Ceres Power Holdings (LSE:CWR) Q2 2026 Earnings Call

0:00 Good morning ladies and gentlemen and welcome to the Ceres Power plc interim results investor presentation. Throughout today's recorded meeting attendees will be in listen only mode. Questions are encouraged they can be submitted at any time just using the Q&A tab situated on the right hand corner of screen. Please just simply type in your questions at any time and press send and for those in the room we will provide you a microphone for the Q&A. Before we begin we'd like to submit the following poll. I'm sure the company would be most grateful for your participation. I'd now like to hand over to Phil Caldwell, CEO. Phil, good morning.

0:28 Good morning everybody and thank you for joining myself and Stuart for the interim results up until 30th of June this year. I'm very pleased to update you on quite significant progress I think the company has been making. Just to remind you, the growth story of Ceres is built upon three strategic pillars. Signing new manufacturing licenses, that's all about growing market share and establishing this technology as the industry standard. Once we have those partners, accelerating them to market and scale up and getting into the market is obviously increasingly important. and then obviously as a technology business we have the single stack technology platform which is Endura which we launched earlier this year and that's really the platform upon which our partners are scaling and making significant investments as we go today.

1:29 The first half of the year we've made what I would say considerable progress I'm very happy with where we are on the pipeline. We've continued to grow that in all regions and we reiterate our guidance. We remain confident that we're in a good position to sign a new licensee this year. Once we have those partners, we're obviously focused on our existing partnerships as well and there's quite a lot of activity going on with those partners. With Doosan in South Korea, they signed their first export order which is around 60 million supply stacks to a variant in Germany. Delta in Taiwan are continuing to put in the first initial production and have also announced plans for a new facility in Guanyin in Taiwan.

2:21 In China, Weichai are going extremely quickly and they're targeting first production later this year, early next year, and have announced 200 megawatts by the end of the year after, so within two years, incredibly fast. On the hydrogen side, Japan with Denso, Denso have received 165 million in government support so we're continuing to make progress on the hydrogen side but our near-term priority is really on the power system side. Earlier this year we also signed a partnership with Centrica here in the UK that's more of a channel partnership where we aim to bring in technology into regions like the UK and Europe from our manufacturing licensees.

3:10 and I'm pleased to say Sensco is already starting to develop their own relationships with our supply chain as well. So that's incredibly important for us as we match up the demand side with the supply side that we're building out in this ecosystem. I mentioned the single stack technology platform Endura. That's our flagship solid oxide stack platform. That's the culmination of many years of not just research but manufacturing and engineering. And it's really the building block now as people scale factories. We're not going to be changing that every year. It's all going to be about improving lifetime and cost. and CapEx of factories as people scale. But that gives them the confidence and we think that is the leading stack platform out there.

4:00 On top of that, or underpinning that should I say, we've reinforced the business. and in the first half we took the opportunity to continue with the business transformation which we undertook last year which is built around these three pillars of focus and that's continuing to deliver an optimal cost base I think. Following years of significant investment we're now at that execution stage and Stuart will talk more about the financial performance in just a moment. and we also reinforced the balance sheet with just over 100 million in an oversubscribed equity issuance earlier this year. That's really important for the business because as our partners are making significant investments and scaling, it's important that they realize that we're here in a very strong position to support them as the technology provider of choice.

4:59 Just a very quick reminder of our strategy. We are 25 years old this year. We believe we have world leading technology on solid oxide. That's transferred to partners now through the Endura Stack Platform, which we launched earlier this year. But it's not just a stack platform. We also provide the factory blueprints and also have relationships now with line builders, factory builders who can help our partners get into market quicker and easier. That technology platform, the Endura, has two functions. Running in one direction we can generate power, running in the other direction we can generate hydrogen or synthetic fuels, as is the case with Reverion.

5:47 The urgency right now is on the power side and we have Doosan in South Korea, Weichai in China, Delta in Taiwan, all either in production or imminently coming into production and scaling. On the hydrogen side we've been working for a number of years with Shell as a channel partner but our licensee partners are Denso who are making good progress and Delta also has the dual license as well and we work with Thermax as a systems integrator in India. So one platform, intentions global factories and partnerships. Just want to talk a little bit about the demand for power.

