Intelligent Energy Holdings plc

Annual Report for the year ended 30 September 2014

Highlights

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

• DP&G division:

› Remains on track to drive growth with a revenue opportunity of c.£650m per annum
› Has under contract over 10,000 telecom sites in India, the majority under a revenue generating interim agreement, with long-term contract potential
› Began to generate revenue from a standing start in March, equivalent to an annualised revenue of c.£50m by the end of the financial year

• Motive division:

› Continues to deliver on its milestones
› In June, added a further blue-chip Japanese car manufacturer customer, as well as signing an important option agreement to provide access to intellectual property with its existing European Premium Car Maker customer

• CE division:

› Launched Upp™, a hydrogen fuel cell portable power solution in Apple stores in the UK (post balance sheet event)
› Demonstrated a laptop-embedded fuel cell to indicate the future direction and scale of the opportunity

• Technology:

› Further enhanced the Group's already class-leading power densities across its technology platforms
› Air-cooled technology demonstrates a 30 per cent increase in stack power density in the latest Gen4 system when compared to the previous generation. Evaporativelycooled technology provides a corresponding improvement in excess of 15 per cent from the baseline of the prior year
› 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
› Strong second-half revenue growth following the launch of CE and DP&G

Strategic report

Intelligent Energy at a glance 2
Intelligent Energy business strategy 4
Chairman's statement 6
Chief Executive's review 7
Chief Financial Officer's review 11
Technology 14
Market overview and product applications 17
Principal risks and uncertainties 20
Corporate responsibility 24

Governance

Board of Directors 26
Directors' report 28
Corporate governance report 32
Audit & Risk Committee report 36
Nomination Committee report 38
Directors' remuneration report 40
Statement of Directors' responsibilities 56
Independent auditor's report 57

Financial statements

Financial statements 58
Notes to the annual financial statements 63

Shareholder information

Notice of Annual General Meeting 95
Company and shareholder information 101

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, and has also signed an option agreement to provide access to intellectual property ("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 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.

Dr Henri Winand

Chief Executive Officer

Intelligent Energy – at a glance

Intelligent Energy is an energy technology business which develops advanced, power-dense hydrogen fuel cell technologies providing highly efficient and clean power generation. The Group works with a range of major international companies towards the aim of embedding its technologies in mass market applications.

The Group's intellectual property and expertise are based around its proprietary fuel cell technologies, which are the product of over 25 years of research and development. Its technology portfolio includes the wider components necessary to turn its fuel cell technologies into systems and products, as well as the software capabilities to manage and optimise the performance and functionality of those systems and products. Its intellectual property portfolio (comprising over 400 patents granted and over 600 patents pending across more than 300 patent families) extends beyond its core fuel cell technology

to encompass patents, know-how and expertise in fuel cell related manufacture and the generation and supply of hydrogen fuel.

Intelligent Energy focuses its technologies on three target industrial sectors: Consumer Electronics, Distributed Power & Generation and Motive, and has recently commenced the fullscale commercialisation of its Consumer Electronics and Distributed Power & Generation divisions. Each of the Group's three divisions is supported by core technology development activities.

Consumer Electronics

Intelligent Energy's CE division focuses on using its compact hydrogen fuel cell technologies for the development of energy solutions for USB-compatible, portable electronic devices such as smartphones, digital cameras and gaming devices.

Distributed Power & Generation

Intelligent Energy's DP&G division provides a power generation and management solution for off-grid, decentralised power applications. Activities are initially being focused on the provision of power to telecom towers in emerging markets that lack a reliable and/or comprehensive central power grid infrastructure.

Motive

Intelligent Energy's automotive expertise includes the design and development of fuel cell systems for primary motive power, range extender and auxiliary power applications. The Group partners with some of the world's leading automotive manufacturers to provide the power technology and systems knowledge to make fuel cell electric vehicles a reality today.

Key strengths

› Leading energy technology company based on disruptive hydrogen fuel cell products and proprietary manufacturing processes
› Executing in multiple, large and growing markets
› Competitive advantage based on differentiated, flexible technology, which is underpinned by proprietary intellectual property ("IP") with high barriers to entry
› Go-to-market strategy in partnership with blue-chip market customers to address critical market needs
› Tailored business model by market to deliver at scale
› Capital to execute
› Experienced management team

Technology

The Group provides engineering solutions that enhance performance, efficiency and durability, whilst ensuring that manufacturing simplicity is maintained. Its technology has been developed with an appreciation of materials suitable for high-volume manufacturing. The Group focuses on the development of Proton Exchange Membrane ("PEM") fuel cells and fuel cell systems that will be cost effective when compared to competing technologies on both an operating cost and acquisition cost basis.

The Group continues to focus on improving the performance, in particular for Motive applications, and to apply its technology to commercial products on an industrial scale in Distributed Power & Generation and Consumer Electronics applications. Research and development of next generation fuel cell stack and system design continues, in order to meet customer driven product roadmap requirements.

Financial statements

Intelligent Energy – business strategy

Intelligent Energy's strategy is based on a philosophy of "design once, deploy many times" so that its flexible and scalable design architecture can, in time, be applied to a wide range of power applications across a wide range of industries.

Utilising its suite of technologies, Intelligent Energy is able to deploy a range of business models in order to expand its participation in the value chain of the industries in which its technologies are, or will be, deployed. In particular, Intelligent Energy intends to focus in the medium to longer term on selling access to IP, technology and related intellectual property to its original equipment manufacturer partners and other third parties (including non-OEM manufacturers) to generate a combination of upfront licence fee payments and ongoing royalty income.

Intelligent Energy's strategy is based on a threefold approach:

1. "Design once, deploy many times"

The key and continuing element of Intelligent Energy's strategy is the "design once, deploy many times" philosophy. With a flexible and scalable design architecture and a proven, modular production capability, its clean power technologies are suited to a wide range of applications from a few watt to being scalable well beyond 100kW. Designed for high-volume, low-cost manufacturing, Intelligent Energy's technologies are being used in a broad range of applications across its three business divisions: Motive, CE and DP&G. The Directors believe that the technologies within the business could be deployed, in time, across a wide range of industries, including the aerospace industry and medical sector.

In addition to providing the benefit of technical and commercial leverage around a small core of platforms, the "design once, deploy many times" philosophy offers the possibility of converged supply chains and even shared manufacturing hubs for the core modules. This has the potential to reduce overall technology development costs when compared with an approach based on different engine core designs for each industry segment.

2. Mass markets

The flexible and scalable design architecture of Intelligent Energy's fuel cell technologies allows the Group to choose the sectors and markets on which it wishes to focus. The Motive, CE and DP&G markets are growing mass markets and are global in nature. The Motive and CE divisions have, from their inception, addressed international markets, whilst the initial focus for the DP&G division is the Indian telecom sector where a significant number of telecom towers require dependable power against a backdrop of a limited and unreliable electricity grid infrastructure and expensive alternative solutions.

The Directors believe all three of Intelligent Energy's target market segments are already large, have the potential to experience further significant growth and offer significant potential to generate revenue for the Group.

In addition, none of the chosen opportunities are dependent on the performance of another segment, which results in a diversified business model.

3. Flexible business model

Intelligent Energy operates under a flexible business model enabling it to adapt its business to the differing needs of potential customers in its target markets and to the macro-economic climate as a whole. Working closely with its OEM and other customers, manufacturing partners and suppliers in its three divisions, Intelligent Energy can be responsive to their needs and flexible in the product specifications and services it provides. At the Group-wide level, the business model is capable of encompassing the selling of access to intellectual property, joint development and collaboration programmes with OEMs and manufacturers, and the provision of power generation and remote monitoring services. At a divisional level, or in a specific market, the balance of these activities that are being carried out at any particular time can vary.

In CE and DP&G, Intelligent Energy is targeting large, growing markets directly, in order to commercialise its technologies with the aim of generating immediate revenues. In Motive, and in time over its other divisions, Intelligent Energy intends to use the manufacturing capabilities and well-established routes to market of its OEM and other customers, manufacturing partners and suppliers to create efficient, low carbon solutions for mass markets by the selling of access to its technology and related intellectual property portfolio to those third parties, to generate both upfront payments and ongoing royalty income. Intelligent Energy's technology is designed for high-volume manufacture and so can offer its customers both reduced time-to-market and lower commercialisation scale-up risks than would be the case if they were to commence fuel cell design and development in-house.

Asset Management and Business Information Systems ("AMBIS")

The AMBIS unit is located at Intelligent Energy's head office in Loughborough, UK. It analyses, interprets and applies the information collected from deployed technologies.

Intelligent Energy's strategy is reinforced by the potential to use the tools and skills within its AMBIS unit to monitor its fuel cells and other power generating assets (including diesel generators managed by the DP&G division in India) remotely so as to identify efficiency and other important operational parameters. This capability can allow Intelligent Energy to actively manage the efficiency of deployed DP&G assets in the field, offer engine health monitoring data for Motive applications, and offer "in-app" fuel and energy related services to end users of CE products. The AMBIS unit capabilities are also able to support revenue generation opportunities across the Group.

Strategic report

Governance

Financial statements

Shareholder information

Chairman's statement

Paul Heiden non-executive chairman

"The Company's Admission to the Main Market of the London Stock Exchange in July 2014 raised £55.0m… and represents a significant landmark in Intelligent Energy's development, enabling access to public market financing for the future development of the business."

I am pleased to present the first annual results of Intelligent Energy since the Company's Admission to the Main Market of the London Stock Exchange.

The Company continues to make good progress in further developing and commercialising its fuel cell technology in what has been a transformational year for the business. Whilst the year has also had its challenges, the determination of the Board, management team and staff to achieve the Company's objectives remains undiminished.

As I discussed in last year's report, raising additional finance was a critical imperative this year. In March, the Company completed a private equity placement with Singapore's sovereign wealth fund, GIC, raising proceeds of £37.8m. GIC acquired 10 per cent of the enlarged capital of the Company and also subscribed for warrants over additional shares. These were subsequently exercised at the end of June, raising an additional £16.6m.

The Company's fundraising activity culminated in an Initial Public Offering and Admission to the standard segment of the Main Market of the London Stock Exchange on 9 July 2014, raising £55.0m. This represents a significant landmark in Intelligent Energy's development, enabling access to public market financing for the future development of the business and providing a market for institutional and retail investors to become shareholders.

I would like to mention a few notable achievements, more details of which can be found in later sections of this report. The Distributed Power & Generation division commenced trading in the second half and exited the financial year with over 10,000 telecom sites in India under contract, all from a standing start. The Motive division has continued its positive momentum, delivering on its existing development contracts, securing a major new customer and signing a significant option agreement to provide access to IP. The Consumer Electronics division completed the commercialisation of Upp, a portable energy supply that from November 2014 became available in Apple stores in the UK.

I am delighted to welcome Dr Caroline Brown to the Board of the Company as an independent Non-executive Director and Chair of the Audit & Risk Committee. Her experience will be extremely valuable and further enhances the skills and experience of the existing Board as we look to expand the business across its three market sectors. Dr Philip Mitchell's role on the Board changed in November 2013 when he transitioned from an Executive Director to a Non-executive Director, thus continuing to provide significant technical and engineering expertise.

In summary, I offer my thanks to everyone involved with Intelligent Energy for their contributions over the past year. I look forward to another year of good progress with further product commercialisation and significant yearon-year revenue growth. As with the introduction of any new and disruptive technology, the path to success is unlikely to be smooth but I am confident the business is well positioned to meet the challenges ahead.

Paul Heiden

Non-executive Chairman 28 November 2014

Chief Executive's review

"The second half of the year in particular saw strong revenue growth and we have started the new financial year with good momentum."

Dr Henri Winand chief executive officer 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 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.

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)

Further market overview information with regard to the Group's three business divisions can be found on pages 17 to 19 of the strategic report.

8 Chief Executive's review

The Upp™ digital advertising at Euston Station, London

CE division update

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 discussions 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 19 November 2014 and also through direct web sales at 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 update

During the first half of the year the DP&G division, through its wholly owned Indian subsidiary company Essential Energy, successfully fieldtested 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. Medium-term targets of 125,000 to 135,000 sites contracted remain on track, 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,1 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 2014,2 and the Indian Department of Telecommunications has recently proposed a rebate in the licence fee for mobile telecommunication operators running towers on green energy.3

¹ http://www.researchgate.net/profile/Shree_Krishna_Khadka2/publication/268152233_Comparative_Analysis_of_Solar-Wind_Hybrid_System_with_Diesel_Generator_System_in_Powering_Remote_ Telecom_Towers_of_Nepal_using_HOMER/links/5462de2b0cf2cb7e9da65c1f 2 http://www.wsj.com/articles/india-frees-diesel-prices-from-government-control-1413648469

³ http://articles.economictimes.indiatimes.com/2013-06-13/news/39952438_1_mobile-towers-renewable-energy-cell-towers

Intelligent Energy at the AfricaCom technology event in South Africa

Motive customers: stepping up through the licensing business model

	Suzuki	EPCM1	JCM2
Technology validation	✓	✓	✓
Joint development agreement	✓	✓	(✓) 3
Option agreement to provide access to IP	✓	✓
Licence exercise	✓
Royalties
1 European Premium Car Maker

2 Japanese Car Maker

3 Under negotiation

Motive division update

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 entered into.

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 ("EPCM"), 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 evaporatively-cooled technology 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 Group'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 bestin-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 roadmap 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.

10 Chief Executive's review

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.

" Intellectual property is the life blood of Intelligent Energy. Therefore, the Company 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.

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.4 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 Company 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.

Further details with regard to the Group's technology, progress during the year and intellectual property is shown on pages 14 to 16 of the strategic report.

Corporate and business update

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.

Outlook

CE division:

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

DP&G division:

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

Motive division:

› Expects to add further to its bluechip OEM customer base
› 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 at year end and no debt

4 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/359299/informatics-energy.pdf

Chief Financial Officer's review

"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."

John Maguire chief financial officer 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 intellectual property 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 Pound Sterling rate of exchange. Related costs are also charged on an underlying Rupee basis, forming a natural hedge on exchange rate movements.

12 Chief Financial Officer's review

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 fundraising 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 cash flow, 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 fundraising 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 Limited 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 receivables 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.

Governance

Financial statements

Shareholder information

" Subsequent to the end of the financial year, continued strong year-on-year revenue growth has been recorded. "

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.

Key performance indicators

CE division:

Progress in the short term in the CE division can be measured by reference to the aggregate number of Upp devices and fuel cartridges that will be sold and re-filled.

DP&G division:

Progress in the DP&G division can be measured in the short to medium term by the number of towers under contract, the number of sites that have fuel cells deployed and which are carrying second customers, together with the average revenue per site.

Motive division:

Progress in the Motive division in the short to medium term can be gauged by the number of key OEM customers and the stage of their journey in purchasing access to Intelligent Energy's IP and associated royalties.

Group risk factors

As with all businesses, the Group is affected by certain risks, not wholly within its control, which could have a material impact on the Group's long-term performance and cause actual results to differ materially from forecast and historic results. The principal risks and uncertainties facing the Group are set out on pages 20 to 23 of the strategic report.

Going concern

Intelligent Energy Holdings plc Annual Report for the year ended 30 September 2014

The Group's business activities, together with the factors likely to affect its future development and position, are set out in the Chief Executive's review section of the strategic report on pages 7 to 10. The financial position of the Group, its cash flows and liquidity position are described above. In addition, note 26 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposures to credit risk and liquidity risk.

As set out in the sections referred above, the business has a number of opportunities, some of which will absorb cash. The Directors believe cash is expected to be available, but in the absence of this the Directors retain the discretion to defer the investment in these opportunities. The Company meets its day-to-day working capital requirements through its cash resources. The current position of the Group and its development plans result in cash consumption for the foreseeable future.

After reviewing the 2014/15 budget and longerterm plans and considering any reasonably likely scenarios that may occur, alongside the significant year end cash and short-term deposits position of £88.9 million, the Directors are satisfied that, at the time of approving the financial statements, it is appropriate to adopt the going concern basis in preparing the financial statements of both the Group and the Parent Company. This view was supported by further investment of cash in the business outside the current level of cash consumption being discretionary, alongside a sensitivity analysis and stress tests undertaken at the year-end, which showed that some severe assumptions would have to be made before there is a negative impact.

John Maguire

Chief Financial Officer 28 November 2014

Technology

The Group's focus has been, and remains, the development and commercialisation of Proton Exchange Membrane ("PEM") fuel cells and fuel cell systems that are capable of high volume manufacture and are cost effective when compared to competing technologies on both an operating cost and acquisition cost basis.

Technology – background

PEM fuel cells:

› Are robust, relatively low temperature (<100°C) devices with rapid start up and response times
› Deliver clean electrical energy, utilising hydrogen as a fuel and oxygen (from the air), producing only pure water as a by-product. They have the highest power densities of all fuel cell types
› Are the most widely applicable fuel cell technology, spanning numerous market sectors with a power range from a few watt to being scalable well beyond 100kW
› Are akin to an internal combustion engine but with a materially higher efficiency. Unlike a battery, which stores energy internally, a fuel cell generates power on demand by drawing its fuel from an external store
› Can be quickly refuelled, are not subject to long recharging periods as with a battery, and can be sized appropriately to meet the run-time needs of the application because the hydrogen is stored separately and externally to the fuel cell

Progress

The Group continues to focus on improving performance, in particular for Motive applications, and to apply its technology to commercial products on an industrial scale in Distributed Power & Generation and Consumer Electronics applications. Research and development of next generation fuel cell stack and system designs continues, in order to meet customer driven product roadmap requirements. Work is ongoing to improve cost, performance and durability with considerable progress made on a number of key components.

Overcoming technology and production challenges to bring the Upp product to market, at commercially feasible costs and volumes, has been a challenging, significant and ultimately successful journey which has expanded the Group's know-how and expertise. This has added to the knowledge gained from establishing the ready-to-scale pilot production line in Japan with SMILE FC System Corporation, the Group's joint venture with Suzuki. This enhanced knowledge allows the Group's "design once, deploy many times" philosophy to extend to manufacturing technology and process. This provides the Group with a solid platform from which to deploy further CE products, to commence series production of its DP&G power units and to support future large scale deployments in Motive.

Air-cooled ("AC") stack technology – recent developments

AC technology offers one of the simplest possible constructs for a fuel cell with low component count leading to reduced assembly complexity and lower manufacturing cost. The Group's AC technology design has continued to be deployed successfully in Motive (e.g. with Suzuki), CE (e.g. Upp) and now in DP&G. Key activities over the year include:

› Successful progression of next generation AC stack technology design for Motive and DP&G applications. This technology has met power uplift requirements, with an increase in stack power output of 30 per cent when compared to the previous generation, and is considered to demonstrate best-in-class power density for air-cooled technology (figure 1). The stack continues to be validated against lifetime and environmental test conditions required by Motive and DP&G applications
› Development programme for next generation AC stack manufacturing technology focused upon cost reduction and component design for manufacture (DfM). In support of the DfM activities, the Group – in collaboration

Figure 1: Diagram showing the increase in power density by volume and weight, for Intelligent Energy's AC technology

with Johnson Matthey – has been successful in securing £1.6m of funding from Innovate UK (formerly the Technology Strategy Board). The programme of work will support the ongoing development of next generation fully automated stack assembly concepts

› The AC technology for Motive applications has continued to be matured under joint development activities with Suzuki. Validation testing of the stacks and 4kW system design against automotive requirements has been completed. DP&G has focused on cost down, field maintainability and volume manufacturability of its 305 units
› A miniature AC stack variant for consumer electronics applications has been taken through the product development process over the last 12 months, enabling the introduction of the Upp product to the market. In parallel, technology development has focused upon both stack and system cost reduction, for example, a reduced cell count at maintained power levels, reduced cost fuel cell components, and low cost system components. A next generation 10W system platform has been initiated which preliminary evaluation suggests may deliver a 20-25 per cent power density increase over the current Upp device
› In order to address the opportunity for the use of fuel cells as embedded power source components in thinner consumer electronics devices, work has started in the area of planar (flat) fuel cell structures. Towards the end of the financial year, an operational planar format of the AC technology was showcased at early stage technology readiness level in a laptop

Evaporatively-cooled ("EC") stack technology – recent developments

The Group's EC fuel cell is flexible in its application in both single and twin stack configurations and can be scaled up in a modular fashion. EC stacks are inherently much more compact than AC stacks and designed for higher pressure use and, therefore, EC stacks are particularly practical in systems where high power density is essential. Key activities over the year include:

› The reinforcement of 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
› The design and verification of the latest generation of EC pressed plate stack technology for automotive application. These latest generation fuel cell stacks are also being supplied to Intelligent Energy's Motive division for further applicationspecific engineering including for customer development programmes
› The next generation of system design. This has included the development of a lightweight and low-cost compressor for automotive applications, which is competitive against US Department of Energy targets, along with the demonstration of stack and associated sub-system operation from frozen conditions at -25°C
› Further increases in the current density and stack durability of the EC technology against realistic drive cycles in a complete fuel cell system configuration. To that end, a new EC 30kW single stack reference platform system was initiated in early 2014. This latest

Twin-stack, 100kW fuel cell system design concept (top view can be seen overleaf)

design has been predominately driven by automotive requirements but this system can be utilised in multiple application environments, in particular for Motive and DP&G. The system design makes use of the latest Intelligent Energy pressed plate stack design and performance parameters

› The creation of a twin-stack, 100kW fuel cell system design concept which demonstrates the Group's competence to deliver a high performance solution for prime-mover power source applications. This system-level capability, previously proven in the development and delivery of a high power fuel cell system for one of Intelligent Energy's automotive customers, underpins the Group's collaborative approach to working with OEMs and other partners

16 Technology

Top view of Intelligent Energy's twin-stack, 100kW fuel cell system design concept

Fuel for CE platforms

The Group continues to progress fuel development for CE applications and during the year significant progress has been made in the development and application of portable hydrogen fuel storage, particularly in metal hydrides. The Group's activities focus on:

› Metal hydrides: formed from metal alloy powders that absorb and release hydrogen at relatively low pressures. The first Upp fuel cartridge is a metal hydride cartridge. In the past financial year, the Group has developed the necessary processes to design, productise, certify and mass produce metal hydride cartridges for the Upp product. As part of this activity, the Group has had to overcome the technical and regulatory compliance challenges of bringing this technology to the consumer. As is often the case when bringing to market a new product in a new product category, this has been more time-consuming than anticipated
› Chemical hydrides: store hydrogen within their substrate through chemical bonds. They are significantly lighter and more energy dense than metal hydrides and can be used to produce cartridges at costs that are appropriate for a disposable cartridge, which should allow the Group to make a variety of fuel cell options available in the market
› "Super fuels": a term utilised by the Group as a generic term to cover future generation fuels which are highly energy dense. Often with a pedigree in space applications, this category of fuel is not widely available outside of research laboratories but fuel evaluation is being conducted at the Group's facilities, as well as in conjunction with various partners and research groups

Intellectual property

The Group believes that a strong, wide ranging intellectual property portfolio offers significant benefits both in generating revenues (for example, through technology-based payments in the Motive division) and protecting the Group's competitive position (for example, by creating a barrier to entry). The Group's commercial business models and technology platforms are underpinned by a large portfolio of intellectual property, both registered and unregistered. For that reason, the Group focuses on maintaining an intellectual property portfolio that supports the varied business models used in its three external facing divisions. Much of the Group's intellectual property portfolio was created within the Group but elements have been acquired throughout the Group's history.

The Group's patent portfolio includes more than 400 patents granted (and over 600 patents pending) across more than 300 patent families, which represents an increase in families of approximately 200 per cent year-on-year with a majority of that increase resulting from acquisitions during the year. The Group also maintains a significant body of confidential know-how and trade secrets. 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 objective is to create a strong overall portfolio that minimises any reliance on individual patents. From time to time this may result in the addition of patents through acquisition. For example, during the year the Group concluded two transactions to acquire technology and related patent portfolios with a primary relevance to its Consumer Electronics division.

Market overview and product applications

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

Consumer Electronics

Market overview

The consumer electronics market is reaching a critical juncture. The sophistication of smartphones and other mobile electronic devices has reached new levels: increasing processing requirements, screen resolution and size, as well as increased volumes of data transfers (figure 2), all place significant energy demands on the battery. There is growing recognition that the performance of consumer electronics devices is becoming compromised by limited battery life as traditional batteries (such as lithium-ion technology) struggle to keep pace. "Downtime" is becoming a more common user experience.

This provides a significant growth opportunity for the CE division. The division's first fuel cell consumer device, Upp, provides mobile power to USB-connected devices such as smartphones, feature phones, gaming devices, digital cameras and wearable technology. Independent from the electricity grid and with no need to plug in to a wall socket, it provides energy on demand. Power dense and with a 5W output, Upp provides up to a week's worth of power to smartphones.

With the objective of enabling "truly mobile" devices with no power or time restrictions, the CE division is also focusing efforts on developing an embedded fuel cell solution for future power hungry devices. A proof of concept within a portable power device was demonstrated before the financial year end. The aim of this focus is to transition to a high margin model, whereby access to the Group's technology will be sold to its OEM partners, generating royalty fees, as well as ongoing revenue from fuel sales.

The Group also believes that the rapid growth in the Internet of Things ("IoT"), the networking

of huge numbers of devices and processes, also offers further opportunities. Forecast to reach 26 billion devices by 2020,5 the IoT is expected to deliver enhanced consumer experiences in the form of home automation, entertainment and improved productivity but is likely to drive increased power consumption on mobile devices and means that previously off-grid devices will need a source of power.

Continued focus in the CE industry on reducing the environmental impact of products and services will also be a key market driver. Reducing CO2 emissions linked to the regular charging of handheld devices through power grids supplied by fossil fuels is one example. The Group believes that this focus should result in a heightened search for technologies that are less reliant on power grids and that fuel cells are well placed to meet the demands of that search.

Product applications

The strategy for the CE division is based on a phased product development plan, where, at each phase the need to plug into the power grid is removed.

Phase 1:

The Upp energy device, consisting of a portable Upp fuel cell and accompanying Upp Cartridge was initially unveiled in November 2013 at the AfricaCom conference in Cape Town, South Africa. The product offers on-demand energy that is independent from the power grid and suitable for powering a wide range of USB-compatible mobile devices. Once the reusable Upp Cartridge is empty, a customer simply exchanges it for a replacement cartridge at an authorised Upp Cartridge exchange point, paying for a refill with a recommended retail price of £5.95.

Figure 2: Explosive growth in data volumes Source: http://www.atkearney.co.uk/documents/10192/760890/The_Mobile_Economy_2013.pdf

18 Market overview and product applications

While this phase will generate revenues from Upp sales (both starter kits and repeat purchases of refilled Upp Cartridges; essentially "bottled energy"), the Group will also generate invaluable market data on pricing and "energy on-the-go" usage behaviour principally through the Upp App (which provides users with personal usage statistics, fuel cartridge exchange locations, FAQs and customer support access). This data will be used by the Group's Asset Management and Business Information Systems ("AMBIS") function to create actionable data for future product iterations and technology developments.

Phase 2:

The Group is investing in the development and testing of new technology to produce a fuel cell power generation product capable of being embedded directly into consumer electronics devices produced by, amongst others, the world's largest consumer electronics OEMs.

Phase 3:

The technology platform underlying the Upp device is scalable and, with relatively limited further development, can be used in low power distributed power applications, which are becoming increasingly common and which will not be restricted to the consumer electronics industry sector. The Group anticipates that advances in fuel cell technology will provide an efficient solution for generating highly distributed, lower power direct current using hydrogen with no AC to DC conversion.

Fuel for CE platforms

Several fuels have been evaluated by the Group for use in fuel cartridges. The CE division continues to focus on deploying metal hydride based Upp Cartridges for its first generation Upp devices. Work is also underway to develop a chemical hydride alternative to enable the production of

Figure 3: Average daily electricity grid outages in India

a disposable cartridge for the next generations of device. More details can be found in the Technology section of this report on page 16.

Distributed Power & Generation

Market overview

The DP&G division operates in the belief that fuel cell technology offers a significant opportunity to provide a more cost-effective and cleaner distributed power solution, particularly in the developing world where rapid population growth combined with a strained and/or aged infrastructure, means that the electricity grid is unreliable at best, unavailable at worst.

The main focus within the DP&G division for the financial year was the telecom tower market in India. This market has scale, customers are actively looking for better power generation solutions than existing diesel generators can offer, and the electricity grid within India does not provide a viable solution. Additionally, the market in India for the supply of power to telecom towers operates under long-term contracts with regular payment flows allowing an externally financeable business model which the DP&G division can exploit. Various alternative energy solutions (such as fuel cell, solar panel, wind power and biomass) are being operated across India but the Group believes that while other alternative technologies will find niche applications, fuel cell solutions can be the dominant alternative to diesel generators.

Market drivers in India:

› Rapid growth with mobile phone subscribers forecast to reach 1.24bn in 20156
› Served by over 400,0007 telecom towers and expected to grow to nearly 1m by 20178 (compared to 54,500 telecom towers covering the whole of the UK)
› Unreliable electricity supply in India: 70 per cent of Indian telecom tower sites are without grid power for more than 8 hours per day (figure 3)
› Diesel generators used to meet power supply shortfalls in the telecom industry consume 2.6bn litres10 of diesel per annum; generators are inefficient, emit high levels of CO2 and are becoming increasingly costly to operate
› Approximately 60 per cent of telecom tower infrastructure companies' operating costs relate to the provision of power
› The bulk purchase price of diesel charged by state owned suppliers is now linked to wider market prices following the lifting of government price controls on diesel in October 2014
› The DP&G division believes that any planned additional investment in grid reinforcement in India will only be sufficient, at best, to match the increase in demand and therefore will not address the existing power generation deficit

Product applications

The DP&G division will provide power management services in respect of passive power equipment at telecom sites along with tailored ownership and asset replacement models to meet customer requirements. The division expects to increase its margin by managing existing power assets under management more efficiently.

The DP&G division sub-contracts the provision of field services (such as maintaining and fuelling power generation equipment and maintaining batteries) to suitable service providers. The DP&G division believes that, as the prime contractor, it should be able to improve the performance of its sub-contractors and the delivery of power through contractor management and the effective use of the Group's AMBIS capability, which is experienced in monitoring fuel cell systems, as well as diesel generators and batteries.

Fuel cell deployment

The DP&G division is targeting an increase in the margin on its electricity usage charges by providing more efficient fuel cell generated power as a replacement to incumbent diesel generated power where fuel cells are economically appropriate (expected lower overall operating and maintenance costs should more than offset initially higher capital costs on deployment).

In India, it is estimated that, taking into account various factors, fuel cells will be suitable for 60 to 70 per cent of current telecom tower sites.

Source: Intelligent Energy (using data from Greenpeace report: http://www.greenpeace.org/india/Global/india/docs/cool-it/reports/telecom-report-may-2011.pdf)

Figure 4: Global CO2 emission legislation – reducing levels of CO2 Source: Intelligent Energy (using data from various available public sources).

