Nexus Infrastructure (LSE:NEXS) — Introduction to eSmart Networks

2:13 Good morning, ladies and gentlemen, and welcome to the NEXUS INFRASTRUCTURE PLC Introduction to eSmart Networks 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 that's just situated on the right hand corner of your screen. Please simply type in your questions at any time and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I would like to submit the following poll. And if you'd give that your kind attention, I'm sure the company will be most grateful. And I'd now like to hand you over to CEO, Mike Morris. Good morning to you, sir. Thank you, and welcome everyone to today's presentation. Yes. My name is Mike Morris, CEO of NEXUS INFRASTRUCTURE.

2:59 We wanted to start the session with a short video to give you a a really good feel for the business. But the bottom line is the world needs cleaning up, and eSmart Networks has a big part to play in that. Helping The UK hit net zero targets by 2050 is the business we are in by electrifying transport, electrifying industry, as well as powering The UK with clean energy, all delivered over the grid. Today, you will hear how we operate in each of these segments, and we are doing it now. Other parts of NEXUS have a role to play in the energy transition. But eSmart networks is a net zero pure play, and I want to bring it into clear focus today. I will introduce my co speaker, Simon, shortly, but let me explain how we will spend the hour.

3:48 To start, I will share five themes for you to keep in mind as you listen to the presentation. Simon will describe the markets and opportunity, plus some case studies to show you what we really do. Then I will cover strategy and mag and managing significant growth. We will finish with about fifteen minutes for questions.

4:11 Let me introduce you to Simon, the managing director of eSmart Networks. He studied electrical engineering at Queen's University in Belfast. After ten years in leadership positions at UK Power Networks, he joined TriconX, our sister company, as technical director in 2016. In 2018, he became the managing director of eSmart Networks. While doing this, he completed his MBA at Warwick University. In Simon, we have an outstanding managing director and a leading authority on electrification. As for me, my interest in climate change goes back to a Prince of Wales sustainability program at Cambridge University in 2011. That year, we created TriconX, our first energy startup.

4:59 Five years later, I purchased my first electric vehicle to experience it from an owner's perspective. It wasn't great, to be honest, but it did help validate our internal thinking on EV infrastructure. And a year later in 2018, we started eSmart Networks. Simon and I are both absolutely committed to creating a cleaner, brighter future. Our vision combined with our business experience means we are well positioned for future growth.

5:31 ESmart networks has a big part to play in energy transition, and here are five reasons why. Our total addressable market is massive. Climate crisis is one of the great challenges of our time, and electrification is the route to net zero. Short, medium, and long term, the work to be done is staggering. First mover advantage. Five years in, eSmart Networks is the first EV infrastructure company to establish itself as a national business. The customer base and expertise acquired in that time has made us the leading EV infrastructure business. There's no need to pick the winning EV brand. Our market includes all the charge point operators, hardware suppliers, and end users.

6:17 We're at the center of the EV world and address the full market no matter who the owner or operator is. We are an experienced and entrepreneurial management team with a track record in energy and a track record in scaling up, which is key as this is a highly scalable business. With a national presence and first mover advantage, we are in a strong position to scale. So I've given you an introduction to eSmart networks. Simon will now take take you through the detail.

6:54 Well, thank you very much, Mike, for that glowing introduction. It has made me blush slightly. I'm gonna start with the regulatory landscape that we're operating in today. It has been a very busy three years in terms of the regulatory landscape within The UK, so much so that unless, like us, you live and breathe it every day, it can be very hard to keep up to date. It's very important to note that The UK laws and framework that we operate all exist within a very aggressive international push to drastically reduce greenhouse emissions. This all really got serious at the Paris two thousand fifteen COP, which led to the November 2020 UK government 10 plan that finally banned internal combustion engine cars from our from seal in 2030 in The UK.

7:42 In December 2020, the UK government set out its carbon budgets for our near term binding targets. And then December 2020, the white paper come out with a lot more detail on how we're gonna get there. In June 2020, the binding targets were set for 70% lower emissions compared to 1990 by 2035, and then we had the COP twenty six in Glasgow just last year. And this is all designed to get us to net zero by 2050. Some key points of our policy now, net zero by 2050 is law. It was enacted in our parliament through the climate change act. The internal combustion engine ban by 2030 is also the law and is being followed now internationally and not just places you would expect like California, but recently New York state, for example, announced a nice ban by 2035 as well. There is no other way to make net zero, which is a law without mass electrification of transport industry and heating, which we will explore in this deck. The result, there is massive opportunities in the electrification of transport and industry, and we are well positioned for this opportunity as you will see during this presentation.

9:07 Both the charts above show the total input of energy into The UK split by its source, electricity, hydrogen, natural gas, oil, petroleum, and biosource on the left hand side. They also show how this energy is ultimately used on the right hand side, split by industry, residential, transport, aviation, and shipping. The flows in the middle show how the energy gets from its various sources of supply to its ultimate end use. The chart on the left hand side shows the energy sources, flows, and use in 2020, the last year we had good data for. While the chart on the right hand side shows what the world will look like in 2050, all according to National Grid's future energy customer transformation scenario, which is a bit of a mouthful, which is updated annually.

