Ceres Power Holdings (LSE:CWR) — Interim Results

0:01 Good morning, ladies and gentlemen, and welcome to the CERES POWER HOLDINGS PLC Interim Results Investor Presentation. Throughout the presentation, investors will be in listen only mode. Questions are encouraged and can be submitted anytime by the Q and A tab situated on the right hand corner of your screen. Just click q and a, scroll to the bottom, type your question, and press send. Company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investment company dashboard. We'll notify you by email once they're ready for your review. Also, I'd like to remind you this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Phil Cordwell, CEO of CERES POWER HOLDINGS PLC. Good morning. Good morning, everybody, and thank you for joining for this interim results presentation.

0:48 I'm joined by my colleague, Richard Preston, CFO. And I'll talk you through business highlights. Richard will talk you through the numbers, and then we'll give you a wrap up on strategy and progress. So let's move on. So we're very proud of these results actually for the first half of the year. Very strong performance considering the the difficult business backdrop that we've experienced over the past year or so. So revenue more or less doubling compared to this this time last year, which reflects the tremendous progress we've made with our commercial partnerships. And we're maintaining a sector leading gross margin of over 70%, consistent with our licensing business model.

1:36 We've seen, I think, the past year, unprecedented demand for fuel cells and hydrogen. And in March, we decided to expand the business, particularly moving into the area of green hydrogen using solid oxide for electrolysis. And we raised just under 180,000,000 through a new equity fundraising, which was fully supported by our strategic partners in Weichai and Bosch. And that's really enabled us to potentially double the the market applications for this technology. Just on Weichai, we can't say too much at this point because we are in mid discussions.

2:23 But, you know, things are progressing well with Weichai. We signed a new joint development with them for stationary power systems alongside what we're doing on transportation, and we're discussions on our strategy towards China. So that's that's progressing well, but I can't really give more of an update at this point. We've had increased interest in some new applications for the technology, particularly in maritime with two new feasibility projects underway with clean maritime demonstration in The UK with the likes of Carnival, GE, Lloyds Register, etcetera.

3:08 And our partner, Doosan, in South Korea, one of the major shipbuilding nations, has also signed partnerships with Hyundai Heavy Industries and Navigate. So we'll say a little bit more about the shipping opportunity. And, really, we're consistent with our purpose. We're we're seeing more applications for the technology to address climate change and take us to the energy transition towards the net zero future. Just a quick overview of of the strategy. What we have really is a unique platform technology, which is the steel cell. And with that common technology, we actually address different power systems.

3:53 We're making good progress now with with Muir in Japan, with Bosch in Germany, and very recently with Doosan in South Korea and Weichai in China. And also using the same common technology, common building block, expanding into the area of solid oxide electrolysis for And we're engaging with oil and gas and some of the global majors who have high interest in in this potentially high efficiency route towards green hydrogen. Just a quick word on products moving towards commercialization. Doosan recently announced the successful completion of a 10 kilowatt system with plans for a soft commercial launch later next year and then a ramp up from there.

4:45 Don't forget, we also signed a very significant technology transfer and license with Doosan, and they plan to bring on production in South Korea of a 50 megawatt facility as well around 2024 time frame. So that system that you see in that picture is the result of a two year joint development, which we initially signed with them to focus on systems. And since that time, we've also expanded them into a manufacturing licensing partner as well. The middle picture there is the Bosch system. Bosch said in publicly earlier this year they're investing €400,000,000 into solid oxide fuel cells with plans to scale up by 2024. And they're putting out a 100 small scale stationary fuel cell power systems into operation this year.

5:35 And the unit you can see there is a 10 kilowatt system, which contains two of our five kilowatt stacks. And then to the right of that, you see Miura in Japan. Miura Miura was our first partner to launch commercial products, and we're continuing to provide low volumes of stacks to Miura for its to support its commercialization. Some of that commercialization has been somewhat slower with COVID because they address the commercial market of convenience stores, office blocks, etcetera. But we're very pleased with the relationship with Miura and the technology progress that we've made to date there. Just a few words on on maritime. Maritime is one of those very hard to decarbonize parts of society, and we're seeing more and more of a focus on solid oxide technology to potentially decarbonize shipping.

