Forgent (LSE:FORG) — Q4 results

0:01 Good afternoon, and welcome to the EQTeq PLC q four results investor presentation. That was recorded presentation. Investors are being in listen only mode. Questions are encouraged and could be submitted anytime via 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. The 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. Before we begin, I'd like to submit the following poll. I'd now like to turn you over to David Plumba, CEO, Nommo Mbaba, CFO, and Jeffrey

0:33 Vander Linden, COO. Good afternoon. Good afternoon. Good afternoon, Paul. Thank you for introduction. Well, I want to welcome again everyone to the Equitec investor made company q four presentation. I would like to start just for new commerce or new audience, you know, with a little bit of a summary of what we are at Equitec. I is a world leading technology innovation company specializing on the production of high quality, high efficiency syngas or synthesis gas. So synthesis gas is important in the energy mix because it's a highly versatile intermediate fuel that could replace or behave like natural gas.

1:20 It's important for particularly for carbon negative baseload energy and biofuels. Our technology is proven, is patented, and and is developed by us. It's carbon negative because we use given the versatility of our technology, we use a vast array of feedstock that displays fossil fuel, typically waste streams that are fine, you know, locally wherever we build the plants. And the importance of baseload energy is because, typically, the alternative of baseload energy, which is the minimal energy that you need to

1:59 produce into the grid is, at the moment, covered mainly by by fossil fuel plants, coal, and and natural gas plants. You know, where you have other renewables like solar and wind being a good backup for energy. They have fluctuation through the year that that that make them not fully useful to replace completely based on energy or power. And for biofuels, because the the the synthesis gas is in in its composition is mainly methane, hydrogen, and carbon dioxide monoxide, and we could reform or extract some of these components from from the synthesis gas to produce biofuels such as, you know, hydrogen or methane or through a process called fissure drops gas to liquids converted into synthetic aviation fuels or other type of fuels.

2:58 So to start, I think we'd like to just take us back and re anchor our thinking in the strategy, the road map, that we shared in our previous, webinar with you, with some of you who who joined us. This is what guides our thinking. It's what, you know, keeps us focused on how we need to develop the company, how we developed it over the past couple of years, and how we need to develop in the next couple of years. Our our goal at the far right hand side of this page is to become a technology license or an innovator. As David has just outlined, we have uniquely innovative technology here, that we believe we are world class, at delivery. And so what we're focused on is becoming that technology license or an innovator. What we have found, though, as we developed as a business is that in order to become that, we have to create the market for that. And although the demand is certainly there, it's structuring the supply side in terms of both the technology itself, which we more or less have in the bag, but then building an ecosystem of suppliers,

4:00 of partners who can help us deploy, deliver successfully, and quality the plants that will run this technology successfully in a number of markets, in Europe, in The US, and then into other markets around the world. And so, really, the journey between now and then is one about growing the business, taking our proven technology, improving it more often in more places, more successfully, building that ecosystem of partners, that global network that allows us then to go and deploy that technology successfully. Those suppliers and partners, of course, in the future will become our licensing partners who will then continue to bring that technology into those markets, but with less and less involvement from us. If you look at the small yellow arrow you see here, what we've called the hump, lovingly, is is a very natural place now for us to be as a company. Because as I said, there's a real, you know, kind of bow wave of of demand that has built up. We we've spoken in past with with investors, and those of you who know us well about, our the growth in our pipeline.

5:07 And the demand that we have is quite significant, and what we're building now is the engine to be able to address that demand, what we call the platform for growth, and eventually, that will become a platform for scale. But the hump is one where, you know, it's a chicken and egg challenge of, getting the funding to to deploy the technology. But at the same time, in order to get that funding, we have to to show that the technology has already been deployed successfully. And, of course, we have deployed it successfully, but the number of places we've deployed it, we need to grow. And that's exactly where we focused last year, going into q four and, of course, this year as well. And so a lot of the the the progress that we've made has been in what we call market development centers, which are showcase plants that will demonstrate that technology in a live environment.

5:54 We have a number of other plants that we'll come on and talk about, that we will deploy for other owner operators. And as we start to build those over the next, year or so, we will we we think we will hit a critical mass where we will have a number of plants that we have successfully deployed. And after that, of course, you know, we will begin to to build that platform for scale to go and and address the wider demand. Yeah. It's important on what what, Jeff said. Said. This is a a natural position to be at the growth stage of the company where it is. When we're talking about the funding, we're talking about the funding for the infrastructure investment that is required for the large capital project investors in the space. And this is is typically owners of infrastructure, you know, owners that are operating energy producing assets. And this is just these are very large organization that start moving much lower, typical lagging to the the market for two reasons. Number one, there is an existing legacy infrastructure that needs to be swept as an asset before they can shift into a new standard.

6:59 You know? And this is this is what we are looking in terms of of the hub. This is this is where we need it very clearly to define in terms of all the technology companies, in terms of engineering, in terms of technical people, the demand is there already. We have, you know, more demand that we can actually address, but the lagging effect is by building this market development center, by building these plans and this infrastructure initially to be able to attract the infrastructure investors and large owners operator of utilities to transfer all legacy infrastructure into a new paradigm shift where you see the the the hockey stick transition of what we, you know, call everyone call the energy transition. The energy transition, it will represent a significant investment in in new infrastructure that will really accelerate adoption of technologies that really address decarbonizing the industry and reaching net carbon net zero goals.

7:57 So let's look a bit at our progress to date then. Yeah. So this this is you know, when we look at 2021, the most important thing is, like, we we set ourselves certain target to do certain outcomes that were very important for us to achieve this platform for growth that eventually, you know, transitioning a platform to scale. So so we said in terms of doing, you know, r and d plans, we'd only

8:26 use them, you know, very actively. In 2021, we use the second half of the year. We have a number of tests that are also important for attract you know, test for strategic partners, technology providers, infrastructure investors that can come to a a full configuration plant like in Lorraine to to test different type of feedstock. So that was a very active period in the in in 2021, and it's something that we see continuing with that momentum in in 2022. In terms of market development center, we we set up that that was a priority, particularly projects that they were there in a in a previous iteration of previous shareholder of Equitex. So we acquire and repower with consortium those two projects, and those projects are aimed to be delivered in in the second half of of twenty twenty two. This is you know, we we we cannot emphasize enough how important will be the multiplying effect of having plans that we operate that we can not only take people, I mean, financial investors and strategic partners to visit, but also, you know, to to train, to create sense of excellence, to create capacity building for local teams and and in in those markets.

