Refuels (Oslo:REFL) — ReFuels CEO and CFO present the Q4 results and host a Q&A

0:01 Good morning, and welcome to the REFUELS investor presentation. Throughout this quarter presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the q and a tab situated in 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 received in the meeting itself. However, the company can review all the questions submitted today and pop up 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 Philip Feld, CEO. Good morning to you, sir.

0:30 Good morning. Thank you, and good morning to everyone who's, yep, taking the time, to follow us and view what we have been up to, for our January to March quarter. So I'll just move us on here. So just a bit of a reminder, really, who we are, what we do. As of today, our focus is around the transport, and that is, predominantly, the very heavy, good heavy part of the heavy goods vehicle sector in The UK. We've got 14 refueling stations, operational, today across The UK, but one more in build, talk a bit a bit bit more about our our ambitions beyond just having one more in build.

1:19 We've got north of 1,700 vehicles on the road today or our customers have that use our stations exclusively. Over the last twelve months, we saved north of 135,000 tons of greenhouse gas emissions, or we helped our customers save 135,000 tons of greenhouse gas emissions through our operations, which is something, yeah, that we're very, very proud of and which will continue to grow going forward. Just a brief recap or maybe reminder as to what one of our stations looks like. This is our new native station up in the Northeast and up in County Durham. Needs a or this is on a a two acre plot, so 8,000 square meters in total size. I think what's important to understand here, because sometimes we we get questions, well, why don't, you know, why doesn't someone who has a regular petrol or diesel forecourt, why don't they just plunk down one or two CNG dispensers, and hence, you've got a competitor?

2:20 Well, if you look at the scale that we operate at, we are a predominantly a truck only refueling facility. And as such, the scale you need to operate, the land you need, the the capacity of the gas pipeline you need to connect to, the electrical connection, and so on and so forth. And if you look at this station alone, we can refuel 14 trucks simultaneously, 80 trucks per hour. Fill time is very, very similar to diesel, maybe one to two minutes longer, but pretty much on par. And, you know, through through a day, this this station can refuel seven, maybe 800 trucks per day. Some of the key highlights from from the quarter, we had strong underlying growth, close to 50% comparing year on year growth.

3:08 If you then look at the EBITDA and annualized EBITDA from the station portfolio, Baden will touch upon that a bit later on. We annualized £7,000,000 in March. Going forward, we're expecting that to go north of £1,000,000 as we get to the end of per month. Sorry. As we get to the end of twenty twenty four. On our certificate generation and trading, we are seeing signs of recovery in the biodiesel sector or at least that sector balancing, and that is supportive of the RTC pricing. We opened one new station. We also have a first private station, which we'll touch upon briefly. And then as I also mentioned, we have another one, in build currently. Our plans to put a lot more into build in a bit, and we've already got firm plans for five higher capacity large, high capacity stations to go into build later in 2024.

4:07 And finally, we have been progressing discussions to to consolidate the station network. Currently, 13 out of those 14 stations that are operational sit outside of our balance sheet through a joint venture with with Foresight. We'll also provide an update on that.

4:28 And then something that we are very, very excited by, and this is in addition, and this has happened since we actually presented our quarterly results on Friday last week. There is a very large truck show in The UK this week. This is a picture I attended there on on Tuesday. This is a picture of a six by two. So the a vehicle that can that can go up to 44 tons in in total combination weight. And this is the first six by two Scania that has been brought into the country. We are extremely excited by this. This is something we've been waiting on for five to six years, and is going to be a true game changer, in growth going forward and in penetration into market segments that we today are unable to address with bio CNG as a fuel.

5:27 I'll touch upon that, a bit later on on on the, know, difference between a four by two and a six by two. But, you know, once again, a game changer the way we see this. It's not gonna have an immediate impact on on on growth and volumes. Of course, it takes time for these orders to come through. But from 2025 onwards, we're expecting this to to to really start to move the needle. If we then go back to some of the key figures, for the quarter, you can see pretty much growth all along all along the path here. I think what what's what's the one I'd like to highlight here is maybe the, you know, unique customer fleets. Where we've now got to as a company, you know, we founded the company ten years ago, is that we are now in a world of true mass adoption.

6:15 Not just true mass adoption amongst the large corporate fleets, but true mass adoption from a perspective where we are now also attracting and addressing demand from the second and third tier fleets, the smaller fleets, the family owned businesses that run twenty, fifty, a 100 trucks, etcetera, and that will just continue to to expand going forward. And that's, of course, a validation of bio CNG as a great fuel choice, that the trucks work, our station network is good, there are indeed tangible economics that work and also the greenhouse gas savings, which once again, we expect once the c six six by two truly comes into to to production, because that is a preferred truck in The UK, But once again, our customer base will continue to to broaden.

