Good morning, ladies and gentlemen, and welcome to the Ceres 2024 full year results meeting. In a moment, Phil Caldwell, CEO, and Stuart Paynter, CFO, will take you through the results. Just a reminder, there'll be a Q&A session afterwards, so if you're in the room, please wait for a microphone to reach you before asking your question. If you're participating online, please type your question into the box provided, and we'll address those too at the end. With that, I'll hand over to Phil to talk you through our record year. Thank you.
Good morning, everybody, and thank you for joining us this morning. I was just thinking on my way in, this is probably my 11th or 12th year of doing the full year results for Ceres, and it's an interesting time to be doing it because what we're reporting today is a record year for Ceres in almost every metric. The business has never been in a stronger position than it is now, despite quite a few economic uncertainties and headwinds. I think we can dive into that this morning, into why I think the business is in really good shape now and for the future. Many of you know the business, but just a quick reminder, we are world leaders in solid oxide technology for both power and hydrogen generation, and I think that's fundamental.
We have unique IP because what we do is difficult, unique, and valuable to many nations looking to decarbonize, many companies looking at how they reinforce power grids right now. It is protected by over 150 patent families. Because it is unique, difficult, and well protected, we can apply a licensing business model that is able to go cross borders at a time where we have tariffs and trade wars going on around us, where we are seeing more localization of production, where we are seeing more shortening of supply chains. We have a very strong position, not just in technology, but in the way we apply the technology to the business model. We continue to collaborate with some of the world's leading companies to deliver clean energy technology at the scale and pace that we believe we need to tackle the urgent need for decarbonization globally.
We have a platform technology, and the uniqueness in the cell, we're not going to go into too much this morning, but the fundamental architecture is based upon low cost, highly available materials that give us the metal supported solid oxide technology that we can apply in two directions. On the one hand, we have licensees applying this for power generation, so that's Doosan in South Korea, Weichai has a license in China, and we added Delta in Taiwan this year. That side of the business is addressing some markets such as AI and data centers, which are starting to see rapid pickup, distributed power, and decarbonization of shipping. You run that technology in reverse, you can produce green hydrogen for industrial decarbonization.
For those parts of society that you do not have an obvious alternative for decarbonization of things like green steel, green ammonia, synthetic fuels, this technology integrated into production facilities gives one of the lowest electricity burden or the highest efficiency that there is in terms of solid oxide electrolysis. We have attracted two partnerships in the past year for electrolysis, Delta in Taiwan and Denso in Japan. We continue to work with end user and system partners such as Shell, such as Thermax in India, such as Linde. I think this is a very important part of the business. As we have seen, you know, some uncertainty, some slowdown on green hydrogen in some parts of the world, and some pushback towards oil and gas in other parts of the world, you have both of these strands to the business.
We have the power generation side with licensees there, and we have the green hydrogen side, which provides something of a natural hedge for the business as we go forwards. Like I said, you know, I've been doing this quite a long time, and this is a year to be proud of. You know, it's a record year, and Stuart will take you through the numbers, but it's a record year in terms of revenue, record year in terms of order intake, record year in terms of gross margin. The business has a very strong financial position and a global footprint. You know, a key milestone we've been working on for a number of years is in South Korea with Doosan.
We expect that factory to come on stream in the second half of this year and really start to produce products which will prove out this business model all the way through to royalties. We are very excited about our relationship with Delta in Taiwan, really world-class manufacturers who have taken the license for both the FC and the EC side of the business, targeting already markets they are in, like data center equipment and also industrial hydrogen markets. In Japan, Denso, one of the world leaders in manufacturing, has completed the upfront technology transfer, having taken the license in the middle of last year, and is really looking at, again, industrial decarbonization in Japan and beyond. India has huge ambitions for green hydrogen, converting green electrons into green molecules such as green steel, green ammonia, et cetera.
