ITM Power Plc

Good morning. Welcome to the ITM Power PLC investor presentation. Throughout this recorded meeting, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated on the right-hand corner of your screen. Just click Q&A, type your question, and press send. The company may not be in a position to answer every question received during the meeting itself. If the company would be in a position to review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to the ITM Power team.

Good morning! Today we want to talk about how the financial year which ended in April went for us as a business. We will give an update on how the regulatory and funding landscape has evolved and which trends we see with our customers. We will check in on our strategic priorities and provide impressions of our company's evolution. We will share insights into our pipeline of sales opportunities and we will give an update on our reference plan situation and product performance. Last but not least, we will summarize our financial results and provide guidance for the financial year 2024-2025. My first full financial year at IDM has seen the company make significant progress. We completed our 12-month plan and have transformed IDM into a credible delivery organization. Today, we have a focused portfolio of products, all utilizing the same market-leading stack technology, which we can now deploy into projects of any size and into almost every region of the world without adaptation. This offers us unmatched supply chain and scale-up advantages. We have achieved a crucial shift in culture. Previously, we spoke about slowing down and focusing on doing things right the first time and putting quality over quantity. This shift in culture has been encouraging our employees to contribute ideas for improvement. It also fosters a culture of accountability, collaboration and continuous learning. The transformation we have undertaken is evident in our day-to-day operations. As a result, EBITDA losses in the financial year decreased significantly to only one third of the previous year, whilst we were able to grow revenues threefold. We now have a disciplined approach to the use of our capital, which is reflected in our strong year-end net cash position. On the technology side, we are at the forefront globally, and we are deploying our electrolysers into some of the largest and most prestigious green hydrogen plants under construction worldwide today. In June this year, we inaugurated the 24-megawatt plant we built jointly with Linde Foyara in Porsgrunn, Norway. It is now the biggest PEM electrolyser plant in operation in Europe. For RWE, we are delivering 200 megawatt to Lingen and following Shell's final investment decision for the Refine2 project taken just a few weeks ago, we are now also delivering another 100 megawatt of our Trident stacks and skids into Shell's refinery in Wesseling, Germany. Recently, we also commissioned our first reference plant in Japan for Sumitomo and Tokyo Gas. Our growing base of reference plants and operational field data helps us to convince new customers of our capabilities. Our recently announced partnership with Hygen, where we were appointed as their preferred supplier for PEM electrolysers for hydrogen projects in the UK and the European Union, and more recently the huge 500 MW capacity reservation by a large industrial customer, are further strong endorsements of our technology and credibility to deliver. Clean technologies are fundamental to governments achieving their ambitious climate, economic and energy security goals. The widespread adoption of clean technologies will accelerate the energy transition and improve energy resilience. Green hydrogen is said to play a key role in the energy mix of the future. In the short and medium term, government incentives and support mechanisms will remain key enablers of the hydrogen economy. They can remove barriers to investment by offsetting cost differentials between fossil-based fuels and green hydrogen. Over time, as the industry scales up, business cases will get stronger and the industry and hydrogen economy will become self-sustaining. According to the International Energy Agency, only under 4% of electrolytic hydrogen production projects worldwide have reached FID so far. In many cases, this is due to a combination of policy and regulatory uncertainty, inflation, increased cost of capital, lack of infrastructure, or uncertain off-tail commitments. They estimate that 70 million tonnes per annum of clean hydrogen will need to be produced by 2030 to remain on track for climate goals. This compares to less than 1 million tonnes produced today. To be robust and resilient, the entire hydrogen value chain must develop and scale in parallel, including production, transport, storage and end-use demand. While this poses complexity, it is widely acknowledged today that renewables will dominate tomorrow's energy systems. Green hydrogen will be vital to ensure uninterrupted access to clean energy and to decarbonize especially energy-intensive sectors like steel production, chemicals, long-haul transport and aviation. There have been lots of tangible developments on the regulatory and funding side. I'd like to highlight a selected few. In the European Union, the Net Zero Industry Act is a key piece of legislation. Proposed by the European Commission as part of the broader Green Deal Industrial Plan, the Council and Parliament agreed to it in February 24. It aims to strengthen the resilience and competitiveness of key net zero technologies in the European Union and to create the right conditions to attract investments. The EU aims to produce 10 million tonnes and to import 10 million tonnes of green hydrogen by 2030. Several funding and subsidy avenues are available to industry, including the Important Projects of Common European Interest and the European Hydrogen Bank, which recently completed its first 800 million euro pilot auction. In addition to the availability of central