Q4 2023 Fusion Fuel Green PLC Earnings Call

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Hello, everyone and welcome to future fuel Green's fourth quarter 2023, Investor update My name is Ben Schwartz head of Investor Relations at fusion fuel.

Benjamin Schwarz: Hello, everyone. Welcome to Fusion Fuel Green's fourth quarter 2023 investor update. My name is Ben Schwarz, and I'm Head of Investor Relations at Fusion Fuel. I'd first like to remind everyone that some of the information provided during the conference call may contain statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties.

I'd first like to remind everyone. That's on the information provided during the conference call may contain statements of future expectations and other forward looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks uncertainties. It is possible that our actual results and financial condition may differ from anticipated results and financial can.

Benjamin Schwarz: It is possible that our actual results and financial condition may differ from the anticipated results and financial condition indicated in these forward-looking statements. For discussion of some of these risks and important factors that could affect Fusion Fuel's future results, see the risk factors in the company's latest annual report on Form 20-F, filed with the SEC. Fusion Fuel assumes no obligation to update or revise any forward-looking information provided during the conference call and should not be liable for any action taken in reliance upon such information. Okay, with that out of the way, thank you all for joining us today.

<unk> indicated in these forward looking statements for a discussion of some of these risks and important factors that could affect fusion fuels future results.

See the risk factors in the Companys latest annual report on form 20-F filed with the SEC our fusion fuel assumes no obligation to update or revise any forward looking information provided during the conference call and should not be liable for any action taken in reliance upon such information.

With that out of the way.

You all for joining us today.

Benjamin Schwarz: In terms of our agenda for the next hour, again, I'll kick things off with an overview of Fusion Fuel, along with some thoughts on the hydrogen market and industry dynamics. Federico and Gavin will then review highlights from 2023, fourth-quarter results, and commercial updates, including the exciting announcement of our recent IPSE designation earlier this year, before wrapping things up with a discussion of our 2024 priorities. We'll then open up the floor for facilitated Q&A. As in our previous quarterly calls, questions can be entered in the chat box in the webcast platform at any point during the next hour.

In terms of our agenda for the next hour.

Kick things off with an overview of patient fuel, although with some thoughts on the hybrid market and industry dynamics, Puerto Rico and Gavin will then review highlights for 2023 fourth quarter results on commercial updates, including the exciting announcement of our recent designation earlier this year.

We're wrapping up with a discussion of our 2024 priorities. We'll then open up the floor for facilitated Q&A as in our previous quarterly calls questions could meet entered in the chat box in the webcast platform at any point during the next hour you can also submit your questions directly to the Investor Relations mailbox.

Benjamin Schwarz: You can also submit your questions directly to the investor relations mailbox at ir@fusion-fuel.eu. So, let's begin with a refresher on Fusion Fuel, our value proposition, and positioning in the green hydrogen market. Our mission is to unlock the energy transition through the design and development of innovative green hydrogen solutions. At the heart of everything we do is our proprietary HEVO microelectrolyzer technology, which employs a simplified and modularized architecture that creates multiple sources of advantage for us, including high industrialized production and a scalable building block approach, enabling us to play competitively in small to mid-scale projects, a segment of the market where we're seeing considerable demand today. We built a robust European pipeline of actionable near-term green hydrogen I'm particularly pleased with the recent designation of our Hevo Portugal project as an important project of common European interest. More on that later.

At IR at fusion Dash.

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So let's begin with a refresher on fusion fuel our value proposition and positioning in the green hydrogen market.

Our mission is to unlock the energy transition through the design and development of innovative green hydrogen solutions at the heart of everything we do is our proprietary <unk> Evo micro electro wise or technology.

<unk> employs a simplified and modular arrives architecture that creates multiple sources of advantage for us, including high throughput industrial life production and a scalable building block approach, enabling us to play competitively in small to mid scale projects a segment of the market, where we're seeing considerable considerable dividends today.

We've built a robust European pipeline of actionable near term green hydrogen projects with diverse avenues for monetizing value creation, along the development cycle.

And by the recent designation of our Hemo, Portugal project as an important project of common European interest.

Later.

Benjamin Schwarz: We have a differentiated and complementary business model that positions us as one of the few green hydrogen players that can credibly deliver truly end-to-end solutions supporting clients throughout their green hydrogen journey. And finally, we're well positioned to take advantage of the significant growth ramp as the market develops with an extensive long-term project pipeline and a world-class production facility located in Portugal, dimensioned for 500 megawatts of annualized production. The next slide, so a couple observations on the green hydrogen market to help ground today's discussion. It should come as no great surprise that 2023 was a difficult year in the green hydrogen space. What was expected to be an inflection point turned out to be, in many ways, a step back as we saw a deceleration of commercial activity.

We have a differentiated and complementary business model that positions us as one of the few green hydrogen players that can credibly deliver truly end to end solutions supporting clients throughout their green hydrogen dream.

And finally, we are well positioned to take advantage of the significant growth ramp as the market develops with an extensive long term project pipeline and a world class production facility located in Portugal as dimension for 500 megawatts of annualized production.

On the next slide a couple of observations on the green hydrogen market to help ground us in today's discussion.

Should come as no great surprise that 2023 was a difficult year in the green hydrogen space, what was expected to be an inflection point turned out to be in many ways a step back.

As we saw a deceleration of commercial activity.

Gavin Jones: There are multiple factors that drive this dynamic, some of which we've touched on previously, including technological immaturity, regulatory uncertainty, a persistent cost premium for green molecules, and a lack of access to project financing, among others. One of the downstream impacts of the delay in market development is that it has extended the timeline to profitability for many market participants, prompting greater attention from investors to capitalists and triggering a shift in strategy towards more sustainable balanced growth. We did start to see some signs of life in the fourth quarter, which we'll discuss a little bit later, capped by the announcement of the H2-Infra IFSE program last month, which has the potential to catalyze the European green hydrogen market and address a long-standing infrastructure bottleneck.

There are multiple factors that drove this dynamic some of which we've touched on previously including technological and majority regulatory uncertainty persistent cost premium for green molecules and a lack of access to project financing among others.

The downstream impacts of the delay in the in market development is that it has extended the timeline to profitability.

Market participants, prompting greater attention from investors on capital discipline, and triggering a shift in strategy towards more sustainable balanced growth.

We did see start to see some signs of life in the fourth quarter, which we'll discuss later capped by the announcement of the HQ Infra if say program last month, which has the potential to capitalize the European green hydrogen market and address our longstanding infrastructure bottleneck.

It's not unreasonable to expect some of these more structural headwinds to persist into 'twenty 'twenty four but these challenges also present, an opportunity for differentiation as Federico and Gavin will explain over the course of the next half hour.

Gavin Jones: It's not unreasonable to expect some of these more structural headwinds to persist into 2024, but these challenges also present an opportunity for differentiation. As Frederico and Gavin will explain over the course of the next half hour, we believe Fusion Fuel is well positioned to overcome these challenges and capitalize on the emerging opportunities we see in front of us. So with that, I'll now introduce Gavin Jones, CFO of Fusion Fuel, to share some highlights from the fourth quarter of 2023. Thank you, Ben, and good afternoon or morning to all of you who have joined our fourth quarter investor update call. I'm joining today from our offices in Ireland. During the fourth quarter, we received two separate purchase orders for a combined total of €4.2 million in revenue.

We believe fusion fuel is well positioned to overcome these challenges and capitalize on the emerging opportunities we see in front of us so with that I'll now introduce Kevin Jones CFO using fuel to share some highlights from the third quarter fourth quarter I should say of 2023.

Thank you Dan.

Good afternoon or morning to all of you who have joined our fourth quarter Investor update call.

Im joining today from our offices in Ireland.

During the fourth quarter, we received two separate purchase orders for a combined $4 2 million euros of revenue.

Gavin Jones: These projects will serve as customers in Portugal and will include the supply of our Hevo chain products, along with the balance of plant equipment and EPC services, and will each represent a 1.25 megawatt system. In addition, we entered into a securities purchase agreement with Likey Nominees, a Macquarie Group company. After the end of the fourth quarter, we received notification of the European Commission's acceptance of our Evo Portugal project as an important project of common European interest. Federico will cover what this ITSA stamp means for Fusion Fuel later in this presentation.

These projects will service customers and Portugal are moving to the supply of our Hegel chain products, along with bonds of plant equipment, and EPC services and when each represent a one time two five megawatt system.

In addition, we entered into a securities purchase agreement with <unk> nominees Macquarie Group company.

After the end of the fourth quarter, we received notification of the European Commission's acceptance of our <unk>, Portugal project as an important project of common European interest.

Federico will cover what it's a stump means for fusion to you later in this presentation.

We raised net proceeds of $5 9 million euros through our ATM facility during February with the lion's share of that is being raised on February 16th when we witnessed unprecedented trading volume following DSA awards.

Gavin Jones: We raised net proceeds of 5.9 million euros through our ATM facility during February, with a line share of this being raised on February 16th, when we witnessed unprecedented trading volume following the IFSEI award. And finally, last week, we were awarded a separate grant from the European Commission as part of the H2 Talent Consortium. The total value of this award is just above 1 million euros.

And finally last week, we were awarded a separate grant from the European Commission as part of the H Piling consortium. The total value of these awards is just a borgwarner in euros.

