N /A — —

Karen Bomba

N /A — —

Uwe Glock 0% — —

Nannan Sun

N /A — —

1. Warren Finegold’s fees increased by 50% upon listing to the premium (FTSE) market index in July 2023.

2. The increase in fees for William Tudor Brown, Julia King and Trine Borum Bojsen reflect the adjustments made to their board responsibilities during 2023 and 2022

which were backdated in 2023.

3. Caroline Brown and Karen Bomba joined the Board on 1 June 2023.

4. Nannan Sun joined the Board on 27 September 2023.

Corporate governance

81Ceres Annual Report 2023

Annual Report on Remuneration (audited) continued

Directors’ shareholdings continued

Relative importance of spend on pay

Under the regulations, companies need to illustrate the relative importance of spend on pay, by disclosing the total employee

remuneration and returns to shareholders (i.e. dividends and share buybacks) in the reporting year and prior year. As the Company

is still pre-profit, there is no relevant data relating to returns to shareholders. Therefore, other Company metrics have been used in

the table below to show employee remuneration in the context of overall business activities. In order to provide context for these

figures, total expenditure is also shown.

2023 2022 Change (%)

Total employee remuneration (£’000) 35,500 28,584 24%

Total expenditure (£’000)

76,286 66,806 14%

1. Total expenditure = adjusted EBITDA less revenue and other operating income.

Statement of planned implementation of Policy in 2024

Fixed pay

Salary

Before reviewing the Executive Directors’ salary for 2024, the Committee took into account, the results of the comprehensive

benchmarking exercise conducted by WTW, the previous year’s business performance and the proposed budget for wider

workforce pay increases.

£’000

2023 2024

Change

from 2022 Base pay

Change

from 2023 Base pay

Phil Caldwell 0% 350 6% 372

Eric Lakin 0% 275 6% 292

The increase to current Executive Directors’ base pay for 2024 of 6% mirrors the budgeted base pay increases for the wider

workforce. The Committee recognises that higher base pay awards will be required in the future to maintain a comparable position

with industry and market peers, but these will be subject to a strong underlying business performance.

Benefits

No significant changes to the provision of benefits are proposed for 2024.

Pension

Executive Directors’ pensions remain aligned with the wider workforce at 8% of base salary.

Pay for performance

Annual bonus

The main proposed change to the operation of the annual bonus plan is the reduction of the target threshold to 60% of maximum.

Target annual bonus (% of base salary)

Phil Caldwell Eric Lakin

Target 90% 90%

Maximum 150% 150%

The construct of the bonus scorecard will mirror the previous year with five categories (and their associated weighting) as follows:

• order intake (35%);

• revenue (35%);

• product development (15%);

• partner success (10%); and

• ESG (5%).

Scorecard targets will be disclosed in the subsequent Directors’ Remuneration Report when they are no longer deemed to be

commercially sensitive.

82 Ceres Annual Report 2023

Directors’ Remuneration Report continued

Annual Report on Remuneration (audited) continued

Directors’ shareholdings continued

Pay for performance continued

2024 Long-Term Incentive Plan

The Committee intends to make a conditional award of performance shares under the 2024 LTIP to the Executive Directors’

with a maximum value of 250% and 200% of base salary for the CEO and CFO respectively.

Performance will be measured over the three-year period from 1 January 2024 to 31 December 2026. The performance

measures and their associated weightings are likely to be as follows:

• order intake (25%) – measured as a cumulative figure in £m by the end of the performance period;

• revenue (25%) – measured as a cumulative figure in £m by the end of the performance period;

• product development (30%) – measured as progress achieved relative to our product and technology roadmap for our

SOEC technology; and

• relative TSR (20%) – measured as relative total shareholder return using two peer groups (split 50:50), namely the FTSE 250

Index alongside the Solactive Hydrogen Economy Index, which is a more industry specific index.

The threshold levels for each element of the performance criteria will be constructed as follows:

Performance criteria Minimum threshold (25%) Target threshold (70%) Maximum threshold (100%) Weighting

Order intake £m 25%

Cumulative revenue

and other income £m 25%

Product development Progress against product and technology roadmap 30%

Relative TSR Median TSR 62.5 %ile Upper quartile 20%

Remuneration governance

Committee role and membership

These details are provided in the Remuneration & Nomination Committee Report on page 59 to 62.

External advisers

Following the appointment of WTW, during 2022, as external independent advisers to the Committee, WTW provided a

comprehensive review of our Long-Term Incentive Plan and conducted an extensive benchmarking exercise during 2023.

During the year, in addition to the consultancy services provided directly to the Committee, WTW also supported the HR team

with access to its wider market salary benchmarking database as well as providing advisory services in relation to a number of

risk-related benefits.

The Committee is satisfied that the advice and services provided by WTW have been objective and independent. WTW’s fees

during 2023 amounted to £80,784.

Shareholder voting

The Company remains committed to ongoing shareholder dialogue and takes an active interest in voting outcomes.

A resolution to approve the Directors’ Remuneration Policy and the Directors’ Remuneration Report as set out in the 2022

Annual Report was passed at the Company’s 2023 AGM. The results of the votes on these resolutions were as follows:

Number of votes Votes in favour Votes against Votes withheld

2022 Directors’ Remuneration Policy 128,207,667 (94.96%) 6,803,863 (5.04%) 58,236 (0.04%)

2022 Directors’ Remuneration Report 114,262,913 (84.63%) 20,747,597 (15.37%) 59,256 (0.04%)

Corporate governance

83Ceres Annual Report 2023

ESG Committee report

Committee membership

Julia King (Committee Chair)

Trine Borum Bojsen

Phil Caldwell

Warren Finegold

Introduction

I am delighted to present the ESG Committee (the “Committee”)

Report for the year ended 31 December 2023. This is the first

report from our new Committee.

The establishment of the ESG Committee demonstrates

the importance that the Board places on ensuring the

responsibilities of the Company with regard to ESG matters

and reporting are not only met, but that they form a core part

of everyone’s day-to-day work in delivering the Company’s

purpose and strategic objectives.

In its first year of operation the Committee has overseen

significant development of the Company’s environmental,

social and related governance reporting and was pleased to

recommend the second annual Sustainability Report to the

Board for approval. The report can be found on the Company’s

website at:

www.ceres.tech/sustainability

The demands placed upon companies in the ESG area in terms

of disclosure and reporting are ever increasing and are not

without some significant challenges. I have been encouraged

by the dedication and commitment of the operational team in

rising to meet these challenges and I have confidence that our

sustainability reporting is evolving positively and purposefully.

Committee composition

The Committee comprises three Non-Executive Directors

(including the Employee Engagement Director) and the Chief

Executive Officer. Executive Committee members and relevant

employees are in attendance along with the Chair of the

employee forum, Connect.

Role of the Committee

The Committee considers all matters relating to the

environmental and social strategies and actions of the Company

and related governance activities and disclosures. Where

necessary it makes recommendations to the Board or to other

Committees of the Board. In particular it engages closely with

the Audit and Risk Committee on issues of climate risk and

integrity of reporting and the Remuneration & Nomination

Committee on ESG-related bonus targets. The Committee

oversees the work of the Operational ESG Committee which

is chaired by the Chief Executive Officer, and provides advice,

guidance and constructive challenge where appropriate.

The full Terms of Reference for the Committee can be

found on our website at:

www.ceres.tech/about-us/corporate-governance

84 Ceres Annual Report 2023

The Committee met five times during the year ended

31 December 2023 and attendance is set out in the table

on page 50 of the Corporate Governance Report.

The key activities undertaken by the Committee in 2023 are

set out in the chart above.

The Committee reviewed and monitored ESG risks,

objectives and priorities regularly throughout the year to

ensure appropriate priorities had been identified and suitable

mitigation actions were in place and progressing. It reviewed

the materiality matrix to ensure the Board scoring was

appropriate prior to its inclusion in, and the recommendation

of, the Sustainability Report (which included the Task Force on

Climate-Related Financial Disclosures); and agreed ESG targets

to be recommended for inclusion in the Executive Committee

bonus targets. More information on bonus targets can be found

in the Directors’ Remuneration Report on pages 63 to 83.

During the year the Committee received reports from the

Connect Chair and the Employee Engagement Director

(Trine Borum Bojsen, also a Committee member) along with

reports from the Chief People Officer on engagement survey

results and resulting actions and activity to support progress.

The Committee ensures that the Connect Chair’s views

(and representative views of Ceres’ employees) are included

in discussions and values the important insight that this brings.

More information on our sustainability work can be found

on pages 18 to 27 of this report and on our website at:

www.ceres.tech/sustainability

Committee evaluation

In the latter part of the year the Committee undertook a

Committee performance evaluation, critical to assess progress

in its first year of operation. Results were received at its

meeting in December 2023 and the outcome showed that

members thought that the Committee, whilst still evolving and

strengthening, was working effectively. It was agreed that

members had the requisite skills and experience and brought

these to bear to advise and guide the business through the

complicated reporting landscape and, importantly, to support

the focus of the business on its purpose.

Julia King

Committee Chair

12 April 2024

Recommended Charitable Giving

& Volunteering Policy; Modern

Slavery Statement; DEBI Policy; and

Code of Conduct & Business Ethics

for Board approval

Reviewed and monitored ESG risks

Reviewed Committee Terms of

Reference and Performance

Recommended ESG enablers for

bonus targets to Remuneration

& Nomination Committee

Monitored ESG objectives

and roadmap

Received updates from Connect

(employee forum)

Recommended Sustainability Report

(including TCFD) for Board approval

Reviewed materiality matrix

Received reports from Employee

Engagement Director

Key activities 2023

Corporate governance

85Ceres Annual Report 2023

Directors’ report

for the year ended 31 December 2023

The Directors present their Annual Report together

with the audited financial statements for the year ended

31 December 2023.

Principal activities

Ceres is a leading developer of clean energy technology, fuel

cells for power generation and electrolysers for green hydrogen.

Its licensing model enables partners to deliver systems and

products at scale and pace to decarbonise power generation,

transportation, industry and everyday living.

Articles of Association

The Company’s Articles of Association (the “Articles”) may

only be amended by special resolution at a general meeting of

the shareholders. The Articles are available on the Company’s

website at:

https://www.ceres.tech/investors/shareholder-centre/

documents/

Directors

The Directors of the Company who served during the year

ended 31 December 2023 and up to the signing of these

statements are set out on pages 45 to 47. The following

Directors joined or left the Company during the year:

• Stephen Callaghan (Senior Independent Director) stepped

down from the Board on 18 May 2023;

• Caroline Brown (Non-Executive Director) was appointed

to the Board on 1 June 2023;

• Karen Bomba (Non-Executive Director) was appointed

to the Board on 1 June 2023;

• Qinggui Hao (nominated representative Non-Executive

Director for Weichai Power Hong Kong International

Development Co. Limited (“Weichai”)) stepped down

from the Board on 27 September 2023; and

• Nannan Sun (nominated representative Non-Executive

Director for Weichai) was appointed to the Board on

27 September 2023.

The powers of the Directors are set out in the Articles and

the appointment and removal of Directors are governed

by the Articles, the Companies Act 2006, the Corporate

Governance Code 2018 and related legislation. All Directors

will put themselves forward for re-election at the Annual

General Meeting of the Company in 2024 with the exception

of Aidan Hughes who will stand down at the close of the

Annual General Meeting. More details on the process to

appoint new Directors are set out in the Remuneration

& Nomination Committee Report.

Directors and Officers liability insurance

The Company maintains liability insurance for its Directors

and Officers as permitted by the Companies Act 2006. The

Company also grants to the Directors indemnities in this regard,

which constitute a qualifying third-party indemnity provision

as defined by Section 234 of the Companies Act 2006, which

were in force throughout the year ended 31 December 2023

and which remain in force at the date of this report.

Results and dividends

The consolidated results for the Group are set out on page 98

of the financial statements. The Directors do not recommend

the payment of a dividend (2022: £nil).

Share capital

The Company’s shares are listed on the Main Market of the

London Stock Exchange. The Company’s Articles contain

provisions which govern the ownership and transfer of shares.

As at 31 December 2023 the Company had an allotted and

fully paid share capital of ordinary shares with a nominal value

of 10 pence each of 192,968,096. Each share carries one right

to vote at general meetings of the Company. No shareholder

holds securities having special rights with regard to control of

the Company. There are no restrictions on voting rights or the

transfer of securities in the Company and the Company is not

aware of any agreements between holders of these securities

that would result in such restrictions. Details of the Company’s

share capital, including changes during the year, are set out on

page 125. Details of the Company’s share schemes are set out

on pages 126 to 129.

Authority to issue shares

The Directors were authorised at the 2023 Annual General

Meeting to allot shares up to a maximum aggregate nominal

amount of £6,419,126 (representing approximately one third

of the nominal value of the then issued share capital of the

Company); and in addition equity securities (as defined by

Section 560 of the 2006 Companies Act) up to an aggregate

nominal amount of £6,419,126 (representing approximately one

third of the nominal value of the then issued share capital of the

Company) in connection with an offer of such securities by way

of a rights issue, This authority will expire at the end of the

2024 Annual General Meeting.

Authority to purchase own shares

The Company was further authorised, for the purposes of

Section 701 of the 2006 Companies Act to make one or more

market purchases (within the meaning of Section 693 of the

2006 Companies Act) of ordinary shares in the capital of the

Company up to a maximum aggregate number of ordinary

shares of 28,886,067, representing 15% of the issued ordinary

share capital of the Company as at 5 April 2023. This authority

will expire at the end of the 2024 Annual General Meeting.

Major shareholders

As at 31 December 2023, the Company had been notified of

the following interests in voting rights pursuant to Chapter 5 of

the Disclosure Guidance and Transparency Rules. BNP Paribas

Asset Management UK Limited notified the Company of three

changes during the year and between 31 December 2023

and the date of this report, further notified the Company of

an update to their holding. The latest disclosure is therefore

included below. Also included for information are the holdings

of the two major shareholders with nominee Directors on

the Board.

Ordinary Shares No. of Shares % of ISC

Weichai Power (Hong Kong)

International Development Co. Ltd 37,965,262 19.67%

Robert Bosch GmbH 33,790,880 17.51%

BNP Paribas Asset Management

UK Limited 9,487,381 4.91%

86 Ceres Annual Report 2023

Listing Rule 9.8.4R disclosures

No shareholder is considered a controlling shareholder as

defined in the Financial Conduct Authority Handbook. The

remaining disclosures required by Listing Rule 9.8.4 are not

applicable to the Company. Notwithstanding this, the Company

has entered into a Relationship Agreement with Weichai Power

(Hong Kong) International Development Co., Ltd, and with

Robert Bosch GmbH as required by LR 9.2.2AR(2)(a).

Employee information

The business engages with its colleagues in numerous ways

including regular communications via weekly news bulletins,

a shared intranet, email communications, virtual and in-person

sessions and monthly “All Hands” meetings. The Connect

employee forum provides a platform for views to be heard

and also engagement and inclusion opportunities, especially in

relation to the marking and celebration of certain events during

the year. Surveys are conducted throughout the year to gauge

colleagues’ thoughts and to obtain feedback on issues and

events. More information on engagement with employees is

set out in the Stakeholder Engagement section on page 28 and

in the Corporate Governance Report on page 51.

The Company actively works to attract, recruit, support

and retain the best talent from diverse backgrounds. As an

equal opportunity employer, the Company provides up to

date tools and resources to enable all individuals to apply and

compete for employment opportunities for which they are

qualified, based on their qualifications, skills and experience.

Tools and approaches are used throughout talent acquisition

and career development, to attract a diverse pool and

ensure that career opportunities are attractive to all potential

candidates, overcoming barriers. Reasonable adjustments are

made to the recruitment process to ensure no applicant is

disadvantaged because of their disability. This is supported

with training to ensure hiring managers do not discriminate or

apply unconscious bias when making hiring decisions. Further

guidance to hiring managers is provided in the Company’s

Talent Acquisition and Diversity, Equity, Belonging and

Inclusion (“DEBI”) policies. The Company also seeks to ensure

the continuation where possible and practical of colleagues

in their role should they incur a disability whilst employed by

the Company.

More information on the ways the Company invests and

rewards its employees is set out on page 64 and in the

Sustainability Report available on the Company website at:

www.ceres.tech/sustainability/

Branches outside the UK

As at 31 December 2023 the Group has branches in Weifang,

China, and in Seoul, South Korea, which support the Group’s

business development strategy in those territories.

Anti-bribery and corruption

The Company has a zero tolerance approach to bribery and

corruption and operates an Anti-Bribery & Corruption Policy.

The Policy also contains requirements with regard to the

provision or receipt of gifts and hospitality which is limited and

which require approval over a certain value threshold. The

Gifts and Hospitality Register, implemented in the latter part of

2023, will be monitored through the receipt of annual reports

to the Audit Committee commencing in 2024. The day-to-day

operation is monitored by the governance team. Mandatory

annual training will commence in early 2024 for all colleagues.

Information security

The Company operates an Information Security Policy. There

have been no information security breaches in the last three

years. Arrangements with third parties are assessed with

thorough due diligence performed to identify and understand

potential risks which may then be mitigated. There have been

no third-party information security breaches. Penetration

testing is performed at least annually and any risks arising are

mitigated immediately. The Company holds insurance for cyber

security which covers information security risk and this was in

place for the duration of 2023. All colleagues are subject to

mandatory information security induction training and annual

refresher training.

Political donations

The Group made no political donations in the year ended

31 December 2023 or the prior period.

Payment practice policy

It is the Group’s policy for 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 as at

31 December 2023, as a proportion of amounts invoiced

by suppliers during the previous year, represented 35 days

(31 December 2022: 47 days). There were no trade creditors

for the Company as at 31 December 2023, as a proportion of

amounts invoiced by suppliers during the previous year; this

therefore represented nil days (31 December 2022: three days).

Going Concern and Viability Statements

Having reviewed the Group’s cash and short-term investments,

forecast income and expenditure, performing appropriate

sensitivity and scenario analyses, and after making appropriate

enquiries, the Directors have a reasonable expectation that

the Group and Company have adequate resources to progress

their strategy. Accordingly, they continue to adopt the going

concern basis in preparing these financial statements. More

detail can be found on page 42 and in the financial statements

on page 102.

The Directors have further assessed the prospects of the

Company over a defined period of time and set out their

conclusions in the Viability Statement which can be found

on pages 40 to 42.

