Invinity Energy Systems plc

Good afternoon and welcome to the Infinity Energy Systems PLC four-year results investor presentation. Throughout this recorded presentation, investors will be in listening mode. Questions are encouraged and they can be submitted at any time by the Q&A tab situated in the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO Jonathan Maron. Good afternoon to you, sir.

Many thanks and good afternoon, everybody. Welcome to the 2024 results presentation. You'll see this is dated May 2025. I think we did say when we were here about a year ago that we would look to bring forward our results from the end of June. Delighted that we've managed to do that. We hit May, albeit just by one day, but significant improvements. My thanks to Adam, definitely, and the rest of the team for achieving that. And we'll look to continue that in the future. I'm conscious it's only a couple of months since the last trading update. And obviously today, understandably, today's session is anchored around those results. I'm going to hand over to Adam in a moment to go through the numbers. There's understandably some questions on where we sit from a cash position, walking through working capital, particularly in relation to LODES. So I've asked Adam to make sure we address that head on. But before I do that, just a bit of sort of a context on where we are and maybe where I see things. And firstly, just taking stock of where we were from a year ago. I think that's always useful. We'd obviously just had a successful fundraising raising £54 million net. We were working very hard to get Endurium, or then it was Mistral, launched, saying that was the critical product we needed to advance ourselves commercially. And we were saying there were strong signals in the market, but we were still waiting for those to develop. But we were confident they were coming. roll forward what is now 11 months. We've launched Endurium, that is absolutely critical for us. We've shipped that first product, we've shipped it to Gamesa and really pleasingly we have got a delighted partner in Gamesa Electric. They were delighted with the product itself and its characteristics, how it's performing. They were delighted with how we had commissioned that project and that really does take the learnings we have from having delivered so many Vs3s into the market. and we are seeing that there is now evidence in abundance that the market for batteries is there. So, secondly, looking at sort of the context for what we're about to go through, what I'm seeing, what we are seeing now, is that it's undeniable that batteries really are coming of age. We've been saying for a long time that if you're going to get energy security, resilience, you think what happened in Spain recently, reduced reliance on natural gas, and critically reduce prices to consumers, that's going to be achieved by increasing penetration of renewables onto the grid. With that, you also get the benefits of net zero, which is very important to us as an organisation as well, but that is only achievable with battery storage. And that's both from a short and long-term perspective, and that is becoming increasingly clear really on a day-by-day basis. I was recently at Indosolar, which is an exhibition in Munich, seeing our partner Siemens Gamesa. There's such an enormous amount of space set aside for batteries. There are so many companies there and interest across the sector, and it really is staggering to see the amount of both buyers and manufacturers focusing on this area, all the ancillary services that go around this. This is becoming a very, very big industry. Matt is going to talk to you in a few minutes' time about the government support programmes we're seeing. The obvious one for that is the cap and floor regime, and that first application window, excitingly, is closing today. From a PR perspective, I think it was just 10 days ago, we managed to have We were lucky enough to have a clip on ITV News, which was really good to see that out in the mainstream media. Michael Shanks, the energy minister, had come up to see us with the chief architect for the cap and floor from Desnes. But at the same time, we had a thought leadership piece in one of the Scottish national newspapers on zonal pricing. That was all in one day. This is the sort of PR which we might have expected once every six months if we were lucky in years gone past. And that was all came together. I think that just shows you the way the industry and the importance of batteries is really coming to the fore. Now, a little bit on vanadium flare batteries. It's not a new technology. First launched, first found 40 years ago, 1986. What has, though, changed demonstrably, And I'm really reassured that really in the last 12 months is that there's an acceptance that technology really does work, that it's appropriate, and there's a space for it. And that first bullet point, top left-hand corner, I think is one of the reasons for that. We are able to say to our customers, we've dispatched broadly more than five and a half gigawatt hours of power from our VS3 batteries. And that is a calling card. And time and time again, I have a conversation with some potential customers. You sort of say, oh, where are the FBs? And you say that, you're like, oh, okay. What does that mean? That means, one of the key questions I think with that is, if that is the case, why are we not selling gigawatt hours of batteries now? And I think there is a very good answer to that, and I'm really pleased with what that answer is, because it's not do VFBs make sense, do they work? It's where are we from a cost and cost of production perspective? And the reason that's important is that I'm firmly of the opinion that is within our control. And we're going to come on to the slide in a minute about how we are taking costs out of that. What we do know is that when we are quoting on the larger projects, such as for cap and