Hydrogen Capital Growth (Frankfurt:65U) — Quarterly NAV and portfolio update

0:01 Good afternoon, ladies and gentlemen, and welcome to the Hydrogen One Capital Growth PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, we'll publish those responses where it's appropriate to do so on the Investor Meet company platform.

0:32 Before we begin, I would like to submit the following poll. And as usual, if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the team from Hydrogen One Capital Growth. JJ, Richard, good afternoon. Well, good afternoon, everybody. Thanks for joining the call, and thanks for the opportunity for us to talk to you about the fourth quarter twenty twenty three results. I'm JJ Trainer, one of the managing partners of Fund. I'm Richard. Oh, hi. Nice to see you guys. I will take you through the materials and, of course, plenty of time for for q and a at the end of the end of the presentation. So the disclaimer statement, agenda for the call, I'll go through the the results and and some of the some of the key figures of the quarter, and then Richard will pick up on portfolio, including some of the financial information that underpins the flight... The value drivers for the for the portfolio companies.

1:22 In the back of the presentation, in the appendix, there's quite a lot of information on on each of the portfolio positions, and so please do take take the opportunity to look at look at those pages at at your leisure. So the highlights for the first quarter, really pleased to see NAV per share rising just over... Just around 6% year over year to just over a pound per share. NAV now sitting at a 103... £133,000,000. Portfolio portfolio could continue to deliver strong growth. These are growth technology businesses. Private portfolio revenues are up under 25% year over year to 74,000,000 for the total private private portfolio. In terms of investments, we made two follow on investments in in the quarter totaling just about £1,000,000.

2:15 And alongside that, we've seen new strategic investors coming into portfolio companies, bringing new equity into those businesses and bringing new industrial collaboration. And Richard will pick up on those those strong themes in in a moment. Overall, we continue to see a strong and improving industrial fundamentals in the clean hydrogen sector despite a difficult macroeconomic situation around us more more generally. This slide we've shown you a couple of times before. Just a quick overview of what the hydrogen industry, the clean hydrogen industry is all about. So on the left hand side here, renewable power going into electrolysis, which then splits water into hydrogen and oxygen.

3:02 The hydrogen gas is then an energy carrier for that renewable power, and it can be stored over long periods and and obviously moved around as a gas. With an end use of that hydrogen as as a as a gas, for example, in oil refineries and chemicals plants across the top of the chart, or that hydrogen gas can be converted back into electricity typically to move heavy objects like like trusses, like like trucks and buses and and and trains or for off grid power. All of this, of of course, is to replace polluting fossil fuels in the energy system and avoid avoid greenhouse gas emissions. So that's what the green hydrogen industry is all about. It's a high-tech sector, a lot of IP, and a lot of, very distinctive, components and companies in those value chains.

3:53 This chart shows Hydrogen One's, sector deal tracker for the for the clean hydrogen sector. What you can see there is $29,000,000,000 of fresh investment in the hydrogen sector since hydrogen one started in in 2020. A strong increase in 2023 compared to 2022 where the numbers are up over over 400% to $17,500,000,000. In that 2023 figure, some some landmark transactions, an IPO in Germany, the go ahead of a major project in Saudi Arabia, and the go ahead of a major green steel project in in Scandinavia. So so a lot happening in this sector, and the trends are very much very much accelerating. Now we're sometimes asked, is all this stuff real? You know? Where where where is all this happening? And the answer is it is real, and then, you know, the map here shows where it is happening.

4:47 Strong industrial activity in this sector. There's just over a gigawatt of green hydrogen online around the world today. That's a 550% increase versus versus 2022. And globally, behind that that that 1.2 gigawatts online, there's another 35 gigawatts plus plus that are that are in in development, primarily in The EU, Middle East, and to some extent in in North America. Within all of that, HYDROGEN ONE has rights over seven gigawatts of green hydrogen projects, which are on the table for the fund in in Germany and Norway and and projects in those... In in that portfolio. We expect to get to final investment decision during during twenty twenty, twenty four.