We have a system license arrangement with Thermax that takes us into that growing market. Lots of positive steps last year. Since last year, we have to acknowledge we've had the disappointing news of Bosch stopping the collaboration for production of SOFC in Germany. You know, Bosch's statement is pretty clear. They've stated they had no concerns over the technology. The technology had reached a high level of maturity, and the relationship with Ceres was good. This has been taken at a more high level strategic decision, and there's more reflection of the economic pressures, I think, that are prevailing in that industry and also in Germany at the time. It does create a short term issue around the shareholding, and we are working with Bosch and its advisors in how they divest their shareholding.
It will obviously maybe create other opportunities as well in the future for us. The portfolio effect of our manufacturing partners and our system partners largely mitigates the impact of Bosch's decision for 2025. With that, I'm going to hand over to Stuart to go through the numbers in more detail.
Thank you, Phil. Good morning, everyone. On that, Phil, this is my first full year results for Ceres, so I'm extremely excited to be here, especially in the year which Phil has described as being a record for us. You know, let me take you through some of the numbers and then some detail around how we generate some of those numbers and a bit about our business model. As you can see, I mean, Phil referenced a record year, revenues GBP 51.9 million, that's a record, generating a gross profit over GBP 40 million, also a record. Importantly, the order intake, the order intake of more than GBP 110 million is generated by these, the majority of which is generated by these two big licensing deals we did with Denso and Delta. That is the fundamentals of the business we're in now.
You know, we've said that we're targeting one new manufacturing license a year, and that really is the driver of both revenue, profitability, and gross margin within this business. You know, that continues to be our number one focus as we move forward. From a cash perspective, you know, north of GBP 100 million as at the end of the year is a strong financial position to be in. You'll see that, you know, both in some of the actions we've taken and the momentum we've driven through the commercial activities, we're looking to reduce the spend in the business through the restructuring we did in Q4 2024. Obviously, you'll see the cash burn coming down largely, you know, driven by the number of partners we've signed. From a revenue and gross profit perspective, there's the evolution over the last few years.
You know, you'll see how affected our numbers are by signing licensing agreements. You know, we're a licensing business. We need to sign licensing agreements. It's what we're focused on. You'll see it's one of the areas of investment in terms of our cost base. That's the right area to invest. We need to attract these great clients like Denso and Delta, and they're going to be royalty generating in the future. As Phil said, we need a portfolio, a large portfolio. We need to keep attracting clients, and that's driving revenues in the short term. We'll continue to try and meet this trend. The licensing model affords a very flexible cost base. As you saw, the gross margins are in the high 70%. When you look at this cost wheel, the cost of generating our revenue is very low.
You'll see that it was GBP 9 million in 2023 and GBP 12 million in 2024. That's driven by the increase in revenue. That's a good place to spend with high margins. You can see the sort of characteristics of our cost base elsewhere. The R&D numbers come down by GBP 5 million between 2023 and 2024. That really reflects the sort of peak investment post the fundraise we did in 2021 in generating the technology we need to attract licensing partners for SOEC. You'll see on the admin side, we've kept that flat, which is what people are looking for. On the commercial side, you'll see we've made the investment. You know, we're investing in those places that make a real difference to the top line.
None of this includes the impact of the change we made at the end of Q4 2024 that we'll see flow through the 2025 numbers. You know, cost management is a very important thing for us in the markets we find ourselves in, and we're taking that very seriously. From a cash outflow perspective, what does that mean? You'll see that we peaked in 2022 with the investment in getting the SOEC technology ready, and that's crystallized into licensing partners in 2024. You know, this cash is largely driven by the number of deals you can do, so it's rather binary. Everything behind that we can control. We are controlling both on a cost perspective and a cash management perspective and investing in those areas which give us the best chance of generating the revenues. This is an interesting slide.
This is a new slide for people. People were asking us, you know, how an MLA, a big manufacturing license agreement, sort of accrues over a number of years and the ongoing impact it has on our revenues. You have seen with both Denso and Delta, the license fees were in the 40 millions, mid-40 millions. This is roughly how the license fee is split over a three-year period post signing, not calendar years, but it depends when you sign it in the year, but this is just supposed to be indicative. The first year, first 12 months after signing, it is about 50% of the revenue and then 25% for the next two 12-month periods.