7:11 If you look at the, you know, overall growth that we've had, we founded the company ten years ago. It took us about six, maybe seven years to really start to see lift off where we got to a critical mass of stations and critical mass of a number of company companies, customers out there that were willing to move away from diesel and over to biocNG. In this graph, you see we have something called MRS volume or we've got station volume. An MRS, is something that's important to us, touch upon that shortly, and explain exactly what it is, but that is a solution that means that we can pull forward customer demand ahead of actually having stations, you know, large pub public access, grid connected stations similar to the to to the picture you saw some slides ago.

8:00 And the MRS, on this slide is this solution. Why? Because we can put a mobile refueling station onto a customer depot. A customer can run up to a 100 trucks a day through it. Our busiest one at the moment runs a bit more than a 100. I think it's about a 110 trucks a day. So we can put it on that depot so that that customer can order, and pull up pull forward truck orders whilst we are developing the public access station on their doorstep, which could be half mile away, a mile away. Once then the public access station goes live, we remove the MRS and redeploy it, excuse me, redeploy that elsewhere. This is a solution that we developed in 2020.

8:47 We had a very specific requirement at that point in time, which were which is for a very large customer in Milton Keynes area, the Magna Park distribution, you know, center complex there where we've got two installed. We didn't really think we would ever need more than two, but it's become such an elegant and such an efficient and such reliable solution that we've now got seven in operation. We've got two in spare because we, of course, need need to maintain them and rotate them. We've got more in build this year. So probably sometime in 2025, we should be north of 10 of these, in operation across the country. We have developed, our first, you know, on depot private station for, Waitrose, at their Bracknell distribution center.

9:35 We sometimes then get the question, but hang on, Philip. You know, you guys have said your focus is on public access. Yes. It is absolutely that is our focus. That is where the growth will be. That is where we see the benefits of truly getting scale. But, of course, we do work closely with our customers. And if our customers need a stop gap solution before they can get to a grid connected station in the future, we will, of course, provide that. And that's what we've done here. We have provided a, a private station for Waitrose at Bracknell, which over time, we would expect will become a grid connected station, and as such, will move away from from from being a purely private station. So what have we done over the last six to nine months with regards to to to new stations?

10:26 We've opened Corby, then we've got Bangor, which is the first one in in in Wales. And only a couple of weeks ago, we we opened our first one in the Southeast Quadrant of England if you want, which is Aylesford in Kent. Once again, an important station because it opens up parts of the country we haven't been able to address previously, and that's off to a great start already. Why? Because we have had an MRS installed there. That MRS will now be removed, and, of course, we then have 60 plus trucks that are using that station on day one. And then finally, we've got Doncaster that's in construction and more going into build, later on this year. So the ones that we wanna build later this year, just spend a minute or so explaining that.

11:12 We have spent many, many years looking around the country, speaking to our customers where do they need stations. We've got a land team of five people who only do one thing, which is go out, work with landowners, you know, secure agreements with landowners, get planning get surveys done, get planning permission, and basically take the site through to to to shovel ready. We now have a much more mature customer base as well than we had just two, three, four years ago. So the next stations that we will put into build, the way we describe them is basically high graded station. That means that we've got a,

11:53 you know, a wide, a very broad portfolio of station opportunities out there, and we are now taking the best of those. I say the best under number of categories. It comes to the economics of those stations, And, of course, those economics are driven by a number of factors such as, you know, land cost, where can we locate them, but also customer demand. Because we've now got such a broad and, I would say, attractive customer base if you want from depth of growth and depth of fleet that we can now choose to build the stations in locations where we will have the fastest customer uptake compared to some of the stations we've had to build in the past, which have also been been built for for certain strategic reasons, such as the first one in Scotland, the first one in Wales, etcetera, in order to open up new markets.

12:46 If we then look at the stations and only station economics, so this is excluding anything that we could potentially make from certificates. The current run rate, which is based on March, you know, annualizing the earnings in March, March is a month, is north of £7,000,000, per annum. We have an order book or our customers have placed orders for close to a thousand trucks. Once those are into operation, that EBITDA annualized EBITDA should reach in the range of £12,000,000 plus, so north of £1,000,000 per month. However, if you then look at the station portfolio, and this is not including any future growth, this is just assuming that we basically stop building stations, which we won't, That takes us up to close to £50,000,000 once those stations get to a a healthy level of utilization.

13:40 And, of course, we've got ambitions, as I've just mentioned, to to build more stations in the near future. We announced in April, that we have a, a process ongoing, to seek financing, so that we can consolidate, the stations that we've currently got today onto our balance sheet and move them all under, one umbrella. We have had a we've got a very good relationship, with Foresight Funds, who have provided the financing for currently for 13 out of the 14 stations we have in operation, and, of course, Doncaster that is in build. We have announced that we're looking for £150,000,000 there or thereabouts, split yet to be determined, but split between a a portion of debt and a portion of equity.

