Invinity Energy Systems plc

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 can be submitted at any time by the Q&A tab situated in the right corner of your screen. Simply type in your questions and press send. The company made it in a position to answer every question it received in the meeting itself. However, the company can review all the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you up to Larry Zolch, CEO. Good afternoon to you, sir.

Good afternoon. Very good to see all of you today or not see you, but to be able to talk to you about our 2023 financial results. Many of you have seen variations of this slide before, you know, Infinity well. So I thought it might be most useful to mention two events that I attended in June. The first was the Long Duration Energy Storage Council's annual meeting in Washington state. And that's where the long duration energy storage providers generally come together to discuss the market opportunity in front of us. The second was the International Flow Battery Forum in Scotland that just concluded last week. And there, everyone in flow batteries from beginning to end are presenting and talking about the technology and the opportunity. These are two quite different sessions. The first one characterized by companies with offerings on the market in a variety of different technologies. The second, all about technologies based on flow, on flow batteries, such as Infinities. In both cases, what was very interesting to me, and I felt... almost a certain humility in the sense that Invinity was clearly in the lead in terms of our product offering in both cases. We were with peers who also have and you could call them competitors but the truth is our competitors are lithium batteries what we could see was we have been making great progress i'm proud of the team for that and we have a ways to go that we are in progress on as well so for all of those reasons um my confidence in the opportunity in front of us continues to grow the stability of our product and the product plans we have is uh very encouraging And my optimism about our company has been growing from, and already, as those of you who have heard me before know that I'm positive and have reason to be positive, this was further support of that. So, Infinity has been making great progress, and we're here to tell you about some of that. And for that, though, I'd like to start by talking about what we've announced recently, our 2023 results. and turn it over to Jonathan Marin, our CFO and chief officer of, and I'm always saying the wrong thing, but he is our chief development officer and has been instrumental in many aspects of the progress that we've been making over the last year and a half.

Jonathan. Larry, thank you very much indeed and good afternoon everybody and I'm delighted to be here today presenting the 2023 results. There are some noticeable changes from when I gave this presentation last year and I think I'll just highlight maybe on two of those. The first is a very sizeable increase in revenue from last year and we'll touch on that obviously in a bit of detail in a moment and also that we announced a clean going concern statement from the auditors. Both are incredibly important from going forward both give credibility to customers and suppliers and show that we're really making good progress and note we had new auditors this year so you know there was a very thorough process which those auditors went through no stone unturned and it's one of the reasons why our results are out towards the end of the period and also that obviously in the first half we were focusing on the fundraising but it is a name of ours to get those out sooner but we're very pleased with what we have presented last week. So looking at the top line there, a 511% increase in revenue, in total income. That was marginally ahead of the guidance that we provided slightly in the year by 400,000. And trading overall was in line with those forecasts. that was driven by an 800% year-on-year increase in product shipments. And so whilst it's clearly delightful to see the financial aspect of that coming through, that does very much point to the operational ability of Invinity. And when you look forward to our future projections, it is important to realise that we are shipping a significant number of products through our factory and through our operations at the moment, and therefore that we have sort of started to demonstrate that we can scale that business. From the commercial side, during 2023, we signed 136.7 megawatt hours of orders. Those are for signed or awarded funding in 2023. And those are for deliveries this year and next year. And again, that's a sizable increase on what we'd achieved in 2022. And that does include 100 megawatt hours of mistral orders. from a commercial pipeline perspective uh matt will talk about a little bit more about that in in the meantime but again a substantial increase when you look at a year-on-year increase from where we were sort of roughly this time last year now we're still recording a loss from operations and that has grown uh by about three million from last year when you look at that that is almost entirely due to an increase in the gross loss in 23 versus 22 but that does relate to two projects which we signed quite a number of years ago and that we'd flagged at length were in a loss-making position. We signed those, if you recall, to prove that we could get substantial product to market and demonstrate the supply chain or our operational abilities. And I think you've seen that come through the benefits of that in the other projects which we have signed. And all those others were flat or small positive gross margins at the project level. And I know there is a question coming on a little bit later as to what we mean by that. And I'll cover exactly what I mean by that when we get to the questions. We have managed to reduce cash outflows and that really was as a result of an improvement in the working capital position and admin costs were unchanged broadly year on year. We are debt free and we finished at the end of May with cash of 53.2 million, substantially increased from the position in the prior year and of course that reflects the recent fundraiser which was cornerstone by UKIB. So just giving a little bit more detail on that, That revenue growth came from shipping projects, 15 projects across Australia, the US, Canada, the UK and Europe. And I think when I take a step back and I consider the size of business we are and where we are sort of positioned in this clean tech space, that is quite an extraordinary achievement. And I think it's difficult to look at anyone of sort of our ilk who's managed to deliver projects across that number of continents and book 22 million of revenue. And when I take a step back and consider how that has changed over the last couple of years, it is substantial progress. The significant contributions came from Elemental, Spencer Energy and of course the Viejas Casinos project in the US, which is being commissioned and installed at the moment. We talked about the majority of that loss relating to 2022 projects. The staff costs number has increased as a result of investment in headcount. People are the core to this business across the entire organisation. We touch on a very sort of, almost heavy duty manufacturing to an extent with lots of sort of steel running through factories. Equally, we're doing a lot of high-tech development and people are key to that and we will continue to invest in them for the benefit of the business. On the R&D side, you'll note there's actually a sort of net income position from R&D. That's because of recoveries from Gamesa Electric under the joint developments and commercialisation, we have agreement with them under Mistral, and that's an improved performance on last year. I've lumped professional fees and other admin expenses together. You'll see there's a net decrease there of 1.3 million. The movement between those is really a reallocation between years, but the overall net increase, a net decrease of spend of 1.3 million really does sort of point to the focus on keeping non-essential expenditure down to a minimum. And I say to those, anyone who knows me, I do really dislike signing invoices off and I will continue that thought process. That doesn't mean that we don't invest in R&D, but when it comes to paying sort of unnecessary fees where we can do things better, I will do my best to make sure we do that. And then critically, no P&L charge for onerous contracts. That is a position where we talked again about margins moving towards positive. That means we've got no provision booked in this year. From a balance sheet perspective, the large inventory position you saw at the end of last year was a result of us delivering very shortly into 2023 the projects in Australia and Canada. When you look at a net basis across the year where you take account of not just inventory, but also amounts owed to suppliers, deferred revenue, And any owner's contract revision, there's actually an improvement on the balance sheet, small improvement from 3.2 million to about 3.6 million. uh from a net cash position uh last year we still had the river fork facility in place at the year end uh that was two and a half million dollars um that has obviously been repaid in the year and that gives us a net cash position of 53.2 million at the end of the year now that last bullet point is quite important because there's been at least one or two comments which have been reported back to me that um given the size of the fundraising that if our cash balance has moved down to that level that must be a reflection of our opex spend That is not the case. We did manage to work with our suppliers through the first half of the year to ensure that we could continue building inventory and building product, looking at this year's revenue. So the fact that that balance has come down is because we have settled those balances and then continue to work with those creditors to build that up. So you don't see that in these numbers other than that one isolated position. So with that, I will hand over to Mary.

