Preliminary Results to year end 30 September 2014

1 December 2014

INTELLIGENT ENERGY HOLDINGS PLC: PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2014

A TRANSFORMATIONAL YEAR WITH STRONG SECOND-HALF GROWTH

Intelligent Energy Holdings plc, the energy technology group ("Intelligent Energy", the "Group" or the "Company"), is pleased to announce its preliminary financial results for the year ended 30 September 2014.

Summary Financial Performance

Highlights

The Company has three external facing divisions that focus on three distinct and growing global mass markets: Consumer Electronics ("CE"), Distributed Power & Generation ("DP&G") and Motive.

· The Company completed its Initial Public Offering on the London Stock Exchange Main Market in July and exited the year with a strong balance sheet, including a cash balance of £88.9m and no debt

· Revenue of £13.6m (2013: £20.8m, boosted by the sale of access to intellectual property ("IP") in the Motive division)

· Strong second-half revenue growth, to £10.1m (H1: £3.5m, 2013 H2: unaudited £8.2m), following the launch of CE and DP&G

· CE division:

o Launched Upp™, a hydrogen fuel cell portable power solution - the first in a series of products and a new product category of portable energy supply - in Apple Stores in the UK (post balance sheet event)

o Demonstrated a laptop-embedded fuel cell to indicate the future direction and scale of the opportunity

· DP&G division:

o Over 10,000 telecom sites in India, the majority under a revenue generating interim agreement, long-term contract potential

o Equivalent to an annualised revenue of c. £50m

· Motive division:

o Continues to deliver on its milestones

o In June added a further blue-chip Japanese car manufacturer customer as well as signing an important option agreement to provide access to IP with its existing European Premium Car Maker customer

· Technology:

o Further enhanced already class-leading power densities across its technology platforms

o Air-cooled ("AC") technology demonstrates a 30 per cent increase in stack power density in the latest Gen4 system when compared to the previous generation. Evaporatively-cooled ("EC") technology provides a corresponding improvement in excess of 15 per cent from the baseline of the prior year

Dr. Henri Winand, Chief Executive Officer of Intelligent Energy Holdings plc, commented:

"This was a truly transformational year for Intelligent Energy. The second half of the year in particular saw strong revenue growth and we have started the new financial year with good momentum. We have a strong, debt-free balance sheet plus the resources to pursue large-scale business opportunities.

The two new divisions that we launched during the second half of the year, Consumer Electronics and Distributed Power & Generation, have enjoyed initial successes. In Consumer Electronics, our newly launched Upp™ product, a portable hydrogen fuel cell power solution, is available in Apple Stores throughout the UK. In Distributed Power & Generation, we now have over 10,000 telecom tower sites in India under energy related contracts, with immediate revenues per tower. Our third external facing and longest standing division, Motive, has secured a new blue-chip customer, a Japanese Original Equipment Manufacturer ("OEM") car maker, in addition to its long-standing customer the Suzuki Motor Corporation ("Suzuki"), and has also signed an option agreement to provide access to IP with its existing European OEM car customer. This comes at a time when other top-tier car makers have recognised the benefits of fuel cell technology and have publicly committed to launching Fuel Cell Electric Vehicles ("FCEVs") in the next one to two years. More broadly, we have demonstrated significant increases in our already market-leading measures of power density, as well as an ability to embed fuel cells in a variety of products from laptop computers to cars, in order to deliver independent power where needed.

We are confident that these exciting operational developments, together with the past and current investments that we have made in our two new divisions, will result in strong year-on-year revenue growth and the narrowing of losses in the year ahead."

