H-Power (LSE:HPOW) — Investor Presentation

0:01 Good afternoon, and welcome to the AFC Energy PLC 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. Just simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself, however the company can review all the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Chairman and Chief Executive Officer Gary Bullock. Good afternoon to you sir.

0:31 Good afternoon Alex and welcome everybody to today's investor meets company presentation for AFC Energy PLC. Format of the day is I'm going to give some introductory remarks just on the highlights of the performance last year and I'm joined here by Peter Dixon Clark, who's the company's CFO. He's going to give a high level view of our financial performance and then for the larger portion of the meeting, we're going to hand over to Mike Rendle. Mike runs our fuel processing ammonia cracking activity, which we've recently rebranded as HYAMTEC. Most of you won't have seen any more detailed information on what we're doing there, so it'll take you through a presentation that we've been sharing with potential partners and investors and give you a high level view of what's going on in the activity there.

1:31 After that we'll be open for questions, I know some of you have submitted some already but there's also the chance to put some here on the live Q and A and they'll pop up in front of me. So once we're finished with the sort of presentation side of it, I'll try and answer as many of the questions as we can get through in the time. So from my part, highlights of the last year, I guess the main one is that it was a year during which AFC moved from a very much research development prototyping workshop type environment to having a full scale production line for producing our air cooled hydrogen generators.

2:17 So, activity for any company, it went on balance very successfully, we had some supply chain challenges in the early days with a couple of particular parts that we were having trouble sourcing and one that we had continued technical problems with, so that set us back a bit. But it forced us actually to try and be a bit more agile in terms of our activity so we could catch up and do the full targeted production that we had planned for the year. So as well as sort of sorting out our supply chain and the specific issues we had with some of the plants, we actually accelerated what we were doing in terms of our outsourcing activity.

3:02 So we've got outsourcing relationships with two key partners, which we intend to extend over time and we were able to accelerate moving some of the parts of the activity out to them. And as a result of that, we were able to deliver albeit much more weighted to the back end of the year, we were able to deliver our first fleet of generators to Speedy for the joint venture that we formed with them for deployment into the construction sector. During this time we were actually deploying some of the early units out into the field and getting practical experience of them. That was a very informative activity, you learn quite a lot when you move from having a properly managed service to putting it in the hands of your end customers, We learnt a lot in terms of the usability of the equipment.

4:01 I guess two key areas, one of which is that in providing it to the construction industry we needed it to make it a lot simpler than we had originally designed it, so the first generators that went out went with a nice flashy HDMI screen and lots of options on it. We quickly reverted to one large green button or one large red button and a sign saying don't stick your finger in here' instead of that. Also, the end users needed quite a lot of information in terms of how to use and operate the equipment that we hadn't recognised we would need, so we learnt a lot there. I guess the most important in terms of the functionality and the performance is that we have a system which is tightly integrated to an intelligent battery system, so we have quite a lot of software which monitors the equipment and controls the battery system in terms of how and when it's charged and giving feedback, things like that. So, we ended up doing a lot of work around that integration part of the activity.

5:10 When we initially deployed them, we thought that they would operate as relatively standalone devices, but it became very clear that we could get much tighter integration, improving the performance of the unit, giving some more feedback, giving some more flexibility of the unit. So those changes we made and we were able to accommodate those changes into the design and the build of the units as they went out and what we learned from the early units, we're able to retrofit back into the first units. We've been working very closely with Speedy in terms of the deployment out to end customers. This is an interesting activity, we're in I think a unique position which is that we've got heart fuel cell generators that are going out into live applications and into a situation where you have relatively unsophisticated end users.

6:09 Most of the deployment of our generators in the past, you know we've had people going out with them and they've been carefully managed. When you put them out into the field and you expect somebody with very little background information to, then you do learn a lot about the service packs that you need to put around these things, so as a higher company distributes these things, there's a lot more than we realised in terms of documentation, so things like risk assessment, all the health and safety stuff, even things like lifting plans, the fact that the lorries that deliver the hydrogen are different from the lorries that normally got access in the site. A long string of activities that need to be put in place so that the end customer gets the sort of level of service, seamless service that they expect when they are hiring other bits of equipment. So that was a very interesting activity.

7:07 We've been working together on the commercial side of things, focusing very much on the higher end larger

7:14 and infrastructure companies, that engagement's been going very well as well, so we've been building up a good commercial pipeline. Again, we're finding with most of the clients they want to get themselves up to speed on this activity, so we've ended up with a pilot site here where our factory is and getting the teams from the larger construction companies so that they can train core teams in the operation of these things, getting their health and safety and other people down as well. So it's been a really good joint activity, we've all been learning as we go, speeding ourselves and the end customers, but it's been a very positive.

7:59 The last highlight I guess was the activity around the ammonia crack side of things. We were moving forward in terms of the IP and what we were developing around this and it became clear that this activity was sensibly more disconnected from the fuel cell activity. The original premise of our work on ammonia cracker was to tightly integrate this with the fuel cell side of things, which some of our competitors I guess in the marketplace do, but it was very clear that we had some much shorter term serious size opportunities in areas that Mike will take you through in a minute, so we felt it was sensible to separate that activity so that we could start to demonstrate value and attract a different group of partners and end clients to that activity.

8:51 During the course of the year we launched as well. So we're pleased with our activity last year, as with any relatively start up company the journey is a lot hairier than you expect during the year but, we were glad to land where we hoped to by the end of the year and I think it's given us a strong base to move on for our next financial year which has just started. So I'll hand over to Peter now who'll give you a quick summary of the financial information, financial results which you've probably, most of you have already seen through our trading statement that'll just set the context and then on to Mike who will give you some more information about our ammonia cracking activity.