During the financial year, planning continued for a phased roll out of hydrogen fuel cells in India with initial phased deployments expected in FY2014/15, which the Group believes will be facilitated by the scale offered by the division's ability to specify the replacement power generation assets on those sites under management and the length of its contracts. Where a fuel cell based solution is not the most appropriate economic or operational option for tower sites, other technologies will be employed for power generation in a manner that the Group determines best suits the operating parameters of the site in question. This may include other renewable power generation assets or the continued use of diesel generators.

Motive

Market overview

A key driver in the desire of car manufacturers to develop fuel cell electric vehicles and other lowcarbon technologies relates to the tightening of international emissions legislation. Governments and regulatory authorities around the world are taking steps to cut emission levels and to decarbonise road transport (figure 4). When compared to other low-carbon technologies, there is growing recognition that FCEVs offer a compelling, clean-power solution in the medium to long term. FCEVs produce zero CO2 and zero particulate emissions at the tailpipe, and combine high levels of performance with the desired range and fast refuelling similar to that experienced in a vehicle powered by a conventional internal combustion engine.

The market for FCEVs is expected to accelerate in 2015 with Asian car makers pioneering the introduction of FCEVs into the market. Following Hyundai's 2014 release of its first production fuel cell electric vehicle, the Toyota Motor Corporation has announced that its latest generation hydrogen powered sedan will be on the road in Japan by the end of this calendar year, with preparations underway to make the FCEV available in the UK, USA, Germany and Denmark by Summer 2015. Honda Motor Company also plans to make an updated model of its first FCEV available to the public in 2016.

In parallel to the commercialisation of FCEVs, the speed of deployment of hydrogen refuelling infrastructure has gathered pace over the past 12 months, particularly in Europe, Asia and North America. For example, the State of California has declared its support for the construction of 68 hydrogen refuelling stations by 2016 and, in October 2014, the UK Government announced an £11 million investment to help establish an initial network of up to 15 hydrogen refuelling stations by the end of 2015 as a step towards a 65 refuellingstation network by 2020. In turn, the roll-out of hydrogen infrastructure is driving a growing number of programmes aimed at increasing the production capacity of hydrogen, which can be used to provide fuel for FCEVs. The Group continues to be actively involved in a number of initiatives around the world to promote hydrogen infrastructure and deploy FCEVs. This involvement provides an opportunity for the Group to influence the pace of FCEV and infrastructure development, to raise Intelligent Energy's profile alongside its OEM and government partners and also to facilitate commercial opportunities between the Group and its project partners.

Taking their lead from the first mover Asian OEMs, clear evidence now exists that many of the other global car manufacturers are also accelerating their activities in relation to FCEV technology. These manufacturers are taking decisions imminently on who to partner with to develop and bring their FCEVs to market at scale in the coming years. With its technology offering bestin-class power densities and engineered for costcompetitive, high volume production, the Group is well-placed to provide a low-risk and accelerated route to market for automotive OEMs through its commercially attractive business model. The Group has seen increased levels of engagement with new potential customers which represent a substantial growth opportunity for the Group.

Product applications

There are three key application areas in which the Motive division is developing technologies and products for the automotive industry:

› Direct motive power (the vehicle "engine"): The Motive commercialisation strategy is to grant vehicle makers or their tier-1 supply partners access to the Group's IP to embed and implement its technologies into vehicles as the primary source of power for the drivetrain. This approach requires a high degree of integration in the clients' vehicles
› Indirect motive power (the vehicle "range extender", used to recharge the battery pack in a battery-electric vehicle during driving): creation of a standard range extender product to allow the Motive division to come to market and to generate product sales and revenues earlier than may be otherwise likely for a series-production direct motive power source application. This approach requires a lower level of integration into the customer's vehicle than is the case with a direct motive power application
› Other applications (non-automotive / auxiliary power units): the Group's fuel cell technologies can readily be deployed in other applications such as rail, marine, aviation and secondary power sources including auxiliary power units as and where suitable business cases exist

7 http://en.reset.org/blog/indian-telecom-industry-going-green

⁶ http://www.thehindubusinessline.com/todays-paper/india-will-get-next-400-million-mobile-users-five-times-faster/article1054909.ece

⁸ http://www.bridgetoindia.com/blog/market-projection-for-solar-in-the-telecom-sector-in-india/

⁹ http://www.trai.gov.in/WriteReadData/Recommendation/Documents/Green_Telecom-12.04.2011.pdf 10 http://www.bridgetoindia.com/blog/market-projection-for-solar-in-the-telecom-sector-in-india/

Principal risks and uncertainties

Risk management involves the identification and evaluation of risks and is ultimately the responsibility of the Group's Board of Directors to ensure that an effective risk framework and management system is in place. The Board is also responsible for setting the risk appetite of the Group.

A key objective of the Board and its senior management team is to safeguard and increase the value of the business and assets of the Group. Achievement of these objectives requires the development of policies and an appropriate internal controls framework to ensure the Group's resources are managed properly and that key risks are identified and, where possible, mitigated. It should be noted that the Company's risk management framework can only help to mitigate certain risks, rather than eliminate them entirely. Some of the risks identified will also be, to a greater or lesser extent, beyond the Company's influence or control. As the Group is developing new, complex and innovative technology products in new and developing markets some future risks may, as yet, be unknown.

Following the Group's Admission to the London Stock Exchange on 9 July 2014, the Board, in conjunction with the Audit & Risk Committee, has sought to make further improvements regarding risk management and internal controls. During this period, the Company has created a new senior management position of Head of Risk; a full review of the risk management framework, risk measures and risk classifications has been carried out with findings and recommendations presented to the Audit & Risk Committee. An external firm has also recently been selected to provide internal audit services to the Group and an internal audit programme is also in the process of being agreed. Key findings from the internal audit programme will be presented to the Audit & Risk Committee at appropriate intervals during the year. See page 37 of the Audit & Risk Committee report for further details regarding the internal audit process.

On a day-to-day level, each business function within the Group has responsibility for maintaining its own risk registers. These risk registers are then used as tools for identifying, evaluating, controlling, monitoring and mitigating risks.

A summary of the principal risks and uncertainties that could impact on the Group's performance is shown below and also details the mitigating actions that are being taken. Further information with regard to risk management and internal controls can be found within the Audit & Risk Committee report on page 37. The content of the table below is not intended to be an exhaustive list of all the risks and uncertainties that may arise within the Group.

Principal risk description Detail of risk Risk management

1 The Group is developing complex, innovative technology products which require further technical development and investment in infrastructure, along with significant adoption by customers. Material markets for fuel cell technology may never develop, or develop more slowly than the Group anticipates. In addition, fuel cells may never be as competitive as other competing technologies or as direct competitors continue to evolve.

Due to the complex, innovative nature of this technology, projects and programmes may not be delivered on time or on budget or may fail to achieve expected performance criteria in new product launches or result in deficiencies in the products that are launched. Such delays could create an impression that fuel cell technology is not suitable or ready, in turn materially impacting the adoption of the technology by customers.

Commercialisation of fuel cell products and technologies also depends upon achieving a suitable total cost of ownership of these products and cost effective implementation of the technologies, since currently fuel cell products are more expensive when compared with products based on existing technologies. The Group may not be able to sufficiently reduce the cost of these products without reducing their performance, reliability and durability, which could affect the willingness of customers to buy the product.

The Group has dedicated project managers who control, monitor and manage identified work packages to meet predefined delivery criteria, or escalate material issues internally.

The Group has protected budget and resources for critical projects to ensure competitive advantage and increase the likelihood of the technology meeting the desired performance criteria and cost within the relevant timeframe to satisfy likely markets.

	21

	Principal risk description	Detail of risk	Risk management
2	The Group is currently reliant on a small number of customers with various contractual obligations; failure to meet these commitments could result	The Group is reliant on revenue from a small number of customers and there can be no assurance that it will be able to retain or obtain additional customer relationships.	The Group has divisional Business Development teams to attract and retain both new and existing business, thereby reducing the reliance on a small number of customers.
	in contracts not being renewed, or termination of existing contracts.	Intelligent Energy has a number of customer contracts requiring adherence to milestones and service level agreements. A failure to adhere to these contractual commitments could lead to	Contractual commitments are closely monitored internally to underpin delivery and identify corrective action, if appropriate.
		financial penalties or in extreme scenarios the loss of future activity.	Due diligence processes are carried out where appropriate and prior to entering into agreements with new customers.
		The Group's customers may experience adverse trading conditions which in turn may affect their ability to continue or to do further business with the Group.	The Group seeks to maximise revenue opportunities by seeking to enter into long-term commercial arrangements with multiple sources of value.
3	The Group is dependent on a variety of third-party providers both in the manufacture of its products and the supporting operations.	The Group is reliant on third parties to successfully manufacture its products in the required numbers and to the required specification. As a consequence, the Group is and will remain exposed to the risks relating to the contract	The Group partners with industry-leading or specialist companies and has in place a detailed internal process to manage its key partners which includes Intelligent Energy staff being heavily involved in the set up phase with the CM.
		manufacturer's ("CM") business. These include: › CM ability to employ and retain suitably qualified staff	During the negotiation of commercial agreements, a balanced approach to apportioning risk is sought.
		› Level of investment the CM makes in factory premises	The Group seeks to develop long-term relations with its key suppliers in order to develop quality
		› CM ability to create and effectively manage the supply chain in order to successfully and consistently manufacture the Group's product to the required standards	manufacturing systems, which are flexible and scalable.
		› Reputational risks to the Group if the CM fails to meet legal or regulatory standards
		The Group will also continue to rely on third-party service providers to deliver its business plan. CE and DP&G will be dependent on third-party providers to provide logistics and distribution of products and equipment. Service providers will be used to provide field services for the assets in the DP&G division and to support cartridge return and refill processes for the CE division.
		Any failure by such third-party service providers to meet their contractual obligations to the Group could have a material adverse effect on the Group's business, financial condition, results of operations or prospects.

22 Principal risks and uncertainties

	Principal risk description	Detail of risk	Risk management
4	The Group is dependent on proprietary technology underpinned by intellectual property and may not be able to obtain, maintain, defend or enforce those intellectual property rights. The Group may also be exposed to litigation in the future in respect of intellectual property	The Group's success will depend in part on its ability to obtain, maintain, defend and enforce its patents and other IP rights that underpin its proprietary technologies and products. There is no assurance that for example: › Any currently pending or future patent will be granted	Intelligent Energy identifies and registers its IP where appropriate to aid enforcement of its rights and protects and challenges infringement, where appropriate. It also looks to regularly extend its proprietary knowledge through acquisition and continued ongoing research activities.
	infringement or product liability claims.	› The Group's patent applications will not be challenged by third parties	IP boundaries and ownership are integral parts of the contracts which the Group enters into at all levels in the business.
	›	Where patents have been issued to the Group, that others will not be able to design around such patents to create a competing technology or product	As part of a new employee's induction, IP training is given which emphasises the importance and relevance of IP to the Group's activities.
		› Competitors will not develop similar products which are not within the scope of the Group's patents	The Group has specialist in-house IP capability that oversees all IP activity including the management of external IP service providers.
		› The Group's IT systems can fully prevent a loss of IP through a cyber-attack	The Group has an IT security framework and roadmap in place which highlights the highest cyber risks. The roadmap is being implemented
		The business carried on by the Group means that it faces inherent risks in respect of IP infringement and product liability claims, each of which could materially adversely affect the Group's business, results of operations or financial condition.	with priority on highest risk items. As new cyber risks develop or are identified, the roadmap and priorities adjust accordingly.
5	Depending on the level of growth in the Group further funding is likely to be required, particularly relating to activities in the DP&G	The Group's longer term liquidity and capital requirements are difficult to predict. This depends on numerous factors, including the	The Group regularly forecasts its future cash flow requirements and monitors the level of future financial commitments.
	division.	success of the Group's products, the Group's R&D activities, relationships with third-party business partners and the impact of competing technologies and market developments. Furthermore, the Group's business plan must account for differing revenue generating activities and capital investment programmes	The Group engages with banks and investors from around the world to diversify potential sources of future investment.

across its three divisions, whilst also seeking to ensure that the Group has the capability to respond to strategic opportunities that may arise

In response to or as a result of any one of, or a combination of these factors, the Group may need to incur additional capital or operating expenditure or accelerate planned expenditure, and may therefore incur net cash outflows in excess of those anticipated in the business plan, requiring the need to raise additional financing.

in target markets.

	Principal risk description	Detail of risk	Risk management
6	The Group depends on key personnel and the failure to retain or attract suitably qualified employees could limit the growth of the business.	The success of the Group and its business strategy are dependent on its ability to attract and retain key management, commercial and technical personnel. The loss of the services of one or more members of the management group, or key technical, or commercial personnel, or the inability to recruit additional personnel as needed, may make it difficult for the Group to manage its business and meet its objectives. As a consequence its business, results of operations or financial condition may be adversely affected.	Intelligent Energy maintains regular contact with recruitment bodies to understand trends in the labour market and regularly monitors staff turnover. Following Admission of the Group's shares to trading on the London Stock Exchange, further consideration has been given to remuneration packages and long-term incentive arrangements offered to key personnel. The Remuneration Committee carries out benchmarking exercises on a regular basis to
			ensure key personnel are remunerated in line with industry levels.
7	The Group's growth strategy involves operating in new and emerging parts of the world where there may be additional complexity in delivering the business plan.	The Group's growth strategy relies in part on the expansion of its businesses in parts of the world which are less developed. The costs associated with entering and establishing in such markets may be higher than expected, and the Group	The Group employs personnel who have strong international backgrounds and puts in place experienced personnel to run and work in its overseas subsidiaries. Where appropriate, recruitment also takes place
		may face significant competition in such markets. The Group understands its business may face a	locally to ensure these businesses understand local markets, customs and working practices.
		range of risks and challenges in its initial target markets, including:	External advisers are sourced locally to ensure legal and regulatory compliance.
		› Difficulties in managing overseas operations
		› Difficulties and delays in contract enforcement and the collection of receivables under the legal systems of foreign countries
		› Regulatory and legal requirements affecting its ability to enter new markets through joint ventures with local entities
		› Changes to or inconsistent application of laws and regulations
		› Overcoming the logistical challenges of the supply and delivery of hydrogen
8	The Group is exposed to foreign currency exchange risk.	The Group's financial statements are prepared in Pound Sterling but once material revenue is generated from the Group's CE and DP&G divisions, the majority of the Group's business is expected to be carried out in currencies other than Pound Sterling. As a result, the Group is exposed to both translational and transactional foreign currency exchange risk.	The Group monitors foreign exchange rates on a weekly basis and enters into forward rate agreements where large value obligations exist at a known date, where deemed suitable.

Corporate responsibility

Intelligent Energy's core corporate values of integrity, pride, passion, innovation and resilience are extremely important within the business; they create the cultural context in which its employees work, as well as defining how fellow employees interact and the attitudes adopted towards the Group's customers. All business is conducted in an open, honest and ethical manner.

Employee involvement, consultation and development

Intelligent Energy attaches significant importance to good employee relations, employee engagement and employee development. The Group recognises its responsibilities for the fair treatment and equality of opportunity for all current and future employees in accordance with legislation applicable to the territories within which the business operates.

As part of its "Staying Informed" communications plan, Intelligent Energy has a range of communications mechanisms to ensure employees remain up to date on business issues. Monthly "Breakfast Meetings" are held at the head office in Loughborough, UK, where different departments and individuals provide updates on current initiatives and projects to the rest of the business. In line with this, an annual "State of the Nation" meeting is held with Dr Henri Winand, Chief Executive Officer, and other members of the Group Executive management team, to update all employees on key achievements of the closing financial year, together with an overview of the business plans and challenges for the year ahead. These messages are shared across all regions, albeit just under 90 per cent of the Group's workforce is currently based at Intelligent Energy's Loughborough, UK, head office.

Every other month, a "Drop-In Session" is held in the format of an informal question and answer session. Members of the Group Executive management team chair these sessions on a rotating basis, giving up to 20 employees at a time the opportunity to ask questions in an informal and relaxed atmosphere.

To further foster good employee relations, senior management meets on a regular basis with employee representatives in a forum called "Speak Easy." This forum provides an opportunity for employee concerns and suggestions to be shared and discussed.

Towards the end of the financial year ended 30 September 2014, all employees had the opportunity to take part in a Group-wide employee opinion survey, managed through an external provider. With a response rate of over 75 per cent, the survey provides valuable feedback on what is working well and future areas for improvement.

Intelligent Energy is committed to ensuring that its employees have the appropriate level of knowledge, skills and competencies for their current and any potential future job within the Group. Employees are actively encouraged to engage in personal and professional development to help them achieve their full potential. Of note, last year 80 courses were delivered, covering 246 employees and totalling 990 days of training. Programmes covered a range of technical, interpersonal and leadership training.

Diversity and employment

Intelligent Energy is committed to promoting equality and diversity and eliminating discrimination in all aspects of its employment and business. The Group's aim is to develop an environment that is free from discrimination where all individuals are able to freely contribute their skills and are encouraged to develop to their full potential.

Table 1 below provides a breakdown of employees by gender as at 30 September 2014, in relation to: i) the number of persons who were Directors of the Company, ii) the number of persons who were senior managers of the Group and iii) the total number of employees in the Group.

Health & safety

Intelligent Energy is committed to providing a safe working environment for all of its employees to work in, whether located at the head office site in Loughborough, UK, or one of its offices outside of the UK.

In January 2014, OHSAS 18001 Occupational Health & Safety certification was achieved through the British Standards Institution. This certification gives recognition to the health and safety management system deployed within the Group's main Loughborough, UK, head office site. This represents another major milestone within an overall goal of achieving continuous health and safety improvements.

During the course of 2014, Intelligent Energy has been conducting further health and safety training programmes for its employees, to ensure that key health and safety skills are in place in

Table 1: Diversity analysis

	Number of males	%	Number of females	%
Directors	8	88.89	11	11.11
Senior employees2	13	92.86	1	7.14
Employees	332	84.69	60	15.31
Total	353	85.06	62	14.94

1 Dr Caroline Brown was appointed to the Board of Directors on 2 May 2014.

2 Senior employees are classed as members of the Group Executive management team (other than Dr Henri Winand and John Maguire, who are counted within the Director numbers shown above, as they are Executive Directors of the Company) and other senior employees who were Directors of principal trading and investment subsidiaries of Group companies (as shown in note 19 of the financial statements) as at 30 September 2014.

order to perform job roles effectively and safely. Such training courses included high pressure gas training for principal engineers/test engineers and externally facilitated training in relation to high pressure pipe assembly. In 2015, plans are in place to introduce additional training modules, such as externally facilitated high voltage awareness courses for engineers in specific areas of the business.

Human rights

Intelligent Energy does not currently have in place a policy that specifically deals with human rights; consideration will be given as to whether a specific human rights policy is required in future over and above existing policies, taking into account the size and nature of the business and the areas of the world in which the Group has business operations. The Group recognises that elements of its supply chain are established in parts of the world where human rights issues are more prevalent and have been publicised in the context of manufacturing activities. The Group utilises its contracts to ensure that its suppliers operate to high standards and that compliance is capable of being monitored and audited.

The environment

Intelligent Energy's fuel cell technologies are focused on delivering more efficient and clean energy in its mass markets, thereby having a positive impact on the environment. Thus, it is no surprise that the Group also seeks to reduce its environmental footprint.

In September 2014, ISO 14001 certification of the Group's environmental management systems was achieved at its head office site in Loughborough, UK, following certification audits by the British Standards Institution; this gives recognition to Intelligent Energy's continuing work to manage and reduce its impact on the environment.

The six month certification process focused on environmental policies and procedures, including waste management, water discharge and chemical release to the atmosphere; consideration is also currently being given to the setting of power/consumption reduction targets and usage monitoring of consumables.

Table 2: Summary of total GHG emissions

Global GHG emissions data for period 1 October 2013 to 30 September 2014

Emissions sources:	Tonnes CO2 e1
Combustion of fuel & operation of facilities	49 tonnes2
Electricity, heat and steam purchased for own use	2,243 tonnes3
Company's chosen intensity measurement:	0.17
Emissions reported above normalised to tonnes per £1,000 of turnover

1 CO2 e – carbon dioxide equivalent, this figure includes greenhouse gases in addition to carbon dioxide.

2 It is to be noted that there are only limited combustion activities relating to heating activities on Intelligent Energy's main Loughborough, UK, site. The main heating requirement is fulfilled by a centralised combined heat and power plant located within the grounds of Loughborough University. Therefore, the attributable Scope 1 emissions related to combustion activities are relatively small. The emissions associated with the air conditioning and refrigeration equipment used on the site have been calculated from the service records detailing actual top-up quantities, using the guidance provided in Annex C of the DEFRA Environmental Reporting Guidelines.

3 The Scope 2 emissions include emissions in relation to electricity usage at Intelligent Energy's Loughborough site. In addition, the emissions related to the heat supplied to the Company by the centralised combined heat and power plant located within the grounds of Loughborough University are also included.

Greenhouse gas emissions

This is the first greenhouse gas ("GHG") emissions report produced by the Company following its Admission to the London Stock Exchange on 9 July 2014. As table 2 shows, data has been prepared for the reporting period of 1 October 2013 to 30 September 2014, in accordance with the principles and requirements of the Greenhouse Gas Protocol, Revised Edition, ISO 14064 Part 1 and DEFRA guidance on how to measure and report on greenhouse gas emissions 2013.

All emission sources have been reported as required under the Companies Act 2006 (strategic report and Directors' reports) Regulations 43 – see Companies Act 2006 (strategic report and Directors' reports) Regulations 2013 paragraph 18.

These sources fall within the Company's consolidated financial statements. The Company does not have responsibility for any emission sources that are not included in its consolidated statements. In compiling the Company's GHG data, the GHG Protocol Corporate Accounting and Reporting Standard (revised edition) has been used, together with the Company's own GHG reporting procedure and emission factors from the UK Government's GHG Conversion Factors.

All material emissions from within the organisational and operational scope and boundaries of the Company are reported. These reported emissions cover all entities over

which the Company had financial control as of 30 September 2014. Emissions from entities and assets acquired or disposed of during the reporting period (i.e. disposed of before 30 September 2014, or acquired after 1 October 2013) are not accounted for within the reported GHG data.

As this is the first financial reporting year in which the Company has been required to disclose its GHG emissions data within its Annual Report, the above data represents the baseline against which reduction targets will be set. However, it is recognised that Intelligent Energy is a rapidly expanding organisation. Both its structure and asset ownership may develop substantially during the next few years; this will require the boundary approach to be reviewed on an annual basis in order to ensure that it continues to suitably represent the Company's carbon emissions.

The strategic report set out on pages 1 to 25 was approved by the Board of Directors and signed on its behalf by:

Nicholas Heard

Company Secretary 28 November 2014

26 Board of Directors

Governing Board member of the European Union's Fuel Cell Hydrogen Joint Undertaking (FCH JU) and Treasurer of the FCH JU's New Industrial Grouping. Member of the UK Government's Green Economy Council, advising the Secretaries of State for Mr Heiden has extensive experience at the most senior levels of industry in a career which has spanned a range of leading engineering, manufacturing and technology companies. These include Rolls-Royce plc, where he was Group Finance Director, and, most recently, FKI plc, where he was Chief Executive Officer. He has extensive experience in the UK, USA and EU. Until recently Mr Heiden was also the Chairman of Talaris Topco plc, a company owned by the Carlyle Group, and United Utilities plc. Mr Maguire has Board-level experience of listed and unlisted technology rich companies. He joined the Company from Etisalat Nigeria, where he was CFO of the mobile operator during its initial rapid growth phase. He was previously CFO at FTSE 250 THUS Group plc for eight years, and prior to that worked in a number of senior finance positions, including Vice President Finance Japan and Asia, Cable & Wireless, based in Tokyo. Mr Maguire is a Chartered Accountant, having trained with Ernst & Young. Before joining the Company Dr Winand was previously Vice President of Corporate Venturing at Rolls-Royce plc. During his time with Rolls-Royce, he managed a power systems business, introduced new manufacturing technologies into the group and was responsible for defining and supervising the implementation of strategies for deriving additional value from the group's technology assets. Dr Winand has a PhD from the University of Cambridge, a Masters of Business Administration from the University of Warwick and a BEng from Imperial College, London. Until recently, Dr Winand was also a member of the University of Cambridge's Alumni Advisory Board. Mr Muller was one of the founding members of ARM Limited when it was created as a joint venture in 1990 between Apple and Acorn. Mr Muller occupied the post of Marketing Director and changed roles in 1996 to become Executive VP of Business Development before becoming Chief Technology Officer in 2000. Mr Muller brings unique experience in building a partnership-based business that has enabled a broad ecosystem of thousands of companies that collaborate together to create innovative technology solutions. Non-executive Director of the London Stock Exchange Group plc. Non-executive Director of Meggitt plc. Chief Technology Officer of ARM Holdings plc. 28 September 2012 1 September 2006 20 January 2012 22 June 2012 Non-executive Director of Jee Limited. Other current appointments Date of appointment Skills and experience non-executive chairman senior independent nonexecutive director chief executive officer and executive director chief financial officer and executive director

DECC, DEFRA and BIS.

Strategic report

Governance

Financial statements

Shareholder information

Martin Bloom independent non-executive Dr Caroline Brown independent non-executive director

Zarir J.Cama independent non-executive director

Flavio Guidotti non-executive director

Dr Philip Mitchell non-executive director

director	director	director
22 June 2012	2 May 2014	22 June 2012	15 July 2005	29 November 2013*
Mr Bloom has significant experience in building high-growth technology companies across a range of sectors. He has strong connections in Asia, in particular with Chinese businesses, institutions and government organisations. As Chairman of ReneSola, Mr Bloom helped this company to list on AIM London and then the New York Stock Exchange, steering the company through rapid growth to become a \$1.5 billion plus turnover company in just a few years.	Dr Brown manages early stage companies and divisions of FTSE100 groups in the energy and technology sectors and has worked as a corporate finance adviser to governments and energy companies with banks including Merrill Lynch, UBS and HSBC. She is an experienced Non-executive Director and has chaired the Audit Committees of WSP Group plc, Mirland Development Corporation plc and Bridge Energy ASA. Dr Brown holds a First Class degree and PhD in Chemistry from the University of Cambridge and a Masters of Business Administration from the Cass Business School, is a Fellow of the Chartered Institute of Management Accountants and is a Chartered Director.	Mr Cama is a former Chief Executive Officer of HSBC India and Malaysia, and was most recently Group General Manager of Group Management Office at HSBC Holdings plc prior to his retirement. Mr Cama's 44-year career at HSBC included a variety of senior management positions in Asia and the Middle East.	Mr Guidotti is an independent business consultant with over 30 years business experience. He has worked in investment banking, first for the Banque Européenne pour l'Amérique Latine (at the time a Fortis affiliate) and then for the Royal Bank of Canada. He has also managed various business divisions at the Southern Cone headquarters of ExxonMobil in Buenos Aires. In 1997, Mr Guidotti was appointed Senior Adviser to the President of the Central Bank of Argentina. Mr Guidotti is a CPA and holds a degree in Business Administration from the Universidad Católica Argentina, Buenos Aires, where he has also been Professor of General Management and Business Strategy for several years.	Dr Mitchell has spent over a decade in senior management roles at the Group, acting at various times since 2005 both in the capacity of Chief Technology Officer and Chief Operating Officer. During his time as an Executive Director, he was instrumental in driving forward the Group's technology platform development, intellectual property value creation and key strategic engineering partnerships. Prior to his employment with the Group, Dr Mitchell was a founder in 1995 of Advanced Power Sources Ltd, a predecessor of the Group, and was a member of Intelligent Energy's original start-up team in 2001. He has a BSc and a PhD in Chemistry from Loughborough University.
Chairman of ReneSola Limited.	Chief Financial Officer of The Penspen Group Limited.	Non-executive Director of HSBC Private Banking Holdings (Suisse) SA.	Director of Explotación San Pedro S.H.	Director of Root Ten Limited.
	Non-executive Director of Mirland Development	Non-executive Director of HSBC Bank Bermuda Limited.
	Corporation plc.	Non-executive Director of Tata Capital Plc.
		Non-executive Director of Tata Capital Pte Ltd Singapore and two of its subsidiaries.
		Chairman and Director of IL and FS Wind Power Management Pte Ltd and IL and FS Wind Power Trust Pte Ltd.		* Dr Mitchell was appointed as a Non-executive Director on 29 November 2013. He was originally appointed an Executive Director on 19 September 2005,

Director of I.B. Tauris & Co Limited.

Director on 19 September 2005, having also previously held various senior positions within the Company.

Directors' report

The Directors present their Annual Report and the audited Group financial statements for the year ended 30 September 2014.

The corporate governance report on pages 32 to 35, the Chief Financial Officer's report on pages 11 to 13 and the corporate responsibility section of the strategic report on pages 24 to 25, are each incorporated by reference into this Directors' report.

Future business developments and outlook

The Board's assessment and evaluation of future development and the outlook for each of the three trading divisions is included within the strategic report.

Directors

The names of the Directors of the Company as at the date of this report, together with their biographical details, are given on pages 26 and 27. There were no other persons, who, at any date during the year ended 30 September 2014, were Directors of the Company. Dr Philip Mitchell was appointed as a Non-executive Director (previously an Executive Director) on 29 November 2013; Dr Caroline Brown was appointed to the Board as an independent Non-executive Director on 2 May 2014.

The statement of Directors' responsibilities in relation to the consolidated financial statements is set out on page 56. Details of the Directors' service contracts are set out in the Directors' remuneration report on pages 40 to 55.

Appointment and removal of Directors

The Company's articles of association ("Articles") give the Directors the power to appoint and replace other Directors. Under the terms of reference of the Nomination Committee, any appointment must be recommended by the Nomination Committee for approval by the Board.

Following the Company's Admission to the Main Market of the London Stock Exchange as a standard listing on 9 July 2014, the Board has determined that, with effect from the 2015 Annual General Meeting ("AGM") and in light of the provisions of the UK Corporate Governance Code, all Directors will stand for re-election on an annual basis. Therefore, all Directors will offer themselves for election or re-election at the AGM to be held on 27 February 2015.

In accordance with subscription agreements between the Company and each of Meditor European Master Fund Limited ("Meditor"), Evolution Placements Corporation ("EPC") and Yukos International UK B.V. ("Yukos"), each of Meditor, EPC and Yukos are entitled to appoint one person to be a Non-executive Director of the Company, subject to that person satisfying any relevant requirements of the London Stock Exchange and to the shareholder in question holding shares and/or current share options equal to 10 per cent, or more, of the Company's issued share capital on a fully diluted basis. Each of these shareholders is also entitled to remove any person it so appoints and, in the event that a person it appointed ceases to be a Director, to appoint another person in his or her place. If Meditor, EPC or Yukos ceases to hold 10 per cent or more of the

Company's issued share capital on a fully diluted basis it will procure the resignation of any person it has appointed as a Director of the Company within a reasonable period of receipt of written notice from the Company requiring it to do so.

