Invinity Energy Systems (LSE:IES) Q2 2026 Earnings Call

0:01 Good afternoon, and welcome to the Infinity Energy Systems plc investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and could be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll.

0:28 and now that's hand over to Jonathan Marron CEO good afternoon sir thank you very much indeed good afternoon everybody we're also joined of course by my two colleagues Matt Harper and Adam Hallett we're all here in London delighted to be talking to you together we've got about an hour session here aim is to go through the presentation in about half an hour leave enough time for Q&A we've already had some really interesting questions come through so I'll leave as much time as possible to go through those and answer all of your questions so recognising that on this call we have a number of people who have been with us for many many years but also it's something new to the story so there's a few slides to go through just introducing the business and where we're up to and then we'll get into the interim results themselves but one thing I'd like to do for whether you are new to the story or whether you have been here for some time is just to talk about how we are describing the business at the moment and the reason being is that we thought long and carefully about how we tell people who we are and how we differentiate ourselves from the competition and that's not just to investors but that's also to the commercial space and what's reassuring is I think as you sort of hopefully hear the message now we're getting very good traction as we talk about this particularly with commercial customers and the reason being is that we're able to say what we offer is a flexibility is important is that markets are changing rapidly and we combine that with electrification the requirements from the grids are changing rapidly and there's a real

2:03 risk that if you do buy an asset that doesn't have flexibility that it could quite quickly become a stranded asset and that obviously is quite a big danger there are examples of that across markets a particular one is in the UK where five or six years ago a lot of half an hour one hour batteries were put onto the grid quickly when that became saturated they became stranded. We have a flexible battery solution. It's flexible because there are no restrictions on cycles and it will last for 30 years and particularly as you start to talk about things such as the power requirements for AI data sensors that is a really difficult and changing market and we are offering a solution that really can change with the requirement from such an AI data to industrial businesses who are designing these solutions in, that is really, really exciting. So we do that across the globe, across all markets, but we do do it on a localised basis. And that is really quite attractive as well, because you're seeing across international markets a drive for localisation, which is being valued.

3:10 And that's particularly true across the US, it's true across Europe, it's true across Japan and other markets. We'll come to the UK a little bit and there is obviously some good questions on the capital floor and I'll sort of comment on that and we'll be covering that in more detail. So if you look about our technology as well, we really are a proven mechanical technology. And mechanical, I say that because if you look at the assets that have typically put onto the grid over the last 100,150 years, those are all mechanical assets. They're a gas asset, they're a coal-fired power station, they're a nuclear asset. what they're not necessarily is something that was really designed to go on a mobile phone or an EV and then has been sort of pushed forward and put onto the grid and therefore you know just like a car if something goes wrong with that car you can get in there and you can change that component part you can change the wheels you can change the oil you know with us it might be a valve it might be a pump or a pipe That's quite easy to go in and resolve. If you have something such as a mobile phone here, typically when that goes wrong you're throwing the entire cell away.

4:13 And typically that can come with some quite complicated ramifications when you look to replace that across a wider field. And so therefore we are more akin to perhaps pumped hydro in a box. Pumped hydro separates your power and your energy storage in terms of your water that's used for gravity. and push down the health from the turbine that generates the power. For us, we do that via a chemical reaction, but ultimately it's the same. And so for a user looking at this, it's not a new technology at all. And then look back. Flow-back tubes were first patented in the 1880s. NASA did some good work accelerating that forward in the 1970s, and we've been working on commercializing this since the merger in 2020.

4:58 And so when you talk to a commercial And then when we talk to what we are doing in some of the other areas, they get much more comfortable with that. And of course, we offer that in two separate areas. We offer that in the containerized solution, enduring, but also we're able to talk about the flexible solution at the bottom. Now what you'll note, if I haven't talked about LDS, if I haven't talked about but actually that's a use case that works very well for us and then in terms of non-lithium I've never liked saying we were a non-lithium business you don't go and buy a or you don't try and sell someone an SUV by telling them you're not a performance sports car tell them exactly what you are and I think that's really important so yeah that flexibility stories really resonates and then when I talk to customers we didn't want to talk about the track record because actually having those 2000 batteries installed in the field and working for our customers is a real differentiator we very recently announced that we had 10 gigawatt hours of power dispatched from our batteries that we were very proud of and you'll see in the interim yesterday that's not strong to 11 already and growing rapidly and that's

6:28 important because all of the projects we talk to now they typically send in technical consultants to review where we are they need the track record they need a robust way and then the other point is that the most of all cost reduction results in the we can have characteristics of a battery that are attractive but if it's not at the right cost at some point you won't get through the financial gateways and the work we've been doing to bring cost down is really opening up that market and then finally we talk about where we are where we are particularly from a price point and we are having some really interesting and accelerated conversations that we haven't had before So just on this slide, we have 180 or so employees.

7:18 To some people that sounds quite a lot, to others not very many at all. A lot of those are working on that cost down approach. It is a product that ultimately is steel, it is plastics, it is liquid, and it's component parts. But actually if you iterate those together, there is about 60 or 70 work streams the team is working on to take cost down. really is important so a reminder of why we win it really is that unlimited cycling that's where we focus on the unlimited cycling the lack of degradation the fact it will last for 30 years and those are characteristics which are really really valued by customers we do talk about the fact that there is no thermal runaway risk that is one of the reasons but not the only reason Yeah, anecdotally you'll see the Moss Landing lithium battery fire that closed the highway in California a number of years ago is back on fire over the weekend.

