Ceres Power Holdings plc (CWR) Earnings Call Transcript & Summary

First of all, thank you for joining at short notice. We -- we signed this agreement literally today. And this is a culmination of the relationship that we've had with over the past 7 years. So it's fantastic progress. And first of all, it relates directly with our strategy. So as many of you know, we're going through a business transformation at the moment, and we're focused on 3 main things. One is signing new manufacturing licenses, of which this is what we're talking about today. The second is accelerating partners to market so that we can actually get into the market and get royalties flowing. And the third thing is launching and maintaining our technology leadership position with a single stack platform, which is going to be power first, but they can also do electrolysis later. Okay. So let's move on. So what we signed today is a manufacturing license agreement for solid oxide for fuel cell only for power markets in China. It does not include electrolysis, and it does not include the marine market. It's a stage technology transfer to establish manufacturing facility, and it is supported by supply from sellers of key components. So we're doing it in collaboration with Weichai. We've been working with them for a number of years. We've developed the systems that you can see behind the team and the photograph here. And now it's about actually starting to bring core technology into production in China. Okay. Next slide. As I mentioned, Weichai is a strategic shareholder. There may be less known to some of you. They're one of the world's largest engine manufacturers globally. They, I think, produce something like 15% market share of engines. They have a broad product portfolio for power generation, including conventional gas engines, diesel engines, et cetera. So this is a natural fit, if you like, for their product portfolio. They employ 100,000 people globally with revenues in '24 of about $30 billion. So they're a pretty progressive and ambitious company in China. The relationship with Weichai has always been good. It was recognized by the European Union as an exemplary case of European-China energy cooperation. So we're coming into this, I think, in a good position based upon the trust we've built up with these guys over the past 7 years. Next slide. And I think China -- the China market, we can't really ignore. It's attracted 76% of global clean tech investment last year for clean-tech factories globally, which is pretty staggering. China now holds 70% of production capacity in every major clean energy technology category. And they continue to have this ambition across all clean energy technologies. And there are various funding opportunities, as you can imagine, to support low zero-carbon technology. The data center market in China is obviously growing as it is elsewhere. It's set to double in the next 5 years. Recent research published by Goldman estimates that the market for fuel cells and particularly for solid oxide fuel cells in that data center market is somewhere between 8 and 20 gigawatts by 2030. And obviously, not all of that is going to be U.S.-based. So partnerships like Weichai are very important. And the China's up and coming 15th Five Year Plan references fuel cells as part of that clean-energy system. And the roadmap suggests that solid oxide for stationary industrial power will be part of that. And I think that's very important because that becomes very strategic. So the financial implications of the deal, it's consistent with our approach with other license deals in the past, which is upfront license fees and then ongoing royalties. We guided this in September that we were working on a deal, but the timing is always what impacts when we can recognize revenue, et cetera. We're not anticipating this will change our revenue for 2025, which we previously guided to GBP 32 million, but it will underpin as a minimum, our revenue for '26 million of GBP 45 million. So it's going to be something that has more of an impact into next year. But I think more importantly, it's the potential for royalties and another the manufacturing partner for Ceres, which is the key progress we're announcing today. And in combination with the business transformation program that we are executing right now, it adds obviously to contracted revenue to '26, but it also builds that royalty stack and brings forward our time to profitability. I think, given some of the cost reduction that we're anticipating going into '26 plus this momentum, I think the company is extremely well placed. So that's a very quick overview of what we've signed today. If you look at how this looks now on our map of partnerships, it builds upon the announcement we had this year of first production in South Korea with Doosan, our partnership with Delta in Taiwan, who have a dual license for both SOFC and EC, Denso in Japan, which has the EC license for hydrogen electrolysis and now Weichai for manufacturing of SOFC. So the growing ecosystem continues, and that's very good news for Ceres with potently 4 production centers coming on stream. Next slide.