Thank you, Jonathan. So I mentioned that we were in a lead position in both of the conferences that I attended in our industries. This is the reason why these series of accomplishments that we've done that Jonathan referred to. It shows a great deal of dedication, hard work. Of course, I'm not going to take you through all of this, but I'm going to point out one month. The month of September, 2023, we got our first Mistral order. That's amazing. And I call it amazing because it was not yet an announced product. And yet they were confident enough in what we were able to show them that they put money down, signed a contract and said, this is the future. And they're right. And then to further support that concept, U.S. Department of Energy also awarded funding for Mistral projects. further corroborating that concept that we have the right product focused on the right market. Talked about our half year 23 results, which were impressive and led to the numbers that Jonathan just went through. And we also took the largest flow battery in Canada and at the time and still to this day, the largest flow battery in North America took that live. And I will tell you, since then, it has been making money. It's been trading very successfully. One of the areas where our product is differentiated from lithium products is the ability to operate in a continuous fashion, including multiple cycles during the day, whenever the opportunity presents itself. This is a merchant trading opportunity or merchant trading battery. They take the energy that they have. They get it from solar. And then they use it to either stabilize the grid or to sell it into the market when the prices are favorable. That kind of very flexible use of our batteries is a hallmark of what we do. All of this is an indicator of the direction of travel that Infinity is taking. But let's be more specific. And I'm going to turn it over to Matt to tell us about the commercial activities in front of us.