6:31 The International Maritime Organization has mandated now a reduction of greenhouse gases by at least 50% by 2050. And if you think about solid oxide, it it offers a really good transition technology because of the multi fuel capability, can run on natural gas, can run on hydrogen, and can run on future fuels such as ammonia, which is increasingly becoming interesting for decarbonization of shipping. Doosan, our partner in South Korea, has engaged with Navigate and Hyundai Heavy Industries, so one of the largest shipbuilders in the world. And as I mentioned earlier, we we now have UK support for feasibility studies with two consortia to start to look at exploitation of solid oxide technology and marine applications. So that's a a new high value market for CERES and also also higher power kind of applications.

7:29 It takes us, again, up into the megawatt scale of application. The potential market for this is obviously very significant industry estimates. Around $1,650,000,000,000 will be needed to decarbonize shipping by 2050. And that translates, you know, the power requirements in that industry around 700 gigawatts. So when you think about the challenge to decarbonize all the different parts of society, this is a pretty significant segment for our our technology in the future. Just a few words on the leadership team. I'm very pleased to announce recently Caroline Hargrove will be joining my executive team as chief technology officer, And Mark Selby is moving into a new role as chief innovation officer to look at technologies beyond solid oxide but aligned with our purpose in addressing net zero and climate change.

8:36 Caroline is very accomplished. She's been CTO of McLaurin Applied Technologies and Babylon Health. She brings some really key experience, particularly around digitalization, into the organization. And and Mark continues to be a a key member of the executive team as we look towards expanding the business with with new technologies in the future. So really positive to strengthen the team. With that, I will now pass you over to Richard who will talk you through the financial update. Thank you, Phil. So just just have a few slides here sort of summarizing where we were for the first half. So as Phil said already, you know, really pleased with the revenue growth, nearly a 100%, maintaining extremely strong gross margins.

9:33 And we expect that those margins will remain high in the in the in the coming periods as well. And what we one also sees is the order book and pipeline. And although that's come off from six months ago, this is expected. You know, we've still got coverage of, you know, roughly two and a half times annual revenues there. So it gives us great visibility going forward. Now from a from an from an EBITDA perspective, we slightly improved from the previous period last year, but it's not something we're focusing on particularly. There's another slide which we'll walk through in a second, which splits out the EBITDA between between the two sides of the business, SOFC and SOEC.

10:22 But, really, what this shows is the despite the the significant increase in revenue and and gross profit, we're putting money back into the company, looking at opportunities both in SOEC and in high power and SOFC. And as Phil mentioned already, we raised just under 180,000,000 early this period, which leaves us an extremely healthy cash position of 260 odd million. So just looking at revenue, you can see, again, we've got some previous periods here. You know, we're maintaining it. It tends to bubble around depending on mix primarily. And we're still, you know, above 70, and I think that's where we'll see it going forward.

11:08 In terms of the mix, you can see there that a big chunk of the revenue in the in the in the year was was license revenues, expected this. I think the the ratio of the mix will change slightly in the second half, but I think we'll still maintain our gross margins at around about the same level. So just going to the next one. Clearly, we raised we raised the money, and really, this is trying to show that actually we're putting it to good use from the perspective of most of it is going or a lot of it is going into r and d. But we also expect over the next few periods that our CapEx is going to increase as we put more into manufacturing capacity and to test expansion particularly.

11:55 And I think that'll come through in 2022. So, really, we're putting the we're putting our funds to work, and, you know, this is a trend that we'll expect to see increasing over the over the coming periods too. And finally, for the first period, we've separated out, you know, for our investors and and clearly internally as well, the two sides of the business. So the fuel cell side and and the more nascent electrolysis side. And really what this is showing is that it's beginning to show the investment phase for other the product side. You know, the the two the two businesses, although we still want it as a single business, one can really see that SOFC is maturing while SOEC is definitely in the investment phase, and we'd expect to see sort of revenues a bit further down the line. It's a few years behind SOFC.