5:35 So this is a real sector. It's happening now, and the growth rates are accelerating. This chart is a summary of the fund. The... It's a concentrated portfolio. It's a high conviction portfolio. Top 10 holdings are over 90% of the NAV. Whether we invest, we invest in revenue generating supply chain companies, developer companies with plans for production mid... Production in in the middle of the decade. We like to invest alongside strategic industrials and other institutions. We look for diversity in the portfolio. It means global allocation right across the value chain. And, of course, we want to invest in businesses that have a clear exit strategy for our investors, either through an IPO or or or a trade sale.

6:26 This chart shows on the left hand side the investments that we've made. So so those those those portfolio positions. And then it... On the right hand and the the center of the chart, the the co investors in these in these companies, what you can see is big industrials, big industrial strategics like Shell, like Vitol, like Centrica, all growing their hydrogen businesses. And then the arrival of ESG funds, not similar to ourselves, companies like Planet First and and and and Amazon and so on. So, you know, a very diverse, very strategic set of investors coming into these into these businesses. And as of when this sector consolidates, the leaders of that consolidation are frankly on this on on this chart. So turning to the results in a bit more detail, and you can see the the the key numbers on the slide here. We used IPED guidelines to to land these numbers, which are reviewed and approved by the board every year, every quarter.

7:26 NAV per share up slightly sequentially and up 6% year over year. The numbers include a 14.1%

7:34 discount rate, which is higher than a year ago and higher slightly than the third quarter. Year over year, that higher discount rate has removed almost 7p per share from the NAV numbers that we see on on on screen here. We made follow on investments in the quarter, £1,000,000 into STROWM and GNC Energy, so existing portfolio companies. We've made those investments alongside other other investors, typically those strategic investors. And all of that leaves cash and and listed listed holdings just around £7,000,000, meaning the company is in a in a robust cash position going forward. The slide on the the chart on the left hand side of the slide here shows the NAV movement in the fourth quarter of twenty twenty three compared to the third quarter of twenty twenty three, all pence per share basis.

8:25 What you can see is a rise in valuations in multiple private positions totaling just just under £3 per share offset offset by fund by fund costs. On a longer term basis, on the right hand side, our NAV per share has been has been steady and rising since the IPO in 2021, and we have characterized that as organic growth as the companies grow their businesses with with our backing and the backing of of other investors with small ups and downs per quarter really around the movements in listed markets discount rates. So that's a respectable bottom line performance as the fund competes its first investment phase. What's not in these figures is the impact of exits. That's all ahead of us with portfolio companies currently active on divestments with advisers appointed in a in a in a couple of cases.

9:20 This chart, and I think really with an eye to the to the full year results, this shows the movement in NAV right across the portfolio on a full year basis. So end of twenty two twenty two going to to the end of twenty twenty three, and we want to be as transparent as we possibly can for for our investors here. What you can see across the year is is valuations increasing in in multiple portfolio companies as a result of growth delivery and despite that increasing discount rates, which end to end has removed £9,000,000 from from the NAV across the year or or around $7.07 pence per share. That's a that's a look at the look at the entire entire portfolio. Now in terms of valuation, as I said, we do use those IPEV guidelines with a with a rigorous quarterly review by our board and an annual review by our our auditor, KPMG.

10:11 As we stand today, the majority of the portfolio is now being valued on DCF, the right hand side of of the chart. And on the left hand side, the orange line is the is the evolution of our NAV since since the IPO in in 2021, which is a steady and and and rising trend. And then the blue line on the left hand side and the gray line, those are those are listed hydrogen positions. Our our share price in blue and and the the the broader listed hydrogen sets are in gray, which are in contrast to the orange line of volatile and falling over that over that period. So this really compares the more fundamental valuations that we get from DCF versus versus listed markets, are very much sentiment driven and and short term interest rate driven.

11:01 All of that leaves our shares on a substantial discount to NAV, which is in line, frankly, with other other listed private equity funds. None of these figures include exits. We do expect that to come this year. Exits should push up the NAV as we exit on premiums to to the invested capital, and and we we we we open and and expect that those exits will will capitalize our share price and show our business model back back to our investors. So those are some comments on on on the results and the valuation. I think we should have it to you on portfolio. Yeah. Thanks, JJ. I'd like to, yes, unpack the portfolio a bit for for you. Just a reminder of how it's been constructed and give you some examples from from what's been happening over the last quarter.

