Ceres Power Regulatory News (CWR)

THIS ANNOUNCEMENT IS RESTRICTED AND IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, AUSTRALIA OR NEW ZEALAND OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL

12 March 2013

CERES POWER HOLDINGS PLC

PROPOSED PLACING AND OPEN OFFER

AND NOTICE OF GENERAL MEETING

Ceres Power Holdings plc ("Ceres" or the "Company"), a leading developer of clean, efficient, cost-effective fuel cell technology for use in distributed generation and other applications, today announces its intention to raise up to approximately £9.7 million (approximately £9.5 million net of expenses).

Highlights

·; Proposed Placing to raise approximately £8.7 million and Open Offer to raise approximately £1 million

·; Issue price for the Placing and Open Offer of 8 pence per New Ordinary Share

·; Open Offer Entitlement for Qualifying Shareholders of 2 Open Offer Shares for every 67 Existing Ordinary Shares

Pursuant to the Fundraise, the Board announces that it is proposing to undertake a Placing and Open Offer to raise up to approximately £9.7 million (approximately £9.5 million net of expenses) in aggregate through the issue of up to 120,948,161 New Ordinary Shares (in aggregate) at 8p per New Ordinary Share. 108,464,733 New Ordinary Shares will be issued through the Placing to raise approximately £8.7 million and up to 12,483,428 New Ordinary Shares will be issued through the Open Offer to raise up to approximately £1 million assuming full take up of the Open Offer. Neither the Placing nor the Open Offer are underwritten. The Placing has been arranged by N+1 Singer with new and existing institutional and other investors. The Issue Price represents a discount of 0.2 per cent. to the mid-market closing price on 8 March 2013 (being the last practicable date prior to the publication of this announcement).

Definitions for all terms defined in this announcement are provided at the end of this announcement.

Introduction

On 17 December 2012, the Company announced that it had raised £3.3 million (before expenses) via a firm placing and placing and open offer in conjunction with a restructuring of the business and the adoption of a new business strategy for the Group. On 14 February 2013, the Company reported that it had successfully completed the restructuring phase and that operating costs had been significantly reduced. The Group's new strategy is to exploit its core cell and Fuel Cell Module ("FCM") technology platform across a broad range of product and market applications by partnering with multiple Original Equipment Manufacturers ("OEMs") to embed the Company's core cell and FCM technology in multiple product platforms, including micro-generation combined heat and power ("mCHP") residential systems, stationary generator set replacement and auxiliary power unit fuel cell products in multiple geographical territories.

Since that time, the new management team, led by interim Chief Executive Officer Steve Callaghan, has moved on from the restructuring phase and the Group has now made sufficient operational and technical progress to enable engagement with a limited number of OEMs. In addition, the Group continues to make good progress towards demonstrating that its core cell and FCM technology can meet the robustness, cost and durability required by its potential commercial partners' product commercialisation programmes.

The management team has been bolstered by the appointment of Richard Preston as Finance Director and Dr Mark Selby as Director of Technology, both promoted from within the business.

Given these operational, commercial and leadership developments, the Board has sought to ensure, by way of the proposed Fundraise, that the Company is well capitalised with sufficient funds to allow the next stage of OEM engagement and technology development to take place. As such, the Board believes that completion of this Fundraise will allow the Group to better concentrate on the commercial and technological advancements without the distraction of on-going fundraising activity and, furthermore, will provide OEM parties, with which it is in commercial discussions the reassurance that the Company is financially secure for the medium term.

The Directors believe that the proceeds of the Fundraise will provide sufficient capital to take Ceres through the next stage of OEM engagements and that, following the deployment of these funds, the Ceres core cell and FCM technology platform will be proven to be suitable for product development programmes with several OEMs in multiple geographies. The Board expects that Ceres will be able to generate revenues from a combination of development licences, on-going fees for services and royalties on OEM sales of mass market products incorporating the Ceres technology in due course. 