9:36 Over to you, Peter. Great, thank you, Gary. Good afternoon, everybody. As Gary said, I'm Peter Dixon Clark, I'm the CFO here. So I've just got one slide. You'll appreciate that these numbers are unaudited. We're in the process of closing out the financial year. So it's really too soon to be too definitive with the numbers. But I think some guidance is helpful. Obviously, that's what we did in the trading update. So if we start with revenue, we're guiding about £4,000,000 versus £200,000 last year. So this really has been a transformational year. On the graph in front of you, I've included revenue for financial year 'twenty two and 'twenty three, just so you can see what a difference.

10:23 And only '24 has the green bar, which is for equipment sales. And so it's a first in terms of it's been a transformational year in terms of quantum, but also transformational year in what we've been selling. And we said that we'd do it, and this is the evidence. So within that

10:47 revenue bar, as I said, we've got the first sales of the 30 kilowatt power generator, predominantly to the joint venture we have with Speedy Hire, which is known as Speedy Hydrogen Solutions. Within the non sales revenue, within the rental revenue, we're earning rental revenue in Spain with Axiona. Gary has already referred to Axiona. That's going particularly well, particularly and one of the things the customer particularly likes is the autonomous operation and the way that the fuel cell is the generator is interacting with the battery. And that's been a major technological step since when we deployed the power towers.

11:32 So again, further evidence of just how far the product has come. Also in the revenue tower is Tango. We signed an agreement later in the year, And this agreement covered both engineering services, essentially localisation. The operating environment in Saudi Arabia, in this case, is clearly very different from The UK. And so prior to selling a generator, we've undertaken a great deal of effectively non recurring engineering. So thinking about the balance sheet, we finished the year with £15,400,000 in the bank, having started with £27,400,000 terms of working capital, big increase, particularly in trade receivables.

12:23 That's because, as Gary just said, the year has been quite end loaded. We work in production drops, which means that a number of generators all become available for sale pretty much simultaneously. But if you sell a generator towards the end of the year, you then have receivables at the end of the year, and those will unwind next year and will receive the cash in FY 'twenty five. R and D receipts, we were able to apply under the new legislation as an R and D intensive small and medium sized enterprise. And what that effectively meant is we were able to cover at a higher rate.

13:09 And so we've recovered 2,700,000 versus the provision in our balance sheet when we did the audit of two point one million. So that's a delta of £600,000, which is sitting in our bank account as we speak. And then we would expect to receive the money for this financial year, FY24, we'd expect to receive that next year. In terms of investing activities, we guided in our RNS about the joint venture that we would start with an investment of £625,000 each would invest, so putting the JV in funds to the tune of £1,250,000 and that happened during the year as guided. R and D, as in intangible assets, we'll expect to see that flowing into the balance sheet.

14:01 We do a capitalisation review twice a year, once at the end of the year and once at the mid year. And clearly the end of the year exercise is yet to take place. Finally, within investing activities, we have invested in equipment for our manual assembly line that Gary referenced, but also quite a bit of equipment for quality control. You'll appreciate that implementing tight quality control ahead of assembling some of the subcomponents saves a great deal of money down track so that we don't assemble faulty components. Finally, financing activities. You'll have seen the RNS at sort of June July time, we raised another 15,800,000 gross of expenses.

14:49 Clearly, when we publish the financing activities, they'll be net of expenses, and they'll also be net of lease payments, and lease payments on an annual basis are about £500,000. And that pretty much sums up where we are at this point on the financials. Thank you. Thanks, Peter. Now, as I said, I'm going to pass over to Mike, who's been leading ammonia cracking fuel processing activity and take you through a summary of where we've got to on that. Hello everyone and thanks Gary and thanks Peter. I really enjoy the opportunity to talk to our shareholders about some of the work that we've been doing as part of HYAMETECH and sort of talk you through some of the really good developments we've been making on our ammonia cracking technologies.

15:36 So I'm going to walk you through that now with some brief information to give you a view. The reason we have sort of started to split out the work that we've been doing on ammonia cracking from some of the fuel cell activities is because we're sort of targeting some different areas. Fuel cells are specifically looking at diesel generator displacement and replacements, and they're targeting the construction sector as one of the near term markets. The things that High EMtech and the ammonia cracking technology can do is we can talk to people working in different sectors, and our main sector that we're targeting is heavy industrial users, because we see that up to 50% of global emissions are coming from these heavy and hard to abate industrial users.

16:25 Now, a lot of these customers and industries and sectors are looking to move to hydrogen. They want to move to hydrogen. They're actively looking to try and get into that sort of space. But the costs to do that are getting very high because it's quite difficult to move hydrogen around in large quantities, which these users are likely to do. So the most natural way of doing that would be to move it in pipelines. At the moment, there isn't a pipeline infrastructure, certainly in The UK, around to do that. So they're having to use hydrogen either generated on-site via electrolysis, and the government has grants and subsidies available under the HAR schemes for companies to do that. But if you're creating electrolysis systems on industrial sites, you need a large amount of electrical power to be able to create the hydrogen you need, and the grid in The UK is currently not geared up to support that.