Thanks very much, Larry and Jonathan. We've talked in the past few minutes about the financial success of the company over the last year and the operational success of the company over the last 17 months. What I am most excited about is not the success that we've seen looking forward, but the success that we've driven that will see the company grow and build in the future. And that's the success in delivering to our customers. And what we've seen over the last six months of last year is that we have delivered the largest flow batteries in all of the jurisdictions in which we operate. We have come to the forefront of what is a recognized need for long duration non-methium storage solutions for the grid the world over. And because we are delivering, we are painting the way for a tremendous amount of growth in the company in the future based on delivering to happy, profitable customers. What you see on the left here is the most recent delivery that we've just executed. This is our 10 megawatt hour project to the Viejas Resort and Casino in Southern California. At the top right, you see the two largest projects that we had delivered midway through last year, which was the 8 megawatt hour project to Australia and the 8.5 megawatt hour project in Canada. And then some of our smaller commercial and industrial projects into Europe and into Asia. Because we are delivering to our customers and because that's giving our future customers tremendously increased confidence in our ability to serve their needs, what we've seen over the last year is a huge uptick in our commercial pipeline. You'll recall that when we talk about our pipeline, we talk about it in a couple of different categories. Qualified deals are ones where we have confirmed that there is a need for the product, that there's money to pay for it, and there's a reason why our battery is going to be the right fit for the project. If those three characteristics aren't there, we don't include them in this group. We've seen a number of companies in our space over the last few months who have stumbled because they have announced projects for which there were not those three different characteristics, and they've had some negative impressions of their companies and of their share prices because of that. We don't do that. We are very, very explicit that we don't put anything into this group unless it is a real opportunity. As deals progress, we move them into what we call our advanced category. This is where we've been selected as the provider for a particular project. We had a couple of very exciting movements over the course of this spring where some operating our batteries have come back with projects that are orders of magnitude larger than what they had previously contracted for. And so that's driven a very big uptick in that advanced group of the last year. And then finally, our base category, those are the deals where we are in final contracting. We call it our base because those are the projects that we are basing our business on. We are reserving working capital, we are reserving production slots, and we are in the sort of the final stages of negotiating the commercial details of those projects, pushing them towards close. Underlying some of these numbers are a couple of interesting points that I would draw your attention to. We are focusing more and more of our direct sales pipeline on key markets, North America, the UK, some of the EU, and then working with some of our partners to explore those non-core markets, especially in Asia. One of the things that we've seen, especially as we are gaining more credibility in delivering these projects, customers are looking at us as a potential supplier for much, much larger opportunities. The average opportunity size in our pipeline now is over 100 megawatt hours, which is great for us because it means that we can deliver much more efficiently, at much better scale, and ultimately at more competitively and at lower cost. The other thing I would flag is that there's nothing in this pipeline that is originated from Siemens Gamesa. You all know that they are our development and commercialization partner for Mistral, and we ultimately will be selling alongside them into some of these key markets. but nothing in their sales pipeline is included here. We have presented alongside them a number of times over the last year. We've attended trade shows alongside them, and their sales team is getting extremely excited about the potential that is embodied in this product. And once we get through the commercial release that we expect to get through with them later this year, that number is going to go way up and that those sales that they have originated will ultimately become part of our broader pipeline as well. So moving beyond the numbers a little bit, if we look sort of around the world at what's driving some of this interest, it's Really, it differs a little bit by region, but the themes are all the same. It's all about further integration of ultra-low-cost renewable power. It's all about domestic energy security. And it's all about the need to drive domestic jobs around that energy security point. In North America, a key driver primarily has been the Inflation Reduction Act, And we are working very actively with some of our partners to make sure that we can meet the Made in America stipulations under that program. Good thing being that, as we're showing in Motherwell that Jonathan will talk about in a moment, we can spin up new manufacturing capacity fairly easily. And so we think we'll be very well positioned to deliver into North America over the coming period. Over in the UK, primarily all the conversations that we're hearing are around energy security, making sure that the UK's energy needs are being served by domestically produced energy, not imported gas, not imported electricity. Very similar story in Europe. That's a market that especially as we gain more traction and advance our relationship with Siemens Gamesa, we think that opportunities there are going to grow significantly for us. Over in Asia, the primary driver is all around eliminating Chinese-based products from the supply chain. Japan, Taiwan, Korea, all of those are markets where we've got tremendous interest from existing and potential customers. All of them want to make sure that they don't have critical infrastructure being provided by a nation that could be potentially unfriendly. Finally, down in Australia, we're very excited by some of the developments down there. What's notable about Australia is that they have one of the world's largest proven reserves of vanadium. So again, that theme around the domestic production of energy sources for the energy transition, where you've got a country that has a tremendous amount of that resource at hand, that's something that they view as a huge strength of our products in that market. So just to touch briefly on one final point, we can't be everywhere all the time, but there are, as you see on this slide, enormous opportunities around the world that we want to be able to address that we need to be at the forefront of with our products. If we're going to be, if we're going to have the kind of success that we want to have on a global basis and the strategy that we've been evolving over the last six months in particular, and really 18 months in general is one where we focus on core regions, primarily the UK and North America. We retain the manufacturing capabilities that we already have. We have direct commercial engagement in those markets because we already have significant presence, significant traction, and the ability to drive a lot of deals in those regions directly by our existing team through our existing capabilities. Outside of that, what we've been focusing on is developing what we're calling our license and royalty model, which is a way of making sure that our products can be at the forefront of serving markets like Taiwan, where we are advancing our partnership with Everdura, for example, but at the same time not have to have the kinds of boots on the ground and the kinds of manufacturing capacity in the country ourselves that could take years for us to develop and that could take a lot of our working capital to put in place. We will always maintain a very tight hold on our core intellectual property, particularly in our cell stacks and in our core materials and in some of our control systems and software. But outside of those, it makes a lot of sense for us to advance our capital light model by licensing the balance of system to those manufacturing partners, having them manufacture them in-country and then having them sell install and support those products over their lifetime on our behalf. Now, that commercial strategy is only so good as it's backed up by a sound financial strategy. So I will hand it back over to Jonathan to walk you through that portion.