14:33 That process is ongoing. We're making excellent process sorry, progress, and we will come back to our shareholders and back to our market once we have reached a, yeah, a certain milestone that we can then announce. And this is really what we're looking to do. The current structure is on the left hand side where you can see we have a joint venture, an off balance sheet joint venture with CNG Foresight. Sorry. The joint venture is called CNG Foresight, but that is with Foresight Group for those 14 stations, 13 in operation, one in build. And when, you know, we then conclude this this this restructuring if you want or simplifying the structure, we will bring all of those stations in under the CNG fuels umbrella and thereby, you know, benefit from those going forward as they have rapidly growing cash flow generation.

15:29 That will then be a benefit to us for our future rollout plans that we're looking to to execute on over the coming coming coming years. And then I will hand it over to Baden. Thank you very much, Philip. So what I thought we'd demonstrate here is the station portfolio profitability. I know we've shown this previously, and this, of course, is the CNG Foresight joint venture and how that's been performing, how that's been performing over the last, last three quarters I've used here, to show the growth within this year. So to put into context, we've grown about 30% in our volumes this year. As you can see, we've had about a 125% increase between q one and q four, in our adjusted EBITDA.

16:15 So that's, yeah, obviously, a very a substantial increase, which which has come down to a couple of different factors, but with all of which obviously are very encouraging for the continued growth of the business. So number one, electricity has come down organically. We obviously have very high electricity prices from the prices since this sort of energy and Ukraine Russia related crisis back in 2022. Those have come down, materially, and, of course, electricity is one of our key inputs. We've also improved our logistics logistic operations, particularly in the trail in running of our trailer fleets. We do nearly 30% of our volumes is currently driven around by the mobile refueling stations, and the improvement of the logistics there clearly brings down our costs brings down the costs and boost margins. And then, of course, then then the really a very substantial factor has also become and to show the scale benefits of the growth that we've had is we're now supplying what we're now, sorry, consuming more than 10 gigawatt hours per annum of electricity, which puts us in the large energy cons customer bracket, which which saw, which has seen about an increase of about a 150,000 pounds of EBITDA per month.

17:22 It has boosted our margins, substantially about 14 and a half to about 18% currently. So EBITDA margins on a per kilo basis, currently around 14p. Gross profit margin's around 18p, and that is up about 50% on the year. So, very healthy margins come from the stations as we continue to build volume through them, continue to be able to share in resources to better to to better run them. As Phillips mentioned before, we've got a we've got a very we've got a confirmed order book of, you know, nearly a thousand trucks now. And with those with those vehicles being ordered being delivered over the next twelve months, should see an increase in our EBITDA to about 1,000,000 per month or £12,000,000 per annum sometime around the end of this calendar year or or during yep. End or end of the financial year, quarter.

18:08 Consolidated revenue in the quarter was down £26,400,000. That was largely due to a 30% decrease in the gas price, a 30 or 7% decrease in the gas price in the period. Gas price for us is a pass through to our customers, so it has no impact on the grow on gross profit or on the or on the bottom line. We delivered 38,400,000 RTFCs in the period. These delivered at a volume weighted average price about 21p per RTFC. This is an it is not just as a a positive margin for us in the period, but also relates to some of the previous head hedging we had done in the prior year, which enabled us to recognize prices that were in fact above market prices. And we've got some we've Philip will have a bit of a discussion on the RTFC prices later, which we've seen a a substantial recovery in of of of, yeah, in in the last couple of months.

19:01 We've recognized the gross profit gross profit of 2,800,000. That was driven primarily by the station management fees we received, sales of RTFCs, which, of course, are now at a positive margins and some of the natural gas prices. We did have an with an EBITDA negative EBITDA, which I'll show you how but I'll in in the quarter of 2,100,000, but I'll show you how we adjust that out to get to the positive EBITDA of £300,000 in the quarter. Overhead costs, we've have a have increased due to an accrual we have for the bonuses, which are expected to be paid out this year. But I think, I'll I'll, we'll repeat for, for the benefit of new listeners. We've done an exercise internally to look at what we would need in order to be able to supply the 30 to 40 stations that we have, that we want to to develop in the medium term. We anticipate an overhead increase of about 15 to 20% will be, will be enough to sustain the operations for that number of stations. So we have got massive operating leverage as we increase the number of stations and the amount of volume we're going through our sites over the years ahead.