Flavio Guidotti was appointed to the Board as a Non-executive Director by EPC under the appointment rights stated above. Neither Meditor nor Yukos has appointed a Director to the Board (and Yukos does not currently hold the requisite number of shares in order to make an appointment).

Beneficial interests in significant contracts

None of the Directors has a material interest in any contract of significance to which the Company or any of its subsidiaries were party during the financial year ended 30 September 2014.

Director authorities

The Directors are responsible for managing the business of the Company and exercise their powers in accordance with the Articles, directions given by shareholder resolution and any statutes and regulations.

Insurance and indemnities

The Directors have the benefit of an indemnity from the Company in respect of its liabilities incurred as a result of their office. This indemnity is provided under the Company's Articles and satisfies the indemnity provisions of the Companies Act 2006 (the "Act").

The Company has taken out an insurance policy in respect of those liabilities for which the Directors may not be indemnified. Neither the indemnity nor the insurance provides cover in the event that a Director is proved to have acted dishonestly or fraudulently.

Annual General Meeting

The AGM of the Company will be held at the Burleigh Court Hotel, Loughborough at 2.00 pm on 27 February 2015. The notice convening the meeting is shown on pages 95 to 100 and includes full details of the resolutions to be proposed, together with explanatory notes in relation to such resolutions.

			Table 3: Issued share capital
	30 September 2013	Immediately following Admission on 9 July 2014	30 September 2014
Ordinary shares of 5 pence each	136,129,653	188,031,599	188,112,899

Capital structure

The Company's ordinary share capital was admitted to the standard listing segment of the Official List, and to trading on the London Stock Exchange's market for listed securities, on 9 July 2014. Table 3 above shows details of the Company's issued share capital, as at 30 September 2013, 9 July 2014 and 30 September 2014.

The Company has a single class of share, being ordinary shares of 5 pence each; full details of the rights accorded to the holders of these ordinary shares are set out in the Articles. Holders of the ordinary shares also have the rights accorded to them under United Kingdom Company Law, including the right to receive the Company's Annual Report, attend and speak at general meetings, appoint proxies and exercise voting rights. Each ordinary share carries the right to one vote at general meetings of the Company. All ordinary shares currently in issue are fully paid.

During August and September 2013 the Company issued 5 per cent unsecured convertible loan notes due 2017 in the principal amount of £32.5m. Of this amount, £2.0m was not paid, was deemed non-recoverable and was cancelled.

On 3 April 2014, £0.3m worth of convertible loan notes were converted into 103,315 ordinary shares.

In accordance with the convertible loan note instrument, upon the Company's Admission to the Official List of the London Stock Exchange, the convertible loan notes automatically converted into ordinary shares in the capital of the Company at a rate of one ordinary share for each 250 pence of nominal amount of notes (being principal plus accrued interest less applicable withholding taxes). Immediately prior to Admission, the principal amount of convertible loan notes outstanding (after the above cancellation and an earlier conversion at the option of the holder) was £30.2m. As at 30 September 2014, there were no amounts outstanding under any convertible loan notes.

On 21 February 2014, the Company and GIC Private Limited ("GIC") entered into a subscription agreement whereby GIC agreed to subscribe for 15,129,468 ordinary shares in the Company at a price of 250 pence per ordinary share. In addition, the Company agreed to issue warrants (with the right to subscribe for up to 6,655,460 ordinary shares at an exercise price of 250 pence per ordinary share) to GIC. These warrants were exercised in full by GIC on 27 June 2014, prior to their expiry date of 30 June 2014.

On 30 May 2014, the Group acquired from SiGNa Chemistry Inc. and its subsidiary, Fuel Cell Power Inc, a patent portfolio and related intellectual property relating to fuel cells and fuel cell systems, fuel cartridges and fuels for fuel cell systems as well as related tangible assets. As part of this consideration, SiGNa Chemistry Inc. agreed to subscribe for 100,000 ordinary shares at a price of 300 pence per ordinary share.

A total of 158,183,461 ordinary shares were in issue immediately prior to the Company's Admission to the London Stock Exchange. As part of the Admission process a total of 29,848,138 new ordinary shares were issued and allotted, to a combination of new institutional investors (a total of 16,174,251 ordinary shares at an issue price of 340 pence per share), to the holders of the 5 per cent unsecured convertible loan notes referred to above (a total of 12,526,400 ordinary shares at a conversion price of 250 pence per share) and to employee members of the 2013 Management Incentive Plan which vested upon Admission (a total of 1,147,487 ordinary shares in relation to tranche one). In addition, as part of tranche one of the award a total of 810,000 approved share options were granted and all remain outstanding at 30 September 2014.

During the 2013/14 financial year, a further 146,865 ordinary shares were issued and allotted in relation to the exercise of share options held through the 2001 and 2009 Share Option Schemes.

30 Directors' report

Outstanding share options and awards

The Company operates the following share schemes: the Intelligent Energy Holdings plc Share Option Scheme of 2009, the Intelligent Energy Limited Share Option Scheme of 2001 and the 2013 Management Incentive Plan.

Intelligent Energy Holdings plc Share Option Scheme of 2009 and the Intelligent Energy Limited Share Option Scheme of 2001:

Share options were granted to certain Directors, employees and former employees. All outstanding options are within their exercise period. Exercise periods vary with the last expiring on 1 August 2017. As at 30 September 2014, a total of 2,970,600 share options remained outstanding in relation to the 2001 and 2009 Schemes.

2013 Management Incentive Plan:

The Admission of the Company to the Official List and to trading on the London Stock Exchange was an Exit Event pursuant to the 2013 Management Incentive Plan and triggered the vesting of the awards to 31 selected employees. The awards pursuant to the scheme vest in 3 equal tranches, the first of which vested at Admission and the remaining two vesting on the first and second anniversary of Admission, respectively. The majority of the awards consist of share awards with a small proportion of the awards being HMRC approved share options (with an option exercise price of 100 pence per award share). Other than for certain specific exceptions, vesting of tranches two and three requires continued employment with the Group. Accordingly, in each of July 2015 and July 2016, the Company will be obliged to issue up to a maximum of 2,149,323 ordinary shares; a maximum total of 810,000 ordinary shares will also be issued upon receipt of exercise notices in relation to approved share options. The Board has no intention of making any further awards under the 2013 Management Incentive Plan.

Shareholder agreements and transfer restrictions

Prior to the Company's Admission to the London Stock Exchange, each of the Company's shareholders with holdings of 5 per cent or more of total issued share capital agreed to be bound by the terms of separate lock-up agreements. Such agreements were entered into with the Company by Meditor European Master Fund

Limited, Evolution Placements Corporation, GIC Private Limited, Yukos International UK B.V. and F&C Asset Management. The lock-up agreements (which, subject to certain limited restrictions, prevent the sale of 78 per cent of the shareholding held by the shareholder in question as at Admission) will expire on 4 January 2015.

Each of the Company's Directors with an interest in the Company's ordinary shares immediately following Admission has also agreed that, subject to certain customary exceptions, during the period from Admission until the publication of the Company's consolidated annual results for the financial year ending 30 September 2014, they will not, without the prior written consent of the Company's joint bookrunners, offer, sell or contract to sell, or otherwise dispose of any ordinary shares, or enter into any transaction with the same economic effect as any of the foregoing. Those restrictions have, therefore, now ceased to be of effect.

From time to time the Company will enter into confidentiality arrangements with proposed counterparties to potential

significant transactions, pursuant to which such counterparties (who may from time to time include existing shareholders in the Company) will agree not to trade in the Company's shares pending the announcement (or discontinuance) of that transaction.

With the exception of the above, there are no specific restrictions on the size of a holding or the transfer of ordinary shares and the Directors are not aware of any other agreements between holders of the Company's ordinary shares that may result in restrictions on the transfer of securities or on voting rights.

Substantial shareholdings

As at 30 September 2014 and 27 November 2014 (being the latest practicable date prior to the publication of this document), the Company has been advised of the following substantial interests in the ordinary share capital of the Company, as detailed in table 4 below.

Table 4: Analysis of substantial shareholdings

Shareholder	Holding as at 30 September 2014	%	Holding as at 27 November 2014	%
Meditor Capital Management	27,408,010	14.57	27,408,010	14.57
Evolution Placements Corporation	25,450,096	13.53	25,450,096	13.53
GIC Private Limited	21,784,928	11.58	21,784,928	11.58
Yukos International UK B.V.	12,002,650	6.38	12,002,650	6.38
F&C Asset Management	10,846,466	5.77	9,150,607	4.86
Royalton Percy LLC	6,900,000	3.67	6,900,000	3.67
DNB Asset Management	6,252,764	3.32	6,205,952	3.30

The Company is primarily seeking to achieve capital growth for its shareholders and it is the Board's intention during the current phase of the Company's development to retain any distributable profits. Accordingly, the Directors do not anticipate paying a dividend in the foreseeable future. However, if the Company were to receive significant, upfront payments relating to the sale of access to IP from its customers and partners which were in excess of the projected capital requirements of the Group at such time, the Board would consider whether it would be appropriate to recommend a special dividend or another return of value to shareholders. In the long term, the Directors intend to follow a progressive dividend policy in respect of excess profits over and above what is required to fund the development of the Group.

Acquisition of the Company's own shares

The Companies Act 2006 and the Company's Articles permit shareholders to give authority to the Company to purchase its own shares. The Company has not sought such authority from shareholders and therefore no shares have been purchased by the Company during the financial year ended 30 September 2014. However, following the Company's Admission to the London Stock Exchange (and in common with the practice of many listed companies) the Directors will now be seeking to gain shareholder authority to purchase up to 10 per cent of the Company's issued share capital at the forthcoming AGM on 27 February 2015. If approved, the authority shall, unless varied, revoked or renewed, expire at the end of the Company's next AGM after the resolution is passed or, if earlier, at the close of business on 27 May 2016. The Directors have no present intention of exercising all or any of the powers conferred by that authority (assuming it is granted) and would only exercise those powers if it is in the interests of shareholders generally.

Articles of association

The Company's Articles were amended pursuant to a special resolution passed at a general meeting of the Company held on 30 May 2014. These amended Articles came into effect upon Admission on 9 July 2014.

Financial instruments

Information about the use of financial instruments by the Company and its subsidiaries is given in note 26 to the financial statements.

Research and development activities

Further information with regard to the research and development activities of the Company during the 2013/14 financial year can be found within the Chief Financial Officer's review on pages 11 to 13.

Employees

Further details in relation to employment policies, employee involvement, consultation and development, together with some of the human resource improvement initiatives implemented during the financial year ended 30 September 2014 are shown on pages 24 to 25 of the corporate responsibility section of the strategic report, which is incorporated by reference into this Directors' report.

Greenhouse gas reporting

The Directors are required to report on greenhouse gas emissions data in accordance with the UK mandatory reporting requirements as set out under the Companies Act 2006 (strategic and Directors' reports) Regulations 2013. Further details are shown on pages 24 to 25 of the corporate responsibility section of the strategic report, which is incorporated by reference into this Directors' report.

Political donations

The Company made no political donations during the financial year ended 30 September 2014 (2013: nil).

Going concern

Going concern is addressed in the Chief Financial Officer's review on pages 11 to 13.

International Financial Reporting Standards

The financial statements included within the Company's Annual Report have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

Independent auditor

Each Director at the date of approval of this annual report confirms that, so far as they are aware, there is no relevant audit information of which the Company's auditor is unaware, and 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. This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

KPMG LLP has expressed its willingness to continue in office as auditor and a resolution to reappoint it will be proposed at the forthcoming AGM.

Approved by the Board of Directors and signed on its behalf by:

Nicholas Heard

Company Secretary 28 November 2014

32 Corporate governance report

Paul Heiden non-executive chairman

Dear shareholder

Welcome to Intelligent Energy's first corporate governance report following the Company's Admission to trading on the London Stock Exchange on 9 July 2014.

As the Company's shares are admitted to the standard listing segment (rather than the premium listed segment) of the Official List of the Financial Conduct Authority, the provisions of the UK Corporate Governance Code (the "UK Code") are not applicable to the Company. However, the Directors have considered the principles and provisions of the UK Code when setting the Company's corporate governance policies.

The Board believes that good governance helps to underpin the success of the Company and its achievement of long-term objectives for the benefit of its shareholders.

During the year, Dr Caroline Brown joined the Board of Directors as an independent Non-executive director. She has also taken the role of Chair of the Audit & Risk Committee. Dr Brown's appointment further enhances the diverse skills and experience of the existing Board.

In the period prior to Admission, the Board also formally agreed the membership of its three sub Committees of Audit & Risk, Remuneration and Nomination, together with best practice terms of reference by which these Committees are to be governed. Further details with regard to the composition, purpose and outputs from these Committees to date can be seen on pages 36 to 55.

As Chairman, I take responsibility for ensuring that good governance is operated within the Group. The Board is accountable to the Company's shareholders for good governance and this report, the Audit & Risk Committee report on pages 36 to 38, the Nomination Committee report on pages 38 to 39, and the Directors' remuneration report on pages 40 to 55 describe how the Company seeks to meet the principles of good governance.

Paul Heiden

Non-executive Chairman 28 November 2014

* Dr Philip Mitchell was appointed as a Non-executive Director in November 2013 but prior to this held various Executive Director positions in the Company. The above statistics are based on Dr Mitchell's non-executive appointment date.

Governance responsibilities of the Board

Duties and responsibilities of the Board are confirmed via a schedule of matters reserved for its decision and this document has recently been updated in line with best practice corporate governance procedures. Such matters reserved for the Board include, amongst other things, responsibility for the overall leadership and strategic aims and objectives of the Company, capital structure, financial reporting, internal controls, approval of material contracts and major investments, Board membership and corporate governance.

Board composition

The Board maintains a balance of Executive and Non-executive Directors that is effective for the promotion of corporate objectives, the protection of the interests of all shareholders and stakeholders and for the governance of the Company as a whole.

At the end of the financial year to 30 September 2014, the Board comprised a Non-executive Chairman, two Executive Directors and six Non-executive Directors (four of which are classed as independent in accordance with the provisions of the UK Code). The Chairman is presumed under the UK Code not to be independent. The composition of the Board can be seen in figure 5.

Biographies of all Executive and Non-executive Directors are shown on pages 26 and 27 and on the Company's website at www.intelligent-energy.com, which also identifies any other key external appointments they hold.

Non-executive Directors

The Non-executive Directors have a range of experience, skills and backgrounds which enable them to make a valuable contribution to the Company and provide independent judgement and constructive challenge to the Board. They have a key role to play in setting strategy, scrutinising the performance of management in meeting agreed goals and objectives and monitoring the reporting of performance. They satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust. They are responsible for determining appropriate levels

of remuneration of Executive Directors and have a prime role to play in appointing and, where necessary, removing Executive Directors, and in succession planning.

Non-executive Director independence

Consideration has been given to the independence of the Company's Non-executive Directors. The Board considers that four of the Non-executive Directors are independent, being Michael Muller, Martin Bloom, Zarir J. Cama and Dr Caroline Brown. The remaining two Non-executive Directors, being Flavio Guidotti and Dr Philip Mitchell, are not considered to be independent (when considered under the best practice corporate governance provisions of the UK Code).

Flavio Guidotti was appointed as a Non-executive Director of the Company in October 2005 in accordance with the terms of a subscription agreement between the Company and one of its largest shareholders, Evolution Placements Corporation ("EPC"). This agreement entitles EPC to appoint one person to be a Non-executive Director of the Company, subject to that person satisfying any relevant requirements of the London Stock Exchange and to EPC holding shares and/or current share options equal to 10 per cent, or more, of the Company's issued share capital on a fully diluted basis.

Dr Philip Mitchell was appointed as a Non-executive Director in November 2013, having spent more than ten years in various senior management roles within the Group. During this time, Dr Mitchell has acted in the capacity of Chief Technology Officer and Chief Operating Officer and has been instrumental in driving forward the Company's technology platform development, intellectual property value creation and key strategic engineering partnerships. Due to his prior roles and length of time working within the Company he cannot be classed as independent under the provisions of the UK Code.

The role of the Chairman and Chief Executive

There is a clear division of responsibilities at the head of the Company between the running of the Board and the executive responsibilities for the running of the Company's business. No one individual has unfettered decision making powers. Paul Heiden, as Non-executive Chairman, is responsible for leading and managing the Board and ensuring it operates effectively. He promotes a culture of openness, encouraging all Board members to involve themselves in debate and apply sufficient challenge regarding major proposals, thus contributing to an effective decision making process. He also fosters relationships between the Non-executive Directors and the Executive Directors. He ensures that shareholder views are discussed at Board level and that communication with shareholders and other stakeholders is effective.

Dr Henri Winand, as Chief Executive Officer, is responsible for running the Company's business in close collaboration and support of the Group Executive management team. His role includes providing leadership to the Group Executive management team, developing proposals for the Board to consider in relation to matters reserved for its judgement and implementing any Board approved actions.

The role of the senior independent Non-executive Director

Michael Muller was appointed as senior independent Non-executive Director in January 2014. The role of the senior independent Non-executive Director is to provide a sounding board for the Chairman, to serve as a focal point to assist in resolving shareholder concerns which have not been resolved by the Chairman or Chief Executive, or in circumstances where a shareholder considers that communication with any of these Directors would be inappropriate. No such matters of concern were raised by shareholders during the financial year ended 30 September 2014. The senior independent Non-executive Director also oversees the assessment of the effectiveness of the Chairman's performance, and is available for the other Non-executive Directors to raise any issues or concerns.

Directors' conflicts of interest

The Chairman and the Non-executive Directors are permitted to serve as Directors of non-group companies provided it does not impinge upon their required time commitment to the Company. The Directors are required to declare any directorships for non-group companies or other appointments which could give rise to actual or potential conflicts of interest.

34 Corporate governance report

The Directors have a duty to avoid a direct or indirect interest which conflicts, or may possibly conflict, with the interests of the Company, unless that conflict has been approved by the Board. The articles of association of the Company give the Directors power to approve conflicts of interest, subject to certain conditions, such as, the meeting being quorate without the Director in question participating and/or that the relevant Director does not participate in the vote. No conflicts of interest were declared during the financial year ended 30 September 2014.

Annual re-election of Directors

In accordance with best practice corporate governance policies, the Board has decided that all Directors will stand for election or re-election at the forthcoming Annual General Meeting ("AGM") of the Company, due to be held on 27 February 2015, being the first AGM since the Company's Admission to the London Stock Exchange.

The Chairman is of the opinion that each Director's performance continues to be effective and that they demonstrate commitment to the role; as such the Chairman recommends a vote in favour of each of the resolutions to be put forward at the AGM in relation to the election or re-election of a Director.

Board support

The Company Secretary, in accordance with guidance from the Chairman, ensures that the Board and each of its Committees receive the necessary information to operate efficiently. All Directors have access to the services of the Company Secretary, who is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary is also responsible for advising the Board, through the Chairman, on all matters of governance and best practice. The Company Secretary also acts as Secretary to the Audit & Risk Committee, Remuneration Committee and the Nomination Committee.

The Directors may take independent professional advice on any matter at the Company's expense, if they deem it necessary, in order to carry out their responsibilities effectively.

Board performance evaluation

The effectiveness of the Board and its Committees is vital to the success of the Company. A formal internal evaluation process is being introduced to help assess Board and Committee performance on a regular

basis. As part of the Board's annual meeting calendar, and in accordance with best practice corporate governance principles, time is set aside for the Chairman to hold meetings with the Non-executive Directors, without the Executive Directors being present and for the Non-executive Directors (led by Michael Muller, the Board's senior independent Non-executive Director) to meet without the Chairman present, at least annually.

Attendance of Directors at meetings

Table 5 below shows the attendance of Directors at meetings of the Board, Audit & Risk Committee, Remuneration Committee and Nomination Committee, during the financial year ended 30 September 2014.

Under the relevant terms of reference for the Committees of the Board, the Audit & Risk Committee is required to meet at least four times per year, the Remuneration Committee two times and the Nomination Committee once.

Table 5: Director attendance at Board and Committee meetings

	Board1		Audit & Risk Committee2		Remuneration Committee		Nomination Committee4
	Number eligible to attend	Number attended	Number eligible to attend	Number attended	Number eligible to attend	Number attended	Number eligible to attend	Number attended
Paul Heiden	11	10	3	3	-	-	1	1
Dr Henri Winand	11	11	3	3	-	-	-	-
John Maguire	11	11	3	3	-	-	-	-
Michael Muller	11	11	5	5	4	4	1	1
Martin Bloom	11	11	5	5	4	2	1	1
Zarir J. Cama	11	11	5	5	4	4	1	1
Dr Caroline Brown3	4	4	3	3	3	3	-	-
Flavio Guidotti	11	11	3	3	-	-	-	-
Dr Philip Mitchell	11	11	3	3	-	-	-	-

1 In addition, ad-hoc meetings are held from time to time which are attended by a quorum of Directors and are convened to deal with specific items of business.

2 The Audit Committee became the Audit & Risk Committee on 2 May 2014. On 30 May 2014, the membership of the Committee was confirmed as Dr Caroline Brown (Chair), Michael Muller, Zarir J. Cama and Martin Bloom. Prior to this the Audit & Risk Committee membership comprised, in practice, the whole Board.

3 Dr Caroline Brown was appointed to the Board and its three Committees on 2 May 2014. Since her appointment Dr Brown attended each of the remaining Board and Committee meetings through to financial year end.

4 Prior to Admission, membership of the Nomination Committee comprised, in practice, the whole Board. As such, Nomination Committee business was incorporated into relevant Board meetings.

Shareholder engagement

The Board values the views of shareholders and recognises their interest, as owners of the Company, in strategy and performance, Board membership and quality of management.

Regular dialogue with the major shareholders was maintained by Intelligent Energy during the period prior to Admission. In preparing for the Initial Public Offering, senior members of the Board met with and briefed potential investors about the Group's operations and prospects. This involved both one-to-one and group meetings, conference calls and visits to the Group's head office in Loughborough, UK.

Since Admission, the Company has continued a dialogue with shareholders, in order to gain an understanding of their views in relation to the business. The Company's broker also regularly meets with the Board to provide investor feedback. The Company ensures that it maintains contact with new and existing shareholders through individual and group meetings and participation in relevant investor conferences and roadshows. The Chairman ensures that shareholder views are discussed at Board meetings and that communication with shareholders and other stakeholders is effective.

The Company's AGM is used to communicate with investors and documents will be sent to shareholders at least 20 working days before the meeting, in accordance with best practice corporate governance guidelines. The Chief Executive Officer makes a presentation at this meeting with regard to the Company's progress during the last year. The Chairman, Chief Executive Officer and the Chairs of each Board Committee will also be available to answer relevant questions. Separate resolutions will be proposed on each substantial issue so that they can be given proper consideration. Details of all proxy votes lodged on all resolutions prior to the meeting will be published on the Company's website as soon as possible after the AGM.

Formal communication channels, other than the AGM, are also used; these include the Annual Report, regulatory news announcements and press releases in response to events or routine

reporting obligations. This is supported by the provision of information to shareholders on the Company's website, in particular the investors section at www.intelligent-energy.com. All information reported to the market via a regulatory information service also appears on the Company's website as soon as is practicable.

Internal control and risk management

Further details regarding internal control and risk management within the Company can be found on page 37 of the Audit & Risk Committee report. The Company's principal risks and uncertainties are detailed on pages 20 to 23 of the strategic report.

Anti-bribery & corruption

The Company takes very seriously its responsibilities under applicable anti-bribery and corruption legislation (including the UK's Bribery Act 2010) and has in place appropriate measures to ensure compliance. During the course of the first half of calendar year 2014, a new anti-bribery & corruption policy was put in place; to accompany this, all employees (whether based in the UK or overseas) were also required to complete online training, designed to clearly communicate employee responsibilities and likely consequences of non-compliance. As part of the induction process, all new UK and overseas employees are required to take part in this online training and confirm their understanding of the policy in force.

Plans are also being made to introduce a new independent and externally facilitated whistleblowing hotline, details of which will be made available to all employees. It is envisaged this hotline will be launched early in 2015.

Audit & Risk Committee report

Membership and meetings of the Committee

Other members: Michael Muller

Chair: Dr Caroline Brown independent non-executive director

Martin Bloom independent non-executive director

senior independent non-executive director

Zarir J. Cama independent non-executive director

Purpose and aim

The Audit & Risk Committee is responsible for reviewing a wide range of matters and their key responsibilities are listed below. The Board of Directors has delegated to the Audit & Risk Committee responsibility for overseeing the financial reporting, internal control and risk management frameworks within the Company. This Committee is also responsible for making recommendations to the Board in relation to the appointment of the Company's external auditor, as well as whether to appoint an internal auditor in respect of the Group's operations.

Dr Caroline Brown became Chair of the Committee on 2 May 2014, immediately following her appointment to the Board on the same date. Prior to Dr Brown's appointment, Paul Heiden, as the Company's Chairman, performed the role of Chair of this Committee.

The Audit Committee became the Audit & Risk Committee on 2 May 2014. Then, on 30 May 2014, membership of the Committee was confirmed (as listed above); other members of the Board attend Committee meetings by invitation. All members of the Committee are independent Non-executive Directors who are free from any relationships or circumstances which are likely to affect, or could appear to affect, the Committee members' judgement.

Dr Henri Winand (Chief Executive Officer), John Maguire (Chief Financial Officer), other senior employees of the Group and representatives of both the external and internal auditors are also invited to attend meetings of the Committee where this is considered appropriate.

Prior to 30 May 2014, Committee membership comprised, in practice, the whole Board.

Nicholas Heard, the Company Secretary, has been Secretary to the Audit & Risk Committee since his

appointment on 2 May 2014; prior to this Pinsent Masons Secretarial Limited acted as Secretary to the Committee.

The Audit & Risk Committee meets as appropriate but at least four times per year. During the financial year ended 30 September 2014, the Committee met five times. Details of Director attendance at Audit & Risk Committee meetings held during the financial year ended 30 September 2014 can be found on page 34 of the Corporate Governance report.

Responsibilities of the Committee

Full details of the Audit & Risk Committee's roles and responsibilities are set out in its terms of reference, which were agreed by the Board in the period prior to the Company's Admission to the London Stock Exchange. These are available on the Company's website at www.intelligent-energy.com, or from the Company Secretary at the Registered Office. The key responsibilities of the Audit & Risk Committee are listed below:

› Monitor the integrity of the financial statements of the Company, reviewing all significant financial reporting issues and all judgements which they contain. This includes the annual and half-yearly reports and accounts, interim management statements and any other formal announcement relating to the Company's financial performance
› The categorisation, monitoring and overall effectiveness of the Company's risk assessment and internal control processes
› Monitor and review the effectiveness of the Company's internal audit function in the context of the overall risk management systems

› Review and assess the annual internal audit plan

The Group Executive management team has been delegated day-to-day responsibilities for maintaining adequate internal control and risk management systems. The Company has in place systems and procedures for exercising control and
› The formulation and deployment of Company accounting policies and procedures

managing risk in respect of its internal control

processes. These include:

› Policies governing the maintenance of accounting records, transaction reporting and key financial control procedures
› The safeguarding of assets from inappropriate use or from loss and fraud, and ensuring that liabilities are identified and managed
› Regular operational review meetings which include, as necessary, reviews of internal financial reporting issues and financial control monitoring
› Ongoing training and development of appropriately qualified and experienced financial reporting personnel

A review of risk management processes and the risk register has also recently been carried out, following the appointment of a new Head of Risk to the business.

Internal audit

The Board (on the recommendation of the Audit & Risk Committee) has selected an external firm to provide internal audit services following the completion of a formal tender process; an internal audit programme is in the process of being agreed, which will, amongst other things, include the DP&G business in India, stock control, billing cycles and financial controls. The internal auditor will present their key findings to the Audit & Risk Committee on a regular basis; the implementation of recommendations will then be followed up at subsequent Committee meetings. A review of the internal audit and scope of work covered is also the responsibility of the Committee, as is a review of the internal auditor's performance against the agreed internal audit programme.

External auditor

KPMG LLP has been the Company's external auditor since September 2012; the lead audit partner will be rotated every five years in accordance with the Auditing Practices Board's Ethical Standards for Auditors. Prior to the appointment of KPMG, the Company's auditor was Ernst & Young LLP.

› Consider and make recommendations to the Board, to be put to shareholders for approval at the Annual General Meeting ("AGM"), in relation to the appointment, re-appointment or removal of the Company's external auditor
› Oversee the relationship with the external auditor including recommendations on their remuneration, approval of their terms of engagement and assessing annually their independence and objectivity
› Review and approve the annual external audit plan and ensure that it is consistent with the scope of the audit engagement
› Review the adequacy and security of the Company's arrangements for its employees and contractors to raise concerns in confidence about possible wrongdoing in financial reporting or other matters. The Committee is responsible for ensuring that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action
› Report to the Board on how it has discharged its responsibilities

Committee activities during the year

During the financial year ended 30 September 2014 and to the date of this report, the key items that the Audit & Risk Committee considered were:

› Discussions with the external auditor on the audit approach and strategy, the audit process, key issues arising out of the audit and discussions regarding the Audit Report
› As part of the Initial Public Offering ("IPO") process, and in conjunction with the Board, a detailed consideration of the procedures and internal controls in place to meet the Financial Position and Prospects (FPP) guidance issued by the ICEAW for the listing on the London Stock Exchange, together with a detailed review of the financial statements included in the Prospectus issued by the Company in relation to the IPO
› Approval of the audit fees and the auditor's letter of engagement
› The independence, objectivity and effectiveness of the external auditors
› The appropriateness of the non-audit services provided by the auditors and the impact of such services on their independence
› The review of the preliminary internal controls and risk management framework, including a detailed review of the risk register, escalation processes of material risks to the Board and the disclosure of principal risks and uncertainties required for the strategic Report section of the Annual Report. As part of the review of risk frameworks a new position of Head of Risk was created
› The requirements for the Company to have an internal audit function
› The review of the Company's preliminary year-end announcement, Annual Report, halfyear report, Interim Management Statement and other regulatory announcements
› The review of the terms of reference of the Audit & Risk Committee and various other draft policies that need to be implemented

Financial reporting

The review of financial reporting, together with the performance in this regard of the Group Executive management team and the external auditor, is a primary role of the Audit & Risk Committee, as is reporting to the Board on the appropriateness of the half-year and annual financial statements concentrating on, amongst other matters:

› The quality and acceptability of accounting policies and practices
› The clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements
› Material areas in which significant judgements have been applied or discussions held with the external auditors
› Whether the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy

Internal control and risk management

The Audit & Risk Committee has overall responsibility for frameworks in relation to internal control and risk management within the business, and for reviewing the effectiveness of such frameworks on a regular basis. Such systems can only be designed to manage, and not eliminate risk. 37

Audit & Risk Committee report

The Committee considers the cost effectiveness, independence and objectivity of the external auditor on a regular basis, agrees their levels of remuneration and reviews the extent of non-audit services they provide.

