Fusion Fuel Green PLC

Research shows nostalgia can help you remember ads. So customize and save with Liberty Mutual. Hello, everyone, and welcome to Fusion Fuel Green's fourth quarter investor update. My name is Ben Schwartz, and I'm head of investor relations at Fusion Fuel. I would like to first remind everyone this call may contain forward looking statements, including but not limited to the company's expectation or predictions of financial and business performance, which are based on numerous assumptions around sales margins, competitive factors, industry performance and other factors which cannot be predicted. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions, and they are not guarantees of performance. I encourage you to read the disclaimer slide in the investor presentation for discussion of the risks that may affect our business or may cause our assumptions to prove incorrect. The company is under no obligation and expressly disclaims any obligation to update, alter, or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. so thank you all for joining us today i'll briefly run through our agenda for the next hour so we will begin the proceedings with some remarks from fusion chairman jeffrey schwartz then the management team will share some fourth quarter highlights financial results and provide a business update we will then open up the floor for a half hour of facilitated q a as in our previous quarterly calls all questions must be submitted in the chat box in the webcast platform For those of you who have dialed in and have questions for management, please direct your questions to the investor relations mailbox at ir.fusion-fuel.eu. So with that, I will pass it over to our chairman for some opening remarks.

Thanks, Ben. Good afternoon or good morning, as the case might be. I'm Jeffrey Schwarz, chairman of Fusion Fuel Green. We're about to begin an investor presentation where we will walk you through a summary of our financial results for the company's first full year of operation, and then update you on business developments as we pursue our plan to build fusion fuel into a global player in the developing green hydrogen business. In that regard, this may seem like business as usual. Make no mistake, it is anything but. Our thoughts are with the Ukrainian people. Russia's unprovoked invasion of Ukraine is an appalling violation of international law, resulting in a tragic loss of life, and even if there were to be a best-case outcome, will trigger a humanitarian crisis. As a medieval Iberian poet and philosopher wrote, I am at the edge of the West, but my heart is in the East. Before I turn it over to Frederico Figuera de Chavez, Fusion CFO, I'd like to offer a couple of observations on the company's first full year of operations. As I've said in past calls, my experience, based on more than 40 years as an investor in public and private companies, is that if you are serving the right market with the right people and the right product or technology, you have a recipe for great success. Well, 2021 confirmed for me that fusion possesses those three attributes. While green hydrogen is still a nascent market, interest in it accelerated throughout the year as evidenced by the pace of incoming inquiries from potential purchasers of technology to produce green hydrogen or alternatively to purchase the green hydrogen itself. We were and continue to be successful at building out our team of talented and experienced individuals, and so doing strengthening our R&D, production, and business development functions, while also establishing a presence in Australia and North America, both being among the most attractive potential markets for our HEVO solar technology. Test results at our first hydrogen farm in Evora, Portugal confirmed levels of production modestly in excess of what we had expected. Our R&D team continues to innovate with a goal to constantly be bringing down costs and increasing performance of the HIVO. And the volatility in energy markets, which resulted in spikes in both natural gas and electricity prices in Europe, demonstrated the unique value proposition of our off-grid solution for producing green hydrogen. Well, one could be forgiven for wondering, given all that, why the disappointing share price performance? I'll simply quote Ben Graham, the father of value investing. In the short run, the market is a voting machine, but in the long run, it is a weighing machine. Our goal with Fusion Fuel is to capitalize on our early mover advantage to build a heavyweight in the green hydrogen business. With that, take it away, Frederico.