Corporate governance

87Ceres Annual Report 2023

Additional disclosures and Non-financial and Sustainability Information Statement

The following information that is relevant to this Directors’ Report and/or is required by S414CA and S414CB of the Companies

Act 2006 is incorporated by reference and can be located in this report and on our Company website (www.ceres.tech) as follows:

Business review and future developments Chair’s statement and Chief Executive Officer’s review Pages 6 to 11

Risk management and principal risks

and uncertainties

Strategic Report Pages 36 to 39

Corporate and social responsibility Sustainability Pages 18 to 27

Corporate governance and Code Corporate Governance Report Pages 44 to 54

Financial instruments Financial statements Page 98 to 135

Research and development expenditure Note 4 Financial statements Page 109

Directors Directors’ information Pages 45 to 47

Directors’ interests in shares Directors’ Remuneration Report Pages 63 to 83

People policies and colleague engagement Sustainability Report/Annual Report Company website

Page 28 and 51

Stakeholder engagement (S172 Statement) Stakeholder engagement Pages 28 to 29

Greenhouse gas emissions and

energy consumption

Sustainability Pages 18 to 27

Environmental matters Task Force on Climate-related Financial Disclosures Pages 22 to 27

Sustainability Report Company website

ESG Committee Report Pages 84 to 85

ESG and Sustainability Policy Company website

Employees Health and Safety at Work Policy Company website

Page 19

DEBI Policy Company website

Page 19 and 62

Employee Engagement Director Pages 51 to 52

Social matters S172 Statement Pages 28 to 29

People and Community – Sustainability Report Company website

Charitable Giving and Volunteering Policy – Sustainability Report Company website

DEBI Policy Company website

Gender Pay Report Company website

Human rights Modern Slavery Statement Company website

Code of Conduct & Business Ethics Company website

Anti-bribery and corruption matters Anti-Bribery & Corruption Policy Page 87

Conflicts of Interest Policy Page 54

Modern Slavery Statement Company website

Speak Up Policy Page 52

Principal risks and impact on business activity Principal risks and uncertainties Pages 36 to 39

Audit Committee Report Pages 55 to 58

Business model Strategic Report Page 16

In addition to the information required by the Regulations, the Company publishes a comprehensive Sustainability Report annually

which details the Company’s sustainability strategy, environmental and governance responsibilities and commitment to social

matters. The 2022 Sustainability Report is available on the Company website at www.ceres.tech/sustainability/.

Directors’ report continued

for the year ended 31 December 2023

88 Ceres Annual Report 2023

Events after the reporting date

On 18 January 2024 the Company announced to the

market that it had signed a global long-term manufacturing

collaboration and licence agreement for both solid oxide

electrolysis cell (“SOEC”) and solid oxide fuel cell (“SOFC”)

stack production with Delta Electronics.

On 24 January 2024 as part of the Trading Update to the

market it was confirmed that the planned China JV had not

been concluded in 2023 and that it is now the Company’s

belief that the proposed JV is unlikely to be completed in its

current form.

Statement of disclosure to the auditor

Each of the persons named as Directors at the date of this

report confirm that:

• so far as they are aware, there is no relevant audit information

of which the Company’s auditor is unaware; and

• that they have taken all steps that they ought to have

taken as a Director in order to make themselves aware

of any relevant audit information and to establish that the

Company’s auditor is aware of that information.

Auditor

A resolution to re-appoint BDO LLP as the Company’s external

auditor for the year ending 31 December 2024 and for its

remuneration to be agreed by the Audit Committee, will be

submitted to the 2024 Annual General Meeting.

Statement of Directors’ responsibilities in respect

of the annual report and 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 are required to

prepare the Group and parent company financial statements in

accordance with UK-adopted International Accounting Standards.

The Directors must not approve the financial statements unless

they are satisfied that they give a true and fair view of the state

of affairs of the Group and parent company and of the profit

or loss of the Group and parent company for that period.

In preparing these 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 they have been prepared in accordance

with UK-adopted International Accounting Standards 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 Group and the

Company will continue in business.

The Directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the Company’s

transactions and disclose with reasonable accuracy at any

time the financial position of the Company and enable them to

ensure the financial statements comply with the requirements

of the Companies Act 2006. They are also responsible

for safeguarding the assets of the Company and for taking

reasonable steps for the prevention and detection of fraud and

other irregularities.

The Directors’ confirm that to the best of their knowledge:

• the financial statements, prepared in accordance with

applicable accounting standards, give a true and fair view of

the assets, liabilities, financial position and profit or loss of the

Company and the undertakings included in the consolidation

taken as a whole; and

• the management report includes a fair review of the

development or performance of the business and the

position of the Company and the undertakings included

in the consolidation taken as a whole, together with a

description of the principal risks and uncertainties.

The Directors confirm that the Annual Report and Accounts,

taken as a whole, is fair, balanced and understandable and

provides the information necessary for shareholders to

assess the performance, strategy and business model of

the Company.

Publication

The Annual Report and Accounts will be made available on

the Company’s website and also on the National Storage

Mechanism in accordance with legislation in the United

Kingdom governing the preparation and dissemination of

financial statements, which may vary from legislation in other

jurisdictions. The maintenance and integrity of the Company’s

website is the responsibility of the Directors. The Directors’

responsibility also extends to the ongoing integrity of the

financial statements contained therein.

The Directors’ Report has been approved by the Board

of Directors and is signed on their behalf by:

Eric Lakin

Chief Financial Officer

12 April 2024

Corporate governance

89Ceres Annual Report 2023

90 Ceres Annual Report 2023

91 Independent auditor’s report

98 Consolidated statement of profit and loss and

other comprehensive income

99 Consolidated statement of financial position

100 Consolidated cash flow statement

101 Consolidated statement of changes in equity

102 Notes to the consolidated financial statements

130 Company balance sheet

131 Company statement of changes in equity

132 Notes to the Company financial statements

136 Directors and advisers

Financial

statements

91Ceres Annual Report 2023

Financial statements

Opinion on the financial statements

In our opinion:

• The financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at

31 December 2023 and of the Group’s loss for the year then ended;

• The Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;

• The Parent Company financial statements have been properly prepared in accordance with Financial Reporting Standard 101

Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice); and

• The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of Ceres Power Holdings Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’)

for the year ended 31 December 2023 which comprise the Consolidated statement of profit and loss and other comprehensive

income, Consolidated statement of financial position, Consolidated cash flow statement, Consolidated statement of changes

in equity, Company balance sheet, Company statement of changes in equity and notes to the financial statements, including a

summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and

UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the

Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting

Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial

statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide

a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee.

Independence

Following the recommendation of the Audit Committee, we were appointed by the Board of Directors to audit the financial

statements for the year ended 31 December 2020 and subsequent financial periods.. The period of total uninterrupted

engagement including retenders and reappointments is four years, covering the periods ended 31 December 2020 to

31 December 2023. We remain independent of the Group and the Parent Company in accordance with the ethical requirements

that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public

interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit

services prohibited by that standard were not provided to the Group or the Parent Company.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent

Company’s ability to continue to adopt the going concern basis of accounting included:

• Assessment of assumptions within the projected cash flows: we evaluated the reasonableness of the assumptions and future

plans modelled within the Board approved going concern forecasts, covering the period to 30 April 2025, including the impact

of strategic initiatives. We considered whether the forecasts aligned with how the Group had traded throughout the year

and post year end, which included reviewing the movement in revenue against our understanding of the contracts and the

movements in expenditure compared to historic costs.

• Sensitivity analysis: evaluation of sensitivities of the Group’s cash flow forecasts. The analysis considered reasonably possible

adverse effects that could arise as well as a stress test to consider the level of future revenue reduction and cost increases that

the Group could support.

• Post year end trading performance: comparison of the post year end trading results to the forecasts to evaluate the accuracy

and achievability of the forecasts planned.

• Disclosures: evaluation of the adequacy of the disclosures in relation to the risks posed and scenarios the Directors have

considered in performing their going concern assessment.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,

individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going

concern for a period of at least twelve months from when the financial statements are authorised for issue.

In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing

material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors

considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections

of this report.

Independent auditor’s report

to the members of Ceres Power Holdings plc

92 Ceres Annual Report 2023

Independent auditor’s report continued

to the members of Ceres Power Holdings plc

Overview

Coverage 100% (2022: 99%) of Group profit before tax

100% (2022:100%) of Group revenue

100% (2022: 99%) of Group total assets

Key audit matters

2023 2022

Revenue recognition – forecast labour hours

Revenue recognition – application of IFRS 15

Capitalisation of development costs

Revenue recognition – revenue spreadsheet errors

Inventory valuation

Revenue recognition – application of IFRS 15, revenue from contracts with customers, has been noted

as a key audit matter in the current year. The matter has been considered to be key this year due to the

restatement that was identified in relation to the prior year revenue recognition.

Revenue recognition – revenue spreadsheet errors is no longer considered to be a key audit matter

because the likelihood of errors arising in relation to the revenue spreadsheet is no longer considered to be

a significant risk and the procedures to address the risk are straight forward.

Inventory valuation is no longer considered to be a key audit matter because the magnitude of the balance

and any potential errors is significantly reduced with the inventory balance reducing from £5.7m to £2.8m.

Materiality

Group financial statements as a whole

£328,000 (2022: £332,000) based on 1.5% (2022: 1.5%) of revenue.

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system

of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of

management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have

represented a risk of material misstatement.

The Group operates in the United Kingdom and China. The Group is made up of four trading companies supported by three holding

companies, one of which being the Parent Company. In establishing the overall approach to the Group audit, we determined the

nature and amount of work that needed to be performed on each component. We have identified two significant components.

Based on our assessment we performed a full scope audit of the complete financial information of all UK entities within the Group.

The financial information of the Chinese entity has been subject to analytical procedures. All audit procedures were performed by

the Group engagement team.

Climate change

Our work on the assessment of potential impacts on climate-related risks on the Group’s operations and financial statements included:

• Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks and their

potential impacts on the financial statements and adequately disclose climate-related risks within the annual report;

• Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how climate change

affects this particular sector;

• Involvement of climate-related experts in evaluating management’s risk assessment; and

• Review of the minutes of Board and Audit Committee meetings and other papers related to climate change and performed

a risk assessment as to how the impact of the Group’s commitment may affect the financial statements and our audit.

We challenged the extent to which climate-related considerations, including the expected cash flows from the initiatives and

commitments have been reflected, where appropriate, in management’s going concern assessment and viability assessment.

We also assessed the consistency of management’s disclosures included as ‘Other Information’ on page 22 with the financial

statements and with our knowledge obtained from the audit.

Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted by

climate-related risks.

93Ceres Annual Report 2023

Financial statements

Overview continued

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial

statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to

fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources

in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the

financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter – 1 How the scope of our audit addressed the key audit matter

Revenue Recognition

– forecast labour hours

(Accounting

policies, Note 2 -

Revenue £22.3m)

Engineering services revenue

is recognised over time using

the labour hours incurred as

a percentage of the forecast

hours to determine the stage

of completion.

Given the determination of

forecast labour hours is highly

judgemental, there is a risk

that the forecast labour hours

are incorrect and as such the

amount of revenue recorded

is not reflective of the stage

of completion. We therefore

determined this to be a key

audit matter.

We have:

• Attended year-end project meetings with senior commercial and

finance staff from the Group to evidence the internal processes and

challenges of the forecast labour hours as part of our risk assessment.

• Compared the prior year estimate of the total forecast hours to the

current year actuals to understand the accuracy of previous forecasts

and considered the validity of any changes in the year by reference to

supporting evidence.

• Challenged project managers on the forecast hours to complete,

considering any internal reporting documentation and milestones

agreed with the customer to check that the revenue calculation was

reflective of the actual position.

• Considered the ability of the project managers to prepare the forecast

labour hours calculation.

• Investigated the monthly run rate of labour hours for the project

incurred as well as those forecast and challenged management on

anomalies identified.

• Confirmed for a sample of labour hours incurred in the period that

the hours had been approved, and obtained evidence to support the

accuracy of these hours recorded against the project.

• Investigated the post year end performance to understand the

accuracy of the year end forecast labour hours.

• Compared gross margin during the year against our expectation and

investigated any variances.

• Obtained and read board meeting minutes during the year for evidence

of any issues relating to progress or delays.

Key observations:

As a result of the testing above we did not find any matters to suggest

that the forecast labour hours were inappropriate.

Key audit matter – 2 How the scope of our audit addressed the key audit matter

Revenue Recognition

– application

of IFRS 15

(Accounting

policies, Note 2 –

Revenue £22.3m)

The Group accounts for

revenue in line with the

requirements of IFRS 15,

revenue from contracts

with customers.

Given that the Group’s revenue

contracts and the application

of IFRS 15 is complex and

requires management to make

a number of judgements.

A number of corrections and

restatements were identified

in respect of the accounting

of revenue contracts in the

current period. We therefore

determined this to be a key

audit matter.

We have:

• Considered the IFRS 15 five step model and compared this to the

conclusions reached by management and our prior period audit work.

• Challenged management where judgements and assumptions had

been made, comparing this against our understanding of the business

and agreeing the judgements to supporting documentation.

• Verified and considered the allocation of the transaction price to

performance obligations on new contracts and audited any estimates

made by management in determining the allocation.

• Ensured the treatment of the contract is in line with the revenue

recognition accounting policy.

• Reconciled the year end revenue recognised in the TB and contract

asset/liability to the workings prepared.

• Verified the impact of corrections or restatements identified during the

course of the audit, and considered the impact on our audit work.

Key observations:

A number of corrections and restatements were identified in respect of

the accounting of revenue contracts under IFRS 15 in the current period.

We verified the impact of these corrections and restatements, and

confirmed they had been appropriately addressed.

94 Ceres Annual Report 2023

Independent auditor’s report continued

to the members of Ceres Power Holdings plc

Overview continued

Key audit matters continued

Key audit matter – 3 How the scope of our audit addressed the key audit matter

Capitalisation of

development costs

(Accounting policies,

Note 12 – Intangibles,

Customer and

internal development

programmes £17.8m)

The Group capitalises

development costs that

meet the capitalisation

criteria of the applicable

accounting standards.

Given the significance of

capitalised development

costs to the group’s activities

and the significant judgement

required in the application

of the capitalisation criteria,

there is a risk that costs

have been inappropriately

capitalised. We therefore

determined this to be a

key audit matter.

We have:

• Agreed a sample of external costs capitalised in the year to supporting

documentation and considered whether these had been allocated

against the appropriate project.

• Confirmed for a sample of labour hours capitalised in the period that

the hours had been approved, and obtained evidence to verify the

projects worked on to support the attribution of these hours to the

relevant project.

• Performed an assessment of the capitalised costs to understand the

rationale behind capitalisation and the likelihood of future benefits to be

drawn from the costs incurred to determine whether the capitalisation

criteria of the applicable accounting standard were satisfied.

Key observations:

As a result of the testing above we did not find any matters to indicate

that judgements made in the capitalisation of development costs

was inappropriate.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.

We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions

of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower

materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels

will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular

circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance

materiality as follows:

Group financial statements Parent company financial statements

2023

2022

2023

2022

Materiality 328,000 332,000 213,000 315,400

Basis for determining materiality 1.5% of revenue Determined by reference to Group materiality

and the aggregation risk when combined with

materiality for the other components.

Rationale for the

benchmark applied

We continue to consider revenue to be the

most appropriate benchmark as the Group

remains in the research and development stage

of their growth and as such are not generating

profits consistent with the operations and size

of the business.

Based on our assessment of the components’

aggregation risk.

Performance materiality 213,000 216,000 138,000 205,200

Basis for determining

performance materiality

In setting the level of performance materiality

we considered a number of factors including

the expected total value of known and

likely misstatements, the number of areas of

estimation within the financial statements and

the type of audit testing to be completed.

Performance materiality was set at 65% of

materiality (2022: 65%)

In setting the level of performance materiality

we considered a number of factors including

the expected total value of known and

likely misstatements, the number of areas of

estimation within the financial statements and

the type of audit testing to be completed.

Performance materiality set at 65% of

materiality (2022: 65%).

95Ceres Annual Report 2023

Financial statements

Component materiality

For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, based on a

percentage of between 56% and 94% (2022: 31% and 95% ) of Group materiality dependent on the size and our assessment of

aggregation risk. Component materiality ranged from £184,000 to £308,000 (2022: £102,000 to £315,400). In the audit of each

component, we further applied performance materiality levels of 65% (2022: 65%) of the component materiality to our testing to

ensure that the risk of errors exceeding component materiality was appropriately mitigated.

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £7,000 (2022: £7,000).

We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

Other information

The directors are responsible for the other information. The other information comprises the information included in the Annual

Report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover

the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance

conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is

materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears

to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to

determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have

performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Corporate governance statement

The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part

of the Corporate Governance Statement relating to the parent company’s compliance with the provisions of the UK Corporate

Governance Code specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate

Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.

Going concern and

longer-term viability

• The Directors’ statement with regards to the appropriateness of adopting the going concern basis

of accounting and any material uncertainties identified set out on page 42; and

• The Directors’ explanation as to their assessment of the Group’s prospects, the period this

assessment covers and why the period is appropriate set out on page 42.

Other Code provisions • Directors’ statement on fair, balanced and understandable set out on page 89;

• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks

set out on page 36;

• The section of the annual report that describes the review of effectiveness of risk management and

internal control systems set out on page 36; and

• The section describing the work of the Audit Committee set out on page 55.

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the

Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.

Strategic report and

Directors’ report

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the Strategic report and the Directors’ report for the financial year for which

the financial statements are prepared is consistent with the financial statements; and

• the Strategic report and the Directors’ report have been prepared in accordance with applicable

legal requirements.

In the light of the knowledge and understanding of the Group and Parent Company and its environment

obtained in the course of the audit, we have not identified material misstatements in the strategic report

or the Directors’ report.

Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared

in accordance with the Companies Act 2006.

Matters on which we

are required to report

by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act

2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for

our audit have not been received from branches not visited by us; or

• the Parent Company financial statements and the part of the Directors’ remuneration report to be

audited are not in agreement with the accounting records and returns; or

• certain disclosures of Directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

96 Ceres Annual Report 2023

Independent auditor’s report continued

to the members of Ceres Power Holdings plc

Responsibilities of Directors

As explained more fully in the Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements,

the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair

view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that

are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability

to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no

realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a

high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which

our procedures are capable of detecting irregularities, including fraud is detailed below:

Non-compliance with laws and regulations

Based on:

• Our understanding of the Group and the industry in which it operates;

• Discussion with management, in house legal counsel, Audit Committee and those charged with governance; and

• Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws and regulations.

We considered the significant laws and regulations to be the UK adopted international accounting standards, UK GAAP, UK tax

legislation, Listing Rules and the Companies Act 2006.

The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the

amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws

and regulations to be the health and safety legislation and GDPR legislation.

Our procedures in respect of the above included:

• Review of minutes of meetings of those charged with governance for any instances of non-compliance with laws and regulations;

• Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations;

• Review of financial statement disclosures and agreeing to supporting documentation;

• Involvement of tax specialists in the audit; and

• Review of legal expenditure accounts to understand the nature of expenditure incurred.

Fraud

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment

procedures included:

• Enquiry with management and those charged with governance and the Audit Committee regarding any known or suspected

instances of fraud;

• Obtaining an understanding of the Group’s policies and procedures relating to:

• Detecting and responding to the risks of fraud; and

• Internal controls established to mitigate risks related to fraud.

• Review of minutes of meetings of those charged with governance for any known or suspected instances of fraud;

• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;

• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material

misstatement due to fraud; and

• Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.

Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls,

incorrect application of IFRS 15 (revenue from contracts with customers) on contracts and incorrect forecast labour hours used in

the calculation of revenue recognition.

97Ceres Annual Report 2023

Financial statements

Auditor’s responsibilities for the audit of the financial statements continued

Fraud continued

Our procedures in respect of the above included:

• Testing a sample of journal entries throughout the year, which met defined risk criteria, by agreeing to supporting

documentation;

• Assessing significant estimates made by management for bias including the forecast labour hours as detailed in the key audit

matters, the dilapidations provisions and the measurement of warranty provision and contingent liabilities;

• Assessing the application of IFRS 15 on new contracts including the estimates and judgements, comparing the application to the

accounting policy and supporting documentation; and

• Testing the risk of incorrect labour hours as detailed in the key audit matters.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who

were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance

with laws and regulations throughout the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the

risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud

may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations

in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and

transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/

auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those

matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law,

we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a

body, for our audit work, for this report, or for the opinions we have formed.