11:52 Some of the fund, where do we invest?

11:53 It's 98% small allocation to to to this, but 98% into private private positions. We invest into revenue generating supply chain companies. You can see on the table on right the right hand side there. Even though some of the... Good chunk of the businesses are based in The UK, a lot of the revenues and the business development is going out internationally, particularly into The EU. We've co invested with a number of strategic industrials as as JJ pointed out earlier in some world class institutions. So this is a real... A sector really underpinned by some high class investments. And we'd expect to see, as JJ said, a number of those those looking to really be the catalysts as potential buyers of these businesses as we go into into this year.

12:39 And we look for portfolio diversity, so we're look... Investing right through the value chain from hydrogen production in the developers all the way through from electrolyzers, electrolysis, pipelines, and storage all the way through to fuel cells and applications on the right hand side. And so the the the chart on the right hand side there gives you an idea of how the the nav is spread out between each of those different positions. Let's just focus on one one of the positions, HYDROC, which did pretty well in the last last quarter. HYDROC make a device which... It it is a form of electrolysis, which allows you to split methane into hydrogen and carbon.

13:24 So these are the the the high q units that that clean up clean up clean up methane and get... Gaining a real foothold in the global oil and gas sector for for reducing flares. A multi flare version of the of the HYDROGEN unit called the HYDROGEN is is now in development. And we're really moving into the commercialization phase now, having spent most of last year getting the the the sort of final sign off on the the the the basic technology. And we're now expanding the the use of these units into CEMEX, and there was some share training that went on between CEMEX and other parties. It... It's secondaries in the in the portfolio at at at very much a higher share price than we're currently holding the shares at, which gives us great confidence that, you know, valuations are heading in the right direction.

14:20 There'll be continued pilot pilot projects. You can see an example of one up there with SHV, Centrica expanding, Hyundai, and and Wintershall. The other thing to bear in mind here is that this is a thermal plasma electrolysis. So it's a... It's it's gas... Using gas plasma technology, but it's now being classified by the government to qualify for additional financial support as a as a green technology. So we're very pleased about our progress with with HYDROC. The the next example here is is. We invested £20,000,000 into. We own just under 10% of this business. They were successful in in in getting grants of 25,000,000 and a Hyundai investing €45,000,000 into the business that completed in October,

15:14 bringing in a very important strategic investor. This this investment is going to be used to to expand the the plants and and facilities. As you can see, the site for for the next factory on on the right hand side there. The investment from behind, though, also comes along along with with strategic intent to to set manufacturing in joint venture in South Korea, and we're looking forward to updating you on on that as we go into 2024. I think think the the the other key investment we need to talk about is. Makes the the the hydrogen transportation container the pioneer. You can see in the picture down on the bottom there that uses patented cascade technology to allow the refueling of of of buses, trucks, and vehicles from the high pressure device.

16:03 The UK government, as we all know, postponed the the IC engine sales from 2030, 2035, and had a bit of a knock on effect into hydrogen in The UK, at least, and sort of move... Moved some of the hydrogen mobility projects forward...

16:23 Backward, sorry, into the future. So and then it's on previously had a UK focus with customers like IT and Motive, which closed last year. And so we're we're seeing a real shift of the the sales of these units onto the continent and into Germany. That... That's that's going very well. And we relaunched the business at the end of January at Swift Hydrogen and restructured the business with the with the European distribution and a sort of streamlined low cost lease lease based model. Be updating you on the... More of the numbers around Swift Hydrogen the first quarter. The the numbers that we've got back at at the end of December, we were more of a certain accounting view of of of a transaction that that was in sort of mid mid cycle, but we'll update markets on that...

17:16 On those numbers precisely as we go forward into into the next quarter. Just a little bit to talk about here on the

17:27 on on the revenue generating potential of of the portfolio since since we invested. On the left hand side, you can see revenue growth by companies, and you can see companies like Bramble and Sunfire have grown the most sort of 10 to 14 times since we invested up on the top right of that chart. And the more recent investments into HYDROC, Strom Elbridge, and HH two e have grown sort of one to six times, but have got great potential.