8:27 These are really and can be really unstable assets and for us to be able to talk about the fact that there's no thermal runaway risk makes a real difference from that planning perspective. In terms of manufacturing, what we're able to do is localize that so that we can take advantage of those local programs as well. So domestic content is really important. There's a question coming up on that as to whether we can take advantage of that, particularly in the U.S. So I will not be just the answer to that, that will come on to us in a minute. What is really, really important to me is how our customers think about us. I mean, 11 people an hour is ultimately the result that you can't hide away from, and that will be a growing number. But what's really important to me is that customer journey from order through to pre-delivery, through to delivery and then commissioning, and then looking after customers afterwards.

9:22 Dr. Craig Reiser there, who is from the APAS, that is just outside of San Diego, where there is our battery is connected to solar at the site of the Paranac Casino that asset has been worked extremely hard that was recently commissioned and Indian Energy are really relying on our battery to be providing the work at that site and look at the testimonial on the site we have no stronger part of the business than Indian Energy and that's really really positive one of the reasons why the funder of that project the Californian Energy Commission the CEC is again looking to push projects our way and you saw that from the announcement quite recently of Steel Group they were a funder of that and as you can see the results of the track record on that battery have been really positive towards us so we push the team very hard we do go the extra mile to look after our customers it is a small industry and they do talk and having that word of mouth referral is really really important to us From an international perspective, it's interesting how this slide has developed over the last couple of years. We do have a version of this that shows where we were two years ago. And this looks like quite an empty map two years ago.

10:39 Now you can see we have a significant number of projects in the US, particularly on the West Coast. Again, in reference to the California Energy Commission that's supported to us. These are projects that are either working in the field at the moment or where we have signed contracts and are delivering. So that sits across both the east and west coast in the US, but also across Europe as well. You'll see we have the FlexSpace project which we'll talk about in a few moments time. The Cockwood Energy System which will be commissioned very soon. The connection to the grid has just been finalised at the moment, we're ready to go, we're just waiting and of course on the far right Spencer Energy that's the site that's been in the desert in Australia for a number of years now and it's probably our long almost our longest and best performing asset in some really harsh environments so again when someone says well how do you operate in the heat we can show them the data there and that's really important from a global manufacturing base. We continue to support the UK through Bathgate and Motherwell and FlexSpace project will continue to support those two factories will come onto cabin floor in a moment and how that potentially could change that or otherwise. the US as you've seen from where those projects are do require US content and that's one of the reasons why we will have the factory up and running by the end of this year and that will be really important in servicing those markets so we're well spread across making sure that we use China from a low cost perspective

12:11 to deliver the heavy industry inputs that's the steel container that's the tanks and then sort of elsewhere we can put the balancer system we can put the electrolyte and of course specs manufacturing equipment And then finally, I've briefly mentioned about the cost before, and this isn't the first time I've mentioned it. We recently went back and just had a look actually about how much cost we took out of that BS3 product during its journey from when we first deployed a systems site, which was really around the Scottish water days, to the last system that we sent out, which was December 2024. And actually, we took about 60% of the product cost out on that BS3 journey. Now remember that was with some effort on cost down but not a significant effort on cost down because a lot of the R&D was going towards Mistral and now Endurium.

13:04 But that came from development of the supply chain and from scale that went through that. But in a product which really was tough to iterate the cost because you did have the fixed batteries within the container and everything that went with that. Because you have to do that 60% with quite a hard product to try and take cost out of. You can see how Endurium which is designed that we can go much faster much further so that's a sharp line there when you see that 66% cost reduction we are basically in that position for all the product we are shipping in early 2027 and that's it looks like that cost reduction curve levels off and that's only because of the steepness of that graph we are still potentially looking at and the trajectory to get there opened up a very significant number of opportunities.

13:57 When we talk about those price points, we get a really interesting reaction because most customers are very unaware that the vanadium flavor industry is heading in this way. A couple of anecdotes for you, and particularly one with Equans. Equans is our delivery partner on the FlexSpace project. We have hired them to do the EPC work. They were very keen to make sure that what they were getting involved with was robust, in terms of the technology and the partner and they actually had some exposure to one of our projects in Europe already and the head of business development said to me look you did the due diligence and the feedback he got back was that yours is the Rolls Royce of Canadian flow batteries and by that he meant two things he meant the quality of the product and also he meant the price in terms of where we work i.e. too expensive and that for me was fantastic feedback if he was talking which he wasn't aware we'd taken a significant cost out of.

14:56 And then talking through where we were actually going to, this problem wasn't a fear, it was a much wider and deeper conversation with you. And then also, maybe six months before that, someone who was in charge of power solutions for a data center business said about palladium flow batches in general, the best storage technology there is, the most expensive. And again, at that point in time, he wasn't wrong. A lot of market commentators will say the same thing. They are not aware of where our price points are heading from the work, particularly in that we're leading. I think when we get there and we start delivering our products and people are able to order that in size, I think we will have a very different position commercially than we're heading into at the moment. So a really, really exciting on costs and on performance.

