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Leading developer
of clean energy
technology
Ceres Annual Report 2022
Ceres is a leading developer
of clean energy technology
for power and green hydrogen,
enabling the world’s most
progressive companies to
decarbonise at scale and pace.
Investment in
future growth
Financial highlights
Revenue
£22.1m
22
21
20
22.1
21.7
30.8
Strategic highlights
Cash, cash equivalents and
short‑term investments
£182.3m
22
21
20
110.2
182.3
249.6
● Hydrogen technology evaluation programme progressing well with
Shell for deployment later this year in India
● First 100kW electrolyser module is on test, giving confidence that
Ceres’ technology can deliver green hydrogen around 25% more
efficiently than incumbent lower temperature technologies
● Ceres' fuel cell and electrolysis test facility, developed with Horiba
Mira at its site in the UK, is now open and supporting technology and
system development
● Continued expansion of Ceres’ highly skilled workforce with significant
investment in commercial resource in global locations with strong
momentum and policy support for hydrogen and fuel cells
Read more on page 08
Investment in future growth
Strategic report
01
02 Strategic roadmap
03 Reasons to invest
04 At a glance
06 Chair's statement
08 Chief Executive’s report
12 Technology review
14 Market review
16 Business model
18 Board engagement with stakeholders
20 Strategy
21 Our key performance indicators
22 Case study: Power generation
24 Case study: Green Hydrogen
26 Sustainability
34 Chief Financial Officer’s statement
39 Principal Risks and uncertainties
Corporate governance
42 Chairman’s introduction to governance
43 Board of Directors
46 Executive Committee
47 Corporate governance report
52 Audit Committee report
55 Remuneration & Nomination
Committee report
58 Directors' Remuneration Report
65 Directors’ report
Financial statements
68
75 Consolidated statement of profit and loss
Independent auditor’s report
and other comprehensive income
76 Consolidated statement of financial position
77 Consolidated cash flow statement
78 Consolidated statement of changes
in equity
79 Notes to the consolidated
financial statements
106 Company balance sheet
107 Company statement of changes in equity
108 Notes to the Company financial statements
112 Directors and advisers
www.ceres.tech
Ceres Annual Report 2022
01
Strategic roadmap
Clear strategic direction
for a net zero world
Purpose
Clean energy for a clean world
Our ultimate purpose is to help sustain a clean, green planet by
ensuring there is clean energy everywhere in the world.
Positioning
We pioneer advanced technologies and embed them
in our partners’ companies to meet their strategic
imperative to transform to clean energy.
Read more on page 12
Goal
Multi gigawatts of manufacturing capacity under
licence with our partners by 2030.
Read more on page 16
Strategy
Commercial
scale
Read more on page 20
Licensing technology
leadership
Stakeholders
Wider society
Shareholders
Employees
Suppliers and partners
Read more on page 17
Enabling our
licensees to succeed
Our values
We commit wholeheartedly
We are creative collaborators
We pioneer with precision
02
Ceres Annual Report 2022
Investment case
Reasons to invest
Leading position in the fuel cell market
Major expansion of our electrolysis activities
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 our proprietary technology generates green
hydrogen at <40kWh/kg, around 25% more efficiently
than incumbent lower temperature technologies. We have
committed £100 million to develop solid oxide electrolysis
("SOEC") and to demonstrate it at megawatt scale.
Global commercial partners
Proud to be a UK technology company
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 scale.
We have assembled one of the strongest teams of
scientists and engineers in the global industry for fuel cells
and green hydrogen – complemented by a robust and
talented management team and Board of Directors.
Asset‑light, licensing business model
Balance sheet strength
Our licensing business model differentiates us from vertically
integrated companies, whereby we focus on our strengths
in electrochemical technology 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.
Ceres Annual Report 2022
03
Strategic report At a glance
Ceres' technology enabled
through global partners
Its core cell technology enables high-efficiency energy conversion at
low cost, and is able to operate in either fuel cell or electrolysis mode,
providing a single product to multiple applications and markets.
250MW
Planned partner capacity
Zero
CO2, SOx, NOx and particulate
emissions when Ceres fuel cell stack
operates on pure hydrogen
570
Employees
2021: 489 employees
Our scalable technology
Solid oxide cell
Ceres’ core cell is based on low-cost materials:
a ceria ceramic electrolyte and a stainless-steel
substrate and interconnect.
Solid oxide stack
Highly differentiated stack technology platform with
strong and growing intellectual property and distinct
advantages of robustness, efficiency and cost.
Read more on page 12
Certification and awards
CERTIFIED
Ceres’ Quality Management System
is certified to ISO 9001:2015.
Certificate number FS 738105.
Ceres Power Limited has been
certified by BSI to ISO 14001:2015
under certificate number EMS 761891.
Ceres is listed on the AIM market
of the London Stock Exchange
and is classified by the LSE Green
Economy Mark, which recognises
listed companies that derive more
than 50% of their activity from the
green economy.
04
Ceres Annual Report 2022
Our operating businesses
Picture: Bosch
power
Leading technology position in solid oxide fuel cells
("SOFC"), being demonstrated in multiple applications and
geographies through established global partnerships.
A differentiated SOEC offering for hydrogen, with distinct
advantages in efficiency, coupling with industrial processes
that are high emitters of carbon dioxide today.
£22.0m
Revenue
(2021: £30.8m)
£0.2m
Revenue
(2021: £nil)
Global reach with our partners
Ceres Annual Report 2022
05
Strategic report Chair’s statement
Building a strong
and sustainable
business
Highlights
● Interest for Ceres' clean energy technology
continues to grow as energy security and sustainable
energy become ever more critical
● Significant effort deployed in maturing our business
operations and commercial pipeline of opportunities
● Investment continues in maintaining our fuel cell and
electrolyser technology leadership, enabled by a
strong cash position
● Progress in Sustainability with the publication of our
inaugural Sustainability Report and the formalisation
of the ESG Committee as a subcommittee of the
plc Board
06
Ceres Annual Report 2022
Dear Shareholders
In my nearly four decades in business, it is hard to think of a
more disruptive year than 2022. From surging inflation, the
highly transmissible Omicron variant of Covid-19, Russia’s
invasion of Ukraine which triggered an energy crisis, to
extreme climate events including record breaking heat waves
and devastating floods in Pakistan – it was a year marked by
political, economic and environmental instability.
The soaring price of energy has highlighted the need for
increased levels of national self-sufficiency and provided
a greater incentive to increase investment in sustainable
energy. In the longer term this should provide a supportive
backdrop for our business, although the high price of gas may
tilt demand for our fuel cell applications more toward Asia.
Through these unprecedented times, the demand for Ceres’
clean energy technology continues to grow and the Company
has maintained a relentless focus on the further development
of our technology and building partnerships with progressive
global businesses.
The strategy of the business is clear: to enable our licence
partners to succeed; to build commercial scale; and to maintain
our technology leadership.
Enabling our licensees to succeed
We do not underestimate the commitment that our licence
partners make to Ceres by investing substantial financial and
human capital into manufacturing our technology at scale. Our
engineering teams are working closely together with Bosch
and with Doosan to achieve planned milestones as they scale
up their production capabilities towards mass market launch
in 2024. It is no small effort to scale nascent technology
into new markets, and we are glad to have partners of their
manufacturing pedigree alongside us on this journey.
Commercial scale
Historically, Ceres has been a research and development
focused organisation. As our business approaches full
commercial scale we need to grow and mature the commercial
and operational parts of the business. This has been a
significant focus of the Board and top management team over
the last few years, and we now have in place the technical,
human and financial resources that will enable us to scale our
commercial activities without growing our cost base as rapidly.
It has been a quieter period for commercial announcements,
which belies the significant efforts that continue behind the
scenes to build a strong pipeline of commercial opportunities
with new and existing partners in both fuel cells and solid
oxide electrolysis ("SOEC"). SOEC has become an increasing
part of our dialogue with potential partners, and we are very
encouraged by the growth opportunity it presents. Partly to
take advantage of this, we have reorganised and expanded
our commercial team, and we expect this investment to bear
fruit over the next few years. During the year, a first SOEC
development programme was agreed with Shell and we look
forward to making further licence updates in due course.
Through these unprecedented times,
the opportunities for Ceres’ clean energy
technology continue to grow and the
Company has maintained a relentless focus
on the further development of its technology
and building partnerships with progressive
global businesses.”
Technology leadership
We maintain a strong cash1 balance to invest in technology
programmes including the next generation of fuel cell
technology, electrolysis applications for green hydrogen,
designing power systems for larger and new applications such
as marine and expanding test capability. During the year, Ceres
grew its team to 570 people, adding further talented scientists
and engineers and ensuring the Company is well-positioned to
capitalise on the significant commercial opportunities that exist
for its differentiated technology.
Sustainability
At the end of 2022 we published our first standalone
Sustainability Report which I would encourage you to read
alongside our updated reporting on pages 26 to 33 of this
Annual Report.
One of the additional steps we have taken since then has
been to formalise the ESG Committee as a sub-committee
of our plc Board. I am pleased to be joining the Committee
alongside my fellow Non-Executive Directors, Julia King
and Trine Borum Bojsen.
It is incumbent on every business to ensure robust
oversight of climate-related risks and opportunities. This
year Ceres has taken the first steps to integrate the Task
Force on Climate-related Financial Disclosures ("TCFD")
into our governance and reporting regime. Beyond
climate change we believe that an effective approach to
sustainability should be underpinned by an analysis of the
wider social and governance considerations that are most
relevant in the context of our business. As a Board we
are committed to supporting the management team to
build a long-term sustainable business, which is inextricably
linked to doing the right thing for all our employees, our
shareholders and for the planet.
1. Comprises cash, cash equivalents and short-term investments.
Board of Directors
Following several changes in 2021, I am pleased to report
that our Board has emerged as a strengthened team working
very effectively throughout 2022. We have reorganised our
committee structure into three: ESG, Audit, and Remuneration
& Nomination. Further details on how these committees
operate can be found in the Corporate Governance report.
Of note during the period, we have seen Julia King become the
Chair of our newly formed ESG Committee and Trine Borum
Bojsen take on a new role as our Employee Engagement
Director. Eric Lakin has been a great addition to the team
as our CFO – complemented as ever by the leadership of
Phil Caldwell, who marks ten years as our CEO in 2023.
We say farewell to Steve Callaghan at this year’s AGM. Steve
has served on the Ceres Board for over ten years, spending
a year as Chief Executive, during which he repositioned the
business and recruited Phil Caldwell as his successor. He has
made a tremendous contribution to the development of Ceres,
and we wish him well in all his future endeavours. We are
currently recruiting Steve’s successor and, as ever, we maintain
a strong focus on reviewing and ensuring that the composition
of our Board and the mix of skills and diversity of thought
evolves along with the business.
What’s in a name
You may know that Ceres was the Roman goddess of
agriculture, giving rise to the word we are all familiar with,
“cereal”. In 1801, a newly discovered dwarf planet was named
after her, and two years later a newly discovered element,
Cerium, was named after the planet – and of course Cerium is
the ceramic element at the heart of our technology. You can
read more on Ceres’ differentiated material set in Phil’s CEO
report that follows on pages 8 to 11.
Ceres is a name that links both our technology and our
mission to keep the planet clean and fertile – and in doing so,
deliver future value for our employees, our partners and our
shareholders. I would like to thank you for continued support
and look forward to updating you on what I hope will be an
exciting year ahead.
Warren Finegold
Chair
Ceres Annual Report 2022
07
Strategic report Chief Executive's report
Leading technology
for power and
green hydrogen
Highlights
● Investing for growth, with over £58 million deployed
in 2022 across R&D, test capacity and manufacturing
resulting in a new generation of stack technology
● Ceres partners with some of the world’s most
progressive companies to deliver global deployment
of our technology at scale and pace
● We are building a world-leading team in solid oxide
fuel cells and electrolysis, and we have grown Ceres
to 570 people
● Our first 100kW electrolyser module is on test
scaling to a 1MW demonstrator, and we are
confident our technology is ~25% more efficient than
incumbent lower temperature technologies
08
Ceres Annual Report 2022
It has been another productive year at Ceres with our first
electrolyser modules on test, an exciting new partnership with
Shell, and a collaboration with Linde Engineering and Bosch for
green hydrogen. We are making good progress on SOFC, with
existing partners Bosch and Doosan scaling production, and
steps towards establishing our China JV. We have also opened
a new test centre with Horiba MIRA in the UK, achieved record
cell production at our pilot facility and grown the Ceres team to
570 colleagues.
These are just some highlights of another year of considerable
progress, despite the challenging macroeconomic backdrop.
Through it all, we remain wholeheartedly committed to the
biggest challenge, to address the urgency for climate action.
The world is not on track to keep global warming at 1.5°C
above pre-industrial levels and we are already starting to see
the devastating effects of climate change around us, from
cyclones and floods to droughts and heatwaves.
We need to decarbonise our energy system, but we also need
to provide energy security, stable power prices and sustainable
employment. There are not many companies that have the
opportunity to do something truly impactful on a global scale
– but I believe that Ceres is one such company. Not only
does it have unique clean energy technology that can play
an important role in hard-to-decarbonise parts of our energy
system, but we sit at the tipping point for our planet, which
means the time to act is now.
570
People including many talented
scientists and engineers
£58m
Deployed across R&D, test and
manufacturing capacity
Our target by the end of this decade is to
have multiple factories in place producing
multi gigawatts of fuel cell equivalent
capacity globally.”
There is simply no turning back to the world of cheap
fossil-based energy.
Hydrogen is now widely recognised by most companies
and governments as key to enabling the energy transition,
at the very least for hard-to-decarbonise industrial sectors
that account for around a third of our energy system and
more than its share of global emissions. Our partners, Bosch,
Doosan, Shell, Weichai and others are among the most
progressive companies, seeking and adopting new clean
energy technologies at scale and pace, and the good news is
that global competition can accelerate us towards achieving net
zero. Where previously we spoke about an energy trilemma
– where clean, low cost and security of supply were in tension
– they now align, and clean energy will be the most secure and
affordable into the future.
In 2022, we celebrated our 21st birthday, bringing the entire
team together for the first time since before the pandemic.
It provided an important pause from the day-to-day challenges
to reflect on the past, present and future opportunities for the
business and with nearly 500 people in one venue, it was a
very visual reminder that we are collaborating with teams of a
similar size across our partner organisations at Bosch, Doosan
and Weichai.
These first steps towards deployment are vital, but they are
not enough. We also seek to grow new partnerships across the
globe to enable greater adoption through many more teams of
people collaborating on Ceres’ technology.
It is no longer a question of credibility around
technology, but credibility of scale
At our reference manufacturing plant in the UK, we are
now producing 2MW of capacity, and by the middle of this
decade we will have added 100 times that capacity with
Bosch and at least another 50MW with Doosan. By the time
our partners start planned series production, they will have
invested more than €500 million1 in scaling our solid oxide
fuel cell ("SOFC") technology.
That same technology run in one direction is a highly efficient
fuel cell for power generation, run in reverse enables low-
cost green hydrogen that provides a vital route to industrial
decarbonisation of sectors such as steel, fertilisers and future
fuels. We have committed £100 million to the development
of its application in solid oxide electrolysis ("SOEC") and the
first 100kW electrolyser module is on test ahead of scaling
into a 1MW demonstrator. Initial results are positive and give
confidence that this technology can deliver green hydrogen
at <40kWh/kg, around 25% more efficiently than incumbent
lower temperature technologies.
In March 2023, we signed a new agreement with Bosch and
Linde Engineering, to assess Ceres’ technology for use in large
scale industrial applications as a pathway to low-cost green
hydrogen. This is our second partnership announcement,
following the agreement with Shell to establish a 1MW
technology pilot of Ceres’ SOEC system at its R&D centre
in Bangalore, India. The agreement builds on Bosch’s existing
expertise in our SOFC technology and combines with Linde
Engineering’s world-leading capabilities in hydrogen process
technology and a global customer footprint in industrial facilities.
Our target is to enable the ecosystem of SOEC partners that
can make Ceres’ technology even more competitive and
prepare it for mass adoption at scale.
By the end of this decade, we aim to have multiple factories in
place producing multi gigawatts of fuel cell equivalent capacity
globally. It is just the start. This is a global challenge and if we
want to have a real impact on climate change, technology alone
is not enough, we must work with partners to scale globally
and at pace.
Collaboration is key
The war in Ukraine has added energy security to the urgency
for climate action and in Europe we saw RePower EU’s
ambitious plans and strong financial incentives to move away
from the reliance on gas and support the deployment of green
hydrogen. In the US, the Inflation Reduction Act, signed into law
last summer saw a record $369 billion earmarked for energy
and climate change policy – in a year when disasters from
drought in the West to hurricanes in the East and a nationwide
winter storm served as a stark reminder of climate perils.
1. www.bosch-sofc.com/about-us/
Ceres Annual Report 2022
09
Strategic report Chief Executive's report continued
Where previously we spoke about an
energy trilemma – where clean, low cost
and security of supply were in tension – they
now align and clean energy will be the most
secure and affordable into the future.”
Strongest team in the global industry
Our partners come to us because of our technology, but they
stay with us because of our people. They are passionate and
brilliant and above all resilient, and they need to be because
the science and the engineering challenges they are solving
every day are hard. We are also working constantly to attract
and retain the best people, ensuring they have training and
development opportunities, benefits and access to share in
the success of the Company. Many of our employees are also
shareholders in Ceres – through Long Term Incentive Plans or
through our employee save-as-you-earn scheme.
It is an exciting time to be at Ceres. We have a strong purpose,
a talented team, and the opportunity to work alongside some
of the most progressive companies globally, driving investment
and scaling clean technologies. Success is in our hands, but
we are not complacent, and we continue to focus on executing
our strategy:
● To enable our licence partners to succeed
Our partners are investing significant time and resources
into manufacturing Ceres’ solid oxide technology, and we
have expanded our engineering and specialist teams to
ensure these early adopters are supported and successful
in deploying new technology into new market opportunities.
● To build commercial scale
We create commercial scale by generating more demand
through increasing commercial partnerships and licences,
growing applications and addressing new markets. This
year we have increased the Commercial teams’ presence
in several global locations, of which you can learn more
about on pages 14 and 15 of this Report.
● Maintain our technology leadership
As a licensing company it is imperative that we stay at
the leading edge of our technology – and that is why we
continue to innovate, from the next generation of our solid
oxide technology, continued innovation of our IP for both fuel
cell and electrolyser systems, to digitalisation programmes
and what further technologies we may need to hit a net zero
future. You can read more on our technologies on pages 12
and 13 of this Report.
Sustainability
The IEA estimates that to fulfil 2050 green hydrogen
demand, the world is going to need 3,585GW of electrolyser
capacity, so it is little wonder that the conversation is
growing around the economic and life cycle impact of raw
materials in the electrolysis supply chain. High demand,
long processing times, limited supply and an undiversified
supply chain have already called into question the price and
availability of metals and rare earths to support the viability of
large-scale electrolysis.
Ceres’ electrolysis stack does not need to use precious
metals. Its construction comprises over 95% automotive
grade steel by weight, the most widely recycled material
globally, and ceria based materials within the active elements
of the fuel cell, which is abundant, cost-effective and has
multiple sources from multiple countries.
We understand that scaling technology comes with an
environmental footprint, and we have undertaken a life cycle
assessment of our stack technology where we quantify the
potential climate impact of producing our cells, which you
can find on the Sustainability section of our website.
We recognise the importance of looking beyond carbon
impact to consider the circular economy for raw materials.
As a next step we will undertake a full evaluation of the
end-of-life recyclability or reuse of our technology, cradle-to-
grave, and will seek to lead the industry for our technology,
embedding sustainability considerations into the very heart
of our development and the transfer of IP under licence to
our partners.
10
Ceres Annual Report 2022
We are collaborating with world-leading
partners and we have built one of the
strongest teams in the global industry
for solid oxide fuel cells and green
hydrogen technologies."
Strategy and outlook
In March 2021, we set out a clear strategy on which we
continue to execute. Investment across the business enables
us to build a sustainable competitive advantage in highly
differentiated solid oxide technology. We collaborate with
world-leading partners and we have built one of the strongest
teams in the global industry for fuel cells and green hydrogen.
All of this gives me confidence that we will deliver on our
ambition to develop and deploy clean energy technology
at the scale and pace needed to decarbonise our energy
systems, and in doing so make a tangible difference for
ourselves, our families and friends, and generations to come.
Phil Caldwell
Chief Executive Officer
Ceres Annual Report 2022
11
Strategic report Technology review
Ceres’ technology platform for
power and green hydrogen
Stay ahead on technology through continuous
innovation and investment in research and development
Ceres’ core cell technology has matured dramatically in the
last ten years with significantly improved new versions being
offered to licence partners. Running in one direction, the fuel
flexible solid oxide cell can generate power from conventional
fuels, such as natural gas, and from sustainable fuels including
biofuels or hydrogen. Run in reverse as an electrolyser, it
can generate green hydrogen at high efficiencies and low
cost. 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 meet commercial requirements.
Innovation is fundamental to our partnerships. Partners are
relying on us to do the deep technology innovation, to
continuously improve performance of our core cells, so that
it becomes increasingly economical to deploy this clean
technology at scale and pace across different applications
and markets.
Enable manufacturing partners to establish global
supply to meet the demand
Ceres aims to achieve manufacturing scale through
partnerships and the ecosystem is growing, with Bosch and
Doosan targeting 200MW and 50MW of production capacity
respectively by 2024, and a third manufacturing facility planned
in China to follow.
Ceres has highly skilled engineers and technicians across our
business – who build strong relationships with our licence
partners, transferring technology and know-how required
for them to set up their own manufacturing facilities. Our
engineering teams then continue to work closely with our
partners to jointly develop further enhancements around the
IP for the benefit of both partners and Ceres in engineering
and manufacturing operations.
This year has seen £58 million deployed
in research and development1 towards
continuous innovation in our cell technology,
to higher power and future fuel use in fuel
cell systems, and to the scaling of our
first-of-a-kind megawatt scale electrolyser
demonstrator.
It is an exciting time to be at Ceres.
We have the right mission, and some of
the most talented people in the world
working on this technology – and with
global partners driving investment and
manufacturing scale we have the potential
to be one of the cornerstone clean
energy technologies in the world."
Caroline Hargrove
Chief Technology Officer
1. Investment in the future, as defined on page 35.
12
Ceres Annual Report 2022
Our own reference manufacturing plant in the UK produced
over 200,000 cells in 2022, which were built into 5kW stacks
to feed both our internal R&D activities and to supply our
development partners for their testing and trials. To support
our testing capabilities, we opened a new fuel cell and
electrolysis test facility during the year, based at Horiba Mira’s
West Midlands site in the UK. It is now open and supporting
Ceres' core technology and system development.
Enable system partners to embed the technology
into as many applications as possible
At Ceres, we work with partners whose expertise lies in
industrialising products for mass production on a global scale.
The gold standard for any commercial products is that they
work for ten years or more in operation. As innovators of our
technology, we cannot afford to wait around for ten years
to get full validation before we roll out new and upgraded
technologies. We are developing trusted digital twins, or
models, to give us faster insights into our performance, allowing
us to predict with increasingly reliable accuracy how it will
perform under a wide range of operating conditions.
Our modelling capability is strengthening fast, and we are
developing digital twins, that will become a vital part of what
we do to help us understand and push the capabilities of our
technology, as well as enable our partners to design ever
more efficient and robust systems, more quickly. Over the
next few years, we expect to be using AI, not only to optimise
our designs and processes, but also to develop brand new
materials. We are sowing the seeds for that today. We will
no doubt also develop innovative new stack and system
improvements as well as new manufacturing approaches
and ways to test and monitor our cells and stacks, delivering
world-leading efficiency and lifetime performance.
Continued improvement of cell and stack technology
Two times power improvement
Three times life improvement (tested); five times life (projected)
Increasing robustness
l
e
u
a
v
y
g
o
o
n
h
c
e
T
l
V7 (in R&D)
Improved current
density
Improved maturity
Improved robustness
New applications
compatible
Digitalisation
V6 – Launch-readiness
+25% current density
Improved maturity
Industrialised processes
Stack design
significantly lower cost
V4 – Field trails
Robustness
Manufacturing
improvements
V5 – Tech transfer
+15% current density
>50% improved
degradation rate
Best-in class efficiently
2016
2018–2021
2021–2024
2023–2026
Ceres Annual Report 2022
13
Strategic report
Market review
Investing in global
commercial capability
Macroeconomic environment for decarbonisation
supported by global policy for net zero and
energy security.
The 2030 Emissions Reduction Plan
outlines a sector-by-sector path for
Canada to reach its emissions reduction
target of 40% below 2005 levels by
2030 and net zero emissions by 2050.
As part of Canada’s plan, the Government
of Canada has launched the $8 billion
Net-Zero Accelerator Fund to help large
emitters reduce their emissions.
The 2022 Inflationary Reduction Act saw
a landmark $369 billion earmarked for
energy and climate change policy in the
US. The hydrogen economy is set to be
stimulated through measures including
production tax credits of $3 per kilogram
for hydrogen, $6 billion of funding for
clean technology demonstrations relating
to heavy industry, and $9 billion for
regional hydrogen hubs.
Our success is determined by our partners’
success. In Bosch, Doosan and Weichai,
we have some of the world’s largest
companies placing their trust in us, and
their investment and their people into
scaling up our technology. We are very
focused on enabling them to succeed
and on strengthening and broadening our
relationships with them over time.
In parallel we continue to grow the
ecosystem of potential licence partners and
we have purposefully built our commercial
firepower to align with the global momentum
for fuel cells and green hydrogen.”
Tony Cochrane
Chief Commercial Officer
14
Ceres Annual Report 2022
The EU has committed €30 billion
for strategic projects in the hydrogen
technology value chain, or so-called
Important Projects of Common European
Interest ("IPCEI"). Together with RePower
EU, it has set ambitious targets and funding
support for green hydrogen, aiming for
consumption of 20MT by 2030, more than
two times EU hydrogen consumption today
and requiring 180-200GW of electrolysers.
The Chinese Government is targeting 15% of
energy from natural gas by 2030, versus 8.2%
in 2020 –as it shifts away from coal to meet
decarbonisation targets. China’s 14th five-year
plan includes electric vehicle charging, green
data centres and smart cities with a move to
decentralised, flexible power. Around 11GW
of electrolysis capacity is expected in China to
meet the target for hydrogen to comprise 10%
of renewable energy use by 2050.