Audit & Risk Committee meetings are attended by the external auditor at the invitation of the Committee Chair in order to ensure full communication of matters relating to the audit, including adequacy of controls and any material judgement areas.

The performance of the external auditor is reviewed on an annual basis by the Audit & Risk Committee, including the level of service provided. Based on this review, the Committee has concluded that at the present time the external auditor is operating effectively and that KPMG LLP continues to prove effective in this role. Therefore, a resolution proposing the re-appointment of KPMG LLP as the Company's external auditor will be proposed at the AGM, together with a further resolution to grant the Board authority to approve their remuneration.

Non-audit services

The Audit & Risk Committee does not currently have a formal policy regarding the appointment of the external auditor for the supply of non-audit services. Having been admitted to the standard listed segment of the London Stock Exchange in July 2014, the Audit & Risk Committee will be developing its policy in relation to non-audit services, to be formally agreed. The policy will outline which nonaudit services are to be pre-approved (being those which are of a routine nature, with a fee that is not significant in the context of the audit or auditrelated services), which services require the prior approval of the Committee and which services the auditor is excluded from providing.

During the year ended 30 September 2014, the main non-audit services provided by the external auditor were in relation to transaction services specifically regarding the Company's Admission to the standard listing segment of the London Stock Exchange. A breakdown of the fees earned by the external auditor for audit and non-audit services can be found in note 9 to the consolidated financial statements. The Audit & Risk Committee does not consider that the non-audit services provided in the period give rise to any conflict of interest or breach of independence of the external auditor.

Dr Caroline Brown

Chair of the Audit & Risk Committee 28 November 2014

Nomination Committee report

Membership and meetings of the Committee

Other members: Michael Muller

Chair: Martin Bloom independent non-executive director

senior independent non-executive director

Dr Caroline Brown independent non-executive director

Zarir J. Cama independent non-executive director

Flavio Guidotti non-executive director

Paul Heiden non-executive chairman

Purpose and aim

The Nomination Committee has overall responsibility for ensuring that the Board and its Committees have the appropriate balance of skills, experience, independence and knowledge of the Company to enable them to discharge their respective duties and responsibilities effectively. The Committee's key responsibilities are shown below.

Flavio Guidotti was Chair of the Nomination Committee in the period to 31 January 2014; after this date Martin Bloom assumed this responsibility.

Dr Caroline Brown became a member of the Committee on 2 May 2014, immediately following her appointment to the Board on the same date. The majority of the members of the Committee shall be independent Non-executive Directors of the Company.

Nicholas Heard, the Company Secretary, has been Secretary to the Nomination Committee since his appointment on 2 May 2014; prior to this, Pinsent Masons Secretarial Limited acted as Secretary to the Committee.

In accordance with the terms of reference for the Committee a quorum is two members. The Committee meets as appropriate, but at least once per year. During the financial year ended 30 September 2014, the Committee met once. Details of Directors' attendance

at Nomination Committee meetings held during the financial year ended 30 September 2014 can be found on page 34 of the Corporate Governance report. During the period prior to Admission, membership of the Nomination Committee comprised, in practice, the whole Board. As such, Nomination Committee business was incorporated into relevant Board meetings.

Responsibilities of the Committee

Full details of the Nomination Committee's roles and responsibilities are set out in its terms of reference, which were amended by the Board in the period prior to the Company's Admission to the London Stock Exchange. These are available on the Company's website at www.intelligent-energy.com, or from the Company Secretary at the Registered Office. The key responsibilities of the Nomination Committee are listed below:

› Regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) required of the Board and make recommendations to the Board with regard to any changes
› Give full consideration to succession planning regarding the Board, taking into account the challenges and opportunities facing the Company and the skills and expertise that will be needed in the future to address these
› Keep under review the executive and Non -executive leadership needs of the Company with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace
› Be responsible for identifying and nominating for the approval of the Board, candidates to fill Board vacancies in relation to both Executive and Non -executive Director roles, as and when they arise
› Before an appointment is made by the Board, evaluate the balance of skills, knowledge, experience and diversity of the Board, and, in light of the results of such evaluation, prepare a description of the role and capabilities required for a particular appointment

Committee activities during the year ended 30 September 2014

A key focus of the Committee during the year was to recommend to the Board the recruitment of Dr Caroline Brown, who was appointed to the Board and as Chair of the Audit & Risk Committee on 2 May 2014. Prior to Dr Brown's appointment a formal tender process was carried out with two external search consultants with expertise in the recruitment of Non -executive Directors. Following this tender process, Odgers Berndtson was appointed to conduct an appropriate search exercise. As part of the recruitment process a candidate brief was produced, taking into account amongst other things the skills, diversity and experience of the existing Board. A specific requirement for this role was previous accounting and/or audit experience at a senior level and a strong track record in corporate governance, to enable the successful candidate to become Chair of the Audit & Risk Committee. A rigorous assessment process was undertaken involving all members of the Board to select the most suitable candidate, culminating in the recommendation and appointment of Dr Brown.

In November 2013, the Nomination Committee recommended to the Board the appointment of Dr Philip Mitchell as a Non -executive Director (having previously been an Executive Director of the Company). Dr Mitchell has worked for the Company in a senior capacity since its inception (and was also a founder in 1995 of Advanced Power Sources Limited, a predecessor of Intelligent Energy); the Committee considered that his significant technical and engineering background would continue to complement the existing skill set of the Board.

In January 2014, the Nomination Committee also recommended to the Board the appointment of Michael Muller, who has been a Non -executive Director of the Company since June 2012, as Senior Independent Non -executive Director, and my appointment as Chair of the Nomination Committee itself.

Martin Bloom

Chair of the Nomination Committee 28 November 2014

Directors' remuneration report

Members of the Remuneration Committee

The members of the Remuneration Committee during the year ended 30 September 2014 were:

Chair: Zarir J. Cama independent non-executive director Other members: Michael Muller senior independent non-executive director Martin Bloom independent non-executive director

Dr Caroline Brown independent non-executive director

Purpose and aim

The Remuneration Committee has overall responsibility for the Remuneration Policy for all Executive Directors and the Company's Chairman. It is also responsible for recommending and monitoring the level and structure of remuneration for senior management. The Committee ensures that the remuneration policy is aligned to the Company's long-term strategic goals. Additionally it ensures that the remuneration policy attracts, retains and motivates Executive Directors and senior management of the quality required to run the Company successfully, without paying more than is necessary, having regard for the views of shareholders and other stakeholders.

Attendance at meetings

Details of Director attendance at Remuneration Committee meetings held during the financial year ended 30 September 2014 can be found on page 34 of the corporate governance report.

Responsibilities of the Remuneration Committee

The Committee's key responsibilities are determining, within agreed terms of reference which are available on the Company's website, www.intelligent-energy.com, the Group's policy on the remuneration of senior executives and specific remuneration packages for Executive Directors and the Chairman, and making recommendations for grants of awards under share-based schemes for Group employees.

Statement from the Chair of the Remuneration Committee

On behalf of the Board, I am pleased to present our first Directors' remuneration report since Admission to the London Stock Exchange on 9 July 2014 ("Admission"). In accordance with the requirements of the applicable remuneration reporting regulations, this report is presented in two sections:

› The Directors' remuneration policy this sets out our forward-looking remuneration policy for Directors and will be subject to a binding vote at the 2015 Annual General Meeting. This will be the first Annual General Meeting since Admission
› The annual report on remuneration this provides details of the amounts earned by Directors in respect of the financial year ended 30 September 2014 and how the Directors' remuneration policy will be operated for the financial year commencing 1 October 2014. This will be subject to an advisory vote at the 2015 Annual General Meeting

Our approach to remuneration

During the year the Remuneration Committee has formulated a new policy in respect of Executive Directors' remuneration to ensure that following Admission, the applicable policy is aligned with best practice while continuing to enable the Company to attract the right calibre of executives. Our reward strategy is to provide remuneration packages that promote the long-term success of the Company, with stretching performance conditions aligned to the high growth nature of our business, which are rigorously applied, attached to performance related elements.

Remuneration decisions in respect of the financial year ended 30 September 2014

In March 2014, we established the Company's 2013 Management Incentive Plan (the "MIP") in which 31 selected employees (including Dr Henri Winand and John Maguire) participate. The MIP incentivised participants by reference to, and enables them to share in, value realised by shareholders up to Admission. Vesting of the awards is staggered to further align participants' interests with those of shareholders and to provide a retention mechanism as the Company enters its next stage. Each award under the MIP crystallised at Admission by reference to the Offer Price as outlined in the annual report on remuneration. Each MIP award vested or will vest as follows; one third on Admission, one third on the first anniversary of Admission and one third on the second anniversary of Admission.

Prior to Admission, the Company undertook an Executive Director and senior management benchmarking exercise to ensure that the remuneration strategy and decisions relating to remuneration following Admission are reflective of our new status as a listed Company and fall within a market competitive range. Deloitte was appointed to act as an adviser to the Remuneration Committee in respect of this benchmarking exercise, which included a review of the total reward package. Details are outlined within the remainder of this report.

Annual bonus performance measures for the Executive Directors were based on delivery of revenue targets, successful fundraising rounds and key strategic objectives and programmes. Taking into account performance delivered, Dr Henri Winand, Chief Executive Officer, recommended to the Remuneration Committee that bonuses be paid only in exceptional circumstances for the 2013/2014 financial year. As a result, he stated that he would not seek to be awarded a bonus for the 2013/2014 financial year and recommended that Chief Financial Officer John Maguire be awarded a cash bonus of £75,000 in recognition of his significant contribution to the equity fundraising activity during the year. The Chief Executive Officer's recommendations were accepted and approved by the Remuneration Committee.

Remuneration in the year commencing 1 October 2014

The financial year commencing 1 October 2014 will be the Company's first full year as a listed Company and in which remuneration arrangements for the Executive Directors will be determined in accordance with the Directors' remuneration policy on the basis described in the annual report on remuneration.

The Executive Directors' salaries applying with effect from Admission will continue to apply for this financial year.

The Remuneration Committee will continue to monitor remuneration policy to ensure it remains aligned to the Company's business strategy and to the delivery of shareholder value.

Approval

The Directors' remuneration policy and annual report on remuneration that follow have been approved by the Board.

Zarir J. Cama

Chair of the Remuneration Committee 28 November 2014

42 Directors' remuneration report: Directors' remuneration policy

Introduction

The remuneration policy has been developed to ensure that post Admission, the Company is able to attract and retain the right calibre of executives to drive business performance. The components of remuneration reflect

that Intelligent Energy is a high growth Company and reward should be linked to the performance of the business. Performance measures enable executives to share in the success of the Company through the ability to earn larger awards where stretching performance targets are achieved.

Directors' remuneration policy

This part of the report sets out the Company's Directors' remuneration policy, which, subject to shareholder approval at the 2015 Annual General Meeting, shall take binding effect from the close of that meeting.

Executive Directors

Component Purpose and link to strategy	Operation	Maximum opportunity	Performance measures
Base salary Core element of fixed remuneration reflecting the individual's role and experience.	Salaries are usually reviewed annually. Salary levels are determined taking into account a range of factors, which may include (but are not limited to): › Underlying Company performance › Role, experience and individual performance › Competitive salary levels and market forces › Pay and conditions elsewhere in the Group	Whilst there is no maximum salary level, salary increases will normally be in line with the typical level of increase awarded (in percentage of salary terms) to other employees in the Group. Salary increases above this level may be awarded in certain circumstances, such as: › Where an Executive Director has been promoted or has had a change in scope or responsibility › To reflect an individual's development or performance in a role (e.g. a newly appointed Executive Director being moved to be aligned with the market over time) › Where there has been a change in market practice › Where there has been a change in the size and/or complexity of the business Such increases may be implemented over such time period as the Remuneration Committee deems appropriate.	n/a

Component	Purpose and link to strategy	Operation	Maximum opportunity	Performance measures
Benefits	To provide broadly market competitive benefits as part of the total remuneration package.	Executive Directors receive benefits in line with market practice, and these include private medical insurance and life insurance. Other benefits may be provided based on individual circumstances. These may include, e.g. relocation expenses, expatriate allowances and travel expenses.	Although the Remuneration Committee does not consider it appropriate to set a maximum benefits level, they are set at a level which the Remuneration Committee considers appropriate based on individual circumstances.	n/a
Retirement benefits	To provide an appropriate level of retirement benefit (or cash allowance equivalent).	Executive Directors are eligible to participate in the Company's defined contribution Group personal pension plan. In appropriate circumstances, such as where contributions exceed the annual or lifetime allowance, Executive Directors may take a taxable cash allowance instead of contributions to a pension plan.	Pension contributions (and/or cash allowance) are currently provided at the level of 4.5 per cent of salary for the Chief Executive Officer and 3 per cent of salary for the Chief Financial Officer. The Remuneration Committee proposes to review the level of retirement benefit provision with the intention to increase the level of contribution/cash allowance, but subject to a maximum of 15 per cent of salary. During the financial year commencing 1 October 2014, the Remuneration Committee intends to increase the level of contribution to the pension (or equivalent cash allowance) to 7 per cent of salary.	n/a
All-employee share plans	To create alignment with the Group and promote a sense of ownership.	The Company has adopted and proposes to operate a tax qualifying, all-employee Sharesave Plan in which the Executive Directors are eligible to participate by making monthly savings contributions over a period of three or five years linked to the grant of an option over the Company's shares with an option price which can be at a discount of up to 20 per cent to the market value of shares at grant.	The limit on participation under the Sharesave Plan will be that set in accordance with the applicable tax legislation from time to time. The contribution limit as at 30 September 2014 is £500 per month.	Not subject to performance measures, in line with HMRC practice.

Strategic report

Directors' remuneration report: Directors' remuneration policy

Executive Directors

Component	Purpose and link to strategy	Operation	Maximum opportunity	Performance measures
Annual bonus and	Annual bonus	Annual bonus	Annual bonus	Annual bonus
Deferred Bonus Plan ("DBP")	The Executive Directors' annual bonus arrangement rewards Executive Directors for achieving financial and strategic targets in the relevant year by reference	Performance measures and targets are reviewed annually and pay-out levels are determined by the Remuneration Committee after the year end, based	Maximum bonus opportunity for Executive Directors is 100 per cent of annual base salary.	Performance measures and targets are set annually reflecting the Company's strategy and aligned with key financial, strategic and/or individual targets. Stretching targets are required
	to operational targets and	on performance against the targets. The Remuneration		for maximum pay-out.
	individual objectives. DBP Provides a retention element through share ownership and direct alignment with shareholders' interests.	Committee has discretion to amend the pay-out should any formulaic output not reflect the Remuneration Committee's assessment of overall business performance. The application of clawback to annual bonus awards is summarised below this table. 50 per cent of any bonus earned is deferred into a share award under the DBP. DBP Awards under the DBP will be granted as a contingent award of shares or the grant of a nil-cost option, in either case vesting after a period of two years. Awards may be settled in cash at the election of the		At least 50 per cent of the bonus will be assessed against financial performance measures which may include revenue or profit or other key financial performance metrics of the Company. The balance of the bonus may be assessed against non-financial strategic measures and/or individual performance. Financial metrics Up to 20 per cent of the maximum potential will be earned for "threshold" performance (the minimum level of performance resulting in a payment). Up to 50 per cent of the maximum potential will be earned for "on target" performance and 100 per cent for "maximum" performance. Non-financial or individual metrics
		Remuneration Committee.		Vesting of any non-financial element of the bonus opportunity
		Deferral of any bonus is subject to a de minimis limit of up to £25,000.		will apply on a scale between 0 per cent and 100 per cent based on the Remuneration Committee's
		Awards under the DBP may be granted on the basis that the number of shares shall be increased to reflect dividends paid over the vesting period, or the Remuneration Committee may make a cash payment		assessment of the extent to which the relevant target has been met. The performance metrics that will apply for 2014/15 are set out on page 52 of the annual report on remuneration.
		equal to those dividends		DBP
		on release of the shares. The application of malus and clawback to DBP awards is summarised on page 45.		Deferred shares are not subject to any additional performance conditions after the application of the performance condition which determines the amount of bonus earned.

Strategic report

Governance

Financial statements

Shareholder information

Executive Directors

Component	Purpose and link to strategy	Operation	Maximum opportunity	Performance measures
Performance Share Plan ("PSP")	To incentivise Executive Directors, and to deliver genuine performance related pay, with a clear line of sight for Executives and direct alignment with shareholders' interests.	Long-term incentive awards are granted under the PSP. Awards under the PSP will typically be granted as a contingent award of shares or the grant of a nil-cost option, in either case vesting subject to the satisfaction of performance targets. Awards may be settled in cash (or granted as a right to a cash amount) at the election of the Remuneration Committee. Awards under the PSP may be granted on the basis that the number of shares shall be increased to reflect dividends paid over the vesting period, or the Remuneration Committee may make a cash payment equal to those dividends on release of the shares. The vesting of awards will be subject to the achievement of specified performance conditions, over a period of at least three years. The application of malus and clawback to PSP awards is summarised below this table.	The usual maximum award level under the PSP in respect of any financial year for Executive Directors is awards over shares with a value of 150 per cent of salary. The absolute maximum under the rules of the PSP in respect of any financial year for Executive Directors is awards over shares with a value of 300 per cent of salary. Awards above the usual maximum (but subject to the 300 per cent absolute maximum) may be made in circumstances including, but not limited to, recruitment.	Relevant performance measures are set that reflect underlying business performance. Performance measures and their weighting where there is more than one measure are reviewed annually to maintain appropriateness and relevance. At least 50 per cent of an award will be based on financial measures with the balance of an award based on financial and/or strategic measures. For threshold levels of performance 25 per cent of the award will vest, rising to 100 per cent of the award vesting for maximum performance. Below threshold performance, the award will not vest.

Information supporting the policy table

Performance measures

Performance measures for the annual bonus and PSP awards are selected to reflect the Company's strategy. Stretching performance targets are set each year by the Remuneration Committee taking into account a number of different factors. Reflecting the current stage of growth of the Company a significant focus of the measures will be related to revenue growth and the commercialisation of the Group's products.

The Remuneration Committee retains the discretion to adjust or set different performance measures or targets where it considers it appropriate to do so (for example, to reflect a change in strategy, a material acquisition and/or a divestment of a Group business or a change in prevailing market conditions and to assess performance on a fair and consistent basis from year to year).

Application of clawback and malus to variable remuneration

For up to three years following the payment of an annual bonus award, the Remuneration Committee may require the repayment of some or all of the award if there is a material misstatement or restatement of audited financial results, if the individual has committed gross misconduct or if information comes to light which, had it been known at the relevant time, would have affected a decision as to the extent to which that award would have vested.

The Remuneration Committee has the right to reduce, cancel or impose further conditions on unvested PSP and DBP shares in circumstances including where there has been: a material misstatement of audited financial results; a material failure of risk management; a material breach of applicable health and safety regulations or serious reputational damage to the Company. In addition, for up to three years

following the vesting of a PSP or DBP award, the Remuneration Committee may require the repayment of some or all of an exercised award (or may reduce or cancel a vested but unexercised award) if there is a material misstatement or restatement of audited financial results, if the individual has committed gross misconduct or if information comes to light which, had it been known at the relevant time, would have affected a decision as to the extent to which that award would have been granted or would have vested.

Operation of the DBP, PSP and Sharesave Plan

The DBP, PSP and Sharesave Plan will be operated by the Remuneration Committee in accordance with the relevant plan rules, including the ability to adjust the number of shares subject to awards and the option price in the event of a variation of share capital, demerger, special dividend, distribution or any other corporate event which may affect the value of an award.

46 Directors' remuneration report: Directors' remuneration policy

Early vesting of awards

As described on page 49, awards may vest earlier than anticipated in "good leaver" circumstances.

In the event of a change of control of the Company or other relevant corporate event (such as a demerger, delisting, special dividend or other event which may affect the value of an award), awards under the DBP and PSP may vest early as follows:

› DBP: awards would vest early on the occurrence of a change of control or other relevant corporate event in accordance with the rules of the DBP
› PSP: awards would vest early on the occurrence of a change of control or other relevant corporate event in accordance with the rules of the PSP. The Remuneration Committee shall determine the extent of vesting taking into account the extent to which the relevant performance condition has been satisfied. Such vesting would ordinarily be on a time pro-rata basis although the Remuneration Committee has the discretion not to apply time pro-rating

Options under the Sharesave Plan will vest early in the event of a change of control in accordance with the rules of the Sharesave Plan. Awards under any other all-employee share plan operated by the Company would also be expected to vest early on the occurrence of a change of control.

Legacy share plans - the Intelligent Energy 2013 Management Incentive Plan (the "MIP")

No further awards can be granted under the MIP. The Remuneration Committee will operate the MIP in accordance with its terms (which give the Remuneration Committee discretion to adjust the number of shares subject to awards in the event of a variation of share capital, demerger, special dividend, distribution or any other corporate event which may affect the value of an award and to settle awards, other than Approved Options, in cash). Outstanding awards under the MIP are scheduled to vest as to 50 per cent on 9 July 2015 (being the first anniversary of Admission) and 50 per cent on 9 July 2016 (being the second anniversary of Admission). Awards under the MIP may vest early in the event of a change of control of the Company (or other relevant corporate event) or on cessation of employment as described on page 49.

Non-Executive Directors

Purpose and link to strategy

To enable the Company to attract and retain Non-executive Directors of the required calibre by offering market competitive rates.

The Chairman is paid an all-inclusive fee for all Board responsibilities.

Non-executive Directors receive a basic fee and additional fees for holding the office of Senior Independent Director or chairmanship of a Board committee.

The Chairman's fee is determined by the Remuneration Committee and the fees of the other Non-executive Directors are determined by the Board.

Fees are based on the level of fees paid to Non-executive Directors serving on the board of similar-sized UK listed companies and the time commitment and contribution expected for the role.

Overall fees paid to Non-executive Directors will remain within the limits set by the Company's Articles of Association.

Operation Other items

Non-executive Directors may be eligible to receive benefits such as travel and other reasonable expenses.

The Non-executive Directors do not participate in the Company's share plans, incentive plans or pension plans.

Dr Philip Mitchell is also entitled to fees under a separate consultancy agreement for other services provided to the Company. These services are in connection with the management of the affairs of the Company and details of the amounts paid under these arrangements in the financial year ended 30 September 2014 are included at page 50

Legacy share options

Flavio Guidotti has outstanding share options, which are outlined on page 54 of the annual report on remuneration.

Illustration of application of remuneration policy

The charts below set out for each Executive Director an illustration of the application for 2014/15 of the remuneration policy set out on pages 42 to 45. The charts show the split of remuneration between fixed pay, annual incentive pay (annual bonus including any amount deferred under the DBP) and PSP on the basis of minimum remuneration, remuneration receivable for performance in line with the Company's expectations and maximum remuneration (not allowing for any share price appreciation).

350 0 0 700 1,050 1,400 Minimum performance 100% £372k Performance in line with expectations 55% £678k Maximum performance 30% £1,247k Total remuneration (£000) Dr Henri Winand John Maguire

Basic salary, benefits and pension Annual bonus PSP Basic salary, benefits and pension Annual bonus PSP

In illustrating the potential reward, the following assumptions have been made.

	Fixed pay	Annual bonus (including any amount deferred under the DBP)	PSP
Minimum performance	Fixed elements of remuneration only: › Base salary (being the latest known	No bonus	No PSP vesting
Performance in line with expectations	salary as at 1 October 2014) › Benefits for the year ended 30 September 2014	50 per cent of salary awarded	25 per cent of maximum award vesting (equivalent to 37.5 per cent of salary)
Maximum performance	› Pension assuming an employer contribution of 7 per cent of salary, with effect from April 2015 (reflecting the intention to move to this level of contribution from April 2015)	100 per cent of salary awarded.	100 per cent of maximum award vesting (equivalent to 150 per cent of salary)

Policy for the remuneration of employees more generally

The Company aims to provide a remuneration package that is competitive in an employee's country of employment and which is appropriate to promote the long-term success of the Company. The Company intends to apply this policy fairly and consistently and does not intend to pay more than is necessary to attract and motivate staff. In respect of Executive

Directors, a greater proportion of the remuneration package is "at risk" and determined by reference to performance conditions. The Company's Sharesave Plan encourages share ownership by qualifying employees in the UK and enables them to share in the value created for shareholders.

48 Directors' remuneration report: Directors' remuneration policy

Approach to recruitment remuneration

When hiring a new Executive Director, the Remuneration Committee will typically align the remuneration package with the above policy.

When determining appropriate remuneration arrangements, the Remuneration Committee may include other elements of pay which it considers are appropriate and necessary to recruit and retain the individual. However, this discretion is capped and is subject to the limits referred to below.

› Base salary will be set at a level appropriate to the role and the experience of the Director being appointed. This may include agreement on future increases up to a market rate, in line with increased experience and/or responsibilities, subject to good performance, where it is considered appropriate
› Pension and benefits will only be provided in line with the above policy
› The Remuneration Committee will not offer non-performance related incentive payments (for example a "guaranteed sign-on bonus")

Other elements may be included in the following circumstances:

› An interim appointment being made to fill an Executive Director role on a short-term basis
› If exceptional circumstances require that the Chairman or a Non-executive Director takes on an executive function on a short-term basis
› If an Executive Director is recruited at a time in the year when it would be inappropriate to provide a bonus or long-term incentive award for that year as there would not be sufficient time to assess performance. Subject to the limit on variable remuneration set out below, the quantum in respect of the months employed during the year may be transferred to the subsequent year so that reward is provided on a fair and appropriate basis
› If the Director will be required to relocate in order to take up the position, it is the Company's policy to allow reasonable relocation, travel and subsistence payments, in line with the Company relocation policy. Any such payments will be at the discretion of the Remuneration Committee
› The Remuneration Committee may also alter the performance measures, performance period and vesting period of the annual

bonus or PSP, if the Remuneration Committee determines that the circumstances of the recruitment merit such alteration. The rationale will be clearly explained in the following Directors' remuneration report

› The maximum level of variable remuneration which may be granted (excluding "buyout" awards as referred to below) is 400 per cent of salary

The Remuneration Committee may make payments or awards in respect of hiring an employee to "buyout" remuneration arrangements forfeited on leaving a previous employer. In doing so, the Remuneration Committee will take account of relevant factors including any performance conditions attached to the forfeited arrangements and the time over which they would have vested. The Remuneration Committee will generally seek to structure buyout awards or payments on a comparable basis to the remuneration arrangements forfeited. Any such payments or awards are excluded from the maximum level of variable remuneration referred to above. "Buyout" awards will ordinarily be granted on the basis that they are subject to forfeiture or clawback in the event of departure within twelve months of joining the Company, although the Remuneration Committee will retain discretion not to apply forfeiture or clawback in appropriate circumstances.

Any share awards referred to in this section will be granted as far as possible under the Company's existing share plans. If necessary and subject to the limits referred to above, recruitment awards may be granted outside of these plans.

Where a position is filled internally, any ongoing remuneration obligations or outstanding variable pay elements shall be allowed to continue in accordance with their terms.

Fees payable to a newly appointed Chairman or Non-executive Director will be in line with the policy in place at the time of appointment.

Service contracts

Each Executive Director has a service contract with the Company which may be terminated by the Company or Director by giving twelve months' notice. While the Remuneration Committee's policy is for the service contract of any newly appointed Executive Director to have a notice period of not more than twelve months, the Remuneration Committee retains discretion to set an initial notice period of up to 24 months reducing to twelve months after the initial twelve months of employment.

Details of the Directors' service contracts (or letter of appointment in the case of a Non-executive Director), notice periods and, where applicable, expiry dates, are set out in the table below:

Name	Commencement date1	Expiry2	Notice period
Paul Heiden	28 September 2012	27 September 2015	Three months
Dr Henri Winand	1 September 2006	-	Twelve months
John Maguire	20 January 2012	-	Twelve months
Michael Muller	22 June 2012	21 June 2015	Three months
Dr Philip Mitchell	29 November 20133	28 November 2016	Three months
Zarir J. Cama	22 June 2012	21 June 2015	Three months
Martin Bloom	22 June 2012	21 June 2015	Three months
Flavio Guidotti	15 July 2005	-	Three months4
Dr Caroline Brown	2 May 2014	1 May 2017	Three months

1 The commencement dates shown above confirm the original date of appointment for each Director to the Company's Board. Revised letters of appointment were then signed by the Chairman and each of the Non-executive Directors on 9 July 2014, being the date of the Company's Admission to the London Stock Exchange. The commencement dates shown above for Dr Henri Winand and John Maguire confirm their original appointment date as Executive Directors of the Company; the Executive Directors then signed new service agreements on 19 June 2014, ahead of the Company's Admission to the London Stock Exchange.

2 The continued appointment of each Director remains subject to annual shareholder re-election at the Company's Annual General Meeting in accordance with best practice corporate governance principles.

3 Dr Philip Mitchell was originally appointed as an Executive Director of the Company on 19 September 2005. The commencement date shown above relates to Dr Mitchell's appointment as a Non-executive Director of the Company.
4 Flavio Guidotti was appointed as Non-executive Director on 15 July 2005, but subject to the terms of a subscription agreement between Evolution Placements Corporation ("EPC") and the Company dated 21 October 2005. The Company may not serve notice to Flavio Guidotti without the consent of EPC, unless Mr Guidotti has committed a material breach of his duties to the Company, or EPC ceases to have the right to nominate a person for election to the Board of the Company.

Payments for loss of office

The principles on which the determination of payments for loss of office will be approached are set out below:

	Policy
Payment in lieu of notice	Each Executive Director's service contract contains provision for payment in lieu of notice at the discretion of the Company. Such payment would consist of basic salary for the notice period (or the balance of the notice period if relevant) and may also include benefits for the relevant period.
Annual bonus	This will be at the discretion of the Remuneration Committee on an individual basis and the decision as to whether or not to award a bonus in full or in part will be dependent on a number of factors, including the circumstances of the individual's departure and their contribution to the business during the bonus period in question. Any bonus amounts paid will be pro-rated for time in service during the bonus period and will be paid at the usual time (although the Remuneration Committee retains discretion to pay the bonus earlier in appropriate circumstances).
DBP	The extent to which any unvested award will vest will be determined in accordance with the rules of the DBP. If a participant leaves due to death, ill-health, injury, disability, the sale of his employer or any other reason at the discretion of the Remuneration Committee, the Remuneration Committee shall determine whether any unvested awards he holds will vest at cessation or at the normal vesting date. Unvested awards will lapse if the participant leaves for any other reason.
	If a participant leaves for one of the "good leaver" reasons referred to above, awards which have already vested at the date of cessation may be exercised during such period as the Remuneration Committee determines.
PSP	The extent to which any unvested award will vest will be determined in accordance with the rules of the PSP. Unvested awards will normally lapse on cessation of employment. However, if the participant leaves due to death, illness, injury, disability, sale of his employer or any other reason at the discretion of the Remuneration Committee, the Remuneration Committee shall determine whether the award will vest at cessation or at the normal vesting date. In either case, the extent of vesting will be determined by the Remuneration Committee taking into account the extent to which the performance condition is satisfied and, unless the Remuneration Committee determines otherwise, the period of time elapsed from the date of grant to the date of cessation. Awards may then be exercised during such period as the Remuneration Committee determines.
	If a participant leaves for one of the "good leaver" reasons referred to above, awards which have already vested at the date of cessation may be exercised for such period as the Remuneration Committee determines.
MIP	The extent to which any unvested award will vest will be determined in accordance with the rules of the MIP. Unvested awards will normally lapse on cessation of employment. However, unvested awards will vest at cessation if the participant leaves due to death and will continue and vest at the normal vesting date if the participant leaves due to disability or, at the discretion of the Remuneration Committee, for any other reason.
Mitigation	Where appropriate the Remuneration Committee would have regard to the departing Director's duty to mitigate loss.
Other payments	Payments may be made (in the event of a loss of office) under the Sharesave Plan which is governed by its rules and the legislation relating to such tax qualifying plans. There is no discretionary treatment for leavers under this scheme.
	In appropriate circumstances, payments may also be made in respect of accrued holiday, outplacement and legal fees.
	Where a buy-out award is made, the leaver provisions would be determined at the time of the award.