9:43 We also have in in 2021, we have 17 project on the development on different phase of development as we we discussed before. You know, our projects the the development of this project can be anything between six months to eighteen months to financial close, and we have we are bringing more project upwards. So now we have project in the whole life cycle in different stage, you know, in in in our development. In terms of on the construction in 2022, we have five which will carry on the construction in '20 sorry, 2021 that will carry on adding one more on the construction in 2022. And on the development, we're moving from 12 to 17 projects. In terms of revenues as well, I mean, this is this is still the phase of growth. We're not yet in the phase of scale. And even so, you can see, you know, strong growth year on year. You know?

10:37 We'll see once we have this footprint of plans built. You know, we we compare you know, still, you know, we will publish our our annual returns in in April, but you can still can see some estimated growth on 2020. And we see we'll we'll go to market in in due course on on the annual result to show similar growth in 2022. In terms of markets, we were in 2020 only on three markets. We are already on on seven markets with strong local and joint venture partners or or wholly owned subsidiaries, And we expect in 2022 to move to another new market as well. I mean, our markets as well, not only geographical, but we are moving as well more toward the direction of of solution driven markets with specific application in those geographical markets.

11:27 In terms of local entities, you know, we have two new local entities as we discussed before, other joint venture subsidiaries in this market. We expect to have another six more in sorry. Another four more to a

11:39 total of six in 2022. And in terms of of the team growing, the team growing is is is is fast fast to satisfy the demand. We're moving from a team of 30 people at the end of twenty twenty one to a team that can grow between, you know, mix between organically and inorganically between 40 plus 50, particularly in the technical team in 2022. In terms of the technical center, how is the split of that of that headcount? You know, at the moment in 2021, we're still about fifty fifty between the corporate center and the technical center, and we see a significant growth in 2022 to in the in the technical center mainly.

12:24 And this is also driven one of the strategy to scale is to partner with strong larger engineering companies that we discussed or or we announced the partnership with Wood. And we'll see in 2022 more strategic partnership like that where we could leverage, you know, their capacity and their engineering, their their commoditized engineering capabilities

12:44 to project, you know, using our innovation and their delivery capabilities to to to grow and address the the demand that we're seeing currently. So before we move on, just a a couple of follow-up comments here. I mean, one thing I think David's already alluded to, when we spoke last with you and as we've communicated over the past, year in our various trading updates, our goal, you know, back in '20, '20 was a lot about pipeline development. And early on in in 2021, the size of our pipeline was such that demand continued to grow. And on the one hand, that's very exciting. But on the other hand, you have to be able to address that demand. You have to be able to address it not just by doing something, but by bringing the best of EQTeq, the best quality, and and, you know, prove that not just the technology is a great technology, but that it can be deployed successfully and to the level of quality that we expect.

13:38 So our goal shifted from pipeline growth then into pull through, and it became more about how do we convert opportunities into projects,

13:46 And then how do we convert those projects to a financial close project, build the plant, commission those plants, and then have them run live, and, of course, clock the operating hours at very high levels of operational uptime that we would expect and that we've seen in plants that we've built today, and in particular, the one that's been running for over a decade at Movialza in Spain. So you could see the pull through effect here from 2020 to 2021. That significant growth, you see it again from 2021 to 2022.

14:17 We should add that the numbers we have on this page are the visible committed numbers. And so, of course, particularly the back end of 2022, we might see one or two or even three things come into the frame that we don't currently see ourselves pulling through at this point. A lot of that will depend upon what David has said at the bottom end of this table, which is about the size and our ability, our capacity to to to address that. Now partners are hugely important to us because, of course, they bring us capacity. If we can start to push more accountability down to our partners in various markets to do the development, to do the delivery, and so on, the more we can push to them, of course, the more we have an ability then to to to to address that demand.

15:03 What what you're seeing down here at the bottom of the page in terms of professionals line in brackets, you know, the plus 50 and so on, is our increasingly close partnership with CT three, we mentioned CT three engineering in based out of Madrid in Spain. We mentioned them in our q four trading update. They have been a long standing partner of the business. We know them very well, and they know us very well. They've worked with us on half a dozen of our projects already, and they do very high quality work and at a very, very, you know, good value. And so we as we kind of work more closely with them, and they buy more and more into what we're doing and what we're trying to achieve as a business, We we feel confident here, and they feel confident with us saying they are an extension now of EQUTEC. They're part of the EQUTEC family, and they bring us enormous capacity.

15:51 Less on process engineering, which is our heartland, but more on civil engineering, mechanical engineering, and electrical engineering, all of which are absolutely crucial when we deploy, our technology into, an overall plant construction project. So that's a very exciting development for us as well. And as you can see, it brings us significant additional capacity to ready us to pursue that demand. Yep. And, also, great relationship in the sector, you you know, know, with large EPCs, auto

16:21 technology companies, energy companies, oil and gas companies. They work with already with CT three for for engineering services. So another thing as well, mean, in terms of of the the I think one thing that also is important to highlight in this review is the fact that that we are thinking of scaling because it's it's an it's an evidence of the maturity of the company as well. First of all, from a point of view of,

16:48 you know, our executives or board, you know, come from much larger build businesses that we're looking what is required to scale at that size to have a a multi geography delivery capability, but also from a point of view that we are not worried to build the first or the second plan and hope that translate well from the lab to the real life. You know? We we we have built plans or CTO has designed for real life for applications for, you know, the best part of twenty years. We, you know, we have operational track record commercial scale, and now it's all about how can we fulfill and control the quality of that delivery in many more geographies as we require for scale.

17:28 So before we talk about how we're gonna move forward to scale, let's talk about, you know, what things looked like in q four. So as David and Jeff suggested that, you know, there have been significant progress made in 2021. I think we just need to step back and see that what we planned out to do at the beginning of the year and what we actually ended the year with.

17:52 I think one of the key aspects was the market development centers. I think we all know that the the, the plant on the on the ground is the most strong message with regards to the commercial viability of the technology. So we said that we would be repowering the, some of the, previous plants. So there are two plants, one in Croatia, one in Italy, with which we are actually pressing ahead. It'll be operational in 2022. With regards to the other plants, we are also making strong progress. And, also, I think coming back to the point which Jeff you mentioned earlier regarding the capacity to deliver multiple projects at the same time. So not only we are repowering the MVCs, but we are also a lot of other plants under construction. So three of them are under construction. There would be additional plants which will come under construction 2022 as well.