We will now move on to the financial results for the fourth quarter.

Gavin Jones: We will now move on to the financial results for the fourth quarter. Please note that all values discussed are in Euros unless stated otherwise. We recognized $1.6 million in revenue during the fourth quarter. This represents revenue related to our manufacture and supply of a hydrogen production system to sustain. As a reminder, SASEC is the largest public research institution in Spain, and this project is based in Zaragoza.

Please note that all volumes discuss churn euros unless stated otherwise.

We recognized $1 6 million in revenue during the fourth quarter.

This represents a revenue related with our manufacturing supply of our hydrogen production system <unk>.

As a reminder.

It's the largest public research institution in Spain, and this project is based in Zaragoza.

This contract is three cases entering 2023, we completed we completed phase one and phase II with phase III scheduled for completion during the first half of 2024.

Gavin Jones: This contract has three phases, and during 2023, we completed Phase 1 and Phase 2, with Phase 3 scheduled for completion during the first half of 2024, in addition to the revenues recorded. We had 0.6 million of inflows that did not meet the revenue recognition requirements, and instead, these amounts will be recognized as revenue during 2024. As you may remember from our second quarter investor presentation, we booked a provision against components within our inventory that were manufactured to legacy design. During the fourth quarter, we recorded a net increase of $6.4 million to this impairment provision and recorded a separate impairment charge of $3.3 million relating to one of our development projects. These significant impairments are for specific components included in the legacy HIBO solar variety.

In addition to the revenues recorded.

We had 0.6 million of inflows, but did not meet the revenue recognition requirements and instead these amounts will be recognized as revenue during 2024.

As you May remember from our second quarter Investor presentation, we booked a provision against components within our inventory that were manufactured to legacy design.

During the fourth quarter, we recorded a net increase of $6 4 million to this impairment provision and recorded a separate impairment charge of $3 3 million relating to one of our development projects.

These significant impairments are for specific components included in the legacy Heber solar practice.

When we carried out the reviews of the inventory components. During the second half of 2023, we fully expect to utilize these components ourselves with third party as.

As recently as last week it became apparent that selling these components will not be a short term solution as negotiations with prospective buyers of salts.

Gavin Jones: When we carried out the reviews of the inventory components during the second half of 2023, we fully expected to utilize these components for sales to a third party. However, as recently as last week, it became apparent that selling these components will not be a short-term solution as negotiations with prospective buyers have stalled. When coupled with the changes in regulation and licensing that saw us give up on the Hibosuil project and that made installing Hibosolar units significantly more complicated, management has decided to impair the full value until such a time as we have a further certainty on our ability to sell or scrap these materials. Some of these components were capitalized within non-current assets, with the remainder recorded within inventory.

When coupled with the changes in regulation and licensing that saw us cable on the Heber solar projects and that make installing heber solar units significantly more complicated now.

Management has decided to impair the full value until such a time that we have a further certainty on our finishing to solder scrap these materials.

Some of these components were capitalized within non current assets with the remainder recorded but in inventory.

We have several of our people dedicated to recovering as much as possible from the legacy inventory that has been impaired during 2023.

Since we first started to set up scrap these legacy components, we've been able to recognize inflows of <unk> 6 million, which had been received between August 2023, and <unk> 2024.

Gavin Jones: We have several of our people dedicated to recovering as much as possible from the legacy inventory that has been impaired during 2020. Since we first started to sell our Square Applies legacy components, we've been able to recognize inflows of 0.6 million, which were received between August 2023 and February 2024. We fully expect these recent impairments to close the chapter on the right-hands related to HEPO solar, and we look forward to fully turning the page on HEPO change.

We fully expect these recent impairments to close the chapter on the write downs related to Heber solar and we look forward to fully turning the page to Evo chain.

In our Investor letter, we allude to exceeding of before and after the.

The impairment of legacy materials is another step forward.

And towards the next stage of our lifecycle as a company.

Our operating cost decrease for the fourth consecutive quarter we.

We saw a reduction to our personnel related costs when compared to the third quarter.

This was mainly due to the allocation of a grant to inflow against quantifying personnel costs.

In addition, we recorded further reductions to legal travel and consulting fees.

Gavin Jones: In our investor letter, we allude to a feeling of before and after. The impairment of legacy materials is another step forward and towards the next stage of our life cycle as a company. Our operating costs decreased for the fourth consecutive quarter.

The pre tax loss for the quarter amounted to $12 3 million, which was mostly driven by noncash items relating to impairment charges of $9 7 million.

Gavin Jones: We saw a reduction in our personnel-related costs when compared to the third quarter. This is mainly due to the allocation of a grant inflow against qualifying personnel costs. In addition, we recorded further reductions to legal, travel, and consulting fees. The pre-tax loss for the quarter amounted to $12.3 million, which was mostly driven by non-cash items relating to impairment charges of $9.7 million, share-based compensation expense of $0.6 million, and a fair value loss associated with our warrants of $0.4 million.

Share based compensation expenses of <unk> 6 million.

A fair value loss associated with our wire in sub zero point $4 million.

Both the non current assets and inventory balances on the balance sheet are shown net of impairment charges.

To further decrease to inventory is down to the revenue recognize.

Until we recognize this revenue the equipment used related to these contracts were recognized as part of inventory.

Other notable movements during the quarter include a reduction of $1 5 million an onerous provisions as we utilize some of the provision that was recorded in 2022 for the above mentioned inventory impairments and grant inflows of $2 6 million, which were received during the fourth quarter.

Gavin Jones: Both the non-current assets and inventory balances on the balance sheet are shown net of impairment charges. The further decrease in inventory is attributed to the revenue recognizer. Until we recognized this revenue, the equipment used related to these contracts was recognized as part of inventory. Other notable movements during the quarter include a reduction of 1.5 million in onerous provisions as we utilize some of the provision that was recorded in 2022 for the above-mentioned inventory impairments, and grant inflows of $2.6 million, which were received during the fourth quarter. Our bank balance was just over $1 million on December 31st.

Our bank balance is just over $1 million on December 31.

Since then we've received $5 9 million through our ATM facility.

Both our capital position on use of the ATM facility have been common themes during our investor updates over the last 12 months.

Most recently in our December meeting I commented that it was our intention to cease activity with the ATM as soon as possible.

This was and continues to be our position until the Esa Award.

Around that time management and were considering various short term financing options that would provide us with a longer runway to a more strategic capital rates.

On foot up Esa announcement on the consequent trading volumes and share price spike the after fast and youthful IC ATM.

Gavin Jones: Since then, we have received $5.9 million for our ATM facility. Both our capital position and use of the ATM facility have been common themes during our investor updates over the last 12 months. Most recently, at our December meeting, I commented that it was our intention to cease activity with the ATM as soon as possible. This was and continues to be our position until the IFSA award.

Based on the options that we had in front of US. The ATM was achieved this way of raising capital in the short term.

We also didn't have to consider some of the bells and whistles such as Warren coverage market discounts interest coupons and lockup periods that would've caused greater dilution to our shareholders and also could have impacted our ability to have more strategic rates.

Gavin Jones: Around that time, management was considering various short-term financing options that would provide us with a longer runway to a more strategic capital raise. On the basis of the IFSE announcement and the consequent trading volumes and share price spike, we acted fast and utilized the ATMs. Based on the options that we had in front of us, the AGM was the cheapest way of raising capital in the short term.

This was an important milestone for the company given the challenges faced in raising capital.

We have significant grant amount is expected for 2024, which will mostly be to reimburse us for spend relating to R&D, our production facility and engineering services for our projects.

Q2, the strengthening of our balance sheet in February.

As we are now receiving customer inflows regularly we are satisfied that the operational inflows coupled with the drawdowns from them acquired facility will provide sufficient runway to enable us to execute and more strategic capital rates.

Gavin Jones: We also didn't have to consider some of the bells and whistles, such as warrant coverage, market discounts, interest coupons, and lock-up periods, that would have caused greater dilution to our shareholders and also could have impacted our ability to do more strategic raids. This was an important milestone for the company given the challenges faced in raising capital. We have significant grant amounts expected for 2024, which will mostly be to reimburse us for expenditure relating to R&D, our production facility, and engineering services for our project. Due to the threat to our balance sheet in February, and as we are now receiving customer inflows regularly, we are satisfied that the operational inflows, coupled with the drawdowns from the Macquarie facility, will provide sufficient runway to enable us to execute a more strategic capital raise.

On the $20 million Macquarie facility, we are working closely with Macquarie to ensure that all remaining conditions that were set at the time of entry into securities purchase agreements have been mesh. So that we were able to draw down the first tranche of 1.15 million U S. Others before the end of the first quarter of 2024.

This is in line with the expectations communicated back in our December update.

We filed the notice for an extra ordinary general meeting of the company shareholders, which will take place on March 20th.

Under Irish law, the company must have authority from its shareholders to issue any securities.

The company shareholders previously authorized the company to issue securities of up to 20% of the ordinary shares of the company during the calendar year, which is equivalent to $2 9 million shares.