The Fundraise is conditional upon, amongst other things, the passing of the Fundraise Resolutions in order to ensure that the Directors have the necessary authorities and powers to allot the Placing Shares and Open Offer Shares for cash on a non-pre-emptive basis. A circular to Shareholders will be posted today, extracts of which are set out below, to provide the details of, and the background to, the Fundraise and to explain why the Directors believe that it is in the best interests of the Company and its Shareholders and, further, why they recommend that Shareholders vote in favour of the Resolutions at the General Meeting.

Copies of the Circular will be available free of charge from the Company's website (www.cerespower.com) and at the offices of N+1 Singer, One Bartholomew Lane, London, EC2N 2AX during normal business hours on any weekday (public holidays excepted) up to and including 28 March 2013.

General Meeting

For the purpose of effecting the Fundraise, the Resolutions will be proposed at the General Meeting to be held at the offices of IP Group plc, First Floor, 24 Cornhill, London, EC3V 3ND at 11.00 a.m. on 28 March 2013.

Enquiries:

Notes to editors:

Ceres Power is a leading developer of clean, efficient, cost-effective fuel cell technology for use in decentralised energy products that reduce operating costs, lower CO2 emissions and improve energy security. These products use the Company's mass manufacturable technology platform, the Fuel Cell Module, based on the Company's unique patented intermediate temperature solid oxide fuel cell technology and operating on mains natural gas or in the future a range of other fuels including packaged fuels, such as LPG. The Company is listed on the AIM market of the London Stock Exchange, and has facilities in Horsham and Crawley, UK, including a pilot-scale fuel cell manufacturing facility.

Important notice:

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any New Ordinary Shares, nor shall it (or any part of it), or the fact of its distribution, form the basis of, or be relied on in connection with or act as any inducement to enter into, any contract or commitment whatsoever with respect to the proposed Placing and Open Offer or otherwise. This announcement is not a prospectus and investors should not subscribe for or purchase any New Ordinary Shares referred to in this announcement. Any offer to acquire New Ordinary Shares referred to in this announcement will be made, and any investor should make his investment, solely on the basis of information in the Circular expected to be published and made generally available in the United Kingdom today. When made generally available, copies of the Circular may be obtained at no cost through the Company's corporate website (http://www.cerespower.com).

The distribution of this announcement and/or the transfer of the New Ordinary Shares in or into jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, this announcement should not be distributed, forwarded to, or transmitted in or into the United States, Australia, Canada, Japan, the Republic of South Africa or New Zealand.

The New Ordinary Shares referred to in this announcement will not be offered in or into any jurisdiction unless such an offer can be made without contravention of any unfulfilled registration or other legal or regulatory requirements. The New Ordinary Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States and may not be offered or sold in the United States absent registration or an exemption from registration. The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority, nor have the foregoing authorities passed upon or endorsed the merits of the Placing and Open Offer or the accuracy or adequacy of the information contained in this announcement or any other document. Any representation to the contrary is unlawful and is a criminal offence in the United States.

N+1 Singer, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company and no one else in connection with the Placing and Open Offer and will not regard any other person (whether or not a recipient of the Circular) as its client in relation to the Placing and Open Offer and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in connection with the Placing and Open Offer or any other matter referred to herein.

Cautionary note regarding forward looking statements:

This announcement includes certain ''forward-looking statements'' with respect to the business, strategy and plans of the Company and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts, including statements about the Company's or the Directors' and/or management's beliefs and expectations are forward looking statements. Words such as ''believes'', ''anticipates'', ''estimates'', ''expects'', ''intends'', ''aims'', ''potential'', ''will'', ''would'', ''could'', ''considered'', ''likely'', ''estimate'' and variations of these words and similar future or conditional expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements. These factors include, but are not limited to, those discussed in the Circular. Neither the Company nor any member of its group undertake any obligation publicly to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, save in respect of any requirement under applicable laws, the Prospectus Rules, the Disclosure and Transparency Rules and other applicable regulations.