12:51 But one can see that solid oxide fuel cell side, the performance is improving, but we do highlight that we're likely to be loss making in the short term as we continue to invest in new applications and high power applications in that side of the business. So on that, I'll hand you back Phil for review of the business strategy. Thanks, Richard. So I I mentioned earlier the expansion of the of the company, and we've just talked about starting to see the progress coming through on the numbers in the solid oxide fuel cell side and the investment into electrolysis for green hydrogen. And if you think about the business, historically, we've expanded the business into more and more applications on the power side, particularly on stationary power moving into commercial buildings, data centers, etcetera, and also transportation applications that we just discussed. Discussed.

13:54 But, again, if you take that core cell and stack technology, running it in reverse, you can potentially have a very valuable route towards green hydrogen. And that's that's exciting for the business because it potentially opens up some of these new markets around sectors that are hard to decarbonize. So it takes us into hydrogen for e fuels, for industry, for decarbonization of things like steel, ammonia, cement, hydrogen gas blending, etcetera. And it really takes us into a whole new area of potential partnerships, and we've had very significant interest in this whole area of solid oxide electrolysis as as we've announced our intention to go forward with the development of the technology and the demonstration of megawatt scale next year.

14:51 So we're really pleased with with the progress we've made and also with the market response to this. I think what's key on this is this makes a lot of sense for the expansion of the company because it's the same cells and stacks, the same supply chain, the same manufacturing capability that can potentially service both markets. And as Richard said, we're keeping this together as one business currently because majority of our teams, teams, r and d, manufacturing, etcetera, are common to both. But we're starting to report on it from the commercial side so that investors can see the progress on the the power system side and the investment going into the the hydrogen side. Just a quick reminder, the use of funds. So we did raise 179,000,000 as we've mentioned. About 25% of that is to grow the SOFC business into some of these new opportunities that we've talked about, higher power, such as what we're doing in South Korea to towards utility scale, and also some of these new applications like the maritime applications we focused on today.

16:00 And then about a 100,000,000 of this over the next few years will go into the development of the electrolysis side. And then 20% is what I would call foundational, which is the infrastructure for test manufacturing capability around digitalization, etcetera, that we that really underpins the innovation and the technology side of the business. So that's a reminder of why we raised the money earlier this year. Just a quick update. You know, this isn't a work in progress, but our intention is to demonstrate this one megawatt scale unit and have that commencing operation in 2022.

16:47 Our target is a dollar 50 a kilo of hydrogen, which we believe at scale, we can we can achieve because of the high efficiency offered by solid oxide electrolysis. So we're excited with the progress we're making on that. We are in discussions with a number of partners, and we can update you on that as well. When we think about potential partners, we're getting an interest from oil and gas, from industrial gas companies, and some low carbon energy applications as well. And we believe this area of the business will be at least as large, if not larger, than our power system business because the demand for green hydrogen is set to grow and double every decade to twenty fifty.

17:33 So we believe that our timing in this market is is right. We will have the demonstrator next next year, year, and then we build commercial partnerships beyond that. And then we should be able to address this growing market as we see it laid out in front of us. The business model and strategy is exactly the same. If you look at the chart on the left, we're driving more and more demand for applications for the technology. And for those of you that know the company well, we've expanded CHP, adding new applications all the time, data centers, vehicles, utility scale power, and now getting into marine on the fuel cell side. For SOEC, this is just beginning. So in the future, we'll probably start to segment this by different industrial applications, different target markets.

18:29 And really, what that does is that drives the demand for our manufacturing licensees. And again, we're targeting expansion geographically of our manufacturing capability in the future. So it really is an ecosystem where we drive demand on the left hand side, and then that creates the need for the supply and the manufacturing licenses on the right hand side. And, again, what we are seeing the evolution that we're going through on the power system side through joint development agreements and license fees leading to royalties, we we see that from the announcements of market launch with our partners like Bosch and Doosan turning into royalties from 2024 onwards as illustrated in this in this chart here.

