Ampeak Energy (LSE:AMP) — Investor Presentation

0:00 Good morning, and welcome to the SAE investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, they can be submitted at any time by the q and a tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Graham Reed, CEO. Good morning to you, sir.

0:30 Good morning, everyone, and thank you for taking the time to join us this morning. My name is Graham Reed, and I'm the CEO of SAE. I'm delighted to be here today with my awesome colleagues, David Taff, our COO, Simon Hurst, our CFO, and Shaw Parsons, our director of external affairs. We hope you enjoy our presentation and leave excited about our business. We look forward to answering any questions you might have about our company. Since joining in 2021, we've overcome significant challenges. To do this, we set ourselves four clear objectives. The first was to create a streamlined business which can identify, respond, and deliver opportunities for the company. The second was to significantly reduce costs and improve efficiency aligned around two business areas, which were Tidal Stream and Battery Energy Storage Systems. The third was to maximize the return on our assets at Usmouth and Maygen.

1:24 And the fourth was to to dispose of noncore businesses. These objectives have been achieved. However, we have a relentless focus on cash and operational efficiency. And you may know that in last year's audit, we received an unqualified going concern statement from our auditors, which we're very proud of.

1:49 So who are SAE?

1:53 We're a major independent power producer, and we specialize in battery energy storage systems and tidal stream generation. We're leveraging our operational experience from the IPP work we're doing at Majen and Usmouth power stations where we've been operating for certainly the last twenty, thirty years at at Usmouth and ten years or so at Maygen. Our significant assets are the Usmouth Sustainable Energy Park, which is in South Wales, and the largest tidal stream site in the world at at Maygen, which we're hugely proud of. Our business is aligned with The UK's binding net zero targets to ensure we're in harmony with the UK government's national objectives with with, net zero 2050.

2:41 Our vision and mission are very important to us. They inspire our people. They get us out of bed in the morning, and they're effectively our strategy for for success. Our vision is to deliver, own, and operate sustainable sustainable energy projects for the benefit of our shareholders and our planet. And our mission on how we do this is to collaborate and innovate to reduce costs and successfully deliver our projects. So I've just got some high level numbers here or high level stats around the specifics of our two main main locations. So at Usmouth in South Wales, we have a huge site, circa 148 acres. And currently, we've got 1.2 gigawatt hours of BES, which has been consented in our first project, which is 230 megawatts. We sold recently to Quinbrook Infrastructure Partners. We did the development piece, and they they are building and and owning that project. And we've got another one gig or an additional one gigawatt of grid connection agreements.

3:45 At May... Majen, we have the Majen tidal array, which is six megawatts currently, and we've been really successful in the last three application rounds, AR four, five, and six. And we've been awarded an additional 59 megawatts to augment the the six already in operation. And we have seabed seabed leases up to just under 400 megawatts, and we've got consented title at at 68 megawatts. In addition, to augment and support the grid connection of 287 megawatts, we have we have in development and in planning at the moment a 200... Circa 200 megawatt BES, which 1.22... 1.2 gigawatt hours.

4:31 So a lot for us to go at, and we're hugely excited about getting this portfolio built out as you'll hear a bit later on in the conversation. So I'll hand you over to Simon now for the next slides.

4:49 Thanks, Graham. Good morning, everybody. I'll give you a bit of an overview of our financial situation and and what we've been achieving over the last three years as a group. I mean, there's no doubt we've been on quite a transformational journey since 2021 when we had a successful equity raise and raised £2,600,000, which really stabilized the group financially and has has allowed us to reposition ourselves to grow. And then since then, we completed two very important contracts, which have brought in around £20,000,000 of revenues to the group. The first, of course, has been the sale of our first battery storage project to us now for energy storage.

5:36 They're the company that are gonna actually build it, and we jointly developed it with them. And that deal completed in 2022 raised £10,000,000 for us. And then following that and in conjunction with that, we sold the land on which that project is being built, for a lump sum, which has raised just under another £10,000,000. That £20,000,000 has been received throughout 2023 and 2024, and that's really given us a strong foundation, and a really stable foundation on which to pursue the rest of our development opportunities. The third really important piece of work we've done during this time is restructure the the timing of £13,000,000 of bond payments to our bond... Bondholders.

6:24 We raised around £13,000,000 of of money through these bonds back in 2017 and 2018, and they were due to mature in dates during 2022 through '24. Clearly, at that time, the group didn't have the the cash to repay them, so we restructured the repayment schedule. Again, on a sliding scale, we start repaying those bonds at the end of twenty five right through to 2029. And, again, that gives us, as a group, the time to build out and and develop the opportunities that we... We're gonna talk about in some detail shortly. And then I guess all of that work really culminated in our 2023 annual report where we're able to recognize the value of our battery energy storage portfolio.

7:15 And we, you know, we look at each of the projects, especially the Uskmount that we have, and we've attributed a value to each of those. And coupled with the opportunity in Scotland as well, we're able to recognize £75,000,000 of value. So that report in 2023, along with it being an unqualified report, as Graham mentioned earlier, is really the first public facing communications that we're able to give around, you know, all the work that's been going on in the background.