CERES POWER HOLDINGS PLC

PROPOSED PLACING AND OPEN OFFER

AND NOTICE OF GENERAL MEETING

1. Background to and reasons for the Fundraise

1.1 Background

Since completion of the December 2012 firm placing and placing and open offer by the Company and the subsequent restructuring of the business, the newly constituted Board has more fully assessed the Group's technology position and commercial strategy and is pleased with the progress made in these areas. As noted in the circular to Shareholders dated 30 November 2012, it was anticipated by the directors of the Company at that time that it was likely that the Company would require further funds in the future to further commercialise its technology platform. Accordingly, the Board has decided to take the opportunity presented by existing and new investors to raise funds through the Fundraise to further capitalise the Company to enable the Board to better concentrate on delivering the Group's technological and commercial strategy as further detailed below.

1.2 Update on restructuring

As reported in the interim results of the Company for the six months ended 31 December 2012 announced on 14 February 2013, the restructure phase has been successfully completed. This has included both the reduction of the overall headcount to approximately 55 people accompanied by a substantial reduction of the Group's on-going cash burn by focusing operations solely on the development, testing and validation of the core cell and FCM technology platform. The Company is in the process of consolidating its testing activities to Horsham, where it retains a high quality pilot-scale cell manufacturing line and FCM assembly plant, which has sufficient production capacity to satisfy the demand from potential OEM partner development programmes for the foreseeable future. 

1.3 Technology progress

Ceres' unique metal-supported solid oxide fuel cell technology is based on ceria electrolyte which enables the fuel cells to operate at around 600°C. This relatively low temperature of operation allows the use of low cost materials, such as stainless steels, throughout the FCM which is a key enabler to low cost products. By laser welding the mechanically tough steel cell substrates and interconnects and using simple high temperature gaskets, Ceres' fuel cells and stacks are physically robust and have been proven to be extremely tolerant to thermal cycling. 

In addition to the significant technical progress made during 2012, further improvements to the Ceres' core cell and FCM technology to date include:

·; achieving DC electrical efficiencies of 50% at lower heating value in prototype FCMs through improved thermal integration;

·; continuing to meet targeted steady state degradation rates; and

·; continued demonstration of the robustness of the stack to thermal and redox cycling through real-world on-off operating cycles and emergency stops.

Ceres continues to develop its core technology platform at cell, stack and FCM level, specifically with on-going improvements to the cell, interconnect production methods and stack and system architecture. Based on the progress demonstrated to date, the Board believes that the core cell and FCM technology platform will meet the performance and long term durability requirements of a number of mass market applications, including residential m-CHP.

1.4 Commercial progress

The Group's strategy to commercialise its core cell and FCM technology platform is well underway with initial commercial discussions having taken place with several OEMs. The Company has received significant interest from potential commercial partners looking to integrate the Ceres technology platform into a range of mass market low-carbon power generation products. Although these discussions are at an early stage, they serve to underpin the Board's confidence in the significant global opportunities for Ceres' technology and the demand for Ceres' application engineering services and system-level proprietary IP. The Board believes that Ceres' technology cost leadership will be a key driver in the adoption of the Ceres core cell and FCM technology by OEM partners seeking to sell large volumes of commercially viable fuel cell products internationally.

The main geographical focus of the Group is Japan, South Korea, North America and parts of Western Europe; the key drivers being the widespread availability of government programmes to drive market uptake of fuel cell technologies and OEM partners with the required advanced engineering and product development capabilities to develop fuel cell-based alternative energy products in these regions.

The initial applications being targeted by the Group include mains natural gas residential m-CHP in the 1-5kW range followed by back-up power in the 1-10kW range for applications including telecoms, light industrial and rural power. Potential market opportunities also exist for auxiliary power units for commercial transport applications.

The Board continues to believe that Ceres' core technology has the potential to be the lowest cost, most compact fuel cell platform for 1-5kW stationary power applications in multiple markets using a range of readily available fuels such as natural gas.

1.5 Business strategy

The Group's strategy is to exploit its proprietary core fuel cell and FCM technology platform across a broad range of product and market applications by partnering with multiple OEMs. This strategy avoids the Company needing to finance the development of multiple complete end-user products itself, potentially enabling the Group's core technology to be adopted more quickly and more extensively than would have been possible under its previous single product strategy. The Group has significant technical and operational capability and experience across the fuel cell, fuel cell stack and FCM and is able to offer OEM partners the technical support required to more quickly and effectively integrate the Ceres core cell and FCM technology into their products.

