Good morning, welcome to the HydrogenOne Capital Growth plc investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted anytime using the Q&A tab situated in the right-hand corner of your screen. Simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. The company will review all questions submitted today and publish responses where appropriate to do so. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Richard Hulf, one of the managing partners of the HydrogenOne Capital Growth, who'll be running the Q2 investor presentation before and answering any of your questions at the end. Good morning, sir. Good morning, everybody, welcome to the Q2 2023 results presentation for HydrogenOne Capital. Thank you to everybody for joining us this morning. My name is Richard Hulf. I'm one of the managing partners of the fund. Let's just start by saying 8 of the 10 companies in the fund are revenue generating, and have generated GBP 52 million in total in the 12-month period to thirtieth of June, 2023. That's a 170% increase in the previous 12-month period. The emphasis really here is on action and on companies delivering through the hydrogen industry. Just a few T's and C's, and on into the presentation. Let's just start with a recap of the fund and of the macro. Bottom line, we're targeting NAV growth of 10 to 15% over time, including exits. We're on track to achieve this from a revenue-generating hydrogen businesses. Short-term industrial transformation of gray to green, followed by the heavy transport mobility transformation. We are hydrogen specialists. That's JJ and myself and the rest of the team. We're investing into companies and projects from the upstream to the downstream. The long-term strategy is to invest into the invest, exit, and recycle. Hydrogen, of course, is zero carbon. On to the next slide. Let's just start with a recap on the fund and the macro. The bottom line is we're targeting NAV growth of 10 to 15% over time, including exits. Oh, I've gone on too far forward, sorry. Back. Sorry, onto the next slide. The three main drivers in the sector: energy transition, air quality, and energy security. Just to recap a few pieces of news from the quarter to the end of June. In May, we had the Dutch government unveil a EUR 28 billion climate package, which included EUR 7.5 billion for green hydrogen. That really benefits several of our companies, Strohm in particular, in the Netherlands, and Germany will be importing the hydrogen from Netherlands, which helps HH2E and Sunfire. In June, the U.K. government published the Energy Security Bill, 10 gigawatts worth of low-carbon hydrogen by 2030. The government actually said hydrogen will be critical in reducing emissions from heavy industry, as well as in power, transport, and potentially heat. The government, U.K. government will be giving, financial assistance, counterparties for hydrogen and offtake, contracts for differences, as it did with the wind sector, and the Hydrogen Production Levy, to fund that going onto household bills. We've been talking about the Neom project in Saudi Arabia for a long time. You may have heard that name. And we've actually had a final investment decision of $8.5 billion confirmed for going into the world's largest, carbon-free green hydrogen plant, in Saudi Arabia. Great things happening in the hydrogen sector. Financial highlights for the Q1. We use IPEV guidelines for these numbers, reviewed and approved by the board, and we've been using a 13.7% discount rate in the quarter, up slightly from Q1. NAV per share, flat on the quarter, reflecting strong fundamentals against the headwinds of rising inflation and interest rates. We made GBP 2.6 million investments in the quarter. That's GBP 1.1 million into the Thierbach project and GBP 1.5 million into Cranfield Aerospace. Cash was GBP 9 million in the quarter, or GBP 12 million including listed investments, meaning the company is in a robust cash position. This slide shows on, on the left-hand side, the NAV movements in the Q2 versus Q2 2022 on a pence per share basis. We saw a rise in year-on-year valuations in private listed positions, totaling around GBP 8.2 pence per share, or 8.5% of Q2 2022 NAV. Respectable bottom line, 4% year-on-year NAV increase as the fund exits its first investment phase. On a long-term basis, on the right-hand side, our NAV per share has been steadily and rising since the middle of 2021 when we did the IPO. Putting all of this together, we're delivering a NAV per share that is steady and rising, holding up well against weak macro environment of rising inflation and discount rates and a global shortage in basic materials. This is because our private companies are, are well-run and resilient. Also bear in mind, we've been in a period of investment for the fund and build before the next phase of harvest and grow. Our last investment was just as recent as the end of 2022 into Strohm. This has been the investment phase, and now you're going to start to see things really happening in the portfolio. On the left-hand side, our NAV has been rising, now flat, whilst our share price currently is reduced in line with