James Fearon (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor

Gatwick, UK

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

98 Ceres Annual Report 2023

Consolidated statement of profit and loss and other comprehensive income

for the year ended 31 December 2023

			2022
		2023	£’000
	Note	£’000	Restated 1
Revenue	2	22,324	19,788
Cost of sales		(8,770)	(9,079)
Gross profit		13,554	10,709
Other operating income	4	3,665	1,332
Operating costs	4	(76,620)	(66,054)
Operating loss		(59,401)	(54,013)
Finance income	5	7,079	2,830
Finance expense	5	(1,287)	(304)
Loss before taxation	4	(53,609)	(51,487)
Taxation (charge)/credit	8	(399)	3,872
Loss for the financial year and total comprehensive loss		(54,008)	(47,615)
Loss per £0.10 ordinary share expressed in pence per share:
– basic and diluted	9	(28.03)p	(24.88)p

1. The restatement to 2022 is described in Note 1

The notes on pages 102 to 129 are an integral part of these consolidated financial statements.

99Ceres Annual Report 2023

Financial statements

Consolidated statement of financial position

as at 31 December 2023

			As at	As at
		As at	31 Dec 2022	31 Dec 2021
		31 Dec 2023	£’000	£’000
	Note	£’000	Restated	Restated
Assets
Non-current assets
Property, plant and equipment	10	25,882	26,387	18,613
Right-of-use assets	11	2,141	2,647	2,438
Intangible assets	12	19,054	13,278	8,478
Long-term investments		—	—	5,000
Investment in associates	13	2,350	2,460	500
Other receivables	15	741	741	741
Total non-current assets		50,168	45,513	35,770
Current assets
Inventories	14	2,825	5,714	3,145
Contract assets 1	2	1,575	400	5,343
Other current assets	16	1,193	957	1,133
Derivative financial instruments	20	8	54	1,073
Current tax receivable		771	7,396	1,615
Trade and other receivables	15	9,876	17,153	5,813
Short-term investments	17	90,249	110,536	93,129
Cash and cash equivalents	17	49,707	71,784	151,455
Total current assets		156,204	213,994	262,706
Liabilities
Current liabilities
Trade and other payables	18	(4,983)	(4,933)	(2,783)
Contract liabilities	2	(7,469)	(7,363)	(3,917)
Other current liabilities	19	(6,301)	(6,275)	(5,047)
Derivative financial instruments	20	(99)	—	—
Lease liabilities	21	(694)	(610)	(754)
Provisions	22	(647)	(929)	(1,579)
Total current liabilities		(20,193)	(20,110)	(14,080)
Net current assets		136,011	193,884	248,626
Non-current liabilities
Lease liabilities	21	(1,902)	(2,514)	(2,285)
Other non-current liabilities	19	(1,360)	(1,011)	(771)
Provisions 1	22	(2,282)	(2,105)	(1,828)
Total non-current liabilities		(5,544)	(5,630)	(4,884)
Net assets		180,635	233,767	279,512
Equity attributable to the owners of the parent
Share capital	23	19,297	19,209	19,073
Share premium		406,184	405,463	404,726
Capital redemption reserve	24	3,449	3,449	3,449
Merger reserve	24	7,463	7,463	7,463
Accumulated losses		(255,758)	(201,817)	(155,199)
Total equity		180,635	233,767	279,512

1. The restatements to the financial positions as at 31 December 2021 and 31 December 2022 have been described in Note 1.

The notes on pages 102 to 129 are an integral part of these consolidated financial statements.

The financial statements on pages 98 to 101 were approved by the Board of Directors on 12 April 2024 and were signed on

its behalf by:

Phil Caldwell Eric Lakin

Chief Executive Officer Chief Financial Officer

Ceres Power Holdings plc

Registered Number: 5174075

100 Ceres Annual Report 2023

Consolidated cash flow statement

for the year ended 31 December 2023

			2022
		2023	£’000
	Note	£’000	Restated
Cash flows from operating activities
Loss before taxation		(53,609)	(51,487)
Adjustments for:
Finance income	5	(7,079)	(2,830)
Finance expense	5	1,287	304
Depreciation of property, plant and equipment	4	7,461	5,592
Depreciation of right-of-use assets	4	641	620
Amortisation of intangibles	4	1,024	1,032
Net foreign exchange gains	4	(232)	(690)
Net change in fair value of financial instruments at fair value through profit or loss	4	143	1,020
Share-based payments	25	67	997
Operating cash flows before movements in working capital and provisions		(50,297)	(45,442)
Decrease/(increase) in trade and other receivables and other current assets		6,356	(11,165)
Decrease/(increase) in inventories		2,889	(2,569)
Increase in trade and other payables and other liabilities		1,847	3,345
(Increase)/decrease in contract assets		(1,175)	4,943
Increase/(decrease) in contract liabilities		106	2,487
Decrease in provisions		(536)	(522)
Net cash used in operations		(40,810)	(48,923)
Taxation received/(paid)		6,911	(1,909)
Net cash used in operating activities		(33,899)	(50,832)
Investing activities
Investment in associate		—	(1,000)
Proceeds from sale of property, plant and equipment		225	—
Purchase of property, plant and equipment		(7,922)	(12,347)
Capitalised development expenditure		(6,800)	(5,832)
Repayment of long-term investments		—	5,000
Decrease/(increase) in short-term investments		21,168	(16,193)
Finance income received		5,616	1,443
Net cash generated from/(used in) investing activities		12,287	(28,929)
Financing activities
Proceeds from issuance of ordinary shares	23	809	873
Expenses from issuance of ordinary shares		—	—
Cash paid on behalf of employees on the sale of share options		—	—
Repayment of lease liabilities	21	(658)	(744)
Finance interest paid	5	(393)	(212)
Net cash used in financing activities		(242)	(83)
Net decrease in cash and cash equivalents		(21,854)	(79,844)
Exchange (loss)/gain on cash and cash equivalents		(223)	173
Cash and cash equivalents at beginning of year		71,784	151,455
Cash and cash equivalents at end of year	17	49,707	71,784

1,2

1. Restatements to 2022 have been described in Note 1.

2. 2022 taxation paid has been restated to increase the taxation paid from £380,000 by £1,529,000 to correct the amount disclosed as tax paid, the corresponding

adjustment is to reduce the increase in trade and other receivables and other current assets. The exchange gains on cash and cash equivalents in 2022 has been

corrected by reducing the previously reported amounts by £690,000 with the corresponding adjustment being made to increase the movement in trade and other

payables, and hence net cash used in operating activities has increased by the same amount.

The notes on pages 102 to 129 are an integral part of these consolidated financial statements.

101Ceres Annual Report 2023

Financial statements

Consolidated statement of changes in equity

for the year ended 31 December 2023

				Capital
		Share	Share	redemption	Merger	Accumulated
		capital	premium	reserve	reserve	losses	Total
	Note	£’000	£’000	£’000	£’000	£’000	£’000
At 1 January 2022 – Previously stated		19,073	404,726	3,449	7,463	(154,056)	280,655
Restatement		—	—	—	—	(1,143)	(1,143)
At 1 January 2022 – Restated		19,073	404,726	3,449	7,463	(155,199)	279,512
Comprehensive income
Loss and total comprehensive loss for the financial year – Restated		—	—	—	—	(47,615)	(47,615)
Total comprehensive loss - Restated		—	—	—	—	(47,615)	(47,615)
Transactions with owners
Issue of shares, net of costs	23	136	737	—	—	—	873
Share-based payments	25	—	—	—	—	997	997
Total transactions with owners		136	737	—	—	997	1,870
At 31 December 2022 – Restated 1		19,209	405,463	3,449	7,463	(201,817)	233,767
Comprehensive income
Loss and total comprehensive loss for the financial year		—	—	—	—	(54,008)	(54,008)
Total comprehensive loss		—	—	—	—	(54,008)	(54,008)
Transactions with owners
Issue of shares, net of costs	23	88	721	—	—	—	809
Share-based payments	25	—	—	—	—	67	67
Total transactions with owners		88	721	—	—	67	876
At 31 December 2023		19,297	406,184	3,449	7,463	(255,758)	180,635

2021 and 2022 financial position have been restated as described in Note 1.

The notes on pages 102 to 129 are an integral part of these consolidated financial statements.

102 Ceres Annual Report 2023

Notes to the consolidated financial statements

for the year ended 31 December 2023

1. Accounting policies used in the preparation of the financial statements

The Company is incorporated and domiciled in the United Kingdom and is registered on the premium segment of the Main Market

of the London Stock Exchange (LON: CWR).

The accounting policies applied in the preparation of these consolidated financial statements are set out below and at the start

of the respective notes to these consolidated financial statements. These policies have been consistently applied to all the years

presented, unless otherwise stated.

Basis of preparation

The consolidated financial statements of the Group have been prepared on a going concern basis, in accordance with UK-adopted

international accounting standards (“IFRS”) .

The Company has elected to prepare its entity financial statements in accordance with Financial Reporting Standard 101 Reduced

Disclosure Framework (“FRS 101”) and these are presented on pages 130 to 135.

The consolidated financial statements have been prepared on a historical cost basis except for derivative financial instruments that

are stated at their fair value.

Foreign currencies

The consolidated financial statements are presented in pounds sterling, which is the Company’s functional currency and the

Group’s presentational currency. Transactions denominated in foreign currencies are translated into sterling at the exchange rate

ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into sterling at

the foreign exchange rate prevailing at the period end. Foreign exchange differences arising on translation are recognised in the

Consolidated Statement of Profit and Loss.

Basis of consolidation

The consolidated financial statements of Ceres Power Holdings plc include the results of the Company, subsidiaries which are

controlled by the Group and the Group’s interest in associates. The Group controls an entity when it is exposed to, or has rights

to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the

entity. In assessing control, the Group takes into consideration substantive potential voting rights that are currently exercisable.

The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are

included in the consolidated financial statements from the date that control commences until the date that control ceases.

Intra-Group balances and transactions, and any unrealised income and expenses arising from intra-Group transactions, are eliminated.

Associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the

financial and operational policy decisions of the investee but is not control or joint control over those policies. The Group’s share of

the results of associates is included in the Group’s Consolidated Statement of Profit and Loss using the equity method of accounting.

Investments in associates are recognised in the Group’s Consolidated Statement of Financial Position at cost plus post-acquisition

changes in the Group’s share of the entity’s net assets, less any impairment in value. If the Group’s share of losses in an associate

equals or exceeds its investment in the associate, the Group does not recognise further losses, unless it has incurred obligations

to do so or made payments on behalf of the associate.

Unrealised gains arising from transactions with associates are eliminated to the extent of the Group’s interest in the entity .

Going concern

The Group has reported a loss after tax for the year ended 31 December 2023 of £54.0m (2022: £47.6m) and net cash used in

operating activities of £33.9m (2022: £50.8m). At 31 December 2023, the Group held cash and cash equivalents and investments

of £140.0m (31 December 2022: £182.3m).

The Directors have prepared annual budgets and cash flow projections that extend 12 months from the date of approval of this

report. The decreased operating cash used in the year is a result of favourable movements in working capital, including significant

debtor receipts at the beginning of the year and a reduction in inventory held. Future projections include management’s expectations

of the further investment in R&D projects, new product development and capital investment as the Group sustains its competitive

advantage in licensing fuel cell and electrolysis technologies. Future cash inflows reflect management’s expectations of revenue

from existing and new licensee partners in both the power and green hydrogen markets.

The projections were stress tested by applying different scenarios in line with the Group’s viability scenarios presented on pages

41 to 42 including a slower intake of future licensee partners leading to a loss of significant future revenue and a resulting cost

mitigation. The China joint venture with Weichai and Bosch has now been removed from future projections. In each case the

projections demonstrated that the Group is expected to have sufficient cash reserves to meet its liabilities as they fall due and

to continue as a going concern. For the above reasons, the Directors continue to adopt the going concern basis in preparing

the consolidated financial statements.

103Ceres Annual Report 2023

Financial statements

1. Accounting policies used in the preparation of the financial statement continued

Critical accounting judgements and estimates

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and

assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported

amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best

knowledge of the amount, event or actions, actual results may ultimately differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised

in the period in which the estimate is revised.

Significant judgements

The judgements made by management in applying accounting policies that are considered to have the most significant impact

on the Group’s assets and liabilities are the following:

• Revenue from customer contracts,

• Capitalisation and amortisation of development costs,

• Recognition of inventory, and

• Determination of the term of the lease as a lessee in the event of agreements with termination options.

Revenue from customer contracts

The Group has recognised revenue from customer contracts of £22.3m in the year ended 31 December 2023 (2022: £19.8m)

and net contract liabilities of £5.9m as at 31 December 2023 (2022: £7.0m). Note 2 sets out the Group’s accounting policies in

respect of revenue from customer contracts and explains the movement to a net contract liabilities position when compared with

the prior year.

Customer contracts typically include engineering services, access to or sale of technology hardware and licences. Judgement is

required when identifying the performance obligations in a contract as well as when determining the basis on which to allocate

revenue between each performance obligation.

In determining the revenue recognition for licence components of customer contracts, judgements must be made as to the nature

of the licences (right to access or right to use) and the number and timing of performance obligations associated with those licences.

These judgements are made based on the interpretation of key clauses and conditions within each customer contract. For example,

where a contract confers the customer with the right to benefit from existing background IP as at a specific date, that is

generally treated as a right to use licence. In contrast, where a contract confers the customer with the right to benefit from

future IP developments as they occur, that is more likely to be treated as a right to access licence. Judgement is also required

when determining the point at which the benefit of the IP is fully transferred to the customer, which can depend on a number

of factors including the customer’s prior experience with fuel cell technology.

Capitalisation and amortisation of development costs

When determining the criteria for starting, and subsequently ceasing, the capitalisation of development costs as an internally

generated asset, IAS 38 requires that strict criteria are met, in particular, that it is probable that future economic benefits will

result from the development asset.

Following the signing of commercial contracts with the Group’s strategic partners in 2018, management determined that the

probability threshold had been met for the Group’s fuel cell (“SOFC”) technology, and the Group implemented processes

to continuously review and assess all customer and internal development programme expenditure to ascertain whether it

is appropriate to capitalise development costs under IAS 38.

Determining when capitalisation should commence is a critical judgement, as is the basis for the appropriate stage at which

to cease capitalising ongoing costs and to commence amortising the capitalised asset.

Within the Group there is an established Technology and Product Development Process with gated milestones that assesses the

technology and product viability and maturity. Generally, until a programme has passed the required milestone gate, all expenditure

is deemed “research” and expensed as incurred. Expenses incurred after the milestone gate is passed are capitalised within the

parameters set out in the accounting policy. Once a programme has passed another milestone gate, confirming development

activities are completed, the capitalisation of costs ceases. Any further expenditure is expensed, and amortisation of the intangible

asset commences.

Application of the above policy requires management’s judgement around key areas such as future commercial feasibility of the

development and that future economic benefit will be derived from the development. The Executive Committee regularly reviews

the critical judgements around capitalisation and useful economic life of development projects.

During the year ended 31 December 2023, the application of these judgements resulted in development costs of £6.8m (2022: £5.6m)

being capitalised (see Note 12). The net book value of capitalised development costs as at 31 December 2023 increased to

£18.8m (31 December 2022: £12.9m), and amortisation of £0.9m (2022: £0.9m) was charged during the year.

Despite encouraging signs of progress with our SOEC technology during the year, including progress made with the first of a

kind demonstrator and signing the Group’s first SOEC contract with Delta Electronics in January 2024, we continue to expense

costs incurred in researching and developing our electrolysis technology. When we apply the strict criteria of capitalisation from

IAS 38 ‘Intangible Assets’ we determined that, as at 31 December 2023, the probability threshold to begin capitalisation has not

yet been met.

104 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

1. Accounting policies used in the preparation of the financial statement continued

Recognition of inventory

In line with the UK Conceptual Framework for a definition of an asset and IAS 2: “An entity should initially recognise inventory

when it has control of the inventory, expects it to provide future economic benefits, and the cost of the inventory can be

measured reliably.” The Group has recognised inventory for its next generation of solid oxide technology.

The key judgement to apply is the expectation of future economic benefits to be derived from the inventory recognised.

During the year the Group signed a loan evaluation agreement for the next generation of the Group’s solid oxide cell technology

and together with the evaluation of the future pipeline, the Group’s assessment is that the threshold for recognising inventories for

the next generation has been met. In the fourth quarter of 2023 raw materials and work in progress from the previous generation

of technology was evaluated to understand if it was capable of being utilised as part of the new technology; otherwise, it was

written off to the Consolidated Statement of Profit and Loss. The amount written off during the year was £1.1m.

As at 31 December 2023 the Group held finished stacks relating to the previous generation of the solid oxide technology

with confirmed customer demand for these stacks. The Group held no finished stacks made up from our new generation of

technology; as such no finished stacks were subject to our internal testing and quarantine processes and as a result no provision

was recognised at the balance sheet date (31 December 2022: £0.7m).

Determination of the term of the lease as a lessee in the event of agreements with termination options

Ceres determines the term of the lease as the non-cancellable period for which the lessee has the right to use the asset as well as

periods covered by termination options if Ceres is reasonably certain that it will not exercise that option. Both leases for premises

contain a break clause. Ceres applies judgement in evaluating whether it is reasonably certain that an option to renew will be

exercised or that an option to terminate the lease will not be exercised. In this context, Ceres considers all relevant facts and

circumstances that create an economic incentive for Ceres to exercise, or not to exercise, the termination option.

During the year, the Group signed a new lease agreement for premises based in Nuneaton. The break clause for the premises

was subsequently exercised and an adjustment of £0.1m was recognised to the right-of-use asset, with a corresponding

adjustment to the lease liability, as set out in Notes 11 and 21.

Significant estimates and assumptions

Significant estimates and associated assumptions are those that have a significant risk of resulting in a material adjustment to

the carrying amounts of assets and liabilities within the next financial year. Although these estimates are based on management’s

best knowledge of the amount, event or actions, actual results may ultimately differ from these estimates. The estimates and

underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in

which the estimate is revised.

The most significant estimates, assumptions and sources of uncertainty applicable in preparing the consolidated financial

statements are set out below:

• Determination of period-related revenue recognition over the course of customer contracts,

• Recognition and measurement of warranty provisions, and

• Recognition and measurement of dilapidation provisions.

Determination of period-related revenue recognition over the course of customer contracts

Customer contracts typically include engineering services, access to or sale of technology hardware and licences. Revenue is

allocated to these key components based on initial cost estimates to deliver the obligations under the contract and established

margins for the different components. Management has established a range of margins to apply to contract components

where the costs can be reliably estimated. Given the sometimes complex and long-term nature of customer contracts, these

forecast cost estimations and margins are considered a significant area of estimation when valuing and allocating revenue to

key components.

Revenue for engineering services is recognised based on the percentage of completion method and is measured based on

the contract labour hours at each reporting period compared to the estimated total contract labour hours required to deliver

the service over the contract life. The assessment of the total project labour hours required to deliver the contracted service is

updated during the term of the contract by project managers and is subject to internal reviews, including comparison to previous

forecasts and past experience. Changes in these estimates may impact revenue recognised at the reporting date.

