Gelion plc (GELN) Earnings Call Transcript & Summary

Very efficient for all of the investors to come and catch. So many companies have learned about so many companies. And of course, we also provide an analysis of quite a few companies as well. And later on, we'll be welcoming Paul Scott to be with us. As many of you will know, Paul from his morning reports on Stockopedia. And we've also got Alan Charleston talking us through Equals Group their results and strategic update because they're in a bid situation. First of all, though, to start up our day, we're going to have Gelion new company, [indiscernible]. And a very big welcome their Chief Executive, welcome John. Good to have John on the show. Welcome, John.

Thank you, David. Well, real honor to be able to talk to your community of interested investors today and certainly to represent Gelion. And if you're right, I'll actually share a few a few slides here. So about Gelion, Gelion is an innovation company. It's an energy transition specialist company working in next-generation battery technologies. And I'm going to share with you today 2 things. Well, first of all, it is a half year results presentation, but I know that this will be the first time that many of the investors -- I hope you'll become shareholders; many of the investors that are on this call will be meeting Gelion. So I've put together a bit of a presentation that sort of gives you the results that shares some of our journey along the way as well. First of all, the disclaimer. I'm not going to read through the details of the disclaimers. You can do that yourself. I do draw attention to them. We are in the battery industry, and there's some particular disclaimers we're putting about batteries and what we're doing. This is a very high-energy area. It's a very high opportunity area. It's also a risk area of technology, but very, very exciting. And Gelion is in a very special position. I'm not going to introduce my leadership team to you physically today because a bunch of us have been traveling. But I do want to draw attention to a few key people. Firstly, our founder, Professor Thomas Maschmeyer. Thomas is remarkable. He's regarded as one of the top 15 chemists in the world, a specialty in particularly catalytic chemistry. So an absolute honor for me to be able to work with Thomas. Myself, John, I'm a serial entrepreneur. I've built a number of significant technology companies around the world had a mono success with that. Those companies were all in the end bought at various times and gained quite a bit of experience through that period. Amit Gupta, our CFO, a very talented CFO, very hands-on, energetic, and we'll talk about some of the impact that Amit and I have been having together on the financial performance as we proceed. And then Louis, who joined us recently. Louis was previously the chemistry supervisor for Panasonic at the Tesla gigafactory, brings an enormous capability and experience to the company. So Gelion, when you understand batteries, there are 2 great battery ecosystems out there. One is moving faster, and that is the lithium-ion industry. We are developing a technology that we see having a big effect as the next generation of that industry. And that's called lithium-sulfur. So when you understand the lithium-ion industry, there's the insider battery, you have an anode, you have a cathode and you have electrolyte. And one thing that's characteristic of that industry is that it's relying on an intercolaton cathode on the cathode side. Sulfur is a new technology, it's a conversion technology, and I'll tell you a little bit later about the importance of that technology. We're aiming to be a leader in lithium-sulfur is most important technology as it takes off in the energy transition. The other industry is the lead acid industry. The lead acid industry and the lithium-ion industry, we're roughly the same size if you went back a couple of years. What's happening now is the lithium-ion industry is taking off really quite quickly, whereas the lead acid industry is growing sort of evenly, maybe at about 6%, 8% per year. Into that lead acid asset ecosystem, we're developing zinc-based cells with the objective as being a next-generation contributor into that ecosystem. Now this is a very large and a very exciting market. And so there's a total addressable market in batteries of almost $2 trillion by 2030. And the leading technologies will be very, very important. Where Gelion is addressing around 80% of the total available value chain, we are developing materials. So we're working to make materials that will be used inside the battery cathode materials and at materials. We're working towards the development of cells. So the cell is a single battery with cathode electrolyte and the packaging. We're working towards making products and products will be built on packs. And also, the company Gelion has significant technology in the recycling sector as well. For those shareholders or those of you who are already shareholders in Gelion you may have been traveling some of this journey with us already. 2023 was a huge year for Gelion. So the company has been delivering on its milestones. I want to explain the context of this. So 2023 for us was a year where in lithium-sulfur, we were establishing our foundation. So going back behind that, Thomas and team had embedded some remarkable breakthroughs in the lithium-sulfur area that gave us the capability to match sulfur with different anode technologies. I'll tell you about the significance of that later. But looking at that, we then did a few large inorganic activities. The first one of those was we acquired a remarkable portfolio of technology in lithium-sulfur from Johnson Matthey. So when you look at lithium-sulfur, it's a technology with extraordinary potential. It's one that people have been working on for a while. And there was a lot of expertise that was actually developed in the U.K. by a group at a company called Oxis. Now Oxis hit the well right around COVID by making a couple of business decisions that got them in a rocky place and the technology was picked up by Johnson Matthey 65 patent families, extraordinary technology base. We actually acquired that from Johnson Matthey when Johnson Matthey took a decision to divest their battery technology generally. We grew our lithium-sulfur business in our research and development. And then we acquired a company in the U.K. called OXLiD. Then we did a joint development agreement with the company in San Francisco called Ionblox. So you can see that we're moving really, really quickly through 2023. I joined just before that. I joined a couple of months before we started this journey. We're now in a phase where we're demonstrating our core differentiation. So we're actually pulling together all the pieces. So we've started to ship cathode samples and partners. This current period, we're doing some remarkable things; I mentioned to you that we brought in Louis