H-Power (LSE:HPOW) — Full Year Results

0:00 Good afternoon, ladies and gentlemen, and welcome to the AFC Energy PLC Full Year Results Investor Presentation. Throughout this recorded meeting, investors will be in listen only mode. Questions are encouraged and can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions at any time and press send. Given the significant attendance on today's call, the company will not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today, and we'll publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll, and I'm sure the company will be most grateful for your participation. I'd now like to hand over to the team from AF Synergy, John Karl. Good afternoon. Thank you. Thank you, Mark. Good afternoon, everyone, and welcome to our presentation on our full year results for the year ending 10/31/2025. So usual disclaimer that we put up for everyone to read in their own time.

0:50 Moving on, by way of an agenda, we'll run through the business overview, talk through the strategic progress the business has made, products and technology overview, what we're focusing on commercially, the results for the financial year, a short time talking about outlook, and then we will take questions from you all. So when we joined the business, and I've said this before, what we did was we really started to look at why the global hydrogen economy hadn't really kick started. And it was clear that it was being held back by cost and infrastructure challenges. So we set out on a journey to develop a business and a strategy that would unlock those those challenges.

1:36 So our cracker technology allows us to deal with the infrastructure and the cost, and our fuel cell technology helps us deal with the the the cost implications of those generator units. So in doing that, the most important aspect for us is ensuring that this business is commercially viable without the need for government subsidies or incentives. We can't control government actions. So if the business can stand on its own two feet irrespective of which government is in power and what the legislation is, then this this a business that is, in our view, is investable as a proposition. So what is the business? And I'm sure some number of you have seen this slide before.

2:22 So we can take ammonia molecules and using our proprietary cracking technology, convert that into hydrogen. That in itself is a business, and we announced last week that we will be selling hydrogen produced from our pilot site in tons for all two off takers. We can also take that hydrogen and using our fuel cell generators, convert that into electrical power. So for construction sites, for example, backup power, etcetera. And why are we doing that? It's it's down to the size of the price. So if we look at the generator market, it's an enormous market, $18,000,000,000 of annual sales. And in the area that we've we've launched the LC 30, our 30 kilowatt units are up to 50 kVA, The addressable market there is around about $6,500,000,000 globally, and this forecast CAGR of 7%.

3:21 If we start to break that down by geography, the three areas that we are targeting, so Europe, the MENA region and North America, there's an addressable market there of over 280,000 units per year. So if we were to price our generators at 95,000, then that would be an addressable market of 27,000,000,000. So 1% of that market per year would generate $270,000,000 of revenue for our business at that price point. Moving on to hydrogen use, hydrogen production. You'll see there's significant forecast growth of hydrogen use between now and 2050. If we just look at the UK government target, which is yet to change, it may well change, but around about 1,600,000 metric tons by 2030, If we had a 5% share of that market at 10 pounds per kilo, which is what we're offering through our fuel as a service offering on our high five units, then that equates to over 750,000,000 of revenue per annum.

4:27 And most importantly, that equates to only 480 high five units. So without substantial numbers of assets deployed, we can generate significant revenue. Into strategic progress. So if we just talk through last year from the time that Carl and I joined the business, we joined in January '25. We're looking a lot more fresh faced than than we are now. But we we came in with two key strategic priorities. One was to preserve cash, to arrest the cash burn, which Carl will walk you through. The second was to create a strategy for this business that would realize and generate significant shareholder value. So the first thing that we did was we announced we were stopping the construction build out of our a r two units because each one cost us over 250,000 of cash to sell.

5:30 And we also set about looking to productize the technology that the business has. And so we launched in March the H-five portable cracker at 10 pounds per kilo, and that development is very much on track. And as we moved into June, we previously announced we were looking to take two thirds of the cost out of our fuel cells. We actually achieved or announced in June, we expected to achieve 85% of reduction in cost. But we also needed somebody, a partner, to really build out those units for us. We don't have the balance sheet to to build a large manufacturing facility and and associated capacity to do that. So we partnered with VOLEX to manufacture those fuel cells generators for us.

6:24 And we also announced at that time a joint development agreement with an s and p 500 company to develop a four ton cracker for a particular application, and I'll talk a little bit more about that shortly as well. And what that served to do is really kind of validate the IP that the cracker has and that that the business has. And then as we moved into July, we announced a joint venture with ICL, Industrial Chemicals Group Limited, for us to jointly produce hydrogen using our H-five units initially at their site in in Port Clarence. And strategically, was very important for us because it's great to have cracker technology, but if you don't have any feedstock, any ammonia to crack, then you don't really have a business. And, of course, being a chemical company, that gives us access to ammonia.