other listed growth funds and renewable energy funds, which are typically trading on discounts to NAV so far in 2023. We can see no relation between what's been happening in the fund and the sector and our share price. On the right-hand side, the table tracks those changes on three-month intervals. Summary of the fund. Where do we invest? Private assets dominate, 97% of the fund, in fact. Small allocation to listed names, 3%, gives us corporate access to figure out what's going on in the sector as an important part of the exit for some of our businesses, so we maintain contact to listed markets. We invested into revenue-generating supply chain companies globally, but so far in the UK and the EU, and developer companies with plans for production around middle of the decade. We also co-invest with strategic industrials and world-class institutions, and we look for portfolio diversity, which means global allocation, and across the full value chain, from hydrogen production all the way through to fuel cells and mobility. What about revenue growth for the fund? 'Cause this is what really makes the companies real for investors. What about growth for the whole fund? On the left-hand side, revenue growth by company since we invested. The earlier investments in Bramble and Sunfire have grown the most, 10 to 15% in the top right-hand part of that chart since investment. The most recent investments into companies like Strohm, Elcogen, and Cranfield, have grown 1-4 times in revenue terms, but have great potential. Then revenues in aggregate on the right-hand side, and that's on a 100% basis. You can see that we've generated GBP 52 million in revenues in the last 12 months. That's up by multiples of revenue that we first started generating from the portfolio, period in 2021, 2022. The growth is real and accelerating as the companies we've invested into really start to deliver. Just an example of one of our key companies. The first example is Strohm, they make this thermoplastic composite pipe or TCP pipe. It's an important part of the fund with 14% of total NAV. Revenues have grown 3 times in under a year since our investment in August 2022, and the valuation on the bottom right of that chart, you can see has more than doubled year-on-year. Strohm and, and project partners have received a, a EUR 3 million grant from the Dutch government as part of that, that, that grant fund that I mentioned earlier. I'll show you a project and some examples of what Strohm has been doing on the next page. It's a manufacturer, so you can see the Strohm carousels on the, on the top left-hand side of that chart. Demand for, for TCP pipe is at an all-time high. We invested EUR 10 million euros into Strohm in August 2022, alongside existing investors like Shell, Chevron, and Evonik, in the first close of funding round that totaled EUR 14 million. As well as supplying new projects in Brazil and receiving EUR 3 million from the Dutch government for Project OFFSET, which puts green hydrogen ammonia into an offshore floating vessel. On the right-hand side there, you can see that another project that where Strohm was selected as partner for the Hydrogen Offshore Production for Europe or the HOPE project, which produces 10 megawatts, that's 4 tons of hydrogen per day, installed off the port of Ostend in Belgium, and you can see how the pipes were used in that project from going onshore to offshore. Another important project and company for us is Sunfire, is the second example. Sunfire revenues increased 10 times since November 2021, up to EUR 27 million. Valuation increased by a reasonable 23% year-on-year, you can see on the bottom right-hand side. Company is still very much in investment mode as we go forward. Been the beneficiary of a final investment decision on the Bad Lauchstadt energy park in Germany, 30 megawatts worth of green hydrogen being produced, stored in salt cavern. That's a GBP 210 million project, and that will use Sunfire electrolyzers. Sunfire successfully installed a 2.6 million solid oxide electrolyzer, the world's largest, at the Neste MultiPLHY project in Rotterdam. Hydrogen is real, hydrogen is happening, and just some examples of some of the projects that we've been involved in through the quarter. I'd just like to finish off by saying that we continue to invest into the best hydrogen companies and projects throughout our own unique network. We target great management teams, establish businesses that are revenue generating, projects with demand and hydrogen offtake, of course, hydrogen means avoided greenhouse emissions. This all adds up to a profitable set of investments generating a real return. JJ and I run the specialist team. We, we only focus on hydrogen. This is the only thing we do, it's a growing sector. We're actively involved at the board level of most of these companies, at project level. We've got a first mover advantage of being one of the first hydrogen funds, certainly the first listed fund, to identify the profitable opportunities a massive pipeline of projects and opportunities going forward. I'd like to leave it there, and pick up on, on, on any, any, questions, and