Hydrogenpro As

Hydrogen Pro is a key player in the energy transition. Using a minimum of scarce natural resources and no noble metals in the process. We decarbonize the planet. One electrolyzer at a time. We keep a strong focus on quality and compliance throughout the value chain. Deliver through the whole life cycle. It is the employees who make the difference on all levels. We are energy givers, constantly looking for greener ideas, better materials, smarter methods. We try, learn, and try again. And for each lesson learned, we share the knowledge as a team. We earn trust by providing proven solutions. The challenges ahead might seem big. Hydrogen Pro is a key player in the energy transition. Using a minimum of scarce natural resources and no noble metals in the process. We decarbonize the planet. One electrolyzer at a time. Deliver through the whole life cycle. It is the employees who make the difference on all levels. We are energy givers, constantly looking for greener ideas, better materials, smarter methods. We try, learn, and try again. And for each lesson learned, we share the knowledge as a team. We earn trust by providing proven solutions. The challenges ahead might seem big. And they are. But we know that by powering innovation, we are energizing tomorrow. We are changing the world for good.

Good morning and welcome to Hydrogen Pros second quarter presentation. Today, I'm accompanied by CFO Martin Holte, who will present the financial results of the first half year. We are still in a market which is moving slower than expected some years ago. But we do see, on back of our deliveries to ASIS and Andrets Saltskitter, ever increased attention. Of the highlights from the second quarter, we decided to invest in increased capacity of our Generation 3 electrodes, as we are receiving more and more interest and requests to quote, including the Generation 3 electrodes. Thus, we decided to enlarge the capacity in Denmark to match our capacity in China. We had a positive development of the cash balance of 62 million Norwegian kroner. We have good progress on delivery of components from our plant in Tianjin to Andrids plant in Erfurt. All electrolysers and gas separator skids are delivered and installed at ACES. We are in good progress of commissioning preparation. We are also learning that some additional work has been required, mainly on equipment delivered from sub-suppliers. It has led to additional costs for the period, but we will seek recourse from our sub-suppliers. Martin will comment further on the effect of this. As well known, our partnership with Andris was strengthened through the 82.7 million investment in Hydrogen Pro. Again, as mentioned, based on increasing requests for quotation of Generation 3 electrodes, there is a need to prepare capacity. We first announced a conservative number on the capacity. But having worked closer with the engineering and design of the production line, we now see that we, within the same CAPEX frame, can reach a higher production volume from 100 MW to 350 MW. We are mainly optimizing on tack time, rinsing and drying capacity. This enables a higher production. We are also now studying the possibility of even further capacity increase and expansion within the current CapEx frame. As we often point out, that capital discipline is a strong focus point in HydroGEN Pro. And therefore, we are working hard on getting out the most of each KRONE investment, as we are in this project. The plant will start operating in Q1 2025. Hydrogen Pro is one of the very few hydrogen OEMs delivering on large projects. We are now proving that we can deliver large complex systems. I cannot give an exact date for the startup of ACES, but at that time, no other can currently demonstrate or having similar references at such scale. You do not find any better proof of concept. We have also, in cooperation with Andrids and the customer, decided to enhance the performance of our delivery. And of the delivery to Salzgitter, we will equip a certain number of electrolysers with Generation 3 electrodes. This gives a unique opportunity to demonstrate the effect of the generation 3 electrodes at full scale. I just visited ACES and it's impressive to be there and to see 20 electrolyzers side by side in one of the production halls. I must say one gets humbled but also very proud to see what we have accomplished in this delivery. According to the IEA, there are 10 projects with a size of 100 megawatt or larger that will come online in 2025 outside of China. Probably some of them will stretch into 2026. Hydroden Pro is one of five or six OEMs that will deliver on mega projects. This puts us in a forefront position with operational projects. As our two projects are among the first ones to start operations, few will have the same reference and documented performance. New customers are asking for references and documented performance. There are very few OEMs who can refer to such installations and document their performance. The significance of the two projects has created recognition and attention, whereas we see an increase in requests from new potential customers. Yes, it is a long way from request to FID. where we have to recognize that there has been a slowdown in FIDs completed due to cost of energy prices, increased inflation, and a clarity in incentive schemes. But all in all, having delivered two megaprojects is giving us recognition and a leading position. Before starting up the ACES project, Mitsubishi invested in a full stack installation at our site on Hawaii called RVP. The electrolyzer is still there and has been taken over by Hydrogen Pro. Now, Andrets is investing in an additional stack called Stack 1, which will be installed alongside with the first RVP electrolyzer. Stack 1 will be equipped with 50% of the electrolyzers being the generation 3 electrodes. In addition to design improvements we have done to further reduce shunt current effects. The combination of reducing shunt currents and using generation 3 electrodes will enhance the performance by reducing the energy consumption or kilowatt per hour per kilo hydrogen we are producing. The result being a reduced levelized cost of hydrogen. The stack one is now being assembled in Erfurt and will be shipped to Heria in October and then being installed. Stack one will be then operating for 500 hours when we will document all operational performance data. We are now in discussions with an interested party to acquire both stacks and to operate them commercially. Given the slow market with FID announcements first half years, we will illustrate a snapshot of our pipeline. And rest assured, we are working with a healthy pipeline. The mega projects we are delivering is clearly drawing attention and interest, where we are taking step by step in terms of completing and finishing them. We are now currently focusing on 43 projects with a total capacity of 7.6 gigawatts. Obviously, there are no guarantees that all these projects will cross the finish line to an FID, but I remain very optimistic for the future. Going forward, we are focusing on five key priorities. Firstly, and as commented already, a successful installation and commissioning of ACES and the delivery to Salzgitter. We are focusing on increased order intake and continuously building a healthy pipeline. And as we see projects coming to maturity, leading to increase of order intake. And then the full-scale documentation and testing together with UNDREADS. I will now hand over the rest of the presentation to Martin.