15:44 And with that, I want to hand over to Kevin to talk to the cameras. Good afternoon. So starting off with the key financial highlights for the first half period. Customer orders that we've signed there are up three times year on year and just over 30 megawatt hours. Really important in terms of scale and what you'll start to see from the financials that we go through later on. All of what this is looking for is just about 80 megawatt hours. Inside, that's excluding the contract process of working through the final design and prototyping for 28, 29 deliveries. And gross loss down 60% year on year. I'll go into a bit of detail in a second as to what's driving that. The end of the first half period with 10 million cash plus 40 million inventory and to deliver on those as increased orders for the second half.

16:37 So profit and loss statement, a little bit more detail here, so we increased our projects and grant income to £1.7 million compared to £18 million in the first half period last year. Decreased the second half weighted set of numbers but delivering it against signed orders there that we've taken in the first half. Within that we've seen the commissioning of four projects, it's all delivery and then The final completion of Codward, our project in the UK, which would be the largest flow factory project in Europe, and what you see is the last half million recognised against that grant income there. In terms of the net loss, so we are 1.5 million reduction year-on-year to 12 million, and really within that are two factors.

17:22 It's the increased R&D account spend that we've announced there to drive our product cost down. and also run through where we are against the results of that investment. And then second, we've now completed the joint balance agreement with Gamesa and so that's recoveries year on year and that's off against that R&D number. So those are the two factors that are driving the bottom line and supporting our product cost journey. So a bit more detail here on the margins. So there's two concepts to explain here. First, the product cost refers to our direct cost. and second this is trade 12 months so over the last 12 months we've announced a breach of those periods and what you're seeing there is a pick up in that gross margin over time and also delivering on increasing product margins and really that's because we've got more volume going to the factory and we're absorbing more of those factory overheads and we're seeing that pattern pick up.

18:21 The other factories then, our first Endurium shipments with the composition of our sale moves from BS3 into Endurium and we've really delivered on our last BS3 sale now and we're seeing it pick up in those margins. So those are two key points and then the last one just to mention there, we've got a fairly warranty costs year-on-year down from 0.9 to 0.2 and that's really driven by two things first improving component performance and then also reduced product costs which is speeding through to the lower region there. Those are the key drivers of what's happening on the gross margin line. And going into the balance sheet, here's obviously two factors that impact cash, one the cash reporting on the balance sheet, and then second the inventory, which is a minding of the delivery against those second half orders.

19:14 And as I say, finishing the year there with a cash position of eventually 40 million, and then the cash addition to that of 10 million, and to go in a solid cash position to support our growing concern. Two of the key points within here, so we talked about inventory, but you're seeing there a capitalization of some of our product costs for the completion of the joint development agreement with Gamesa, but then capitalizing out some of that work that's going into Austro, you're seeing that there on the balance sheet.

19:53 Next point please, Joe.

19:56 We've got costs to the right place and we're getting increasingly proof from our customers that we're delivering against their expectations We're sharpening our focus on where exactly our products deliver the greatest value. One of the biggest initiatives we've gone through over the last three months has been a deep dive, providing work by our internal team with some external consultants to understand, unequivocally, where we are the best storage solution so that we can focus our commercial efforts in that area. The three questions that we've gone out and asked ourselves and asked our customers and asked the market is, What operational problems are our customers working to solve? What financial benefit do they derive from applying storage to those problems? And where does Infinity Solutions solve those problems better than anything else that's available on the market? And the clear answer comes back that there are three segments where we dramatically outperform other solutions.

21:02 other projects commercial and industrial sites especially where there's already co-generation involved and in more emerging markets the need for offering and bolstering AI infrastructure For the next slide. The AI one is particularly exciting to us. The in front of meter LDAS case and the CNI case, we've been working on those extensively over the last couple years. AI is new. And one of the things that we had to spend a lot of time understanding is what exactly the load profile looks like for these data centers and how we would fit into those. I think what we've been learning is that there's I mean it's two different sets of AI infrastructure facilities and therefore electrical loads onto the facilities.

21:51 One is where you've got in current AI data centers, these will be these are the data centers that are doing relatively repeatable tasks. Things like you know people are asking you know what is the call source from yesterday and AI is pulling those together and presenting them with a very understandable easily understood format. Separate from that are training workloads and these are the sort of much more complex questions like for example if you were to ask an AI agent to develop a model to predict tomorrow's football scores which is something that involves learning, that involves iteration, that involves the coordination of every one of the processor units that are built on each one of these individual sites.

22:36 Those training sites have a far more stochastic electric load going into them. And the graph you see on the slide is showing 15 minutes worth of electricity flow onto one of those sites. And you see those electric loads fluctuating from near zero to near 100% overnight. um that's a low profile that is extremely difficult to integrate onto if you like to create it's something that utilities around the world are struggling with um to uh to uh to integrate effectively onto their existing systems but In both cases, because of, going back to Son's point around flexibility, because we have the ability to discharge our battery over and over again, unlimited cycles, without shortening their life, it means that we can address those training workloads very, very capably.