Outlook

· CE division:

o The launch of Intelligent Energy's first consumer device, Upp, in Apple's UK retail stores provides a sound platform for this new product category. Further Upp expansion into new sectors and geographies are planned

o Next phases of product refinement aimed at reducing the size and cost of Upp, whilst increasing power

· DP&G division:

o Progress in the last twelve months in India provides increased growth opportunities for the short and medium term. This includes the deployment of fuel cell power systems in a phased rollout from the end of the second quarter of the current financial year, assisting margin expansion

o Targeting 125,000 to 135,000 telecom tower sites under contract in the medium term, in India and elsewhere, with an estimated average invoiced revenue per site of £4,000 to £5,000 per annum

o Opportunities for additional customers per site are being pursued, including a collaboration with Hydro Industries for India, announced in March

· Motive division:

o Expects to add further to its blue-chip OEM customer base

o Working closely with its existing customers to secure next-phase commitments

· Divisional outlook underpins confidence in strong year-on-year revenue growth and the subsequent narrowing of losses as past and current investments in the two new divisions are expected to yield results in the year ahead

· The Company has started the new financial year with a strong balance sheet with cash and short-term deposits of £88.9m and no debt

(1) EBITDA is a non-statutory measure often used by investors as a proxy for cash and to calculate the value of a business. The Company uses adjusted EBITDA (Earnings before Interest, Tax, Depreciation, Amortisation, share of joint venture results, equity fund raising costs and IFRS2 share-based payment charges) as an indicator of trading profitability and a proxy for operating cashflow, before any cash movements relating to investment, tax, funding and changes in working capital. It is not an IFRS measure, and not therefore shown in the Group income statement.

Presentation and webcasts

Today, there will be a 9.00am presentation and webcast in London for analysts and investors, and a 5.00pm webcast for international analysts and investors.

9:00am GMT webcast

Link to webcast: http://www.media-server.com/m/p/evnc2vmg

Conference call (listen only):

Participant access: dial in 5-10 minutes prior to the start time using the number / conference ID below

Confirmation code: 8923289

Participants, local - London, UK: +44 (0) 20 3427 1900

Participants, local - New York, USA: +1 646 254 3364

5.00pm GMT webcast

Link to webcast: http://www.media-server.com/m/p/tv2ci4jx

Conference call (listen only):

Participant access: dial in 5-10 minutes prior to the start time using the number / conference ID below

Confirmation code: 7069006

Participants, local - London, UK: +44 (0) 20 3427 1916

Participants, local - New York, USA: +1 212 444 0895

Please contact Powerscourt on +44 (0) 20 7250 1446 or at [email protected] for further details about the presentations.

A copy of the presentation will be made available from 8.45am today on the Intelligent Energy website under 'Latest Downloads' at http://www.intelligent-energy.com/investors/reports-presentations.

Enquiries

Intelligent Energy Holdings plc: +44 (0) 1509 271271

Dr. Henri Winand, Chief Executive Officer

Mr John Maguire, Chief Financial Officer

Dr. Mark Lawson-Statham, Director of Corporate Finance

Powerscourt: +44 (0) 20 7250 1446

Giles Sanderson / Matthew Fletcher / Rob Greening

About Intelligent Energy

Intelligent Energy Holdings plc is an energy technology group which develops efficient and clean hydrogen fuel cell power systems for the global automotive, consumer electronics, distributed power and generation markets - from powering zero-emission vehicles to compact energy packs for mobile devices and stationary power units for the always-on infrastructure.

Working with international companies, Intelligent Energy aims to embed its technology in mass market applications to solve the challenges of continuous power and productivity, by creating everyday energy solutions to power people's lives. The Group's intellectual property and expertise is based around proprietary fuel cell technologies, which are the product of over 25 years of research and development. Its patent portfolio includes more than 400 patents granted (and over 600 patents pending) across more than 300 patent families. The Group also maintains a significant body of confidential know-how and trade secrets.

With its principal facility and headquarters in Loughborough, UK, the Company also has operations in India, Japan and Singapore, a commercial office in Silicon Valley, USA, and research facilities in Florida, USA. Intelligent Energy Holdings plc is listed on the London Stock Exchange (LSE: IEH).

More information on Intelligent Energy is available at WordPress, Twitter, YouTube and LinkedIn. Or visit the Intelligent Energy website.