The actual recognition of wholly or partially unsatisfied performance obligations may ultimately differ from the estimate made

at the reporting date and it is reasonably possible that outcomes on these contracts within the next reporting period could

differ, adversely or favourably, in aggregate to those estimated. The estimated labour hours to complete each contract reflect

management’s best estimate at that point in time. If the hours incurred for all of the Group’s engineering services contracts were

10% higher or lower for the following 12 months (1 January 2024 to 31 December 2024), revenue recognised in that period could

be up to £0.5m higher or lower (2022: £0.9m higher or lower) as a result.

105Ceres Annual Report 2023

Financial statements

1. Accounting policies used in the preparation of the financial statement continued

Recognition and measurement of warranty provisions and contingent liabilities

As at 31 December 2023, the Group recognised warranty provisions of £0.6m (31 December 2022: £0.9m). When recognising

and measuring provisions, assumptions are required about probability of occurrence, maturity and level of risk. Determining

whether a current obligation exists is usually based on review by internal experts. The amount of provision is based on expected

expenses, and is either calculated by assessing the specific case in light of empirical values, outcomes from comparable

circumstances, evidence provided from historical commercial settlements, or else estimated by experts.

Following the completion of certain contracts utilising our fuel cell stacks, and based on more data around stack failure and

degradation rates, the Group continues to hold a contingent liability of £0.1m (31 December 2022: £0.3m). The contingent

liability is recognised as there is a less than probable likelihood of the stacks failing or of the Group paying out on any potential

subsequent stack failures for certain stacks that may still be run by customers.

Management believes that, based on existing knowledge, it is reasonably possible that warranty costs could be up to 50% higher

than expected. This could result in the Group incurring additional costs of up to c.£0.3m over the next 12 months (2022: £0.6m)

as a result. Note 22 sets out further details around the Group’s warranty provisions.

Recognition and measurement of dilapidation provisions

As at 31 December 2023, the Group has recognised dilapidation provisions of £2.3m (31 December 2022: £2.1m). The amount

of provision is based on the expected cost at the termination of the lease agreements, to bring the leasehold properties back to

their original condition. The provision has been based on an independent surveyor’s report; however, management has applied

judgement and interpretation to determine the best estimate of the expenditure required to settle the Group’s probable liability

based on this valuation, as well as to determine appropriate discount and inflation rates to apply. If total dilapidation costs ended

up being 10% higher than expected, additional costs incurred would be in the order of £0.2m (2022: £0.2m). Note 22 sets out

further details around the Group’s dilapidation provisions.

Prior period adjustments

The directors have identified a number of prior period adjustments in the period:

Revenue

Revenue in 2021 and 2022 has been restated to correct the historical timing and foreign exchange impact of revenue recognition

for legacy licences, and to appropriately offset contract balances relating to the same identified contracts. At 31 December 2021,

the result of these adjustments on the consolidated statement of financial position was to reduce contract assets by £2.0m and

reduce contract liabilities by £0.4m with a corresponding reduction in net assets of £1.6m. At 31 December 2022, the result of

these adjustments on the consolidated statement of financial position was to reduce contract assets by £2.9m, increase contract

liabilities by £1.0m and reduce net assets and increase in accumulated losses by £3.9m. In respect of the consolidated statement of

profit and loss and other comprehensive income with a corresponding reduction in net assets and increase in accumulated losses

of £3.9m, the adjustments reduced revenue by £2.3m, reduced operating costs by £0.1m and increased the loss before tax by

£2.3m. There was no overall impact on cash flows from operating activities or recognised tax as a result of these adjustments.

Property, plant and equipment and non-current provisions

The movements in dilapidation provisions relating to items capitalised within property, plant and equipment, were not previously

capitalised but were incorrectly expensed to the income statement. Furthermore, the 2022 dilapidation provision did not correctly

reflect property, plant and equipment additions in the prior period. At 31 December 2021, the result of the adjustments on the

consolidated statement of financial position was to increase property, plant and equipment by £0.5m with a corresponding

increase in net assets and reduction in accumulated losses. At 31 December 2022, the result of these adjustments on the

consolidated statement of financial position was to increase property plant and equipment by £0.5m, increase non-current

provisions by £0.2m with a corresponding increase in net assets and reduction in accumulated losses of £0.3m. In respect of the

consolidated statement of profit and loss and other comprehensive income, the adjustments increased operating costs and losses

by £0.2m. There was no overall impact on the net cash used in operating activities or other cash flows, or recognised tax as a

result of these adjustments.

Cash and cash equivalents and short-term investments

2022 short term investments incorrectly included cash balances with a value of £8.5m. At 31 December 2022 the result of

the adjustments on the consolidated statement of financial position was to increase cash and cash equivalents by this amount

with a corresponding reduction to short-term investments. There was no impact on net assets or recognised tax as a result of

this adjustment. In respect of the consolidated statement of cash flows, the adjustment reduced the net cash used in investing

activities and the net decrease in cash and cash equivalents by the same amount.

Other current and non-current liabilities

Other current liabilities in 2021 and 2022 incorrectly included deferred income to be realised in more than one year. At 31

December 2022, the result of the adjustments on the consolidated statement of financial position was to increase other non-

current liabilities by £1.0m with a corresponding reduction in other current liabilities. At 31 December 2021, the result of the

adjustments on the consolidated statement of financial position was to increase other non-current liabilities by £0.8m with

a corresponding reduction in other current liabilities. There was no impact on net assets, recognised tax or the consolidated

statement of cash flows as a result of these adjustments.

Further prior period adjustments were required to the disclosure of cash flows in the consolidated cash flow statement, the

classification of assets under construction in note 10 and the disclosure of financial assets in note 20. These adjustments have

been detailed in the respective statement or note.

New standards and amendments applicable as of 1 January 2023

The Group has adopted all standards and interpretations amended or newly issued by the IASB that were effective in the year.

Their adoption has not had any material effect on the consolidated financial statements.

106 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

1. Accounting policies used in the preparation of the financial statement continued

New standards and amendments issued but not yet effective

The following adopted IFRSs have been issued, have an effective date for annual periods beginning on or after 1 January 2024

and have not been applied by the Group in these consolidated financial statements. Their adoption is not expected to have a

material effect on the consolidated financial statements unless otherwise indicated.

The following amendments are effective for the periods beginning 1 January 2024 and 1 January 2025, but have not yet been

adopted by the UK Endorsement Board:

• IFRS 16 Leases (Amendment – Liability in a sale and leaseback)

• IAS 1 Presentation of Financial Statements (Amendment – Classification of liabilities as current or non-current)

• IAS 1 Presentation of Financial Statements (Amendment – Non-current liabilities with covenants)

• IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures (Amendment – Supplier finance arrangements)

• IAS 21 The Effect of Changes in Foreign Exchange (Amendment – Lack of exchangeability)

2. Revenue

Revenue and direct costs

Revenue comprises the fair value of the consideration received or receivable for the provision of goods and services in the

ordinary course of the Group’s activities. Revenue is shown net of value added tax, other sales taxes and after eliminating sales

within the Group.

Revenue primarily consists of amounts received or receivable under evaluation, development, supply and licence contracts.

The nature of goods and services provided under these contracts consists of engineering services, access to or sale of

technology hardware and licences to access and use intellectual property (“IP”).

Engineering services are provided under evaluation and development agreements. The nature of the work typically comprises

engineering staff time for design, development, modelling and test analysis. The performance obligation in relation to this work

is deemed to be satisfied over time based on a percentage of completion basis.

Technology hardware is provided to customers under evaluation, development and supply agreements. Where access to the

hardware is provided under an evaluation agreement, the performance obligation is deemed to be satisfied on a straight-line basis

over the period that the customer’s preferred technology performance attributes are verified under the evaluation agreement.

Where access to the hardware is provided under development and supply agreements, the performance obligation is satisfied

at the point in time that the hardware is delivered and accepted.

Access to IP is provided to customers under licence agreements. The nature of the licences (right to access or right to use) is

determined based on the interpretation of key clauses and conditions within each customer contract. The performance obligation

is the disclosure of IP under the licence and is based on the number and timing of disclosures associated with those licences.

For a right to use licence the performance obligation is satisfied at a point in time when the IP is disclosed. For a right to access

licence the performance obligation is satisfied over the time that access is granted to IP developed.

Revenue is allocated to engineering services and access to or sale of technology hardware based on initial cost estimates to

deliver the obligations under the contract and established margins for the different components (cost-plus margin). Management

has established a range of margins to apply to contract components where the costs can be reliably estimated.

Given the sometimes complex and long-term nature of customer contracts, these forecast cost estimations and margins are

considered a significant area of judgement when valuing and allocating revenue to key components.

Revenue is allocated to licences on a stand-alone selling price basis where observable. Where the licence forms part of a wider

contract for the provision of engineering services and technology hardware, the Group uses a cost-plus margin approach for

revenue allocated to engineering services and technology hardware components and a residual approach for allocating revenue

to licences.

Percentage of completion is measured based on the cumulative actual contract labour hours at each reporting period compared

to the estimated total contract labour hours to deliver the service over the contract life. The assessment of the total project labour

hours to deliver the contracted service are updated during the term of the contract by project managers and are subject to

internal reviews, including comparison to previous forecasts and past experience.

Material differences in the amount of revenue in any given period may result if the judgements or estimates prove to be incorrect

or if management’s estimates change on the basis of development of the business or market conditions. This is considered further

in the significant judgements and estimates section of Note 1.

The revenue recognition is subject to certainty of receipt of cash, or when any specific conditions in agreements have been met.

Where there is a timing difference between the recognition of revenue and invoicing under a contract, a contract asset or liability

is recognised.

If a loss is expected in respect of a contract, the entire loss is recognised immediately in the Consolidated Statement of Profit and Loss.

Variable consideration, such as for the achievement of performance targets or variation requests under negotiation with the

customer at the reporting date, can be included in the transaction price together with the estimated costs to perform the

associated obligations. These estimates of the expected value or most likely amount are recognised to the extent that it is highly

probable that there will not be a significant reversal in the amount of cumulative revenue recognised in a future reporting period.

Contract modifications are treated as a separate contract if the scope of the contract increases because of the addition of distinct

goods or services, and the price of the contract increases by an amount of consideration that reflects the stand-alone selling price

of the additional promised goods or services.

107Ceres Annual Report 2023

Financial statements

2. Revenue continued

Where a contract modification does not meet these criteria, it is accounted for as an adjustment to the existing contract,

either prospectively, where the remaining goods or services are distinct from the goods and services transferred before the

modification, or through a cumulative catch-up adjustment, where the remaining services are not distinct and are part of a single

performance obligation that is only partially satisfied when the contract is modified.

The Group’s revenue is disaggregated by geographical market, major product/service lines, and timing of revenue recognition:

Geographical market

		2022
	2023	£’000
	£’000	Restated
Europe	12,394	7,980
Asia	9,589	11,391
North America	341	394
Rest of World	—	23
	22,324	19,788

For the year ended 31 December 2023, the Group has identified two major customers (defined as customers that individually

contributed more than 10% of the Group’s total revenue) that accounted for approximately 51% (SOFC and SOEC) and 39%

(all SOFC) of the Group’s total revenue recognised in the year (year ended 31 December 2022: two customers that accounted

for approximately 48% and 38% of the Group’s total revenue for that year).

Major product/service lines

		2022
	2023	£’000
	£’000	Restated
Engineering services	10,220	9,039
Provision of technology hardware	5,726	5,380
Licences	6,378	5,369
	22,324	19,788

Timing of transfer of goods and services

		2022
	2023	£’000
	£’000	Restated
Products and services transferred at a point in time	6,544	4,760
Products and services transferred over time	15,780	15,028
	22,324	19,788

Contract-related assets and liabilities

			31 Dec 2022	31 Dec 2021
		31 Dec 2023	£’000	£’000
	Note	£’000	Restated	Restated
Trade receivables	15	3,422	11,825	2,612
Contract assets – accrued income		1,575	400	5,343
Total contract-related assets		4,997	12,225	7,955
Contract liabilities – deferred income		(7,469)	(7,363)	(3,917)

1. The adjustments in respect of 2022 and 2021 are described in Note 1.

2. The adjustments as described in Note 1 have impacted 2022 licences revenue in both Europe and Asia.

No material expected credit losses were recognised against trade receivables or contract assets in either the current or prior year.

Further details regarding the composition of trade receivables can be found in Note 15.

The contract assets – accrued income – relates to consideration for work completed but not billed at the reporting date.

The contract assets are transferred to trade receivables when the rights become unconditional, which is generally when work

is invoiced. The increase in the balance compared with 31 December 2022 is a result of significant revenue recognised in the

period from two customers and timing differences with invoicing.

The contract liabilities – deferred income – relates to invoices raised or consideration received in advance from customers.

There are no significant financing components associated with deferred income. The increase in the balance compared with the

prior year is primarily due to timing differences between revenue recognised on work performed and raising invoices to customers.

108 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

2. Revenue continued

Revenue recognised in the current year that was included in the contract liabilities – deferred income – balance at the beginning

of the year was £2,380,000 (31 December 2022: £771,000).

There were no significant amounts of revenue recognised in the year ended 31 December 2023 arising from performance

obligations satisfied in previous periods (31 December 2022: no significant amounts).

Significant changes in the contract assets and the contract liabilities balances during the year are as follows:

	Contract assets	Contract liabilities
	2023	2023
	£’000	£’000
Revenue recognised that was included in the contract liability balance at the beginning of the year		2,380
Increases due to cash received, excluding amounts recognised as revenue during the year		(2,486)
Transfers from contract assets recognised at the beginning of the year to receivables	(400)
Increases as a result of changes in the measure of progress	1,575

	Contract assets	Contract liabilities
	2022	2022
	£’000	£’000
	Restated	Restated
Revenue recognised that was included in the contract liability balance at the beginning of the year		771
Increases due to cash received, excluding amounts recognised as revenue during the year		(4,217)
Transfers from contract assets recognised at the beginning of the year to receivables	(5,012)
Increases as a result of changes in the measure of progress	69

1. The adjustment in respect of 2022 is described in Note 1.

Significant changes in the contract assets and the contract liabilities balances during the year are as follows: continued

The revenue expected to be recognised in future years for evaluation and development, supply and licence agreements in respect

of performance obligations that are unsatisfied (or partially unsatisfied) at the year-end is:

	2024	2025	2026
	£’000	£’000	£’000
Evaluation, development, supply and licence agreements	13,016	3,240	3,240

The comparatives as at 31 December 2022 are as follows:

	2023	2024	2025
	£’000	£’000	£’000
Evaluation, development, supply and licence agreements	15,060	1,458	—

1. Excluding future royalties receivable from partners.

The above analysis excludes revenue which is contracted but contingent upon milestones or decision criteria which are at the

customers’ discretion.

The Company applies the practical expedient in IFRS 15.121 and does not disclose information about remaining performance

obligations that have original expected durations of one year or less.

3. Segmental analysis

In accordance with IFRS 8, the Group has identified two reporting segments, being Power – SOFC and Hydrogen – SOEC, based

on internal management reporting information that is regularly reviewed by the chief operating decision maker, which the Group

considers to be the Executive team. The Group reports revenue and gross profit by segment to the Executive team. All of the

Group’s non-current assets are in the UK.

					31 December 2022
		31 December 2023			Restated
	Power –	Hydrogen –		Power –	Hydrogen –
	SOFC	SOEC	Tota l	SOFC	SOEC	Tota l
	£’000	£’000	£’000	£’000	£’000	£’000
Revenue (external)	21,567	757	22,324	19,608	180	19,788
Cost of sales	(8,346)	(424)	(8,770)	(9,070)	(9)	(9,079)
Gross profit	13,221	333	13,554	10,538	171	10,709

1. The adjustment in respect of 2022 is described in Note 1.

109Ceres Annual Report 2023

Financial statements

4. Loss before taxation

Research and development

The Group undertakes research and development activities either on its own behalf or in conjunction with customers.

Group and customer-funded expenditure on research, and on development activities not meeting the conditions for capitalisation

(see Note 12), are written off as incurred and charged to the Consolidated Statement of Profit and Loss.

Government grants

Grants are recognised on a case-by-case basis. Revenue grants are recognised in the Consolidated Statement of Profit and Loss

as other operating income as the related costs are incurred and expensed. The reimbursement of the cost of an item of plant and

equipment or intangible by way of a capital grant is presented as deferred income and recognised in the Consolidated Statement

of Profit and Loss as other operating income on a basis consistent with the depreciation or amortisation of the asset over its

estimated useful life.

For grants with no technical milestones, and where recovery is reasonable, the grant is recognised on an accruals basis in order

to match the associated expenditure with the grant income. For grants with technical milestones, these grants are held on the

Consolidated Statement of Financial Position as deferred income and are recognised only when the relevant milestone has

been achieved.

		2022
	2023	£’000
	£’000	Restated
Operating costs are split as follows:
Research and development costs	54,034	48,546
Administrative expenses	17,681	15,116
Commercial expenses	4,905	2,392
	76,620	66,054
Loss before taxation is stated after (crediting)/charging:
Other operating income – grant income	(270)	(251)
Other operating income – RDEC tax credit	(3,395)	(1,081)
Other operating income – total	(3,665)	(1,332)
Staff costs, including share-based payments (Note 6)	41,906	34,801
Cost of inventories recognised as expense (Note 14)	4,568	5,023
Depreciation of property, plant and equipment (Note 10)	7,461	5,592
Depreciation of right-of-use assets (Note 11)	641	620
Amortisation of intangible assets (Note 12)	1,024	1,032
Repairs expenditure on property, plant and equipment	1,030	1,039
Net change in fair value of financial instruments at fair value through profit or loss	143	1,020
Net foreign exchange gain recognised in operating costs	(232)	(761)
Net foreign exchange loss/(gain) recognised in finance expense/(income)	805	(173)

1. The adjustment in respect of 2022 is described in Note 1.

2. The restatement to depreciation in 2022 is as a result of changes in dilapidation as described in Note 10.

Services provided by the Group’s auditor

During the year the Group obtained the following services from the Group’s auditor as detailed below:

	2023	2022
	£’000	£’000
Fees payable to the Company’s auditor for the audit of parent Company and consolidated financial statements	68	54
Fees payable to the Company’s auditor for other services:
– the audit of the Company’s subsidiaries	177	141
– audit-related assurance services – review of interim financial results, including audit assurance	30	150
– audit-related assurance services – grants and awards	—	7
– reporting services in relation to the Group’s move to the Main Market	85	217
	360	569

110 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

5. Finance income and expense

Interest income and expense

Interest income and expense is recognised in the Consolidated Statement of Profit and Loss in the year in which it is earned

or accrued.