18:39 I think what also we have been looking at is moving from syngas to looking at all the applications and the off take solutions because the market that we're currently in, it's not it's not about getting the the pure synthesis gas or availability of that as an alternative, but also making sure that all sorts of biofuels or other applications of that in the industry that we have and the challenges that are there to achieve the net zero, we actually go through that process and and make the SIM gas available for those applications. Just we before we move on on that one, I think it's important to note as well, we announced in December that we were on our own deferring work on d side and billing for exactly the reason that is is identifying here.

19:31 You know, David said at the very outset of today's presentation, you know, that syngas, you know, the versatility of syngas in general, but also the specific efficiency and the quality of the syngas that EQTAC produces, put us in a very, very enviable position in terms of pursuing these markets. Now that's theoretically interesting. But in fact, what's happened is very, very quickly as we've gone out and started these discussions, moving on from heat and power or combined heat and power into talking about hydrogen, talking about synthetic natural gas, talking about, you know, for example, jet fuel.

20:10 As we get into these types of discussions about advanced biofuels, what we're finding is a few things. Number one, technology partners are very, very keen to talk with us because they're fascinated with it. And they're very good at the downstream application, the syngas to something. But where they are struggling is getting a high quality, high efficiency synthesis gas that enables them to do what they do well. And, you know, we won't mention names, but there are a number that you can read about in the newspaper every day where we're struggling for that very reason. That

20:40 represents a great market opportunity for us, and we are going after it. The The second thing we found is that the UK government, in particular, has made great strides,

20:51 and and they're pushing very hard to look at how can we what is the best solution for hydrogen? They know that electrolyzers are expensive. They know that there is a market for that, but it's several years down the road. And we were delighted to hear that the the UK Department for Business Energy and Industrial Strategy, BASE, have now named gasification as their preferred technology for hydrogen and advanced biofuels. That gives us an enormous opportunity again, and we have gone into conversations with base so they're well aware of who we are, and how we want to pursue things. So later on in this presentation, we'll come on

21:28 and talk a bit with you about some of the language that we're using, some of the key aspects of what we do that we're beginning to highlight more for this marketplace. Because what we see there is great opportunity for us, and we are we are actively going after it. Yeah. And I think one thing that is important we say as well, I mean, the the the the people and the attention to synthetic natural gas hydrogen from our point of view is something that we have always discussed. I mean, at the beginning, I mean, even at this market is moving very quickly. But at the beginning last year, even we were talking about that it's still too early

21:59 for for that market. The reason being that we want everything that'd be driven by a commercial demand. So so it's it's it's very interesting to talk about the hydrogen economy of the future, but where can we create current commercial demand to be able to accelerate that? And we see that mainly in in industrial applications. You know? Before we're gonna be putting hydrogen into buses, before we're gonna be piping hydrogen in fuel cells, you know, to throughout the world, You know, you're gonna have localized demand for industries that require, like, fertilizer industry that requires ammonia to produce fertilizer. They have very clear current needs that they have that commercial demand. So that's why we focus in that. That's the reason why we are seeing a great opportunity to to reconfigure some of the applications in in Bellingham. This is what the project in in this side is also so interesting.

22:53 And also now, you know, the the accelerated interest also from the local and and and central government on the project in Southport. So yeah. And since we've raised it, shall we just pause a bit and talk about both Billion and Dside? I mean, I'll start by talking about Billion and and perhaps, David, you as a project executive on d side can talk about that. I mean, both remain extremely exciting projects for us, and we are full steam ahead on both. Full steam ahead on what? In the case of billing, we've got an amazing location.

23:24 We're surrounded by large scale industry, and we're in conversation already with a number of those local with those neighbors as they like to call themselves. It's a vibrant you know, if if any of you are familiar with with the Tea Side Industrial, you know, area up there, it's quite a vibrant area. It's a heavily networked area,

23:43 in that they they share a network for for carbon capture, for c o two. They they share one for other things, and, of course, they're building a, and extending a new hydrogen network. You will have read that BP are getting involved in there as are a number of others. So it is a very vibrant place to do a large scale, you know, plant, that we have planned. Those designs are are done at a level. We've been working very closely with three, large, tier one EPCs who have been very actively looking. One or two of them in particular, we've been working side by side with for over six months now, really looking at, those plans

24:22 and how we develop those and take them forward into FEED. But before we get too far into FEED, what we've discovered is actually there is a wide range of potential offtakes that are of interest to the market up there. Now, you know, to be fair, for the reasons some of which Dave has just outlined, hydrogen is very interesting, but the market for it is still quite young. So we have to look at the trade off between will some of these industrial companies buy hydrogen? They're more likely than any kind of consumer application.

24:53 But will some of them buy hydrogen now, or do we need to wait a few years for that? And how is that going to work? And or are there other off take applications that will fill the gap before hydrogen becomes truly, you know, high demand for those businesses? And so there's kind of a thinking through of, technically, to what extent can we build a plant that does one and then another? Is that prohibitively expensive? So we've got to think through a number of these different issues. And more than think them through, we need to model them through and and look at what kinds of impacts those have on in IRR over what periods periods of time. And so there are a wide range of variables, and we've got our own commercial leads. We're getting subject matter experts. And most importantly, we're trialing these with some of the relationships we've built up in building them to start to look at what the best possible model is. The last thing I'll say, and we've said this many times before, particularly about building, but really about any of the large scale plants in The UK we're

25:46 pursuing, the number one objective here is to do them extremely well. We're We're not in the game of rushing these just to have a plant that we can look at. The smaller scale plants we have in places like Croatia and Italy, as Norman mentioned, or in California or in Greece, we can move much more nimbly on, you know, and and we'll, I think, gain much more momentum. And those twelve to eighteen months that David has mentioned, we'll see development periods shrink as we build more and more of those. In

26:17 the case of these larger plants and building more also, it's easier on the small plant to retain full control of the whole integration. In large part, you need to work with a much broader stakeholder group. And by doing that, it's a great opportunity as well. You know? It's a great risk of managing the stakeholder integration, but also it's a great opportunity to attract more strategic partners and to be able to have a bigger audience from technology partners, from investors, from infrastructure partners, where can look at what is the applicability of the technology for large capital

26:47 projects. So, you know, that's a great opportunity. I mean, we have not just, you know, one or two projects that we need to build to prove, but we need to use every single project in our pipeline to showcase not only the project build, but the process to build a project, the iterative discussions with partners to engage them, to discuss the realm of what is possible commercially, technologically, and also in achieving, you know, the the carbon reduction goals that we all have. And forgive me. I'll just throw in. You mentioned that we, in the future, will be moving, you know, from market verticals, which we have now gradually and potentially solution verticals. And the solution we are deploying at billing them right now, for example, is a dramatically different solution.