23:28 Even going back to those inference workloads, whereas a lot of those sites are being built out with on-site generation, whether that's solar or wind, on average you're looking at very, very high cycle camps to be able to support those loads, most effectively with batteries. That means if you compare our batteries with what a lithium ion cell would be able to do by comparison, the type that we have very, very low lifetime, without the kind of augmentation you see throughout the MRAE means that we have some significant advantages. What do those advantages mean in terms of the numbers? Well, look, this is important. This is a massive opportunity. 45 billion pounds around the world. And when we look at the benefit that we have over incumbents on the Inference side, we've got about a 15% advantage on the total cost of delivering electricity to these sites.

24:21 12% of damage on the trading side. So in both cases, something clear evidence where we are materially better than the incumbents in a market segment that is experiencing massive and sustained growth. Fortunately, we've got you know, we've got our products about portfolio one of the most exciting projects is exactly related to that and many of you have heard us talk extensively over the last few months about our project with FlexSpace. It's really hard to underscore the scale of this project. I mean 1.5 gigawatt hours is a big number. But when you get on site and see the magnitude of this facility really the depth and impact that this factory is going to have.

25:15 Because these numbers are just numbers, worth putting some reference points around them. The average electricity load into the city of Zurich is about 0.4 gigawatts. So this is one and a half times that load. This is a massive piece of infrastructure that will be a critical asset on the Swiss grid. And there is the degree to which we are able to deliver this battery, deliver that energy into the data center reliably and make sure that this can be an asset that the Swiss Grid uses to continually optimize its operation rather than having a challenge to integrate that data center alone is really the reason that our technology has been proven to be that buffer between the data center's needs and what the grid can provide over the course of many decades.

26:05 We're going through the engineering phase of this project right now. We're really happy that we've continued to meet a lot of the milestones, the stage gates that are part of that development process. And looking forward to the final steps towards the fulfillment phase, which we understand is going to begin through the middle of next year. Adam Beck, are you on the commercial pipeline? Yeah, there's a bit more detail here on the pipeline and all the numbers. We split the pipeline into three sections. and first thing are audible so those are signed and conditional orders and the second being framework so essentially this is master service agreements or MOUs signed with customers and they're going through final financing and contracting milestones and then development pipelines this is really projects that have been into a scheme with Iminity Technology or submitted for a license with Iminity Technology and we give a sense of that essentially on an un-risk basis such as some of the 13 gigawatt hours across our pipeline amendment and we've not included in there the qualified pipeline that hasn't gone through some of those milestones and then how does that sit in terms of outlook?

27:17 Over the next three years of 26-28 you can see the bulk of that is sitting across North America and that's really driven by incentives in that market at the moment so the 30% investment tax credit, the 10% production tax credit, the $45 per kilowatt, a lot of incentives that poured up to about a 50% tax incentive for local manufacturing in that market and you see this talk to setting up our local plant next year to deliver on that. By sector, on the right hand side there, it's really split across two main areas of focus, one being renewable developers and utilities, so predominantly there's larger schemes, like the Cap and Full, that are being pushed out in North America at the moment, and then data science space, and we'll talk a little bit early on to the use case there.

28:05 So what does that translate to in terms of number? We've given a bit more color there. This is now on a risk basis for sales. So essentially we are risking our order book there at 9%, the frameworks at P50, and then everything within the development pipeline there at P10. And it gives you a sense of how the pipeline looks on an outlook basis, broken across those three factors. That all boils down into a 5x increase in share there, since we're still in the 5%. we based that on independent artists by Benchmark there who is the industry leading forecaster in this market and to give you a sense of what that actually means in terms of the whole flow battery market today on the numbers we're putting out there which are relatively heavily risked in order for us to give some confidence behind the way we're putting it out there.

28:57 The risk of going into Q&A early, P50, P10? Yeah, so essentially P50% risk weighting, P10 and 10% risk weighting. So we just, within the order book there, we get some, there's some footage there, even having recognition within the frameworks, and that's also a function of when the customers are delivering that financing on their projects, and the final market there, you've got some development risk as they close out the last milestones on their projects. So a little bit more visibility there in terms of how we're putting things like that.

29:29 Vicky? Okay, so last slide and then we'll jump into Q&A. We can justifiably say that we are a leader at a technology business in this space from the track record we've got and the commercial validation. What is important is that we scale this, we scale it rapidly and it's become commercially very successful and the whole team here is focused on that. We are a technology business but actually we really want to be a high value and that's where we're all driving to, but with extremely strong foundations of good technology with the products at the right cost. And that cost-competitiveness is really what is driving those bigger opportunities.

30:14 If you look across that map of projects deployed or being deployed, if you exclude that FlexBase project, almost all of the projects that are within our pipeline are at bigger scales than you see across that entire map. And that's just evidence We continue to do it, of course. We continue to iterate on that to make sure that we do remain competitive in that area. The market is also moving hugely in our favour. That requirement for flexibility isn't something that we necessarily talked about a couple of years ago, or if we did, it wasn't nearly as flexible as it was regularly to us. Now, when we talk to those who are commissioning systems, flexibility is really valued by them, and there are a limited number of assets that can offer that.