20:02 Here, we show the adjusted EBITDA, which we've previously shown before with one element that's been removed, thankfully, because it was heavily distorting our earnings figures. We used to have to, account for an RTFC adjust RTFC price adjustment based on the timing of purchase and sales of RTFCs. We no longer have to do that. So that cleans up the our cleans up our reported EBITDA quite well. Once we once we adjust for share based payments and the timing of EPC revenues, which essentially are the contract development contract revenues that we have earned, earned but not yet done the work or, alternatively, occasionally, done the work but not yet earned. So we adjust those out. We see we have an adjusted EBITDA of about £300,000. Obviously encouraging to return to adjusted EBITDA profitability in the quarter.

20:50 Total assets, 203,000,000 in the quarter, down about £10,000,000 from last quarter, but that was largely due to the 30% or so decrease in the natural gas price. So we had a corresponding decrease in liabilities in the period too. And so total equity a total equity ratio has fallen from 57% to 56% in the period.

21:18 Net cash flow from operating activities was was £2,500,000 negative and cash from investing about a negative point one. We we we we drew £1,000,000 from the Foresight facility, which was £6,000,000 drawn up to the end of thirty first of March. So it still has, still had availability, up to the £10,000,000, up to the £10,000,000 of working capital available there. Group held 4,300,000 in cash at the end of the period.

21:49 Thank you. I'll hand back to Phil. Thanks, Baden. So let's just take a brief look at the market that we operate in. In general, our market or we say our market is for trucks above 18 tons. However, when you look at at at that market and the market segmentation between rigid, which is the light blue on the left hand side, and four by two and six by two trucks, which are the articulated trucks in the marketplace. Our core market is the four by two and the six by two truck market, which I'll touch upon.

22:26 That does not mean that we are not focused on the rigid market or that we do not have customers who want to grow their CNG fleet in the rigid market. On the contrary, a couple of years ago, had you asked us, we probably wouldn't have said, we we would probably have said we don't expect a lot of growth within the rigid segment. However, that's wrong. We are now seeing growth that is surprising us, but the majority and the the bread and butter of our growth, if you want, is going to be within the four by two and the six by two market going forward. So what are the advantages here for our customers? Two advantages. One, yes, a CNG truck is more expensive to buy than a diesel truck, but the fuel is considerably cheaper.

23:14 And because you have a fuel, portion of your overall, cost of running a truck is so much cheaper, you typically have a payback period of your additional CapEx for that truck in the range of one to two years. Average savings for our customers, you know, if you if you were to drive a a imaginary diesel truck one mile or 10 miles and you were to drive an imaginary CNG truck 10 miles, the the the the savings of operating that truck would be about 30% and has been 30% historically. Currently, we're sitting above those 30%, and that's also one of the the driving factors for why customers here are so keen to continue to order because here, they get the benefit of running on 100% renewable and sustainable gas and also having attractive economics compared to running a diesel baseline, vehicle.

24:10 We spent a lot of time talking I've I've mentioned the six by two, and I'll continue to mention it because it's such a an exciting thing for us. And as I said, I, you know, I don't really like using the word game changer, but there's really no other way of describing how important that six by two vehicle is for, for The UK market.

24:30 If you look at the typical usage of a four by two vehicle today, an average vehicle uses about 32 tons of 32,000 kilograms of gas per annum. That contributes close to £6,000 of gross profit per truck for us as it goes through a per annum, as it goes through our station network. However, a six by two vehicle operates in a heavier part of the of the fleet operations.

24:58 As such, does heavier work, consumes more fuel, needs more energy. And as such, as six by two vehicles come through and start to get into the, you know, customer hands here eventually, we are expecting that the average fuel used per vehicle per annum through our station network will go up. And, of course, if you look at a six by two vehicle, it will use on average, we we estimate about 45,000 kilograms, which again increases our gross profit margin significantly. So what is a four by two and what is a six by two? Well, if you look at the the four by two, which you see on the left hand side here, that is a tractor and trailer combination where the tractor unit is one rear axle. That means that it can typically operate up to 38 tons in in combination weight.

25:49 That is 14%. So the total market of a four by two, this is including all fuel types where, of course, the majority are diesel still, makes up 14% of the articulated truck market in The UK, 21,000 trucks in total. On the right hand side here, you see one of our demo trucks, six by two demo trucks. It has two rear axles and can operate up to 44 ton total combination weight. Now you might say 38 tons for four by two, forty four tons for six by two. It's only six tons. What's the big difference? If you do six tons of additional payload and you can do that twice a day over three hundred and forty, 350 operational days a year, you're into thousands of tons of additional payload during during a year. So it is a big deal.