You can see some of the activities which go on in that three year period with the aim of getting them to start production in a condensed timeline of three years. This is exactly what Delta said they can do. They signed with us beginning of 2024, and they publicly stated they're aiming to be on the market end of 2026. That's, you know, a testament to the number of times we've done this now, the condensing of the timelines of swapping the information, sharing the information, building their supply chains, and helping them get to market with the right systems. We are getting better at this as we do this, and the portfolio effect of this offering to partners is what we're selling going forward. This is the longer term.
You know, right now we're at that stage where it says Doosan on this chart. We're expecting our first royalty check this year from Doosan, the first commercial sales of the SOFC offering that they're giving to the market. In the longer term, you know, we're looking forward to being able to reap the benefits of being a licensing business, which is that the royalty base and the royalty revenues will grow and become a more and more substantial part of the royalty base. You know, that's a far more predictable, sustainable, profitable company you can generate. At the moment, you know, our success is dictated by the number of manufacturing licenses we can sign to keep that three year momentum going you saw on the previous slide. Over time, that'll transform itself into a royalty model, and that's what we're looking forward to.
The more clients we can have, the bigger portfolio effect, as Phil said, we can have, the more chance we have of being successful. To finalize, you know, we continue to develop new partnerships, as we've said before, one manufacturing partnership a year, which is the cost base we've set. The cash burn would be, you know, between GBP 20 million and GBP 25 million. With two in a year, we'd look to be breaking even at this point as we add momentum to that three year cycle you've already seen. We're well placed for that growth. The existing licenses are really going flat out. Future partnership prospects, the pipeline is looking good, and we're seeing, you know, more prospects in the SOFC world with data centers, et cetera.
The cost base rationalization we did at the end of last year will pull through into this year, and we'll see decreased costs. You know, I think we're in a strong position to both, you know, maintain that cash balance, manage cash throughout, and be able to get to that profitable royalty generating status without needing any more funds. With that, pass back to Phil.
Thanks, Stuart. Just a quick update or a reminder of the business strategy. You know, our growth strategy is based upon three key pillars: commercial acceleration, technology leadership, and probably most importantly, execution at the scale and pace that we need. Commercial acceleration first. We now have three manufacturing partners starting to establish factories globally. We also have a balanced business model, which is quite interesting because it creates both near term and long term opportunities for the business, both in terms of the power generation side and the hydrogen market side as well. This is probably more important than ever given the uncertainties around the pace of the energy transition right now. Technology leadership, Ceres is, you know, the leader in this technology globally. We have a fantastic team, and you've seen it from the cost base.
Most of our resources are people, world class scientists and engineers. You know, we've invested a lot in enhancing things like digitalization and modeling so we can now predict and develop faster durability models, doing things a lot more digitally rather than in hardware. Also, we're doing some big stuff as well, you know, taking it through to system development. We have the megawatt scale demonstrator literally coming on stream now at Shell in India. That will be a significant proof point for us on the technology side on SOEC. Execution at scale and pace. I think a key milestone is when first products come out in the market with the Ceres technology. I think that is a key moment for the business, and we're expecting that this year.
Obviously looking after new licensees that we brought on last year and adding to that, Delta in Taiwan, Denso in Japan, Thermax in India, as well as the relationship with Doosan and others. This is a photograph. Some of you have seen this video before. This facility is incredibly impressive. You know, it is the size of three football pitches. It is a state of the art production facility in Doosan. We have been working with them on this for a number of years, and that will come on stream, as I said, in the second half of the year. Their footprint obviously is South Korea, but they also have the US footprint as well. This is for fuel cells. This is purely focused on power generation for markets like data centers, like commercial industrial power, like maritime power as well.
The first market opportunity is on the power system side. When we look at that, you know, you can do, you try and do bottom up or top down numbers. If we take a look at 2030, we believe that the market opportunity for solid oxide, assuming about a 20-30% market share is achievable for Ceres, it's equivalent to about a 22 gigawatt market. Now, if we get 20-30% of that, that's the equivalent for us of factory capacity of something like nine or 10 200 megawatt factories. There's not many players at all addressing the power system side. Probably our nearest peer or competitor is Bloom Energy. Just signed deals this year at gigawatt levels of production.
