Earnings Call: H1 2023

Sep 28, 2023

Good morning, ladies and gentlemen. Welcome to the Ceres Power Holdings plc interim results investor presentation. Throughout this recorded presentation, investors online will be in listen only mode. Questions are encouraged. They can be submitted at any time using the Q&A tab just situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, we would like to submit the following poll, and as usual, I am sure the company will be most grateful for your participation. I would now like to hand over to CEO Phil Caldwell. Good morning. Good morning, everybody, and thank you for joining us. I am Phil, Chief Executive, and I am joined with Eric Lakin, our CFO, and Elizabeth, our Director of Investor Relations this morning. I am very pleased to talk you through the interim results for the period ending June 30 this year. The business continues to make good progress, both operationally and strategically. We have a number of key activities going on, particularly with our two main licensee partners, Bosch and Doosan, progressing towards start of production. A significant milestone this year with Bosch receiving IPCEI funding of around €160 million for their facility in Bamberg in Germany. That is obviously a big step forward and we are very active with Doosan, which we will talk about during the presentation. We made a big move into electrolysis just under two years ago, really. I am very pleased, in fact, that the testing that we have done so far, the progress we have made, has surpassed expectations. We have signed a number of collaborations. Obviously, we are already working with Shell, and earlier this year we signed a collaboration with Linde Engineering and Bosch. We will talk further about electrolysis during this session. We are in active discussions with a growing number of potential licensees, both on the SOFC side and interestingly, more and more on the SOEC side. We are seeing very strong interest in this technology and we have strengthened our global commercial footprint now in terms of the business development team that we have pursuing these opportunities. On the technology side, we have passed some critical milestones this period. We have a new second generation stack, which is designed for the industrialization and the scale-up, and that has gone through a critical design review, and we expect that to go into production in our facility next year. Obviously, moving on into partners shortly after. Not insignificantly, we are pleased to say that earlier this month we achieved FTSE 250 indexation. Having been on the AIM market for quite a while, we have successfully graduated to the main market. I would like to address the issue of the Weichai China JV. We are going to talk a lot today about a lot of the advantages of the licensing model, in terms of its ability to scale, its gross margins. The one downside is we are not always in control of our own timeline. We have a continued delay, as we have said, between Bosch and Weichai on the sign-off of the JV. As per the statement we made earlier this year, we've actually taken the associated revenue with the JV out of this financial period. I would like to also point out though, that our relationship with both Bosch and Weichai remains very healthy. We've, this year, been supporting the development of larger 120 kilowatt stationary units at Weichai in China, which are now on test at several sites. We have a new board director appointment we've announced this morning with Dr. Nannan Sun, who's one of the leading technologists in Weichai, is joining the Ceres board. The Weichai collaboration very much remains strong and we'll obviously update you when we can on progress on the collaboration between Weichai and Bosch as we go. With that introduction, I'd like to hand over to Eric to go into the numbers of the first half in more detail, and then I'll talk to you again about the strategic direction, once we've been through the numbers. Eric? Okay, thanks, Phil. For the six months ending June this year, revenue is GBP 11.3 million. That reflects an increase of 17% from the same period last year. That reflects primarily progress with our commercial partners as they move towards industrialization and we meet some milestones and KPIs during the half. Gross margin was up at 61% compared to 49% for the first half of 2022. That reflects a combination of increase in revenue and also an evolving mix and maintaining industry leading sector margins. Gross profit of GBP 6.9 million compares to GBP 4.7 million in the first half of last year. That increase largely reflects the increase in revenue as well as the improved gross margin year on year. Adjusted EBITDA loss of GBP 23.8 million in the half compared to GBP 20.8 million loss last year. That reflects an increase in our expenditure on targeted investments for the future, which I'll come onto later. As a reminder, we made a change to our P&L reporting last year, and we're being consistent with that now. The R&D expenditure credits, which is becoming quite significant, following an increase in the rates from those we show as other operating income, no longer show within cost of sales. That's a separate line. Our headline revenue is our KPI, but other operating income we pull out separately now includes RDEC. Just a reminder of that, and we've made like-to-like comparisons for the prior