Ceres Power Holdings plc

Good morning ladies and gentlemen and welcome to the Ceres Power plc interim results investor presentation.

Throughout today's recorded meeting attendees will be in listen only mode. Questions are encouraged they can be submitted at any time just using the Q&A tab situated on the right hand corner of screen. Please just simply type in your questions at any time and press send and for those in the room we will provide you a microphone for the Q&A. Before we begin we'd like to submit the following poll. I'm sure the company would be most grateful for your participation. I'd now like to hand over to Phil Caldwell, CEO. Phil, good morning.

Good morning everybody and thank you for joining myself and Stuart for the interim results up until 30th of June this year. I'm very pleased to update you on quite significant progress I think the company has been making. Just to remind you, the growth story of Ceres is built upon three strategic pillars. Signing new manufacturing licenses, that's all about growing market share and establishing this technology as the industry standard. Once we have those partners, accelerating them to market and scale up and getting into the market is obviously increasingly important. and then obviously as a technology business we have the single stack technology platform which is Endura which we launched earlier this year and that's really the platform upon which our partners are scaling and making significant investments as we go today. The first half of the year we've made what I would say considerable progress I'm very happy with where we are on the pipeline. We've continued to grow that in all regions and we reiterate our guidance. We remain confident that we're in a good position to sign a new licensee this year. Once we have those partners, we're obviously focused on our existing partnerships as well and there's quite a lot of activity going on with those partners. With Doosan in South Korea, they signed their first export order which is around 60 million supply stacks to a variant in Germany. Delta in Taiwan are continuing to put in the first initial production and have also announced plans for a new facility in Guanyin in Taiwan. In China, Weichai are going extremely quickly and they're targeting first production later this year, early next year, and have announced 200 megawatts by the end of the year after, so within two years, incredibly fast. On the hydrogen side, Japan with Denso, Denso have received 165 million in government support so we're continuing to make progress on the hydrogen side but our near-term priority is really on the power system side. Earlier this year we also signed a partnership with Centrica here in the UK that's more of a channel partnership where we aim to bring in technology into regions like the UK and Europe from our manufacturing licensees. and I'm pleased to say Sensco is already starting to develop their own relationships with our supply chain as well. So that's incredibly important for us as we match up the demand side with the supply side that we're building out in this ecosystem. I mentioned the single stack technology platform Endura. That's our flagship solid oxide stack platform. That's the culmination of many years of not just research but manufacturing and engineering. And it's really the building block now as people scale factories. We're not going to be changing that every year. It's all going to be about improving lifetime and cost. and CapEx of factories as people scale. But that gives them the confidence and we think that is the leading stack platform out there. On top of that, or underpinning that should I say, we've reinforced the business. and in the first half we took the opportunity to continue with the business transformation which we undertook last year which is built around these three pillars of focus and that's continuing to deliver an optimal cost base I think. Following years of significant investment we're now at that execution stage and Stuart will talk more about the financial performance in just a moment. and we also reinforced the balance sheet with just over 100 million in an oversubscribed equity issuance earlier this year. That's really important for the business because as our partners are making significant investments and scaling, it's important that they realize that we're here in a very strong position to support them as the technology provider of choice. Just a very quick reminder of our strategy. We are 25 years old this year. We believe we have world leading technology on solid oxide. That's transferred to partners now through the Endura Stack Platform, which we launched earlier this year. But it's not just a stack platform. We also provide the factory blueprints and also have relationships now with line builders, factory builders who can help our partners get into market quicker and easier. That technology platform, the Endura, has two functions. Running in one direction we can generate power, running in the other direction we can generate hydrogen or synthetic fuels, as is the case with Reverion. The urgency right now is on the power side and we have Doosan in South Korea, Weichai in China, Delta in Taiwan, all either in production or imminently coming into production and scaling. On the hydrogen side we've been working for a number of years with Shell as a channel partner but our licensee partners are Denso who are making good progress and Delta also has the dual license as well and we work with Thermax as a systems integrator in India. So one platform, intentions global factories and partnerships. Just want to talk a little bit about the demand for power. I think many of you probably are seeing this or familiar with this. but there's two things going on here one is the demand for power has never been greater and that's got pretty acute because conventional power generation equipment is in short supply if you want to buy a gas turbine it's five to seven years lead time if you think about nuclear it's into the next decade if you think about waiting for a grid connection not just in the UK but in many countries now it's at least five years and up to a decade Now the time to power creates a window of opportunity for us. I believe that we have about a five year window to get into this market, establish this technology and get down the cost curves and scale the supply chain. Part of that is time to market. It's all about time to market. Our first factory that we did with Doosan took us around four years around the COVID time. Current factories that have been built around three years, The factories that we currently have now, the last factories we signed with the likes of Weichi, are on track for about two years or less. That's because we've standardized the Endura, we've built factories several times over, and we've actually now got partners who can actually, when we sell a license, we can actually bring into view and help people lay down production pretty quickly. So two things going on. Time to power is acute and waits for conventional power generation has got longer and our ability to get people into the market is getting faster. So why do we think that the Endura platform can win in the power market? Well I've just mentioned the first factor which is time to power and I mentioned this window. However it only works if this technology is cost competitive and right now we are cost competitive with conventional power generation. There are thereabouts. Now, with time, there's going to be more supply, I think, of things like turbines, resips, etc. And they'll start to come cheaper again. But I think where we are with solid oxide is we're only at the beginning of that scale-up journey. And the costs are going to come down with scale, with supply chain, with localization. We're cost competitive now and I think in the future. If you look at the attributes of this technology, it's predominantly steel. The rare earths we use are commonly available. We're using equipment that's come out of standard chip