The final results for the period July to September 2024. The presentation today will be given by CEO Philip Fjeld and CFO and Managing Director Baden Gowrie-Smith. After the presentation, we will have a Q&A session, and you can submit your written questions during the webcast on the right-hand side, and with that, I hand it over to Philip.
Thanks very much, Alan.
Alan.
Good morning to everyone online. I'm pleased to be here today with Baden to present our Q2 results, and we will get into it quite immediately here. So, once again, just a couple of slides to remind the audience as to who we are and what we do. We're on a mission to decarbonize Europe's truck fleet. We're starting out in the U.K. As of today, we've got 14 large refueling stations. You'll see what one of those looks like in a bit. That are open, public access stations. We currently have north of 1,800 trucks using our stations every day. If you look at the last accounting period we had, we helped our customers save more than 150,000 tons of greenhouse gas emissions, which is something that we are very proud of.
Once again, taking a look at one of our stations, this is Newton Aycliffe in the northeast of England. Why do we continue to show this picture? It's been a recurring one from our presentations. It's because what we do is quite different to what most people usually associate with refueling vehicles. Why? Because we don't have any retail facilities on site. These are unmanned facilities, very efficient ones as such. We are targeting the truck market. This is an example where we can refuel 14 trucks simultaneously. And as such, we, as of today, are not aware of any more efficient ways of putting huge quantities of renewable energy into trucks. So, some of the key highlights for the past quarter. We continue to see steady demand growth, volumes up 20% year on year. Annualized EBITDA for the station portfolio.
We'll get into the difference between station portfolio and what we generate from biomethane and RTFCs a bit later on, but that was seven million annualized in Q2, and that's expected still to come up to more than one million a month once the current order book that we know our customers have placed are put on the road. Through the quarter, we've seen improved RTFC margins. I've got some slides on that later on, but that's also a trend that we're now seeing going forward, and as such, we are very excited about the biofuel industry and the biofuel market healing and rebalancing, and we see that as driving our strong earnings growth going forward. We put our 16th station into construction in Livingston, and we've got four more that are ready for development once we get the Foresight transaction and the recombination with Foresight concluded.
And also later on, you'll see we've done a long-term offtake agreement for biomethane. Just want to highlight one thing here on the right-hand side where we are listing certificates, awarded, and sold. Why is there such a big jump up in Q2 compared to Q4 and Q1? That is driven by two reasons. One is we have come through a very challenging period for the biofuel industry as a whole, and therefore the margins of sourcing biomethane have been poor, and we have chosen not to be fully sourced during those periods. We are now catching up. We have the ability to catch up, and that's what we're now doing. So that's why you will see going forward in the quarters ahead, we will have a very large generation of RTFCs. Why? Because we are taking the ability to catch up now that the markets are rebalancing.
We have had record dispense volumes, and that will continue to be driven going forward. If you look at that graph, you will also see there are some months in there, particularly over the summer months, where we were essentially flatlining. Two reasons for that. One, we saw a temporary downward trend or downtick, if you want, in the U.K. haulage sector in general, which meant that trucks were less utilized. But also, we had a period where there were just less trucks being delivered into our customers' hands. That's now reversed. We're now seeing a strong flow of new trucks coming onto the road, which again will have a very positive impact on refueling in the months and quarters ahead. We've got two stations in buildup at the moment. We've got Doncaster, which we're expecting to open later this year.
And then we've got Livingston, which is slated for opening in the April to May timeframe next year. Livingston, I think, is a good example. I know you need to squint here, but in the background of that station, you see a huge distribution center. And that's a good example of why these stations are built where they are. That is a very large Tesco distribution center, which, and therefore having a station on the doorstep, means that their journey to decarbonize their fleet is made that much easier. And also, you will see on the map on the right-hand side those four stations that are in late-stage development, ready to go into construction. I usually speak a bit about our 6x2 market and so on and so on that's coming. The first Scania demo truck is now on the road. This picture was taken a couple of weeks ago.