EU funding, individual Member States are allowed to fund projects and developments directly as well. Beyond incentives, the EU's Renewable Energy Directive, and most recently RET3, mandate an increase of renewable fuels of non-biological origin, primarily hydrogen. It sets ambitious targets for the hydrogen sector, notably requiring at least 42% usage by 2030 and 60% by 2035. Also, the UK has seen lots of movement recently. The government's ambition is to produce 10 gigawatts of clean hydrogen by 2030, with a minimum of 6 gigawatts of it being green. The hydrogen allocation rounds, short HAR, allocate revenue support to hydrogen production facilities to bridge the cost gap. For the first round, HAR1, 11 projects with in total 125 megawatts were successfully announced in December last year. The projects will receive over £2 billion of revenue support through 15-year contracts and £91 million of upfront capital funding. Haar 2 aims to support up to 875 MW of capacity, with the application window having just closed in April this year. A shortlist of projects is expected to be announced in autumn. Haar 3 and Haar 4 are expected to target 1.5 GW each. The UK's Green Industries Growth Accelerator, short Giga Fund, of £960 million was announced in autumn last year to support the expansion of clean energy supply chains, including hydrogen. In March this year, an additional 120 million was added to the fund, and successful applications are expected to begin drawing down their funding from 2025. In the U.S., the Department of Energy released its National Clean Hydrogen Strategy and Roadmap in 2023, targeting 10 million tons by 2030, 20 million tons by 2040, and an impressive 50 million tons by 2050. Furthermore, the Treasury Department and the IRS released long-awaited proposed regulations for the eligibility and implementation of the Section 45V hydrogen production tax credit, with up to US$3 per kg of hydrogen for producers. In October last year, the DOE announced US$7 billion of funding to launch seven regional clean hydrogen hubs to accelerate commercial-scale deployment. In March of this year, the DOE announced $750 million in funding to reduce the cost of clean hydrogen, covering 52 projects across 24 states. Also elsewhere in the world, green hydrogen strategies continue to evolve at pace. Last year, Japan updated its strategy with $107 billion earmarked to be invested over 15 years to achieve 2 million tons by 2030, 12 million tons by 2040, and 20 million tons by 2050. In May this year, the Japanese Parliament passed the Hydrogen Society Promotion Act, which paves the way for providing 15-year subsidies for locally produced and imported low-carbon hydrogen. India announced an ambition to produce 5 million tons of green hydrogen by 2030. Egypt's green hydrogen strategy is targeting up to 8% of the global tradable market by 2040. Australia announced a hydrogen production tax incentive of 2 Australian dollars per kilogram, which will be available over a 10-year period starting from 2027. I could go on for hours, but let's keep it short. Given the ambitions and targets of governments around the world, the green hydrogen market and electrolyzer demand are expected to see strong growth over the coming years. We are out of the hype phase. Green hydrogen is happening, and ITM is well positioned to play a leading role in this emerging, very large market. There is broad consensus that green hydrogen is the enabler of a successful energy transition for grid balancing and decarbonizing especially hard-to-obey industries, which are the cause of approximately 30% of global emissions today. As just explained, governments all over the world are creating environments conducive to investment, including grant funding and increasing carbon taxation. At the same time, these governments are proactively investing into infrastructure for hydrogen transport and storage, both which are essential for a cross-border hydrogen economy to take shape. The EU and US alone both foresee more than 300 billion of investments by 2050 each. Green hydrogen is becoming a massive market. The rationale hasn't changed. In the short term, however, the electrolyzer market is still immature, with many companies promising more than they are actually capable of delivering. IDN Power is standing out as one of the few exceptions here. We have been completing important reference plans. We are generating more and more field data, and an increasing number of industrial customers is investing their trust in us. While the number and size of project inquiries has continued to grow significantly, and I will talk more about this later, customer FIDs oftentimes keep being delayed. Energy price and inflation developments have entailed business cases by customers who are waiting for a government funding decision, in some cases for more than a year. The market potential for green hydrogen remains excellent, with strong growth expected in the coming years. In the short term, the realities of industrial scale-up will remain incremental though. This does not mean that FIDs won't come, as just proven wrong by the positive ReFind2 FID, but patience remains key. The energy transition and green hydrogen do not magically happen overnight. This is a marathon, not a sprint. As such, we have to make sure not to run out of breath before we reach the finish line. Equally, we cannot run too slow as to not fall behind. This balance between exponential long-term growth but slowed down FIDs in the near term implies the need for readiness and flexibility whilst managing cash commitments carefully. Our strategic priorities announced in January this year aligned with our vision of delivering the world's best electronizers, scaling our operations profitably to meet the rising demand and growing our global footprint and reach over time. We have reassessed these priorities against the observed market developments and can confirm that they remain fully valid. As a recap, To remain at the forefront