Gavin Jones: On the $20 million Macquarie facility, we are working closely with Macquarie to ensure that all remaining conditions that were set at the time of entering the securities purchase agreement have been met so that we are able to draw down the first tranche of US$1.15 million before the end of the first quarter of 2024. This is in line with the expectations communicated back in our December update. We filed a notice for an extraordinary general meeting of the company's shareholders, which will take place on March 20th. Under Irish law, the company must have authority from its shareholders to issue securities. The company's shareholders previously authorized the company to issue securities of up to 20% of the ordinary shares of the company during any calendar year, which is equivalent to 2.9 million shares.

The company has determined that it would be in its best interest to seek approval from shareholders to provide the company with authority to issue securities above and beyond the 20% cap.

Okay.

The reason we are making this request now is that while salaries ATM sales have meaningfully extended our runway.

We no longer have ample room to maneuver, what's remaining on the 20% thresholds.

We continue to believe that uncertainty around our capital position is the greatest concern at the markets and that resolving the capital constraints will remedy our longstanding valuation disconnect relative to our peers.

As we have noted in previous updates we have been exploring multiple options to further solidify our cash our capital position.

Which may entail selling securities more than this cap.

A priority of ours is to take the cash burn by the end of 2025 and to do this we won't need to reinforce our balance sheets.

Our strengthened balance sheet should not only provides comfort to our teams investors and shareholders that the company is sufficiently equipped to achieve its goals and targets. But also provides our customers with further assurances that the warranties that are being offered as part of our technology contracts can be fulfilled.

Gavin Jones: The company has determined that it would be in its best interest to seek approval from shareholders to provide the company with authority to issue securities above and beyond this 20% cap. The reason we are making this request now is that while February's ATM sales have meaningfully extended our runway, we no longer have ample room to manoeuvre what's remaining under the 20% threshold. We continue to believe that uncertainty around our capital position is the greatest concern of the market and that resolving the capital constraints will remedy our longstanding valuation disconnect relative to our peers. As we have noted in previous updates, we have been exploring multiple options to further solidify our capital position, which may entail selling securities more than this cap.

It is imperative that the company can move quickly and decisively in the event of a prospective capital raised for strategic partnerships.

To be fully here, we're not looking to issue 100 million shares as has been in fares, both through direct and indirect communications with some stakeholders.

We didn't want to mislead anyone anyone by putting a specific number in the notice when we currently have no basis to support us.

As noted in our Investor letter management and the board are amongst the largest holders of fusion Sheila securities and we are sensitive to the dilutive impacts any significant financing would have on existing shareholders and are therefore fully motivated on our lines to ensure that any equity offerings. We consider creek.

Gavin Jones: A priority of ours is to peg the cash burn by the end of 2025, and to do this, we will need to reinforce our voluntary... A strengthened balance sheet should not only provide comfort to our teams, investors, and shareholders that the company is sufficiently equipped to achieve its goals and targets but also provide its customers with further assurances that the warranties that are being offered as part of our technology contracts can be fulfilled. It is imperative that the company can move quickly and decisively in the event of a prospective capital raise or strategic partnership. To be fully clear, we are not looking to issue 100 million shares, as has been inferred both through direct and indirect communications with some stakeholders. We didn't want to mislead anyone by putting a specific number in the notice when we certainly have no basis to support it.

It's meaningful long term value for the company and its shareholders.

We are maintaining our revenue guidance for 2024.

Of the 34 million forecasted.

$7 3 million of this has been contracted to states.

The remainder will be made up from the sales that are currently in negotiation.

Some of these negotiations are linked to our CNS portfolio and the USA progress has significantly broadened the time discussions around those projects.

This means that the negotiations are taking longer but our ultimate more significant for the company.

We have not included a further equipment sales from our pipeline, which significantly exceeds the amount left to execute for 2024.

Given our experience with delivering projects delays will happen soon.

So we were allowing some room so that further conversion of our pipeline will offset some possible delays.

As a reminder, the <unk>.

Gavin Jones: As noted in our investor letter, management and the board are amongst the largest holders of Fusion Fuel Security, and we are sensitive to the dilutive impacts any significant financing would have on existing shareholders and are therefore fully motivated and aligned to ensure that any equity offering we consider creates meaningful long-term value for the company and its shareholders. We're maintaining our revenue guidance for 2024, of the $34 million forecast. 7.3 million of this has already been contracted today. The remainder will be made up from sales that are currently in negotiation.

<unk> of revenue recognition for each contract could be different in some cases revenue is recognized over delivery phase of the projects and analytic cases, it's at a point in time, usually when the full project has been to leverage and client acceptance has been received.

For that reason, our 34 million target will not be recognized on a linear basis are spread evenly over each quarter.

From an actual perspective, we are forecasting SG&A costs of between 14 and $16 million and capex of between eight and $10 million for 2024.

Right now we have a lower cost base when compared to our competitors and we are working to reduce this further.

Diluting the quality of our products and ancillary services.

Gavin Jones: Some of these negotiations are linked to our CNS portfolio, and the progress of Ipsig has significantly broadened the time discussions around those projects. This means that the negotiations are taking longer but are also more significant for the company. We have not included further equipment sales from our pipeline, which significantly exceeds the amount left to execute for 2024.

As can be shown on this slide are our costs reduce in 2023.

At a lower cost base, we fully expect to see further benefits during 2024.

Our goal continues to be reaching cash flow self sufficiency and as noted earlier, we expect this to happen during 2025, if we can execute our business plan.

Before I pass you over to Frederico I would just like to reiterate our commitment to our shareholders that we will continue to manage the company in a cost effective manner and migrate from the legacy products.

Gavin Jones: Given our experience with delivering projects, delays will happen, so we were allowing some room so that further conversion of our pipeline will offset some possible delays. As a reminder, the timing of revenue recognition for each contract could be different. In some cases, revenue is recognized during the delivery phase of the project, and in other cases, it's at a point in time, usually when the full project has been delivered and client acceptance has been received. For that reason, our 34 million target will not be recognized on a linear basis or spread evenly over each quarter.

Products and projects that will not create value in the near term frederico the floor is yours.

Thank you Kevin.

And good afternoon or good morning to all.

Pleased to share with you today, the latest news from the numerous licensees without showing loan.

Firstly and I'd be remiss, if I didn't start in such an important piece of news.

We were informed that all chinas, Fortunately, Fortunately due which we submitted in 2020 for MSA consideration finally received its approval.

This is a major milestone for us having worked in the background on this project for nearly four years ago.

For many quarters, we've been quiet on the absurdity.

Gavin Jones: From an outflow perspective, we are forecasting SG&A costs of between $14 and $16 million and CapEx of between $8 and $10 million for 2024. Right now, we have a lower cost base when compared to our competitors, and we are working to reduce this further without diluting the quality of our products and ancillary services. As can be shown on this slide, our costs reduced in 2023, and with a lower cost base, we fully expect to see further benefits during 2024. Our goal continues to be reaching cash flow self-sufficiency.

<unk> seen this front given the uncertainty and also its potential to significantly to stools any figures we would publish.

We made a mistake in order to be his insight into these essentially more cautious on how we communicate around this project going forward.

At the same time.

We put substantial efforts into building a business that was not solely dependent on this large project in the USA decision.

Something that given the long lead times on these mega projects was a very prudent thing to do.

Now I'm very pleased to note that today, we have a business hotels, the upstate projects as a boost to our funds rather than the foundation to them.

Today, we want to clarify where the project is and what it means for the company.

Firstly the upside includes three phases.

<unk> two of which have already been awarded grants totaling 32 million euros from Portugal's recipients.

Frederico Figueira de Chaves: And as noted earlier, we expect this to happen during 2025 if we can execute our business plan. Before I pass you over to Frederico, I would just like to reiterate our commitment to our shareholders that we will continue to manage the company in a cost-effective manner and migrate from legacy products and projects that will not create value in the near term. Frederico, the floor is yours.

And recovery plan.

We've announced these awards in recent news and we have already received and inflows from these 32 million euros.

The third of all stays with substantially larger for a total of 500000 megawatt.

Megawatts.

As expected to take nearly to the end of the decade to execute.

With its three phases, we expect this portfolio to be a driver of long term value institution fuel.

Being designated an important project of common European interest means that the company can now enter into bilateral agreements on funding funds with local governments beyond the existing growth programs.

Frederico Figueira de Chaves: Thank you, Gavin, and good afternoon or good morning to you all. I'm pleased to share with you today the latest news from the numerous activities we have going on. Firstly, and I'd be remiss if I didn't start with such an important piece of news, we were informed that Altena's project Port Mahalou, which we submitted in 2020 for IPCEI consideration, finally received its approval. This is a major milestone for us, having worked in the background on this project for nearly four years. For many years, we've been quiet on the IPSEI and the CNIS front, given the uncertainty and also its potential to significantly distort any figures we would publish.

And we can also enter into discussions with the European investment bank for possible financing solutions and support.

Financing large green hydrogen projects today is not possible without those type of sports given the early stage of the industry.

Therefore, having these options is of immense value for any project investor.

Quite simply makes a project of this dimension viable which makes it incredibly valuable.

The project foresees, a production of green hydrogen to make green ammonia in Portugal with eventual shipping of a significant part of this production to northern Europe.