17:24 So with that in mind, and the complexities of putting a hydrogen network around, we've started to look at how easy would it be to convert our ammonia cracking technologies to generate hydrogen on demand in a containerised solution that could be deployed quickly and readily, because we think liberating hydrogen from ammonia using our cracking technology is a potential way forward for these industrial sectors to move quickly. We want them to accelerate, adopt hydrogen as fast as possible to start addressing these emissions targets. So looking at our main practical tech in a little bit more detail, and for the investors and shareholders that have come to our AGMs in the past, I've had some of our cracking systems available for people to see.

18:14 But our expertise is we have a modular device, and the benefits of a modular device means it's highly scalable. Rather than these very large petrochemical sized plants, we can make something that small. So for instance, our current reactor is probably about the size of a fire extinguisher. We can then bank a number of these fire extinguisher sized crackers together to get a much higher throughput of hydrogen or delivered hydrogen because we designed it from the beginning to be highly scalable and that modular. It also works over a very wide pressure range, and this is some of the key bits of our technology over other people's, which means we can integrate it with lots of other things, be it fuel cell systems, be it purification technologies or other plant and equipment.

19:07 It already runs at a higher pressure, so you don't need to compress the hydrogen that you're making.

19:12 But it all does that in a really compact, small size. Again, our reactor is about the size of a fire extinguisher. It's highly efficient. We've published some numbers and I'm looking to publish more numbers in the future about our operational efficiency, but it's designed right from the beginning to be able to utilise multiple thermal heat sources. And I'll come back to why that's important in a minute.

19:38 We've now been filing quite a lot of IP on this. We've been working on this on and off for nearly twelve years, but we filed a number of patents recently and we're making some really good progress in that sort of space. But one of the other real key benefits of the system is its fast response time. We're trying to simulate a pipeline. I mean, the whole point when we're talking to customers is they want a pipeline of hydrogen, but they can't get it. They're used to pipelines of gas. If we can simulate that using our system, it means we can integrate it into chemical plant, industrial uses, so much more straightforward. And the other beauty is because we've designed our system from the very beginning to work in combination with fuel cells, we have to have a system that's very fast, very dynamic, very good response time.

20:32 We can start our reactors from room temperature up to full operation within twenty minutes, and that, compared to other crackers I have seen, has taken numerous hours. So for us, that's quite a big selling point because, again, it means we can simulate pipeline activities. Some of our achievements. I put this slide together just to sort of show that we've been doing an awful lot in the background.

21:02 So we've connected fuel cells, the AC energy fuel cells led by David Harvey, with our crackers in the past. We can chew that. We've actually charged electric vehicles using that system from ammonia. So we've gone from ammonia to hydrogen, pure hydrogen by the way, to electrical power, to the motion in a car. We've also built what we believe is The UK's largest pure hydrogen pilot plant, and we've got certifications of our hydrogen gas quality

21:34 from that. We show that we're better than the most stringent requirements for ammonia in the hydrogen gas stream. We've scrubbed it all out, all as part of our efficient system. We meet the grade D and we can process around two and a half tonnes a day ammonia throughput. Just on that point, that system is approximately or will generate the same amount of hydrogen as a one megawatt electrolyzer. So we've got YouTube videos around that you can look at it in more detail. But if you think a one megawatt electrolyzer obviously requires one megawatt's worth of electrical power, our plant, to do the same job, requires six kilowatts worth of electrical power, so 0.6% of the power to generate the same amount of hydrogen.

22:20 So you don't need a very large electrical backbone or grid connection for this to operate because the energy is already in the content of the ammonia in the first place. We are just liberating it and making it available for other uses. So it means the rollout or the deployment of pure hydrogen plant based on our technology is actually relatively straightforward. More recently, we've got a UKRI government grant, Project Entice, where we're working with Male Powertrain, Clean Air Power and University of Nottingham. In fact, we had a review yesterday there. We're midway through that report. We've already shown successful operation of our cracker fuelling a four stroke combustion engine with some fantastic results. And I won't go into them in great detail here, but I'll come back to that shortly.

23:12 We've also got some fantastic ammonia cracker tests and evaluation facilities. We've been building out some of our capabilities, and I believe they're enviable. We've had a number of people come round, very large industrial players come round, and they cannot believe some of the capabilities we've got all on-site, all under our roof. And that means we can control the IP. No one can see the stuff that we're working on. We can generate the data, generate things, and move exceptionally fast because of that. And I've already touched on, we've got a building IP portfolio. So all of these things are creating significant value for our shareholders. Looking at the future, the left hand box, we've got the core reactor. This unit is where we've been focusing the bulk of our time up to now.

24:01 We're pretty much completed on the design and we're actually working quite thoroughly on the manufacturing aspects of that unit, because that's one of the key things for us to be successful in the future is not have you got the best technology, but can you make the units at the right scale, at the right speed and the right quality. So we're a long way down the road on that as well, and we've been factoring that right from the very beginning.

24:25 That unit can work on industrial gas provision, it can work on engines and it can work in combination with purification technologies for fuel cells. In the coming year, we're looking at now linking multiple units together. We've already got a few of them worked in parallel. We want to scale that up significantly. We're looking for a 10 times throughput. So we want to connect a number of these reactors together into a module, which we want to be able to deploy to customer sites in the next financial year. And And again, the target for that is our industrial

24:57 burner customers. But also, that could then get integrated with purification tech for generating pure hydrogen, leading to a containerized solution where we can generate pure hydrogen for our fuel cell customers. And I'll touch on that again towards the end of this presentation. So target markets and applications. The thing to draw your attention to is the same ammonia cracker can work in all of these three devices or all of these three markets. We don't necessarily have to do much redesign work, and our core IP is valid in all. So the first priority is creating cracked gas, so a hydrogen and nitrogen gas mixture. So we're splitting the ammonia up to be able to feed into combustion applications for industrial users.

