Invinity Energy Systems (LSE:IES) — Interim Results

0:00 Good afternoon, and welcome to the INVINITY ENERGY SYSTEMS PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. 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 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 hand you over to Jonathan Marin, CEO. Good afternoon, sir. Thank you very much indeed. Good afternoon, everybody. I'm also joined, of course, by my two colleagues, Matt Harper and Adam Howard, who are here in London. Delighted to be talking to you together.

0:46 We've got about an hour session here. Aim is to go through the presentation in about half an hour and leave enough time for Q and A. We've already had some really interesting questions come through. So I want to leave as much time as possible to go through those and answer all of your questions. So recognizing that on this call, we have a number of people who've been with us for many, many years, but also some who are new to the story. So there's a few slides to go through just introducing the business and where we're up to, and then we'll get into the interim results themselves. But one thing I'd like to do for whether you are new to the story or whether you have been here for some time is just to talk about how we are describing the business at the moment. And the reason being is that we thought long and carefully about how we tell people who we are and how we differentiate ourselves from the competition.

1:34 And that's not just to investors, but that's also to the commercial space. And what's reassuring is, think, as you sort of hopefully hear the message now, we're getting very good traction as we talk about this, particularly with commercial customers. And the reason being is that we're able to sell what we offer is a flexible energy storage solution. And the reason flexibility is important is that markets are changing rapidly. And by that with electrification, the requirements from the grid are changing rapidly. And there's a real risk that if you do buy an asset that doesn't have flexibility that it could quite quickly become a stranded asset. And that obviously is quite a big danger. There are examples of that across markets, a particular one is in The UK, where five or six years ago, a lot of half an hour and one hour batteries were put onto the grid, chasing a particular revenue stream and quite quickly when that became saturated they became stranded.

2:27 We have a flexible battery solution. It's flexible because there is no restrictions on cycles and it will last for thirty years. And particularly as you start to talk about things such as the power requirements for AI data centers, that is a really difficult and changing market. And when you we are offered to offer a solution that really can change with the requirement from such an AI data center, that's really attractive. So when we talk to industrial businesses who are designing these solutions in, that is really, really exciting. So we do that across the globe, across all markets, but we do do it on a localized basis. And that is really quite attractive as well because you're seeing across international markets a drive for localization, which is being valued. And that's particularly true across The U. S, it's true across Europe, it's true across Japan and other markets. And we'll come to The UK a little bit and there is obviously some good questions on cap and floor. And I'll sort of comment on that and we'll be covering that in more detail.

3:26 So if you look about our technology as well, we really are a proven mechanical technology. And mechanical, I say that because if you look at the assets that are typically put onto the grid over the last one hundred, one hundred and fifty years, those are all mechanical assets. They're a gas asset. They're a coal fired power station. They're a nuclear asset. What they're not necessarily is something that was really designed to go in a mobile phone or an EV and then has been sort of pushed forward and put onto the grid. And therefore, just like a car, if something goes wrong with that car, can get in there and you can change that component part, you can change the wheels, you can change the oil. With us, it might be a valve that isn't working, might be a pump or a pipe. That's quite easy to go in and resolve. If you have something such as a mobile phone here, typically when that goes wrong, you're throwing the entire cell away.

4:13 And typically that encompassing quite complicated ramifications when you look to replace that across a wider field. And so therefore, we are more akin to perhaps a pumped hydro in a box. And pumped hydro separates your power and your energy storage in terms of your water that's produced with gravity and pushed downhill through a turbine that generates the power. For us, we do that by a chemical reaction, but ultimately, it's the same. And so for a user looking at this, it's not a new technology at all. And then the flow batteries were first patented in the 1880s. NASA did some good work accelerating that forward in the 1970s, and we've been working on commercializing this since the merger in 2020. And so when you talk to a commercial business, this isn't a new step forward per se.

5:02 This is technology that's been established. It just hasn't had the investment to date to accelerate it as fast as other technologies. And then when we talk through what we are doing in some of the other areas, they get much more comfortable in that. And of course we offer that in two separate areas. We offer that in a containerized solution in durium but also we're able to talk about the flex based solution at the bottom. Now what you'll note is I haven't talked about ELIS and I haven't talked about non lithium and that's deliberate because actually that flexibility means we can offer different types of duration storage, not just LDIS that forms part of it and of course we're very good at doing that and we are competitive in that area. But that flex based project is a two point five hour system. That's not long duration, but actually that's a use case that works very well for us. And then in terms of non lithium, I've never liked saying we were a non lithium business.

5:52 You don't go and buy a you don't try and sell someone an SUV by telling them you're not a performance sports car. Tell them exactly what you are. And I think that's really important. So that flexible energy storage really resonates. And then when I talk to customers, we move on and talk about the track record because actually having those 2,000 batteries installed in the field and working for our customers is a real differentiator. We very recently announced that we had 10 gigawatt hours of power dispatch from our batteries that we were very proud of. And you'll see in the interim yesterday, that's notched on to 11 already and growing rapidly. And that's important because all of the projects we talk to now, they typically send in technical consultants to review where we are. They need the track record. They need the data.

6:37 These assets are looking to go on the field for thirty years plus. They have to work and they have to work in a robust way. And then the other point is that demonstrable cost reduction. Because ultimately, we can have characteristics of a battery that are attractive, but if it's not at the right cost at some point, you won't get through the financial gateways. And the work we've been doing to bring costs down is really opening up that market. And when finally we talk about where we are indicatively from a price point, we are having some really interesting and accelerated conversations that we haven't had before. So just on this slide, we have about 180 or so employees. To some people that sounds quite a lot to others, not very many at all. A lot of those are working on that cost down approach. It is a product that ultimately is steel, it is plastics, it is liquid and it's component parts. But actually as you iterate those together, there is about 60 or 70 work streams the team is working on to take cost out. We are putting the resource and the investment into that to make sure that we can step ahead of all of our competition, and that really is important.