year. In terms of the balance sheet, 30th of June position is GBP 161 million, so healthy, strong cash position, and employees of 586 compared to 570 at the end of the prior year. That reflects a reduced growth in headcount as we reach critical mass, and we are really targeting investments. We are going to see a slowdown in the growth of our headcount continuing through the year. Order backlog of GBP 61.1 million compares to GBP 67.8 million at the end of the prior year, and that reflects a reduction from the revenue recognized from that backlog, offset by some new order intake in the half. The other key metric for us was the planned partner capacity, unchanged at 250 megawatts, and that reflects 200 megawatts factory being constructed by Bosch and 50 megawatts from Doosan. In terms of the development and trends for revenue, gross profit and margin, as you can see, the revenue is relatively lumpy and a lot of the variability reflects the timing of license fee income and revenue recognition, and that will continue to be the case until the point where royalty revenue income becomes a significant part of the overall revenue mix. The gross profit margin, as I mentioned before, is a combination of total revenue, level of absorption of our factory costs, revenue mix. This slide here shows the different revenue components. I will just give a reminder of what they are. Many of you will be familiar with this, but we have currently got three main contributions to our top line. Engineering services, which is really time of our engineering team as we support our partners with collaboration and joint collaboration for system developments and manufacturing progression. That is relatively predictable and that is charged on a sort of hourly, daily rate basis. Supply represents prototype technology, so the provision of cells and stacks and components for our partners, so existing partners for developing systems, but also new partners who are looking to test the product and with a consideration of potentially becoming new licensees. That is recognized at a point in time, at the point of shipment of stacks and components, and that is a relatively stable line. It was higher this half compared to this time last year, as we are supporting our partners moving towards start of production next year. License fee income. That is the high margin. Can be 100% margin. That includes both upfront license fees for technology transfer as well as ongoing development license revenue. The latter is the largest component of that right now, so typically with Bosch and Doosan as we are continuing with the joint collaborations with them under the collaboration license agreements. Royalties, we note here, that is not yet part of our revenue. That is longer term, high margin revenue. As a reminder, we receive royalties at the point of commercial sale of systems into which our stacks go. It is not triggered by stack production by partners, but ultimately by revenue. We are not expecting material royalty revenue next year, even though our partners are moving towards start of production next year on series mass manufacture production, but it will become more material in 2025 when those stacks being manufactured go into systems which are ultimately sold to end users. That is the trigger for our royalty income, which we expect to be an increasing component of our business going forward. As I mentioned earlier, we continue to invest in a targeted way for the future. Investment in the future is defined by us as being our R&D spend, as well as our CapEx, as well as capitalized investment. Together, that reflects investment in capacity and capability for future revenue. It has increased year on year. A lot of the investment now is going into projects, particularly SOEC. It includes investment in our demonstrators, the SOEC demonstrators. We have two, the first one for Shell, the second one for Linde and Bosch. It also reflects significant investment in our test capability, including the outsourced test with HORIBA MIRA. There is an image on this slide which shows that new test facility in Nuneaton, which was inaugurated this year. Also development in fuel cells, particularly investments in future fuels compatibility, and as Phil mentioned earlier, the next generation of cells and stacks, which provide performance improvements and reduced costs. The spend is down from last six months. We are, again, as I mentioned before, having very focused targeted investments and the level of growth of our investment in the future will be less than prior years as we get to critical mass. Some of these one-off projects, such as the system demonstrator SOEC, they will effectively come to an end towards the end of next year. In terms of the cash outflows or cash burn, it has reduced from this time last year and certainly the prior six months as well. That is a reflection of, partly we had some one-off benefit. We reduced receivables in the half. There was a significant outstanding receivables balance at the end of last year with existing partners, which got paid down early in the half. That is a one-off benefit that will not repeat in the second half. Having said that, we expect the cash outflow in the second half of this year to be less than the second half of last year. Still second half loaded, but the overall cash outflow this year, we expect to be lower than prior