Frederico Figueira de Chaves: We made that mistake in our early years and decided to be substantially more cautious in how we communicate around this project going forward. But at the same time, we put substantial effort into building a business that was not solely dependent on this large project and the IPSE decision. Something that, given the long lead times on these megaprojects, was a very prudent thing to do. And I'm very pleased to note that today we have a business that counts the Ipsway project as a boost to our plans rather than Foundation 2000. Today we want to clarify what the project is and what it means for the company. Firstly, the FSA includes three phases, the first two of which have already been awarded grants totalling 32 million euros from Portugal's resilience and recovery plan. We've announced these awards in recent years, and we have already received information from these 32 million people.

It is a truly ambitious projects, enabling the avoidance of around 650000 tons of sue to in the process and producing more than 300000 tons of print ammonia.

This project is led by choosing to who will be executed with several partners, it's simply not possible with strategic projects of this size by ourselves.

And a key consideration.

Conditions this engagements.

Of several partners.

Cross multiple countries.

And it has substantial spillover benefits to the local economies.

As noted we expect this to be a significant contributes with small business over its long lifetime.

However, we will only provide guidance on the expected amounts.

We'll pause to be implemented by fusion fuel once we've gone through the various negotiations with partners governments and financing players.

This will still take many months to see through and we will look to update you as we have more information in the meantime, we continue to relentlessly execute on our 'twenty 'twenty four and 2025 activities.

Frederico Figueira de Chaves: The third and last phase is substantially larger, for a total of 530 MW, and is expected to take nearly to the end of the decade to execute. With its three phases, we expect this portfolio to be a driver of long-term value. Being designated an important project of common European interest means that the company can now enter into bilateral agreements on funding plans with local governments beyond the existing grant program, and it can also enter into discussions with the European Investment Bank for possible financing solutions and support. Financing large green hydrogen projects today is not possible without this type of support, given the early stage of the industry.

Last quarter I provided some information regarding our engineering capabilities.

And the benefits it brings to our business and relationships.

Today, I would like to drive this point further.

As outlined in the slide we offer engineering advisory services for one two and three studies.

Procurement services for bone support equipment.

This is everything apart needs beyond the electrical Liza.

And in Liberia, we do construction planning and supervision and thought legalization.

This full suite offering positions fusion Q.

As a true partner and advisor clients.

Many of which are not cast a process or developers and require the close the pools to bring the project to reality.

Already in 2024.

Frederico Figueira de Chaves: Therefore, having these options is of immense value for any project investor. It quite simply makes a project of this dimension viable, which makes it incredibly valuable. The project foresees the production of green hydrogen to make green ammonia in Portugal, with the eventual shipping of a significant part of this production to Northern Europe.

The 34 million euros revenue guidance, Kevin mentioned.

We expect 2 million euros to be from pure engineering services alone in their own 10 million euros to come from the procurement and supply of balance of plant and equipment for plants that we're designing for and with clients.

This allows us to capture a significantly larger share of the wallet of the total spend on each hydrogen plants.

Electrolyze it can at times be less than 50% of the overall tone cost so being able to deliver the remaining equipment and services can be a large contributors while top line. Although we recognize that the equipment provision has little margin, but also lower warranty and project related risks.

Frederico Figueira de Chaves: It is a truly ambitious project, enabling the avoidance of around 650,000 tons of CO2 in the process and producing more than 300,000 tons of green ammonia. This project is led by Fusion Fuel but will be executed with several partners. It's simply not possible to execute a project of this size by ourselves, and a key consideration of the if-safe conditions is the engagement of several partners across multiple countries, and it has substantial spillover benefits to the local economy. As noted, we expect this to be a significant contributor to our business over its long lifetime. However, we will only provide guidance on the expected amounts will pass to be implemented by Fusion Fuel once we have gone through the various negotiations with partners, governments, and financing players. This will still take many months to see through, and we will look to update you as we have more information.

With each plants, we deliver and design our expertise grows and further puzzles ahead and the other early stage industry.

It allows us to be a trusted partner.

And allows us to capture repeat business with clients. It is important to note that to date.

Every client we have has the potential for repeat business and to nearly all of the clients. We're dealing with we are already designing and submitting proposals for follow on funds.

To share some of the latest information regarding that he between offering will note that this is a truly customizable and modular solution.

Well, we all producing cubes of various sizes as well as containerized solutions for larger projects.

I will pause here and just.

Right, but the question that I've seen coming up we haven't in the past provided these data sheets openly on our upsides.

Frederico Figueira de Chaves: In the meantime, we continue to relentlessly execute on our 2024 and 2025 activities. Last quarter, I provided some information regarding our engineering capabilities and the benefits they bring to our business and relationships. Today, I would like to address this point further.

We effectively designed the projects to the customized scope for the clients. So this is something that we do and we engage with the client because we given that it's such a modular solution, which will be Taylor, but each project delivery to the clients' needs.

Frederico Figueira de Chaves: As outlined in the slide, we offer engineering advisory services for 1, 2, and 3 studies. Procurement Services for Balanced Apart Equipment. This is everything a plant needs beyond the electrolyzer. And in Liberia, we do construction planning and supervision, and plant legalization.

Thank you.

The Hugo chain, which began its commercialization in mid 2023 has already started full production at <unk> facility.

We continue to see strong interest in the solution.

And we are delivering proposals in project designs on Nivea weekly basis at this point.

We will be delivering.

The remaining tubes. During this month Tau first Hugo chain installation at our client funds.

This project includes full frontal debris and allows us to see client bookings to the tune of three times deal, which was the volume with the provision of other equipment and services.

Frederico Figueira de Chaves: This full suite offering positions Fusion Fuel as a true partner and advisor for clients, many of which are not CASP operators or developers and require close support to bring the project to reality. Already in 2024, in the 34 million euros revenue guidance Gavin mentioned, we expect €2 million to be from Pure Engineering Services alone and around €10 million to come from the procurement and supply of balance of plant equipment for plants that we are designing for and with clients. This allows us to capture a significantly larger share of the wallets of the total spend on each hydrogen plant. The electrolyzer can at times be less than 50% of the overall plant costs, so being able to deliver the remaining equipment and services can be a large contributor to our top line, although we recognize that the equipment provision has a lower margin but also lower warranty and product-related risks.

The severity interesting projects, where we are delivering our system. The permits the use of hydrogen into their industrial funds and allows them to change the fuel mix, we currently use and significantly reduce the carbon footprint.

The savings generated from the carbon reductions and the changing of the fuel mix are enough to offset the cost of the plant without meeting grant support.

This shows us.

The.

The <unk> solution is for certain cases economically viable even without growths.

This early stage in the industry.

To finish ill briefly cover on the strategic priorities, we have laid out for the year.

In 2024, we plan to deliver and install six to seven full tivo chain systems to southern European clients.

These fibrous flicks it to be full pompe deliveries.

In addition, we will already be working on the engineering and preparatory work for certain projects will be delivered in 2025.

These projects range from 300 kilowatts as was the one that I just mentioned before all the way to five megawatts in size and we expect to also start work on the 10 megawatt seen as one project this year.

Frederico Figueira de Chaves: With each plant we deliver and design, our expertise grows and further pulls us ahead in the early stage industry. It allows us to be a trusted partner and allows us to capture repeat business with clients. It's important to note that today's... Every client we have has the potential for repeat business, and for nearly all of the clients we're dealing with, we are already designing and submitting proposals for follow-on farms. To share some of the latest information regarding the HeboChain offering, I want to note that this is a truly customizable and modular solution, where we are producing cubes of various sizes as well as containerized solutions for larger projects I will pause here and just interact with the question that I've seen coming up. We haven't in the past provided the data sheet openly on our website, as we effectively design the projects to a customized scope for the client. So this is something that we do, and we engage with the client because, given that it's such a modular solution, we truly tailor each project delivery to the client's needs. Thank you.

One of our priorities for this year and already mentioned by Kevin but in for.

Most of what was last year as well continues to be strengthening that the strengthening of our balance sheets.

Laser focus on reaching cash flow breakeven and we need to be properly capitalized to reach this milestone.

Our strong capital position allowed the company to have confidence in for the funds those midsize project sales and to be able to provide credible warranty backup.

In addition, the other way of booking revenues. We believe this is the last step to addressing the significant valuation disconnect to our peers.

The Macquarie facility provides the company with the strategic line to be able to tap into as it needs capsule and as opportunities arise, but we see significant value.

Would be additional 12 baseline.

We have been in longstanding discussions with several capital and strategic partners that can bring additional value to the company.

Of course, more Clark soucy as a great complement to these potential tuttle.

And we believe the combined effects will generate substantial shareholder value.

Frederico Figueira de Chaves: The Hugo chain, which began its commercialization in mid-2023, has already started full production at our Benevento facility, and we continue to see strong interest in the solution, and we are delivering proposals and project designs on nearly a weekly basis. We will be delivering the remaining cubes during this month to our first EVO chain installation at our client's site.

With our facilities at hand, and the recent ATM raise we continue to be able to pursue the value add capital strength and the activities that we launched quite some time ago.

We have been cautious to do the right deal for the company as Beth mentioned before and we will continue to do so.

Yeah.

As we've noted broadening the TV addressable market for us is important.

The Hebrew chain, we have a great solution to do just that.

Frederico Figueira de Chaves: This project includes full plant delivery and allows us to see client bookings to the tune of three times the electrolyzer value with the provision of other equipment and services. This is a very interesting project where we are delivering a system that permits the use of hydrogen in their industrial farms and allows them to change the fuel mix they currently use and significantly reduce their carbon footprint. The savings generated from the carbon reductions and the changing of the fuel mix are enough to offset the cost of the plant without needing grant support.