6:33 I think many of you probably are seeing this or familiar with this. but there's two things going on here one is the demand for power has never been greater and that's got pretty acute because conventional power generation equipment is in short supply if you want to buy a gas turbine it's five to seven years lead time if you think about nuclear it's into the next decade if you think about waiting for a grid connection not just in the UK but in many countries now it's at least five years and up to a decade Now the time to power creates a window of opportunity for us. I believe that we have about a five year window to get into this market, establish this technology and get down the cost curves and scale the supply chain.

7:21 Part of that is time to market. It's all about time to market. Our first factory that we did with Doosan took us around four years around the COVID time. Current factories that have been built around three years, The factories that we currently have now, the last factories we signed with the likes of Weichi, are on track for about two years or less. That's because we've standardized the Endura, we've built factories several times over, and we've actually now got partners who can actually, when we sell a license, we can actually bring into view and help people lay down production pretty quickly. So two things going on. Time to power is acute and waits for conventional power generation has got longer and our ability to get people into the market is getting faster.

8:13 So why do we think that the Endura platform can win in the power market? Well I've just mentioned the first factor which is time to power and I mentioned this window. However it only works if this technology is cost competitive and right now we are cost competitive with conventional power generation. There are thereabouts. Now, with time, there's going to be more supply, I think, of things like turbines, resips, etc. And they'll start to come cheaper again. But I think where we are with solid oxide is we're only at the beginning of that scale-up journey. And the costs are going to come down with scale, with supply chain, with localization. We're cost competitive now and I think in the future. If you look at the attributes of this technology, it's predominantly steel.

9:01 The rare earths we use are commonly available. We're using equipment that's come out of standard chip manufacture, PV manufacturing. It can scale rapidly and there's no reason why we can't get down these cost curves, particularly with the manufacturing partners that we've already signed. But then I think there's another story to this, which is what gives solid oxide the right to win in the long term? And if you actually look at this from the other factors that are coming on in terms of power generation, The first thing is permitting. So just because you can build power doesn't mean you should build power or you have the right to build power. And you're probably seeing it in the news. There's a lot of resistance to new data centers, for example, being built, particularly in the US.

9:50 And we're seeing power generation, what we call behind the meter, on-site power generation, In some cases, contracts that were won by conventional power generation, like turbines, like resips, are actually now being flipped over towards solid oxide. Why is that? Well, first thing is almost zero water usage, which is becoming critical in many regions, as we've seen this summer. Things like lower carbon to zero carbon when you combine it with carbon capture. No combustion means air quality, so there's no socks, no knocks. It's virtually silent, which means you can put it in buildings, you can locate it close to urban centres, etc.

10:35 And because it's behind the meter, there shouldn't be an impact on local power prices as well. So actually, this technology is a better technology from a sustainability point of view, and that's becoming more of an issue with permitting. So if you have a technology that can be delivered in the right time scale because it's modular and coming out of factories, it's cost competitive and aids permitting, solid oxide becomes a permanent part of that energy mix. So it's not just a passing thing because we can't get conventional power generation. Then I think the other thing that's interesting is when we think about conventional power generation, It's AC based, it's alternating current. And that's because it was developed in the last century for the economy we had then.

11:20 If you look at our economy now, it's more computing, it's AI, it's electric vehicles. A lot of that infrastructure is DC based. And we're seeing companies like Nvidia pushing 800 volt DC architecture. The good thing about fuel cells is that they're DC native. That means they actually generate DC power. That means that you can, first of all, they're more efficient. So you can save about 5% as NVIDIA's view in terms of the efficiency of going from AC to DC in a data center by being DC direct. It's high voltage lower current, which means you're saving on things like copper, you're eliminating things like switchgear, transformers, etc.

12:05 And you can also get more power into the rack, which is going to be a key feature going forwards. So as well as the permitting, the 800 volt DC compatibility is going to become more and more of a potential requirement from about 28, 29. So the way I see the whole thing is the windows opened up now, First buying criteria is always going to be cost and time to power. But then permitting comes along and then also future proofing for 800 volt DC. So the Endura platform meets all of those requirements. This is Sarah's view of the market. We haven't changed this.