Thank you, Matt. The financial strategy In some sense, it's going to be boiled down to one word, and I use that word, which is mistral. We have developed with VS3 a product that's proved the technology, it's proved the business, it's proved supply chains. No one talks to us at the moment, sort of asks what a flow battery is anymore. No one really asks about vanadium. They don't ask what the technology works. They now ask us about price. They ask us about delivery timescales. BS3, as I say, is a product that works, but as you see from the gross margin discussion earlier, it is priced at a point whereby we are not earning a sufficient gross margin from it, but nor is it really priced at something that can unlock the significant demand, which Matt talked about earlier. So what Mistral does for us is two things. It enables us to drive down the average selling price per unit. to a level where we think we can unlock significant demand. But not only that, it is designed in a way that we can reduce the cost of manufacture to deliver to us what we see as an industry standard margin. And in the modelling, we talk about 20% plus, but actually we're looking for a little bit north of that and towards up towards the 20 to 30% range. And that really is critical to the strategy. And that's why there's been such a huge focus on developing the product and why we're very excited with what's coming down the track. In terms of the cash profile of a sale, We do have a supply chain that crosses the vanadium side, it crosses steel, it crosses membrane, felts, etc. Those all come with different lead times. We take a deposit up front that enables us to lock in lead time items and lock in the price of vanadium, because what we mustn't do is start taking vanadium price risk. And then the aim is to have payments coming in from customers that broadly match where we sit with payment terms with customers. And such that by the time we ship the product to site, we have received the vast majority of the funds for us. We are still working through exactly whether we will match that perfectly. My suspicion is that there will be a little bit of a gap. And we are talking to a number of players across the industry who are very keen to fund that working capital cycle if it ends up being in that position. So what we're not planning on doing is using shareholder funds for that. um and then at the bottom right reducing operational costs because um gross margin is one thing but actually we need to be make sure we maintain financial discipline uh below that gross margin line so continue to invest in our in r d and our modeling shows that we will continue to invest not just once mistral is there but to keep that product innovation going such that we can reduce cost and increase performance but just keep our banks down such that we deliver a sensible net margin across the business and therefore profitability and that net cash generation. It is essential that we are in a position where as soon as possible we can start paying our own way and not relying on shareholders for further funds. That is a key point that all of the board across the executive and non-executives are focused on. When you look at that margin improvement, It comes from a number of different positions. As we talked about, it comes from delivering and driving the cost of the products down through design and innovation. It also comes from furthering supply chain efficiencies. And so you don't just reduce costs from a volume perspective from making things a bit better, but you also understand how our product is made. And therefore you can do that more efficiently. And also you can put greater volume through the supply chain. You can have more than one supplier and then use that position to be able to get a sensible pricing from those suppliers. So that's why scale really helps. But then the third bullet point, and Matt talked about this earlier on the license and royalty model, that is a potentially very significant and interesting enhancement to royalties. because if you look at the the everdura deal which we signed at the beginning of this year um we will continue to manufacture the stacks and we will transfer the stacks to them as a nil profit no loss basis so at cost but what we get back from that is that when they make a sale we will get a very healthy um gross uh very healthy margin as a percentage of their sales as they receive cash And we haven't disclosed what that is, but it is a certainly north of 10% margin. So that is a very exciting place to be. And what that means is that that effectively flows through entirely to the gross margin line. So enhancing margins. And also, frankly, through quite significantly to the net line as well. And therefore, that will really enhance our gross margins and net margins. Observer Duo is one of those types of deals and we're actively looking at seeing which other ones we can pull together as well. In terms of capital deployment, that is a picture that was taken. I was in Motherwell last week at the time of the International Flow Battery Forum. That is a very significant facility. Hopefully I've captured the scale of that. That is our facility. hopefully you've all seen the announcement of a capital markets event which we are hosting in Motherwell towards the end of this month. You're all cordially invited to that and I would be delighted to meet as many of you in person as possible. You won't just be seeing this facility but also the Bathgate facility as well. This is a 26,000 square foot facility which will enable us to significantly increase our throughput of final assembly of both BS3 and Mistral units. And I think I managed to capture the crane at the top there. That is a crane that is capable of lifting, I think it's 30 metric tons, may even be 35 metric tons, but 25 is what it needs to do. There are two low loaders in the country capable of taking a box of that size off a lorry and moving that around a factory. That's about a thousand and a half pounds a day. I say there's two in the country and they don't like you taking it for longer than a couple of days at a time. That's what we have to rely on at the moment in Bathgate with this crane. We don't have to do that at all. So we can put as many boxes through as we as we possibly can do. So, you know, that's we have signed the lease for that and we're busy fitting that out. as judiciously as possible, i.e. not spending any more than we need to on that. So delighted for you to come and have a look. What that does do is free up some space in Bathgate and that will enable us to put in a semi-automated, another stack line, but this time a semi-automated stack line, which is about 200 megawatt hours of stack production. So Bathgate becomes a center of excellence for producing stacks and also R&D and some of the other activities and then Motherwell is where the real heavy lifting takes place. The second bullet point there talks about the investment into long duration storage projects in the UK. In the fundraising recently, part of the monies which were invested by UK Infrastructure Bank are targeted to do just that. The UK has one of the most complicated revenue stacks across the world that we have seen. And what that means is when an investment committee is looking at a project and trying to get to a position where it can sign off an investment case, it becomes harder and harder to get empirical evidence for new types of revenue streams that are coming out. um what this money will enable us to do is to help shift some of those returns around to give some confidence to those investment committees to sign off those decisions and that will enable us to get we think two to three mistral projects as well as the loaders projects onto the grid and i'm sure we'll talk about in a little bit further in detail about the cabin floor regime which is being proposed um at the moment there is outside of pumped hydro, there is one long duration storage asset really on the grid at the moment. That's the current battery energy super hub Oxford, where we will be in a position to have three or four more of those. We will also have the trading data for that. So at the moment, we can see our assets are performing very well operationally, but it's very difficult for us to back calculate that to find out how well they are doing financially. As part owners of the business, we will have that access to that data. And we think that will be an extraordinary helpful tool in sitting down with other investment committees and developers and getting them comfortable with the economics of a project. As I say, this really is about economics. It's not really about performance and technology. That's done. It's about the economics. So us having this extra tool in the UK, we think will be very helpful. And then finally, that capital appointment will support the final development of Mistral and its launch. So Larry, over to you.

