Hydrogenpro As

Good morning and welcome to Hydrogen Pro's first quarter presentation. Today, I am accompanied by CFO Martin Holte, who will present the financial result, and Odd-Anne Lorentzen, who will take you through our latest technology development and the way forward. Hydrogen Pro, for those who are watching us for the first time, is a focused company, concentrating on high-pressure electrolyser and gas separator skid, which is designed for renewable energy supply. We are addressing selected large-scale industry segments. For instance, in balancing of grid and power to gas in our 240 megawatt ACES project. Also in the steel production in our 100 megawatt SALCO project decarbonizing, as well as other related industry for refinery and ammonia as examples. Good morning and welcome to Hydrogen Pro's first quarter presentation. Today, I am accompanied by CFO Martin Holte, who will present the financial result, and Odd-Anne Lorentzen, who will take you through our latest technology development and the way forward. Hydrogen Pro, for those who are watching us for the first time, is a focused company, concentrating on high-pressure electrolyser and gas separator skid, which is designed for renewable energy supply. We are addressing selected large-scale industry segments. For instance, in balancing of grid and power to gas in our 240 megawatt ACES project. Also in the steel production in our 100 megawatt SALCO project decarbonizing, as well as other related industry for refinery and ammonia as examples. We will give you more updates on our deliveries, but reminding that Hydrogen Pro is delivering to two of the largest projects in the world. This puts us in the forefront position with operational projects. Customers asking for references and installations when addressing a supplier. As our two projects are among the first ones to start operation, few will have the same reference and documented performance. Some of the highlights from the quarter. First, Andritz was placing an order for 100 megawatt electrolyzer unit from Hydrogen Pro for project in Germany. Here we are still awaiting for the FID. There was awarded a $2.5 million purchase order, which now is in production. The new manufacturing line of advanced electrodes in Denmark started up. Investment is on time and below budget. And we had a successful completion of our large-scale validation test, which confirmed the performance improvements. We are now in the installation and commissioning of ACES in 2025, this year, and the SALCOS project in 2026. And we had an equity injection by hundreds in Mitsubishi, which was completed in January this year, and Longe being expected during the second quarter, pending the Chinese ODI approval process. Health and safety is being on top of our agenda, and it is satisfying to see the good trend continuing. The ACES project, as I mentioned, is now in commissioning, in cold commissioning as we call it, and will successfully now start up during the next months and quarters going into hot commissioning and full operation. On the SALCO delivery, we have delivered all components and assembly as well has started. and we will now start the production of generation 3 electrodes and deliver it from Denmark. In Denmark, we have now produced the first electrodes at the new production line in Aarhus. And I'm glad we are on budget, and although we are still optimizing the production, we see that quality-wise, we are having much more stable results and process control. Thereby, we'll achieve further improved performances on the electrodes. We are also studying the possibilities of increasing the capacity in the line based on improved efficiency without any major capex. Last quarter, we referred to, at that time, the upcoming full-scale validation test. And now, during March and April, we successfully completed the test. The purpose was a full-scale verification of the generation 3 electrode, but also design improvements we have done to reduce, for instance, shunt currents. Half the stack was equipped with Generation 2 electrodes and half the stack with Generation 3. All results have been measured and verified with physical gas flow meters. There were also other technical parameters important to the total performance, which has been tested and verified. The stack is manufactured on our European value chain setup. The next step is now to reduce the power consumption even further on generation three electrodes. And we are now starting the process to increase the pressure from 15 bar to 30 bar. Where other OEMs are making a point of going from atmospheric to pressurized, we are already delivering 50 bar and now targeting to be supplying 30 bar by next year. Why is this important? Well, many customers need high-pressure gases, and to pressurize later in the value chain adds cost, both on the investment side and in operating the compressors. Odana will come back to both the result of the test and the way forward on our technology roadmap. And I will now give the word to Martin.