26:41 84% sorry. 86% of The UK articulated market, truck market, is a six by two market. And as of today, we've got about 56 by twos, on the road, and these aren't factory built either. There are modifications that need to be done after the factory line. That that that total market is 124,000. Huge market that we today have been unable to penetrate. With the Scania factory built six by two being launched or being presented to the first time on Tuesday this week, it opens up that door to us so that we can now start to penetrate the six by two market the way we have the four by two market. We estimate that by the end of twenty twenty four, we would have approximately 10% of the total four by two market running through our network.

27:33 We can achieve that in the six by two market over time. Well, you can do the math what that means for us. If we then look at orders going forward, our customers are running today north of 1,700 trucks through our network. We know that those customers have ordered close to a thousand trucks that will be delivered over the next twelve plus months. And then we know that a number of our large customers have indicated to us that they will continue to order trucks when we expect them to, but they they've indicated their order plans for 2025 and '26. Well, you might say, well, hang on. Why haven't they ordered trucks for '25 and '26 now? Well, typically, you would order trucks six to nine, maybe twelve months in advance, but usually six to nine months. So if you need a vehicle on the road, second half twenty twenty five, you're not gonna order that vehicle before probably late twenty four or very early twenty five.

28:29 We spent a bit of time in the past talking about, you know, the biodiesel market and why that's so important to us. You've got to remember that we generate a lot of RTFCs, renewable transport fuel certificates, and the value or the price of those certificates is determined by the price spread of one liter of fossil diesel and one liter of waste derived biodiesel. Due to factors outside of our control, that market crashed or the biodiesel market crashed, in 2023 and thereby severely depressing the RTFC prices. What we are now starting to see is a recovery in some of the biodiesel market fundamentals.

29:16 The EU is now investigating flows of biodiesel for China through an antidumping investigation. The UK announced yesterday that they are doing exactly the same. So as such, there are some you know, there is positive direction at the moment that the market is rebalancing, that this wave of allegedly fraudulent biodiesel or a lot of it was alleged to be fraudulent. Biodiesel came in in 2023 is washing through the market, and as such, we are starting to see, more supportive, fundamentals for what we can achieve going forward in the RFC market. If you look at where RFCs are trading, they're currently trading in the twenty twenty ish range, maybe a bit more currently, and that is important to us because that means that, of course, the margins that we can make from sourcing biomethane will start to increase again.

30:19 So here we're showing margins back from 2021. The average margin has been about 30% per annum. Sorry. 30% margin, on sourcing of biomethane. Currently, we're below that, but with the seemingly steadily increasing and improving market fundamentals, we are now seeing these prices, start to start to recover, and our margins are starting to recover. An important aspect to to remember here is because our volume has grown so much in 2022, '23, and continues to grow month on month going forward, we don't need to get up to 30 or 40% margin in order for that to have a significant impact on our earnings.

31:07 No. Because the volume component now has doubled or at at least grown more than a 100% since the last time prices were at sensible levels. We're only a marginal and a and a, I would say, fairly small recovery in RCFC values and increase in margins will have a outsized impact on our earnings and cash flow generation going forward. So just to summarize, before we take some questions, we there's no doubt we've got a strong market leadership in The UK and very strong market position in The UK. That's take many years to to to build. Now we are coming into a phase where we can actually harvest some of those benefits and harvest some of those seeds that we've been planting over the years.

31:58 We're starting to see a strong networking effect now from the the the station network. True economies of scale are coming through now. Baden mentioned previously how our EBITA margins and how our margins in general have increased, dramatically, I would say, over the last twelve months. And Baden also highlighted, you know, we've we've got huge operational leverage in the business. We need maybe 15 to 20% additional headcount to operate a station network that is close to three x of what we've got today. So once again, that will start we will start to reap the benefits of that very soon and pretty excited about that going forward. We are today focused on The UK market.

32:45 We won't be tapped out on growth there for a very long time to come, but our focus isn't only on The UK. Over the next couple of years, we we will also probably or likely start to get involved in some projects across the EU, but our focus for now is in The UK. We've got a medium term target of 30 to 40 stations and then continued growth beyond that. Finally, strong underlying growth that will continue going forward. Very excited about the visibility we have on orders from our customers. Progressing attractive sites. We've got five more we wanna put into build very soon and then continue to roll out more attractive sites from 2025 onwards.

33:32 And finally, probably repeating myself for the umpteenth time now, but the the six by two that was released this this this week cannot highlight enough the what impact that will have on the business. And on the overall ecosystem that we've created here, going forward, we've already got, a list of close to a 100 fleets that wanna demo that vehicle or that type of vehicle, as soon as, it is put on the road, shortly after the summer break. And with that, we will conclude the presentation and see if there are any questions. Perfect. Philip, Baden, thank you very much for the presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen.