The Directors believe that this business model offers OEM partners a lower cost, lower risk and potentially more rapid approach than developing their own alternative technology in-house. The Board expects that Ceres will be able to generate revenues from a combination of development licences, on-going fees for services and royalties on OEM sales of mass market products incorporating Ceres technology in due course.

1.6 Reasons for the Fundraise

The Board has confidence that the senior management team now in place has the skills and capabilities to deliver the Group's new strategy. In addition, the Company continues to make good progress towards demonstrating that its core cell and FCM technology can meet the robustness, cost and durability required by its potential commercial partners' product commercialisation programmes and commercial discussions with OEM partners are progressing well.

Given the operational, commercial and leadership developments since the December 2012 firm placing and placing and open offer, the Board has sought, by way of the Fundraise, to ensure that financially the Company is well capitalised to allow the next stage of OEM engagement and technology development to take place. As such, the Board believes that completion of the Fundraise will allow the Group to better concentrate on the commercial and technological advancements without the distraction of on-going fundraising activity and will provide the OEM parties with which it is in commercial discussions the reassurance of the Company's financial security for the medium term. 

In addition to cash and cash equivalents of £7.9 million which the Group held on 31 December 2012, the R&D tax credit of £2.7 million which was received in January 2013 and the significant reduction in cash burn since 2012, the Directors believe that the anticipated proceeds of the Fundraise, being approximately £9.5 million (net of expenses and assuming full take up of the Open Offer), will provide sufficient working capital for the Group to make substantial commercial and technical progress.

1.7 The next 12 months

The Board's focus during the next 12 months remains largely unchanged from that highlighted in the circular to Shareholders dated 30 November 2012. 

The technology focus will be to continue the planned fuel cell and FCM technology developments and to validate both cell performance and manufacturability and FCM performance in order to enable validation of its core technology platform with third parties.

The Group expects to expand its pipeline of potential partners over the period and the intention is to secure at least one commercial arrangement within the next 12 months with an OEM customer intending to use Ceres' core cell and FCM technology platform in its products. The Board also expects a number of other third parties to evaluate Ceres' cells, stacks and FCMs during the same period. 

2. Use of proceeds

As stated in the circular to the Shareholders dated 30 November 2012, the purpose of the December 2012 firm placing and placing and open offer was to provide the Group with sufficient funds to continue its operations for a further 12 months. The Directors believe that the net proceeds of that fundraise continue to be sufficient to fund the Group's operations for the twelve month period following that fundraise. However, as detailed in the circular to the Shareholders dated 30 November 2012 and above, the Company will require further funds to further commercialise its technology platform and the Board is taking the opportunity presented by existing and new investors to raise funds through the Fundraise. Accordingly, the net proceeds of the Fundraise will be used to fund the Group's continued operations in line with its technological and commercial strategy. 

3. Key elements of the Placing and Open Offer

3.1 Placing

The Company is proposing to raise approximately £8.7 million, before expenses, by way of the conditional placing of 108,464,733 Placing Shares at the Issue Price with existing and new institutional and other investors. The Issue Price represents a discount of 0.2 per cent. to the mid-market closing price on 8 March 2013 (being the last practicable date prior to the publication of this announcement). The Placing is conditional on (amongst other things) Admission and has not been underwritten. The Directors are participating in the Placing, as disclosed in paragraph 8 of this announcement.

IP2IPO Limited ("IP2IPO") has agreed to subscribe for 21,791,045 Placing Shares at the Issue Price. As a Qualifying Shareholder, IP2IPO is also entitled to subscribe for 3,208,955 Open Offer Shares at the Issue Price and has irrevocably committed to subscribe for such Open Offer Shares. The 25,000,000 New Ordinary Shares which will be held by IP2IPO following Admission will, together with its Existing Ordinary Shares, represent 24.84 per cent. of the Enlarged Issued Share Capital. IP2IPO has also irrevocably undertaken to vote its 107,500,000 Existing Ordinary Shares, representing 25.70 per cent of the Existing Ordinary Shares, in favour of the Resolutions.