7:49 So a reminder of why we win. It really is that unlimited cycling. That's where we focus on. The unlimited cycling, lack of degradation, the fact it will last for thirty years. And those are characteristics which are really, really valued by customers. We do talk about the fact that there is no thermal runaway risk. That is one of the reasons, but not the only reason why we're involved in a flex based project. But increasingly, as you look across the world, that lack of thermal runaway really does make a difference from a permitting perspective. Anecdotally, you'll see the Moss Landing lithium battery fire that closed the highway in California a number of years ago is back on fire over the weekend. These are really and can be really unstable assets. And for us to be able to talk about the fact there's no thermal runaway risk makes a real difference from that planning perspective.

8:38 We in terms of manufacturing, what we're able to do is localize that so that we can take advantage of those local programs as well. So domestic content is really important. There's a question coming up on that as to whether we can take advantage of that particularly in The U. S. And I will not prejudge the answer to that matter and come on to that in a minute. What is really, really important to me is how our customers think about us. And 11 gigawatt hours is ultimately the result that you can't hide away from, and that will be a growing number. But what's really important to me is that customer journey from order through to pre delivery through to delivery and then commissioning and then looking after customers afterwards. Doctor. Craig Reiter there who is from Viejas that is the site just outside of San Diego where there is our battery connected to solar outside the casino, Paranac Casino. That asset is being worked extremely hard.

9:37 And that was recently commissioned and Indian Energy are really relying on our battery to be providing the work at that site. And look at the testimonial on the site, we have no stronger fund of the business than Indian Energy, and that's really, really positive. So one of the reasons why the funder of that project, the California Energy Commission, the CEC, is again looking to push projects our way. And you saw that from the announcement quite recently of Pacific Steel Group. They were a funder of that. And as you can see, the results of the track record on that battery have been really positive towards us. So we pushed the team very hard. We do go the extra mile to look after our customers. It is a small industry, and they do talk. And having that word-of-mouth referral is really, really important to us.

10:28 From an international perspective, it's interesting how this slide has developed over the last couple of years. We do have a version of this that shows where we were two years ago. And this looks like quite an empty map two years ago. Now you can see we have a significant number of projects in The U. S, particularly on the West Coast, again, reference to the California Energy Commission that's supported to us. These are projects that are either working in the field at the moment or where we have signed contracts and are delivering. So that sits across both the East And West Coast in The U. S, but also across Europe as well. You'll see we have the Flex based project, which we'll talk about in a little in a few moments' time. The Cockwood Energy System, which will be commissioned very soon. We just released the connection to the grid is just being finalized at moment. We're ready to go. We're just waiting for others to do their work.

11:18 And then, of course, on the far right, Spencer Energy. That's a site that's been in the desert in Australia for a number of years now and is probably our long almost our longest and best performing asset in some really harsh environments. So again, when someone says, how do you operate in the heat? We can show them the data there, and that's really important. From a global manufacturing base, we continue to support The UK through Bathgate and Motherwell. Flex based project will continue to support those two factories. We'll come on to cut and floor in a moment and how that potentially could change that or otherwise. The U. S, as you've seen from where those projects are, do require U. S. Content. And that's one of the reasons why we will have the factory up and running by the end of this year. That will be really important in servicing those markets. So yes, well spread across, making sure that we use China from a low cost perspective to deliver the sort of the heavy industry inputs, that's the steel container, that's the tanks.

12:18 And then sort of elsewhere, we can put the balance of system, we can put the electrolyte and, of course, stacks manufactured locally. And then finally, I briefly mentioned about cost before and this isn't the first time I've mentioned it. We recently went back and just have a look actually about how much cost we took out of that VS3 product during its journey from when we first deployed a system to site, which is really around the Scottish Water days, to the last system that we sent out, which was December 2024. And actually, we took about 60% of the product cost out on that VS3 journey. Now remember that was with some effort on cost down, but not a significant effort on cost down. There's a lot of the R and D work that's going towards Mistral, now Endurium.

13:04 But that came from developments of supply chain and from scale that went through that. But in a product, which really was tough to iterate for cost because you did have that six factories within the container and everything that went with that. And to be able to do that 60% with quite a hard product to try and take cost out of. You can see our enduring, which is designed specifically to take cost out of, that we can go much faster and much further. So that sharp line there, where you see that 66% cost reduction, we are going to be in that position for all the product we are shipping in early twenty twenty seven. And that's it looks like that cost reduction curve levels off, and that's only because of the steepness of that graph. We are still potentially looking at taking out a further 50% from that point through to 2030.

13:52 And the trajectory to get there opens up a very significant number of opportunities. When we talk about those price points, we get a really interesting reaction because they are most customers are very unaware that the vanadium flow battery industry is heading in this way. A couple of anecdotes for you, and particularly one with Equans. Equans is our delivery partner. On the flex space project, we have hired them to do the EPC work, but they were very keen to make sure that what they were getting involved with was robust in terms of the technology and the partner. And they actually have some exposure to one of our projects in Europe already. And the Head of Business Development said to me, look, we did the due diligence and the feedback we got back was that yours is the Rolls Royce of vanadium flow batteries.

14:37 And by that, meant two things. He meant the quality of the product and also he meant the price in terms of where we were, I. E, too expensive. And that for me was fantastic feedback because he was talking about the quality of where we were with that BS3 product, but also the cost point, which he wasn't aware we'd taken that significant cost out of. And then talking through where we are actually going to is Colin was looking at a much wider and deeper conversation with you. And then also, maybe six months before that, someone who was in charge of power solutions for data center business said about vanadium flare batteries in general, the best storage technology that is the most expensive. And again, at that point in time, he wasn't wrong with a lot of the market commentators will say the same thing. They are not aware of where our price points are heading from the work that's particularly met you're leading. And I think when we get there and we start delivering our products and people are able to order that in size, I think we will have a very different position commercially than we're heading into at the moment.