It's really interesting, I think, as we start to see this market grow, particularly if you look geographically at places like APAC, where we're very strong, obviously Americas, but MEA and the rest of the world, it does have this global footprint as well. We expect this side of the business is going to grow actually in the near term. The hydrogen side, I think people understand the size of this opportunity. Numbers quoted are a bit further out. We're quoting 2040 here. That undoubtedly is a huge opportunity for this business, and particularly when we see those market applications that we talked about in steel, ammonia, synthetic fuels being just under half of that market by 2040 and the geographic spread as well.
That's really where we're seeing the traction that we have with partners internationally, particularly in Asia, looking at how do they make this business opportunity a reality in areas which are sometimes energy constrained, sometimes wanting to, which are renewables, want to be exporters of green molecules. That is how we see the hydrogen side. Two sides of the business, the power generation and the hydrogen side. Really our objective is to become the industry standard for solid oxide. There are not many players in solid oxide. When you compare that with alkali, I think there are something like 60 companies alone in alkali in China, and the costs coming out of China now are about a third of the rest of the world. You know, formidable competition there. When you look at PEM, there is obviously a number, a high number of players as well in that area.
When you look at solid oxide, there's a handful of players. As we create new licensees, it's entirely feasible we can become the industry standard. You know, each one of those entering the market, looking to have a significant market share of, let's say, at least 20%, you can very quickly get to high market share of this solid oxide business. The model is clear. It's about establishing a global ecosystem of world class partners. We have three cell and stack manufacturers being established concurrently. It's no coincidence that they tend to be at this stage in APAC. It's low cost, high quality, world class in manufacturing scale up. It's where we see the pattern with things like batteries, EVs, solar, and that's fertile ground for us in terms of where we expect to build a lot of the business capability in the near term.
It really accelerates their market entry for partners by leveraging the continuous innovation and development of our world leading solid oxide technology. The business priorities for 2025 are pretty clear for us. I've mentioned we're working hard to support partners get to market. Doosan starting production in the second half of this year is a big milestone for us. The commercial focus is on building out that partner portfolio, signing additional manufacturing and system partners globally. We're investing in the commercial activity around that as well. On the EC side, that demonstration with Shell coming on stream will be a big milestone because I think it's a proof point that attracts other potential licensees into the market.
As Stuart's been through, we have continued financial discipline through rigorous cash management and overall remain on track with encouraging momentum as we go into 2025 and we look at significant opportunities ahead. Thank you for your attention. With that, I think we're very happy to take any questions this morning.
Great. Maybe one there with Ken first.
Hi, Keller from Goodbuddy. As you observe, Phil, you'd in other respects be taking a victory lap on the results. As a loss making business, the value depends on people's expectation of future cash flow. That means in a way more than licensees, royalties down the line. The impact of Bosch is therefore that, you know, the confidence you have that someone who's spent hundreds of millions then decides not to go ahead casts a doubt over the whole business. The question is, what is it in the costs, the business model, the target markets for particularly, say, Delta and Denso that you think's different that they're effectively in the same timeframe zigging when Bosch's act, so to speak?
What would be your kind of summary of why they're going ahead and making an investment when another player who had significant investments and albeit other issues, but in Germany, which is very pro hydrogen, has chosen not to go ahead? Thanks.
Yeah, I obviously don't want to comment. I can't comment in too much detail on Bosch's go-to-market strategy and business. I think if you look at the trend and you look at the partners in Asia, I think there's a couple of fundamental things. One is it's definitely a lower cost base for manufacturing, particularly when you consider energy costs in places like Europe versus APAC, et cetera. I think also they do have pretty fertile market opportunities in their own regions as well, as well as the exporters. Most of those companies are looking to export, but also have a home market. They are world class in manufacturing.
You know, Bosch also has that capability, but I think it's a different approach maybe from an automotive base to some of these other companies in terms of the Taiwanese, for example, very used to high value, high production in terms of like their chip industries. That is probably a bit more akin to some of the work we do. You talk about a zig or a zag. I think the Bosch decision is somewhat unfortunate timing because I think that what we're seeing is on the stationary power side, we did have some headwinds, I think, particularly around hydrogen in Europe for power generation. That doesn't necessarily make sense, but for natural gas, it makes a lot of sense. I think with the situation in Ukraine, et cetera, the European market was a lot more uncertain than in recent years.