ORA (Guernsey) Limited ("Ora") has agreed to subscribe for 26,377,512 Placing Shares at the Issue Price. As a Qualifying Shareholder, Ora is also entitled to subscribe for 3,622,488 Open Offer Shares at the Issue Price and has irrevocably committed to subscribe for such Open Offer Shares. The 30,000,000 New Ordinary Shares which will be held by Ora following Admission will, together with its Existing Ordinary Shares, represent 28.37 per cent. of the Enlarged Issued Share Capital. Ora has also irrevocably undertaken to vote its 121,353,358 Existing Ordinary Shares, representing 29.02 per cent of the Existing Ordinary Shares, in favour of the Resolutions. Together with the 2,000,000 Existing Ordinary Shares held by Michael Bretherton, who is considered to be a concert party of Ora, the total holding of 153,353,358 Ordinary Shares of both Ora and Michael Bretherton following Admission will represent 28.74 per cent of the Enlarged Issued Share Capital.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings will commence at 8.00 a.m. on 2 April 2013.

3.2 Open Offer

In order to enable Shareholders to participate in the Fundraise, the Company is providing all Qualifying Shareholders with the opportunity to subscribe at the Issue Price for their pro rata entitlement of the Open Offer Shares for an aggregate of up to 12,483,428 Open Offer Shares. The Open Offer has not been underwritten and no excess application facility is being offered.

Assuming full take up of the 12,483,428 Open Offer Shares by Qualifying Shareholders, the proceeds of the Open Offer will be approximately £1 million.

Both the Placing and Open Offer are conditional upon, amongst other things, the approval of Shareholders of the Fundraise Resolutions at the General Meeting and upon the Placing and Open Offer Agreement becoming unconditional in all respects.

4. Details of the Open Offer

Qualifying Shareholders, on and subject to the terms and conditions of the Open Offer, will be given the opportunity under the Open Offer to apply for any number of Open Offer Shares at the Issue Price pro rata to their holdings on the following basis:

2 Open Offer Shares for every 67 Existing Ordinary Shares

Fractions of Open Offer Shares will not be allotted to Qualifying Shareholders in the Open Offer and entitlements under the Open Offer will be rounded down to the nearest whole number of Open Offer Shares.

There will be up to 12,483,428 Open Offer Shares available to Qualifying Shareholders under the Open Offer. Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that the Open Offer Entitlements will be admitted to CREST on 13 March 2013. The Open Offer Entitlements will also be enabled for settlement in CREST on 13 March 2013. Applications through the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

The latest time and date for acceptance and payment in full under the Open Offer will be 11.00 a.m. on 27 March 2013, unless otherwise announced by the Company via a Regulatory Information Service.

Qualifying Non-CREST Shareholders should note that their Application Form is not a negotiable document and cannot be traded.

The Open Offer will be conditional, amongst other things, on the approval of the Fundraise Resolutions by the Shareholders at the General Meeting and upon the Placing and Open Offer Agreement becoming unconditional in all respects and Admission of the Open Offer Shares becoming effective by not later than 8.00 a.m. on 2 April 2013 (or such later time and/or date as the Company and N+1 Singer may determine, being not later than 8.00 a.m. on 16 April 2013).

If Admission does not take place on or before 8.00 a.m. on 2 April 2013 (or such later time and/or date as the Company and N+1 Singer may determine, being not later than 8.00 a.m. on 16 April 2013), the Open Offer will lapse, any Open Offer Entitlements admitted to CREST will thereafter be disabled and application monies under the Open Offer will be refunded to the applicants, by cheque (at the applicant's risk) in the case of Qualifying Non-CREST Shareholders and by way of a CREST payment in the case of Qualifying CREST Shareholders, without interest as soon as practicable thereafter.

Application will be made to the London Stock Exchange for the Open Offer Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings will commence at 8.00 a.m. on 2 April 2013.

Further information on the Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, will be set out in the Circular and, where relevant, on the applicable Application Form.

5. Effect of the Fundraise

108,464,733Placing Shares will be issued pursuant to the Placing and, assuming full take up of the Open Offer, up to 12,483,428 Open Offer Shares will be issued pursuant to the Open Offer. All the Placing Shares and the Open Offer Shares will, when issued and fully paid, rank pari passu with the Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission. No temporary documents of title will be issued.