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Operational Review

As a result of the successful capital raising activities during the 2013/14 financial year, which culminated in the admission to the Main Market of the London Stock Exchange in July, Intelligent Energy made progress on commercial and operational development activities within its three external facing business divisions of CE, DP&G and Motive. In the Group's internal facing division of Platform Support, the business also continued to invest in its portfolio of leading technologies with a marked increase in patents granted and filed over the year.

Market overview

Intelligent Energy's technology is relevant to three major global themes:

· The limitation of batteries in dealing with the increasing power requirement of consumer electronic devices and, with the tremendous growth in the prevalence of these devices, the absolute need for clean, efficient power that is portable (CE division)

· The need for efficient, economic and clean distributed power to deal with the stress placed on existing power grids in developed economies and the cost and desirability of building extensive grid infrastructure in emerging economies (DP&G division)

· The increasing concern and tightening regulatory initiatives relating to carbon emissions (Motive division)

CE division

Within the CE division, activities during the first half of the financial year were centred on the launch of Upp, a hydrogen fuel cell portable power solution, and the division's first in a planned series of products. Priorities included the preparation of Upp fuel cartridges for contract manufacturing in the UK, and refining production and functional testing of the fuel cell units with another contract manufacturer in Asia. In addition, field product testing continued apace with targeted sales in different geographies, as well as various other operational activities associated with the commercialisation of this new product category. The Group also successfully completed an important purchase of an intellectual property portfolio from a battery manufacturer; this was a joint initiative with an international electronics company. An important commercialisation milestone was delivered during the Spring when Upp received 'CE' and 'CSA' certification and was declared safe for carriage on aircraft. Since then, a material number of Upp products have been repeatedly used across the world and carried through a wide number of airports.

Upp launch activities continued into the second half of the financial year. The CE team worked closely with other areas of the business to prepare Upp and its refuelling channels for market readiness. This included the transfer of the Upp fuel cartridge production run to an Asian contract manufacturer. This proved to be more time-consuming and costly than anticipated; product continues to be closely monitored with respect to yield issues by our CE and operations teams, as production ramps up. As part of this pre-launch activity, the CE team also worked on the preparation of key additional customer and distributor accounts, including telecom and consumer goods companies in different geographies. The division also began to recruit a network of Upp fuel cartridge exchange points to support the UK launch of Upp. This network is expected to increase during the new financial year with the CE team in discussion with a number of high-value brand names.

During the period, the Group has made progress with embedding its fuel cell technology into consumer electronics devices with the development and demonstration in September of its flat plate (planar) technology in a laptop. This work will continue to be a key focus for the technology team in the new financial year.

In early November 2014, Upp was named a 2015 CES Innovation Awards Honoree, which recognises Upp as a cutting edge technology product in portable power.

In a significant development since the financial year end, the Group announced the UK retail launch of Upp, with Upp starter packs being available to buy in UK Apple Stores from 19th November 2014 and also through direct web sales at http://www.BeUpp.com. Following the launch of Upp within the UK, the CE division plans to use a similar sales, marketing and operational template to expand into other countries.

DP&G division

During the first half of the year the DP&G division, through its wholly owned Indian subsidiary company Essential Energy, successfully field tested its power management services offering to the Indian telecom market.

In January, Essential Energy signed its first operational framework agreement to provide efficient power for Ascend Telecom Infrastructure Private Limited's telecom towers across India. In March, an agreement was signed with Microqual Techno Limited to provide energy services to telecom transmission equipment. Under these agreements, rapid, demonstrable improvements included, for one customer, a reduction of 78 per cent downtime in power outages and 16 per cent of fuel consumption between July and September. In addition, during the fourth quarter the division commenced power management services and derived revenues from an interim agreement with a further Indian customer. As a result of these developments, the division started to generate revenue during the second half of the financial year. There is now an active sales pipeline and the division is in discussion with a number of other significant customers in India, with scope to replicate the business model across other developing countries. The medium-term target of 125,000 to 135,000 sites contracted remains on track, representing a revenue opportunity of c. £650m per annum.

