Good afternoon and welcome to this company presentation from ReFuels regarding the announced transaction to create a leading Bio-CNG clean fuel infrastructure platform. 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 written questions by email to ir@investorweb.no. With that, I hand the word over to Philip.
Thank you very much, Alan, and welcome to everyone who's showing interest in what we do here at ReFuels, whether you're watching this live or on demand afterwards. We had an exciting announcement over the last 24 hours that the transaction we've been working on with Foresight for many months now has finally been concluded. Yeah, looking forward to taking you through why we are so excited about this transaction. Can we pull up the slides, please? Next slide. There we are. What we've basically done here is we've created a fully integrated Bio-CNG infrastructure platform. Previously, we've had basically three verticals. We've had one vertical that was the biomethane sourcing and trading part of the business. We've had another vertical, which was CNG Fuels, which was basically the development company and the operating entity.
The stations have been sitting outside of that again in a vertical called CNG Foresight. What we're doing here is we're bringing it all together under the CNG Fuels umbrella, thereby creating a platform that has direct ownership of 16 public access stations. We are fully equity funded. We'll talk a bit more about that in a bit. We're looking to double refueling capacity over the next three years. It will give us much improved access to external growth funding, not through equity, but through debt. Next slide, please. What are the details here? As I mentioned, we've had three verticals. We're now collapsing that structure, if you want, and bringing it all under the CNG Fuels umbrella.
ReFuels is also, so Foresight are then bringing in the stations into CNG Fuels, and we are bringing in RTFS, which is the upstream part of the business. We have a plan, a fairly conservative plan, but a plan to roll out nine more grid-connected stations over the next three years, at least nine grid-connected stations over the next three years. Of course, additional MRSs, mobile refueling stations on top of that. We will initially own 40% of this structure. Depending on value realization scenarios, that can go up to 55% in the future. We do need to get shareholder approval for it. We are expecting to obtain that over the coming weeks and therefore to close this transaction during the first half of April. Next slide, please. If you remember our previous structure, as I said, we had three verticals.
That was fairly complex for investors to understand. It was also not giving us the best platform from where to source external funding, external debt to grow the business. What we are doing now is we are combining all of this under the CNG Fuels umbrella. That means we bring in the assets, we bring in the cash flows. As such, it gives us a much stronger platform, sorry, from where to grow in the future and secure that external funding that we require. Next slide, please. If we look at the strategic rationale, once again, we are an infrastructure business, of course. We have assets in the ground, which are the stations here in the U.K. We also are a very large buyer and sourcer and trader, if you want, of biomethane from across Europe.
Under the new structure, we not only bring in the assets, we also can benefit from the cash flows that we can generate through the sourcing of biomethane and through the sale of RTFCs. That in the previous structure was not that easy to access. Now, with a strong balance sheet and the cash flows coming in from the internal operation here, it gives us the platform from where to grow in the future. Next slide, please. As of today, we have a capacity to refuel up to 10,000 trucks per day. We are currently at around 2,000, there or thereabouts, with more growth coming later this year. Under the new agreement, over the next three years, we will double that refueling capacity from 10,000 up to 20,000, or the potential for 20,000 trucks per day by the end of 2028.
Of course, it does not mean that we are going to cap necessarily our growth there, but that is what we have agreed over the next three years, which is as far out as we can probably accurately predict or at least try to accurately predict at this point in time. If the market requires additional stations, then of course, we will find a way to provide additional growth in infrastructure over the coming years. Next slide, please. We are focused on HGVs, heavy goods vehicles. Why? First of all, only a very, very small subset of vehicles, 1% of vehicles on the road, make up close to 20% of greenhouse gas emissions. If you deal with that 1%, then of course, you are making an outsized contribution towards greenhouse gas emission reductions here in the U.K.