of technology, product and delivery credibility, we will evolve our products, including the continuous improvement of our Trident Stack Platform and Neptune Plug and Play units. We will strategically extend our portfolio, currently under development, with a larger capacity, game-changing Stack Platform to widen the gap to competition even further. be prepared for rapid scaling of stack volumes and continue to evolve our processes and capabilities in manufacturing, engineering, procurement and field services. To scale our operations whilst retaining flexibility and conserving cash, we will continue to deepen the level of automation, which we have been making great progress on. We will grow production capacity in line with commercial projects and focus on credible sales opportunities and capture a significant market share by offering the best products, value and credibility to our customers. To grow our global footprint and reach, while staying adaptable, we will ensure an appropriate setup in all attractive off-tech regions. We want to be best positioned and ready for rapid demand uptick, as we are in the European Union by means of our new entity IT Empower Germany. We have also just recently expanded our business development in the US. We will take an asset-light product and service first approach and continue to expand regional product compliance. To reiterate, these strategic priorities remain fully valid and we have been making significant progress on each one of them already since we announced them in January this year. In the beginning of this year, we promised to be launching a larger capacity containerized unit. As always, we walked the talk. In May, in response to significant customer demand, we introduced Neptune 5, our new 5 megawatt containerized full-scope plug-and-play electrolyzer plant. Designed against the highest safety and quality standards and incorporating the learnings from our operational electrolyzers around the world, Neptune 5 utilizes our leading and proven Trident Stack technology. Neptune 5 is compact and versatile, providing 5 MW of reliable and highly efficient hydrogen production capacity, all contained in the smallest footprint per MW in the industry today. It offers the widest operational range in its class. It can cope with load changes between 12.5 and 100% within just seconds. Neptune 5 is competitively priced and ideally suited for midsize projects. Customer interest has been overwhelming since its launch. With this latest addition, we now have a complete and comprehensive product portfolio, perfectly aligned with what our customers want and need. With Trident, we continue to offer the leading PEM technology, coming in a 2 MW hydraulic skid solution. Whilst for some customers we can directly send Trident into capable EPC integrators, many other customers cannot do much with electrolyzer stacks alone. Therefore, we are offering our Trinet technology packaged in full-scope plug-and-play electrolyzer plants coming in 40 food containers. Customers only require tap water and electricity, our system does the rest. Neptune 2 is our 2 MW solution, a popular choice for mobility applications and smaller projects below 10 MW. Neptune 5, as just explained, is our 5 MW containerized plant, well suited for mid-sized projects. Poseidon is our 20 MW core electrolysis module solution for large-scale EPC projects, typically starting from 60 MW in size, open-ended, or where customers want to build plants in a way which allows later modular expansion. The vast majority of projects we are building Poseidon into is way beyond 100 MW in size. For projects which we are realizing together with Linde Engineering as our strategic EPC partner, Linde is deploying their own high-PEM module which scope-wise is comparable to our Poseidon offering. It is a highly standardized and proven 10 megawatt solution integrating our Trident stacks and skids into the wider balance of plant. Linde's HiPAM module is the basis for the 200 MW we are jointly delivering to RWE in Lingen and the 100 MW we are now together deploying for Shell. HiPAM is without a doubt the most mature module of its type in the market worldwide today. This is how a Linde 200 megawatt high-prem configuration with IDM stacks and spits looks like in a real project. This is a render of the RWE Lingen 200 megawatt plant currently in construction. When talking about electrolyzers, people often underestimate how huge and complex a 200 megawatt plant really is. This is a massive gas plant and to be successful requires a very close collaboration between the core electrolyzer technology provider on the one hand and a highly skilled and capable hydrogen experienced EPC integrator on the other hand. Here another view to give you an impression of the size and dimension. The GetH2 Nucleus 200 MW plant in Lingen is the largest PEM electrolyzer plant in physical build worldwide today. Here now an example of how a Neptune 2 unit looks like in commercial reality as delivered to Sumitomo for Tokyo Gas. This photo was taken last month in Yokohama, Japan. The unit marks the first commercial scale electrolyzer ever imported into the country. I won't go into more details at this point, as Simon will provide a more detailed update on our reference plans later in the presentation. However, in the context of significant funding programs for green hydrogen recently announced by the Japanese government, having an early foot in the door in this strategically growing market is certainly an important milestone and achievement for IDM. We are evolving and growing into regions in which we see relevant customer demand, justifying investments into increased customer proximity. Besides our resources on the ground in France, the US and Australia, our main operating hubs today are Sheffield in the UK and Linden in Germany. Our Sheffield factory was not only the world's first PEMGIGA factory, with our expansion to 20,000 square meters, it continues to be the world's largest PEMGIGA