27:33 David just outlined some of the reasons. The economics work very differently. The stakeholder group is very different.

27:39 You know, the the plant lifetime is very different, and the dynamics of that economic model are very different. That business model changes. So the solution that we're building there versus a small scale distributed set of plants that are almost identical, for example, in California to do something quite different. These are all different solution models. And so to David's point, we have to showcase that business model well, not just show that we can build a plant. And so for all those reasons, we are apps we would not defer these these projects if we did not feel there was value in doing so. We do not intend to drag out timelines, quite the contrary, but we want to get that model right, get the stakeholders aligned with us in that thinking, and then proceed at pace to deliver the quality, but also prove that business model in reality.

28:30 And and and I think one thing to which is important to mention, as David suggested, because there's so many stakeholders involved, Obviously, there's a lot more consultation on fine tuning the final solution on the project itself. I think in terms of, Jeff, you were talking about the fact that we need to model the decision to have a good decision support, tooling in place to move them in the right direction. I think even for that, testing some of the commercial assumptions in the market for something like hydrogen, which is up and coming, is also very critical. So we just wanna make sure we have the correct data points. We're modeling them right and coming to the right decision for the overall shareholder value accretion.

29:05 So coming to the d side. Yeah. On this side, I and then I'll I'll I'll make a general comment on on all The UK and the large capital project. In d side, it's it's also, you know, very exciting. We we are now, a, maturing the relation that we have with Logic, which is our our our land strategic land partner on the on the side. We we had the opportunity as well. I mean, this is a perfect example where Toyota, he was looking for the offtake of the,

29:31 you know, carbon negative gas and and and renewable power that we can provide, and they were they wanted to put electrolyzers on-site to then use the renewable power to produce the hydrogen. And we'll just wait. Well, hang on a second. We could depend on what the application of the hydrogen is. Let's do a feasibility if we can provide the hydrogen from gasification, you know, from an upgrading of the of the singles into, you know, into hydrogen. And this is what we, you know, what we're doing. I mean, the the there's still very anecdotal market impression that you can only make high quality hydrogen from electrolysis, which obviously, you know, that's that's true. You get 99.9% purity of hydrogen. But you could do the same at at at the cost point of electrolyzer.

30:16 You could do the same upgrading from as well. And at the moment, it makes sense for us to do analysis because we may come even at a lower price than electro electrolysis. We have already completed a feasibility from a planning and and health and safety point of view if we can have hydrogen from in in the in the land next to this site, which was very positive. And we expect, you know, in in q one discussing with some of the technology partners to to select who could be working on the technical and financial viability with us, with some of the engineering companies such as Wood that have been announced and and the and the Vesta subsidiary. But the the the important thing is is, like, as as Jeff was saying before, all these technologies that that come from petrochemical mainly for midstream oil and gas are pretty established using fossil fuels to separate methane from from coal gasification or for crude gasification or separate, you know, hydrogen to water shift units.

31:17 The the key now is to bring that expertise and that process expertise in petrochemical with a partner that has the innovation capability and the production of the versatile and and two specification production of syngas to be able to integrate this and then just deploy this solution in in many places. One more thing that I would say about that, which is general to all the project, is, you know, we we have a complex

31:44 you know, the the the process of the plan is complex, but also the business model to scale, it can be perceived as complex. And at at at the place of stakeholders that we have in this project, there's still a lot of confusion in the market. You know you know, I thought you were talking to, you know, a utility partner like an IDEX or a EON, and now you're talking to a or a Kibo.

32:07 Everyone has a place and a time in the process. You know? You have funding partners at project level, which are funding partners that need to deploy capital to build this project. These are large, you know, other owners, operator of infrastructure, or infrastructure private equity investors. You know, all those conversation have in in fact accelerated. We're talking to more utility companies. We're talking to more oil and gas companies. We're talking we're talking to more infrastructure private equity investors. And that is the lowest capital to arrive. Those are very large institution that take a lot of time, and they are the one that have the lowest tolerance to risk. You have a a precursor to that, which is the development partner, which is to co invest, you know, capital in the development phases. As we say, one thing that was important for us is to initially, we were the using the the the development capital to catalyze some of these projects to completion. Now what we're seeing, there's opportunity to sell the project SPVs or equity early on the project SPV while retaining, you know, the direction of the of the developing choices, etcetera, etcetera. And this is where you have companies like, you know, the discussion that we have with with Keyboard, with Metro Energy, which are companies that are pivoting. You know?

33:21 They are company that have a

33:23 small cap companies in a in a in a fossil fuel or or a mining environment that has is is quickly being disrupted. They are pivoting on being developers of projects that are part of the new energy mix where some of the experience of developing power project in fossil fuels is transferable to a sector, you know, and where they are willing to put risk capital at the early stage of the development phase. So

33:52 everyone has a time and a place. People are also asking, oh, you have the technology department. It's a 40,000, you know, employees company, you know, global reach. They're gonna go on finance billing them. That's not the way it works. You know? Engineering company, technology partners are engineering company, technology partner to provide engineering and validation and structure of delivering those project. You know, infrastructure investor, infrastructure investors,

34:17 owners operate of the utilities, our owner operator of utility. You know, there's a number of stakeholders, and they are all required to be able to take this project to completion, operation, and successful, you know, production in in in in the future. And and just briefly, I think it it is also important for us to understand that that our team is always pushing the boundaries once it comes to the applications. The the r and d tests which are being conducted at University of Lorraine, we have been looking at different feedstocks. We're looking at contaminated plastics, which obviously attracts a much higher gate fee. It it allows us to provide another alternative to what the other solutions out there in

34:55 the market are. So we're always pushing those boundaries, and we will keep on doing that. We've got a a three to five year plan from 2022 onwards to keep on doing that further as well. Yeah. And I think Just to add in the in the r and d and the importance of price is is worth saying what what is contaminated plastic. Contaminated plastic are typically those plastics that come from containers that we're holding either hydrocarbon, oil paints. That is very interesting niche market in The UK and globally because they are not

35:24 willing to be taken by incinerators anymore, and we know the product with incinerator generally. And it's not a plastic that you can typically recycle easily because of the hydrocarbon content of it. So by doing test on that, number one, we reassure the partners that are coming to us with this demand. But remember, the important thing here as well is, like, we can just go and show how accurate our computational model is. Like, listen. We model on a simulation what is gonna be the composition of the syngas for the contaminated plastic, and then go to Lorraine, do the actual process, and see how accurate our predictions were. All of that build confidence. All of that make traction with all the important stakeholders for this type of application.