31:03 And so that commercial momentum we're beginning to see I think does validate our strategy, recognising there's a lot more to do to transition that pipeline into firm orders and make sure that as we look at our revenue forecast in the year to come, we start the year as we're beginning to see now with a significant amount of that future revenue already backed into commercial orders. Thank you. That's great. Thank you very much for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the right-hand corner of your screen. I just want to take a few moments to review those questions submitted today. I'd like to remind you that recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via our dashboard.

31:48 As you can see, we have received a number of questions throughout today's presentation. I'd like to just hand back to you to share the Q&A with the team and I'll pick up from you at the end.

31:59 So delighted to see a lot of questions coming through. I'm going to start, there's a few here I think relating to the financials which Ali won't let me start with you on. I think it's sort of between inventory, cash and customer receipts. Can you give a bit more detail on how we're going to manage cash over the next 12 months? Yeah, so as we mentioned earlier on we've been looking at cash runways as a function of both cash on the balance sheet and then the inventory which is work we've completed in the first half and the delivery against our order book. So perhaps in half of that we're winding in the second half for our deliveries there and the remainder in the early next year for our deliveries in 2027 and that's really what's sitting behind there for the 12 month going to CERN now and within the interim statements.

32:51 and also manage our cash runway and there's a couple of questions here on pipeline that I'm just seeing there can you give a little bit more I mean Matt I might come to you when we talked about the 11 gigawatt hour frameworks what sort of customers are we talking about are we talking about people at the sort of approach end of the spectrum of buying Okay, so within our 11, the question here is, within your 11 legal hours of the pipeline, can you give a bit more insight to what actually sits within that? So what are those frameworks that people sign up to? Yeah, look, we've still got a healthy part of the business that's related to the front of the year developments that have always been the core of our business.

33:42 I think the big change over the most recent period is on the data center side. You know, obviously getting the second phase of FlexSpace into that pipeline has been, you know, a big uptake. But you can appreciate, given the amount of interest in the data center segment globally, um we've now got a lot of the amount of interest in what we can do for those data center operators builders instructors um and uh and uh and and so there are a large and growing number of other data center opportunities that are also part of that 12th or 11 days great that's actually another question here asking about flex space do we see it as a one-off or is it no it's Look, we're really focused on getting that product right for that customer and we're going through the development details to make sure that at the end of this new market that we're doing the right things for what those data center operators are going to need. Our intention is that we will be able to turn that or at least portions of that into more of a repeated offering. We're able to offer some further sites down the road, really duplicate what we've learned and make sure that we can replicate it for other thousands of customers in the

34:54 But I think just to follow up on that, the number one focus is that project in itself is extremely valuable to us. The focus is entirely on getting that delivered. That is a delivery cycle to 29, 30, 30. The installation phase that we start in about a year or so is time for the design and finalisation of the integration work is the work being done now. At some point in time we can look to replicate that elsewhere. But for the moment, we are absolutely focusing on that. That just opens up opportunities elsewhere as well. So back on that pipeline question as well, if you look what sits within this, you know, we had a review relatively recently of some of the parts of the pipeline that don't necessarily permeate, permeate, permeate, percolate. And I was really reassured by just the number and breadth of deals that sit across that.

35:46 It's enormous. We've got basically the same question asked twice in the same way from two people that would have admitted each other.

35:59 We've talked about the rest of the world's element in the geography. What does that actually mean? Where are we seeing the demand outside of North America and Europe and the UK? Where is that? Is it China? Is it India?

36:12 Well look, this is a global marketplace and we are, you know, whilst 180 days seem like a lot when you strip out those working on product development as well, it is a large market to cover with a relatively small commercial team that needs to cover not just front end sales but sales engineering that sits beneath that. So we need to focus on core markets where we've got the expertise and the bandwidth. What's really interesting about China particularly is China's deployed more vanadium flow batteries than anywhere else in the world and the price points that we are at or will be at shortly next year we think are probably below where the Chinese are 7.8 million batteries and we also know from the tenders we've been involved in such as FlexSpace and other anecdotal evidence that we think our batteries perform at better than a lot of Chinese however we need to make sure that we do approach that in a sensible way for all the reasons that I'm sure I don't need to go into to make sure that corporately we're positioned correctly there India is an interesting market India is very very very cost conscious and you know rightly so we are pushed on margins this is a business where we have to make the terms for our shareholders and typically within India a lot of businesses do chase very low if not negative margin business to build market share and hope they'll be able to There are a lot of opportunities where we don't have to do that.

37:50 I'm sure Shell would support us in that.

37:53 There are European projects which sit alongside the Flex space one in terms of sort of scale of opportunities. There's a lot of opportunity there that we are only scratching the surface of as well and at some point in time we will

38:13 and there's a few questions on FlexBase I think we've answered most of them but there's one here about asking for a bit more specificity around the engineering and so you've said the engineering process is on track can you give any more detail on what that really means in terms of progress towards the side of the world? Yeah sure I mean what I would say is that you know we were awarded that project on the basis of our track records and on the basis of The concept that we were able to deliver against the requirements of the customer in our RFP. Within the next year, what we're going to be going through is a series of stage dates where we will have to deliver a sequentially more evolved version of what that engineering design looks like.