floor and elsewhere, that we are cost competitive. We have a roadmap to take where we are with Endurium platform to take the cost out. And we are quoting and we are competitive and we know we are winning business in that. And the frontier power that's to be put out is really proof of that. Now, look, lithium is our big competitor. I think the markets and those who are Looking at long duration, there is plenty of room for all the long duration storage businesses that have got to this stage to find a place for themselves. But the real competitor is lithium. And there's been lots of conversations about that. The price has dropped for lithium over the last 12 months. We anticipate it dropping further and we are forecasting it dropping further. And when I say we're competitive, it's against the forecast that it will drop further. So we are alive to that. There are plenty of places, though, where Much of the lithium cannot compete. We're seeing tenders in New York. We're seeing rhetoric from places such as India where they do not want Chinese product coming onto their grid. Whether you're right or wrong, that does create extra opportunities for us. Don't lose sight, CATL, probably our biggest competitor. They have 20,000 people in R&D. They recently raised almost $5 billion, a huge market cap, and they measure the number of patents they register almost in the sort of double digits on a per day basis. And if you look across the sort of the LDS space, what we are seeing is that, you know, the number of competitors there is beginning to thin out to those that are looking at being successful. So EOS, we've got huge respect for EOS. I'm sure all of you have sort of looked at EOS. You know, they've got a revenue not too dissimilar to us, you know, 10 million or so in the first quarter, a bit more than us, but you know, where we've been before. you know, they are approaching that cost perspective by selling at a significant gross loss. We are not prepared to do that. We don't have the balance sheet to do that. I'm sure, Sheffielders, you wouldn't want us to do that. But, you know, that does mean it is harder to compete in the shorter term. You know, their OPEX base, you know, probably about four times where we are. Again, you know, that creates challenges, but we're still able to deliver on the R&D front. But, you know, their market cap is just shy of a billion dollars when I looked earlier today. I think when you look at the size of CATL and EOS as our two big competitors, we have a product that competes. I am firmly of the belief that whilst it's stiff competition, and we must be aware of that, there is clearly value we can create as a business when we get that right. So maybe just before I finish on three things, that cost reduction, I've talked about why it's important. That 24% is how we have taken the cost out of Endurium since that first launch. So that's really to date. It was a platform where we knew we could continue to take cost out. And hopefully we've shown a little bit of visibility as to how we are trending against where we first thought. The opportunities are so large. Matt's going to talk about what that means. Those are transformational deals that could and we hope will come through to us. It does mean that sales cycle is slightly longer potentially, but the transformational effect of those coming through is really interesting. And then the third point on strategy, I think about a short, medium and long-term strategy. Maybe focus on that medium term to start with. Our strategy is to get to the position where there are significant volumes of transactions coming through from the programs that we are seeing today. So first and foremost, the cap and floor program. Again, Matt's going to come on to that. That enables us to have volume at the right price, which really does enable us to continue to drive that cost out. In the longer term, I see us being cost competitive against the competition in areas where a vanadium flow actually makes sense from a use perspective, where we can compete without additional support from a program specifically focusing on long duration storage. And that is important because we need own right, and that is what we are challenging ourselves to do, and I believe we can do. When I look at the short to medium term, we are approaching that absolutely through partners, and we have an existing partner with Everdura, but we continue to look at partners elsewhere in the world to approach some of those opportunities. And again, I'm quite excited by some of the conversations we are having, and hopefully more to come in due course on that front. We've got very good visibility on that pipeline in the shorter term. We are focusing on getting through a lower number of profitable deals. That is our strategy. They have to be sold at positive product gross margin. We are all frustrated they don't come through as quickly as we would like, but I am absolutely reassured by the number and volume that are in there and the traction that's there that they will come through. We've got the experience from BS3. It was exactly the same. It was really frustrating seeing those come through. And then they did in the end. There was a much smaller pipeline of deals on those VS3s than we're currently seeing on Endurium. And so that's why I have faith. It's very hard looking at one individual one and saying, yes, we'll definitely do that one. But if you look across the volume and depth of those conversations and what customers are telling us, I really do have confidence that they're going to come through. So that really, I guess, focuses on that middle bullet point, increased deal size. That's just a sort of a hint as to where those average deals are going, I would anticipate, I would expect in years to come that that number would increase significantly. So hopefully that's set the context for what we're all going to talk about now. Adam, if I may, I'll hand over to you.