After a lengthy period of field trials, field surveys and business model refinements during the 2011/12 and 2012/13 financial years, the division is now well positioned to take advantage of the substantial opportunities that exist for power management services within India: approximately 60 per cent of telecom tower infrastructure companies' operating costs relate to the provision of power, with diesel costs accounting for a high proportion of this; there is an increasing move in the Indian telecommunication industry to introduce more efficient technologies in order to reduce the country's carbon footprint; the bulk purchase price of diesel charged by state suppliers is now linked to wider market prices, following the lifting of government price controls on diesel in October 2014; and the Indian Department of Telecommunications has recently proposed a rebate in the licence fee for mobile telecommunication operators running towers on green energy.

Motive division

During the first half of the financial year, Motive generated virtually all of the Group's revenue. As anticipated, Motive divisional revenues returned to their historical revenue run rate arising mainly from joint development contracts as the upfront portion of the 2012 revenues generated in the sale of access to IP to its long-standing customer, Suzuki have all been recognised in the prior two years. However, future royalty payments are receivable when vehicles are produced using the related IP, based on the total amount of power associated with such production, supplied by or on behalf of any member of the Suzuki group.

During the second half of the year, working closely with Suzuki, activities relating to the existing joint development agreement resulted in the introduction of a pre-production, fuel cell power system, the Gen4. Compared to the previous generation of systems, Gen4 delivers a 30 per cent increase in stack power density to yield 3.9kW net rated power at system level and has been designed for easy integration into two and four-wheeled vehicles. A further multi-year, joint development agreement was also signed between the Group and Suzuki during the period.

Other notable achievements for the Motive division during the second half of the financial year included the successful delivery, on time, of a significant milestone commitment to the European Premium Car Maker customer, with which a material option agreement to provide access to IP was signed in June. This activity was based on the application of the Group's EC technology in a system developed in collaboration with the EPCM to produce in excess of 100kW gross rated power under test, and led to a further unit being installed and successfully demonstrated in a vehicle. The division also added a new Japanese customer, another substantial car maker, thus building on the Company's existing presence in Japan with Suzuki at a time when major Japanese car OEMs, such as Toyota, are announcing the introduction of fuel cell electric vehicles starting in late 2014.

As the automotive industry readies itself for the market introduction and commercial sales of fuel cell electric vehicles in earnest during 2015, as evidenced by the new FCEV model launches from some of the world's largest automakers at the Los Angeles Motor Show in November 2014, the Motive division has experienced increased interest from, and is engaged in discussions with a number of additional automotive OEMs who do not have their own fuel cell technology but who are now looking to enter this market. With its proprietary technology offering best-in-class power densities and being engineered for cost-competitive, high-volume production, the Group is well-placed to provide a low-risk and accelerated route to market for these newly motivated automotive OEMs.

The Motive division can generate revenue in a number of ways, through: (i) Joint Development Agreements ("JDA"s), (ii) the upfront sale of access to IP and (iii) royalties. In the run up to mass market penetration of FCEVs, which is expected to occur from 2020, the Group has the proven ability to generate revenues ahead of this time, principally through JDAs and the sale of access to its technology. Typically, the Group offers a joint development road map to its customers incorporating programmes of development and engineering support providing short, medium and long-term revenue opportunities for the Group via staged payments.

Successful JDA cooperation can lead to the signing of agreements with customers which can result in the Motive division receiving highly material intellectual property related revenues in the medium term. As these payments are typically one-off in nature and can be received at any time, they are difficult to predict and can lead to lumpiness in revenues.

The introduction of fuel cell vehicles into the market by the Group's customers in the medium to long term will drive recurring royalty fees for the Motive division. Such royalties, which can be generated as regular payments or as one-off, upfront payments equivalent to the estimated net present value of the potential regular payments, represent further potential for very substantial additional revenues in the medium to long term.