19:17 We expect the the new electrolysis side will obviously lag this by several years, but will follow the same kind of profile. So we do think it's very synergistic with our business model and will will add significant future value to the company. So just to summarize, you know, I'm very pleased with this very solid set of results. I think, you know, we've we've done well again to maintain the business trajectory given what's been quite a challenging international backdrop over the past year. And we are on track to achieve estimates of over 31,000,000 for the full year.

20:03 So I'm very, very pleased with progress. We've got good visibility now on commercialization of products with our partners making announcements such as Bosch, such as Doosan, etcetera, and more and more pull into these higher power and new applications like Maritime. Our relationship with Weichai is is progressing well towards our strategic partnership for China. And we're now we're now actively engaging, as I mentioned, on the SOEC side with the oil and gas, with the industrial gas companies as well. So hopefully, we can bring partners into this and have more to say on that in the future. We still plan to move to the main market, and we're on track to to achieve that by middle of twenty twenty two.

20:51 So all in all, we're making very significant progress consistent with our purpose to address climate change, to decarbonize parts of society which are are not able to achieve that without hydrogen fuel cells today, and ultimately create a very significant business and create further shareholder value. So with that, I'm willing to take any questions. Fantastic. Phil, Richard, thank you indeed for the presentation. And ladies and gentlemen, do please continue to submit your questions using the q and a tab. Just click on it, scroll to the bottom, type your question and press send. We just want the company to take a few moments to review those investor questions we've had submitted already. 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 on the Investor Me company platform.

21:39 I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected to the opportunity to provide feedback in order that the company can better understand your views and expectations. Elizabeth, if I may just hand back to you to host the Q and A, where appropriate to do so, read out the question, please. Thank you. Thanks very much. Yeah. Morning, guys. Elizabeth Skerritt here. I look after investor relations for CERES, and we've had a few questions coming through. Some from Anthony, Plum. Hi. Good morning. He asks, what sort of new technologies outside of solid oxide might Mark be looking at in his new CIO role, Phil? I don't want to be too specific at this point, but have to be aligned with our purpose, and they have to be aligned with our expertise in electric electric chemistry.

22:32 So they're all related to energy transition and and how we achieve net zero. So it's those kind of technologies beyond solid oxide. Yeah. Great. And and and Anthony has a second question. Perhaps, Richard, you can pick this up. How much runway does the increase in manufacturing capacity to three megawatts give us? That's a good question. So what we what we're seeing with especially with with electrolysis is that there's more because the scale of electrolysis products at the end of the day are much larger than fuel cell products. We're finding that we can see this future demand for this future demand for bigger prototypes, I suppose.

23:21 And we can you know, how much does three megawatt give us? It certainly gives us a bit a bit more headway, but I can see, you know, potentially that we would look to increase slightly beyond that as well. But it's not something that we've we've made a conscious decision on yet. But, again, it's driven by demand, and it's driven by demand for the prototypes and for the early stage programs. Okay. Okay. Great. Thanks, Richard. Question here from Nick who says, who are your competitors? And then he cheekily adds, are they doing better? Don't think we're gonna comment on that, but, do you want to Yeah. Align the competitive landscape? Yeah. The competitive landscape in solid oxide, obviously, Bloom Energy in The US is is doing well and competes in some of the same markets that we do.

24:14 South Korea, also getting into electrolysis, etcetera. We're we're actually seeing now more and more interest in solid oxide electrolysis. I think a year or two ago, people were saying, oh, solid oxide is a is potentially the highest efficiency, but still at the research stage. Actually, that's changed significantly. Obviously, we're we're now starting to develop and commercialize solid oxide for electrolysis. So is Bloom Energy. So is HOLDINGS. So they announced a half gigawatt factory Scandinavia. So I think it's indicative of a healthy market that's forming, to be honest. On the power system side, the certain Japanese large industrial ceramics companies, which is a conglomerate of several companies.

25:09 But I think globally, there's relatively few. And I think that's what's exciting for CERES is, you know, where believe we have the the world's best technology, and we're also one of only a handful of players in this whole solid oxide space, which is addressing all these massive markets, industrial decarbonization, shipping, green hydrogen, utility scale power. So I think it just puts us in a really strong position. I'm I'm actually encouraged if more and more solid oxide comes into the competitive landscape because we can't make this market on our own. But I think it's, you know, solid oxide as a technology is is maturing rapidly. Great. Thanks. And then this we've received a quick couple of questions through on AVL.