7:19 So having reset the strategy and set out timelines for execution of that strategy, we went to the market to raise money to deliver it and successfully raised 27,500,000 gross to to set us on our way to deliver, as I say, deliver that strategy. So then the second phase of of hard work started, and that was really taking the business and the structure that we had and going about repurposing it, reorganizing it in such a way that we could set ourselves up to win. So we we took 1,500,000 of cost out of the business. We reduced the headcount by about 20%. We also bolted a a front end onto the business, so a commercial function onto the business through the appointments of both a chief strategy officer and a chief commercial officer.

8:12 And the reason why we created both roles is it was very clear when we started to look for a chief commercial officer directly in this space as the rolodex that would be required to understand what is going on and get us early entry points into the organizations that we believe are suitable for our technology. That commercial person just doesn't exist with a track record of delivery. So and and given that Carl neither Carl or I are actually from this this sector, we appointed Nick Walker, who's ex HPOW Hunt analyst, who, quite frankly, knows everything and everyone in this space, so the the the Oracle of of hydrogen.

9:00 And alongside that, appointed CCO from from ABB who ran part of their hydrogen business. We also, and very importantly, created a project management office. So nascent technology businesses, r and d heavy businesses, they're relying on delivering technology often overpromise and under deliver because they do not manage their projects as well as they should do. So that PMO office gives us insight on it in a real time basis of of what is being delivered. Is it being delivered on time? Is it being delivered on budget? And we also have a risk management framework around that as well.

9:45 And, obviously, the success of that is highlighted in the launch of the LC30 ahead of schedule. And a final point on this slide. In October, we supported Tango with Extreme E and Extreme H. We sent our 200 kilowatts unit, fuel cell generator unit along with the team out to Saudi Arabia to support that. And that unit ran in the desert heat and the dust and the sand producing 17 megawatts of power over the days that it was there with a 100% uptime, which I think came as a bit of a surprise to to Tamgo in terms of that reliability. So that's last year.

10:33 If we stop if we stop to to to talk through partnership updates before I then go on to talk about what we're looking to achieve this year. So as I mentioned, we announced an s and p five hundred JJ partnership. We announced in November that the first stage of that was complete, and the first first stage was providing them with detailed analysis of the cost per molecule of hydrogen. So, basically, how efficient our crackers are and the consumption of of power in in the generation of that kilo of hydrogen, for example, molecule of of hydrogen. And initially, the the agreement was we would develop, as I mentioned, a four ton per day cracker.

11:21 As our commercial teams that we've developed, our commercial front end that we've developed became much more involved in the conversation with their commercial teams, it became very clear that that application, that single use case could be used and expanded significantly for multiple verticals. What what do I mean by that? So we were looking at a port side application. If we start to look at, certainly in in in Europe and the same applies in this country, as you start to move inland, tier two power consuming industries, let's say tier two, so glass making cement factories, asphalt manufacturers, that require 20 to 30 megawatts of power.

12:09 Without a pipeline, the a cracker at a port would would not benefit them. And so the view of our S and P 500 partner that we we support and we're working with them on on a commercial basis now is working well, identifying and working with those types of industries. And the likelihood is that rather than a four ton cracker, it's gonna be closer to a 10 or even 15 ton cracker, which translates to 20 to 30 megawatts of power. So whilst we haven't kicked off the second phase of the development of the four ton cracker, and it's unlikely that we will, the most likely outcome is that we end up developing a much larger cracker, 10 to 15 tons a day, as I mentioned.

12:56 And the the size of that price is significantly greater because rather than one use case application, we're now looking at multiple verticals and industries that could use that cracker, and we would be cracking the ammonia at site. So we're very pleased with the way that that is developing. We have biweekly calls with them to progress that. And as I say, the commercial teams are working hand in hand. And a point on and I think there's there's there's already been a lot of questions about the Phantom S and P 500 partner. Who are they? When are gonna be announced? We said at the time that we would be announcing who they were once we'd finished the second phase, which essentially, we've done the development work. We've got a contract in hand for a number of crackers, and then they're comfortable with their name being released.

13:50 The likelihood is it won't happen like that. I think the likelihood most likely outcome is that we will be announcing who they are much sooner than that because of the commercial association that we have and working together with some of these companies. So it's coming is the is the short answer to that. Moving on to to ICL. So as we announced last year and and updated in November, we're applying for permitting to operate our H-five unit at Port Clarence. And importantly, the way that we're approaching this is not just locally with the environment agency in the Middlesbrough area. What we're focusing on is working with the EA centrally so we can create a framework for future deployments of crackers. So what we don't want to do is have a Groundhog Day situation where we work with environment agency locally, we get a permit for Port Clarence, then we come to do a second deployment somewhere else, and then all of a sudden, it's a case of, well, how do how do we do this? This process doesn't exist. So we're working on that central framework.