There are more arriving shortly, and there is a very, very long waitlist for fleets to demo that vehicle. We've never seen interest like this in a new CNG product ever. You've got to remember, we've been doing this for 10, soon 11 years. And through that period, there have been lots of model changes. Larger engines have been developed, even larger range with larger CNG tanks, etc. But what we're seeing now with the 6x2 interest, that is truly on another level compared to what we've seen in the past. So very excited by this and finally getting these into customers' hands so that they can demo them, because the reality is a lot of customers will want to demo a vehicle before they order them, and then looking forward to the order book opening very shortly.
I mentioned previously also we announced some months ago that we have signed an agreement with Green2x in Denmark. I think this is a good example of some of the longer-term strategic discussions, negotiations, and contracts we enter into. Why? Because we've got a rapidly growing demand for biomethane through our station network. It's important to us, yes, to do short-term sourcing, of course, to fill, but we also need a steady flow and a steady inflow, if you want, of longer-term agreements. Even though they start up some years from now, it's important for us to build a book, if you want, of longer-term large offtake agreements for biomethane. And this is a very, very good example. This is the largest one that we've entered into to date.
I expect we'll do larger ones in the future, yes, but it's a good example of us making sure that we are well stocked and have a good supply of biomethane, even though it will start up some years down the road. We've mentioned this in the past. We have an ongoing process with Foresight where we are looking to simplify the structure, bringing the stations in onto the balance sheet here so that it simplifies the structure, yes, but it provides greater clarity as to what we do, but also so that these assets can be then used as asset-backed financing, basically, for future growth so that we can source debt and use that to grow the company going forward. The negotiations are going well. We are currently in the final drafting stages here. And as such, this is something that we're really excited about. Why?
Because that gives us a really strong platform for future growth in the coming years. So I'm going to touch a bit upon what we do on the biomethane side and through RTFCs, Renewable Transport Fuel Certificates. I'll be using the RTFC acronym quite a bit here. We operate under a policy in the U.K. that is called the RTFO, Renewable Transport Fuel Obligation. It's a U.K. Department for Transport policy, and it's their main policy to decarbonize road transport in the U.K. It's a blending obligation. So that means that the obligated parties have to blend a certain amount of renewable fuel, liquid fuel, petrol or diesel. So bioethanol or biodiesel needs to be blended with fossil petrol or fossil diesel.
What you see below here is the overall blending mandate increases every year going forward, thereby creating great demand, particularly for biodiesel, which is the fuel here, which essentially determines the RTFC prices, and that's why we've been so focused and spent a lot of time talking about the impact that Chinese biodiesel and the inflow, the huge inflow of Chinese biodiesel in 23 and 24 into the European market had on depressing prices and thereby driving down RTFC prices. We've also said that we are, in past quarterly presentations, that we're seeing the market rebalancing. There are signs out there that the market, both physical market, but also ticket market, meaning the certificate market, is rebalancing.
I wouldn't say that we are completely healed as yet, but it's definitely fair to say that the industry is in a much better place now than it was just three, six, nine months ago. What we're now seeing is policy measures have been taken to ensure that there is a fair competition within the market, and you've seen that on tariffs being imposed. China also just a couple of weeks ago announced that they are ending tax rebates, used cooking oil as an example, exports. Once again, we expect that to continue to rebalance the market as we go into 2025. And more importantly, we're now seeing that RTFCs have recovered to a level where it is possible now to source biomethane at margins that are increasingly attractive margins, yes. Baden will get into that a bit later on.
But where we are now, we are able to once again source biomethane, and it should contribute to our earnings in a very positive way in the quarters ahead. Also, one thing to keep your eyes on and a big thing that's happening from the 1st of January next year is that the U.K. and the E.U. are implementing and are bringing in a sustainable aviation fuel mandate. Now, why is fuel for planes important when we are dealing with road transport? And I'm referencing biodiesel because it will typically be produced from the same feedstock that today is being used to produce road biodiesel. And the industry is expecting that the SAF market, sustainable aviation fuel market, will have an increased willingness to pay compared to the road biodiesel market.
