Invinity Energy Systems (LSE:IES) — Full Year Results for the year ended 31 December 2024

0:00 Good afternoon, and welcome to the INVINITY ENERGY SYSTEMS PLC full year results investor presentation. Throughout the quarter presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time by the q and a tab situated right in front of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. Have the company can review the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO Jonathan Marron. Good afternoon to you, sir.

0:32 Many thanks and good afternoon everybody. Welcome to the 2024 results presentation. You'll see this is dated May 2025. I think we did say when we were here about a year ago that we would look to bring forward our results from the end of June. Delighted that we managed to do that. We hit May, albeit just by one day, but, you know, significant improvement. My thanks to Adam, definitely, and the rest of the team for achieving that, and and we'll look to continue that in the future. I'm conscious it's only a couple of months since the last trading update. And obviously, today understandably, today's session is anchored around those results. I'm going to hand over to Adam in a moment to go through the numbers. There's understandably some questions on where we sit from a cash position, walking through working capital, particularly in relation to LODES. So I've asked Adam to make sure we address that head on.

1:22 But before I do that, just a bit of sort of a context on where we are and maybe where I where I see things. And firstly, taking stock of where we were from a year ago, I think that's always useful. We'd obviously just had a successful fundraising raising, £54,000,000 net. We were working very hard to get, Endurium, more than it was Mistral, launched, saying that was the critical product we needed to advance ourselves commercially. And we were saying there were strong signals in the market, but we were still waiting for those to develop. But, you know, we were confident they were coming. Roll forward, what is now eleven months, we've launched Endurium, and that is absolutely critical for us. We've shipped that first product. We've shipped it to Gomesa. And really pleasingly, we have got a delighted partner in in Gomesa Electric.

2:10 You know, they were delighted with the product itself and its characteristics, how it's performing. They were delighted with how we had commissioned that project, and that really just take the learnings we have from having delivered so many VS3s into the market. And, you know, we are seeing that there is now evidence in abundance that the market for batteries is there. So, you know, secondly, looking at sort of the content context for what we're about to go through, what I'm seeing, what we are seeing now is that it's undeniable that batteries really are coming of age. We've been saying for a long time that if you're going to get energy security, resilience, you think what happened in Spain recently, you know, reduced reliance on natural gas and critically reduced prices to consumers, that's going to be achieved by increasing penetration of renewables onto the grid. With that, you also get the benefits of net zero, which is very important to us as an organization as well, but that is only achievable with battery storage.

3:09 And that's both on the short and long term perspective, and that is becoming increasingly clear really on a a day by day basis. I was recently at, INTERSOLAR, which is an exhibition in Munich, seeing our partner, Siemens Gamesa. There's such an enormous amount of space set aside, for for batteries. There are so many companies there and interest across the sector, and it really is staggering to see the amount of both buyers and manufacturers focusing on this area with all the ancillary services that go around this. This is becoming a very, very big industry. Matt is going to talk to you, in a few moments' time about the government support programs we're seeing. The obvious one for that is the, the cap and floor regime, and that first application window excitingly is closing today. From a PR perspective, I think it was just ten days ago, we managed to have, we were lucky enough to have a, a clip on ITB News, which was, really good to see that out, you know, in the mainstream media.

4:06 Michael Shanks, the energy minister, had come up to see us with, the chief architect for the cap and floor from Desnes. But at the same time, we had a thought leadership piece in one of the Scottish national newspapers on zonal pricing. That was all in one day. This is the sort of PR which, you know, we might have expected once every six months if we were lucky in years gone past. And that was all came together. I think that just shows you that the way, you know, the the industry and the importance of batteries is really coming to the fore. Now a little bit on vanadium flow batteries. Yeah. It's more of new technology. First first launched, first found in forty years ago, 1986. What has though changed demonstrably, and I'm really reassured that after the last really in the last twelve months, is there's an acceptance that technology really does work, that it's appropriate, and there's a space for it. And that first bullet point, top left hand corner, I think, is one of the reasons for that. We are able to say to our customers, we dispatched, you know, broadly more than five and a half gigawatt hours of power, from our v s three batteries.

5:09 And that is a calling card. And I time and time again, I have a conversation with some, you know, potential customers. You sort of say, oh, where are VFBs? And you say that. You're like, oh, okay. And what does that mean? That means yeah. So one of the key questions I think with that is if that is the case, why are we not selling gigawatt hours of batteries now? And I think there is a very good answer to that, and I'm really pleased with what that answer is because it's not do batteries make, do VFBs make sense, do they work? It's where are we from a cost and a cost of production perspective. And the reason that's important is that I'm firmly of the opinion that is within our control. And we're going to come on to the slide in a minute about how we are taking costs out of that. What we do know is that when we are quoting on the larger projects such as for cap and floor and elsewhere, that we are cost competitive. You know, we have a roadmap to take where we are with enduring that platform and take the cost out. And we are quoting, and we are competitive, and we know we are, winning winning business in that. And, you know, the Frontier Power Apps we put out is really proof of that.

6:14 Now look. Lithium is our big competitor. I think, you know, the markets and those who are looking at long duration think that there is plenty of room for all, you know, the long duration storage businesses that have got to this stage to find a place for themselves. But the real competitor is lithium. And there's been lots of conversations about that. The price has dropped for lithium over the last twelve months. We anticipate it dropping further, and we are forecasting it dropping further. And when I say we're competitive, it's against the forecast that it will drop further. So we are we are alive to that. Yeah. There are plenty of places, though, where much of the lithium cannot compete. You know, we're seeing tenders in New York. We're seeing a rhetoric from places such as India where, you know, they do not want Chinese product coming onto their grid. Whether you're right or wrong, that does create extra opportunities for us.