25:58 So is there any more detail we can provide on progress with AVL and some sort of sense of timing? And the the second part of that question was, you know, differences that we see between early stage projects and what the pipeline looks like. We're pleased with the relationship with AVL. I think we've we've already already disclosed we're working on three early stage programs with them in different types of applications. They bring to us some capabilities, some market experience that we didn't previously have. So, you know, they're they're already active in things like maritime sector. They have capability also in electrolysis. So we I can't be too specific at this point because it wouldn't be appropriate, but the pipeline is healthy with them, and it's a it's a growing relationship.

26:54 So we'll we'll announce on additional partners when they're actually at the right stage to do so. Great. Thanks, Phil. And probably one for you, Richard. James asks, could you say a bit more about the order book and why it is down down on last year? I think you did touch on this, but he also sort of asked about expectations for growth in the coming year. Yeah. Sure. So I think maybe it's worth just reminding everyone how it works. We tend to have a small number of large value contracts as our primary contracts, and we have a number of smaller ones, which is sort of earlier stage. Now when we when we when we win a new contract, we tend to have a significant increase in order book and pipeline.

27:44 And then as we recognize the revenue over, say, a period of a number of years, some of that revenue some of that order book and pipeline will decline as it gets translates into revenue. And so on an individual contract basis, it it expects a sort of sawtooth sort of graph. In other words, pipeline increasing and then we build it. Then then we as we earn it, as we earn the revenue, it it comes comes off, off, and then we win another contract, it rises again. And we're just at the stage, you know, principally, obviously, last year, we won, you know, the big contract with Doosan, and that was a big increase. And what we're doing is we're recognizing some revenue against that, and it's naturally naturally coming off. Now as and when we win new deals and we expect to win that, of course, then we'd expect that to rise again. So the general trend is increasing, but there'll just be this sort of sort of as you see it.

28:38 Great. Thanks, Richard. And question from Lacey. Morning. Probably for Phil. On the Doosan partnership Mhmm. You said in the statement that you believe the target capacity of 50 megawatts could increase further. It seems to me this partnership could move very quickly given Doosan's ambitions and the general backdrop in career. Lacey asked, is there a limit to how quickly we could meet those ambitions, and what does it mean in terms of putting capacity in people from outside? Yeah. It's a good question. I think Doosan are already the market leader in stationary power fuel cells in South Korea. We've seen their ambition towards shipping. We know also, you know, that that whole South Korean market has very aggressive targets for not just stationary power, but also electrol electrolyzers as well. So I I think think South Korea is going to be a key market for us, and we will do everything we can to support Doosan as our our lead partner into into South Korea.

29:43 Right now, we've actually got on the ground in South Korea. So refreshingly coming out of the the pandemic, we're actually able to get people on the ground to support the technology transfer that's going on. And, really, it's the first stage over the next couple of years where we we help them to stand up the manufacturing capacity. Once that initial phase is done, it can be increased because they will have then that capability, that knowledge. But But the the first step is is incompressible, and that's really over the next couple of years. So I think it's not like we can bring it forwards, but I do think that once we establish this partnership through to production, so 2024 onwards, we expect that it will grow in capacity.

30:35 And if you think about the the markets it's addressing, as I've mentioned in the presentation, it's increasingly higher power applications. You know, if you think about an APU for a ship, you're talking several megawatts. You know, if you're talking about utility scale power, they've already put 50 megawatt power plant with using previous generations of fuel cells into production. So it very quickly scales into multi megawatts kind of applications. Great. Thanks, Bill. And and a follow-up from Lacey, perhaps for you, Richard. Just in terms of recruitment, we added a 100 employees in the first half, and around half of those were scientists and engineers. But Lacey asked, can we give any indication of what the split is in terms of SOSC and SOEC?