from his experience in manufacturing. And one of the things we're focused on in the current period is demonstrating the manufacturing simplicity of the technologies that we are developing. As we're working to become a leader in this technology worldwide, we're working towards forming strategic partnerships globally as well. And our goal is inside this period to start the development of what we call our advanced commercial prototyping center. Now this is a very important stage for Gelion because that allows us to start to supply into the supply chain and start to see the supply chain. We'll now be working on our demonstration power format and getting our validation sells out to customers. It's a very busy time in the lithium-sulfur area. We're moving very, very quickly. On the zinc side, we, in 2023, produced a number of prismatic cells. We took a bit of a pivot. We were working on a technology that was called zinc bromide. We moved away from that into a zinc hybrid technology, and we have stepped back a little bit in that we're doing research to make sure that we're ready to go before we start accelerating the investment in that side of our business. Part of the reason for that is just the excitement level that we've had on lithium-sulfur, which I'd like to talk to you about now. What comes beyond lithium-ion? Well, lithium-ion is a great technology. When you look at the energy transition, we are going to increase the number of batteries that we use around the world by orders of magnitude. Now as we do that, we need to accelerate the growth and the availability of battery materials. We also need to make batteries work better. So you may have read about things like, well, let you people are too heavy, but we wanted to go further. Well, one way to address that is to make the batteries lighter. And one of the features of lithium-sulfur is that we can double the growth metric energy density or other way of saying that is we can make the batteries half the weight. That's a big thing. We can also meet batteries at a less prone to thermal runaway of safer batteries. We can also reduce the bill of materials. So when you understand battery technologies, the ion is really cheap and the cathode tends to be really expensive because of the materials that are used. By making the cathode out of sulfur, we can reduce the price of the materials. And something that is extraordinarily important to understand, it's not only do we do that, but we remove the dependency on cathode materials. Sulfur is abundant. Sulfur is available widely around the world. It's not a metal that is produced in limited territories and may have some challenges. By developing the Sulfur cathode technology, we're also on a path to take batteries beyond geographic or geopolitical control, even while introducing chemistry sulfur that can meet the true demand of the energy transition. So this is a very big deal. So Gelion is working on supporting energy transition lifting with our aim to build a strong commercial business anchored on lithium-sulfur. So there's 2 things we've got to do first, lithium-sulfur realize the potential of the technology. And secondly, when the competition be the leader in lithium-sulfur. So here's a few reasons that Gelion and is special in what we're doing here. The first one is the manufacturing advantage. Now I'm not going to get into a whole lot of detail on this. What I'll do is next time I come along to [Indiscernible] I'll bring along Thomas, and I'll bring on Louis, and we can go into more technical description. But a lot of our competitors talk about super materials and really exotic materials. We're not using any of that. We're actually implementing our technology and aiming and implementing it in a way where we can introduce the technology on top of the existing capabilities of the industry. That's really important. We're also working on a way on an approach without toxic solvents without rare or complex materials and low cost. Lithium-sulfur is very special. And I did say in the introductory bit about the work that Thomas and team in Gelion and are done towards using alternate cathode. And that's because most lithium-sulfur initiatives rely on a lithium metal anode, that's something that's really special. It's actually the highest density anode. So it's a great technology to use with the anodes but it can be a difficult technology on the anode side, and it can be challenging to master because of passivation and dendrites and other factors. What Thomas and team did was to make it possible for us to use alternate anodes like a silicon sulfur battery. And recognizing that certain aspects of the IP portfolio that existed in Oxis protected core areas of electrolyte that were important to that, we picked up the Johnson Matthey IP, and then we put in place the JDA with a remarkable company called Ionblox out of San Francisco. And we're developing a silicon sulfur battery. Now that's a development target at a long cycle life, high safety and good stability very important development. And finally, you have protected lithium metal anodes. Now there's a bit of a holy grail there. Everybody wants to get to a protective lithium metal anode and we are working on particularly lithium metal as well using some remarkable technology that we have licensed from universities in the U.K. that have been working under the Oxis business of the Faraday Institute in the U.K. towards long-cycle life and high safety. So then that gives us as Gelion 2 technology pathways to achieve mass electrification. The first one of those at the top here is the silicon sulfur part. And that's where we've been working on the enabling technologies and the agreements towards silicon anodes and prelithiation and our arrangement with in Ionblox. On the bottom, the lithium metal and that gets us to market ready early into specialist applications that can use unpredicted lithium anodes. And then through our work on making protected lithium anodes to the future potential of the ultimate outcomes. If you look at the technologies available today in order to achieve high performance, you come down to pretty quickly and understanding that it's going to be attained either by sulfur cathode or by oxygen cathode or a cathode. Air is really hard, sulfur is practical. It's fairly clear at least to me that sulfur is the technology of the future. So looking at it another way as an investor, here comes Gelion looking for leadership in one of the most exciting technologies on the planet and building value in our company for our shareholders. These are some of the steps. As I said, I joined just before 2023. I'm committed to success for Gelion and to see Gelion become a leader in this. And you can see the momentum that the company has been gathering. We are here. So in the last -- I guess, it's the last month, we've just released some results about the outcomes of what we did last year. So last year, we acquired the LiSiS patent families. We accelerated our program. We acquired OXLiD. We did the Ionblox, but hey, what does that all mean? So we let our shareholders know recently about some of the outcomes from that work. And we did that in the form of progress announcements. The first of those announcements was about the performance of the acquired technology. We announced that we had achieved 395 what [Indiscernible]. We almost could have said 400, but we said 395. Why is that significant? 