So the title of this slide, Building a Sustainable Business, really has three parts to it. One is, what is a sustainable business? It's a company with a compelling product that has a market, where that market is willing to pay enough for it that we can make enough profit to wash our own face, as we say, to pay our wages, to pay our expenses. That's the sustainable business is one that is doing those things and growing and meeting more and more of the market opportunities. There's also the development phase business that we have been in. Development phase, we've been spending shareholder money to develop a market, a product suite, the capability to deliver that suite, the organization around all those things. And we have worked very, very hard on that. And then the third part is the transition from one to the other. And generally, that's full of risk because moving from one product that may not be profitable or particularly profitable, like our VS3, to a new product always has the risk that customers only want the new one. There's risks involved in terms of scaling up and then having delays somewhere that cause the expenditures to be wasted or just utilizing capital inappropriately. We're always very, very conscious of the fact that everything we're doing is using our shareholder capital to build this sustainable business. I'm proud of the transition we are going through. We are doing our very best to manage it. We're not perfect. We've made some mistakes. We've learned from those mistakes. But what we have not done is make the fatal mistakes that we have seen in other industries and other businesses and other businesses and energy stores. We are in the middle of the transition. from development phase to sustainable and your support in doing that and the recent fundraising that we were able to accomplish in support of that is critical to our future so we have a number of very good questions i think we will get to that and end the formal part of the presentation here and i'll turn it back over to our moderator tough

Perfect. Larry, Matt, Jonathan, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab, which is situated on the top right corner of your screen. But while the company take a few minutes for the 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 your investor dashboard. As you can see, we have received a number of questions, both pre-submitted and throughout today's live presentation. And Larry, if I could just hand back to you just to read out those questions where appropriate to do so, I'll pick up from you at the end.

Absolutely. I'm going to take us through these questions very quickly. I'll direct them to Jonathan and Matt as appropriate. We're going to answer them in a fairly short manner so that we can get through as many as possible. Key question is, when do you expect Mistral to launch? That is the key question. That's absolutely right. We have been saying this year, we're standing by that. It's a big project. It has to be right. You know, you make a mistake, Energy Super Hub Oxford, we had 160 flow battery modules, and we made some, you know, we had some teething problems, as we would say. We fixed them all, but we had to do a few things across all those modules. Didn't have to do them again because we learned. In Mistral, the scale is larger, the opportunity and challenge is larger, and therefore we have to get it right. I still say this year, we're standing by this year. The next question, are any projects that involve Gamesa included in the Infinity project pipeline? And if so, what percentage are we talking about? Matt?

Yeah, look, the answer is all of them, because Gamesa is not only our partner in this program, but they're also a supplier of some of the key components into Mistral. Now, I suspect what you're asking is, are there projects that are sold by Gamesa in that project pipeline? And the answer is no. All of the projects in that pipeline as at today, though they include some of the power management components from Gamesa, though many of them include the power of the inverters that Gamesa is manufacturing. None of them at this stage are deals that are sold by Gamesa directly.

The next question, when can we expect news on the expansion of U.S. manufacturing and is the company U.S. Vanadium still involved? The answer there is we are very conscious of the fact that our DOE projects require a degree of US content. We intend to meet that content requirements and we're working closely with those, the purchasers of the DOE-funded Mistral deals to make sure that we meet those requirements and meet their timing. So it's still something that we're not ready to announce yet, but we're making progress. There's been a substantial lull in contract announcements. When can investors expect that to start to change? Matt?