We not only want to sell to northern European markets.

In 2024, we also plan to certify the solution for use in North America and in Australia.

We are already delivering multiple proposals and quant designs.

Both these regions and to ensuring that the solution is julie's first pods for the.

Local regulations will be possible 2024 activities.

As part of our focus to reach cash flow breakeven, we will continue to push cost reduction methods to add to the significant savings already achieved.

Frederico Figueira de Chaves: This shows us that the HevoChain solution is, for 1,000 cases, economically viable even without grants at this early stage in the industry. To finish, I'll briefly cover the strategic priorities we have laid out for the year. In 2024, we plan to deliver and install six to seven full HevoChain systems to southern European clients. Of these, five are expected to be full plant delivery.

In addition, we will continue to make adjustments to our resource allocation and investments to ensure they are aligned with our strategy.

Such a fast moving industry were balanced make adjustments when we.

See the reassessment of our spending and investment is an ongoing priority task protective committee.

In the past we made a costly mistakes are building inventory for projects that were in advanced stages, but could be cancelled or impacted by regulatory changes.

Frederico Figueira de Chaves: In addition, we will already be working on the engineering and preparatory work for certain projects to be delivered in 2025. These projects range from 300 kilowatts, the one I just mentioned, all the way to 5 megawatts in size, and we expect to also start work on the 10 megawatts seen as one project. One of our priorities for this year, and already mentioned by Gavin, but for most of what was last year as well, continues to be the strengthening of our balance sheet, with our laser focus on reaching cash flow breakeven, and we need to be properly capitalised to reach this milestone. A stronger capital position allows the company to have confidence in front of clients to close mid-sized project sales and to be able to provide credible warranty backup. In addition, now that we are booking revenues, we believe this is the last step to addressing the significant valuation disconnect with our peers.

As an example of a resource allocation with safety, we will not be making again, we will not be providing working capital advances to projects with clients.

And we will ensure that the capital deployed is aligned with our short and midterm revenue.

Yes.

Lost sales strategic partnerships.

Honest subs are a key part of all value creation and they range from commercial partnerships with developers and system integrators, such as the ones. We have already mentioned in the past for Spain, Italy, and North America.

All the way into partnerships with a technology angle such as the ones, We've mentioned before with Chronicle burn with Toshiba.

But adding to these.

We are building close relationships with suppliers of bonus of parts equipment, such as power components and compressive solutions.

Our upside projects really brings a completely new scope to the partnerships that are possible.

Given its size and the type of transports that we're dealing with are of the very largest I mentioned and have the capacity to have a broad and long lasting impact on the company.

Therefore, we're also taking a lot of time on these relationships, which will they were able to find the right partner and right fit for <unk>.

Frederico Figueira de Chaves: The Macquarie facility provides a company with a strategic line to be able to tap into as it needs capital and as opportunities arise where we see significant value but would be additional to our base plan. We have been in long-standing discussions with several capital and strategic partners that can bring additional value to the company. The Macquarie Facility is a great complement to these potential capital sources, and we believe the combined effects will generate substantial shareholder value.

These discussions started several months ago, and we expect them to continue throughout 2024.

So we look forward to providing you with more news during the year on the partnership front.

I want to close by noting that it has been a very eventful few months of the company.

It would not be an understatement to note that it was very much feels that we have reached the before and after a moment.

With the closing of that he was sort of a legacy.

The ATM raise Macquarie facility combined with the FCA approval.

Frederico Figueira de Chaves: With the facilities at hand and the recent ATM raise, we continue to be able to pursue the value-added capital strengthening activities that we launched quite some time ago. We have been cautious to do the right deal for the company, as Gavin mentioned before, and we will continue to do so. As we've noted, broadening the target addressable market for us is important. With the Hevo chain, we have a great solution to do just that.

We are now fully focused on delivering on what we have mentioned here today and what has been in work for quite some time, including many client projects that have begun to move forward once again.

We're excited by the opportunities that lie ahead and to move forward that we see in the overall hydrogen markets in the last year.

Now with that we'll open up to some Q&A.

Okay.

Great. Thanks for BRCA, So, let's begin with a couple of questions from analysts beginning with <unk> <unk> from Royal Bank of Canada, who asks.

Frederico Figueira de Chaves: We not only want to sell to Northern European markets, but in 2024, we also plan to certify the solution for use in North America and in Australia. We are already delivering multiple proposals and plant designs for both these regions, and so ensuring that the solution is duly specified for local regulations will be part of our 2024 Act. As part of our focus to reach cash flow breakeven, we will continue to push cost reduction efforts to add to the significant savings already achieved.

Whether the company has reviewed and adjusted its U S ambitions as a result of the 45 the guidance update.

Inflation reduction Act.

As I sit here in the U S I'll take that one.

Puerto Rico, a gambler chime in if they'd like.

That guidance is is certainly more stringent than the market expected and important to note that it remains still in the definition phase.

And we have to see certainly what will happen following the current U S election cycle.

The proposed additionality and timing correlation rules.

Frederico Figueira de Chaves: In addition, we will continue to make adjustments to our resource allocation and investments to ensure they are aligned with our strategy. In such a fast-moving industry, we are bound to make adjustments. We see the reassessment of our spend and investment as an ongoing priority task for our executive committee. In the past, we made the costly mistake of building inventory for projects that were in advanced stages but could be cancelled or impacted by regulatory changes. This is an example of a resource allocation mistake that we will not be making again. We will not be providing working capital bonuses to projects or clients.

Where are those laid out in the European renewable energy Directive delegate index, which measures were implemented adopted last last year. It sounds like early last year.

So we're very we're very familiar with operating within those constraints.

The U S and North America more broadly remain a near term priority for us and we continue to engage in commercial discussions with counterparts in that in that all important geography.

Yes.

My question is from Jeff Gramm with Alliance Global partners.

For Gavin and Kevin can you discuss gross margin expectations for 2024.

Sure Thanks, Pat and thanks, Jeff for the question.

So for 2024, we expect our gross margins to be in the region of 15% for projects that will include our hemo shading products, along with balance of plant equipment and EPC services.

Frederico Figueira de Chaves: And we will ensure that the capital deployed is aligned with our short and mid-term revenue targets. Law School and Strategic Partnerships Partnerships are a key part of our value creation, and they range from commercial partnerships with developers and system integrators, such as the ones we've already mentioned in the past for Spain, Italy, and North America, all the way to partnerships with a technological angle, such as the ones we've mentioned before with Fraunhofer and with Toshiba. But in addition to these, we are building close relationships with suppliers of balance of payments equipment, such as power components and compressor Our RIPCES project really brings a completely new scope to the partnerships that are possible. Given its size, the type of transplants that we are dealing with are of a very large dimension and have the capacity to have a broad and long-lasting impact on the company.

The three core elements of these projects all have different margins put in combination of margin of approximately 15% as forecasted.

As we look ahead to 2025, we expect this average to increase closer to the 20% Mark at particularly as we increased production volumes.

Within our embedded that takes facility.

Thanks, Kevin stick with you, but Federico can join in.

What are the main risks you see to heating or.

Our 'twenty guidance and what potential mitigates are there do you have in place to have to address those.

Sure So again.

Frederico Figueira de Chaves: Therefore, we're also taking our time on these relationships to ensure that we're able to find the right partner and the right fit for Fusion Fuel. These discussions started several months ago, and we expect them to continue throughout 2024. So we look forward to providing you with more news during the year on the partnership. I want to close by noting that it has been a very eventful two months for the company.

As we said on many times over the last 12 months and even on this call. The biggest risk of time on how long it takes from tender tender stage two.

<unk> signed contracts to that execution.

So that's probably our biggest risks diminish.

As both I and Frederico mentioned earlier with the St process, There's a lot more interest in our projects with a larger potential client base for those now.

Frederico Figueira de Chaves: It would not be an understatement to note that it very much feels like we have reached the before and after moment, with the closing of the Hiva Solar Legacy, the ATM Rays, and Macquarie Facility combined with the IPSEI approval. We are now fully focused on delivering on what we have mentioned here today and what has been in the works for quite some time, including many client projects that have begun to move forward once again. We're excited by the opportunities that lie ahead and the move forward that we have seen in the overall hydrogen market over the last year. Now, with that, we'll open up to some Q&A. Great

So that brings us more negotiations more discussions and that just ex out the timeline a bit more.

But I think in that scenario, we need to be patient because the conversations are probably a bit more positive now.

But the FCA announcements.

Benjamin Schwarz: Thanks, Federico. So, I'm speaking with a couple of questions from analysts, beginning with Erwin Grorodon from the World Bank of Canada, who asks whether the company has reviewed and adjusted its U.S. ambitions as a result of the 45 V guidance update of the Inflation Reduction Act. As I sit here in the U.S., I'll take that one, but we'll invite Frederico or Gavin to chime in if they'd like.

And why do we do to kind of navigate those potential delays and we have a strong product pipeline.

And I think we've been quite prudent in our guidance in terms of.

And not not including a.

A portion of the potential contracts that we are.