hand it back to you. That's great, Richard. Thank you very much indeed for the presentation. Ladies and gentlemen, do please continue to submit your questions using the Q&A tab situated in the right-hand corner of your screen. Just while the team take a few moments to review those questions submitted today, I'd like to remind you that recording the presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Richard, we received a number of pre-submitted questions, and perhaps I can start off the Q&A session with those, if I may. Yeah. The first one reads as follows: Given the current share price, would you consider buybacks? Share buybacks, we have been very successful in investing the cash that we've raised. We've got enough cash to run the fund for another few years, but we don't really have the cash to buy back shares at the moment. We would potentially start thinking about buying back shares as we make exits from the business, and that's something that we'd have to decide whether that was appropriate at the right time and place. No, share buybacks are not really on the table for a growth fund of this kind. Fantastic. Thank you very much indeed. Second question we've got here is, could you remind us of the anticipated build-out of the Thierbach project? Thierbach is just for those investors that are not familiar, it is a hydrogen, green hydrogen production project in Germany. Germany has got the same 10-gigawatt green hydrogen target as the UK, but that's all green hydrogen. We should be taking a final investment decision on this project by the end of the year. This is one of those projects where the the land is already acquired. We've been through the front-end engineering design, and we're just finalizing the the offtake agreements from that project. This is something that's definitely happening later on this year. Thank you very much indeed. What have we got here? Could you talk about when you might look to exit a portfolio company, and secondly, would you consider disposal this, at this stage? There aren't any disposals at this stage. The exit comes from when there is a decent trade sale offering. It's very much driven by value creation. We're looking for minimum 2 times, up to 5 times return on invested capital. If that comes at any time, of course, we'd accept that. Just to give investors visibility of what's going on inside the fund, I think probably next year we'd start to see some of the first exits from the fund at those sorts of multiples. Of course, that's what the overall returns of the fund are based on. It's these, the, the incremental growth that you're seeing at the moment, which is very small and modest, as we've only just made the investments. The real return from this fund comes from when, when we exit these, and that's coming up over, starting from 2024. That's great. Thank you, Richard. Does the company plan on paying dividends in the future? Under what circumstances would that be? This is not. This is a growth fund. There, there aren't any income streams that you would see in other funds that, that, that, that were set up not to generate growth and returns, but just to return cash flows back to investors. This is not that sort of fund, so we don't really have a schedule for dividends. We may pay back dividends to investors, if we can't reallocate the capital that we've generated from exit, in a, in a, in a profitable and attractive way. So there may be the option to pay back some dividends to investors, but the plan here is that the hydrogen sector is doing so well, and will do even better in the future, that we would expect to be able to redeploy capital and carry on growing the fund. Investors would see that in terms of the share price delivery in the future as real value is created and investors can see that. Thank you very much indeed. What is being done to reverse the large drop in the HydrogenOne share price? We, we have never really seen the link between what's going on in the fund bit, to be honest, and what's happening in the share price. Our only explanation is a very there's a complete disconnect. Our only explanation we can offer to investors is that this is a very low growth environment. Markets are not particularly minded to put money into growth stories. It's very much about safety. And we've also got. We're almost in a recession. We've got high commodity prices. We've got high, high component prices. You know, this is all being managed very well within the investment environment for hydrogen, so we, we don't really see a link between the two. We can only explain it on a, at the macro level. In terms of, you know, what's going on in the companies, the revenues are growing. The businesses are doing well. New projects are being started up. Governments are increasingly putting capital into the sector. There, there can be no doubt that the hydrogen sector is going ahead, and we're starting to prove that through the companies we invested into and what's happening in the projects in the real world. It really isn't a case of, as it was in the past, we, we have to admit, that hydrogen's had many false starts, but now it is, it