Look, the one thing I would say is that one of the significant hurdles that we had in closing deals up until the last couple of weeks was around our capitalization. Our customers were looking at the kind of multi-million or even tens of million dollars worth of deals that they were trying to get done with us. And we're very nervous about our financial position. That has changed significantly. That was a big reason why we were able to get the four megawatt hour deal with Rincon contracted and announced just a few days ago. And we think that that momentum is going to carry forward now that we are operating from that much more stable financial position.

We had the question, what do you mean by before allocation of facility costs when talking about the margin on battery sales? Jonathan?

Yes. So, I mean, if I can answer that simply, I think what I mean by that is at the end of the project, have we added to the cash balance or have we deducted from it, i.e. is this Yeah, incremental from a balance sheet perspective. And by that, you know, we get into a detailed discussion of absorbed, unabsorbed overheads. But what I've included in there is all direct labour, all direct costs. But if what I haven't done is done a sort of an allocation of facility costs based on sort of average number of units across that, as those are obviously fixed costs and would be there in any case.

Vinayum flow batteries have major advantages over lithium-ion batteries for Eldez, but will they ever be able to compete on price? Matt, how would you answer that? I'm sure all three of you could have an opinion.

Look, I will answer the question explicitly, and then I'll answer the question that I think is actually underlying the question. Will we compete on price? Probably not, right? Lithium-ion batteries are becoming very, very inexpensive. With that said, we don't compete on price and we don't intend to. What we intend to compete on is the cost of energy out of the system over its lifetime. And there are various forms of calculating that, whether it's the levelized cost of storage or whether it's the total cost of ownership or whether it's simply the cost of delivering a megawatt hour out of our batteries. You know, we are today significantly less expensive than lithium on a per megawatt hour of energy delivered. And that's the metric that as all energy industries mature and solar was the most recent example of this and batteries will end up being the same way. It's that it's that cost of actually generating power that ultimately is going to drive our success. Like I say, we are today ahead of lithium in that regard. The reason that we've been so successful, for example, in advancing the case for our technology with the U.S. Department of Energy and with Desnes in the U.K. is because they see us as the most clear line of sight towards the kind of costs of delivered energy that they know that the electric grid is going to need five to ten years out. And so because of that, even though the absolute capital cost of our product may be somewhat higher than lithium in the long run, because of the cost of delivery is so low, we are going to be very, very competitive and significantly outcompete lithium in the areas that we're targeting.

The capital market event is to be held on the 23rd of July, as Jonathan mentioned. And to paraphrase, I had mentioned that we will ship, we're very focused on shipping Mistral. real question is are we going to be talking about it are we disclosing it at the capital markets event short answer is no um we i've said this year i mean this year um and that includes first customer ship um that includes quite a bit of additional information that said we're likely to show a little bit more about um these draw than we have shown in public before um just to uh keep you um um abreast of the progress that we're making um So with strategic investment placing success, I'm listening to a VSA podcast. And will there be more announcements on partnerships in the coming months? And we have partnerships on different levels, as Matt referred to. Matt, what would you say about that?

Sorry, Larry, I'll have to repeat the question.

Well, just are there more partnerships coming along that we're going to be talking about that we can mention now, I guess, is the real question.

Well, no, we won't mention them until our partners are happy for us to go and announce this publicly. Look, I would say that if you look around the world, there are some very exciting regions for energy storage where we do not yet have an announced partnerships. The Middle East would be one of them. Some of the largest renewable energy projects in the world are being built in that region. And we have some very active industry discussions there. It's not a region where we would want to enter ourselves, but it is a region that has tremendously capable partners and tremendously capable organizations that could take our product and really make it a meaningful part of the energy mix in that part of the world.

Will Mistral Lunch come with Gamesa-related projects attached? Matt, do you want to answer that? I don't think we can talk about projects.

Yeah, I mean, look, we've already announced Mistral projects on our side, you know, that Infinity will deliver. I would be answering on Siemens Cabasa's behalf if I was to answer whether their projects will also come along with that announcement. I think the intent between the companies is that that announcement is an open authorization to sell, right? That's the day that the products will be going live on our websites, that we'll be talking completely openly about how they're going to be delivered, when they're going to be delivered and how. Will there be explicit projects announced alongside that? Possibly, but I don't think it's a definitive condition.

Jonathan, I'm going to sort of throw this one to you. I'm giving you an advance warning, but Matt can jump in too. So between the two of you, what are the main drivers for UK projects now? Is it first the cap and floor policy conclusion or is the recapitalization already enough to drive contracts wins? And is the UK government consultation period on the cap and floor mechanism being held up by the general election in the UK?

