Patrick Yau: Good morning, ladies and gentlemen, and welcome to the Ceres 2024 Full Year Results Meeting. In a moment, Phil Caldwell, CEO; and Stuart Paynter, CFO, will take you through the results. Just a reminder, there will be a Q&A session afterwards. So if you're in the room, please wait for a microphone to reach you before asking your question. And if you're participating online, please type your question into the box provided, and we will address those towards the end.

With that, I'll hand over to Phil to talk you through our record year. Thank you.

Phil Caldwell: Good morning, everybody, and thank you for joining us this morning. I was just thinking on my way in, this is probably my 11th or 12th year of doing the full year results for Ceres. And it's an interesting time to be doing it because what we're reporting today is a record year for Ceres in almost every metric.

The business has never been in a stronger position than it is now despite quite a few economic uncertainties and headwinds. And I think we can dive into that this morning into why I think the business is in really good shape now and for the future. Many of you know the business, but just a quick reminder. We are world leaders in solid oxide technology for both power and hydrogen generation and I think that's fundamental. We have unique IP because what we do is difficult, unique and valuable to many nations looking to decarbonize, many companies looking at how they reinforce power grids right now, and it's protected by over 150 patent families.

Because it's unique, difficult and well protected, we can apply a licensing business model that is able to go cross-borders at a time where we have tariffs and trade wars going on around us, where we're seeing more localization of production, where we're seeing more shortening of supply chains. So we have a very strong position, not just in technology but in the way we apply the technology to the business model. And we continue to collaborate with some of the world's leading companies to deliver clean energy technology at the scale and pace that we believe we need to tackle the urgent need for decarbonization globally. We have a platform technology, and the uniqueness in the cell, we're not going to go into too much this morning. But the fundamental architecture is based upon low-cost, highly available materials that give us the metal-supported solid oxide technology that we can apply in two directions.

So, on the one hand, we have licensees applying this for power generation. So that's Doosan in South Korea, Weichai has a license in China, and we added Delta in Taiwan this year. And that side of the business is addressing some markets such as AI and data centers which is starting to see rapid pickup, distributed power and decarbonization of shipping. You run that technology in reverse, you can produce green hydrogen for industrial decarbonization. And for those parts of society that you don't have an obvious alternative for decarbonization of things like green steel, green ammonia, synthetic fuels, this technology integrated into production facilities gives one of the -- or the lowest electricity burden or the highest efficiency that there is in terms of solid oxide electrolysis.

And again, we've attracted two partnerships in the past year for electrolysis, Delta in Taiwan and Denso in Japan. And we continue to work with end users and system partners such as Shell, such as Thermax in India, such as Linde. And I think this is a very important part of the business. As we've seen some uncertainty, some slowdown on green hydrogen in some parts of the world and some pushback towards oil and gas in other parts of the world, you have both of these strands to the business. We have the power generation side with licensees there, and we have the green hydrogen side, which provides something of a natural hedge for the business as we go forward.

So, like I said, I've been doing this quite a long time, and this is a year to be proud of. It's a record year. And Stuart will take you through the numbers, but it's a record year in terms of revenue, a record year in terms of order intake, record year in terms of gross margin. And the business has a very strong financial position and a global footprint. So, a key milestone we've been working on for a number of years is in South Korea with Doosan.

We expect that factory to come onstream in the second half of this year and really start to produce products, which will prove out this business model all the way through to royalties. And we're very excited about our relationship with Delta in Taiwan, really world-class manufacturers who've taken the license for both the FC and the EC side of the business targeting already markets they're in, like data center equipment and also industrial hydrogen markets. In Japan, Denso, one of the world leaders in manufacturing, has completed the upfront technology transfer, having taken the license in the middle of last year and is really looking at again industrial decarbonization for the -- in Japan and beyond. And then, India has huge ambitions for green hydrogen, converting green electrons into green molecules such as green steel, green ammonia, et cetera. And we have a system license arrangement with Thermax that takes us into that growing market.

So lots of positive steps last year. Since last year, we have to acknowledge we've had the disappointing news of Bosch stopping the collaboration for production of SOFC in Germany. And Bosch's statement is pretty clear. They've stated they have no concerns over the technology. The technology reached a high level of maturity and the relationship with Ceres was good.