is actually going ahead. What we're hoping to show investors is the evidence of that through the financial results of the companies we've invested into. That's great. Thank you, Richard. The last one we've got here. Has there been any changes to the top 10 investments? No. The companies we've invested into so far are hydrogen producers, Gen2 and HH2E. We've got the electrolyzer companies, and we've got the fuel cell companies, and we've got one application with Cranfield Aerospace Solutions. No, the companies and the projects have remained the same. It's not until we raise more capital that we'll be moving on to the next phase of investing into even more attractive companies and projects. The key thing about that we look for in the companies we're investing into is they've got to have scalability, they've got to have cash flow and revenues, and they've got to have materiality. Investors shouldn't doubt that, that, that, that, that, that this is an an industrial fund investing into industrial scale businesses. There, there, there, there are no small scale start-up businesses. This is, this is not venture capital. This is, this is scale-up and, and growth investment into the real global hydrogen sector. Fantastic. Thanks, Richard. That, that covers off those pre-submitted questions. As you can see, we've had a number of questions have actually come through. Could I just ask you to click on that Q&A tab? Just start at the top, and where appropriate to do so, just read out the question and give your response, and I'll, I'll pick up from you at the end. Yeah, sure. Okay, let's go up to the top. Related to your Gen2 investment, would you look at any of the other project partners working on other Provaris projects? We have got a long pipeline of very real projects in Europe and OECD and beyond. We're starting to look at projects in the U.S. at the moment that are benefiting from the Inflation Reduction Act, which has put a very large amount of capital from, back from the U.S. government to get these projects underway. We are looking at other projects to keep this real. We could invest another GBP 100 million tomorrow. We are under NDA on a lot, lot of projects around the world. A lot of people have, have seen what we're doing already with Gen2, as, as you mentioned, and HH2E, and they want the benefit of our experience to invest alongside them in other projects globally. There are much larger infrastructure funds that, that we're working closely with, who want the HydrogenOne factor, the HydrogenOne experience, to help, to help them make their projects real. We've been through this phase of putting deposits down for electrolyzers, negotiating offtake agreements, and negotiating land. You know, they've re- there, there, there's nothing really different overall in, in a hydrogen project compared to any other sort of large renewable project, but there are nuances that are different, and we've experienced that, and that's becoming very valuable to, to other, other investors. Yes, we are seeing opportunities globally that we'd like to invest into. Another question, in terms of the next 12-24 months, clearly, IPO exit, main way of driving SPHH2E, have talked about IPO. Any other updates? Well, I mean, this is just a presentation on the last quarter. I want to sort of keep it focused on that, really. Yeah, but to take our word for it, there are at least three companies in, in the portfolio that have already appointed advisors to think about potential exits should they come next year. Now, being on the boards of these companies, J.J. and I have experienced this, that us and other investors in those funds have always recommended that people take on investment banking advice early on, just in case an unexpected bid comes. We, we haven't actually had, we, well, there's nothing for us to talk about in that, in that area yet, but we can say that we are, we are well prepared for that to happen. Okay, next question: How do you source new opportunities, and what are the exit routes planned to redeploy capital? Well, there, there's a slide from some of our previous presentations where we, where we've listed out all the co-investors with us in the different projects that we've got, which include Jeff Bezos and his fund from Amazon. That, that include, includes some of the the off takers of the of the products from the companies we invested into. People like Centrica, Kia, Hyundai, these are all world-class, class investors, and there's a, there is a community of us. It's quite a small, but, but close-knit community of hydrogen investors, and we, we generate a lot of our projects and ideas from those, as well as being approached from, from, from other third parties. Redeploying the capital, I mean, the growth is phenomenal in the hydrogen sector, and it will become even more phenomenal, and we don't want to miss out. We fully intend to redeploy capital into the sector as the projects become real and they get much, much bigger. For example, some of the projects we're looking at with HH2E and Gen2, these are around 100 megawatts. These are world-scale projects, but all of them are looking