	2023	2022
	£’000	£’000
Interest received	7,079	2,657
Foreign exchange gain on cash, cash equivalents and short-term deposits	—	173
Total interest income	7,079	2,830
Interest paid	(99)	—
Interest on lease liabilities	(248)	(212)
Unwinding of discount on provisions	(89)	(87)
Other finance costs	(46)	(5)
Foreign exchange loss on cash, cash equivalents and short-term deposits	(805)	—
Total interest expense	(1,287)	(304)

6. Employees and Directors

The average number of persons (including Executive Directors) employed by the Group during the year was:

	2023	2022
	£’000	£’000
By activity:
Research and development	369	249
Prototype production	128	177
Administration	77	96
Commercial	16	14
	590	536

	2023	2022
	£’000	£’000
Staff costs (for the above persons) comprised:
Wages and salaries, including compensation for loss of office	35,500	28,584
Social security costs	3,928	3,290
Other pension costs (Note 7)	2,411	1,930
Share-based payments (Note 25)	67	997
	41,906	34,801

	2023	2022
	£’000	£’000
Directors’ emoluments:
Aggregate emoluments	1,027	947
Company contributions to defined contribution pension schemes	51	51
Gain on exercise of share options and other share schemes	707	38
	1,785	1,036

	2023	2022
	£’000	£’000
Highest-paid Director:
Aggregate emoluments	565	534
Company contributions to defined contribution pension schemes	28	28
Gain on exercise of share options and other share schemes	707	38
	1,300	600

1. The Directors had LTIPs with an aggregate value of £1,197,835 exercisable as at 31 December 2023 (31 December 2022: £2,999,435).

111Ceres Annual Report 2023

Financial statements

6. Employees and Directors continued

Two Directors (2022: two Directors) have retirement benefits accruing under defined contribution pension schemes.

Additional information on the emoluments of the Directors, together with information regarding the share interests and

share options of the Directors, is included in the Remuneration Report on pages 63 to 83, which forms part of these audited

financial statements.

Key management compensation

The Directors consider that the key management of the Group comprises the Executive Board and Non-Executive Directors.

The key management compensation is summarised in the following table:

	2023	2022
	£’000	£’000
Salaries and other short-term employment benefits	3,880	3,386
Post-employment benefits	206	148
Share-based payments	(111)	342
	3,975	3,876

7. Pensions

Pension scheme arrangements

The Group operates a defined contribution pension plan for employees. The assets of the scheme are held separately from those

of the Group in independently administered funds. The plan is a post-employment benefit plan under which the Group pays fixed

contributions during the employee’s service and will have no legal or constructive obligation to pay amounts after the employee’s

service ends. Obligations for contributions to defined contribution pension plans are recognised as an expense in the Consolidated

Statement of Profit and Loss in the period during which services are rendered by employees.

The pension charge represents contributions payable by the Group to the funds and amounted to £2,411,000 (31 December 2022:

£1,930,000). £316,000 was payable to the funds as at 31 December 2023 (31 December 2022: £nil).

8. Taxation and deferred taxation

Taxation

The taxation charge for the year comprises current and deferred tax and any adjustment to tax payable or receivable in respect

of previous years. Tax is recognised in the Consolidated Statement of Profit and Loss except to the extent that it relates to items

recognised directly in equity, in which case it is recognised in equity. The RDEC receivable represents the Directors’ best estimate

of tax due to the Group at the year-end under the RDEC credit regime.

Deferred taxation

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial

recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and

differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount

of assets and liabilities, using tax rates enacted or substantively enacted at the year-end.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which

the temporary difference can be utilised.

	2023	2022
	£’000	£’000
UK corporation tax	—	(4,470)
Foreign tax suffered	334	828
Adjustment in respect of prior periods	65	(230)
Taxation credit	399	(3,872)

The current tax rate is 23.52% (2022: 19.00%). From 1 April 2023 the main corporation tax rate increased from 19% to 25%

on profits over £250,000.

A tax charge has arisen as a result of expenditure surrendered and claimed under the SME R&D regime in the prior year and

foreign tax and withholding tax arising on licence income received from customers based in China and South Korea.

112 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

8. Taxation and deferred taxation continued

The tax result for the year is different from the standard rate of UK corporation tax of 23.52% (2022: 19.00%). The differences

are explained below:

		2022
	2023	£’000
	£’000	Restated 1
Loss before taxation	(53,609)	(51,487)
Loss before taxation multiplied by the UK tax rate of 23.52% (2022: 19.00%)	(12,609)	(9,783)
Effects of:
Losses carried forward	12,307	9,417
Enhanced tax deductions for R&D expenditure	—	(3,310)
Expenses not deductible	240	160
Fixed asset differences	62	(215)
Employee share scheme	1,452	—
Effect of overseas tax rates	252	742
Adjustment in respect of prior periods – R&D tax credit	65	(230)
Difference between R&D tax credit and small company tax rate	—	1,387
Tax on RDEC credit	434	159
Deferred tax rate change	(649)	—
Other short term timing difference	773	(1,141)
Share option timing differences	(1,928)	(1,058)
Total taxation credit	399	(3,872)

1. The adjustment in respect of 2022 is described in Note 1.

Potential deferred tax assets have not been recognised. The gross temporary differences are set out below:

		2022
	2023	£’000
	£’000	Restated
Temporary differences:
Difference between capital allowances and depreciation	(2,967)	60
Deductions relating to share options	(7,158)	(15,356)
Other timing differences	(563)	(319)
Losses carried forward	(224,544)	(173,434)
	(235,232)	(189,049)

1. The adjustment in respect of 2022 is described in Note 1.

The deferred tax assets have not been recognised as the Directors consider that it is unlikely that the asset will be realised in

the foreseeable future. The element of the RDEC credit that can only be set off against future UK corporation tax liability is

£2,482,000 (2022: £1,225,000) and has not been recognised as the Directors consider that it is unlikely that this asset will be

realised in the foreseeable future.

9. Loss per share

Basic and diluted loss per £0.10 ordinary share of 28.03p for the year ended 31 December 2023 (restated 31 December 2022:

24.88p) is 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. Given the losses reported during the year, there is no dilution of losses per

share for the year ended 31 December 2023 (31 December 2022: no dilution).

		2022
	2023	£’000
	£’000	Restated 1
Loss for the financial year attributable to shareholders	(54,008)	(47,615)
Weighted average number of shares in issue	192,651,782	191,385,618
Loss per £0.10 ordinary share (basic and diluted)	(28.03)p	(24.88)p

1. The adjustment in respect of 2022 is described in Note 1.

113Ceres Annual Report 2023

Financial statements

10. Property, plant and equipment

Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. The cost

includes all expenditure that is directly attributable to the acquisition of the assets. Subsequent costs are included in the asset’s

carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits

associated with the asset will flow to the Group and the cost of the asset can be measured reliably. All other repairs and

maintenance costs are charged to the Consolidated Statement of Profit and Loss during the financial period in which they are

incurred. The Directors annually consider the need to impair these assets.

Depreciation is charged to the Consolidated Statement of Profit and Loss on a straight-line basis over the estimated useful lives

of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:

Leasehold improvements	Ten years or the lease term if shorter
Plant and machinery	Three to ten years
Computer equipment	Three years
Fixtures and fittings	Three to ten years

Depreciation methods, useful lives and residual values are reviewed, and adjusted if appropriate, at each balance sheet date.

The carrying values of property, plant and equipment are reviewed on an ongoing basis for any indication of impairment.

Where any indication of impairment exists, the recoverable value of the assets is estimated. An impairment loss is recognised

in the Consolidated Statement of Profit and Loss whenever the carrying value of property, plant and equipment exceeds its

recoverable amount.

Assets under construction represents the cost of purchasing, constructing and installing property, plant and equipment ahead

of their productive use. The category is temporary, pending completion of the assets and their transfer to the appropriate

and permanent category of property, plant and equipment. As such, no depreciation is charged on assets under construction.

	Leasehold	Plant and	Computer	Fixtures	Assets under
	improvements	machinery	equipment	and fittings	construction	Tota l
	£’000	£’000	£’000	£’000	£’000	£’000
Cost
At 1 January 2022 - Previously stated	7,412	25,514	2,563	348	1,975	37,812
Brought forward restatement	151	518	—	—	—	669
At 1 January 2022 - Restated	7,563	26,020	2,563	348	1,975	38,481
Additions	1,121	5,194	203	—	6,848	13,366
Transfers	71	1,672	—	—	(1,743)	—
Disposals	(1,621)	(6,669)	(831)	(72)	—	(9,193)
At 31 December 2022	7,134	26,229	1,935	276	7,080	42,654
Additions	1,318	3,647	164	115	1,937	7,181
Transfers	511	2,009	—	—	(2,520)	—
Disposals	(150)	(568)	(57)	—	(68)	(843)
At 31 December 2023	8,813	31,317	2,042	391	6,429	48,992
Accumulated depreciation
At 1 January 2022 - Previously stated	3,358	14,291	1,790	232	—	19,671
Brought forward restatement	37	160	—	—	—	197
At 1 January 2022 - Restated	3,395	14,451	1,790	232	—	19,868
Charge for the year	956	4,119	444	73	—	5,592
Depreciation on disposals	(1,621)	(6,669)	(831)	(72)	—	(9,193)
At 31 December 2022	2,730	11,901	1,403	233	—	16,267
Charge for the year	1,264	5,783	379	35	—	7,461
Depreciation on disposals	(150)	(411)	(57)	—	—	(618)
At 31 December 2023	3,844	17,273	1,725	268	—	23,110
Net book value
At 31 December 2023	4,969	14,044	317	123	6,429	25,882
At 31 December 2022 - Restated	4,404	14,328	532	43	7,080	26,387
At 31 December 2021 - Restated	4,168	11,581	773	116	1,975	18,613

1. The adjustment in respect of 2022 and 2021 is described in Note 1.

2. The transfer from assets under construction to plant and machinery in the 2022 property, plant and equipment note was understated by £779,000. The note has been

re-presented to reflect this correction.

Assets under construction primarily comprise plant and machinery and leasehold improvements related to the Group’s

manufacturing and testing facilities.

114 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

11. Right-of-use assets

The Group holds material leases for premises and lower value leases for IT equipment, with lease terms ranging from six months

to ten years. The Group recognises right-of-use assets and lease liabilities (i.e. leases are recognised on the Consolidated Statement

of Financial Position) for all leases other than for short-term leased plant and machinery (i.e. leases that have a term less than

12 months). Short term lease expense is recognised in operating expenses.

Lease liabilities are initially measured at the present value of the remaining lease payments discounted at the Group’s incremental

borrowing rate. Subsequently, lease liabilities are measured by adjusting to reflect interest on the lease liability, reducing the liability

to reflect lease payments made and to reflect any re-assessment or lease modifications, or revised in-substance fixed lease

payments (refer to Note 21).

The associated right-of-use asset for property leases and other assets is initially measured at the amount equal to the lease liability

reduced for any lease incentives received, and increased for: lease payments made at or before commencement of the lease;

initial direct costs incurred; and the amount of any provision recognised where the Group is contractually required to dismantle,

remove or restore the leased asset. Subsequently, right-of-use assets are measured at cost less any accumulated depreciation and

adjusted for any re-measurement of the lease liability. The re-measured lease liability is calculated by discounting the revised lease

payments using a revised discount rate at the effective date of the modification. A corresponding adjustment is also made to the

right-of-use asset unless the scope of the lease is decreased, in which case a gain or loss may be recognised.

Right-of-use assets are depreciated over the shorter of the lease term and the relevant useful economic life following the periods

set out in the property, plant and equipment depreciation policy. Where the lease transfers ownership of the underlying asset to

the lessee by the end of the lease term or the cost of the right-of-use asset reflects that the lessee will exercise a purchase option,

the right-of-use asset is depreciated over its useful economic life.

Right-of-use assets are tested for impairment by applying IAS 36 Impairment of Assets. The carrying values of right-of-use assets

are reviewed on an ongoing basis for any indication of impairment. Where any indication of impairment exists, the recoverable

value of the assets is estimated. An impairment loss is recognised in the Consolidated Statement of Profit and Loss whenever

the carrying value of a right-of-use asset exceeds its recoverable amount.

	Land and	Computer
	buildings	equipment	Total
	£’000	£’000	£’000
Cost
At 1 January 2022	3,694	43	3,737
Adjustment of lease term	829	—	829
At 31 December 2022	4,523	43	4,566
Additions	168	—	168
Adjustment of lease term	(33)	—	(33)
At 31 December 2023	4,658	43	4,701
Accumulated depreciation
At 1 January 2022	1,289	10	1,299
Charge for the year	606	14	620
At 31 December 2022	1,895	24	1,919
Charge for the year	627	14	641
At 31 December 2023	2,522	38	2,560
Net book value
At 31 December 2023	2,136	5	2,141
At 31 December 2022	2,628	19	2,647
At 31 December 2021	2,405	33	2,438

During the year, the Group signed a new property lease and the break clause for that lease was subsequently triggered.

An adjustment was recognised to decrease the right-of-use asset, with a corresponding adjustment to the lease liability.

During the prior year, the Group signed an extension to a property lease and revised the expected term of that lease accordingly.

An adjustment of £0.8m was recognised to increase the right-of-use asset, with a corresponding adjustment to the lease liability.

115Ceres Annual Report 2023

Financial statements

12. Intangible assets

Research and development

Expenditure incurred on research and development is distinguished as relating to a research phase or development phase

with reference to the Group’s technology and product development process.

All research phase expenditure is recognised in the Consolidated Statement of Profit and Loss as an expense when incurred

(see Note 4).

Development phase expenditure is capitalised from the point that all of the following conditions are met:

• the product or process under development is technically and commercially feasible;

• the Group intends to and has the technical ability and sufficient resources to complete the development;

• future economic benefits are probable; and

• the Group can measure reliably the expenditure attributable to the asset during its development.

Development phase activities involve a plan or design for the production of new or substantially improved products or processes

in relation to the Group’s core fuel cell and system technology and intellectual property. The expenditure capitalised includes the

cost of materials, direct labour and an appropriate proportion of overheads.

Capitalisation of development phase activities continues until the point at which the product or process under development meets

its originally mandated technical specification. For product and process development, this is at the point where the production

design version is approved or the development is completed.

Subsequent expenditure is capitalised where it enhances the functionality of the asset and demonstrably generates an enhanced

economic benefit to the Group. All other subsequent expenditure on the product or process is expensed as incurred.

Where development activities are funded through government grants and the cost of those activities is capitalised under this

policy, the grants received are considered capital grants and are presented as deferred income and recognised in the Consolidated

Statement of Profit and Loss as other operating income on a basis consistent with the depreciation or amortisation of the asset

over its estimated useful life.

Patent costs incurred in the procurement of patents in relevant territories are capitalised where the Group considers those patents

relate to technology that is deemed to be commercially feasible. Other patent costs and costs to maintain patents once granted

in those territories are expensed to in the Consolidated Statement of Profit and Loss as incurred.

Subsequent to recognition, internally generated intangible assets are reported at cost less accumulated amortisation and

accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives and is presented

within operating costs. The estimated useful lives are reviewed and adjusted as appropriate, at each balance sheet date. Intangible

assets which are not yet available for use are tested for impairment at each balance sheet date.

The following useful lives are used in the calculation of amortisation:

Capitalised development	Two to seven years
Patent costs	Three to ten years
Perpetual software licences	Three years

116 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

12. Intangible assets continued

Research and development continued

The carrying values of intangible assets are reviewed on an ongoing basis for any indication of impairment. Where any indication of

impairment exists, the recoverable value of the assets is estimated. An impairment loss is recognised in the Consolidated Statement

of Profit and Loss whenever the carrying value of an intangible asset exceeds its recoverable amount.

	Internal
	developments	Customer and
	in relation to	internal	Perpetual
	manufacturing	development	software
	site	programmes	licences	Patent costs	Tota l
	£’000	£’000	£’000	£’000	£’000
Cost
At 1 January 2022	411	8,407	252	633	9,703
Additions	—	5,340	273	219	5,832
At 31 December 2022	411	13,747	525	852	15,535
Additions	—	6,443	—	357	6,800
At 31 December 2023	411	20,190	525	1,209	22,335
Accumulated amortisation
At 1 January 2022	164	1,038	23	—	1,225
Charge for the year	82	748	125	77	1,032
At 31 December 2022	246	1,786	148	77	2,257
Charge for the year	82	728	137	77	1,024
At 31 December 2023	328	2,514	285	154	3,281
Net book value
At 31 December 2023	83	17,676	240	1,055	19,054
At 31 December 2022	165	11,961	377	775	13,278
At 31 December 2021	247	7,369	229	633	8,478

The customer and internal development intangible relates to the design, development and configuration of the Company’s core

solid oxide fuel cell and system technology. Amortisation of capitalised development commences once the developed technology

is complete and is available for use.

13. Subsidiary undertakings and associates

Details of the Group’s subsidiaries and associates at 31 December 2023 are as follows:

			Proportion of
			nominal value
			of shares held
	Country of	Description of	by the
Name of undertaking	incorporation	shares held	Company	Type of entity
Ceres Power Ltd	England and Wales	£0.001 ordinary shares	100% 1	Subsidiary
Ceres Intellectual Property Company Ltd	England and Wales	£1.00 ordinary shares	100% 1	Subsidiary
Ceres Power Intermediate Holdings Ltd	England and Wales	£0.01 ordinary shares	100%	Subsidiary
Ceres Power Licence Company Ltd	England and Wales	£1.00 ordinary shares	100% 1	Subsidiary
Ceres Holdings International Ltd	England and Wales	£1.00 ordinary shares	100% 1	Subsidiary
Ceres Engineering Consulting (Shanghai) Co Ltd	Shanghai, China	£1.00 ordinary shares	100% 2	Subsidiary
RFC Power Ltd	England and Wales	£0.001 ordinary shares	24.2% 3	Associate

1. Ceres Power Ltd, Ceres Intellectual Property Company Ltd, Ceres Holdings International Ltd and Ceres Power Licence Company Ltd are 100% held directly by Ceres

Power Intermediate Holdings Ltd. Registered address is Viking House, Foundry Lane, Horsham, West Sussex, RH13 5PX.

2. 100% held directly by Ceres Power Ltd. Registered address is Office 1903i, Floor 19/F, Tower B, No.1065 West Zhongshan Road, Changning District, Shanghai, China.

3. 24.2% held directly by Ceres Power Intermediate Holdings Ltd. Registered address is Windsor House, Cornwall Road, Harrogate, HG1 2PW.

117Ceres Annual Report 2023

Financial statements

13. Subsidiary undertakings and associates continued

The principal activity of Ceres Power Ltd is the commercialisation and continued development of the Group’s fuel cell and

electrochemical technology. The principal activity of Ceres Intellectual Property Company Ltd is the administration of registered

intellectual property developed within the Group. The principal activity of Ceres Power Intermediate Holdings Ltd is as a holding

company to the other Group companies and to manage the Group’s cash, cash equivalents and investments. The principal activity

of Ceres Power Licence Company Ltd is the provision of overseas licence and royalty services.

On 23 August 2021, the Group established a Wholly Foreign Owned Entity (“WFOE”), Ceres Engineering Consulting (Shanghai)

Co Ltd in Shanghai, China. The company is a 100% owned subsidiary of Ceres Power Ltd. The principal activity of the company

is to provide business development and technical support to our business and partners in China.

On 11 November 2021 Ceres Power Intermediate Holdings Ltd acquired an 8.4% shareholding in RFC Power Ltd in exchange

for consultancy services performed. RFC Power specialises in developing novel flow battery chemistries for energy storage

systems. The shareholding was treated as an investment in associate as the Group determined that the transaction gave the

Group significant influence over RFC Power, provided primarily by the share of equity capital and representation on the RFC

Power Board. The Group recognised an investment in associate of £0.5m accordingly. At the same time, the Group signed

an option agreement providing Ceres with the option to acquire the balance of the outstanding share capital for up to £25m,

payable in Ceres shares, exercisable from July to November 2022.

