Invinity Energy Systems plc

Good afternoon, ladies and gentlemen. I'm joined by my colleague, Matt Harper. Matt is our chief commercial officer. And I'm sat here in the capacity, of course, as chief executive, which is a change from the past and also holding the mantle for CFA. And we'll cover that in a minute as to how we plan to address that. Welcome, everybody. I haven't had the chance to talk to you since we put out a trading statement in early September, and that has been front and centre of everybody's mind. So I think I'd like to sort of approach this interim results presentation slightly differently than we've done before and pretty much head into addressing the key issues that we raised at early September. And then also, of course, that we've tried to address or shown how we're starting to address with the interims. For those of you who are new to the story, there are a couple of slides at the beginning that will be on the website that you can read. There is also other footage talking more generally about Infinity Energy Systems. But I prefer to use this time to go through some of the nearer term questions which people have and then make sure we've got time to answer those questions. So I'm going to move to our corporate priority slide. And very specifically, the trading statement which we put out in September was, of course, disappointing. And I'm not going to pretend that it wasn't. I think it's right. we acknowledge that front and centre. There really were two key issues that sat within that, one of which was the conversion of the commercial pipeline into orders and also, more specifically, the revenue expectations for those orders both this year and next year. And then alongside that, where we were in the cycle of developing Mistral and making sure that the costs for that were at the levels that we expected. And really what we're going to address now is those two points head on so we can show you where we are. I think if we take a step back, and I was having some interesting discussions with the analysts over the weekend after we made the release, and I think it is worth putting in context that were we to be having a say a March year end I think the statement probably could have been worded slightly differently it's worded correctly for where we are but the reason I say that is what we're actually looking at for 24 revenues is two key projects that are within that the first one is the ever dura project which we announced earlier this year that's the first full Mistral array being shipped, and that's now moved from Q4 into Q1, Q1 to Q2, but also the LODES project. And I'll get Matt to talk about that in a moment. Those two projects, which we'd anticipated to be in 2024, would have shifted to Q1 2025. And the reason that's important is that would have significantly moved that revenue balance. And I think it would have been a very different looking statement. And actually, if you then roll that forward to 26, if we had a March year end, I think by then we're planning to be shipping in volume in early 2026, Mistral, and then also hopefully have ramped that up in late Q4 2025. Again, that would have changed the position quite significantly. So taking a step back, whilst the numbers changes is quite stark to an extent, it is a shift. And I think putting that in context is important. And we're going to talk in a moment about where we are with Mistral. And obviously we had some good news on that front in terms of the Gamesa electric order, which we announced. So if I can move us on to the next slide on commercial updates. Of those two key points here, clearly the deal closure we'd expected in 24 was slower than we'd expected. The first thing I want to note is that the commercial pipeline that we'd announced previously and have talked about on numerous iterations of these talks remains materially unchanged. and i think i really want to emphasize that the the base and the advanced pipeline and there's no difference there they're taking longer longer to close but those deals are still there uh the qualified pipeline which is where you get up to that six gigawatt hours of storage again the numbers remain the same but there is the obvious churn that you see within that as we qualify projects out and we bring new ones into that and actually in reality um i would um say that we're in a position whereby we are, because we don't need to chase that overall number, I think we can sort of look at some of the projects we are seeing in, and there's some significantly larger projects which would start to distort those numbers, and I think make them, give them less visibility at the moment. And what I'm keen to do with shareholders is get to the position whereby there is near-term guidance over how we can hit our numbers. So that's the slide, that's the element there on revenue visibility. 2024 analyst consensus forecast is around about £5 million. That comes from two projects. That's the APALCO deal we announced and actually is within our first half numbers. And then Ringcon that's within the second half numbers, which we announced over the summer. and which we will look to deliver this year. Those units are set within our factory and we're looking to do the assembly, final acceptance testing and movement out of that factory this year. So we've got good visibility on that. We talked about the numbers that have moved from 24 to 25, the overdue contract and loaders. Together that accounts for the vast majority of the 25 revenue target of 25 million, which the analysts have got there. So again, that notice deal is not yet signed, but we've got some very good confidence that that will come through. You can see that there is visibility building towards very good coverage already of 25 before we start looking at what else is in the pipeline that we think has got a good chance of converting. But again, let's focus on the deals that are government funded and closed, and that really does build some certainty. And then there's upside from there. And with that idea, looking at 2026, the Department of Energy deals in the US, which we announced a year ago, and we'll talk in a moment about how we are progressing with those, that together with some other government funded deals accounts for over half the target for 2026. Now, those are not yet signed, but the reason that I think we can focus on those is if you think about a risk profile, a deal which has gone through a government procurement programme where the government has looked at the technology. Our partner has discounted all other technologies, has put us forward as the preferred technology of choice, gives us a significantly lower risk profile than might otherwise be the case. You know, these things never have no risk, of course, and we need to close that out. But I think hopefully that shows you there's much better visibility on getting to our near term numbers. rather than a pipeline of six gigawatt hours, which is real, but hasn't with the benefit of hindsight given that visibility. So that's what I'll be trying to achieve now is so that we are much more able to point in the direction of travel. I think just before I hand over to Matt to say where we've made some recent commercial progress, key markets, they remain UK and Europe and it remains North America. And I'm very keen and clear when i'm talking to people that remains the case the new chief exec i'm now based in the uk rather than the us but it is very important that we we realize the us remains a core market for us and we will be in a position whereby we can deliver us content projects in the uk which will start in 20 2026 so i think that's a core message but clearly the focus on the uk and europe is very important and with our new shareholder and the opportunities that are going on here i think we're really well placed to deliver against that Outside of that, Australia and Asia, that will remain our strategy to deliver that via partners. That is a really exciting part of the business and really can drive significant additional margins to us. So Matt, if I can hand over to you to talk about some of the very recent progress we've made.