7:51 This is some data from our 2023 annual report, which which really just reinforces some key messages around what we've achieved with the business. We're undoubtedly a much more focused and and lower risk business now. Much more focused... I say that because we're focused on our battery energy storage portfolio, that title portfolio, and and and delivering returns from both of those. Also, risk, our operating costs have dramatically reduced since 2021, predominantly through headcount reductions. So in 2021, we're running at just under £15,000,000 per annum of operating costs, now down around five. And that, of course, includes discretionary spending for our development costs themselves as well as the fixed costs around predominantly our payroll.

8:50 Talked about debts a little bit. You can see that's come down and and now sits group debt, which excludes our major end debt, which, course, of is is nonrecourse. So in other words, Majen debt that some of you may see on the balance sheet is only payable by Majen itself. It's not a... It cannot be paid by the group. So the group, though, does owe the the abundance bondholders 13,700,000, and and and that's the principle that that I've just been talking about. It's been rephased over a number of years.

9:25 We are very lean now. Operating costs are low, and we're gonna keep them low. Our strategy as we generate generate more opportunities is not necessarily to recruit more people on a full time basis. We'll tend to buy in specific project expertise as we require it, whether that's planning consultants, certainly our legal resourcing and or or contract managers or specific project managers. And and and we'll do that, yeah, as as we add add projects to the portfolio. And I alluded to this at the start, but what's underpinned all of the the performance to date really is our... The fact we've been able to bring in £20,000,000 of of cash into the business.

10:12 And you can see the revenue growth there in the bottom left hand corner, £15,300,000 last year. Our interim results this year, you will see recognizing... Received £7,000,000 to the end of June for our land sale contract, and the balance of that income will come in during the rest of this year and early next. So we really continued the strong performance from 2023 into 2024, and, we look forward to, building on that, as we move into 2025 as well. So now, I'll hand over to David, who's going to talk about the, portfolio for us. Thanks, Simon. Morning all. Yeah. I'm just gonna give an overview of our battery energy storage system portfolio and also our title stream generation projects.

11:02 So firstly, starting on our battery energy storage system portfolio, just a, a bit of a high level background. What what is a battery energy storage system? Why do we need it? And how does

11:14 it make money? So what is what is a BES, which is the acronym for battery energy storage system? Essentially, the battery energy storage systems consist of lithium ion battery technology. These are the same batteries you'll find in electric cars. And what we do is we essentially procure these from large OEMs under... They're brought to site fully factory assembled in 20 foot shipping containers. Each shipping container consists of about five megawatt hours of batteries. So to give a bit of a feel for what that means, our first project, which is a 120 megawatts, runs for two hours, so it's two forty megawatt hours. That will have about fifty twenty foot shipping containers in order to fulfill that capacity. In addition, there's ancillary equipment for power conditioning and transformers for direct connection to the grid.

12:04 So this equipment is supplied under long term supply agreements. They're fully warranted and and fully bankable supply agreements, and that's a critical part of our strategy.

12:15 So that... That's physically what a battery energy storage system is. So so how does it make money? Essentially, the the the best is directly connected to the grid. So a standalone grid connected storage system. So so what it does is it manages the supply and demand. So the intermittency of wind and solar can be balanced by these large utility scale batteries.

12:38 And how do they make money? They they essentially trade the energy. So when the... When demand is low and generation is high, electricity is cheap, and our batteries then charge up to full capacity. This generally happens in the middle of the night when it's when it's windy and everyone's asleep. But then, as as as the morning time approaches and and prices go up, our batteries then very rapidly discharge, and they make money from the difference in price in electricity trading. This function is is something that we we subcontract to third parties. There's optimization providers in the market, several very large PPA utility type companies. They essentially will will operate our battery on a twenty four seven basis from control centers.

13:24 They'll... They do that then with with... And they'll they'll offer us a guaranteed floor price. So the long term forecast revenue streams of these batteries is very well understood from revenue models and is getting increasingly well understood as as more and more batteries get deployed to the extent that we can get guaranteed revenue streams from from large,

13:43 from large PPA providers and fully fully backed by their... Our parent company's balance sheet. In addition to that, we also earn revenues from capacity market. So capacity market is is a is a contract we'll sign directly with National Grid. The capacity market is is an insurance policy for for the grid against future blackouts. Essentially, we're we're on standby should the grid ever have a stress event, and we get paid to to be on

14:08 standby in that way. So that's, again, another fixed revenue stream. So in terms of our over... Overall revenue stack, about 50% of them are are absolutely fixed and contracted and guaranteed. And when you combine that with a a fully risk wrapped EPC, fully warranted long term supply agreement, that makes it a very investable and very bankable proposition. And that's a that's a very critical, feature to understand about this type of project.

14:36 So why has battery energy storage systems suddenly become viable at utility scale? What... What's been happening is that's been significant drops in the price of batteries over the past few years due to oversupply of cells from China.

14:49 And and combined with that, the long term revenue streams are becoming, as I as I said, more more well understood and they look very attractive. So overall, there's huge interest from equity and debt capital in investing into this sector. So the last five years have seen a steady rise in investment in utility scale batteries and that continues to grow. And as well, the suite of contracts are getting more more and more mature. We can

15:13 also raise project finance significant amounts. And this this enables SAE to to be able to fund these projects and retain significant ownership through the equity carry that we've earned through the development phase. And we then invest in... Into these batteries a long time... Alongside strategic partners.