The Remuneration Committee reserves the right to make additional exit payments where such payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation), or by way of settlement or compromise of any claim arising in connection with the termination of a Director's office or employment.

Existing contractual arrangements

The Remuneration Committee retains discretion to make any remuneration payment or payment for loss of office outside the policy in this report:

› Where the terms of the payment were agreed before the policy came into effect

› Where the terms of the payment were agreed at a time when the relevant individual was not a Director of the Company and, in the opinion of the Remuneration Committee, the payment was not in consideration of the individual becoming a Director of the Company
› To satisfy contractual commitments under legacy remuneration arrangements

For these purposes, "payment" includes the satisfaction of awards of variable remuneration. In relation to an award over shares, the terms of the payment are agreed at the time the award is granted.

Statement of consideration of employment conditions elsewhere in the Group

The Remuneration Committee does not formally consult with employees as part of its process when determining Directors' pay. However, the Remuneration Committee is kept informed of general decisions made in relation to employee pay and related issues. As noted in the Directors' remuneration policy table, the level of salary increases of employees within the wider Group is considered when setting the base salary for the Directors.

50 Directors' remuneration report: annual report on remuneration

Statement of consideration of shareholder views

The Remuneration Committee considers shareholder feedback received on remuneration matters, as well as any additional comments received during any other meetings with shareholders. Prior to Admission, the Remuneration Committee consulted with shareholders in relation to the introduction of the MIP. The Company's share plans to be operated post-Admission were summarised

in the Prospectus, and the Remuneration Committee intends to consult with selected shareholders in respect of any significant changes to the Executive Director remuneration arrangements.

Annual report on remuneration

The following part of the remuneration report is subject to audit, other than the elements explaining the application of the remuneration policy for 2014.

"Single figure" of remuneration

The table below details the total remuneration receivable by each Director for the financial years ended 30 September 2014 and 30 September 2013. Where necessary, further explanation of the values provided are included in the footnotes to the table or the additional information that follows it.

		Salary and fees	Taxable benefits	Annual bonus	LTIP	Pension	Total remuneration
		£0001	£0002	£000	£0003	£0004	£000
Non-executive Chairman
Paul	2013/2014	111	-	505	-	-	161
Heiden	2012/2013	100	-	-	-	-	100
Executive Directors
Dr Henri	2013/2014	235	1	-	5,967	11	6,214
Winand	2012/2013	200	-	150	-	9	359
John	2013/2014	202	2	75	1,909	3	2,191
Maguire6	2012/2013	180	1	150	-	-	331
Non-executive Directors
Michael	2013/2014	46	-	-	-	-	46
Muller	2012/2013	40	-	-	-	-	40
Dr Philip	2013/2014	105	-	-	-	-	105
Mitchell7	2012/2013	150	1	60	-	-	211
Zarir J.	2013/2014	48	-	-	-	-	48
Cama	2012/2013	42	-	-	-	-	42
Martin	2013/2014	46	-	-	-	-	46
Bloom	2012/2013	40	-	-	-	-	40
Flavio	2013/2014	41	52	-	-	-	93
Guidotti8	2012/2013	40	26	-	-	-	66
Dr Caroline	2013/2014	21	-	-	-	-	21
Brown9	2012/2013	-	-	-	-	-	-
John	2013/2014	-	-	-	-	-	-
Rennocks10	2012/2013	10	-	-	-	-	10

1 The salaries and fees for 2013/2014 reflect the salaries and fees paid in respect of that year. Where salaries or fees were increased during the year, the figure is calculated as the aggregate of the pro-rated salary/fee for each part of the year.
2 In the "single figure" of remuneration table, the value in the "benefits" column is the taxable value of benefits received in the year. These are medical insurance and for Flavio Guidotti, taxable travel allowance.
3 In the "single figure" of remuneration table, the value in the "LTIP" column for Dr Henri Winand and John Maguire for 2013/2014 is the value related to the Company's 2013 Management Incentive Plan, calculated as set out in the "Long-term incentives" section below.
4 The pension figure represents the cash value of Company pension contributions paid to the Executive Directors' Group Personal Pension Plan or as a cash allowance.
5 The bonus to the Non-executive Chairman was in recognition of the additional activities and time commitment required in the period leading up to Admission.
6 The benefits and annual bonus amounts for John Maguire are slightly different to those stated in the Prospectus. The figures in the Prospectus were incorrect due to an input error. The difference of circa £3,000 is not material.
7 Dr Philip Mitchell was an Executive Director of the Company from 19 September 2005 until 28 November 2013. From 29 November 2013 Dr Mitchell was a Non-executive Director of the Company. From 2 December 2013, Dr Philip Mitchell also provided consultancy services through Root Ten Limited for the Company. These services are in connection with the management of the affairs of the Company. The fees referred to above for 2013/2014 represent his salary as an Executive Director in the period from 1 October 2013 until 28 November 2013 and his fees as a Non-executive Director and as a consultant in the period from 29 November 2013 until 30 September 2014. The fees referred to above for 2012/2013 represent his salary as an Executive Director during the period 1 October 2012 until 30 September 2013.
8 Flavio Guidotti holds office as a Non-executive Director, as a nominated Director of the Company by Evolution Placements Corporation (EPC). Fees for Flavio Guidotti's services are paid directly to EPC. Benefits relate to a travel allowance paid to EPC in respect of Flavio Guidotti's attendance at Board meetings and his other Board duties. Further details relating to the appointment of Flavio Guidotti as a Non-executive Director of the Company and the rights of EPC are shown within in the Directors' Report on pages 28 and 29.
9 Dr Caroline Brown was appointed as a Non-executive Director on 2 May 2014. The fees referred to above for 2013/2014 represent her fees as a Non-executive Director in the period from appointment until 30 September 2014. Dr Caroline Brown did not serve as a Director of the Company during 2012/13.
10 John Rennocks was a Non-executive Director of the Company until 30 November 2012. The fees referred to above for 2012/2013 represent his fees as a Non-executive Director in the period from 1 October 2012 until 30 November 2012. John Rennocks did not serve as a Director of the Company during 2013/14.

2013/2014 annual bonus

The annual bonus performance measures for the Chief Executive Officer and the Chief Financial Officer for 2013/2014 were based on delivery of revenue targets, successful fundraising rounds and key strategic objectives and programmes. Revenue of £13,619,000 and equity fundraising of gross £109,938,000 were delivered. No bonus was earned by the Chief Executive Officer. The Chief Financial Officer earned a bonus of £75,000 in recognition of his significant contribution to the equity fundraising activity during the year. Since the targets were set, and principally relate to a period prior to Admission, the Directors consider that they remain commercially sensitive and so they are not disclosed. Going forwards, the Remuneration Committee proposes to disclose bonus targets retrospectively when these are no longer considered to be commercially sensitive.

Long-term incentives

On 7 March 2014, awards under the Company's 2013 Management Incentive Plan (the "MIP") were granted to 31 selected employees, including Dr Henri Winand and John Maguire. Each award entitled the participant to share in a "MIP Pool" based on value realised by shareholders as calculated in accordance with the rules of the MIP. On Admission, the value realised was measured by reference to the Offer Price, with the "MIP Pool" being 16 per cent of the difference between the Offer Price of £3.40 and a threshold value of £2.30 (as defined in the plan rules). Dr Henri Winand's interest represented 25 per cent of the MIP Pool and John Maguire's interest represented 8 per cent of the MIP Pool.

Each participant's share of the MIP Pool was converted into a number of shares determined by reference to the Offer Price. The awards vested or will vest as a result of Admission with one third vesting on Admission, one third vesting on the first anniversary of Admission and the final third vesting on the second anniversary of Admission. Part of each of Dr Henri Winand's award and John Maguire's award were granted as share awards under which shares can be acquired for nil cost, and part of each award was granted as a tax qualifying option under which shares can be acquired on the payment of an exercise price of £1 per share. Although the second and third tranches of the awards will vest on the first and second anniversaries of Admission, they are not subject to any further performance conditions and so all three tranches of the awards are included in the "single figure" of remuneration table for 2013/2014. Vesting of the second and third tranches of the awards will ordinarily be subject to continued employment up to the vesting date.

Total number of shares subject to share award	Value of shares subject to share award1	Total number of shares subject to tax qualifying option	Value of shares subject to tax qualifying option1	Total value for the purposes of the "single figure" of remuneration table1, 2
	£000		£000	£000
1,733,769	5,895	30,000	72	5,967
540,405	1,837	30,000	72	1,909

1 For the purposes of the "single figure" of remuneration table, the value of a share is assumed to be £3.40, being the Offer Price at Admission. In the case of the tax qualifying options, the exercise price of £1 per share is deducted in calculating the value.

2 Part of Dr Henri Winand's share award that vested on Admission and all of John Maguire's share award that vested on Admission were satisfied in cash at the discretion of the Board, in accordance with the rules of the MIP.

Implementation of the Directors' remuneration policy in the financial year commencing 1 October 2014

Base salary and fees

The basic salaries for the Executive Directors and the fees for the Non-executive Directors were increased with effect from Admission. Those increased salaries and fees, which will continue to apply for the financial year commencing 1 October 2014, are set out in the table to the right:

	2014/15 base salary / fee
Paul Heiden (Non-executive Chairman)	£150,000
Dr Henri Winand (Chief Executive Officer)	£350,000
John Maguire (Chief Financial Officer)	£275,000
Non-executive Director (basic fee)	£45,000
Additional fee for holding the office of Senior Independent Director	£8,000
Additional fee for holding the office of Chair of the Remuneration Committee, or of the Nomination Committee, or of the Audit & Risk Committee	£8,000 (per Committee)

52 Directors' remuneration report: annual report on remuneration

Annual bonus and Deferred Bonus Plan

For the financial year ending 30 September 2015, the Chief Executive Officer and Chief Financial Officer will each be eligible to earn a bonus on the following basis.

	Opportunity The maximum opportunity for each of the Chief Executive Officer and Chief Financial Officer will be 100 per cent of salary.
Operation	50 per cent of any bonus earned will be payable in cash.
	50 per cent of any bonus earned will be delivered in the form of a nil-cost award under the Company's 2014
	Deferred Bonus Plan, which will ordinarily vest, subject to continued employment, after two years.
Performance	50 per cent based on Group
measures	financial performance measures and fundraising.
	50 per cent based on other personal measures.

The Committee considers that future revenue or fundraising targets and the strategic individual targets are matters which are commercially sensitive; they provide Intelligent Energy's competitors with insight into the Company's business plans and expectations and should therefore remain confidential to the Company. However, as discussed above, the Committee will disclose targets and performance against these retrospectively when these are no longer considered to be commercially sensitive.

Long-term incentives

For the financial year ending 30 September 2015, it is proposed that the Chief Executive Officer and Chief Financial Officer will be granted awards under the Company's 2014 Performance Share Plan on the following basis.

	Opportunity The maximum award for each of the Chief Executive Officer and Chief Financial Officer will be 150 per cent of salary.
Operation	Awards will be granted in the form of nil-cost awards under the Company's Performance Share Plan, with vesting subject to the satisfaction of performance conditions measured over the Company's 2015, 2016 and 2017 financial years.
Performance measures	Awards will vest subject to the satisfaction of revenue and order pipeline targets (measured independently) and subject in all cases to the Company's underlying financial performance over the Company's 2015, 2016 and 2017 financial years.

The Committee considers that revenue and order pipeline targets are matters which are commercially sensitive and provide Intelligent Energy's competitors with direct insight into the Company's medium term strategy and business plans and should therefore remain confidential to the Company. The Committee will disclose the performance targets, on a retrospective basis at vesting.

Payments made to former Directors during the financial year ended 30 September 2014

No payments were made during the financial year ended 30 September 2014 to any person who was not a Director when the payment was made but who had previously been a Director.

Payments for loss of office made during the year

No payments for loss of office were made during the financial year ended 30 September 2014 to any person who was a Director at any time in the year or any previous year.

Shareholding guidelines

The Remuneration Committee has adopted a guideline that Executive Directors will be required to acquire (within a five year period from Admission or, if later, from date of appointment) and retain shares with a value equal to 150 per cent of base salary and that 50 per cent of any after tax shares acquired on the vesting of an award under the Company's 2014 Performance Share Plan must be retained until the guideline is met. Only unfettered shares count towards this guideline (i.e. shares owned outright by the Executive Director or his spouse) or shares subject to awards under the Company's share plans which have vested (on a net of tax basis). For these purposes, the value of the shares is the value at the date of acquisition or, in the case of shares subject to vested share awards, the value of the shares at vesting.

The Chief Executive Officer currently meets the shareholding guidelines. The Chief Financial Officer does not currently meet the guidelines but is expected to achieve the required shareholding within the five year time period.

There are no shareholding guidelines that apply to the Non-executive Directors.

Statement of Directors' shareholdings and share interests

Shareholdings

The interests of the Directors and relevant connected persons in the Company's ordinary shares as at 30 September 2014 are shown in the table on the right.

Interests in the Company's share plans

The Directors held the following awards under the Company's share plans as at 30 September 2014. The performance measures applying to these awards have been met.

The tables below do not include the face value of the shares at the date of grant as at the time that the awards were granted, the shares did not have a face value.

Shares held by the Director and relevant connected persons as at 30 September 20141
40,000
370,903
21,574
0
1,245,834
20,000
0
25,450,0962
0

1 A breakdown of vested and unvested shares where the performance conditions have been met is shown below in the section "Interests in the Company's share plans." There are currently no unvested share awards where the performance conditions have not been met.

2 The ordinary shares in which Flavio Guidotti is interested are comprised of 25,390,096 ordinary shares held by Evolution Placements Corporation (Flavio Guidotti is an investment and business adviser to the shareholders of Evolution Placements Corporation) and 60,000 ordinary shares held by Prismoy International S.A. (a company of which Flavio Guidotti is the beneficial owner).

Dr Henri Winand

Plan	Date of grant	Type of award	Number of shares	Exercise price (pence)	Date from which exercisable	Expiry date
		Tax qualifying option (tranche 1)	10,000	100	9 July 2014	6 April 2017
2013		Tax qualifying option (tranche 2)	10,000	100	9 July 2015	6 April 2017
Management Incentive Plan	7 March 2014	Tax qualifying option (tranche 3)	10,000	100	9 July 2016	6 April 2017
		Share award (tranche 2)	577,923	0	The award is due to vest on 9 July 2015
		Share award (tranche 3)	577,923	0	The award is due to vest on 9 July 2016

John Maguire

Plan	Date of grant	Type of award	Number of shares	Exercise price (pence)	Date from which exercisable	Expiry date
2013 Management Incentive Plan		Tax qualifying option (tranche 1)	10,000	100	9 July 2014	6 April 2017
		Tax qualifying option (tranche 2)	10,000	100	9 July 2015	6 April 2017
	7 March 2014	Tax qualifying option (tranche 3)	10,000	100	9 July 2016	6 April 2017
		Share award (tranche 2)	180,135	0	The award is due to vest on 9 July 2015
		Share award (tranche 3)	180,135	0	The award is due to vest on 9 July 2016

54 Directors' remuneration report: annual report on remuneration

Flavio Guidotti

Plan	Date of grant	Type of Award	Number of shares	Exercise price (pence)	Date from which exercisable	Expiry date
Intelligent Energy Limited 2001 Share Option Scheme (as amended on 1 August 2003)	15 July 2005	Share option	350,000	80	15 July 2005	15 July 2015
Intelligent Energy Holdings plc 2009 Share Option Scheme	30 March 2011	Share option	175,000	150	30 March 2011	27 June 2015
Intelligent Energy Holdings plc 2009 Share Option Scheme	30 March 2011	Share option	115,000	150	30 March 2011	27 June 2016

On 25 October 2013, Dr Philip Mitchell exercised an option granted to him on 20 January 2003 to acquire 20,000 ordinary shares at an exercise price of £0.40 per share.

The following sections of the annual report on remuneration are not subject to audit.

Performance graph

The graph below shows the total shareholder return ("TSR") performance for the Company's shares in comparison to the FTSE All-Share Index for the period since Admission (9 July 2014) until 30 September 2014. The FTSE All-Share Index was chosen as the index against which to compare the Company's TSR performance because, in the opinion of the Directors, it illustrates the Company's TSR performance against a broad equity market index of UK companies. The graph shows the value, by the end of the 2014 financial year, of £100 invested in the Company's shares on Admission compared with £100 invested at that time in the FTSE All-Share Index.

Strategic report

Historical Chief Executive Officer remuneration outcomes

The table below shows details of the total remuneration, annual bonus and LTIP vesting (as a percentage of the maximum opportunity) for the Chief Executive for the year ending 30 September 2014. Note that this relates to the whole of the year ending 30 September 2014 and so is not directly comparable to the period used for TSR purposes.

	Year ended 30 September 2014
Total remuneration	6,214,000
Annual bonus as a percentage of maximum opportunity	0%
LTIP vesting as a percentage of maximum opportunity	n/a1

1 On vesting of the MIP, each participant was entitled to share in a "MIP Pool" based on value realised by shareholders as calculated in accordance with the rules of the MIP. Accordingly, it is not possible to express the value derived as a percentage of the maximum opportunity.

Change in Chief Executive Officer remuneration compared to the change in remuneration of the wider workforce

The table below illustrates the change in the Chief Executive Officer's salary, benefits and bonus between 2012/2013 and 2013/2014 compared to the average percentage change for all UK-based employees. UK-based employees have been selected as the comparator group reflecting that the Chief Executive Officer and Chief Financial Officer are UK-based.

	Salary	Benefits	Bonus
CEO	17.3%	11.7%	-100%
UK based employees	0.9%	11.7%	38%

Relative importance of spend on pay

The following table sets out the percentage change in distributions to shareholders by way of dividend and share buyback and the overall expenditure on pay (as a whole across the organisation). The change in the average number of employees is also shown.

	Year ended 30 September 2013 £000	Year ended 30 September 2014 £000	Percentage change
Dividends and share buybacks	0	0	n/a
Overall expenditure on pay	£18,478	£28,530	54.4%
Average number of employees	306	354	15.7%

Consideration by the Directors of matters relating to Directors' remuneration

Advisers

During the year ended 30 September 2014, Deloitte LLP was appointed by the Remuneration Committee to provide independent advice in relation to the Committee's consideration of matters relating to Directors' remuneration. Deloitte's fees for advice provided to the Remuneration Committee during the year ended 30 September 2014 were £34,100. Fees were charged on a time and materials basis and included advice to the Company during the year in relation to share plans and senior management remuneration.

Deloitte LLP is a member of the Remuneration Consultants' Group and voluntarily operates under its code of conduct in its dealing with the Remuneration Committee. The Remuneration Committee continued to review the appointment of Deloitte LLP and is satisfied that all advice received was objective and independent.

Nicholas Heard, the Company Secretary, has been secretary to the Remuneration Committee since his appointment on 2 May 2014. Prior to this, Pinsent Masons Secretarial Limited acted as secretary to the Committee. Dr Henri Winand (Chief Executive Officer), John Maguire (Chief Financial Officer) and Julie Evans (Group HR Director) attend meetings at the invitation of the Remuneration Committee; they are not present when their own remuneration is discussed.

Statement of Directors' responsibilities

In respect of the Annual Report and the 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 Group and Parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and applicable law and have elected to prepare the Parent Company financial statements on the same basis.

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 their profit or loss for that period. In preparing each of the Group and Parent Company financial statements, the Directors are required to:

› Select suitable accounting policies and then apply them consistently
› Make judgements and estimates that are reasonable and prudent
› State whether they have been prepared in accordance with IFRSs as adopted by the EU
› Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Parent Company will continue in business

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a strategic report, Directors' report, Directors' remuneration report and corporate governance report that comply with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the Directors in respect of the Annual Report

We confirm that to the best of our knowledge:

› The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole
› The strategic report includes a fair review of the development and performance of the business and the position of the Company, and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face

By order of the Board

Dr Henri Winand John Maguire

Chief Executive Officer Chief Financial Officer 28 November 2014 28 November 2014

Independent auditor's report

To the members of Intelligent Energy Holdings plc

We have audited the financial statements of Intelligent Energy Holdings plc for the year ended 30 September 2014 set out on pages 58 to 94. The financial reporting framework that has been applied in their preparation is applicable in law and International Financial Reporting Standards ("IFRSs") as adopted by the EU and, as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the 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 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 Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditor

As explained more fully in the Directors' responsibilities report, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at

www.frc.org.uk/auditscopeukprivate

Opinion on 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 30 September 2014 and of the Group's loss for the year then ended;
› The Group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;
› The Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006; and
› The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

› The part of the Directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006; and
› 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 information given in the corporate governance report set out in the governance section of the Annual Report with respect to internal control and risk management systems in relation to financial reporting processes and about share capital structures is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where 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.
› A corporate governance report has not been prepared by the Company.

Wayne Cox (Senior Statutory Auditor) for and on behalf of KPMG LLP, Statutory Auditor Chartered Accountants 31 Park Row Nottingham NG1 6FQ 28 November 2014

Governance

Intelligent Energy Holdings plc Annual Report for the year ended 30 September 2014

Financial statements

Consolidated income statement

for the year ended 30 September 2014

		2014	2013
	Notes	£000	£000
Revenue	7	13,619	20,846
Cost of sales	8	(9,892)	(13,497)
Gross profit		3,727	7,349
Research and development costs	8	(21,335)	(13,878)
Operation and administration costs	8	(38,029)	(20,159)
Operating loss		(55,637)	(26,688)
Finance income	11a	363	116
Finance cost	11b	(4,338)	(664)
Share of loss of joint ventures accounted for using the equity method – net of income tax	19	(982)	(2,514)
Gain on disposal of joint venture	12	983	-
Loss before tax		(59,611)	(29,750)
Income tax	13	11,385	8,798
Loss for year attributable to owners of the Company		(48,226)	(20,952)

Earnings per share
(expressed in pence per share)	14
Basic and diluted earnings per share		(31.4)	(15.6)

All of the loss for the year is attributable to the owners of the Company and all activities relate to continuing operations. The accompanying notes are an integral part of the financial statements.

Consolidated statement of comprehensive income

for the year ended 30 September 2014

	2014	2013
	£000	£000
Loss for the year	(48,226)	(20,952)
Other comprehensive (expense)/income;
Items that are or may be subsequently reclassified to profit or loss
Exchange (loss)/gain on retranslation of foreign operations	(1,458)	59
Comprehensive expense for the year attributable to owners of the Company	(49,684)	(20,893)

All of the comprehensive expense for the year relates to continuing operations.

Statement of financial position

at 30 September 2014

			Group		Company
		2014	2013	2014	2013
	Notes	£000	£000	£000	£000
Non-current assets
Property, plant and equipment	16	6,878	5,282	-	-
Intangible assets	17	11,462	9,455	-	-
Investments accounted for using the equity method	19	1,418	3,821	-	-
Investments in subsidiaries and joint ventures	19	-	-	13,822	7,857
Deferred tax asset	13	16,327	9,158	-	-
Trade and other receivables	21	1,798	-	-	-
		37,883	27,716	13,822	7,857
Current assets
Inventories	20	4,133	1,530	-	-
Trade and other receivables	21	11,079	9,821	214,459	116,108
Current tax receivable		3,409	3,470	-	-
Short term deposits	22	42,766	-	-	-
Cash and cash equivalents	23	46,110	31,626	1,156	1
		107,497	46,447	215,615	116,109
Total assets		145,380	74,163	229,437	123,966
Current liabilities
Trade and other payables	24	(17,553)	(8,614)	(4,400)	(1,219)
Non-current liabilities
Deferred tax liability	13	-	(2,600)	-	(2,600)
Liability component of convertible loan notes	25	-	(18,530)	-	(18,530)
		-	(21,130)	-	(21,130)
Total liabilities		(17,553)	(29,744)	(4,400)	(22,349)
Net assets		127,827	44,419	225,037	101,617
Equity attributable to owners of the Company
Equity share capital	27	9,406	6,807	9,406	6,807
Share premium		222,718	94,784	222,718	94,784
Other reserves		35,049	38,675	7,484	9,652
Retained earnings		(139,346)	(95,847)	(14,571)	(9,626)
Total equity		127,827	44,419	225,037	101,617

The accompanying notes are an integral part of the financial statements. The financial statements on pages 58 to 94 were approved by the Board of Directors on 28 November 2014 and signed on its behalf by;

Chairman Director

P Heiden J Maguire

Strategic report

Governance

60 Financial statements

Consolidated statement of changes in equity for the year ended 30 September 2014

		Other reserves
	Equity share capital	Share premium	Equity component of convertible loan notes	Capital reserve	Merger reserve	Currency translation reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000	£000	£000
At 1 October 2012	6,639	93,448	-	-	29,277	(313)	(74,914)	54,137
Loss for the year	-	-	-	-	-	-	(20,952)	(20,952)
Other comprehensive income	-	-	-	-	-	59	-	59
Total comprehensive income/ (expense) for the year	-	-	-	-	-	59	(20,952)	(20,893)
Shares issued (net of issue costs)	168	1,336	-	-	-	-	-	1,504
Issue of convertible loan notes	-	-	9,652	-	-	-	-	9,652
Share-based payment transactions	-	-	-	-	-	-	19	19
Total transactions with owners, recognised directly in equity	168	1,336	9,652	-	-	-	19	11,175
Balance at 1 October 2013	6,807	94,784	9,652	-	29,277	(254)	(95,847)	44,419
Loss for the year	-	-	-	-	-	-	(48,226)	(48,226)
Other comprehensive expense	-	-	-	-	-	(1,458)	-	(1,458)
Total comprehensive income/ (expense) for the year	-	-	-	-	-	(1,458)	(48,226)	(49,684)
Shares issued (net of issue costs)	1,968	106,409	-	-	-	-	-	108,377
Share-based payment transactions	-	-	-	-	-	-	2,559	2,559
Conversion of convertible bond	631	21,525	(9,652)	7,484	-	-	2,168	22,156
Total transactions with owners, recognised directly in equity	2,599	127,934	(9,652)	7,484	-	-	4,727	133,092
Balance at 30 September 2014	9,406	222,718	-	7,484	29,277	(1,712)	(139,346)	127,827

Other reserves

The balance classified as merger reserve relates to the acquisitions of Advanced Power Sources Limited and Intelligent Energy Limited. The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries and joint ventures.

The convertible bond was converted into ordinary shares during the year. The realised element of the equity component of the convertible loan notes was transferred to retained earnings with the residual amount held in the capital reserve as detailed in note 25.

Company statement of changes in equity

for the year ended 30 September 2014

			Other reserves
	Equity share capital	Share premium	Equity component of convertible loan notes	Capital reserve	Retained earnings	Total
	£000	£000	£000	£000	£000	£000

At 1 October 2012	6,639	93,448	-	-	(8,147)	91,940
Loss for the year	-	-	-	-	(1,498)	(1,498)
Total comprehensive expense for the year	-	-	-	-	(1,498)	(1,498)
Shares issued (net of issue costs)	168	1,336	-	-	-	1,504
Issue of convertible loan notes	-	-	9,652	-	-	9,652
Share-based payment transactions	-	-	-	-	19	19
Total transactions with owners, recognised directly in equity	168	1,336	9,652	-	19	11,175
Balance at 1 October 2013	6,807	94,784	9,652	-	(9,626)	101,617
Loss for the year	-	-	-	-	(9,672)	(9,672)
Total comprehensive expense for the year	-	-	-	-	(9,672)	(9,672)
Shares issued (net of issue costs)	1,968	106,409	-	-	-	108,377
Share-based payment transactions	-	-	-	-	2,559	2,559
Conversion of convertible bond	631	21,525	(9,652)	7,484	2,168	22,156
Total transactions with owners, recognised directly in equity	2,599	127,934	(9,652)	7,484	4,727	133,092
Balance at 30 September 2014	9,406	222,718	-	7,484	(14,571)	225,037

Statement of cash flows for the year ended 30 September 2014

2014 2013 2014 2013 Notes £000 £000 £000 £000 Operating activities Loss before tax (59,611) (29,750) (10,157) (1,498) Net financing expense 3,975 548 4,334 510 Gain on disposal of joint venture (983) - (983) - Share of joint venture losses 982 2,514 - - Operating loss (55,637) (26,688) (6,806) (988) Adjustment for: Depreciation and impairment of property, plant and equipment 16 2,449 2,806 - - Amortisation of intangible assets 17 785 481 - - Unrealised profit adjustment on transactions with joint ventures 19 (15) 85 - - Impairment of investments - - - 796 Equity settled share-based payments 29 2,559 19 - 19 Foreign exchange loss on operating activities 110 - - - Working capital adjustments: Increase in inventories (2,603) (375) - - (Increase)/decrease in trade and other receivables (6,213) 951 (106,985) (27,867) Increase/(decrease) in trade and other payables 7,922 (631) 2,481 1,219 Taxation received 3,792 3,261 - - Net cash outflow from operating activities (46,851) (20,091) (111,310) (26,821) Investing activities 293 - Net interest received/(paid) (39) - Proceeds on disposal of joint venture 1,133 - 1,133 - Purchase of short term deposits (42,766) - - - Purchase of property, plant and equipment 16 (4,046) (3,791) - - Purchase of intangible assets 17 (2,791) (1,179) - - Term loan granted (1,798) - - - Net cash (outflow)/inflow from investing activities (49,975) (5,009) 1,133 - Financing activities Issue of ordinary share capital 27 108,377 1,504 108,377 1,504 Issue of convertible loan notes 2,955 25,317 2,955 25,317 Net cash inflow from financing activities 111,332 26,821 111,332 26,821 Increase in cash and cash equivalents 14,506 1,721 1,155 - Effect of foreign exchange rates on cash and cash equivalents (22) 38 - - Cash and cash equivalents at beginning of period 23 31,626 29,867 1 1 Cash and cash equivalents at year-end 46,110 1,156 23 31,626 1	Group			Company

Notes to the annual financial statements

Governance

1 Authorisation of financial statements

The financial statements of Intelligent Energy Holdings plc and its subsidiaries (the "Group") for the year ended 30 September 2014 were authorised for issue by the Board of Directors on 28 November 2014 and the balance sheet was signed on the Board's behalf by P Heiden and J Maguire. Intelligent Energy Holdings plc is a listed public limited company incorporated and domiciled in England and Wales.