On 6 December 2022, the Group signed revised equity and option agreements with RFC Power to: (i) increase the Group’s

shareholding in RFC Power to 24.2% in return for a payment of £1m cash made on 6 December 2022 and for the provision

of further consultancy services commencing in December 2022 through to mid-2024 for a value of £1m; and (ii) defer the

exercisable period whereby Ceres has the option to acquire all the remaining share capital of RFC Power from between

May 2022 and November 2022, to between 1 January 2024 and 30 April 2024 but at the same exercise price.

The contribution of £2m was treated as an additional cost of investment in the associate, increasing the cost of the investment

to £2.5m at 31 December 2022. The value of the option at year end was determined to be £nil (31 December 2022: £nil).

In February 2024 the Group has terminated its option to acquire the remainder of RFC Power’s shares. The Group continues

to hold the 24.2% investment as an associate. The Group has recognised its share of RFC Power’s loss for the year ended

31 December 2023 of £110,000 (31 December 2022: £40,000).

The results of Ceres Power Ltd, Ceres Intellectual Property Company Ltd, Ceres Power Intermediate Holdings Ltd, Ceres Holdings

International Ltd, Ceres Engineering Consulting (Shanghai) Co Ltd and Ceres Power Licence Company Ltd are included within

these consolidated financial statements. The Group’s share of the results of RFC Power Ltd are included within these consolidated

financial statements by applying the equity method of accounting, as set out in Note 1. The Group’s share of RFC’s results since

acquiring the shareholding is not material and has therefore not been disclosed separately.

On 15 August 2022, the Group established a new international holding company, Ceres Holdings International Ltd. This company

is a 100% owned subsidiary of Ceres Power Intermediate Holdings Ltd and is currently dormant.

14. Inventories

Inventories consist of raw materials, work in progress and finished goods .

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct material cost and, where applicable,

direct labour costs and direct overheads that have been incurred. Cost is calculated using the first-in, first-out (“FIFO”) method.

Net realisable value represents the estimated selling price less all estimated costs to completion and selling costs to be incurred.

	31 Dec 2023	31 Dec 2022
	£’000	£’000
Current:
Raw materials	1,648	1,566
Work in progress	787	1,477
Finished goods	390	2,671
	2,825	5,714

During the year ended 31 December 2023, inventories of £4.6m (31 December 2022: £5.0m) were recognised as an expense

and were included within cost of sales. As at 31 December 2023, no provision was recognised (2022: £0.7m).

118 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

15. Trade and other receivables

Trade receivables are recognised initially at transaction price and subsequently held at amortised cost using the effective

interest method, less loss allowances. Loss allowances are calculated using the simplified approach to determine expected credit

losses, taking into account both historical payment profiles and any credit losses experienced, together with forward-looking

macroeconomic factors. The carrying amount of these balances approximates to fair value due to the short maturity of amounts

receivable. Payment terms generally range between 30 and 60 days depending on the customer.

Although the Group’s past experience of significant credit losses on these assets has been negligible, the impairment assessment

performed by the Group considers both past experience and future expectations of credit losses. As a result of this assessment,

the Group considers the risk of expected credit losses on trade receivables and contract assets to be immaterial. Further details

on this assessment are provided in Note 20.

	31 Dec 2023	31 Dec 2022
	£’000	£’000
Current:
Trade receivables	3,422	11,825
VAT receivable	2,273	1,853
RDEC receivable	4,008	3,032
Other receivables	172	443
	9,876	17,153
Non-current:
Other receivables	741	741

Non-current other receivables comprise rent deposit guarantees held by landlords in respect of the Group’s leased properties.

There is no material difference between the fair value of trade and other receivables and their carrying values and they are not

materially overdue at the year-end. There are no expected credit losses recognised during the year ended 31 December 2023

(31 December 2022: £nil). The carrying amounts of the Group’s trade and other receivables are primarily denominated in pounds

sterling, euros and US dollars (as set out in Note 20).

16. Other current assets

	31 Dec 2023	31 Dec 2022
	£’000	£’000
Current:
Prepayments	1,193	869
Accrued other income	—	88
	1,193	957

No accrued other income was recognised in the year to 31 December 2023, previously this related to consideration for work

completed on grant-funded contracts but not billed at the reporting date. The accrued other income is transferred to other

receivables when the rights become unconditional.

17. Cash, cash equivalents and investments

Cash and cash equivalents

Cash and cash equivalents includes cash at bank and in hand, pooled money market funds and short-term deposits with an original

maturity of less than or equal to one month.

Short-term investments

Short-term investments include bank deposits with an original maturity greater than one month and a maturity as at the date

of the Consolidated Statement of Financial Position of less than or equal to 12 months.

		31 Dec 2022
	31 Dec 2023	£’000
	£’000	Restated 1
Cash at bank and in hand	7,063	16,312
Money market funds	42,644	55,472
Cash and cash equivalents	49,707	71,784
Short-term bank deposits greater than one month and less than 12 months	90,249	110,536
	139,956	182,320

119Ceres Annual Report 2023

Financial statements

17. Cash, cash equivalents and investments continued

The Group holds surplus funds in accordance with the treasury policy, as set out in Note 20.

			31 Dec 2022
	Interest	31 Dec 2023	£’000
	rate type	£’000	Restated 1
Interest rate risk profile of the Group’s financial assets:
Cash at bank and in hand	Floating	7,063	16,312
Money market funds	Floating	42,644	55,472
Short-term bank deposits greater than one month and less than or equal to 12 months	Floating	20,000	20,000
Short-term bank deposits greater than one month and less than or equal to 12 months	Fixed	70,249	90,536
		139,956	182,320

1. The adjustment in respect of 2022 is described in Note 1.

During the year ended 31 December 2023 the fixed rate short-term bank deposits were primarily designated in pounds sterling,

had remaining terms of between 3 days and 5 months (31 December 2022: 18 days and 10 months) and earned interest of

between 2.30% and 5.94% (31 December 2022: 1.23% and 5.15%). Also included in short-term bank deposits was a deposit of

CNH71m (c.£8m) on a rolling monthly term earning interest of approximately 2.3% (31 December 2022: CNH68m (c.£8m) at 1.4%).

The credit quality of financial assets has been assessed by reference to external credit ratings.

18. Trade and other payables

Trade and other payables are initially recognised at fair value, which is typically the invoiced amount and then held at amortised

cost. Other payables include taxes and social security amounts due on behalf of the Group’s employees.

	31 Dec 2023	31 Dec 2022
	£’000	£’000
Current:
Trade payables	3,624	4,795
Other payables	1,359	138
	4,983	4,933

19. Other liabilities

		31 Dec 2022	31 Dec 2021
	31 Dec 2023	£’000	£’000
	£’000	Restated 1	Restated 1
Current:
Accruals	5,933	6,032	4,803
Deferred income	368	243	244
	6,301	6,275	5,047
Non-current:
Deferred income	1,360	1,011	771

1. The adjustment in respect of 2022 and 2021 is described in Note 1.

Accruals include estimates of amounts owed to suppliers that have not been invoiced at the year-end, and to the Group’s

employees for various employee-related payments. Deferred income consists of grant income and RDEC tax credits deferred

in relation to associated development costs which have been capitalised as an intangible asset. Grant income is recognised in

the Consolidated Statement of Profit and Loss in the same period as the expenditure to which the grant relates.

120 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

20. Financial instruments

Derivative financial instruments

The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates. The Group uses

forward contracts, and in limited circumstances options, to hedge against foreign currency-denominated income and expenditure

commitments. The use of financial derivatives is governed by the Group’s treasury policy, as approved by the Board. The Group

does not use derivative financial instruments for speculative purposes. Details of financial instruments are shown later in this note.

Derivative financial instruments are recognised at fair value. The gains or losses on re-measurement to fair value are recognised

immediately in the Consolidated Statement of Profit and Loss as they arise and are shown in Note 4.

The Group only uses derivative financial instruments to hedge foreign currency exposures which arise from an underlying current

or anticipated business requirement. The Group does not currently apply hedge accounting to any derivatives in place, and

derivatives are treated at fair value through P&L. The Group does not currently use derivative instruments to manage its interest

rate risk. The Group does not trade in financial instruments.

Fair values of financial assets and financial liabilities

There is no material difference between the fair value and the carrying value of the Group’s financial assets and financial liabilities.

Carrying value approximates to fair value because of the short maturity periods of these financial instruments.

The fair value of forward exchange contracts is estimated by discounting the difference between the contractual forward price

and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds).

The fair value of currency options is estimated using the Black–Scholes pricing model based on the strike price with reference

to the future exchange rate, spot rate and risk-free interest rate. Forward exchange contracts and options are included in the

Level 2 classification.

Other than the forward contracts and options noted below, none of the Group’s assets and liabilities were measured at fair value

at 31 December 2023 (31 December 2022: none).

The fair values of all financial assets and financial liabilities by class, together with their carrying amounts shown in the balance

sheet, are as follows:

				Carrying
		Carrying		amount	Fair value
		amount	Fair value	31 Dec 2022	31 Dec 2022
	Fair value	31 Dec 2023	31 Dec 2023	£’000	£’000
	hierarchy	£’000	£’000	Restated 1	Restated 1
Financial assets at amortised cost
Trade and other receivables 1		3,594	3,594	12,268	12,268
Cash, cash equivalents and investments		139,956	139,956	182,320	182,320
		143,550	143,550	194,588	194,588
Financial assets measured at fair value through profit or loss
Forward exchange contracts	Level 2	1	1	26	26
Currency swap contract	Level 2	7	7	—	—
Non-deliverable forward	Level 2	—	—	28	28
		8	8	54	54
Financial liabilities measured at amortised cost
Trade and other payables and accruals		(10,563)	(10,563)	(10,957)	(10,957)
Financial liabilities measured at fair value through profit or loss
Forward exchange contracts	Level 2	(99)	(99)	—	—

1. The trade and other receivables for 2022 have been restated to remove non-financial instruments. Previously trade and other receivables were £14,121,000.

Capital management

The Group’s capital is considered to comprise cash at bank and short-term investments as set out in Note 17. The Group’s

approach to managing its capital is described in the “credit risk” section below.

Financial risk management

The Group’s operations expose it to a variety of financial risks that include credit risk and market risk arising from changes to

interest rates and foreign currency exchange rates. The Board reviews and agrees policies for managing each of these risks.

The principal risks addressed are as follows:

121Ceres Annual Report 2023

Financial statements

20. Financial instruments continued

Credit risk

The Group’s exposure to credit risk arises from holdings of cash, cash equivalents and investments, and if a counterparty or

customer fails to meet its contractual obligations.

The Group’s primary objective to manage credit risk from its holdings of cash, cash equivalents and investments is to minimise the

risk of a loss of capital and eliminate loss of liquidity having a detrimental effect on the business. The Group places surplus funds

of no more than £30m per institution into pooled money market funds with same-day access and of no more than £12m per

institution for bank deposits with durations of up to 24 months. During the year the Group’s treasury policy restricted investments

in short-term money market funds to those which carry short-term credit ratings of at least two of AAAm (Standard & Poor’s),

Aaa-mf (Moody’s) and AAAmmf (Fitch) and deposits with banks with minimum long-term rating of A-/A3/A and short-term rating

of A-2/P-2/F-1 for banks in which the UK Government holds less than 10% ordinary equity.

Trade receivables at the year-end relate to three customers (31 December 2022: three) of which £194,000 relates to the

Europe geographic region and £3,228,000 to Asia (31 December 2022: £579,000 relates to the Europe geographic region

and £11,246,000 to Asia).

Contract assets at the year-end related to one customer from the Europe geographic region of £1,575,000 (31 December 2022:

related to three customers of which £358,000 relates to the Europe geographic region and £42,000 to Asia).

The Group’s customers are generally large multinational companies or research institutions and are consequentially not considered

to add significantly to the Group’s credit risk exposure. All trade receivables are due within the agreed credit terms for the current

and preceding year and are consequently stated at cost.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss

allowance for all trade receivables and other contract assets (primarily unbilled work in progress).

To measure expected credit losses, trade receivables and other contract assets are analysed based on their credit risk

characteristics including days past due and the specific payment profile of the customer to determine a suitable historical loss rate.

The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors that the Group

considers could affect the ability of its customers to settle the receivables.

The Group has followed this approach as at 31 December 2023 and as a result has not recognised a loss allowance for trade

receivables or other contract assets (31 December 2022: no loss allowance). Management does not consider that a reasonably

possible change in the estimation of expected credit losses would have a material impact on the results of the following year .

Interest rate risk

Interest rate risk on the Group’s liabilities is minimal.

The Group’s finance income is sensitive to changes in interest rates. A change of 0.5% in interest rates on all variable rate instruments

held by the Group at 31 December 2023 would have impacted the finance income by £348,000 (31 December 2022: £416,000).

The decrease in sensitivity to interest rate changes is driven by the reduction in variable-rate cash, cash equivalents and

investments held at the balance sheet date when compared with 31 December 2022. Interest rate risk is mitigated by investing

in deposit accounts of different durations ranging from 32 days to up to 24 months and by utilising deposit accounts with fixed

interest rates.

122 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

20. Financial instruments continued

Liquidity risk

Liquidity risk is the risk arising from the Group not being able to meet its financial obligations. The Group manages its liquidity

needs by preparing cash flow forecasts, including forecasting of the Group’s liquidity requirements, to ensure the Group has

sufficient cash to meet its operational needs.

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the effect

of netting agreements:

			31 Dec 2023						31 Dec 2022
	Carrying	Contractual	1 year	1 to 2	2 to 5		Carrying	Contractual	1 year	1 to 2	2 to 5
	amount	cash flows	or less	years	years	>5 years	amount	cash flows	or less	years	years	>5 years
	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000	£’000
Non-derivative
financial liabilities
Trade and other payables
and accruals	(10,563)	(10,563)	(10,563)	—	—	—	(10,957)	(10,957)	(10,957)	—	—	—
Lease liabilities	(2,596)	(3,038)	(887)	(883)	(1,268)	—	(3,124)	(3,793)	(840)	(853)	(1,851)	(249)
Derivative
financial liabilities
Forward
exchange
contracts:
(Outflow)	(2,337)	(2,239)	(2,239)	—	—	—	—	(93)	(93)	—	—	—
Inflow	—	—	—	—	—	—	1,907	2,000	2,000	—	—	—
Currency
swap contracts:
(Outflow)	—	—	—	—	—	—	—	—	—	—	—	—
Inflow	1,767	1,760	1,760	—	—	—	—	—	—	—	—	—

Foreign currency exposures

The Group’s primary transaction currency is pound sterling. Exposures to foreign currency-denominated contracted receivables

and commitments arise from the Group’s overseas sales and purchases, which are primarily denominated in euros, US dollars,

Canadian dollars and Japanese yen. During the year ended 31 December 2020, the Group entered into a fixed term deposit

denominated in Chinese renminbi, to fund the expected initial investment of CNH68m (c.£8m) in the proposed collaboration

with Weichai Power Co. Ltd. This deposit has been rolled forward following the ongoing discussions around the final form of the

collaboration which are expected to complete during 2024.

The Group seeks to mitigate its foreign currency exposure by entering into forward currency exchange contracts, and in limited

circumstances, currency options in accordance with the Group’s treasury policy. Where the amounts to be paid and received

in a specific currency are expected to largely offset one another, no further hedging activity is undertaken. Forward currency

exchange contracts and options are primarily entered into for significant foreign currency exposures that are not expected to

be offset by other currency transactions. The Group’s objectives and policies are largely unchanged in the reporting periods

under review.

During the year ended 31 December 2020, the Group entered into a non-deliverable forward (“NDF”) to hedge an exposure

to KRW related to a long-term customer contract. As at 31 December 2023, £nil cashflows remained under the hedge

(31 December 2022: £5.0m), as they were net settled in pound sterling during 2023. Forward exchange contracts include

forward currency contracts to sell £2.7m in total and buy US and Canadian dollars over the next 12 months.

123Ceres Annual Report 2023

Financial statements

20. Financial instruments continued

Foreign currency exposures continued

The table below shows the extent to which the Group has monetary assets and liabilities in currencies other than pounds sterling.

Foreign exchange differences arising on the retranslation of these monetary assets and liabilities are taken to the Consolidated

Statement of Profit and Loss.

			Canadian	Japanese	Chinese
	Euro	US dollar	dollar	yen	renminbi	Other
31 December 2023	£’000	£’000	£’000	£’000	£’000	£’000
Exposures to foreign currency risk:
Cash and cash equivalents	1,383	1,332	164	127	136	22
Fixed term bank deposits	—	—	—	—	7,750	—
Trade and other receivables	—	1	—	—	2	—
Other current assets	—	—	—	—	24	—
Trade payables and payments on account	(276)	(450)	(2)	—	—	(7)
Other current liabilities	—	—	—	—	(56)	—
Forward currency contracts
– (outflow)/inflow	(2,000)	2,500	300	—	—	—
Balance sheet exposure	(893)	3,383	462	127	7,856	15

			Canadian	Japanese	Chinese
	Euro	US dollar	dollar	yen	renminbi	Other
31 December 2022	£’000	£’000	£’000	£’000	£’000	£’000
Exposures to foreign currency risk:
Cash and cash equivalents	2,126	2,531	85	456	89	30
Fixed term bank deposits	—	—	—	—	8,475	—
Trade and other receivables	27	2	—	—	—	—
Trade payables and payments on account	(516)	(178)	(4)	—	—	(6)
Forward currency contracts
– (outflow)/inflow	(2,000)	—	61	33	—	—
Balance sheet exposure	(363)	2,355	142	489	8,564	24

A 10% weakening of the following currencies against pound sterling at 31 December 2023 (or 31 December 2022) would have

resulted in a profit or loss charge to the Consolidated Statement of Profit and Loss by the amounts shown below. This calculation

assumes that the change occurred at the balance sheet date and had been applied to risk exposures existing at that date.

This analysis assumes that all other variables, in particular other exchange rates and interest rates, remain constant. The analysis

is performed on the same basis for the comparative period.

	Profit or (loss)
	2023	2022
	£’000	£’000
Euro	89	36
US dollar	(338)	(235)
Canadian dollar	(46)	(14)
Japanese yen	(13)	(49)
Chinese Renminbi	(785)	(856)
Other	(1)	(2)

A 10% strengthening of the above currencies against pound sterling at 31 December 2023 (or 31 December 2022) would have

had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables

remain constant .

124 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

21. Lease liabilities

The Group leases certain assets under lease agreements. The lease liability consists of leases of land and buildings and computer

equipment. The property leases expire between June 2024 and November 2028. Full details of the accounting policy under

which leases are recognised are in Note 11 .

	£’000
Balance as at 1 January 2022	3,039
Lease payments	(956)
Interest expense	212
Adjustment of lease term (see Note 11)	829
Balance as at 31 December 2022	3,124
New finance leases recognised	66
Lease payments	(906)
Interest expense	248
Adjustment of lease term (see Note 11)	64
Balance as at 31 December 2023	2,596
Current	694
Non-current	1,902
Balance as at 31 December 2023	2,596
Current	610
Non-current	2,514
Balance as at 31 December 2022	3,124

Lease liability contractual maturities (representing undiscounted contractual cash flows) are set out in Note 20.

22. Provisions and contingent liabilities

Provisions

A provision is recognised in the Consolidated Statement of Financial Position when the Group has a present legal or constructive

obligation as a result of a past event that can be reliably measured and it is probable that an outflow of economic benefits will be

required to settle the obligation where relevant.