7:02 But, yeah, don't lose sight. CATL, probably our biggest competitor. They have 20,000 people in r and d. They recently raised almost $5,000,000,000. You have a huge market cap, and they measure the number of patents they register, you know, almost in the sort of double digits on a per day basis. And if you look across the sort of the elder space, what we are seeing is that, you know, the number of competitors there is beginning to thin out to those that are looking at these being successful. So IES, we've got huge respect for IES. I'm sure all of you have sort of looked looked at IES. You know, they've got a revenue not too dissimilar to us, you know, 10,000,000 or so in the first quarter, a bit more than us, but, you know, where we've been before. You know, they are approaching that cost perspective by selling at a significant gross loss. We are not prepared to do that. We don't have the balance sheet to do that. I'm sure shareholders, you wouldn't want us to do that.

7:49 But, you know, that does mean it is harder to compete in the shorter term. You know, their OpEx base, you know, probably about four times where we are. Again, you know, that creates challenges, but we're still able to, deliver on the r and d front. You know, their market cap is just shy of $1,000,000,000 when I looked earlier today. You know, I think when you look at the size of CATL and EOS as our two big competitors, we have a product that compete. I am firmly of the belief that whilst stiff competition and, we must be aware of that, there is clearly value we can create as a business when we get that right. So maybe just before I finish and hand over to Adam, I'll finish on three things. Yeah. That cost reduction, I've talked about why it's important. Yeah. That 24% is how we have taken the cost out of Endurium since that first launch. So that's really to date. It was a platform where we knew we could continue to take cost out, and hopefully, we've shown a little bit of visibility as to how we are trending against where we first thought.

8:48 Yeah. The opportunities are so large. You know, Matt's going to talk about what that means. Those are transformational deals that could and we hope will come through to us. It does mean that sales cycle is slightly longer potentially, but, you know, the transformational effect of those coming through is really interesting. And then the third point on strategy. I mean, I talk I think about a short, medium, and long term strategy. Maybe focus on that medium term to start with. Our strategy is to get to the position where there are significant volumes of transactions coming through from the programs that we are seeing today. So first and foremost, the cap and floor program. Again, Matt's gonna come on to that. That enables us to have volume at the right price, which really does enable us to continue to drive that cost out.

9:35 In the longer term, I see us being cost competitive against the competition in areas where a vanadium flare battery makes sense from a use perspective, where we can compete without additional support from a program specifically focusing on long duration storage. And that is important because we need to know we can compete in our own right, and that is what we are challenging ourselves to do and I believe we can do. When I look at the short to medium term, we are approaching that absolutely through partners and we have an existing partner with Everdura, but we continue to look at partners elsewhere around the world to approach some of those opportunities. And again, I'm quite excited by some of the conversations we are having and hopefully more to come in due course on that front. We've got very good visibility on that pipeline in the shorter term. You know, there will be we are focusing on getting through a lower number of profitable deals. That is our strategy. They have to be sold at positive product gross margin.

10:30 You know? We are all frustrated they don't come through as quickly as we would like, but I am absolutely reassured by the number and volume that are in there and the traction that's there that they will come through. We've got the experience from v s three. It was exactly the same. It was really frustrating seeing those come through, and then they did in the end. There was a much smaller pipeline of deals on those v s threes than we're currently seeing on Endurium. And so that's why I have faith. It's very hard looking at one individual one and saying, yes. We'll definitely do that one. But if you look across the volume and depth of those conversations and what customers are telling us, I really do have confidence that they're going to come through. So that really, I guess, focuses on that middle bullet point, increased deal size. You know, that's just a sort of a a hint as to where those average deals are going. I would anticipate, I would expect in years to come that that number would increase significantly.

11:19 So, hopefully, that set the context for what we're all gonna talk about now. Adam, if I may, I'll hand over to you. Good afternoon, everyone. I'm going take you through two slides here. First of all, on our financial results and the P and L and a bit of a deeper dive into what's been happening there and through 2024 and then a little more detail on our cash position and working capital, addressing some of the good questions that have been raised. So first and foremost, I we have to acknowledge 2024 as a transition year. And from VS3 to Endurium, revenues were down three quarters year on year. And bear in mind that those are essentially VS3s that have been contract and sold through 'twenty two, 'twenty three, and you can see how that's playing out here in margin position. Crucially, the first revenues there were recognized from the planner with our partner, Gomesa, in Spain. It's around about a twelve month sales cycle for Enjoyment and BS3, and we'll start to see some of those first orders come through.

12:15 The gross loss increased from 3,300,000 to $3,500,000 Around about $3,000,000 of that comprises the warranty costs and provisions and then 1,000,000 from the the the overheads for the new mother world facility. Those warranty costs you're seeing flow through, they relate to known issues on the s four stack and the DC DCs. The s four stack has since been superseded by the S5, and those DC DCs are being swapped out by the supplier. So those are being remedied and worked through. The gross margin loss improved year on year from minus 20% to minus 8%. Again, those are BS3s predominantly contracts in 'twenty two, 2023. And then looking elsewhere across the P and L, we're seeing cross control while growing operations.

13:03 So that 7% year on year increase in OpEx is predominantly driven by increase in R and D investment for Endurium, whereas we're seeing some inflation increases in both our staff costs and other admin costs in order to pursue our objectives of cost saving measures.

13:21 So putting that together, there's a 20% year on year improvement in the EBITDA loss after adjusting for R and D, those noncash items that we talked to and one off expenses, including our REIT domiciliation this year from Jersey to The UK.

13:37 So as you say, a couple of comments that have been raised on the financials since they've been released. I think there's a couple of points that haven't necessarily been booked up on which are worth emphasizing here. Specifically, the $3,000,000 short term deposits that's in there and other current assets, that has since matured. So $35,000,000 total cash position. Secondly, LODES inventory. One of the reasons that LODES was so important for us was that buildup of inventory towards the end of last year and therefore, the push to get that closed out in the first quarter And of this then finally, the loaders ring fencing. So we will spend all of those ring fenced monies on loaders plus the CapEx for the commissioning of our Bathgate line, which will shortly take place.