25:47 So think chemical plants, think large scale boilers, heat generation, furnaces, cement manufacturing, steel, etcetera. These sort of applications where they are huge consumers of natural gas and they're looking for alternative solutions.

26:06 The second priority is, again, large scale engines. So these are megawatt class engines. So for instance, there is sort of like a mining truck image that's shown there. That typically will be a 12 cylinder, ten, fifteen litre engine generating megawatts worth of shaft power. But these also could work on stationary power generation, so the large

26:36 power solutions which we have for dealing with grid support applications where, again, very large natural gas users and then looking to get away from carbon based fuels. And then the final priority, which we'll touch on towards the end, is making ultra pure hydrogen on demand for fuel cells for both transport and power generation.

27:00 And the reason of splitting this part out into a separate unit rather than having linked directly with the fuel cell is we can provide the quality hydrogen for any fuel cell customer, any application, be it combustion applications all the way through to buses, trucks, HGVs, being ready to actually deploy hydrogen refueling stations for the coming decade where hydrogen fuel cell trucks are going to be making a bit of a difference. So going into a little bit more detail,

27:35 touching on the first priority, so looking at the gas grid or the gas networks, where you have factories, again, large chemical plants, for instance, where you are bringing in methane, where you pay a lot of money, not just for the therms of methane, but you're also paying standing charges for pipe work, pipe connections,

27:56 etcetera. Also, if you're a big user, you've got carbon credits and carbon taxes that you have to start factoring in to your calculations, for your economics. And if you're looking at trying to be slightly off grid or you're not on a network, you're looking at LPG. All of these systems, when you combust them, will be generating carbon dioxide. So industries are looking at alternatives, they're trying to move to alternatives.

28:21 Again, first pass, if hydrogen pipelines were available, most people would move to that. But that's probably still decades away before it's integrated and linked to most industries. You could transport hydrogen, but if you think about the logistics and the costs of moving hydrogen around, it's problematic. It can work on small scale systems, but on the very large industrial users, it is a challenge. Other people are looking at actually doing away with combustion processes completely and moving to electrical power. But But again, as we touched on previously, the grid in The UK and certainly in some parts of Europe is not there. It doesn't have sufficient capacity or drop size to be able to support huge multi megawatt arc furnaces that may be required to do a similar sort of job.

29:08 So all of the three alternative green solutions, they could work, but they do have challenges. So the solution we're proposing is, well, you could keep your current industrial plant, your industrial burners, industrial solutions, feed in a cracked gas stream, so a hydrogen nitrogen mix from our ammonia cracker, and then just deliver ammonia to site. And for large chemical plants or large industrial users, handling ammonia on-site is relatively straightforward. The process is tried and tested. But you will get up to 100% reduction in CO2 if you move fully away from natural gas to our crack gas. The logistics of moving the fuel is relatively straightforward. Chucking ammonia around The UK is easy.

29:57 It is a relatively small footprint. You do not need to have lots of storage spaces for trailers of hydrogen And it's available now, and we believe it is a pretty cost effective transition. So we're working quite a lot with some of our industrial users to move to adopt and trial our technologies in the coming financial year. And the emissions from our process are predominantly nitrogen and hydrogen that's coming out sorry, nitrogen and water that's coming out of the tailpipe. Looking at other applications, certainly on the engines, and we're looking at, again, very large multi megawatt scale engines. And the little image on the left hand side gives a bit of a view of how this could work. And we're demonstrating this right now. So we could have an ammonia cracker where you put ammonia into the system, it's cracked into hydrogen and nitrogen, and that whole gas mixture does not need to be purified.

30:54 The hydrogen and nitrogen can go straight into the engine because the nitrogen doesn't have an issue because when you're putting air into an engine, 70% of that is nitrogen as well. So all we're doing is just adding a little bit of extra nitrogen through to the engine. Once it's combusted within the engine, you have hot exhaust products. That hot exhaust, which is primarily hot nitrogen now, water, actually due to our design of our cracker, we can extract heat from that. We can take a lot of the thermal energy and really boost the efficiency of our ammonia cracker, and we cool down the exhaust pipe. By taking the heat out, we reduce the parasitic energy consumption, which certainly means that our technology has become quite an interesting solution for these large scale engines.

31:39 So our design is highly efficient and is designed to boost the system efficiency. Now, a lot of people looking at engines using ammonia are looking actually at dual fuel. So they're looking at diesel or methanol with ammonia. So if you've got a dual fuel where you've got carbon based fuel to start it, you've still got carbon emissions that are coming through. But our technology allows for a single inventory because we can make the hydrogen on demand, which acts as that catalyst, that fuel that allows you, that pipe fuel that allows you to burn ammonia readily. And because we've got the nitrogen and we're controlling the temperatures in the combustion chamber, because we're slowing the reaction down because of the presence of the nitrogen, our NOx becomes a lot lower.

32:30 So the tests that we've been doing so far, we've published this as part of the Marianne H-three work that we're doing with the University of Nottingham and our other partners on our Entice grant, is showing that the emissions from an ammonia engine in this configuration is lower than what you get on a typical petrol engine, and that's before you put any abatement technologies in there. But the abatement is relatively straightforward. So if you're familiar with diesel engines, where you have AdBlue, which is a urea solution which contains ammonia molecules or variants of ammonia molecules to help reduce nitrous oxide, we don't need to add any of that. We can use the standard diesel abatement tech because we've already got ammonia present, so we can control the emissions as part of our system without complex additional dosing mechanism systems.