15:31 So so that's what, why, and how. And next slide. So this describes the market overview. Really, this this this slide is setting up the need for batteries. This is a graph prepared by MODO Energy, who are leading market consultant in BES sector. So this graph shows the need for batteries for national grid, and there's about 60 gigawatts needed to be able to reach net zero. So put simply, the The UK cannot achieve its net zero targets without a massive increase in the amount of best systems being deployed. There is just simply no other technology that can match the the huge the huge need of intermittent generation with demand as as efficiently or cost effectively as best. So the the real question is how quickly can we deploy this? And this is where there's... You get different points of view in the industry.

16:23 There's a huge amount of batteries in the grid connections queue as is well reported, 100... Hundreds of gigawatts. So it it might lead to to to one... Might easily lead for one to assume the market could easily get saturated. The reality is that the rollout is constrained by many, many factors, which is the availability of grid connections, the availability of suitable land, infrastructure, whether the batteries are in locations that they can get planning permission, and whether the developers have the experience to actually build, own, and operate them as an IPP. And these are the areas that we have really got a competitive advantage as I'll come on to in a moment.

17:00 And the other the other aspect of this this graph to also focus in on is the duration of the batteries. Yeah. The initial duration of batteries has been installed at the minute is is one and two hour duration. These are the durations which are essentially just looking at focusing on on getting the the revenues from the absolute troughs of the of the pricing during the day and discharging the batteries at the absolute peak. So you're

17:25 mixing that maximum differential in energy pricing and and maximizing the revenue stream from it. As batteries get cheaper and cheaper, that differential of pricing and the amount of revenue you need to earn actually drops off, And this is what enables longer duration batteries to to start... Become viable. And and what we've seen over the past year is that the viability, has has massively improved. So there's a huge growth opportunity as this graph shows as we're gonna through darker green sections, we can start deploying four hours, six hours,

17:56 or even eight hour batteries into the twenty thirties. So the key thing to recognize is that s... All SAEs projects are being designed, developed with spare land and planning in order for us to capitalize on this opportunity. So once the market is ready, we will deploy much longer duration batteries. We've doubled the... Or even tripled the capacity of of our plants, and we'll increase the revenue streams and returns and investment from these projects as we do so.

18:27 So, yeah, I mentioned the competitive advantage. So so so why is it taking so long for these batteries to get deployed? It's because the sites do not have the infrastructure needed, so they need to build massive overhead lines, huge amounts of road road infrastructure. They maybe are not in the ideal locations from a planning perspective. This is the advantage that OSCMAP brings for SAE and our shareholders. At at OSCMAP, we own the land, grid, and all the infrastructure needed. It's an ideal location for battery energy storage. We... We've got the site and infrastructure, and we are the freehold landowners for for... And we can develop around 3.5 gigawatt hours of beds in this site and are actively doing so. The first beds in the site, in fact, is already under construction. The second one has already received planning.

19:12 The the site is very well supported by the local planners and and very favorable from a planning perspective because the type of project we're installing is very similar to the type of industry that was previously on the site as it was a power station. And in in that power station, we've retained the operation and maintenance team who have all the local knowledge, who understand the grid connection regime, understand the environmental constraints and requirements of the site, the health and safety requirements, and have good relations to supply chain. So we've got... We're in an excellent place to to rapidly deploy batteries, and hence, we've got we've got an ability to supply the need quicker than than our competitors.

19:50 So this map here shows the location of our key key projects, which are are... The the green one at the bottom is the one that's already under construction we sold to UES. And at the top, we've got the three AW projects. AW stands for Avonwhisk, which is the Welsh Welsh name for the River Osk, which runs around the site. So AW one, two, and three make up 718 megawatts of best, which we're we're planning to build on and operate as SEE. And this map also shows the location of the National Grid substations. So next, I'm gonna play a short video for you now. So it's a picture of pens, thousand world... Words, and this video really helped bring the scale of the site to life. I'm I'm I'm sure how how much of a great asset just my power station is for SAE and our shareholders.

20:42 So this video is a a recent drone flyover of the site. I'll just pause it here to to discuss a small bit of what you're looking at. So in the background, you can see the River Rusk. Just in front of that, there's there's a u shaped concrete foundation. That was the previous site of the of the cooling towers. Essentially, what you're looking at is, these were pre... These were previous cooling tower water basins. These are previously used to store the water to cool the power station, and is all that remains of the cooling tower. So we have already invested heavily in the demolition of that site, and that's the site that we're now rapidly approaching financial close for a 120 megawatt best system. In in the foreground where where you can see the immediate foreground, that's the AW 3 project, which has enough land. You can see a huge amount of land there for 350 megawatts.

21:32 I'll keep playing it here. Yeah. So, you can see the scale of the sites. This is a 148 megawatt site. All the land is owned by us. So this is where you can see the existence of the national grid infrastructure. What you're looking at here is a 275 k v outdoor switch switch gear substation. So a lot of other projects you will see who are trying to deploy best just do not have this infrastructure on their site. They need to wait for long lead times. They need to wait for all the consenting for the overhead lines. This is all in in existence in Oscar and and ready to ready to be repurposed and connected into a best system. Yeah. And the final part of the video, we'll just do a bit of a flyover of the entire site. So you can see here the the overall scale of the site is, say, a 148 megawatts...