year as we manage our cash carefully and ensure it is being invested with the areas of highest return. It is also worth noting, we are benefiting from having a strong cash balance and higher interest rates. We are making sure we safeguard our funds and deposits with only very high investment grade counterparties, but ensuring a reasonable economic return for those and the effective interest rate has improved significantly year on year. We had interest income of GBP 2.8 million in the first half compared to just GBP 0.7 million in the first half of last year. We expect a similar type of interest income for the second half as well. With that, I will hand back to Phil. Thanks, Eric. I would just like to spend a little bit of time talking about the strategic progress of the business. As you may be aware, we view this technology as a platform technology that addresses both the power generation side and now the green hydrogen side. It is quite unique in the industry. On the power side, we are obviously targeting distributed power, commercial power and potentially maritime applications as well. On the green hydrogen side, we are very focused on industrial decarbonization. We see the market opportunities for this being green steel, green ammonia and the future fuel, synthetic fuels market where we have a very distinct advantage. Our execution of this strategy is based upon three pillars. One is enabling our licensed partners to succeed. What that means is supporting our partners as they scale up, because our target is to get multi-gigawatts of production of this technology in place by the end of this decade. That is what ultimately turns the business into royalty generating and a very profitable business. We are moving forward on that with both Bosch and Doosan, and as we have mentioned, we will come on to the funding of that helps from the European Union. As well as our existing partners, we are building commercial scale, and part of that is obviously the move into electrolysis, where we see huge market opportunity and building some of the initial partnerships with Shell, Bosch and Linde. Those demonstrations are obviously key. But also we are building a wider engagement across the hydrogen value chain. The hydrogen side of the business is quite different from the power system side of the business, and that is why we are engaging with end users, EPCs and manufacturers, and we will talk a little bit about that in a few minutes. Key, obviously, as a licensing business, is to maintain technology leadership, hence a lot of our investments going into next generation of stack technology, next sets of materials, both for FC and for EC, and continuing the innovation on the IP side and capturing that both for the fuel cell and the electrolyser systems. Just a couple of key points of highlights. Doosan's 50 megawatt factory is nearing completion, and by that, building is complete, all the equipment is in. We have got teams on the ground actually starting to commission that equipment now. That is on schedule for commissioning into the second half of 2024. Doosan has obviously secured domestic supply chain, which is what we expect, and laid the foundations beyond the 10 kilowatt system into higher power applications, particularly targeting some of those markets I talked about in marine and commercial power. They have the relationships, as mentioned here, with Shell and the Korean Shipbuilding and Offshore Engineering. So very strong relationship with Doosan. Here you see Stefan Hartung, the Chief Executive of Bosch, looking very pleased to receive his EUR 160 million of IPCEI funding, and that is specifically for the mass production of our technology. So that is to fund the solid oxide fuel cell program and scale up, or it is a contribution. The whole investment by Bosch is closer to EUR 500 million. What they have developed is systems that offer the plug and play up to 100 kilowatts, and they have got that in various demonstrations you can see on their websites, including for applications like hospitals and for data centers and those kind of applications. Expanding the relationship with Bosch, obviously Bosch, as a manufacturing partner, a logical step could be into the SOEC market. What we have signed this year is that relationship with a three-way between Bosch and Linde Engineering to demonstrate, again, at a megawatt scale, our system on a facility in Stuttgart in Germany. This is going to be slightly different from the first system deployed with Shell, because we see this more of a test bed where we can actually put in newer versions of the technology. So more of a development partnership than the pure demonstration that we have with Shell. Obviously, our interest in this relationship is Bosch is a mass manufacturer, and Linde as a leading EPC and system integrator are key components into that value chain. Here we have got a video, a very short video, if we can show that, of the first system being actually installed at AVL Schrick in Germany. Here you see the containerized system for the first time with the electrolyser modules in it. That is actually literally going through hot commissioning now. So we expect to be making hydrogen with this system any day now. That is the validation step before that system then gets shipped to Bangalore in India, with Shell at the end of this year. I think that is a pretty impressive