33:21 That's what a lot of people are interested in and where we're going with this. So this project has been quite exciting because we've had a lot of customer engagement looking at can we take our technology and integrate it with large scale engines for trials and demonstrations to prove that the numbers we're getting in the lab scale actually work on a large scale. And then to come to the last part, the hydrogen refuelling aspect, and again, tapping into the construction market and the AFC energy fuel cell solutions, we can see a hub and spoke type model working potentially with some of the larger construction industries, where you could have a number of the AFC energy fuel cells dotted around providing power, but you could have a hydrogen refueler located on the site, generating the hydrogen constantly and filling tanks up, which can then get taken and filled for the fuel cell systems, which then necessitate a single supply of ammonia, be it weekly or monthly, just running in the background, providing hydrogen on-site cleanly and greenly.

34:29 So those three sort of applications are the main areas that we're chasing as part of the next year to try deploying and getting the customer feedback on that. But the long and short of it is we're intending to make hydrogen happen. We want to stop talking about these things and actually now put these technologies out in the field and supporting not only our fuel cells, but also generating more revenues and supporting our investors. Thank you. Thanks Mike. So that concludes the formal presentation material, I'm sure that we've got questions in addition to the ones that have been submitted already. Alex, shall I hand back to you? Yes, definitely. Gary, Peter, Mike, thanks very much for your presentation.

35:18 Ladies and gentlemen, please do continue to submit your questions and you can do that just by using the Q and A tab which is situated on the top right hand corner of your screen. As Gary just mentioned, we have received a number of questions. I'll dive the first one here, which reads as follows. What sort of time horizon are we looking at for securing a partner for HYMTECH? And are partnerships being considered based on their ability to contribute towards costs? Mike, do you want to take that? Yeah. So we're talking to a number of potential people at the moment, and I'm quite staggered by the interest that the creation of high-tech has generated. We've got a lot of inquiries coming in from a lot of different people, people that recognise the value of what we've created. So we're evaluating all the opportunities at the moment, but what we're trying to do is not run before we can walk.

36:09 The critical thing for us is to get our technology now outside of our environment, put it into real customer locations, validate that with partners, which will be hopefully financially contributing to some of these developments and these activities. But there's a lot of interest in that sort of space. So I'd say there's a lot to come and keep watching this space. Perfect, thanks very much Mike. Next question here, can you please provide more details on the production challenges you've encountered with the pilot manufacturing line and what steps have you taken to mitigate these? Well, it's supply chain related generally, not performing within specifications. The main area was actually rather than the units themselves, it was the way that they integrated with the battery systems.

37:02 So essentially this was more complex than we thought, so it was basically software related activities, so we ended up making quite a lot of adjustments to the software and the way it integrated with the battery system. We had supply challenges with one specific power conversion piece of equipment and we had to basically do a cycle round in terms of finding alternative suppliers for this one particular unit, an alternative approach which we did. That was probably the thing that was on the critical path and delayed most of our production, but we've got to fix that eventually. But I would say normal teething problems, generally everything has performed at or above expectations once the equipment's been produced, it was really just the challenges on the supply chain side of things.

37:58 Gary? Yeah perfect, just checking that you can hear me? Yeah, yeah. Perfect, the next question here, are you in a position yet to provide a set of tangible KPIs which can be tracked on a regular basis to evaluate operational performance? Actually that's a good question, I mean a brief answer would probably be no, that we're not fully there yet in terms of our KPIs. What we have started to do though is around the production activity, we've hired somebody who's an experienced production manager and we've got a very strong quality team, so we've been doing detailed work in terms of all the measures around quality of production, quality of the individual items we've been buying in and the likes, we've got a very strong quality process.

38:43 We're just in the middle of implementing an ERP system, so that will, with the next fleet of equipment that we produce, we'll start to get some proper KPIs and metrics outside of that. The other metric that we are tracking is really around the cost side of things, so understanding the manpower and the level of activity and the automation that we can put into that. So we have got a set of KPIs, I think the main change will come as we're putting a SAGE system in place, the big step forward and that should be in the next run of equipment will be once that ERP system's installed. Alex? Thank you very much. The next question here, can you provide an update on the quantum of the overall order book and anticipated timeline for associated revenue recognition?

39:38 Yeah, I'll take that if I may. Okay, so this is a reference to our last set of glosses where we talked about an order book and that was approximately £26,000,000 and that was a combination of where we had existing contracts which contained sort of pricing and elements and some of that order book was committed there and then, some of it was contained within the contract subject to certain milestones. So the best way to think of the order book is obviously as we make sales to the Speedy JV, the order book reduces because the Speedy JV was included in that order book. Axiona was also in that order book and I think we've mentioned already that Axione is on a six month trial, which will conclude next year and on the conclusion of the trial, Axione has the option to extend the trial or purchase the equipment. And of course, if they purchase the equipment that will then move out of the order book. In terms of order book growth, the most likely source of growth will be in our Tango relationship.