This has been taken at a more high-level strategic decision and is more a reflection of the economic pressures, I think, that are prevailing in that industry and also in Germany at the time. It does create a short-term issue around the shareholding, and we are working with Bosch and its advisers in how they divest their shareholding. And it will obviously maybe create other opportunities as well in the future for us. The portfolio effect of our manufacturing partners and our system partners largely mitigates the impact of Bosch's decision for 2025. With that, I'm going to hand over to Stuart to go through the numbers in more detail.

Stuart Paynter: Thank you, Phil. Good morning, everyone. So, unlike Phil, this is my first results -- full year results for Ceres. So I'm extremely excited to be here, especially in the year which Phil has described has been a record for us. And let me take you through some of the numbers and then some detail around how we generate some of those numbers and a bit about our business model.

So, as you can see, I mean, Phil referenced a record year. Revenue is GBP51.9 million. That's a record generating a gross profit over GBP40 million, also a record and, importantly, the order intake. The order intake of more than GBP110 million is generated by these -- the majority of which is generated by these two big licensing deals we did with Denso and Delta. And that is the fundamentals of the business we're in now.

So we've said we're targeting one new manufacturing license a year, and that really is the driver of both revenue profitability and gross margin within this business. So that continues to be our number one focus as we move forward. From a cash perspective, north of GBP100 million as at the end of the year is a strong financial position to be in. And you'll see that, both in some of the actions we've taken and the momentum we've driven through the commercial activities, we're looking to reduce the spend in the business through the restructuring we did in Q4 2024. And obviously, you'll see the cash burn coming down, largely driven by the number of partners we've signed.

So, from a revenue and gross profit perspective, there's the evolution over the last few years. You'll see how affected our numbers are by signing licensing agreements. We're a licensing business. We need to sign licensing agreements. It's what we're focused on.

And you'll see it's one of the areas of investment of -- in terms of our cost base. And that's the right area to invest. We need to attract these great clients like Denso and Delta, and they're going to be royalty generating in the future. But as Phil said, we need a portfolio, a large portfolio. We need to keep attracting clients, and that's driving revenues in the short term.

So we'll continue to try and meet this trend. The licensing model affords a very flexible cost base. As you saw, the gross margins are in the high 70s. So when you look at this cost wheel, the cost of generating our revenue is very low. So you'll see that it was GBP9 million in 2023 and GBP12 million in 2024.

That's driven by the increase in revenue. So that's a good place to spend with high margins. And then you can see the sort of characteristics of our cost base elsewhere. So the R&D numbers come down by GBP5 million between '23 and '24, and that really reflects the sort of peak investment post the fundraise we did in 2021 in generating the technology we need to attract licensing partners for SOEC. I think, you'll see on the admin side, we kept that flat, which is what people are looking for.

And then, on the commercial side, you see we've made the investment. So we are investing in those places that make a real difference to the top line. None of this includes the impact of the change we made at the end of Q4 2024, but we'll see flow through the '25 numbers. So cost management is a very important thing for us in the markets we find ourselves in, and we're taking that very seriously. So from a cash outflow perspective, what does that mean? Again, you'll see that we peaked in 2022 with the investment in getting the SOEC technology ready, and that's crystallized in two licensing partners in 2024.

And again, this cash is largely driven by the number of deals you can do, so it's rather binary. But everything behind that, we can control, we are controlling both on a cost perspective and a cash management perspective and investing in those areas which give us the best chance of generating the revenues. This is an interesting slide. This is a new slide for people. People were asking us sort of how an MLA, a big manufacturing license agreement, sort of accrues over a number of years and the ongoing impact it has on our revenues.

And you've seen with both Denso and Delta, the license fees were in the GBP40 million, mid-GBP40 million. And this is roughly how the license fee is split over a three-year period post signing, not calendar years, but it depends when you sign it in the year. But this is just supposed to be indicative. So in the first year, first 12 months after signing, it's about 50% of the revenue and then 25% for the next two 12-month periods. And you can see some of the activities which go on in that three-year period with the aim of getting them to start production in a condensed time line of three years.

And this is exactly what Delta said they can do. So they signed with us beginning of '24, and they publicly stated they're aiming to be on the market end of '26. And that's a testament to the number of times we've done this now, the condensing of the time lines of swapping the information, sharing the information, building their supply chains and helping them get to market with the right systems. So we are getting better at this as we do this, and the portfolio effect of this offering to partners is what we're selling going forward. And this is the longer term.