Technology developments

Intelligent Energy's patented and highly differentiated technology results in class leading power densities. As a consequence, the Group is able to develop and deploy fuel cell stacks and systems that cover a wide power range (from a few watt to being scalable well beyond 100kW). This range of power outputs spans a number of important mass markets (including those targeted by the CE, DP&G and Motive divisions) utilising only two common technology architectures: air-cooled ("AC") and evaporatively-cooled ("EC"). The Group's 'design once, deploy many times' philosophy leads to a convergence of effort (by the Group and its partners) around common technology platforms, manufacturing methods and supply chains. This differentiated business model allows for operational efficiency and results in significant barriers to entry against current and future competitors in each of the Group's target markets.

High power density is an essential requirement and an important differentiator across Intelligent Energy's target markets and applications. The Group's stack technology remains at the forefront of the industry in this regard. During the year, the Group has reinforced its power density leadership in EC technology, achieving an increase in excess of 15 per cent in stack power density over the baseline pressed plate stack architecture, and has delivered the Gen4 AC system which yields a 30 per cent improvement in stack power density when compared to the previous generation of the product. The Group considers this result to be best-in-class for stack power density for air-cooled fuel cell technology.

The Group has made progress with developing its planar technology for consumer electronics applications. This work will continue to be a key focus for the technology team in the new financial year.

During the period, the Group was named the top British patent applicant for energy and storage technologies in 2013 in a report compiled by the UK Intellectual Property Office. The Group's patent portfolio includes more than 400 patents granted (and over 600 patents pending) across more than 300 patent families.

Intellectual property is the life blood of Intelligent Energy. Therefore, the Group continues to make focused investments in expanding its broad set of tangible and intangible intellectual property, thereby creating a significant barrier to entry to competitors.

Corporate activities and business services

In March, the Company completed a private equity placement to Singapore's sovereign wealth fund, GIC, raising proceeds of approximately £37.8m (before expenses). GIC acquired 10 per cent of the enlarged share capital of the Company at that time on completion of the placing and also subscribed for warrants over further shares, which were subsequently exercised at a price of 250 pence per share at the end of June, raising an additional £16.6m. A further £55.0m was raised by an Initial Public Offering with the shares being admitted to the Main Market of the London Stock Exchange in July.

Intelligent Energy continues to refine its operations and IT security, both within the UK and overseas. The infrastructure and facilities available at the Group's headquarters in Loughborough, UK, were developed further during the year, in order to support the planned growth of the business. The Group also opened a small-scale operations base in Singapore as well as establishing a commercial facility in San Jose, USA, with the aim of working closely with its business partners who are located in California and Silicon Valley in particular. As mentioned above, the Group has also expanded operations in India via the DP&G business, and also has a satellite office in Japan.

In order to support the growth objectives of Intelligent Energy's three external facing divisions, additional talent was recruited across all key disciplines within the business during the financial year. The total number of people employed within the Group globally as at 30 September 2014 was 408 (2013: 343); as at 28 November 2014 this figure has increased to approximately 422.

Group Financial Summary

The 2013/14 financial year brought together two very different six month periods.

First-half revenue was generated almost exclusively from Motive division joint development agreements with OEM partners. In contrast, the operating cost base comprised expenditure not only for the Motive division but also for the CE and DP&G divisions, which were not yet generating material revenues. The necessary expansion of specialist resource in core development and commercial activities within Platform Support increased the recurring cost base. Compared to the prior two years, Motive revenue also decreased as revenue from the sale of access to IP under a Suzuki contract ceased, as expected. Overall, therefore, revenue decreased whilst costs increased resulting in increased losses year-on-year.

In contrast, the second half saw strong growth in revenue versus the first half and an absolute increase from the second half of the previous year. This was driven by the commencement of DP&G revenue from a standing start in March, together with an expansion of joint development agreement revenue in Motive and some additional trial-related revenue in Consumer Electronics after achieving 'CE' and 'CSA' certification of the launch product, Upp, in the Spring.