It's also fair to say that, of course, trucks, particularly the large trucks, they do use a lot of fuel. You essentially get more bang for your buck if you want by focusing on the large emitters, the large fuel consumers than you would if you were trying to focus on the smaller vehicles. That's our target market. That doesn't mean that we are not also working with fleets who want to decarbonize vans or the smaller end of the truck space. Our core market is the large end, the heavy end of the truck spectrum, because that's one where we can have the greatest impact on greenhouse gas emissions. Also, of course, it makes most sense from an economics perspective as well. Next slide, please. As of today, our focus is on putting as much biomethane into trucks as possible.
That does not necessarily mean that we will be only doing biomethane forever. Of course, we have made it clear in the past that we do believe in a multi-energy vector, a multi-green energy vector future. As of today, our customers are demanding one thing and one thing only from us, and that is Bio-CNG. When they want fast charging or something else, we will find ways to provide that. As of today, it is Bio-CNG and biomethane that is our focus. If you look at economics here for fleet operators, not only do they get to save 80%-90% greenhouse gas emissions compared to running on diesel, they also get to save 25%-30%+ on fuel cost. It also stacks up favorably compared to 100% biodiesel, which is HVO. Next slide, please.
Where have we come from as a company and where are we going? If we look at the last five years, we've taken the company from basically having just shy of 400 trucks going through our network to now getting up to close to 2,000 trucks going through our network. If you look at the one market segment that we've been focused on and we've been where the truck manufacturers have been providing trucks, which is the 4x2 market, we're now getting close to 10% market share in the U.K. That means that if you drive up and down the motorway in the U.K., on average, 1/ 10, 4x2 trucks you see is a CNG truck that's refueled at our network. Next slide, please. However, and this is where we are really excited. We've got both Scania and IVECO now bringing out the 6x2 truck model.
That is a six times larger market than the 4x2 market that we've currently been, I would say, constrained to operate within. I mentioned we've got close to 10% market share of the 4x2 market. Our market share in the 6x2 market is negligible at the moment. We are now, given that the truck manufacturers are bringing out the 6x2 models as we speak, we're expecting strong growth in that segment, which will then complement the growth we've already got in the 4x2 market. There is a lot of excitement around the 6x2 clearly, but overall, we're really excited about the growth that we've got coming ahead. That is why we also need more stations. Next slide, please. Mentioned previously, we're looking to double capacity from 10,000 up to the capacity to refuel 20,000 trucks per day. How real and how tangible is that growth?
Have we got sites ready to go? The answer is yes. We've got planning on a number of locations where we basically have been waiting on this transaction to be finalized so that we can go into construction on those in the not too distant future, which is basically a couple of months away. We've got a well-stocked pipeline of future sites that we will then be building next year, the year after, and so on. Next slide, please. What do typical station economics look like? This is a typical average site, if you want. CapEx is around GBP 8 million, depending on whether you buy the land or you lease the land. The IRR that we're typically seeing from stations is 25%-30%, typical five-year payback.
Clearly, if you then start to factor in the potential and the exposure we then have towards biomethane sourcing and RTFC values, etc., those numbers can change quite rapidly and shorten the payback period very quickly. Five years with an IRR of 25%-30%, we feel that is fairly conservative and is consistent with what we're currently seeing across our network. Next slide, please. In the past, and when we founded the company back in 2014, our focus was pretty much exclusively on grid-connected large public access stations. In 2019, we built our two first MRSs, mobile refueling stations, and that has now grown into 10. We've got number 11 that's going to build and likely more later this year. It's become a really cost-effective, flexible solution that we can deploy very quickly.
From we order an MRS until we have an operation is probably about seven to eight months. It does not require planning approval. As such, it is a fast, quick win both for us and for the customer, which means that we can then unlock truck orders whilst either a customer is waiting on a grid-connected station to be built nearby, or we are in a situation where maybe we will not build a station nearby, and therefore the MRS becomes more of a semi-permanent solution. Over the next three years, the target is to basically triple the number of MRSs we have in operation from 10 to 30. Next slide, please. We operate under the RTFO, the Renewable Transport Fuel Obligation, where we source biomethane, put that into trucks, and generate RTFCs. That is a legal blending obligation here in the U.K.