14:25 And then we do expect to then recover around about 50% of that through grants in order to reinvest back in the business. So walking through those numbers, we finished the year 2024 at $35,000,000 of cash, including the short term deposits. Around about $5,000,000 of that is ring fenced still to be spent on low debt. We have around about $20,000,000 of net OpEx after R and D income and $3,000,000 of CapEx. A portion of that is also discretionary, and we expect to realize some gross margin through the year as well. So that takes us to the cash position you're seeing forecast by the analysts across the range of 8,000,000 to $13,000,000 at the end of the year. We're delighted that BDO, after some thorough work through our financials and ongoing concern and also the downside scenario, given that this the business is a clean bit of health through to the June 30 and the going concern statement that you see in these financials.

15:19 So then I'm going to pass it back across to Jonathan to take us through our cost down.

15:27 Thank you, Adam. So I think in my context, I highlighted why this is so important. And hopefully this will give you a bit of a steer on really two two places. So first thing to point out is that we said that when we launched Endurium that we wanted to be, you know, out the box 30% lower than than v s three. And from the the prices that we've been quoting on

15:55 the the deals we've announced already on Endurium, we are we are there. So that is that is very pleasing. The other thing we I think we pointed out when I took over as the role of chief exec in September was that we needed to head down that cost curve very quickly from the first units that we were shipping from from the facility in in Vancouver. And what you see at the top there, that gray line, is where we at that point in time where we were plotting cost coming out. So the the the firm line is what was directly within our two year cost roadmap. And then, you know, dotted to twenty thirty where we saw those projections taking us. Now that is yeah. Just to give you a flavor for where we thought we were at that point in time with work to be done based on known projects within the the cost the cost road map.

16:48 What we have managed to achieve and what I've tried to show you here is that we are doing better than we first thought last August. So, you know, last August, we said we had work to do, and we are doing that work, but doing better. So that red line is where we are now forecasting where we are. So that is a greater drop off. And you'll see that that cost, when you come out to 2030, we think we'll have taken 70% out of the cost from that first launch. So when I talk about how we have confidence that we can compete against other technologies, both from the LDS front and on the lithium front, it's because we've got that level of confidence to be able to give you this information because we've got the work there. Now this this is the the known knowns, if I can call them that.

17:34 I have challenged the team that we need to think outside of the docs and dot sorry. Outside of the box and try and do better because, you know, there is one of the things which Gamesa Electric tell us is that, you know, if you'd ask them to predict where they thought what costs were coming out of their turbine business for for interests, They managed to do significantly better than they first thought. So, you know, we will not rest on our laurels and say, you know, achieving this is a significant significant achievement. You know, the competition will undoubtedly continue to innovate, and we will we will do the same. So, you know, that that shows you know, when you look at the pricing there, you know, that pricing that we are quoting there for for '28, '29 is competitive with where we know the competition is quoting for cap and fall for interest for interest. How are we doing that? It certainly comes with additional volume. Volume is very important. The reason that we have a commoditized modular product is so that we can do as on a repetitive basis, take cost out of that. There is still a lot of value engineering to do and to be done.

18:41 You know, part of that comes with developing the supply chain further as as well and working with them, but also just how we've how we put put the product together. We've launched our semi automated stack line. We're about to launch, I should be clear, our semi automated stack line up in Bathgate. I was up there twice twice recently, and, you know, it's a very, very impressive impressive setup And replicas as well. So, you know, we can significantly increase our capacity

19:11 with not too much of a lead time and not too much CapEx. So, you know and that takes, you know, it takes cost out and improves quality. Huge hugely important there. And then finally, the other way that we have managed to to do that, and I'll hand over to Matt in a minute, who'll probably give you a bit more clarity on that, is, as I say, we are really pleased with how that first system at the plant is is going. We are from that able to, you know, increase the operating parameters, and ultimately cost per kilowatt is a function of the numerator and the denominator. And if we can increase that denominator, that ought to I e, you get more from the system, you know, it's one of the ways of taking cost out earlier and faster than you thought. So, Matt, I'll hand over to you if I may. Thanks, Jonathan, and thank you all for being with us this afternoon.

19:58 Look. We've been thrilled with the performance at of our product at Laplana, which is the first version of Endurium or the first site where Endurium has been installed. Not only have we been thrilled, but the most exciting thing from our perspective is the degree to which our customers have been very, very happy with this. You'll recall that this was this first delivery was to our partners at Gomesa Electric. They were enormously encouraged by three things, the commissioning time within which we were able to get the system up and running. They were expecting it would take six to eight weeks, and it was operational in two. The degree to which we've exceeded the performance specifications within the product, and the degree to which the performance of the product has indeed been as steady, if not steadier, than everything that we've experienced in the field to date. This this graph you see on the top left hand side is about eight week, eight days worth of constant charge and discharge cycling over the full depth of discharge range, and, you know, we are indeed proving that this product has that same rock solid stability that previous generations did.

21:05 Jonathan talked on the previous page about how this ties into cost reduction, and I think I I would put it slightly differently. I would say when you look at that product optimization bullet, really what we're trying to do is to do more with less, and that's what we've proven we can do here. We have exceeded the specifications for this product so we can deliver better than the performance we expected, and therefore, we can deliver at lower cost for the same capabilities delivered on-site. As our our partners at Gamesa are, as many of you may be aware, they are looking towards a potential acquisition of their business by ABB. ABB is very, very active with their, what they call, their battery as a service model. That's an opportunity for large commercial and industrial customers to take advantage of storage on their facilities.