22:20 Under... A 148 acres. Sorry. And we've got here just, on the right, you can see our first project under construction. This is the this is the one we we sold to UES, which has initially been built at two thirty megawatts, and there's another 120 megawatts planned to be expanded on it. And location of the chimney, and around that land there, we've also got space for another 250 megawatts, which we've got a grid connection agreement for. So the scale of the site and the opportunity we have at hand is absolutely enormous. So if we just come back to the presentation...

22:58 So, really, just trying to put some numbers on on all of this, to to help just quantify the opportunity. So this is really, showing you the capacity and the grid connection year of all of our projects. First two projects at the top have been developed by us, as I said, but I was just described earlier, but they have already been sold.

23:18 All the projects below that line are the ones that we are actively developing and we planned to build on and operate. So in less than three years, just to put it into context, SAE have created a 2.6 gigawatt hour best portfolio, and that's on a two hour basis. That that that portfolio can be expanded and almost doubled at a 4.8 gigawatt hours once the market is ready for four hour duration. So we we generate a significant income for the first two projects, and they continue to provide income to the group as there's as there's an expansion project. And we we continue to create value for... As each project moves through each stage of the operations, we we will earn revenue from these projects. So, yeah, what does it mean in terms of value value creation?

24:07 Really, what we've what we've recently announced, very proud to announce that we've we've acquired all the rights of the AW one project on the August 7. We we we described some of the economics in that RNS. So that project is is currently going through the full, final development phase, and we've estimated a cost of 65,000,000 to build it and is forecast to generate 12,000,000 per annum and 9,000,000 EBITDA. So this ties back to what I was saying earlier about the the very strong investment case these projects present. Running financial models in these projects are showing

24:42 internal rates of return in the range of 12 to 15%. It's it's it's it's a really attractive investment proposition. But not only that, they also can attract a high level of gearing so we can raise project finance for these projects because they've... They come with a bankable suite of contracts, bankable supply, EPC contracts, and also fully fully floor priced PPAs. And and we... And and we're building this with a very experienced team. We... At the same the same same team and management team, we've also been involved in the major end projects, as Graham mentioned earlier on. The table then also extrapolates that out. What does that mean for the rest of the portfolio? So the four project was... Four projects we've listed here are the ones we plan to to build on and operate. A lot of these are coming online pre 2030.

25:30 So what you're looking at here is when I add up all the CapEx and all the annual revenues on this page, we're looking at a CapEx ticket of about £400,000,000, but that will generate for the group about a £1,100,000,000 per annum, and that's on a two hour basis. That's before we even move to the next development opportunity we mentioned earlier. So once we move from a two hour two hour capacity to four hour capacity, that revenue is expected to go from £100,000,000 up to a £150,000,000. So, really, the the scale of that opportunity is is absolutely enormous. It's it's hugely exciting, we're we're absolutely committed to getting these projects built and is is a game is a game changing financial outlook for the company.

26:17 So that's everything we have, for today on batteries. Just moving on for a brief update on our TidalStream business. So TidalStream, again, just for the basics, what is TidalStream? I guess that many of our shareholders will will know quite a lot about it because it is our heritage. It's where we sort of cut our teeth in the power sector. Our TidalStream project in May, Jen, is something we're immensely proud of. We've already deployed the largest tidal stream deployment in the world at six six megawatts. It's already generated 68 gigawatt hours. We've been operating that reliably for five years now. And the concept really is that they they look very much like underwater wind turbines. They're deployed from DP vessels onto substructures.

27:03 This graphic shows gravity based structures, which is what we used on phase one. We're we're planning to move that to more pinpile structures in phase two. And so so the... Once you deploy the turbines onto the gravity based structures, they've got cables back to shore through horizontal directional drilling. And the power is conditioned onshore. So as much of the equipment as possible is retained onshore. That's one of the differences between a tidal turbine and a wind turbine, which which helps improve reliability and then onward to the national grid. And then it makes revenue. It's got subsidy support from the government. Previously, the phase one array has got rock support, five rocks per megawatt hour. And the future phases are not... Have strongly backed by the UK government. They've now got ring fenced CFDs, which we've been participating every year since since that's been announced quite successfully.

27:56 Magent is the world's largest planned tidal stream project. It's a 398 megawatt seabed lease. We've got 86 megawatts offshore consent and a and a very large grid connection agreement. It's it's produced 72% of all UK tidal energy production, and that

28:12 stat is improving all the time as we're generating one one gigawatt hour a month at the moment. And when the next turbine goes in, that'll that'll increase further. So 70... 67 gigawatt hours produced to date is is a phenomenal achievement. And we've also, in the development phase, been extremely successful as well. We've secured 59 megawatts of the CFD's capacity over the last three years. And that goes to show really how good a resource it is at this site. This site can compete with with with any site in the world, really. And what we've done is we've secured almost 50% of the budget available in the title industry over the past three years.

28:52 And what what the future phase also provides is is another huge, revenue and and funding opportunity for the group is a 59 megawatt array. We estimate we'd we'd generate in the region at 32,000,000 revenues per annum, which which obviously diversifies and adds to that 100,000,000 per annum revenue stream, which we're targeting for the best portfolio.

29:14 So thank you for listening. Yeah. That's the end of my bit. I'll pass it back to Graham to to wrap up the slides. Thank you, David. Well, I hope you agree that we're in a very exciting place in our company's evolution. You've heard from the team around the finances, the changes we've made, the journey we've been on. You've heard about our projects. You've heard that we've got really early access to the battery storage space. We pivoted from what we were doing at our mouth into batteries batteries a couple of years ago. We're gonna be operating best projects from 2026. And as David mentioned, the early adopters, people that can bring their projects to market sooner are gonna be the winners in the... In this race.