So right now, we're at that stage where it says Doosan on this chart. So we're expecting our first royalty check this year from Doosan, the first commercial sales of the SOFC offering that they're giving to the market. But in the longer term, we're looking forward to being able to reap the benefits of being a licensing business, which is that the royalty base and the royalty revenues will grow and become a more and more substantial part of the royalty base. And then that's a far more predictable, sustainable, profitable company you can generate. At the moment, we are -- our success is dictated by the number of manufacturing licenses we can sign to keep that three-year momentum going, you saw on the previous slide.

But over time, that will transform itself into a royalty model, and that's what we're looking forward to. And the more clients we can have, the bigger portfolio effect, as Phil said, we can have, the more chance we have of being successful. So to finalize, we continue to develop new partnerships. As we've said before, one manufacturing partnership a year, which is the cost base we've set. The cash burn would be between GBP20 million and GBP25 million.

With two in a year, we'd look to be breaking even at this point as we add momentum to that three-year cycle you've already seen. We're well placed for that growth. The existing licensees are really going flat out. And the future partnership prospects, the pipeline is looking good, and we're seeing more prospects in the SOFC world with data centers, et cetera. And the cost base rationalization we did at the end of last year will pull through into this year, and we'll see decreased costs.

So I think we're in a strong position to both maintain that cash balance, manage cash throughout and be able to get to that profitable royalty-generating status without needing any more funds. With that, I pass back to Phil.

Phil Caldwell: Thanks, Stuart. So just a quick update or a reminder of the business strategy. Our growth strategy is based upon three

key pillars: commercial acceleration, technology leadership and, probably most importantly, execution at the scale and pace that we need.

Commercial acceleration first. We now have three manufacturing partners starting to establish factories globally. And we also have a balanced business model, which is quite interesting, because it creates both near-term and long-term opportunities for the business both in terms of the power generation side and the hydrogen market side as well. So, this is probably more important than ever given uncertainties around the pace of the energy transition right now. Technology leadership.

Ceres is the leader in this technology globally. We have a fantastic team, and you've seen it from the cost base. Most of our resources are people, world-class scientists and engineers. And we invested a lot in enhancing things like digitalization and modeling so we can now predict and develop faster durability models, doing things a lot more digitally rather than in hardware. And also, we're doing some big stuff as well.

We've taken it through to system development. We have the megawatt scale demonstrator literally coming onstream now at Shell in India. So that will be a significant proof point for us on the technology side on SOEC. Execution at scale and pace. I think, a key milestone is when first products come out in the market with the Ceres technology.

I think, that is a key moment for the business, and we're expecting that this year. And obviously, looking after new licensees that we brought on last year and adding to that Delta in Taiwan, Denso in Japan, Thermax in India as well as the relationship with Doosan and others. This is a photograph. Some of you have seen this video before. This facility is incredibly impressive.

It's the size of three football pitches. It's a state-of-the-art production facility in Doosan. We've been working with them on this for a number of years, and that will come onstream, as I said, in the second half of the year. And they have the footprint, obviously, in South Korea, but they also have the US footprint as well. This is for fuel cells.

So this is purely focused on power generation for markets like data centers, like commercial, industrial power, like maritime power as well. So, the first market opportunity is on the power systems side. And when we look at that, you can do -- you try and do a bottom-up or top-down numbers. If we take a look at 2030, we believe that the market opportunity for solid oxide, assuming about a 20% to 30% market share is achievable for Ceres. It's equivalent to about a 22-gigawatt market.

Now if we get 20%, 30% of that, that's the equivalent for us of factory capacity of something like nine or 10 200-megawatt factories. There's not many players at all addressing the power systems side. Probably our nearest peer or competitor is Bloom Energy to sign deals this year at gigawatts levels of production. So it's really interesting. I think, as we start to see this market grow, particularly if you look geographically at places like APAC, where we're very strong, obviously, Americas but EMEA and the rest of the world, it is -- it does have this global footprint as well.