Japan has pledged climate
commitments to reach net
zero by 2050. Japan’s Green
Growth Strategy launched in
2021, supported by a Green
Innovation Fund of $15 billion
(around JPY 2 trillion) was
created to assist ambitious
green projects by companies
and other organisations over
the next decade.
In January 2023, the Indian
Government announced the Green
Hydrogen Mission with an initial outlay
of $2.4 billion. Mission aims to make
India a global hub for production,
utilisation and export of green hydrogen
and its derivatives. The industry aims
to reduce production cost by a fifth by
over the next five years.
Korea’s Green New Deal comprises
$135 billion in investments for both
green and digital technologies. On top of
this, a $380 million fund for the hydrogen
industry was created and is aiming to
inject KRW43.3 trillion ($31.1 billion)
into the hydrogen ecosystem through
2030. The Korean Renewable Portfolio
Standard targets that by 2026 25% of
all power generation must be renewable,
with fuel cells running on natural gas
qualifying under this definition.
Ceres Annual Report 2022
15
Strategic report Business model
Asset‑light, licensing business model
Ceres aims to build an ecosystem where manufacturing partners,
today Bosch and Doosan, will supply stacks to system partners,
generating royalties on both the stacks and systems sold.
Our competences
Read more on our technology on page 12
Stay ahead on technology through
continuous innovation and investment
in R&D
Enable manufacturing partners to
establish global supply to meet
this demand
Enable system partners to embed the
technology into as many applications
as possible
How we create value
Stack supply to OEMs
Cell and stack IP
System IP
Manufacturing
partner
Ceres licenses core
technology to partner
License fees
OEM
customer
Sells consumer
products
Ceres licenses system
technology to partner
Licence and
engineering service
fees
Stack royalties £/kW sold
System royalties £/kW sold
How our business model works
Ceres has an asset-light, licensing business model which is
intended to generate high-margin revenues at all stages
of engagement. These include engineering services fees
to help develop products, licence fees to access our
IP, providing prototype stacks to enable development
of products, and royalty fees based on kWs of sales by
partners into their end markets.
Manufacturing partners license core cell and stack
technology for mass manufacture, and systems partners
license system technology for integration into clean
energy technology products. Currently, Ceres’ pilot
facility provides stacks into our partners’ development
programmes and some into early commercial sales
of products.
Future revenues will be based largely on royalties from
products made by partners. This model allows Ceres
to focus on its research and development programmes,
with licensee partners providing the industrialisation
and manufacturing skills and marketing capabilities.
16
Ceres Annual Report 2022
The value we create
Wider society
We aim to play a central role in the global transition to
clean, affordable power, to help tackle climate change
and air pollution. This will bring health and sustainability
benefits to societies around the world as they progress
to zero emissions targets. Ceres stacks can create power
while emitting low or even zero carbon and minimal
emissions. We can also use stacks to make green
hydrogen, a key enabler to net zero.
Entries received for the 2022
Reimagine schools competition
21
Entries
Shareholders
Ceres shareholders can expect to gain investment
returns from a high-growth, technology-driven company.
Ceres has a globally critical purpose and a culture that
is closely aligned to the UN’s SDGs. Our licensing model
delivers high-margin revenues in the power generation
space and we have opportunities with SOEC for the
significant green hydrogen markets of the future.
Investor meetings over the year
252
Meetings
Employees
Ceres is an inspiring place to work and our people are
as dynamic, flexible and innovative as our technology.
We collaborate with some of the world’s most
progressive and demanding companies. We embrace
equal opportunities for everyone and, with the Ceres
Academy, have employee development and talent
management programmes.
Employee engagement rate
in our groupwide survey
76%
Engagement
Suppliers and partners
We aim to play a central role in the transition to
clean, affordable power and green hydrogen to help
tackle the effects of climate change and air pollution.
By collaborating closely with suppliers and partners, we
are developing fuel-flexible SOFC stacks that enable
them to start this transition today as well as future-proof
them for the fuels of tomorrow.
As a signatory, we procure in
accordance with the 10 principles
of the UN Global Compact
10
Principles
Read more on our Board engagement with stakeholders on page 18
Ceres Annual Report 2022
17
Strategic report Board engagement with stakeholders
Statement by the Directors with regard to their duties
under S172(1) Companies Act 2006 for the year ended
31 December 2022
S172(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 has identified the Company’s stakeholders as set
out in these pages. It believes that it has at all times acted in a
way that it considers, in good faith, would benefit the Company
as a whole and where stakeholders may be impacted, has
considered their views in its decision making.
Through the various engagement mechanisms set out in these
pages, the Board ensures that it is cognisant of the views of
stakeholders in all its discussions. Examples of how stakeholder
views have influenced Board decisions and activity are
demonstrated in this section.
How we engage
Stakeholder
Shareholders
Key importance
To ensure shareholders understand and have
confidence in the Company’s strategy and
performance, purpose and culture. To build strong
relationships with our shareholders and understand
the issues that are important to them.
Engagement mechanisms
● Annual General Meeting
● RNS and press announcements
● Face-to-face meetings and calls
● Capital Markets days and webcasts
● Digital channels
● Investor events
● Annual Report
Suppliers and partners
To ensure the Company, its partners and our
supply chain are aligned to the achievement
of the Company’s strategy, ensuring all parties
understand and benefit. To create an ecosystem
which will aid the achievement of our goals.
● Regular engagement across the
Company, including our commercial
operations and technical programmes
● Company representatives located globally
● Independent surveys or discussions
● Use of advanced supply chain
management tools
Employees
To attract, develop, incentivise and retain the best
people to help us achieve our strategy and vision,
and create a strong and supportive culture.
● Monthly All Hands meetings
● All-employee offsite events
● New-joiner lunch with the CEO
● Employee share options
● Employee surveys and feedback
● Roundtable lunches with the Chair of
the Board
● Employee Engagement Director
● Employee Forum Connect
Wider society
To generate social and environmental impact,
which is part of the Company’s core purpose.
● Community initiatives, such as Reimagine
in collaboration with STEM Learning UK
Industry
To maintain the Company’s technology
leadership and reputation in the global fuel cell
and electrolyser industry, we are a key player in
research opportunities and look for partnership
opportunities to further progress the technology
and infrastructure required to meet our strategic
objectives.
Regulators/legislators
To ensure the Company is fully compliant with
all necessary laws and regulations to keep our
colleagues and the Company safe in the pursuit
of our goals.
● Website and public reporting
● ESG reporting and accountability
● Participation in industry conferences
● Publication of white papers and thought
leadership
● Membership of industry bodies and
associations
● Collaborations with academic and
research institutes
● Forums, meetings and conferences
● Board updates on relevant changes
in legislation and regulation
● Retention of advisers and consultants
where appropriate
18
Ceres Annual Report 2022
Links to stakeholders
Shareholders
Employees
Industry
Suppliers and partners
Wider society
Regulators/legislators
Board decisions and activity
Sustainability strategy and report
The Board approved the Company’s Sustainability strategy
and in conjunction with this, the first Sustainability report for
publication. The Board considers that an effective approach to
Sustainability is underpinned by analysis of the wider social and
governance considerations to ensure we are doing the right
thing for our people, our communities and our planet.
Key stakeholders considered:
21st Birthday event
The Chair of the Board attended and participated in the
21st Birthday Company wide event in November 2022. This
direct interaction in a more informal setting with colleagues
from across the entire business ensured that colleagues felt
the Board was truly engaged with the operational activities of
the business and importantly, was available to hear and discuss
their views.
Key stakeholders considered:
New Committee of the Board – ESG Committee
The restructure of the Board and its Committees and the
introduction of a dedicated, Board-level ESG Committee
demonstrated the Board’s commitment to ESG reporting,
engagement and accountability.
Key stakeholders considered:
New Non-Executive Director search
The commencement of a search for new Non-Executive
Directors will bring further diversity to the Board and ensure
thoughtful and effective decision making in the pursuit of
the Company’s strategic objectives. Ensuring the Board is
comprised of the relevant skill sets and that it is continuously
evaluated and strengthened provides assurance to our
shareholders that the Company is led by a strong and
dynamic Board.
Key stakeholders considered:
Employee Engagement Director appointed
The Board appointed Trine Borum Bojsen, Non-Executive
Director as the Employee Engagement Director. Trine has
significant experience in the renewable energy sector which
gives her invaluable insight into the day-to-day work of our
colleagues. This appointment will ensure there is a clear channel
for the views and needs of our colleagues to be fed directly
into Board decision making. The appointment was made in the
latter part of the year and the role will develop further in 2023.
Key stakeholders considered:
Modern Slavery Statement for the year ended
31 December 2021
The Board approved the Company’s first Modern Slavery
Statement responding to the requirements of the Modern
Slavery Act 2015. The Company was not required to make
such a statement but did so to demonstrate its zero tolerance
approach and its commitment to ensuring no form of modern
slavery or human trafficking was present in its business or
supply chains.
Key stakeholders considered:
Developing the governance framework
In anticipation of the desired move up to the Premium Listing
on the Main Market of the London Stock Exchange, the Board
has overseen and approved the review and development of
a number of policies and related documents during the year.
It has refreshed and restructured its Committee structure to
ensure effective and efficient use of time and has reviewed
and updated its Matters Reserved to the Board and Committee
Terms of Reference. Compliance with regulators and legislation
underpins the Company’s activities and seeking to achieve high
standards of governance and compliance is a key focus for
the Board.
Key stakeholders considered:
Ceres Annual Report 2022
19
Strategic report Strategy
A clear strategic vision
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 have multi gigawatts of manufacturing capacity
under licence with global partners by 2030.
1
Enabling our licensees to succeed
We aim to support our manufacturing partners to
start mass production by 2024 through delivery of
our Gen 2 stacks.
● We are supporting Bosch and Doosan as they scale up their
production capabilities towards mass market launch in 2024.
● We also continue to work with our system partners to help
them bring innovative products to their respective markets.
Links to KPIs
1 2 5
Links to risks
1 2 6
2
Commercial scale
We create commercial scale by generating more
demand though increasing commercial partnerships
and licences, growing applications and addressing
new markets.
● We aim to bring in new manufacturing partners as well as
secure the manufacturing entity in China.
● We aim to attract multiple system partners and OEMs to drive
demand of the Ceres fuel cell stack in volume.
Links to KPIs
2 3 4
Links to risks
5
3
Licensing technology leadership
We maintain our technology leadership in both SOFC
and SOEC and drive further innovation.
Links to KPIs
6
● We engage in technology demonstrations and data-sharing
initiatives that offer early evidence of the benefits of Ceres’
SOFC and SOEC technology.
● We continue to innovate our IP for both fuel cells and
electrolysers.
Links to risks
3 4
For more information on risks, please see page 39
20
Ceres Annual Report 2022
KPIs
Our key performance indicators
Financial KPIs
1 Revenue
£22.1m
22
21
20
22.1
21.7
30.8
Description
Revenue reduced compared with 2021
primarily due to deferral of the China JV
and related licence fee revenue, however
Ceres continues to deliver revenue at
high margins.
2 Number of licensing partners
(at 31 December)
3 Order backlog
(at 31 December)
5
22
21
20
2
2
2
3
3
3
Stack partners
System partners
Description
Doosan and Bosch are our stack
manufacturing partners, with Weichal,
Doosan and Miura as system partners.
£67.8m
22
21
20
67.8
78.7
97.0
Description
"Order backlog" refers to confirmed
contracted revenue including revenue
which management estimates is
contingent upon options not under
the control of Ceres.
Links to strategy:
1
Links to strategy:
1
2
Links to strategy:
2
Non‑financial KPIs
4 Overall manufacturing capacity
5 Partner programmes delivery
6 Demonstrate SOEC
2022 performance
250MW.
2022 performance
Bosch and Doosan programmes on track
for 2024.
2022 performance
Successful demonstration at module
level in 2022 and on track for 1MW
scale in 2023.
Description
Planned stack manufacturing capacity
from our partners.
Description
We aim to ensure that our manufacturing
partners start mass production as planned.
Description
We are looking to demonstrate SOEC
at 1MW scale.
Links to strategy:
2
Links to strategy:
1
Links to strategy:
3
Links to strategy
1
Enabling our licenses to succeed
2
Commercial scale
3
Licensing technology leadership
Ceres Annual Report 2022
21
Strategic report Case study
Power
generation
39%
Against a backdrop of subsidies, targets and
regulation, the energy industry is now gaining
the confidence needed to make the transition
to greener energy sources.
BP’s forecasted increase in global energy demand by 2030
7.1TW
The World Meteorological Organization’s ("WMO") estimate
of clean energy capacity to be installed by 2030 to reach the
Paris Agreement’s long-term global goal.
320,100tonnes CO2
The carbon saved each year from powering 200,000 homes with our
stationary fuel cells running on hydrogen compared to a 200MW UK
power station – to find out more visit our carbon saving calculator.
The largest contributor to global greenhouse gas ("GHG") emissions
is from the use of energy: electricity and heat production, industry,
transportation, and other energy accounts for around 70% of all
global anthropogenic GHG emissions according to the Centre for
Climate and Energy Solutions. Decarbonising these vast sectors
is a great challenge, but also a huge opportunity.
Global energy demand is estimated to increase by 39% by
2030 as forecasted by BP. Decarbonising our current grid
whilst facilitating this increase in energy demand will require
7.1TW of clean energy capacity to be installed by 2030
according to the WMO. To address this, countries require
highly efficient, scalable, fuel flexible and environmentally
friendly power generation systems.
Ceres' SOFC technology and the stationary fuel cell
systems developed by our partners addresses this
market as it can generate electricity at much higher
efficiencies than traditional methods using multiple fuel
sources: we calculated a 45% reduction in CO2 emissions
compared to consuming electricity from the centralised
grid of the average G20 country whilst using natural
gas. To discover multiple use cases and the associated
emissions savings try our online carbon saving calculator.
22
Ceres Annual Report 2022
Distributed power
Across our energy systems, there is a need to
reinforce power grids that are coming under
increasing demand from electrification. Stationary
fuel cells systems such as those developed by
our partners using Ceres’ technology provide highly
efficient, scalable, fuel flexible and environmentally
friendly power generation systems for use in
many applications.
Commercial power
Our technology is ideally suited to a wide range
of commercial power applications, including
decentralised power plants in cities, power for data
centres, backup power for off-grid applications
and commercial CHP. Clean power provided by
fuel cells brings simplicity, lower cost, improved
efficiency and a much lower carbon footprint.
Shipping
The decarbonisation of shipping is being driven
by regulation and targets from the International
Maritime Organisation ("IMO") with the industry
proactively adopting technologies and fuels to help
meet these targets. Ceres is currently developing
a modular-based system for a range of marine
applications including coastal, portside and offshore.
Our fuel-flexible technology is robust, durable
and handles vibration well, with straightforward
integration and in-life servicing making it well suited
to marine environments.
Ceres Annual Report 2022
23
Strategic report Case study
Green
hydrogen
Hydrogen from low-emissions sources has an important
role in the energy transition with potential to replace fossil
fuels in sectors where few clean alternatives exist, such as
industry, heavy transport, shipping and agriculture.
x91
BloombergNEF estimate of worldwide electrolyser production
growth needed to meet 2030 demand
3,585GW
IEA estimate of global electrolyser capacity needed to meet the
2050 demand for green hydrogen)
<40kWh/kg
Ceres testing has demonstrated delivery of green hydrogen
around 25% more efficiently than incumbent technologies
The recent global volatility has only served to highlight the
urgency for energy security, with governments under increasing
pressure to decarbonise their economies and hydrogen now widely
acknowledged as an essential part of the route to net zero.
Companies around the world are already ramping up electrolyser
production, green hydrogen plants are under construction, and the
industry is finally making the leap from pilot projects to industrial
scale. The International Energy Agency ("IEA") estimates that the
world will need 3,585GW of electrolyser capacity to meet the
demand for green hydrogen in 2050, an increase from 1GW of
installed capacity today. It is no longer an issue of credibility around
technology but a question of credibility around scale.
Today, Ceres is addressing the significant market for electrolysis
through a differentiated offering for hydrogen, with distinct
advantages of efficiency, coupling with industrial processes that
are high emitters of carbon dioxide today. The technology uses
commonly found materials that can be mass produced at low cost
with a limited carbon footprint. Ceres has committed £100 million to
the development of SOEC and early testing has added confidence
that this technology will deliver green hydrogen at <40kWh/kg,
around 25% more efficiently than incumbent technologies.
24
Ceres Annual Report 2022
Green steel
Low-cost green hydrogen is particularly well-suited
to hard-to-decarbonise sectors such as green steel
production, which today uses a lot of heat and coal
as a reducing agent. Ceres' SOEC technology is
well-suited to integration with industrial processes
where waste heat can be utilised to increase efficiency.
Future fuels
Ceres' SOEC technology is well-suited to integration
with synthetic fuel production processes where
waste heat can be utilised to increase efficiency.
Hydrogen can be used to synthesise fuels where
higher energy density fuel is required in shipping
and aviation. Methanol, ammonia and methane can
all be synthesised from hydrogen and are being
considered as future energy carriers and in zero
carbon power generation.
Gas blending
Natural gas grids can be decarbonised with an
injection of green hydrogen. Existing natural
gas infrastructure can accommodate significant
quantities of hydrogen to enable low carbon
heating for residential and commercial buildings.
Where natural gas is used for heat in industrial
processes, further blending of hydrogen can
reduce carbon intensity.
Ceres Annual Report 2022
25
Strategic report Sustainability
Whilst on our mission to tackle
climate change, we strive for a
positive impact on all stakeholders
Sustainability at Ceres
Affordable and clean energy
To achieve global carbon reduction commitments the energy
transition must occur simultaneously, in multiple sectors and
geographies, at both scale and pace. Ceres’ unique licensing
model embeds its technology in the products of international
partners such as Bosch, Doosan, Shell and Weichai. This
delivers the scale investment for manufacturing and
commercialisation to make a global impact by decarbonising
some of the most energy intensive sectors. Through licensing,
Ceres aims to deploy multi gigawatts ("GWs") of global
capacity by 2030, displacing up to 1.6 million tonnes of CO2
per GW each year. The equivalent of the average emissions
of almost half a million people for every GW installed.
Industry, innovation and infrastructure
Limiting global temperature rise needs a rethink of our energy
systems. This includes reinforcing existing power grids to cope
with electrification and intermittency and addressing 'hard to
decarbonise' sectors such as heating, industry, data centres,
heavy transport and shipping. Ceres is a pioneer in solid
oxide technology for fuel cells and electrolysis which will play
an essential part in the transition to a future energy system.
Ceres will enable global change and facilitate innovation in
clean energy systems by continuing to lead the sector with
advanced technologies for fuel-flexible low to zero carbon
power generation and electrolysers for green hydrogen.
The way the world views energy is changing for
the better. The increase in climate-related disasters
is driving global commitments to net zero and
accelerating the energy transition. Ceres plays a
central role in this transition to a clean energy system
with its unique technology that delivers both low
carbon power and green hydrogen. What drives
the business and the employees at Ceres is tackling
climate change and its strategy toward sustainability
is no different.
Ceres addresses climate change directly through
its products. It has also made major strides in its
sustainability practices and disclosures over the
past year; in environmental, social and governance
aspects. The Company wide initiatives and disclosures
are to ensure Ceres is doing its utmost to further the
development of the five United Nations Sustainable
Development Goals that it can tangibly contribute
to. This is good for the planet, our people and the
business, and is ensuring we are prepared for the
opportunities and risks that come from the changing
climate and a changing world.”
Julia King
Non-Executive Director
26
Ceres Annual Report 2022
Sustainable cities and communities
Sustainability in our governance
Ceres takes a holistic approach to climate change and
sustainability which is underpinned by wider social and
governance considerations. This includes expanding and
investing in its workforce and developing people to deliver
today's technologies and the innovation needed for a green
energy future. Operations and culture are aligned with purpose
at Ceres, ensuring successful technology transfer to its partners
and a positive impact on the communities in which it operates.
Responsible consumption and production
Whilst the rapid deployment of this technology accelerates
the world to a net zero future, Ceres is aware of its own
environmental impact. As the Company grows, Ceres has taken
the first steps to evaluate its own emissions including analysing
and reporting on our Scope 3 emissions alongside Scopes
1 and 2. Although Ceres’ absolute emissions will increase in
the short term, it aims to reduce the carbon intensity of its
operations and will start, this year, working through a full carbon
reduction pathway based on Science Based Targets initiative
("SBTi") guidance to achieve net zero emissions before 2050.
This is included as a metric for executive remuneration. See
Carbon Emissions for more.
Climate action
We aim to reach multi GWs of global capacity through our
partners by 2030. Each GW of capacity has the potential to
displace up to 1.6 million tonnes of CO2 each year when running
on natural gas, compared to the conventional grid in an average
G20 country. If run on hydrogen, it can displace over 3.5 million
tonnes of CO2 annually for every gigawatt installed. In addition
to emissions savings of deploying our technology, we aim to
minimise the impact of our technology on the environment as
we strive to reduce the CO2 per kW of producing our stacks as
set out in our life cycle analysis on page 31.
The responsibility on every business to ensure proper
oversight of climate-related risks and opportunities has
never been higher. Ceres conducts all business activities
in an honest, ethical and socially responsible manner,
aiming to align with best practice and to be a responsible
employer. The Ceres Code of Ethics and Business Practice
sets out this behaviour as a good corporate citizen which
applies to interactions with, and between, our employees,
but also with broader stakeholders, including the partners,
suppliers, shareholders, and wider society. For more
information, please refer to the Governance section on
our website.
Key sustainability components:
● This year the Board established an ESG Committee,
which will meet for the first time in 2023 and is Chaired
by Julia King. It operates in conjunction with the existing
Operational ESG Committee, Chaired by Phil Caldwell. To
read more about the Committees of the Board see the
Corporate Governance section starting on page 41.
● Commencing in 2022, ESG including climate-related risks
were included in Ceres’ corporate risk reporting process.
The Chief Executive, as Chair of the Operational ESG
Committee, is responsible for identifying, managing,
and mitigating these risks. These feed into the Group’s
risk review process, which is reviewed by the Audit
Committee and ultimately owned by the Board.
● Specific ESG related KPIs are being introduced for the
Executive team, proposed by the ESG Committee and
agreed by the board. Delivering our first TCFD report
and achieving a net zero strategy form part of Executive
remuneration for 2023.
27
Strategic report Sustainability continued
Developing our strategy and reporting
Progress in 2022
Targets for 2023
Net zero pathway
In 2023, we will begin establishing a net zero pathway
to reduce our greenhouse gas emissions based on SBTi
guidance, and work with an independent third party on this.
Establishing a net zero strategy by the end of 2023 is part
of the executive remuneration KPIs.
Beginning our Task Force for Climate-related Financial
Disclosures ("TCFD")
This year, Ceres will start TCFD analysis, both as it is the gold
standard for climate-related disclosures and as a requirement
to fulfil our ambition to transition from our UK AIM listing
to a Premium Listing on the Main Market of the London
Stock Exchange.
Sustainability Accounting Standards
Board ("SASB") aligned
Ceres is using the SASB framework for accounting standards
and disclosure guidance on financially material sustainability
measures. We understand our corporate performance on all
dimensions of sustainability, our SASB report is available on
the Sustainability section of our website.
ISO 9001 and ISO 14001 Certification
Ceres is proud to have achieved ISO 14001:2015 for its
Environment Management System, minimising the
environmental impact of our operations. Certificate number
EMS 761891. Our Quality Management System is certified
to ISO 9001:2015 (FS 738105).
Streamlined Energy and Carbon Reporting ("SECR")
We have been reporting against SECR disclosures since
2020, and we have achieved SECR verification for our
Scopes 1, 2 and limited Scope 3 emissions for 2021.
We have continued to strive to understand of our own
emissions in 2022, again reporting on our SECR verified
Scopes 1, 2 and limited Scope 3 emissions for this year
and we are seeking a deeper Scope 3 analysis in our
Sustainability Report later in the year.
28
Task Force on Climate‑related Financial Disclosures
Recognising the economic risks and opportunities inherent in a changing climate, and the clear and consistent disclosure necessary
to capture this climate-related risk assessment is crucial to ensure Ceres is a sustainable business for years to come. This will allow
us to continue to gain partners and deploy our technology at scale and pace around the world well into the future.
The table below has been given voluntarily and shows our initial progress and considerations ahead of starting our TCFD analysis
and the publication of our TCFD report later in the year.
Recommendation
Recommended disclosures
Governance:
Ceres’ oversight of
climate-related risks
and opportunities
● The Board is responsible for the Group’s risk framework, which includes climate related risks
and opportunities. The CEO bears ultimate responsibility for reporting on climate-related risks.
● We have taken steps to formalise the review of risks and actions by the establishment of an
ESG Committee of the Board creating an independent sustainability group, which will assess
and review all climate-related risks and opportunities.
Strategy:
The actual and
potential impacts of
climate-related risks
and opportunities on
the Ceres’ businesses,
strategy and financial
planning
2022 progress: The ESG Committee has been formalised as a Committee of the Plc Board,
comprised of Julia King as Chair, Warren Finegold, Trine Borum Bojsen and Phil Caldwell,
and sustainability KPIs were introduced into executive remuneration.
● We work collaboratively with partners to deploy our carbon saving technology whilst striving
to understand the impacts of climate-related risks on our own business, and the impact on our
partners as they seek to scale up our technology.
● Our sustainability strategy focuses on adapting to climate change, whilst reducing our own
emissions and most importantly ensures our product offering enables our partners to tackle
the climate problem effectively.
2022 progress: As the design authority, Ceres evaluates the environmental footprint of
our technology and embeds life‑cycle considerations into our designs and the technology
transfer to our partners, promoting responsible practices and influencing behaviours in the
manufacturing, scale up and longer‑term disposal of our technology.
Risk management:
The processes used by
Ceres to identify, assess
and manage climate-
related risks
● 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.
2022 progress: Commencing in 2022, ESG including climate‑related risks were included in
Ceres’ corporate risk reporting process. These feed into the Group’s risk review process,
which is reviewed by the Audit Committee and ultimately owned by the Board.
Metrics and targets:
The metrics and
targets used to assess
and manage relevant
climate-related risks and
opportunities
● Metrics to assess climate-related risks and opportunities include climate risk and environmental
profiling data including life cycle analysis, water use, energy use and carbon emissions.
● We will continue to disclose our greenhouse gas ("GHG") emissions, see page 31 for Scopes
1, 2 and limited Scope 3 SECR verified emissions reporting.