30:00 We have a strong pipeline of projects as we've, again, walked through with exceptional revenues over the coming coming years, which are quite astounding when you look at them on paper when you consider the size of our company. But they've also got the built in expansion possibilities that we talked about. As the market changes, we will augment them from two hours to four hours to eight hours and maybe even even more than that.

30:24 Simon covered around the lean organization. We've got very low working capital demands. It was a strategic decision we took very early on to cut down our our burn rates, especially when we were challenged, you know, in 2021 for the first couple of years before we got things back on track. We have an experienced team of three of whom whom... Or four of whom you you will have met today.

30:46 And they're a team that I think are doing an awesome job for for our shareholders and our stakeholders and the environment. And, you know, we've got a medium term growth opportunity from our tidal stream, which, as David said, is our heritage, and we're super proud of what we've achieved to date and what the potential is moving forward. So I'd just like to thank you for... Again, for attending today. And, you know, we look forward to answering any questions that you might have. Thank you.

31:17 Graham, Simon, David, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions. You can do that just based on the Q and A tab, which is situated on the top right hand corner of your screen. But just while the company take a few moments to view the questions that have been submitted today, I'd like to remind you the recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. We have received a number of questions, both pre submitted and throughout today's live presentation. And Sean, at this point, if I could hand over to you to chair the q and a, that'd be great. And then I'll pick up from you at the end.

31:46 That's brilliant. Thank you, and hello, everyone. So I'm just gonna start off, and and thank you so much in advance for your for your questions. There's some great ones coming in, and we'll do we'll do our best to to answer as many as we can today. And then we have scope to to answer and follow-up with those that we aren't able to get to. I was gonna start off by asking you, Simon, some questions we've we've had come in, which has been really positive around such an exciting and large pipeline of projects. But But the the question is is do we have the cash in the company able to deliver that pipeline?

32:22 Well, yeah, short answer is yes. I mean, we're, you know, we're we're a fully solvent, stable business nowadays, and, you know, as evidenced by by the last audit opinion we received. So we got no issues around funding the business going forwards. What's gonna happen in terms of the the big CapEx requirements for these projects is, you know, we'll be raising debt and equity investment from the markets to help fund most of the initial project, at least the first one, with a contribution from SAE. So... And that's typical in this space, you know, project finance for these large capital intensive projects. So, yep, we're we're in a really good space at the moment. That's great. Thanks, Simon. And and and one of the other follow-up questions we had was around...

33:11 It's great to have that that ability to deliver these projects, but one question was around how we are managing the increasing costs that that so many are facing, including ourselves around staffing, but also development costs.

33:25 Yeah. Okay. So... Well, staffing costs, we've got a really tight handle on. We have a head count of 13 at the moment, which is is very lean. And as I said earlier, you know, we buy in specific expertise as and when we need it. We don't anticipate any significant increase in headcount... In full time headcount. So we'll match our resourcing with with the projects we're developing. And then when you think about the development costs themselves, we see... I guess there's three tranches of of costs we see. There's legal fees to support and delivering the commercial side of the project. Those typically are back ended when we reach financial close. Planning planning fees and so on, so we do need to spend at the outset. They're fairly settled, to be honest, and reasonably stable.

34:18 We're not seeing huge amount of inflation in in that area. And and then any additional resource we need, which yes. It is a cost, but in the context of the total CapEx of these projects, it's not material. Could could I just build on that a little bit and just to say that,

34:36 yeah, when we do embark on a development project, then combination of David working with Simon will produce a budget that is effectively what we are determined to spend or we determine is required to be spent to bring the project to financial close. And then they will ruthlessly manage that on a monthly basis to make sure that we stick within those budget guidelines for that particular project. So we're absolutely on top of the cash management.

35:01 Thank you both. Graham, if I can just ask you a question, please. And that's around... We've had a couple of questions on this. I'll I'll combine them together around using our our expertise and our experience of Tidal at Majen and whether there's scope or whether we have plans to expand to other projects around the world or to help other companies in their delivery. Are you talking specifically title projects? There's one on title. The other one is around... It's it's generic, but are we gonna look at other sites more broadly, or are we focused on what we've got? Yeah. I mean, we're we're absolutely focused in two business streams as as I've articulated and the team has as well, and that's battery energy storage systems and and tidal generation.

35:51 I don't see that changing in the short term. If

35:55 it's appropriate because of the technology comes comes around that we think could augment or work well with our skills and expertise and the assets that we own, then we would give it some consideration. But if you look at our project portfolio starting at Us Us mouth, you know, a £150,000,000 revenue per year when we build out those projects to two hours... Sorry, to four hours, I think it was, and it was a hundred to two hours. I mean, that will just increase.

36:23 And also getting Maygen two state... Phase two, phase three over the line is very important to us as well. And with all of that and the size of the businesses that we are, that is a huge amount for us to go at. So I don't want us to start scattergun approach when it comes to project development. We are talking to people with other sites that will support what we're doing. But, you know, we absolutely must be ruthless around around being focused. You know, there's a there's a great saying which we live by, which is the main thing is to keep the main thing the main thing, and that's what we're focused on. So it's battery storage and it's tidal, and it's in The UK at this time. Thanks, Graham. David, I was just gonna move to a question on you.