Once again, in a world where there is not unlimited access to feedstocks, waste oil feedstocks that are required today to make road biodiesel, we are expecting that to be taken out of the road biodiesel sector and put to use in the Sustainable Aviation Fuel sector, and thereby most likely providing an uplift to road biodiesel prices. Earlier this week, the Department for Transport in the U.K. issued a consultation where they are asking industry participants like us and, of course, others in the U.K. to comment on potential changes that might be required under the RTFO to ensure that road biodiesel or the road transport sector can remain competitive in a world where Sustainable Aviation Fuel is likely to take feedstock and product out of that sector. We're seeing RTFC prices recover.
They're currently trading in the GBP 0.23-GBP 0.25 range or have been doing so in the last through November. Once we get into those ranges, we're starting to see then meaningful margins and meaningful cash generation on our end. And what we've just done here is to outline what, with certain assumptions clearly, was to outline how exposed we are and how sensitive we are to RTFC prices. Now, that works both ways, of course, downside, but also on the upside. And I think this is a good illustration. As we now see more and more trucks being delivered, what does this potential look like for us with regards to sourcing of biomethane and the improving margins that we will get from that as RTFC prices now are increasing? And with that, I will hand it over to Baden.
Thank you, Philip.
As Philip mentioned, we are now starting to see improvements in the underlying prices of RTFCs, as well as the cost of biomethane, which has now become, which is, yeah, now there's a lot more coming back into the market as the markets rebalance. This has enabled us to purchase sensibly priced biomethane in an environment where the RTFCs are improving in their underlying price. We have had six very difficult quarters, and this is the first quarter where we've really seen a material improvement, which has led into an October, which was very favorable. We sold 72 million RTFCs in this effort to catch up of the biomethane of the year at a volume-weighted average price of about GBP 0.20.
Now, as Philip's mentioned, we have been seeing prices in the GBP 0.23-GBP 0.25 range, close to the historical average around GBP 0.25, which coincides roughly with the average margins of around 30% over time. So in October this year, we saw margins around 27.5%. So really getting up close to that historical level that we anticipate our new supply contracts we're negotiating and sales we're doing will start to approach. And as this market has begun to open up and with an increased amount of volume going through at sensible levels, we've been able to recommence our hedging activities into next year to lock in both biomethane supply for the customers, but also lock in the margins we receive. So bringing those forward.
It's important to note that even though we only had an increase, we only had a 2%-3% increase in margins over last year, that the last year's margins that we saw were largely beneficiaries in some sense of the forward sales we had done in the 2022 year, and therefore, yeah, and so the margins we are seeing now are very much current in the market, and that's why we're so excited about them, so for those who may be new to watching our presentations, the CNG Foresight joint venture holds the CNG stations. That means that we do not consolidate them onto our balance sheet, but we feel it's important to show the underlying growth and their performance, especially in light of the transaction we're currently working on with Foresight Group, where we plan to bring those back onto our balance sheet.
So station EBITDA in the quarter was GBP 1.75 million, and that's up about 75% on last year for the same period. Truck growth, however, was slow in the period, principally due to slow deliveries of the vehicles, which we know are on order and they will show up, but it's just about the timing of when they both show up and when they're brought on the road by the customers. And so we feel that the EBITDA contribution of those is obviously yet still to come. We also have there is pent-up demand being built up for this larger 6x2 vehicle, which is nearly ready for order. And of course, there are customers that have been waiting for that for a long time who will naturally place an outweighed number of orders of those once they're available.
The analyzed EBITDA run rate is about GBP 7 million in Q2, and we anticipate, as Philip's mentioned, for that to exceed GBP 1 million per month at the point these trucks are delivered to the stations. So we had a good quarter. Overall revenues of about GBP 35.8 million versus GBP 27 million from last year, principally due to increases in our sales and natural gas prices and, of course, the RTFCs. We had gross profit margin, gross profit of GBP 2.9 million in the quarter, of which about GBP 2.7 million was attributed to RTFC sales and natural gas sales at higher dispense volumes than in prior quarters, and obviously still a relatively modest margin, but improving, which we anticipate will continue.