31:21 Yeah. I can't really be that precise about that. And the reason I can't is we don't don't have we don't treat the two businesses as different business units. So it's not like we recruit, you know, 10 people into this business unit and 10 people into that business unit. We run it we run the company a matrix structure with projects. So at the moment, clearly, what's happened in the in the first half of the year is that we've, you know, we've got a lot of focus into SOEC. I can't really give a split. I think probably the best way to look at it is if one looks into the accounts, you can see the the the OpEx split pre EBITDA, and you can get a sense then of where the resource is going.

32:09 So sorry. Can't be more precise on that. No. That's great. Thanks, Richard. And coming back to you, Phil, Adam Collins, hello, Adam, asks about Caroline and her strength in digitalization. What is that? What does that look like for CERES digitalization? I think it's it's consistent with the technology business. If you think about traditionally how how CERES develops technology, we'll we'll develop stuff materials level. We'll build it into small cells and stacks. Then we'll put it on test. We'll iterate. And all of that has a a certain timeline. And then also, when you're thinking about durability and lifetime, you're putting things on long term tests, looking for very small, you know, percentage points of percentages of degradation, etcetera, over tens of thousands of hours or or several years.

33:05 With our gen two stack, which is the our latest generation, which we're developing now, most of that has been done through modeling, through a multiphysics kind of software that can predict all of the, you know, the the characterization of what's happening at the cell and stack level. And it's almost you know, you might have heard of things like digital twins. If we can develop digital twins of our designs, we can actually predict the design and the performance before we actually go through the whole point of making making a cell, putting it on test, which all has a time and and innovation. So it's it's really the modern way that, you know, most major companies now are developing technologies.

33:52 So the whole move towards digitalization will enable us to speed up the development programs. It will enable us to be a bit leaner on on test. A big a big investment we're putting in now is is our test fleet. But, again, we get to a point where that becomes a limitation if we're moving into different fuels. You know, we're testing on hydrogen. We're testing on ammonia. We're testing on natural gas. If you think about some of the different applications we're we're developing, etcetera, simulation and digitalization becomes a key thing. And then you can also apply it into manufacturing as well, digital factories as well, you know, predicting how how things move through data mining. I mean, we've got so much data that comes out of our our cell manufacture in terms of cell quality, etcetera, and the different unit operations along the way.

34:45 So it really will be a step change over the next few years that'll basically, we want the company to go faster on iterations of of development. And, you know, Caroline's experience is invaluable. I mean, she developed the digital twin for Lewis Hamilton's Formula One, McLaren, for example, something that's very complex, but it's done in digital and with Babylon Health as well. So it's a it's quite a a new perspective for CERES that we we definitely are gonna invest in in the next few years. Great. Thanks. And and a follow-up from Adam. He says good to see the interest from oil and industrial gas companies in in a electoralist. Excuse me.

35:31 Do any of our existing partners cover hydrogen production? Not yet. But it depends on if you think about it, our existing partners today tend to be power system companies. But then if you think about our manufacturing partners, there's there's two types of partners here. So if if your question is from the end end user point of view, then no. But if you think about it from a supply chain point of view, a common manufacturing base, there's no reason why cells that are made in a licensee factory that are going towards fuel cells wouldn't potentially go towards an electrolysis application.

36:18 Like, know, we've mentioned it's the same core cell and stack, the same core materials, the same core supply chain, the same made on the same machines. So it's a potentially very valuable add on to our manufacturing licensees. Great. Thanks. And there's been a couple of questions through about solid oxide electrolysis. I mean, I'd encourage anybody who hasn't to go and listen to the teaching that we did in July because that was quite a deep dive on the tech. But perhaps you could just sum up for listeners here, Phil, in terms of what we see and expect from further development and and and how it compares with existing kind of pen electrolyzer or alkaline electrolyzer landscape.

37:08 Yeah. The look. The the fundamental difference between a solid oxide and an alkaline or a PEM is high temperature electrolysis versus low temperature electrolysis. So alkaline and PEM operate sub a 100. Solid oxide operates from 600 to eight fifty kind of temperature range. And, you know, the science behind it is basically solid oxide cells are higher efficiency than panel alkaline. So that's important when you think that the two thirds of the energy input into making green hydrogen is actually the the energy you put in. So efficiency matters. Now where that really matters is potentially where you also have waste heat available, which helps you with that higher temperature operation.