factory in commercial operation. We have continuously deepened the level of automation in our factory, something for which it is important to get the balance right. You need to be absolutely certain what to automate before you invest and you need robust validation of new manufacturing methods and equipment before introduction into the commercial production process. An incremental approach to automation has proven to be right. Given significant customer demand, a key focus area in our expansion in Sheffield lies on our capability to manufacture an increasing number of Neptune units in parallel. In October last year, we have opened our new Continental European Hub in Linden. ITM Power Germany is home to our after-sales operations in the region and we are recruiting into functions such as business development and IoT, all of which we need for our accelerated growth. As local content requirements may become stricter in the European Union, we are making sure that we are ready. Our pipeline of project opportunities has grown strongly, especially in regions where companies see consistent regulation and incentive schemes relating to green hydrogen production or demand. Today, we are working on more than 100 sales projects, and over the past 18 months, our sales pipeline has grown by an almost unbelievable 25 times. At the same time, with more and more industrial customer demand, also the quality of our sales pipeline has improved. Although this does not necessarily translate into FIDs overnight, I personally have never seen a sales pipeline grow so quickly ever in my career. Over time, this will eventually translate into massive orders. Europe continues to lead the way in terms of tangible progress on green hydrogen projects, with major industrial and energy companies developing portfolios of projects. In addition to the strong energy markets of Germany and the Netherlands, the first hydrogen bank auction confirmed the competitiveness of the Iberian and Nordic markets for large-scale production. Customers are developing their projects at a range of capacities with a significant number of projects in the sub 50 megawatt range where our containerized products are ideally suited. These projects commonly target mobility applications and specific industrial use cases such as distilleries or semiconductor manufacturing. In the 100 megawatt plus scale, we see strong momentum in relation to green ammonia production, refining and sustainable aviation fuel. Due to the large volumes of hydrogen produced and the risks associated with single off-takers, such projects are often contingent on emerging hydrogen infrastructure like pipelines and storage. There are also a number of very large gigawatt-scale projects, predominantly in regions offering low-cost renewable energy potential, typically targeting export. We expect these projects to adopt a realistic phased approach to manage execution, financial and off-take risks. Integrated energy, oil and gas companies continue to be active in the development of their green hydrogen project portfolios. They have a mature approach to technical and financial risk management in relation to the investment into physical assets at scale and the capability to finance off their balance sheet. Pure play green hydrogen or wider renewable energy project developers are also increasingly common and, in the absence of balance sheet strength, are driving the market in relation to project financing options. Customers are now reacting to their very own experience of developing and delivering early pilot projects or to reports of the experience of others. This has increased customer focus on evidence of technology performance, design, integration, and execution capability across OEMs and EPCs, and the ability to demonstrate real-world operational data. As projects scale in size, customers increasingly want to ensure they can deliver on their business case, especially when they get paid only for each kilogram of hydrogen produced, like for example under the UK market mechanism. Furthermore, customers recognize that there are only a small number of OEMs and EPCs truly capable to deliver reliably, especially large-scale projects. This will become an ever more decisive differentiator in the market. For us, IDM, this leads to capacity reservations, under which customers typically prepay a certain amount of the final contract price to secure production slots ahead of their pending FID. Especially industrial customers have started to realize that production capacity will become scarce, given the low number of credible OEMs in combination with significantly growing project sales pipelines. Let's talk data. Our pipeline by product and year of manufacturing from 2024 to 2031 shows a 60% share of Trident stacks and skids and a 33% share of Poseidon module demand. Projects based on containerized Neptune units are typically planned less long ahead by customers, given their smaller size and shorter project execution time. The further out, the bigger the average project size. If we take a look at the year 2026 as a snapshot , then the picture looks very different though. There is a significantly higher share of demand for containerized Neptune systems, predominantly Neptune 5 for mid-sized projects. This is highly important to us, as the underlying data gives us valuable insights into where to put our focus on capacity growth and regional product compliance necessities. As I had already mentioned, our current factory expansion is putting strong emphasis on a further increase of our parallel container assembly capabilities. Let's take a view on this data by region. More than half of our pipeline, and I would also dare to say the on average more mature projects, are located in Europe, with a quickly growing demand uptick in the UK due to the HA funding. Australia, with its vast renewable potential, remains a very interesting but rather slowly developing market. And the rest of the world is leaning strong towards US projects.