● Achieving a net zero strategy will become part of executive remuneration this coming year.
2022 progress: Our inaugural Sustainability report includes ESG policies, metrics, and data
and SECR reporting covering our carbon emissions data.
Ceres Annual Report 2022
29
Strategic report Sustainability continued
Carbon emissions breakdown
This chart provides a visual breakdown of our Scopes 1, 2 and Scope 3 emissions sources. *Percentages of emissions based
on 2021 data. Our in depth scope 3 emissions analysis for 2022 to be published in our sustainability report later in the year.
Greenhouse gas emissions tCO2e
Scope 1
Direct
1.3%
Direct
emissions from
owned or
controlled
sources
Scope 2
Indirect
0%
Indirect
emissions
from
purchased
electricity,
heat and
cooling
Scope 3
Indirect
98.7%*
Indirect upstream and downstream value chain emissions
Purchased goods
and services
Waste generated
in operations
Consumption of
natural gas
Transportation
and distribution
Downstream
leased assets
Transportation
Market based
Renewable
sources
Employee
commuting
Other 11
categories
Streamlined energy and carbon reporting
As our partners adopt our technology at scale and build
gigawatt capacity, Ceres’ clean energy technology will
enable the reduction of carbon emissions globally. Ceres is
expanding its operations to meet the growing demands of
an increasing number of partners, technologies and ambition.
This will inevitably increase emissions in the short term. This
short-term increase is significantly outweighed by the impact
our technology has on the world’s ability to decarbonise.
Since 2020, Ceres has been improving its disclosures on
carbon emissions, and in 2021 we worked with Ricardo Energy
and Environment ("Ricardo") as an independent third party to
analyse our Scopes 1, 2 and 3 emissions.
Ricardo verifies that our data sources are robust, ensures
we work towards calculation improvements and provides
limited assurance that based on the procedures and process
conducted, we offer a fair representation of GHG data
in accordance with ISO 14064-1 and the GHG Protocol
Corporate Standard.
This year, we will again disclose our Scopes 1, 2 and 3 emissions,
which include zero Scope 2 emissions as our electricity is
guaranteed as renewably sourced until September 2024.
SECR verified Scopes 1, 2 and limited Scope 3 emissions are
published in this report, with the calculation of the remaining
Scope 3 emissions to be published later in the year in our
Sustainability report.
30
Ceres Annual Report 2022
Streamlined Energy and Carbon Reporting ("SECR") for the 12 months to December
Below we provide a year-on-year comparison of the SECR verified Scopes 1, 2 and limited Scope 3 emissions presented in our
2021 Annual report. A more detailed picture of our Scope 3 emissions for 2021 is available in our Sustainability report, published
online in October 2022. We will endeavour to publish this more complete picture of our emissions for 2022 as soon as the
detailed analysis has been completed.
i
i
s
n
o
s
s
m
e
d
e
f
i
r
e
v
R
C
E
S
i
Disclosure
Description
Scope 1
Direct
emissions
Scope 2
Indirect
emissions
Scope 3
Other
indirect
emissions
Total
Fuel used in transport
and consumption of
natural gas2
Electricity used
for operations
(location-based
method for emissions)
Electricity purchased
and used for operations
(market-based method
for emissions)
Fuel used in personal
vehicles for
business travel
Total SECR verified
carbon emissions
(market‑based)
2020
2021
2022
Energy
(kWh)
Emissions 1
(tCO2e)
Energy
(kWh)
Emissions 1
(tCO2e)
Energy
(kWh)
Emissions 1
(tCO2e)
1,997,664 3
368
2,168,437
398 3
2,243,492
411
4,901,240
1,143
5,481,294
1,164
6,340,242
1,226
4,901,240
861
5,481,294
Nil 4
6,340,242
Nil 4
55,404 3
14
50,014
12
69,931
17 5
6,954,308
1,243
7,699,744
410
8,653,665
428
Footnotes: 1. CO2e calculated from fuel used in company vehicles, electricity purchased, and natural gas consumed for ongoing operations, converted to tCO2e
using government-approved conversion factors. 2. Other gas use and emissions from test stands and international travel excluded. 3. Values updated relative to 2020
and 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. 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. 5. Fuel used in personal vehicles for business travel,
upstream supply chain and downstream in-use emissions SECR Verified as of March 2023.
Life cycle analysis
Cradle to gate emissions
Substage
Raw materials
Manufacturing
Transport
Total
Total/kW
1kW stack
(kg CO2e)
5kW stack
(kg CO2e)
295
136
6
437
437
1,192
643
32
1,867
373
As well as understanding our own carbon emissions we have
undertaken a cradle-to-gate life cycle assessment to give clarity to the
environmental impact of our current generation fuel cell stacks; both
a 1kW and a 5kW power system stack. Through our licensing model,
our stacks will be used in numerous different applications, but for
comparison a power system running on natural gas will save 7.92tCO2e
per year when compared to the average G20 nation grid, making the
payback time in terms of carbon footprint less than 12 months. As
the design authority, we seek to lead the industry for our technology,
embedding sustainability considerations into the very heart of our
development and the transfer of IP under licence to our partners.
Decisions on next generation technology are already being made
with consideration to further reduce carbon intensity.
Ceres Annual Report 2022
31
Strategic report
Sustainability continued
Social
Early careers
In collaboration with STEM Learning UK, Ceres hosted our
inaugural Reimagine competition in 2022. A science animation
competition for secondary schools in the southeast of
England, it aims to inspire the next generation of innovators
and creatives to think about the global climate challenge and to
bring their own creativity to tackling the mission for net zero.
Now in its second year, the competition seeks to encourage
a greater diversity of students into science, technology,
engineering and maths ("STEM") and maybe just find some
new ways for STEM and arts to collide and collaborate.
The Ceres People team also lent their time and expertise to
local high schools in Horsham to support students with CV
writing, interview skills and techniques.
Community impact
"The Springboard Project" was Ceres’ nominated charity
of the year, where members of the Ceres team generously
donated toys to their Christmas "Giving Tree" appeal as well as
volunteering support at their annual children’s Christmas party.
Our Connect employee forum leads Ceres’ efforts in engaging
with our local community and our activities throughout the
year included support for the homeless through our Wrap Up
London and Brighton & Hove campaigns, organised coffee
mornings in aid of Macmillan Cancer Support and many joined
the midnight walk raising money for the Chestnut Tree charity.
Workforce: 2022 split by roles
Workforce: 2022 gender split
35+
79+
Engineer:
Technician:
Other:
Scientist:
2021
2022
171
166
113
39
221
170
144
35
Male:
Female:
2021
2022
80%
(393)
20%
(96)
79%
(451)
21%
(119)
In November 2022, we celebrated our 21st birthday
bringing the entire team together for the first time in
several years. It was an important pause from the day-to-
day challenges to reflect on the past, present and future
opportunities for the business and with nearly 500 people.
32
Ceres Annual Report 2022
34
+
23
+
8
+
F
21
+
F
Diversity, equity, belonging and inclusion
We call it DEBI and it encompasses our belief that talent and
ingenuity stem from a variety of perspectives and experiences.
As an organisation and a group of people, we have an open
and inclusive culture. Find our diversity and inclusion policy on
our website.
During 2022 we celebrated events including Pride week with
our Rainbow Café, and raised funds for our Charity Partner
Switchboard, allowing them to open a new LGBTQ+ helpline
number this year. Other events for employees include our
buddy scheme, where new employees are assigned a buddy
from outside their team, to support with knowledge sharing
and integration. We also run a reverse mentorship scheme,
where senior colleagues can learn from others around their lived
experiences and challenges they have faced at work, arming
them with knowledge to support equality, diversity and inclusion.
We have revitalised the Ceres Horsham offices creating our
collaboration space, encouraging employees to collaborate in
new ways and creating an inclusive environment for all.
We also hosted our first World Day for Cultural Diversity, which
saw our 42 represented nationalities within Ceres celebrate a
veritable feast for both our technical centre and our production
site, with dishes from across the world gracing our canteen spaces.
Development and progression
Ceres was proud to launch our apprenticeship scheme in 2022
and welcome on board our first cohort of apprentices who are
working towards an HNC level 4 Engineering Manufacturing
Technician qualification and enjoying learning all about our
technology and manufacturing operations.
In addition to practical experience, we continue to invest in
training and development across the Company, introducing
new programmes including the Scientist of Yourself, project
management and agile training alongside our existing bespoke
Ceres Academy training courses and offering. We are proud to
have made over 70 promotions and rotations of roles across
the Company during the year.
Health and safety
In 2022, the Total Recordable Incident Rate ("TRIR") for the Group
was 0.18, continuing a downward trend from 0.36 the previous
year. Ceres has continued to achieve zero Reporting of Injuries,
Diseases and Dangerous Occurrences ("RIDDORs") year on year.
Supply chain
As a signatory to the UN Global Compact we procure in
accordance with the Ten Principles, ensuring Human Rights, Labour,
Environment and Anti-Corruption risks and impacts are considered
as part of our procurement strategies and decisions. During 2022
we introduced our first Procurement Policy, and internal Sustainable
Procurement and Supply Chain Assurance policies, all aligned to
ISO 20400. Collectively these policies set out the standards we
measure ourselves and our supply chain against. We are proud that
our Environmental Management Systems was ISO 14001 certified in
2022, demonstrating the progress we are making on managing
environmental impacts in our supply chain. Looking forward,
we will build on the successes of 2022 by introducing our first
Supplier Code of Conduct and supplier manual, setting out clearer
expectations and standards for suppliers, as we strive to continually
improve supply chain sustainability.
Engagement and retention
In our first Gallup 12 Groupwide survey, we achieved a good
score of 76% overall engagement, from a 66% completion
rate, and 280 suggestions for improvement. Our overall
retention rate dropped to 84% in 2022, broadly in line with and
reflecting the post-pandemic movement of people witnessed
across all industries. Exit interviews are conducted with all
leavers to understand reasons for leaving and identify potential
opportunities for improvement.
No. of employees
325
2020
£332
Investment
per
employee
570
489
2021
£673
2022
£704
42
Nationalities
represented
76%
Groupwide survey
engagement rate
Board approval
The Strategic Report set out on pages 2 to 40 has been
approved by the Board
Eric Lakin
Chief Financial Officer
Ceres Annual Report 2022
33
Strategic report Chief Financial Officer's statement
Focused
investment for
the future
Ceres has a significant role
to play in the multi‑decade
energy transition. Given our
business model, it's vital that
we continue to invest in our
capability to harvest our
IP and develop long‑term
sustainable competitive
advantage for our partners
in the clean power and
hydrogen markets. This
is why – notwithstanding
short‑term fluctuations
in license fee revenue –
we continue to invest in
leading‑edge technology
and commercial capacity to
drive growth for the future."
34
Ceres Annual Report 2022
Introduction
2022 was another year of significant investment for Ceres,
with continued engagement and progress with our strategic
partners in the solid oxide fuel cell (SOFC) business. In
June 2022, we also entered into a Technology Evaluation
Agreement with Shell for our solid oxide electrolyser cell
(SOEC) technology.
We have continued to invest in the business to further
drive innovation and support future growth in areas such
as prototype and test capacity, energy materials, product
and systems engineering, future fuels capabilities and the
development of our SOEC technology. We have also
expanded the business development function and now have
a presence in North America, India, Japan, Germany, China,
South Korea and the UK.
Reporting on the results
The Group reported revenue of £22.1 million in 2022, compared
with £30.8 million in the prior year. Almost all of the Group’s
revenue in 2022 related to the fuel cell business. As reported
in November 2022, the signing of the China JV contracts has
been delayed to 2023 impacting the timing of the associated
licence fee revenue recognition. Gross margins reduced to 59%
(2021: 62%*), reflecting the reduction in high-margin licence fee
income recognised in the year compared with 2021.
As noted in our Interim Results, the phasing of revenue in
2022 and 2023 is highly sensitive to the timing of signing
new licence agreements.
1 2021 gross margin restated (previously 66%) to reflect the classification of the
RDEC tax credit within other operating income rather than offsetting cost of sales.
£22.1m
Revenue
(2021: £30.8m)
£58.4m
Investment in the future
(2021: £34.9m)
£182.3m
Cash and short‑term investments
(2021: £249.6m)
Other income of £1.3 million (2021: £2.2 million) relates to grant
income, and now includes our RDEC tax credit as well as grant
funding towards projects.
Overall R&D costs increased by 54% to £48.3 million compared
to 2021 of £31.3 million as planned with our expansion of both
our SOFC business and development of our SOEC business.
The order book1 reduced to £67.8 million as at 31 December
2022 from £78.7 million at 31 December 2021; with new order
bookings more than offset by the recognition of revenue
primarily on existing contracts with our partners Doosan and
Bosch during the year. Going forwards, the order book will
continue to vary based on the timing of contracts won, and
revenue recognised from them.
Ceres Power: Fuel cells
The SOFC part of the business recorded revenues of
£22.0 million (2021: £30.8 million) and a gross profit of
£12.9 million (2021: £19.0 million), with the reduction compared
with the prior year reflecting the deferral of the China JV and
the expected recognition of associated upfront licence fee
revenue. The segment’s Adjusted EBITDA2 loss increased
to £21.6 million (2021: £4.5 million). Investment in research
and development ("R&D") for SOFC increased by 48% to
£29.1 million (2021: £19.7 million).
There will be continued investment in SOFC in 2023 to support
future expansion, and so the level of losses or future profitability
of this part of the business will continue to be highly influenced
by the level of SOFC licence fee revenue recognised in a
given period, until royalty revenue streams become material.
Another notable investment is the development of our
second generation of fuel cell technology, which will offer
improvements in power density, durability and cost.
Ceres Hydrogen: Electrolysis
We plan to invest £100 million in the development of our SOEC
technology and we are now two years along this journey and
making good progress. Our SOEC business recognised revenue
for the first time in 2022, of £0.2 million (2021: £nil), from a
contract with a potential new partner in Asia to evaluate the
Group’s SOEC technology. The SOEC business recorded an
Adjusted EBITDA2 loss of £21.7 million (2021: £12.2 million).
This was primarily driven by a 66% increase in R&D activities
to £19.2 million (2021: £11.6 million), particularly around the
investment in our “first of a kind” 1MW demonstration unit for
use in the contract with Shell. We made good progress in the
year with the first Electrolysis Cell Module ("ECM"), which forms
part of the demonstrator, now on test with encouraging early
results with respect to green hydrogen production efficiency.
Focused investment for the future
Throughout 2022, we continued to invest in both capabilities
and people to support our partners, deliver our technology
roadmap and drive future growth.
Our employee base includes specialist expertise such as highly
skilled engineers; electrochemistry and materials scientists;
and test and stack technicians, and remains our most valuable
strategic resource. Total employees increased to 570 by the
end of 2022 compared to 489 at the end of the prior year.
Capitalised development in the year, which currently only
relates to ongoing SOFC development, increased to
£5.8 million compared to £4.6 million for 2021 and we hold
net £13.3 million capitalised to date. Amortisation of this to
the income statement was consistent with the prior year,
as expected, at £1.0 million (2021: £1.0 million).
Our investment in property, plant and machinery increased
to £13.3 million (2021: £7.4 million), and was principally on
manufacturing improvement, automation and capacity
expansion, as well as expanding our test infrastructure. This
continued investment also resulted in increased depreciation
of £5.5 million in 2022 compared to 2021 of £4.2 million.
Going forward, we plan to continue to grow our test capability
to support the expected growth of our partners, and also
enable additional market opportunities including new SOFC
applications such as marine and alternative fuels, and SOEC
development. We also intend to expand our manufacturing
capacity for prototypes and demonstrators for both SOFC
and SOEC products. Consequently, we expect our capital
expenditure to continue to be at higher levels in 2023.
Overall, this “investment in the future3” (R&D costs, capitalised
development and capital expenditure) increased 67% to
£58.4 million (2021: £34.9 million). The £58.4 million comprises
£40.2 million in R&D (excluding depreciation, amortisation and
share-based payments), £12.4 million in capital expenditure and
£5.8 million in capitalised development.
As a result of these planned investments, consistent with
the capital raise and strategy to develop our electrolysis
technology, the Group reported an increased operating loss
of £51.5 million in 2022, up from a loss of £23.4 million in 2021.
In December 2022, Ceres concluded a deferral of the option
agreement to acquire the remaining shares of RFC Power
Ltd ("RFC"), which is a “Long Duration Energy Storage” R&D
business with proprietary manganese flow battery technology.
This option is now exercisable in the period 1 January 2024 to
30 April 2024, having previously been exercisable between
May 2022 and November 2022. Simultaneously, Ceres
invested a total of £2.0 million in RFC, comprising £1.0 million
funding capital as well as entering into a joint development
agreement to advance the progress of this promising technology.
Consequently, Ceres’ holding of RFC increased to 24.2% from
8.4%, and our investment in associates increased to £2.5 million
(2021: £0.5 million).
Ceres Annual Report 2022
35
Strategic report Chief Financial Officer's statement continued
Strong financial position: the foundation for
continued progressive growth
The Group ended the year with a strong liquidity position of
£182.3 million in cash and short-term investments (31 December
2021: £249.6 million) reflecting the investment in the business
as described above. Finance income increased to £2.8 million
(2021: £0.4 million) reflecting the improved rates applied to the
Group's floating rate deposits and higher rates available when
rolling over maturing fixed rate deposits.
Equity free cash outflow (defined and reconciled to net cash
from operating activities on page 38) was £68.4 million
(2021: £32.0 million), being driven by net cash used in
operating activities of £51.5 million (2021: £20.3 million), capital
expenditure of £12.4 million (2021: £7.4 million) and capitalised
development of £5.8 million (2021: £4.6 million), with the
balance from interest receipts and exchange rate movements.
Other significant movements in the balance sheet included
inventories increasing to £5.7 million (31 December 2021:
£3.1 million) reflecting increased activity at our manufacturing
facility to meet anticipated demand for our fuel cells and
component parts to support our partners' development and
scale-up activities. We recognised net contract liabilities of
£3.1 million which is a change in position against 31 December
2021, when we had net contract assets of £3.0 million, with the
movement reflecting timing differences between recognising
revenue and issuing invoices to customers. Trade receivables
increased to £11.8 million (2021: £2.6 million) primarily reflecting
a number of significant invoices raised in the last quarter of
2022 with two major customers. Of the £11.8 million due at
31 December 2022, c.£10 million was received in the first two
months of 2023.
Financial outlook
We continue to invest across the business to build a sustainable
competitive advantage in highly differentiated solid oxide
technology, which offers the potential for superior efficiencies,
reliability and economics for low carbon power generation
and the production of green hydrogen. The government
funding announced by the EU and the USA for clean energy
technologies in 2022 reinforces the opportunities for our
international partners to utilise Ceres’ world-class technology
to manufacture fuel cell and electrolysis systems at scale, to
support the rapidly growing, global demand for low carbon
electrons and molecules where they are needed.
Eric Lakin
Chief Financial Officer
1. Order book refers to contracted revenue bookings, and now excludes other operating income.
2. See page 38 for the definition of Adjusted EBITDA, which is an Alternative Performance Measure.
3. The Group defines "investment in the future" as being the total of the Group’s R&D (excluding depreciation, amortisation and share-based payments), capitalised R&D
and capital expenditure.
Consolidated statement of profit and loss
for the year ended 31 December 2022
Revenue
Cost of sales1
Gross profit1
Other operating income1
Operating costs
Operating loss
Finance income
Finance expense
Loss before taxation
Taxation credit1
Loss for the financial year
Adjusted EBITDA2
2022
£’000
22,130
(9,079)
13,051
1,332
2021
£’000
Restated 1
30,776
(11,731)
19,045
2,228
(65,905)
(44,703)
(51,522)
(23,430)
2,830
(304)
(48,996)
3,872
438
(380)
(23,372)
2,280
(45,124)
(21,092)
(43,230)
(16,675)
1. The 2021 taxation credit has been restated to increase the credit by £310,000 following the adjustment of prior year R&D tax credit claims and a related tax provision
reported in 2021. The 2021 cost of sales, gross profit and other operating income have further been re-presented to reflect the classification of the Group's RDEC tax
credit within other operating income in the 2022 results. Previously the amount was offset against cost of sales. The impact of this change was to increase 2021 cost of
sales and other operating income, and reduce gross profit by £1.3m.
2. See page 38 for the definition of Adjusted EBITDA, which is an Alternative Performance Measure.
36
Ceres Annual Report 2022
Segmental reporting: analysis of results between fuel cells and electrolysis
The results of the Group's two segments, being Power (SOFC) and Hydrogen (SOEC) are reported below, down to Adjusted
EBITDA level.
Year ended 31 December 2022
Year ended 31 December 2021
Revenue
Cost of sales1
Gross profit1
Other operating income1
Operating costs (excluding adjusting items)
SOFC
£’000
21,950
(9,070)
12,880
1,332
SOEC
£’000
180
(9)
171
—
Total
£’000
22,130
(9,079)
13,051
1,332
(35,769)
(21,844)
(57,613)
Adjusted EBITDA2
(21,557)
(21,673)
(43,230)
SOFC
£’000
30,776
(11,731)
19,045
2,228
(25,765)
(4,492)
SOEC
£’000
—
—
—
—
(12,183)
(12,183)
Total
£’000
30,776
(11,731)
19,045
2,228
(37,948)
(16,675)
1. 2021 cost of sales, gross profit and other income has been re-presented to reflect the classification of the Group's RDEC tax credit within other operating income, as
set out on the prior page.
2. See page 38 for the definition of Adjusted EBITDA, which is an Alternative Performance Measure.
Consolidated cash flow statement
for the year ended 31 December 2022
Loss before income tax
Non-cash adjustments
Movements in working capital
Income tax (paid)/received
Net cash used in operating activities
Investing activities
Investment in associates
Purchase of property, plant and equipment
Capitalised development expenditure
Decrease in long-term investments
Net increase in short-term investments
Finance income received
Net cash used in investing activities
Financing activities
Proceeds from issuance of ordinary shares
Expenses from issuance of ordinary shares
Cash paid on behalf of employees on the sale of share options
Repayment of lease liabilities
Finance interest paid
Net cash (used in)/generated by financing activities
Net (decrease)/increase in cash and cash equivalents
Exchange gains on cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Short‑term investments
Long‑term investments
2022
£’000
2021
£’000
(48,996)
(23,372)
5,939
(8,085)
(380)
6,697
(6,745)
3,078
(51,522)
(20,342)
(1,000)
(12,347)
(5,832)
5,000
—
(7,377)
(4,573)
3,000
(24,668)
(23,898)
1,443
438
(37,404)
(32,410)
873
—
—
(744)
(212)
(83)
(89,009)
863
151,455
63,309
119,011
—
181,472
(2,572)
(7,490)
(405)
(316)
170,689
117,937
563
32,955
151,455
93,129
5,000
Cash, cash equivalents, short‑ and long‑term investments
182,320
249,584
Ceres Annual Report 2022
37
Strategic report Chief Financial Officer's statement continued
Non-GAAP results – Alternative Performance Measures ("APMs")
The Group uses certain APMs to better describe certain performance metrics, which assist management to understand the
underlying trading performance of the business, as set out and explained below.
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.
Unaudited
Operating loss
Depreciation and amortisation
Share-based payment charges
Exchange gains
Unrealised losses/(gains) on forward contracts
Adjusted EBITDA
2022
£’000
2021
£’000
(51,522)
(23,430)
7,138
997
(863)
1,020
5,760
2,615
(563)
(1,057)
(43,230)
(16,675)
Reconciliation between net cash from operating activities and equity-free cash flow
The Group defines equity-free cash flow as net cash from operating activities plus capital expenditure, adjusted for interest
payments and receipts and exchange rate movements. The table below reconciles net cash from operating activities to equity-free
cash flow for each year.
Unaudited
Net cash from operating activities
Capital expenditure (total)
Interest receipts/(payments) (net)
Exchange rate movements
Equity‑free cash flow
2022
£’000
(51,522)
(18,179)
487
863
2021
£’000
(20,342)
(11,950)
(283)
563
(68,351)
(32,012)
38
Ceres Annual Report 2022
Principal risks and uncertainties
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.
Risk management process
The Board is responsible for the Group’s risk framework
and aims to ensure that the Group’s ability to achieve its
objectives outweighs its risk exposure. However, the Group’s
risk management programme 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.
The Executive Directors are responsible for identifying,
managing, and mitigating the risks to the Company. The
Executive Directors review the risks facing the Company at
Executive committee meetings and with senior management
across operations as a core part of day-to-day operations of
the business. There is a bi-annual review process to assess the
risk register at corporate level, and programme and project
specific risks are reviewed at project level.
The Board and its Committees review key risks and mitigations
and the Audit Committee subsequently puts them to the Board
annually for inclusion in the Annual Report.
Principal business risks and mitigation actions are set out below.
This summary is not intended to include all risks that could
ultimately impact our business and the risks are presented in
no particular order. We have considered possible risks resulting
from the conflict in Ukraine, including potential disruption to
our supply chain, as well as areas such as cyber security and
climate change, and following internal investigations do not
believe any new principal risks need to be captured. 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.
Trend directions:
Increasing
Decreasing
Unchanged
Principal risks
There is a risk that…
Actions taken by management/mitigations
Change
1
Core
technology
development
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 level and cost points
under ongoing programmes, with full
resources and facilities deployed to meet
milestone requirements.
During the year we have invested in
upgrading our test infrastructure and
capacity via outsourcing agreements.
We have also increased the headcount
for technology development activities.
Challenges remain due
to short timescales and
the risk of late changes
driven by development
issues, delayed test
validation and maturing
manufacturing processes.
We continue to work in close collaboration
with partners in their trials and early
market launches. Project teams on both
sides have been enhanced.
2
Partners’
market
launch
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 stack product
maturity not keeping up
with commercialisation,
or technology not
meeting requirements
No change. Progress
has been made towards
market launches with
our partners. There
remains a risk around
the development and
validation of stack
attributes that may take
longer than planned,
impacting go-to-market
timing or revenue linked
to specific milestones.
Link to
strategy
Enabling
licensees
to succeed
Enabling
licensees
to succeed
Ceres Annual Report 2022
39
Strategic report Principal risks and uncertainties continued
Principal risks
There is a risk that…
Actions taken by management/mitigations
Change
3
Intellectual
Property
protection
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.
Progress had been
made to ensure we
are able to protect and
exploit our IP.
Link to
strategy
Enabling
licensees
to succeed
4
Long-term
competition
and market
The value proposition of our
technology may become
eroded or it may become
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.