39:04 Not only proving the concept works, not only proving that the commercial model works, but building out the actual set of orders, the actual set of components that are going to be installed into the basement of this data center. Of course, knowing that that is material different from how we've delivered a lot of our products We're going to be shipping individual components of our factories so that they can be fully integrated to the site. Getting that done in a way that is supportive of the product itself while maintaining the performance, not only technical but also commercial, that we intend to achieve is something that our customer needs to ensure that we're doing properly.

39:44 Okay, thank you.

39:47 The next point, and we had a lot of questions on this, I think people came armed to the call around cap and floor. There's a number of questions here saying that they've seen articles in the press and the Times essentially saying that the market has some high expectations of the number of awards. I'm really asking, you know, what's our view on what happened and our view on the chance of anything changing?

40:15 but there's also a lot we can talk about here and there are different views I've seen on how to approach this what is really interesting and you've seen some of the Sunday Times articles both this Sunday and a couple of Sundays ago so we don't like the headlines I think you should get past the headline a couple of weeks ago and actually look at the bulk of all of what was in the article two weeks ago and last week we've had some extremely positive feedback from frankly all stakeholders and I think everybody who's looked at this has said a number of things and it's interesting I'll come into this a minute why doesn't the government sort this out but also strong support that we are actually making this an issue that people need to be aware of and need to look at now I said government like this but actually when you look within it we are speaking to a significant number of stakeholders within the wider organisation that this government and what you realise within that is that it's just not one body it's many different bodies trying to work together and I think what we have seen is an incredible amount of support for our case that infinity technology and more broadly UK technology should have had a better run at that program and that's one of the reasons why I think the Sunday Times journalist picked it up she is running with this because she thinks it's a really interesting story we can create a significant number of jobs and we can create a significant amount of investments that simply won't come here and when

41:46 you look across what the US does the US offers a 30% refund on capex expenditure and the refunds are used to the US manufacturers for putting manufacturing there that's why we're moving there the EU is going to do something similar in the next couple of years Japan does the same thing and the UK is unique in almost not doing that there was a 5% benefit in UK content when actually they've had up to 20% in other countries you know we're asking the question why was that done in this scenario and then when you look across the projects that were consented if you look at the pumps hydro projects and very specifically one of the developers there has announced that you know they have some significant challenges in relation to costs and you know that project will only go ahead if it beats IRR thresholds so you know I certainly am warning that won't happen and then you know some of the other developers have got some rather unique which again have never been done before. And there is a strong argument that a broad breadth of technologies across just those two narrow verticals would make sense for all the other reasons we can talk about. And so my view is that our share price was doing very well up until that announcement and it is highly disappointing and we were very disappointed with the result and I think it's only right that we push that scenario through Should we do that in private?

43:12 Yes, we are significantly. I think us highlighting to others to gather support has been really well received. And we are hearing some very positive lives that come back. Will that ultimately result in a change? I do not know and I can't forecast that. But I tell you what, I would far prefer to fly the flag of identity and do our best to get some change and hide away and not do that and just say it would be nice if it changed. I think that's everything we can do. and we are definitely being listened to at very, very high levels. All the machines of the wider government, the network companies have changed at this stage, as I say, as have them. What's really interesting is if you look at what this means for our technology versus others, typically our technology is scored at the same price point, same financials as other technologies. So this wasn't anything to do with quality of technology or quality of price. I think our projects were marked quite partially.

44:07 They were inundated with a number of projects that went into capital and I think they took some pretty generic assumptions and again looked at reports on other technologies which were a couple of years old and drew some very unfair, sort of unhelpful should we say, comparisons on those. So that's why our customers have gone back and said look that's not right, you're using incorrect data. So I think there are a whole bunch of reasons as to why what came out wasn't fair and also a lot of the project the storage system wasn't made clear but it was only really announced and even then it was quite opaque at the end of it so a lot has been done in this process but not just us but others think should it have been done better and therefore it's only right that we push this there is talk of there being another round shortly to follow and for us we are very much concentrating on this round this is an issue that needs to be dealt with sooner rather than later I want to create those thousand jobs up in Scotland I want and as I think the article said, proud British, I wanted to work here and there's no reason why I can't with a little bit of movement and sense that comes with it.

45:16 Thanks. I think this follows naturally on, there's a question here around UK manufacturing and do we have the scale to deliver projects like FlareSpace and also other large scale projects presumably.

45:30 So it takes about a six month lead time across the scale and that's typically the lead time all needs that manufacturing. and so we've got that in order for the US and we'll be capable of being commissioned and brought up to speed quite quickly so we don't at the moment that's the whole point if we did at the moment we would be putting a lot more unabsorbed overheads through the P&L which would be impacting profitability but we can scale quickly we are able to bring in and repurpose people from the oil and gas industry people who are midway through their career is available now. These are not highly highly skilled people. These are people with training. These will be retrained in other areas.