Thank you, Jarle. Then I will walk you through the Q1 2025 financials. So during the first quarter, revenues came in at 22 million. These are now mainly related to the ongoing deliveries on the South Coast project to Andrits. Gross margin in the quarter was 32%. This was negatively impacted by around 0.8 million on the ACES project. So when adjusting for this, the gross margin would be at 69% during the first quarter. Personnel expenses came in at 39 million, a reduction of 3 million versus the fourth quarter, while other OPEGs was at 18 million, which is a decrease of 13 million versus the fourth quarter last year. And the reduction is then primarily driven by lower professional services costs, travel costs, and project-related costs. So then we end up with an EBITDA that came in at minus 50 million. The EBIT was minus 55 million. And as you can see, the net financials was minus 10 million during the quarter. And that is explained then by the appreciation of the Norwegian kroner versus some key currencies being dollars, euro and Chinese yuan. So that was an appreciation of the NOC during the first quarter. So the net loss then came in at 65 million. We are now ramping up manufacturing in Denmark, and the remaining share of the deliveries to Salkos will now be delivered from our company. factory in Aarhus, Denmark, mainly during the second half of this year. Then let's look into the development in the liquidity position in the quarter. So the cash balance at the start of the year was 191 million and it ended at 165 million at the end of the first quarter. So the changes in the cash position were as follows. The EBITDA was at minus 50 million. Changes in networking capital of minus 23 million. We invested 22 million in the quarter. That was mainly then related to the production line in Denmark. And the investment in Denmark is now completed on time and below budget. The remaining part of the investments in Denmark will then be reflected now in the second quarter financials. The backlog increased from 305 million to 318 million, which now then includes a purchase order, which we were awarded during the first quarter of 2.5 million US dollars. This is a slide I have presented in connection with the fourth quarter numbers. The market is more challenging right now, and it's important to be conscious on spending. It has always been key for us to have a strict capital discipline and spend our funds wisely. But given the slow market we are facing, we are now taking some measures to meet the situation. The cost savings program consists of four main elements. downsizing in Europe, reduced use of professional services and external consultants, reduced cost in Tianjin and also in Shanghai. So in total, we plan to take out more than 40 million of costs annually. The program has been initiated and you already saw in the fourth quarter that the costs are coming down and the impact will continue now to increase during this year. I will now give the word back to Jarle to give an update on the market.

Thank you. First of all, as I already mentioned, we are a focused company and we are focusing on the partnership model. In addition to the capital side of investment that the partners are bringing, having large strategic partners, we are together offering a full delivery scope. Customers are normally asking for a lot larger scape than just the electrolyzer equipment of the plant. So a total EPC and often complete solutions all the ways from power in one end of the plant to dried and compressed gases in the other end is requested. So HydroGEN Pro is then focusing on our core delivery parts marked with the number one. With partners, it puts us then in a stronger position in addressing the market, but also together developing the technology. And here I refer to the full-scale test, as I mentioned earlier in my presentation. Hydrogen Pro is focusing then developing and offering the best core technology and equipment. And the partners provide then the full scope and also sharing the risk at levels Hydrogen Pro would not be able to do alone. And such partners are thereby giving us better bankability. Going up the value chain, we see that synergies can also be realized on the supply and manufacturing side together with the partners. So we are now exploring these together with our new partner, Longe. Partners like Andrets and Mitsubishi are already preferred suppliers to customers. and other verticals looking into decarbonization or entering the hydrogen space. Although we are focusing on the large scale market, we do see that several projects are beginning at a smaller scale. So, do not forget our partner, the IHK. Maybe not as large as the three other partners, but important in addressing the small application market. PAM is often addressing smaller scale projects based on solar and wind energy with load variations. Pressurized alkaline is equally responsive to load variation and fitted to a special containerized solution. JHK is now developing projects in Germany and Benelux. The standardization with prefabricated container solutions brings all the same benefits as PEM in small projects, but it is more cost-effective and eliminating all use of rare metals. Looking at the world map for IEA, we can see, based on renewable energy prices, where it's most advantageous to produce hydrogen. This without taking any government incentive schemes into account. Beside China, parts of USA and South America, Iberia, UK, Scandinavia, Middle East and India as well as Australia are recognized as attractive areas. And some of the same regions have also developed clear political and governmental policies to excel the green hydrogen economy. with set ambitions of around a compounded annual growth of up to 50%. Yes, we do realize and see several what I would call negative articles regarding cancellations and postponements of hydrogen projects. But not all being negative, the hydrogen development train is rolling, although we would like to see it rolling faster. And looking at the map I showed based on attractiveness and where we have identified active project development, For Hydrogen Pro, our main focus in then Europe and USA is currently less transparent right now. Although some of the projects, particularly in the Gulf area, are still progressing towards FID as they are communicating to us. So we maintain our foothold. Furthermore, we are looking into India and watching the Middle East. Based on end-user sectors, we have detected eight to nine large-scale target areas. And remember my first slide with the hard-to-abate sectors. You will recognize these in this slide as well. And also remember my slide on partnership for large-scale projects. Our three partners having already foothold with several companies within these sectors based on established business from other business areas like power and energy, decarbonization, steel, pulp and paper, and so on. Our pipeline remains stable. Yes, we see some projects falling out or delayed with longer horizon, but also new coming in, replacing those being pushed out in time. We are focusing on bringing forward the prioritized projects, thus increasing this pool. But in total, we are therefore remaining at 12 to 13 megawatt of prioritized projects. So to summarize, we are basing our market strategy on solid partnerships, enabling delivery power on large scale projects globally. HydrogenPro with partner developing standard small scale container solution to address this part of the market. Hydrogen Pro is focusing on three, four large market regions. Our offering is suited for the most attractive segments that are hard to abate and increase the number of prioritized projects getting closer to FID. And now I'm happy to hand over to Ord-Anne, who will take you through the technology development.