I think when you look at nations that are energy constrained, such as Taiwan, such as Japan, such as Korea, et cetera, this makes a hell of a lot of sense in terms of their needs for power generation. I think there's some fundamental differences. Like I said, I don't think we can ignore in Europe the cost base that Asia has. You know, we talk a lot about tariffs and content, and I use that example of alkali. Right now, I mean, there's a huge threat to European production coming from Asia Pacific and China. From our point of view, if we want to win in this business, we have to have the best technology provided at the lowest cost and scaled globally. We're somewhat agnostic to where that happens.
We follow the market, and those people are clearly, they believe in a very strong business position to actually win in those markets. I think there are some of the fundamental differences.
Chris.
Hi, morning. James Carmichael from Berenberg. Just a couple, I guess, just sticking with Bosch sort of for a second. Obviously, unfortunately, they've stepped away, but just wondering if that is potentially an opportunity for Delta and/or Denso to maybe accelerate some of their timelines. I guess there's some kit lying around in Germany that is no longer needed, or is that a bit optimistic? Maybe just on Shell and their demonstrator project, can you maybe just, you mentioned it's sort of being commissioned, it's being commissioned as we speak. Can you just sort of remind us, I guess, what happens next? How long do you need to sort of monitor the data for? Maybe just a bit of color on whether there are people sort of sitting around waiting for that data before they make a decision on that technology? Thanks.
Like I said, it's not for me to comment on what Bosch does regarding how it exits, but I think your observation is valid. I think it does create an opportunity for Ceres because, you know, we've obviously lost a significant strategic partner, but in some ways there have been other companies that maybe would have been closer to Ceres, but we were, you know, we already had significant strategic partners. That is now less of an issue for signing new partnerships. I do think commercially it could create some new opportunities for us. In terms of the Shell relationship, the one megawatt demonstrator is there to prove out 37 kilowatt hours per kilo of hydrogen production, which is world class in terms of high efficiency.
We already announced last year, we're beyond this, we're working on pressurized modules scaling up to 10 megawatts and above, and we're doing a lot of that work with Shell as well. I think that's an important part of that relationship. It goes beyond this first of a kind demonstration into what become the commercial building blocks that allow us to scale. That obviously feeds into our licensee partners like Delta and Denso as well as attracting new commercial partners.
I think we had a question from Chris.
Hi, Chris Leonard from UBS. Maybe two questions if I can. I think you mentioned growing demand over the last 12 months from data centers and seeing that end market for power generation growing. How do you think you guys are positioned to capture that? Will that come through existing partners, or do you think there's other players out there that you can target? On the existing partnerships, could that change their timeframes? Could they maybe pull things forward? Would that even be possible in terms of commercialization? The second question, maybe more to Stuart on the cash burn rate of $20 million-$25 million. In my head, that might have improved from previously $20 million-$30 million as a range ballpark. Is there anything in particular that's driven that? Is that being the restructuring?
Maybe any change there or any color there would be helpful. Thank you.
Okay, I'll answer the first part of that question. I think with the interest in the power side of the business, including the data center side, I think over the past 12 months or so, you've probably all seen that side of business interest growing significantly. I think one of the things that's not been obvious is a read across for Ceres. Because if you actually look at what Bloom Energy has done and done very well, there's very few other providers of this technology out there in the power generation side. Doosan, both in South Korea and also in North America, clearly is also targeting that same market. I think it's not so much an acceleration, but I think that demand is very helpful. You know, that pull is needed because, you know, we talked about, well, why didn't Bosch go ahead?
Maybe they did not have that pull at the time in Europe, but I think that is clear now. It is a clear signal coming from the market. First of all, you know, we want to get product out there with existing partners, but I do think it is a big opportunity. Delta, it is another target market for them. They make a lot of equipment that already services the data center market. You know, a lot of their power management equipment, et cetera, goes directly into that. What is really good about them is they are already in that supply chain. They are already selling to those customers, et cetera. They know them very well. I think we will see new entrants coming into that. I think it is part of the business that we do expect to grow, actually, which was not the case a couple of years ago.