400 million of a very important milestone. When you think about the energy of ordinary lithium-ion cells, this is approximately 2x. The next one is a little bit technical and I apologize for that, but I'll do a little bit of a technical explanation for you. The thing that held sulfur was that sulfur goes from solid to liquid to solid when you charge and discharge. But what this one in the middle indicates is that what we achieved was we demonstrated solid to solid conversion. So the problem of liquid solid is that in the liquid state, these tens called polysulfide can cross between the cathode and the anode. By doing a solid to solid conversion, we prevented that happening, and we demonstrated it. Now this is really important to understand because this came out of originally Oxis. So I mentioned this company Oxis that had spent in the order of 100 million pound developing lithium-sulfur. And in my view, just got it right just before they hit their problem. And what they got right was they achieved -- I'm going to use a very difficult term here, it's called a quasi-solid state of polysulfide, a semi solid-state approach with a low polysulfide soluble electrolyte. Now what does that mean? What that means is they came up a way to stop polysulfide these liquid things from crossing the battery by using this low polysulfide soluble electrolyte. And we've taken that forward and shown that to be effective in that second announcement there. The third one was an announcement of our work with Ionblox and the success of the work with Ionblox. So going back to the slide I showed you a moment about, you can see that last year, we took some very deliberate actions to get to leadership. And the first thing we did this year was we were very happy to be able to go back to our shareholders and say, "You know what, those activities we did last year, we've got validation of the efficacy of those transactions." This puts that in just one more way. So Batteries take time, but then when you start to get there, you move really quickly. And this shows how the heritage of the work that Gelion has been doing goes back to 2005 in Oxis but the key breakthrough was right there, 2018 when Oxis managed to do this solid-to-solid conversion with their low polysulfide soluble electrolyte. That's the work that we picked up. And this OXLiD group had taken it forward. Mark, Adrien Amigues now works with us as our President for U.K. and Europe with [indiscernible] great team that assembled around them in the U.K. to continue to work with the support of the Faraday institution. And that's why we acquired OXLiD as well to put it together the work that Gelion had been doing to very quickly establish a position in leadership for Gelion. There is incredible value that has been created through that process that's not yet been recognized. So I guess one of the things that's tough in a way is that many of our competitors have been private companies, we're a listed company. [Indiscernible] listed companies have run this companies before. It's a great way to do things. But at the moment, a lot of those private companies seem to be having higher valuations in some of the listed companies necessarily. We think we've put ourselves in a great position and that through 2023. We've really accumulated value that we're accelerating the momentum on that at the moment, that hasn't yet been reflected in an increasing price for Gelion. So looking at the competitive global landscape, LG is a competitor in lithium-sulfur. We have another competitor from North America who's much higher value than us. But in terms of IP and patents, we have exceptional patent families that cover the full spectrum. Looking at our zinc technologies, zinc is abundant, low cost as well. This is a technology that we are developing aimed at the lead acid industry. But with the excitement that we have going on with our lithium-sulfur at the moment, straight up the majority of the investment that we're doing on behalf of our shareholders is going into establishing our lithium and sulfur leadership while we're making sure on this side that we've got the technology right before we start to lean into it. And so we're doing a technology and commercial study. Again, enthusiastic, I got to move quick so that I can get through the financials with you. We are a very diligent company financially. And I did mention my CFO, Amit Gupta and the talent of this man, I'm really going to give Amit tremendous credit for the way he has supported me, as I've been working through this transition towards leadership for Gelion. So on each of our metrics, we outperformed our projections. So bottom line, we did a lot of cost control, even while we were working to accelerate the important parts of our business. In terms of cash use, we controlled our expenses so that we could afford to invest. And we did invest. We invested in acquisitions. We invested in IP. We invested in property, plant and equipment. I think that's the best thing we can be doing for our shareholders is to be making sure that we're controlling controllable costs and investing effectively where we can get the most benefit for our shareholders. And you'll see that again in these financial slides. We reduced our employee expenses. I've started to increase our R&D expenses just marginally. Significantly reduced the business expenses. And you can see that big rise in IP where we're working towards leadership. So as a summary and an outlook for our report, well, 2023 was great. It was a big year. We achieved a lot. We did a raise in the course of that year to support the acquisition that we did. 2024, we've come out of the blocks really fast with the demonstrated validation of the primary elements of our technology plan to show that the moves that we've done in '23 were on the mark. And you're going to see the continued momentum as we move forward. You'll see more test results, more validation. You'll see us explain the importance of this manufacturing simplicity to the industry. That will be a big deal. It will attract the attention of the participants in the industry, the major strategic participants. We'll be producing materials and cells for our partner elevation. And our goal is to be securing strategic partnerships, global partnerships that let everybody know just on an important company Gelion is. So thank you very much. That's the formal part of the presentation. And I guess I'll get to the important part and look forward to answering any questions and maybe give them.