So we expect this side of the business is going to grow actually in the near-term. The hydrogen side, I think people understand the size of this opportunity. Our numbers quoted are a bit further out, we're quoting 2040 here. That undoubtedly is a huge opportunity for this business, particularly when we see those market applications that we talked about in steel, ammonia, synthetic fuels being just under half of that market by 2040 and the geographic spread as well, that's really where we're seeing the traction that we have with partners internationally, particularly in Asia, looking at how do they make this business opportunity a reality in areas which are sometimes energy constrained, sometimes wanting to -- which renewables want to be exporters of green molecules. So that's how we see the hydrogen side.

So two sides of the business, the power generation and the hydrogen side. And really, our objective is to become the industry standard for solid oxide. There's not many players in solid oxide. When you compare that with alkali, I think there's something like 60 companies alone in alkali in China. And the costs coming out of China now, about a third of the rest of the world.

So formidable competition there. When you look at PEM, there's obviously a number -- a high number of players as well in that area. When you look at solid oxide, there's a handful of players. And as we create new licenses, it's entirely feasible we can become the industry standard. And each one of those entering the market, looking to have a significant market share, let's say, at least 20%, you can very quickly get to high market share of the solid oxide business.

So, the model is clear. It's about establishing a global ecosystem of world-class partners. We have three cell-and-stack manufacturers being established concurrently. It's no coincidence that they tend to be at this stage in APAC. It's low-cost, high-quality, world-class in manufacturing scale up.

It's where we see the pattern with things like batteries, EVs, solar, and that's fertile ground for us in terms of where we expect to build a lot of the business capability in the near term. And it really accelerates their market entry for partners by leveraging the continuous innovation and development of our world-leading solid oxide technology. So the business priorities for '25 are pretty clear for us. I've mentioned we're working hard to support partners get to market. So Doosan starting production in the second half of this year is a big milestone for us.

The commercial focus is on building out that partner portfolio, signing additional manufacturing and system partners globally. And we're investing in the commercial activity around that as well. On the EC side, that demonstration with Shell coming onstream will be a big milestone, because I think it's a proof point that attracts other potential licensees into the market. As Stuart's been through, we have continued financial discipline through rigorous cash management. And overall, we remain on track with encouraging momentum as we go into 2025, and we look at significant opportunities ahead.

So, thank you for your attention. And with that, I think we're very happy to take any questions this morning. A -

Patrick Yau: Great. Maybe one there with Ken first.

Ken Rumph: Hi, Ken Rumph from Goodbody.

As you observed, in other respects, you've taken a victory lap on the results. But as a loss-making business, the value depends on people's expectation of future cash flow. And that means, in a way, more than licensees, royalties down the line. And the impact of Bosch is therefore, the confidence you have that someone who's spent hundreds of millions then decides not to go ahead cast a doubt over the whole business. So the question is, what is it in the costs, the business model, the target markets for particularly, say, Delta and Denso, that you think is different that they're effectively in the same time frame zigging when Bosch's act, so to speak? So what would be your kind of summary of why they're going ahead and making an investment when another player who had significant investments and albeit other issues, but in Germany, which is very pro hydrogen, has chosen not to go ahead? Thanks.

Phil Caldwell: Yeah. I obviously don't want to comment -- I can't comment in too much detail on Bosch's go-to-market strategy and business. But I think if you look at the trend and you look at the partners in Asia, I think there's a couple of fundamental things. One is it's definitely a lower cost base for manufacturing, particularly when you consider energy costs in places like Europe versus APAC, et cetera. I think also they do have pretty fertile market opportunities in their own regions as well, as well as the exporters.

So most of those companies are looking to export, but also have a home market. They are world-class in manufacturing. Bosch also has that capability. But I think it's a different approach maybe from an automotive base to some of these other companies in terms of the Taiwanese, for example, very used to high-value, high-production in terms of like the chip industries. And that is probably a bit more akin to some of the work we do.

And you talked about a zig or a zag, I think the Bosch's decision is somewhat unfortunate timing, because I think that what we're seeing is on the stationary power side, we did have some headwinds, I think, particularly around hydrogen in Europe for power generation. That doesn't necessarily make sense. But for natural gas, it makes a lot of sense. And I think with the situation in Ukraine, et cetera, the European market was a lot more uncertain than in recent years. But I think when you look at nations that are energy constrained such as Taiwan, such as Japan, such as Korea, et cetera, this makes -- hell of a lot sense in terms of their needs for power generation.