10:01 So the left hand side then in 2020. So electricity makes up 20% of all energy consumed in The UK, mostly industrial and residential, although we can start to see flows into electric vehicles for transport. Natural gas is very dominant today, which is very typical given what's going on in the gas wholesale markets and consequently our energy prices. And this is used for the majority of residential heating and is also used extensively in industry. It's no surprise to anyone that diesel and oil makes up the vast majority today of our transport requirements for obvious reasons, but this mix has to change. We simply cannot get to net zero if we continue to burn gas, oil, and petrol.

10:51 So 2050 then, the chart on the right hand side, according to National Grid's customer transformation scenario. So by 2050, natural gas, oil, and petrol have now been largely eliminated with electricity filling the gaps. Electricity now makes up the majority of our energy requirements nearly 80%. Clearly, this will require massive and unprecedented infrastructure investment, which will lead to electrification of transport, industry, and heat. Natural gas has now become a very minor role to play where some processes cannot be electrified, such as very high heat industrial processes and chemical feedstock processes as well.

11:37 This net this increase from 20% today to 80% in the future is a staggering increase and is the only viable way we will get to net zero, which again is law by 2050.

11:55 So this is a complex chart, I will admit, but I will make it more accessible, hopefully, when I explain it. This is a more detailed view of what the world will look like in 2050, again, according to National Grid's future energy scenario. So on the left hand side of the graph, this is a supply into The UK by its various sources, gas, nuclear, solar, offshore wind, onshore wind, and other renewables such as biosource. The areas with the East Martin Networks logo is where we plan, design, and build the infrastructure for this generation and enable its connection to the electricity grid. In the middle are the flows of energy through the various transformations until it gets to its ultimate use. So for example, some electricity does get converted to hydrogen via electrolysis for use in aviation and shipping.

12:51 On the right hand side is where the energy is used. Again, where you see our logo is where we plan, design, and build the infrastructure required to get this energy from the grid. The vast majority of industrial load in 2050 is now electric as is residential largely because heat has been electrified as has transport, which, of course, is because of electric vehicles. So what what do we do in this mix? So on the supply side, we model out the grid to identify where the capacity is to enable low cost, fast connections, and then we design and physically build this infrastructure. On the demand side, we need to see him in high skills to model the network and plan to identify, again, where the capacity is. We then design and build this infrastructure, but we also, very importantly, integrate renewable technologies such as PV and wind, batteries, and electric vehicle provisions into this demand connections we build on the demand side.

13:58 A bit of a word on hydrogen, which is quite topical. We do believe hydrogen will have a very important role to play in the future. For example, aviation, shipping, and some very high heat industrial applications really lend themselves to, using hydrogen. But even then, as you can see in the chart, it will come from electricity. So hydrogen will also have a very important role to play in grid balancing. So when we have excess generation, we will make hydrogen available on-site and store it. And then at peak times when we have more demand than we have good green generation, we will burn this hydrogen which creates zero emissions, allowing us to use all our clean generation, which is clearly very desirable.

14:46 But this all requires substantial grid infrastructure to enable it. So in summary, in this slide, we operate at the supply side of the grid, which is generation. We operate on the on the demand side and integrate renewable technologies as well as well as operate in the middle, for example, where hydrogen is used for electrolysis, for grid balancing, and battery storage as well. Also, to note, Triconnect, our sister company, also operate within the residential space, which gives a wider group very wide exposure to the energy transition.

15:29 So we'll talk about our business model and ecosystem now. So we do have a very integrated ecosystem and business model where all the areas are highly adjacent and highly additive to each other. So the grid, first of all so the grid and there is no coincidence that it's in the center of our Venn diagram because it really is a center of our ecosystem. So we use the same in house skills, modeling capability, and systems across all three market segments. This gives us very high efficiencies and means that the three areas are highly interrelated and all mutually reinforce each other. So turning to electric vehicles, first of all, in the green. So this is mostly high powered hubs for EV networks.

16:16 Now we can't disclose who our customers are in this area because of confidentiality, but they are all big names in the high speed charging arena, which you would recognize from the news. Typically, these projects are six to eight three hundred and fifty kilowatt high powered DC chargers. Now to put that into perspective, 300 kilowatt one three hundred kilowatt charger is enough energy to supply 300 houses. So this is substantial infrastructure we're talking about. Also, in our EV market segment is buses. So these are bus operators who need to electrify their depots. Now you may have seen recently, the mayor of London announced that TFL will only allow electric buses from now on in London.

17:04 And very topically, on Saturday, the government released a consultation on which date to set a ban on the sale of internal combustion engine buses and coaches. And the consultation is basically which date will it be between 2025 and 2032. Also in our EV market segment is fleet electrification. This is for last mile, middle mile, lots of miles, and work fleets. We are working with some of the biggest fleet operators around the country in this area for electrification of vans, delivery vehicles, and the car fleet as well. Lastly, in our EV segment is destination charging, and this is where people go and spend longer dwell times such as supermarkets, gyms, etcetera. And we have already delivered a rollout program for one of the large national supermarkets, and we have other of these schemes in the planning phase right now.