15:37 So a really, really exciting place to be because of that work we're doing on cost and on performance. And with that, I will hand over to Adam to talk through our numbers. Good afternoon. So starting off with the key financial highlights for the first half period. Customer orders that we've signed there are up three times year on year and just over 30 megawatt hours. And really important in terms of scale and what you'll start to see flowing through some of financials that we go through later on. Order book as it stands today looking forward is just under 80 megawatt hours inside. Obviously, that's excluding the flex based contract process of working through the final design and prototyping for 2028, twenty twenty nine deliveries. Gross loss down 60% year on year. I'll go through a bit of detail in a second as to what's driving that. We ended the first half period with £10,000,000 cash and plus £40,000,000 inventory and deliver on those as increased orders for the second half.

16:37 So profit and loss statement, a little bit more detail here. So we increased our project and grant income to £1,700,000 compared to £800,000 in the first half period last year. So clearly, it's a second half weighted set of numbers, but delivering significant signed orders there that we've taken in the first half. Within that, you'll see the commissioning of four projects, small delivery and then the final completion of Cockwood, our product in The U. K, which would be the largest flow battery project in Europe. And what you're seeing is the last $500,000 recognized against that grant income there. In terms of the net loss, so we are another $1,500,000 reduction year on year to $12,000,000 And really within that, two factors is the increased R and D headcount spend that we've announced there to drive our product cost down.

17:27 And Jonathan's run through where we are against plan on that as such a result of that investment. And then second, we've now completed the joint agreement with Gamesa. So there's less recoveries year on year, netted off against the R and D number. So those are the two factors that are driving the bottom line and supporting our product cost journey. Next slide, please. So a bit more detail here on the margins. So two concepts to explain here. First, the product cost refer to our direct costs, so it's excluding overhead and warranty. And second, this is trailing twelve months. So looking over the last twelve months we've announced for each of those periods. And what you're seeing there is a pickup in that gross margin over time and also delivering on increasing product margins.

18:13 And really that's because as we've got more volume going to the factory, we're absorbing more of those factory overheads and we're seeing that pattern pick up. The other factor is then our first Endurium shipments as composition of our sale moves from v s three into Endurium. We've really delivered on our last v s three sale now. We're seeing a pickup in those margins. So those are two key points. And then the last one just to mention there is we've a fairly significant reduction in our warranty costs year on year down from 0.9 to 0.2. That's really driven by two things. First, improving component performance and then also reduced product costs, which is feeding through to the lower vision there. So the key drivers of what's happening on the gross margin line. Next slide, please.

19:02 And just going into the balance sheet here, there's obviously two factors that impact cash. One, the cash we reported on the balance sheet. And then second, the inventory, which is unwinding and the delivery against those second half orders. And as I say, finishing the year there with a cash position of eventually $40,000,000 and then the cash addition to that of $10,000,000 and to get us in a solid cash position to support our current concern. Two of the key points within here. So we talked about inventory. You're seeing there a capitalization of some of our product costs for and some with the completion of the joint development agreement with GEMASA. We're then capitalizing that some of that work that's going into into Austro. You've seen that there within on on on the balance sheet. Next point, please, Joe.

19:56 And I'll hand the call to Matt on the call customer segments. Great. Thanks so much, and great to be here with you this afternoon. So look. Now that we've got cost to the right place, and we're getting increasingly proof from our customers that we're delivering against their expectations, we're sharpening our focus on what where exactly our products deliver the greatest value. One of the biggest initiatives that we've gone through over the last three months has been a deep dive, combining work by our our internal team with some external consultants to understand unequivocally where we are the best storage solutions so that we can focus our commercial efforts in that area. The three questions that we've gone out and and and and asked ourselves and asked our customers and asked the market is, what operational problems are our customers working to solve? What financial benefit do they derive from applying storage to those problems?

20:45 And where do where does INVINITY's solutions solve those problems better than anything else that's available in the market? And the the the clear answer comes back that there are three segments where we dramatically outperform other solutions. Stand alone co located projects, commercial and industrial sites, especially where there's there's already cogeneration involved, and in in in more emerging markets, the need for buffering and bolstering AI infrastructure. Go to the next slide. The AI one is particularly exciting to us. You know, the in front of meter LDES case and the C and I case, we've been working on those extensively over the last couple of years. AI is new. And one of the things that we had to spend a lot of time understanding is what exactly the load profile looks like for these data centers and how we would fit into those. I think what we've what we've been learning is that there's kind of these two different sets of AI infrastructure facilities and therefore electrical loads onto the facilities.

21:51 One is where you've got inference data centers. These are the these are the data centers that are doing relatively repeatable tasks. Things like, you know, people are asking, you know, what are the football scores from yesterday? And and and and the AI is pulling those together and presenting them in a very understandable, easily understood format. Separate from that are training workloads, and these are the sort of much more complex questions. Like, for example, if you were to ask an AI agent to develop a model to predict tomorrow's football scores, which is something that involves learning, involves iteration, that involves the coordination of every one of the processor units that are built on, you know, each one of these individual sites. Those training sites have a far more stochastic electric load going into them, and the graph you see on this slide is showing fifteen minutes worth of electricity flow onto one of those sites, and you see those electric loads fluctuating from near zero to near 100% over and over.

22:54 That's a load profile that is extremely difficult to integrate onto the electric grid. It's something that utilities around the world are struggling with to integrate effectively onto their existing systems. But in both cases, because of going back to Jonathan's point around flexibility, because we have the ability to discharge our battery over and over again on limited cycles without shortening their life, it means that we can we can address those training workloads very, very capably. Even going back to those inference workloads, you know, whereas a lot of those sites are being built out with on-site generation, whether that's whether that's solar or wind. You know, on average, you're looking at very, very high cycle counts to be able to support those loads, most effectively with batteries.