17:52 If we aggregate the revenues on the right hand side on a 100% basis, we've we've generated 74,000,000 revenues in the last twelve months. That's up a 125% from the equivalent period q four twenty two on a pro form a basis. So it shows that we've got real revenue generation from this portfolio. It's real, and it's accelerating. A little bit about where where is value generated in the portfolio. And if if we look... What what... What's likely to happen as we go forward, new fundraisers at at higher valuations are gonna drive value, m and a, as as JJ said earlier, and and acquisitions and and IPOs. Our portfolio of companies range from the early stage companies, 29% of the portfolio, demonstrating technology and projects.

18:45 Projects really are real, but they they they they need to get to the FID stage to release a lot of value. Not currently factored into the portfolio in terms of gen two and h h two e, but something that you will see come along in the future. Mid stage, that's about 10% of of the of the of the portfolio. Project starting starting up, a new manufacturing going ahead, and late stage growth, a good chunk, 55 of the portfolio, where we're really starting to to see material revenues and growth that you you you will see that in the portfolio coming from the larger positions like like at and Sunfire. And most of the revenue growth in 2023 came from from those sorts of companies. So exit's most likely to come from the the late stage companies, but also don't discount some of the the high value intellectual property that exist in some of the nonrevenue generating companies.

19:39 Still very attractive for for potential buyers. And what we can actually say, this is real because two of the companies in the portfolio in the last quarter appointed investment banks in preparation for for these sorts of negotiations and discussions. So that's really a sort of a a snapshot of of q four, and we're well on track this quarter with robust NAV liquidity of about 7,000,000, including listed shares. NAVs one zero three p, up 1.6% on the quarter, 6% on the year. That's great performance. Portfolio is up 2.7 p from multiple private companies, and revenues with... From those companies up a 125, 74,000,000.

20:25 So overall, all on track, delivering the growth and value we set out to do. Our next steps will be the exits from the portfolio. We expect that multiples of invested capital really demonstrating that this HYDROM model is working. So I'd like to leave it there for now, and we'll pick up on some questions. But back back to you. Perfect. JJ, Richard, thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. Richard, JJ, as you can see there in the Q and A tab, we have received a number of questions from investors.

21:12 And thank you to all of those on the call for taking the time to submit

21:16 their questions. But Richard, JJ, if I may just hand back to you just to read out those questions and give your responses where it's appropriate to do so, and I'll pick up from you at the end. Thank you. Yeah. Thanks. So first question, why did discount rate increase between September, December? Well, you might be thinking that because you were looking at risk free rates. What we've also got factored into the way we calculate our discount rates is is is the small company discount or premium depending on how you look at it. And and we we... We've sort of really applied a a more rigorous small company premium, and that actually pushed up the discount rate particularly on the smaller companies in the fund. Can you expand a little more on on Herman's? Yeah.

22:02 Well, we we sort of went through that. What we're currently factoring is, like, an accounting view of the transaction that we've... That we'll be talking more about in in q one. We we were... It's a special situation with because we were a minority investor, the only institution. So we've sort of slim lined the shareholder register. The the the founders are out, and now it's just Hydrogen One. And we'll be looking to to to get further investments into that business as we go in... Into the new year

22:31 and move to the lease model, which is which is what we always wanted to do. But now we've got we've we've got more control. We can instigate some of those those strategies. There's a question around the CEMEX and Hyundai investments where we talk about those investments in in in HYDROGEN, which is underpinning the NAV. So there's a question about, you know, what what what does that mean in practice. I mean, the the the the that that that investment from those two businesses was done at at a minimum at at at our valuation of the business, the businesses in in some in some... To some extent, slightly higher, actually. So so very firmly, you know, underpinning our investment thesis on on and and HYDROC.

23:18 The the use case of those proceeds, and Richard talked about the Hyundai piece. I mean, this is unlocking significant new growth in that business. And Alpogen are currently doing the groundworks on a on a new factory in the... In Tallinn, Estonia to manufacture fuel cell fuel cell stacks at scale, which will... We'll have when we export it into the Far East. So so we're we're we're pleased with both of those strategic investments. So to to what degree does the company require capital to inject into its investing companies, and how does it expect to raise such such money? Well, they're sort of linked in a way, Andrew. I think we... The the hype... We we we have got to demonstrate that the investments we've made, we make a multiple when we exit.