12:52 We think it's about a 22 gigawatt opportunity by the end of the decade. There's a lot of interest obviously right now in things like data centres but that's about 50% of the market. We're also seeing a lot of interest in industrial applications, commercial buildings and also shipping in the future. Regionally, obviously the US is the biggest market right now. But when you look at the rest of Asia, that's 50% of the market, Europe, etc. So we see this as a global market. This is not unique to one particular region. Just going on now to what progress our partners are making. I mentioned earlier Doosan making progress with their first contract for stack supply with Reverion in Germany. Reverion is an interesting company because they have a truly reversible system using our technology so they can generate power in one direction When they don't need that power they can actually generate synthetic methane in the other direction so you have something that can arbitrage if you like and work on both sides of the energy mix.

14:03 It's an important milestone for Doosan because it's their first export contract for SOFC. I mentioned Delta, the first production we're busy with now right now in Tainan so that's a 2026 production facility They have announced this year a brand new facility in Guanyin in the north which will house the scale of the mass manufacture of the solid oxide as well. So Delta is obviously a key customer for us, very big already in the ecosystem of data centres and has the strength and the ability to scale fast. We signed the partnership with Centrica earlier this year.

14:50 That's all about bringing in this technology into markets where we've got the right kind of festival spark spread in terms of the opportunity for localised power generation and also the need and we have that in the UK in terms of the time for grid connections etc. There's a lot more detail on this. We published a joint white paper with Sensica just last week and that's really got a lot of interest particularly for end users for Sensica as well. But that's also well worth looking at. And it's not just about us. Our role here is to facilitate the ecosystem so we've introduced Sensica to all of our partners. Sensica signed the first Agreement with Delta and that's really targeting data centers and other energy intensive industries in the UK and Europe as well.

15:46 WeChi are going fast. We've been working with WeChi for a long time on system. They haven't launched their new system yet but it's pretty impressive and they're looking to sell that through a subsidiary Padawan in Europe at 600 kilowatt SRFC systems so at some stage I hope later this year this will be launched and announced but that's they have a lot of experience on the system side and obviously now they're scaling up on the stack production side as well. That's on the power generation side. I want to also just reference our progress on hydrogen. I mentioned Denso. They've continued to develop the SOEC technology.

16:35 They've had big government backing in Japan. That's continuing. We're very happy with progress there. our partnership with Shell on the demonstrator continues to exceed expectations and we're looking at now the next version of that which is the pressurized SOEC which we're doing in combination with Shell but also looking to test that in India with Thermax our EPC partnership there. I think that what we're seeing on the hydrogen side is obviously India is a big Big market for the hydrogen side, but we're also starting to see growing interest in China as well. So we continue to develop this technology because we are starting to see some demand for the SOEC.

17:23 What do we think this market looks like? About 38 gigawatts, but that's a 2035 number. I think the easy way to think about this is near term between now and 2030, we think this is a power generation market. but if you're scaling Endura and you have the production, you're positioning yourself I think for the hydrogen market which follows end of this decade and into the next decade. So I think it's an important future value creation for us and our positioning is good because all the work we're doing on the stack in terms of power generation scale up supply chain, et cetera, it's the same stock technology that services the hydrogen market in the future as well. and as I mentioned at the beginning it's all about becoming the industry standard for solid oxide so that is building out this ecosystem.

18:13 We have the four manufacturing partners we talked about already and the systems and channel partners in terms of Sensco, Thermax and Shell. So that's a brief overview of where we are strategically. I'm very happy with the progress to date and now I'll hand you over to Stuart to talk you through the financials. Thank you Phil. So Phil's given us a bit of a briefing on where the market is and where we are in the market with our partners and I'm just going to give you a little view of how that translates into numbers and how things are going back in Horsham and Redhill where we're making some progress internally and transforming ourselves into a commercially focused company. So on the financial review, our guidance for the year was that we had contracted revenues of £45 million. You can see that we've achieved about half of that in the first half, which is, I think, good progress. I've got a slide on the execution here.

19:11 Obviously, the gross margin is going to be high. The mix is around licensing revenues in the first half, and we'll maintain that high margin. and the loss you can see has come down on a comparable revenue basis from the prior year based on all the work we've done in terms of rationalising our cost base to give us more focus on the commercials and again you can see that in the R&D cost as well and we believe that this is now an optimised level of R&D we're spending so as Phil said all this work crystallised into the EnduraStack we launched in the first half of the year Now we believe we've got the right people in the right places in our business to both deliver the next raft of lifetime and cost innovations in SOFC and SOEC and also to get our message out into the marketplace correctly.