38:00 And then you can push efficiencies into the high eighties towards 90% efficient. So the way I see at the electrolysis market is we're gonna need all these technologies. They all have different sweet spots for applications, really. Alkali is the most mature. It's been around for decades. It's it's low cost. And, you know, that that's probably what you're gonna see on some of the the really large deployments, particularly where you've got very low cost energy and maybe power power input is less of an issue. PEM is very good at intermittency, low balancing, refueling stations. So PEM obviously has a role to play as well. And the solid oxides really, I believe, come into industrial decarbonization where you're integrating with industries like steel, ammonia, petrochemicals, etcetera, because then you really get this advantage of of efficiency.

39:05 And like I mentioned earlier, it's not just unique to CERES. I I think think you're starting to see solid oxide as being talked about more and more as the future, high efficiency electrolysis technology. And and that's how that's how I see the the market segmenting. Great. Thanks, Phil. And perhaps a follow-up to that, Richard. Tom from Investec, I asked, could you give us an indication of when the first solid oxide electrolyzer licensees Could it be sooner than 2024? Yeah. I think we can't really give guidance on this, but I I think we must we've got to remind the audience that SOEC is, you know, is more nascent than solid oxide than the fuel cell side of the business.

39:58 And I think the I think there's two things here. What we're doing in solar oxide electrolysis is creating a demonstration. Now as we've as we've said in the results is that we've got some, you know, good conversations going with some third parties. But I think it's too early for us to expect to be able to license the technology to the third parties. One of the one of the things that we're doing alongside the demonstrator is to create enough IP or more IP so more valuable to us going forward. And therefore, there's an advantage in in waiting to license system IP until that happens. So I wouldn't want to give guidance on on timing, but I don't think it's you know, we'll we'll be be looking looking at at a a system licensee for solar oxide electrolysis.

40:49 I don't think we'll expect to see one in the next couple of years or so. Great. Thanks, Richard. And we've had a few questions through just in terms of logistics supply chain. Are there any implications of logistics challenges? Are we dependent on the supply of any particular scarce resources or global shortages impacting us? Perhaps you could touch on this, Bill. We've obviously, you know, keeping a careful watch on on this, but I think we're we're not seeing any near term concerns at this point. But, again, we're making sure that our supply chain is is is maintaining maintaining supply.

41:36 We're probably using some of the less exotic materials than other technologies, you know, predominantly steel, cerium being very the most widely available of the rare earth ceramic materials. But, you know, we we we will con continue to monitor the situation carefully because, obviously, you know, it it it is it is out there as a global theme, and we've got to got to maintain the business. And no no no implications on the order books? No. At the moment at the moment, not. I mean, Phil's completely right. You know, we monitor it carefully. We we mitigate, you know, for some materials where we get it from from, you know, from some places we obviously buy in advance to just in case there is a supply issue. But at the moment, we haven't seen any.

42:30 And at the moment, I can't see it, you know, I can't see it affecting in a future pipeline or future revenue, but we we hire it in in the report that, of course, it's a risk. Great. Thank you. And perhaps another one for you, Richard, as well. Ray asked, what additional costs do we forecast for moving to the main market? Yeah. So that's a that's an interesting question. You know, clearly, on the main market and, you know, with as as Phil said, we're looking to move second in the first half of next year. And, you know, with our current valuation, we'd expect to move into the FTSE two fifty index.

43:17 In terms of additional costs, it's difficult to put a number to it, but and clearly, are additional governance related costs which flow into the company, which is just a matter of doing business in the main market. But, you know, often and this is why why we see companies moving up into the main market. It's worthwhile to to have those additional costs. Great. Thank you very much. And and perhaps just to to finish on a couple of themes that are also coming through, I think questions as ever around IP and, you know, as a worldwide licensing company, how do we protect that? And I guess into that, if we could say a little bit about the, you know, intentions in China and in particular sort of IP protection.