Contingent liabilities

Contingent liabilities are disclosed where the likelihood of payment of potential future cash outflows is considered more than

remote, but is not considered probable or cannot be measured reliably.

Property dilapidations

Provisions have been made for future dilapidation costs on the leased properties. This provision is the Directors’ best estimate

as the actual costs and timing of future cash flows are dependent on future events and are updated periodically. The estimate

is supported by advice received from professional advisers. Provisions are determined by discounting the expected future cash

flows at a pre-tax rate that reflects risks specific to the liability. Any difference between expectations and the actual future liability

will be accounted for in the period when such determination is made.

Warranties

As at the year-end, only a small proportion of technology hardware supplied or sold to customers was provided with contractual

warranties. The warranty provision is recognised in accordance with IAS 37 as the majority of technology hardware supplied

or sold to customers has been provided without contractual warranties and there is no option to acquire a warranty separately.

Where a constructive obligation is considered to have been created through an expectation or past practice, a provision for

the associated costs of future claims has been included at the year-end. The Group recognises a provision for both contractual

and constructive obligation warranties when the underlying products and services are sold. The provision is based on the

past performance of the technology hardware, management’s knowledge, customer expectations and a weighting of possible

outcomes against their associated probabilities. Where warranty obligations are not considered to be probable, they are not

provided for but instead are disclosed as contingent liabilities unless remote.

Contract losses

The Group holds provisions for expected contractual costs that it expects to incur over the life of the contract. Management

exercises judgement to determine the value of the costs to be incurred and the amount of the provision to be made. Each

provision is considered separately and the amount provided reflects the best estimate of the most likely amount to be incurred.

Provision is made when the contractual or constructive obligation occurs. The provision is used to offset the costs incurred in

delivering the onerous contracts.

125Ceres Annual Report 2023

Financial statements

22. Provisions and contingent liabilities continued

The movement in provisions charged to the Consolidated Statement of Profit and Loss for the year ended 31 December 2023

is set out below along with the value of provisions at 31 December 2022:

	Property
	dilapidations 1	Warranties	Contract losses	Total
	£’000	£’000	£’000	£’000
At 1 January 2022	1,828	1,253	326	3,407
Movements in the Consolidated Statement of Profit and Loss:
Amounts used	—	—	(137)	(137)
Unwinding of discount	87	—	—	87
Unused provision reversed	—	(707)	(135)	(842)
Increase in provision	190	329	—	519
At 31 December 2022 - Restated	2,105	875	54	3,034
Movements in the Consolidated Statement of Profit and Loss:
Unwinding of discount	89	—	—	89
Unused provision reversed	—	(553)	(10)	(563)
Increase in provision	88	281	—	369
At 31 December 2023	2,282	603	44	2,929
Current	—	603	44	647
Non-current	2,282	—	—	2,282
At 31 December 2023	2,282	603	44	2,929
Current	—	875	54	929
Non-current - Restated	2,105	—	—	2,105
At 31 December 2022 - Restated	2,105	875	54	3,034

1. The adjustment in respect of 2022 is described in Note 1.

The dilapidation provision at 31 December 2023 represents the present value of costs to be incurred in making good the Group’s

leasehold properties at the break points of the leases in approximately two to three years’ time. The main uncertainty relates

to estimating the cost that will be incurred at the end of the respective leases. A revaluation of the property dilapidation was

performed by a specialist for the year ended 31 December 2023.

The warranty provision at the year-end is primarily the result of a constructive obligation and reflects the Directors’ best estimate

of the cost required to fulfil these obligations with respect to a number of the Group’s customer contracts. Subsequent to their

initial recognition, warranty provisions are utilised or released over the periods of the various warranty obligations, which are

expected to be less than two years. There are several areas of uncertainty supporting the provision, including determining the

amount of technology hardware that may require repairing or replacing and respective timing as manufacturing costs are expected

to reduce over time. In addition, as most of the Group’s warranty provisions relate to constructive rather than contractual

obligation and there is limited history of warranty claims with the Group’s current customers, any final warranty obligation will be

subject to negotiation with the respective customer. The calculation of the warranty provision is subject to certain estimates, as

set out in Note 1.

During the year, following the conclusion of certain contracts utilising our fuel cell stacks, and based on a further year’s data around

stack failure and degradation rates, £0.6m of the existing provision was released to the Consolidated Statement of Profit and Loss.

As at 31 December 2023, the contract loss provision relates to one contract for the provision of technology hardware.

The provision relates to an onerous contractual obligation to reimburse our customer to remove installed fuel cell systems

from end-user properties and to return them to us.

23. Share capital

	31 Dec 2023		31 Dec 2022
	£’000		£’000
	Number		Number
	of £0.10		of £0.10
	ordinary shares	£’000	ordinary shares	£’000
Allotted and fully paid
At 1 January	192,086,775	19,209	190,729,638	19,073
Allotted £0.10 ordinary shares on exercise of employee share options	881,321	88	1,357,137	136
At 31 December	192,968,096	19,297	192,086,775	19,209

During the year ended 31 December 2023, 881,321 ordinary £0.10 shares were allotted for cash consideration of £799,684 on

the exercise of employee share options (year ended 31 December 2022: 1,357,137 ordinary £0.10 shares were allotted for cash

consideration of £866,717) (see Note 25).

126 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

24. Reserves

The Consolidated Statement of Financial Position includes a merger reserve and a capital redemption reserve. The merger reserve

represents a reserve arising on consolidation using book value accounting for the acquisition of Ceres Power Limited at 1 July 2004.

The reserve represents the difference between the book value and the nominal value of the shares issued by the Company to

acquire Ceres Power Limited. The capital redemption reserve was created in the year ended 30 June 2014 when 86,215,662

deferred ordinary shares of £0.04 each were cancelled.

25. Share options

Share-based payments

The Group has a number of employee and executive share option and award schemes under which it makes equity-settled

share-based payments.

The fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding

increase in equity, over the period in which the employees become unconditionally entitled to the awards. The fair value of the

awards granted is measured using option valuation models, taking into account the terms and conditions upon which the awards

were granted. The fair value of the share-based payment, determined at the grant date, is measured to reflect vesting and

non-vesting conditions and for market-related vesting conditions there is no true-up for differences between expected and actual

outcomes. Expected volatility was determined by calculating the historical volatility of the Company’s shares compared with AIM

over a period consistent with the expected term of the options.

Where the parent Company grants options over its own shares to the employees of the Group, these are accounted for as

equity-settled in the consolidated accounts of the Group.

The total charge recognised in the year ended 31 December 2023 relating to employee share-based payments was £67,000

(2022: £997,000).

The Company has a number of share option schemes and savings-related share option plans for its employees and a separate

historical scheme for Executive Directors.

		2023	2022
		£’000	£’000
a) 2004	Employees’ share option scheme	—	—
b) Sharesave schemes		148	241
c) Long Term Incentive Plan (“LTIP”)		(81)	756
		67	997

a) 2004 Employees’ share option scheme

In previous years, the Company issued share options under this scheme for Directors and employees, under which approved and

unapproved share options were granted. The Company adopted the “Ceres Power Holdings Ltd 2004 Employees’ share option

scheme” at the time of listing in November 2004.

Under this scheme, Directors and employees hold options to subscribe for £0.10 ordinary shares in Ceres Power Holdings plc at

prices ranging from £0.10 to the closing mid-market price on the day preceding the share option grant. All options are equity-settled.

The vesting period for all options is generally between three and six years. If the options remain unexercised after a period of ten

years from the date of the grant, the options expire. Options are forfeited if the employee chooses to leave the Group before the

options vest.

Movements in the total number of share options outstanding and their relative weighted average exercise price are as follows:

	2023		2022
	£’000		£’000
		Weighted		Weighted
	Number	average	Number	average
	(‘000)	exercise price	(‘000)	exercise price
Outstanding at 1 January	982	£0.84	1,476	£0.75
Exercised	(222)	£0.84	(421)	£0.48
Lapsed	(127)	£0.85	(73)	£0.99
Outstanding at 31 December	633	£0.84	982	£0.84
Exercisable	633	£0.84	982	£0.84

The weighted average share price on the exercise date of options was £3.35 (2022: £5.73).

127Ceres Annual Report 2023

Financial statements

25. Share options continued

Share-based payments continued

The range of exercise prices for options outstanding at the end of the year is as follows:

	2023		2022
	£’000		£’000
		Weighted		Weighted
	Number	average	Number	average
Expiry date – 31 December	(’000)	exercise price	(’000)	exercise price
2023	—	—	250	£0.86
2024	615	£0.84	669	£0.84
2025	4	£0.90	36	£0.90
2026	14	£0.55	27	£0.55

The options outstanding at the end of the year have a weighted average contractual life of 0.63 years (31 December 2022: 1.45 years).

a) 2004 Employees’ share option scheme continued

In 2014 and 2016, certain option-holders under the 2004 share option scheme were awarded Employee Shareholder Status (“ESS”) shares

in the Company’s subsidiary, Ceres Power Intermediate Holdings Ltd. The ESS shares were granted as a modification to the unexercised

2004 Employees’ share scheme options providing the relevant employees with additional exercise rights. The issue of the ESS shares has

not changed the vesting period or exercise price of the unexercised 2004 Employees’ share scheme options granted. The total fair value

charge of these options remains unchanged and the gross benefit received cannot exceed the gain realisable under the original share

options and it cannot be received at an earlier time. Shares granted in Ceres Power Intermediate Holdings Ltd under the ESS scheme have

minimal rights attached to them.

b) Sharesave scheme

During 2019 a new HMRC-approved savings-related share option scheme was implemented, under which employees save on a

monthly basis, over a three-year period, towards the purchase of shares at a fixed price determined when the option is granted.

This price is set at a 20% discount to the market price. The options must be exercised within six months of maturity of the savings

contract, otherwise they lapse.

Movements in the total number of share options outstanding and their relative weighted average exercise price are as follows:

	2023		2022
	£’000		£’000
		Weighted		Weighted
	Number	average	Number	average
	(’000)	exercise price	(’000)	exercise price
Outstanding at 1 January	673	£4.36	984	£2.83
Granted	893	£3.13	394	£5.96
Exercised	(300)	£1.95	(496)	£1.27
Lapsed/cancelled	(416)	£5.82	(209)	£7.53
Outstanding at 31 December	850	£3.52	673	£4.36
Exercisable	—	—	6	£1.27

The weighted average share price on the exercise date of options was £4.02 (2022: £4.43).

The weighted average fair value of options granted in the year was £1.70 (2022: £3.34).

The expiry dates of options outstanding at the end of the year are as follows:

	2023		2022
	£’000		£’000
		Weighted		Weighted
	Number	average	Number	average
Expiry date – 31 December	(’000)	exercise price	(’000)	exercise price
2023	—	—	308	£1.95
2024	17	£9.83	42	£9.83
2025	83	£5.96	323	£5.96
2026	750	£3.13	—	—

The options outstanding at the end of the year have a weighted average contractual life of 2.78 years (2022: 1.78 years).

128 Ceres Annual Report 2023

Notes to the consolidated financial statements continued

for the year ended 31 December 2023

25. Share options continued

Share-based payments continued

c) LTI P

During 2016 a Long Term Incentive Plan (“LTIP”) was implemented by the Remuneration and Nomination Committee. Participation

in the LTIP is at the invitation of the Committee and is intended to be used to incentivise the performance and retention of the

Company’s Executives and certain key employees.

The maximum awards for all participants are determined by the Remuneration and Nomination Committee with appropriate input

from independent advisers. Performance is based on achieving targets. Targets are major milestones which are aligned to the

Group’s strategic plan and also a sliding scale of Total Shareholder Return (“TSR”), which is measured over a period of three years

with an additional holding period of two years for Executives. Malus, hold and clawback conditions apply.

Movements in the total number of share options outstanding and their relative weighted average exercise price are as follows:

	2023		2022
	£’000		£’000
		Weighted		Weighted
	Number	average	Number	average
	(’000)	exercise price	(’000)	exercise price
Outstanding at 1 January	3,997	£0.10	3,963	£0.10
Granted	1,522	£0.10	892	£0.10
Exercised	(267)	£0.10	(382)	£0.10
Lapsed	(762)	£0.10	(476)	£0.10
Outstanding at 31 December	4,490	£0.10	3,997	£0.10
Exercisable	2,155	£0.10	2,421	£0.10

The weighted average fair value of options granted in the year ending 31 December 2023 was £3.38 (2022: £3.97).

The weighted average share price on the exercise date of options was £3.28 (2022: £5.69).

The expiry dates of options outstanding at the end of the year are as follows:

	2023		2022
	£’000		£’000
		Weighted		Weighted
	Number	average	Number	average
Expiry date – 31 December	(’000)	exercise price	(’000)	exercise price
2026	829	£0.10	1,029	£0.10
2027	279	£0.10	289	£0.10
2028	543	£0.10	559	£0.10
2029	504	£0.10	544	£0.10
2030	—	—	696	£0.10
2031	—	—	—	—
2032	850	£0.10	880	£0.10
2033	1,485	£0.10	—	—

The options outstanding at the end of the year have a weighted average contractual life of 6.61 years (2022: 6.45 years).

Assumptions

The fair values of the 2004 and Sharesave schemes were measured by use of the Black–Scholes pricing model. The inputs to the

Black–Scholes model were as follows:

	Sharesave	Sharesave	Sharesave	Sharesave
	scheme 2023	scheme 2022	scheme 2021	scheme 2020
Grant date	28 April 2023	27 April 2022	30 April 2021	22 January 2020
Share price at date of grant (£)	3.494	7.450	12.290	2.440
Exercise price (£)	3.128	5.960	9.832	1.95
Expected volatility (%)	69%	53%	53%	53%
Expected option life (years)	3.25 years	3.25 years	3.25 years	3.25 years
Average risk-free interest rate (%)	3.61%	1.00%	1.00%	1.00%
Expected dividend yield	Nil	Nil	Nil	Nil

The exercise prices of options are stated above. 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 historical volatility of the Company’s shares

since the Company restructured in 2012. The risk-free rate of return is management’s estimate of the yield on zero-coupon UK

Government bonds of a term consistent with the expected option life.

The fair values of the LTIP schemes were measured using a binomial pricing model and Monte Carlo simulation model.

129Ceres Annual Report 2023

Financial statements

25. Share options continued

Assumptions continued

The inputs to the Monte Carlo simulation model were as follows:

	LTIP 2023	LTIP 2022	LTIP 2020	(2)	LTIP 2020	(1)
	23 March	23 March		10–21 December		10 October
Grant date	2023	2022		2022		2020
Share price at date of grant (£)	3.91	7.40		10.52–11.56		2.16
Exercise price (£)	0.1	0.1		0.1		0.1
Expected volatility (%)	69%	64%		31%		21%
Expected option life (years)	Up to 7 years	Up to 7 years		up to 7 years		up to 7 years
Average risk-free interest rate (%)	3.61%	1.46%		1.00%		1.00%
Expected dividend yield	Nil	Nil		Nil		Nil

26. Events after the balance sheet date

Since the end of the year, Ceres announced its first joint SOEC and SOFC licence agreement with Delta Electronics. The agreement

includes revenue of £43m to Ceres through technology transfer, development licence fees, and engineering services.

Whilst we continue to maintain strong relationships with both Bosch and Weichai, it is now our belief that the proposed JV

is unlikely to be completed in its current form.

In February 2024, we made a strategic decision to discontinue our option to acquire the remaining shares of RFC Power (“RFC”),

the pioneering flow battery company, in which Ceres retains a 24.2% stake. We continue to support RFC’s development through

technology and engineering services, leveraging the complementary nature of our expertise in electrochemistry and systems.

This decision is aligned with our strategy to concentrate on our core business areas of fuel cell and electrolysis innovation. We will

also continue to support RFC to engage with potential financial and strategic partners to best position it to achieve future growth

and success in the energy storage market.

27. Capital commitments

Capital expenditure that has been contracted for but has not been provided for in the consolidated financial statements amounts

to £5,671,000 as at 31 December 2023 (31 December 2022: £8,679,000). The reduction reflects the progress made during the

year with the Group’s planned test expansion and the production of the first-of-a-kind electrolysis demonstration unit.

28. Related party transactions

As at 31 December 2023 the Group’s related parties were its Directors and RFC Power Ltd. Information around key management

compensation is set out in Note 6.

Major shareholders have been considered in the Director’s Report and it was concluded that they do not meet the definition

of a related party in line with IAS 24 ‘Related Party Disclosures’.

During the year the following Directors exercised share options:

				Total number	Weighted		Number
				of options	average price	Total gain	of shares
Date of exercise	Director	Type of options		exercised	on exercise	on exercise	retained
30 March 2023	Phil Caldwell	LTIP		200,000	£3.463	£672,600	200,000
04 May 2023	Phil Caldwell	Sharesave		4,610	£1.952	£6,602	4,610
07 July 2023	Mark Selby	2004		ESS	2,063	£2.825	£4,066	2,063
12 July 2023	Michelle Traynor	Sharesave		1,844	£1.952	£2,003	1,844
10 August 2023	Clarissa de Jager	Sharesave		7,377	£1.952	£10,284	7,377
03 October 2023	Phil Caldwell	2004	ESS	11,859	£3.204	£27,869	11,859

During the year ended 31 December 2023 two Directors sold 141,313 2004 Employee Shareholder Status (ESS) shares in Ceres

Power Intermediate Holdings Ltd and received 92,864 Ceres Power Holdings plc shares in consideration in addition to the linked

ESS options as set out in the table above.

During the year ended 31 December 2022 one Director exercised and retained 7,109 share options under the Company’s

employee Sharesave scheme and one Director exercised and sold 14,218 share options under the Company’s employee

Sharesave scheme. There were no other transactions between the Company and the Directors during the year ended

31 December 2022.

Transactions between the Group and RFC Power Ltd, being an associated entity of the Group, comprised engineering consultancy

services provided by the Group to RFC Power for the value of £0.6m (31 December 2022: £0.4m) in return for equity share

capital as described in Note 13.

130 Ceres Annual Report 2023

Company balance sheet

as at 31 December 2023

Note

As at

31 Dec 2023

£’000

As at

31 Dec 2022

£’000

Fixed assets

Investments 3 383,718 382,880

Current assets

Debtors: amounts falling due within one year 4 2,354 5,138

Cash at bank and in hand 5 239 2,074

2,593 7,212

Creditors: amounts falling due within one year 6 (1,114) (2,969)

Net current assets 1,479 4,243

Net assets 385,197 387,123

Capital and reserves

Called-up share capital 8 19,297 19,209

Share premium 406,184 405,463

Capital redemption reserve 9 3,449 3,449

Profit and loss account (43,733) (40,998)

Shareholders’ funds 385,197 387,123

The Company made a loss after taxation of £2.8m in the year (2022: £2.8m).

The notes on pages 132 to 135 are an integral part of these Company financial statements.