The Fundraise Resolutions set out in the Notice of General Meeting must be passed at the General Meeting in order for the Placing and Open Offer to proceed.

Upon completion of the Fundraise and assuming nil take up of the Open Offer in excess of the Committed Portion of the Open Offer Shares, the Placing Shares and the Open Offer Shares will in aggregate represent approximately 21.61 per cent. of the Enlarged Issued Share Capital and the Existing Ordinary Shares will represent approximately 78.39 per cent. of the Enlarged Issued Share Capital.

Shareholders should note that the Open Offer is not a rights issue. Qualifying Shareholders should be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market on behalf of or placed for the benefit of Qualifying Shareholders who do not apply for Open Offer Shares under the Open Offer.

6. General Meeting

For the purposes of effecting the Fundraise, the following Resolutions will be proposed at the General Meeting to be held at the offices of IP Group plc, First Floor, 24 Cornhill. London, EC3V 3ND at 11.00 a.m. on 28 March 2013. The full texts of the Resolutions are set out in the Notice of General Meeting incorporated into the Circular, but set out below is a summary of the Resolutions which will be proposed at the General Meeting:

l Resolution 1 (to be proposed as an ordinary resolution): to authorise the Directors under section 551 of the Act to allot shares up to an aggregate nominal amount of £1,209,481.61 for the purposes of the Fundraise. If passed, this authority will expire on the earlier of the date of the next annual general meeting of the Company and 28 June 2014;

l Resolution 2 (to be proposed as a special resolution): to disapply the pre-emption rights pursuant to the provisions of sections 570 and 573 of the Act in respect of the allotment of equity securities pursuant to the Fundraise. If passed, this authority will expire on the earlier of the date of the next annual general meeting of the Company and 28 June 2014.

As well as the Resolutions set out above, the following Resolutions will also be proposed at the General Meeting. The full texts of these Resolutions are set out in the Notice, but set out below is a summary of these Resolutions:

l Resolution 3 (to be proposed as an ordinary resolution): to authorise the Directors under section 551 of the Act to allot shares up to an aggregate nominal amount of £1,760,589.07 (representing 33% of the nominal value of the Enlarged Issued Share Capital). If passed, this authority will expire on the earlier of the date of the next annual general meeting of the Company and 28 June 2014 and will be in substitution for the authority granted by the Company at the annual general meeting held on 31 December 2012; and

l Resolution 4 (to be proposed as a special resolution): to disapply the pre-emption rights pursuant to the provisions of sections 570 and 573 of the Act in respect of the allotment of equity securities up to an aggregate nominal amount of £1,067,023.68 (representing 20% of the nominal value of the Enlarged Issued Share Capital). If passed, this authority will expire on the earlier of the date of the next annual general meeting of the Company and 28 June 2014 and will be in substitution for the authority granted by the Company at the annual general meeting held on 31 December 2012.

Resolutions 3 and 4 will be conditional on the passing of Resolutions 1 and 2.

The Board is proposing Resolutions 3 and 4 in order to seek Shareholder approval to grant the Board additional flexibility to issue shares up to a certain amount without the need to seek Shareholder approval at the relevant time. These authorities, if passed, would give the Board flexibility to raise funds on an expedited basis to take advantage of potential fundraising opportunities which may arise. The Board has no present intention of exercising these authorities (other than in connection with the issue of options) and the Board will only exercise these authorities when it is satisfied that it is in the Company's interests to do so.

7. Related Party Transaction

Ora and IP2IPO, substantial shareholders in the Company (as defined by the AIM Rules), have conditionally agreed to subscribe for Placing Shares pursuant to the Placing and to take up in full their Open Offer Entitlements. The respective participation of Ora and IP2IPO in the Placing and the Open Offer represents related party transactions for the purposes of the AIM Rules. Accordingly, by reason of their connection with either IP2IPO or Ora (as applicable), none of Alan Aubrey, Robert Trezona or Michael Bretherton are independent directors for the purpose of the related party statement below.