40:47 And we made a very good start by signing the first contract at the end of the financial year. And, you know, we're looking to sort of build on that. So I'm not going to give you a number, but that is essentially, those will be the dynamics of that number when we next discuss it. Thank you, Peter, that's great. Next question, can you please provide an update on the competitive landscape and how your products stack up against other energy providers? Are there any products where you have an exclusive IP which will protectenhance their marketability? Yeah, that's a good question. We tend not to sort of immediately jump on looking at other fuel cell companies as our direct competitors at the moment. Mean what we're trying to do is get a sector established in the use of hydrogen, so anybody who's working in hydrogen, whether it's production side of it like the electrolyzer companies or other fuel cell companies or people who are involved in the distribution of hydrogen, we all tend to regard ourselves in the same boat and don't really talk about each other as competitors.

41:54 You know what we're competing against is you know diesel generation, diesel fuel. Having said that, there is activity going on in the marketplace. As I say, I think we're probably unique in terms of, you know, deploying generators into live applications in the construction sector, so there we're not really bumping into anybody else. There are some manufacturers like Geopura, EODEV who do larger units at the high end, I think generally more focused on the higher industrial side of things. We have, as you know, we've got units that operate at that size and scope, but we have not seen significant demand for units at that level at the moment, so if that area was to expand we could easily step into it. We are doing another high end unit, we've developed one for ABB and we're working another high end unit who will have to be deployed into a quarry in the first quarter of next calendar year.

43:01 The challenge in the real world at the moment is that they burn so much hydrogen, the practicalities of it is that you really need to deploy them onto industrial sites where you've got a ready supply of hydrogen and so the technology is out there, obviously fuel cells doing the sorts of things we're doing, but it's not like we're really getting individual situations for example where somebody's saying oh do we go for AFC, do we go for something else, where almost every situation we're involved in is a unique situation and we're working directly with the client and obviously with the speed of relationship we've essentially got a target client list which is their largest customers that we're working on and again I think we're in a unique position there, none of the others are offering solutions. There are alternatives potentially in the marketplace, obviously different sources of green energy, but again we don't really see ourselves competing against those at the moment.

44:09 That's great, thank you very much Gary. The next question here, will the board look at listing the stock in other markets where valuations are higher? Yeah, again it's a very topical point, guess many of the investors and shareholders on the cords know that The UK markets, in particular A market at the moment, do undervalue companies, so if you look at a company like for like listed on the A market as against maybe one of the European markets and certainly The US market, the valuations are different. There has not been a lot of money going into The UK market and that has depressed valuations and also until recently there was this hangover which people were unsure as to what was going to happen as a result of the last budget in terms of inheritance tax relief things like that. So all of those things mean that the company's valuation like for like is less than on other exchanges.

45:11 Having said that, moving an exchange is quite expensive, certainly moving to a US exchange, the downside there is that really to get visibility in The US you have to be much bigger as a company and that unless you're you know let's say a billion, at least a billion dollars market cap, it's really not worth the effort of moving across. Having said that, know we always look at different opportunities, we've got advisors involved and we have looked at that, but we don't think that's likely to be the next move that we make, but we will keep it under review. Understood, thank you very much Gary. Next question, where do Germany, KSA, USA and Japan sit in the current AFC energy plans for sales and mass localised assembly of systems?

46:04 Again, very topical question because it's one the topics that we're teeing up in discussions with the board at the moment. So what we're doing at the moment is essentially focused on The UK, so say the first fleet of generators we've produced were almost exclusively being deployed in The UK. There are other geographies, The US, The Middle East, where there is demand and growing demand for alternatives to diesel generation, so those are very attractive markets potentially, and it's a question of how we scale up and how we exploit those markets. We know that in certain markets, The US and The Middle East, there are advantages to producing in those geographies and you can get government support to do that and we've got potentially obvious partners who might be interested in picking that up.

47:07 So our feeling is that we've got something with our relationship with Speedy and the particular products that we're stripping out to the construction set which is potentially if you like a test bed for other geographies. How we then take that into other geographies and expand our manufacturing relationships over there, we've got discussions ongoing but I don't think we've concluded in terms of what the next route is forward in doing that, whether it's to extend our contract manufacturing relationships like we've got in Germany already with Solna or whether it's to work with a big industrial and do some sort of license type agreement or something like that or what we're increasingly finding is that there's more value than we expected in the integration of these systems.

47:55 So one of the live bits we've got into The Middle East for example, the fuel cell is actually less than a third and closer to a quarter of the total cost of what we're bidding in there because it comes integrated with the large battery system. So these batteries, these are large expensive complex battery systems that combine as part of the offering, and quite often solar arrays and other renewable sources. So you can bid something in which has a combination of different power sources driven around the battery, even non renewable as well, so if you need, you know, you've got a particular peak load for example, you might just use a diesel generator for that and these can all plug into the same battery system and the hydrogen we use when it can and maybe topped up with some of others. So we are feeling that the relationship with Speedy is teaching us more as to how we might be more of a complete solution provider and particularly because we're in the early days of deployment we're getting more customers who are looking to us to do everything end to end. So again that might be a model, know, almost like if you like a franchise type approach whereby if we know what we're going to do, what we can do, can build up the IP and the capability around that and deploy it into other geographies.

49:26 But it's very active and the geographies that were picked out this question, they are actually the ones that we're focused on. There is a bit one that's we're least advanced on, at least as far as the fuel cell is concerned, is Japan, but Japan is one of the leaders in their activity on the ammonia side of the business, so we also do have discussions with big Japanese industrial companies as well to the right extent of that. Thank you for that detail, Kerry. The next question here, slightly shorter, how long will Tango trial their first generator for? Tamgo, yeah, so Tamgo bought a generator and are buying generators, they are being, but what they're being used for is trials with end customers.