You know, there was a lot of sentiment away from power generation using natural gas and fuel cells. Now I think it's swung back because just to remind people, it's more efficient than generating it from a centralized gas power plant or a peaker plant. It also lends itself very well to carbon capture as well because you end up with a much more concentrated stream of carbon off the back end, which is very, very straightforward to capture. It does have a very strong offering for those markets. Stuart, do you want to take the...
Yeah, yeah. From a cash burn perspective, 20-25, if we sign one licensing deal, we've said that we've, you know, built the cost base for. You know, I think there are a few variables in there. One is around timing and, you know, milestones and payment dates and those sorts of things. It's not an exact size, but what we do know is from the restructuring point of view, we were targeting about 15% of our costs. You know, we're confident we're going to deliver that. If you look at that cost ring, you take out the cost of goods, the rest is up for grabs. That's going to be sort of high single digit, maybe low double digit millions of GBP in terms of cost savings one year to the next.
Yeah, I mean, from a discipline point of view, we know that, you know, we need to manage the cost base to maintain the technology lead, which Phil said, and to be able to invest in the commercial side, but minimize all the other areas of spend and just be very efficient.
Good morning, guys. Thank you very much for the presentation. Just one quick question from me, kind of following up on the cash flow point, Stuart. I noticed that there's a GBP 15.7 million working capital outflow in 2024 due to some payments being received in January and not dropping in 2024. Should we expect that working capital outflow to then unwind in 2025? How do you look at that?
Yeah, we expect revenues to be broadly similar from 2024 to 2025, contingent on signing a single deal. That will unwind a little bit. We were slightly unfortunate. We received quite a lot of cash just after the year-end.
Okay, perfect. Thank you very much.
Hi, good morning, guys. Sky here. On the 2025 revenue guide of broadly similar to 2024, that kind of implies low 50s, but with the $5 million shift from 2024 to 2025, kind of implies high 40s. I am just kind of wondering if you can break that down a little bit more for us. For example, how much relates to new licensed partnership deals, if any? How much are you factoring in for royalty revenues, if any?
Yeah, I mean, we tried to provide some visibility on that slide that you saw where we broke it down over the three-year time period. I mean, you sort of answered your own question slightly there, Sky, because the GBP 5 million that moved, you know, the license fees are chunked down into sort of milestones. And those milestones can move between years quite easily, as you saw. There is a GBP 5 million move from 2024, between 2024 and 2025 that happened. And, you know, whenever we've got these milestones occurring by the end of the year or the beginning of the next year, they can move between years.
What we have just tried to do is say, look, broadly similar, given all of the milestones and given all the opportunities we see in front of us, we expect it to be broadly similar with a number of moving parts. We will give more guidance and hopefully more clarity at the July interims update. We just wanted to give some indication that the pull-through from the two deals we signed in 2024 should give a nice smooth sort of revenue profile for the next year.
Maybe I'll rephrase it and try and be a bit more direct. I've got GBP 37 million in my model for existing partnership revenues in 2025. That would kind of imply GBP 10 million on top of that from your guidance for new partnerships. Is that fair?
We're saying broadly similar. You know, we're at 51.9, broadly similar is about the same. You know, I mean, we're happy to give you some individual sort of advice if you're looking at your model, but you know, we don't all see in your model.
Fair enough. Worth a try. Doosan, Delta, and Denso, presumably you've been having conversations with them post the Bosch announcement. What can you say around those conversations and what's their reaction been?
Obviously, as you would expect, they're pretty private conversations with the senior management in those organizations. Broadly speaking, business as usual, no issues at all. Doosan are head down, you know, moving towards that production milestone, and we're supporting them in that. Denso is at an earlier stage, different market, EC, not FC. They are not really affected by that decision at all. Maybe it is an opportunity. Delta, what's encouraging about Delta is, you know, they're very commercially focused. They're building out demand. They're seeing demand ahead of time. You know, they have a different way of doing it, let's say, than other partners. They very much focus on the market and create that demand and then build the factory accordingly. I think that's all very positive as well. There's no negative impact at all.