The Independent Directors (being all those Directors other than Alan Aubrey, Robert Trezona and Michael Bretherton), having consulted with the Company's Nominated Adviser, N+1 Singer, consider the terms of Ora's and IP2IPO's participation in the Placing and Open Offer to be fair and reasonable insofar as Shareholders are concerned. In providing advice to the Independent Directors, N+1 Singer has taken into account the commercial assessment of the Independent Directors.

The AIM Rules do not prohibit related parties from exercising the voting rights attached to their respective Ordinary Shares at the General Meeting.

8. Directors' and Senior Management Participation

The Directors are participating in the Placing in the amounts indicated in the table below, amounting to an aggregate subscription for 937,500 Placing Shares or approximately 0.86 per cent of the Placing. Following the Placing and assuming nil take up of the Open Offer in excess of the Committed Portion of the Open Offer, the Directors will beneficially own, in aggregate, 0.94 per cent. of the Enlarged Issued Share Capital.

* Assumes nil take up of their respective Open Offer entitlement

In addition to the Directors' participation in the Placing, certain members of the Company's senior management team have agreed to subscribe for 137,500 Placing Shares, in aggregate.

9. Recommendation and Irrevocable Undertakings

The Directors consider the Fundraise and the passing of all the Resolutions to be in the best interests of the Shareholders and the Company as a whole. Accordingly, the Directors recommend that Shareholders vote in favour of the Resolutions as they have irrevocably undertaken to do in respect of their beneficial holdings of an aggregate of 4,058,955 Existing Ordinary Shares, representing approximately 0.97 per cent of the Existing Ordinary Shares.

In addition to the Directors, certain other Shareholders have irrevocably undertaken to vote in favour of the Resolutions in respect of the Existing Ordinary Shares in which they are interested, amounting in aggregate to 256,409,285 Existing Ordinary Shares, representing approximately 61.31 per cent of the Existing Ordinary Shares.

Expected Timetable of Principal Events

Definitions

The following definitions apply throughout this announcement unless the context requires otherwise:

 "Act" the Companies Act 2006

 "Admission" the admission of the Placing Shares and the Open Offer Shares (as the case may be) to trading on AIM becoming effective in accordance with the AIM Rules

"AIM" the market of that name operated by the London Stock Exchange

"AIM Rules" the provisions of the London Stock Exchange entitled "AIM Rules for Companies" as amended or reissued from time to time governing, amongst other things, admission to AIM and the continuing obligations of AIM companies

 "Application Form" the personalised application form on which Qualifying Non-CREST Shareholders may apply for Open Offer Shares under the Open Offer

"Articles of Association" the articles of association of the Company, as amended from time to time

"Board" the board of directors of the Company as at the date of this announcement

"Business Day" any day (excluding Saturdays and Sundays) on which banks are open in London for normal banking business

"CCSS" the CREST Courier and Sorting Service established by Euroclear to facilitate, amongst other things, the deposit and withdrawal of securities

"Circular" the circular to be sent to shareholders in connection with the Fundraise

"Committed Portion of the

Open Offer" the 6,831,443 Open Offer Shares, for which IP2IPO Limited and Ora (Guernsey) Limited have irrevocably undertaken to subscribe under the Open Offer

"Company" or "Ceres" Ceres Power Holdings plc

"Computershare" Computershare Investor Services PLC

"CREST" the relevant system (as defined in the CREST Regulations) for the paperless settlement of share transfers and the holding of shares in uncertificated form in respect of which Euroclear is the operator (as defined in the CREST Regulations)

"CREST Manual" the rules governing the operation of CREST consisting of the CREST Reference Manual, the CREST International Manual, the CREST Central Counterpart Service Manual, the CREST Rules, the CCSS Operations Manual, the Daily Timetable, the CREST Application Procedures and the CREST Glossary of Terms (as updated in November 2001)

"CREST member" a person who has been admitted to CREST as a system-member (as defined in the CREST Manual)

 "CREST payment" shall have the meaning given in the CREST Manual issued by Euroclear

"CREST Regulations" or the Uncertificated Securities Regulations 2001 (S.I. 2001/3755),