great thank you very much jeffrey and thank you all for joining us today i look forward to updating you on our progress as always before we get into the meat of the presentation um i want to recap for any new joiners on what fusion fuel is all about um in the next in a nutshell we aim to deliver cost-effective clean hydrogen solutions We do this through our proprietary miniaturized electrolyzer combined with our concentrated photovoltaic panel. This allows us to offer a fully integrated off-grid hydrogen solution that delivers a market leading cost of green hydrogen production. Before going into the details of the company update, I'd like to touch upon the hydrogen market overall. As Jeffrey mentioned, the tragic events in the Ukraine have a direct impact on both the energy and hydrogen markets. The continued increase in the cost of natural gas has a direct impact on the cost of grey hydrogen, now reaching values of around €4 per kilo without including the carbon charges. Due to the ongoing uncertainty in the market, This is a commodity that may continue to experience significant volatility in high prices. This is generating interest in green hydrogen from players industries that were previously reluctant on making the shift from greater green. However, with energy prices also hovering at very high rates, any solution that requires energy from the electrical grid are not commercially viable. FusionFuel's off-grid integrated solution is perfectly suited for the current market conditions, and we have been seeing continued increased interest in our HEVO solar. On the hydrogen market overall, we've also been seeing increased interest in the mobility sector in hydrogen, which is very exciting that this market seems to be taking shape even faster than we initially expected. Jean and I will update you on some of the company financials, the main events that happened in Q4, as well as some more of our recent developments that we've also been announcing. As we will dive into some of these items here later in the presentation, I'll briefly focus on the items that are not outlined later on. Firstly, we continue to add significant talent to our team. And most notably, at a very senior level, we added Teri Jester to our board, bringing with her a wealth of experience in product development, production management, and renewable energy. We also brought on three new executive committee members with David in Australia and Zach and Jason in the US, all three bringing substantial knowledge and experience to our executive team. and they highlight our ambition for significant growth in those markets. Both the US and Australian regions present an enormous opportunity for our technology. Dave, Zach and Jason have the experience to not only open up these markets for us, but also to help us across several strategic projects we have in the company more broadly. We're very happy to have them on board and they're already having an impact in the company. On the financials, we will provide more granular detail when we submit our audited financials as part of the 20F in April. So we continue to now for the course, we just do the sort of financial flash. In the fourth quarter, we recorded negative operating costs, i.e. a positive P&L impact of €11.1 million. This was significantly driven by a release of previously recorded share-based payments. This is a non-cash expense, or in this case, a non-cash release. The release is due to the forfeiture of the contingent capital consideration by three of the four parties involved in the 2020 Business Combination Agreement. This was driven by a desire to remove a conflict of interest that the structure created between executives and shareholders. So this is overall beneficial for the company. This resulted in a reversal of 19.6 million euros, which when netted with a Q4 share based payment charges, leaves us with a net negative share based payment charge of 14.7 million euros as outlined on the slide. In terms of actual cash expenses in the fourth quarter, we saw an increase of 1.7 million euros quarter on quarter. This increase was driven by large expenses during the year that were booked in Q4. These include around half a million related to various auditing, accounting, and grant advisory services, higher recruiting costs related to several senior and specialist function hires, and the booking of several large yearly administration costs, such as transportation, rent, travel, and business expenses, which fell in the fourth quarter. Going forward, we will be amortizing that throughout the year, and so that one-off impact will not be seen in 2022. In addition, in Q4, we also welcomed 15 new hires in the quarter, including some senior managers, which also increased our personnel costs. For guidance for future courses, we expect our operating cost quarterly run rate to vary and to devolve from around 2.3 million to 3 million per course as the year progresses and as we continue to grow the team. In Q4, we recorded a pre-tax profit of 24 million euros. And as much as I'd like to take credit for that, this was also driven by another very large positive non-cash impact. And it's mainly driven by accounting practices and standards. As mentioned in previous courses, we need to recognize fair value movements on outstanding warrants. With the negative market developments at year end, we needed to book a release of 13 million euros in the fair market value of these instruments. In terms of cash, we've closed the fourth quarter with around 35 million euros in cash or other liquidity instruments. And the main drivers of the 7 million cash drawdown in Q4 is