Subsequent to the end of the financial year, continued strong year-on-year revenue growth has been recorded. The announcement of Apple's UK retail stores stocking the CE division's hand-held Upp products, and continued market traction in India for DP&G's energy supply offering, have confirmed the Directors' confidence in continued revenue expansion in the year ahead.

Consolidated Income Statement

Revenue and gross margin

Revenue for the year was £13.6m (2013: £20.8m). While revenue reduced year-on-year, as noted above, the second half of 2013/14 recorded revenue of £10.1m (2013 H2: unaudited £8.2m), a £1.9m or 23 per cent H2 year-on-year increase. Compared to H1 2013/14 revenue of £3.5m, H2 2013/14 revenue was ahead by £6.6m or 189 per cent. Across all segments, over 98 per cent of revenue in the year related to activity for customers based outside of the UK.

Some £8.6m of revenue was derived from the Motive division (2013: £20.8m), balanced towards the second half of the year due to the pattern of joint development activities entered into and the addition of a new customer in the second half. Intellectual property related revenue was £8.0m lower year-on-year. This aspect of Motive's revenue stream is variable and difficult to predict in terms of when future IP opportunities might convert.

Some £4.9m of revenue was recorded in DP&G (2013: £nil), representing particularly strong growth in H2 from a new line of business in India. DP&G exited the year as the largest contributor to Intelligent Energy's consolidated revenues. The first customer contracts were signed in January, with the first revenues flowing in March and strong growth recorded in the last quarter. DP&G revenue is invoiced in Indian rupees and reflected in the consolidated accounts at the appropriate sterling rate of exchange. Related costs are also charged on an underlying rupee basis, forming a natural hedge on exchange rate movements.

For the year, CE generated less than £0.1m of revenue and gross margin, with development production runs taking place towards the end of H2 2013/14 post the achievement of product certification and the transfer of manufacturing to Asia.

Gross margin represents revenue less cost of sales. Cost of sales in the period reflects fuel costs in the DP&G division, labour costs, materials and facilities used in delivering contracted revenue-earning joint development projects in Motive and the cost of trial orders for Upp. Gross margin for the year was £3.7m (2013: £7.3m) and, in percentage terms, 27 per cent of revenue (2013: 35 per cent), with the absolute reduction in gross margin reflecting the lower level of revenue in the period.

Research and development

In the year, R&D expenditure for non-revenue generating projects amounted to £21.3m (2013: £13.9m). This included a charge of £1.6m for the non-recoverable costs of the development product runs for CE including a provision for the carrying value of selected CE stock items. The overall increase year-on-year of £7.4m reflected a higher overall level of development and research activity related to the Group's fuel cell platforms, including evaporatively-cooled and air-cooled stack technology and their performance. R&D costs mainly comprise staff costs, outsourced services and material costs related to the fuel cell research and development that have been described. An average of 104 (2013: 101) directly employed staff have been engaged in this area over the course of the year.

Operation and administration costs

Operation and administration expenses in the year amounted to £38.0m (2013: £20.2m). Of the increase of £17.8m, £7.1m related to fund raising costs associated with the £109.9m in gross equity funds received in the year. An additional £6.0m related to the share-based payments charge, arising under IFRS 2, for the Management Incentive Plan arising as a result of the IPO and shared across 31 individuals. An average of 250 (2013: 205) directly employed staff have been engaged in this area of the business over the course of the year, covering supplier management, logistics, facilities, IT, aspects of application engineering, customer solutions development, commercial activities, marketing, HR, finance, legal and procurement.

Adjusted EBITDA

EBITDA (Earnings before Interest, Tax, Depreciation, Amortisation and share of joint venture results) is a non-statutory measure that is widely used as an indicator of trading profitability and a proxy for operating cashflow, before any cash movements relating to investment, tax, funding and changes in working capital. It is not an IFRS measure, and not therefore shown in the Group income statement.

For Intelligent Energy, the Directors use adjusted EBITDA which is measured as EBITDA excluding one-off fund raising costs and the IFRS 2 share-based payments charge. On this measure, adjusted EBITDA for the year was a loss of £39.4m (2013: loss of £23.4m). The movement in adjusted EBITDA reflected the impact of lower revenue, and planned higher operating costs, to support the activities of the two new divisions.