2 Basis of preparation

The financial statements have been prepared under a "going concern" basis, in accordance with International Financial Reporting Standards as adopted by the European Union as they apply to the financial statements of the Group and Parent Company for the year ended 30 September 2014 and applied in accordance with the Companies Act 2006.

The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 30 September 2014 and have, unless stated otherwise, been applied consistently and to all periods presented in these financial statements. The financial statements have been prepared on a historical cost basis, except where measurement of balance at fair value is required, as explained below.

The financial statements are presented in Pound Sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.

No separate income statement is presented for Intelligent Energy Holdings plc as permitted by section 408 of the Companies Act 2006.

2.1 Going concern

The Group's business activities, together with the factors likely to affect its future development and position, are set out in the Chief Executive's review section of the strategic report on pages 7 to 10. The financial position of the Group, its cash flows and liquidity position are described in the Chief Financial Officer's review on pages 11 to 13. In addition, note 26 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposures to credit risk and liquidity risk.

After reviewing the 2014/15 budget and longer-term plans and considering any reasonably likely scenarios that may occur, alongside the significant year end cash and short-term deposits position of £88.9 million, the Directors are satisfied that, at the time of approving the financial statements, it is appropriate to adopt the going concern basis in preparing the financial statements of both the Group and the Parent Company. This view was supported by further investment of cash in the business outside the current level of cash consumption being discretionary alongside a sensitivity analysis and stress tests undertaken at the year end which showed that some severe assumptions would have to be made before there is a negative impact.

3 Changes in accounting policy and disclosures

3.1 New and amended standards and interpretations

In the current year, the Group has adopted the following new standards and interpretations:

› IFRS 13 Fair Value Measurement replaces existing guidance on fair value measurement in different IFRSs with a single definition of fair value, a framework for measuring fair values and disclosures about fair value measurements. This standard applies to assets, liabilities and an entity's own equity instruments that, under other IFRSs, are required or permitted to be measured at fair value or when disclosure of fair value is provided
› Amendments to IAS 1 Presentation of Financial Statements considers the presentation of comparative information beyond minimum requirements and presentation of the opening statement of financial position and related notes
› Amendments to IAS 16 Property, Plant and Equipment relating to the classification of servicing equipment
› Amendments to IAS 32 Financial Instruments: Presentation regarding income tax consequences of distributions

The adoption of these standards and amendments has not had a significant impact on the financial statements.

The following standards and amendments have been published, endorsed by the EU, and are available for early adoption but have not yet been applied by the Group in these financial statements:

› IFRS 10 Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate entities it controls. Control requires exposure or rights to variable returns and the ability to affect those returns through power over an investee
› IFRS 11 Joint Arrangements outlines the accounting by entities that jointly control an arrangement. Joint control involves the contractual agreed sharing of control and arrangements subject to joint control are classified as either a joint venture (representing a share of net assets and equity accounted) or a joint operation (representing rights to assets and obligations for liabilities, accounted for accordingly)
› IFRS 12 Disclosure of Interests in Other Entities is a consolidated disclosure standard requiring a wide range of disclosures about an entity's interests in subsidiaries, joint arrangements, associates and unconsolidated "structured entities". Disclosures are presented as a series of objectives, with detailed guidance on satisfying those objectives
› Amendments to IFRS 7 Disclosures Offsetting Financial Assets and Financial Liabilities sets out the disclosures required for financial assets and financial liabilities within the scope of the common disclosures
› Amendments to IAS 27 Separate Financial Statements carries forward the existing accounting and disclosure requirements for separate financial statements, with some minor clarifications. The requirements of IAS 28 and IAS 31 for separate financial statements have been incorporated into IAS 2
› Amendments to IAS 28 Investments in Associates and Joint Ventures applies IFRS 5 to an investment or portion of an investment, in an

Notes to the annual financial statements

3 Changes in accounting policy and disclosures (continued)

associate or a joint venture that meets the criteria to be classified as held for sale. It also does not require re-measurement of the retained interest in the investment upon cessation of significant influence or joint control

The standard amendments that will apply in the future are not expected to have a significant effect on the Group or Company financial statements.

4 Basis of consolidation

The Group financial statements consolidate the financial statements of Intelligent Energy Holdings plc and the entities it controls (its subsidiaries) and equity account the Group's interest in associate and jointly controlled entities drawn up to 30 September each year. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement. The financial statements of subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting year as the Parent Company and are based on consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from them, are eliminated.

4.1 Associates and jointly controlled entities (equity accounted investees)

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 per cent of the voting power of another entity. Jointly controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement and requiring the venturers' unanimous consent for strategic financial and operating decisions. Associates and jointly controlled entities are accounted for using the equity method (equity accounted investees) and are initially recognised at cost. The Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group's share of the total comprehensive income and equity movements of equity accounted investees, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group's share of losses exceeds its interest in an equity accounted investee, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payment on behalf of an investee.

5 Significant accounting estimates and assumptions

The preparation of financial statements requires the Directors to make estimates and assumptions that affect the amounts reported for assets and liabilities as at the statement of financial position date and the amounts reported for revenues and expenses during the year. The nature of estimation means that actual outcomes could differ from those estimates. The key sources of estimation uncertainty are as follows:

5.1 Contract revenues

The Group measures revenues on provision of engineering services contracts using the stage of completion method, to ascertain the appropriate revenue to recognise during a contract. Estimating the stage of completion is measured by reference to the contract cost incurred as a percentage of total estimated cost.

5.2 Share-based payments

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted and the cost of cash-settled share awards with employees by reference to fair value. Estimating fair value requires the determination of the most appropriate valuation model for a grant of equity instruments, which is dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including the expected life of the option, volatility, forfeiture and dividend yield and making assumptions about them. Subsequent revaluation of the cash-settled liability requires further estimation of fair value at settlement or reporting date. The assumptions and models used are disclosed in note 29.

5.3 Impairment of non-financial assets

The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Goodwill is tested for impairment annually and at other times when such indicators exist. Other non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable. When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details, including a sensitivity analysis of key assumptions, are given in note 18.

5.4 Deferred tax assets

The recognition of deferred tax assets relating to the carry forward of unused tax losses and unused tax credits requires the assessment of the extent to which it is probable that future taxable profits will be available against which the unused tax losses and tax credits can be utilised. Given the history of tax losses of the Group, it is required that there is convincing other evidence that sufficient taxable profits will be available against which the unused tax losses or unused tax credits can be utilised. This requires judgement on the part of the Directors.

The Directors have, therefore, assessed whether, in their opinion, the recovery of the deferred tax assets is probable, and whether convincing evidence exists to justify this assessment. This assessment is based on the forecasts for the business, which are in turn based in part on known advances in the commercial viability of the Group's businesses. These forecasts indicate sufficient future UK taxable profits to utilise the accumulated tax losses. Accordingly the Directors have concluded that the utilisation of the accumulated tax losses is both probable and supported by convincing evidence.

5.5 Fair value of convertible loan notes

The Group has issued convertible loan notes which have been converted to equity share capital during the year. These convertible loan notes

5 Significant accounting estimates and assumptions (continued)

comprise both a liability and an equity element. The equity element is calculated as the net proceeds receivable after deducting the liability element of the convertible loan notes.

The liability element of the convertible loan notes is calculated by discounting the cash flows of the instruments at an interest rate that would be available in the market for an equivalent financial liability. The estimation of this interest rate requires judgement on the part of the Directors.

5.6 Development costs

Development costs are capitalised in accordance with the accounting policy in note 6.7. Initial capitalisation of costs is based on management's judgement that technological and economical feasibility is confirmed. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the assets, discount rates to be applied and the expected period of benefits. The Directors have specifically assessed the position of the development of the Upp product during the financial year with reference to the timing of a first commercial customer order. As set out in note 33 to the financial statements the Group has successfully launched the Upp product subsequent to the year end which is considered to be the first commercial customer order for this product. The carrying amount of capitalised development costs at the end of the year is £nil (2013: £nil).

5.7 Disposals of joint ventures and associates

Any deferred consideration arising from the sale of a joint venture or associate, where dependant on unknown future events, will require significant judgement from management to estimate whether the conditions of the consideration will be met.

6 Summary of significant accounting policies

The accounting policies which follow set out the significant policies which apply in preparing the financial statements for the year ended 30 September 2014.

6.1 Revenue recognition

The Group generates revenues principally through the sale of hydrogen fuel cell and hydrogen generation products (sale of goods), the provision of power generation and power management services (power management), consultancy for technology and product advancement (provision of engineering services) and the sale of access to our intellectual property. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and receivable revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods and services supplied, stated net of discounts, rebates, value added tax and other sales taxes or duty. The following criteria must also be met before revenue is recognised:

Provision of engineering services

Consultancy for technology and product advancement revenue is recognised by reference to the stage of completion. Stage of completion is measured by reference to the cost of labour hours and materials incurred to date as a percentage of total estimated cost of labour hours and materials for each contract. Past experience has shown costs incurred to be the best measure of progress. Where the contract outcome cannot be measured reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. When contracts are extended or combined the total consideration receivable is merged, and the revenue recognised over the full revised contract.

Power management

Power management revenue represents the amounts earned from the supply of power management services and excludes sales taxes. Revenue is recognised as the service is delivered in accordance with the contractual arrangements. Revenue is accrued or deferred at the balance sheet date depending on the date of the most recent invoice issued and the contractual terms.

Access to intellectual property

Where elements of contract revenue can be separately identifiable, these revenues are spread across the substantive delivery period for those elements. Where multiple element contracts are entered into and the constituent parts do not stand alone, all revenues are spread over the period of the contract.

Sale of goods

Fuel cell and hydrogen generation product revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch of the goods.

Public body funded work

Project work is undertaken for public bodies where such work is of benefit to the Group's ongoing research and development activities. The Group measures revenues on such contracts using the stage of completion method, to ascertain the appropriate revenue to recognise during a contract. The stage of completion is measured by reference to the cost incurred as a percentage of total estimated cost.

6.2 Interest in joint ventures

The Group has a contractual agreement with Scottish and Southern Energy plc, which represents a joint venture, through another entity, IE-CHP (UK & Eire) Limited. The Group has a contractual agreement with Suzuki Motor Corporation, which represents a joint venture, through another entity SMILE FC System Corporation, a company incorporated in Japan. The Group had a contractual interest in IE LEV Limited which took the form of a joint venture. This contractual interest was disposed of in February 2014.

Investments in joint ventures are accounted for using the equity method. The investment is initially recognised at cost and the carrying amount is increased or decreased to recognise the Group's share of the profit or loss of the investee after the date of acquisition. Financial statements of the jointly controlled entities are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies used into line with those of the Group; to take into account fair values assigned at the date of acquisition and to reflect impairment losses where appropriate. Adjustments are also made in the Group's financial statements to eliminate the Group's share of unrealised gains and losses on transactions between the Group and its jointly controlled entities. The Group ceases to use the equity method on the date from which it no longer has joint control over or significant influence in the joint venture.

Notes to the annual financial statements

6 Summary of significant accounting policies (continued)

When the Group's share of losses exceeds its interest in an equity accounted investee, the Group's carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has legal or constructive obligations or made payments on behalf of an investee.

6.3 Business combinations and goodwill

Business combinations are accounted for using the purchase method of accounting. The cost of acquisition is the consideration given in exchange for the identifiable net assets. This consideration includes any cash paid plus the fair value at the date of exchange of assets given, liabilities incurred or assumed and equity instruments issued by the Group. The acquired net assets are initially recognised at fair value. Where the Group does not acquire 100 per cent ownership of the acquired Company, a non-controlling interest is recorded as the minority's proportion of the fair value of the acquired net assets.

Any adjustment to the fair values is recognised within 12 months of the acquisition date. Goodwill on acquisitions comprises the excess of the fair value of the consideration for investments in subsidiaries over the fair value of the identifiable net assets acquired. Any goodwill and fair value adjustments are recorded as assets and liabilities of the acquired Company for the purposes of consolidation and are recorded in the local currency of that Company. The costs of integrating and reorganising acquired businesses are charged to the post-acquisition income statement.

Goodwill is carried at cost less accumulated impairment losses. The Group's goodwill is reviewed at each statement of financial position date on an annual basis, or more frequently if there is an indication that the goodwill is impaired, to determine whether events or changes in circumstances exist that indicate that their carrying amount may not be recoverable. If such an indication exists, the asset's recoverable amount is estimated. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. An impairment loss is recognised in the income statement for the amount by which the asset's carrying amount exceeds its recoverable amount.

6.4 Investment in subsidiaries and joint ventures

In its separate financial statements the Company recognises its investments in subsidiaries and joint ventures at cost. The investment is reviewed on an annual basis to determine whether the carrying amount is recoverable. In the event that the carrying amount is irrecoverable, provision is made to reduce the amount of the investment to the recoverable amount.

6.5 Property, plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly attributable to making the asset capable of operating as intended. Depreciation is provided on all property, plant and equipment, other than land, on a straight-line basis over its expected useful life, to its residual value as follows:

› Plant, machinery and equipment: 2 to 5 years
› Office equipment, fixtures and fittings: 3 to 5 years

Depreciation commences when the asset is fully constructed and operational with no depreciation charged on assets under the course of construction.

The carrying values of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable and are written down immediately to their recoverable amount. Useful lives and residual values are reviewed annually and where adjustments are required these are made prospectively. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset is included in the income statement in the period of derecognition.

6.6 Impairment of assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's ("CGU") fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or Groups of assets.

Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.

As set out in note 18, in assessing the cash flows of one of the Group's segments, Platform Support, an estimate is made of the cash flows that are considered to be generated as a result of an imputed charge for the access to and utilisation of, the technology and intellectual property by the external facing segments. These cash flows are not allocated to the segmental reporting note.

Impairment losses on continuing operations are recognised in the income statement. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at re-valued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

Governance

6 Summary of significant accounting policies (continued)

6.7 Intangible assets

Intangible assets acquired separately from a business are carried initially at cost. An intangible asset acquired as part of a business combination is recognised outside goodwill if the asset is separable or arises from contractual or other legal rights and its fair value can be measured reliably. Intangible assets with a finite life have no residual value and are amortised on a straight-line basis over their expected useful lives as follows:

› Patents: 15 to 20 years
› Development expenditure: 5 to 15 years
› Software: 3 to 5 years

Amortisation commences when the asset is fully constructed and operational with no amortisation charged on assets under the course of construction.

Patents

Patents have been granted on intellectual property rights for a period of 15 to 20 years by the relevant government agencies in countries where patents are applied for. Each patent application is carried at cost less accumulated amortisation and accumulated impairment losses. The carrying values of patents are reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Patent renewal fees are taken to the income statement in the year in which they are incurred.

Development costs

Expenditure on internally developed intangible assets, excluding development costs, is taken to the income statement in the year in which it is incurred (research costs are expensed as incurred). Expenditure relating to clearly defined and identifiable development projects is recognised as an intangible asset only after all the following criteria are met: the project's technical feasibility and commercial viability can be demonstrated; the availability of adequate technical and financial resources and an intention to complete the project have been confirmed; and the correlation between development costs and future revenues has been established. Development expenditure for a new product which represents an entry into a new market is only recognised as an intangible asset from after the date that a first commercial customer order is received as in the opinion of the Directors it is not until this time that commercial viability is established.

During the period of development, the asset is tested for impairment annually. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future sales. During the period in which the assets are not yet in use they are tested for impairment annually.

Research and development costs recognised as an expense in the income statement have been disclosed separately below gross profit, as these costs are not directly related to sales activity.

6.8 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes all costs incurred in bringing each product to its present location and condition, as follows:

› Raw materials and goods for resale: purchase cost on a first-in, firstout basis
› Work in progress and finished goods: cost of direct materials and labour plus attributable overheads based on a normal level of activity, excluding borrowing costs
› Net realisable value is based on estimated selling price less any further costs expected to be incurred to completion and disposal. Obsolete and defective inventory is impaired to its estimated recoverable amount

6.9 Trade and other receivables

Trade receivables, which generally have 30 to 90 day terms, are recognised and carried at the lower of their original invoiced value and recoverable amount. Where the time value of money is material, receivables are carried at discounted cost. Provision is made when there is objective evidence that the Group will not be able to recover balances in full. Balances are written off when the probability of recovery is assessed as being less than likely.

6.10 Trade and other payables

Trade and other payables are stated at cost. Trade payables are noninterest bearing.

6.11 Cash and cash equivalents and short term deposits

Cash and cash equivalents includes cash in hand, deposits held with banks and other short-term highly liquid investments with original maturities of three months or less. For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

The Group considers all bank deposits with original maturity dates of greater than three months and maturing in less than one year to be short term deposits.

6.12 Financial assets

The classification of financial assets depends on the purpose for which the financial assets were acquired and is determined at initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. "Accounts receivable", "cash and cash equivalents" and "short term deposits" are classified as "loans and receivables".

Loans and receivables are measured initially at fair value and then subsequently measured at amortised cost.

Interest income is recognised as it accrues using the effective interest rate basis.

Notes to the annual financial statements

6 Summary of significant accounting policies (continued)

6.13 Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, net of directly attributable transaction costs.

Subsequent measurement

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortisation is included in finance cost in the income statement.

De-recognition of financial assets and liabilities

A financial asset or liability is generally derecognised when the contract that gives rise to it is settled, sold, cancelled or expires.

Compound financial instruments

Compound financial instruments issued by the Group comprise convertible loan notes denominated in Sterling that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed and does not vary with changes in fair value.

The liability component of compound financial instruments is initially recognised at the fair value of a similar liability that does not have an equity conversion option. The equity component is initially recognised at the difference between the fair value of the compound financial instruments as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition except on conversion or expiry.

Interest related to the financial liability is recognised in profit or loss. On conversion, the financial liability is reclassified to equity and no gain or loss is recognised in the income statement.

6.14 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

6.15 Share-based payments

Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments ("equity-settled transactions") and in the form of cash or other assets for amounts based on the price of the Company's equity instruments ("cash-settled transactions").

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date on which they are granted, and is recognised as an expense in the income statement over the vesting period, which ends on the date on which the relevant employees become fully entitled to the award. The fair value is determined using appropriate valuation models relevant to the structure of the scheme and include the Black-Scholes model and the Monte-Carlo model further details of which are given in note 29.

In valuing equity-settled transactions, no account is taken of any service and performance conditions, other than performance conditions linked to the price of the shares of the Company (market conditions). Any other conditions which are required to be met in order for an employee to become fully entitled to an award, like market performance conditions, are taken into account in determining the grant date fair value.

The grant-date 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 that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.

At each statement of financial position date before vesting, the cumulative expense is calculated, representing the extent to which the vesting period has expired and management's best estimate of the number of equity instruments that will ultimately vest. The movement in cumulative expense since the previous statement of financial position date is recognised in the income statement, with a corresponding entry in equity.

Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition, an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification, based on the original award and the fair value of the modified award, both as measured on the date of the modification. No reduction is recognised if this difference is negative.

For cash-settled share awards the services received from employees are measured at fair value and recognised in the income statement as an expense over the vesting period with recognition of a corresponding liability. The fair value of the liability is re-measured at each reporting date and at the date of settlement with changes in fair values recognised in the income statement.

6.16 Leases

Leases where the lessor retains a significant portion of the risks and benefits of ownership of the asset are classified as operating leases and rentals payable are charged in the income statement on a straight-line basis over the lease term.

Governance

Financial statements

Shareholder information

6.17 Foreign currency translation

The Group and Parent Company financial statements are presented in Pound Sterling, which is the Group's functional and presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the statement of financial position date. All differences are taken to the income statement.

The assets and liabilities of foreign operations are translated into Sterling at the rate of exchange ruling at the statement of financial position date. Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the date of the transactions). The resulting exchange differences are taken directly to a separate component of equity. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.

6.18 Segment reporting

The Group is organised into four business segments, three external facing segments namely Automotive ("Motive"), Consumer Electronics ("CE"), Distributed Power & Generation ("D&PG") and one internal facing segment Platform Support. This is based upon the Group's internal organisation and management structure and is the primary way in which the Chief Operating Decision Maker (CODM) is provided with financial information. The Directors believe that the CODM is the Board of Directors.

Segment revenue and segment EBITDA (earnings before interest, tax, depreciation, amortisation and share of joint venture results) are the revenue and profitability measures provided to the CODM and used in monitoring and managing performance of each segment.

Assets and liabilities are not reported by business segments as they are currently managed and reported on a group basis, other than goodwill which is allocated to the Platform Support segment.

6.19 Income taxes

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted by the statement of financial position date. Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, with the following exceptions: where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss; in respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future; and deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised. Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date. Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise income tax is recognised in the income statement.

Research and development tax credit

Claims for tax credits in respect of research and development expenditure incurred are recognised when amounts due can be estimated with a high level of certainty.

6.20 Finance Bill 2013 research and development "above the line" credit

The Group is claiming research and development expenditure credits on qualifying costs under the legislation in the Finance Bill 2013. The credit is recognised in cost of sales in the period in which the related costs for which the credit is intended to compensate are incurred.

6.21 Pensions and other post-retirement benefits

The Group operates a Defined Contribution scheme. This is a pension scheme that has an agreed contribution rate from the employee and employer. Contributions are known and agreed in advance. The scheme consists of a grouping of individual pension contracts. Each employee owns their own contract, which benefits from the discount available to the Group, in which they can plan and save towards an optimum pension income in their retirement.

7 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 & 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.

70 Notes to the annual financial statements

7 Operating segments (continued)

2014	Consumer Electronics	Distributed Power & Generation	Motive	Platform Support	Group
	£000	£000	£000	£000	£000
Revenue from external sales	42	4,948	8,629	-	13,619
EBITDA (segment profit measure)	(10,112)	(4,372)	516	(38,435)	(52,403)
Depreciation and amortisation					(3,234)
Operating loss					(55,637)
Net financing cost					(3,975)
Share of loss of joint ventures					(982)
Gain on disposal of joint venture					983
Loss before tax					(59,611)
Income tax					11,385
Loss for the year					(48,226)

2013	Consumer Electronics	Distributed Power & Generation	Motive	Platform Support	Group
	£000	£000	£000	£000	£000
Revenue from external sales	-	-	20,846	-	20,846
EBITDA (segment profit measure)	(9,458)	(1,445)	6,202	(18,700)	(23,401)
Depreciation and amortisation					(3,287)
Operating loss					(26,688)
Net financing cost					(548)
Share of loss of joint ventures					(2,514)
Loss before tax					(29,750)
Income tax					8,798
Loss for the year					(20,952)

Major customers

Three customers each represented in excess of 10 per cent of the Group's total revenue during the year (2013: two customers). Motive segment revenue includes £4,347,000 and £2,863,000 from two separate customers (2013: two customers of £16,501,000 and £4,120,000 respectively). Distributed Power & Generation revenue includes £4,881,000 (2013: £nil) from a single customer.

Geographical information

The Group's country of domicile is the United Kingdom. Revenues are attributed to customers based on the customer's location.

	Revenue from external sales
	2014	2013
	£000	£000
United Kingdom	70	86
Europe, Middle East and Africa ("EMEA")	3,119	4,239
India	4,948	-
Asia Pacific	5,482	16,521
	13,619	20,846

Strategic report

7 Operating segments (continued)

The total non-current assets other than deferred tax assets located in the UK is £17,108,000 (2013: £13,992,000) and the total of such non-current assets located in other countries is £4,448,000 (2013: £4,566,000).

Analysis of revenue by revenue stream

	2014	2013
	£000	£000
Sale of intellectual property	-	8,000
Provision of engineering services	8,629	12,846
Power management	4,948	-
Sale of goods	42	-
	13,619	20,846

Adjusted EBITDA

The Company uses adjusted EBITDA (earnings before interest, tax, depreciation, amortisation, share of joint venture results, equity fundraising costs and IFRS 2 share based payment charges) as an indicator of trading profitability and a proxy for operating cash flow, 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.

	2014	2013
	£000	£000
EBITDA	(52,403)	(23,401)
Share-based payment charge	5,965	19
Equity fundraising cost	7,055	-
Adjusted EBITDA	(39,383)	(23,382)

8 Expenses by nature

	2014	2013
	£000	£000
Staff costs	22,565	18,459
Consultancy, contractors and outsourced services	6,272	4,455
Share based payments	5,965	19
Materials and consumables used for research and development	6,135	7,184
Equity fundraising costs	7,055	-
Cost of fuel	3,377	176
Depreciation and amortisation	3,234	3,287
Facilities and services	3,019	2,166
Travel and subsistence	2,741	2,382
Costs of inventories recognised as an expense	2,475	3,765
Inventory write-down	1,608	-
Legal and professional costs	1,531	1,749
Marketing	1,476	659
Operating lease charge	1,315	923
Capitalised staff costs	(329)	(61)
Research and development "above the line" credit	(670)	-
Other expenses	1,487	2,371
Total cost of sales, research and development costs and operation and administration costs	69,256	47,534

Intelligent Energy Holdings plc Annual Report for the year ended 30 September 2014

72 Notes to the annual financial statements

9 Auditor's remuneration

	2014	2013
	£000	£000
Auditor's remuneration
Audit of the Parent Company and consolidated financial statements	84	78
Other services:
− Audit of subsidiaries pursuant to legislation	18	10
− Audit of associates	5	5
− Audit-related assurance service – half year review	75	-
− Other assurance services	14	4
− Due diligence services – Initial Public Offering / fundraising	360	90
	556	187

10 Employees and Directors' emoluments

(a) Employee benefit expense

	2014	2013
	£000	£000
Wages and salaries	18,927	15,978
Social security costs	2,901	2,236
Pension contributions	737	245
Staff costs	22,565	18,459
Equity settled share-based payments (note 29)	2,559	19
Cash settled share-based payments (note 29)	3,406	-
Total employee benefit expense	28,530	18,478

The monthly average number of employees, including Directors, during the year was as follows:

	2014	2013
	Number	restated
		number
Research and development	104	101
Operations and application engineering	175	144
Corporate and commercial	75	61
	354	306

The analysis of monthly average number of employees reflects structural changes to the business. The comparative numbers have been restated to a consistent basis.

Strategic report

10 Employees and Directors' emoluments (continued)

(b) Directors' emoluments

The aggregate emoluments of the Directors of the Company are set out below:

	2014	2013
	£000	£000
		restated
Aggregate emoluments	1,042	1,200
Aggregate amounts receivable under long-term incentive plans	2,577	-
Aggregate gains made on the exercise of share options	32	180
Company contributions to money purchase pension schemes	4	-
	3,655	1,380

Two Directors (2013: two) are accruing benefits under a company money purchase pension scheme.

Detailed disclosures of Directors' emoluments are shown in the Directors' remuneration report on page 50 and details of Directors' interests in share options and awards are shown on pages 53 and 54 which form part of the financial statements. In the current year aggregate emoluments are based on the year in which they are earned. The comparative numbers have been restated to a consistent basis.

11(a) Finance income

	2014	2013
	£000	£000
Interest receivable	363	116
11(b) Finance cost
	2014	2013
	£000	£000
Interest payable on bank overdrafts	4	155
Interest payable on convertible loan notes	3,005	509
Funds raised not received	712	-
Other finance costs	617	-
	4,338	664

12 Gain on disposal of joint venture

The Company disposed of its investment in IE LEV Limited on 28 February 2014. The carrying value of the investment at that point was £nil. Proceeds of £1,407,000 were received and associated costs of sale were £424,000. The gain realised on the sale of the investment was £983,000 (2013: £nil).

The Directors have concluded that no account should be taken of any contingent consideration receivable on the basis that it is not deemed highly probable.

Intelligent Energy Holdings plc Annual Report for the year ended 30 September 2014

74 Notes to the annual financial statements

13 Income tax

(a) Tax charged/(credited) in the consolidated income statement

	2014	2013
	£000	£000
Current income tax
Research and development tax credit in respect of the current year	(3,400)	(3,400)
Foreign income tax	21	273
Research and development tax credit in respect of prior years	(352)	(3,228)
Total current income tax	(3,731)	(6,355)
Deferred tax
Origination and reversal of temporary differences	(7,523)	(2,911)
Rate change on opening deferred tax	-	1,416
Adjustments to prior years	(131)	919
Recognition of deferred tax assets not previously recognised	-	(1,867)
Total deferred tax	(7,654)	(2,443)
Income tax credit reported in the income statement	(11,385)	(8,798)

Income tax credited directly to equity during the year of £2,115,000 (2013: charge to equity of £2,600,000) arises on convertible loan notes (see note 25).

(b) Factors affecting current tax charge

The tax assessed on the loss before tax for the year is higher (2013: lower) than the standard rate of corporation tax in the UK of 22 per cent (2013: 23.5 per cent). The differences are reconciled below:

	2014	2013
	£000	£000
Loss before tax	(59,611)	(29,750)
Loss before tax multiplied by standard rate of
corporation tax in the UK of 22 per cent (2013: 23.5 per cent)	(13,114)	(6,991)
Expenses not deductible for tax purposes	3,186	130
Non-taxable income	(249)	-
R&D enhanced super deduction net of research and development tax credit in respect of current year	(747)	(195)
Foreign income tax	21	273
Effect of share of loss of equity-accounted investees	213	549
Joint venture consortium relief payment	(34)	(37)
Adjustments in respect of prior years	(483)	(2,309)
Rate changes on deferred tax assets	-	1,416
Current year losses net of recognition of tax effect of previously unrecognised tax losses	(178)	(1,634)
	(11,385)	(8,798)

13 Income tax (continued)

(c) Deferred tax

Group

Deferred tax assets and liabilities are attributable to the following:

	Assets		Liabilities		Net
	2014	2013	2014	2013	2014	2013
	£000	£000	£000	£000	£000	£000
Accelerated capital allowances	-	-	(1,214)	(704)	(1,214)	(704)
Other timing differences	863	-	-	(2,600)	863	(2,600)
Tax losses carried forward	16,678	9,862	-	-	16,678	9,862
Net deferred tax asset/(liability)	17,541	9,862	(1,214)	(3,304)	16,327	6,558
Offset	(1,214)	(704)	1,214	704	-	-
	16,327	9,158	-	(2,600)	16,327	6,558

Movement in deferred tax balances during the year:

	Balance at beginning of year	Recognised in income statement	Recognised in equity	Balance at end of year
	£000	£000	£000	£000
2014
Accelerated capital allowances	(704)	(510)	-	(1,214)
Other timing differences	(2,600)	1,348	2,115	863
Tax losses carried forward	9,862	6,816	-	16,678
Net deferred tax asset	6,558	7,654	2,115	16,327
2013
Decelerated/(accelerated) capital allowances	353	(1,057)	-	(704)
Other timing differences	-	-	(2,600)	(2,600)
Tax losses carried forward	6,362	3,500	-	9,862
Net deferred tax asset/(liability)	6,715	2,443	(2,600)	6,558

The unrecognised deferred tax asset comprises the following:

	2014	2013
	£000	£000
Losses	1,276	1,609
Unrecognised deferred tax asset	1,276	1,609

Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. This is supported by the Directors' assessment of the Group's future earnings on an entity basis.