Nonetheless, we're very pleased to see that we've had an Adjusted EBITDA that is very slightly positive in this quarter, which is great news to see that recovery coming back through and the leverage to the upside in EBITDA generation we have for these continued margins in the coming quarters. It is the first quarter we've had since we listed where we've had a positive EBITDA that was driven by current market sales, principally current market sales. So this really is a reflection of the fact that the markets are rebalancing and we can generate very healthy earnings in these markets where the markets are functioning normally. Nonetheless, we are still focused on our overhead costs.
We have continued to manage our R&D costs on new stations that are outside the sort of near-term and medium-term pipeline to focus our efforts on the ones that are really near-term that we want to bring into development over the next year or so. We've seen, yeah, nearly halving of those and associated legal costs that go with that. Of course, we didn't increase volumes dramatically in the quarter, but we still managed to bring our overhead cost per kilo down slightly in the period to GBP 25. Of course, in the prior period of GBP 37, you can see that the operating leverage we have as a business as we continue to add volumes, which we anticipate will start taking a pretty material leg up from this quarter onwards.
Financial position, GBP 180 million of assets in the period due largely to increases in receivables and the sales of natural gas. We have GBP 84.5 million of goodwill and GBP 10 million of customer-related intangibles. As you may remember, in the last quarter, these were revalued based on the valuation requirements of our audits following the combinations last year and the audits that occur for our annual accounts. So these were based on independent valuations. Large increase in trade receivables is principally driven by related party transactions where we act as an agent for the sales of gas to customers through the station network of CNG Foresight. We had an equity of around GBP 97.5 million at a ratio of 54%. That has come down principally due to the borrowings of the group, with related parties being principally the Foresight Group. Finally, in cash flow, the cash flow decreased.
Operating cash flow for activity is about GBP 1.9 million. This is actually principally due to increases in trade receivables over trade payables due to the large sales of RTFCs and natural gas in the period, which were due to be paid for, so that led to a GBP 1.9 million loss there. We had investment activities outflow of GBP 0.6 million due to investments in tangible assets required, and we drew GBP 1.2 million actually on the facility, a working capital facility with Foresight, which is now fully drawn. And as Philip has mentioned previously, it's anticipated that those will be converted into CNG Foresight shares in due course, and net decrease in cash in the period has left the group with GBP 8.3 million in cash. Thank you.
Thank you, Baden, so I can see that some questions have come in, but I'm just going to wrap up briefly.
I think, as Baden mentioned, we had a quarter that we feel was positive. I'm not going to use the word, say, necessarily it was a strong quarter as such, but it was a positive quarter where we are absolutely moving in the right direction. What that quarter, of course, doesn't reflect is necessarily what we're seeing in the RTFC market today, and that's why we're very excited about the coming quarters where we will actually get to see and get to deliver and demonstrate what the company can do once we get to relatively normalized RTFC margins, given the volume growth, underlying volume growth we've got, and finally, also, as Baden mentioned on the stations, we're starting now to see really meaningful earnings coming off the stations. We're seeing really tangible scale benefits now. Why?
Because once you open a new station as such, it takes a bit of time for them to get up to a certain run rate. But once they do that, we have incredible scale potential within those stations. And as we now do attract more and more trucks coming onto the road over the coming months and quarters, that will really start to filter through and become evident, both through the profitability of the stations, but also through the fact that we can generate more RTFCs as such and put more biomethane through our network. So overall, really pleased with how the markets are now developing. And as Baden said, yes, we've had six pretty rough quarters, if you want, but we now feel that we're coming through that.
And even with just the rebalancing of the markets, the way it has appeared so far, that is a good stepping stone for us and a good foundation for the future. So thank you for that. And I will start taking some questions here. Let's have a look here. Okay. Are any other producers also catching up on RTFCs, and could this induce further weakness in the market? There's a long and a short answer to that. I see there's quite a few questions there. So I'll keep it fairly brief. The answer is no. This is largely a biomethane-related thing. And biomethane, again, is a quite small portion of the overall RTFCs generated. So the answer there is no. And then there's one on the 6x2. You mentioned a long waiting list for the Scania 6x2. Is this for demo trucks or actual orders?