There are similar operations, sorry, similar obligations across Europe. That is a robust system that has been in place since 2008. It does not have an end date. Of course, that is an important legal framework in order to decarbonize road transport in the U.K. and is the main policy to decarbonize road transport in the U.K. As we move forward year- on- year, more renewable fuels need to be blended. That becomes more challenging with biodiesel. Therefore, for biomethane, the way we are sourcing and generating certificates is something that is required and needed in order to meet the obligation over the coming years. Next slide, please. We operate in a market-based policy environment. What does that mean? That means that there are not any guaranteed prices. This is not a subsidy. As such, there are market forces, supply-demand, and external factors that determine the value of certificates.
As you will see here, certificates have historically been volatile. It would be surprising if it stopped being volatile into the future. Yes, there is volatility around certificates. As you will also see, there is a limited time period typically where certificate prices can be depressed or certificate prices can be really high. Currently, we are at GBP 0.26 , which is there or thereabout the average price that we have seen in the past. Currently, the biodiesel market, which determines the price here, is rebalancing. We are quite, I would say, optimistic that over the coming years, we are going to see a continued firming of the price as we go forward. That does not mean there will not be volatility for sure, but on average, we are expecting a firming price into the future. Next slide, please. Finally, the biodiesel sector, the road biodiesel sector, does not work in isolation.
Why do I say that? And why are we talking about sustainable aviation fuel? Because the feedstock that is used for typically road biodiesel, such as used cooking oil and tallow, is also the main feedstock that is used for sustainable aviation fuel. There is only so much of it out there. There is ample supply this year to satisfy both markets, probably next year as well. Most, I would say, industry participants who are active in these markets are expecting a tightening market as we go forward, as sustainable aviation fuel likely has a higher willingness to pay, and therefore will take feedstock out of the road biodiesel sector. All else equal, that should also firm up the RTFC prices over the coming years. We are not necessarily banking on that happening. All our estimates are that we will stay where we are at this point in time.
Clearly, if we start to see firming RTFC prices going forward, as I am sure Baden will run through in a bit, that will be positive for our margins and earnings. Next slide, please. This just shows some of the potential upside that we have here in various RTFC price scenarios. That does not mean that we necessarily are reliant and have to see higher prices. At GBP 0.26 at the moment, that is a healthy place to be. We are able to source biomethane at healthy margins, both for us and for the producers. Clearly, should we see higher prices into the future, then that basically hits straight to our bottom line. Next slide, please. Here I will hand it over to Baden.
Thank you very much, Philip. As we discussed, we now have the basis for a large amount of growth over the next couple of years. Here we are illustrating some of the potential growth and outcomes from that with what we are now going to be capable of. We have historically had growth rates in excess of 40% in our truck growth. Last year was a particularly slow year given some pressures on the haulage industry, including inflation. With the release of new 6x2 vehicles, we do feel that we can see higher growth rates returning towards our previous historical growth rates. Of course, that is a big driver for us of the economics of our stations, of course, utilization. We do not feel we have used 8,000 trucks by the end of 2030 because we have sort of put a sort of a block at the end of that.
Depending on how adoption evolves over the next couple of years, that may be brought forward or hopefully can end up we can fall within that range. Of course, at some point, we will reach that point. It's really more of a question of when it happens, not if it happens. What drives our EBITDA? A combination of the truck growth, truck growth when it happens, and of course, the RTFC values now. We get access to both of those revenue streams with the new structure we have. We have both the RTFC values coming in, as well as the station revenues, which have not previously had direct access to. We are current in these forecasts here. We're using a simple GBP 0.26 RTFC price, the current RTFC price we see. As Philip's described, there are reasons to believe that could firm over time.