"Regulations" as amended from time to time

"CREST sponsor" a CREST participant admitted to CREST as a CREST sponsor

"CREST sponsored member" a CREST member admitted to CREST as a sponsored member

 "Directors" the Directors of the Company as at the date of this announcement

"Disclosure and Transparency Rules" the disclosure and transparency rules of the FSA

"Enlarged Issued Share Capital" the issued share capital of the Company as enlarged by the issue of the Placing Shares and the Open Offer Shares  (assuming nil take up of the Open Offer in excess of the Committed Portion of the Open Offer)

"Euroclear" Euroclear UK & Ireland Limited, the operator of CREST

"Existing Ordinary Shares" the Ordinary Shares in issue as at the date of this announcement

 "FSA" the Financial Services Authority

"FSMA" Financial Services and Markets Act 2000 (as amended)

"Fundraise" together, the Placing and the Open Offer

"Fundraise Resolutions" the Resolutions numbered 1 and 2 in the Notice of General Meeting

"General Meeting" or "GM" the general meeting of the Company convened for 11.00 a.m. on 28 March 2013, notice of which is set out in the Circular

"Group" the Company and its subsidiaries from time to time

"Independent Directors" the Directors other than Alan Aubrey, Michael Bretherton and Robert Trezona

"Issue Price" 8 pence per New Ordinary Share

"London Stock Exchange" London Stock Exchange plc

 "N+1 Singer" Nplus1 Singer Advisory LLP, nominated adviser and broker to the Company

"New Ordinary Shares" together, the Placing Shares and the Open Offer Shares and "New Ordinary Share" means one of them

 "Notice of General Meeting" the notice convening the General Meeting set out in the Circular

"Official List" the official list maintained by the UK Listing Authority pursuant to Part IV of FSMA, as amended from time to time

"Open Offer" the conditional offer made by the Company to Qualifying Shareholders inviting them to subscribe for the Open Offer Shares on the terms and subject to the conditions set out in the Circular and, in the case of Qualifying Non-CREST Shareholders, in the Application Form

"Open Offer Entitlements" an entitlement of a Qualifying Shareholder, pursuant to the Open Offer, to apply for 2 Open Offer Shares for every 67 Existing Ordinary Shares held by the Qualifying Shareholder at the Record Date

"Open Offer Shares" up to 12,483,428 new Ordinary Shares which are the subject of the Open Offer

"Ordinary Shares" ordinary shares of 1p each in the capital of the Company

"Placing Shares" the 108,464,733 new Ordinary Shares which are the subject of the Placing

"Placees" the persons with whom Placing Shares are to be placed

"Placing" the conditional placing of the Placing Shares,

"Placing and Open Offer

Agreement" the conditional placing and open offer agreement dated 12 March 2013 between the Company and N+1 Singer and relating to the Placing and Open Offer

 "Prospectus Rules" the rules made for the purposes of Part V of FSMA in relation to offers of securities to the public and admission of securities to trading on a regulated market

"Qualifying CREST Shareholders" Qualifying Shareholders whose Existing Ordinary Shares are held in uncertificated form

"Qualifying Non-CREST Qualifying Shareholders whose Existing Ordinary Shares are held in

Shareholders" certificated form

"Qualifying Shareholders" Shareholders whose Existing Ordinary Shares are on the register of members of the Company at the close of business on the Record Date with the exclusion of (subject to exceptions) persons with a registered address or located or resident in the Restricted Jurisdictions

"Receiving Agent" Computershare Investor Services PLC

"Record Date" close of business on 8 March 2013

"Registrar" Computershare Investor Services PLC

"Regulatory Information Service" a regulatory information service that is approved by the FSA and that is on the list of regulatory information service providers maintained by the FSA

"Resolutions" the resolutions to be proposed at the General Meeting as set out in the Notice of General Meeting

"Restricted Jurisdiction" each and any of Australia, Canada, Japan, the Republic of South Africa, New Zealand and the United States

"Securities Act" the US Securities Act of 1933, as amended

"Shareholders" holders of Ordinary Shares

 "UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland

 "US", "USA" or "United States" the United States of America, each state thereof (including the district of Columbia), its territories, possessions and all areas subject to its jurisdiction

"USE" Unmatched Stock Event