We continue to
increase our pipeline
of customers which
mitigates the impact
of individual customers
choosing not to
move forward.
Licensing
technology
leadership
Our first electrolysis control module
is successfully running and producing
hydrogen at our site in Horsham, and we
are working with our partners to validate
the technology.
5
Commercial
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.
We plan to ensure SOEC leadership
through development, demonstrations,
and partnerships.
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.
As reported in
November 2022,
negotiations continue
around the joint venture
agreements with Bosch
and Weichai.
Progress in the
development of SOEC
technology is reducing
the risk.
Commercial
scale
6
Operational
execution
The Company may be
unable to satisfy customer
contracts and scale-up, with
an increasingly complex
partner structure.
This may be due to
organisational growth
management, testing
capacity, supply chain,
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.
Licensing
technology
leadership
We are building up
the business to be in a
better position to meet
the challenges of our
customers’ expectations.
40
Ceres Annual Report 2022
Corporate
governance
42 Chairman’s introduction to governance
43 Board of Directors
46 Executive Committee
47 Corporate governance report
52 Audit Committee report
55 Remuneration and Nomination Committee report
58 Directors' Remuneration Report
65 Directors’ report
Chair’s introduction to governance
Our purpose, culture and
values drive dynamic and
robust decision making. The
Board believes in healthy and
constructive debate to ensure
the decisions it makes are
in the long-term sustainable
interests of the Company."
42
Ceres Annual Report 2022
Dear Shareholder,
On behalf of the Board I am pleased to present the Corporate
governance report to you for the financial year ended
31 December 2022.
2022 has been a year of significant development for the
Board, with new appointments made early in the year
establishing themselves, adding real value and building our
effectiveness. My sincere thanks go to Steve Callaghan, who
will step down from his role as Senior Independent Director
and Non-Executive Director of the Company at the Annual
General Meeting in 2023. The search has begun for two new
Non-Executive Directors (more details can be found in the
Remuneration & Nomination Committee Report). Diversity of
gender, social and ethnic background, cognitive and personal
strengths are all vital characteristics of any appointment to the
Board as we aim to ensure the decisions we make take into
consideration the needs of our stakeholders and the business.
Governance underpins all business activities and during the
year the Board reviewed its own governance structure,
adjusting the committee structure and remit to make the
most efficient use of time and focus appropriately; to better
align discussion topics and decisions; and importantly to
bring ESG more specifically into focus with a dedicated
ESG Committee at Board level. More details can be found
in the Corporate Governance section.
We are committed to listening to and understanding the views
of our shareholders and other stakeholders. This is critical to
the execution of our strategy (set out in the Strategic Report).
More details on how we have engaged with our stakeholders
are set out in the S172 Statement in the Strategic Report.
As we continue to work towards a move up to the Premium
Listing on the Main Market of the London Stock Exchange, I am
grateful to all our colleagues for the enormous amount of work
undertaken to drive the business forward during this past year
and in creating a foundation of solid governance on which the
business can thrive.
Warren Finegold
Chair of the Board
Board of Directors
Committee membership key
A
Audit Committee
RN
Remuneration & Nomination Committee (effective from 2 November 2022)
R
Remuneration Committee (until 2 November 2022)
NG
Nominations & Governance Committee (until 2 November 2022)
E
D
ESG Committee (will meet formally in 2023)
Disclosure Committee
Chair of Committee
Warren Alan Finegold
Chair of the Board
Philip Joseph Caldwell
Chief Executive Officer
Eric Daniel Lakin
Chief Financial Officer
Stephen James Callaghan
Senior Independent Director
E
NG RN
D
E
D
A
NG
R
RN
Appointment date
1 March 2020
Nationality
British
Appointment date
2 September 2013
Nationality
British
Appointment date
10 January 2022
Nationality
British
Appointment date
18 December 2012
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
18 years, formerly at Intelligent
Energy and ICI. 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
Commercialisation of fuel cells
across multiple markets &
geographies; strategic delivery;
team building and leadership.
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 & corporate
finance; strategy; mergers
and acquisitions; international;
public markets; listed company
governance requirements.
Skills and experience
Steve joined the Company
as CEO in December 2012
and led the turnaround phase.
He was appointed Senior
Independent Director in
March 2014. He is also Chair
of Marston Holdings, and
Vice Chair of NEC Software
Solutions, formerly Northgate
Public Services, appointed on
31 March 2021 having been
CEO for five years. Steve
has held a number of CEO
positions in public and private
businesses over a period of
25 years in parallel with a small
number of non-executive roles.
He has a degree in Electrical
and Electronic Engineering
from Cranfield University.
Key strengths
Ceres business knowledge
& understanding;
transformation leadership;
performance delivery.
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 &
regulatory matters; strategy
development; capital markets;
mergers & acquisitions.
Ceres Annual Report 2022
43
Corporate governance Board of Directors continued
Committee membership key
A
Audit Committee
RN
Remuneration & Nomination Committee (effective from 2 November 2022)
R
Remuneration Committee (until 2 November 2022)
NG
Nominations & Governance Committee (until 2 November 2022)
E
D
ESG Committee (will meet formally in 2023)
Disclosure Committee
Chair of Committee
Trine Borum Bojsen
Non-Executive Director
William Tudor Brown
Non-Executive Director
Uwe Klaus Glock
Non-Executive Director
Qinggui Hao
Non-Executive Director
E
A
R
RN
Appointment date:
15 March 2022
Nationality
Danish
Appointment date
1 April 2021
Nationality
British
Skills and experience
Trine joined the Board in March
2022 and is the Employee
Engagement Director. In May
2022 she was appointed
the senior vice-president of
North Sea Renewables at
Equinor ASA. 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. Trine has an M.Sc in
Engineering from the Technical
University of Denmark.
Key strengths
Market knowledge; technical
expertise; stakeholder
relationship building.
Skills and experience
Tudor joined the Board in
April 2021. He is one of the
founding members of ARM
Holdings plc, where he was
until 2012 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 Cambridge
University. 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; licensing.
Appointment date
18 June 2020
Nationality
German
Appointment date
18 June 2020
Nationality
Chinese
Skills and experience
Qinggui joined Ceres in
June 2020 and is the
Weichai nominated Non-
Executive Director as part
of the strategic collaboration
agreement with Weichai. He
is the Investment Director of
Shandong Heavy Industry
Group Co., Ltd., the parent
of Weichai. Qinggui joined
Weichai in 2004 and held
various positions across
the business including
Linde Hydraulics GmbH &
K.G., as Deputy General
Manager of Weichai Power
(Luxembourg) Holding S.àr.l.,
and as Secretary of the
board and director of the
Capital Operation department
of Weichai. He holds dual
bachelor's degrees in Law
and Economics.
Key strengths
Relationship with Wechai;
Chinese market knowledge.
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. 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; German
and European energy &
building industries.
44
Ceres Annual Report 2022
Aidan John Hughes
Non-Executive Director
Julia Elizabeth King
Baroness Brown of
Cambridge
Non-Executive Director
A NG
R
RN
E
Appointment date
9 February 2015
Appointment date
17 June 2021
Nationality
British
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 Aidan
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;
risk management.
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. Julia is the Chair of
STEM Learning Limited and
a Non-Executive Director of
Frontier IP. She has held roles
at Rolls-Royce plc, Cambridge
University, Imperial College
and as Vice Chancellor and
Chief Executive of Aston
University. She is currently
Chair of The Carbon Trust,
a Non-Executive Director
of Ørsted, Chair of the
Adaptation Committee of the
Climate Change Committee
and a member of the BEIS
Hydrogen Advisory Council.
Julia is a Fellow of the Royal
Academy of Engineering
and the Royal Society 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;
climate change expertise.
Board of Directors: tenure
20+
80+
Board of Directors: gender
<1 year:
1 year:
2 years:
7 years:
9 years:
10 years:
2 Directors
2 Directors
3 Directors
1 Director
1 Director
1 Director
Male:
8
Female: 2
80%
20%
Ceres Annual Report 2022
45
Corporate governance20
+
F
20
+
30
+
10
+
10
+
10
+
F
Executive Committee
Geraint Castleton-White
Chief Programmes Officer
Tony Cochrane
Chief Commercial Officer
Clarissa de Jager
Chief of Intellectual Property
Mark Garrett
Chief Operating Officer
Geraint was appointed as
Chief Programmes Officer
in 2021 and has been
working with Ceres in an
interim role since 2018.
He started his career as a
graduate apprentice at Ford
Motor Company and has
subsequently worked for
established OEMs and early
start-ups, including Lotus,
Cosworth and TWR. He
has an honours degree in
Mechanical Engineering from
Southampton University and
is a Chartered Engineer and
Fellow of the Institution of
Mechanical Engineers.
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 holds a BSCE in
Mechanical Engineering.
Clarissa joined in 2018,
bringing over 25 years of
commercial legal and IP
experience, having worked in
transport and new energy at
Ricardo, medical technology
at Elekta with Philips, and
logistics and distribution at
Royal Mail. Clarissa also chairs
the Ceres Power Intellectual
Property Company board.
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.
Deborah Grimason
General Counsel
Company Secretary
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.
Caroline Hargrove CBE
Chief Technology Officer
Dr Mark Selby
Chief Innovation Officer
Michelle Traynor
People Director
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 industry. Mark previously
worked as the Company’s
Chief Technology Officer
and moved to a new position
as Chief Innovation Officer
in September 2021, in which
he will provide leadership
for Ceres on innovation of
new technologies beyond
the established solid oxide
portfolio. As Chief Innovation
Officer, Mark will focus his
efforts on developing new
and future opportunities
for Ceres, building the team
and relationships to make
this happen.
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 20 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.
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 to
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.
46
Ceres Annual Report 2022
Corporate governance report
A solid foundation of governance is the
basis on which Ceres can thrive. Transparency
and engagement are fundamental to build
and maintain the trust of our shareholders
and other stakeholders."
Reporting Code
As a company listed on AIM (Alternative Investment Market)
Ceres has applied the Quoted Companies Alliance Corporate
Governance Code (the “2018 QCA Code”) and its ten
principles throughout the year ended 31 December 2022. How
we have applied the 2018 QCA Code is set out on our website
https://www.ceres.tech/about-us/corporate-governance/.
Whilst the Company is not required to comply with the UK
Corporate Governance Code 2018 it seeks to apply best
practice wherever practicable and is building this compliance in
advance of the desired move up to the Premium Listing on the
Main Market of the London Stock Exchange.
The Company is also subject to the UK City Code on
Takeovers and Mergers and the Companies Act 2006.
The Board of Directors
The Board has collective responsibility and a legal obligation
to promote the interests of the Company. It is responsible
for setting the vision and strategy to enable the Company
to deliver long-term sustainable value to its shareholders. It
approves the business plan, monitors performance and ensures
the necessary resources are in place to deliver. Ensuring the
business has a robust framework of internal controls and risk
management is key to enable delivery; to take advantage of
business opportunities; and to mitigate risks to the achievement
of its strategic objectives. (More information on the risk
management framework can be found in the Principal risks
section on page 39 and on internal controls in the Audit
Committee report).
The Board is responsible for succession planning for the Board
and senior management, and more details on this work can be
found in the Remuneration & Nomination Committee report.
The Non-Executive Directors provide constructive challenge,
strategic guidance and specialist advice and hold the Executive
Directors and senior management to account. Details of the
specific skills each Director brings to the Board are set out on
pages 43 to 45.
Demonstrating and embedding the desired culture and values
for the Company is led by the Board and is cascaded down
through the Executive Committee to the business. Both the
Board and the Executive Committee firmly believe in leading
by example and ensuring that the culture aligns with the
Company’s purpose, values and strategy.
Details of all the Board members and their skills and experience
are set out in the Board of Directors section of this report.
Division of responsibilities
The Chair leads the Board and is responsible for ensuring the
effectiveness of the Board in directing the Company. The
Chair, supported by the Company Secretary, ensures the
Board receives the information it requires to make informed
and balanced decisions in a timely manner. The Senior
Independent Director acts as a sounding board for the Chair
and as an intermediary for the other Directors and shareholders
if required. The roles and responsibilities of the Chair, Chief
Executive Officer, Senior Independent Director and Company
Secretary are set out on the Company’s website in compliance
with the 2018 QCA Code at https://www.ceres.tech/about-us/
corporate-governance/.
The Chair and Chief Executive Officer and the Chair and
Company Secretary meet regularly outside of the Board meeting
schedule to ensure that appropriate matters are covered at
Board meetings; to discuss strategy and performance; and to
maintain an open and transparent working relationship which
encourages constructive debate at meetings. The Chair also
meets periodically with members of the Executive Committee.
During the year, the Board reviewed and updated its schedule
of Matters Reserved to the Board and in conjunction with
this, the Delegation of Authority Policy. Both documents
clearly set out decisions and areas for consideration and
where responsibility and approval levels for those decisions
lie. Matters outside of the remit of the Board of Directors or
the Committees of the Board fall to the Executive Committee
which reports back to the Board via the Chief Executive Officer
at each Board meeting. The schedule of Matters Reserved
to the Board can be found on the Company’s website at
https://www.ceres.tech/about-us/corporate-governance/.
The Board discharges certain areas of its responsibility through
Committees of the Board which, as at 31 December 2021,
comprised the Audit Committee; Remuneration & Nomination
Committee; and newly formed ESG Committee (due to meet
for the first time in early 2023).
Until 2 November 2022, the Committees of the Board had
been comprised of an Audit Committee, Remuneration
Committee, and Nominations & Governance Committee.
The Board reviewed the remit of each Committee and in
order to bring ESG into prominence given its integral role in
the Company’s purpose, the ESG Committee was created
at Board level (formed from the ongoing Operational ESG
Committee), chaired by Julia King. As the ESG Committee
would take on the majority of the elements of governance
for the Company formerly undertaken by the Nominations &
Governance Committee, the Board agreed that combining the
Remuneration and Nomination elements would be an efficient
use of time since both areas were related. The remaining
elements of governance which related specifically to the Board
(such as the Register of Interests and independence evaluation)
would be retained by the Remuneration & Nomination Committee
as this was deemed a more appropriate forum for such matters.
Ceres Annual Report 2022
47
Corporate governance Corporate governance report continued
The ESG Committee is scheduled to meet for the first time in
March 2023 and as such a dedicated report on the Committee
is not included in this report. More detail on the Company’s ESG
work is contained within the recently published Sustainability
report 2021, which can be found on the Company’s website
at https://www.ceres.tech/sustainability/. More details on the
other Committees of the Board can be found in the relevant
Committee reports.
The Board also established a Disclosure Committee in the
latter part of the year, membership of which is comprised of
the Executive Directors and General Counsel & Company
Secretary. The Committee oversees the Company’s
compliance with disclosure obligations.
All Committees of the Board have Terms of Reference which
clearly set out their areas of responsibility and which can
be found on our website https://www.ceres.tech/about-us/
committees/. The full Governance framework is set out on
page 50 of this report.
Meetings
The Board met 13 times in 2022 (including four extraordinary
meetings convened to address specific items of business) and
the attendance of each Director is set out in the table below.
Meetings are held both virtually and in person and any Member
unable to attend can provide their feedback and comments
to the Chair of the Board (or Committee Chair as appropriate)
prior to the meeting and the relevant Chair ensures these views
are fed into discussions.
Board meetings are structured to ensure the optimum time is
spent on key matters and that sufficient time is provided for
robust debate and challenge. Activities of the Board during the
year are set out on page 51 and included an offsite, two-day
strategy meeting with the Executive Directors.
Reports are presented to every Board meeting by the Chief
Executive Officer, Chief Financial Officer and other Executive
Committee members and include the monitoring of KPIs.
Captured in these reports are the activities of the Executive
Committee (chaired by the Chief Executive Officer which met
monthly throughout 2022) and the Steering Committees which
report into the Executive Committee. The reporting structure
is illustrated in the Governance framework on page 50 of
this report.
At the end of each full Board meeting the Chair of the Board
and the Non-Executives meet without the Executive Directors
present to discuss the performance of the Executive Directors
and the operation of the Board. The Chief Executive Officer
joins for the last portion of these meetings to receive feedback.
Meetings were held at a number of different sites throughout the
year including at Company sites in Horsham and Redhill. The
Board believes there is significant value in visible leadership and
providing opportunities for engagement with colleagues across
the business and will continue this approach throughout 2023.
Attendance table
Committee
Executive Directors
Phil Caldwell
Eric Lakin
Non‑Executive Directors
Trine Borum Bojsen1
Tudor Brown
Steve Callaghan2
Qinggui Hao
Aidan Hughes3
Warren Finegold4
Uwe Glock
Dame Julia King
Board
13/13
13/13
10/12
13/13
10/13
12/13
13/13
13/13
13/13
13/13
Audit
Committee
Nominations and
Governance
Committee
Remuneration
Committee
Remuneration and
Nominations
Committee
n/a
n/a
n/a
5/5
4/5
n/a
5/5
n/a
n/a
n/a
n/a
n/a
n/a
n/a
3/4
n/a
4/4
4/4
n/a
n/a
n/a
n/a
n/a
5/5
4/5
n/a
1/5
n/a
n/a
5/5
n/a
n/a
n/a
2/2
2/2
n/a
n/a
n/a
n/a
2/2
1. Trine Borum Bojsen joined the Company on 15 March 2022.
2. Steve Callagham Chaired the January meeting of the Remuneration Committee before Tudor Brown took over as Committee Chair.
3. Aidan Hughes stepped down from the Remuneration Committee after the January meeting.
4. Warren Finegold was a regular attendee of the newly formed Remuneration & Nomination Committee until he was made a Member at its December meeting by
amendment to the Terms of Reference.
Board evaluation
The Board evaluation for 2022 was an internal process and
included questions specifically designed to capture progress
against areas noted for improvement in the previous, externally
facilitated evaluation in 2021. Responses were collated and
results anonymised and analysed, with a formal report on the
outcome and proposed actions to be taken presented to the
full Board at its meeting in November 2022.
Much progress against the recommendations set out in the
external evaluation had been made and new actions were
identified and agreed (largely relating to the operation and
administration of the Board) to further enhance the Board’s
efficient running during 2023.
The Board evaluation included questions relating to the
operation of the Committees of the Board and these scores
and comments were fed into each Committee’s annual
evaluation of its own performance. Given the new Committee
structure, the Board considered that a thorough review of
remit and responsibility had been undertaken and that the new
structure would be more efficient and effective.
The Senior Independent Director met with the other Non-
Executive Directors without the Chair present during the latter
part of the year to appraise the Chair’s performance. All agreed
that the Chair of the Board was and continues to be an
effective leader of the Board, facilitating constructive Board
relationships and debate, and promoting an environment of
openness and acceptance.
48
Ceres Annual Report 2022
Engagement with shareholders and stakeholders
The Board is accountable to the Company’s shareholders
and engagement is welcomed to fully understand their views,
requirements and expectations. The Company communicates
regularly with shareholders through various channels including
the London Stock Exchange’s Regulatory News Service
("RNS"), face to face meetings with institutional shareholders,
analyst briefings, investor roadshows and conferences,
capital market events, press interviews, at its Annual General
Meeting and through the Company’s social media channels.
The Company’s website is also kept up to date with all
announcements and annual reports.
During the year the Chair of the Board held an investor dinner
for major shareholders, met with Ceres colleagues at two lunch
events and attended and participated in the 21st Birthday
Company event held in Brighton in November.
The Company engaged with shareholders in a session
presenting the recently published Sustainability report which
can be found on our website at https://www.ceres.tech/
sustainability/. More details on how the Company engages
with its stakeholders can be found in the S172 Statement in the
Strategic Report.
During the year the Board appointed Trine Borum Bojsen as
the Employee Engagement Director. In compliance with the UK
Corporate Governance Code 2018, Trine’s role will engage with
colleagues through attendance at the ESG Committee which
will work in conjunction with the Operational ESG Committee
upon which a Connect representative (the Company’s employee
forum) sits; by meeting with the Connect group directly; and
through feedback from colleague surveys. Trine will ensure that
the colleague voice is heard at the Board level and that their
views are considered in decision making. As the appointment
was made in the latter part of the year the role is expected to
develop throughout 2023.
The Board welcomes shareholder attendance and participation
at its Annual General Meeting in 2023 and all Directors and
Committee Chairs will be available for questions.
Culture and values
The Board believes in not only promoting a value based
corporate culture but in demonstrating the Company’s
values (set out on page 2) in their interactions, discussions
and decision making. The Board ensures that these values
are incorporated within the strategic objectives and the
executive team are accountable to the Board for the successful
integration of the values throughout the business.
The approval and implementation of policies and oversight of
internal controls ensure the business’ attitude to compliance is
led by the Board. Regular colleague surveys provide an insight
into the successful integration of the values and policies and
deep dives such as the HR session undertaken during the year
enabled the Board to spend focused time in reviewing the
effectiveness of mechanisms employed to embed the culture
and values, and to engage and motivate colleagues.
Speak Up Policy
All colleagues are encouraged to speak openly and honestly
and raise concerns appropriately with their line managers.
Where they do not feel that they can do this they can
raise their concerns in accordance with the Company’s
Speak Up Policy.
The Board approved the refreshed Speak Up Policy in 2022
which clearly set out the mechanism for colleagues and third
parties (which includes consultants, contractors, casual and
agency workers) to report any concerns to a restricted access
email address. Concerns are investigated thoroughly with
any parties implicated removed from the process to ensure
independent investigation.
The Audit Committee receives an annual report on any
concerns raised during the year along with any key themes
and actions identified.
71%
29%
Non-Executive Director Independence
71+
Chair of the Board):
Non-independent:
F Independent (excluding
The Board reviews annually the independence of its Directors.
The Board considers all its Non-Executive Directors (including
the Chair of the Board) to be independent with the exception
of Uwe Glock and Qinggui Hao who, as nominee directors
of Bosch and Wechai Power respectively, represent major
shareholders of the Company. At least half the Board (excluding
the Chair of the Board) are therefore considered independent
in compliance with the UK Corporate Governance Code 2018.
As reported in the 2021 Annual Report, Steve Callaghan has
served on the Board for more than nine years and is scheduled
to rotate off the Board at the Company’s AGM in 2023. Due
to his independence of character and objectivity, Steve was
regarded as independent by the Board throughout the year
ended 31 December 2022.
The Non-Executive Directors do not receive any
remuneration from the Company other than their fees and
the reimbursement of expenses, nor do they participate
in any share option, bonus or pension arrangement. More
details on the Non-Executive Directors' fees are set out in
the Remuneration report.
Conflicts of interest
The Board takes the management of conflicts of interest very
seriously and operates a number of procedures to effectively
manage conflicts of interest.
The majority of Board business is conducted with all parties
present in a full Board meeting. An additional restricted Board
meeting is held without the Bosch and Weichai Power nominee
Non-Executive Directors present, to cover any items of
business for which those Directors would be conflicted.
The Board also holds a Register of Interests which it reviews
annually and declarations of any conflicts of interest are
requested at the start of each meeting. Should a conflict
be raised, the affected party would leave the room for the
duration of the item concerned and would not be party to
any related decision making.
The Company has a conflicts of interest policy which is
provided to all colleagues on their induction to the business.
Ceres Annual Report 2022
49
Corporate governance29
+
Corporate governance report continued
Internal controls and risk management
The Board has overall responsibility for ensuring the Company
has a robust framework of internal controls and suitable
procedures to manage risk effectively.
The Board regularly reviews the Risk Register throughout the
year, evaluating and ensuring the suitability of mitigations and
controls in place to manage risk and to take opportunities in the
strategic interest of the business. More information about the
principal risks to the Company’s achievement of its strategic
objectives and the risk management framework is set out
on pages 39 to 40. The Board has delegated responsibility
to the Audit Committee for oversight of the internal controls
framework and more information about the work of the
Committee can be found in its report on pages 52 to 54.
Board support
All Directors have access to the Company Secretary for advice
and support on governance matters. They also 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 an induction which
includes a briefing on their responsibilities by the Company
Secretary and the Company’s nominated adviser. Formal
training is offered to Directors as required and all Directors
can attend ad hoc training, seminars and/or conferences
relevant to their specific skills, professional qualifications and
roles on the Board. All members of the Board have access to
appropriate professional development courses and receive
ongoing briefings on current developments, including updates
on governance and regulatory issues.
In preparation for the intended move up to the Premium
Listing on the Main Market of the London Stock Exchange,
the Directors were also briefed in full on their future duties
and responsibilities.
Governance framework
Our values
PLC Board
Full Board Meetings/Restricted Board Meetings*
Audit
Committee
Remuneration &
Nomination
Committee
ESG
Committee
Disclosure
Committee
Matters reserved to the Board
Division of responsibilities
Terms of Reference
Executive Committee
Commercial
Steering
Committee
Technology
Steering
Committee
Business
Excellence
Steering
Committee
Operational ESG
Committee
IP Operational
Committee
Internal controls
Internal/external audit
Legal and regulatory compliance
Strategy implementation
Strategy monitoring
* Restricted Board meetings do not include Uwe Glock and Qinggui Hao as non-independent Bosch and Weichai Power nominee Non-Executive Directors.
Risk management
50
Ceres Annual Report 2022
Board activities
Strategy
Performance
Finance
Offsite Strategy Days
Strategic actions
Strategic projects
The Board spent two days with the
Executive and external speakers
on strategy development and has
continued to monitor the actions arising
to ensure delivery.
Updates on major strategic projects are
received and discussed as required.
CFO Report
Budget
Business Plan
Final and Interim Results
The Board received a report from the
CFO at every meeting.
During the year it also discussed in
detail the budget and business plan
and approved the final and interim
results for the Company along with
the accompanying announcements.
Operational Reports
CEO Report
Deep Dives – HR, Investor Relations,
Technology and Intellectual Property
Monitoring of KPIs
The Board receives reports from the
CEO and from key areas of the business
including Commercial; Operations;
Technology; and Intellectual Property at
every Board meeting.
Deep dives into specific areas have been
scheduled and the Board undertook a
deep dive into HR, Investor Relations,
Technology and Intellectual Property
during the year.
Strategic KPIs are monitored at
every meeting.
Risk Management
ESG
Governance
Risk Register & principal risks
The Board receives the Risk Register
twice per annum (and by exception
as required) and reviews the register
to ensure the principal risks stated are
appropriate and to satisfy itself that the
management and mitigation of those
risks is satisfactory.
Sustainability report
The Board approved the Sustainability
report which was published during the
year and which can be found at https://
www.ceres.tech/sustainability/.