This is a sensible place just to place it now to see what that would illustratively how, if you use the trucks, we the truck forecasts and those values, what sort of levels of EBITDA generation and cash flow the business can have. There are two different styles of revenue, of course. One is more annuity, which is trucks turning up to our stations, given our strong market position and the regularity with which they turn up. Then you have the RTFCs, which are very low downside because we have control over our sourcing timing, but also very high upside and extremely high leverage to improve prices over time. We have a time value, of course, in here as well. The sooner we get trucks through, the more we can drive EBITDA.
What is nice to see is that both the stations and the certificates are actually very valuable. Not quite equally valuable, but of course, those are volatile prices over time. They can move around, but we have confidence in the two revenue streams. The RTFC cash flow in the near term can really help drive station growth. Next slide, please. Here are some value distribution scenarios based on the structure we have. Probably worth briefly reflecting on where we have been. We have had a structure which had a higher cost of borrowing and was dramatically more complicated as a story to go and not just raise capital, but also to be able to have confidence in our cash flows, which we can generate, which we could use towards building new stations. We have looked at how we might simplify the structure previously.
We've market tested it, and where we've landed, we feel is on an incredibly well-informed investor in Foresight and an excellent structure, which having market tested, we feel is a brilliant one for valuing value for our shareholders. We would have likely had to have a very large capital raising, but we feel now we're in a position where we are fully equity funded, and we have the capacity to bring on low-cost debt, which with the cash flow streams we now have, the dual cash flow streams, now is much more capable of. What you're seeing here is three different scenarios. Obviously, there's, as I said, a time value here.
There's a combination of time value when you take into account the cost of debt, but also that actually we have the capacity here to generate significantly more or possibly less EBITDA over these periods, which obviously changes these forecasts somewhat. It is likely that people would consider the business with different valuation models. Of course, here we've used a fairly simplistic EV, enterprise value to EBITDA model. However, this doesn't take into account a number of different factors that we have that are positive for the business, the terminal values of our stations being a very dramatic one, of course, given the strategic value, but also, yeah, and also the rapid growth in the cash flow streams for increasing utilization across our stations. Next slide, please.
What do we feel will drive both the EBITDA and drive the multiple at which we exit if you again use a relatively simplistic EV/ EBITDA model? Truck growth, of course, is a very substantial one. We are doubling capacity, and we are, with our strong market position, the key beneficiary of increasing that mass adoption. Maturity in the RTFC market, which we have seen over the number of years, we are becoming a larger player in that market. We are seeing it mature. The capacity for us to be able to have more visibility in the future is not unlikely over the next couple of years. Of course, we will continue to increase the cash flow from those certificates.
We have our strategic market positioning as well, which is our market penetration, which is very high at the moment, as well as our ability to continue to build out new stations before others. We feel that is also going to create a strategic position, which is very attractive in the event that that was to be recognized at some point. All of those would lead to a significant value appreciation for our shareholders from the current point and from the current position we're in. Yeah, we're very enthusiastic about trying to deliver that value over the next couple of years. Thank you.
Thanks, Baden. Just to summarize, to bring some of the key investment highlights here. First of all, we feel very excited about bringing the three verticals together. I think Baden touched upon it. We've market tested and looked at lots of different structures here. We feel that this is by far the best structure that is available to the company and will give us the best value creation for our shareholders going forward. We've now got a structure where we can double capacity over the next three years.
That does not mean we're going to stop there, but I think it's important to start somewhere and to put some stakes in the ground that we can be measured against over the coming years so that there are some clear deliverables here from us as management to shareholders. We now have, by once again collapsing the structure, bringing the verticals together, a self-funded infrastructure company here that also has the exposure to a lot of upside through the biomethane sourcing.