The financial statements on pages 130 to 135 were approved by the Board of Directors on 12 April 2024 and were signed on its

behalf by:

Phil Caldwell Eric Lakin

Chief Executive Officer Chief Financial Officer

Ceres Power Holdings plc

Registered Number: 5174075

131Ceres Annual Report 2023

Financial statements

Company statement of changes in equity

for the year ended 31 December 2023

Note

Share capital

£’000

Share premium

£’000

Capital

redemption

reserve

£’000

Profit and loss

account

£’000

Total

£’000

At 1 January 2022 19,073 404,726 3,449 (39,201) 388,047

Loss for the financial year — — — (2,794) (2,794)

Total comprehensive loss — — — (2,794) (2,794)

Transactions with owners

Issue of shares, net of costs 8 136 737 — — 873

Share-based payments charge 8 — — — 997 997

Total transactions with owners 136 737 — 997 1,870

At 31 December 2022 19,209 405,463 3,449 (40,998) 387,123

Loss for the financial year — — — (2,802) (2,802)

Total comprehensive loss — — — (2,802) (2,802)

Transactions with owners

Issue of shares, net of costs 8 88 721 — — 809

Share-based payments charge 8 — — — 67 67

Total transactions with owners 88 721 — 67 876

At 31 December 2023 19,297 406,184 3,449 (43,733) 385,197

The notes on pages 132 to 135 are an integral part of these Company financial statements.

132 Ceres Annual Report 2023

Notes to the Company financial statements

1. Accounting policies used in the preparation of the financial statements

Basis of preparation

The financial statements of the Company have been prepared in accordance with Financial Reporting Standard 101 Reduced

Disclosure Framework (“FRS 101”).

In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of

International Accounting Standards, but makes amendments where necessary in order to comply with the Companies Act 2006

and has set out below where advantage of the FRS 101 disclosure exemptions has been taken.

Under Section 408 of the Companies Act 2006, the Company is exempt from the requirement to present its own profit and

loss account.

In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:

• Cash Flow Statement and related notes;

• Comparative period reconciliations for share capital;

• Disclosures in respect of transactions with wholly owned subsidiaries;

• Disclosures in respect of capital management;

• The effects of new but not yet effective IFRSs;

• Disclosures in respect of the compensation of Key Management Personnel; and

• Disclosures of transactions with a management entity that provides key management personnel services to the Company.

As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under

FRS 101 available in respect of the following disclosures:

• IFRS 2 Share-based Payments in respect of Group-settled, share-based payment; and

• IFRS 7 Financial Instrument Disclosure.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these

financial statements.

The financial statements are prepared on the historical cost basis.

Critical accounting judgements and estimates

The preparation of financial statements under FRS 101 requires the Company’s management to make judgements and estimates

that affect the reported amounts of assets, liabilities, revenues and costs. Although these estimates are based on management’s

best knowledge of the amount, events or actions, actual results may ultimately differ from these estimates. The estimates and

underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in

which the estimate is revised.

The judgements that are considered to have the most significant impact on the Company’s assets and liabilities are set out below:

The review of amounts owed by Group undertakings involved judgement when determining the credit risk of fellow Group

undertakings and their ability to repay loans. As at 31 December 2023, management determined that Ceres Power Limited

remains unable to repay any amounts in excess of the carrying value of the loan and therefore the historical provision of £59.3m

(2022: £59.3m) was maintained.

Management’s review of the Company’s investments to determine whether an indicator of impairment exists requires estimates

to be used when evaluating the carrying value of investments against their value in use. The value in use is estimated using

a discounted cash flow valuation. The basis for the projected cash flows is the Group’s business plan, which is prepared by

management. As at 31 December 2023, this review resulted in management determining that the value in use continues

to be in excess of its carrying value, and no impairment is therefore required.

2. Loss for the year

The Company has taken advantage of the exemption available under Section 408 of the Companies Act 2006 and has

not presented its profit and loss account. The Company’s result for the year ended 31 December 2023 was a loss of

£2.8m (31 December 2022: loss of £2.8m), which is stated after charging £68,000 (2022: £54,000) for remuneration

receivable by the Company’s auditor for the auditing of the financial statements and £30,000 (2022: £150,000) in relation

to the review of the interim financial information.

133Ceres Annual Report 2023

Financial statements

3. Fixed asset investments

Investments in equity securities

Fixed asset investments in subsidiaries are carried at cost less impairment.

Share-based payments

The Group in which the Company is associated has a number of employee and executive share option and award schemes under

which it makes equity-settled, share-based payments.

The fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding

increase in equity, over the period in which the employees become unconditionally entitled to the awards. The fair value of the awards

granted are measured using option valuation models, taking into account the terms and conditions upon which the awards were

granted. The fair value of the share-based payment, determined at the grant date, is measured to reflect vesting and non-vesting

conditions and there is no true-up for differences between expected and actual outcomes.

Where the Company grants options over its own shares to the employees of its subsidiaries, it recognises an increase in the cost

of investment in its subsidiaries with the corresponding credit being recognised directly in equity.

Impairment of fixed asset investments

Investments are stated at cost and reviewed for impairment if there are indicators that the carrying value may not be recoverable.

An impairment loss is recognised to the extent that the carrying amount cannot be recovered either by selling the asset or by

continuing to hold the asset and benefiting from the net present value of the future cash flows of the investment.

Investment in Group undertakings

2023

£’000

2022

£’000

Cost

At 1 January 382,880 380,996

Capital contributions arising from share-based payment charge 828 1,884

Additional investment in shares of Ceres Power Intermediate Holdings Ltd 10 —

At 31 December 383,718 382,880

The Directors have reviewed the investment in its subsidiary for indicators of impairment at the year-end, including considering

the progress of technical development, funds held and the positive performance of the Group, as well as the Group’s market

capitalisation. Accordingly, an indicator of impairment was identified with the Group’s market capitalisation being lower than

the carrying value of the investments as at 31 December 2023. A detailed impairment test was performed and as a result

the Directors continue to believe that the recoverable value of the investment exceeds its carrying value.

The Company’s investments comprise interests in the following entities:

Name of undertaking Country of incorporation Description of shares held

Proportion of

nominal value of

shares held by

the Company Type of entity

Ceres Power Ltd England and Wales £0.001 ordinary shares 100%

Subsidiary

Ceres Intellectual Property Company Ltd England and Wales £1.00 ordinary shares 100%

Subsidiary

Ceres Power Licence Company Ltd England and Wales £1.00 ordinary shares 100%

Subsidiary

Ceres Power Intermediate Holdings Ltd England and Wales £0.01 ordinary shares 100%

Subsidiary

Ceres Holdings International Ltd England and Wales £1.00 ordinary shares 100%

Subsidiary

Ceres Engineering Consulting (Shanghai) Co Ltd Shanghai, China £1.00 ordinary shares 100%

Subsidiary

RFC Power Ltd England and Wales £0.001 ordinary shares 24.2%

Associate

1. Ceres Power Ltd, Ceres Intellectual Property Company Ltd, Ceres Holdings International Ltd and Ceres Power Licence Company Ltd are 100% held directly by Ceres

Power Intermediate Holdings Ltd. Registered address is Viking House, Foundry Lane, Horsham, West Sussex, RH13 5PX.

2. 100% held directly by Ceres Power Ltd. Registered address is Office 1903i, Floor 19/F, Tower B, No.1065 West Zhongshan Road, Changning District, Shanghai, China.

3. 24.2% held directly by Ceres Power Intermediate Holdings Ltd. Registered address is Imperial College, White City Incubator Translation and Innovation Hub,

London, W12 0BZ.

The principal activity of Ceres Power Ltd is the commercialisation and continued development of the Group’s fuel cell and

electrochemical technology. The principal activity of Ceres Intellectual Property Company Ltd is the administration of registered

intellectual property developed within the Group. The principal activity of Ceres Power Intermediate Holdings Ltd is as a holding

company to the other Group companies and to manage the Group’s cash, cash equivalents and investments. The principal activity

of Ceres Power Licence Company Ltd is the provision of overseas licence and royalty services.

Changes in the Company’s investments are in Note 13 to the Consolidated financial statements on page 93.

134 Ceres Annual Report 2023

4. Debtors: amounts falling due within one year

Trade and other debtors

Trade and other debtors are recognised initially at fair value. Where considered necessary they are subsequently measured at

amortised cost using the effective interest method, less any impairment losses. The Company applies the general approach for

the impairment review of loans to subsidiaries.

31 Dec 2023

£’000

31 Dec 2022

£’000

Other debtors 8 24

Prepayments and accrued income 17 21

Amounts owed by Group undertakings 2,329 5,093

2,354 5,138

The amounts owed by Group undertakings comprise inter-company loans and recharges. No specific repayment or interest

terms are associated with these amounts. As of 31 December 2023, a loss allowance of £59,316,000 (31 December 2022:

£59,316,000) has been recognised against the inter-company loan to Ceres Power Limited and Ceres Intellectual Property

Company Limited, reflecting management’s best estimate of the expected credit losses for that balance.

A subordination agreement exists between the Company and Ceres Power Ltd. As at 31 December 2023, amounts owed

by Ceres Power Limited to the Company of £60,676,000 (31 December 2022: £60,676,000) are subordinated to all other

creditors of Ceres Power Limited.

5. Cash and cash equivalents

Cash and cash equivalents comprise cash balances.

6. Creditors: amounts falling due within one year

Trade and other creditors

Trade and other creditors are recognised initially at fair value. Where considered necessary they are subsequently measured at

amortised cost using the effective interest method. The amounts owed to Group undertakings comprise inter-company loans and

recharges. No specific repayment or interest terms are associated with these amounts.

31 Dec 2023

£’000

31 Dec 2022

£’000

Other creditors 895 8

Accruals 219 324

Amounts owed to Group undertakings — 2,637

1,114 2,969

Notes to the Company financial statements continued

135Ceres Annual Report 2023

Financial statements

7. Taxation

Taxation

Tax on the profit or loss for the year comprises current and deferred tax and any adjustment to tax payable in respect of previous

years. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity

or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or

substantively enacted at the balance sheet date.

Deferred taxation

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial

recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and

differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount

of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which

the temporary difference can be utilised.

Potential deferred tax assets have not been recognised but are set out below:

31 Dec 2023

£’000

31 Dec 2022

£’000

Tax effect of timing differences because of:

Short-term timing differences (5) (5)

Losses carried forward (1,688) (1,751)

(1,693) (1,756)

The deferred tax assets have not been recognised as the Directors consider that it is unlikely that the asset will be realised in the

foreseeable future. The gross amount of losses carried forward as at 31 December 2023 was £7.0m (31 December 2022: £7.0m),

which do not have an expiry date.

8. Called-up share capital

31 Dec 2023

£’000

31 Dec 2022

£’000

Number of

£0.10

ordinary shares £’000

Number of

£0.10

ordinary shares £’000

Allotted and fully paid:

Ordinary shares at 31 December 192,968,096 19,297 192,086,775 19,209

Details of shares issued in the period are provided in Note 23 to the Group financial statements. Details of share options are

disclosed in Note 25 to the Group financial statements.

9. Capital redemption reserve

The capital redemption reserve was created in the year ended 30 June 2014 when 86,215,662 deferred ordinary shares

of £0.04 each were cancelled.

10. Employees

The Company has no employees other than the Non-Executive Directors (including the Chairman), whose remuneration

is set out on page 78.

136 Ceres Annual Report 2023

Directors of Ceres Power Holdings plc

• Trine Borum Bojsen (Non-Executive Director)

• Tudor Brown (Non-Executive Director)

• Phil Caldwell (Chief Executive Officer)

• Warren Finegold (Chairman)

• Uwe Glock (Non-Executive Director)

• Nannan Sun (Non-Executive Director)

• Aidan Hughes (Non-Executive Director)

• Caroline Brown (Non-Executive Director)

• Karen Bomba (Non-Executive Director)

• Professor Dame Julia King (Non-Executive Director)

• Eric Lakin (Chief Financial Officer)

Registered number

5174075

Company Secretary

Deborah Grimason

Registered office

Viking House

Foundry Lane

Horsham

West Sussex

RH13 5PX

China office

Office 1903i, Floor 19

F Tower B, No.1065

West Zhongshan Road

Changning District

Shanghai

China

Japan office

19F Hilton Plaza West Office Tower

2-2-2 Umeda Kita-Ku

Osaka

530-0001

Japan

South Korea office

Seoul Finance Center, 4F

136 Sejeong-daero

Jung-gu

Seoul

South Korea (100-768)

Auditor

BDO LLP

31 Chertsey Street

Guildford

Surrey

GU1 4HD

Solicitor

RPC LLP

Tower Bridge House

St. Katharine’s Way

London

E1W 1AA

Bankers

National Westminster Bank Plc

2nd Floor, Turnpike House

123 High Street

Crawley

West Sussex

RH10 1DQ

Broker

Joh. Berenberg, Gossler & Co. KG

60 Threadneedle Street

London

EC2R 8HP

Registrar

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol

BS99 6ZY

Ceres Power Holdings plc

Viking House

Foundry Lane

Horsham

West Sussex

RH13 5PX

www.ceres.tech

“Ceres”, “Ceres Power”, “Clean Energy Starts With Ceres” and

“SteelCell” are registered trademarks belonging to the Group.

Directors and advisers

137Ceres Annual Report 2023

Other information

Biofuel

A fuel derived from biomass, rather than by the very slow

geological processes involved in the formation of fossil fuels.

Most common biofuels include bio-ethanol (from sugar or

starch crops) and biodiesel (from oils and fats).

Combined heat and power (CHP)

A unit that generates electricity while at the same time

capturing usable heat that is created during this process.

This heat can then be used to provide hot water or central

heating for example, improving the efficiency of the device.

Decarbonisation

The process of lowering the amount of greenhouse gas

emissions (mostly carbon dioxide, CO

) produced by the

burning of fossil fuels.

Efficiency, electrical/thermal

The amount of electricity/heat that is produced by a process

for every unit of energy supplied to the process, often

expressed as a percentage.

Efficiency, total

The amount of useful energy in any form that a process

produces for every unit of energy supplied to the process,

often expressed as a percentage.

Electrolyser

A device that uses an electric current to drive a chemical

reaction, the reverse process to that of a fuel cell. There are

several types of electrolysis technologies:

• Alkaline electrolysis (AEL):In use for more than 100 years,

it uses a liquid alkaline electrolyte solution and operates

at low temperature with liquid water. It is the largest scale

and lowest cost technology today, but is not as efficient as

other technologies.

• Proton Exchange Membrane Electrolysis (PEME): Uses a

solid electrolyte that requires expensive rare metal catalysts.

It can operate at high current densities at low temperature

with liquid water and has a high dynamic response

• Solid Oxide Electrolysis Cell (SOEC): Least mature

technology, it works at high temperature on steam, giving

it significantly higher efficiency and lower operating costs

than other technologies when using waste heat, and when

integrating it with existing processes such as steel, ammonia

and synthetic fuel.

Energy

In physics, the capacity for doing work. It may exist in potential,

kinetic, thermal, electrical, chemical, nuclear or other various

forms. Measured in Joules or Watt-Hours.

Flow battery (or Redox Flow Battery)

An electrochemical method of storing and generating

electricity with flexible storage capacity and flexible discharge

electricity rate. A flow battery may be used like a fuel cell or

a rechargeable battery, with the electrolyte stored outside of

the cell. Unlike a battery, the storage capacity is de-coupled

from the cell and the electrolyte can be fed at different rates

to generate varying amount of electricity.

Fuel cell

A device for converting chemical energy (fuel) directly into

electrical energy without the need for combustion. There are

several fuel cell technology families, classified by their operating

temperature and the type of electrolyte used. These include:

• Alkaline fuel cell (AFC): relatively low operating temperature

(60-80 Celsius) and one of the oldest designs for fuel cells,

used in the United States space program since the 1960s.

AFCs require pure hydrogen as fuel

• Polymer exchange membrane (PEM) fuel cell: relatively low

operating temperature (60-80 Celsius). The low operating

temperature means that it doesn’t take very long for the fuel

cell to warm up and begin generating electricity. Requires

pure hydrogen as fuel

• Phosphoric acid fuel cell (PAFC): operate at around 200

Celsius, mature technology and most often used in stationary

power generation systems. It has relatively low efficiency and

so is typically only used in CHP systems

• Solid oxide fuel cell (SOFC): high operating temperatures

(up to 950 Celsius) but highly efficient and able to generate

electrical power from multiple fuel types including natural

gas, biofuels, hydrogen blends and pure hydrogen. However,

these cells are typically expensive as they are constructed

from exotic (but fragile) materials resistant to the high

operating temperatures.

Stack

An assembly of individual fuel cells into a device that can

deliver a large amount of electrical power. Ceres stacks

are currently manufactured in 1kW and 5kW units. These

can be connected in a modular manner to create higher

power systems.

Greenhouse gas

A gas that absorbs infrared radiation (net heat energy) emitted

from Earth’s surface and reradiates it back contributing to

rising surface temperature, or the greenhouse effect. The

most common greenhouse gases are carbon dioxide (CO

methane (CH

), nitrous oxide (N20) and water vapour (H

0).

Hydrogen

A highly abundant naturally occurring gas commonly cited as a

fuel for the future as it has a high chemical energy content for

its mass and creates no harmful emissions when it is burned to

release this energy. Hydrogen is currently used as a feedstock

for a number of industrial processes (such as metal smelting or

fertiliser production) and is commercially defined by its method

of production and the treatment of the waste gases produced:

• Brown: produced by using coal where the emissions are

released to the air

• Grey: produced from natural gas where the associated

emissions are released to the air

• Blue: produced from natural gas, where the emissions are

captured using carbon capture and storage

• Pink: produced from electrolysis powered by nuclear energy

• Green: produced from electrolysis powered by

renewable electricity

Glossary

138 Ceres Annual Report 2023

Intellectual property (IP)

An asset that is created by the innovative activities of people

and businesses. IP can be in the form of inventions, literary

and artistic works, designs and symbols, names and images

used in commerce. In business, unique IP is often the basis of

competitive advantage and is therefore closely protected for

example by calling out a copyright, registering a trade mark, or

filing a patent. Intellectual Property Rights are protected by law

and allow the holder to assert control over how they are used

through contracts and licences.

Natural gas

A fossil fuel energy source that is formed deep beneath

the earth’s surface. The largest component of natural gas is

methane, composed of carbon and hydrogen. When natural

gas is burned or used in a fuel cell, it produces energy and

waste carbon dioxide.

NOx or Nitrous Oxide

A gas that is often formed as an unwanted biproduct of

combustion: the higher the temperature or pressure of the

combustion, the more NOx is formed. It is a significant cause

of poor air quality.

OEM, Original Equipment Manufacturer

A company that manufactures and sells products or part of

a product to another company.

SOFC system

An assembly that is made up of the fuel cell, fuel input handling

components and components engineered to manage the

electrical power output and waste heat and gases.

or Sulphur Oxide

The gaseous substance that is formed when sulphur

compounds, such as those found in many fossil fuels, are

burned. Before low-sulphur fuels ere regulated, they were

a significant cause of poor air quality from vehicles.

Watt

The unit by which power is measured. The amount of energy

(measured in Joules) is delivered in a fixed amount of time,

Joules per Second. Units are typically expressed in kilowatts

(1kW = 1,000 watts); megawatts (1MW = 1,000kW); gigawatts

(1GW = 1,000MW).

Zero emission

Refers to a vehicle, engine, motor, process or some other

energy source, that emits no waste products that pollute

the environment or disrupt the climate.

Glossary continued

Ceres Power Holdings plc commitment to environmental issues is

reflected in this Annual Report, which has been printed on UPM Finesse

Silk, an FSC® certified material. This document was printed by Opal X

using its environmental print technology, which minimises the impact of

printing on the environment, with 99% of dry waste diverted from landfill.

Both the printer and the paper mill are registered to ISO 14001.

Ceres Power Holdings plc

Viking House

Foundry Lane

Horsham

West Sussex

RH13 5PX