18:02 So our second market segment in the blue is renewable generation. These are grid connections for a very large scale solar parks predominantly. So these are 50 megawatts, you know, covers 200 acres of land for the biggest developers as well as grid connections for other renewables such as onshore wind, which is now coming back, and biomass as well. Lastly, we have industrial electrification. These are large, what we call mega sheds, huge warehouses, which are driven by the move to online shopping that also requires heavy renewable integration. It also includes advanced low carbon food production facilities as well as highly automated warehousing with really large electrical loads. It's important to note that while these are three distinct market segments with different customers who have different requirements, The same engineering solution finding, design, and build resources are used across all three market segments, giving us good visibility and good economies across the business.

19:14 A bit of a talk through of our really explosive growth then. So back in 2015 well, 2017, sorry, when EVs really were early market, we were seeing a demand in our sister company, TriconEX, for our residential house building customers for EV charging. But also, we started to be approached by non TriconEX customers for EV charging as well, such as little and other supermarkets actually at the time. These different customers had very different requirements, and it was a different market we recognized early. So we created a smart networks to capitalize on this massive opportunity, combining the wider group's in-depth electrical, commercial, and civil engineering capabilities.

20:01 In 2018, we formed Eastmart Networks, and we had very early success securing over a 100 rapid charging points roll out across the country. This was for motor fuel groups actually to electrify all their petrol stations and forecourts. In 2019, we successfully delivered this large program of works and had further successes in securing more large programs. And by now, EV was in the news. It was becoming a national priority. By 2020, we had really diversified the customer base, working with the vast majority of the charge point network operators out there and still are. A highlight in 2020 was installing the first battery storage system to support ultra high speed DC charging for IONITY, actually, the big joint venture with Volkswagen, Mercedes, etcetera.

20:55 And in 2021, this is when we really seen the explosive growth. We secured 20,000,000 of new work. We turned over £9,000,000 in revenue, and importantly, we generated a profit. So unlike practically every other player in this space, we generate sustainable operating profits now. Revenue growth from 2020 to 2022 has seen an approx CAGR of 120, and the three market segments are growing well, although EV is and remains our largest segment, and this is forecast to continue. We, very importantly, have an active pipeline of 436,000,000, giving us good visibility in the medium term, and we do talk about this pipeline in a bit more detail later on.

21:48 So I talked about the grid a bit, so I'll just cover what our different segments are. So first of all, grid modeling. So we use highly specialized and sophisticated load flow software to model out the very constrained electricity grid in terms of load flows, thermal capacity, fault levels, and voltage rise. This enables us to pinpoint where the capacity is available both on the supply side and the demand side, allowing our customers to connect quicker and with the lowest capital cost. This is a key differentiator as the capacity on the electricity grid is constrained and really is becoming more constrained as we go through the EV rollout. We then turn to our advanced design capability.

22:35 So from our modeling stage, we secure the connection for our customers. And then using our dedicated and high skilled and very experienced design engineers, We value engineer both the connection and the wider infrastructure to protect the investment levels of our customers. Proximity to investor funds. So this ability to really value engineer the connections means that we work directly with the investment for funds at an early stage in the project life cycle as grid costs are typically the biggest variable within their financial models and carry significant risk. We then move on to portfolio management. So because we have this proximity to the investment funds, means we typically work across their entire pipelines in a portfolio method right across the country. So we can prioritize our portfolios in terms of delivering their most viable sites first, their most attractive sites, which increases their return on investment right across their portfolio.

23:42 If we are not involved, the process takes much, much longer. So for example, to get an answer from the distribution network operator on if there is capacity or not on a certain part of the network for, say, a 50 megawatt solar scheme takes ninety days. Yep. Ninety days

23:59 and costs £7,000 for the privilege of an answer. We do that in a matter of days or weeks depending on the need. We operate a standard process right across the business, which we call concept to go live, which is illustrated on the slide. So very briefly, it starts with this really early engagement early early on in the project life cycle or the portfolio life cycle with the customer. We'll do this capacity modeling piece. We then review the entire portfolio and prioritize it in terms of best investments to least best and present this back to the clients. They've got a good visibility of what they should do when, and they then prioritize their own investment plans.

24:47 We then take this optimized portfolio back, and we create realistic times sure delivery plans right across The UK. We then carry out the detailed electrical and civil design work in house, value engineering of projects at every stage. We then, using our in house teams, install the infrastructure. We commission the infrastructure, and we make it live, is when the our customers start generating their revenue. This process applies across all three of our market segments. And given the absolute land grab that is going on in the industry right now, our processes and everything about our company is built for speed, which is vitally important for our customers. Compare that with the ninety day yes or no approach from the distribution network operator.