manufacture, PV manufacturing. It can scale rapidly and there's no reason why we can't get down these cost curves, particularly with the manufacturing partners that we've already signed. But then I think there's another story to this, which is what gives solid oxide the right to win in the long term? And if you actually look at this from the other factors that are coming on in terms of power generation, The first thing is permitting. So just because you can build power doesn't mean you should build power or you have the right to build power. And you're probably seeing it in the news. There's a lot of resistance to new data centers, for example, being built, particularly in the US. And we're seeing power generation, what we call behind the meter, on-site power generation, In some cases, contracts that were won by conventional power generation, like turbines, like resips, are actually now being flipped over towards solid oxide. Why is that? Well, first thing is almost zero water usage, which is becoming critical in many regions, as we've seen this summer. Things like lower carbon to zero carbon when you combine it with carbon capture. No combustion means air quality, so there's no socks, no knocks. It's virtually silent, which means you can put it in buildings, you can locate it close to urban centres, etc. And because it's behind the meter, there shouldn't be an impact on local power prices as well. So actually, this technology is a better technology from a sustainability point of view, and that's becoming more of an issue with permitting. So if you have a technology that can be delivered in the right time scale because it's modular and coming out of factories, it's cost competitive and aids permitting, solid oxide becomes a permanent part of that energy mix. So it's not just a passing thing because we can't get conventional power generation. Then I think the other thing that's interesting is when we think about conventional power generation, It's AC based, it's alternating current. And that's because it was developed in the last century for the economy we had then. If you look at our economy now, it's more computing, it's AI, it's electric vehicles. A lot of that infrastructure is DC based. And we're seeing companies like Nvidia pushing 800 volt DC architecture. The good thing about fuel cells is that they're DC native. That means they actually generate DC power. That means that you can, first of all, they're more efficient. So you can save about 5% as NVIDIA's view in terms of the efficiency of going from AC to DC in a data center by being DC direct. It's high voltage lower current, which means you're saving on things like copper, you're eliminating things like switchgear, transformers, etc. And you can also get more power into the rack, which is going to be a key feature going forwards. So as well as the permitting, the 800 volt DC compatibility is going to become more and more of a potential requirement from about 28, 29. So the way I see the whole thing is the windows opened up now, First buying criteria is always going to be cost and time to power. But then permitting comes along and then also future proofing for 800 volt DC. So the Endura platform meets all of those requirements. This is Sarah's view of the market. We haven't changed this. We think it's about a 22 gigawatt opportunity by the end of the decade. There's a lot of interest obviously right now in things like data centres but that's about 50% of the market. We're also seeing a lot of interest in industrial applications, commercial buildings and also shipping in the future. Regionally, obviously the US is the biggest market right now. But when you look at the rest of Asia, that's 50% of the market, Europe, etc. So we see this as a global market. This is not unique to one particular region. Just going on now to what progress our partners are making. I mentioned earlier Doosan making progress with their first contract for stack supply with Reverion in Germany. Reverion is an interesting company because they have a truly reversible system using our technology so they can generate power in one direction When they don't need that power they can actually generate synthetic methane in the other direction so you have something that can arbitrage if you like and work on both sides of the energy mix. It's an important milestone for Doosan because it's their first export contract for SOFC. I mentioned Delta, the first production we're busy with now right now in Tainan so that's a 2026 production facility They have announced this year a brand new facility in Guanyin in the north which will house the scale of the mass manufacture of the solid oxide as well. So Delta is obviously a key customer for us, very big already in the ecosystem of data centres and has the strength and the ability to scale fast. We signed the partnership with Centrica earlier this year. That's all about bringing in this technology into markets where we've got the right kind of festival spark spread in terms of the opportunity for localised power generation and also the need and we have that in the UK in terms of the time for grid connections etc. There's a lot more detail on this. We published a joint white paper with Sensica just last week and that's really got a lot of interest particularly for end users for Sensica as well. But that's also well worth looking at. And it's not just about us. Our role here is to facilitate the ecosystem so we've introduced Sensica to all of our partners. Sensica signed the first Agreement with Delta and that's really targeting data centers and other energy intensive industries in the UK and Europe as well. WeChi are going fast. We've been working with WeChi for a long time on system. They haven't launched their new system yet but it's pretty impressive and they're looking to sell that through a subsidiary Padawan in Europe at 600 kilowatt SRFC systems so at some stage I hope later this year this will be launched and announced but that's they have a lot of experience on the system side and obviously now they're scaling up on the stack production side as well. That's on the power generation side. I want to also just reference our progress on hydrogen. I mentioned Denso. They've continued to develop the SOEC technology. They've had big government backing in Japan. That's continuing. We're very happy with progress there. our partnership with Shell on the demonstrator continues to exceed expectations and we're looking at now the next version of that which is the pressurized SOEC which we're doing in combination with Shell but also looking to test that in India with Thermax our EPC partnership there. I think that what we're seeing on the hydrogen side is obviously India is a big Big market for the hydrogen side, but we're also starting to see growing interest in China as well. So we continue to develop this technology because we are starting to see some demand for the SOEC. What do we think this market looks like? About 38 gigawatts, but that's a 2035 number. I think the easy way to think about this is near term between now and 2030, we think this is a power generation market. but if you're scaling Endura and you have the production, you're positioning yourself I think for the hydrogen market which follows end of this decade and into the next decade. So I think it's an important future value creation for us and our positioning is good because all the work we're doing on the stack in terms of power generation scale up supply chain, et cetera, it's the same stock technology that services the hydrogen market in the future as well. and as I mentioned at the beginning it's all about becoming the industry standard for solid oxide so that is building out this ecosystem. We have the four manufacturing partners we talked about already and the systems and channel partners in terms of Sensco, Thermax and Shell. So that's a brief overview of where we are strategically. I'm very happy with the progress to date and now I'll hand you over to Stuart to talk you through the financials.