37:11 I think there's there's, I think, general recognition that the addition of of Maybes is fantastic to have a project just beyond beyond us, ma'am, and the opportunities to use... Utilize our experience there. Are you able to give a bit more clarification on the the relationship and role of Scottish Enterprise in that project?

37:31 Yeah. Sure. No problem. Yeah. So, essentially, Scottish Enterprise were originally a a a legacy shareholder of the major end project. So they are a 16% minority owner of the major end project. So once once we came to the idea of of utilizing mid gen's grid connection for a base system, it only makes sense that they would retain that same ownership of the project... The best project because we're we're utilizing mid gen's grid connection. So it's as simple as that, really. It's it's a continuation of the the ownership they had in in the in the assets that we have up at Midgen. Thanks, David. You covered this a bit in your presentation, but I just wanted to to come back to you as well around the state of the BES market. And specifically, we've had a question around what's happening with the cost of of BES and how that's impacting our our plans. Yeah.

38:24 I mean, the the cost reductions this year have been absolutely absolutely phenomenal. We've we've seen it since we started tendering at the start of the year to where we are now. We've we've seen we've seen over a 30%

38:34 reduction in the cost, and it it actually shows no no sign of stopping. So I think as I mentioned, last year, there was sort of a bit of a lot of people on the fence as to whether any any longer duration lithium ion projects were viable. The rhetoric now has moved massively, and that long duration for lithium ion is is absolutely,

38:53 possible if the if the CapEx reduction keeps going in this trajectory. So so... Yeah. It's... And and and that again is is bolstered the economic case case for batteries, and and the economic returns are very healthy as a result of of these reduced CapEx. Thanks, David. Simon, just on the the the finance side again, we've had a question here. And, I I know you had some in your presentation around the the estimate for earnings for for the company.

39:25 It's... The question is basically asking just that is can you just give a little bit more or a a summary of what are our earning potentials in the short term?

39:36 Well, I guess there's couple of things are gonna happen. You know, as we develop these projects and and start building them, the values we attribute to them will increase closer we get to actually operating them. But the... And that in itself will support the balance sheet. When we start operating the first project in 2026, as David mentioned, we're looking at £12,000,000 of revenue per annum, around 9,000,000 of EBITDA.

40:04 And that, you know, that will... Some of that will go to repay debt, other part of it will come as distributions to the group. So that will boost our earnings immediately. I think if you look at our earnings valuations at the moment when we closed the year on the balance sheet, we had net assets of around £40,000,000,

40:27 which compares very favorably to our market capitalization, which is sitting at around 15 right now. So we think there's quite a big disconnect in in that respect. Our earnings are... And the earnings potential far outstrips where we are with with our market cap at the minute, and we see a very positive outlook. And if you refer back to independent investor notes that that have been written on the business earlier this year, that that bears out that assertion as well. Thank you, Simon. Graham, we've we've had some questions around Proteus and and our relationship there. I've got two questions. So I'll start with the first one, and that was around with the sale of Proteus. Do we still have ambitions as a company to be a manufacturer of hardware in the future?

41:18 Well, the the simple answer to that is no. We sold Proteus because we didn't

41:25 see that as an area that we wanted to continue to develop. But we also, at the time, as I think I mentioned, one of our key priorities at the outset was to divest ourselves of noncore businesses, and that was what we did with Proteus because we couldn't, at the time, even fund what they were doing. So for us, it was a win win. You know, Proteus management bought the business. We retained a small stake.

41:49 They got external funding, and we got access to the technology that we had developed. Had we not been able to sell Proteus, then that business would have been shut down, we would have lost our access to turbines. So the relationship we have with Prochis is an excellent one, but it is one of a supplier owner type relationship. So we will buy turbines from them at the appropriate time, and we will work with them when it comes to helping them

42:17 develop their turbines through the sites that we are operating. But, also, we mustn't lose sight of the fact that produce do assist us very carefully with the maintenance of the turbines and the deployment and redeployment of turbines as well. So we have a very strong relationship with them, but they are an independent organization.

42:36 Thanks, Graham. And, actually, the the second question fits in really well with that. Is you just able to explain our holding in Proteus and specifically around the reduction down from 21 to 11, I think, is the question that figures quoted here. Yeah. I mean, it was all part of the original deal that that we did, and it's part of the negotiation of the commercial commercial settlement that it would... Our shareholding would be reduced to 1010% after a period of time. We don't have any voting rights on the board. We're not axe... We don't access any profit. We're just there as a a silent shareholder to give us, you know, some form of leverage if that's required you know, maintain maintain the relationship. But the main... The relationship has been...

43:25 It's very symbiotic. You know, our success is their success in title and vice versa. So it's really important that we that we maintain that. But that was just the commercial decision we took at the time. Thanks, Graham. I'm gonna stick with title and David. I'm just gonna come to you next, if that's okay. Talk about it. Just quickly, I've had a a question just asking about the research notes that, Simon, you referred to. Just to say their notes were released by Longsburg Capital and Zeus, and they are... There's links available on our website. If you are able to go to that, you'll be able to access them through that. David, on Tidal, we've had just some questions around the four turbine and its redeployment, but also if there's any milestones leading up into next year that that we can be expecting.