50:14 So there is trial activity in that they are not going to the unit, first unit that's going out is going to be moved from different customer situation to customer situation, but it's not a trial into Tanco, they've bought the unit and we're doing the localisation and the integration and the product support around that setting them up as a distributor. Again we're slower on that activity than we expect it to be but that's really for the same reasons with Speedy which is that if we're sending the units out there we need to make sure that they are working effectively, we've made any of the changes, it's more difficult when stuff goes out into The Middle East, don't want people flying backwards and forwards to there. We were lucky in that one of our first deployments was into Axiona in Spain and that has been, the environmental conditions there, know, it's gone through a very hot period of the year over there so we've actually got some experience in the environmental side of that as well, so but the first unit's gone out and it will be a question of whether we now start to win some of these bids with the real end clients with our relationship with Tamco, the units that are going out now is for them to get set up as a proper distributor to be able to support and demonstrate this equipment locally.

51:35 Thank you very much. The next question: do you anticipate reaching breakeven within the next three financial years? Great, I'll take that. Think so at this stage in the product life cycle, we wouldn't expect to guide on something like that and we haven't yet. What I can say is we're working hard on the rate of costs down because that's what will drive this. Cost down we expect to see through scale. Gary's already talked about all the work we've done with supply chain, but also value engineering. And we won a government grant not so long ago, as you'll remember, the red diesel replacement grant, and what that has essentially done is paid for half the cost of our development of our next generation generator.

52:25 Now I hasten to add, when I say next generation, the point is it's doing all the same things, but it's doing it with fewer components in a particular way that will lead to significant cost savings. So as I say, not in a position to guide at this stage, given where we are in the product life cycle, but working hard behind the scenes to strip as many costs of the unit as possible and, you know, continue that downward curve. Understood, thank you Peter. The next question, how will the hydrogen be supplied and delivered to overseas contracts? Yes, it depends on the scale. Mean, with them in The Middle East, that is one area where we expect to be able to get hydrogen easily and readily there. Obviously they have access to solar power, renewables and hydrogen supply down there, so we'll be with Tamco sorting out supply essentially through them down in The Middle East.

53:27 In Spain and across Europe we've managed to develop our own access to supplies over there. We have a particular contract with a call off contract with one provider over there as well at the moment, so we'll see how that goes. We're learning from our activity in The UK, we've got a number of different threads for our activity there, not only in terms of both buying the hydrogen but the options for shipping it around. So in addition to the normal large cylinders that you can buy from the large gas manufacturers, we've got some other options, we've procured ourselves a couple of what are called nano stuns, so each one of those takes just over four thirty kilos of hydrogen, so that could keep one of our typical generators going for a month and then there are other smaller options as well, almost like a trailer type approach that can maybe do about up to 100 kilos and easily delivered on-site. So we're experimenting both with the methods of delivery but also developing the supply side of that as well and obviously we also have the ability to produce our own hydrogen in reasonably large quantities here on-site.

54:46 I think this is something that you have touched on, but if you have anything else to add then please do. With the Middle East and North African region and particularly Saudi Arabia being core markets for AFC, would the board consider dual listing AFC on the Saudi exchange? We haven't looked at dual listing on any of the exchanges and the Saudi exchange is potentially something in the future. If we want to expand in The Middle East then that is likely to result in some relationship with a local provider. A lot of western companies as they get into the sector, they will partner up with a larger group and maybe do something locally. So I think it would be more likely that if we wanted to expand down there that we would have something like a joint venture with maybe one of the big industrial groups or something down there and we're well connected, fact Tango for example is part of a much bigger concern as our lead group and so I think that's more likely than a listing on the Saudi. I think we can get the investment and what we need to do down there probably through some partnering with a large trade partner if we go forward, whether it's on manufacturing extending our distribution agreements down there.

56:10 Thank you very much. Could you please discuss how you see the future for the ammonia cracker? Is this something you might, for example, see as a spin off to a new business? How do you see this technology maturing within AFC? And finally, have you had any external interest from other companies in respect to this tech? You start on that and then I'll chip in. So we've created a company called HYAMTEC where we can move all of the technologies, development assets and things into at some point in the future should we need to. The reason we've done that is because the areas of interest in the companies that we're talking to are different to those that we talk to for the activities we've done for FuelCell. So having the ability to run as a separate entity means you can open up different areas, different options for future financing, future growth and sort of future relationships which might be different if you had to stick as part of the ASC parent sort of company.

57:15 So we're looking at all those different options but at the moment we're still a 100% owned subsidiary ASE Energy. Yeah, I mean as we've referenced in some of our communications including the trade mix, this is a deliberate strategy by the company to show, you know, find a way of demonstrating value in the activity that we're doing around the ammonia cracker. Up until now we've been doing it deliberately, slightly lower profile, part of that is for competitive reasons, including building up our own intellectual property but also trying to make sure that we're in a position to move relatively quickly out to live deployments rather than signal this a long time in advance.

58:03 Now I don't think the immediate option although these things are always possibilities will be to form it as a separate company, I think the short term what we're trying to do is demonstrate value so we've got something here which people can look at and then they can look at other companies that are specialised in ammonia cracking like Amagy which I think is valued at about 600,000,000 and Sizagy and some others they can see and they can compare what we're doing with some outside valuation criteria. Also when it does come to you know potentially getting investment or partnerships, then we're talking to a different set of companies so as Mike's touched on already, know through having visibility of this, this has attracted a different set of companies or different types of companies, the large industrial companies, the companies who make these very large engines or diggers, people who do power generation themselves, these sorts of partners.