24:09 And when people see that, they will start buying the shares and volume, and the share price goes back up to to the NAV. And then we can go out and start raising money in the market. Really, not not just not just to serve... Service the existing portfolio, but to expand this because with with a huge sense of frustration, we are very, very close to every single company and project hydrogen opportunity in the market, but our hands are tied until we we can get more capital. So in terms of where the... Where does the... That that new or existing capital go, it will go in in... Into those those new investments. And one sort of helps the other. I I think think we need the tailwinds of an improving market in an economy. We we probably expect to see that this year. Who knows when? But, no, we... It's it's all looking very positive to us at the moment. There's a question from Ivan. Thanks for the question around the increasing interest in the use of ammonia as a hydrogen carrier.

25:06 Yes. Yes. We we we agree with that. If you want to transport hydrogen over long distances and at scale than than doing that in liquid form, it's just more efficient than transporting it as a a gas. And and, you know, you you see this this sort of application in the natural gas industry where natural gas is shipped over long distances as as a liquid... Liquefied natural gas sector. The problem with with liquefied hydrogen or liquefying hydrogen is just the very, very low temperatures that that you need to get it to to turn it into a liquid. If you convert it into ammonia, you still need to cool it down to turn it into a liquid, but but not by nearly as much. So so this is an energy efficient way of of of liquefying the the hydrogen energy carrier.

25:54 I think a subset of that, Ivan, is is that we are seeing a lot of interest in the use of of green ammonia as a fuel for shipping. And and again, it's about efficiency. So you can just store a lot more liquid than than you can store a gas. One of the the the the logics behind the Hyundai investment in El Cajon is the the production of a green ship, so, you know, emissions free ship. And the the the concept that Hyundai have is to use ammonia as the fuel to to to... For for for that ship using alpinjin as as as the fuel cell provider to turn that ammonia into electricity to move the ship and and and to power the equipment. So, yeah, great great question and very familiar trend that we're seeing in the sector.

26:39 Could you confirm that hydrogen is unlikely ever to be used for the supply of domestic gas to households, please? I'm afraid we can't confirm that. The The UK is in the late stages of of of years and years and years of testing hydrogen to go to 20% international grids quite soon. But The UK is not the only one. Germany is also looking at hydrogen gas grid blending as are other countries in the EU. So you... You're gonna see this coming up quite soon, and it won't be a 100%. I mean, all boilers sold in The UK, I can't remember since which year, can go up to 20% hydrogen already. So there's not much work to do, and this is and this is zero carbon if you wanna totally make sense.

27:27 We... Our fund doesn't depend on that happening. We are more into industrial applications of hydrogen. But, you know, you asked the question and, yeah, that's the answer. It it is gonna happen. We've got a presubmitted question, which is around, I think, essentially, can you exit businesses that are not profitable for hydrogen sectors, not not profitable? And then that that sort of parallel question with that from Connor around STROWTH and its its revenue out of 2025. So let let me have a go at that. I mean, I think the sort of short answer is that some of these businesses we've invested in are profitable already. So it isn't quite right to say that the hydrogen sector is is is not not profitable. When we look at the the the financial outlook for our portfolio companies, I mean, 2026, 2027, we see a lot of EBITDA coming into the portfolio, positive EBITDA. So so, you know, the the outlook is is is good, and and in some cases, the the business is already in that in that position.

28:28 But I think the the the the kind of slightly slightly different answer to that question is that we we do expect to be able to sell businesses that are pre EBITDA, and that is not unusual in in a in a technology sector like this. And there's no reason why we shouldn't be able to achieve that with the with the portfolio that we have today.

28:48 Within all that, STROWM, which is kinda... I think part of Connor's question. STROWM is a a Netherlands based pipeline business. They make low low carbon pipes that are used in in kind of legacy oil and gas businesses, and I think most typically to transport hydrogen and c o two. And that is a company that's growing those energy transition applications, hydrogen c o two, very quickly, and they're they're targeting, you know, you know, around half of their revenues to come from this energy transition theme in the next couple of years, 2025. Question, what is the motivation to exit the two investments for which you've engaged advisers? Are the shareholders of these investments also selling?