Benjamin Schwarz: I think that that guidance is certainly more stringent than the market expected. It is important to note that it remains kind of still in the definition phase, and we have to see certainly what will happen following the current U.S. election cycle. The proposed additionality and time correlation rules mirror those laid out in the European Renewable Energy Directive Delegated Acts, which I think were implemented and adopted last year at some point early last year, so we're very familiar with operating within those constraints. The U.S. and North America, more broadly, remain a near-term priority for us, and we continue to engage in commercial discussions with counterparts in that all-important geography. Questions from Jeff Gramp at Alliance Global Partners. This one's for Gavin.

Discussions that we could convert into contracts.

And so.

Optimistically looking at us.

And as we.

Convert the pipeline to contracts.

Our work to re align us as any delays on the project side of the revenue guidance.

Great. Thanks, you mentioned the <unk> project.

This was also asked by one of the audience members what are the next steps or milestones to keep an eye out for it with respect to.

The <unk> project.

So I have to say that and again apologies for the technical difficulties with the camera here, but if I just.

Did everyone at Teva, having to avoid seeing may well electricity both slides.

So that's a great question.

Gavin Jones: Gavin, can you discuss gross margin expectations for 2024? Sure. Thanks Ben and thanks Jeff for the question. So for 2024, we expect our growth margins to be in the region of 15% for projects that will include our Evochain products along with the balance of plant, equipment, and EPC services. The three core elements of these projects all have different margins, but in combination, a margin of approximately 15% is forecasted, and as we look ahead to 2025, we expect this average to increase closer to the 20% mark, Thanks, Gavin. Stick with you, but Frederico can join in too.

With the I'd say theres, many prompts than it's worth in parallel now so we have to.

With the negotiations with our partners, which you can imagine for projects that kicked off nearly four years ago, there's been substantial amount of changes.

The evolution of the relationship we have with our partners.

As well as we now need to begin the discussions with the Portuguese government on the.

Financial sort of support as well as with the <unk>. This is going to take several months to clarify.

And I don't know.

We will be working on those in parallel.

But I don't expect us to be able to give concrete guidance on what the subsidy will mean for us.

In detail.

For at least one or two quarters.

Again I want to note that this is a projects, especially the large parts of the project the bit that's still in the definition process those seen as three.

Gavin Jones: What are the main risks you see to hitting our 2024 guidance and what potential mitigants are there in place to address them? Sure, so again, as we said many times over the last 12 months and even on this call, the biggest risk is time and how long it takes from the tender stage to, you know, sign contracts and then execution. So that's probably our biggest risk at the minute.

There will be only sort of kick off really in 2026.

So for US the next steps will really be funding up the partnerships in that includes.

The partnerships.

Technology front include.

Includes partners on the ammonia from the offtake side.

Gavin Jones: As both I and Federico mentioned earlier, with the ESA process, there's a lot more interest in our projects, and we have a larger potential client base for those now. So that brings us more negotiations, more discussions, and that just ekes out the timeline a bit more. I think in that scenario, we need to be patient because the conversations are probably a bit more positive now on the ESA announcement. What are we doing to navigate those potential delays? We have a strong product pipeline. I think we've been quite prudent in our guidance in terms of not including a proportion of the potential discussions that we could convert into contracts. So I'm optimistically looking at it as we convert the pipeline into contracts, and I will look to, you know, realign if there are any delays on the project side of the revenue guidance. Great, thanks.

As well as the financing side.

So all of those discussions will be very intense.

Scott I would just note it's manage expectations, we will let's say projects, including the ones that were announced a few years ago take quite a while.

To take shape.

So I want to highlight that this will be a.

One driver of long term value for us, but we already see it with the interactions we're having with clients. It has the large amount of spillover positive spillover effect on other projects in the credibility for other projects Hunt.

But it will not be.

The driver about 'twenty 'twenty four 'twenty five success.

Thanks, Rodrigo your topic around a bit you mentioned the green ammonia partner for that project.

There was a question on the estimated production cost appropriate amount yet to be opened in northern European markets. Perhaps you can provide some clarification on how that figures into the broader ecosystem.

Frederico Figueira de Chaves: You mentioned the IPSEI project. This was also asked by one of the audience members. What are the next steps or milestones to keep an eye out for with respect to the IPSEI project? Right, so I take that, and again, apologies for the technical difficulties with the camera here. I think I just did everyone a favor by having to avoid seeing me while we were talking about the slides.

The hero of Portugal project.

So as part of the upside.

With or without.

We have to sort of main roles one.

One is the overall overall quarterly.

Frederico Figueira de Chaves: But, so it's a great question. To note with the IPCEI, there are many fronts that need to work in parallel now. So we have to move forward with the negotiations with our partners. As you can imagine, for a project that kicked off nearly four years ago, there have been substantial amounts of changes there and an evolution of the relationship we have with the partners, as well as we now need to begin the discussions with the Portuguese government on financial support, as well as with the EIB. This is going to take several months to clarify.

<unk> project lead.

But also the hydrogen components of the project.

We always hedge right.

Right from the beginning our partner for the ammonia fronts.

So this is a long standing partnership with a partner.

Who has a long standing.

Bonior project.

Okay.

The ammonia project.

So to note.

This is not.

Fusion fuel endeavor. This is with a partner and we hope to be able to disclose such notable future quarterly updates.

Frederico Figueira de Chaves: And I don't, you know; we will be working on those in parallel, but I don't expect us to be able to give concrete guidance on what the IPCEI will mean for us in detail for at least one or two courses. Again, I want to note that this is a project, especially the large parts of the project, the bit that's still in the definition process, the CNS3, that will only sort of kick off really in 2026. So for us, the next steps will really be firming up the partnerships, and that includes partnerships on the technology front, partners on the ammonia front, the off-take side, as well as the financing side. So all of those discussions will be very intense, and we'll start now.

What's the <unk>.

The hydrogen.

Sorry, the green ammonia being.

Being produced.

Competitive.

Also backed by the fact that the.

Green hydrogen production in the <unk> region with very cheap renewable energy.

Is it very competitive.

Material for us production.

Thanks, let's cover off on Jeff Cramps with final question.

In the past we've discussed.

Cincy and cost improvements to subsequent generations of the hero technology does that remain an ongoing program or our efforts more focused now on commercialization of the existing generation.

Frederico Figueira de Chaves: I would just note and manage expectations that all website projects, including the ones that were announced a few years ago, take quite a while to take shape. I want to highlight that this will be a significant driver of long-term value for us. We already see it in the interactions we're having with clients.

Okay.

It's both.

Quick question.

We do have what we believe is a pathway.

To reduce the staff costs by a further third so a substantial cost reduction.

However, we.

We do plan to be fully committed to the commercialization of the current version of the heap leaching.

Frederico Figueira de Chaves: It has a large amount of positive spillover effects onto our other projects and the credibility our other projects have, but it will not be... the driver of our 2024 and 2025. Thanks Federico, you mentioned the Green Ammonia partner for that project. There was a question about the estimated production costs for Green Ammonia to be sold in northern European markets.

In order to achieve those cost savings that filled some R&D work to do.

So we will have a competitive product today, we think is relevant for the markets of today and for the coming years.

And we have the power to substantially reduce those those costs. So we are actively working on both fronts.

Frederico Figueira de Chaves: Perhaps you can provide some clarification on how that figures into the broader ecosystem of the Hebo Portugal project. So, as part of the IPSE, we have two sort of main roles. One is the overall project developer or project lead, but also the hydrogen component of the project. We have always had, right from the beginning, a partner for the ammonia front.

Great. Thanks, There was a question here about the fees paid to.

The bank's core selling shares in the market I'll just quickly cover off on this.

Call correctly, if the placement agent fee for the ATM facility is 3% or so.

Which is considerably cheaper than fees that would be paid to investment bankers and a conventional equity offering so.

I think that's just a perhaps a misunderstanding.

Frederico Figueira de Chaves: So this is a longstanding partnership with a partner who has a longstanding ammonia project already, a green ammonia project. So to note, this is not a Fusion Fuel endeavor. This is with our partner, and we hope to be able to disclose that in one of our future quarterly updates. The Green Ammonia being produced there is competitive, also backed by the fact that the green hydrogen production in the CNES region, with very cheap renewable energy, is a very competitive raw material for that. Thanks, let's cover up on Jeff Grant's final question.

Sure.

Of course, the cost of production of Green hydrogen in the at the ever a project.

Puerto Rico, perhaps you can comment on that.

So we have.

Two of our projects.

The projects that we have that as long as they say.

<unk> is the small ones that project.

For us it is a and.

An extension of our R&D facility. So for example, we currently have installed.

Or sort of Hugo chain units because in order to test several of the cubes.

In a sort of connected series that is the slide that we do with us.

Frederico Figueira de Chaves: In the past, we've discussed efficiency and cost improvements to subsequent generations of the HEVO technology. Does that remain an ongoing program, or are efforts more focused now on commercialization of the existing generation? It's both, Ben, and a quick question to note.

So the cost of the function that is.

It was a bit of a moving target because we are constantly sort of updating the technology that it isn't.

An extension of all the R&D facility.

This is the only plant.