20:06 We did do a fundraiser in the first half. As Phil said, it's important, given who we speak to in terms of the ecosystem, some of the biggest companies in the world, that they've got surety that we're going to be around to be their R&D engine for the next 20 years. This is a 20-year investment they're making in their factories, hopefully accessing both of the markets Phil's taken us through. and that leaves us with a strong cash position so that's really really really really positive for us and then on the cash outflow that's normalised obviously without the fundraise in it but we've got a lumpy cash inflow and outflow given some of the big amounts that swing in and out of our bank balance given some of the billing we do so we're pretty confident now we've got the right financial structure the right cap table to make the sort of progress that we're looking for Just on this revenue and gross profit, I want to just highlight here that this is about execution.

21:06 So when we made the changes and kicked off our transformation at the end of last year, we wanted to be sure that we could still deliver for our partners. and you know I think this is a story of delivery from our teams. Very proud of our teams having delivered half of the contracted revenue in the first half, very confident we can deliver the the contracted revenue in the second half. So that really is a testament to a team that's going through embracing this transformation and continuing to deliver for our customers. And a bit on the transformation, you know, it started at Q4 2025 and it's going to finish sometime this year. I mean, continual improvement will always be there.

21:52 But in terms of our transformation programs, we've really done a lot of work. So the team can be very proud of themselves. We've got 350 to 370 people back in Redhill and Horsham who are doing a great job. We believe we've transformed the company into this commercially focused company. I think that reads through to the pipeline health that our Chief Commercial Officer spoke about at the Capital Markets Day. And we've launched Endura, which we do at the Capital Markets Day too, and that's really the crystallization of a ton of hard work from the team. and now we're very focused on this is our product to the market making these lifetime and cost improvements which we're very confident we can do to make this business case even more compelling for our existing and potential new partners so we've enhanced our commercial capabilities done a lot of sort of cultural work on being very partner-centric and we've also reduced cost while we're there so that's you know we believe now we've got an optimized cost base so we can make you know various investments from this point to enable us to bring this technology to the widest market we can.

23:08 So the cost base, you can see it's coming down significantly, or it's come down significantly, and now this is the base which we see we can make these specified strategic investments from, but we're gonna be very, very prudent. We've got the right people in the right place doing the right things now, and we're gonna be pretty prudent with that cash. But we do see now the opportunity to make some investments in scale up for our partners. and you know this is a technology now that's gone going from pilot scale to commercial scale when we say commercial scale this is very large commercial scale so we need to ensure that we are acting both on the demand side as Phil laid out with Centrica and on the supply side through supply chain management to make sure that our partners can move very very quickly to gigawatt scale because ultimately this is all about royalties for us and then the cash flow, you can see it's obviously coming down, it's dependent on signing new customers.

24:15 But we're definitely trending in the right direction here and we reiterate that we've got a strong pipeline and with one partnership, on a cadence every 12 months will be more or less break even from a profitability and a cash perspective. So that's the situation we find ourselves in now. So we've optimized the cost base for that purpose and to deliver world-class R&D, which we believe we can do and put ourselves in the strongest position to be around for the longest time for our partners. With that, I'll hand back to Phil.

24:51 Thanks Stuart. Yeah so just to close out really, we think we're in a very healthy position now to take full advantage of this opportunity that we see ahead of us. That power demand isn't going away, it's accelerating and time to power is now the defining constraint and it will be for the next five years. That's driving more and more interest for this technology and this technology is now I think going from being something that was a new technology to something that people now start to understand and actually becomes part of that an option, a real option for power generation for behind the meter. We've built the Endura platform and that's really designed for scale and as we said after many years of R&D we're now in that scale up phase so that Endura platform isn't going to significantly change year on year but it's going to have the continuous focus of cost, lifetime, performance from our technology team in Serres.

25:58 and really our aim is to establish this as the global standard and the way we do that is more partners scaling on the Endura platform. and that's the strategy we have and we're very happy with the progress we're making to date. So thank you for your attention this morning and we're happy to take questions. That's great, I feel sure. Thank you very much indeed for updating investors. Ladies and gentlemen, for those online, if you continue to submit your questions, just using the Q&A tab situated on the right hand side. Before we take those online questions, perhaps I could just invite questions from the room. I'll pass you the microphone and then we'll move on. Thank you.