Absolutely. Thank you, Jonathan. So in line with that strategy, some of the changes that we've immediately made in sort of the commercial team are really around two things Jonathan mentioned, focusing in on certain core regions and then making sure that we've got the right kind of commercial intelligence flowing into our groups so that we can close the deals that we need to get closed. That's meant that over the last couple of weeks we've added a new sales director for the UK and Europe. This is a gentleman who has over 25 years experience in sales in the energy industry with leading companies like Siemens, Schneider Electric. and others, and really a very deep network of contacts and a very deep understanding of how this business operates. In parallel, we've brought back into the business a vice president of business development based in the U.S., with some very, very strong links with the US Department of Energy, who has in the past been key to us getting the traction that we've had in the US. And we think that he's going to really help us accelerate those deals that we have with the US government to be able to get them from the stage where they are awarded, as they are now, to the stage where they are closed and in our manufacturing pipeline for delivery in the immediate term. And then finally, we've brought into our team a new role that we're calling Director of Market Intelligence. This individual has over a decade of experience in energy markets, energy trading, the UK electricity system, and the way that batteries in particular are being deployed into those networks. And as we look to refine our commercial strategy based on what the data we have at hand shows us about where our batteries should be being deployed, what markets we should be targeting, what customers we should be targeting, and how those targeted customers should be making best use of our batteries, we think that data-driven approach is going to be very, very helpful. Those people are a part of that overall focus and that refresh focus on accelerating deal flow. All three of those are looking to add impetus behind our existing commercial strategy. There is, especially on the business development and market intelligence side, one of the things that we're spending a lot more time on is looking at where we should be focusing directly versus where Our licensed and royalty partners can be the ones that we are best supported outside of our core markets to make sure that we can, you know, in places like Taiwan, places like Korea, you know, the rest of the world, we can continue to gain traction for our product, but do so at arm's length by supporting potential customers, potential partners in the right way. And then finally, you know, we can't emphasize enough that, you know, the sort of the financial modeling and data-driven analysis that we're going to have stand behind every one of our deals going forward.

Matt, just before we move on to that slide, if I can just from a, forgive me, we're both fighting to move back to the right place. From a, I don't want to sort of undersell the importance of some of those new hires. Certainly two of them have been done in the last two weeks. The director of market intelligence was something that you and I have been talking about for six months and we absolutely needed. And it was something that I'd spotted over the last period of time here that we've had two of our sales team in the UK working on longer relationships with clients, but really struggling to articulate to our clients what to put into their financial models from a revenue perspective, because the UK and outside the UK, there's different approaches to buying a battery. In the UK, it is very financially driven, and we've got one of the most complicated revenue stacks, I think, anywhere else in the world. And historically, our clients have only been able to take a revenue curve for a lithium battery to put that into their models. And not surprisingly, that hasn't delivered the sort of the top line revenue that's needed to justify the larger capex cost that comes from our batteries. And the UK battery market's changed over the last six months. It's moved much more to a a merchant trading model and what that means is that our clients need some assistance and we frankly not have the ability to give that to them externally now with that new hire and also with some engagement we've been doing with external parties. We are able to prove what we've known all the way along that a flow battery that is put in Scotland will earn significantly more revenue than a flow battery that's put in south of England and significantly more than a lithium battery. But that's only with a certain use case and also enables us to make sure that we can target our sales efforts rather than being just focused on a, well, they've asked for a battery, let's try and sell them a battery. Firstly, why do you want one of our batteries and why don't you want a lithium battery? And if you want a lithium battery, then frankly, that's the right way to go. But someone who needs to cycle once or twice a day, someone that has planning issues, someone that's concerned with the fire risk, I think ours is a very good product and we can prove to them what to put at their top line and then the rest of the numbers of it. And I think that will really enhance our sales message.