25:40 So turning to our market segments then, just to describe them in a bit more detail. First of all, we'll look at the electric vehicle infrastructure market. So today, there are 40,000 charge points across The UK. And according to the Society of Manufacturers and Traders, the SMMT, I struggle to say that, we will need approximately 2,700,000 by 2030, which is a massive increase by anyone's standards. Now it doesn't matter what report you look at here, be it the SMMT, the AA, National Grid, UK transport strategy, or the government's EV infrastructure strategy, excuse me, that was launched on Friday, they all say the same thing. We need a staggering increase on electric vehicle charge points.

26:29 The SMMT estimate that the infrastructure alone, the infrastructure costs of this massive rollout by 2030 will be 17,000,000,000. Now we have delivered a lot of this infrastructure already, so we know how much it costs to plan, design, and install this infrastructure. And the bit that we do typically makes up 50% of the total spend on all of these projects. The balance, the other 50% is things like the charging hardware, land, software, permits, things like that. This means that we can see an £8,300,000,000 market out to 2030 for electric vehicle charging infrastructure. Using the visibility from our own customers and the wider market, we are able to estimate the market values across the three main areas of EV that we are highly active in.

27:23 Number one is cars, car charging. That's worth about 4,500,000,000, the biggest segment, but then there are the most cars. Buses, a significant segment of 1,400,000,000, and then fleet in the middle at 2,400,000,000. And to give a bit of color on those segments, I've got a bit of a case study we'll look at now. But the main takeaway here is that every report you look at, every forecast, the market is massive without a shadow of a doubt.

27:56 So case study on our first area, EV, which is cars. So this is a case study for a company that plans 100 electric vehicle full courts. Yes. We now have electric vehicle full courts with no diesel or petrol them across The UK, and the first one is already open and running. The loads at these sites, the electrical loads, they need our masks. So just to put it into perspective, each one of these four courts need needs the same electrical capacity that would supply six and a half thousand houses. That is a time. For the technical out there, that's a six MVA 33,000 volt connection. The average contract value for us for these is in around a million pounds, and we currently have four of these in the business right now at various stage of design and build. And, actually, two will be simultaneously going live. So the in the build process right now, and they will open in autumn twenty twenty two. You will see a big rise in electric vehicle forward courts towards the end of this year and into NEXS. We are now working with the same company on a national program for forward courts in the hubs as their grid partner, and we are doing a lot of capacity modeling. And I've actually modeled out over 200 sites that are actually viable for the four courts, and they are now in the planning and delivery cycle.

29:23 Buses are second area. So this is a pan European bus operator, which is tran transitioning its fleet to 100% electric buses. And, last year, they ordered a 150 BYD with a 100% electric buses. They had extremely challenging timelines given the TFL contract deliverables they had. These are sites that are very space constrained. They're very tight sites physically, and they're very complex. And they're in very highly electrically loaded urban areas such as Fullwell on South London, Harrow, and Edgeware. And they are very densely populated, which, again, means that the grids are very complex and densely loaded.

30:09 The typical electrical demand for one of these bus depots is the same power for about 2,000 houses. Again, that's very significant in highly built up areas. And the average contract value for us here is about 750,000. We've we've delivered two of these last year. We've got two in build now, and there's about five in the pipeline. Full well, one of our projects, as an example, needed a three MVA, so that's about 3,000 houses worth of electricity, but the local distribution network operator told them this would cost £3,000,000 and take three years to complete because the network needed significant major reinforcement. But they had to start operating these buses in October, and they were told us in June. So clearly, a major business risk for this bus operator.

30:58 So we took a project on. We modeled out the local 11,000 volt network, and we quickly identified that there was one MVA available right now. And that was minimal reinforcement, costs £600,000, which is lower than 3,000,000. Three MVA would be available overnight when the demand is low, everyone's in bed. So we work with BYD to map out the demand of the buses and when they needed their their maximum demands over the twenty four hour cycle, And we designed an innovative and first of its kind solution where from one from 08:00 in the morning to 10:00 at night, the bus depot can draw one MVA to the network. And from 10:00 at night to 08:00 the following morning, they can demand the full three MVA.

31:46 And because we model the site, we knew, and it has now since been delivered, that that is enough energy capacity through the night

31:53 to fully charge all our buses ready for the morning run out. This site all went live in October in time for delivery of our new buses. This problem solving ability means we're now working on their full portfolio, again, giving us good visibility of their future forward pipeline. Next segment is and the last of EV is fleet. So this case study was three sites. We converted to a 100% electric last mile delivery van. So every site had hundreds of vans, a big American online retailer. Rapid delivery was required here, and we had to operate around some very strange seasonal demands in November when they get their peak workload.

32:41 So these were very tight for, time periods we had to deliver in. This these contract values are around 600,000 to £2,000,000 to us to date, and this customer has a large pipeline we're now delivering across The UK and Ireland for fleet electrification.

33:01 So turning to industrial electrification in our middle segment. So the chart on the left hand side shows the supply of energy to industry in 2020. Again, it's split by its source, electricity, natural gas, hydrogen, oil, and petrol, while the chart on the right hand side shows a scenario in 2050. Currently, 35% of the energy used industry is from electricity. Natural gas makes up the majority with significant oil, which surprises a lot of people.