46:15 So that's the me time that we can move to. Otherwise whenever we bring people up to Motherwell Bathgate days have been up before on any of the open days we'll see that what we really need is a dry enclosed area. It is useful to have a plane that can carry 30 tonnes but actually we can do that with a foot. Ultimately we need a stable floor. It doesn't need to be temperature controlled. It is in Scotland. It doesn't need a little bit of heat. um but ultimately we can find space pretty quickly um and you know with some starting capital orders and we can quite quickly uh sort of move to bring that investment in okay and speaking of um there's questions around us manufacturing

46:55 We've been asked a couple of questions around it in terms of when are we going to hear more, what are the plans? As Jonathan touched on, there are tremendous advantages to manufacturing in the US market, both in terms of tax credits on the production side and tax refunds on the customer side. We are, I would say, most of the way through selecting We're in negotiation on contracts for leasing the space that we're going to build this facility out in. We've validated that we've got an initial team that's going to be able to go and help us get that set up so we're not starting fresh with new personnel. We've got a team ready to step in and I think we'll be announcing that final location once those contractual details are done.

47:49 Brilliant. Okay, and briefly going back to the numbers, there's a question here asking around sort of the uplift in admin overheads and I don't know if you could just come to that after. Yes, a good question. So the one and a half million movement in the bottom line there is what explained in note four of the accounts. Essentially there are two factors driving that. Half of it is a comparator effect. Now that we've completed Endurium and the joint development agreement, those recoveries are no longer there from Ganesha given that the current project has pushed out of the market. And then the other half of it is an increase in staff costs. Now the increase in staff costs Thank you very much So the improvement in component costs, the improvement in component performance is what's driving those improved gross margins.

48:46 So it is investment we're making now to deliver on the numbers we have and now that we have out there. So acknowledge the point. We're managing our admin budget judiciously in order to manage against that. And the investment we're seeing in those R&D staff costs is reflecting that as well.

49:07 And I'll stick with you Adam, there's a slight technical question asking around sort of how it works in terms of the sales and the cash coming through. Is selling a battery a one-off or are there maintenance contracts? How does that play through the season of a project? Yes, the bulk of the revenue recognition, so 95% plus is on delivery of the battery at the moment. There is an ongoing piece there in terms of the long-term service agreement that we recognise and make home revenues over time. and for our bigger projects and the likes of JetSpace and what would make more sense for those sort of projects is a percentage completion basis that's what the industry tends to use and certainly for our major deliveries that the bulk is upon the delivery of the drawing product.

49:53 Thank you and the question always comes up is because it's something that I think Charles is always keeping on competition where are we seeing the main competition and how and what's all that and what markets? As you said, the number one commercial competition that we usually see is almost like at 98% of the world's market. That's from a competitive perspective the thing that's most challenging for us. We do see, I think the question though is what other low value companies are out there. We certainly do come up against some of them. The FlexBase project, for example, they have invited multiple bids. everyone interested in the industry globally getting into it. What I would say is that competition out of some of the lower cost regions, China and India, for example, was present in those bands, but was deemed to not have the kind of track record that we were working with. So, yes, there are other players out there.

50:54 No one has been able to probably gross market where we have this yet. And Moving on to a different area, sort of more corporate, and there's three different questions asking the same thing here about, you know, have we got, is the idea of moving to the U.S. or a U.S. listing sort of on the past, giving the sort of clear focus on the commercial side of it?

51:21 I mean, we can maybe rephrase the question of there's moves to the U.S. or look to include the U.S. capital markets in our thinking, I think would be The second part of that is absolutely true at the right point in time. I was at a conference in the U.S. with one of our brokers a few months ago and he spoke to quite a number of potential shareholders there and had quite a few of those discussions with all the shares. They fully understand that market in the U.S. and when you look at where the to try and tap in a liquid investor base there that really understands what we are doing and why we are doing it and however again we are still committed to the UK we have the National Wealth Fund as a major shareholder of ours and maintaining liquidity and enlisting in London will absolutely be at the forefront of our attention so move to US no at the right point in time when we are the right size to be able to potentially tap that liquidity yes there is a possibility are we about to be outside in the near future I would see them.

52:30 Question about cost down map I'll probably continue is obviously good progress on the cost down and is are you worried about customers delaying until products become cheaper so the idea that someone might just hang on for six months and just order it That's a bit of the same.

52:47 We'll see.

52:48 It is something to be concerned about. We have not seen that actually happen within our pipeline. Usually by the time our customers approach us, especially, you know, to the segmentation we went through earlier, most of them are either commercial and industrial customers who are looking to save money on their electricity bills starting tomorrow, or AI dentist data centers where they absolutely are not able to connect to the grid inside. and and and and Let's go, I can see a question here just asking around bankability. I mean clearly it's something that we've been focusing on, track record 11 billion hours which is part of that. It's a reference to the previous one of these I think we talked about we were having some positive conversations with banks earlier on project financing. Are those discussions still ongoing?

53:49 The really important point is we stepped up from delivering small scale units to large commercial units backed by project finance debt and you're starting to see that now in the first few projects we're doing at commercial scale typically beyond 20-30 MWh and we've had a number of discussions around that one of the key parts of that is then being able to put an insurance wrap around the product in order to get the project finance lenders comfortable there in terms of risk return and we have progressed those decisions particularly and looking to close that out as we said over the next few months in order to get to a place where for cap and floor as they're engaging with their project finance centres they can put non-recourse debt behind the products and so really really important work stream also the benefit of corporate is really important here so being able to take both the insurance providers we're working with two in particular and also the lenders um we're working mainly with two two between our house bank and being able to take those entities out to a project site in the UK to see an operating project at that scale on the grid is really important in terms of driving driving those and yeah I've seen positive mentions on that this year Joe.