21:54 And especially where we've now proven we have a battery that can be installed effectively, that performs reliably, and that doesn't have some of the degradation and fire risk that the competition has. We think we're gonna be very we're we're gonna have some really interesting discussions about how we could dovetail with similar similar similar models to that similar business models to that in the future. Now looking beyond that one project, of course, we're keen to see what is coming up. And, really, over the next three years, we've got sort of a slightly different evolving view over time. In terms of the projects that we will be delivering in 2025, we have substantially all of our projected revenue for this year covered with with four major projects with Everdura, STS, LODES, and HITT.

22:46 Those projects are all being manufactured as we speak and are on track for delivery. When we look forward to 2026, we've got a number of very, very large scale projects, that are in negotiations, some of which we've, we've publicly disclosed already, some of which, remain confidential. In The US, we've talked, about the DOE, long duration energy storage programs, where those where we remain those projects remain in development. I'm sure many of you are aware that anything going on with renewables or, you know, new energy technologies in The US and and especially related to the DOE have seen some not insignificant hiccups over the last over the last few months. But we are encouraged by the fact that the programs with which we are engaged are still progressing, are still going through their contractual negotiation, and we still expect to close and deliver within that within 2026.

23:40 We're also seeing new solicitations from the California Energy Commission, and we've seen we've been successful in delivering those projects in the past. The CEC remains very encouraged by the progress that we've been able to make, and they are they are pushing us as as as one of a small number of selected and encouraged technologies to go forward to their much larger loan duration source, those solicitations from 2026 and and ultimately beyond. Beyond that, you know, we've got an active book of business evolving in Europe and The UK, Asia with our partners in in Taiwan and Korea, and also, of course, in Australia, especially given Australia's interest in vanadium batteries because there's so much vanadium in the in the in the country.

24:28 Looking out to 2027, really, what we see in '27 and beyond around the world is a shift from some of these earlier long duration storage deployments to large scale programmatic procurement schemes that are supporting our, you know, classes of technology like ours, especially high throughput and long duration proposals. And especially, what we're very encouraged by is the degree to which those schemes include carve outs for nonlithium storage. You all will be very familiar with the cap and floor scheme here in The UK where where proposals were due in today, and we've been very encouraged by the amount of interest that the the developer community here in The UK has in deploying our projects into that program.

25:17 In The US, we see pro we see evolving programs in NYSTEMS and the CERT the CEC and similar similar projects in Canada as well. Just to do a bit of a deeper dive into some of those some of those larger projects around the world, as I said, we the the thing that is most of interest to us is the fact that all of these have some form of advantage or carve out for nonlithium technologies. You know, if you if you add up these these projects around the world, I mean, the the cabin floor project here in The UK is the largest one that has been announced and and formally launched to date. But there are tens of gigawatt hours worth of opportunity for us that we are tracking, that we are now working with some of the world's leading project developers and owner operators to put forth solicitation for.

26:12 And just to do a deep dive into into two of those programs, the first one is is is a program in in New York that's funded by NYSERDA. It's their bulk energy storage program. They're looking to deploy about six gigawatt hours worth of storage of which sorry, six gigawatts of which about 600 megawatts is carved out for a nonlithium nonlithium projects. They've done that in a very interesting way where they have they're emphasizing nonlithium programs by giving them a longer contract for offtake, which means that they're essentially helping nonlithium

26:50 technologies get become part of their grid without incurring any additional costs to ratepayers. So it's something that is beneficial not only for companies like us, of course, but also beneficial for New York's electricity consumers. Similarly, in in British Columbia, there has just been announced what's called the the the energy storage procurement or sorry, the energy procurement of which storage and capacity is a significant part. This is expected to add about 600 megawatt hours worth of with the storage on the grid, and they have significant interest in there are stipulations in the program about how domestically produced and locally produced technologies are gonna be key to those programs. So very much very much of interest our side.

27:38 Now I think the thing that's most important about the position that we are in right now and one of the places that we see a lot of our customers sorry. Not our customers. A lot of a lot of our competitors struggling is in the progress towards being able to credibly deliver these projects. And what's been so encouraging in our business over the last few months is that we continue to get phenomenal feedback from our customers about how our products are performing, about how our company is supporting them, and about their view expect to have our products as part of their future. When we we talked a little bit about GEMESA and the work that they've done at their their project with with our initial enduring battery. But even beyond that, we've had some very encouraging feedback from our partners at ELENANTINITY ENERGY in Alberta with their their solar coupled battery.

28:31 Pardon me. Our team, the the team at Everdura in Taiwan see phenomenal opportunities for our projects and our products on that on on that island, especially because of their hesitancy to incorporate technologies on the electric grid that have their origin in Mainland China. And finally, if we look to to to California, of course, you know, California has always been a standard standard there in how to deploy more and larger net zero technologies. Our partners at Indian Energy have been have been enormously encouraged by the degree to which we were able to go in and meet their needs. And as we look into the next couple of years and some very, very large solicitations coming out from the California Energy Commission, we believe that Indian Energy will again stand beside us as our partner to get those projects done.

29:27 And with that, I think I'll pass it over to Jonathan to reflect on what is a very sunny outlook. Thank you, Matt. Yeah. So I've in my session at the beginning, think I covered all of these points. I think I'd like to move quite quickly on to to the q and a because I know we've got a significant number coming through. But just to reiterate, for Elders this really is a transformational period and we're seeing this not just in The UK where there's obvious moves but elsewhere as well, really across some very interesting

30:00 jurisdictions, some which are key markets for us, others which are markets where we intend to play with partners. So we are very much reassured by what we are seeing and delighted that we have Endurium there as the product. If we had not managed to launch Endurium at the back end of last year, when we did it, we would not have been having the conversations we are now in the cabin floor program and elsewhere, both from a product reliability characteristics and from a cost perspective. I've referenced partnerships. They will continue to play a very, very important role for us. And a large part of my role is working with partners and potential partners to try and move that forward to assist in our growth. And just to finalise what Matt has said, some of those very large scale projects relating to procurement schemes are those which we are very much focusing on, and we believe that will drive significant growth out to the end of this decade.