comprised of the 3.65 million operating costs I mentioned earlier and another roughly 3.5 million euros in raw materials and capex investments. Now for our outstanding shares and warrants remain unchanged from the third quarter. As outlined in the third quarter, we introduced an employee incentive plan to both incentivize and retain personnel and ensure their alignment with shareholders, but also as a form to attract talent. So this is reflected in the very last line here on this table. This is the restricted stock units. We believe these are critical instruments to help us deliver the growth potential to us. And these restricted stock instruments are well-vest over several years. So they form a form of a, how do I say, lock up for some of our key employees as well. Now going into the business update, now that I've done the more dry and sort of technical part of the presentation, we're excited to show you what we're working on and where Fusion Fuel is today and where we're already being a pioneer in the green hydrogen market. I'll start by sharing our five key milestones for 2022. As you'll remember from last year, we had this slide each quarter outlining what the priorities for the year was. Our intention is to do the same in 2022. So our five key priorities start with production. This is the go-live of our Beneventa facility. So the benefit facility is critical for our growth. It's critical to deliver not only the increased production capacity, but also the reduction in unit costs of the HIPAA solar and also on the securing the grants and financing for this facility. Then secondly is to continue to close both hydrogen purchase agreements and tech sales contracts to fill our 2022 and 2023 targets. And importantly for that is also to secure grants for projects and development. So there's enormous amounts of grants and programs available for clean hydrogen and green hydrogen solutions. And we want to make sure that we are heavily participating in these. On third tech, this is critical. We continue to evolve our HEVO and HEVO solar technology. At the heart of our company is a large technology component. We intend to keep innovating, keep staying at the forefront of the technology piece of the business. Throughout the year, we will be launching different generations of the Hibosolar. These will either improve on the performance or will improve in the cost of the product. So this will be a continuously ongoing process, not only in 2022, but also in 2023. We also want to introduce green oxygen capturing capabilities to our solution. So our solution does produce oxygen with no emissions. So we want to have the ability to capture it. And we want to continue to innovate and develop further products. So over time, we want to not only have the HIVO Solar, we'd like to continue to work on new product development. Fourth, very important, is the project development. So this is our ability to deliver and execute some projects in flight. We'll touch upon a few of those in a moment. Also kick off and start the construction of some of the subsequent projects that we've already announced that we've already approved. And importantly, to secure the licenses for Fusion Fuel's multi-year project portfolio. But this is a challenging one because the licensing environment changes country by country and it's a very new world. But this is a core priority for us to make sure that we're able to deploy our units into the ground. Lastly, and most critically, we want to ensure that we have a robust safety culture across all areas of the company. We have hydrogen producing facilities. We also have a production plant. Safety is going to be a principal pillar of the culture and DNA of this company. I want to start with Benevente. Very pleased to inform you that we have secured just under 10 million euros in financing support for the development of the Benevente production plant. It represents around 25% of the total investment expected in that plant over the coming two to three years, where we then plan to have a production capacity of around 500 megawatts per year. The installation, as I mentioned, is at the heart of our growth plans. And the financial support that we obtained from Portugal's trade and investment agency highlights Portugal's commitment to its announced hydrogen ambitions. We'll continue to provide updates on the Benevento facility and development of it in the coming pauses. Now, a quick update on Evro. So Evro-1, as Jeffrey mentioned, continues to produce hydrogen and receive visitors to site. This was the critical and most important function of this demonstrator site. It also, as Jeffrey referred to, continues to perform between 5% to 10% better than was expected, depending on solar radiation, which is absolutely fantastic. We continue to work through the licensing steps required for full commissioning with significant progress already made. We hope to fully go live in the coming months. Evra is a true trailblazing project. It's the first solar to hydrogen project in Iberia. It's the first project that uses hydrogen as energy storage to feed into the electrical grid. And so while everyone is talking about green hydrogen, we are the only ones currently delivering clean hydrogen from renewable energy source through to the electrolyzer, through to the end storage. The challenge is that we are also forcing the development of new standards and licensing frameworks as part of being at the forefront of this market. Over time, we expect that framework to become more straightforward with subsequent projects. I'll now pass on to João to update on some of the upcoming projects we have.