Frederico Figueira de Chaves: We do have what we believe is a pathway to reduce the stack costs by a further third, so a substantial cost reduction. However, we do plan to be fully committed to the commercialization of the current version of the HEPO chain, as in order to achieve those cost savings, there's still some R&D work to do. So we have a competitive product today that we think is relevant for the markets of today and for the coming years, and we have a path to substantially reduce those costs. We are actively working on both fronts. Great, thanks. But there's a question here about the fees paid to the banks for selling shares in the market. I'll just quickly cover this off.

Funds that we currently have funds to own and operate.

And it is and we have changed the purpose rather from being a pure.

Commercial book.

Lastly, beginning in sort of an R&D.

Facility for large scale testing.

So it's a non answer because the question keeps changing because it is directly related to our R&D capex as we continue to deploy sort of new took hold the key to the sites.

Thanks for the recovery a couple of questions in the chat box around the status of the Bakersfield project in California.

Sure. So the Bakersfield project like any large project has a very extended time period. So again similar to the absurdity, but we've made a deliberate decision to northeast updating on these large projects.

Benjamin Schwarz: If I recall correctly, the placement agent fee for the ATM facility is 3% or so, which is considerably cheaper than fees that would be paid to investment bankers in a conventional equity offering. So I think that's just perhaps a misunderstanding. Question about the cost of production of green hydrogen at the Evera project, Federico; perhaps you can comment on that. So, as you know, we have two overprojects. The overproject that we have that is live today is the small one. That project there, for us, it is an extension of our R&D facility. So, for example, we currently have installed there our sort of HevoChain units because in order to test several of the cubes, in a sort of connected series, that is the site that we do it at.

Bookings.

So those of you who followed us for some time you will have heard of other large projects in other locations, but we are still sort of working on in the background.

If and when there is any meaningful news, we will bring yourself, that's always a big risk to these projects.

Hum.

Binary outcome, they could die at any moment.

But we will notice and we've mentioned before that in 2024 and 2025, we are really focused on delivering for small and medium sized projects to that end. We are actively engaged in offers.

Frederico Figueira de Chaves: So the cost of hydrogen there is always a bit of a moving target because we are constantly sort of updating the technology there. It is an extension of our R&D facility, to note. This is the only plant that we currently have plans to own and operate, and it is, and we have changed the purpose rather from being a pure commercial purpose to actually being sort of an R&D facility for sort of large-scale testing. So, it's a non-answer because the question keeps changing because it is directly related to our R&D CapEx as we continue to deploy new technology to the site. Thanks Federico.

It's in Australia.

In the.

The North American market, so both the U S and Canada.

Offering projects in the 10 megawatt number.

Space, where we believe the execution of those will be much earlier than something for the size of Bakersfield will be up saves will these sort of mega projects.

Thanks very good.

Sticking with you what is the company most excited about with respect to the strategic partnership process, we've alluded to at length and what are the timeline expectations, if any that shareholders should have.

Frederico Figueira de Chaves: A couple questions in the chat box around the status of the Bakersfield project in California. So, the Basis Field Project, like any large project, has a very extended time period. Again, similar to the IPSE, we've made a deliberate decision not to update on these large projects.

Meaningful progress on that front.

So I think the most exciting part of it has really been the <unk> effect.

The effect of a halo effect from the upside.

Frederico Figueira de Chaves: So, those of you who've followed us for some time will have heard of other large projects in other locations that we are still sort of working on in the background; if and when there is meaningful news, we will bring it up. There's always a big risk with these projects, which have a sort of binary outcome. They could die at any moment.

No.

And also the partnership discussions.

There has been a sort of sense of urgency from the past.

The counterparts.

In order to accelerate the discussions so in the past we had the most urgency and looking to move the discussion forward no. There was a new sense of competition in order to lock down the opportunity.

Frederico Figueira de Chaves: What we will note, and we've noted it before, is that in 2024 and 2025, we are really focused on delivering on small and medium-sized projects. To that end, we are actively engaged in offers, both in Australia and in North American markets, both the US and Canada, offering projects in the 10-megawatt and under space where we believe the execution of those will be much earlier than something for the size of data fields or Earth's space or these sort of megaprojects. Sticking with you, what is the company most excited about with respect to the strategic partnership process we've alluded to at length? And what are the timeline expectations, if any, that shareholders should have for meaningful progress on that front?

And so for us the most exciting thing is sort of seen that that shift.

Our partners engagement levels have gone through the roof.

In these discussions the more completely this is number of different partnerships facilities. These are partnerships to do general sort of project developments.

Financing on.

The portfolio as a whole not specifically casinos.

Strategic direction, where it could be a potential investments in the company and as well as in projects, which is of course would be a.

Frederico Figueira de Chaves: I think the most exciting part of it has really been the IPSEI effect, or the HALO effect from the IPSEI, where in all sorts of partnership discussions, there has been a sort of sense of urgency from the part of the counterpart in order to accelerate the discussions. So in the past, we had the most urgency in looking to move the discussions forward. Now there is a new sense of competition in order to lock down the opportunity.

The ideal solution for the company, but also of course partnerships, specifically with something as big as.

It's a.

Portfolio.

Thanks, Patrick.

The demand.

And I guess feedback that we're seeing from the market or the Hubert training solution and.

Do you see any commercial momentum that could help the company grow out of its current cash constrained.

Frederico Figueira de Chaves: And so for us, the most exciting thing has sort of seen that shift where our partners' engagement levels have gone through the roof in these discussions. Now, more concretely, there are a number of different partnership possibilities. These are partnerships to do a general sort of project development and project financing on project portfolios as a whole, not specifically to SINAS, as a sort of strategic direction where it could be a potential investment in the company and as well as in projects, which, of course, would be the ideal solution for the company. But also, of course, partnerships specifically for something as big as the IPSEI portfolio. Thanks, Federico.

The interest is.

Very large significant as I mentioned.

Oil states.

It feels like we are doing proposals and designs for new plants and projects nearly on a weekly basis.

So there was a lawsuit demand in addition to.

Very exciting set of developments where.

People were delivering projects to have multiple projects in the pipeline.

As we noted we have sold.

Project two products to the same clients, but just as recently as this week we were asked proposal.

Frederico Figueira de Chaves: What's the demand and, I guess, feedback that we're seeing from the market for the Hebochain solution? And do you see any commercial momentum that could help the company grow out of its current cash constraint? Sure. The interest is very large. It's significant.

For a third project for that same client.

The clients, where we're delivering a 300 kilowatt system.

As tens of pumps.

Such a system could also be employed.

The momentum that we're seeing.

Probably in the last six months or so.

Frederico Figueira de Chaves: As I mentioned during my update, it feels like we are doing proposals and designs for new plants and projects nearly on a weekly basis. So there is a lot of demand, in addition to the very exciting sort of development where people we're delivering projects to have multiple projects in the pipeline. So, as we noted, we have sold two projects to the same client, but just as recently as this week, we were asked for a proposal for a third project for that same client.

Then if you said this.

The new thing for us.

And also in the US and also in the prostate geology and this was really with the launch of the commercialization of those people change mid of last year.

We believe that this is a general increase in the month of momentum for hydrogen.

Projects had been relatively dormant and we're now seeing a lot of those some of those projects sort of re emerge and sponsors have life again to move into the implementation phase.

Substantial demand pool projects for engineering support so he bow chain itself.

Frederico Figueira de Chaves: The client where we are delivering a 300 kilowatt system has tens of plants where such a system could also be employed. So, the momentum that we're seeing, probably in the last, developing the program. But we believe that this is a general increase in the market momentum for hydrogen. A lot of projects have been relatively dormant, and we are now seeing some of those dormant projects re-emerge and start to have life again to move into implementation. So, substantial demand for projects, for engineering support, for HEPOchain itself, and it's keeping both our commercial team and our engineering team very busy, www.fusionfuel.com. I think we should get Gavin involved a little bit here. A question on the current runway in light of the proceeds of February's ATM activity. Sure, thanks Ben. I was feeling a bit left out there.

And it's keeping both our commercial team and our engineering team very busy.

I think we should get Kevin about the little bit here a question on the current runway in light of the proceeds of the February as ATM activity.

Sure. Thanks, Pat I was getting a bit left out there.

So in terms of the run rate filing date February activity.

Like our priority now very much has to operationalize Macquarie get that facility.

Often running drawdown tranche one.

And once we can operationalize gosh, we should have greater flexibility in accessing this affinity and I think that going forward.

As I noted in my update for Iran.

We anticipate cash inflows from client contracts and grants agreements throughout 2020 for amongst Mitchell B, most of which will be received monthly.

Gavin Jones: So in terms of the run rate following the hybrid activity, our priority now very much is to operationalize Macquarie, get that facility up and running, and draw down Tranche One. Once we can operationalize that, we should have greater flexibility in accessing this facility as needed going forward. And as I noticed in my update earlier on... We anticipate cash inflows from client contracts and grant agreements throughout 2024, most of which will be received monthly. In terms of runway, I think given the stage of discussions with various counterparts regarding financing solutions and strategic partnerships, it's probably not appropriate for me to discuss specifics right now. But hopefully, you know, we'll have some updates between now and our next quarterly update. Thanks, Gavin.

In terms of runway I think given the stage of discussions with various counterparties regarding financing solutions strategic partnerships, it's probably not appropriate for me to discuss specifics right now.

But hopefully we'll have some some updates between now and our next quarterly update.