34:21 Just while the company take a few minutes to read the questions that have been today, I'd like to remind you the recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. And, Philip, if I could just ask you to read out those questions and give responses where it's appropriate to do so, I'll pick up from you both at the end. Thank you very much. Yep. I'll get going here. Can you explain the changes in fundamentals that you think will help RTC prices? Well, touch upon some of them. Going back to some of the basics again, we are, you know, exposed whether you like it or not to the direction of biodiesel pricing because that is essentially what determines the RTFC price of the RTFC value. We are seeing the market or seemingly seeing the market becoming more balanced between supply and demand.

35:13 Flows from Asia, I wouldn't say they've stopped, but are greatly reduced. There are ongoing investigations here to to to weed out the flows that that probably shouldn't have occurred in 2023, and as such, there is a more positive backdrop. Probably like to highlight a couple of other things as well, which aren't immediate, but will have which will have an impact from 2025 onwards. There is a sustainable aviation fuel mandate that will be implemented in The UK and The EU from the 01/01/2025 onwards. Why is that relevant to us? Because a lot of the feedstocks used cooking oil and tallow typically that today are used to make road biodiesel are expected to go into the sustainable aviation fuel sector and be used there to produce sustainable aviation fuel. Why do we believe that?

36:04 Because the sustainable aviation fuel sector is expected to pay well in excess of what the road sector can do. So as such, of course, feedstocks will flow to the best paying market. And we believe that were that would structurally start to tighten the the road biodiesel market from 2025 onwards. The exact timelines of that, of course, you know, beyond our crystal ball gazing here, but that we are expecting a structural tightening to take place in '25 and '26, which should also have a positive impact, on these fundamentals going forward. Second question, do you think the truck manufacturers will be able to produce enough six by twos? And the this the simple answer is yes for the following reasons.

36:51 When the truck manufacturers produce a CNG truck, it is essentially produced on the same production line as a diesel vehicle. There are certain components need to be changed out, but we're not talking here about a, you know, complete separate production line in a complete, you know, that needs to be built up, retooled, and so on and so forth. Having spoken to the truck manufacturers about giving around giving out too many details, they don't see any constraints from 2025 onwards to produce both four by twos. I would like to stress that would continue to be very important market for us. We don't wanna talk down the four by two importance to us, but where they can satisfy demand for both four by twos and six by twos in the future. And as such, yes, there will be a bit of time of ramp up from 2024, and I think we need to be sensible, temper everyone's expectations. You know, it's not gonna have a huge impact on on trucks on the road for 2024, but the impact will be felt from '25 onwards, and that's where the truck manufacturers are telling us that they don't see any limitations on their end as to how many vehicles they can they can produce.

38:02 Why don't you have more competition in this market if it is so attractive? And I presume that is down to, you know, someone's room, you know, referring to stations, etcetera. Well, first of all, you know, we we believe it's an attractive market. Others can can can take their views. I think it's a multifaceted question, which which actually has, yeah, a lot of depth to it in in the answers here. If you look at this from a very high level view, what we do, and you purely look at a station and you look at, you know, we've poured some concrete, we've we've we've flattened some land, We've put some compressors on there. We've connected to the gas grid. That doesn't maybe look like it's that complex. Actually, that part of it is actually quite complex as well because the design that we've got, the fact that we can operate them as unmanned stations, There's no one in Europe that's got a capability that we've got at the scale of the stations we've got and the fact that we can operate our stations from a phone.

39:02 So there alone, we've got a competitive advantage. But the biggest motive you want or our biggest competitive advantage here is access to land. It's access to the customer base. It's the knowledge that we've built up. You know, we've got sites that we would like to build urgently that we've been going at for seven to eight years and we're still not building. Why? Because securing land takes a long time, negotiating with landowners, doing all the surveys, getting a planning submission put in, getting planning approval, then discharging conditions, and then actually getting it trouble ready. So, typically, from someone is looking to, you know, acquire a site and start, you know, to to to take it through the the process that I mentioned, that can take two to three years at best, probably longer, and then it takes eight months to build.

40:01 And that is not a function of money. So even if you got unlimited resources, any one of the energy majors, it's not a function of money. It's a function of time. Planning authorities don't work any faster just because you're a large energy major. Surveys take the time they take, negotiating with landowners, and so on and so forth. But because we've been doing this for so long, we've got a huge land bank that we're currently maturing, moving through the stages, that is our biggest competitive advantage today and is something that others would need to catch up on before they can even start to build their own stations. With the launch of the new six by two, how do you see this driving your revenue, and what, if anything, is the limiting faction capturing market share? Well, probably answered some of that already.