achievement from a standing start of less than two years to get to that megawatt scale. I think the other thing that is very exciting about this technology is the types of efficiencies that we are getting already, that without heat, are in the mid 40, 45 kilowatt hours per kilo or less, going down into the high 30s of kilowatt hours per kilo of hydrogen. That is world-class in terms of with heat integration and potentially without heat integration as well. So I think the data that we are going to get from this pretty soon will validate this technology, particularly for the industrial decarbonization markets and potentially into the non-heat markets as well. If we can move on. What we have then is a modular scale of concept. I mentioned we have the next generation of stack technology. What we have been doing over the past year or two, and some of you may have seen this in our CP2 facility, is we have now gone to larger footprint cells, which then enable us to build larger building blocks, and also lower cost, much simpler to manufacture stacks. Some of that work we have done in collaboration with our scale-up with Bosch, and then we are building those into arrays. The first modules that we have developed are one megawatt demonstrators, but we are now looking at larger scale building blocks, which will then be built into repeat units into hundreds of megawatts to gigawatt scale. The area that we are looking at now is how we scale these on the right, and we are doing some work with a number of EPCs on how you actually take it from low megawatts to hundreds of megawatts to gigawatts. So that's the logical progression that the company is making in this electrolyser market. As I mentioned, it's a different industry that we're now playing in for the hydrogen side of the business. Ceres as a technology provider, works with our stack manufacturers and module manufacturers. Then we're doing a lot of work and relationship buildings with EPCs and system integrators and also the hydrogen end users. So the way we see this, for example, is Shell would be a hydrogen end user, Linde is a potential EPC or system integrator, and Bosch is a manufacturer. So that's the kind of ecosystem that we're starting to build on the electrolyser side. So in terms of the outlook for the year ahead, I think what we've done, over the past year or so is really do some of the hard yards on scale up. We've done some really solid work on the next generation of stack technology, which is now coming forwards. We're supporting our partners on second and third factory builds. So this will be after CP2 and Doosan in Germany. We've done this three times now in terms of taking it from pilot scale into mass production. As you can see, the level of engineering that we've been able to do, all of that electrolyser, all those modules is all built by Ceres. So that's not something that we've had to rely on others for. We've outsourced some of the engineering to build it, but it's all our design, it's all our capability, and that's quite impressive on the demonstrators with Shell, with Bosch and Linde. The full year revenue growth I mentioned, obviously we're frustrated by the delay in the China JV, but, depending on signing of new license partners, we still can expect full year revenue growth this year. We are building a pipeline of interest both on the power side and on the electrolysis side. I don't think we're that far away from now being able to offer electrolysis as an offering now that could be licensed. The work is underway on the next scale of modularization to enable us to address hundreds of megawatts to gigawatts of the green hydrogen opportunities, which we clearly see as a big opportunity and will be an increasing focus for the company going forwards. So with that, I'll take any questions with Eric. That's great. Eric, Phil, thank you very much indeed for updating investors. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the right-hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you the recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor Meet Company dashboard. Phil, perhaps if we could take the questions from the room first. I'll start over. Sorry. Thank you. Hi, Erwan from RBC. Just one question for me, please, on Doosan. Is it fair to expect first production more in 2025 now versus late 2024? We expect stack production in 2024, as in the like I said, we have got teams there now, very active. You go through cold commissioning, hot commissioning, and then into production. If you are talking about the whole system production, I think that is going to be late 2024, possibly 2025. But that is really Doosan's. We are not involved on the systems side of this application with Doosan. That is Doosan doing that scale-up and production. Understood. Thank you. Hi, Alex Smith from Investec. Just a quick one on the electrolysis business. I guess you kind of commented that it could potentially be one of the largest parts of the business towards the second half of the decade. It seems like quite an aggressive ramp-up from where we are today. If you could maybe outline maybe the key milestones, I guess, looking at a product that would be 2-3 megawatts that can then be modularized and sold, but maybe the key milestones in the next 2 years to kind of get you on that path. Yeah, I think that's a good question. Look, first of all, the