15:02 But, obviously, what we've done in the meantime is in parallel, discuss with the environment agency receiving approval to to change the permit that we have at our site in Dunsford so we can start to sell the hydrogen there, and I'll talk about that on the next slide. So that is working working well. We also, last week, signed a agreement or announced signing of the agreement with Komatsu. That's an eighteen to twenty month $2,000,000, circa $2,000,000 project. It's actually more than 2,000,000. The purpose of that is they're very large mining trucks. So they're the big four, five story mining trucks. If you look on LinkedIn, Nick Walker's got a nice picture of himself stood in front of one.

15:49 I think Mike Randall's got one, our CTO as well. But those those trucks, they're the engines cost between 750,000 a million dollars are absolutely huge. And what they're looking to do is determine whether or not they can run off a blend of ammonia and cracked a cracked gas, so hydrogen cracked from ammonia. And the reason why the the the cracker is needed is ammonia engine burns very dirtily. So there's a lot of there's a lot there's a lot of NOx, there's a lot of nitrogen based oxidized emissions, which which are not good for the environment. With the introduction of hydrogen, it burns cleanly. So you have a very, very small amount of NOx that you can kind of scrub out post post burn.

16:40 And so effectively, you can run that engine, and it's 99.99% emission free. So we've already done some desktop work. It was more than desktop work with a project that we received a grant for to convert a 250 kilowatt Volvo engine to run on the same basis. We've we've done that work. We've shared the information, the results of that with Komatsu, which is one of the primary reasons why they are going down on this journey with us. And Komatsu has has already invested tens of millions of dollars in determining whether a hydrogen engine would be suitable for these large mining trucks and has determined it it just isn't suitable because of the size of hydrogen storage that will be required just isn't it's not able to put it on one of those large large trucks. So very exciting development.

17:41 I'm not gonna speculate on what it could can lead to, but we see it as as strong promise for the future and a further validation of the cracker technology and the cracker IP that we have. Speedy hire. As many of you will know, we have 20 units that we sold into a JV at the back end of twenty twenty four. We've had many successful deployments of those units, and it's really providing us with an understanding of the footprint that we require on a construction site or a deployment site, what risk assessments need to be undertaken, how we get hydrogen to site. So that is has been successful and continues to be so. And then TAMGO, after after sort of a multiyear flirtation, I think is the right term, that we've had with TAMGO following the success of the 200 kilowatt liquid cooled unit in in Riyadh in October.

18:42 They're very keen to get an understanding of the LC 30 once we explain to them that ultimately it has the same the same engine, the same architecture, the same performance characteristics, albeit at a lower power. And following the launch of that, they've been very interested in helping us showcase that and create commercial opportunities and take the partnership to the next level. And finally, in terms of VOLEX, we are continuing to work with them on the LC 30 build. So the first two units we have built ourselves as as AFC. Units three, four, and five, VOLEX will oversee the build of at Dunsfold, and beyond that, it will be transferred to their facility for manufacture.

19:30 So that's the partnerships. If we then roll into 2026 and the key milestones that we have achieved and expect to achieve, So as mentioned, we launched the LC 30 in January, in February, or just last week, in fact, the engine development work with Komatsu. Also, the approval of hydrogen sale and export from our site in Dunsford. And the benefits of that to us are are many. So firstly, it accelerates the revenue. We previously said we'd be expecting to generate revenues from that pilot cracker by the end of the first half of this calendar year, albeit that that was going to be at Port Clarence. Now we're gonna begin starting generating revenues from April, so we accelerate that revenue. Secondly, it allows us to train ICL operatives at our sites in Dunsford.

20:27 Three, it allows us to demonstrate not just to ICL, but also to to investors, our shareholders, and to the market that there's off takers for this hydrogen as we sell it. And three, there's also opportunities with our S and P 500 partner in this country where they have customers that are very keen on understanding how they can integrate cracked gas into their processes. So there's a lot of opportunity that is happening around that, and it ultimately gives us flexibility around what we do with this cracker. Initially, as I said, we were going to move that to Port Clarence as a really initially as a as a as a as a low risk approach for for ICL to engage in terms of JV.