Got it back to Frederico. This is our final question. So if anybody else has additional questions. Please do get them in.

The.

Refueling station in Madrid for extra room is currently operational and what if any feedback.

Has the company received from that.

That clients.

Sure.

So yes, it is operational nodes.

I don't have the exact numbers of the number of bus.

Buses is it's it's refueling.

Frederico Figueira de Chaves: Back to Frederico, this is our final question, so if anybody else has additional questions, please do get them in. The refueling station in Madrid for Exelum. Is that currently operational, and what, if any, feedback has the company received from that client? So, yes, it is operational to note. I don't have the exact numbers or the number of buses it's refueling. As noted, this is a plant that we have delivered to Exelum.

As noted this is a pond that we sell.

Delivered to absolute.

So although we do know that it is producing hydrogen and it is retooling buses.

I believe on a on a daily basis, so the pontoons.

Operational.

As.

Sort of contracted decline we floored.

The first two years of debt funds, but we will be in the very much of a sort of handholding approach with them.

Frederico Figueira de Chaves: So although we do know that it is producing hydrogen and it is refueling buses on a daily basis, believe it on a daily basis. Thus, the plant is operational. As sort of contracted with the client, we... For the first two years of that plant, we will be in a very much of a sort of hand-holding approach with them. So we have a team that is in constant contact and spends quite a bit of time in the field with the clients. As with any sort of, let's say, electrolyzer deployment today, it had its teething issues. This is where we actually noted the advantage of our modular solution. So to note, a lot of the electrolysis systems, when they have any sort of issue, it's a sort of binary outcome. The plant shuts down, or it is live.

We have a team that.

As important concepts.

Spence, but there's a time in the field with the clients.

As with any sort of let's say the virtualized deployments.

Today.

It had teething issues.

This is where actually we noted them the advantage of all modular solution.

So to note a lot of the electrical systems when they have any sort of issue. It's a sort of binary outcome the plant shuts down or it is mine.

In our case with the modular solution that allows us to.

Actually splichal fossil the bonds, the gross and the problems that emerged in the pumps can keep operating.

Frederico Figueira de Chaves: In our case, with the modular solution, it allows us to actually switch off parts of the plant, address any problems that emerge, and the plant can keep operating. So from the client's side, for whatever teething issues that there have been, the production of hydrogen has been able to continue. And again, it is one of our, currently one of our most attractive selling points is this sort of modularity of the solution and the availability that this solution gives. As I say, every project has had its teething issues. We're sort of happy to say that our solution is able to minimize the pain that they've caused. And the plant has continued to operate and continue to deliver hydrogen and allow the hydro refueling station to operate. So we are happy with that and with how it is going on with our partner, Exeloop. Thanks, Fabricio.

So from the science, the late or whatever.

Teething issues that they have been the production of hydrogen has been able to.

Continuing to produce and again it is one of our.

That will evolve most attractive sort of selling points.

Is this sort of modularity.

The solution and the availability.

But that's for this solution as.

As I say every project is at its teething issues with sort of happy to say that our solution is able to.

Minimize the pain.

Gross.

The plant has continued to operate and continue to deliver hydrogen into a level of the hydro repeat those patients who operates.

So we are happy with us.

But how that is going on with <unk>.

Absolutely.

Thanks, Let me go one more question here, which is a very good and an important one.

Frederico Figueira de Chaves: One more question here, which is a very good and important one. With the proposed increase in the number of issuable securities, which will be voted on by shareholders at the EGM later this month, is management's expectation that those additional shares will be drawn down in one transaction or over a period of time to maximize value as the share price hopefully appreciates? So Gavin, I'll take part of that, and then if you...

With the proposed increase in the number of Issuable Securities, which we voted on by shareholders.

<unk> later this month is our managements expectations at that those additional shares will be.

Yes.

Drawn down in one one transaction or over a period of time.

Maximize.

Do you as the share price completely appreciate it.

So Kevin I'll take parcel, but then if you.

If you need to jump in.

Frederico Figueira de Chaves: If you need, just jump in. I'll note that the request we're making here from management and from the board's perspective to give us the flexibility to make the right deal with the capital partner and strategic partners that emerge probably can be understandable for a small company of our size. People are reluctant to put significant effort and legal costs and so on into a process if there is doubt that the management of the board can get it through. So in order to ensure that we're able to continue and execute on discussions without them reaching a sort of critical element or a critical bottleneck point, we need to have the flexibility to be able to make the right deal for the company.

On.

The requests were making here from from management and from the Board's perspective.

Just to give us the flexibility to make the right deal.

With the.

Capital partners strategic partners that emerge.

But we can be on Thunderbolt for a small company of our size.

People are reluctant to put.

Thanks <unk>.

<unk> methods.

Legal costs and so on into our process. If there is doubt the management of the board can get it through.

So in order to ensure that we're able to continue and execute on discussions without them, reaching sort of critical elements for critical bottleneck points.

Need to have the flexibility to be able to make the right deal for the company and we are and we know that in lesser and I'll speak to the full board at this time.

Frederico Figueira de Chaves: And we are, and we noted that in the letter, and I speak on behalf of the full board of this committee. We are very, very conscious of the dilution impact that any sort of transactional capital raise can have on shareholders. However, we want to make sure that we are able to do the best for the company and for Shell. Now, we believe that the... concerns have been substantially alleviated with the ATM in the Macquarie facility. But those concerns kept the company from being valued, in our eyes, by fairly inspired competitors.

Very very conscious of it.

Dilution impact.

Any sort of transactional customer rates can have.

Or shareholders.

However, we want to make sure that we are able to do the best for the company and for shareholders.

Now we believe that the.

Sort of capital concerns in the past of which have been.

Substantially alleviated with the ATM and the Macquarie Macquarie facility.

But those concerns.

<unk> kept the company from being valued.

All in all is fairly small.

Competitors.

Frederico Figueira de Chaves: So we believe that any addressing of that issue will actually unlock significant shareholder value, and Jeffrey Schwarz. Thank you. It depends on the counterpart, concretely to the question. So there are counterparties, as with the Macquarie piece, and this is one of the reasons why we like the Macquarie facility. The dilution varies tranche by tranche.

So we believe that any addressing.

That issue will actually unlock significantly shareholder value.

That's the first point.

No.

It depends on the counterpart to the question. So theyre all counterparts as with the Macquarie piece and this is one of the reasons why we do like the Macquarie Macquarie facility.

The dilution.

Various tranche by tranche.

Frederico Figueira de Chaves: It allows us to address some of that valuation gap, or, in our eyes, mispricing, and doesn't impact, doesn't have a one-off hit on valuation for our shareholders. That said, for example, if we had a for project revenue, sales revenues, combined with a capital influx would have substantial shareholder value. So, the type of transaction will depend on the partners, and we're having discussions with several types of partners, And the reason why we are being vague in our request is that we need the flexibility to pursue the right deal, for the company and for the channel. I would lastly note that we have been in the capital raise efforts for what feels like nearly a year and a half now.

So it allows us to address some of that valuation gap.

So all in all our eyes mispricing.

And doesn't impact.

And those are kind of a one off hits.

On dilution pool.

We're all shareholders.

That said for example, if we have a.

Strategic partner, which is bringing long term value to clients bring boltzmann value to project and additional sort of revenue to projects.

And to the company, but wants to do a one off transaction that might be the best in the best interest first of all because.

<unk> revenue sales revenues combined with a.

Capital.

Influx would have substantial shareholder value.

No.

The type of.

Transaction will depend on department. So, we're having discussions with several types of partners or potential partners here.

And the reason why we are being vague and I'll request is we need the flexibility to pursue the right deal.

Frederico Figueira de Chaves: We have been offered... Of course, to avoid those, managing very tight budgets, managing our cashflow as best we can to make sure that we are not pushed into that. I would say that the management board has been... We are very, very focused on making sure that we pursue a deal that creates substantial value for the shareholders and for the company. We are pursuing those discussions, and we have been in those discussions and negotiations. Now we need the ability to execute those as they mature.

For the company.

Please.

I would note that.

We have been in the capital raise.

But it feels like maybe a year and a half now.

We have been all foods.

So.

Several term sheets with low to states would be value destructive for the company.

We'll have done our best to avoid those.

Managing very tight, but just managing our cash flow as best we can I just make sure that we're not pushed into that.

I will say that the management board has been.

Very very focused on making sure that we pursue will deal that creates substantial value to the samples to the company.

Benjamin Schwarz: Terrific. Okay, thank you, Frederico. So, in the absence of any additional questions, I think we'll call it for our fourth quarter investor update. Thanks to everyone who joined us and asked questions. If you have additional questions or you'd like to speak with myself or with management, feel free to reach out to me and the IR team at ir at fusion-fuel.eu. We look forward to seeing you all again at our next update. Thank you all.

We are pursuing those discussions and we have been in those discussions and negotiations and now we need the ability to execute those as they mature.

Terrific. Okay. Thank you Puerto Rico, so in the absence of any additional questions I think.

We'll call it for our fourth quarter <unk>.

Investor update thanks, everyone, who joined and ask questions. If you have additional questions that you'd like to speak with with myself fourth management feel free to reach out.

To me the IR team at IR at fusion dashboard look focusing you all again.

Our next update.

Thank you. Thank you all.