megawatt scale demonstrator is obviously a key milestone because, in this industry, people want to actually be able to touch and kick something that's real and of a significant size. Also, we want to demonstrate, we've obviously done a lot of module testing. We want to test it in the whole balance of plant, larger system arena. We know that that megawatt is literally a test bed. The work we're looking at is the modularization of that. So what's the next, or not the next, what is the minimum viable module size that we need to be able to scale to address that market? Like I said, we're doing work on that, with EPCs now because we're not necessarily experts in that. We need to work with industry on that. Probably they won't be containerized systems in the future. They'll look and feel a lot more like chemical plants. That's going to be a key step for us. I also think the next key step will be signing licensees. What we have with the interest from Shell and Linde and Bosch is really at the demonstration, the evaluation phase. But what we are seeing is, given the potential of the performance, and if you remember when we did the electrolysis teach-in, you're talking about a 25% saving in OpEx, a 25% saving in CapEx, a 25% saving in upstream renewables that you don't need to have. If you're 55 kilowatt hours on conventional low temperature electrolysis and you can get down to 40 or below with SOEC, that's a big saving on the upstream capacity that you need. I think that's really becoming a compelling sales case for this technology. Because of that, we're seeing people who are interested in early adoption. So they're the proof points, which is get the megawatt scale up and running, the modularization for larger scale and licensing partners, and I expect all of those in the coming year or so. Thanks. Hi. James Carmichael from Berenberg. Maybe, can you just provide a bit more detail on the second generation fuel cell stack that you've outlined? Maybe anything specific you can give us on the cost and performance improvements. Then just to confirm, I think it's right to say that that doesn't automatically flow through to existing license partners, would they need a new license to get access to that? Then just a quick second one, just on, I guess the big sort of moving part for the second half is signing a new licensing partner in terms of the P&L. Can maybe just sort of give us a bit on your level of confidence there and how that could impact the gross margin. Thanks. Yeah. Well, if I take the second part of the question first. We have a number of active, I cannot say too much, but we are quite advanced on a number of opportunities. You can never guarantee timing or if they are even going to happen. That is just the way the pipeline works. But I think, we have some good candidates there that would satisfy what we need for the targets that we have for this year. But obviously, they are not certain yet, so I am not going to make any future forecast on that. In terms of the next generation of cell and stack technology, it is quite simple. We have actually gone to larger footprint, streamlined the number of processes, the number of repeating units that it takes to build cells and stacks. So that has a knock-on effect in both the CapEx and the OpEx. When we do license deals with Doosan and Bosch, we have KPIs on the cost per unit of stacks produced. And we are hitting those KPIs with these designs and also the previous generation as well. Your question about does everybody get it automatically? It depends on the nature of the license. But very often what we do is based upon minimum royalties or minimum payments, then there are technology refreshes that come into the license. Look, it is part of our long-term partnership. We want our partners to be competitive and stay ahead, and that is how we justify our I know that technology leadership I talked about, we have to maintain our value through continuous innovation. James, just to pick up your specific question on gross margin. If we, as we have talked about with a new license partner, if achieved this year to support the revenue, the technology transfer, the license element will be effectively or close to 100% margin. So the margin in the second half would be higher than the first half, should we make the consensus revenue. Morning, it is Edward Maravanyika from Liberum. Just a question on Doosan. Do you have any visibility or any sense of whether they have tied up sales to their customers? Because you mentioned that it is not production that triggers revenue but actual sales. We do have some visibility on that, but again, I think, I would refer you to their public statements because they are a publicly listed company. So you have to follow Doosan's guidance. But obviously, what I can say, in South Korea, they have an existing market already with their phosphoric acid business. So they are selling into a distributed power market already. Government has very ambitious targets for the penetration of fuel cells as a renewable technology by, I think it is 16 gigawatts by 2040 or something like this. So they are very much backed by government policies as well. So all of that helps, but in terms of a specific sales number, I cannot comment on that. But again, I think Doosan is quite useful because it is public, so you will see in the fullness of time, you will see their own