Excellent. Thank you very much, John. That was really good. And I will remind the audience. I've got almost 100 on here already. I'd just remind you to put your questions in the Q&A box, and I will put it forward to John for you. The first one is from Jim; could you please explain how much money was raised last year?

Jim, we raised $4 million.

And overall, how do you see fundraise is going? Will you need more? Or could that be enough to get you through to a level where you won't need any further [indiscernible].

We will raise more money. Our ambition is to raise that money as the increased value that we've brought into the company is appreciated.

And maybe a little bit of extra information on some of the companies that you've already been running because you mentioned that you have another previous experience of companies. Could you give us a little bit on that?

So I guess my first company was a company called KeyCorp. It was a company I founded. And it was a company that grew pretty well. The share price improved significantly throughout the duration of my stewardship of that company. When I came in, I think it was around $0.2 or something like that. It was a very low price. I might be wrong on $0.2 it might be 4 or 8 or something like that. But anyway, the company listed at a $0.40 share price went on left, it was an $8 share price and 6 months later, it was 16. It was 50% control of that company was acquired by the Telco in Australia at that point in time. So that was a good journey. I then ran 3 companies subsequently. And in each case, the companies were acquired by significant enterprises. My early career was in the area of payment systems and security. And then the second half of my career was in energy storage. So in the battery industry. I guess if you look for the claim to fame in my career, if I could be so bold, it is that pretty well the technologies that I steward ended up in broad distribution around the world. So I think my experience is well suited to what we're trying to do here, which is to steward an incredible technology with an awesome team to make a huge impact. This can be one of the most important technologies of the energy transition and to make sure that we do that in a way that generates rewards for our shareholders. At the end of the day, who will give us the opportunity to that?

Now Louis would like to know what type of global partnerships are you looking to secure later this year?