21:17 We're gonna be able to demonstrate the that there are offtake requirements for that hydrogen in very short order. So whether we move it or not, we're not sure. Depends on the demand, depends on the high five deployment in Port Clarence, how quickly we can do that. Because ultimately, that that pilot unit will be in time, will be superfluous to requirements as we move to the high fives. So that's the cracking. If we then look at back to LC 30, we have to put the unit through CE market through regulatory approval, both the CE. We're also going to be putting it through Saba, which is for the Saudi Arabian market, and for UL for the North American market. But we're focusing initially on CE. These things will happen in parallel, but we're focusing on the CE.

22:16 We're unable to sell product until we have that marking, and we're anticipating that in the August time frame, which allows us then to sell units to customers in in September. So we're looking at building units prior to then ready for delivery to customers from September and October. However, being prudent and ensuring that we protect cash at all time until we've got a real feel and understanding of what that demand profile looks like, we're only committing at this point to delivering 15 units, one five, 15 units through to the end of our financial year to so through to October 2026. That could change because you'll see there on that sort of is that magenta line? Is that magenta line? So the light blue line, the the arrow.

23:12 The the key focus for the commercial teams from certainly from the launch of the the l c 30 is and and also with the progress we're making with the H-five is taking the pipeline that that we're building that is expanding quite nicely and converting that into contractual orders. So we may well change that view in the next couple of months if we have very clear signals to a a very strong order backlog for LC 30 units. But as things stand right now, we are committing and scaling up to build 15 by then. In terms of capacity of, you know, what the medium term capacity for LC 30 units is, the limiting factor for us is availability of fuel cells, which is limited to 500 units per month. So that's 6,000 units per year.

24:14 If we filled that capacity, that's obviously on a $100 a year. Sorry. A $100 per unit, about 600,000,000 of revenue. So we've got we've got ample capacity that we can scale into very quickly. But as I say, just to stress again, at this moment in time, we are committing to having 15 units available for customers. Then moving back into October Extreme H, we'll be working with Tamgo. Again, we also expect to be showcasing a number of LC 30 units as well as our 200 kilowatt unit to potential customers in the Gulf Region at that time. And then finally, we are looking to commission our first H-five unit with ICL in Port Clarence in November.

25:04 So a lot of delivery of technology, but most importantly, as I mentioned, the focus on building that commercial pipeline and converting it to contractual orders. We move on to product and technology. This is the LC 30. I won't read all the words on the page. Designed principally to replace the the AR two unit, the air cooled unit that was designed for the Speedy JV. So it's gone to construction sites, can be used for EV charging, and anyone that is coming to one of our demo days next week will see this unit working in anger and also the backup power and things like events. The principal benefits of that unit versus the previous unit are listed on here. But in summary, it's an it will be an ultra reliable unit that we have a warranty to stand behind because we're taking effectively an off the shelf unit that's been in use for, as it says there, many million run hours.

26:10 It uses 20%, up to 20% less fuel than the a r two. The footprint is almost 40% smaller. The reason it's only 40% smaller is because we've designed this for a 100 kilowatt fuel cell to fit in exactly the same chassis. So the LC 100, when it comes, will be identical fit form and footprint as the LC 30. The weight is reduced by half, and it also has an eyelet hook at the top so it can be lifted off the back of a of a loader. It doesn't require a a forklift. And probably most importantly, as we start to look at addressable markets, the temperature range, rather than being limited to minus five to plus 40, is extended to from to minus 20 to plus 50.

27:07 So the benefit of liquid cooling gives us an ability to be comfortable deploying these units across all six inhabited continents. And then the reactor technology, so our IP for our crackers is is is built around the the reactors that we have. So we have numerous IP filings in place for these. It is designed to operate over a wide pressure range, so we get a lot of throughput. Works with pure other purification technologies for fuel cell applications, we can scrub out trace ammonia and post cracking push the hydrogen into our fuel cells.

27:55 It's very small, which is helpful because that also gives it low thermal mass and makes it very responsive so we can, excuse me, we can effectively produce hydrogen on demand. This will heat up, in twenty minutes. It's got very low electrical power consumption. It can utilize multiple heat sources, so it can actually run completely independently off grid utilizing its its own waste heat streams if required. And in terms of the progress of H-five, so as you'll see there, we've released new high efficiency designs for prototyping, filed further IP, validated our BOM cost, that's bullet materials, completed hazard assessments, very importantly, identified key suppliers and onboarded, those, which is obviously something you ought to derisk early, in new technology.

28:56 And we have received a number of inquiries for H-five despite the fact that the unit isn't physically available yet. And just a reminder why ammonia cracking is a lower cost way of making hydrogen. The primary cost of producing hydrogen through electrolysis is electric electricity pricing. So electrolyzers efficiency range from 55 to 60 kilowatt hours per kilogram. So based on UK grid prices in this country, looking at 12 to £15 to produce the hydrogen that compares with our ability to produce hydrogen if you look at low carbon, so blue ammonia, which we can use, which is for any kind of UK government contract, is around about £1.70 a kilo. Once you add on a couple pounds with electricity, our cost to produce is around about 25% of the cost of electrolysis.