communication on that. Thanks. Nick Walker from Peel Hunt. Three quick questions, if I may. First of all, there is a lot of talk, obviously in your statement and obviously some of the sentiments you have given today, that quite a lot of the emphasis of the company is shifting towards electrolysis, and you are saying that is going to be the bigger part of the business mid-decade onwards. My question is, why do you think that given that your power business, obviously with Bosch and Doosan and no doubt others, would you say that is not taking off as fast as you thought it might be and that the core of the offer is quite compelling in my view. Obviously, it is particularly with regards to efficiency and cost saving of power, which should be of concern to everybody in the world. Would you say that sort of the interest level generally, globally and within your customers is moving towards the hydrogen potential? I am just interested in that sort of power versus hydrogen emphasis within the customer base, and if you see the horses traveling, if you like, in terms of speed, first of all. Secondly, with respect to once your partners, Bosch and Doosan and others, start to manufacture and obviously generate royalties. As you said, you are not in control of that clearly. Is that going to enable you or hinder you from giving guidance going forward, from the company's perspective? Okay, that is that. And thirdly, just quickly, with respect to AVL, obviously you have mentioned quite a few times that there are quite a few sort of new prospects in the hopper, some of which are quite advanced. Has AVL been quite a significant generator of those system opportunities? Okay. In terms of the market pace, we still see big market opportunities for SOFC. I think what we are seeing is if you look at the demand now, there is more and more demand on the green hydrogen side than on the fuel cell side. Would I say FC has slowed down? Perhaps to some extent with what has happened in Ukraine, gas prices locally, that has obviously given people a little bit of pause for thought, maybe, in the European markets. I think in the Asian markets, I still think natural gas is going to be a big driver in the future. And some of the people we are talking to for potential for new SOFC licensees are in that part of the world. So I think it is a bit of a geographic play, to be honest, Nick, in terms of where we see the demand coming from. I think what we are realizing is the way things are going, the green hydrogen side is going to be even bigger demand than the fuel cell side. We want to make sure that we are in the game and go fast enough to capture that. I think we could take approach of the strategic question we are going to face is, well, keep FC going as a primary and then slowly build up EC or put the accelerator onto EC as well. I think that's what the market's telling us is the sensible thing to do, is to accelerate EC. The second question, I didn't quite understand. Can you repeat it? Yes. Oh, maybe Alex got it. What's our ability to support guidance or revenue forecast from royalties, given it's partly out of our hands, it's our partners selling. Once the contract comes, obviously. Yeah. It's a good question. This will be a new, obviously, revenue stream for us. Formally, it varies by contract. We have rights around some estimates of what the royalties could be. Also there'll be quarterly updates from the partners. We'll be able to see not just annually, but an ongoing basis what their sales are. We also need to establish, as you can imagine, new processes for auditing and reviewing those sales and agreeing the royalties that will be due to us. That's all understood and effectively embedded in the contracts. Informally, they are partners, they're not just customers, so we'll have ongoing dialogue and conversation with them as we do today, but it'll evolve into getting a sense of their pipeline opportunities and sales forecasts. I think whilst it won't be an exact science and it'll depend ultimately on understanding the timing of their manufacture and building inventory and ultimately selling, I think we should have a reasonable handle on understanding what those royalties would be, at least on a short-term basis. There was a third question on AVL. The last thing, just here. Has the AVL been a significant generator of new prospects? I think AVL hasn't materialized in the way we hoped. It has generated prospects, but none of the material scale that we've hoped for. The new prospects that we are pursuing right now is coming actually to our extended commercial team. We've actually invested regionally, in our own sales team, and that's really where these opportunities are starting to come from. Thanks. But one thing on AVL is they've been a key partner in the build and test of that video that you saw there. That's an AVL Schrick. So they are still a very useful partner for us in some aspects of the business. Hi. I'm good, buddy. Two questions. Firstly, just where in the boiler wars, if you like, in Germany, to phrase it that way. Obviously Bosch aren't intending to make a boiler in a sense. They're now talking about kind of 100 kilowatt units for data centers and stuff. But where does a gas with the potential for hydrogen or other fuels technology fit in where we've ended up in Germany? Second question was just, once again, updating on Japan. You've