33:35 By 2050, electricity will make up 80% of this mix, which mirrors the wider electrification of The UK industry we talked about earlier on. As well as a shift to electricity, we're seeing immediate demand right now for large warehousing, advanced automation warehousing, and low carbon indoor food production facilities.

33:58 On most of these projects, the integration of the grid supply, electric vehicles, and renewable generation on one site is key for true low carbon productions and our customers ESG agenda, and we add huge value in this integration piece here. Again, speed is vitally important. Compare the waiting the ninety days from the distribution network operator to get an answer that may include millions of reinforcement years down the line. We do this all in a matter of weeks.

34:32 Got a case study on electrical on industry electrification. So this client came to us in autumn twenty twenty with a large mega shed, 750 it's the biggest building I've seen in my life. Massive mega shed that was due to be opened in spring twenty twenty one. But the distribution network operator, I told them this would the eight MVA required would cost them £5,000,000 and take three years to complete. At this stage, the client had already started construction. So clearly, this could not be allowed to happen. So we took this project on. We quickly modeled out the local 11,000 volt and 33,000 volt network, and we rapidly installed a TMVA connection because we could see the TMVA was available to get them going.

35:24 They needed us to draw down a 100,000 foot square square foot freezer, a master freezer. And, unbelievably, it took two months to draw this thing down to minus 20 degrees, but we installed this connection while we sort of, like, the long term connection and got them away. So in the background, while we were doing this, we completed the required reinforcement on the local 11 k b network to free up the six m b n. I think this this was about two or three

35:56 hundred thousand pounds worth of reinforcement rather than the the £5,000,000. But we went live with everything on time in July 2021. Our solution here saved the client £3,000,000 and accelerated that program by two point five million years with which is as staggering as that sounds. We've also designed that solution to incorporate six MVA of roof mounted solar generation, which will allow that site and that customer to sell 100% green electricity to the grid. We are now working with this client on their forward pipeline of sites across both UK and Ireland.

36:39 Renewable infrastructure then, our third market segment. So the the top line of this, the graph on the left hand side left hand side shows a national not I've been talking too long now. So it's a nice shows a national grids projection for solar going forward to 2030 across the five scenarios. The scenarios are called leading the way, which we feel is too aggressive, steady state, which will actually miss net zero, so isn't viable, but customer transformation is the most reasonable and the most likely. So you can see from the graph on the top, we have 13 gigawatts of installed capacity today, which will rise to 30.8 gigawatts by 2030, a large 106% increase as shown in the middle chart, which compares 2020 to 2030.

37:38 We know, because we deliver this, what pounds per megawatt cost solar developers need to keep the cost under for a final project so they can earn a return on the investments. So that means that we can easily calculate the size of this market. So if you look at the pie chart on the right hand side, 354,000,000 is what's called d and o non contestable costs. So this is high voltage work that is not open to competition that the DNO have

38:09 to do. So this is upstream of their network that we don't get involved in. But the remainder, the 534,000,000 is contestable work. This is the work that we plan, design, and build. So that gives us the size of the market for that area. On the bottom of the slide is onshore wind, so it works in the same way. The left hand graph shows the forecast wind over time with the center graph showing that we move from 12.7 gigawatts to 26.6 gigawatts by 2030, which using the same calculations as solar we know is worth 408,000,000 for the infrastructure that we build, design, and install. So taken together, the market for our infrastructure is 942,000,000 out to 2030, which is a significant market, but, of course, secondary to the much bigger market of electric vehicle infrastructure.

39:08 There are very high regulatory and technical barriers around this work that we do. We are especially accredited from Lloyd's register that allows us to plan, design, and build high voltage electricity networks up to 132,000 volts.

39:29 A case study in renewable infrastructure. So, typically, solar developers, first of all, they find land that is near grid assets like an overhead line or a substation. They sign heads of terms with that landowner, and then they investigate if the grid can accept this generation or not. This is a time consuming and drawn out process only for the DNO to say no. There's no capacity, so then they they move on. We've turned this process completely on its head. So we model out all the networks across the country. So we've identified strips of land where there is capacity on the overhead lines predominantly, but some cables as well. We issue this to our developer customers. They then have a map of The UK that shows them where there's capacity.

40:15 So they only approach landowners where they know there is capacity, and they know how much it will cost to connect so they've got really accurate models that they can then base their commercial negotiations with the landowner on. This gives our developer customers and us very good visibility of pipelines out into the future. Thankfully, that is the end of my bit. I will now hand back to Mike to finish the presentation. Great. Thank you, Simon. As you can see, the opportunity is a is a significant one for us, and we feel like we are very well positioned for future growth. To support future growth, we need a few things. Right? We need strong leadership, a plan that really understands the the needs and the nuances of the market, and a highly skilled team.