31:03 Brilliant. Okay. I think it's time to go to q and a. I'm delighted to say we've got a lot of questions in here. So without further ado, I think suggest we get started. So the first question, I think, will go to you, Jonathan. There are a number of questions going in, basically, pointing out today's deadline on the cap and floor scheme deadline. Can you elaborate on with that in mind, can you elaborate on plans to scale ahead of sort of potential demand that could arise from the cap and floor and other some of the other schemes that that Matt actually pointed out in his in his slides?

31:45 Yep. Abs absolutely. So today is the the closing deadline. I think close at play midnight tonight for for those applications. And, you know, we we put out an announcement about our excitement for that that scheme and also our arrangement with with Frontier Power, but also talking about others. And, you know, our rhetoric has has not changed from that point in time. So we are very much looking forward to how those sort of flow through the system over the next period. In terms of scaling up, we have been having conversations with potential partners, potential customers, not just on cap and floor, but elsewhere, and what they are reassured by. And when we went through the the funding process last year where we had a number of technical consultants coming up and looking at our our manufacturing capabilities was that the ability to scale up was very much within our control. You know, that semi automated stack line, which we've launched, which was a million pounds worth of investment, and, yeah, that is capable of being replicated in relatively short order.

32:59 There is space available here in the Central Belt. There's a reason why we are based there, and we're getting an awful lot of support from local government, both in the Scottish sense and the central government area as well. You know, we've got a good supply chain. We we work in best cost regions. So there's a lot, obviously,

33:18 at the moment that comes from from China, but we were able to make sure that that sort of sits there at the the low tech end of the of the process. Therefore, you know, there's nowhere much cheaper to buy steel than China at the moment. We get some of the tanking done there. But we any other parts of the supply chain we are concerned by, we can derisk and move elsewhere. So I am

33:40 confident on our ability to scale up. But the other is one one of the reasons why we have the level of OpEx we do. You know, we are not just looking at the current business at the moment. We have a lot of people who are making those plans such that we can demonstrate to customers we have the ability to scale and fulfill those orders. Thanks. I'm going to actually just hijack quickly. There's a question here from Greg saying, in the past, INVINITY has dismissed of a flow battery company stating we're well ahead of them. It looks as though some zinc batteries are

34:12 increasingly looking competitive. How do you feel about competing battery providers for the the cap and floor scheme? Well, I think there's there's probably a number of parts of your question specifically at the end of it relating to the cap and floor scheme, but also on a more wider basis. If we have been dismissive in the past, that would not be something that I've ever been comfortable of. And, hopefully, under my leadership, you would not hear us being dismissive if we have done that before, if I can if I can say that. I am, yeah, I am firm that we need to collaborate across the LDS space, whether that be with other flow battery businesses on the vanadium side, whether it might be with other chemistries, you know, there are, you know, some great advances being made on the organic side, and whether it's actually across batteries with different chemistries such as as IES.

35:02 If you look across as a parallel to what's what's happening in California with the California Energy Commission, they decided to support effectively four technologies to try and get them to the stage that each of them could have a product to be delivered at scale

35:20 at the right cost. They supported IES. They supported ESS. They supported Redflow, and they supported us. And if you look, Redflow unfortunately went into administration twelve or so months ago. ESS is clearly having its issues as well. You can see that highlighted. And you'll see that's just us and EOS left. You know, frankly, the elder space, that's not good. I want more people to survive. We don't want to be the only player in the elder space, and we need to collaborate. So I'm at the International Flow Battery Forum at the end of this month. You know, the discussion is all going to be around collaboration, and I think that's really healthy for everybody. What I would say is across that cap and floor space, we haven't seen many other technologies in there. You have to be our TRL eight and our assessment of where a lot of other players are, you know, certainly outside the VFP space, is they're not at that TRL 8 space. EOS obviously announced a partnership with Frontier Power alongside us.

36:24 You know, we are working with Frontier Power effectively alongside them, we are competitive. So, you know, again, we don't want to be the only other player in that space. They've said that they will look to set up UK manufacturing if they're successful. Frankly, I've mentioned that to the energy minister. I've said, look. You need to put in place some incentives for UK manufacturers, and I'm not just talking our own book. You there's a clear clear signal that if you are giving some support for locally produced content, manufacturers will come, and that is going to assist us as well. So, you know, we need more people in this space, and I'm just confident that we've got the technology, and we've got the pros the the road map to to compete.

37:05 Thanks. And just to clarify that TRL stands for technology readiness level, which is a sort of government government standard for for the maturity of your technology. There's a number of questions here, unsurprisingly, given this is a full year results presentation around the around the finances and sort of speaking about working capital and and how that breaks down. Adam, I know you covered this at the top of the call, it's quite possible there's a few people that joined late. Would you mind just sort of summarizing the position on on on working capital just briefly? Yes, absolutely. And thanks, Jay, for the question. So first of start off with the cash position. There's $3,000,000 sitting there in a short term deposit in other current assets that have since matured. So our cash position at the end of the year was 35,000,000 And 5,000,000 of that is ring fenced for low less. So that's the 20,000,000 net of the grant and net of what you're seeing sitting there in inventory at the end of the year.

38:01 We have around 20,000,000 of net OpEx after our R and D income

38:06 and then around $3,000,000 in CapEx, which is largely discretionary. We do expect to receive some gross margin on the sales through 25,000,000 So that's $28,000,000 of outflows plus the gross margin takes us to the 8 to $13,000,000 at the end of the year that you're seeing forecast there by the market. Though that cash burn is around $2,000,000 a month, we will need to manage the OpEx and CapEx position judiciously through to the June 30, which is what we're seeing reflected in the going concern statement there from BDO, which takes us through cash runway to June 30.