Those are customers who want to demo a vehicle. We've never seen such interest in wanting to demo a vehicle, which is why Scania is now bringing in a lot more demo trucks over the coming months. And then there's a timeline here, which is basically from you order a truck, when would it be delivered? Once again, Scania as such will have to answer that question. But what we are hearing, and I think this is an important point as well, that over the last couple of years, we have typically, or the truck industry and cars as well, probably, has been suffering from supply component shortages, etc., etc., with almost unprecedentedly long lead times. It could be nine to 12 months before you've received a truck. What we're hearing at the moment is that CNG trucks can be delivered in four to five months.
So, we're seeing the market there also recover, and that's what we're being told for the 6x2. So, let's be conservative there. You can probably get a truck on the road within a six-month period, which is a remarkable improvement to where we were a couple of days ago, sorry, years ago. Are the economics more favorable for a fleet to switch from diesel to 6x2 rather than 4x2? Yes. Why? Because the 6x2 vehicle pulls heavier. There's heavier work, consumes more fuel, so therefore your fuel savings are greater. And when you then look at the vehicle premium compared to a diesel versus a CNG, the savings rack up more quickly. So, that's maybe simplifying it slightly, but overall basis, the answer is yes. Are there any potential changes that you would like to see in the RTFO consultation?
I think the main point there is we believe firmly, and I think the industry, the biofuel industry in the U.K. believes firmly that there is scope here to increase the blending obligation. There is scope to bring in more renewable and sustainable biofuels, not just biomethane, but other biodiesel as well, into the RTFO. So that's going to be interesting to look at going forward, and I think there is scope for the U.K. definitely to be more ambitious in this area. If we compare ourselves to levels in Germany, Netherlands, EU, etc., the U.K. is lagging behind and could do more for sure when it comes to having a greater ambition with regards to blending of biofuels over the coming decades. In what way is growth in SAF something ReFuels can capitalize on? Is it with increased demand for RTFCs or in terms of volumes for ReFuels?
It's all about the price spread essentially between biodiesel and fossil diesel because that's what determines the value of an RTFC. If we see tightness emerging in the road biodiesel market, then of course that price will have to rise in order to attract more feedstock into that sector. A rising biodiesel price will result in a rising RTFC price. That's why we're excited. There's also another effect here. As of today, there are RTFCs being generated by SAF being supplied to aircraft today, which is part of the RTFC pool. That will be removed from the RTFC pool as of next year and therefore also generating increased demand for road biodiesel or RTFCs from biomethane, etc., next year. There's a bit of a double whammy here.
One is you get increased demand next year from the SAF mandate, but as of today, there is actually SAF going into aircraft today, and that is generating RTFCs that are part of the 2024 RTFC pool, which will then be removed. So there is a double effect here, basically. Yeah, and here's a crystal ball gazing one. What level of RTFCs are you likely to forward sell? Well, I think there are two answers to that one. One is about price and one is about quantum of them. We like to, when we source biomethane, and this is by having the consolidated structure that we currently do, by being so closely linked between the dispensing of the fuel to the sourcing of the biomethane. By sourcing biomethane today, you can enter into biomethane supply contracts for later in 2025, right? When we do that, 2025 RTFCs are currently trading.
We, of course, want to make sure that we can then lock in margins. So that doesn't mean that we are necessarily forward selling 100% of the volume at any given time, but we are, of course, focused on making sure that we do profitable deals and making sure that we put robust hedging in place. I don't want to quantify exactly how much we're going to forward sell and how much we're going to be selling prompt, but for 2025, for sure, we are already entering into deals now for Q1, Q2 next year, calendar Q1 and Q2 next year, based on what we can source biomethane for today and based on what we can sell RTFCs at a healthy margin for next year.
Could potential changes in the crop cap on waste derived or on waste derived fuels in the RTFO consultation increase or decrease supply of U.K. biomethane? Yes, potentially. That's a quite technical question, which we could spend a lot of time answering here. Potentially, yes. But I think maybe the simple answer to that one is there will be other drivers that are likely to have a greater influence on that than necessary changes to crop cap or anything else along those lines. At which level are you able to source biomethane in the market currently? I'm guessing this is someone who wants us to spill our secret sauce as to our market position. So I'm not going to answer that one other than to say there is a lot of biomethane in the market at the moment looking for a home.