40:49 You know, don't expect the six by two to have a meaningful impact in 2024 because it's just been launched. Know, it will go into regular production later in '24 and really crank up production levels from '25 onwards. But, yes, we do expect it will have a huge impact on earnings from 2025, onwards. Limiting factor in capturing market share there, that's a very good question. I'd probably say stations. You know, we've got 14 in operation today, one more in build. We wanna put five more in build. It gets to 20. The UK could need does need 100 of these large stations in order to, you know, truly penetrate and be able to address pretty much all all parts of the market geographically and also segment wise with regards to to to various haulage haulage patterns.

41:45 So I would say but 20 stations is gonna be a you know, is gonna get us off to the races in a big time with regards to six by two market penetration. You've got to remember, you know, we've got today north of a 150 fleets that have signed a contract with us. Some of those are still waiting for their first trucks to arrive, by the way. The vast majority of those fleets are predominantly six by two fleets, meaning the majority of the vehicles are six by twos. So once the six by two here in big numbers from '25 onwards, we would expect those numbers to really, yeah, to to really crank up because we've already convinced a very large portion of our customer base that a six by two is is is something that that they'll want to run.

42:33 Let's have a look here. The funding structure to expand to the new 14 sites and site availability, what challenges do you foresee in scaling up the infrastructure? I've touched upon one of them, which is the time it takes to secure land, to run that through the process, planning approvals, and so on and so forth. The other one is, of course, financing. You know, if we had an unlimited amount of funding available, you know, we would be building more stations, today. However, would like to stress here one thing, that we do not need that much more funding in total. Yes. Bringing back in the foresight station is one thing, but on top of that, the type of growth capital we need on top of that doesn't need to be a a huge check. Why do I say that?

43:26 Because of the cash flow generation that will start to come off our existing network. That would really ramp up from '25 onwards and as such, put us in a very good position to have a sensible cost of capital and a quite, you know, optimized funding structure if you want going forward. So we're quite excited about that, but I would say there are, you know, two limiting factors today if you want. It's really about securing land and getting that into a shovel ready state and financing. But both of those, we have a plan for, and both of those we'll be executing on over the next twelve months. With with increased demand, what revenue profit do you expect from active seeds? What's the target waiting for your model? K.

44:11 I'll I'll I'll answer that briefly, and then I'll hand a bit over to Baden as well. I think it's important here to understand that the numbers that you've seen in the presentation, the 7,000,000, the 12,000,000, the up to the $159,000,000, sorry, of EBITDA generation in the station portfolio does not include a single pound from RTFC generation or from profitability from biomethane. That isn't totally on top of that. I also mentioned, you know, we don't need a lot of growth in RTFC values here in order for us to see a significant ramp up and significant increase in cash flow generation. I'll just leave it at that and maybe, you know, what's the target waiting for your model or maybe So I think I we've previously shown in a prior presentation the kind of operating leverage we have towards the RTFC prices, economic leverage we have towards the RTFC prices.

45:06 It's not appropriate for us to guide on where we think RTFC is gonna go because we simply that is a, know, that's a complex market that we and for the reasons Philip's been through, have have have our feelings on where we where we think it should head sustainably. But in you know, as as we've shown before, at the volumes we're currently at over the next twelve months or so, for every 3 or so pence above $18.19 pence RTFC price, we generate an additional 10,000,000 or so of EBITDA. So, you know, currently trading, you know, currently trading just over 20p, and, obviously, we'll have to see where that where that moves to during the rest of the course of the year. That's a crude number, of course. Things can move around in a in a customer and revenue side, but that is a that is a a sort of a simple, back of the envelope basis for for thinking about how that will, how that can affect the probability of the business.

45:58 Of course, as our volumes continue to grow, that that that metric then changes again for next year. Thanks, Baden. Then we've a question here, which is why do the directors feel it is appropriate to increase bonus accruals when there is negative EBITDA and a significant cat cash flow debt? Well, I'll, you know, answer that one. It's pretty pretty straightforward. As for bonuses, what Baden and I get in bonuses, which are unlikely to be bonuses, to be fair, is up to the board of directors to to to decide, and that will, of course, heavily depend on financial metrics. If you look at the rest of the organization, however, the ones that keep stations operational, the ones that build stations, and do all of the other very important work in the company, that those are not necessarily the majority of those targets are not necessarily related to financial metrics and shouldn't be for a company at our stage given the growth that we've got and the importance here of operating stations with a 100% uptime and so on and so forth. So I'll leave that at that and and just say that, yeah, that's that's that one.