38:44 Thanks, Adam. You mentioned Lodos. There's a couple of questions here on the Lodos project. I think I'm sort of conflating three questions together here from various people. But talk in terms of the strategic importance of low dose, I mean, there's there's one question here asking, you know, why why is it with the s three? There's another question asking about how does this drive future sales? Why does it represent a good a good use of funds? Jonathan or Matt, do you wanna take this?

39:15 Maybe sort of answer answer some of that. The reason it's with v s three is because the grant was specifically for us to deploy v s three batteries and not enduring. But I think if we tried to switch it, that grant wouldn't have been there. Number two is we have an inventory of v s threes, which are on the balance sheet at the end of the year. You know, one of the reasons why we are keen to push this through is so that we can turn that inventory into cash. When we have been talking to potential competitors and across, really, across their sort of stakeholder base, being able to say we have our own projects of this size, which is coupled to solar, is hugely important and very, very helpful.

40:00 It's also, frankly, really improving our understanding. You know, we we are selling batteries into a a a project, and those batteries are an important part of it, but there's many other aspects that go on, and it is helping us, frankly, to understand more of the sales cycle. So there's a huge number of learnings across that. Matt, anything that you wanted to to add on this? No. I look. I would just reinforce. It's a in big part about walking in our customers' shoes, and that is from a development perspective, from a revenue perspective, from a lifetime operation perspective. And just in terms of structuring and transacting around around projects like this. The more we know how it works, the better we will be able to support our customers, and there's no better way than to to learn how it works than by doing it ourselves. Yeah. I I was at yeah. Adam and I were at the town council meeting last week where they they were initially concerned by the application because they were worried about the fire risk from our batteries, which is, you know, a standard response when you see see a battery project.

41:05 Adam and I went to them, talked them through the technology, why we were doing it, how it was looking to to progress. And by the end of it, they were delighted. They want an invitation to the opening launch and discussions with, you know, there's various developments going on outside and is it a possibility to, you know, create a PPA potentially from that site to our battery so you can start to sort of put a sort of an off grid solution reducing power to to cost to the consumers to create an island dissolution net zero. So, yeah, the learnings for us and just to see how those conversations are taking place are are really exciting. It is not going to be our core business. Yeah. This is I don't want anyone to think that we're gonna continue doing this elsewhere. We simply don't need to. I think when we first looked at raising money and and having it deployed here, we had not anticipated cap and floor coming through nearly as quickly and at such scale as as we as we do now. And therefore, I think we just you know, this is a good use of the monies, and I don't think we need to look to replicate that anywhere else.

42:14 Thank you. I'm gonna go to there's a there's a a question here from Steven, a question here from Peter, which I'm gonna sort of slightly bolt together. The first is around and, Matt, I'll aim this at you, I think. Can you elaborate on what the most promising new customer segments are? They then go on to sort of list a couple of the data centers, microgrids, grid rely grid resilience. Before before you answer that, the second part of this question is there was a, obviously, a t r one received recently from a an Indian an Indian investor in the company, and and and this question is asking sort of to how do we look at India as a future market. So if you could look at it, you answer it first in the perspective of the customer segment, then maybe on a sort of broader sort of geographical segment thinking about India in particular. Thanks. Sure.

43:03 Look. I would say, broadly, if you were to look at that slide that I showed earlier on in this hour, the most exciting thing that's happening is that all of the world's regulators are looking at what storage is needed on the electric grid. They are realizing that it has to be ultra high cycle long duration technologies, and they are realizing that, that the the current incumbent technologies are not going to fit the bill for everything that is going to be needed. That may seem like a triviality or like a sort of a it may not seem significant for some of you who've been following our company for a while because I think we've been sharing that message with anyone who will hear it for the past several years now.

43:51 But the fact that, that the regulators all around the world have turned around and have developed programs and are launching multibillion pound programs to address exactly that challenge is hugely significant. If we you know, outside of that that sort of grid space that we've been looking at pretty extensively, I think one of the things that we're very encouraged by, and and, Joe, you you you talked about this a little bit, was the degree to which large industrial sites, especially especially data centers, but but also more conventional industries as well, are are looking are are looking more and more at storage as a a way of of decarbonizing and driving cost out of their operations. You know, one of the things that has been very encouraging for us is we've gotten under the hood as it were with some of the data center providers we're speaking with is we found that the the the the load at a data center is highly variable.

44:50 And so in order for a battery to serve that load appropriately, it has to be a battery that can do ultra high cycle counts, not just one or two cycles a day, but cycling almost continuously over a twenty four hour period to be able to regulate the energy flowing into one of those data centers. That's an that's a that's a a duty cycle where we are ideally suited. And especially when you layer on some of the additional benefits of our batteries, you know, the nonflammability, it means that it is a technology that is very, very well suited for being close coupled with those those large data centers as they get built out. Finally, Joe, you mentioned you mentioned new market segments, and we we talked a little, you know, about India as an example. Look. As as we've always said, you know, we do not have ambitions to be a, you know, a global seller of end use products to end customers.

45:42 You know, it is our it's our view that the fastest way for us to scale our business is to work through really talented, really capable partners in individual regions. You know, that's why we signed our d our our our our agreement with Everdura in Taiwan. And and, you know, nothing to announce here today, obviously, but, you know, we are actively looking at what other partners could be helpful to us in in other parts of the world, including, of course, the Indian Subcontinent. Thanks, Matt. There's a question here from Gareth around partners. So INVINITY has built impressive network of partners as they mature. Do you see potential for certain key partners to take equity positions in in the business that align long term interest and derisk our ambitions for global growth?