41:03 Firstly, strong leadership. Track track record is everything in business, and we have a proven team at the top. Little more on the team later. A focused business plan is crucial, and we have a clear plan for each of those three areas that we operate in. From concept to go live, there is a process that works across each revenue stream. Our plan focuses on mark market segments that are both high growth and sustainable. Our activities have very high barriers to entry. This this work is extremely specialized, and a lot of it is in a regulated environment. So whether it's our in house grid modeling or stacking two or three technologies to design a solution, the work is is is technically sophisticated.

41:49 The talent pool for this sector is very small. We are recruiting high quality from across The UK. It's it's because people are attracted by our our mission on net zero and the chance to make a difference. The the DNOs, the distribution network operators, they are the best pool of electrical talent and a primary target for recruitment. ESmart Networks has access to the full market supply side and demand side. In in EV, our biggest market, we have a presence in in all parts of the ecosystem, so whether it's fully electric, forecourts, large fleets, and buses. TriconX will make a significant contribution to net zero in its own right, but that's that's a presentation for for another day.

42:35 The reason for the reason it has a slide today is is track record. We are seeing a lot of EV businesses with quite inexperienced management team, quite quite unproven. Great ideas, but have they got that execution experience? Supporting organic growth in a start up is not new to us. So whether it's that strong leadership, knowing how to attract talent, accessing the marketing and, the marketing in a heavily regulated space, these are things we have a track record of in TRI CONEX. For TRI CONEX in 2,011, we prioritized two things in particular. Firstly, solving customers' problems, and they were normally complex problems, and secondly, consistent delivery. If you solve those complex problems and deliver consistently, customers return time and time again.

43:24 So our job is to replicate this repeat business model in eSmart networks as we deliver our forward order book. So TriConnex has given us ten years of expertise on the grid. You know, that created this exciting adjacency into electrification, but but it's also given us the tools and the experience to know how to scale a business. A key part of my job is to build a great team. We did it at TriConnex, and we are doing it at eSmart Networks. The useful thing about having done it before is that you learn a lot of lessons, often by your mistakes. We recognize that individual talent is really important, but it's the team that makes the difference, and that's the culture in our business. As Michael Jordan said in the last dance, talent wins games.

44:11 Teamwork wins championships. An important lesson from TRI CONEX in building that team was the blend of the old and the new. Too much old can generate groupthink, and too much new can be unmanageable. So direct reports into Simon are 50% old and 50% new. Chris Dora and Matt Richardson bring the NEXUS DNA, and we're involved in Triconnect right from the start. So they've been there, and they've got the T shirt on an energy starter. David and Christine bring in the new. That's experience in a different perspective. The the other lesson for us in start ups is that below the leadership line, the majority needs to be new and hired with great precision. Every hire should be well thought through. Below the leadership team for us, we are 80% new employees.

44:59 We now are a team of over 80, and that will grow as we scale. So our focus takes up a lot of our time and energy is to recruit and retain the best and then invest in their development. Electrical engineers and operations and electrical designers and technical are the scarcest resort in EV infrastructure. DNO recruitment is a priority, as we've said, and the team of 20 grid specialists led by David McDonald in our Belfast office is a key part that separates us from the rest. Part of having a clear plan is strategic objectives that everyone in the organization understands and are committed to. Our people know that every decision we make comes back to these four objectives.

45:45 Firstly, we are about the long term. This is not a sprint and then taking your foot off the pedal. The growth opportunities in eSmart networks are significant in the short, medium, and long term. We are building a business to last, 100% pure play made for net zero. Secondly, that equates to outsized growth over the next three to five years and clearly beyond as net zero momentum builds. We are resourcing and scaling accordingly. Thirdly, other businesses in EV will struggle to make money. We were profitable last year, and we will be this year. We're not here to burn through a lot of cash just because it's available. We are here to make money. And finally, we're a capital light business. We invested 2,500,000 to create eSmart networks, and we don't need any additional capital to grow organically.

46:35 We are cash generative and agile. As you can see, we had a step change in growth last year, and we will do so again this year. Dominated by eve EV, but renewables and industry really starting to build. So the order book was 3,800,000 September 2020, 13,500,000 last September. It's up significantly at the half year, which is the end of this week. We are seeing extensive early work on portfolios last year now maturing into predictable wins this year and going forward. We have helped operators focus on feasible projects, allowing them to complete their negotiation with landowners where they can deliver quickly rather than waste a ton of time and money.

47:24 There is a spread of pipeline across a wide range of targeted customers, and future visibility assists our resource planning. Multiple customers protect us against any one portfolio stalling and provides a regular flow of new work into design. So our pipeline covers the three segments from the Venn diagram, and we have specialist sales teams in each one managing sector specific customer needs. Given the size of the market and our pipeline, we have been very selective on customers and projects, and we expect margin pressure to be upwards as we build to a critical mass. I said at the beginning, eSmart networks will be a high growth business in energy transition.