23:44 That means as you compare our batteries with what a lithium ion cell would be able to do by comparison, The fact that we have very, long lifetime without the kind of augmentation you would see through lithium array means that means that we have some significant advantages. What do those advantages mean in terms of the numbers? Well, this is a massive opportunity, £45,000,000,000 around the world. And when we look at the the benefit that we have over incumbents on the inference side, we've got about a 15% advantage on the total cost of delivering electricity to these sites, about a 12% advantage on the training side. So in both cases, something clear evidence where we are materially better than the incumbents in a market segment that is experiencing massive and sustained growth.

24:38 Fortunately, we've got, you know, within our product portfolio, one of the most exciting projects is exactly related to that AI data center development. Many of you have heard us talk extensively over the last few months about our project with FlexSpace. It's really hard to underscore the scale of this project. I mean, 1.5 gigawatt hours is a is a big number. But when you get on-site and you see the magnitude of this this this this facility that is being built, it staggering to understand, you know, really the depth and impact that this battery is going to have. You know, worth because it's, you know, these numbers are just numbers, you know, worth putting some some reference point around them. You know, the average electricity load into the city of Zurich is about 0.4 gigawatts, you know, so this is one and a half times that load. This is a massive piece of infrastructure that will be a critical asset on the Swiss grid, and there is, you know, the degree to which we are able to deliver this battery, deliver that energy into the data center reliably, and make sure that this can be an asset that the Swiss grid uses to continually optimize its operation rather than, you know, having a challenge to integrate that data center load is really the reason that our technology has been proven to be that buffer between the data center's needs and what the grid can provide over the course of many decades.

26:05 We're going through the engineering phase of this project right now. You know, we're really happy that we've continued to meet a lot of the, you know, the milestones, the stage gates that are part of that development process, and looking forward to the final steps toward the fulfillment phase, which we understand is going to begin through the middle of next year. Adam, back to you on the commercial pipeline? Yeah. A little bit more detail here on pipeline and to inform the numbers. We split the pipeline into three sections. First being our order book, so those are signed and conditional orders. And the second being framework, So essentially, this is master service agreements or MOUs signed with customers. They're going through final financing and contracting milestones and the development pipelines. This is really projects that have bid into a scheme with INVINITY's technology or submitted for a license with INVINITY's technology.

27:02 Just to give a sense of that essentially on an unrisked basis such as in the 13 gigawatt hours across our pipeline at the moment, we're not including that qualified pipeline that hasn't gone through some of those milestones. And then how does that sit in terms of an outlook basis? Well, over the next three years of 26 to 28%, you can see the bulk of that sitting across North America. That's really driven by incentives in that market at the moment. So the 30% investment tax credit, the 10% production tax credit, the $45 per kilowatt, there's lot of incentives that boil up to about a 50% tax incentive for local manufacturing in that market. You've seen us talk to setting up our local plant next year to deliver on that. And so and then by sector on the right hand side there, it's really spread across two main areas of focus.

27:49 One being renewable developers and utilities. So predominantly, there's larger schemes like the cabin floor that are being pushed out in in North America at the moment. And the data and space. And we talked a little bit early on to the use case there. So what does that translate to in terms of numbers? We've given a bit more color there. This is now on a risk basis for sales. So essentially, we are risking our order book there at 9%, the framework is at P50 and then everything within the development pipeline there at P10. And this gives you a sense of how the pipeline looks on an outlook basis, but kind of across those three factors. That all boils down into 5x increase in share that, just in the 5% of the flow matching market. We base that on independent analysis by Benchmark there, are the industry leading forecaster in this market. So to give you a sense of what that actually means in terms of the whole flow battery market today on the numbers we're putting out there, which are relatively heavily risked in order for us to give some confidence behind what we're putting out there.

28:56 Thank you. And the risk of going into Q and A early, are the P50, P10? Yes. Essentially, P50, 50% risk weighting, P10, 10% risk weighting. So we're just within the order book there, we get some slippage there given timing of revenue recognition within the frameworks. And that's ultimately a function of when these customers are delivering their financing on their projects. And with the final bucket there, you've got some development risk as they close out the last milestones on their project side. So you get a little bit more visibility there in terms of how we put it into the pipeline. Thank you. Okay. So last slide, then we'll jump into Q and A. We can justifiably say that we are a leader on it as a technology business in this space from the track record we've got and the commercial validation.

29:47 What is important is that we scale this, we scale it rapidly to become commercially very successful. And the whole team here is focused on that. We are a technology business, but actually we really want to be a high value commercially scaled business. And that's where we're all driving to, but with extremely strong foundations of good technology with the products at the right cost. And that cost competitiveness is really what is driving those bigger opportunities. If you look across that map of projects deployed or being deployed, if you exclude that flex based project, almost all of the projects sat within our pipeline are at bigger scales, and you see across that entire map. And that's just evidence of the ability for us to move into those bigger projects. But it comes from the work we've done on cost, and we'll continue to do on cost and continue to iterate on that to make sure that we do remain competitive in that area. The market is also moving hugely in our favor. That requirement for flexibility isn't something that we necessarily talked about a couple of years ago. Or if we did, it wasn't nearly as expected as regularly to us. Now when we talk to those who are commissioning systems, flexibility is really valued by them.

30:59 And there are a limited number of assets that can operate that can offer that. And And so that commercial momentum we're beginning to see, I think, does validate our strategy, recognizing there is a lot more to do to transition that pipeline into firm orders and make sure that as we look at our revenue forecast in the year to come, we start the year as we begin to see now with a significant amount of that future revenue already backed into commercial orders. So thank you. That's great. Thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q and A, can be accessed via our investor dashboard.