Profit/(loss) for the year

The loss for the year was £48.2m (2013: loss of £21.0m), being a reflection of the adjusted EBITDA reported above, and the following items:

· The Group's share of the loss on joint ventures accounted for under the equity method of £1.0m (2013: loss of £2.5m). This was offset by the disposal in the year of the Group's investment in IE-LEV for £1.0m net of transaction costs

· Net interest charges of £4.0m (2013: £0.5m), with interest accruing for the convertible loan notes issued in H2 2012/13. These notes were converted to equity in July and no further interest charges are recorded post conversion

· Income tax credit of £11.4m (2013: credit of £8.8m) reflecting the net impact of R&D tax credits and adjustments to the deferred tax asset. The deferred tax asset relates primarily to accumulated losses and the Directors remain confident that profits will arise in the future to fully utilise these tax losses

Consolidated Statement of Financial Position

Non-current assets

Property, plant and equipment at £6.9m (2013: £5.3m) represented additions of £4.0m in the year, offset by depreciation of £2.4m. Additions included test rigs and chambers and other equipment for the commercialisation programmes. Intangible assets at £11.5m (2013: £9.5m) reflected additions of £2.8m and amortisation of £0.8m. Intangible assets include the Group's intellectual property patent portfolio of over 300 patent families, including patents pending.

Investments using the equity method

The Group accounts for joint ventures using the equity method, and includes the carrying value of its share of positive net assets in the statement of financial position. In the year, the carrying value moved from £3.8m to £1.4m, reflecting Intelligent Energy's share of net costs in SMILE FC System Corporation and IE-CHP (UK & Eire) Limited and foreign exchange revaluation of the net assets of SMILE FC System Corporation.

Current assets and current liabilities

Inventory at £4.1m (2013: £1.5m) was higher year-on-year due to carrying additional material related to preparations for the commencement of volume production for consumer electronics-related activities, and for DP&G, in addition to Motive and Platform Support projects planned in 2014/15.

Trade and other receivables at £11.1m (2013: £9.8m) were up year-on-year. Trade debtors in particular were £3.5m higher reflecting the significant increase in trading activities at the year end, particularly in India. Trade and other payables at 30 September 2014 of £17.6m (2013: £8.6m) represented trade payables of £6.1m (2013: £1.3m), other payables of £4.4m (2013: £1.2m) and accruals and deferred income of £7.1m (2013: £6.1m), partly reflecting an increase in trading at the year end and remaining IPO-related costs that were paid after the year end.

The net movement in inventory and trade and other receivables and payables for the year was an increase in working capital of £0.9m.

The cash and short term deposits balance at £88.9m (2013: £31.6m) primarily represents the inflow from equity issues in the year, offset by EBITDA losses and capital investments and movements in working capital.

Convertible Loan Notes

Intelligent Energy Holdings plc issued unsecured convertible loan notes in August 2013 for £32.5m with a coupon rate of 5 per cent, compounding annually, which were due to mature in 2017. The loan note was a compound financial instrument and for accounting purposes was split into a debt component (£18.5m at 30 September 2013) and an equity component of £12.3m.

The loan note converted into shares at IPO in July and the debt component was retired, including accrued interest. The equity component remains in equity.

Commitments

At 30 September 2014, outstanding purchase orders amounted to £16.2m (2013: £4.3m). Intelligent Energy is also contractually committed to a further ¥500m (£2.8m) investment in SMILE FC System Corporation, expected in 2015.

Forward-looking statements

Certain statements made in this announcement are forward-looking. These represent expectations for the Company's business, and involve risks and uncertainties. The Company has based these forward-looking statements on current expectations and projections about future events. The Company believes that expectations and assumptions with respect to these forward-looking statements are reasonable. However, because they involve known and unknown risks, uncertainties and other factors, which in some cases are beyond the Company's control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements.