36:03 And it also, ultimately flows through to the revenue growth that we are seeing, on the previous slide, David, that you mentioned, how twenty twenty numbers were €2,200,000. Now we have kind of jumping to four to five times of that amount, and we will see similar sort of multiplier effect in 2022 as well. And the journey will continue till the time, you know, we have built that scale. So I think that is all good foundations to deliver the strong revenue growth that we are currently focusing on. Absolutely. And and and it's important. I mean, we we we we like that we are judged as a much more mature company in terms of disciplines and revenue targets and EBITDA, but, also, we need to understand that we are miles away from just a pilot scale type of test of all the technologies that are out there much more from a point of view of hype of potential growth instead of just a proven technology and now thinking how can we deploy this at scale. So the fact that we can show strong revenue growth while we are at

37:01 that investment for scale phase, you know, is very encouraging, and I think it's important in the current market because the market are taking a much more defensive position where, you know, the investor general institution are gonna be a lot less forgiving to companies that are gonna be loss making for the next ten years, and they're looking someone to have a horizon where it's it's at least, you know, there's there's a good balance between reinvestment in scaling, but also in terms of controlling cost and and and negative EBITDA. We we have also increased you know, the capital deploy has significantly increased or or assets as well on the on the books. So the important thing is we need to deploy capital efficiency in a way that generate the maximum growth and return also from investors to become more attractive in the set.

37:52 K. Fantastic. Thank you very much indeed for your presentation. I'm afraid we're still going. I beg your pardon. Sorry. I thought you were handing over to me, so I'll be quiet. Thank you very much. Thank you very have two more slides. So So we we'll be we'll be quick on this slide because I think this is a relatively straightforward one, and it and it kind of alludes back to what we were saying about moving to scale. We cannot wait until the scale requirement comes knocking. Once we've got over that hump we talked about earlier on, you know, we will be forgiven less and less for not addressing the demand that we see growing for what we do. And, therefore, as we prove, not just that the technology is great, which is already proven, but we prove we can deploy it successfully time and time again, and indeed deploy it more rapidly, you know, with with different variations of different types of feedstock and different types of offtake as we've just outlined.

38:46 As we prove that, we will need to be able to scale. And so rather than waiting, we are already setting in place the structure that will allow us to go after and pursue that demand. So these two little diagrams here help bring to life perhaps where we're focused. On the left, you see our what we call our go to market model, and there are four really critical factors that we believe we we have to get right in every market to be successful. At the core of it is a joint venture or some other subsidiary arrangement. You know, we started, I think, year ago. We were talking to you about go to market partnerships. Those partnerships we're converting now into either wholly owned subsidiaries as we will put in place in France this year as one example and probably in Italy as well.

39:31 But, also, we're we we put in place majority owned joint ventures as we've already announced in Croatia and in and in the Aegean, you know, for Greece and and other adjacent markets there, and we will put in place in other areas as well. Behind that is a strong MD or managing director, but indeed an entire senior team, effectively a David and Norman and Joel and Jeff in every market who we believe don't just have the understanding of the technology, don't just have the local relationships, but also have access to capital and have access to routes to market that bode well for us in terms of their becoming licensing partners in the future. And so these are people who have the commercial savvy establish and grow a business in each of those markets.

40:19 Behind them is a partner network. You know, we've talked about the ecosystem we're building. We need to have the partner network locally. So we will have local partners, and we we will spend our time also building the multinational partners who we can deploy into multiple ones. And between the two of them, we'll have a reliable, repeatable capability for deployment in all of those markets. And, of course, topping all of this off will be a market development center, an MDC. That's That's the showcase facility we're putting into Italy this year. We're putting into into Croatia this year, and then we will go on and put into every other market so that we can use that to bring prospective customers, to bring partners, and and as David said, also to train and certify, you know, EQTEC certified, you know, people to do maintenance and so on. If we look at the right hand side, that's how we look as a group. If you if you move the camera out and look across all of us as a group, we are going into these market verticals, which are our revenue and profit centers.

41:16 And, horizontally, we will always, EQUTEC, provide the innovation, provide the licensing, and provide the maintenance in so much as we will be the ones who certify whether or or not not a local maintenance team could do maintenance on an EQTAC plant or an EQTAC power plant, if I could put it that way, based on being certified by us. When it comes to funding and commercial and development and delivery, we want to gradually see the verticals take that over, and we want them to be leading and, in fact, to be self sufficient for doing any of those things. We are not there right now. We are still in the position where we, as EQTech, are providing a lot of that support, But we are seeing in specific areas, particularly in some of the countries I've just mentioned, that more and more they are able to take on funding in commercial in some of these aspects.

42:07 And that gives us, you know, a strong confidence that we're building independent vertical markets that can take the work from us, and we can then be ready to move to scale. Yeah. I think this, again, talks into the maturity of the business and the and the and the executive team on where we are in the growth phase. I mean, each of these go to market entities or model I yeah. Think we mentioned that in an interview not a couple days ago. Each of this one can be in their own merits, you know, you know, an IPO or a very large viable business in that market. The beauty of this model is, like, some of these ones we say, we may end up doing five, ten projects and then just find an alternative because they are not exclusive. But if they grow in a certain scale, they can become a a licensor, IPO in a specific market.