30:02 And the further benefit is our crackers are designed to be portable. They're decentralized crackers, so we can position them at the point of use or where the hydrogen demand is. So we do not have very expensive transportation costs that are associated with the movement of hydrogen, the issues of moving hydrogen through tunnels, and the the CapEx cost of very expensive tube trailers. We rely on standard isotanks that have been moving ammonia around for fifty, sixty years. Moving on to commercial focus and and and priorities. So we're building out our channel for our fuel cell generators.

30:49 So in The UK, we obviously have Speedy Hydrogen Solutions joint venture with Speedy Hire. We're looking at targeting an entry point into the North American market. Also, The Middle East, I've spoken about Tamgo. And we expect to to reengage with Axione once we have LC thirties available that they can then put on test on their site in Madrid with a view to and generating orders from that. And the focus for that commercial team, again, there's a there's a lot of repetition in this in this slide deck, is to bring in orders for those high five crackers and LC thirties. We're gonna continue to progress the JDAs and and JVs through the product and revenues, and as well as building out the the commercial team, we've also now started to add marketing resource.

31:42 Now we have product. We need to have collateral, sales collateral that goes alongside that that technology. Then if we look at the geographical markets and and the drivers, so we're targeting markets where there are policies in place because the the barrier to entry is is low, and where there is a clear demand for the technology and for for hydrogen. So UK, EU, US, and Canada. And then in terms of those chosen markets, and this is a piece of work that we've done internally, but also with our s and p 500 partner.

32:27 We believe, for example, when I mentioned the the 10 ton a day cracker earlier, but that would be suitable for the the the four heavier industries here. So we need industrial heat, steel manufacture, chemicals, and cement, as well as high five units, which are suitable for equipment rentals and for hydrogen mobility. And over to Carl for trading performance. Okay. So this year, you have seen that we posted a loss before tax of 22,200,000. Now why that seems on the face of it a big step backwards from last year's performance, which was GBP 4,800,000 lower, actually, the majority of the shift or more than the majority of the shift is around accounting rather than underlying trading performance, and I'll walk you through that in a moment.

33:20 So in that accounting, there is GBP 12,400,000 of noncash items. So in our profit and loss account, there are charges that don't actually cost us any cash, and that is an increase of GBP 8,400,000 on the previous year. And again, I'll walk you through that in a moment. What we did spend, so we spent GBP 11,700,000 on developing our technology. That's up from GBP 9,500,000 in the prior year. And of that GBP 11,700,000, we capitalized GBP 5,200,000. The increased focus on development over other activities meant that we qualified for more R and D tax credits, which will come in, in the current financial year FY 'twenty six. And so we are looking to receive about GBP 3,300,000 in sort of June and July time, which is an increase of GBP 1,400,000 over what we received in the current year for last year.

34:12 We went to the market, as John said earlier, and we raised net GBP 25,800,000. We also received GBP 2,200,000 of government grant funding, which helped support the 11,700,000 of development spend. And most importantly for this business, it's about cash preservation, why we deliver the strategy, and we spent cash out of the organization before any financing activity, 15,400,000. That is a reduction of $11,200,000 on what was spent in FY 'twenty four. And we'll walk you through how we did that and why we did that in a moment. We finished the year with the majority of our net fundraised in the bank, so 25,300,000, and that gives us significant cash runway to do what we need to do looking forward.

34:58 K? So going back to where we started a moment ago, thinking about the accounting for our change in strategy. Just to recap, that change of strap strategy made made us not want to build any more a r two units, so we're not gonna make any more sales. We stopped the development and focused our efforts on taking the cost out of that platform, which John just walked through, which delivered the LC 30. And that, together with our high five, gives the customer a TCO comparable to diesel. So three constituent impacts on our trading from a profit and loss point of view. We didn't make any sales. So in the prior year, we made $4,000,000 of sales, but that was predominantly sales to the JV. This year, sales are negligible, only 100,000.

35:48 Because of the shift away from the a r two platform and that change of strategy, we'd ordered a significant amount of inventory that was sat on the balance sheet at the start of this of start of financial year '25, And we made the decision to write that off, which cost us 2,600,000 through the profit and loss account, but obviously, nothing in terms of cash because all that was paid for in the prior year. The other thing we look to do is to think through the impact of and this is an accounting it's accounting rather than any sort of relation or any sorry, the its accounting rather than a formal agreement with SpeedyHire, we decided to essentially make provision for the cost of swapping out the AR2 technology with the LC30 at some point in the future. So the current technology works. It's fit, form, and function.