48:10 Now you know the business better, I like to revisit those five reasons. A massive addressable market. Simon's first slide on regulatory landscape made an important statement. Net zero by 2050 is law, and electrification is the route to net zero. Electricity supplied 20% of The UK's energy needs in 2020. This will rise to 78% by 2050. Our addressable market of over 9,000,000,000 only through 2030 is more beyond, and our future pipeline demonstrates how well positioned we are to grow. E smart e smart networks is the first EV focused infrastructure company to establish itself at scale in the market.

48:56 From concept to go live, we are the company to partner with on high powered charging of cars, fleets, and buses. This early mover advantage in EV, combined with our modeling and design capability on the grid, creates a strong competitive moat. Most most EV investment opportunities are exposed to a particular operator or hardware manufacturer. Our market includes all operators, manufacturers, and end users. All roads lead to eSmart networks. We are a highly experienced and entrepreneurial management team with a track record on strategy and execution. We see this as a fantastic opportunity to do well by doing good, and we have the capability in the team to make it happen. This is a capital light, highly skilled business with a great outlook.

49:46 It has a national presence, with first mover advantage, it has put itself in a great position to scale. We will double the business this year and double the and double the year after. So while the longer term is very, very exciting, our aim in '22 '23 is to double and double again. Finally, I should highlight that everything you've heard today is organic. The risk scope for consolidation, and we see an opportunity to accelerate growth with a transaction in 2223. Thank you for listening. Now it is time for questions, and there's a questions come through. Mike, that's great. Mike, Simon, thank you very much indeed for your presentation today. Ladies and gentlemen, please do continue to submit your questions just using the q and a tab that's situated on the right hand corner of your screen. But just while Mike and Simon take a few moments to review those questions 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.

50:42 Mike, Simon, as you can see, we've received a number of questions throughout today's presentation. Thank you to all investors submitting their questions. If I could please ask you just to run through that q and a tab and when it's appropriate to do so, read out the questions and give your response, and then I'll pick up from you at the end. Thank you. Right. Thank you. So the first question is from Jake. Given the market cap valuation of competitor Podpoint that recently IPO'd and currently has a 300 mil market capitalization, do you believe the market is not valuing ESMART correctly in the context of NEXUS share price. Yes. Yes. We do we we we do agree with that, Jake. I think we've got that read across, and we've got other other other comparables with private equity. But our job is to to tell the story, is to educate the market, and and that's what we've started and that's what we've started to do. So I think we'll be patient, and that will that will come through.

51:35 You know, that quality will will will come to the top. I think our job as well as telling the story is continue is continuing to, to deliver, and that's what we're obsessive about internally. So, yes, I do agree with the point in your question, but I think we've got a plan to to move the needle there. Second question, there's two questions from Nick b. Simon, if you could take the first one, I'll take the second one. Can you expand on the customer mix and revenue split? Do any customers represent a high percentage of the total revenue? Oh, I can't see that question. Sorry. Repeat that, Mike. I can't see it. What do you, also, can can you expand on the customer mix and revenue split? Do any customers represent a high percentage of the total?

52:27 Yeah. No problem. So, unfortunately, we can't talk about our individual customers because of the confidentiality. But but broadly, in the EV sector, there's about 16 major customers we have. So that it is quite diverse, actually. So we're not dominated by by one big customer there. It's very diverse. And then the I n c and renewable market segments, we've got about four major major customers each. There's a teal of smaller ones, but there's a four major ones. So across all three areas, we're we are very diverse. I think it was in the slides earlier on what the the revenue splits are, but it's it's certainly majority EV and has been or will continue to be majority in the 60% EV, 60% plus going forward, and then the other two split roughly half and half renewables and INC.

53:23 Great. Thanks, Simon. Nick's first part of the question was, what do you see as the USP, for TriconX? So, Nick, TriconX build network in gas, water, electric, fiber, and EV. So it offers five services. So I guess the real USP designs and build those instead of going to five different providers, Thames Water, UKPN, Podpoint, etcetera, etcetera, they can come to TriConnex, and they can get all five services. Question on inflation, Simon. How are you managing inflationary pressures on the business? So the vast majority of the contracts that we enter into with our customers are our own specific terms and conditions. And within that, it gives us the right to pass on things like copper price increases, aluminum, steel, commodity price increases, you know, over I think it's over 80% of our order book is in that state.

54:22 So and and that's a legacy thing in the industry where copper was always a a risk, so we always built that into your contracts anyway, and that also gives us good coverage to to pass on inflation new pressures. The the balance is not on our terms and conditions, tends to be on JCT and any c type frameworks where, again, we've got some mechanisms in there to pass on price increases. But very importantly, we, you know, we want to be transparent with our customers. So we have a weekly update from our buy in teams to our our estimating team. So we've got a very short cycle in terms of how we price projects. Thanks, Simon. Question from James.

55:08 Please, could you help us understand what the margin structure and cash flow profile for the business looks like medium, long term. I'll I'll I'll take that. I mean, the short term, we're looking at two to 3% net margins, and we're looking to grow that to, high single digits over the over the sort of three to four year period. We're looking to be comparable with TRACONEX margins, which are at nine nine to 10%, net. In in terms of cash flow, the business is in is in good shape from a cash flow point of view. You know, the terms are sensible, and the business is always in a in a in a cash positive, position, which, I think as Simon and I both alluded to today is is quite unusual in the EV space. So I think I think margins were profitable, and and margins are heading in the right direction, and cash flow profile is positive.