31:48 As you can see, we have received a number of questions throughout today's presentation. And Joe, if I could just hand back to you to chair the Q and A with the team, and I'll pick up from you at the end. Brilliant. Thanks, Lily. Delighted to see a lot of questions coming through. I'm going to start there's a few here, I think, relating to the financials, which Adam, why don't we start with you on? There's I think it's sort of between inventory, cash and sort of customer receipts. Can you give a bit more detail on how we're going to manage cash over the next twelve months? Yeah. So as we mentioned earlier, we've been looking at cash runway as a function of both cash on the balance sheet and then the inventory, which is work we completed in the first half for delivery against our order book. So perhaps half of that unwinding in the second half for our deliveries there and the remainder at the early next year for our deliveries into '27.

32:44 And that's really what's sitting behind there for the twelve month concern there within the interim statements in order to manage our cash runway. Thanks. And there's a couple of questions here on pipeline. I'm just seeing there. The can you give a little bit more? I mean, Matt, I might come to you on this. When we talked about the 11 gigawatt hour frameworks, I mean, what what sort of customers are we talking about? Are we talking about people at the sort of which end of the spectrum of buying batteries we're talking about? So within our 11 the question here is within the 11 gigawatt hours of the pipeline, can you give a bit more insight to what actually sits within that? So what what are those frameworks that people signed? Yeah. Look, it's it's we've still got a healthy part of the business that's related to to the the the the the fundamental developments that we've always that has always been the core of our business.

33:42 I think the big change over the most recent period is on the data center side. You know, obviously, getting the second phase of FlexSpace into into into that pipe that part of our pipeline has been, you know, a big uptick. But I think you can appreciate, given the amount of interest in the data center segment globally, we've now got a lot of inbound interest in what we can do for those data center operators, builders, instructors. And and and and so there are a large and growing number of other data center opportunities that are also part of that 12 gigs or 11 gigs. Great. And that that's actually another question here asking about flex space. Do we see it as a one off, or is it a No. It's look. We're we're laser focused on getting the that project right for that customer.

34:27 And, you know, we're we're we're going through the the development details to make sure that that that as we enter this new market, that we're doing the right things for for what those data center operators are gonna need. Our intention is that we will be able to turn that or at least portions of that into more of a repeated offering that we're able to offer to further sites down the road, really duplicate what we've learned and make sure that we can that we can replicate it for other customers in other regions. But I think just to follow-up on that, the number one focus is that project in itself is extremely valuable to us. And the focus is entirely on getting that delivered. That is a delivery cycle to twenty nine, twenty thirty. The installation phase certainly starts in about a year or so is time, so the design and finalization of the integration work is the work being done now. At some point in time, we can look to replicate that elsewhere.

35:21 But for the moment, we are absolutely focusing on that. That just opens up opportunities elsewhere as well. So back on that pipeline question as well, if you look what sits within this, I was we had a review relatively recently of some of the sort of the parts of the pipeline that don't necessarily permeate percolate up. And I was really reassured by just the number and breadth of deals that sits across that data center space. It's enormous, particularly in The U. S. Front. It's quite staggering to see what comes from Okay. And we'll there's actually we've got basically the same question asked twice in the same way from two people that would have been at each other. Can you just talk about we've talked about the rest of world element in the geography. What does that actually mean? Where are we seeing the demand outside of North America and Europe and The UK? Where is that? Is it China? Is it in Europe? Where is that?

36:12 Well, look, this is a global marketplace. And we are whilst 180 may seem like a lot when you strip out the those working on product development as well, it is a large market to cover with a relatively small commercial team that needs to cover not just front end sales, but the sales engineering that sits beneath that. So we need to focus on core markets where we've the expertise and the bandwidth. What's really interesting about China particularly is China has deployed more vanadium flow batteries than anywhere else in the world. The price points that we are at or will be up shortly next year, we think are probably below where the Chinese are selling their vanadium flow batteries. And we also know from the tenders we've been involved in such as flex space and other anecdotal evidence that we think our batteries perform at better than a lot of our Chinese technology, if not all of it. So there is a potential for some really interesting opportunities within China. However, we need to make sure that we do approach that in a sensible way for all the reasons that I'm sure I don't need to go into to make sure that corporately, we're positioned correctly there.

37:20 India is an interesting market. India is very, very, very cost conscious. And rightly so, we are pushed on margins. This is a business where we have to make returns for our shareholders. And typically, within India, a lot of businesses do chase very low, if not negative margin business to build market share and then hope they'll be able to generate a profit in years to come. That is not a business model that we have really ever adopted or intend to adopt and don't need to adopt. So within India, we will look to cherry pick opportunities where we don't have to do that. And I'm sure shareholders would support us in that. There are European projects which sits alongside the flex space, well, in terms of sort of scale and breadth of opportunities. There's a lot of opportunities there that we are only scratching the surface on as well. And at some point in time, we will look a little bit broader towards Africa and elsewhere. But I think for the way we'll be concentrating on those core markets.

38:12 Okay. And there's a few questions on Flex based. I think we've answered most of them, but there's one here about asking for a bit more specificity around the engineering. So you've you've said the engineering process on track. Can you give any more detail on what that really means in terms of progress towards the signed order? Yeah. Sure. I mean, what I would say is is that, you know, we were awarded that project on the basis of our track record and on the basis of the concept that we were able to to to to deliver against the requirements of the customer before leaving their RFP. Within within the within the next year, what we're gonna be going through is a series of stage gates where we will have to deliver a sequentially more evolved version of what that engineering design looks like, you know, not only proving the concept works, not only proving that the the commercial model works, but, you know, building out the the actual the actual set of orders, actual set of components that are gonna be installed into the basement of this of this data center. It's worth noting that that is, you know, materially different from how we've delivered a lot of our products in the past. Rather than a container that ships out of our our factory, we're gonna be shipping individual components out of our factory so they can be fully integrated inside.