Committee Reports
Board Evaluation
Insurance
Policies
Register of Interests
The Board receives reports from each
of the Committee Chairs at each Board
meeting following committee meetings.
This ensures all Board members are
informed of the activities undertaken.
The Board received and discussed
the results of the Board evaluation
and monitors progress against
actions agreed.
The Board approved the insurance
provision for 2023, refreshed and new
policies, and reviewed the Register
of Interests.
Ceres Annual Report 2022
51
Corporate governance Audit Committee report
Committee membership
Aidan Hughes (Committee Chair)
Tudor Brown
Stephen Callaghan
52
Ceres Annual Report 2022
Introduction
I am pleased to present the Audit Committee (the “Committee”)
report for the year ended 31 December 2022. As mentioned
earlier in this Annual Report, Steve Callaghan will step
down from his role as Senior Independent Director and
Non-Executive Director of the Company at the Annual
General Meeting in 2023. I would like to extend my thanks
to him on behalf of the Committee for his invaluable
contribution throughout his tenure.
The Committee provides an important role in overseeing
Ceres financial reporting, risk management, internal controls
and the activities of external and Internal Audit functions.
We value transparency and open discussion and would like
to thank all participants who have contributed to the work
of the Committee over the past year.
Committee composition
The Committee is comprised entirely of Non-Executive Directors
and has the necessary recent and relevant financial experience
in compliance with the UK Corporate Governance Code,
particularly by the Committee Chair (more details of the skills
and experience of Committee members can be found on pages
43 to 45). The Committee’s membership also has competence
relevant to the fuel cell technology and engineering sectors.
The Chair of the Board, Executive Directors, Financial Controller,
Senior Internal Audit and Risk Manager, and External Audit
partners attend meetings as and when required.
The search for new Non-Executive Directors specifically seeks
experience and qualities suitable for an Audit Committee
Member, and candidates will meet with the Chair of the Audit
Committee and the Chief Financial Officer as part of the
recruitment process.
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
and estimates;
● 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 and 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.
Work of the Committee – key activity
Full/Half Year financial statements
Reviewed and recommended to the Board
Risk Register
Internal Audit Plan
Tax Policy
Treasury Policy
Speak Up Policy
Reviewed
Approved; received reports; monitored actions arising
Approved
Approved and monitored operation
Reviewed effectiveness, approved amended Policy and received reports
Non-Audit Fees Policy
Approved and monitored operation
Effectiveness of External Auditor
Reviewed and monitored
Risk management and internal controls
The Executive Committee regularly reviews and discusses
the Risk Register ensuring it accurately reflects potential risks
in all areas of the business and that appropriate assessments
are made of the potential impact and likelihood of each
risk. The Executive Committee makes recommendations
to the Committee on new risks, updates and amendments.
The Committee reviewed the Risk Register several times
throughout the year, developing the requirements in terms of
reporting format and seeking assurance that the risks, scoring
and mitigations were appropriate. The Board has overall
responsibility for approving the Risk Register and specifically,
the principal risks. More details are set out on pages 39 to 40.
The Committee oversaw the internal control framework,
approving a number of refreshed policies during the year and
monitoring compliance through the receipt of reports.
Internal controls are designed to safeguard the assets of the
Company and to ensure the reliability of financial information
that is utilised both internally and externally. The Directors,
having reviewed the effectiveness of the system of internal
financial, operational and compliance controls and risk
management, consider that the systems of internal control
operated effectively through the financial year, and up to the
date that the financial statements were signed.
The Internal Audit function was assessed continuously to
ensure its effectiveness and relevance to the Company’s
pursuit of its strategic objectives. Audits are designed to be
constructive, highlight areas for improvement and actions for
consideration, and to support the business in its day-to-day
operation. The Committee received reports on the outcomes
and actions arising from internal audits undertaken during the
year and received assurance from the Executive team that
actions taken had the intended benefit and results for the
business. The Committee requests timely reviews in certain
audit areas where follow-up is needed and ensures these are
included in the Internal Audit plan for the current and following
year, which it approves.
Significant financial reporting matters
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 2022:
Revenue recognition in respect of existing and new
customer contracts
During the year, the Group recognised revenue of £22.1 million
(2021: £30.8 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 in allocating revenue
between and valuing the different services provided. The Audit
Committee reviewed the judgements and estimates applied
by management during the year when accounting for revenue
recognition and considers them to be appropriate.
In particular, during the year, the Committee has reviewed
management’s judgements applied to recognising revenue
for the significant Doosan, Bosch and Weichai collaboration
agreements. This included a review of estimates used for
percentage completion based on forecast labour hours to
complete. Following discussions in Committee meetings,
the Committee considers management’s treatment to be
appropriate.
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 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 is appropriate. In addition, the
Committee considered management's approach of continuing
to expense SOEC related costs and agreed with their assessment
that the relevant threshold to capitalise costs has not yet been
met due to the relative immaturity of the technology and the
uncertainty around future commercial feasibility.
Ceres Annual Report 2022
53
Corporate governance Audit Committee report continued
Significant financial reporting matters continued
Intangible assets (capitalised development costs) continued
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.
External audit
BDO LLP was reappointed as the Company’s external auditor
at the Annual General Meeting held in May 2022, to hold
office until the 2023 Annual General Meeting. BDO LLP was
first appointed at the Company’s Annual General Meeting on
4 December 2019.
Provisions relating to warranty and dilapidations
As at 31 December 2022, the Group held provisions of
£1.9 million (2021: £1.8 million) for property dilapidations and
£0.9 million (2021: £1.3 million) for warranties. The Committee
reviewed the approach for assessing these provisions with
management, noting that professional advisers contributed
to the assessment of the dilapidations provision and that
management have updated the provision following a partial
refurbishment of one of the Group’s properties.
The warranty provision consists of a mix of contractual
and constructive obligations and the Committee reviewed
management’s assessment of 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 2022, the Group held £5.7 million (2021:
£3.1 million) of inventory, relating to raw materials, work in
progress and finished goods. During the year, the Committee
reviewed reports from, and held discussions with, both
management and the Group’s external auditor to consider
the Group’s processes in relation to processing, counting and
reporting inventory.
The valuation of inventory requires certain judgements and
estimates to be made in respect of net realisable value and
classification, including an appropriate valuation of an inventory
provision supported by the Group's stack testing processes and
data. The Committee reviewed these judgements and estimates
and is satisfied that the valuation of inventory as at 31 December
2022 is appropriate. Further details around inventory are set
out in Note 14 to the Group financial statements.
Re-measurement of property lease term
As at 31 December 2022, the Group reported lease liabilities
of £3.1 million (2021: £3.0 million) primarily relating to leases of
two properties. During the second half of the year, the Group
revised the expected term on one of its property leases,
recognising an adjustment of £0.8 million to increase the
related lease liability and right-of-use asset, with no impact to
the income statement. The Committee considered the events
and circumstances that led management to revise the lease
term against the relevant guidance set out in IFRS 16 "Leases"
and determined the judgements and resultant treatment to be
appropriate. Further details around the Group’s leases are set
out in Note 21 to the Group financial statements.
The Committee places great importance on the safeguarding
of independence of the external auditor and reviewed its
independence and effectiveness at the year-end review
meeting. The Committee agreed that BDO LLP had provided
objective and independent advice. The external auditor can
speak with the Committee Chair on a one to one basis and
met with the Non-Executives without the Executive Directors
present at the full year and interim results meetings. This
enabled the Committee to assess their independence on
an ongoing basis.
Non-audit fees
The Company’s Policy on non-audit fees aligns with the FRC’s
Revised Ethical Standard published in December 2019. The
Committee previously approved BDO LLP to provide advisory
services to the Company in relation to the Group's potential
move to the Main Market. The Committee considered the
impact on the independence of the external auditors and
were satisfied that the appropriate safeguards were in place
to maintain their 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 external auditors include amounts relating to the audit
of the interim accounts for the six months to 30 June 2022.
It was anticipated that these would be subject to external
audit as part of the documentation for a main market listing for
Ceres. As it transpired, the main market listing did not happen
during 2022 and therefore the external audit of these accounts
did not take place although much of the expense was incurred.
The fees paid are set out on page 86 of the notes to the
financial statements.
Committee evaluation
The Committee evaluated its performance throughout the
year ended 31 December 2022 both through the main Board
evaluation process, and by inviting additional comments from
the Committee Members. The Committee concluded that it
had operated effectively, with the required rigour and critical
enquiry, throughout 2022.
Aidan Hughes
Committee Chair
54
Ceres Annual Report 2022
Remuneration & Nomination
Committee report
Committee membership
Tudor Brown (Committee Chair)
Stephen Callaghan
Julia King
Warren Finegold
Introduction
I am pleased to present the Remuneration & Nomination
Committee (the “Committee”) report for the year ended
31 December 2022.
The Remuneration Committee, the Nominations & Governance
Committee and the new Committee (more on this below)
have worked hard during the year to ensure the business is
supported by Directors with relevant skills who are motivated
by appropriate and stretching targets linked to remuneration.
In these challenging times it is essential that the Committee
considers the requirements of the Directors concerned within
the context of all colleagues, without whom the business could
not succeed.
Committee composition
The newly formed Remuneration & Nomination Committee
met from 2 November 2022 onwards. Until that date the
Committee structure had consisted of a Remuneration
Committee and a separate Nominations & Governance
Committee. The Board reviewed its committee structure
during the year and concluded that since Nomination and
Remuneration matters were related, an amalgamation of
the two areas would be appropriate and would ensure most
efficient use of time.
Prior to the formation of the new Committee, Steve Callaghan
had chaired the Remuneration Committee, but did so for the
last time at its meeting in January 2022. Thereafter I took the
role of Committee Chair and Aidan Hughes stepped down
from the Committee. The Chair of the former Nominations &
Governance Committee was Warren Finegold (Steve Callaghan
and Aidan Hughes were members).
To ensure the requisite level of expertise and independence
required for a Remuneration Committee, the membership
of the new Committee remained the same as that of the
previous Remuneration Committee, with the Committee Chair
possessing the requisite remuneration committee experience
prior to their appointment. All the members of the Committee
are determined to be independent.
The Chair of the Board was added as a member of the
Committee as the Committee believed that he would bring the
required leadership in relation to Board composition, succession
planning and evaluation matters. The Chair was deemed to be
independent upon appointment to the Committee and will not
Chair the Committee at any time.
No Director is involved in the discussion or decision making
relating to their own remuneration and the Chair will not be
involved in any discussions relating to his succession.
Other Board members and individuals such as the People
Director and external advisers are invited to attend meetings
as and when appropriate.
Ceres Annual Report 2022
55
Corporate governance Remuneration & Nomination Committee report continued
NED search process
Search firm engaged
Board members consulted for desired skills, experience
Draft specifications provided to the Nomination &
Governance Committee* for review and approval
Long list of potential candidates identified and presented
to the Nomination & Governance Committee
Short list of candidates put forward for introductory
discussions with the Chair of the Board
Candidates meet with other identified Board members
Candidates selected based on merit and
objective criteria
* The Nominations & Governance Committee was in operation until 2 November
2022 when the committee structure was amended and the new Remuneration
& Nomination Committee commenced.
Role of the Committee
The Committee’s role is twofold, combining the responsibilities
of a Nomination and a Remuneration Committee. The
remuneration and nomination work previously undertaken by
both the Remuneration and the Nominations & Governance
Committees was fed directly into the new Committee.
Governance matters would be managed by the newly
formed ESG Committee (with the exception of elements of
governance relating specifically to the Board such as the
Register of Interests and independence evaluation, which
were retained by the Remuneration & Nomination Committee
as this was a more appropriate forum for such matters). The
Committee governs all aspects of the Executive Directors’ and
Chairman’s remuneration and reward arrangements and advises
on employee benefit structures throughout the Group. It is
responsible for reviewing the composition and structure of the
Board and for identifying and recommending candidates for
Executive and Non-Executive Director positions. The full Terms
of Reference for the Committee are set out on the Company’s
website at https://www.ceres.tech/about-us/committees/.
Remuneration
During the latter part of the year after a thorough tender
process the Committee was pleased to approve the
engagement of WTW as its remuneration adviser. WTW have
no other connection with the Company or any of its individual
Directors. The Directors’ Remuneration Report, setting out
more information on the work of the Committee during the
year, and details on remuneration for the Executive Directors,
Chair and Non-Executives, can be found on pages 58 to 64.
Nomination
Board composition
The Board is comprised of ten Directors, six of whom are
considered independent. As communicated in the 2021 Annual
Report, the CFO, Eric Lakin and a new Non-Executive Director
Trine Borum Bojsen joined the Board in early 2022 as a result
of the searches conducted in 2021 (which were detailed in the
2021 Annual Report). Whilst there is currently a diverse mix
of perspectives, backgrounds and nationalities on the Board,
additional appointments aim to increase and build on this.
The Senior Independent Director ("SID"), Steve Callaghan is
due to step down from the Board at the Company’s AGM in
May 2023 and the search has commenced for a replacement
Non-Executive Director. In addition, the increasing workload
for the independent Non-Executive Directors was considered
by the Board during the year and it was agreed that a further
Non-Executive Director should be recruited. Russell Reynolds
Associates was engaged to conduct the search for suitable
candidates based on criteria set by the Board as a whole.
Whilst Russell Reynolds Associates had been engaged in the
prior year for previous candidate searches, it has no other
connection to the Company or any of the individual directors.
As at the year ended 31 December 2022 appointments had
not yet been made but it is hoped that an outcome will be
reached in early 2023. The search process is set out as follows:
56
Ceres Annual Report 2022
Nomination continued
Gender balance
20+
80%
Male:
F Female: 20%
The gender balance of the Board as at the year ended
31 December 2022 is set out above and the Board recognises
the need to increase the number of women on the Board in
conjunction with the Financial Conduct Authority’s target of at
least 40% women on boards and at least one of the senior
roles on the board being undertaken by a woman (Chair, CEO,
CFO or SID). It is hoped that the search for two new Non-
Executive Directors will contribute to meeting these targets,
although the Board believes that the benefits such diversity will
bring far outweigh the requirement to meet the specified
targets.
The Board benefits from having a diverse mix of nationalities
amongst its members. The Board approved the new Diversity,
Equity, Belonging and Inclusion Policy in 2022 and whilst it
remains committed to making appointments based on merit
and objective criteria, it welcomes diversity in all its forms,
understanding the strengths and benefits these bring not only
to discussion but to effective decision making and strategic
planning. In order to achieve its strategic objectives the Board
believes that a diverse team of colleagues is imperative
to the successful development of our technologies and
communication and support for our licensing partners, both
current and future.
Director induction
During the year the Committee oversaw the development
of a comprehensive onboarding checklist for Non-Executive
Directors. The checklist formed the basis for a thorough
induction to the business covering all aspects including relevant
documentation, formal processes related to the nominated
advisers, meetings with relevant Board members and Executive
team members, training on duties, corporate documents
and board pack software, and tours of Company sites. The
checklist, whilst intended to cover all necessary aspects for
a new Director is not exhaustive, and any requests made by
incoming Directors for tailored or specific introductions or
training is accommodated.
Director rotation and re-election
All Directors will be subject to annual re-election with effect
from the Annual General Meeting of the Company in May 2023
in compliance with the UK Corporate Governance Code 2018.
Details of each Director’s skills, experience and contribution
to the Board are set out on pages 43 to 45. The tenure of
each director is set out in the table on page 45. Directors are
appointed for an initial three-year term which is then subject
to renewal. Steve Callaghan has been on the Board for longer
than the nine-year maximum term according to best practice.
As has been communicated previously, the Board continues
to consider that he remains objective and independent in his
actions and he was retained to ensure continuity given the
number of newly appointed Non-Executives during 2022. As
mentioned earlier, he will step down from the Board at the
Annual General Meeting in 2023.
Committee performance
The Committee evaluated its performance at the end of the
year, both as part of the main Board evaluation process and by
inviting specific comment and discussion from the Committee
members. The evaluation was undertaken in light of the new
formation of the Remuneration & Nomination Committee and
so comments were invited from both the former Nominations
& Governance Committee and Remuneration Committee
members. Given the recent and thorough consideration
undertaken regarding the operation of the new Committee,
all were in agreement that the Committee was well structured
and resourced to perform effectively going forward.
Tudor Brown
Committee Chair
Ceres Annual Report 2022
57
Corporate governance80
+
Directors’ Remuneration Report
Clean energy
starts with Ceres
Tudor Brown
Remuneration & Nomination Committee Chair
58
Ceres Annual Report 2022
1. Introduction
Dear Shareholders,
As Chair of the newly formed Remuneration & Nomination
Committee, I am pleased to introduce the Directors' Remuneration
Report for 2022. This Report has been prepared in accordance
with relevant UK corporate governance and legal requirements.
The report consists of the remuneration outcomes for 2022;
the implementation of Directors' remuneration policy for 2023;
and an overview of the Directors' remuneration policy.
The past year has been one of consolidation following the
appointments of Trine Borum Bojsen to the Board as well
as Eric Lakin as Chief Financial Officer and Deborah Grimason
as General Counsel and Company Secretary. There have
been no changes of remuneration policy and a clear focus on
ensuring alignment of pay and reward performance with our
long-term strategy.
During the year, the Committee’s key activities have included:
● assessing and approving individual attainment and
achievement against performance targets for annual/short-
term bonuses and Long Term Incentive Plan ("LTIP") awards;
● considering and agreeing the annual Groupwide salary increase;
● conducting an independent review of our LTIP scheme;
● setting and approving the performance criteria and targets
for LTIP awards granted during the period;
● considering dilution effects of share option schemes in the
short, medium and long term;
● agreeing to grant ShareSave shares available to UK
employees; and
● reviewing the Terms of Reference for the Committee
leading to the formation of the combined Remuneration
& Nomination Committee.
Pay outcomes for Executive Directors
Base salary: £350,000 (CEO) and £275,000 (CFO)
Annual bonus: £183,750 (CEO) and £144,375 (CFO)
Long-term incentive plan (LTIP): below-target vesting of
44% based on three-year performance
Total cash compensation: £563,276 (CEO) and
£434,651 (CFO)
2. Remuneration outcomes for 2022
2.1 Single total figure of remuneration and prior year comparison
The following table sets out a single figure for the total remuneration received by each of the Directors for the year ended
31 December 2022.
Executive
Phil Caldwell
Eric Lakin1
Richard Preston2
Non‑Executive Directors
Warren Finegold
Steve Callaghan
Caroline Hargrove3
Aidan Hughes
Qinggui Hao
Uwe Glock
William Tudor Brown4
Julia King5
Trine Borum Bojsen6
Salary/fee
£
Pension
£
Bonus
£
Total
31 December
2022
£
Total
31 December
2021
£
350,000
269,006
5,192
120,000
70,000
—
70,000
55,000
55,000
60,000
55,000
44,417
29,526
21,270
437
—
—
—
—
—
—
—
—
—
183,750
144,375
—
—
—
—
—
—
—
—
—
—
563,276
434,651
5,629
120,000
70,000
—
70,000
55,000
55,000
60,000
55,000
44,417
503,444
—
340,942
110,000
65,000
48,058
65,000
47,500
47,500
43,750
29,615
—
1. Eric Lakin was appointed as Chief Financial Officer on 10 January 2022.
2. Richard Preston stepped down as Chief Financial Officer on 10 January 2022.
3. The remuneration paid in the prior year to Caroline Hargrove includes amounts accrued until her retirement from the Board on 25 October 2021.
4. 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 has been processed to be paid in March 2023.
5. 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 has been processed to be paid
in March 2023.
6. 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 has been processed to be paid in March 2023.
2.2 2022 annual bonus (payable in 2023)
2.2.1 Determination of the 2022 annual bonus
The annual bonus is intended to reward delivery of short-term operational targets which are derived from the Company’s annual
business plan.
The annual bonus award is based on the Committee’s assessment of Executive Directors’ performance against several stretching
objectives and key performance indicators ("KPIs") agreed by the Board at the beginning of the year using a balanced scorecard
approach split across financial performance, commercial scale, partner progress and success, technology advancements, and
operational delivery and efficiency.
In assessing performance, the Committee uses a formulaic approach to reviewing outcomes and deliverables against the
objectives 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.
For 2022, a significant proportion of the financial performance and commercial scale objectives were attributable to the anticipated
formation of the joint venture between Ceres, Bosch and Weichai. Whilst the Committee recognised the considerable work and
effort that went into preparing the ground for this, a deferral to this strategic venture in China was announced on 17 November 2022
and this had a direct impact on the outturn of the results in relation to the metrics of financial performance and commercial scale.
The table below shows the results of the Committee’s assessment of the performance delivered in 2022.
Metrics
Financial performance
Licensees to succeed
Commercial scale
Technology leadership
Key business enablers
Total
Weighting
(CEO/CFO)
20%
25%
25%
15%/10%
15%/20%
100%
Result
0%
33%
25%
60%
61%
36%
Ceres Annual Report 2022
59
Corporate governance
Directors’ Remuneration Report continued
2. Remuneration outcomes for 2022 continued
2.2 2022 annual bonus (payable in 2023) continued
2.2.2 Quantum of bonus award
Whilst the mathematical scorecard outcome for 2022 was 36%, this was adjusted down by the Committee to 35% as a final bonus
achievement for the CEO and CFO, resulting in bonus awards of £183,750 and £144,375 respectively. Final bonus awards for all
Executives are payable in cash in March 2023.
Bonus achievement after weighting
Value in cash
CEO
35%
CFO
35%
£183,750
£144,375
2.3 Long Term Incentive Plan
The 2019-2022 LTIP award was subject to performance conditions assessed to 30 June 2022.
The LTIP performance criteria for the Executive Directors consisted of share price target; licence revenue; and cumulative income.
Whilst the share price target was met (at £5.48), both the licence revenue and cumulative income targets were predicated on
successfully forming the strategic joint venture in China, which did not occur within the three-year performance criteria.
As a result of this, licence revenue for the year ended 30 June represented 40% of total revenue and income as against the target
of 50%. Overall cumulative income at the end of the performance period equated to £74.5 million as against the target of greater
than £118 million. The Committee concluded that the criteria for both these elements had not been met.
In assessing the overall performance, the Committee determined that the awards should vest based on a 44% achievement for
the Executive Directors and Persons Discharging Managerial Responsibilities ("PDMRs") as illustrated in the table below. These are
subject to a two-year holding period for the Executive Directors as per the scheme rules.
Target performance metric
Share price
(> £3.50)
Licence revenue
(licence revenue of 50% or more of the total revenue and income in the year ended 30 June 2022)
Cumulative income
(>£118m)
Total
Weighting
Actual
achievement
Result
(weighting x
achievement)
44%
100%
44%
28%
28%
0%
0%
0%
0%
44%
For the non-PDMRs the performance criteria were split 50:50 between the share price target stated above alongside partner
progress towards successful product launches and these were scored at 100% and 50% achievement respectively, giving an
overall achievement and vesting result of 75%.
2.4 Directors’ interests
Phil Caldwell
Options
Options (unapproved)
Options (unapproved)
Options (unapproved)
Options (unapproved)
Sharesave options
(approved)
Sharesave options
(approved)
Sharesave options
(approved)
LTIP
LTIP
LTIP
LTIP
LTIP
LTIP
At 31 Dec
2021
number
123,313
80,424
100,000
100,000
100,000
7,109
4,610
Granted
number
Exercised
Lapsed/
surrendered
number
At
31 Dec 2022
number
Exercise
price
Exercise period
—
—
—
—
—
—
—
—
—
—
—
—
(7,109)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(90,552)
—
—
123,313
80,424
100,000
100,000
100,000
£0.85 Nov 2019 — Nov 2023
£0.85
£0.85
£0.85
£0.85
Jul 2017 — Jul 2024
Jul 2018 — Jul 2024
Jul 2019 — Jul 2024
Jul 2020 — Jul 2024
—
£1.27
Jun — Nov 2022
4,610
£1.95
Feb — Jul 2023
1,510
558,593
87,000
138,530
71,148
114,107
126,080
£5.96
Jun — Dec 2025
£0.10 Sep 2019 — Sep 2026
£0.10 Oct 2020 — Oct 2027
£0.10 Oct 2021 — Oct 2028
£0.10 Oct 2022 — Oct 2029
£0.10 Dec 2023 — Dec 2030
£0.10 Mar 2025 — Mar 2032
—
1,510
558,593
87,000
138,530
161,700
114,107
—
—
—
—
—
—
126,080
1,575,386
127,590
(7,109)
(90,552)
1,605,315
60
Ceres Annual Report 2022
2.4 Directors’ interests continued
At 31 Dec
2021
number
Granted
number
Exercised
Lapsed/
surrendered
number
At
31 Dec 22
number
Exercise
price
Exercise period
Eric Lakin
Sharesave options
(approved)
LTIP
—
—
—
3,020
118,880
121,900
—
—
—
—
—
—
3,020
118,880
121,900
£5.96
Jun – Dec 2025
£0.10 Mar 2025 – Mar 2032
2.4.1 Directors' interests in shares
The Directors had the following interest in shares in the Company as at the date of signing of this Annual Report:
● Phil Caldwell: 67,673;
● Eric Lakin: 5,991;
● Steve Callaghan: 149,352;
● Aidan Hughes: 31,520;
● Warren Finegold: 10,004;
● Tudor Brown: 15,000; and
● Uwe Glock: 8,000.
2.5 Performance graph
The following graph shows the Group’s performance, measured by total shareholder return ("TSR"), compared with the
performance of the FTSE AIM for the period from 1 January 2022 to 9 February 2023. Share price performance represents one
of the key performance indicators of the LTIP scheme, measured over a three-year performance period.
110%
100%
90%
80%
70%
60%
50%
40%
30%
20%
31 Dec 2021
1 Apr 2022
2.6 CEO pay ratio
1 Jul 2022
CWR.AIM
30 Sep 2022
30 Dec 2022
AXX.AIM
The table below shows the CEO pay ratios for 2022 using method B (gender pay gap methodology) relative to the 2021 pay ratios.
Year
2022
2021
Method
B
B
25th percentile
pay ratio
50th percentile
pay ratio
75th percentile
pay ratio
18.3
16.5
15.7
11.9
8.2
8.5
2.7 Payments for loss of office and to past Directors
There were no payments for loss of office made to Executive Directors during the year (2021: no payments).
Ceres Annual Report 2022
61
Corporate governance
Directors’ Remuneration Report continued
3. Implementation of Directors’ remuneration policy for 2023
3.1 Base salary
Salaries are reviewed annually considering market benchmarks for executives of comparable status, responsibility and skill, overall
company performance as well as broader macroeconomic factors such as inflation. For 2023 the Committee has agreed with
the Executive Directors that their salaries be frozen, allowing for a 6% salary increase to be available and applied across the
wider workforce.