42:55 And this just also build a lot of resilience in the in the in the model of the group. You know? And this is, as we say, I mean, it was only less than two years ago that we're talking about about qualified pipeline and the pipeline that we're managing centralized. Now we can already start to talk about a pipeline of go to market entities that in itself are developing pipelines of projects. So you we are creating our own market, and, also, we are creating our own future license source, and we are creating the blueprint for our market. So when the larger guys come to to place looking at it for a acquisition of the technology, licensing of technology, or an acquisition of the whole group, you know, we'll have very well established protocols, documentation, and commercial structures to be able to reference to.

43:44 So I mentioned earlier on what we'd like to close off with is is a bit of a of a a refinement of how we talk about EQTeq. Given some of the things that we've said, you know, on this call, you know, what what we talk about in terms of what EQTeq does and will do for the world, is going to change. Now on the right hand side of this, you'll see our ESG framework. Some of you might have seen that we launched this, just last month in January at the start of this year. That was following quite a lot of work at back end of q three and in q four last year, thinking through the role of ESG for a company that is itself on the ESG agenda of other companies, but also the the responsibilities of a company such as ours when it comes to ESG.

44:30 And so if I just outline very briefly the key components of that, you know, we say that we're we're grounded in commercial responsibility, and we start with that at the very bottom of it because everything is built upon that. Number one, we have to be commercially viable. Because if we're not commercially viable, we can do nothing to help the world. And so that is at the core of what we do. But we also have to be responsible, and that means everything from what Nolan is setting up in terms of our corporate governance capabilities. You know, the way that we we run our compliance, the way that we comply with not just the the places where EQUTEC has its home in Spain, in The UK, in Ireland, but also in in every market where we do business. And, therefore, this extends right the way through the group. It also means we have to look after our people, and we have to make sure that they have a a good environment to work in, that they grow in that environment. And, of course, health and safety is absolutely crucial for a company such as ours.

45:24 We then say that built on that is what we do at our heart, which we're calling carbon engineering. Now David talked earlier we talked earlier about syngas and the fact that that is ultimately what we produce as an intermediate fuel, you know, to power baseload energy and biofuels. But the way we do that is through what we call as carbon engineering. And there are a lot of companies out there that are doing engineering around carbon, but the core of what we do, the chemical engineering capabilities, are what really make us unique because we really do understand all of the variables end to end through the entire process that we deploy. And we really need to be louder and clearer about our ability to do that because that creates a range of opportunities for us that most other or or all other alternatives in the marketplace do not have available to them in the same way. Yeah. I think a good point to make and what we were quite excited to to to to when we came out with carbon engineering as as the DNA, the source of this, the seed of this is because, you know, where where where many companies out there and companies that we're partnering, which has a a place and a time, which are doing engineering of equipment or something to address a problem.

46:40 You know, when you look at the process of how we decompose a feedstock and how we produce the singers and then how can we produce more methane or more carbon or, you know, biochar, it comes down to look at the chemical reaction at carbon level, which is the most prevalent element in the periodic table. So it's very interesting, the ability to really when you see our our team of of scientists working on that, they are looking at exactly how can we reconfigure carbon molecules to create methane instead of carbon or more carbon instead of hydrogen, etcetera, etcetera. So this is this is the the essence of where we are, and that grows the other stems, let's say, of our ESG strategy. And so those stems and and the leaves and and, you know, continue the metaphor as you like. But those will all change and evolve over time. But the two things that will not change is our commitment on the one hand to sustainable communities.

47:38 You know, we have increasingly a local proposition. You know you know, despite the billing and the d size built in large industrial areas, they're still local, and those customers are still very local. But when you get down to the South Port, one which we've highlighted in our trading update, you get into Croatia, when you get into Italy, when you get into Greece and California and you look at the small scale plants that we're able to build where the feedstock is located, not some big central place where you have to transport all of that stuff in, but actually, in those very local areas, we have a strong investment in supporting those communities. We create local jobs. We create local well-being. We provide energy or biofuels to that local community. And so, therefore, we will do a lot to focus on those local communities. And as we meet with representatives of those communities or indeed get them involved directly in our project boards as we've done in California, we, you know, we will have that commitment to sustainable communities. And finally, of course, perhaps the most obvious is the clean world. You know, we are building carbon negative plants, and we will say more and more about how we're doing that in a way that helps us reach net zero and deliver, you know, a clean world.

48:52 So very quickly on the left, and and and guys, please jump in. But we do believe net zero is real. We do believe that, you know, even before COP twenty six, but certainly coming out of COP twenty six, there is a large scale bow wave of commitment behind reaching net zero by 2050. We've been disappointed with the fact that things like natural gas, you know, which is a fossil fuel, are now being viewed as acceptable for reaching twenty fifty targets, and we will speak about that. Because we do believe, as we've said, that there are alternatives, and we should be inspiring innovation, new solutions, not going backwards to older ones. So we know that there's a huge gap between now and and twenty fifty. We've priced it around with with McKinsey at around $98,000,000,000,000 because to reach twenty fifty right now, there's an enormous gap. We can't currently do it.

49:46 We think we're part of filling that gap and and and potentially a very big part of filling that gap. And I think one thing which is very important to mention is that where we are as EQTeq, it's not about the technology anymore. It's about pushing the boundaries, innovation, and getting onto that scale platform as as, commercially, quickly as we possibly can by staying capital light. Because at the back of our minds is always that we want to make sure we do these projects by not investing too much capital of EQ from EQTech, but leveraging from the funding pipeline and the partners what we have been incubating for the past, you know, twelve to eighteen months. Absolutely. Absolutely. And and this is is exactly it's all always how to use the resource efficiency.

50:33 If that resource is is carbon or if that resource is capital, it's about efficiency and move into profitability as quick as possible because that is what really accelerates adoption. We always say, you know, science projects are great. You know, they have a time and a place philanthropy, you know, for venturing. You know, we need to accelerate solution that are commercially viable today, and I think that's that's very important. Conscious of the time, we may need to start. Yeah. I think we've commented on the next three, and I think what Norman has just said really brings out the last, which is our primary not the technology. It's proven. It's ready. It's there. As David said, the innovation we're driving will keep us at the forefront. What we need to focus on now is getting the business going and proving we can deliver that technology of practice so that we can scale.