26:42 Thanks guys, Alex here from Berenberg. Just a question on kind of the current pipeline of partners that you're talking to. Could you maybe give a bit more color on what that looks like, how live discussions are going and you mentioned some reallocation of resources towards kind of better customer engagement. A bit more color on how you can do that would be great.

27:01 Yes, I'll say what I can. So the pipeline has grown significantly and continues to grow. and that's in all regions so we have engagements in in the US in Asia there's a lot of activity and here in Europe as well so we have invested in the business development team significantly and we have you know we're starting to see I think the the fruits of that in terms of the number of engagements and the quality engagements of where they're at. Obviously it's a pipeline so people are at different stages and we're obviously focused on some of the ones that are later on in those stages.

27:51 I would say that we are, I'm very happy we are doing everything we're doing, delivering to the customers. There's always a timing issue in terms of we're not fully in control of that so The more of these engagements that we have the better but as we look towards the end of this year and into next year the health of that pipeline is very strong so I'm very confident that that will yield future MLA partners.

28:21 You mentioned line builders and you almost have a factory blueprint. Does that help accelerate your discussions with future partners that they can scale as quickly as possible?

28:29 It does and it's almost become part of the buying process now that a lot of our potential partners actually go and visit our partners on who would actually build factories. A typical process would be they'll come in see the technology in Horsham or see the pilot facility in Redhill, but then they'll also go and see the scale of activity and who can actually deliver that as well. So I think it's a key part of that sales activity because the pipeline of partners that we have are all looking at how do I produce several hundred megawatts and above. So that's the real consideration for them.

29:17 So just one last one and this one kind of a Centrica partnership and that was quite successful was quickly unlocked quite a bit of demand already is that also something we should see in the future more collaborations similar to that Centrica partnership?

29:30 Yeah it's something that we're looking at replicating but I think at the moment we want to get that Centrica one moving I mentioned the activity that's going on with Sanskrit the white paper etc they're looking to get units into the UK end of this year beginning of next year and I think that really starts to accelerate things as well because I think once people can actually see the units and the technology firsthand I think that's important step Good morning. Alex O'Hanlon from Pamela Libram. Well done on a strong first half. The first question I just wanted to pick up on is something you said, Stuart, around strengthening partner-centric values and behaviors. Could you just give us a bit more detail on what that means and how you kind of track and monitor it?

30:19 This is a cultural program that we've got working. So we've essentially refreshed the company values and we've rolled them out and the people team have done a great job in communicating that across the business. and you know like any cultural program actually the proof of the pudding is in the long term so you bake all those cultural values into your hiring programs and your communications and you know I mean we we're not we're not trying to change massively the people that are already at Ceres are all mission focused very purpose driven and we're just trying to make sure everything's perfectly aligned and and you know how do you how do you assess cultural success ultimately the proof of the pudding is in the long term health of the business and we think certainly in the first half we've seen a good good record of execution and you know the pipeline health's looking good so I think I think we think it's working and the people team are doing a great job in rolling this out Great, thank you. And then just one other probably slightly technical question.

31:33 Last year you signed the Wei Chai agreement in November and obviously there's a bit of time that it takes for tech transfer and then therefore before you can recognize revenue. Should we be thinking in terms of if you can assign potentially a new MLA that that tech transfer could happen quicker or is kind of that two months probably where we should kind of be thinking of because I know you've you said that you're confident in the 45 million and anything else would be additional on top of that. Yeah, look, revenue recognition is not that simple when it comes to big contracts. And it does depend on how the contracts are worded, written. And of course, contracts are negotiated by two parties, and they've got to survive the battle, essentially. So we do our best to make it as predictable as possible. It's not that predictable.

32:24 but we're fairly confident that we can both sign and recognise revenue in this calendar year for a new MLA. but you know we are well aware of our obligations both in terms of the guidance we've given and the consensus that's out there that we've got to be very clear and transparent with the market when the time is right so you know we are something we track and certainly part of the progress we're making is in the investment we've made in our commercial teams is the contracts are now at least templated to be a lot more clear on when the revenue recognition occurs than the WHI contract which was a very sort of old, it was an update to a 2018 contract so it was pretty complicated. We're hoping to make things a bit simpler but it's not clear.