I'm not quite sure about the answer to that last one, because you don't tend to get too much of a steer from government during that period of time. I don't think we've got, we've had no indication to suggest that it is. And actually, we are still having almost daily calls behind the scene with DESNES in various prizes. So that's a lot. Our experience is no, whether higher up the echelons it is, I don't know, but there's absolutely no visibility from our perspective that it is. I mean, the main drivers for UK projects, it certainly was our capital position. So that has unlocked a lot of discussions. But also Cap and Floor, I was there at an energy summit in London, just as Cap and Floor had been there. announced and our stand was inundated with developers, utilities, financiers wanting to come and talk to us and very much a 50 megawatt six-hour system is a 300 megawatt hour system and if you without giving any pricing away you know that is you know probably north of 100, 120 million pounds of revenue for one single project to us so those are enormous opportunities um and um the regime is focused very much on you know seemingly exactly the technology we have could you say that again that's helpful to my comment so um maybe hand over to you

Yeah, sure. Look, so the only thing I would add is that while, yes, the near term, one of the near term drivers for UK projects is some of those sort of near term regulatory developments like cap and floor. But, you know, without giving away too much, when we look at the companies with whom we are in the advanced stages of commercial discussions. The majority of them, or a lot of them, are global players. We just announced our second deal with EDF Renewables. They're the ones who are executing the project at Rincon in California. They are the same. They're the parent of Pivot Power with whom we did the Energy Super Hub Oxford project. And organizations like theirs, I'm not talking about them specifically, obviously, but organizations like theirs are starting to see that there is a global need for non-Lithium long duration storage for electric grids worldwide. Now, cap and floor might be the thing that will get those projects done in the UK in the sort of next three to four years. But it's the global perspective around needing to understand these projects at a gigawatt hour scale. and then being able to deploy those projects all over the world that those kinds of organizations are very much focused on. And we think that it makes great sense to have some of those pioneering projects located in the UK and are looking forward to engaging and building some of those.

um nigel asked a number of questions um and some of them would take a long time to answer so we're gonna have to do a little bit of a lightning round here um on this um what remains to be done before mistral has lost and how long will that take still saying end of year um there are risks attached we have to get it right it has to be right that means it has to be proven to perform well under a series of escalating stages um The product is designed. Now it's a matter of really pushing hard on it in simulation of what the customer will see so that we can find any areas of weakness and address them. We're already building MeStrong. and at pilot level, and it's working. So now it's a question of what does that mean for the customer? We have to deliver something that is as proven as we know how to make it. And that's gonna take through the end of the year. And there are risks that it could move beyond that, but I'm not aware of anything that will cause it to be delayed beyond the end of the year. The capacity for Mistral, you know, the great thing is it takes, we can, We can bring together a global supply chain to build Mistral. We're not having to build gigafactories. That's terrific. The time to build a Mistral, the final assembly is relatively fast. The supply chains, some of them are long lead time items. So we have real expertise in this area that people I don't think fully appreciate. What expertise it takes so that when we deliver a fully factory tested product to the customer, it's working, it's ready, it's been tested. Many, many things have had to come together to do that. Already with our VS3 product, we're doing that. It's essentially the same technology scaled up for Mistral. So I remain quite confident we are going to be able to do that. Round-trip efficiency is going to be in the 70s, not saying more than that, but we're making progress in the electrochemical sense as well. And then there's the labor government question. I'm very optimistic about our UK prospects, which is good because every once in a while I get a little discouraged by what goes on in the US and back and forth. So, you know, we are optimistic in general about the need for us in front of us at this point. Larry Knight.

Can I jump in? We've got about nine minutes left, and there's a number of questions here that I think will be kind of swept up in one envelope. There's a lot of questions around competition from other emerging battery technologies. Steven asked about Ambri. There's another question coming about some of the other Vanadium Flow players. Look, the thing that I would remind everyone of and that we remind ourselves constantly is that The number one characteristic for success with our commercial projects and the projects that we're chasing is being able to point to existing examples and recent examples of successful deals that we have delivered and customers who are actually making money with our products. Very few of those other players can point to that right now. I often joke that everyone's done the high school science experiment where you put a nickel and a penny into an orange and you get electricity out of it. There are a lot of energy-sored technologies that are very much at the development stage that have not... cross the gap to being able to be profitable and deployed in the field. We have overcome that barrier. Our customers are making money today, and that's what's giving us the platform for growth, the platform for wider acceptance of our technology. That is not true of a lot of the other new entrants. That's not true of a lot of the other vanadium battery companies at this stage. So while we are always aware of and watching developments across the industry, we remain very confident that in terms of delivering on our customers' needs, delivering profitable projects, we remain well ahead inside this category.