You know, it's business as usual.
Is there any chance of those guys taking the Bosch stake?
Look, that's not for me to... You'd have to ask them.
Okay, let's just take a break for a moment from the room. We'll come back for any final questions in a moment. There are some questions that have come through from our online audience. Firstly, Phil, you've talked a little bit about potential for partnerships in Europe. What about the U.S.? What are your thoughts about the opportunities there?
I think as everybody realizes, the U.S. is somewhat unpredictable at the moment. I think the landscape, certainly on the green hydrogen side, has become very challenging right now. Our focus in the U.S. will be a lot more focused on the power generation side, which is absolutely clear as an opportunity. It is not going to be a big growth market we anticipate near term on the green hydrogen side. That is how we are seeing that side of the business. That is a different story, obviously, on the green hydrogen side in Asia, which is still very much on a growth trajectory.
Are there other territories where we see opportunities for the business? Are they in power or in hydrogen production?
Yeah, look, we're taking a global approach. You know, it's hard to think of an area that we're not active in, or at least having those early engagements in: Middle East, North America, India, APAC, China. I mean, that's the whole point about this business model is we will go where the market is because we're not locked into a manufacturing facility in a particular region subject to restrictions of tariffs or cost bases, et cetera. The diversity of this business model does mitigate some of the challenges maybe traditional pure-play manufacturers have right now as policy shifts. I mean, if you were building a factory in the U.S., you've probably seen people canceling those as well. I mean, it's in the public domain. Bosch has canceled a factory there that was going to be expanded on their side of the business as well. Not that it's solid oxide.
You've had other green hydrogen players planning things around IRA and then canceling them or pausing them. With our business model, we can go wherever that demand is. That's what we do. We follow the market.
Great. One that's coming on technology. What differentiates solid oxide from the cheaper Chinese alkaline technologies that are available today in electrolysis?
It's really efficiency and OpEx. It's not just the efficiency of the unit. Look, there's a lot of data on this now, and you can question Chinese quality, but it will get better. You will have a lower CapEx on the alkali from China, for sure. That's problematic versus other suppliers. If you look at the OpEx side, your alkali is 50-55 kilowatt-hours per kilo of hydrogen, whereas we're around 36-37. That's important because it's about a 30% reduction in your energy consumption, your OpEx, but also 30% less needed of your upstream power or renewable supply into that, or an upswing of, if you have that renewable asset, 25-30% more production from that asset. You have to look at the whole economics of the thing.
It's not just the CapEx cost of that electrolyzer unit. The efficiency drives a really attractive business case for levelized cost of ammonia, levelized cost of steel, levelized cost of hydrogen. And that's why, you know, a lot of players are starting to add solid oxide to their portfolio.
A couple for you, Stuart. Firstly, can you recap the order intake for 2024 and give us a bit more color on when that might materialize? Is that going to be over the next two or three years or beyond?
The order intake was just north of GBP 110 million. That is all orders taken in 2024. As you saw from the slide, we'd expect the orders, which largely are made up of Denso and Delta in that order number, to accrue over the next sort of 36 months in the sort of percentages we've listed there. About 50% of that order will turn into revenue in the first 12 months and then 2025 and 2026, roughly.
Okay. Do you have a sense of when we might expect to see royalties from Delta and Denso? Again, do we have any thoughts about where the applications or end uses might be for those royalties?
I think with Delta, we've already mentioned, I think their original plan is to have something by the end of 2026, so into 2027. The first products they're targeting are FC and then EC after that. Denso is EC, so not FC, and signed later, so you know is behind Delta in terms of that typical kind of cycle that we described here.
Thank you. Last one, just on cash position. Are we comfortable where we are with cash as a route into the part of profitability?
Yeah, we were carrying just north of GBP 100 million at the end of the year. As I mentioned, we had some cash inflows in January, which pushed up some working capital movements. Yeah, I mean, the answer is we're comfortable that we've got the cash to see us through the next phase of the business, given what we see in front of us and the opportunities from a commercial perspective to get to that royalty-generating sort of sustainable business that I laid out on the very colorful slide that gave the outlook for the next few years.