That will then put us in a very strong position with regards to attracting outside funding, so external debt. If you look at the market position we have created in the 4x2 market, close to 10%, that is something that we will be looking to replicate in the 6x2 market now over the coming years. That does not mean that we expect the 4x2 market growth to slow down. On the contrary, if we have managed to grow this much by only being able to have the 4x2 market, we should be able to turbocharge our growth over the coming years. Finally, analyzing the company, understanding how shareholders are going to benefit from building the market position we have and growing the market has not been easy.
We feel this structure is a lot easier, and that will also be demonstrated in the earnings results that we'll be providing over the coming quarters because, as I say, with everything under one roof, it will be clearer to investors what the earnings are today and over the coming quarters, but also what the potential future here could look like in the coming years. All in all, very excited about bringing this together. Yes, it's taken a long, long time. It's a complex deal to pull off because we are collapsing three verticals, basically. That has taken time, but we are finally here. We just need a couple of weeks to get shareholder approval. With that, we'll move on to the next slide, and then we'll take some questions.
Thank you, Philip. We have received a couple of questions here. First question, are you all set to start building out these nine stations now with the new structure? What would it take to build out even more stations?
I have touched upon it briefly, maybe not enough. We have stations ready to go or development sites ready to go as we speak. Yes, we need a couple of months just to get tenders done from civil contracts, etc. Yes, we are ready pretty much over the coming months to go into construction of some of the first nine sites. We have additional locations coming through. We are expecting planning approval later this year and into 2026. This is not a situation where we are only now starting to bring these sites forward. They are sitting there waiting and have been waiting on this transaction to complete, basically.
Now, does that mean we will stop with nine? I think I alluded to the fact that we want to put some markers in the ground that the company can be measured against. I think that's a sensible approach. Does that mean we will stop at nine? Absolutely not. We will be led by customer demand. If customer demand develops in a positive way over the coming years and we will require more than nine stations, of course, we will try to exceed the number of nine. With the platform we've currently got, which is self-funding, additional capital should be available to us.
Good. Just as a reminder, you can submit your questions by email to ir@investorweb.no. On to the next question. You say you are fully equity funded. Can you please elaborate on that? Does it include the nine stations and future growth?
Yeah. We mentioned that a couple of times through the presentation. I think it's important to elaborate a bit on that. A lot of people have been asking us over the last three to six months, and that's probably some uncertainty that's been hanging over the company as such. Are you going to do a large equity raise in order to fund future growth? Under the new structure, the answer is no. We don't need to secure additional equity in order to realize the nine stations that we just mentioned here. They will be self-funded or a combination of self-funding through the operational cash flows and through external debt. The answer is no. We are not looking to do an equity raise. We don't need to do an equity raise in order to get to nine stations.
If we want to grow beyond nine stations, then once again, we would not be looking to source equity for that. We believe the company is now in a very good position to utilize capital markets more efficiently and get debt at market terms, which is a lot cheaper than what we have been able to fund in the past. Anything you want to add to that, Baden?
No, not really. I think that is spot on. We will look to the debt markets in order to accelerate the rollout immediately. The cash flows from the combined business are growing very rapidly. Clearly, the development of the sites as soon as possible is fantastic for our customers. It is important to the business. Yeah, we will look to source that, bring that in, and get the stations developed as quickly as we can, yeah, to have more trucks on the road sooner.
Good. On to the next question. If you reach the doubling of capacity by end of 2028, what would be the next phase after this? Could you see any future dividends from CNG Fuels?
Wow. Crystal ball gazing here. I think it's a bit premature to start talking about dividends. Let's focus on delivering on those nine stations. Let's focus on delivering on continued growth through the market segment. Clearly, if things go well, both at the station sides and with biomethane sourcing and profitability there, there are scenarios, absolutely, where you can see substantial free cash flow being generated, which might be in excess of what is required to build more stations in the future. Absolutely. Let's not focus too much on that at this point in time. There are clear scenarios for that, of course, but that will be some years down the road, for sure.
Good. Next question is on financing costs. How does the new structure affect the ReFuels financing cost compared to the old structure, maybe on debt cost?