46:33 Jonathan, do you wanna take that one? You're on mute as well. Apologies. Matt's just talked about the the significance and importance of partners, and, you know, I will reiterate reiterate again. I want us to push for more more partnerships. Listen. There is no better way of aligning interests than if there is some sort of equity ownership stake. So, you know, it certainly happened when we signed the deal with Everdura. Everbright, you know, made made a small investment at that stage. You know, we are certainly alive and welcome any such, you know, possibilities with any future partners. That's not to say that would happen or must happen, but certainly wouldn't rule it out. Thanks, Jonathan. There's a couple of questions here from multiple people asking around the sort of tariff situation and and how we're sort of managing that.

47:28 This question is asking about how the kind of The US situation is, how how our Chinese supply chain is affected, and also how the sort of the perhaps a benefit of being UK and our plans to move into The US. I've conflated about five questions there. But can you talk in sort of general about how we're sort of managing, I guess, of the geopolitical things that are going on and and especially concerning sort of The US and moving stuff in and out? Yep. I mean, at the I think the answer is we we are trying not to be too reactive because things are changing rapidly. And that in itself is the challenge is that it's very hard to come up with a plan when there is a risk that everything could change on a on a six pence, you know, within in in in short order.

48:15 We are fortunate that we have capability across across the globe. Obviously, we've got manufacturing here. We've got manufacturing presence in North America, in in Vancouver. Obviously, we can fulfill directly from China, and we've got a partner who is working to spin up in in Taiwan. So that creates optionality. You know, at the at the moment, we we seem to have negotiated as benign a tariff regime as anyone else from a US perspective. We from The UK. So, you know, it is it is it is feasible that we can fulfill into The UK sorry, into The US from The UK. But it is always been within our plans to start to produce in The US, so that remains the case.

49:03 We are not going to commit capital to the ground to do that up until we've got the projects in place. So, you know, the the Department of Energy Awards, which we announced a while ago, you know, are still are still there and still very much alive. And there are other projects in The US as well. So, you know, I am hopeful that we will be able to drag some of those through and start to set up capability in The US. But also there's others other jurisdictions we are looking at as well with partners that could potentially come into that mix. Thank you. Actually, the subject of partners, there's a there's a question here asking around about STS Group. So obviously, Hungarian our partner saying it's it's good to see repeat business.

49:48 Is our relationship with STS Group something we'd like to model for future partnerships? Matt? Look. Absolutely. Yeah. And I and I think if we look around the world, you know, there are a number of companies already where we've had those kinds of partnerships. You know? Certainly certainly, STS is is is is one, but ENERGY and and and EVERGY would be other ones that I would point to. You know, the easiest way to build our book of business is to work through partners who have already installed our products. And, you know, almost I'm trying to think of an example, but I would say the vast majority, if not all the companies that we've delivered to already, we are currently exploring with them how we would turn around and go and build the next the next bigger projects because almost universally, you know, especially our customers who are in the the the the grid scale storage space, the grid scale renewable space, they are looking to continue to build their book of business as we are ours For them to go and deploy known product in a in a in a known fashion using a known technology is something that is very much of interest to them.

51:06 Thanks, Matt. And and I think sort of sticking with you, please. There's a couple of questions, specifically one from from Richard here. Just asking around to sort of, you know, for those that are a bit new to the story, what are the one or two sort of key competitive differentiators that we have that makes allows us to win business? You know, as your your position on the in the commercial team, you're probably the best place to answer this. Yeah. For sure. Look. I would if if there were two things, I would say it is durability. This is a technology that can be deployed alongside wind or solar projects and can be relied upon to deliver the regulation of those projects over their thirty year life.

51:53 That is not a capability that that lithium ion batteries can offer. Second of all, the the degree of throughput that we are able to put through one of those batteries on, you know, a day or a week or a month is is is totally unlimited. So a few minutes ago, we were talking about how data centers have a highly stochastic load profile. For us to be able to regulate that load twenty four hours a day and and and and do so in a way that keeps our customers' bills electricity bills as low as possible is not something that that the that the lithium ion batteries do well. They tend to experience very, very much accelerated aging or capacity degradation when you run them continuously like that, when you run them in highly variable duty cycles like that.

52:42 And so that combination of lifetime and throughput are probably the number one reason why people are looking at buying our batteries over the other things on the market. Thanks. Question from Paul asking specifically around the some some of the criteria under the cap and floor mechanism, and I might put this to Jonathan considering the people he met last couple of weeks. Is there any specific benefit to UK manufacturing under the ELDES cap and floor evaluation criteria? Thanks, Joe. And, Paul, thank you for asking that question because this is probably one of the my my key points at the moment. The answer is possibly. And the reason I say possibly is because whilst there was an awful lot of documentation around cap and floor, it hasn't gone into any specific detail on this point. We are told that there will be. We're told that it is certainly something they want to push forward, but there isn't a huge level of detail. So I'm talking to anybody that will listen from Michael Shanks to to Desnas to Ofgem to our National Wealth Fund shareholder to GB Energy to anyone else to say, look. Within the within wind regime, was the CFD regime there, there was a financial incentive for local content.

54:06 And there would be a huge lost opportunity if that isn't replicated in The UK. I think when you look at some of what's within how cap and floor has been put together, there must have been some uncertainty as to the level of interest and the ability for manufacturers to build up capacity here. We are the only UK battery manufacturer, and there therefore, you know, it's difficult to just support one. You know, I'm pleased that I'm really pleased that IES said that they would look potentially look to set up manufacturing here. And we have been and I said very specifically to to minister Shanks, look, if you if you provide an incentive, we will build extra capacity here and jobs going into the hundreds.