So I think there's some fundamental differences. And like I said, I don't think we can ignore in Europe the cost base that Asia has, and we talk a lot about tariffs and content. And I use that example of alkali right now. I mean, there's a huge threat to European production coming from Asia Pacific and China. From our point of view, if we want to win in this business, we have to have the best technology provided at the lowest cost and scale globally.

And we're somewhat agnostic to where that happens. So we are -- we follow the market, and those people are clearly -- they believe in a very strong business position to actually win in those markets. So I think, there are some of the fundamental differences.

Patrick Yau: Chris?

James Carmichael: Hi, good morning. James Carmichael from Berenberg.

Just a couple. I guess just sticking with Bosch, sort of for a second. Obviously, unfortunate they've stepped away, but just wondering if that is potentially an opportunity for Delta and/or Denso to maybe accelerate some of their time lines. I guess there's some kit lying around in Germany that is no longer needed. Or is that a bit optimistic? And then maybe just on Shell and the demonstrator project.

Can you maybe just -- you mentioned sort of being commissioning -- it's being commissioned as we speak. Can you just sort of remind us, I guess, what happens next? How long do you need to sort of monitor the data for? And maybe just a bit of color on whether there are people sort of sitting around waiting for that data before they make a decision on that technology.

Phil Caldwell: Like I said, it's not for me to comment on what Bosch does regarding how it exits. But I think your observation is valid. I think, it does create an opportunity for Ceres, because we've obviously lost a significant strategic partner, but in some ways, there have been other companies that maybe would have been closer to Ceres, but we were -- we already have significant strategic partners that is now less of an issue for signing new partnerships.

So I do think commercially it could create some new opportunities for us. In terms of the Shell relationship, the 1 megawatt demonstrator is there to prove out 37 kilowatt hours per kilo of hydrogen production, which is world-class in terms of high efficiency. We already announced last year, beyond this we're working on pressurized modules, scaling up to 10 megawatts and above and we're doing a lot of that work with Shell as well. So I think that's an important part of that relationship. So it goes beyond this first-of-a-kind demonstration into what become the commercial building blocks that allow us to scale.

And that obviously feeds into our licensee partners like Delta and Denso as well as attracting new commercial partners.

Patrick Yau: I think we had a question from Chris.

Chris Leonard: Hi, Chris Leonard from UBS. Maybe two questions, if I can. So I think you mentioned growing demand over the last 12 months from data centers and seeing that end market for power generation growing.

How do you think you guys are positioned to capture that? Will that come through existing partners or do you think that there's other players out there that you can target? And will that maybe -- on the existing partnerships, could that change their time frame? Could they maybe pull things forward? Would that even be possible in terms of commercialization? And the second question, maybe more to Stuart, on the cash burn rate of GBP20 million to GBP25 million, in my head, that might have improved from previously GBP20 million to GBP30 million as a range ballpark. Is there anything in particular that's driven that? Has that been the restructuring? Maybe any change there or any color there would be helpful. Thank you.

Phil Caldwell: Okay. I'll answer the first part of that question.

I think we -- the interest in the power side of the business, including the data center side, I think over the past 12 months or so, you've probably all seen that side of business interest growing significantly. I think one of the things that's not been obvious is a read across the Ceres. Because if you actually look at what Bloom Energy is doing and doing very well, there's very few other providers of this technology out there in the power generation side. Doosan, both in South Korea and also in North America, clearly is also targeting that same market. So I think it's not so much an acceleration, but I think it -- that demand is very helpful.

That pull is needed, because we talked about, well, why didn't Bosch go ahead? Maybe they didn't have that pull at the time in Europe, but I think that's clear now -- it's a clear signal coming from the market. So first of all, we want to get product out there with existing partners, but I do think it's a big opportunity. So Delta, it's another target market for them. They make a lot of equipment that already services the data center market. A lot of their power management equipment, et cetera, goes directly into that.

And what's really good about them is that we're already in that supply chain. They're already selling to those customers, et cetera. They know them very well. So I think we will see new entrants coming into that. And I think it's part of the business that we do expect to grow actually, which wasn't the case a couple of years ago.

There was a lot of sentiment away from power generation using natural gas and fuel cells. But now I think it's swung back because it -- just to remind people, it's more efficient than generating it from a centralized gas power plant or a peaker plant and also lends itself very well to carbon capture as well, because you end up with a much more concentrated stream of carbon off the back end, which is very, very straightforward to capture. So it does have a very strong offering for those markets. Stuart, do you want to take the cash burn?