I'll let Baden answer that one.
Yeah. We have gone out and we've market tested a large spectrum of professional investors. We historically had a 13% cost base on just the funding we had with Foresight Group, which we successfully deployed about GBP 115 million or so in the period between December 2020 and now. To refinance that in the current markets with what we're looking at now, it's around 10% funding cost from the shareholders.
It's obviously very attractive on a market basis, especially for the size and for the and given that it's not as restrictive as debt and has the capacity, of course, to bring in more over the more above it. I feel like we've taken a route which has given us flexibility on future capital funding at lower rates probably than we've already got now. This is an improvement on where we've been historically. With every year that goes past, we bring our equity cost of capital down as well as we continue to grow the business and de-risk it. I feel like we've taken a very good step in the right direction here to fund this next round of growth.
Good. Next question. You had your quarterly reporting a few weeks back with positive momentum. How has this quarter been so far? Good question.
Very pleased with how this quarter is panning out and what 2025 calendar year, sorry, I know we've got a calendar year 2025 looks like going forward. We've been able to do a very good job, or our team have done a very good job in the biomethane sourcing market. RTFC prices are proving to be supportive at this point in time, meaning that we can lock in sensible margins for that. There's a lot of quoting activity going on with new customers and existing customers looking to place very large orders. We've got the Scania 6x2. It's come out. IVECO have just launched a new model series, both the 4x2 and 6x2.
There is a lot of really solid good stuff going on at the moment that will, of course, be reflected in the quarterly earnings for this quarter. More importantly, will also be reflected in the quarters ahead, given that we have some visibility currently, of course, on biomethane sourcing and RTFC prices. All in all, very pleased about how we are trending and what the prospects look like for the rest of the year in 2026.
Good. Another question submitted there. Can you briefly discuss how you envision the pre-agreed exit with Foresight looking in three years? Can you touch upon the milestones related to the RTFC distributions mentioned in the appendix? Would you look to buy out the remaining portion of RTFS to consolidate the structure further?
Okay. Bunch of questions there. On a pre-agreed value realization with Foresight, there is no clear-cut answer to that. Foresight is a fund manager. They, at some point in time, need to crystallize returns to their shareholders, to their investors. When will that happen? What will that look like? That depends. Baden touched upon a couple of scenarios here, strategic rationale, etc., etc. It is really a hard question to answer, not because we do not want to, but just purely because we do not know what the world looks like two or three or four years from now with regards to what does a potential value realization for Foresight look like. That is something that we will just be open about and be flexible around.
You had one around, I think there were some RTFS milestones in there. That is related to distributions, dividend distributions, basically from RTFS coming up to CNG Fuels. There are certain hurdles there that need to be met, which will then be, yeah, which are over the next three years. If they are met, then there is an additional value distribution there, both to us and to Foresight.
When it comes to buying out the part of RTFS that CNG Fuels does not own today, there is 21.6% that CNG Fuels does not own. There are no plans at this point in time to do that. Whether or not that makes sense in the future remains to be seen. Cannot rule that out one way or the other. No, there are not any plans today to look to consolidate that.
Good. That is all the questions we have received. I hand it back to Philip to close the call.
Thank you, Alan. Thanks for those who have been sending in the questions. Yeah, we are finally at the end of a very long journey of getting this deal done. That does not mean that the hard work is now over. On the contrary, this is now when the real work starts. That is on delivering on the growth and maximizing the benefits of the platform that we've now put in place. We will be laser-focused on that over the coming years.
We are very excited about, as I mentioned, the ongoing market developments here. I think with this new structure, we are set up in a really, really strong way to capitalize both downstream and upstream. I am looking forward to providing updates to shareholders, of course, as we progress through the year. Thank you all for tuning in and for showing interest in what we do. Of course, if you have specific questions for us that you did not want to answer on this call, then feel free to reach out directly to Baden or myself. Thank you.