59:07 And these sorts of partners are very used to high levels of investment and long term projects, so you know they understand what we're doing and we're at the stage now where they can start to consider this sort of technology maybe in terms of being an alternative, in terms of the way they build out their infrastructure. So we don't believe that the value of what we're doing is recognised in the share price at the moment, but the immediate way of doing this is really just to you know demonstrate in practical terms what we can do and get you know the initial clients and potential partners on board with this, but you know that's not to say we you know any company of course can always you know spin off a subsidiary or come to some sort of arrangement and if we saw that was a more effective way forward or if we had specific approaches around that then that was something we would look at, but at the moment it's very much in the early days of demonstrating this technology and the value it's got to the company.

1:00:14 Thanks very much. We've got another question here, Mike I do think you just touched on it so if you do want me to move on then do let me know. Please explain the benefits of Hymetech and it being a separate limited company rather than a division of AFC. Yeah, think I just covered that in that same question really. So you do have the option being able to put the IP, the people and everything into it so you can demonstrate it, so you do have that optionality later on even if it's not to spin it off then people can actually see what's in the company and understand what the value is and in the early days you know obviously this is very recent activity but already some of our analysts who cover the company are starting to talk about the value that's represented there and we've had them visiting and showing them how advanced we are in terms of the deployment and that so hopefully that will start to be recognised more broadly and you know days like today are part of that activity as well, so we've got a lot of investors in the company on this call who perhaps don't realise that there is more value around the ammonia to crack technology than has yet been recognised.

1:01:30 Thank you very much. I know we're getting short on time, is it perhaps I should pick a couple of the questions off the web to address? Yes Gary, that works fine so please feel free to read out any questions where appropriate to do so and I'll pick up from you at the end. There's a question about our relationship with Speedy and how will progress in the future and if we've tied ourselves to it and whether it stops us selling equipment to other companies. That's an interesting question but it's really from a positive perspective we now see that. So for example in the early engagement with Speedy's clients, some of Speedy's clients have of their own inventory and they have higher inventory so in the discussions with them, we've had discussions around well actually I would like to potentially buy some of these units and then hire some as well, So we've already had discussions with Speedy as to how we can use the joint venture, although it's not set up that way at the moment, to be more of a reseller and also more of an integrator, so that when we do get maybe even if it's not an existing Speedy customer, if there's a new construction site where there has to be zero emissions, then we could essentially put a bit together

1:03:00 as to how we would support them whether it's renting the equipment or buying it or even in certain situations like the Axiona would be a good example where we've got the option of both renting it and then selling it after a period of time, so that's something that we're looking at and as an option going forward. Other questions here? There's questions about fundraising. Peter, do you want to say what our thinking is on sources of funds in the future? Yeah, happy to. So as I say, we came back to market relatively recently back in June, raised £15,800,000 So we're now looking ahead.

1:04:04 There was a question about our runway. One of the things we've been doing is looking at a sort of a cost review and we said in the RNS how we expect to reduce our monthly cash burn by about 1,000,000 over the course of a year. So essentially, we've got a number of options. There's still a lot of interest out there, but at the moment, the share price is very low. Any sort of follow on would be potentially highly diluted. So essentially what we're looking to do is continue to deliver next year, see the share price increase and then look at the options as we get there. But nothing expected in the near term, it's all about continuing to deliver on the milestones and see that share price start to walk back up.

1:05:03 Thank you. There are quite a few questions about the CEO transition and Alex this might be one to close on just so everybody gets on exactly the same basis on this. So the reason I'm doing this job on an interim basis is that when Adam decided to return to Australia, we found and appointed a new CEO, John Wilson. He had a notice period with his existing company, he had been part of a company that had been bought out by private equity and they expected him to deliver on the integration activity before they would release him. We felt he was exactly the right person for the job and it would be better to wait for him than to go for somebody who's immediately available.

1:05:53 That's not at all unusual when it comes to hiring CEOs. Most CEOs are on a lengthy notice period so you often have this. People have looked at his background, he was hired, we deliberately recognised that we were moving into a scale up activity, so we wanted somebody who had proven experience in manufacturing scale up and in terms of delivering shareholder value. We saw that he'd been very successful in his previous company in doing that, you know, that got close to I think 10 times return for the shareholders over the period, so we hired him on that basis. People have been speculating that we've hired him because we want to take the company private, that isn't an intention and we've got him because he didn't particularly want to carry on working for a private equity company and would prefer to work back in the listed environment, particularly with the company was at the stage of evolution that he was used to in the past.

1:07:00 So he's on track to join us on the January 6 and we're starting to involve him now. His activity on his current company is ramping down, so over the course of the last week or so he's technically left now his previous company but he has other things he needs to do, so we're managing to get him involved in the activity, so the strategy and plan for next year, and also for example as we get investor engagement or potential new partners, rather than me pick up some of these and then hand them on, then what we'll do is to introduce him into those discussions even before he joins and he's flexible to be able to do that. So that's the current situation and obviously we're all looking forward to working with him properly on board in the first week of January and what we'll do is we'll do another one of these sessions very soon after he arrives so you can question him in a bit more detail personally, so that will be our plan.

1:08:07 Thank you Alex, I think we're done now, we've gone over our time I know, but Yeah, perfect and thank you very much for being so generous with your time and updating investors today. Could I please ask investors not to close the session? They should now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will then take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management of AFC Energy PLC, we'd like to thank you for attending today's presentation and good afternoon to you all. Thank you. Thank you very much.