to be scaled up to gigawatts and beyond. That's huge. Your entry passport to those projects is very much enhanced by being a first investor into those projects. There's a huge amount of follow-on investment within the existing portfolio that we expect to pursue, as well as other projects. The U.S., I mentioned earlier, that's a very key part of, of global scale and green hydrogen. We would expect to be, investing more into, into the U.S. as we go forward. That's a, a follow-on question there. Longer-term relationships with, with INEOS, are they in preferential positions for acquiring, H, HGEN assets? Well, of course, all, all investors will know that, when, INEOS in, first invested into the fund GBP 25 million, at the IPO, that they had co-investment rights, into projects. Not, not the companies, but into the projects. Yes, that, that, that we maintain that, that, that option for them, and they sit on our board, and they're very much part of the, the monthly debate, on how the fund is being run, and which companies we're investing into. So far, they haven't invested into any of these projects, but they have got that right as we go on into the future. What is your view of the colors of hydrogen, other than green, e.g. things such as gasification? We theoretically could invest into blue hydrogen, yellow hydrogen, you know, nuclear. We haven't seen any decent nuclear generated. What really defines the colors is where does the electricity come from that you use to split the water in the electrolyzer? But with exception of Blue, which is basically using steam methane reforming, the very polluting method that we currently make grey hydrogen with and capturing the CO2. We could do those, but we prefer to do green hydrogen projects, really because there are so many of them where the lead, on, on a lot of these opportunities, and the economics are a lot more attractive. We would probably continue to investing into, in, into green hydrogen, simply because the opportunity is there and, and it's much, much greater. Another question: After 170% growth in revenues of investee, investees, what is your expectation for the next 12 months? Well, I, I have to say, looking at the revenue growth of these companies, only just getting underway. We would expect another period of high growth in revenues. I guess after the next sort of two to three years, we might start to see that, that, that revenue growth starting to tail off. You know, it's we're very much in the, in the top gear of revenue generation at the moment. I mean, HiiROC, for example, is just coming out of the certification period. We're now, we're now looking about tooling up for manufacturing in different parts of the world, and really scaling up that. I, I would see that, that, that, that carrying on. Another question here: How have your listed investments performed, and what is the basis of the increase in valuations of your, of your private investments? Well, I mean, the... First of all, the private portfolios increase in valuation, even against the rising discount rate, really because one small factor has been increased inflation, which some would regard as negative, but does actually benefit cash flows in the future, when you factor in a higher inflation rate. The more fundamental thing is the actual, real, tangible growth and increase in orders for products, for electrolyzers, for fuel cells, that most of our companies have experienced. Fundamental growth in those businesses is what the increase in the valuation is. We very much risk our forward cash flows based-- we don't just factor in somebody saying that they're going to generate a revenue for a product in 2025, 2026, we apply risk factors. As the company gives evidence of the, the order book materializing, we reduce those risk factors. That's another fundamental part of value creation in the business. You said you and another were specialists in hydrogen. May I ask, financially or technically, how many technical people are on the board? We have got one, two... Well, there, there are four, five board members, and three of them are technical specialists. And so, yes, quite a bit of technical input on the board. Trust me when I say the board do give us a hard time, as they should do, over the performance of the fund, the performance of the companies, and, and whether technically these, these, these companies and projects meet, meet the right expectations that you we should do from looking at investing into a portfolio of, of companies. Another question: Have, have there been any noteworthy transactions in the hydrogen sector outside of hydrogen, one that can give an indication of the prevailing discount, market valuation of, of hydrogen companies? Yes, I wish JJ was here to remind me. The there was a an IPO of the a hydrogen spin-off of of Thyssenkrupp. Yeah, the Thyssenkrupp, they, they, IPO'd off the electrolyzer part of their business for GBP billions within the last month, and that has a very direct read across to Sunfire, and just demonstrates the relatively lowish valuation that we're carrying Sunfire on at the moment compared to that, that, that real-world