29:33 Well, I mean, it's... It... This is a... The the... This complete alignment between the investors in in those two two cases, we don't appoint the adviser. The company itself appoints the adviser. We approve the adviser, the the investment bank, to go ahead and do that. But this... There there has to be a complete consensus between shareholders that that this is the right the right time. It usually gets started when the when the company is already entertaining offers from from external buyers, and we want to get ahead of the game and make sure we've got the the advisers in place to to give that advice on which the right right the right acquirers to go ahead with. What we're seeing at the moment, it kind of relates back to a number of the questions here, is that these these are strategic industrials that realize that HYDROGEN is gonna be a big part of their business within the next sort of five five years.

30:31 And if they don't move into it now, that's very, very short in terms of corporate planning horizons. So they don't need to see EBITDA positive companies. They need to see companies that have got the right product, the right technology, the right IP, and the right market share potential. And that's what's driving it more than than than profitability. There's a couple of questions around when will you exit businesses. So Mark has has has asked a question around that and, you know, can you help us calibrate that? And then a sort of parallel question, what... Why is your share price so volatile? What are seeing in the shareholder register? The concerns of the exits, Mark, can we just leave it at 2024? We expect to exit businesses in 2024. I'm afraid we can't be more more precise than that.

31:17 And, you know, there there are advisers and and other other stakeholders stakeholders stakeholders involved in those processes. In terms of the share price register, I agree with the comment that there's a there's a high degree of volatility in there. I think what what we're seeing in our register is is actually quite a stable, set of investors, underpinned by who are a cornerstone, of the the IPO, of course, and institutional and wealth managers or or with relatively static positions, very stable positions. And then if you like day trading in in in in in more in more retail end of the market. So so that that... That's how we see the the movements in our share price. I'm gonna...

32:03 We're gonna bounce this between us because I'm not quite sure what the answer is. Are you going to increase early stage production investments? Well, I I I mean, I'm I'm not quite sure what that means. One interpretation might be companies that are producing hydrogen that... And the answer to that is yes. There are definitely companies beyond gen two and h h two e that we're currently in discussions with for potential investments. I suppose all all hydrogen production at the moment is early stage production. Or if it's referring to companies making electrolyzers and fuel cells, we probably would prefer not to be in early stage production. We prefer businesses that are more mature, that have got a well established technology, a established order book of buyers. We tend not to go into the early stage of of of production of of engineering, but but with with hydrogen itself, we we would.

33:05 There's a question about what... Why why have listed hydrogen businesses? Why why the share prices performed so badly? So, Andrew, thanks thanks for the question on that. I mean, we we see this as as a general market sell off of of re... Renewable themes and energy energy transition themes, which which was part of a much larger market sell off of of of of earlier stage growth businesses in 2022 and particularly in 2023. And what... What's driven that is the the rise in interest rates and, you know, a consequence of of investors more broadly to to go rip... To go go risk off and look for more, if you like, more defensive type type investments.

33:52 And so, you know, it's it's difficult to call the bottom on these things, but but to us, the the the the the listed hydrogen sector looks, yeah, looks looks, like I say, quite oversold. And, certainly, our share price, which is trading at about half the fundamental value of the fund, obviously, that's a difficult experience for our investors. But for new investors, frankly, that is an interesting entry point into in... Into the hydrogen sector. Robert says portfolio stage early to growth to 94% assumed balance is cash. It's... Well, it's cash and and and listed companies. As we said in the presentation, yes, 7,000,000 in in sort of cash and cash equivalents.

34:38 So that that... That's great for us. It gives confidence going forward. There's a question from Will around the capital requirements of gen two energy and h h two e and how we fund those projects. And if we don't fund them, then what what what what we do. So just to recalibrate everybody, gen two energy and h h two e are project developer businesses who are designing and and planning to build green hydrogen facilities in Norway and in and in Germany. We've invested on behalf of our shareholders in in the the top coast, so in the in the holding companies. And then each of those businesses are setting up special purpose vehicles to attract much larger quantum of of capital to actually build the projects when they reach the final investment decision.