Stuart Paynter: Yeah. So from a cash burn perspective, GBP20 million to GBP25 million, if we sign one licensing deal, we've said that we've built the cost base for.

I think, there are a few variables in there. One is around timing and milestones and payment dates and those sorts of things. So it's not an exact science. But what we do know is from the restructuring point of view, we're targeting about 15% of our costs. And we're confident we're going to deliver that.

So if you look at that cost ring, you take out the cost of goods, the rest is up for grabs. So that's going to be sort of high single digit, maybe low double-digit millions of pounds in terms of cost savings one year to the next. So yeah, I mean, from a discipline point of view, we know that we need to manage the cost base to maintain the technology lead, which Phil said, and to be able to invest in the commercial side, but minimize all the other areas of spend and just be very efficient.

Unidentified Analyst: Hi, good morning, guys. Thank you very much for the presentation.

Just one quick question from me, kind of following up on the cash flow point, Stuart. I noticed that there's a GBP15.7 million working capital outflow in '24 due to some payments being received in January and not dropping in 2024. Should we expect that working capital outflow to then unwind in 2025? How do you look at that?

Stuart Paynter: Yeah. So we expect revenues to be broadly similar from 2024 to 2025 contingent on signing a single deal. So that will unwind a little bit.

We were slightly -- unfortunately, we received quite a lot of cash just after the year-end.

Unidentified Analyst: Okay. Perfect. Thank you very much.

Skye Landon: Hi, good morning.

Skye here. On the 2025 revenue guide of broadly similar to '24, that kind of implies low 50s. But with the GBP5 million shift from GBP24 million to GBP25 million, it kind of implies high 40s. So I'm just kind of wondering if you can break that down a little bit more for us, for example, how much relates to new license partnership deals, if any, how much you factored in for royalty revenues, if any?

Stuart Paynter: Yeah. So I mean, we tried to provide some visibility on that slide that you saw where we broke it down over the three-year time period.

I mean, you sort of answered your own question slightly there, Skye, because the GBP5 million that moved, the license fees are chunked down to -- into sort of milestones. And so as milestones can move between years quite easily, as you saw, there's a GBP5 million move from '24 -- between '24 and '25 that happened. And so whenever we've got these milestones accruing quietly at the end of the year or at the beginning of the next year, they can move between years. So what we've just tried to do is say, look, broadly similar, given all of the milestones, and given all the opportunities we see in front of us, we expect it to be broadly similar with a number of moving parts. So we'll give more guidance and hopefully more clarity at the July interims update.

But we just wanted to give some indication that the pull-through from the two deals we signed in '24 should give a nice smooth sort of revenue profile for the next year.

Skye Landon: Maybe I'll rephrase it and try and be a bit more direct. I've got GBP37 million in my model for existing partnership revenues in '25. So that would kind of imply GBP10 million on top of that from your guidance for new partnerships. Is that fair?

Stuart Paynter: Well, we're saying broadly similar.

So we're at GBP51.9 million, broadly similar. It's about the same. So I mean, we're happy to give you some individual sort of advice looking at your model. But we don't all seen your model.

Skye Landon: Fair enough, worth a try.

Then Doosan, Delta and Denso, presumably, you've been having conversations with them post the Bosch announcement. What can you say around those conversations? And what's their reaction been?

Phil Caldwell: Well, obviously, as you would expect, they're pretty private conversations with the senior management in those organizations. But broadly speaking, business as usual. No issues at all. Doosan are head down, moving towards our production milestone, and we're supporting them in that.

Denso is at an earlier stage, different market, EC, not FC. So they're not really affected by that decision at all, and maybe it is an opportunity. And then Delta, what's encouraging about Delta is they're very commercially focused. They're building out demand. They're seeing demand ahead of time.

And they have a different way of doing it, let's say, than other partners. So they're very much focused on the market and create that demand and then build the factory accordingly. And I think that's all very positive as well. So there's no negative impact at all. It's business as usual.

Skye Landon: And is there any chance of those guys taking the Bosch stake?

Phil Caldwell: Look, that's not for me to -- you'd have to ask them.

Patrick Yau: Okay. Let's just take a break from the room. We'll come back for any final questions in a moment. But there are some questions that have come through from our online audience.