44:16 Yeah. Sure. I mean, so the four turbine is is is is all but ready to go back to go back go back in. So that will be re... Redeployed in the very next next available opportunity.

44:28 And then we put back up to a full six megawatts of generation. As I've mentioned earlier, we're already generating one gigawatt hour a month. So that... For turbine going in, it'll it'll bolster that revenue even further and and get the get the array basically operating as as originally as originally intended. So the other the other part of that question, sorry, Sean, was? So it was whether... What what milestones we've got upcoming that people can expect into next year? Thanks, Dave. Yeah. So, I mean, we're we're we're running, obviously, obviously, a a full development program with the mid gen two project. Mid gen one now, we fully predicted that it should it should just go in and operate for for for many years reliably. So so so that's sort of... We've ticked the box with that. We've proven the concept.

45:13 The focus now is entirely on major end too. It's working with our supply chain to to get EPC contracts in place, to make sure that they are bankable, to look to raise the finance needed to build the 59 megawatt array, and also look to future allocation around. So we've been successful so far. We've got 59 megawatts, but we've got 86 megawatts of consent. So we'll be looking to fill that up, and and all of that can be part of the major into your project should we be should we be successful. Thanks, David. Graham, I'm just gonna come to you now. So people are really liking our our new vision and and what you set out in your presentation. But we've had a question here if... Saying how the vision... It... It's quite broad and whether you could be a bit more specific around and around the technologies we are going to focus on.

46:06 Sure. At the outset, I've tried to stress that we are a focused business, and we're focusing on battery energy storage systems and tidal stream. So everything we talk about within our vision around sustainable energy projects for the planet, etcetera, and our stakeholders is through those two current technologies. As David, I think, fantastically presented, you know, the depth and strength of our battery portfolio and our title portfolio is is is immense, immense, and the potential revenue that we could generate from those projects is immense. But we have to stay focused. You know, we are a small company.

46:53 We are... To some extent, we move at the speed we can move because of the cash that we have. And we have to be very, very careful to make sure we get the maximum ROI on every penny that we spend in in development. So whilst I know it might be exciting to go and do other things, we're not. Yeah. Yeah. We're focusing on batteries, and we're focusing on title, and we're focusing focusing on those at the moment in two locations in The UK only. That might change, but at the moment, we've got to get these projects away,

47:28 built, get those fantastic revenue streams coming into the company. Cash gives us choice and control, and then we could look at being maybe diversifying sometime in the future. But at the at the moment, I want to stress we're focused on what we're doing now, and that's title and batteries. Thanks, Graham. And I think that I'm gonna pivot to to one of those sites and ask about... Because we've had quite a few specific questions around the site. One of them... And, David, I'm I'm gonna come to you for this one. But a specific one asking about the the chimney and the works required. So on the video, which was brilliant to see, we've seen how the cooling towers have come down, we've but had a specific question around is the chimney and what other demolition works would we need to do to fit more on-site.

48:17 Yeah. So I I think it follows exactly like you you you suggested, Sean. It follows in the in the exact same way as the as the cooling tower. So so what we would do first is we we we

48:27 will get our planning permissions secured for the projects first and foremost because that justifies we've got all the project rights in place to make the investment necessary to actually demolish it. So what we did with the cooling towers, you will you will see exactly, in January this year, we we got awarded planning permission, and we immediately invested in demolishing them. The the site team did a fantastic job of taking them down in a in a very safe way and clearing the site ready for construction of the of the AW one best. The chimney and other buildings around the site that you'll see dotted around, we have done... We have got quotes from demolition contractors for taking them down, and that would be all factored into our dev x budget at the at the point in time that the project was ready to to to take them down, which would be which would be naturally once once the projects get planning, all the all the project rights are in place, so it's been derisked, then we would make the investments in in sort of enabling works for for building the projects, if that makes sense.

49:25 That's brilliant. Thank you, David. Sticking with AskMouth, but Simon, I was I was hoping you'd be able to pick this one up. And it was a specific question around the value, the freehold value of AskMouth, and if we've recognized that in our accounts. No. We don't recognize the freehold value of the land. We we recognize the value of the projects that we're developing, and and we we we work out for each individual project based on its forecast income streams at a future point in time, how much those projects will be worth. And then, of course, there's there's discount factors applied to recognize the risk of getting from the early stage point of a project to actually operating it. So that's where the value comes from in the in the accounts.

50:12 That's great, Simon. I'll I'll come back to ask Martha. There's a few more there for you, David. But, Graham, I just wanted to ask one of you, and it's around our our relationship with our largest shareholder, Cimek. We've had a couple of questions asking us to to clarify what our relationship currently is.

50:32 So if you could pick that up for us, please. Sure. So are approximately 29% shareholder in our business.

50:40 That shareholding entitles them to two seats on the board, which they don't have. We We had a conversation with them a couple of years ago where we said we felt it would be inappropriate for them to have seats on the board, and they agreed. However, we do keep them appraised on an outlook basis of what the business is doing as you would with any any shareholders. The relationship is very professional. It's very long distance. It's very infrequent. But as and when we need to discuss things with Simon, we discuss them. And we have a... What I would I would say is a very cordial relationship. They don't they don't try and interfere. They don't interfere in in what we're doing. They rely on us to keep them updated, and it's just very professional.