36:43 But as we look forward, we just took the decision from an accounting point of view to provide for the cost of swapping those out. And why do we wanna swap them out? Well, once we get to scale, we don't really want to have a commitment of maintaining 20 different units from the LC30 in the future. And so if and when we do swap it out, we've essentially cost of swapping them out will have is recorded in the financial 25 number. K? So there's no to be totally clear, there's no we haven't gone to speedy high and said, you don't need to pay us anymore. They still need to pay us. It's just a provision that we've made in the financial statements. K? So I thought it might be useful to walk through, the bridge. So last year, we posted a profit of a loss, sorry, of 17,400,000.

37:31 The decision not to make any more a r twos actually benefited us 1,800,000 versus what we spent in the previous year. We invested some of that in development costs, as I say, developing the LC-thirty and the High Five. When you look at the utilization of labor, actually, the nondevelopment labor actually went down year over year, so that saved us 1,800,000. And because of the focus on research and development, our tax benefit in the year is 1,400,000. So when we compare on a like for like basis before accounting and noncash items, the loss that we made in the prior year was 17,400,000 and the loss in FY 2025 was 13,800,000 To that number, a one off transaction is to write off the stock. We won't be doing that. That won't reoccur in the future. We've also made this provision to swap out the generators at some point in the future. That's GBP 2,900,000. Again, that's a onetime item.

38:30 In the prior year, the business spent a lot of money on development and assets, and the full year impact of the depreciation on those on that investment in the prior year is there's increased depreciation by GBP 1,900,000. There's no cash cost to that. And then finally, there was a GBP 1,000,000 increase, $05,000,000 in the share based payment charge and GBP $05,000,000 in remuneration to the management team, which has been settled in equity, again, primarily to preserve cash. So that's how we walk from GBP 17,400,000 loss in the prior year to a 22,200,000 loss in FY 'twenty five. For a business in our stage of development, it's all about cash. So as I mentioned earlier, last year, the business consumed 26,600,000 in cash to deliver what it delivered.

39:22 This year, that cash has been significantly reduced. The cash burn has been significantly reduced to 15,400,000. Also, you can see, big part of that is around CapEx. So last year, in FY '24, we spent $3,000,000 This year, we limited that to $700,000 the majority of which was already committed to before we joined the organization. Just switch to the next slide. So coming in, what we needed to do very quickly was get a hold of get a hold of the cash and put the controls and process in place to to limit the spend, why we took a step backwards, reset the strategy, get the business in the right shape, and now and then reinvest in the new strategy. So if you look back at the fifteen months, the average quarterly spend in the fifteen months prior to us joining, the quarterly cash burn was just short of £7,000,000 a quarter.

40:19 What we did very quickly is come in and hit the brakes on that. John mentioned earlier, we stopped spending on any project that wasn't adding value, and we managed to reduce the quarterly cash burn down to £3,000,000. So on top of that, we went through a program of looking at every single cost that we have in the organization and rationalized everywhere we could. That unfortunately left to left us in a position where we had to make some people redundant. That That redundancy of people exiting the organization will save us short of £1,000,000 a year. We also exited two properties, one in Dunsvold, one in Germany, which, again, will save us another £05,000,000 a year. So the business is now set up. It's lean. It's ready to go. We have reinvested some of that money in the commercial front end that John mentioned earlier.

41:07 And you'll see the tick up in Q4 in cash going out of the organization. That is primarily driven by the cost to execute, the manning reduction plan and the shutting down of the sites and $1,300,000 of cash out of the organization to develop the two products that John watched through earlier, which is the LC-thirty and the HPOWER PLC product. Okay. So just by way of a summary. So we feel we've made substantial progress with that strategic reset or the execution following that strategic reset because of the things Carl's just walked through. The business is well capitalized to deliver the strategic initiatives that we have outlined. And I'll stress the point again, this year is all about, as well as delivering the technology, it's all about taking that pipeline of opportunities and conversing it to contractual orders, which will then start the sustained revenue growth that the business needs to see to begin to create shareholder value.

42:10 Thank you. That's great, Karl, John. Thank you very much indeed for our updated investors. Ladies and gentlemen, please do continue to submit your questions, which is in the Q and A tab situated on the right hand corner of the screen. I'd just like to remind you that the recording, along with a copy of the slides and the published Q and A, will be available via your Investor and Company dashboard. Thank you to everybody for your engagement. We received a considerable number of questions ahead of today's event, and you've had, again, increased engagement throughout today's presentation. I know you've covered a lot of topics that were sent in ahead of today's meeting through the presentation. So hopefully, that's given a number of investors some visibility around their particular areas that they were looking at. But if I may, John, just hand back to you. If I could just ask you to read out some of the questions that we've got there today, and I'll pick up from you at the end. It's dangerous giving me the iPad and the control of this, but here we go. So first question, when are you going to make real money, question mark, profit, question, question mark, question mark.