As one of the largest buyers of unsupported biomethane in Europe, we find the market conditions helpful at the moment. I think that's maybe all the supply-demand balance is helpful. I think I'll leave it at that. Those were all the questions, unless there's anyone else who has got anything else here. Avelin, do we have any other questions that have come in through any other channels here that I'm not aware of?
Yeah, we have one question regarding on the RTFC prices. So we can take that. That's on. We saw in your presentation that the RTFC prices have risen and are around the average for the last year, so GBP 0.25. Has this increase continued in November? And how do you see the prices developing in 2025?
So the final part of that question is, of course, a crystal ball gazing one, which is, I mean, it's historically been a very volatile market. It's historically been quite binary also. But when shortages develop, prices come up very quickly. When oversupply develops, like it did in 2023 and 2024, prices come down pretty brutally, fairly quickly. We are starting to see it rebalance. I think the markets in general are quite tentative at the moment. Why? Because you can't blend for 2025 yet. So if you want to generate certificates, whether it's in the U.K. or Netherlands or in Germany, as an example, you can't be blending now and using those tickets necessarily next year. So the overall demand for biofuels needed in 2025, we're not really seeing that yet. So now there's a lot of positioning taking place.
But overall, prices now, they're in the GBP 0.23-GBP 0.25 range. It's really hard to predict where we're going to be next year. But even at these levels, we are comfortable with regards to margin generation. We're comfortable in sourcing biomethane in the market. Clearly, as you've seen from some of the slides, if we do start to see higher prices than that, then of course, that's going to have a very meaningful impact on our earnings. And what we will do going forward is we will update our investors and the market more often on RTFC prices because today you need RTFC prices are behind paywalls, etc. So we'll make sure that there is greater clarity on that going forward. And as such, that's something that hopefully will also provide a bit more clarity to investors out there.
Good.
And then we have one question regarding the two new stations that you have in build now. When these are operational next year, is there a typical ramp-up period, or is it usually full utilization from the beginning of new stations?
So the answer there is, regardless of which station it is, there is always a ramp-up period. So what we typically say is that a station reaches or is modeled to reach so-called steady state, which people will look at that as full utilization, but we don't like to use that terminology because then people think that there's queuing at the stations and so on and so forth. So steady state is essentially full utilization, but it has been haircut quite significantly to account for the fact that we're not going to see queuing, right? But steady state is when a station is busy.
That typically is modeled to happen in year five. Now, some will ramp up more quickly. Some might take a bit longer. But what we typically see is that from a station goes live, it typically becomes cash flow generative, cash flow positive only after a couple of months. So yes, these assets are quite expensive to build, but they are very efficient and quite low cost to operate as such. So therefore, from a cash flow generation perspective, it happens quite quickly and for some stations, even within the first month of opening.
Yeah, it's fair to say that also we've become better at this over time as customers have pent-up demand. They're very aware of our plans to build new stations. They know we have a regular and ongoing dialogue with them on sort of ideal locations.
And at new stations, which includes the two which you've asked about here, one of those stations, we will be able to deploy a mobile refueling station on that site prior to it being fully commissioned and to the gas grid so that customers who have placed early orders are able to refuel more quickly and therefore we can bring forward the loading by several months, which is obviously something that this mobile refueling station solution is able to deliver us and the benefit to customers.
Good. And that's all the questions that have arrived. So I hand it back to you, Philip.
Thank you very much. And thank you for everyone listening in today. Hopefully, it's come through. They were quite excited and feel that we're turning a corner here with regards to what's coming ahead.
We're looking forward to updating you further on the Foresight transaction shortly and also provide, as I mentioned, a bit more clarity in our monthly updates that we provide to the market to provide some more clarity on RTFC prices. And as always, if anyone wants to reach out to us to take questions offline, please do. But thank you so much for listening in this morning. And yeah, looking forward to catching you on the next one.
Thank you.