From an employee communication and engagement perspective, this was shared at the monthly "All Hands" meeting held in
January 2023.
A full external executive pay benchmark refresh is planned for 2023 and this will feed into future pay recommendations and the
Directors' remuneration policy.
Base salary of Executive Directors
Base salary at
1 January 2023
1 January 2022
3.2 Annual bonus
CEO
CFO
£350,000
£350,000
£275,000
£275,000
The following chart shows the nature of performance metrics and weightings that will be applied to the Executive Directors for
the annual bonus in 2023. The Committee considers that the disclosure of detailed performance targets in advance for 2023
would be commercially sensitive and they are not, therefore, disclosed here. Scorecard targets will be disclosed in the subsequent
Directors' Remuneration Report when they are no longer deemed to be commercially sensitive.
Annual bonus metrics
20+
20%
Licensee success:
25%
Commercial scale:
25%
Technological advancement: 10%
ESG/Key business enablers:
10%
Personal objectives:
10%
F Financial performance:
3.3 Long Term Incentive Plan
Following an independent review of the LTIP scheme by WTW in 2022, the Committee plans to make an adjustment to the LTIP
performance criteria for the 2023 LTIP award grant, covering the period from 1 January 2023 to 31 December 2025 which will be
granted in March 2023.
The main change endorsed by the Committee is the move away from using an absolute share price target and instead adopting
a relative share price target using two peer groups (split 50:50), namely the FTSE 250 Index alongside the Solactive Hydrogen
Economy Index, which is an industry-specific index.
The performance criteria associated with the 2023 LTIP award will be based on the following criteria and weightings:
Performance criteria
TSR performance
Order intake
Cumulative revenue and grant income
Declared licensee partner production capacity
Weighting
(PDMR)
Weighting
(non-PDMR)
25%
25%
25%
25%
25%
25%
25%
25%
The Executive Directors LTIP awards will be granted based on 250% of base salary for the CEO and 200% of base salary for
the CFO.
3.4 Non-Executive Directors' fees
Following a review of comparable external benchmarking of Non-Executive Director fees in 2022, no further adjustments are
planned in relation to the Non-Executive Directors' fees for 2023, with the exception of the Chair of the Board whose fees will
increase once the Company has successfully completed the move onto the FTSE index.
62
Ceres Annual Report 2022
25
+
25
+
10
+
10
+
10
+
Non-Executive Directors' fees for 2023
Position
Chair of the Board
Board fee (incorporating membership of one committee)
Senior Independent Director
Committee Chair
Additional committee membership
Employee Engagement Director
2023
2022
£120,000*
£120,000
£55,000
£10,000
£10,000
£5,000
£5,000
£55,000
£10,000
£10,000
£5,000
—
*
The fees for the Chair of the Board will increase to £180,000 per annum once listing on the FTSE index has been completed (as previously reported in the 2021
Annual Report).
4. Remuneration policy
4.1 Remuneration principles
Ceres has adopted a set of remuneration principles that apply across the whole company. Remuneration arrangements for our
Executive Directors have been developed with the following principles in mind:
● strategic alignment – reward will be linked to achieving Ceres’ long-term strategy, growth and sustainability;
● cultural alignment – reward will be linked to our purpose and values;
● performance related – reward outcomes will be based on performance measured against clear targets and criteria;
● market competitive – comprised of fixed pay around the median and variable pay capable of delivering remuneration at
upper quartile;
● balanced and fair – reflective of best practice and aligned to the UK Corporate Governance Code; and
● sustainable – reflective of the sustainability of the Company and our contribution to a broader sustainable future.
4.2 Executive Directors' remuneration policy
The remuneration of the Executive Directors comprises of 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:
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 annually
and set at median levels taking
into account market ranges for
Executives in companies of a
similar size and industry sector.
Pension
To provide an opportunity
for Executives and
employees to build up
income on retirement.
Benefits
To provide
market competitive
employee benefits.
Sharesave
To encourage UK-based
employees to own shares
in Ceres Power Holdings.
Executives participate in
the Group Personal Pension
("GPP") plan or a similar
cash allowance is provided
for those exceeding HMRC
pension allowances.
Benefits encompass health
and travel related benefits
and insurances. These are
reviewed and benchmarked
on a periodic basis.
The Ceres Power Holdings
Sharesave scheme is an all
employee plan which the
Executive Directors can
participate in.
None.
Salary increases are
typically kept in line with
the rest of the Company.
Increases in excess of
the wider workforce are
driven by market data
and conditions.
Pension contributions are
in line with all employees
at up to 8%.
None.
Executive benefits mirror
those of all employees.
None.
Savings capped at
HMRC limits.
None.
Ceres Annual Report 2022
63
Corporate governance Directors’ Remuneration Report continued
4. Remuneration policy continued
4.2 Executive Directors' remuneration policy continued
Component
Purpose
Operation
Opportunity
Performance metrics
Annual bonus To incentivise and
reward strong
performance
against annual
business goals
and objectives.
Performance targets
and measures are set at
the start of each year.
The Committee
considers the extent to
which these have been
achieved and determines
the award level.
Long-Term
Incentive
Plan ("LTIP")
To engage and
motivate Executive
Directors to
deliver on KPIs
that support the
long-term strategy
in order to deliver
long term returns
to shareholders.
An annual award of
Ceres Power Holdings
share, subject to
performance criteria
over a three-year
performance period.
An additional
holding period of
two years applies
following vesting.
The target award is
150% of salary.
The maximum award is
150% of target.
The threshold is 25%
of target.
Using a weighted scorecard
approach, performance is measured
against agreed targets and KPIs
covering financial performance,
licensee success, commercial scale,
technological advancement, ESG and
personal objectives.
The Committee retains the discretion
to adjust the bonus if it considers that
the formulaic outcome does not reflect
underlying business performance.
The maximum
annual grant is
300% of salary.
The vesting of awards is linked to
agreed performance criteria which
may include but is not limited to:
Threshold performance
results in 25%
vesting, rising to
100% vesting for
maximum performance.
● financial performance (e.g.
cumulative revenue);
● partner success (new and existing);
● key business and technology
milestones; and
● relative share price performance.
Weightings may vary from year to year.
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.
Shareholding
requirements
To ensure sustained alignment between the interests of the Executive Directors and our shareholders, the CEO
and other Executives are required to build and maintain a shareholding equivalent to 150% and 100% of their
salaries respectively.
Malus and
clawback
The Committee may apply malus and/or clawback to variable pay in certain specified circumstances including:
misconduct, material misstatement of financial results affecting the assessment of a performance condition, or
where there has been an error or inaccuracy relating to the determination of variable pay.
4.3 Executive Director service agreements
All Executive Directors have service agreements that terminate on six months’ notice.
4.4 Non-Executive Directors' remuneration policy
Ceres seeks 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. All Non-Executive
Directors have formal letters of appointment that can be terminated on one month’s written notice by either side.
The Chairman is paid a single fee for all responsibilities. The Non-Executive Directors are paid a basic fee which encompasses
membership of one Board Committee, with Committee Chairs, the Senior Independent Director, the Employee Engagement
Director and members of additional Board Committees paid an additional fee to reflect their extra responsibilities. The Chair and
Non-Executive Directors receive no other pay or benefits, except for reimbursement of expenses, and do not participate in incentive
plans. Fees are reviewed on an annual basis.
Tudor Brown
Non-Executive Director
64
Ceres Annual Report 2022
Directors’ report
for the year ended 31 December 2022
The Directors present their Annual Report together
with the audited financial statements for the year ended
31 December 2022.
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 (“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 2022 and up to the signing of these
statements are set out on pages 43 to 45. The following
Directors joined or left the Company during the year:
● Richard Preston (Chief Financial Officer) retired from the
Board 10 January 2022;
● Eric Lakin (Chief Financial Officer) appointed to the Board
10 January 2022; and
● Trine Borum Bojsen (Non-Executive Director) appointed to
the Board 15 March 2022.
The appointment and removal of Directors is governed by the
Articles, the Companies Act 2006, the QCA Code 2018 and
related legislation. All Directors will put themselves forward for
re-election at the Annual General Meeting of the Company in
2023. More details on the process to appoint new Directors is
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 third party indemnities for the benefit of
its Directors which remain in force at the date of this report.
Results and dividends
The consolidated results for the Group are set out on page 75
of the financial statements. The Directors do not recommend
the payment of a dividend (2021: £nil).
Share capital
The Company’s shares are listed on the Alternative Investment
Market (“AIM”) of the London Stock Exchange. The Company’s
Articles contain provisions which govern the ownership and
transfer of shares.
As at 31 December 2022 the Company had an allotted and
fully paid share capital of ordinary shares with a nominal
value of 10 pence each of 192,086,775 (31 December 2021:
190,729,638). 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, is set out on
page 101.
Major shareholders
The Company has been notified of the following holdings of 3%
or more of the 192,318,738 ordinary shares of £0.10 each in the
Company at 22 March 2023.
Table of major shareholders
No. of Shares
% of ISC
Weichai Power (Hong Kong)
International Development Co., Ltd
Robert Bosch GmbH
Hargreaves Lansdown Asset Mgt
BNP Paribas Asset Mgt
37,965,262
33,790,880
8,359,082
7,698,058
19.74%
17.57%
4.35%
4.00%
Employee information
The business engages with its colleagues in numerous ways
including regular communications via its 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 but also engagement and
inclusion opportunities, especially in relation to the marking and
celebration of certain events during the year. In November
2022, the Company hosted a 21st Birthday event for all
employees in Brighton. Surveys are conducted throughout the
year to gauge employees' thoughts and to obtain feedback on
issues and events (including the Brighton event).
The Company actively works to attract, recruit, support,
develop and retain the best talent from diverse backgrounds.
As an equal opportunities employer the Company makes
reasonable accommodation to enable all individuals to apply
and compete for employment opportunities for which they are
qualified. The Company also seeks to ensure the continuation
where possible and practical of employees in their role should
they incur a disability whilst employed by the Company.
Branches outside the UK
As at 31 December 2022 the Group has branches in Weifang,
China and in Seoul, South Korea which support the Group’s
business development strategy in those territories.
Political donations
The Group made no political donations in the year ended
31 December 2022 or the prior year.
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 2022, as a proportion of amounts invoiced
by suppliers during the previous year, represented 47 days
(31 December 2021: 34 days). Trade creditors of the Company
as at 31 December 2022, as a proportion of amounts invoiced
by suppliers during the previous year, represented 3 days
(31 December 2021: 7 days).
Going Concern Statement
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 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 80.
Ceres Annual Report 2022
65
Corporate governance Directors’ report continued
for the year ended 31 December 2022
Additional disclosures
The following information that is relevant to this Directors’ Report and is incorporated by reference can be located as follows:
Business review and future developments
Chair of the Board’s Statement, Chief Executive
Officer’s Report and Chief Financial Officer's Statement
Pages 6, 8
and 34
Principal risks and uncertainties
Corporate and social responsibility
Corporate governance
Financial instruments
Strategic Report
Sustainability
Page 39
Page 26
Corporate governance report and Company website
Page 47
Financial statements
Pages 75 to 111
Research and development expenditure
Note 4 financial statements
Directors
Directors' information
Directors’ interests in shares
Directors’ Remuneration Report
People policies and colleague engagement
Sustainability
Stakeholder engagement (S172 Statement)
Board engagement with stakeholders
Greenhouse gas emissions and energy consumption
Sustainability
Page 86
Page 43
Page 61
Page 32
Page 18
Page 30
Events after the reporting date
No significant events have occurred after the reporting date.
In preparing these financial statements the Directors are
required to:
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 reappoint BDO LLP as the Company’s External
Auditor for the year ended 31 December 2023 and for their
remuneration to be agreed by the Audit Committee, will be
submitted to the 2023 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. Under that law the Directors
are required to prepare the Group and parent company financial
statements in accordance with UK adopted international
accounting standards.
Under Company law 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.
● 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.
Publication
The Directors are responsible for ensuring the Annual Report
and the financial statements are made available on a website.
Financial statements are published on the Company's website
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
23 March 2023
66
Ceres Annual Report 2022
Financial
statements
Independent auditor’s report
68
75 Consolidated statement of profit and loss and
other comprehensive income
76 Consolidated statement of financial position
77 Consolidated cash flow statement
78 Consolidated statement of changes in equity
79 Notes to the consolidated financial statements
106 Company balance sheet
107 Company statement of changes in equity
108 Notes to the Company financial statements
112 Directors and advisers
Independent auditor’s report
to the members of Ceres Power Holdings plc
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 2022 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 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 2022 which comprise the Consolidated statement of profit and loss and other comprehensive
income, the Consolidated statement of financial position, the Consolidated cash flow statement, the Consolidated statement
of changes in equity, the Company balance sheet, the 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.
Independence
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 entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
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 project 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 June 2024, 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 considered 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 so as 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.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
68
Ceres Annual Report 2022
Overview
Coverage
99% (2021: 100%) of Group loss before tax
100% (2021: 100%) of Group revenue
99% (2021: 100%) of Group total assets
Key audit matters
2022
2021
Revenue recognition – incorrect application of IFRS 15
Revenue recognition – forecast labour hours
Revenue recognition – revenue spreadsheet errors
Inventory valuation
Capitalisation of development costs
Revenue recognition – incorrect application of IFRS 15 is no longer considered to be a key audit matter
because only one new significant contract has been agreed in the year and no revenue has been
recognised in relation to the contract.
Materiality
Group financial statements as a whole
£332,000 (2021:£462,000) based on 1.5% (2021: 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, though the Chinese entity is a holding company. The Group financial
statements are a consolidation of seven companies. 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. All components apart from the Chinese entity
were considered significant.
Based on our assessment we performed a full scope audit of the complete financial information of all entities within the Group
apart from the Chinese entity. The financial information of the Chinese entity has been subject to an analytical review with specific
audit procedures completed over material balances. All audit procedures were performed by the Group engagement team.
Ceres Annual Report 2022
69
Financial statements Independent auditor’s report continued
to the members of Ceres Power Holdings plc
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 year 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
Revenue Recognition
– forecast labour hours
(Accounting policies, Note 2
– Revenue £22,130k)
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.
The forecast labour hours is highly
judgemental. There is therefore
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 of the contract.
Key audit matter 2
Revenue Recognition –
revenue spreadsheet errors
(Accounting policies,
Note 2 - Revenue £22,130k)
The Group uses a manual
spreadsheet to calculate revenue
related balances.
Due to this manual process, there is
a risk that the revenue spreadsheet
is incorrectly completed, manually
manipulated or there are errors
in the spreadsheet leading to
incorrect revenue recognition.
How the scope of our audit addressed the key audit matter
Our audit procedures included the following for a sample of
engineering services contracts:
● We tested the operating effectiveness of the control
in relation to the review and approval of the forecast
labours hours at the year end through attendance at the
engineering services project meetings. The testing checks
that the forecast labour hours are approved by a senior
member of staff only after challenging and understanding
the stage of completion of the contract.
● Challenged the project manager as to the stage of
completion of the contract against the stage of completion
recognised through consideration of internal memo’s
prepared and milestones per the contract to check that the
revenue calculation was reflective of the actual position.
● Considered the ability and competence of the project
managers to prepare the forecast labour hours calculation.
● Investigated the post year end performance to understand
the accuracy of the year end forecast labour hours.
● Reviewed the prior year estimate of the total forecast hours
and compared it to this year’s forecast. Further we reviewed
how the total forecast hours have changed throughout the
year on each project to understand the accuracy of previous
forecasts and the validity of any changes made to the total
forecast hours in the current year.
Key observations:
As a result of the testing above we did not find any matters
to suggest that the forecast labour hours was inappropriate.
How the scope of our audit addressed the key audit matter
For a sample of revenue recognised for each of the
three revenue streams we agreed the revenue through to
supporting documentation to check that the revenue has
been correctly recognised and in the correct year.
We reconciled the revenue spreadsheet to the nominal
ledger and compared the spreadsheet to the version audited
in the prior year to check the accuracy of any historic data
brought forward.
We performed data analytics on the spreadsheet to check
the formulae and functionality, and to check there was no
data corruption.
Key observations:
As a result of the testing above we did not find any
material matters to report with regards to the Group’s
revenue spreadsheet.
70
Ceres Annual Report 2022
Overview continued
Key audit matters continued
Key audit matter 3
Inventory Valuation
(Accounting policies, Note 14
– Inventories £5,714k)
The Group's inventory is valued
using standard costing. Therefore
the inventory recorded includes
an element of direct labour
and overheads.
We considered there to be a risk
in relation to the estimates applied
when calculating the standard cost
to be absorbed into inventory.
Key audit matter 4
Capitalisation of
development costs
(Accounting policies,
Note 12 – Intangibles,
Customer and
internal development
programmes £12,126k)
The Group capitalises all eligible
development costs as intangible
assets on the basis that the
technology has been commercially
viable with the commencement
of material licencing contracts
with customers over the last three
years and the assets meet the
other capitalisation criteria of the
applicable accounting standards.
Management review the costs
incurred against the requirements of
the applicable accounting standard
and consider if the capitalisation
criteria has been met.
There is a risk that costs are
incorrectly capitalised as judgement
is required as to whether the
capitalisation criteria are met.
How the scope of our audit addressed the key audit matter
Our audit procedures included the following:
● We reviewed the standard costing applied to the valuation
of inventory. This included, verifying the inputs to the
calculation to supporting documentation and assessing the
appropriateness of the assumptions including material yield
and labour and overhead absorption which was assessed
against historic rates.
● We reviewed the nature of total operating costs incurred
by the Group in the year and calculations applied for the
inventory standard costing to identify any potential under
absorption into the year end stock balance.
Key observations:
As a result of the testing above we did not find any matters
to suggest that estimates made in the valuation of inventory
relating to the absorption of standard cost were inappropriate.
How the scope of our audit addressed the key audit matter
Our audit procedures included the following:
● 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 as well to
determine whether the other capitalisation criteria of the
applicable accounting standard was satisfied.
● On a sample basis we vouched underlying expenditure
capitalised to invoices and other support.
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 were inappropriate.
Ceres Annual Report 2022
71
Financial statements Independent auditor’s report continued
to the members of Ceres Power Holdings plc
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:
Materiality
Group financial statements
Parent company financial statements
2022
£
2021
£
332,000
462,000
2022
£
315,400
2021
£
438,900
Basis for determining materiality 1.5% of revenue
Determined with reference to 95% of Group
materiality.
95% of Group materiality given the assessment
of the component aggregation risk.
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.
Rationale for the
benchmark applied
Performance materiality
Basis for determining
performance materiality
216,000
277,000
205,200
263,150
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 (2021: 60%)
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 (2021: 60%).
Component materiality
We set materiality for each significant component of the Group based on a percentage of between 31% and 95% (2021: 29%
and 95%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component.
Component materiality ranged from £102,000 to £315,400 (2021: £132,000 to £438,900). In the audit of each component, we
further applied performance materiality levels of 65% (2021: 60%) of the component materiality to our testing to ensure that the
risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £7,000
(2021: £9,000). 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.
72
Ceres Annual Report 2022
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.
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 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.
Responsibilities of Directors
As explained more fully in the statement of Directors’ responsibilities, 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:
We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it operates,
and considered the risk of acts by the Group which were contrary to applicable laws and regulations, including fraud. These
included but were not limited to compliance with the Companies Act 2006, AIM listing rules, the principles of the QCA Corporate
Governance Code, and the applicable accounting frameworks.
We also assessed the susceptibility of the Group and Parent Company’s financial statements to material misstatement, including
how fraud might occur by considering the key risks impacting the financial statements. We identified a fraud risk with respect to
management override in relation to inappropriate journals and manipulation of accounting estimates and judgements. We also
noted a fraud risk in relation to the forecasting of labour costs in relation to the engineering services revenue or through the
manual overriding of the revenue recognition spreadsheet.
Ceres Annual Report 2022
73
Financial statements Independent auditor’s report continued
to the members of Ceres Power Holdings plc
Auditor’s responsibilities for the audit of the financial statements continued
Extent to which the audit was capable of detecting irregularities, including fraud continued
Our procedures in response to the above included the following:
● We agreed the financial statement disclosures to underlying supporting documentation.
● We made enquiries of management and those charged with governance as well as reviewing the Board and Audit Committee
meeting minutes to identify any reported or indications of non-compliance with laws and regulations including fraud occurring
within the Group and its operations.
● We reviewed and assessed the accounting estimates for possible bias, this included our testing in relation to the inventory
valuation as detailed in the key audit matters above.
● We tested journal entries, focusing on journal entries containing characteristics of audit interest, year end consolidation
journals, journals processed by users with priviledged IT access rights and those relating to revenue by agreeing to
supporting documentation.
● In response to the risks of fraud in revenue recognition set out above, we have performed the procedures as set out in the key
audit matters section of our report.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members 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.
Nick Poulter (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Guildford, UK
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
74
Ceres Annual Report 2022
Consolidated statement of profit and loss and other comprehensive income
for the year ended 31 December 2022
Revenue
Cost of sales
Gross profit
Other operating income
Operating costs
Operating loss
Finance income
Finance expense
Loss before taxation
Taxation credit
Loss for the financial year and total comprehensive loss
Loss per £0.10 ordinary share expressed in pence per share:
basic and diluted
2022
£’000
22,130
(9,079)
13,051
1,332
2021
£’000
Restated 1
30,776
(11,731)
19,045
2,228
(65,905)
(44,703)
(51,522)
(23,430)
2,830
(304)
(48,996)
3,872
(45,124)
438
(380)
(23,372)
2,280
(21,092)
(23.58)p
(11.36)p
Note
2
4
4
5
5
4
8
9
1. The 2021 taxation credit has been restated to increase the credit by £310,000 following the adjustment of prior year R&D tax credit claims and a related tax provision
reported in 2021. The 2021 results have further been re-presented to reflect the re-classification of the Group’s RDEC tax credit of £1,304,000. This was previously
disclosed within cost of sales but is now presented within other operating income to align to the change in presentation applied to the Group’s 2022 results. See Note 1
for details.
The notes on pages 79 to 105 are an integral part of these consolidated financial statements.
Ceres Annual Report 2022
75
Financial statements Consolidated statement of financial position
as at 31 December 2022
Assets
Non‑current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Long-term investments
Investment in associates
Other receivables
Total non‑current assets
Current assets
Inventories
Contract assets
Other current assets
Derivative financial instruments
Current tax receivable
Trade and other receivables
Short-term investments
Cash and cash equivalents
Total current assets
Liabilities
Current liabilities
Trade and other payables
Contract liabilities
Other current liabilities
Derivative financial instruments
Lease liabilities
Provisions
Total current liabilities
Net current assets
Non‑current liabilities
Lease liabilities
Provisions
Total non‑current liabilities
Net assets
Equity attributable to the owners of the parent
Share capital
Share premium
Capital redemption reserve
Merger reserve
Accumulated losses
Total equity
As at
31 Dec 2022
£’000
Note
As at
31 Dec 2021
£’000
Restated 1
As at
31 Dec 2020
£’000
Restated 1
10
11
12
17
13
15
14
2
16
20
15
17
17
18
2
19
21
22
21
22
23
24
24
25,964
2,647
13,278
—
2,460
741
18,141
2,438
8,478
5,000
500
741
14,979
3,971
4,909
8,000
—
741
45,090
35,298
32,600
5,714
3,309
957
54
7,396
17,153
119,011
63,309
3,145
7,331
1,133
1,073
1,615
5,813
93,129
151,455
216,903
264,694
(4,933)
(6,387)
(7,286)
—
(610)
(929)
(2,783)
(4,290)
(5,818)
—
(754)
(1,579)
2,107
864
1,002
59
1,208
6,208
69,231
32,955
113,634
(9,112)
(7,505)
(2,675)
(43)
(823)
(612)
(20,145)
(15,224)
(20,770)
196,758
249,470
92,864
(2,514)
(1,933)
(4,447)
(2,285)
(1,828)
(4,113)
(3,622)
(1,610)
(5,232)
237,401
280,655
120,232
19,209
405,463
3,449
7,463
19,073
404,726
3,449
7,463
17,217
227,682
3,449
7,463
(198,183)
(154,056)
(135,579)
237,401
280,655
120,232
1. 2020 and 2021 trade and other receivables and current tax receivable have been restated to reflect an adjustment to prior year R&D tax claims as set out in Note 1.
The notes on pages 79 to 105 are an integral part of these consolidated financial statements. The financial statements on pages 75
to 78 were approved by the Board of Directors on 23 March 2023 and were signed on its behalf by:
Phil Caldwell
Chief Executive Officer
Eric Lakin
Chief Financial Officer
Ceres Power Holdings plc
Registered Number: 5174075
76
Ceres Annual Report 2022
Consolidated cash flow statement
for the year ended 31 December 2022
Cash flows from operating activities
Loss before taxation
Adjustments for:
Finance income
Finance expense
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangibles
Net foreign exchange gains
Net change in fair value of financial instruments at fair value through profit or loss
Share-based payments
Operating cash flows before movements in working capital and provisions
(Increase)/decrease in trade and other receivables and other current assets
Increase in inventories
Increase in trade and other payables and other liabilities
Decrease/(increase) in contract assets
Increase/(decrease) in contract liabilities
(Decrease)/increase in provisions
Net cash used in operations
Taxation (paid)/received
Net cash used in operating activities
Investing activities
Investment in associate
Purchase of property, plant and equipment
Capitalised development expenditure
Repayment of long-term investments
Acquisition of short-term investments
Repayment of short-term investments
Finance income received
Net cash used in investing activities
Financing activities
Proceeds from issuance of ordinary shares
Expenses from issuance of ordinary shares
Cash paid on behalf of employees on the sale of share options
Repayment of lease liabilities
Finance interest paid
Net cash (used by)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Exchange gains on cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 79 to 105 are an integral part of these consolidated financial statements.