47:09 Here's another one. There's a lot of room to grow in The UK, but it seems that permitting is an issue. Are there any European countries with permitting and access electricity gas networks make them more attractive than The UK? It's a good question. The answer is yes. Yes and no. Permitting in The UK or or permitting challenges are not unique to The UK. There are other European countries that have challenges, yeah, along along the same lines as well. Should we then be spending more time focusing outside of The UK? Well, if you wanna focus outside of The UK, you have to remember we spent ten years here building a customer base. We've spent ten years here building an organization and so on and so forth. So just because permitting here is a challenge doesn't mean that, you know, we shouldn't continue to focus on this market. And remember, these permitting challenges of something that have been really holding us back over the last two, three, four years, but we're now coming through this process, a funnel if you want, where we're now starting to see sites drop out the other end and becoming trouble ready. And as such, we are in a very good position going forward for having permits in place to really turbocharge our growth to get site into into into construction.

48:31 So, yes, there are, you know, many facets to that answer, but we'll continue to focus in The UK, and we will then leverage what we do here, our expertise, our IP across Europe and probably do that through JV structures, etcetera, where we can benefit from from from companies that already have boots on the ground. Here's another one. To deliver growth, you need to source significant volumes of buying ethane. Where will this come from, and how can you secure the right price levels? What contracts do you have in place? How far into the future? So first of all, we are not constrained by only sourcing biomethane here in The UK. We can source, and we do source biomethane all across Europe As long as a biomethane facility is connected to the to the intra, you know, European pipeline grid, we can mass balance biomethane from that plant.

49:22 We do not as of today, there's more biomethane chasing transport demand than there is transport demand. So we do not see a shortage of biomethane for the next two to three years. Now my crystal ball doesn't go out more than two to three years, but we can with confidence say that over the next two to three years, we do not expect a shortage. And I'd like to add, there is billions and billions and billions of euros being poured into, not just in The UK, but across Europe into new production facilities. And as such, as our demand grows, at our stations, production is going to grow with it. If you look at your typical type of contracts, which which will part of the question, it's a it's a complex one to answer.

50:07 We have a a base, and you should think of this as a layer cake. For every year that goes forward, we add long term contracts. But matching exactly when a station opens with exactly when trucks arrive, with exactly when you buy methane production capacity comes online is, of course, impossible. So therefore, we we do also rely on what we determine as the short term by methane market, which is somewhere between, you know, a a one quarter's worth of supply to maybe supply through the year. That's important to us so that we can balance that. But we do have a mixed portfolio of of contracts, which also gives us a mixed portfolio with regards to exposure to to RTC prices, to gas prices, etcetera. But, yeah, we we we we don't see a shortage of bimethane in the future, but we do expect, you know, going forward, there'd be a lot of new production capacity coming online, and we will continue to have a diverse set of of supply sources.

51:13 And then I think we have the final one here. What is the annual central overhead financing cost? Yep. I'll take that one. So we think of our sort of cost base in sort of two parts. Again, I think that's been disclosed previously. About, about 6,000,000 or so, we think of as the cost of running the existing network, and the ability for us to run a larger network within the with with with with, with, all of our systems and, employees that can do that and sourcing by me then, etcetera. There is additional about 3 or so, million, which is require which which we consider to be business development and the growth, and to the growth engine that's gonna deliver the business plan over the next couple of years. So if you combine that together, it's somewhere in the £9,000,000 range.

51:58 If you take our EBITDA from the stations, which was we feel it's important to bring those back in, and, of course, recent, in recent improvements in RTSC revenues, we'd be very close to covering this entirely at the moment. And, of course, that's growing at a very rapid rate at the moment. So more than covering that, very, very shortly, if not already. And then if, of course, we look back at our discussion on on what what we would need for that overheads in order to maintain a portfolio of double double or more the size we currently have of stations, we think that's about 15 to 20% increase. So we have excellent, excellent leverage to to that growth. Yeah. And, and and as I say, we're pretty much washing our faces at the moment. Perfect. Philip Baden, I might just jump in and thank you for answering those questions from investors.

52:43 Obviously, we will publish those responses on the investor meet company platform. But just before redirecting investors to provide you their feedback, which is particularly important to you both, Philip, I was wondering if I could just ask you for a few closing comments. Thank you very much. Once again, thank you to all of you who've been yeah. Who are showing interest in the company and for some good questions coming through. Yeah. Exciting times ahead. We're, of course, very excited by the six by two. We shouldn't forget, you know, the ongoing growth we've, we've got as well. And, yeah, we'll we'll come back to our shareholders, over the coming weeks or month or so in updating on what we're doing on the financing side of things. But, yeah, really excited about the future here.

53:31 Got some got some really good new stations going into build soon as well. So, yeah, thank you for showing an interest and looking forward to, yeah, to keeping you updated as we go forward. Perfect. Philip, Baden, thank you very much for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This won't take a few moments to complete, but some should be greatly valued by the company. Apart from management team for REFUELS, we'd like to thank you for attending today's presentation, and good morning to you all.