Thanks, Dennis, and good morning, everyone. I'd like to start by building on the important theme of product performance data that Dennis mentioned earlier. I'll outline some practical examples of recent product deployments, give an impression of what we're learning from these experiences and how this is helping our customers build confidence towards making investment decisions. As you've seen, the deployment of Trident stacks continues, both in containerized and non containerized products. In the recent months, we've deployed nine Neptune 2 products into semiconductor, gas synthesis and refuelling applications, and each of those has been deployed into very different world regions. Non-containerised Trident stacks have also been integrated and operated in different process industries. The 4MW RWE plant in Lingen, the 24MW YARA project in Porsgrunn, and the 10 MW Refine One project with Shell in Vesseling. The Refine One stacks have been upgraded to the latest generation in a phased process that started in late 2023. The pictures on the right are from key events during June and July this year, and all of these plants have generated valuable data, which I'll explain in more detail. It's well known that ITM has extensive test facilities, from cell and stack through to full product. Any of you that have visited ITM will have seen this firsthand. These facilities have generated a tremendous amount of data over the years. Now the addition of experience from infill products is really starting to drive customer confidence. ITM has built and tested over 200 Trident stacks. Each one goes through a full factory acceptance program. This includes integrity, certification and performance tests over the full operating range. I've explained in previous presentations the performance of Trident and so won't repeat it here, But what I will say is that full load efficiency of every stack is measured and analyzed in detail for consistency. The stacks continue to deliver industry-leading efficiency, and this data can be made available to prospective customers. Tens of thousands of stack operating hours have been accrued at Yara alone. Similarly, every Neptune unit undergoes factory acceptance testing and a detailed customer witness test. This is performed over the full operating range with multiple test points. Every unit tested has met all metrics defined in the specification. Importantly, the Neptune product run rate indicates in-field availability of over 98%. While having such performance data is clearly valuable, our facilities for live customer witness testing has made a significant impact. Via this facility, prospective customers effectively have the opportunity to try before they buy. By visiting ITM or participating online, customers can observe live performance and get access to a summary of the test data generated. Together, this is demystifying electrolyser system capabilities and performance, and therefore unlocking customer confidence. In addition, ITM has developed rapid data processing algorithms for our long-term in-house testing, and we continue to build our infrastructure to access more data and process it faster to maximize value for our customers and also for ITM. Now with its complement of current generation stacks, the Refine 1 system has also accrued tens of thousands of stack operating hours. Shell is assessing performance regularly, using a controlled and consistent test protocol, and to date no measurable degradation has been observed. Finally from me, and to bring us fully up to date, I'm delighted that Shell have made a positive final investment decision on the Refine 2 project. This was announced on the 25th of July and is another important project for ITM. It will see us supply 100 megawatts of Trident stacks and skids. This is in addition to the 10 megawatts that's already at site in Refine One. Linda has been appointed as the EBC integrator, meaning that all our joint experience will be applied. Many of you will appreciate that Shell has a rigorous FID process. Prior to reaching their decision, Shell undertook an extensive audit of ITM. This covered our technology and also our operations in the factory. This, together with the performance of our latest generation of stacks in Refine One, played a major role in Shell's confidence to proceed to FID. So I see this as a strong endorsement of our technology and company. Repeat business from a leading industrial and well-informed customer is an important achievement and another valuable reference point for other prospective customers looking for a reliable electrolyser supplier. And with that, I'll hand over to Andy.