39:31 Getting that done in a way that is supportive of the product itself while maintaining the performance, not only technical but also commercial, that we intend to achieve is is something that we need and our customer needs to make sure that we're doing it properly. Okay. Thank you. The the next point, and we had a we had a a lot of questions on this. I think people came armed to the call with around cap and floor. There's questions a number here saying that they've seen articles in the press and in The Times, essentially saying that the market had some high expectations of a number of awards I'm really asking, what's our view on what happened and our view on the chance of anything changing or not? Okay. No, thank you, Joe. I was hoping to come on to this soon.

40:16 But there's an awful lot we can talk about here. And there there are are different views I've seen on how to approach this. What is really interesting, and you've seen, you know, saw the Sunday Times articles both this Sunday and a couple of Sundays ago. So that we don't like the headlines. I think if you if you get past the headline a couple of weeks ago, actually look at the bulk of the all of what was in the article two weeks ago and last week, we've had some extremely positive feedback from, frankly, all stakeholders. And I think everybody who's looked at this has said a number of things. And it's interesting, I'll come in to say, why doesn't the government sort this out? But also strong support that we are actually making this an issue that people need to be aware of and need to look at. Now I said government like this because actually when you look within it, we are speaking you know, a significant number of stakeholders within the wider organization that is governed. And what you realize within that is that it's just not one body. It's many different bodies trying to work together. And I think what we have seen is an incredible amount of support for our case that's INVINITY technology and more broadly, UK technology should have had a better run at that program.

41:31 And that's one of the reasons why I think the Sunday Times journalist picked that up. She is running with this because she thinks it's a really interesting story. We can create a significant number of jobs and we can create a significant amount of investments that simply won't come here. And when you look across what The U. S. Does, The U. S. Offers a 30% refund on CapEx expenditure and a refund to The U. S. Manufacturers for putting manufacturing there, that's why we're moving there. The EU is looking to do something similar in the next couple of years. Japan does the same thing. And The UK is unique in almost not doing that. There was a five percent benefit for UK content, when actually they've had up to 20% in other cases. So we're asking the question, why was that done in this scenario? And then when you look across the projects that were consented, if you look at the pumped hydro projects, very specifically, one of the developers there has announced that they have some significant challenges in relation to costs and that project will only go ahead if it beats IRR threshold. So I certainly awarding that won't happen.

42:37 And then some of the other developments have got some rather unique lithium projects, which again have never been done before. And there is a strong argument that a broad breadth of technologies across just those two narrow verticals would make sense for all the other reasons we can talk about. And so my view is I would prefer this has our share price was doing very well up until that announcement. And it is highly disappointing, and we were very disappointed with the result. And I think it's only right that we pushed that scenario through. Should we do that in private? Yes, we are significantly. I think us highlighting to others to gather support has been really well received. And we are hearing some very positive vibes that come back. Will that ultimately result in a change? I do not know and I can't forecast that. But I tell you what, I would far prefer to fly the flag of INVINITY and do our best to get some change and hide away and not do that and just say, would it be nice if it had changed? I think we have done everything we can do and we are definitely being listened to at very, very high levels.

43:42 Will the machines of the wider government enable something to change at this stage? As I say, I don't know. What's really interesting is if you look at what this means for our technology versus others, typically our technology is scored at the same price point, same financials as other technologies. So this wasn't anything to do with quality of either quality of technology or quality of price. I think our projects were marked quite harshly. There was a they were inundated with a number of projects that went into cap and floor. And I think they took some pretty generic assumptions and again looked at reports on other technologies, which were a couple of years old and drew some very unfair sort of unhelpful, shall we say, comparisons on those. So that's why our customers have gone back and said, look, that's not right.

44:28 You've used incorrect data. So I think there are a whole bunch of reasons as to why what came out wasn't fair. And also a lot of the projects have said, look, the scoring system wasn't made clear, that it was only really announced and even then quite opaque at the end of it. So a lot has been done in this process that not just us, but others think should have been done better. And therefore, it's only right that we push this. There is talk of there being another round shortly to follow. For us, we are very much concentrated on this round. This is an issue that needs to be dealt with sooner rather than later. I want to create those 1,000 jobs up in Scotland. I want to bring investment here. As I think the article says, proud British, I want it to work here. And there's no reason why it can't with a little bit of movement and sense that comes with it. Okay. Thanks. I think this follows naturally on. There's a question here around UK manufacturing.

45:21 Do we have the scale to deliver projects like flex based and also, you know, other large scale projects, presumably, if refer to things like We so it takes about six month lead time for us to scale, and that's typically the lead time on the stack manufacturing. And so we've got that stack well in order for The U. S, that we've delivered shortly and we'll be capable of being sort of commissioned and brought up to speed quite quickly. So we don't at the moment, but that's the whole point. If we did at the moment, we would be putting a lot more unabsorbed overheads through the P and L, which would be impacting profitability, but we can scale quickly. We are able to bring in and repurpose people from the oil industry, people who are midway through their careers, but also graduates and apprenticeships. We really can tap into the labor market that is available now.

46:09 These are not highly, highly skilled people. These are people with training who can be retrained in other areas. So that's the lead time that we can move to. Otherwise, whenever we bring people up to Motherwell Bathgate, those who've been up before on any of the open days, we'll see that what we really need is a dry enclosed area. This is useful to have a crane that carry 30 tonnes, but actually we can do that with a forklift. Ultimately, we need a stable floor. It doesn't need to be temperature controlled. It is in Scotland. It does need a little bit of heat, of course. But ultimately, we can find space pretty quickly. And with substantial cap and floor orders, we can quite quickly sort of move to bring that investment in and get it up and running. Okay. And speaking of, there's questions around U. S. Manufacturing.