44:05 Yeah. Look. We spend quite a lot of investment on harvesting, capturing, and maintaining IP. You know, it's it's something that we we do well at CERES, and we have that both as registered IP in the forms of patents, but also trade secrets and know how as well. So the the whole whole the whole IP portfolio is is a combination of those. We also obviously protect it to our our contracts and our licensing arrangements. And, mainly, we partner with people that also have high respect for our IP. And, also, if if you're a licensee of our technology, you also then have a valuable asset that you are also want to maintain and and protect.

44:55 It's no difference in China. Our strategy towards China, which we believe will be one of the biggest markets for hydrogen and fuel cells, undoubtedly, is getting the right partnerships in place. And through those partnerships, that's how we intend to to protect our interests. Great. Thanks, Phil. And then, Richard, what what are the key milestones we should expect news in the run up to the end of the year? I think we've mentioned them in the in the report. And it's difficult to be too precise. I mean, clearly, one of the things that that we're working on is the joint venture in China and moving that forward before the end of the year.

45:42 So that's really the, you know, a prime objective of of us. And, you know, as we as we say, we can't update at the moment. This is something that we would certainly hope to before the end of the year. I think that's the prime one. You know, I think there's other otherwise, it's going to be, you you know, just general positive movement on SOEC. You know, as we highlight, we're talking to, you know, another partners there as well. But I I think that's probably sufficient. Yeah. Great. Okay. And, Phil, just to close out maybe, we have COP twenty six coming up in November. Is there anything that world leaders could be doing to assist assist in in getting getting technology fuel cell and hydrogen technologies further up the agenda?

46:29 I think it's firmly on the agenda now, to be honest. I if you'd asked me that question a year or so ago, would have said they could do a lot more, but I think now 30 of the world's economies already have hydrogen policies. We saw president Biden announce tax breaks of about $3 a kilo for green hydrogen in The US. That's a big step forwards. So I actually think it is on the agenda for COP. And, you know, I think initiatives the such as Biden has taken in terms of tax breaks, incentives to actually enable the market to really take off are probably the the biggest steps that could happen along with carbon pricing. You know, I think the more and more that we do on on setting carbon pricing or more and more of these applications that are hard to decarbonize then come into the money in terms of potential for green hardship.

47:27 So I'm I'm actually optimistic that things are going in the right direction, and I think there's definitely there's definitely the investor appetite out there to back technologies that really address net zero. So I I think it's I think it's happening. I think it's real, and I think COP twenty six will will hopefully move it move it on further. Great. Thanks very much, and and thanks to everyone everyone for for their their questions. We'll be sure to go through each in detail and publish answers following this. I'll hand back to our hosts. That's fantastic. Elizabeth, thank you so much for hosting the q and a. Phil, Richard, thank you again for such detailed responses to all the questions that have come through. And as Elizabeth said, all the questions that have been sent in the company will have the ability to review.

48:14 And we'll publish responses where it's appropriate to do so. Just on that basis, Phil, perhaps I can just ask you for a closing snapshot before I redirect the investors to give you some feedback, please. Yeah. Sure. Like I said, I think it's a very positive set of results today. We doubled revenues and compared with last year. We maintained the high margins that we enjoy as an IP licensing business. We're making great progress on the electrolysis side, and we now have over 250,000,000 of cash on balance sheet following the raise earlier this year. And we expect to be able to announce new partners coming on board, hopefully, in the near future on power system, but increasingly on the electrolysis side as well.

49:04 We're opening the new markets into things like decarbonization for for maritime. And we're making good progress towards our relationship with Weichai in China, which which is gonna be a very important market for us. So the business is in great shape, and we're growing fast. And the investment enables us to go faster. That's absolutely fantastic, Phil. Richard, thank you again for updating investors today. Could I please ask investors not to close the session as you'll be automatically redirected for the opportunity to provide your feedback in order that the management can better understand your views and expectations? This will only take a few moments to complete and is greatly valued by the company. On behalf of the management team of CERES POWER HOLDINGS, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you, and good morning.