When you look at what we're trying to achieve, we're looking to try to go beyond what the lithium-ion industry is doing today now. We're using a couple of key strategies in doing that. We're trying to do it in a capital-light way; a way of describing that is we want to hijack the supply chain. So rather than fight the supply chain, we want to integrate with the supply chain. And so by integrating with the supply chain, we want to find the partners who can help us do that. Now we say the lithium-ion and your mind go straight away to maybe CATL making batteries in China or Tesla using batteries in the U.S. But in fact, the supply chain is pretty intricate. I tried not to go too deep into the technology, but you do have people met in cathode anode making separators and making electrolytes. And so when you look across the industry, there are huge players making huge investments to capture leadership in just one part of the battery. We want to work with those customers. Our technology is sulfur, it's carbon, it's binders, it's electrolytes. And you think about those things, and they're very easy words to say, but there are specialist companies that have the leadership in each one of those steps. And they're the partners that we want to work with. When we formed our JDA with Ionblox is an example of a company that had done a great job performing key partners. And so Ionblox has amongst its investors applied materials as one of the world's leading lithium metal and Prelithiation Company. So lithium who is an end user. There are many types of strategics that you can bring on board. And I think one of the healthiest signs that we can deliver for our shareholders is to reach into that supply chain and demonstrate that we're important to that supply chain to.

There is one for Martin on supply chain. So he asked, can you explain about any possible risks which could be faced to the current supply chain?

Well, I'd point to the geopolitics going on at the moment. I mean it factors most batteries a lot [indiscernible]. And a lot of the rest of the old don't like it for whatever reason, whether it's right or wrong. The geopolitics at the moment are that the majority are made in China. So there are metals that are restricted in the supply chain that are difficult to get to an inflection. I'd like to think that we're on the side of freeing up the supply chain, sorry, removing risk in the supply chain. Looking at phosphate, it's a pretty good technology; you can get most of the metals. But lithium-sulfur is even easier. So you can access sulfur in the U.K. No problem. You can access sulfur in the U.S., you can access sulfur anywhere that you are. So I think that we are on the side of truing up the supply chain.

Now Bill wants to know who are your major shareholders who came on board in the recent capital raise.

So our major shareholders, we have our founder, Thomas Maschmeyer is a major shareholder. We have Henderson, when we acquired Oxford, became a major shareholder. We have some high net worth who joined at the beginning that are our major shareholders. We have a wonderful array of U.K. institutions who I can't name because it's not appropriate to name, but I think we've got some great U.K. institutions, all of whom have backed us all the way through. And one of the large ones led with us in this last round. And I guess the other thing to give confidence in the last round was that the directors of the company all contributed to the last round, and we took up 10% of the last round. So all of this made a significant investment into the company in the last round. We also have high net worth individuals who have come in, in the U.K. and EIS-DCT investors who have joined as well. I've got to know a lot of our investors and they're back in us to be successful.

Now Jack wants to know, how does your lithium-sulfur tech compared to other or different batteries? And how big is the total addressable market?

Future in total addressable market, twice as energy dense, safer, lower cost. Things we have to improve power. So at this point in time, we still need to do more work on power. We need to do more work on cycle life. So there are things that we need to address in the technology. We have advantages and also things that we haven't got to the standards that we need to get. But for sure, lithium-sulfur is one of the most likely technologies to be the next generation in a whole range of applications, not just niche application, but a whole range of applications that we see in the industry.

And what do you think are the 3 biggest risks to the business?

I think, look, we have to make sure we get to the goal. So ensuring we get there. So I've said we're going to raise more money. When you're raising money at any time in a company, there's risks associated, macroeconomic or your own risk. That's always a risk. So we have to see it all the way through it. If we do, and this is going to be a great company. If you ask me what the next risk is. It's pretty hard to go there. As long as my team here are able to follow through all of the plans that we're doing in discipline through there. We'll have competitors come at us, but we'll be one of the leaders as that happens. So I guess I did say, David, in my background, the company has tended to get bought, I would think that's a risk. I will tell you that my very first company when it got bought, I think, had a lot further to go than where it was. So this is an important technology and important team with a great opportunity. I'd love to see this thing go the whole way and be totally successful.

And what do you think is the next milestone we should be looking out for?

You'll see progressive milestones right through this year. So I get in trouble if I tell you what the next milestone is, but we're certainly working hard on delivering it for our shareholders at the moment. So we're working both on [indiscernible] milestones, but we're also working on commercial milestones as well towards partnerships and relationships.

Great. Well, thank you, John. It's been really good having you on the show, and we'll be watching out for everything with Gelion and all those milestones and the exciting times ahead.

The point they're coming to your physical meeting.

That would be lovely, intrigued with that. May 22 and May 23, under investor's day. Great. Thank you.