55:06 Perfect and you mentioned Cockwood and there's a couple of questions here asking you know what is going on with Cockwood, when are we going to see that going live? I know we've briefly talked about it but you know can you give a little bit more about what's between us and you know that project being switched on and making any actions?

55:25 We had a conversation with a journalist earlier who asked us the same question and the response was meted with a shrug and a nod. We are in no different position than a lot of developers. In case you're wondering why projects slip, it's normally things outside of the developer or the technology provider's control of which we are based on this front. We were hoping that this asset and we certainly engaged with the DNOs to try and make sure that this asset would be connected in the first half of this year we certainly did all the work we could do our end and paid all the monies across we had to actually advance to make sure equipment could be ordered and notwithstanding that the slow progress has been seen by us as well so I think they've done all the work in the road they've done the connections up we announced it 30th August into September and they're just doing the final work. Adam, what are we saying? What are we anticipating to switch on?

56:21 Yeah, so the project is fully delivered. So we're waiting on the substation. So by the end of the year, we'll have that project fully commissioned. We're expecting to be able to do its first commissioning test by November. And that'll be that process.

56:33 Thank you. Yeah. Prostratingly slow, it's highly outside of our control, despite our best efforts. But as I say, this is seen across the industry and what we're doing with the obviously very much looking forward to your advice and those on the call.

56:49 But we're doing it today. Absolutely. Moving on, there's a question here on the medium around one of our approaches to that and our view on sort of it as a future maybe as part of cost down but also in terms of security of supply.

57:04 Matt, do you want to?

57:06 Yeah, sure. We continue to scour the world for the best, highest quality, lowest cost sources of high material. I think what we've found in the last year is there are some emerging sources, particularly in the secondary product realm, which is very encouraging. Secondary product meaning that we're not facing any holes in the ground. This material is coming out of either the petrochemical industry or the steel industry. as a waste stream. And what we're finding is more and more that there are new production people who are setting the line on the basis of some sort of advanced manufacturing and advanced So, you know, we where the prices are in the current market. And what we see is the current market prices being reinforced more and more by new entrants.

58:01 So, you know, market prices are likely to stay closer to where they are now than where they've been over the last decade. And in the background, we're continuing to work very closely with some of those existing and emerging producers to make sure that we can get There's a number of people that have referenced the recent items. Someone's here referenced the monthly newsletter we put out with a picture of the Trade Commissioner for Europe at FlexSpace. How are we feeling the engagements going with the UK, Canadian and governments in general? getting those things with a lot of meetings but do we feel that those are actually bearing fruit and building relationships?

58:48 Maybe a shout out first of all from our MP in Bathgate Kirsten Sullivan she could not have been more helpful towards us or more supportive but also we've seen that across a number of other MPs and ministers in this space they are very very helpful and supportive and understanding and want us to do well. The trickiest bring that forward to effect change whether that's just in general the way government works not this government but government in general works you know that's one of the challenges I think we face in the UK maybe more so going elsewhere but you know at a level where we are dealing with people we're getting a very very positive response and I think yeah we are making progress let's look we've had a lot of funding from the UK governments you know the disappointment is what happened with cap and floor and I think that really was quite a unique government department and doing one thing and probably delivering an outcome that no one quite expected.

59:43 That is separate from how our sort of level of engagement works elsewhere. Maybe from a Canadian perspective, Matt? Yeah, look, obviously Canada is obviously very interested in infrastructure projects of national interest right now. One of the big conversations is around, they call it, 10 Canadian electric stations, which is strengthening the electric grid, not only within any digital provinces in the country, but looking at the interconnection of all of those provinces together. That is an investment program, expected discussion in the tens of billions of dollars over the next five years. and storage is one of the items on the docket as being a critical part of that infrastructure. So, you know, no deals to announce yet, but certainly individual portions of that strategy are likely to be storage and as one of the preeminent Canadian storage suppliers, we think we're likely to be able to do so.

1:00:36 I think we've managed to get through most of the Q&A, so I'll pass that to Lily. that's great thank you for answering those questions you can from investors and of course the company can review all questions submitted today and we'll publish those responses on the InvestMeet company platform just before redirecting investors to provide you with their feedback which is particularly important to the company Jonathan can I just ask you for a few closing comments

1:00:57 Yeah, of course Andy, thank you. Just finishing on from what Matt was saying there, when I look at the business, that government engages also across the US as well. We have the California Energy Commission, California's fourth largest economy in the world. We have the government organization there, the Energy Commission, hugely supportive of us and pushing projects our way. When I look across Europe, we are building or designing with a very clear route to building effectively a system that will deliver more power and the two nuclear power stations next door to it. We've got a technology that's robust with data and heading towards the right price point. We are in a good position as the market is also looking for our type of product. So we've got a lot of the hard work here. There will be ups and downs along the way, but I'm confident the trajectory is in the right direction.

1:01:47 I'm really excited for the future of the grid. Thank you for updating investors today. If I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can best understand your views and expectations. This will take a few moments to complete and I'm sure be greatly valued by the company. On behalf of the management team we'd like to thank you for attending today's presentation and good afternoon to you all.