43:04 So having worked in private equity, I can tell you the two aren't the same. You can have a lot of profit and be burning lots of cash through through financial engineering. But if if I take the question on the basis that I think it's meant, ultimately, not to be too flippant, we need to generate revenues that are greater than our costs. That's ultimately when the business becomes profitable. We don't have any forecasts in the market. So what I would refer people to is the the fixed cost cash burn we said is under 1,000,000 a month. Margins that we would aspire to are 40 plus percent margins. So on that basis, people can do their own kind of calculations to establish what revenue we would require to get there.

43:51 And what else I can say on that is we're working as hard as we can, as quickly as we can to to get there. Second question. Hi. Is all hydrogen revenue produced in partnership with ICL split fifty fifty? The the hydrogen rev revenue reduced to ICL will be split fifty fifty. The the hydrogen that we are generating in Dunstford from the from the permit variation we've received will be ASC only revenue. Third question. Hi. How long does it take to build one l c 30 hydrogen generator? Eighty five hours. Eighty five hours. Next question. Hi. Is any type of fundraiser expected or required in 2026? Do wanna talk about going concern?

44:40 Yeah. So as so as part of the audit this year, again, comparing ourselves last year Last year, when we issued the audit statement or Grant Thornton did, we had a material uncertainty, which essentially meant that there is there was requirement to raise money in the period twelve months from signing the audit report. We've just signed the audit report this week, and we don't have that material uncertainty statement anymore. So in notes that we built around the period that we looked at, it essentially says that with by September 27, we need either need a substantial order book or have some kind of fundraising event. And that's so for the next eighteen months, we are in good shape, but that's the analysis that we've done so far.

45:32 Thank you. Next question. Hi. How many kilograms of hydrogen does the new LC30 use in a twenty four hour period running at full power? It's between forty and forty five kilos. How many kilograms of hydrogen is one of our 200 kilowatt fuel cells use? It's almost seven times that, so 270 or thereabouts. Next question. Hi. What are the high five production targets for financial year twenty six to twenty seven? We've got a talk through. Obviously, we're looking to deploy the first one in 2026. And based on firstly, we have to have CE marking for that unit. So based on that and customer demand will depend on the units that produce in 2027.

46:22 In terms of capacity, we believe we've got capacity for one high five a week. So roughly 50 a year based on manufacturing Dunsford, which we would not be looking at doing long term other than for the cracker reactors. Hang on. Where's where have I gone here? Okay. Oh, you're deleting them as I'm reading. That's why I'm thinking, where am I? Okay. I thought it was dangerous leaving it with me. Hi. What are the Hi five production I've done that one. You haven't deleted that one. Smart. Okay. Apologies. Very professionalist. Hi. Has the Hi five unit been actually proven to work at that scale? So I'd refer you to the the pilot site in Dunsford.

47:10 That has the theoretical capacity of 400 kilograms per day. The H-five is obviously 500 kilograms per day. So the short answer is yes. Next question, how will AFC Energy improve its media visibility in the future to attract potential institutional investors' pension funds? So what the business needs to do in the first instance is move from being a speculative stock to to one that is highly investable. So we need as well as setting out a clear plan of what we say we're going to deliver, we need to start delivering it, we need to start generating revenues. And once we have that, we will be attractive to other institutions. The register as it stands now has changed significantly over the last twelve months, particularly due to the fundraise.

47:57 I think when we joined, it was around about 15% institutional equity positions. Now it's closer to 40%, albeit there's only one, I believe, that is over 3%. Next question. I think this is actually a statement that's been submitted by the chairman. I have complete confidence in the management and plans of AFC Energy and would like to thank them for their work. They still have a lot of work ahead of them. The whole secret is winning over the masses of AFC Energy and its products. They will manage it. Many investors believe in them. Thank you. Well, thanks, Gary. Appreciate appreciate that. Next question. Do you intend to take HYAMETEK publicly sorry, public independently in the next three to five years? If so, what will be left for ARC Energy?

48:47 We've got absolutely no intention of of of doing that. We are a PLC. Hiamtec is effectively a brand of of AFC Energy, so no. Next question. What is the current status of your collaboration with with ABB? Well, there isn't one. I think we we outlined or certainly stated in in one of the IMC meetings that I I've never personally had any conversations with with with ABB. They are a shareholder. They still hold, I think, about 1,700,000 shares, but we've had no conversations with them. Next one, does our manufacturing partnership with always have the confirmed capacity to deliver 50 plus LC 30 units and 10 plus high five crackers?