Great. Thank you. Let's return to the room. I think we had a couple of questions from Ken and Sean.
Hi, Sean McLaughlin at HSBC. Just your confidence in the new licensee in 2025, obviously your guidance embeds that. Just to understand really the confidence that that will happen in 2025, contingencies around that, what might the guidance actually look like with no new licensees?
I think it's as Stuart laid it out. I mean, if you look at the typical profile, and I think we already covered it in one of the slides, a typical licensee will add around GBP 20 million or so in the year. It's early on in the year. It's very difficult to give guidance at this point. Where was that slide? That one. The thing with these deals is they're large deals, and timing is very difficult to predict. We are building the portfolio, they're building the pipeline. I think what's important about them is once you land them, then they are taking that market share and building that royalty. They obviously have a near-term impact on cash. Actually, probably what's more important about them is the potential market share that they can take on the royalty path as well.
It is confidence levels at this stage in the year. We have a number of opportunities ahead of us. As the year goes on, we can give more guidance. We are not a company that is selling hundreds or thousands of units. We are selling large corporate deals. That is what we do. We sell them their investment cases to businesses that then, on the back of that, are investing in factory builds and several hundred million. Those kind of deals are complex and they take time. Because of that, they are hard to predict. When you land them, it is that long-term partnership.
Just thinking around the expansion of the commercial side of the business in order to effectively accelerate that whole process, I mean, it's clear that 2024 was a great example of how that is already working. Would you say that you are at a level of the commercial base that you need, or is that an area that you would need to expand further?
I think we're at a base level. We're adding a little bit to that this year. We brought on a new Chief Commercial Officer last year. He's got plans of how he wants to develop that regionally as well. We're carrying out some of that now. I think we're also realizing that we also need to address both sides of this market equally. We've had a big focus on green hydrogen over the past year or so. Now we're starting to see different kinds of market dynamics coming out in power generation. For that, you sometimes need different skill sets and different experience. We're looking to add some of that capability as well.
Last question, if I may, just with this pivot, I guess, towards the higher commercial cost, at which point will that need to pivot back to R&D to ensure that you have a next generation platform to kind of keep those conversations more active?
No, I don't think it's a pivot back. I think that when you look at the breakdown of where our investment goes, the majority of our 500 or so people are scientists and engineers, et cetera. So we have a very strong technical leadership basis in the business. That's not temporarily being starved of resources while everybody goes off into commercial. They're very different people, as I'm sure you would probably appreciate.
When you look at the restructuring we did at the end of last year, as a licensing business, understanding we need to be at the technological forefront of our area, we have costed that with the right resource, the right levels of people, the right skills, the right experiences to generate that technology leadership. What you are seeing here, the biggest spend in 2023, for example, was the very, very heavy lift of proving out the fuel cell in hydrogen, which is now done. Now we are into lifetime and cost management, which is the two primary areas of focus in R&D now. We are trying to get longer life out of the cells, and we are trying to engineer cost out of the cells because that is going to make the biggest difference to our commercial teams.
I think we've got time for one more question. I think that falls to you, Ken.
Sorry, Ken, I'm from Goodbuddy again. Okay, on the two kind of programs, a year ago, you were saying that the kit was in Bangalore or Hyderabad, or wherever it was, in India with Shell. What's kind of taken a year for them to get going? Secondly, what's going on with Linde, and what's the sort of progress there? Thanks.
Yeah. The whole commissioning and everything just takes time. It's literally day by day. It's like almost waiting for news imminently. We are now in the hands of Shell because it's really Shell doing a lot of the commissioning, all the safety sign-offs, all those checks, et cetera, very rigorously. There's not been any technical delay. It's just how long it's taken. I think it's imminent. There's no news currently on the Linde side of things. We are obviously developing the next generation pressurized modules, et cetera, and that's what's anticipated to be going forwards there. There's no new news on that at this point.
Great. Thank you very much, ladies and gentlemen, for your attention and for your insightful questions. I think it's been an interesting conversation. Let's draw a line under it there and say good day to you. Thank you very much, and also to you online. Thank you so much.
Thanks.