Deferred tax assets have not been recognised for tax losses in subsidiaries where they are not expected to generate future taxable income.

There are no temporary differences associated with unremitted earnings of foreign subsidiaries.

76 Notes to the annual financial statements

13 Income tax (continued)

Company

Deferred tax assets and liabilities are attributable to the following:

	Assets		Liabilities		Net
	2014	2013	2014	2013	2014	2013
	£000	£000	£000	£000	£000	£000
Other timing differences	-	-	-	(2,600)	-	(2,600)
Net deferred tax liability	-	-	-	(2,600)	-	(2,600)

Movement in deferred tax balances during the year:

	Balance at	Recognised	Recognised	Balance at
	beginning	in income	in equity	end of year
	of year	statement
	£000	£000	£000	£000
2014
Other timing differences	(2,600)	485	2,115	-
Net deferred tax asset	(2,600)	485	2,115	-

2013
Other timing differences	-	-	(2,600)	(2,600)
Net deferred tax asset	-	-	(2,600)	(2,600)

(d) Factors which may affect future tax charges

The trading losses referred to above will be available for offset against future profits of the same trade, assuming there is no major change in the trade's nature or conduct. The Company will continue to claim research and development tax relief where it is eligible to do so. Future tax charges will be affected by government changes to the standard rate of corporation tax in the UK.

Reductions in the rate to 21 per cent (effective from 1 April 2014) and 20 per cent (effective from 1 April 2015) were substantively enacted on 2 July 2013. This will reduce the Company's future current tax accordingly. Deferred tax assets and liabilities at 30 September 2013 and 30 September 2014 have been recognised at the 20 per cent tax rate which is expected to apply when the assets are realised or liability settled.

14 Earnings per share

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

	2014	2013
	£000	£000
Earnings per share – Basic (pence)	(31.4)	(15.6)
– Diluted (pence)	(31.4)	(15.6)
Loss for the financial year (£000)	(48,226)	(20,952)
Weighted average number of shares used:
− Issued ordinary shares at beginning of year	136,129,653 132,779,155
− Effect of ordinary shares issued during the year	17,243,998	1,571,063
Basic weighted average number of shares	153,373,651 134,350,218

14 Earnings per share (continued)

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 the diluted earnings per share because their effect would have been antidilutive.

15 Loss attributable to members of the Parent Company

The loss of the Parent Company for year ended 30 September 2014 was £9,672,000 (2013: loss of £1,498,000).

16 Property, plant and equipment

Group	Office	Plant,	Total
	equipment,	machinery
	fixtures and	and
	fittings	equipment
	£000	£000	£000
Cost:
At 1 October 2012	1,551	6,998	8,549
Additions	373	3,418	3,791
Disposals	(60)	(5)	(65)
Foreign currency adjustment	(5)	6	1
At 1 October 2013	1,859	10,417	12,276
Additions	242	3,804	4,046
Foreign currency adjustment	-	2	2
At 30 September 2014	2,101	14,223	16,324
Depreciation and impairment:
At 1 October 2012	726	3,519	4,245
Depreciation charge for the year	402	2,404	2,806
Disposals	(60)	(5)	(65)
Foreign currency adjustment	-	8	8
At 1 October 2013	1,068	5,926	6,994
Depreciation charge for the year	465	1,984	2,449
Foreign currency adjustment	1	2	3
At 30 September 2014	1,534	7,912	9,446

Net book value:

At 30 September 2014	567	6,311	6,878
At 30 September 2013	791	4,491	5,282
At 1 October 2012	825	3,479	4,304

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. The Company does not hold any property, plant and equipment.

Intelligent Energy Holdings plc Annual Report for the year ended 30 September 2014

78 Notes to the annual financial statements

17 Intangible assets

Group	Software	Patents	Goodwill	Total
	£000	£000	£000	£000
Cost:
At 1 October 2012	2,022	2,320	11,519	15,861
Additions	299	880	-	1,179
Foreign currency adjustment	-	(6)	-	(6)
At 1 October 2013	2,321	3,194	11,519	17,034
Additions	805	1,986	-	2,791
Foreign currency adjustment	-	(4)	-	(4)
At 30 September 2014	3,126	5,176	11,519	19,821
Amortisation and impairment:
At 1 October 2012	733	729	5,637	7,099
Amortisation	328	153	-	481
Foreign currency adjustment	-	(1)	-	(1)
At 1 October 2013	1,061	881	5,637	7,579
Amortisation	494	291	-	785
Foreign currency adjustment	-	(5)	-	(5)
At 30 September 2014	1,555	1,167	5,637	8,359
Net book value:
At 30 September 2014	1,571	4,009	5,882	11,462
At 30 September 2013	1,260	2,313	5,882	9,455
At 1 October 2012	1,289	1,591	5,882	8,762

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

The Group will continue to review the goodwill for impairment against the criteria set out in note 18.

The Company does not hold any intangible assets.

The carrying value of goodwill of £5,882,000 (2013: £5,882,000) acquired through business combinations is tested annually for impairment.

All other assets across the Group have a defined life and are amortised over a fixed period. The carrying value of these assets will be reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. No such events or changes arose in the current year.

Allocation of goodwill

The statement of financial position of the Group is reviewed by the Chief Operating Decision Maker (CODM), which is defined as being Intelligent Energy Holdings plc's Board of Directors, at a group level. Assets and liabilities are not reported separately to the CODM on a segmental basis.

The Group has evolved organically into four distinct reportable segments, being: three external facing divisions of DP&G, CE, Motive and the internal facing Platform Support division. The technology and intellectual property that supports the external facing segments and to which the goodwill is related is centrally monitored within the internal facing segment of Platform Support.

Allocation of all the carrying value of goodwill to Platform Support is therefore the approach which best reflects the reality of the business operating model of "design once deploy many times." Platform Support represents the lowest level within the Group at which goodwill is monitored for internal management purposes and is the CGU, at the lowest level, at which cash flows can be determined.

Applying the approach detailed above all of the Group's goodwill of £5,882,000 (2013: £5,882,000) is allocated to Platform Support and the recoverable amount has been measured based on a value-in-use calculation. The key assumptions in the value-in-use calculations were:

Period of projected cash flows

The Directors have used a ten-year forecast period with an assumed long term growth rate after 2024 of 3 per cent per annum. Given the longterm nature of the Intelligent Energy business model it is considered appropriate to use a ten-year forecast period to assess the expected cash flows to be generated from the assets under review.

The Chief Executive's review on pages 7 to 10 sets out the outlook for the Group. The Directors expect to benefit from these opportunities to move towards cash flow positive.

Allocation of cash flows

External revenue and cash inflows are generated from the external facing divisions of CE, DP&G and Motive. In assessing the cash flows of Platform Support an estimate is made of the cash flows that are considered to be generated as a result of an imputed charge for the access to, and utilisation of, the technology and intellectual property by the external facing segments. The technology and intellectual property primarily relates to air-cooled and evaporatively-cooled fuel cells.

Although these cash flows are not cross allocated in the segmental reporting note, management considers that it is necessary to include them in the estimation of the value-in-use of the Platform Support CGU. This is because the "design once deploy many times" philosophy is fundamental to the core principle of the Group's business model.

The amount of these revenues is estimated by considering the percentage of revenue that is forecast to be achieved by each external facing segment as a result of the combination with Platform Support. While these percentages are not derived from external sources of information, as no such sources exist, management utilises its considerable knowledge and experience of the industry in which it operates in estimating the amounts that would be re-charged if Platform Support were an independent entity. Among other things, it considers the number of additional licences that may be signed and the additional value that may be achieved per licence as a result of the fuel cells' enhanced performance.

Discount rate

Platform Support future cash flows are discounted at a pre-tax rate of 16.3 per cent (2013: 18.8 per cent).

Research and development costs are based on the estimated investments required by the business to complete the research and development phases of each product line currently in progress. In each case senior management has estimated the total cost of labour, materials and capital expenditure necessary to start full production.

Market share assumptions have been estimated on a product application basis. The assumptions are based on forecast global demand trends. A view of the possible market share is then applied to the new technology introduction.

Raw material and production costs are based on estimated product cost curve structures. The cost curves are based on current raw material and production costs, synergies in mass production and the effect of learning during manufacture.

Conclusion

The Directors are confident that the amount of goodwill allocated to Platform Support and the assumptions used in estimating its fair value are appropriate.

Whilst it is conceivable that key assumption in the calculation could change, the Directors believe that no reasonably foreseeable change to key assumptions would result in an impairment of goodwill, such is the margin by which the estimated fair value exceeds the carrying value. Similarly all other assets are supported on a value-in-use basis.

The carrying value of investments and receivables recognised in the Parent Company has been considered as part of the review and the Directors have confirmed that they are recoverable on a value in use basis.

80 Notes to the annual financial statements

19 Investments

Group		Company
2014	2013	2014	2013
£000	£000	£000	£000
-	-	7,588	1,623
1,418	3,821	6,234	6,234
1,418	3,821	13,822	7,857

Investment in joint ventures

	Group	Company
	£000	£000
At 1 October 2012	6,420	7,030
Provision to reflect losses in joint ventures	(178)	(796)
Joint venture losses	(2,336)	-
Unrealised profit adjustment on transactions with SMILE FC Corporation	(85)	-
At 30 September 2013 and 1 October 2013	3,821	6,234
Provision to reflect losses in joint ventures	-	-
Joint venture losses	(982)	-
Foreign exchange on translation	(1,436)	-
Unrealised profit adjustment on transactions with SMILE FC Corporation	15	-
At 30 September 2014	1,418	6,234

Investment in subsidiaries

	Company
	2014	2013
	£000	£000
At 1 October	1,623	1,623
Capital contribution arising from share-based payments	5,965	-
At 30 September	7,588	1,623

19 Investments (continued)

(a) Subsidiary undertakings

Details of the principal trading investments at 30 September 2014 in which the Company holds 20 per cent or more of the nominal value of ordinary share capital are as follows:

Subsidiary	Country of incorporation	Proportion of voting rights and shares held	Nature of business
Intelligent Energy Limited	England and Wales	100%	Development and commercialisation of fuel cell based energy solutions
Intelligent Energy India Private Limited	India	100%	To represent Intelligent Energy Holdings plc and its Group companies by promoting technical/financial collaborations, partnerships and joint ventures between the Group and companies in India
Essential Energy India Private Limited	India	100%2	Trading company to support the Group's activities in India
Essential Energy (Operations) India Private Limited	India	100%2	Trading company to support the Group's activities in India
Intelligent Pure Water Technologies Private Limited	India	100%2	Proposed trading company to support the Group's activities in India
Intelligent Energy Inc	USA	100%1	Fuel processing system development and partnering activities in the US including marketing the Group's fuel cell power systems in the USA
IE Japan Limited	Japan	100%	To represent Intelligent Energy Holdings plc and its Group companies by promoting technical/financial collaborations, partnerships and joint ventures between the Group and companies in Japan
Intelligent Energy Holdings (Singapore) PTE Limited	Singapore	100%	Trading company to support the Group's activities in Asia

1 Includes indirect holdings of 100 per cent via Intelligent Energy Limited.

2 Includes indirect holding of 100 per cent via Intelligent Energy Holdings (Singapore) PTE Limited.

(b) Joint ventures

IE-CHP (UK & Eire) Limited

Intelligent Energy Holdings plc maintains 50 per cent share in IE-CHP (UK & Eire) Limited. The joint venture is a jointly controlled entity whose principal activity is the development of combined heat and power fuel cell units with integrated natural gas reformers. The Group accounts for its interest in IE-CHP (UK & Eire) Limited using the equity method.

The share of the assets, liabilities, income and expenses of the jointly controlled entity at 30 September 2014 are as follows:

	2014	2013
	£000	£000
Current assets	84	184
Liabilities due within one year	(264)	(6)
Unrecognised losses	180	-
IE-CHP carrying value write down	-	(178)
Share of net assets	-	-

82 Notes to the annual financial statements

19 Investments (continued)

Share of the joint venture's results:

	2014	2013
	£000	£000
Revenue	95	84
Cost of sales	(23)	(199)
Administrative expenses	(464)	(540)
Operating loss for the year	(392)	(655)
Finance revenue	-	1
Tax	34	38
Loss for the year	(358)	(616)

Due to the ongoing losses within this joint venture the investment remaining in both the Group and Company financial statements was impaired to £nil in the prior financial year. As a result the Group's share of the loss noted above is not recognised in the Group's income statement for the current year. There are no contingent liabilities relating to the Group's interest in the joint venture.

SMILE FC System Corporation

On 1 November 2011, Intelligent Energy Holdings plc and Suzuki Motor Corporation subscribed for ¥750,000,000 (£6,234,000) each representing 1,875 shares in the joint venture.

Intelligent Energy Holdings plc maintained a 50 per cent share in SMILE FC System Corporation throughout the year. The joint venture is a jointly controlled entity whose principal activity is the manufacture, evaluation and improvement of air-cooled fuel cells, to be supplied to the Suzuki Motor Corporation. The Group accounts for its interest in SMILE FC System Corporation under the equity method.

The Company is contractually committed to a further ¥500,000,000 investment in SMILE FC System Corporation, expected in 2015.

The share of assets, liabilities, income and expenses of the jointly controlled entity are as follows:

Share of the joint venture's balance sheet

	2014	2013
	£000	£000
Fixed assets	416	768
Current assets	1,142	2,045
Liabilities due within one year	(70)	(85)
Unrealised profit adjustment	(70)	-
Share of net assets	1,418	2,728

Share of the joint venture's results

	2014	2013
	£000	£000
Revenue	-	-
Cost of sales	-	-
Administrative expenses	(984)	(1,713)
Operating loss for the year	(984)	(1,713)
Finance revenue	-	-
Tax	2	(7)
Loss for the year	(982)	(1,720)

Governance

19 Investments (continued)

The Group has the option to invest a further £400,000 in IE-CHP (UK & EIRE) Limited which will maintain the Group's shareholding at 50 per cent. If the Group does not exercise this option its shareholding in IE-CHP (UK & EIRE) Limited will reduce to 34.4 per cent. There are no contingent liabilities relating to the Group's interest in the joint venture.

IE LEV Limited

Prior to the disposal of IE LEV Limited on 28 February 2014 as described in note 12, IE LEV Limited was accounted for as a joint venture. The Company had a £550 investment in IE LEV Limited which in turn owned Emerald Automotive Inc, through an intermediate parent company. The IE LEV Limited Group had net liabilities at 28 February 2014 and therefore the share of net assets of this group owned by Intelligent Energy Holdings plc was £nil (2013: £nil) at the point of disposal. In the prior year, share of loss of joint ventures was reported as a part of operating loss. In the current year it has been represented to be below operating loss. The Directors consider that this is a more meaningful presentation of the Group's results.

20 Inventories

	Group
	2014	2013
	£000	£000
Raw materials	3,534	1,530
Finished goods	599	-
	4,133	1,530

The difference between purchase price or production cost of inventories and their replacement cost is not material. The cost of inventories recognised as an expense and included in the income statement amounted to £2,475,000 (2013 £3,765,000). The Group recognised an inventory write-down of £1,608,000 within research and development costs within the CE segment in 2014 (2013: £nil).

21 Trade and other receivables

	Group			Company
	2014	2013	2014	2013
	£000	£000	£000	£000
Trade receivables	5,789	2,287	-	-
Less: Provision for impairment of trade receivables	(41)	(3)	-	-
Trade receivables (net)	5,748	2,284	-	-
Amounts owed by subsidiary undertakings	-	-	214,459	111,153
Amounts owed by joint ventures	80	115	-	-
Other receivables	764	4,955	-	4,955
Prepayments and accrued income	4,487	2,467	-	-
Current trade and other receivables	11,079	9,821	214,459	116,108
Non-current: other receivables	1,798	-	-	-
Total trade and other receivables	12,877	9,821	214,459	116,108

Trade receivables are non-interest bearing and are generally on 30 to 90 days' terms.

Non-current other receivables at 30 September 2014 comprise a loan due from a third party with an effective interest rate of 18 per cent.

Current other receivables at 30 September 2013 comprise irrevocable undertakings to subscribe for convertible loan notes where the cash was not received by year end.

84 Notes to the annual financial statements

21 Trade and other receivables (continued)

Prepayments and accrued income includes accrued revenue relating to payments not yet received on long-term projects as follows.

	2014	2013
	£000	£000
At 1 October	1,646	3,527
Decrease in accrued revenue during the year	(771)	(1,881)
At 30 September	875	1,646

As at 30 September, the analysis of trade receivables that were past due, but not impaired is as follows:

	Total	Not past due	<30 days	30–60 days
	£000	£000	£000	£000
2014	5,748	4,538	1,208	2
2013	2,284	2,190	-	94

The credit quality of trade receivables that are neither past due nor impaired is assessed by reference to historical information relating to counterparty default rates.

As at 30 September the aged analysis of trade receivables impaired is as follows:

	Total	3–6	Over 6
		months	months
	£000	£000	£000
2014	41	-	41
2013	3	3	-

The movement on the Group provision for impairment of trade receivables is as follows:

	2014	2013
	£000	£000
At 1 October	3	-
Provision for receivables impairment	38	3
At 30 September	41	3

The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group does not hold any collateral as security.

The carrying value of the Group's trade and other receivables is denominated in the following currencies:

	2014	2013
	£000	£000
Pound Sterling	6,201	9,821
Indian Rupees	6,669	-
US Dollars	6	-
Euros	1	-
	12,877	9,821

Company

The carrying value of trade and other receivables equates to their fair value. Amounts owed by subsidiary undertakings are denominated in Pound Sterling, are interest free and due on demand. No amounts are past due and are not impaired.

22 Short-term deposits

	Group		Company
	2014	2013	2014	2013
	£000	£000	£000	£000
Short-term bank deposits	42,766	-	-	-

The effective interest rate on short-term deposits at the year end was 0.87 per cent 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.

23 Cash and cash equivalents

Group		Company
2014	2013	2014	2013
£000	£000	£000	£000
46,110	31,626	1,156	1

Cash at bank earns interest at floating rates based on bank deposit rates. Deposits are made for varying periods dependent on the cash requirements of the Group. The Group only deposits cash surpluses with major banks of high quality credit standing.

24 Trade and other payables

	Group		Company
	2014	2013	2014	2013
	£000	£000	£000	£000
Trade payables	6,063	1,338	-	-
Other payables	4,400	1,219	4,400	1,219
Accruals and deferred income	7,090	6,057	-	-
	17,553	8,614	4,400	1,219

Trade and other payables are stated at cost. Trade payables are non-interest bearing and are normally settled on 30 to 60 days terms.

Included within accruals and deferred income are the following amounts relating to deferred revenue from customer prepayments received on long-term projects.

	2014	2013
	£000	£000
At 1 October	994	1,809
Increase/(decrease) in deferred revenue during the year	353	(815)
At 30 September	1,347	994

86 Notes to the annual financial statements

25 Liability component of convertible loan notes

	£000
Carrying amount of liability
Proceeds from issue of convertible notes (32,492,000 notes at £1 par value)	32,492
Transaction costs	(2,219)
Net proceeds	30,273
Amount classified as equity (net of transaction costs of £898,000)	(12,252)
Accrued interest	509
At 30 September 2013	18,530
Accrued interest	3,005
Cancelled loan note	(1,287)
Conversion into ordinary shares on 3 April 2014	(158)
Conversion into ordinary shares on Initial Public Offering	(20,090)
At 30 September 2014	-

These notes were issued across a period from August to September 2013. Interest compounded annually at 5 per cent and was rolled up into the value of loan notes held. The loan notes and accrued interest were convertible into ordinary shares at a total value of £39,224,600 in June 2017 at the option of the holders and were also available to convert at any date up to maturity at the option of the holder. Any unconverted notes at maturity became payable on demand.

On 3 April 2014 103,315 loan notes were converted into ordinary shares of the Company with a value of £258,000. All remaining convertible loan notes were fully converted into 12,526,400 ordinary shares of the Company upon Admission to trading on the London Stock Exchange in July 2014, with a value of £31,316,000. The impact of the conversion was to increase share capital and share premium by £22,156,000 as follows:

	£000
Liability component of convertible loan notes at conversion	20,248
Deferred tax liability on conversion	2,115
Withholding tax	(207)
Credit to share capital and share premium on conversion	22,156

On conversion the equity component of the convertible loan notes of £9,652,000 remains in reserves. The realised element of £2,168,000 has been transferred to retained earnings and the unrealised element of £7,484,000 transferred to a capital reserve.

26 Financial instruments

Group

Capital management

The Directors consider the capital of the business to be the share capital and reserves of the Group. Due to the stage of development of the Group's technology, the Group manages capital requirements through raising equity share capital or convertible loan notes. The requirement to raise equity share capital or convertible loan notes is determined by reference to projected cash flows that are reviewed regularly.

Risks

Interest rate risk

The Company and Group held convertible loan notes during the year with a fixed interest rate at 5 per cent, which were converted to ordinary share capital on Initial Public Offering of shares in July 2014. At 30 September 2014 the Group does not hold any borrowings or other liabilities attracting an interest charge. The Group holds financial assets attracting interest receivable as detailed in notes 21, 22 and 23.

26 Financial instruments (continued)

Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

Foreign exchange risk arises when future commercial transactions or recognised assets and liabilities are denominated in a currency that is not the entity's functional currency. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Group will use forward contracts, transacted by Group treasury.

The Group is in the process of implementing a treasury risk management policy to hedge anticipated cash flows in each major foreign currency for the subsequent 12 months.

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group's foreign operations will be managed primarily through borrowings denominated in the relevant foreign currencies.

At 30 September 2014, the Group has no foreign currency borrowings or derivative financial instruments (2013: none).

At 30 September 2014, if the Pound Sterling had weakened/strengthened by 10 per cent against the US Dollar, Japanese Yen, Indian Rupee and Euro with all other variables held constant, post–tax loss for the year would have been £280,000 higher/£230,000 lower, mainly as a result of foreign currency exchange gains/losses on Indian Rupee denominated trading.

Credit risk

The Group's credit risk is predominantly with major multinational original equipment manufacturing companies, based in Europe and Japan and a major telecommunications provider in India. Concentration of credit risk arises from a major customer in India and from a significant amount of cash funds that are placed with a number of the major UK clearing banks. The Group only places cash deposits with banks with investment credit rating in accordance with the Group's treasury policy. The Group seeks to diversify exposure such as ensuring that concentration of funds with an individual bank at any time does not exceed pre-determined limits as set out in the Group's treasury policy.

The carrying amount of the financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows:

	2014	2013
	£000	£000
Trade and other receivables	12,877	9,821
Short-term deposits	42,766	-
Cash and cash equivalents	46,110	31,626
	101,753	41,447

Liquidity risk

The Group maintains adequate liquid funds to match contractual cash flows, with any surplus funds being placed on short-term interest-bearing deposit.

Accounting classifications and fair values

When measuring the fair value of an asset or liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation technique as follows:

› Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
› Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
› Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

The fair value of the liability element of the convertible loan notes was estimated on inception by discounting future cash flows using rates estimated to be those which were available for debt on similar terms, and falls within level 2 of the fair value hierarchy.

All other financial assets are recorded in the consolidated statement of financial position at amortised costs with carrying value being a reasonable approximation of fair value.

Notes to the annual financial statements

26 Financial instruments (continued)

The following tables show the carrying amounts and fair values of financial assets and financial liabilities. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

30 September 2014	Carrying amount
	Loans and receivables	Other financial liabilities	Total
	£000	£000	£000
Financial assets not measured at fair value
Trade and other receivables excluding prepayments and accrued income	8,390	-	8,390
Short-term deposits	42,766	-	42,766
Cash and cash equivalents	46,110	-	46,110
	97,266	-	97,266
Financial liabilities not measured at fair value
Trade and other payables	-	(10,463)	(10,463)
	-	(10,463)	(10,463)
30 September 2013	Carrying amount
	Loans and	Other	Total
	receivables	financial liabilities
	£000	£000	£000
Financial assets not measured at fair value
Trade and other receivables excluding prepayments and accrued income	7,354	-	7,354
Cash and cash equivalents	31,626	-	31,626
	38,980	-	38,980
Financial liabilities not measured at fair value
Trade and other payables	-	(2,557)	(2,557)
Convertible notes – liability component	-	(18,530)	(18,530)
	-	(21,087)	(21,087)

The book value of the financial assets and financial liabilities not measured at fair value is in all cases considered to be fair value.

Liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross, undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

30 September 2014	Carrying amount	On demand Less than 3		2–5 years	Total
	£000	£000	£000	£000	£000
Trade and other payables	(10,463)	-	(10,463)	-	(10,463)
30 September 2013	Carrying amount	On demand	Less than 3 months	2–5 years	Total
	£000	£000	£000	£000	£000
Trade and other payables	(2,557)	-	(2,557)	-	(2,557)
Convertible notes	(18,530)	-	-	(39,224)	(39,224)
	(22,425)	-	(2,557)	(39,224)	(41,781)

Strategic report

Governance

Company

(a) Accounting classifications and fair values

26 Financial instruments (continued)

The following tables show the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

30 September 2014	Carrying amount
	Loans and	Other	Total
	receivables	financial
		liabilities
	£000	£000	£000
Financial assets not measured at fair value
Trade and other receivables	214,459	-	214,459
Cash and cash equivalents	1,156	-	1,156
	215,615	-	215,615
Financial liabilities not measured at fair value
Trade and other payables	-	(4,400)	(4,400)

30 September 2013	Carrying amount
	Loans and	Other	Total
	receivables	financial liabilities
	£000	£000	£000
Financial assets not measured at fair value
Trade and other receivables	116,108	-	116,108
Cash and cash equivalents	1	-	1
	116,109	-	116,109
Financial liabilities not measured at fair value
Trade and other payables	-	(1,219)	(1,219)
Convertible notes – liability component		(18,530)	(18,530)

The book value of the financial assets and financial liabilities not measured at fair value is in all cases considered to be fair value.

(19,749) (19,749)

Notes to the annual financial statements

26 Financial instruments (continued)

(b) Liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

30 September 2014	Contractual cash flows
	Carrying amount	On demand	Less than 3 months	2 to 5 years	Total
	£000	£000	£000	£000	£000
Trade and other payables	(4,400)	-	(4,400)	-	(4,400)

30 September 2013	Contractual cash flows
	Carrying amount	On demand	Less than 3 months	2 to 5 years	Total
	£000	£000	£000	£000	£000
Trade and other payables	(1,219)	-	(1,219)	-	(1,219)
Convertible notes – liability component	(18,530)	-	-	(39,224)	(39,224)
	(19,749)	-	(1,219)	(39,224)	(40,443)

27 Issued share capital

Issued, called up and fully paid	2014	2013
– number	188,112,899 136,129,653
– £000	9,406	6,807

Holders of the ordinary shares (of 5p nominal value each) are entitled to receive dividends and other distributions and to attend and vote at any general meeting.

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

	Shares of 5p each
Issue of new share capital	38,059,179
Conversion of convertible loan notes	12,629,715
MIP share award	1,147,487
Exercise of share options	146,865
	51,983,246

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).

Equity share capital

The balance classified as share capital relates to the nominal value of shares on issue of the Company's equity share capital, comprising 5p ordinary shares. Share premium

The balance classified as share premium relates to the aggregate net proceeds less nominal value of shares on issue of the Company's equity share capital.

Equity component of convertible loan notes

During the year ended 30 September 2013 the Company issued convertible loan notes with equity and liability elements (see note 25). The convertible loan note proceeds, after deducting the liability element, are deemed to be the equity element and have been accounted for in reserves.

The loan notes were converted upon the listing of the Group on the London Stock Exchange. The liability element has been transferred to share capital and share premium whilst the equity element in reserves remains, in equity.

Merger reserve

The balance classified as other reserves relates to the acquisitions of Advanced Power Sources Limited and Intelligent Energy Limited, as recommended by section 612 of the Companies Act 2006.

Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations.

29 Share-based payment plans

A total share-based payment expense of £5,965,000 has been recognised in the year, comprising an equity-settled charge of £2,559,000 (2013: £19,000) and a cash-settled charge of £3,406,000 (2013: £nil).

The Company has issued a number of share-based payment plans to employees including share options and share awards as described below.

2001 and 2009 Share Option Schemes

The exercise price of the options are fixed and determined on the date of the grant. The option holders have the option to purchase ordinary shares at the option price between the exercise dates. The fair value of the options is estimated at the grant date using a Black-Scholes model, taking into account the terms and conditions upon which the options were granted. The contractual life of each option granted is varied. The schemes are equity-settled sharebased payments and there are no cash settlement alternatives.

The 2009 Share Option Scheme is subject to specific performance criteria being met.

The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, the share options during the year in relation to the 2001 and 2009 Share Option Schemes:

	2014	2014	2013	2014
	no.	WAEP	no.	WAEP
		pence		pence
	£000	£000	£000	£000
Outstanding at 1 October	3,725,379	96	8,087,059	69
Exercised during the year	(146,865)	92	(3,375,430)	45
Expired during the year	(607,914)	115	(986,250)	52
Outstanding at 30 September	2,970,600	92	3,725,379	96
Exercisable at 30 September	2,970,600	92	3,610,379	95

At 30 September 2014, the weighted average remaining contractual life for the 2001 and 2009 scheme share options outstanding is 1.28 years (2013: 1.52 years). There were no options granted during the current or prior year under the 2001 or 2009 schemes.

The range of exercise prices for options outstanding under this scheme at the end of the year was 80p to 150p (2013: 80p to 150p). Of the 2001 and 2009 share options exercised during the year the majority were exercised before the Company listed for trading on the London Stock Exchange and therefore a weighted average share price at the date of exercise is not available. The share price at 30 September 2014 was 247.5p.

The Group has taken advantage of the exemption in IFRS 1 in respect of equity-settled awards so as to apply IFRS 2 only to those equity-settled awards granted after 7 November 2002.

92 Notes to the annual financial statements

29 Share-based payment plans (continued)

The following inputs were used in a Black-Scholes model to estimate the value of the options at grant date for the 2001 and 2009 share-based payment plans:

Dividend yield (%)	-
Expected volatility (%)	40%
Risk–free interest rate (%)	0.77%
Expected life of option (years)	2 to 8.5
Weighted average share price (£)	1.00
Model used:	Black-Scholes

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.