51:26 And and we don't really follow what's going on within CIMIT. So at the end of the day, it's it's a relationship that is is just there, you know, that we... We're at pains to stress to anybody that we're working with, that we are an independent company, and we make the decisions as a board for our company for the benefit of our shareholders. Thanks, Graham. I'm I'm just gonna stick with you now. Just just a quick question around... We really like your points around the operational efficiency and the work that we've done as a business really drive that efficiency. But people have talked about as we grow and as that pipeline grows, how are how are you as a CEO and us as a business

52:13 gonna keep a handle on making sure we maintain that operational efficiency? Well, I think when you look at the

52:22 experience and track record of the team, myself included, you know, we've worked in big businesses. We've run big businesses. We've run billion dollar projects. You know, we know what it takes to run a business efficiently and projects efficiently. You know, our decision was taken very early on. Some of it was out of need because we had to cut our headcount because we had to cut our cost to stay in business. But as we've moved through that cycle and we're in a cycle of growth, we have taken the decision to outsource a lot of things that one could potentially insource. And we took that decision because we're not yet at a scale where we can employ certain skills, whether that be finance, whether that be planning. We can't employing them full time because it's a part time role.

53:09 So until we get to a situation where

53:10 we're at a scale that we can effectively more cheaply employ resources directly as opposed to externally, we'll we'll continue as we are. So I see I see that as a transition. We're on a journey of growth, and it's all the time trying to keep your overheads low, trying to trying to keep keep your fixed costs low such that you can you can, you know, make the best returns that you can. But, obviously, as you grow, you you will end up bringing onboard more full time resources because that's just the most economical way of doing it. But when it comes to running projects, you know, we've we've all... My team and I, we've run small projects, large projects. Sometimes small projects are harder to run the larger projects, but we've we've run projects. So project controls, commercial management, project reporting, cost value analysis, all that sort of stuff is bread and butter to us.

54:03 And we've most recently demonstrated that on the build out of of Majem, which was built to to budget and program. So I have absolute, absolute confidence that the projects that we build

54:15 will be built on time and to budget. Thanks, Graham. I think this is our our our last question. And, David, I'm gonna come to you and finish on, you know, probably our our most exciting, which is is The Us come out site. A lot of people are really seeing the potential and having seen that video, I think I think everyone's got a grasp of the of the scale of the site and the scale and the opportunity that we have.

54:39 Moving on a little bit from Graham's on our our focus, but a lot of people have asked. We've had multiple questions on this around what more could be done at site. Is there potential at that site to go beyond batteries and get into other generation assets? So, David, I don't know if you want to talk about long term. Sure. I mean I mean, just to to to build on what Graham has said, I mean, the the the opportunity at OSMA is absolutely enormous. We've got 148 acre site. We've got grid connection on the land. So we've got 3.5 gigawatt hours of batteries in in development. That that is a phenomenal portfolio in and of itself. So we... Our focus is entirely... My my team's focus is entirely on getting them projects built and operating and bringing bringing that revenue into the business and doing it reliably, safely, on time, and on budget.

55:27 That will... That doesn't mean that we... Beyond that, once once these projects are embedded in... These are fifteen to thirty year projects. So they've got operating lives of fifteen to thirty years where every year, we will be focused on making sure we're bringing in them revenue streams. We're gonna be operating as an IPP for three for 3.5 gigawatt hours of of batteries at Auskmaat. So that is our best plan. That is our core focus. Above and beyond that is there's there's many, many concepts. Are designs we worked on through the years, and we've we've we've got them into sort of... We we we we can look at them. We haven't ruled them out, but it's not our focus at the minute. And we... Once we get the revenues in and these projects bedded down, we might we might revisit and see and see what else we can do at the site. We we reel nothing out, but the focus is at getting these batteries deployed.

56:17 That's brilliant. Thank you, David. And that brings the end of questions. I've had one around access to the research note on our website. I've double checked, and it... It's down at the moment. I'll pick that up afterwards. And later today, that should be back up from working. So we'll make sure that is available as as a a follow-up. Follow-up. That's it for the questions. Thanks, guys, for answering them so well. And as I said, if there's further questions, then please feel free to get in touch. We're really keen to pick them up.

56:44 Perfect, Sean. Thanks for sharing the Q and A, and thank you all for answering those questions. Of course, the company can review all the questions submitted today, and we will publish those responses out on the Investor Meet company platform. But just before redirecting investors to provide you with their feedback, which is particularly important to you all, Graham, could I just ask you for a few closing comments?

57:02 Yeah. Sure. Thank you. Well, again, I'd just like to thank everyone for taking time out of their diaries to be with us today. I I hope you can see the enthusiasm that that we have for our business, and, hopefully, you can see the great great opportunity it is. Our grids... Our business, I think, is at a stage where we're in a fantastic position to capitalize on our massive project portfolio that we've talked about in-depth today. You know, the need is there from government and national grid, you know, with the target for net zero. 2050, they've got to get batteries on the system, you know, to balance and stabilize the grid. So the need is there, and we've got a great team that's gonna make this happen. So just thank you again. And if there are any questions, you know, after the event, please don't hesitate to contact us. Thank you again.

57:55 Thanks once again for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This won't take a few moments to complete, but I'm sure you'll be greatly valued by the company. On behalf of the management team of SAE, we'd like to thank you for attending today's presentation, and good morning to you all.