46:55 Jonathan promised to be there. Be talking about, and we've truly been asked a couple of questions around it in terms of when are we going to hear more, what's the plans? Yes. Look, I mean, as Jonathan touched on, there are tremendous advantages to manufacturing in The US for The US market, both in terms of tax credits and on production side and and tax refunds on the on the on the on the customer side. We are, I would say, most of the way through selecting a sign we're in negotiation on on on contracts for for leasing the space that we're gonna build this facility out in. We've we've validated that we've got an initial team that's gonna be able to go and and help us get that set up. So we're not starting fresh with with new personnel. We've got a team ready to step in, and I think we'll be, you know, announcing that final location once those contractual details are are are there.

47:48 Brilliant. Okay. And we'll briefly go back to the numbers. There's a there's a question here asking around sort of the the uplift in in admin overheads. And, Adam, perhaps you could just cover that off and give it more color. Yeah. So good good question. So the 1,500,000 movement in the bottom line there is is what explained in in note four accounts. Essentially, there are two factors driving that. Half of it is a comparator effect. Now that we've completed Endurium and the joint development agreement, those recoveries are no longer there from Gamesa given that joint product is pushed out to market. And then the other half of it is increase in in staff costs. Now the increase in staff costs is the investment we're making to deliver that 60% cost reduction. I think it's really important we make that investment.

48:34 It's also what you're seeing driving the improvement in gross margins and gross profit line. So the improvement in component costs, the improvement in component performance is what's driving those improved gross margins. So it is investment we're making now to deliver on the numbers we have and the outlook we have out there. So acknowledge the point. We're managing our admin budget judiciously in order to manage against that. The investment you're seeing in those r and d staff costs is reflecting that as well. Thanks. And I'll stick with you, Adam. There's a slight technical question you're asking around sort of how it works in terms of the sales and the cash coming through. Is selling a battery a one off or on a maintenance contract?

49:19 How does that flow through Yes. The bulk of the revenue recognition, so 95% plus is on delivery of the battery at the moment. There is an ongoing piece there in terms of the long term service agreement that we recognize, the Rareco revenues over time. And for our bigger projects, so like flex space, what would make more sense for those sort of projects is a percentage completion basis. That's what the industry tends to use. But certainly for our main deliveries, the bulk is upon delivery of the joint product. Thank you. And there's a question that always comes up is because it's something that I think our shareholders are always keeping on. Competition, where are we seeing the main competition and how in what format and what markets?

50:05 And do want to take that? Sure. Look, the number one commercial competition that we usually see is almost like it. It's 98% of the world's market. From a competitive perspective, the thing that's most challenging for us. We do see I think the question, though, is is what other flow battery companies are out there. You know, we certainly do come up against some them. You know, the flex space project, for example, they were they had invited multiple bids. They got sort of everyone interested of interest in the industry globally bidding into it. What I would say is that, you know, competition out of some of the lower cost regions, China and India, for example, was was was was present in those bids, but was deemed to not have the kind of track record that we were able to move to the table. So, yes, there are other players out there. No one has been able to credibly boost the market more than we have at least as yet. Okay.

51:02 Moving on to a different area, to more corporate. There's three different questions asking the same thing here about, you know, have we got is the idea of moving to U. S. Or a U. S. Listing sort of something that's on the cards giving us sort of clear focus on the commercial side then, Jonathan, maybe Okay. I mean we can maybe rephrase question if there's moved to The U. S. Or look to include The U. S. Capital markets in our thinking. And I think the second part of that is absolutely true at the right point in time. I was at a conference in The U. S. With one of our brokers a few months ago and spoke to quite a number of shareholder potential shareholders there. In fact, quite a few of them following those discussions bought shares. They fully understand that market in The U. S. And when you look at where the bulk of our projects are and the bulk of our pipeline is, it would make absolute sense to try and tap in a liquid investor base there that really understands what we are doing and why we are doing it. However, again, we are still committed to The UK.

52:05 We have the National Wealth Fund as a major shareholder of ours and maintaining liquidity and listing in London will absolutely be at the forefront of our attention. So move to U. S, no. At the right point in time, when we have the right size to be able to potentially attack that liquidity, yes, that is a possibility. Are we about to announce that in the near future? I would say no. Question about cost down, Matt, I'll probably come to you. Is you know, obviously, progress on the cost down. Is are you worried about customers delaying until products become cheaper? So the idea that someone might just hang on for for for six months and just order it later. Is that something that we're seeing or something you're worried about? Look, it's almost like it it is it is something to be concerned about. We have not seen that actually happen within our pipeline. Usually, by the time our customers approach us, especially, you know, to the that segmentation we went through earlier, most of them are either commercial and industrial customers who are looking to save money on their electricity bills starting tomorrow or AI dentist data centers where they absolutely are not able to connect to the grid and install that data center until they've got a power solution in place. Both those things mean that it has to be installed as soon as humanly possible, and therefore waiting is not an option.

53:20 Fair enough. Let's go I'm just I can see a question here just asking around bankability. I mean, clearly, it's something that we've been we've been focusing on and track record, low and midwares, which will be part of that. And it's a reference to the previous one of these. I think we talked about we were having some positive conversations with banks and others around project financing. Are those discussions still ongoing? Adam? Yes. A really important point is we step up from delivering small scale units to large commercial units backed by project finance debt. You're starting to see that now in the first few projects we're doing at commercial scale, typically beyond twenty, thirty megawatt hours.