49:33 So capacity for the LC 30 units, absolutely. VOEX will not be manufacturing the the high five. The high five is a miniature chemical plant. That's not something they're they're interested in doing. And as I said earlier, we would be looking at manufacturing the the cracker reactors. For the first units, we will build the whole the whole unit. And beyond that, we would be looking to to outsource that. Next question. Hi. Was AFC participating in the same bidding process for the contracts awarded to GeoPura? How does this affect AFC? So this relates to the Lower Thames Crossing and the announcement, I think, that came out on Monday, which is one of the worst kept secrets in the construction industry. I think we've known for about three or four weeks about that going to GeoPura.

50:23 So no. No. We weren't. The tender closed. I think it was July 2024. It before Carl and my time. At that time, we didn't have a product. We had technology. We didn't have a product, so we weren't participating in that tender. What does it mean for AFC? It's actually a real positive thing. And the reason it's positive is, firstly, it's government giving some commitment to supporting the hydrogen economy. So there's a commitment for hydrogen to be available for construction companies to use on on LTC, which is really important, which means there'll be investments in hydrogen assets, which is very helpful for us because, obviously, our l c thirties are hydrogen assets. In in terms of what else it means for us, it's it's really quite interesting because the price per kilo of hydrogen hasn't been disclosed.

51:17 But again, being a sort of leaky industry, we think the price, the headline price is £9 a kilo, which we assume is based on a GOPERA benefiting from a payout from the H-one scheme. There's been no payouts as yet of £9.50 a kilo. So the if that is the case, it's a it's I think it's two and a half thousand tons is the is the inverted commerce contract. That essentially is a £22,500,000 value of which the taxpayer, you and I and all the rest of us that contribute to the economy, will be paying about £24,000,000 for them to deliver 22,500,000 worth of hydrogen. But I think what it further shows to highlight is the competitive advantage that our technology has. So if we, for example, were unable to access that level of subsidy nine pound 50 kilo, not only would we be able to give away the hydrogen to the construction companies, we'd actually be able to pay them to take the hydrogen, and we would still be profitable.

52:27 So it really kind of highlights the kind of disconnect between government subsidy in our view or certainly my view in particular, I shouldn't try and cut tar a car with this brush, get my just get myself into trouble, not both of us, that funding OpEx for hydrogen is gonna do nothing to reduce the cost of hydrogen because you're back to how is hydrogen being produced through electrolysis. It's the cost of power that's an issue, and that is not going to change. So the subsidy should be going towards investments in capital equipment, and we have the technology to have a significantly lower price point that drives that commercial viability. There's a there's a there's a couple of other questions. Are you as bullish on AFC prospects as you ever were on EKT or your other management roles? EKT was a a micro conglomerate that I ran for ten years.

53:21 It went from 5 p to 65 p, so thirteen thirteen bagger, and then sold part of that one again for about three and a half times more. No comment on that. I think this is this is a business that's got great great opportunity. It's the reason why I joined it. It's the reason I persuaded Carl Yep. To come and join me as well. But watch your space on that. Fine. I guess I guess final actually, let me just sort of scroll through. I mean, someone's asking when the cash runs out. We just we just answered that. One I'll take one final question off here.

54:07 Okay. Will you take preorders for the LC30 units prior to getting the C certification? Yes, in the short term. Perfect. John and Carl, thank you very much indeed, and thank you to everybody for your engagement this afternoon, and we'll make any other questions available to you post today's meeting. John, and I, investor feedback is important to you both. I'll shortly redirect those on the call to give you their thoughts and expectations, but perhaps, John, a couple of closing comments, and then I'll send investors for feedback. Yes. Thanks, Mike. Well, I think the final thing I'd like to say is to thank everyone for listening to us today. Those that have already invested, thank you. We appreciate that. Hope it comes across that we we believe in the business. We're doing everything we can to progress the the fortunes of the business. And to date, everything that we set out to deliver, we have delivered.

55:01 It doesn't always work out like that. The path to successful development of nascent technology businesses is is nonlinear, but we're certainly doing everything we can, and we'll continue to do so. So thanks for the support. That's great. John, Karl, thank you very much indeed for updating investors. The company is asking investors not to close the sessions. We'll now automatically redirect you so you can provide your feedback in order the company can better understand your views and expectations. Behalf of management team of AFC Energy, we'd like to thank you for attending today's presentation. Good