CAP Clean Air

RNS Number:6351B
Clean Air Power Limited
07 August 2007


For immediate release                                             07 August 2007


                              Clean Air Power Ltd
                      ("Clean Air Power" or "the Company")

                                 Trading Update

Clean Air Power plc (AIM:CAP) the developer of Dual-FuelTM combustion technology
that enables heavy-duty diesel engines to run on a combination of both diesel
and natural gas provides an update on its 2007 activity.


Dual-FuelTM Technology


Clean Air Power is pleased to announce the completion of its new engine
management system project. Completed in July 2007 and developed with engineering
support from Ricardo Plc, this new software will allow Clean Air Power's
Dual-FuelTM technology to integrate with the latest heavy duty diesel engine
technology on the market today. The integration of the software into an engine
is already under way and it will be used in all future Clean Air Power
Dual-FuelTM products, whether developed in conjunction with an OEM or solely by
the company.


Entering into a cooperation agreement with a major truck or engine manufacturer
remains the number one priority for Clean Air Power. However, the Company has
made progress in its development of its Dual-FuelTM technology leading it to
believe that a Euro V solution may well now be possible without a formal OEM
agreement.


Clean Air Power's activities with truck manufacturers in Europe continue with
the Board being confident of developing cooperation during the coming year.


In Australia, the Company has strengthened its commercial and engineering team
to facilitate the continued development of the Dual-FuelTM technology. An
important engineering development project has been taking place in Australia in
recent months, mainly funded by the truck operators and Australia Greenhouse
Office (AGO), a government body. This project has resulted in many improvements
to the Company's Australian software.


January 2007 saw the announcement of a major contract when Mitchell Corp
Australia Pty Ltd, a bulk logistics solutions provider, ordered 50 systems worth
a total of approximately #1.5m. Prior to placing this order, Mitchell took
delivery in 2006 of 14 Clean Air Power Dual-Fuel vehicles which had been
converted by a third party. These have proved to be unreliable and have required
reworking to meet the Clean Air Power specification as confirmed by the
development project. This has resulted in delays to the installation programme
and a lack of confidence within Mitchell Corp. Clean Air Power has now taken
control of the whole installation process and will ensure adherence to the exact
specification set down in the recent development project.


The company's largest Australian customer, Murray Goulburn, is in the process of
having an additional 12 Clean Air Power systems installed and installations have
also started on the #0.25m order from Kleenheat Gas Pty Ltd which was announced
in May.


However, delays resulting from the development programme and issues with
Mitchell means that year end sales projections are significantly below market
expectations.


The Australian truck market is one of the most demanding in the world with very
heavy gross vehicle weights and extreme ambient temperatures. The company has
recently completed the development of an optional secondary intercooler to deal
with these extreme temperatures.

The Company continues to view Australia as an important market with strong
product awareness and strong financial benefits for the operators.


In the UK sales of the Genesis product to date have been significantly below
expectations. While a number of blue chip organisations have trialled the
products, decision making and due diligence within these organisations continues
to be a long drawn out process.


A number of these trials have the potential to generate sales in the remainder
of the year. However, due to the low year to date sales UK Genesis revenue for
the whole of 2007 is expected to be significantly below expectations.


Components Business


Clean Air Power manufactures some of the components incorporated in the
company's Dual-FuelTM technology. A number of these components are also used in
spark ignited gas engines, hydraulic gearboxes and certain other applications.


With sales mainly in Europe and the USA, growth in demand for gas engine
components during 2007 continues to be strong. Revenue for this division remains
in line with expectations.

Emissions Reduction Business


This area of the business provides solutions to large stationary diesel engines
such as those used in pumping stations. The current market is mainly in the US
and we provide a service whereby the emissions from new installations are
treated to meet local legislation.


Although revenue to date is below expectations the Company anticipates the
confirmation of a major contract shortly which should produce year end revenues
in line with expectations.


Summary


Clean Air Power is well placed to take advantage of the growing momentum for
reduced climate change emissions, whilst also delivering considerable cost
reductions. The company expects demand to develop in the coming year.


As highlighted above, Company sales have been lower in key regions, which leads
the Board to anticipate that results for the full year will be well below
expectations.


The slower than anticipated increase in sales of the Dual-FuelTM products has
led to a greater than expected cash burn. As a result the company will be
considering its options for raising further funds during the remainder of the
current year in order to fund the development of a Euro V solution and to
progress activity with manufacturers.


John Pettitt, CEO, says "With increasing fuel costs and increasing awareness of
carbon emissions the drivers for operators to invest in Clean Air Power's
technology continue to grow stronger. Early adoption has proved much slower than
anticipated but the fundamentals of the technology remain very persuasive. The
Board remains confident that discussions with truck manufacturers and large
fleet operators will lead to good progress during 2008 and 2009"

For further details please contact:

Clean Air Power                                   Tel: +44 (0) 1494 527110

John Pettitt, Chief Executive
Peter Rowse, Finance Director

Buchanan Communications                           Tel: +44 (0)20 7466 5000

Charles Ryland/Ben Willey

Canaccord Adams Ltd                               Tel: +44 (0)20 7050 6500

Robert Finlay/Erin Needra


                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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