54:51 And, you know, we have the MP for Bathgate with us who's, you know, eyes lit up at that thought, and minister Shanks is actually the the MP in the area next door. So, yeah, there was a real incentive, I said, look, you've got to bring together what we talk about that just transition and the industrial strategy to be very specific as to sort of how manufacturing businesses such as ours will react. Because the alternative is our clients will say we need the absolute low cost. There's no benefit from UK manufacturing. Every other battery arrives on a container ship from China, deliver one from China. We we can do it. It's a little bit less. It's not a significantly greater cost than The UK. The benefits to The UK will significantly outweigh what would be doesn't need to be a significant incentive.

55:37 And it's within our gift to do that. So, you know, I am pushing anyone that will listen to, to hopefully give us that advantage. But if not, we have the ability to fulfill from elsewhere. And I really hope we don't have to do that because we got the chance as a UK of creating something really exciting here. Thanks, Jonathan. I think we all agree with that. Just I'm just gonna sort of slightly slightly carry on from that point. There's a question in from from from Peter asking around the asking if there, you know, there's any risk of price turmoil caused by product dumping. So triggered by sort of the, you know, the stuff coming in from from from China and dropping the dropping the. Is this something I know we talked about sort of lithium ion prices at the when you when you open the call. Is this something that we're we're still looking at sort of having to deal with in the future?

56:29 And how does that sort of link into our cost competitiveness and the the sort of product cost down road map we've got? Matt, do you wanna take that? Yeah. Happy to. I mean, look, we could I mean, usually, when you talk about dumping, it's it's it's where there is an equivalent product that's being manufactured in country and where one company one one one country is is providing that product at a below market or, you know, below cost. We don't see direct equivalents, you know, where there are no lithium ion batteries being manufactured in The UK. So I don't know if you didn't necessarily call it dumping. What we have absolutely seen is that that in terms of getting lithium ion costs down, we've seen some anticompetitive behavior coming out of China and and and using that anticompetitive advantage to try and squeeze out all other forms of, storage, not just not just ours. So it's not just a question of trying to replace something with a cheaper version of that same thing. It's trying to use, you know, ultra low manufacturing costs supported by, let's call it, nonmarket incentives, to basically skew the entire movement of the industry in a single direction.

57:51 To the degree that we you know, I think this is why we've seen all of these solicitations that I was talking about earlier have carve outs for nonlithium storage. Because if you are gonna make the case that dumping is happening, you know, you wanna have domestic industry that's manufacturing goods at scale to be able to make that to to be able to make that comparison. You know, when we or if, I guess, if we if to to not say anything too forward looking. If we are able to spin up our manufacturing at the scale that we intend under programs like cap and floor or some of the programs in North America, we will have that proof in hand. And I think that that's when a more comprehensive case for dumping and and potentially anti dumping legislation will be will be will be available to us.

58:45 Just just to add to that, I mean, there's have been broadly two phases of storage. The first phase has been about short, sharp bursts of energy for ancillary services. Lithium did that very well. That market became strong quite quickly, which is why those assets became less profitable. The next stage is really about assets that last a long time and that can work much harder. And so that's why you see in in in Hungary, in the Matalo, there's a real benefit there to long dated assets, which which manage their state of charge better. In The UK, there's a lot of benefit to assets that will last twenty five years and not degrade. In the MAX in Italy, there's a degradation limit. They really are looking for different features that that first generation couldn't necessarily provide in the same way.

59:31 And that's where we're looking to position that on top of what's becoming quite important issues around safety and fire and also security in terms of the access to critical grid infrastructure. So there's a couple of important differentiators to add to that beyond the cost piece that you're seeing from China. Thanks, both. And noting we're almost at time, I might just do one last question, which point this to you, and I'll let you let you answer that and maybe give us some some closing comments. So how can you explain the current market disconnect that sees the company's share price valuing INVINITY at 70,000,000, close to net cash and a fraction of the potential value of even one or two large oldest projects. I can sense the frustration in in that in that question, but I'll I think it's one we will share. I'll let you answer.

1:00:21 Yeah. I I I share that frustration as as well. The my understanding of the way UK markets at the moment is that this isn't an issue just for us. And very specifically, what you are seeing is fund managers who have, you know, who are running money are seeing significant outflows, and they're effectively forced sellers of companies that are relatively illiquid. And so what happens is on any amount of buying interest or news flow, you're creating a trading opportunity at that share price. And so what you're not getting is any positive movements up from that sort of activity that would ordinarily dry that up. And so we've seen that with some of the our shareholders who, you know, we've got good relationships with, who are supportive, who've just had to find cash from somewhere to pay for those outflows. So in the very short term, that's fundamentally what is driving share price performance across The UK market, particularly The UK small cap market.

1:01:22 And, you know, there is there is talk about inflows coming in for various reasons, and hopefully, that will start to sort of address some of that balance because it is very hard to explain on a, you know, tech on a on a practical basis, you know, the valuation differences between us and others. But once we once we do start delivering, I'm sure that will resolve itself. It's just really quite frustrating to see in the short term. But, yeah, I I think I I certainly I share I share that, and we will do all we can to resolve it as we can do. Thanks. I think we're gonna we're gonna leave it there. So, Jonathan, I'll hand over to you to to wrap up. Okay. No. Well, Thank you to all of those who've attended today. Thank you also for your patience. Yeah. Your your concerns on where we are from a commercial perspective, where we are from a working capital perspective are shared by by the wider board. We have those discussions on a regular basis and be reassured that we are putting our shoulders to the wheel to make sure that we address those judiciously and deliver on the the opportunity for this business, which we think is is is very significant. Significant. So thank you again, and I shall say my goodbyes until next time.

1:02:34 That's great. Thank you all for updating investors today. Could I please ask investors not to close the session? As you know, we automatically redirect it to provide your feedback or the management team can better understand your views and expectations. On behalf of the management team of INVINITY ENERGY SYSTEMS PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.