So firstly, Phil, you've talked a little bit about potential for partnerships in Europe. What about the US? What are your thoughts about the opportunities there?

Phil Caldwell: Well, I think as everybody realizes, the US is somewhat unpredictable at the moment. And I think the landscape certainly on the green hydrogen side has become very challenging right now. So our focus in the US will be a lot more focused on the power generation side, which is absolutely clear as an opportunity. And it's not going to be a big growth market we anticipate near term on the green hydrogen side.

So that's how we're seeing that side of the business. That's a different story, obviously, on the green hydrogen side in Asia, which is still very much on a growth trajectory. So...

Patrick Yau: Are there other territories where we see opportunities for the business, either in power or in hydrogen production?

Phil Caldwell: Yeah. Look, we're taking a global approach.

We're -- it's hard to think of an area that we're not active in or at least having those early engagements in middle East, North America, India, APAC, China. So I mean, that's the whole point about this business model, is we will go where the market is because we're not locked into a manufacturing facility in a particular region subject to restrictions and tariffs or cost bases, et cetera. The diversity of this business model does mitigate some of the challenges maybe traditional pure-play manufacturers have right now as policy shifts. I mean, if you were building a factory in the US, you've probably seen people canceling those as well. I mean, it's in the public domain.

Bosch has canceled a factory there that was going to be expanded on their side of the business as well, not with solid oxide. You've had other green hydrogen players planning things around IRA and then canceling them or pausing them. So with our business model, we can go wherever that demand is. And that's what we do. We follow the market.

Patrick Yau: Great. One that's come in on technology. What differentiates solid oxide from the cheaper Chinese alkali technologies that are available today in electrolysis?

Phil Caldwell: It's really efficiency and OpEx. And it's not just the efficiency of the unit. So look, there's a lot of data on this now, and you can question Chinese quality, but it will get better.

So you will have a lower CapEx on the alkali from China, for sure, and that's problematic versus other suppliers. But then, if you look at the OpEx side, your alkali is 50, 55-kilowatt hours per kilo of hydrogen whereas we're around the 36, 37 kilowatt hours. So that's important because it's about 30% reduction in your energy consumption, your OpEx, but also 30% less needed of your upstream power of renewable supply into that or to an upswing of -- if you have that renewable asset, 25%, 30% more production from that asset. So you have to look at the whole economics of the thing. It's not just the CapEx cost of that electrolyzer unit.

The efficiency drives a really attractive business case for levelized cost of ammonia, levelized cost of steel, levelized cost of hydrogen. And that's why a lot of players are starting to add solid oxide to their portfolio.

Patrick Yau: All right. A couple for you, Stuart. Firstly, can you recap the order intake for '24 and give us a bit more color on when that might materialize? Is that going to be over the next two or three years or beyond?

Stuart Paynter: So the order intake was just north of GBP110 million.

That is all orders taken in '24. As you saw from the slide we put up, we'd expect the orders which largely made up of Denso and Delta in that order number to accrue over the next sort of 36 months in the sort of percentages we've listed there. So about 50% of that order will turn into revenue in the first 12 months and then 25% and 25%, roughly.

Patrick Yau: Okay. And do you have a sense of when we might expect to see royalties from Delta and Denso? Again, do we have any thoughts about where the applications or end uses might be for those royalties?

Phil Caldwell: I think with Delta, we've already mentioned.

I think their original plan is to have something by the end of '26 or into '27. The first products they're targeting are FC and then, EC after that. Denso is EC, so not FC, and signed later. So it's behind Delta in terms of that typical kind of cycle that we described here.

Patrick Yau: Thank you.

Last one, just on cash position. Are we comfortable where we are with cash as a route into the part of profitability?

Stuart Paynter: Yeah. So we were carrying just north of GBP100 million at the end of the year. And as I mentioned, we had some cash inflows in January, which pushed up some working capital movements. So yeah, I mean, the answer is we're comfortable that we've got the cash to see us through the next phase of the business given what we see in front of us and the opportunities from a commercial perspective to get to that royalty-generating sort of sustainable business that I laid out on the very colorful slide that gave the outlook for the next few years.

Patrick Yau: Okay. Thank you. Let's return to the room. I think, we had a couple of questions from Ken and Sean.

Sean McLoughlin: Hi, Sean McLoughlin at HSBC.