got a partner there. Nothing much has happened really, but it's another Asian market that is interested in both fuel cells and hydrogen. Look, I'm not an expert on the German market. I think boiler wars, as you call it, is something that's not clear which way that's going to go. I think the offering of Bosch is very different because it is basically distributed power at a very efficient scale and is hydrogen-ready. Germany is looking at putting hydrogen into gas grids, et cetera, in the future. I think, though, that kind of rhetoric and sentiment probably doesn't help if you're targeting something as a boiler, but this clearly isn't. This is something a lot more sophisticated than that. Japan is interesting actually for me because, look, we've been doing business in Japan for a number of years. I think Japan has lost the way in terms of its leadership that it had on fuel cells. If you go back as far as like ENE-FARM units and the big push they had on automotive and refueling stations. However, just this year, consistent with the approach around the world, I think Japan has announced over 100 billion of government policy funding directly now into Japanese companies. So a bit of a mini IRA type approach or a mini IPCEI approach, not even mini, pretty substantial, is happening in Japan as well. So we're starting to see renewed interest now in Japan in hydrogen technologies, but that's a fairly recent step, I would say. So it's still. Again, we've got a sales office in Japan and Korea in that part of the world as well. So it's definitely an interesting market for us, but it's only just, I think, waking up again. Thank you. Sean McLoughlin, HSBC. A couple of questions from me. Could I just get your view on Weichai's change of board member? Any reasoning for the switch? Dr. Sun in the release talks of the next phase of the partnership. If you could just maybe elaborate on what that means and maybe changes you'd expect with Dr. Sun. The second question may be more for Eric. You mentioned tapering of R&D. Is this sensible? How do you make this work with your ambition to conserve technology leadership and stay ahead of peers? Thanks. I'll comment on the board change. I think Powell, who was our previous board member, served for 3 years. He's a really good guy, but he was a corporate development type of person who was involved in the original JV negotiations, et cetera. Dr. Sun heads up a lot more technology and is responsible for SOFC within Weichai. So it's a lot more, I think, hands-on and closer to the core business of Ceres. So I think it's a positive step, because I think she's very capable and actually, like I said, is closer to the technology and closer to the business. So I think it's kind of a natural cycle for the board member to change, but I think it's a good appointment. Yeah, thanks for the question, Sean. In terms of R&D, let me clarify. There are two things going on. First of all, to your point, R&D continued investment is absolutely key to our business, both staying at the forefront of SOFC technology as well as electrolysis, and that will continue. We have invested a lot in people and capability, and that will continue. There are elements of that will be stable, if not grow. The tapering point is really our total investment in the future, which covers R&D OpEx, CapEx, capitalized development. It includes some non-recurring significant projects. The ones to call out would be the two demonstration units we have mentioned, which are not small costs. I will not clarify what they are, but that includes all of our own stack production, which is internally, internal consumption for R&D, which is expensed. The module developments, the container, and those projects will continue through to next year, but after next year, they will not be repeated. We are not planning more than two demonstrations at this point. Similarly, with the test infrastructure, significant investment, a lot of CapEx, but some OpEx as well, that goes into the capability. So particularly with the Nuneaton building. It is the fabrication of test units, which do not come cheap, but also development of the site for test capability. Again, that will be phasing out towards the end of next year. I think the point being, in terms of we look at our total spend and cash burn, there are known projects with a finite life, but his underlying investment will continue for sure, particularly material science, engineering. Okay. If there are no more questions in the room, maybe I will hand back to you, Elizabeth, for any that may be online that you wish to address. Thanks, Mark. Yeah, we have five questions. If I can just come to you first, Phil. We have got a couple of questions, understandably, around the SOEC business. Perhaps you could elaborate on the timeframe for trials, in SOEC, to actually convert into licenses and maybe bundling with that, someone asks, when will green hydrogen opportunities be significant in replacing gas? I guess if you could also just touch on actually again, where we see those SOEC opportunities. Yeah. The demonstration plans that we have are Shell delivery by the end of this year, installation commissioning early next year and operation then, I think it is something like a 2 or 3-year period. It will not take us that long to actually get the data that we need and the confidence that we need in the performance