Thank you, Jarle. Then I will walk you through the Q2 results. So in the second quarter, we generated revenues of 50 million. This is mainly related to the first deliveries on the Saltskitter project. Further on, the quarter is then significantly impacted by the ACES project. The gross profit was minus 22 million and the EBITDA was minus 65 million with a net loss of 77 million in the quarter. The negative gross profit is then attributable to additional costs on the ASS project, with a total negative result impact of 36 million in the quarter. So to get a better understanding of the underlying business, we have then excluded the negative impact of the ACES project on the group level in the columns on the far right side. So when excluding ACES, the revenues come in at 54 million. Gross profit at 14 million, which equals then a 25% gross margin. And the EBITDA is then improved to minus 29 million. Then let's look at the liquidity position. The cash balance ended at 247 million, an increase of 62 million during the quarter. Looking at the changes in the cash balance, going from left to right, the quarter started at 185 million. We had then the EBITDA of minus 65 million. No investments were made in the quarter, as the payments now for the investment in Denmark started in the early part of the third quarter. But then we have the Andrids equity injection of 83 million. And then lastly, a positive change in net working capital on others amounts to a positive impact of 45 million kroner. And the main driver of the change in net working capital is prepayments on contracts. This results then in a cash balance of 247 million at the end of the second quarter. The order backlog ended at 416 million versus 445 at the end of the first quarter, as there were no significant contract awards in the second quarter. HadronPro has proved that it's possible to scale up and grow profitably while maintaining a strict capital discipline. And we will continue to do so going forward. Our top priority is to invest in technology, to be a technology leader. And our high R&D activity during the last few years is very much enabled by significant amount of R&D grants in Denmark. The electrode technology is a game-changing technology and we have decided to now expand the manufacturing capacity in Denmark. Hydron Pro has chosen one core electrolyzer technology, large-scale high-pressure alkaline, hence a focused offering that is scalable to meet different project sizes. And with this platform, it gives us then an operational leverage where we can grow and at the same time maintain a lean global organization. And further to that, instead of building a large organization, we have partnered up with Andrits in Europe, and we see this gives us a far better market reach. To generate industry-leading returns, we also have a strong focus on a competitive and flexible supply chain with our setup in Tianjin and now building the electrode manufacturing in Aarhus, Denmark as well. And lastly, we focus on retaining a sustainable networking capital when we take on new contracts to continue to grow the company. And that became now evident in the second quarter this year. First of all, Hydron Pro is a technology company. The total addressable market for Hydron is huge. Green hydrogen can replace fossil hydrogen, being from natural gas or from coal, but it can also replace fossil fuels where hydrogen is not used today. Hydrogen is all about bringing the levelized cost down. With our large-scale offering and technology, we are in a very, very good position to be competitive on a global scale. Delivering on ACES and the Andris contract now with Saltsgitter gives us credibility with a track record that demonstrates our ability to deliver on the large projects. We have a manufacturing capacity of around 500 megawatts of electrolyzers and 350 megawatts of electrode capacity now being built in Denmark. We have a scalable offering. We can deliver up to gigascale sizes on projects. And a large part of the revenues will be from after sales, which then will create recurring revenues when we have installed several plants going forward. We are a team with extensive experience in the intellectual space, bringing the best out of the competence we have in Europe, Asia and also the US. So with that, that concludes today's presentation. Now we will go to the Q&A session and I will ask Jarle to join me on the stage.