33:16 Thanks guys, Lacey Midgley, Bloomberg Intelligence.

33:19 Just thinking about the new MLA economics, obviously the backdrop here is completely different to what you were dealing with four or five years ago. Customers, you know, they need solutions and they need them yesterday. I mean, does that give you more I guess leverage at the negotiating table when you're thinking about upfront license fees with partners has your thinking around any of that changed given where we are and given how quickly now you can get new factories up and running and then I think within that as well if we think about particularly Phil you talked about the 800 VDC you know compatibility early estimates on longer term running costs of SOFC being a lot cheaper does that give you any more you know I guess the same question leverage on the royalty fee you can eventually charge and is there any change in how you're thinking about all that I know ultimately there's a higher setup cost here and you just want MLA's and new partners on board but is any of that thinking changed at all given the backdrop?

34:23 I think we haven't changed our thinking to date on license fees but obviously as we're starting to get more demand or competition I think it certainly helps it strengthens our position but the license fees are are helpful in terms of the funding of the day-to-day business but really what's more important is is scale up and royalties and we've just got to be a bit careful that when when we're negotiating these deals if you're too If the license fees are too high, before people get into the market and pay back, you don't want to skew that investment decision.

35:09 But I think on the royalty side, I think given the benefits that we're seeing and the potential of SOFC, I think the royalties then become, let's say more sustainable, as in you obviously negotiate royalties going into a contract, but Five years, ten years in, you want to be preserving those royalties and for new contracts potentially you could negotiate even higher royalties in the future. But it's all about proving out the economics. So short answer is we haven't changed it fundamentally. I would say that each commercial negotiation has nuances. and depends on what the scope is and the size of the customer and the scale of ambition is, the attractiveness of those partners to us obviously has a factor as well. So the longer term is more important to us than the near term.

36:10 Thank you. And just checking on Delta's second factory, presumably that's covered by the existing MLA. How do we think about other partners that are looking to scale as that demand is there?

36:22 Yeah, we don't charge additional fees for additional scale. We don't make it volume limited. We actually want people to scale. So Delta have got the license they need to scale. And then it's just the investment decisions on new factories, etc. I think the The first one, Tynan, was always going to be almost like a development factory because the footprint and everything else was somewhat constrained and this is a brand new facility that they're now investing in.

36:57 Hi, Sky Landon with Rothschild. First question, on wage high revenue recognition, are you able to share a little bit about the percentage that was in 1H and percentage in 2H, just as we're thinking about the 45 million? And then second question, I guess a follow up on the partner expansion with Doosan, they've obviously had the success that they've seen in getting orders, getting pipeline in. have they shown any interest in increasing the size of their initial factory? Thanks. So first question first. So the majority of the revenue is going to be Q1 for wage high because it was signed in November last year and the full tech transfer happened in the first half.

37:45 So we'll have some wage high revenues in the second half of the year but the majority would have been in the first.

37:51 Second part of the question. We obviously stay close to Doosan and what we would like them to do at some stage is to move to the Endura platform because Doosan is an earlier partner around what I would call the first generation technology which is the slightly smaller footprint, slightly smaller stack size. But obviously they're now getting orders, they want to fill that factory. So it's an ongoing business decision for Doosan really, that conversion or additionality. Doosan I'm sure will update the market as and when they're thinking about expansion.

38:41 Great, if there's no further questions in the room just for now, maybe Meryl I can come back to you. I know you've got quite a lot of questions online, so some of which I think you may have touched upon, but if I may just hand back to you.

38:51 Yep, so why don't we stay on the vein of Dusan. One of the questions are, their announcement of the contract with Reverian, what can Serres expect from the value of those royalty payments and is this a one-off fee or will this be ongoing?

39:07 It's part of, again, it's part of the license deal they have, so When they sell product, we get royalties. So it's within the standard range that we always say that we receive between $1500 a kilowatt, depending on the scope of what they're selling. And so we just expect to receive payment via royalties.

39:33 Another question which is slightly more technical is referencing the cost competitiveness and how does that impact based on natural gas prices and then are our power partners primarily targeting natural gas as the power source for the SOFC?