51:21 Yeah. Now we're done. Jeffrey, thank you very much, indeed. Sorry to interrupt you earlier. Thanks again for the presentation. Ladies and gentlemen, do please continue to submit your questions using the q and a tab situated in the right hand corner of your screen. Just Just while the team take a few minutes to review those questions submitted already, I'd like to remind you the recording, the presentation, along with a copy of the slides, and the published q and a can be accessed via your investor dashboard. Before we press touch on some of the live questions, we did receive several presubmitted questions. If I may, David, I'll start with you in the first It reads as follows. In the previous life presentation held during q four twenty twenty one, I expressed concerns with the front end CapEx loading of a large number of projects and the potential delays to project delivery potentially creating cash flow difficulties. The current business model seems to be relying on EQT funding projects in order to showcase the technology.

52:09 Is this sustainable with current cash flow projections for the company, and how long does the company need further capital raise during 2022? I I think we addressed that in the in the in the conversation. I think again, I think we make clearly the the the definition that the the or project, and we don't intend to invest in the project at the infrastructure level. So that's where is the capital heavy investment, and that's an infrastructure play. And although it's a very interesting play with the IRRs that we have, IRR or project have, that's not the game that we're in. We want to be a rapid scalable technology, in fact, being involved less and less. Where we use capital is is on the development phase, which which in comparison with the typical CapEx is a small portion of capital for the value created both on the infrastructure and on this potential sales to equity. Now at that level, what we are showing now is by bringing, you know, other partners and other development partners, including, you know, listed companies that we mentioned, Kibo and Meta Energy, which are able to raise money on their own balance sheet, the small capital required for the development in comparison. We're not talking about hundreds of million, but we're talking about hundreds of thousands to millions.

53:20 This is something that we are doing, in fact, being more efficient with the capital that we deploy and and being able to redeploy it for creating more value. In terms of the capital raise question as well, I mean, we said this before. It's all about efficiency of capital. You know? Again, at the at the right valuation with the right dilution for the right use of capital, you know, we are public company in the public markets. We will do that if tactically becomes interest or important to create value. You know? It's not something that we're doing to keep the the lights on. It's something that we're doing to generate more value like we've been doing. In terms of the share price, you know, to a certain extent, the share price will do what the share price does. You You know, in terms of the of the drop in the share price since the last year. This is a drop by sector wide.

54:06 If you look any consider proxy energy transition stock, we receive, you know, weekly updates from the likes of JP Morgan. You know, everything has come off a cliff for about 60 to 65% of where it was that. That was a lot of hype. I think we were undervalued against our peers then, and I think we continue to be significant on the value against our peers now. You know? But the whole sector has has has moved, you know, have readjusted, and and, eventually, the penny will drop. You know? I think there's still analysts in the market that don't understand our business model, don't understand how sophisticated and well thought is this strategy to scale, and, you know, that time will come. Fantastic. Thank you. And the second one we had here for you actually, Jeffrey, how close is financial close on Billingham? The LPA needs to be paid by the February 26. Can we expect close this month?

54:56 Yeah. It's a good question. No. I think it's unrealistic to expect financial close this month. Just to confirm the facts about the land purchase agreement, the LPA, the backstop date that was set at the time of the agreement is the February 26 this year. That is something that we set as a as a matter of comfort between the two partners. Obviously, we have to take that very seriously. But the other thing that the two partners, we with Scott Brothers take very seriously about the land is the is how to get best value from that. We talk fortnightly with with them. Our project development manager who's on the billing project speaks regularly with the leads from Scott Brothers. And so, you know, they are very well aware of the status of the project, and also very well aware of the choices we're making, the value that we're targeting. So, you know, we we anticipate that we will continue to have very constructive dialogue with them and that we will come out with the right answers together.

55:48 And, of course, if, you know, as things change and, you know, if they change, we will make the appropriate announcements to to the market accordingly. Yeah. From a legal from a legal point of view, the land purchase agreement have conditioned to be satisfied that they were just building for these reasons, and they're and they're conditioned to be satisfied or to be waived by both parties. And and we both have a vested interest to maximize the value and the appeal and the profile of the project. You know? It it will benefit, you know, both parties, so so we see that as a it was intended to be drafted with that. Fantastic. And the final pre submitted question, I think you just covered off already, David. Do you think the market has faith in EQUTEC given the current share price compared to the December 2020 highs? I think you have covered most of that off, but is there anything further to add? If not, if I may, I know we haven't got too long left, but if you could click on that q and a tab, more appropriate to do so, just read out the question and give you a response. And just to remind all the investors, of course, all the questions that you've submitted today will be available for review by the company. We will publish responses back out to you.

56:46 Okay. We'll we'll try to do really rapid fire. First one is what are the high margin feedstock being considered a Italian BC, and do you need to change anything technically to accommodate a new feedstock recipe? High margin feedstock means that added by cost or gate fee of that feedstock improve the financial model and the returns on the plan. So some of them could be a a reduction of the cost of the feedstock or or an increase on the gate fee. We are looking at some of them, and we are ready from the beginning work for versatility and the additional infrastructure required for those project. So we are looking to for us, a priority is not to miss the the operational date in 2022. So so, you know, improve the the financial model and keep with the deadline to build the plant and commission in half year twenty twenty two.

57:36 Next question. What step are you going to take into improve shareholder value, deliverable strategy, you know, scale and, you know, have more project in financial close and continue to do what we're doing until eventually the market or the large entities that we are in discussions will the penny will drop, and they will be you know, value will be obvious. Shall I take the next one? So I think the next question is more around, the the revenue that has been billed on Beliche and Kaluesh, whether that came through in 2021 and if the cash has been received. So the answer is that, yes, the revenue was billed in 2021 because we had met certain milestones for which we have built revenue, and the cash will come in line with the payment milestones on the invoices themselves.