There are a number of questions about vanadium. I'm going to wrap them all up into a lot of vanadium in the world. We are projected to be one of the biggest, probably after certain internal to China batteries, we're the biggest consumer of vanadium electrolyte. And we have supply chain that we're working on with many different companies. Actually, I was talking with our head of operations, 10 different paths right now for getting the electrolyte we need, including working with U.S. Vanadium and others for domestic U.S. production. So for all of those reasons, we are confident that Vanadium will be available and hit the price that we need over time, and we're working there. I want to turn it back to Jonathan on the Labour government side. Jonathan, what would you say?

Well, there's quite a number of questions coming in on the basis of assuming that a Labour government is the one that's announced on Friday. And without betting on the polls, I have to say that is looking remarkably likely at the moment. We have engaged with both the Conservatives and the Labour parties over the last six to 12 months, if not before. We've obviously been very grateful to the incumbent administration for the support that's been received. We spoke with, I think it was, Alan Whitehead back in January, who is the shadow minister for energy security, about where they stood on long duration energy storage. And we were very pleased to hear his response. He knew an awful lot about the sector. He pointed us towards GB Energy. And if you look at what the themes for GB Energy are, they very much are focused on energy security not being reliant on, as they say, dictators. So that does include China. So lithium from China is very much out. And also being in control of our own destiny and that not being lithium. So he was very, very positive and suggested that there could be a lot more support for businesses such as ours in our space. and reassuringly he also knew an awful lot about us already so we came away from that conversation and you know should we say not not concerned with a change in government and there's certainly some opportunities there but that's without making any thought of assessment as to how we hope it goes tomorrow

All makes sense. There are so many questions. They are all interesting and we would love to answer them. One of them is that's adjacent to what Matt said, but it has to do with liquid air and a major investment that UK Infrastructure Bank put into liquid air, but also has to do with the larger issue that as markets mature, as the long duration energy storage market matures, it will tend to segment. And what that segmentation means is there's a place for batteries that are used occasionally. There's a place for batteries that have a relatively small amount of energy compared to their power. There's a place for batteries that have an enormous amount of energy compared to their power. And then there's the question is, well, where does Infinity fit into that? We're fortunate in that we've addressed the highest value portion of that, which is the major throughput, the heavy use, heavy cycling. We cost more, as we've talked about, than lithium batteries, and then we also cost less than lithium batteries if you look at the use over the lifetime and the energy going through it. But it only costs less if you're really using the battery hard, and our batteries are designed for that. Form Energy is an air battery. hundreds of hours of discharge, fantastic. When there is an interval between renewable energy, that's when a battery like that is required. Not at all appropriate. They only can go through 13 cycles a year before violating the warranty. Not competition in the slightest. In fact, exactly the opposite. We need that kind of battery system or the liquid air system to support the other use cases that we don't address and that the ones we do address daily heavy duty use. So that's the one thing I'd say. Another thing is that another series of questions have come up and I'm going to throw it to Jonathan on that. There's been a gap, Jonathan, between Sort of our perception of the opportunity and value and the stock price, we are all hyper conscious of that. We're conscious of the fact that all three of us have substantial portions of our net worth invested in Vinity, and that is true. I've had direct cash outlays into Vinity and into Avalon before that. that represent a lot for us. And for all of those reasons, we're hyper aware of the stock price. Do you have any answers on why there is that gap between where the value to the market is and where we are, where we believe we should be? I mean, Gary, thank you.

In a couple of minutes, I mean, it's something you could talk about for hours. I mean, and it's core fundamental, it's supply and demand and it's liquidity. And at the moment, across the small cap market, there is very low liquidity. And therefore, if you get to a position where there are a few number of sellers, the market makers just won't take a position or move the stock down. We are conscious that a rising share price is important to all. It gives our shareholders a chance a warmer feeling that everything's heading in the right direction. Our staff are all shareholders, they're all option holders, and we want them to feel that they are incentivized to stay with Invinity and see the growth in the business. It helps our customers to see a rising share price as well. I think if you look at the timeline of developments of Invinity over the last 17 months that was earlier, a lot has been achieved. But I think we got into a position on the funding side where it took longer than we'd hoped to get the fundraising with the UK IB cornerstone and announced. But that was a fantastic transaction. I think the open offer period in the three weeks thereafter probably sort of took out any of the additional buying interest. And we're in a position now where we need to try and sort of build things going forward. So it is supply and demand in a thin market, and it's really frustrating. But I think we're cognizant of it, but need to, from a day-to-day basis, not get too worried about that. Otherwise, we'll spend our time worrying about share prices and not growing the business. But fundamentally, I do believe the two come back together at some point in the future.

I'm afraid that's all the time that we have to answer questions. There's so many that I wish we could because I think we do have good answers for them. Grateful to everyone for their engagement and participation in this session today. We will be publishing some answers to the questions. Not sure exactly the mechanism for that, but we'll let you know.

Perfect. Larry, Matt, Jonathan, thank you very much for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. This will take a few moments to complete, but some shall be greatly valued by the company. On behalf of the management team of Infinity Energy Systems PLC, we'd like to thank you for attending today's presentation and good afternoon to you all.