Note
2022
£’000
2021
£’000
(48,996)
(23,372)
5
5
4
4
4
4
4
25
13
21
21
17
(2,830)
304
5,486
620
1,032
(690)
1,020
997
(43,057)
(12,693)
(2,569)
2,655
4,022
1,137
(637)
(51,142)
(380)
(438)
380
4,215
541
1,004
(563)
(1,057)
2,615
(16,675)
22
(1,038)
2,832
(6,467)
(3,215)
1,121
(23,420)
3,078
(51,522)
(20,342)
(1,000)
(12,347)
(5,832)
5,000
(99,618)
74,950
1,443
—
(7,377)
(4,573)
3,000
(62,898)
39,000
438
(37,404)
(32,410)
873
—
—
(744)
(212)
(83)
(89,009)
863
151,455
63,309
181,472
(2,572)
(7,490)
(405)
(316)
170,689
117,937
563
32,955
151,455
Ceres Annual Report 2022
77
Financial statements Consolidated statement of changes in equity
for the year ended 31 December 2022
At 1 January 2021 - Restated1
Comprehensive income
Loss and total comprehensive loss
for the financial year
Total comprehensive loss
Transactions with owners
Issue of shares, net of costs
Share-based payments
Total transactions with owners
Note
23
25
Share
capital
£’000
17,217
—
—
1,856
—
1,856
Share
premium
£’000
Capital
redemption
reserve
£’000
227,682
3,449
Merger
reserve
£’000
7,463
Accumulated
losses
£’000
Total
£’000
(135,579)
120,232
—
—
177,044
—
177,044
—
—
—
—
—
—
—
—
—
—
(21,092)
(21,092)
(21,092)
(21,092)
—
2,615
2,615
178,900
2,615
181,515
At 31 December 2021 - Restated1
19,073
404,726
3,449
7,463
(154,056)
280,655
Comprehensive income
Loss and total comprehensive loss
for the financial year
Total comprehensive loss
Transactions with owners
Issue of shares, net of costs
Share-based payments
Total transactions with owners
23
25
—
—
136
—
136
—
—
737
—
737
—
—
—
—
—
—
—
—
—
—
(45,124)
(45,124)
(45,124)
(45,124)
—
997
997
873
997
1,870
At 31 December 2022
19,209
405,463
3,449
7,463
(198,183)
237,401
1. 2020 and 2021 results have been restated to reflect an adjustment to prior year R&D tax claims as set out in Note 1.
The notes on pages 79 to 105 are an integral part of these consolidated financial statements.
78
Ceres Annual Report 2022
Notes to the consolidated financial statements
for the year ended 31 December 2022
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 AIM Market of the London
Stock Exchange.
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 106 to 111.
The consolidated financial statements have been prepared on a historical cost basis except for derivative financial instruments that
are stated at their fair value.
During the year the Group re-classified the presentation of the Research and Development Expenditure Credit ("RDEC") tax
credit within the consolidated statement of profit and loss. The RDEC tax credit was previously presented within cost of sales,
however in order to better align with our peers and to achieve a more consistent presentation with other items to which we apply
government grant accounting to (see Note 4), the Group now presents the RDEC tax credit within other operating income. Prior
year comparatives have been re-presented accordingly. The impact of this change was to increase the current year’s cost of sales
and other operating income by £1.1m (2021: £1.3m).
The 2021 and 2020 results have been restated to reflect an adjustment to R&D tax credit claims for certain costs which were
inadvertently claimed in 2019 and 2020 under the Small and Medium-sized Enterprise (SME) R&D tax credit schemes, whereas
they should have been claimed at a lower claim rate under the RDEC scheme.
As a result, the 2021 taxation credit has been increased by £0.3m to remove a provision that was recognised in 2021 against
future tax credits that should have been recognised in 2019 and 2020. The 2021 net loss has therefore reduced from £21.4m
to £21.1m. The opening statement of financial position as at 1 January 2021 has also been presented, restated by a net £1.3m
decrease to current assets reflecting a £1.9m decrease in current tax receivable under the SME tax scheme and a £0.6m increase
in other receivables under the RDEC tax scheme. The 2021 other receivables increased by £0.9m and the current tax receivable
decreased by £1.9m giving rise to a net decrease in net assets of £1.0m.
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 or 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.
Ceres Annual Report 2022
79
Financial statements 1. Accounting policies used in the preparation of the financial statement continued
Going concern
The Group has reported a loss after tax for the year ended 31 December 2022 of £45.1m (2021: £21.1m) and net cash used in
operating activities of £51.5m (2021: £20.3m). At 31 December 2022, the Group held cash and cash equivalents and investments
of £182.3m (31 December 2021: £249.6m). The Directors have prepared annual budgets and cash flow projections that extend
15 months from the date of approval of this report. The increased operating cash used in the year is in line with the Group’s
strategy to invest in the development of our electrolysis and fuel cell technology to support future revenue streams. Future
projections include management’s expectations of the further cash outflows associated with the Group’s investment in R&D
projects and expansion of manufacturing and testing capacity, together with contracted and anticipated customer contracts
and the planned investment in the China collaboration with Bosch and Weichai. The projections were stress tested by applying
different scenarios including the loss of significant future revenue, continued adverse macroeconomic factors and a scenario in
which the planned joint ventures in China do not go ahead. 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.
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
● 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 £22.1m in the year ended 31 December 2022 (2021: £30.8m)
and net contract liabilities of £3.1m as at 31 December 2022 (2021: net contract assets of £3.0m). Note 2 sets out the Group’s
accounting policies in respect of revenue from customer contracts and explains the movement in net contract assets 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.
80
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 1. Accounting policies used in the preparation of the financial statement continued
Capitalisation and amortisation of development costs continued
During the year ended 31 December 2022, the application of these judgements resulted in development costs of £5.6m
(2021: £4.3m) being capitalised (see Note 12). The net book value of capitalised development costs as at 31 December 2022
increased to £12.9m (31 December 2021: £8.2m), and amortisation of £0.9m (2021: £1.0m) was charged during the year. Despite
encouraging signs of progress with our SOEC technology during the year, including signing a contract to evaluate our first of a
kind 1MW electrolysis demonstrator system with Shell and promising initial results from the internal test of our first electrolysis cell
module (ECM) at our Horsham premises, we continue to expense costs incurred in researching and developing our electrolysis
technology. When we apply the same strict criteria that we applied when considering capitalisation of our SOFC technology, we
have determined that, as at 31 December 2022, the probability threshold to begin capitalisation has not yet been met.
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, respectively.
During the year, the Group signed an extension to a property lease and revised the expected term of that least accordingly.
An adjustment of £0.8m was recognised to increase 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
● Recognition and measurement of dilapidation provisions
● Recognition and measurement of inventory provision
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
cumulative actual contract costs (or labour hours) at each reporting period compared to the estimated total contract costs (or
labour hours) required to deliver the service over the contract life. The assessment of the total project costs (or 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 costs to complete each contract reflect management’s
best estimate at that point in time. If the costs incurred for all of the Group’s engineering services contracts were 10% higher or
lower for the following 12 months (1 January 2023 to 31 December 2023), revenue recognised in that period could be up to
£0.9m higher or lower (2021: £0.8m higher or lower) as a result.
Recognition and measurement of warranty provisions and contingent liabilities
As at 31 December 2022, the Group recognised warranty provisions of £0.9m (31 December 2021: £1.3m). 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 the light of empirical values, outcomes from comparable circumstances,
evidence provided from historical commercial settlements, or else estimated by experts.
During the year, following the completion of certain contracts and an additional year’s data regarding stack failure and degradation
rates, £0.7m of the existing provision was released. Of this amount, £0.3m has been disclosed as a contingent liability as although
there remains a risk of stacks failing we have determined that this is not probable at the balance sheet date.
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.£0.6m over the next 12 months (2021: £0.6m) as
a result. Note 22 sets out further details around the Group’s warranty provisions.
Ceres Annual Report 2022
81
Financial statements 1. Accounting policies used in the preparation of the financial statement continued
Recognition and measurement of dilapidation provisions
As at 31 December 2022, the Group has recognised dilapidation provisions of £1.9m (31 December 2021: £1.8m). 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 (2021: £0.2m). Note 22 sets out further
details around the Group’s dilapidation provisions.
Recognition and measurement of inventory provision
As at 31 December 2022, the Group held a higher volume of "quarantine" stacks than during previous periods, reflecting the
increased manufacturing levels during the year. These stacks have failed initial internal testing against our demanding quality
standards required to be met before stacks can be delivered to customers or partners. They are, however, still capable of
being used for limited-life testing or system integration. Estimates have been applied when determining the number of stacks
currently in quarantine that may be downgraded following subsequent testing, together with the number of stacks that have not
yet been tested that may fail future testing. Estimates have also been applied when determining a net realisable value of these
"downgraded" stacks, based on evidence of previous commercial negotiations. As a result, an inventory provision of £0.7m has
been recognised as at 31 December 2022 (31 December 2021: £nil). Management believe that it is reasonably possible that a
higher proportion of stacks could fail future testing, and that the provision could therefore increase by approximately £0.5m.
Note 14 sets out further details around the Group’s inventory.
New standards and amendments applicable as of 1 January 2022
The Group has adopted all standards, interpretations amended or newly issued by the IASB that were effective in the year.
Their adoption has not had any material effect on the condensed consolidated financial statements.
New standards and amendments issued but not yet effective
The following adopted IFRSs have been issued, have an effective date for annual periods beginning 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 period beginning 1 January 2024, 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)
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.
82
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 2. Revenue continued
Revenue and direct costs continued
Revenue allocated to key components of contracts is recognised when performance obligations in relation to the key
components are satisfied. Performance obligations are deemed to be satisfied as follows:
● Access to technology hardware – either on delivery or over time access is granted
● Sale of technology hardware – on delivery
● Engineering services – percentage of completion (based on labour hours)
● Right-to-use licence – at the point in time the IP is disclosed
● Right-to-access licence – over time that access is granted to IP developed
Percentage of completion is measured based on the cumulative actual contract costs (or labour hours) at each reporting period
compared to the estimated total contract costs (or labour hours) to deliver the service over the contract life. The assessment of
the total project costs (or 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.
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
Europe
Asia
North America
Rest of World
2022
£’000
8,460
13,253
394
23
2021
£’000
7,676
22,748
109
243
22,130
30,776
For the year ended 31 December 2022, 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% and 36% of the Group’s total
revenue recognised in the year (12 months ended 31 December 2021: three customers that accounted for approximately 59%,
25% and 11% of the Group’s total revenue for that year).
Major product/service lines
Engineering services
Provision of technology hardware
Licences
2022
£’000
9,039
5,380
7,711
2021
£’000
6,777
7,353
16,646
22,130
30,776
Ceres Annual Report 2022
83
Financial statements 2. Revenue continued
Timing of transfer of goods and services
Products and services transferred at a point in time
Products and services transferred over time
Contract-related assets and liabilities
Trade receivables
Contract assets – accrued income
Contract assets – deferred costs
Contract assets
Total contract-related assets
Contract liabilities – deferred income
2022
£’000
4,760
17,370
22,130
2021
£’000
15,326
15,450
30,776
Note
15
31 Dec 2022
£’000
31 Dec 2021
£’000
11,825
3,309
—
3,309
15,134
2,612
7,010
321
7,331
9,943
(6,387)
(4,290)
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 decrease in the balance compared with 31 December 2021 primarily relates to one customer, as a result of issuing
significant invoices in the last quarter of the current year.
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.
Revenue recognised in the current year that was included in the contract liabilities – deferred income – balance at the beginning
of the year was £1,144,000 (12 months ended 31 December 2021: £5,199,000).
There were no significant amounts of revenue recognised in the year ended 31 December 2022 arising from performance
obligations satisfied in previous periods (12 months ended 31 December 2021: no significant amounts).
Significant changes in the contract assets and the contract liabilities balances during the year are as follows:
Revenue recognised that was included in the contract liability balance at the beginning of the year
Increases due to cash received, excluding amounts recognised as revenue during the year
Transfers from contract assets recognised at the beginning of the year to receivables
Increases as a result of changes in the measure of progress
Revenue recognised that was included in the contract liability balance at the beginning of the year
Increases due to cash received, excluding amounts recognised as revenue during the year
Transfers from contract assets recognised at the beginning of the year to receivables
Increases as a result of changes in the measure of progress
Contract assets
2022
£’000
Contract liabilities
2022
£’000
1,144
(3,241)
(6,999)
3,298
Contract assets
2021
£’000
Contract liabilities
2021
£’000
5,199
(1,985)
(837)
7,010
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:
Evaluation, development, supply and licence agreements1
The comparatives as at 31 December 2021 are as follows:
Evaluation, development, supply and licence agreements1
2023
£’000
15,060
2022
£’000
23,982
2024
£’000
1,458
2023
£’000
10,311
2025
£’000
—
2024
£’000
1,988
1. Excluding future royalties receivable from partners and expected revenue from the planned collaboration with Weichai and Bosch in China.
84
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 2. Revenue continued
Contract-related assets and liabilities continued
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, gross profit and Adjusted EBITDA by segment to the Executive team.
Revenue (external)
Cost of sales
Gross profit
Other operating income
Operating costs (excluding adjusting items)
Adjusted EBITDA1
Adjusting items:
Depreciation and amortisation
Share-based payment charge
Net foreign exchange gains
Fair value adjustment
(unrealised foreign exchange)
Operating loss
Finance income
Finance expense
Loss before taxation
Taxation credit
Loss for the financial year
31 December 2022
31 December 2021
Restated2
Power – SOFC
£’000
Hydrogen – SOEC
£’000
Total
£’000
Power – SOFC
£’000
Hydrogen – SOEC
£’000
Total
£’000
21,950
(9,070)
12,880
1,332
(35,769)
(21,557)
180
(9)
171
—
(21,844)
22,130
(9,079)
13,051
1,332
(57,613)
(21,673)
(43,230)
30,776
(11,731)
19,045
2,228
(25,765)
(4,492)
—
—
—
—
(12,183)
30,776
(11,731)
19,045
2,228
(37,948)
(12,183)
(16,675)
(7,138)
(997)
863
(1,020)
(51,522)
2,830
(304)
(48,996)
3,872
(45,124)
(5,760)
(2,615)
563
1,057
(23,430)
438
(380)
(23,372)
2,280
(21,092)
1. Adjusted EBITDA is an Alternative Performance Measure, and is defined on page 38.
2. The 2021 taxation credit has been restated to remove a provision of £0.3m recognised in 2021 against future tax credits, that should have been recognised in 2019 and
2020. Further, the 2021 RDEC tax credit of £1.3m has been re-presented to disclose the credit within other operating income rather than within cost of sales. Note 1
sets out the relevant details.
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.
Ceres Annual Report 2022
85
Financial statements 4. Loss before taxation continued
Government grants continued
Operating costs are split as follows:
Research and development costs
Administrative expenses
Commercial expenses
Loss before taxation is stated after (crediting)/charging:
Other operating income – grant income
Other operating income – RDEC tax credit1
Other operating income – total
Staff costs, including share-based payments (Note 6)
Cost of inventories recognised as expense (Note 14)
Depreciation of property, plant and equipment (Note 10)
Depreciation of right-of-use assets (Note 11)
Amortisation of intangible assets (Note 12)
Repairs expenditure on property, plant and equipment
Net change in fair value of financial instruments at fair value through profit or loss
Net foreign exchange gain recognised in operating costs
Net foreign exchange gain recognised in finance income
2022
£’000
2021
£’000
48,348
15,165
2,392
65,905
(251)
(1,081)
(1,332)
31,290
11,245
2,168
44,703
(924)
(1,304)
(2,228)
34,801
26,992
5,023
5,486
620
1,032
1,039
1,020
(690)
(173)
5,867
4,215
541
1,004
589
(1,057)
(563)
—
1. The 2021 RDEC tax credit has been re-presented to disclose it within other operating income, to be consistent with our presentation of other items accounted for as
government grants and the 2022 credit. The 2021 R&D tax credit of £1,304,000 was previously reported within cost of sales.
Services provided by the Group’s auditor
During the year the Group obtained the following services from the Group’s auditor as detailed below:
Fees payable to the Company’s auditor for the audit of parent company and consolidated financial statements
Fees payable to the Company’s auditor for other services:
– the audit of the Company’s subsidiaries
– audit-related assurance services – review of interim financial results, including audit assurance
– audit-related assurance services – grants and awards
– advisory services in relation to the Group’s potential move to the Main Market
2022
£’000
54
141
150
7
217
569
2021
£’000
25
65
134
21
96
341
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.
Interest received
Foreign exchange gain on cash, cash equivalents and short-term deposits
Total interest income
Interest on lease liabilities
Unwinding of discount on provisions
Other finance costs
Total interest expense
2022
£’000
2,657
173
2,830
(212)
(87)
(5)
(304)
2021
£’000
438
—
438
(316)
(64)
—
(380)
86
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 6. Employees and Directors
The average number of persons (including Executive Directors) employed by the Group during the year was:
By activity:
Research and development
Prototype production
Administration
Commercial
Staff costs (for the above persons) comprised:
Wages and salaries, including compensation for loss of office
Social security costs
Other pension costs (Note 7)
Share-based payments (Note 25)
Directors’ emoluments:
Aggregate emoluments
Company contributions to defined contribution pension schemes
Gain on exercise of share options and other share schemes1
Highest‑paid Director:
Aggregate emoluments
Company contributions to defined contribution pension schemes
Gain on exercise of share options and other share schemes1
2022
£’000
2021
£’000
249
177
96
14
536
204
145
58
7
414
2022
£’000
2021
£’000
28,584
3,290
1,930
997
34,801
2022
£’000
947
51
38
1,036
2022
£’000
534
30
38
602
20,613
2,390
1,374
2,615
26,992
2021
£’000
1,248
44
98
1,390
2021
£’000
478
25
—
503
1. The Directors had LTIPs with an aggregate value of £2,999,435 exercisable as at 31 December 2022 (31 December 2021: £10,018,452).
Two Directors (2021: 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 58 to 64, which form 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:
Salaries and other short-term employment benefits
Post-employment benefits
Share-based payments
2022
£’000
3,386
148
342
3,876
2021
£’000
2,298
92
1,502
3,892
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 £1,930,000 (12 months ended
31 December 2021: £1,374,000). No amount was payable to the funds as at 31 December 2022 (31 December 2021: £219,000).
Ceres Annual Report 2022
87
Financial statements 8. Taxation and deferred taxation
Taxation
The taxation credit 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.
Current tax receivable is the expected tax receivable on the activities for the year, using tax rates enacted or substantively
enacted at the year end. The current tax receivable represents the Directors’ best estimate of tax due to the Group at the year
end under the SME R&D tax and the RDEC credit regimes.
UK corporation tax
Foreign tax suffered
Adjustment in respect of prior periods1
Taxation credit
2022
£’000
(4,470)
828
(230)
2021
£’000
Restated 1
(2,917)
973
(336)
(3,872)
(2,280)
1. The 2021 taxation credit has been restated to remove a provision recognised in 2021 against future R&D tax credits that should have been recognised in 2019
and 2020. The restatement has increased the adjustment in respect of prior periods by £310,000, from a credit of £26,000 to a credit of £336,000.
The current tax rate of 19% is unchanged (2021: 19%).
A tax credit has arisen as a result of expenditure surrendered and claimed under the SME R&D and RDEC tax credit regimes in the
current and prior year. Foreign tax relates to withholding tax arising on licence income received from customers based in China
and South Korea.
The tax result for the year is different from the standard rate of small profits UK corporation tax of 19.00% (2021: 19.00%).
The differences are explained below:
Loss before taxation
Loss before taxation multiplied by the UK tax rate of 19.00% (2021: 19.00%)
Effects of:
Losses carried forward
Enhanced tax deductions for R&D expenditure
Expenses not deductible
Fixed asset differences
Effect of overseas tax rates
Adjustment in respect of prior periods – R&D tax credit1
Difference between R&D tax credit and small company tax rate
Tax on RDEC credit
Other short term timing differences
Share option timing differences
Total taxation credit
2022
£’000
(48,996)
(9,309)
8,943
(3,310)
160
(215)
742
(230)
1,387
159
(1,141)
(1,058)
(3,872)
2021
£’000
Restated 1
(23,372)
(4,441)
6,895
(4,366)
120
456
788
(336)
1,199
251
—
(2,846)
(2,280)
1. The adjustment in respect of prior periods – R&D tax credit has been restated as described above.
A change in the main UK corporation tax rate, announced in the budget on 3 March 2021, was substantively enacted on 24 May 2021.
From 1 April 2023 the main corporation tax rate will increase from 19% to 25% on profits over £250,000. The rate for small profits
under £50,000 will remain at 19%. Where the Company’s profit falls between £50,000 and £250,000, the lower and upper limits,
it will be able to claim an amount of marginal relief providing a gradual increase in the corporation tax rate. This will impact the
Company’s future tax charge accordingly.
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.
88
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 8. Taxation and deferred taxation continued
Deferred taxation continued
Potential deferred tax assets have not been recognised. The gross temporary differences are set out below:
Temporary differences:
Difference between capital allowances and depreciation
Deductions relating to share options
Other timing differences
Losses carried forward
2022
£’000
60
(15,356)
(319)
2021
£’000
Restated
(6,587)
(50,773)
(592)
(171,884)
(125,221)
(187,499)
(183,173)
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
£1,225,000 (2021: £861,000) 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 23.58p for the year ended 31 December 2022 (31 December 2021: 11.36p)
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 2022 (31 December 2021: no dilution).
Loss for the financial year attributable to shareholders
Weighted average number of shares in issue
Loss per £0.10 ordinary share (basic and diluted)
2022
£’000
2021
£’000
Restated 1
(45,124)
(21,092)
191,385,618
185,689,432
(23.58)p
(11.36)p
1. The 2021 loss for the year has been restated to remove a provision recognised in 2021 against future R&D tax credits that should have been recognised in 2019 and
2020. The loss has been decreased by £310,000 compared with the amount previously reported. Details are set out in Note 1.
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
Motor vehicles
Three to ten years
Three to five 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.
Ceres Annual Report 2022
89
Financial statements 10. Property, plant and equipment continued
Property, plant and equipment continued
Leasehold
improvements
£’000
Plant and
machinery
£’000
Computer
equipment
£’000
Fixtures
and fittings
£’000
Assets under
construction
£’000
Motor
vehicles
£’000
Cost
At 1 January 2021
Additions
Transfers
At 31 December 2021
Additions
Transfers
Disposal
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Charge for the year
At 31 December 2021
Charge for the year
Depreciation on disposals
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
At 31 December 2020
5,883
1,529
—
7,412
1,111
71
(1,621)
6,973
2,712
646
3,358
936
(1,621)
2,673
4,300
4,054
3,171
21,409
3,521
572
25,502
5,147
893
(6,669)
24,873
11,196
3,089
14,285
4,030
(6,669)
11,646
13,227
11,217
10,213
2,061
502
—
2,563
203
—
(831)
1,935
1,398
392
1,790
444
(831)
1,403
532
773
663
314
34
—
348
—
—
(72)
276
149
83
232
73
(72)
233
43
116
165
756
1,791
(572)
1,975
6,848
(964)
—
7,859
—
—
—
—
—
—
7,859
1,975
756
12
—
—
12
—
—
—
12
1
5
6
3
—
9
3
6
11
Total
£’000
30,435
7,377
—
37,812
13,309
—
(9,193)
41,928
15,456
4,215
19,671
5,486
(9,193)
15,964
25,964
18,141
14,979
Assets under construction primarily comprise plant and machinery and leasehold improvements related to the Group’s
manufacturing and testing facilities.
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).
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.
90
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 11. Right-of-use assets continued
Cost
At 1 January 2021
Additions
Adjustment of lease term
Disposals
At 31 December 2021
Adjustment of lease term
At 31 December 2022
Accumulated depreciation
At 1 January 2021
Charge for the year
Disposals
At 31 December 2021
Charge for the year
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
At 31 December 2020
Land and
buildings
£’000
Computer
equipment
£’000
4,729
—
(1,035)
—
3,694
829
4,523
766
523
—
1,289
606
1,895
2,628
2,405
3,963
18
43
—
(18)
43
—
43
10
18
(18)
10
14
24
19
33
8
Total
£’000
4,747
43
(1,035)
(18)
3,737
829
4,566
776
541
(18)
1,299
620
1,919
2,647
2,438
3,971
During the 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.
During the prior year, the Group revised the expected term on one of its property leases, recognising an adjustment of £1.0m
to reduce the right-of-use asset, with a corresponding adjustment to the lease liability.
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.
Ceres Annual Report 2022
91
Financial statements 12. Intangible assets continued
Research and development continued
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
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.
Cost
At 1 January 2021
Additions
At 31 December 2021
Additions
At 31 December 2022
Accumulated amortisation
At 1 January 2021
Charge for the year
At 31 December 2021
Charge for the year
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
At 31 December 2020
Internal
developments
in relation to
manufacturing
site
£’000
Customer and
internal
development
programmes
£’000
Perpetual
software
licences
£’000
Patent costs
£’000
411
—
411
—
411
82
82
164
82
246
165
247
329
4,424
3,983
8,407
5,340
13,747
139
899
1,038
748
1,786
11,961
7,369
4,285
—
252
252
273
525
—
23
23
125
148
377
229
—
295
338
633
219
852
—
—
—
77
77
775
633
295
Total
£’000
5,130
4,573
9,703
5,832
15,535
221
1,004
1,225
1,032
2,257
13,278
8,478
4,909
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.
92
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 13. Subsidiary undertakings and associates
Details of the Group’s subsidiaries and associates at 31 December 2022 are as follows:
Name of undertaking
Ceres Power Ltd
Country of
incorporation
Description of
shares held
England and Wales
£0.001 ordinary shares
Ceres Intellectual Property Company Ltd
England and Wales
£1.00 ordinary shares
Ceres Power Intermediate Holdings Ltd
England and Wales
£0.01 ordinary shares
Ceres Power Licence Company Ltd
Ceres Holdings International Ltd
England and Wales
£1.00 ordinary shares
England and Wales
£1.00 ordinary shares
Ceres Engineering Consulting (Shanghai) Co Ltd
Shanghai, China
£1.00 ordinary shares
RFC Power Ltd
England and Wales
£0.001 ordinary shares
Proportion of
nominal value
of shares held
by the
Company
100% 1
100% 1
100%
100% 1
100% 1
100% 2
24.2% 3
Type of entity
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
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.
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 has been treated as an additional cost of investment in the associate, increasing the cost of the
investment to £2.5m at 31 December 2022 (31 December 2021: £0.5m). The value of the option continues to be determined
to be £nil (31 December 2021: £nil).
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 9 February 2022, the Group announced the intention to collaborate with Weichai and Bosch to access the substantial
opportunities that exist for fuel cell technologies in the Chinese market. This is likely to include a three-way collaboration to form
a fuel cell system JV set up in Shandong province in China to develop and manufacture SOFC system products, with Weichai
being the majority shareholder and Bosch and Ceres minority shareholders. Ceres is expected to take up a holding of 10%.