58:22 Same same in. Yeah. And same in. Then with the CINGUS 200 plan at this site, use standard pressure swing absorption technology. That's quite technical. One one of the consideration is that is a is a combination of, yeah, you know, water shift technology. It depends on the on the upgrading that we need to do on the side. We have discussion, as I said, we've mentioned before with Vesta and a number of very well experienced technology partners on that. Wait. No. This is all the same. Okay. So I think I'm billing and Kibo Energy have been lined as a partner for the project. Number of investor have concerns. I think we covered this as well. This is the point. I mean, we are not expecting other Kibo or Metal Energy to take the lion's share of the capital stack of any of this project, you know, nor do they. You know? I think this is this is just they have transferable skills on the development phase in terms of negotiating power purchase agreement in in in the case of of a network that could be relevant for the projects and, you know, coinvesting and taking equity on the SPVs that we would like to offload the majority equity holding from the point of view of equity as as soon as possible. So that's I think that's that's the role that we a lot of the, let's say you know, I I cannot comment from the other companies, but a lot of the probably perception of both of companies I mean, we we see in the broader, you know, fossil fuel companies transitioning from there. You know, there's a lot of value destruction that has happened because of the approach to investor now to

59:53 coal and, you know, oil and gas is is kind of coming back in fashion with the the increase in prices. But this is this is this is market driven as well. So, you know, we we we cannot comment of of why the perception of this company is. But, usually, investor, when they lose money, you know, they are not very happy. That's that's just that's just a fact of life. Okay. And then I'll take the next one. Is North Forge still considered an MDC, and when is this forecast to be commissioned? I mean, look. What we will definitely have an MDC in The US. There's no question about that. In terms of whether it'll be North Fork or not, well, as the first plant, it's a very good candidate. So I don't see why we wouldn't do that, but I I wouldn't say that we have formal plans yet to announce it as an MTC. Without a doubt, though, we will wanna showcase. In terms of when it's due to be commissioned, we very much hope it will be commissioned this year.

1:00:41 And we know right now that, work is progressing out there. We've had an update only this week, and we're talking to them, of course, probably every other day. So, you know, we will keep you posted on that, and we very much hope to have it commissioned this year. Then how efficient is your process compared to other certification companies? Like, I'm not gonna amaze other companies, so they'll make a direct comparison, but, would you be able to keep ahead of the competition? Well, first of all, this goes straight into the the discussion that we have before. We have 60 different type of feedstock analyzed accurately in our process. You know, plastic is one of them, and you fill the the blank with whatever that is. We design the process. We don't have a kit that was acquired from my research institute or a kit that was acquired from another technology team or a team of engineers trying to reverse engineer all the technology. We have our own technology developing house with the same team that has been working the three of the PhD have been working together, including our for the best part of twenty years. So we will create part of what we talk about solution driven.

1:01:44 We will spin off this solution, which are companies like the one that you mentioned there, which have a single feedstock solution for a single application being offtake of whatever that fill the blank hydrogen, synthetic natural gas, etcetera, etcetera. Then a new plan has not been commissioned for some years. How confident are you that testing commissioning risk are well managed, and will there be insurance? You want to answer? Yeah. No. It's a very good question. I mean, this this goes back to what we were saying about needing to prove that we can deliver this in practice. True. We're we're very confident. And, yes, there is technology insurance on some specific plans where viable. We also have certain instances where we're talking to tier one EPCs who are willing to wrap the entire thing.

1:02:30 That's how confident they are. How confident the insurers are in the technology where they have done detailed technical due diligence. So we do have that. But in terms of moving ahead, yes, absolutely. We we have maximum confidence. And quite the contrary, we we are we are oh, thank you. Yeah. We are we are ensuring that we don't move ahead if we don't have that confidence. And that is why we are ensuring that we get these things right. Yeah. Another question is why Spain is not a target market given the plan and relationship there. That that's interesting. It is all about the the good question is all about having that elements that make a go to market partner there. This may change very rapidly. It may fast track, but it's a combination of the commercial environment from tariffs and also in terms of having the the right development of project teams and having the type of project that we would like to pursue that we can prioritize. You know? This this that's the reason.

1:03:27 Our I like this question. Are biofuel synthetic meth methane future prices more profitable than current power purchase agreements? It's a fantastic question, and it's the heart of exactly the work we're doing right now. I mean, the short answer is it appears yes. But the point is, is there a buyer for all of these things who we can get active in the next couple of years? So we're looking at a wide range of opportunities. You know? Even at a at a electricity angle, whether you put it in the grid or whether you sell it to a private wire, you know, you're looking at different price points completely. We, therefore, are also looking at SNG. We're looking at hydrogen. We're looking at biofuel, other biofuels. But, critically, it's not just the price point we can hit. It's also the cost of production that we have to look at. And so all of these things get factored into our quite sophisticated financial modeling, and that is exactly at the heart of what we're looking at right now. So we look forward to answering your question in greater detail. Yeah. And the last question is, as gasification is now seen by the government as primary as primary way of reducing carbon and equity and global leader, what's your plan for getting government contracts for plants around The UK?

1:04:34 Not only The UK, but we are that's why we're in in conversation and discussion. There's there's there's a number of of of interest in opportunities, and we are now at the table that we were not before. You know, we we we were too with our heads in operations for for a while. And this the back end of last year and this year, we are much more as an advisers. We're much more as a also older brother of new driving technologies in carbon capture, in AI for carbon accounting, etcetera, etcetera, where we can use our plans and our expertise to accelerate their growth and work with the government as well. We're in discussion with the, you know, department and trade and industry as well to look at an interesting partners. We we are, you know we'll watch the space. I mean, it's it's still early. And and I think we've just we've just gone through the hour, and thank you very much indeed for all the questions you have asked. And, of course, there are any further questions that do come through, the team will have the ability to review those questions. We'll publish responses where appropriate to do so on the investor me company platform.

1:05:32 Before redirecting investors to provide you with some feedback, which I know is particularly important, perhaps I could ask you for a few closing comments, please, David. Well, I mean, you know, I I think what to say, first of all, you know, thank you for the interest in our company from existing investor, new investors, and from change makers all over the world. I think we we really appreciate the the the trust. You know, we we just want to say that the the way we are we are repaying that trust is we have a very committed team, EquityTech, everyone from top to bottom, sideways. I I I put an incredible quality of work, incredible time, you know, from the engineering designing the vessels to the the PR efforts. Everything is is taken consideration. We take very seriously our mission. It was a pleasure to do our ESG strategy statement because, really, brought to life the fact that ESG for us is not just a nice addendum or or a on top that we need to do, but ESG is core to our strategy from scale and grow. And when we say that we are not building more plants in more places at the speed that we should, it's just because the world needs this for decarbonization, for net zero, and for the energy transition.

1:06:48 That's fantastic, David, Norman, Jeffrey. Thank you indeed for updating investors today. Can I please ask investors not to close the session? You should be automatically redirected to provide your feedback, and all the team 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 at QTECH PLC, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you, and good afternoon to you all. Thank you. Thanks.