39:48 So it's reliant on the difference between the power price and the gas price so because basically very simply what we're doing is we're taking If it's natural gas as the fuel, we're taking natural gas and converting it at a 60% efficiency into power or higher if we use the heat or the cooling. So it's very much Reliant on where you're actually putting this. So, for example, one of the reasons why it's attractive in the UK is we've got some of the highest power prices in the world. And actually our spark spread, our gas price and our power price is actually very attractive for this technology. Now okay if gas prices go up it depends on what's the knock-on effect on the power price but there's there's quite a big margin there so it's it is competitive today in certain geographies it depends on where you're you're looking at that to answer the question today it's natural gas based Reverian are also tapping into things like the biogas market in Germany and it can be future fuels such as hydrogen but today it's natural gas.

41:03 Great, Stuart a question towards you is that we continue to spend heavily in R&D with around 48.6% in 2025 and just querying if we will continue to have that type of R&D expenditure going into the future or will we see it going down or up? Well if you're comparing to 2025 it's going to go down I mean you saw on the on the slide the R&D cost went from say 25 in the first half of 2025 to 18 in the first half of 2026 so you know that is representative of the crystallization of the effort to produce Endura so Endura as a as a project is now in the commercialised world. So we've chosen to have a look at that R&D cost base, optimise it, which we believe we've now done, and that's going to roll forward so we believe we've got the right number of people in the right jobs to keep on innovating on lifetime and cost without having to be spending the amount that we took to actually get Endura to the market.

42:13 Thank you. One of the questions on a similar vein is as we intend to sign more partners over the next couple of years, how should investors think about the evolution of revenue mix over the next few years of us front license fee engineering services versus royalties?

42:32 I think today if you look at the revenue mix, it's that combination. Licensed Fees, Engineering Services and as we sign more partners we can expect that for the next few years. Royalties are there but they are not yet material I would say but they should start to grow into next year and 28, 29 etc so royalties will become more of that revenue mix in the future and towards the you know the late stage of this decade they're going to be significant because that's when we expect cumulatively our partners scaling to the high levels around a gigawatt or more by that stage.

43:14 Great, thank you. One of the other questions was just given the interest in behind the meter do we anticipate having more than one licensee this year or could we have more in next year just given the demand and kind of coming back to that pipeline just it's come up a couple times I thought it might be helpful to reiterate.

43:35 Look we've we've based the business on one a year on average The thing that is very unpredictable is timing. A few years ago we had two in one year, none in the year before, etc. So I think it's entirely possible that you can have a year where there's more than one, particularly as momentum builds. but the guidance we have is one a year of the quality of problems that we want really gets us to that industry standard. and we do try and think of this as sort of cadence rather than in year because the the year end albeit that you know we've all we're all in the finance where we all have to adhere to the year end and what we're looking at is an average cadence of one every 12 months so we don't know whether two arrive at once and there's a gap or you know two then one then a gap um and if we don't know which year they're going to fall into necessarily but what we're looking at the the average cadence of the signings of these things

44:43 Great. I think one just final question is as a UK tech company, wondering if we are in discussion with UK government to explore initiatives or partnerships that may be available?

44:57 We have obviously got a strong relationship with government. We do various things, trade missions, etc. I was fortunate enough to go with the previous Prime Minister on the India trade missions, etc. We've done that in the past to Asia. We do work with government, get government support. In terms of financial support, the business right now is pretty well capitalised so there might be certain needs or projects where government can help but we've never relied on government funding and we don't really rely on subsidies either. We're very much a commercial operation and we're very proud to be in the UK but The global opportunity is there that we're very self-sufficient.

45:54 Excellent. I think those cover the majority of the question of the key themes, so I'll hand back to you Phil for any closing remarks.

46:01 yeah look I just reiterate I think it's a really exciting time in the business right now we're obviously very engaged on on both new partnership acquisition and also not by any means you know our focus is very much on the scale up of our existing partners at the same time so we've got the business in the right shape to be able to do both and we'll update you obviously on progress as and when we get more announcements I think you know with our existing partners they're in that stage of starting to scale starting to launch new products etc I think we'll get more news flow from some of those guys as well as and when they start to actually come forward so I think that's there's quite a lot to look forward to in the next 12 months or so Great, Phil, Stuart, Meryl, thank you very much indeed for updating investors.

47:01 Ladies and gentlemen, we will now redirect you for your feet.