35:31 Now if we're if we're funded and and those those opportunities rank well in terms of the returns criteria, then we we would have the right to invest in those in those projects. And if we were funded, we may well may well do that. The flip side is if we're if we're not funded or the projects don't meet our returns criteria, then we're not required to make those investments. And we'll simply... Our shelves will simply enjoy the carry from those from those those projects that flows back into those top curves. So in a lot of ways, Will, this is a this is a free option for our for our shareholders at this point. And I I think as as we said at the beginning, the the the whole value of those projects with... Under IPF guidelines, we we cannot reflect that in in our NAV until until they get to FID, and and we're getting close FID going forward on both projects.

36:26 Side to that theme, have you considered raising debt to ease the capital shortage? It's Good question, Ivan. Yeah. Yeah. Well, only in terms of of sort of revolving credit facility to to manage, you you know, smaller injections of capital into the existing portfolio for those companies to to really use as working capital. We're very wary of of debt as a as a a significant instrument on the fund, and we would never do that. I think we're restricted on how much we can go anyway into debt. But, yes, we're looking into it at the moment, but we we haven't currently committed to any debt facilities. So we're currently debt free. Okay. We're maybe getting towards the end towards the end of our questions On cost. Yeah. Okay.

37:17 Should we pass it back? So there's quite a detailed engineering question from from ar.zed around electricity costs for the use of green hydrogen as a fuel gas turbine. I wonder... You... You'll find an email for us on our website. Delighted to answer that question, but perhaps if you could drop us an email, and we could get I can answer that for the for the... We we... It's the two projects that you're referring to. The the Norwegian project for Gen two, electricity cost is about €36 per megawatt hour. And you might say, frankly, that's low. Well, it is because it's coming from hydropower, and and there's further... A further c o two subsidy from the Norwegian government that would ultimately affects the the the total hydrogen production cost, which is well below €5 per kilo.

38:18 There's a question from David, Jay. David, thanks. It's what do we expect the profitability of our holdings to be across 2024? David, thanks for the question. We we... If you don't mind, we'll bring that back. That that is an interesting, interesting point, which we will we will certainly try to, to answer in our in our annual report cycle. Okay. What are your... Nick w, what are your favorites... Favorite subsectors for the hydrogen industry for new investments? As in when you have funds. As in when you have the funds. I mean, we we we have taken a view. If you look at our largest holdings in terms of sort of... In terms of NAV, electrolysis and fuel cell, and we we we do see those as as really critical high-tech components with a lot of IP, a lot of market growth, a lot of pricing power.

39:16 So these are businesses like like Alperger, like Sunfire, like HYDROCK, like Bramble. And, you know, we we we continue to see those as as interesting places to be in this industry. Over time, 2024, '25, '26, the the major growth in capital deployed in hydrogen is gonna be in the projects. So it's constructing those green hydrogen facilities that that use those electrolysis and and and and to some extent fuel cell, and obviously, all the construction costs costs around that. So so that that is the view that we took at the at the IPO, and I think a lot of ways that view hasn't changed. Okay. I I I... There's one or two that that just repeats of early questions. I I think I think we're there on the the q and a. Thank you very much for that. Anything further, please contact us by email, and we'll address that. But can we hand it back to Perfect. Mister Mead? Perfect. Richard, JJ, thank you very much indeed for being so generous of your time then addressing all of those questions that that came in from investors. And, of course, as you rightly say, we'll be able to give you back any further questions that do come through immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so. But, Richard, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great. Yes. Look.

40:42 Thanks everybody for for for coming on to the into the session here, and and thanks for following us and staying with us through 2023. We're really looking forward to developing the portfolio further in 2024. We hope to see a number of exits from the portfolio. It certainly appears that way from where we're looking at within the shareholder register of these companies. We think HYDROGEN is really going to move quickly ahead in 2024, and this is the best way for you to access that through through the platform of Hydro One. So thanks very much, everybody, and look forward to seeing you again soon. Perfect, Richard. That's great. And thank you once again for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations?

41:35 This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of HYDROGEN CAPITAL GROWTH PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.