Just the -- your confidence in the new licensee in '25. Obviously, your guidance embeds that. So just to understand really the confidence that, that will happen in 2025, contingencies around that. What might the guidance actually look like with no new licensees?

Phil Caldwell: I think, it's as Stuart laid it out. I mean, if you look at the typical profile, and I think we already covered it in one of the slides, a typical licensee will add around GBP20 million or so in the year.

The -- we -- it's early on in the year. It's very difficult to give guidance at this point. Where was that slide? That one. But the thing with these deals is, they're large deals and timing is very difficult to predict. So we're building the portfolio, building the pipeline.

And then, I think, what's important about them is, once you land them, then they are taking that market share and building that royalty. So they obviously have a near-term impact on cash. But actually, probably what's more important about them is the potential market share that they can take on the royalty path as well. So it's -- confidence levels at this stage in the year, we have a number of opportunities ahead of us. As the year goes on, we can give more guidance.

We're not a company that's selling hundreds of thousands of units, but we are selling large corporate deals. That's what we do. And we sell them their investment cases to businesses that then, on the back of that, are investing in factory builds and several hundred millions. And those kind of deals are complex and they take time. And because of that, they're hard to predict.

But when you land them, it's that long-term partnership.

Sean McLoughlin: And just thinking around the expansion of the commercial side of the business, so in order to effectively accelerate that whole process. I mean, it's clear that 2024 was a great example of how that is already working. Would you say that you are at a level of the commercial base that you need? Or is that an area that you would need to expand further?

Phil Caldwell: I think, we're at a base level. We're adding a little bit to that this year.

We brought on a new Chief Commercial Officer last year, and he's got plans of how he wants to develop that regionally as well. So we're carrying out some of that now. I think, also -- we're also realizing that we also need to address both sides of this market equally. We've had a big focus on green hydrogen over the past year or so. And now we're starting to see different kind of market dynamics coming out in power generation.

And for that, you sometimes need different skill sets and different experience. So we're looking to add some of that capability as well.

Sean McLoughlin: And last question, if I may. Just with this pivot, I guess, towards the higher commercial cost, at which point will that need to pivot back to R&D to ensure that you have a next-generation platform to kind of -- to keep those conversations more active?

Phil Caldwell: No, I don't think it's a pivot back. I think that when you look at the breakdown of where our investment goes, the majority of our 500 or so people are scientists and engineers, et cetera.

So we have a very strong technical leadership basis in the business. That's not temporarily being staffed or resourced while everybody goes off and -- it's commercial. They're very different people, as I'm sure you would probably appreciate it.

Stuart Paynter: And when you look at the restructuring we did at the end of last year, we -- as a licensing business, understanding we need to be the technological forefront of our area, we have costed that with the right resource, the right levels of people, the right skills, the right experiences to generate that technology leadership. So what you're seeing here, the biggest spend in '23, for example, was the very, very heavy lift of proving out the fuel cell in hydrogen, which is now done.

And now we're into lifetime and cost management, which is the two primary areas of focus in R&D now. We're trying to get longer life out of the cells and we're trying to engineer cost out of the sales, because that's going to make the biggest difference to our commercial teams.

Patrick Yau: I think we've got time for one more question. I think it falls to you, Ken.

Ken Rumph: Sorry, Ken Rumph from Goodbody again.

Okay. On the two kind of programs, a year ago, you were saying that the kit was in Bangalore or Hyderabad or wherever it was in India with Shell. What's kind of taken a year for them to get going? And secondly, what's going on with Linde and what's the sort of progress there?

Phil Caldwell: Yeah. So the whole commissioning and everything just takes time. It's literally day-by-day, I guess, almost waiting for news imminently.

But that's, we're now in the hands of Shell. Because it's really Shell doing a lot of the commissioning or the safety sign-offs, all those checks, et cetera, very rigorously. So it's not -- there's not been any technical delay. It's just how long it's taken. But I think it's imminent.

There's no news currently on the Linde side of things. We are obviously developing the next-generation pressurized modules, et cetera, And that's what's anticipated to be going forward there. So there's no new news on that at this point.

Patrick Yau: Great. Thank you very much, ladies and gentlemen, for your attention and for your insightful questions.

I think, it's been an interesting conversation. Let's draw a line under it there and say good day to you. Thank you very much. And also to you online, thank you so much.

Phil Caldwell: Thanks, everyone.