of that. That is going to be a key milestone. The Bosch Linde unit is about a year behind that, so planning for late next year. We are building that second unit now, and Bosch are actually preparing the site and then installation later next year. That is initially a 2-year period, but like I mentioned, we have the capability in that relationship to put different modules in, different next generation of technology into that. So that is probably something that we will keep on an ongoing basis. We kind of view that a little bit as a potential extension of our test capability, because when you are testing electrolysis on that scale, it is not an insignificant energy bill you have, in terms of electricity costs and everything to actually generate and you need somewhere for that hydrogen to go as well. These facilities are incredibly valuable test beds for us, because the real world applications, but also the running costs of that are borne by our partners as well as contributions towards the project costs that Eric talked about. In terms of when green hydrogen becomes significant, I think versus natural gas was the question. We are not targeting generating green hydrogen initially to put into gas grids. This is really targeting industrial applications. This is hydrogen potentially to produce green steel, hydrogen to produce ammonia, hydrogen as part of the synthetic fuel process. That is where we see this technology. I think you are still quite far off when you will see hydrogen in gas grids, because I think the first use of hydrogen will be in industrial decarbonization. It is absolutely essential. It is a no-brainer, and it is a high-value application. Yeah. Absolutely. Thanks. Anastasia is on the line from Goldman Sachs. She is asking which other EPC providers are we thinking about collaborating with, beyond those that we have announced in Linde and Bosch? We've got a number that we're either working with already or starting to talk to. I'm not going to list them off here, but obviously, if they become significant, we'll announce them. Yeah, absolutely. There's a question on the line in terms of the North American market, excuse me, and whether we're looking at that closely and if we have a view on the competitiveness of that market. We are looking at that closely. We've just, again, put a regional salesperson into that area. We're starting or we have collaborations with some of the National labs and places like that where we can demonstrate technology. There's a lot of excitement about the U.S. market because the IRA bill, but that tends to be on a tax credit kind of basis. So it's more, at this point, favoring people who are actually getting into the production, and we're actually looking at how do we actually get access to developers of the technology. But it's definitely a target market for us. We'll keep you up to date on that. Great. Thanks. Eric, perhaps I could come to you. There's a question here just asking, do Ceres' current cash reserves cover the investment required to bring us through to profitability? Okay. Yeah, good question. As we've talked about, we have a healthy balance sheet, strong cash position, no debt. We've obviously tracked the cash burn very closely. We're managing our costs whilst ensuring we balance that with investment for future growth. It really comes down to commercial outcomes and the timing of that. We're very comfortable where we are. The future cash flows over the coming years will clearly depend on the ramp-up of revenue and the timing of those new license partners as well as royalties. Brilliant. Thanks. There's a question here, it doesn't specify where, but asking, do we have any plans to do a dual listing? I'm assuming that's on the U.S. market, but No, not yet. Not currently. Give us a chance. We've only just got onto the main market. Yes, I was going to say, don't tell me that's my next job. Great. Just to close out maybe, somebody asks, do we have any view on the U.K. government green energy policy and what else might we like to see? We would like to see a U.K. IRA type bill. That would be very helpful. Look, the U.K. is in a state of flux at the moment, and my concern is, honestly speaking, that the green agenda is being politicized to some extent, which isn't helpful. But we're not expecting a great deal more to happen until the next election, really. Personally, I think the U.K. is falling behind in terms of policies when you look at what's happening in Europe, in the U.S., in Japan, as we've talked about today, in South Korea. The good news from Ceres' point of view is we indirectly benefit from, if, say, funding to our partners and others, we can do the same in other parts of the world. But I would like to see more direct support for innovation and development of U.K. companies, in the government. But I think we're going to have to wait until the next election to get clarity on whether that's even possible. Great. Thanks. Thank you, Elizabeth, Phil, Eric, for updating the analysts this morning and the attendees, investors online. Can I please ask investors online not to close this session as we will now automatically redirect you to the opportunity to provide your feedback in order that the company can better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Ceres Power, we would like to thank you for attending today's presentation. Good morning to you