56:00 There's a question, Simon, on is there scope for recurring revenue within the EV charging point installed base, so maintenance, servicing, or upgrades? Upgrade is an interesting one. So already, we have seen a few projects now where we installed the first electrical infrastructure three years ago, and now we're back upgrading that infrastructure with updated hardware. So we are finding that the the hardware in this world, you know, it's not like it's not very long lived hardware, like the actual transformers and networks are. The the the chargers tend to have a shorter life cycle. So definitely, not just is there opportunity. We are doing that. We are upgrading sites that were installed quite a while ago.

56:46 On the maintenance and service side, we we keep it under constant review, but we don't do that now. We we judge that to be a fairly commoditized, low margin area that doesn't fit within our higher margin, me and design and construction work. So while we keep it under review, it's it's not something we're currently involved in because of of margin pressures we see in that world. Thanks, Simon. There's a question, Philip. What is the smallest project presumably presumably residential that you consider for a a project? Firstly, Philip, eSmart Networks doesn't do any residential, so any residential EV sits in, TriconX. It is strictly the the sectors that Simon's outlined today. In terms of the smallest project, the average order size is is growing quite significantly over the last eighteen months.

57:41 What would what would you how would you explain the range, Simon? Physically, the smallest projects that we we look at are 50 kilowatt chargers and above. So, you that those contract values would be 20,000. Below that, it it's a more commoditized, national scale business, and we we concentrate on the more complex where we can add the higher value. So 50 kilowatt DC charging and above. We generally don't get involved in AC charging because it's relatively simple. And it's mostly residential. It makes us at Citrix and Triconix. Over the next five years just remember. Over the next five years, how sustainable is the current CAGR trajectory? Simon, would you like to pick up on that? Yeah. Definitely. I mean, you know, as I outlined, the the market is absolutely massive here. And if we triangulate the 17,000,000,000, for example, at the SMMT, we're talking about roughly half of which is to ours, even just looking at government stimulus.

58:42 So the charging investment fund, the CAF, which is launched last year, is 400,000,000. And already, we have turned some of that over because the money that the Zoo Capital put into one of our customers, we are the installation partner there. The rapid charging fund, which the government launched end of last year, and they just updated in their infrastructure charging strategy come out on Friday. That's a £950,000,000 fund, which is specifically there to fund the high voltage apparatus and reinforcement for motorway service areas, so exactly where our market is. So that 950,000,000 is for the work we do. And then launched on Friday as part of the government's EV charging strategy was a 450 levy, which is a local electric electric vehicle infrastructure funds. This is to fund local authorities to fund large amounts of residential on street parking. So this isn't residential in the house. They try to make those, but out in the street, hundreds of chargers. So even looking at government stimulus and bear in mind that the government's approach is that we will stimulate, but the private market will pick up the most of this, then we we see stable high, high growth, which generates high CAGR going out into the future without a shadow of a doubt.

1:00:10 Thanks, Simon. We're at 12:30. If I could just quickly do one, Philip, it's gonna be a quick answer. But I assume that being capital light, you will rely upon additional recruitment to be able to support the growth. I don't I don't think we're relying on on, recruitment only, but it is key. We do we have created our own academy to to to grow our own, bringing graduates in, and the Belfast piece is important again because Belfast University is the finest university in The UK for electrical, design and electrical engineers. But I think it's the deep knowledge and and and skill set we have combined with the early mover and the very, very high barriers of entry. That's what's gonna underpin our growth. But, yeah, there is a scarcity of the right people, but we think we've got a plan to grow our own as as well as, you know, as well as attracting those that aren't are are experienced and proven.

1:01:02 So I think I think we're there. Mike, Simon, that's we did. That's great. Thank you very much indeed for addressing all of those questions that have come through from investors. And, of course, we will make all the questions submitted today available to you immediately after the presentation has ended. And ladies and gentlemen, we'll publish all those responses where it's appropriate appropriate to do so on the investment company platform and notify by email when these are ready for your review. Mike, perhaps we're redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please ask you for a few closing comments, that'd be great. Thank you. Yeah. Thanks, Jay. Look. Thank you for joining us today. I know everybody's really busy. I hope you found it useful. I wanted I wanted you to get a picture really of how much knowledge and expertise we've built built in the last five years. And I think we're sort of sitting in a different place to, you know, most businesses in this kind of early EV world.

1:01:52 And also that we're a really experienced management team. We're on an absolute mission to become market leaders in electrification. It's been a great start to 2022 for eSmart Networks, and we look forward to speaking to you again later in the year, to share to share our successes and future plans. So thank thank thanks again, everybody. That's great. Mike, Simon, thank you very much indeed for taking the time to update investors today. 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 that the management team can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of management team of NEXUS INFRASTRUCTURE PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.

1:02:37 Thank you. Thank you.