54:06 And we've had a number of discussions around that. One of the key parts of that is then being able to put insurance wrap around the product in order to get the project finance lenders comfortable there in terms of risk return. We have progressed those discussions materially looking to close that out, as we said, over the next few months. In order to get to a place where for cap and floors, they're engaging with their project finance lenders, they can put nonrecourse debt behind buying the product. And so really, really important worksheet. Also, the benefit of Cockpit is really important here. So being able to take both the insurance providers, we're working with two in particular, and also the the lenders where we're working mainly with two two two including our house bank.

54:52 Being able to take those entities out to a project site in The UK to see an operating project of that scale on the grid is really important in terms of driving those discussions. And, yeah, seeing positive momentums on that this year, Joe. Perfect. And you mentioned Cockwood. There's a couple of questions here asking what is going on with Cockwood? When are we going to see that going on? I know we briefly talked about it, but can give a little bit more about what's between us and that project being switched on and making revenue? We had a conversation with a journalist earlier who asked us the same question, and the response was met with a sort of a shrug and a nod. We are in no different position than a lot of developers. And if in case you're wondering why projects slip, it's normally things outside of the developer or the technology providers' control, of which we are both on this front.

55:44 We were hoping that this asset and we certainly engaged with the DNO to try and make sure that this asset would be connected in the first half of this year. We certainly did all the work we could do on our end and paid all the monies across. We had to actually advance to make sure equipment could be ordered. And notwithstanding that, the slow progress has been seen by us as others. So I think they've done all the work in the road. They've done the connections up. We announced it Saturday towards the end of September. They're just doing the final work. Adam, what are we saying when we're anticipating switch on? Yes. So we've got the project fully delivered. So as we're waiting on the substation. So by the end of the year, we'll have that project fully commissioned. We're expecting to get the O2L's first commissioning test by end of November, and then we'll complete that process.

56:33 Yes. Frustratingly slow, entirely outside of our control despite our best efforts. But as I say, this is seen across the industry and one of the things the industry needs to work on to get these projects connected quicker. And obviously, very much looking forward to inviting those on the call when we do get it connected. Absolutely. And moving on, there's a there's a question here on vanadium around what our approach is to to that and our our our view on sort of it as a future maybe as part of cost down, but also in terms of security of supply. And, Matt, do you want to speak a little bit about that for you? Yeah. Sure. Look, we we we continue to scale the world for the best highest quality lowest cost sources of that material. I think what we've found over the last year is there are some emerging sources, particularly in the in the secondary product realm, which is very encouraging.

57:26 You know, secondary product meaning that we're not digging new holes in the ground. This material is coming out of either the petrochemical industry or the steel industry as a as a as a waste stream. And and and what we're finding is more and more that there are new new production capabilities coming online on the basis of some sort of advanced manufacturing and and advanced purification processes. So, you know, we we've we've greatly enjoyed where the prices are in the current market, and what we see is is the current market prices being reinforced more and more by new entrants. So, you know, market prices are likely to stay closer to where they are now than where they've been over the last decade. And in the background, we're continuing to work very closely with some of those those existing and emerging producers to make sure that we can get continued low cost off take of exactly the product that we need.

58:18 Brilliant. Okay. And there's there's a number of people that have referenced sort of recent IES and I think someone's here referenced the monthly newsletter we put out with a picture of the Trade Commissioner for Europe at FlexBase. How are we feeling the engagement is going with The UK, Canadian and governments in general? And are we getting those things with a lot of meetings, but do we feel that those are actually bearing fruit and building relationships? Jonathan? Yes. Maybe a shout out, first of all, from our local MP in Bathgate, Kirsten Sullivan. She could not have been more helpful towards us or more supportive. But also we've seen that across a number of other MPs and ministers in this space. They are very, very helpful and supportive and understanding and want us to do well. The trick is enabling them to have the evidence to bring that forward to effect change. And I think that's just in general the way government works, not this government, but government in general works. That's one of the challenges I think we face in The UK, maybe more so than elsewhere.

59:21 But as a level where we are dealing with people, we get a very, very positive response. And I think, yeah, we are making progress. Let's look. A We've lot of funding from the UK government. Yeah. The disappointment is what happened with cap and floor. And I think that really was quite a unique government department going off on its own and doing one thing and probably delivering an outcome, but no one quite expects it. That is separate from how our sort of level of engagement works elsewhere. Maybe from a Canadian perspective, Matthew? Yeah. Look, I mean, I would say Canada, obviously, very interested in in in infrastructure projects of national interest right now. One of the big conversations is around, they call it, pan Canadian electrification. So basically strengthening the electric grid not only within individual provinces within the country, but looking at the interconnection of all of those provinces together.

1:00:09 That is an investment program expected to stretch into the tens of billions of dollars over the next five years. And storage is is one of the items on the docket as being a critical part of that infrastructure. So, you know, no no deals to announce yet, but but certainly individual portions of that strategy are likely to be storage, and as one of the preeminent Canadian storage suppliers, we think we're likely to take a deal with a good piece of that. So I we managed to get through most of the Q and A now, so I'll pass back to Lily. That's great. Thank you for answering those questions you can from investors. And of course, the company can review all questions submitted today and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Jonathan, could I please just ask you for a few closing comments?

1:00:57 Yes, of course, Ali. Thank you. Just finishing off from what Matt was saying there, when I look at the business, that government engagement also across The U. S. As well. We have the California Energy Commission. California is the fourth largest economy in the world. We have the government organization there, that's the energy commission, hugely supportive of us and pushing projects our way. When I look across Europe, we are building designing with a very clear route to building effectively a system that will deliver more power than the two nuclear power stations next door to it. We've got a technology that's robust with data and heading towards the right price point. We are in a good position as the market is also looking for our type of product. So we've done a lot of the hard work here. There will be ups and downs along the way, but I'm confident the trajectory is in the right direction.

1:01:47 I'm really excited to see what the future could bring. That's it. Thank you. You for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.