Intelligent Energy Holdings plc

Consolidated income statement

for the year ended 30 September 2014

Consolidated statement of financial position

at 30 September 2014

Consolidated statement of changes in equity

for the year ended 30 September 2014

Consolidated statement of cash flows

for the year ended 30 September 2014

Notes forming part of the preliminary financial statements

Basis for preparation

The financial information presented within this document does not comprise the statutory accounts of Intelligent Energy Holdings plc for the financial years ended 30 September 2014 and 30 September 2013 but represents extracts from them. These extracts do not provide as full an understanding of the financial performance and position, or financial and investing activities, of the Company as the complete Annual Report.

The statutory accounts for the financial year ended 30 September 2014 have been reported on by the Company's auditor and will be delivered to the registrar of companies in due course. The reports of the auditor were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The Annual Report, including the auditor's report, can be downloaded at www.intelligent-energy.com.

(a) Significant accounting policies

The accounting policies applied in these financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 30 September 2014.

(b) Judgments and estimates

In preparing these financial statements, management necessarily makes judgments and estimates that have a significant effect on the values recognised in the financial statements. Changes in the assumptions underlying these judgments and estimates could result in a significant impact to the financial statements.

 The significant judgments made by management in applying the Group's accounting policies and key sources of estimation uncertainty are the same as those applied to the consolidated financial statements as at and for the year ended 30 September 2014.

1 Operating segments

The Group complies with IFRS 8 'Operating Segments' which requires operating segments to be identified and reported upon that are consistent with the level at which results are regularly reviewed by the entity's chief operating decision maker. The Chief Operating Decision Maker for the Group is the Intelligent Energy Holdings plc Board of Directors. Information on the divisions is the primary basis of information reported to the Intelligent Energy Holdings plc Board of Directors. The performance of the divisions is assessed on a non-IFRS measure being EBITDA (earnings before interest, tax, depreciation, amortisation and share of joint venture results).

The Group is strategically organised as three externally facing business units: Motive which focuses on fuel cell technology application in vehicles, Distributed Power and Generation which focuses on the provision of power and management services, and Consumer Electronics which focuses on the mass market application of portable energy and miniaturisation of fuel cell technology. These business units are supported by Platform Support which undertakes the Group's research and development activities and also provides back office support functions.

3 Earnings per share

Earnings per share is based on the Group's loss attributable to ordinary shareholders and a weighted average number of ordinary shares outstanding during the year.

The impact of share options, share warrants and potential ordinary shares associated with the convertible loan notes has an antidilutive impact on the earnings per share for the year ended 30 September 2014 and 30 September 2013.

3,780,600 share options (2013: 3,725,379), 5,446,133 share awards (2013: nil), 6,655,460 share warrants (2013: nil) and 15,689,840 potential ordinary shares in relation to the convertible debt (2013: 15,689,840) were excluded from the weighted-average number of ordinary shares used in the calculation of diluted earnings per share because their effect would have been antidilutive.

4 Property, plant and equipment

The cost of plant, machinery and equipment at 30 September 2014 includes £1,493,000 (2013: £1,508,000) of assets in the course of construction.

5 Intangible assets 

The cost of software at 30 September 2014 includes £835,000 (2013 £505,000) of assets in the course of construction.

The effective interest rate on short-term deposits at the year end was 0.87% and these deposits have an average maturity of 146 days. Short-term bank deposits include restricted bank deposits of £3,500,000 at 30 September 2014 (2013: £nil), held as security in relation to trading activities in India and are pledged until the maturity of the associated contract in June 2015.

8 Issued share capital

Shares were allotted during the period since 1 October 2013 as follows:

The issue of ordinary shares during the year generated additional gross funds of £109,938,000 (2013: £1,504,000) for the business.

Transaction costs in respect of equity issues have been deducted from equity (net of any related income tax benefit) to the extent that they are incremental costs directly attributable to the equity transactions that would otherwise have been avoided. The value of issue costs netted off equity in the year was £1,561,000 (2013: £nil).