Detailed non-binding Heads of Terms were signed by all parties in early 2022 and we now await the final agreement between
Bosch and Weichai.
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.
Ceres Annual Report 2022
93
Financial statements 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.
Current:
Raw materials
Work in progress
Finished goods
31 Dec 2022
£’000
31 Dec 2021
£’000
1,566
1,477
2,671
5,714
1,299
969
877
3,145
Inventories have increased in line with the continued improvement in manufacturing capacity and to ensure the Group can satisfy
existing and anticipated customer demand for technology hardware.
During the year ended 31 December 2022, inventories of £5.0m (12 months ended 31 December 2021: £5.9m) were recognised
as an expense and were included within Cost of Sales. In addition, as at 31 December 2022, a provision of £0.7m (2021: £nil)
was recognised following the downgrading of a number of stacks that failed our initial internal quality control testing. These stacks
potentially have a more limited life than expected and have therefore been provided against to reflect their lower net realisable
value. The calculation of this provision involved estimates, as described in Note 1.
15. Trade and other receivables
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.
Current:
Trade receivables
Other receivables
Non‑current:
Other receivables
31 Dec 2022
£’000
31 Dec 2021
£’000
Restated 1
11,825
5,328
17,153
2,612
3,201
5,813
741
741
1. 2021 other receivables have been restated to reflect the adjustment of prior year R&D tax claims, as set out in Note 1. The R&D tax claim receivable has been increased
by £948,000 accordingly.
The Group’s trade receivables balance at 31 December 2022 is significantly higher than at 31 December 2021 primarily reflecting
a number of significant invoices raised in the last quarter of 2022 with two major customers. Of the £11.8m due at 31 December
2022, c.£10m was received in the first two months of 2023. Other receivables primarily consist of amounts invoiced and
recoverable in respect of grants, rent deposits, VAT and the RDEC tax credit. In particular, the RDEC and VAT balances increased
compared with the prior year, primarily reflecting the increased R&D spend in the year. 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 2022 (12 months ended 31 December 2021:
£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).
94
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 16. Other current assets
Current:
Prepayments
Accrued interest income
Accrued other income
31 Dec 2022
£’000
31 Dec 2021
£’000
869
—
88
957
673
322
138
1,133
Accrued other income relates 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.
Long-term investments
Long-term investments include bank deposits with a maturity greater than 12 months as at the date of the Consolidated
Statement of Financial Position.
Long-term bank deposits greater than 12 months
31 Dec 2022
£’000
31 Dec 2021
£’000
—
5,000
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.
Cash at bank and in hand
Money market funds
Cash and cash equivalents
Short-term bank deposits greater than one month and less than 12 months
The Group holds surplus funds in accordance with the treasury policy, as set out in Note 20.
31 Dec 2022
£’000
31 Dec 2021
£’000
7,837
55,472
63,309
119,011
4,957
146,498
151,455
93,129
182,320
244,584
Interest rate risk profile of the Group’s financial assets:
Cash at bank and in hand
Money market funds
Short-term bank deposits greater than one month and less than or
equal to 12 months
Long-term bank deposits greater than 12 months
Interest
rate type
31 Dec 2022
£’000
31 Dec 2021
£’000
Floating
Floating
Fixed and
floating
Fixed
7,837
55,472
119,011
—
4,957
146,498
93,129
5,000
182,320
249,584
During the year ended 31 December 2022 the fixed rate short-term bank deposits were primarily designated in pounds sterling,
had remaining terms of between 18 days and 10 months (31 December 2021: 32 days and 12 months) and earned interest of
between 1.23% and 5.15% (31 December 2021: 0.05% and 1.8%). Also included in short-term bank deposits was a deposit of
CNH68m (c.£8m) on a rolling monthly term earning interest of approximately 1.4% (31 December 2021: CNH68m (c.£8m) at 1.8%).
Floating rate cash deposits, money market funds and other bank deposits earned interest based on relevant UK LIBID-related
equivalents. The credit quality of financial assets has been assessed by reference to external credit ratings.
Ceres Annual Report 2022
95
Financial statements 18. Trade and other payables
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.
Current:
Trade payables
Other payables
19. Other liabilities
Current:
Accruals
Deferred income
31 Dec 2022
£’000
31 Dec 2021
£’000
4,795
138
4,933
2,425
358
2,783
31 Dec 2022
£’000
31 Dec 2021
£’000
6,515
771
7,286
4,803
1,015
5,818
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 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.
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 2022 (31 December 2021: none).
96
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 20. Financial instruments continued
Fair values of financial assets and financial liabilities continued
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
amount
31 Dec 2022
£’000
Fair value
31 Dec 2022
£’000
Carrying
amount
31 Dec 2021
£’000
Fair value
31 Dec 2021
£’000
Fair value
hierarchy
Financial assets at amortised cost
Trade and other receivables
Cash, cash equivalents and investments
Financial assets measured at fair value through profit or loss
Forward exchange contracts
Non-deliverable forward
Level 2
Level 2
Financial liabilities measured at amortised cost
Trade and other payables and accruals
14,121
182,320
196,441
14,121
182,320
4,175
4,175
249,584
249,584
196,411
253,759
253,759
26
28
54
26
28
54
321
752
1,073
321
752
1,073
(10,957)
(10,957)
(7,548)
(7,548)
1. The comparatives or trade and other payables and accruals as at 31 December 2021 have been re-presented to exclude deferred income and certain non-financial
instruments which had previously been presented as financial liabilities. This has reduced the amount disclosed as trade and other payables and accruals by £38,000
from £7,586,000 to £7,548,000 in respect of carrying amount and fair value. This has had no effect on the loss for the year ended 31 December 2021 or on net
assets as at 31 December 2021.
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:
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 2021: five) of which £579,000 relates to the Europe
geographic region and £11,246,000 to Asia (31 December 2021: £697,000 related to the Europe geographic region, £274,000
to North America and £1,641,000 to Asia).
Contract assets at the year end related to four customers of which £927,000 relates to the Europe geographic region and
£2,382,000 to Asia (31 December 2021: related to five customers of which £1,459,000 relates to the Europe geographic region,
£321,000 to North America and £5,551,000 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 2022 and as a result has not recognised a loss allowance for trade
receivables or other contract assets (31 December 2021: 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.
Ceres Annual Report 2022
97
Financial statements 20. Financial instruments continued
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 2022 would have impacted the finance income by £416,000 for the year ended
31 December 2022 (31 December 2021: £957,000).
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 2021. Interest rate risk is mitigated by investing in deposit
accounts of different durations ranging from 32 days to 24 months and by utilising deposit accounts with fixed interest rates.
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 2022
31 Dec 2021
Carrying
amount
£’000
Contractual
cash flows
£’000
1 year
or less
£’000
1 to 2
years
£’000
2 to 5
years
£’000
>5 years
£’000
Carrying
amount
£’000
Contractual
cash flows
£’000
1 year
or less
£’000
1 to 2
years
£’000
2 to 5
years
£’000
>5 years
£’000
Non‑derivative
financial liabilities
Trade and
other payables
and accruals1
Lease liabilities
(10,957)
(10,957) (10,957)
—
—
—
(7,548)
(7,548)
(7,548)
—
—
—
(3,124)
(3,793)
(840)
(853)
(1,851)
(249)
(3,040)
(3,602)
(833)
(832)
(1,303)
(634)
1. The comparatives for trade and other payables and accruals as at 31 December 2021 have been re-presented to exclude deferred income and certain non-financial
instruments which had previously been incorrectly presented as financial liabilities. This has reduced the amount disclosed as trade and other payables and accruals by
£1,053,00 from £8,601,000 to £7,548,000 in respect of the carrying amount, contractual cash flows and amounts due in 1 year or less. This has had no effect on profit
for the year ended 31 December 2021 or on net assets as at 31 December 2021.
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 2023.
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 2022, gross cash flows totalling £5.0m remained under the
hedge (31 December 2021: £10.3m), which is due to be net-settled in pound sterling during 2023. Forward exchange contracts
include forward currency contracts to sell €2.2m euros in total, and buy pounds sterling, over the next 12 months.
98
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 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.
31 December 2022
Exposures to foreign currency risk:
Cash and cash equivalents
Fixed term bank deposits
Trade and other receivables
Trade payables and payments on account
Forward currency contracts – (outflow)/inflow
Euro
£’000
US dollar
£’000
Canadian
dollar
£’000
Japanese
yen
£’000
Chinese
renminbi
£’000
Other
£’000
2,126
—
27
(516)
(2,000)
2,531
—
2
(178)
—
85
—
—
(4)
61
142
456
—
—
—
33
89
8,475
—
—
—
489
8,564
30
—
—
(6)
—
24
Balance sheet exposure
(363)
2,355
31 December 2021
Exposures to foreign currency risk:
Cash and cash equivalents
Fixed term bank deposits
Trade and other receivables
Trade payables and payments on account
Other payables
Forward currency contracts – (outflow)/inflow
Balance sheet exposure
Euro
£’000
US dollar
£’000
Canadian
dollar
£’000
Japanese
yen
£’000
Chinese
renminbi
£’000
Other
£’000
1,687
—
474
(287)
—
(5,421)
(3,547)
505
—
274
(393)
—
744
1,130
38
—
—
—
—
237
275
565
—
—
(9)
—
—
103
8,179
—
(25)
(30)
—
556
8,227
29
—
—
(10)
—
—
19
A 10% weakening of the following currencies against pound sterling at 31 December 2022 (or 31 December 2021) 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.
Euro
US dollar
Canadian dollar
Japanese yen
Chinese Renminbi
Other
Profit or (loss)
2022
£’000
36
(235)
(14)
(49)
(856)
(2)
2021
£’000
(314)
(38)
(4)
(56)
(734)
(3)
A 10% strengthening of the above currencies against pound sterling at 31 December 2022 (or 31 December 2021) 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.
Ceres Annual Report 2022
99
Financial statements 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.
Balance as at 1 January 2021
New finance leases recognised
Lease payments
Interest expense
Adjustment to lease term
Balance as at 31 December 2021
Lease payments
Interest expense
Adjustment of lease term (see Note 11)
Balance as at 31 December 2022
Current
Non-current
Balance as at 31 December 2022
Current
Non-current
Balance as at 31 December 2021
£’000
4,445
41
(721)
316
(1,042)
3,039
(956)
212
829
3,124
610
2,514
3,124
754
2,285
3,039
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 majority of technology hardware supplied or sold to customers has been provided without contractual warranties,
however 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 losses on onerous contracts. 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.
100
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 22. Provisions and contingent liabilities continued
Contract losses continued
The movement in provisions charged to the Consolidated Statement of Profit and Loss for the year ended 31 December 2022 is
set out below along with the value of provisions at 31 December 2022:
Property
dilapidations
£’000
Warranties
£’000
Contract losses
£’000
At 1 January 2022
1,828
1,253
Movements in the Consolidated Statement of Profit and Loss:
Amounts used
Unwinding of discount
Unused provision reversed
Increase in provision
At 31 December 2022
Current
Non-current
At 31 December 2022
Current
Non-current
At 31 December 2021
—
87
—
18
1,933
—
1,933
1,933
—
1,828
1,828
—
—
(707)
329
875
875
—
875
1,253
—
1,253
326
(137)
—
(135)
—
54
54
—
54
326
—
326
Total
£’000
3,407
(137)
87
(842)
347
2,862
929
1,933
2,862
1,579
1,828
3,407
The dilapidation provision at 31 December 2022 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.
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, £0.7m of the existing provision was released to the Consolidated Statement of Profit or Loss.
Of this amount, approximately £0.3m was re-classified as a contingent liability as the 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 is no longer considered
to be probable, but is considered to be more than remote.
As at 31 December 2022, the contract loss provision relates to one contract for the provision of technology hardware. The
existing loss provision at 31 December 2021 was utilised in the year as expected against final customer shipments. The remaining
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
Allotted and fully paid
At 1 January
31 Dec 2022
£’000
31 Dec 2021
£’000
Number
of £0.10
ordinary shares
Number
of £0.10
ordinary shares
£’000
190,729,638
19,073
172,171,527
Allotted £0.10 ordinary shares on exercise of employee share options
1,357,137
Allotted £0.10 ordinary shares on cash placing (see below)
—
136
—
1,490,531
17,067,580
£’000
17,217
149
1,707
At 31 December
192,086,775
19,209
190,729,638
19,073
On 17 March 2021 the Group announced a fundraise that would allot 17,067,580 new ordinary shares of £0.10 each in the
Company, for a total gross cash consideration of £180,916,340. Together with the placing, 12,967,629 shares were allotted
on 17 March 2021 which included Bosch and certain Directors of the Company subscribing for 3,649,150 and 24,376 shares
respectively. On 19 May 2021 Weichai subscribed for and were allotted the remaining 4,099,951 shares.
During the year ended 31 December 2022, 1,357,137 ordinary £0.10 shares were allotted for cash consideration of £866,717 on
the exercise of employee share options (year ended 31 December 2021: 1,490,531 ordinary £0.10 shares were allotted for cash
consideration of £705,636) (see Note 25).
Ceres Annual Report 2022
101
Financial statements 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 2022 relating to employee share-based payments was £997,000
(2021: £2,615,000).
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.
a) 2004 Employees’ share option scheme
b) Sharesave schemes
c) Long Term Incentive Plan (LTIP)
2022
£’000
—
241
756
997
2021
£’000
—
384
2,231
2,615
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:
Outstanding at 1 January
Exercised
Lapsed
Outstanding at 31 December
Exercisable
2022
£’000
2021
£’000
Number
(‘000)
Weighted
average
exercise price
1,476
(421)
(73)
982
982
£0.75
£0.48
£0.99
£0.84
£0.84
Number
(‘000)
2,425
(946)
(3)
1,476
1,476
Weighted
average
exercise price
£0.66
£0.52
£0.85
£0.75
£0.75
The weighted average share price on the exercise date of options was £5.73 (2021: £12.50).
102
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 25. Share options continued
Share-based payments continued
a) 2004 Employees’ share option scheme continued
The range of exercise prices for options outstanding at the end of the year is as follows:
Expiry date – 31 December
2023
2024
2025
2026
2022
£’000
2021
£’000
Number
(’000)
Weighted
average
exercise price
Number
(’000)
Weighted
average
exercise price
250
669
36
27
£0.86
£0.84
£0.90
£0.55
611
801
37
27
£0.62
£0.84
£0.90
£0.55
The options outstanding at the end of the year have a weighted average contractual life of 1.45 years (31 December 2021: 2.15 years).
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:
Outstanding at 1 January
Granted
Exercised
Lapsed/cancelled
Outstanding at 31 December
Exercisable
2022
£’000
2021
£’000
Number
(’000)
Weighted
average
exercise price
Number
(’000)
Weighted
average
exercise price
984
394
(496)
(209)
673
6
£2.83
£5.96
£1.27
£7.53
£4.36
£1.27
1,042
162
(202)
(18)
984
—
£1.43
£9.83
£1.06
£4.91
£2.83
—
The weighted average share price on the exercise date of options was £4.43 (2021: £11.01).
The weighted average fair value of options granted in the year was £3.34 (2021: £5.50).
The expiry dates of options outstanding at the end of the year are as follows:
Expiry date – 31 December
2022
2023
2024
2025
2022
£’000
2021
£’000
Number
(’000)
Weighted
average
exercise price
Number
(’000)
Weighted
average
exercise price
—
308
42
323
—
£1.95
£9.83
£5.96
516
313
155
—
£1.27
£1.95
£9.83
—
The options outstanding at the end of the year have a weighted average contractual life of 1.78 years (2021: 1.44 years).
Ceres Annual Report 2022
103
Financial statements 25. Share options continued
Share-based payments continued
c) LTIP
During 2016 a Long Term Incentive Plan (LTIP) was implemented by the Remuneration 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 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:
Outstanding at 1 January
Granted
Exercised
Lapsed
Outstanding at 31 December
Exercisable
2022
£’000
2021
£’000
Number
(’000)
3,963
892
(382)
(476)
3,997
2,421
Weighted
average
exercise price
Number
(’000)
Weighted
average
exercise price
£0.10
£0.10
£0.10
£0.10
£0.10
£0.10
4,315
—
(342)
(10)
3,963
2,134
£0.10
—
£0.10
£0.10
£0.10
£0.10
The weighted average fair value of options granted in the year ending 31 December 2022 was £3.97 (2021: no options granted).
The weighted average share price on the exercise date of options was £5.69 (2021: £12.36).
The expiry dates of options outstanding at the end of the year are as follows:
Expiry date – 31 December
2026
2027
2028
2029
2030
2031
2032
2022
£’000
2021
£’000
Number
(’000)
1,029
289
559
544
696
—
880
Weighted
average
exercise price
Number
(’000)
Weighted
average
exercise price
£0.10
£0.10
£0.10
£0.10
£0.10
—
£0.10
1,141
336
657
1,116
713
—
—
£0.10
£0.10
£0.10
£0.10
£0.10
—
—
The options outstanding at the end of the year have a weighted average contractual life of 6.45 years (2021: 6.88 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:
Grant date
Share price at date of grant (£)
Exercise price (£)
Expected volatility (%)
Expected option life (years)
Average risk-free interest rate (%)
Expected dividend yield
Sharesave
scheme 2022
27 April 2022
Sharesave
scheme 2021
30 April 2021
Sharesave
scheme 2020
22 January 2020
Sharesave
scheme 2019
29 April 2019
7.450
5.960
53%
12.290
9.832
53%
2.440
1.95
53%
1.583
1.266
53%
3.25 years
3.25 years
3.25 years
3.25 years
1.00%
Nil
1.00%
Nil
1.00%
Nil
1.00%
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.
104
Ceres Annual Report 2022
Notes to the consolidated financial statements continuedfor the year ended 31 December 2022 25. Share options continued
Assumptions continued
The inputs to the Monte Carlo simulation model were as follows:
Grant date
Share price at date of grant (£)
Exercise price (£)
Expected volatility (%)
Expected option life (years)
Average risk-free interest rate (%)
Expected dividend yield
LTIP 2022
23 March
2022
LTIP 2020 (2)
10–21 December
2020
LTIP 2020 (1)
10 October
2019
LTIP 2019
10 October
2018
7.40
0.1
64%
10.52–11.56
0.1
31%
2.16
0.1
21%
1.89
0.1
54%
Up to 7 years
Up to 7 years Up to 7 years Up to 7 years
1.46%
Nil
1.00%
Nil
1.00%
Nil
1.75%
Nil
26. Events after the balance sheet date
There are no material events that have occurred after the balance sheet date.
27. Capital commitments
Capital expenditure that has been contracted for but has not been provided for in the consolidated financial statements amounts
to £8,679,000 as at 31 December 2022 (31 December 2021: £8,086,000), in respect of the acquisition of property, plant and
equipment, primarily related to the Group’s planned test stand expansion.
28. Related party transactions
As at 31 December 2022 the Group’s related parties were its Directors and RFC Power Ltd. Information around key management
compensation is set out in Note 6. During the year 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.
During the year ended 31 December 2021 one Director exercised and retained 8,491 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 2021.
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 £0.4m (12 months ended 31 December 2021: £0.1m) in return for
equity share capital as described in Note 13.
Ceres Annual Report 2022
105
Financial statements Company balance sheet
as at 31 December 2022
Fixed assets
Investments
Current assets
Debtors: amounts falling due within one year
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Net assets
Capital and reserves
Called-up share capital
Share premium
Capital redemption reserve
Profit and loss account
Shareholders’ funds
As at
31 Dec 2022
£’000
As at
31 Dec 2021
£’000
Note
3
4
5
6
8
9
382,880
380,996
5,138
2,074
7,212
14,892
468
15,360
(2,969)
(8,309)
4,243
7,051
387,123
388,047
19,209
405,463
3,449
(40,998)
19,073
404,726
3,449
(39,201)
387,123
388,047
The Company made a loss after taxation of £2.8m in the year (2021: £1.3m).
The notes on pages 108 to 111 are an integral part of these Company financial statements.
The financial statements on pages 106 to 111 were approved by the Board of Directors on 23 March 2023 and were signed on its
behalf by:
Phil Caldwell
Chief Executive Officer
Eric Lakin
Chief Financial Officer
Ceres Power Holdings plc
Registered Number: 5174075
106
Ceres Annual Report 2022
Company statement of changes in equity
for the year ended 31 December 2022
At 1 January 2021
Loss for the financial year
Total comprehensive loss
Transactions with owners
Issue of shares, net of costs
Share-based payments charge
Total transactions with owners
At 31 December 2021
Loss for the financial year
Total comprehensive loss
Transactions with owners
Issue of shares, net of costs
Share-based payments charge
Total transactions with owners
At 31 December 2022
Note
Share capital
£’000
Share premium
£’000
Capital
redemption
reserve
£’000
Profit and loss
account
£’000
Total
£’000
17,217
227,682
3,449
(40,502)
207,846
—
—
1,856
—
1,856
—
—
177,044
—
177,044
—
—
—
—
—
(1,314)
(1,314)
—
2,615
2,615
(1,314)
(1,314)
178,900
2,615
181,515
19,073
404,726
3,449
(39,201)
388,047
—
—
136
—
136
—
—
737
—
737
—
—
—
—
—
(2,794)
(2,794)
(2,794)
(2,794)
—
997
997
873
997
1,870
19,209
405,463
3,449
(40,998)
387,123
8
8
8
8
The notes on pages 108 to 111 are an integral part of these Company financial statements.
Ceres Annual Report 2022
107
Financial statements 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 2022, 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
(2021: £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 2022, 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 2022 was a loss of £2.8m (12 months
ended 31 December 2022: profit of £1.3m), which is stated after charging £54,000 (2021: £66,000) for remuneration receivable
by the Company’s auditor for the auditing of the financial statements and £150,000 (2021: £134,000) in relation to the audit of
the interim financial information.
108
Ceres Annual Report 2022
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:
Cost
At 1 January
Capital contributions arising from share-based payment charge
Additional investment in shares of Ceres Power Intermediate Holdings Ltd
At 31 December
31 Dec 2022
£’000
31 Dec 2021
£’000
380,996
1,884
—
199,278
2,614
179,104
382,880
380,996
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, no indicators of impairment were identified and 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
Ceres Power Ltd
Country of incorporation Description of shares held
England and Wales
£0.001 ordinary shares
Ceres Intellectual Property Company Ltd
England and Wales
£1.00 ordinary shares
Ceres Power Licence Company Ltd
England and Wales
£1.00 ordinary shares
Ceres Power Intermediate Holdings Ltd
England and Wales
£0.01 ordinary shares
Ceres Holdings International Ltd
England and Wales
£1.00 ordinary shares
Ceres Engineering Consulting (Shanghai) Co Ltd
Shanghai, China
£1.00 ordinary shares
RFC Power Ltd
England and Wales
£0.001 ordinary shares
Proportion of
nominal value of
shares held by
the Company
100% 1
100% 1
100%
100% 1
100% 1
100% 2
24.2% 3
Type of entity
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
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.
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.
Ceres Annual Report 2022
109
Financial statements Notes to the Company financial statements continued
3. Fixed asset investments continued
Investment in Group undertakings continued
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-2023 for a value of £1m (to be made up in cash
where the value of services does not meet the £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 for the same exercise price.
The contribution of £2m has been treated as an additional cost of investment in the associate, increasing the cost of the
investment to £2.5m at 31 December 2022 (31 December 2021: £0.5m). The value of the option continues to be determined to
be £nil (31 December 2021: £nil).
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 9 February 2022, the Group announced the intention to collaborate with Weichai and Bosch to access the substantial
opportunities that exist for fuel cell technologies in the Chinese market. This is likely to include a three-way collaboration to form
a system JV in Shandong province in China to develop and manufacture SOFC system products, with Weichai being the majority
shareholder and Bosch and Ceres minority shareholders. Ceres is expected to take up a holding of 10%. Detailed non-binding
Heads of Terms have been signed by all parties and full contracts are expected to be agreed during 2023.
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.
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.
Other debtors
Prepayments and accrued income
Amounts owed by Group undertakings
31 Dec 2022
£’000
31 Dec 2021
£’000
24
21
5,093
5,138
97
23
14,772
14,892
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 2022, a loss allowance of £59,316,000 (31 December 2021: £59,316,000)
has been recognised against the inter-company loan to Ceres Power Ltd, 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 2022, amounts owed by
Ceres Power Ltd to the Company of £60,676,000 (31 December 2021: £60,676,000) are subordinated to all other creditors of
Ceres Power Ltd.
5. Cash and cash equivalents
Cash and cash equivalents comprise cash balances.
110
Ceres Annual Report 2022
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.
Trade creditors
Other creditors
Accruals
Amounts owed to Group undertakings
31 Dec 2022
£’000
31 Dec 2021
£’000
—
8
324
2,637
2,969
23
71
221
7,994
8,309
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:
Tax effect of timing differences because of:
Short-term timing differences
Losses carried forward
31 Dec 2022
£’000
31 Dec 2021
£’000
(5)
(1,751)
(1,756)
(5)
(1,688)
(1,693)
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 2022 was £7.0m (31 December 2021: £6.8m),
which do not have an expiry date.
8. Called-up share capital
Allotted and fully paid:
Ordinary shares at 31 December
31 Dec 2022
£’000
31 Dec 2021
£’000
Number of
£0.10
ordinary shares
Number of
£0.10
ordinary shares
£’000
£’000
192,086,775
19,209
190,729,638
19,073
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 59.
Ceres Annual Report 2022
111
Financial statements 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
Nominated adviser and broker (NOMAD)
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
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.
Ceres Annual Report © Ceres Power Holdings plc 2021.
All rights reserved.
Directors and advisers
Directors of Ceres Power Holdings plc
● Trine Borum Bojsen (Non-Executive Director)
● Tudor Brown (Non-Executive Director)
● Phil Caldwell (Chief Executive Officer)
● Steve Callaghan (Senior Independent Director)
● Warren Finegold (Chairman)
● Uwe Glock (Non-Executive Director)
● Qinggui Hao (Non-Executive Director)
● Aidan Hughes (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)
112
Ceres Annual Report 2022
Ceres Power Holdings plc’s commitment to environmental issues is reflected in this Annual Report,
which has been printed on Amadeus Silk, an FSC® certified material.
This document was printed by Pureprint Group using its environmental print technology, with 99%
of dry waste diverted from landfill, minimising the impact of printing on the environment. The printer
is a CarbonNeutral® company.
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
www.ceres.tech