demonstration of value creation from, from an IPO. Okay. How are you going to raise further funds to take advantage of the opportunities you refer to? Well, that's all over to you. We hope that you carry on buying our shares. Our share price reverts to reflect truly what's going on in the portfolio. Then we can raise more capital on the London Stock Exchange. Then we can start to realize some of these companies. As fast as the share price moves in one direction, it can move quickly in the other direction. So we would hope as people come back from their holidays, they start to focus on really what's going on in the business. Then we can start to see, we can get back into a fundraising mode as as we would expect to do. We hope all of our other investment trust colleagues can realize the same as well. How reliant is Sunfire, Sunfire's new 30-megawatt green hydrogen facility in Europe- European subsidies to be a financially competitive versus grey hydrogen, producing at EUR 30 per megawatt, current European pricing? Does the U.S. IRA proposal impact where future opportunities are located? No, the Sunfire green hydrogen facility in Europe is more reliant upon us, the investors, rather than subsidies for, from others. The sort of pricing that was in the question as well implied EUR 10 per million BTU. Obviously, I can't disclose the pricing around the that particular project. I actually I don't know what the details are, but that isn't too far wrong from the sort of offtake pricing that we're starting to see from our own experience in Germany as well. Yeah, I mean, the U.S. IRA proposals, that drives our capital allocation as far as those projects are economically attractive. We wouldn't see a dominance of our investment, future investment into the U.S. We would always try to keep a prudent portfolio approach in allocating capital, besides, we are restricted in the funds in terms of maximum exposure of any single investment around the world as well. I'm not sure how we're doing on timing. Just are we okay on timing? Carry on. Okay. Next question: What about gearing to take advantage of investment opportunities if you can't raise money through issuing new shares because NAV, NAV and the share price? There's not much we can do about that. We can, I mean, the fund doesn't aim to gear up fundamentally. We, we aim to, to borrow money at the project, special purpose vehicle level, at the SPV level. That is sort of separate to the fund. We are planning to put in a revolving credit facility to, to, to manage between funding cycles. I suppose to that degree, yes, we, we will find a way, to fund between fundraising, fundamentally, we do need to, to carry on, raising funds. As much as we're, we're beholden to the market here, there are signs we see of, of the, of, of, of us being through the worst in the market. Now we can see got line of sight to markets improving and sentiment improving, and hopefully our, our share price improves as well to reflect what, what's going on inside the fund. Okay, we've got time for one more. Okay, one more question here. Is it possible to have a more detailed breakdown of what has driven the NAV over the quarter? Yes, well, hopefully, we can try to address that in our interims that will be coming up. When was that around, so the September, September time. We can give you, as we have done before, a greater breakdown of, of, of where that, that NAV, NAV is. I think, think that's... Fantastic, Richard, thank you. Thank you for taking so many questions from investors. Of course, any further questions that do come through, the team will have the ability to review those. As mentioned earlier, we'll publish responses where appropriate to do so, back out to you. Richard, just before redirecting investors to provide you with their feedback, which is particularly important to you and the team, if I could just ask you just for a few closing comments, please. Yes, certainly. We just want to reassure investors that what we, we, we, we don't see any link between the share price and what's actually going on in the fund. The things are looking very good. We're on the boards of all these companies. We've got direct control over the companies. They're growing nicely and predictably, and we can see some, some huge potential from exits for the- these businesses o- o- over the, over the coming years. The macro and the, and, and the backdrop of, of government support, of projects starting up, hopefully, investors see that this is a very real sector that's growing, and, and we're part of it, and we're one of the leading funds. Thank you very much. That's fantastic. Thank you very much indeed for updating investors today, Richard. Could I please ask investors not to close the session? You should be automatically redirected to provide your feedback in order for Richard and the team can better understand your views and expectations. This will only take a few moments to complete, and that is valued, greatly valued by the company. On behalf of Richard and the HydrogenOne Capital Growth plc, we'd like to thank you for attending today's presentation, and good morning to you all.