Good afternoon, everyone. I'm going to lead you through two slides here. First of all, our financial results from the P&L, a bit of a deep dive into what's been happening there through 2024, and then a little more detail on our cash position and working capital, addressing some of the good questions that have been raised. So first and foremost, we have to acknowledge 2024 is a transition year from BS3 to Endurium. Revenues were down three quarters year on year. And bear in mind that those are essentially BS3s that have been contracted and sold through 2022-23. And you can see how that's playing out here in the margin position. Crucially, the first revenues there were recognised from La Plana with our partner Gamesa in Spain. It's around about a 12-month sales cycle for Endurium and BS3. We'll just have to see some of those first orders come through. The gross loss increased from 3.3 to 3.5 million. Around about 3 million of that comprises the warranty costs and provisions, and then 1 million from the overheads from the new Motherwell facility. Those warranty costs you're seeing flow through, they relate to known issues on the S4 stack and the DCDCs. The S4 stack has since been superseded by the S5, and those DCDCs are being swapped out by the supplier. So those have been remedied and worked through. The gross margin loss in preview on year from minus 20 to minus 8%. Again, those are BS3s, predominantly contracts in 2022, 2023. And then looking elsewhere across the P&L, we're seeing cross-control while growing operations. So that 7% year-on-year increase in OPEX is predominantly driven by increase in R&D investment for Endurium, whereas we're seeing some inflation increases in both our staff costs and our other admin costs in order to pursue our objectives of cost-saving measures. So putting that together is a 20% year-on-year improvement in EBITDA loss after adjusting for R&D, those non-cash items we talked to, and on-off expenses, including our re-domiciliation this year from Jersey to the UK. So, as you say, a couple of comments that have been raised on the financials since they've been released. I think there's a couple of points that haven't necessarily been picked up on, which are worth emphasising here. Specifically, the 3 million in short-term deposits, so this is in there and other current assets. That has since matured, so 35 million total transposition. Secondly, LODES inventory. One of the reasons that LODES was so important for us was that build-up of inventory towards the end of last year, and therefore the push to get that closed out in the first quarter of this year. And then finally, the LODES ring fencing. So we will spend all of those ring fencing monies on LODES plus the CAPEX for the commissioning of our Bathgate line, which will shortly take place And then we do expect to then recover around about 50% of that through grants in order to reinvest back in the business. So walking through those numbers, we finished the year 24 at $35 million of cash, including the short-term deposits. Around about $5 million of that has been spent on LODES. We have around about $20 million of net OPEX after R&D income, and $3 million of CAPEX. A portion of that is also discretionary. and we expect to realise some gross margin through the year as well. So that takes us to the cash position you're seeing forecast by the analysts across the range of 8 to 30 million at the end of the year. We're delighted that BDO, after some thorough work through our financials and our going concern, and also the downside scenario, given that the business is a clean bit of help through to the 30th of June, and the going concern statement that you see in these financials. So then I'm going to pass it back across to Jonathan to take us to our cost plan.