2013 Management Incentive Plan

The Company introduced the HM Revenue & Customs approved 2013 Management Incentive Plan ("MIP") during the year.

The purpose of the MIP is to provide participants with an opportunity to participate directly in the growth of the value of the Company by receiving the MIP award. This allows the participants to share in a pool of value, "the MIP Pool", which is linked to the growth in the value of the Company's shares. Participants receive shares and share options in the Company if the Company is sold, taken over or is floated on a stock exchange ("Exit Event").

Awards were granted to employees under the MIP on 7 March 2014. The Admission to the London Stock Exchange in July 2014 was an Exit Event under the conditions of the MIP. The size of the MIP Pool was determined by reference to 16 per cent of the difference between the Offer Price of £3.40 and £2.30. Each participant's share of the MIP Pool was converted into the number of shares (awarded in the form of a) MIP share options and b) MIP share awards) determined by reference to the Offer Price with the MIP award vesting as follows:

› One third on the date that the Company's shares are floated on the stock exchange
› One third on the first anniversary of the date of flotation
› One third on the second anniversary of the date of flotation

During the year 810,000 share options were granted and 5,446,133 shares were awarded to the MIP scheme participants.

MIP share options

The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, the share options during the year in relation to the MIP:

		2013
	2014	WAEP
	No.	pence
Outstanding at 1 October	-	-
Granted during the year	810,000	100
Outstanding at 30 September	810,000	100
Exercisable at 30 September	270,000	100

Share options were granted on 7 March 2014 (on listing of the Company the value of the MIP Pool was determined and as a result the number of options was confirmed to be 810,000). One third of the granted share options (270,000 options) vested on 9 July 2014 on listing of the Company on the London Stock Exchange. At 30 September 2014, the weighted average remaining contractual life for the MIP share options outstanding is 9.42 years. The weighted average fair value of options granted during the year, under the MIP, determined by the Monte-Carlo valuation model was 110p per option.

29 Share-based payment plans (continued)

MIP share awards

The following table illustrates the number (No.) and weighted average fair value (WAFV) at grant date of shares awarded during the year in relation to the MIP:

		2014
		WAFV
	2014 No.	pence
Awarded during the year	5,446,133	104

Share awards were granted on 7 March 2014 (on listing of the Company the value of the MIP pool was determined and as a result the number of awards was confirmed to be 5,446,133).

On Admission of the Company to the London Stock Exchange on 9 July 2014 the first tranche of the share award vested with the MIP participants. Part of the first tranche of the share award was modified by the Company issuing a reduced number of 1,147,487 shares and settling a number of share awards in cash instead of facilitating sales of ordinary shares under the award. In addition, the Company paid in cash, the value of the share award that vested on Admission, in respect of one Director of the Company. These elements of the award totalling £3,406,000 have been treated as cash-settled share based payments which have been settled during the year.

The remaining 4,298,646 share awards vest in two equal amounts on the first and second anniversary of the Company listing on the London Stock Exchange and will be equity settled.

The following inputs were used in a Monte-Carlo model to estimate the value of the options and share awards at grant date for the MIP share-based payment plans:

Dividend yield (%)	-
Grant date	7 March 2014
Expected volatility (%)	39.24%
Risk–free interest rate (%)	1.09%
Expected life of option (years)	3
Share price at grant date (£)	2.50
Model used:	Monte-Carlo Algorithm

30 Commitments and contingencies

Operating lease commitments – Group as lessee

The Group has entered into commercial leases on several properties, and items of office and laboratory equipment. These leases have an average duration of between less than 1 year and 6 years. The property leases all contain an option for renewal, with such options being exercisable before the expiry of the lease term at rentals based on market prices at the time of exercise. There are no restrictions placed upon the lessee by entering into these leases.

Future minimum rentals payable under non-cancellable operating leases as at 30 September are as follows:

	2014	2013
	£000	£000
Within one year	1,452	902
After one year but not more than five years	4,730	264
After 5 years	295	-
	6,477	1,166

During the period, £1,315,000 (2013: £923,000) was recognised as a lease expense. This was made up of minimum lease payments for equipment of £227,000 (2013: £212,000) and for rent of £1,088,000 (2013: £711,000).

94 Notes to the annual financial statements

31 Off-statement of financial position arrangements

The Group enters into operating lease arrangements for the hire of buildings and plant equipment; these arrangements are a cost effective way of obtaining the short-term benefit of these assets. There are no other material off-statement of financial position arrangements.

32 Related-party transactions

Group and Company

During the year the Group and Company entered into transactions, in the ordinary course of business, with other related parties being subsidiary companies. Transactions entered into, and trading balances outstanding at 30 September with other related parties, are as follows:

	Sales to	Purchases	Amounts	Amounts
	related	from related	owed by	owed to
	party	party	related	related
			party	party
	£000	£000	£000	£000
Subsidiaries - Company
2014	-	-	214,459	-
2013	-	-	111,153	-
Joint ventures – Group and Company
2014	925	-	80	-
2013	300	-	115	-

The amount owed by related party subsidiaries refers to the intercompany debt with Intelligent Energy Limited. The amount owed to related party subsidiaries refers to intercompany receivables with Intelligent Energy Inc of £122,000 and Essential Energy (Operations) Indian Private Limited of £47,000.

The sales and amounts owed by related-party joint ventures refers to the development contract with IE-CHP (UK & Eire) Limited and SMILE FC System Corporation.

Terms and conditions of transactions with related parties

The related party transactions were made on terms equivalent to those that prevail in arm's length transactions.

Intelligent Energy Holdings plc, a Company registered in England Wales, is the ultimate parent entity and controlling party in the Group.

Key management compensation

Key management personnel are deemed to be the Directors of the Company. The compensation paid or payable to key management for employee services is shown below:

	2014	2013
	£000	£000
Short-term employee benefits	1,042	1,200
Post-employment benefits	4	-
Share-based payments	2,609	180
Total	3,655	1,380

33 Events after the reporting period

The Group announced the UK retail launch of Upp, with Upp starter packs being available to buy in Apple UK stores from 19th November 2014. Whilst it is not possible to estimate the financial impact of this event, the Directors expect it to have a positive effect on the revenues of the Consumer Electronics segment. This is a non-adjusting event since it does not relate to conditions existing at the balance sheet date.

Notice of Annual General Meeting

This document is important and requires your immediate attention. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank, solicitor, accountant, fund manager or other appropriate independent financial adviser.

If you have sold or otherwise transferred all of your shares in Intelligent Energy Holdings plc (the "Company"), you should send this document as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee.

Notice is given that the Annual General Meeting of the Company will be held at the Burleigh Court Hotel, off Ashby Road (A512), Loughborough University (West Park), Loughborough, LE11 3GR at 2.00 pm on 27 February 2015 for the following purposes. Resolutions 1 to 16 (inclusive) will be proposed as ordinary resolutions and resolutions 17 to 19 (inclusive) as special resolutions.

Ordinary resolutions

1 To receive the Company's audited financial statements for the financial year ended 30 September 2014, together with the Directors' report and the auditor's report on those financial statements.
2 To approve the Directors' remuneration report (other than the part containing the Directors' remuneration policy) for the financial year ended 30 September 2014, as set out on pages 40 to 55 of the Company's 2014 Annual Report.
3 To approve the Directors' remuneration policy, as set out on pages 42 to 50 of the Company's 2014 Annual Report.
4 To re-elect Mr Paul Heiden as a Director of the Company.
5 To re-elect Dr Henri Winand as a Director of the Company.
6 To re-elect Mr John Maguire as a Director of the Company.
7 To re-elect Mr Michael Muller as a Director of the Company.
8 To re-elect Mr Martin Bloom as a Director of the Company.
9 To re-elect Mr Zarir J. Cama as a Director of the Company.
10 To re-elect Mr Flavio Guidotti as a Director of the Company.
11 To re-elect Dr Philip Mitchell as a Director of the Company.
12 To elect Dr Caroline Brown as a Director of the Company.
13 To re-appoint KPMG LLP as auditor of the Company to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting of the Company at which accounts are laid.
14 To authorise the Directors to determine the remuneration of the auditor of the Company.
15 That the Company, and any company which is or becomes a subsidiary of the Company at any time during the period to which this resolution relates, be authorised for the purposes of section 366 of the Companies Act 2006 (the "Act") to:
a) make political donations to political parties and/or independent election candidates not exceeding £25,000 in total;
b) make political donations to political organisations other than political parties not exceeding £25,000 in total; and
c) incur political expenditure not exceeding £25,000 in total

in each case during the period beginning on the date of the passing of this resolution and expiring at the conclusion of the next Annual General Meeting of the Company, or on 27 May 2016, whichever is earlier.

For the purpose of this resolution "political donation", "political party", "political organisation", "independent election candidate" and "political expenditure" are to be construed in accordance with sections 363, 364 and 365 of the Act.

16 That, in accordance with the provisions of section 551 of the Companies Act 2006 (the "Act"), the Directors be and are generally and unconditionally authorised to allot shares in the Company, or to grant rights to subscribe for or to convert any security into shares in the Company ("Rights"):
a) up to an aggregate nominal amount of £3,135,215; and
b) comprising equity securities (as defined in section 560 of the Act) up to an aggregate nominal amount of £6,270,430 (such amount to be reduced by the aggregate nominal amount of any allotments or grants made under paragraph (a) of this resolution) in connection with an offer by way of rights issue:
- i) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and
- ii) to holders of other equity securities as required by the rights of those securities or, subject to such rights, as the Directors otherwise consider necessary,

and so that the Directors may impose any limits or restrictions and make any arrangements which they consider necessary or appropriate to deal with treasury shares, fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter,

such authorities are to expire at the conclusion of the Company's next Annual General Meeting after this resolution is passed or, if earlier, at the

Governance

96 Notice of Annual General Meeting

close of business on 27 May 2016, but, in each case, so that the Company may make offers or agreements before the authority expires which would or might require shares to be allotted, or Rights to be granted, after the authority expires, and so that the Directors may allot shares or grant Rights in pursuance of any such offer or agreement notwithstanding that the authority conferred by this resolution has expired.

Special resolutions

17 That, subject to the passing of resolution 16, in accordance with the provisions of sections 570 and 573 of the Companies Act 2006 (the "Act"), the Directors be and are generally empowered to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the authorities granted by resolution 16 as if section 561(1) of the Act did not apply to any such allotment provided that this power shall be limited:
a) to the allotment of equity securities in connection with an offer of equity securities (but in the case of an allotment pursuant to the authority granted under paragraph (b) of resolution 16, such power shall be limited to the allotment of equity securities in connection with an offer by way of rights issue only):
- i) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings; and
- ii) to holders of other equity securities, as required by the rights of those securities or, subject to such rights, as the Directors otherwise consider necessary,

b) to the allotment (otherwise than in the circumstances set out in paragraph (a) of this resolution) of equity securities pursuant to the authority granted by paragraph (a) of resolution 16 up to an aggregate nominal amount of £470,282,

such power to expire at the conclusion of the Company's next Annual General Meeting after this resolution is passed or, if earlier, at the close of business on 27 May 2016, but so that the Company may make offers or agreements before the power expires, which would or might require equity securities to be allotted after the power expires and so that the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this authority has expired.

18 That the Company be and is generally and unconditionally authorised to make one or more market purchases (as defined in section 693 of the Companies Act 2006 (the "Act"), of ordinary shares in the capital of the Company provided that:
a) the maximum aggregate number of ordinary shares authorised to be purchased is 18,811,289;
b) the minimum price which may be paid for an ordinary share shall not be less than the nominal value of an ordinary share at the time of such purchase;
c) the maximum price which may be paid for an ordinary share is not more than the higher of:
- i) 105 per cent of the average of the middle market quotation for an ordinary share as derived from the Daily Official List of the London Stock Exchange for the five business days immediately preceding the day on which the ordinary share is purchased; and
- ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out,

in each case, exclusive of expenses;

d) this authority shall expire at the conclusion of the Company's next Annual General Meeting after this resolution is passed or, if earlier, at the close of business on 27 May 2016;
e) the Company may make a contract of purchase of ordinary shares under this authority which would or might be executed wholly or partly after the expiry of this authority, and may make a purchase of ordinary shares in pursuance of any such contract; and
f) any ordinary shares purchased pursuant to this authority may either be held as treasury shares or cancelled by the Company, depending on which course of action is considered by the Directors to be in the best interests of shareholders at the time.
19 That a general meeting other than an Annual General Meeting may be called on not less than 14 clear days' notice.

Recommendation

The Board believes that each of the resolutions to be proposed at the Annual General Meeting is in the best interests of the Company and its shareholders as a whole. Accordingly, the Directors unanimously recommend that ordinary shareholders vote in favour of all of the resolutions proposed, as the Directors intend to do in respect of their own beneficial holdings.

By order of the Board

Registered Office: Charnwood Building Holywell Park Ashby Road Loughborough LE11 3GB United Kingdom

Nicholas Heard

Company Secretary 24 December 2014

Explanatory notes to the proposed resolutions

Resolutions 1 to 16 (inclusive) are proposed as ordinary resolutions, which means that for each of those resolutions to be passed, more than half of the votes cast must be cast in favour of the resolution. Resolutions 17 to 19 (inclusive) are proposed as special resolutions, which means that for each of those resolutions to be passed, at least three-quarters of the votes cast must be cast in favour of the resolution.

Resolution 1 – Receipt of 2014 Annual Report

The Directors are required to lay the Company's annual accounts and the Directors' and auditor's reports on those accounts (collectively, the "Annual Report") before shareholders each year at the Annual General Meeting ("AGM").

Resolutions 2 and 3 – Approval of Directors' remuneration report and Directors' remuneration policy

Following changes to the Companies Act 2006 (the "Act") and in line with regulations which came into effect on 1 October 2013, the Directors' remuneration report (the "Directors' remuneration report") is now presented in three sections:

› the annual statement from the Chairman of the Remuneration Committee;
› the annual report on remuneration; and
› the Directors' remuneration policy.

The annual statement from the Chairman of the Remuneration Committee, set out on pages 40 to 41 of the 2014 Annual Report, summarises, for the financial year ended 30 September 2014, the major decisions taken on Directors' remuneration, any substantial changes relating to Directors' remuneration made during the year, and the context in which those changes occurred and decisions have been taken.

The annual report on remuneration, set out on pages 50 to 55 of the 2014 Annual Report, provides details of the remuneration paid to Directors in respect of the financial year ended 30 September 2014, including base salary, taxable benefits, short-term incentives (including percentage deferred), long-term incentives vested in the year, pension-related benefits, any other items in the nature of remuneration and any sum(s) recovered or withheld during the year in respect of amounts paid in earlier years.

The Directors' remuneration policy, set out on pages 42 to 50 of the 2014 Annual Report, provides details of the Company's proposed policy on Directors' remuneration (including the proposed policy on payments for loss of office).

The Directors' remuneration report (other than the part containing the Directors' remuneration policy) is subject to an annual advisory shareholder vote by way of an ordinary resolution. Resolution 2 is to approve the Directors' remuneration report (other than the part containing the Directors' remuneration policy).

The Directors' remuneration policy is subject to a binding shareholder vote by way of an ordinary resolution, at least once every three years. Resolution 3 is to approve the Directors' remuneration policy. The Directors' remuneration policy will, subject to shareholder approval, take effect from the conclusion of the AGM. Payments (including payments for loss of office) will continue to be made to the current and any former Directors in line with existing contractual arrangements until this time.

Once the Directors' remuneration policy takes effect, all remuneration payments and payments for loss of office made by the Company to the current and any former Directors must be consistent with the Directors' remuneration policy or, if inconsistent with the Directors' remuneration policy, must have been separately approved by way of an ordinary resolution of the shareholders in accordance with the relevant provisions of the Act.

If the Directors' remuneration policy is approved and remains unchanged, it will be valid for up to three years without a new shareholder approval. If the Company wishes to change the Directors' remuneration policy, it must first seek the approval of the proposed revised Directors' remuneration policy from shareholders before it can implement the new policy.

If the Directors' remuneration policy is not approved for any reason, the Company will, if and to the extent permitted by the Act, continue to make payments (including payments for loss of office) to the current and any former Directors in accordance with existing contractual arrangements and will seek the approval of a proposed revised Directors' remuneration policy from the shareholders as soon as practicable.

Resolutions 4 to 11 (inclusive) – Re-election of Directors

In light of the best practice set out in the UK Corporate Governance Code (the "UK Code"), every Director (other than Dr Caroline Brown who is standing for election for the first time) will stand for re-election at the AGM. Biographical details of each Director can be found on pages 26 to 27 of the 2014 Annual Report. Three of the Non-executive Directors who are standing for re-election, being Mr Muller, Mr Cama and Mr Bloom, are considered independent under the UK Code. Mr Heiden (as Non-executive Chairman), Mr Guidotti and Dr Mitchell are not considered to be independent under the UK Code.

Resolution 12 – Election of a Director

In accordance with the Articles, Dr Caroline Brown is standing for election as a Director of the Company following her appointment to the Board on 2 May 2014. Dr Brown is considered to be independent under the UK Code. Biographical details for Dr Brown can be found on page 27 of the Annual Report.

Resolution 13 – Re-appointment of auditor

The Company is required to appoint an auditor at each general meeting at which accounts are laid before shareholders, to hold office until the next such meeting.

The Audit & Risk Committee has reviewed the effectiveness, performance, independence and objectivity of the existing external auditor, KPMG LLP, on behalf of the Board, and concluded that the external auditor was in all respects effective.

This resolution proposes the re-appointment of KPMG LLP until the conclusion of the next AGM.

Resolution 14 – Authority to agree auditor's remuneration

This resolution authorises the Directors, in accordance with standard practice, to agree the remuneration of the auditor. In practice, the Audit & Risk Committee will negotiate and approve the remuneration of the auditor on behalf of the Board.

Explanatory notes to the proposed resolutions

Resolution 15 – Political donations

This resolution is proposed because the Act requires companies to obtain shareholder approval before they can make donations to political parties, other political organisations or independent election candidates, or incur political expenditure. The Company does not make and does not intend to make donations to political parties, other political organisations or independent election candidates, nor does it incur, or intend to incur, political expenditure, within the ordinary meaning of those words. However, the definitions of political donations, political expenditure and political organisations used in the Act are very wide. In particular, the definition of political organisations may extend to bodies such as those concerned with policy review, law reform, the representation of the business community and special interest groups such as those concerned with the environment, which the Company and its subsidiaries might wish to support. As a result, the definitions may cover legitimate business activities not in the ordinary sense considered to be political donations or political expenditure. Such activities are not designed to support any political party or independent election candidate or to influence public support for any political party or independent election candidate. The authority which the Board is requesting is a precautionary measure to ensure that the Company and its subsidiaries do not inadvertently breach the Act, and will be capped at £25,000 in respect of each type of expenditure.

Resolution 16 – Authority to allot shares

This resolution seeks shareholder approval to grant the Directors the authority to allot shares in the Company, or to grant rights to subscribe for or convert any securities into shares in the Company ("Rights") pursuant to section 551 of the Act (the "Section 551 authority"). The authority contained in paragraph (a) of the resolution will be limited to an aggregate nominal amount of £3,135,215, being approximately one-third of the Company's issued ordinary share capital as at 24 December 2014.

In line with guidance issued by the Investment Management Association ("IMA"), paragraph (b) of this resolution would give the Directors authority to allot shares in the Company or grant Rights in connection with a rights issue up to aggregate nominal amount of £6,270,430, representing approximately two-thirds of the Company's issued ordinary share capital as at 24 December 2014, as reduced by the aggregate nominal amount of any allotments or grants under paragraph (a) of this resolution.

The Company does not hold any shares in treasury.

If approved, the Section 551 authority shall, unless renewed, revoked or varied by the Company, expire at the end of the Company's next AGM after the resolution is passed or, if earlier, at the close of business on 27 May 2016. The exception to this is that the Directors may allot shares or grant Rights after the authority has expired in connection with an offer or agreement made or entered into before the authority expired.

Resolution 17 – Partial disapplication of pre-emption rights

This resolution seeks shareholder approval to grant the Directors the power to allot equity securities of the Company pursuant to section 570 and 573 of the Act (the "Section 570 and 573 power") without first offering them to existing shareholders in proportion to their existing shareholdings.

The power is limited to allotments for cash in connection with pre-emptive offers, subject to any arrangements that the Directors consider appropriate to deal with fractions and overseas requirements and otherwise for cash up to a maximum nominal value of £470,282, representing approximately 5 per cent of the Company's issued ordinary share capital as at 24 December 2014, which is in accordance with the relevant IMA guidelines for the Company.

If approved, the Section 570 and 573 power shall apply until the end of the Company's next AGM after the resolution is passed or, if earlier, until the close of business on 27 May 2016. The exception to this is that the Directors may allot equity securities after the power has expired in connection with an offer or agreement made or entered into before the power expired.

Resolution 18 – Authority to purchase own shares

This resolution seeks shareholder approval to grant the Company the authority to purchase its own shares pursuant to sections 693 and 701 of the Act.

This authority is limited to an aggregate maximum number of 18,811,289 ordinary shares, representing 10 per cent of the Company's issued ordinary share capital as at 24 December 2014.

The maximum price which may be paid for an ordinary share will be an amount which is not more than the higher of (i) 5 per cent above the average of the middle market quotation for an ordinary share as derived from the Daily Official List of the London Stock Exchange for the five business days immediately preceding the day on which the ordinary share is purchased; and (ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out (in each case, exclusive of expenses).

If approved, the authority shall, unless varied, revoked or renewed, expire at the end of the Company's next AGM after the resolution is passed or, if earlier, at the close of business on 27 May 2016. The Directors have no present intention of exercising all or any of the powers conferred by this resolution and will only exercise the Company's authority in this regard if it is in the interests of shareholders generally.

Resolution 19 – Notice period for general meetings other than AGMs

This resolution seeks shareholder approval to allow the Company to continue to call general meetings (other than AGMs) on 14 clear days' notice. In accordance with the Companies (Shareholders' Rights) Regulations 2009, the notice period required for general meetings of the Company is 21 days unless shareholders approve a shorter notice period (subject to a minimum period of 14 clear days). AGMs will continue to be held on at least 21 clear days' notice.

The approval will be effective until the Company's next AGM, when it is intended that a similar resolution will be proposed. In accordance with the Act, in order to be able to call a general meeting on less than 21 clear days' notice, the Company must make a means of electronic voting available to all shareholders for that meeting.

Explanatory notes as to the proxy, voting and attendance procedures at the Annual General Meeting

1 The holders of ordinary shares in the Company are entitled to attend the AGM and are entitled to vote. A member entitled to attend and vote may appoint a proxy to exercise all or any of their rights to attend, speak and vote at a general meeting of the Company. Such a member may appoint more than one proxy, provided that each proxy is appointed to exercise the rights attached to different shares. A proxy need not be a member of the Company.

2 A Form of Proxy is enclosed with this notice. To be effective, a Form of Proxy must be completed and returned, together with any power of attorney or authority under which it is completed or a certified copy of such power or authority, so that it is received by the Company's registrars at the address specified on the Form of Proxy not less than 48 hours (excluding any part of a day that is not a working day) before the stated time for holding the meeting. Returning a completed Form of Proxy will not preclude a member from attending the meeting and voting in person.
3 Any person to whom this notice is sent who is a person nominated under section 146 of the Act to enjoy information rights (a "Nominated Person") may, under an agreement between him and the shareholder by whom he was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the AGM.
4 If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 2 above does not apply to Nominated Persons. The rights described in paragraphs 1 and 2 can only be exercised by ordinary shareholders of the Company.
5 To be entitled to attend and vote at the AGM (and for the purposes of the determination by the Company of the number of votes they may cast), members must be entered on the Company's register of members by 6.00 pm on 25 February 2015 (or, in the event of an adjournment, 6:00 pm on the date which is two days before the time of the adjourned meeting excluding any part of a day that is not a working day). Changes to entries on the register of members after this time shall be disregarded in determining the rights of any person to attend or vote at the meeting.
6 As at 24 December 2014, the Company's issued share capital consists of 188,112,899 ordinary shares of 5 pence each, carrying one vote each.
7 CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
8 In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuer's agent (RA19) by 2.00 pm on 25 February 2015. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
9 CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST Personal Member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s) such action as shall be necessary to ensure that

a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

10 The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) (a) of the Uncertificated Securities Regulations 2001.
11 Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares.
12 Under section 527 of the Act, members meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the AGM; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the Act. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Act. Where the Company is required to place a statement on a website under section 527 of the Act, it must forward the statement to the Company's auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the AGM includes any statement that the Company has been required under section 527 of the Act to publish on a website.
13 Any member holding ordinary shares attending the meeting has the right to ask questions. The Company must answer any such questions relating to the business being dealt with at the meeting but no such answer need be given if: (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

100 Explanatory notes to the proposed resolutions

14 A copy of this Notice, and other information required by section 311A of the Act, can be found at www.intelligent-energy.com
15 You may not use an electronic address provided in either this Notice of AGM or any related documents (including the Proxy Form) to communicate with the Company for any purposes other than those expressly stated.
16 The following documents will be available for inspection at the Company's Registered Office during normal business hours (Saturdays, Sundays and public holidays excepted) from the date of this notice until the date of the AGM and at the place of the AGM for 15 minutes prior to and during the meeting:
a) copies of all service agreements under which Directors of the Company are employed by the Company or any subsidiaries; and
b) a copy of the terms of appointment of the Non-executive Directors of the Company.
17 You may register your vote online by visiting the website of the Company's registrar, Equiniti, at www.sharevote.co.uk. In order to register your vote online, you will need to enter the Task ID, together with your Voting ID and Shareholder Reference Number which are set out on the enclosed Proxy Form. The return of the Proxy Form by post or registering your vote online will not prevent you from attending the AGM and voting in person, should you wish. Alternatively, shareholders who have already registered with Equiniti's online portfolio service, Shareview, can appoint their proxy electronically by logging on to their portfolio at www.shareview.co.uk and clicking on the link to vote. The on-screen instructions give details on how to complete the appointment process. A proxy appointment made electronically will not be valid if sent to any address other than those provided or if received after 2.00 pm on 25 February 2015.

forward-looking information.

Company and shareholder information

As at 30 September 2014, there were 509 holders of ordinary shares of £0.05 each in the capital of the Company. Their shareholdings are analysed below.

Shareholdings:

Size of shareholding	Number of shareholders	Percentage of the total number of shareholders	Number of ordinary shares as at 30 September 2014	Percentage of ordinary shares in issue
1 – 5,000	130	25.54%	260,009	0.14%
5,000 – 50,000	213	41.85%	4,520,191	2.40%
50,001 – 100,000	54	10.61%	3,847,268	2.05%
100,001 – 500,000	68	13.36%	15,109,533	8.03%
Over 500,000	44	8.64%	164,375,898	87.38%
Total	509	100.00%	188,112,899	100.00%

UK

Loughborough (head office)

Charnwood Building Holywell Park Ashby Road Loughborough LE11 3GB UK Tel: +44 (0) 1509 271 271

London

88 Wood Street London EC2V 7RS UK Tel: +44 (0) 208 528 1495

India

Ferns Icon

Unit No.4, 2nd Floor, Sy. No. 28, Doddanekkundi, Outer Ring Road Bengaluru 560037 India Tel: +91 80 6715 5500

Japan

16F Umeda Square Building 1-12-17 Umeda Kita-ku Osaka Japan 530-0001 Tel: +81 (0) 6 6147 2122

USA

1731 Technology Drive, Suite 755 San Jose California 95110 USA Tel: + 1 408 503 0503

Directors:	Paul Heiden non‑executive chairman Dr Henri Winand chief executive officer John Maguire chief financial officer Michael Muller senior independent	Auditor: Legal adviser:	KPMG LLP St Nicholas House 31 Park Row Nottingham NG1 6FQ Pinsent Masons LLP	Registrar services A number of shareholder services can be accessed online at www.shareview.co.uk including a variety of "how to" guides and the portfolio service, which gives shareholders access to more information on their investments, such as
	non‑executive director Martin Bloom independent non‑executive director		30 Crown Place London EC2A 4ES	balance movements and indicative share prices. The shareholder helpline number is 0871 384 2030 or +44 (0) 121 415 7047 (if calling
Company Secretary:	Dr Caroline Brown independent non‑executive director Zarir J. Cama independent non‑executive director Flavio Guidotti non‑executive director Dr Philip Mitchell non‑executive director Nicholas Heard	Principal bankers: Stockbroker:	Barclays Bank PLC 5/6 High Street Hitchin Hertfordshire SG5 1BJ Canaccord Genuity Ltd 88 Wood Street London EC2V 7QR	from overseas). Lines are open 8.30 am to 5.30 pm Monday to Friday, excluding public holidays. Calls to these numbers are charged at 8 pence per minute (excluding VAT) plus network extras. Calls to the shareholder helpline from overseas will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes.
Registered Office: Registered Number: Website address:	Charnwood Building Holywell Park Ashby Road Loughborough Leicestershire LE11 3GB 05104429 www.intelligent-energy.com	Registrar:	Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA	Forward-looking statements Certain sections of this Annual Report contain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this report. Such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such

AI assistant

Shell PLC — Annual Report 2014

5307_10-k_2014-09-30_aacfed00-1cd4-4db2-839c-d981c124fc31.pdf

Intelligent Energy Holdings plc

Annual Report for the year ended 30 September 2014

Highlights

• DP&G division:

• Motive division:

• CE division:

• Technology:

Contents

Strategic report

Governance

Financial statements

Shareholder information

Intelligent Energy – at a glance

Consumer Electronics

Distributed Power & Generation

Motive

Key strengths

Technology

Intelligent Energy – business strategy

1. "Design once, deploy many times"

2. Mass markets

3. Flexible business model

Asset Management and Business Information Systems ("AMBIS")

Chairman's statement

Paul Heiden

Chief Executive's review

Market overview

8 Chief Executive's review

CE division update

DP&G division update

Motive customers: stepping up through the licensing business model

Motive division update

10 Chief Executive's review

Technology developments

Corporate and business update

Outlook

CE division:

DP&G division:

Motive division:

Chief Financial Officer's review

Consolidated income statement

Revenue and gross margin

12 Chief Financial Officer's review

Research and development

Operation and administration costs

Adjusted EBITDA

Profit/(loss) for the year

Consolidated statement of financial position

Non-current assets

Investments using the equity method

Current assets and current liabilities

Convertible loan notes

Commitments

Key performance indicators

CE division:

DP&G division:

Motive division:

Group risk factors

Going concern

John Maguire

Technology

Technology – background

Progress

Air-cooled ("AC") stack technology – recent developments

Figure 1: Diagram showing the increase in power density by volume and weight, for Intelligent Energy's AC technology

Evaporatively-cooled ("EC") stack technology – recent developments

16 Technology

Fuel for CE platforms

Intellectual property

Market overview and product applications

Consumer Electronics

Market overview

Product applications

Phase 1:

18 Market overview and product applications

Phase 2:

Phase 3:

Shell PLC Annual Report 2014