Ceres Power H1 2025 Earnings Report

Ceres Power EPS Results

• Actual EPS: -GBX 10.14
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Ceres Power Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Ceres Power Announcement Details

• Quarter: H1 2025
• Date: 9/26/2025
• Time: Before Market Opens
• Conference Call Date: Friday, September 26, 2025
• Conference Call Time: 4:30AM ET

Ceres is a leading developer of clean energy technology: electrolysis for the creation of green hydrogen and fuel cells for power generation. Its asset-light, licensing model has seen it establish partnerships with some of the world's largest companies, such as Bosch, Doosan, Delta and Weichai. Ceres' solid oxide technology supports greater electrification of our energy systems and produces green hydrogen at high-efficiencies as a route to decarbonise emissions-intensive industries such as steelmaking, ammonia and future fuels.

Ceres Power H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Major partners are scaling manufacturing, with Delta Electronics investing US$170 million in Taiwan, Doosan starting mass production in South Korea, and Shell and Thermax hitting key electrolysis milestones in India.
• Positive Sentiment: Ceres has “crossed the Rubicon” into commercialization, with first-generation products rolling off factories for data centers, commercial buildings and grid support.
• Positive Sentiment: The company will launch a single stack platform in 2026 that serves both power and hydrogen markets, unifying R&D and supply chain efforts.
• Positive Sentiment: Ceres targets a near-term 22 GW power market by 2030, driven by AI data centers and commercial power needs, capitalizing on solid oxide’s fast deployment and >60% efficiency.
• Positive Sentiment: In H1, revenue reached £20 million with industry-leading gross margins and positive cash flow, full-year guidance was set at ≥£32 million, and a ~20% OpEx reduction is planned to drive profitability.

Presentation

[Phil Caldwell, Chief Executive at Ceres Power]

Good morning, everybody, and welcome to the Ceres Power interim results for 2025. I'm Phil Caldwell, Chief Executive, and I'm joined by Stuart Paynter, Chief Financial Officer, and Patrick Yau, Head of Investor Relations. Without further ado, let's go through the first half year. The first half of 2025 has been quite an exciting year for Ceres in a number of different ways. Probably the biggest milestone for us is the start of production with Doosan in South Korea. That's a milestone that we've anticipated for a long time, and it really is a pivotal point for the company because it proves out R&D innovation all the way through to mass production and ultimately will lead to the payment of royalties and proves out the business model. That's a big milestone for us achieved in this first half of the year.

[Phil Caldwell, Chief Executive at Ceres Power]

We're very pleased with progress with other partners as well. Delta Electronics has acquired land and factory facilities now to begin their scale-up in Taiwan, committing around GBP 170 million investment into those large-scale manufacturing facilities for hydrogen energy solutions. We've had some landmarks with Shell as well on electrolysis, the largest solid oxide deployment in India, achieving record efficiencies. Our partnership with Thermax goes from strength to strength also in India, opening the [Hydrogen X] hub, which is going to actually test and validate systems and ultimately build systems in India as well. There's a lot that we'll talk about this morning there. I think the markets are interesting as well. I'm sure you've seen the headlines, but the power markets are changing dramatically, probably in a way that we didn't anticipate 12 months ago.

[Phil Caldwell, Chief Executive at Ceres Power]

It's really being catalyzed, if you like, by the near-term need for power, the time for power, driven by things like AI-driven data centers. That market has shifted dramatically, and as a business, that's a big opportunity that we need to respond to as well. For Ceres, we're now very much in the commercialization phase. As I mentioned, we've kind of crossed the Rubicon, if you like, from R&D into mass production. That's been coming for a long time. Our teams, our people have worked incredibly hard on that. We're getting pretty good at this as well in terms of factory builds with our partners globally. We really have this clear ambition to establish Ceres as the industry standard in solid oxide. We have a strong balance sheet and positive cash flow in the period, and Stuart will talk to the financials in a minute.

[Phil Caldwell, Chief Executive at Ceres Power]

In response to what's going on in the markets and also the transition of where the company is, moving from heavy investments in the R&D phase now through to commercialization and manufacturing, we are undertaking an alignment of resources and a business transformation initiative over the next few months leading to a year, which really will focus our partners more on initializing and executing on these commercial power market opportunities that we see and supporting partners as they go into mass production. I just want to remind you, you're probably pretty familiar with the technology. It's the unique technology, the steel cell. This is the latest, larger footprint, but you know, high-performing fundamental steel cell technology that we have at Ceres. That same cell now has a dual use, and we will be launching next year our latest stack platform.

[Phil Caldwell, Chief Executive at Ceres Power]

That's a single product, a single stack platform that will service both the power markets and the hydrogen markets. That's very important to us because what that means is we have a single platform, we have a very much focused R&D and product development pathway, and also the maturity, the scale, the supply chain build-out that we're doing for these first markets for power ultimately will also directly result in the maturity, the cost down, and everything that we need for the hydrogen market as well.

[Phil Caldwell, Chief Executive at Ceres Power]

Single cell, single stack platform on the top here, you can start to see the first products coming through from our partnership with Doosan, our partnership with WEICHAI in China, our partnership with Delta in Taiwan, and also we're making good progress on the hydrogen side of the business as well, particularly with Shell and Thermax in India, and also our partnership with DENSO in Japan as well. Just to give you an illustration, this is now becoming very real for Ceres. I think, for some people, it's probably you understand the technology, you understand the potential of this, but seeing it in reality is what's now starting to happen. This is getting very real for Ceres. This is the first time probably that we're sharing with you the inside of that factory at Doosan. This is 300 m long, highly automated, state-of-the-art production facility in South Korea.

[Phil Caldwell, Chief Executive at Ceres Power]

It's a semi-clean room environment, all based upon the Ceres technology. It's an amazing facility, and we're very excited to have hit that milestone. Doosan developing the power systems that will now go into things like commercial buildings, the data center markets, and grid reinforcement in South Korea. We're making good progress with WEICHAI as well, developing larger power systems again on that commercial stationary power type applications. Very good progress in China. I mentioned Delta in Taiwan. This is a picture of the facility that they've recently purchased, which is just to give you a sense of scale. It's probably 4x the size of the Doosan factory as well. You can start to see the potential of the scale-up of our partnerships. I want to say a few words about the two markets that we serve: the power market and the hydrogen market.

[Phil Caldwell, Chief Executive at Ceres Power]

If we start with the power market, AI-driven data centers, you've seen it in the news. It's driving what we believe is a killer application for solid oxide power. You can't go anywhere without seeing headlines about investment in infrastructure, not just here in the U.K., but in the U.S., in places like here, South Korea, Thailand. One of the key themes of this is the need for power. We believe that this represents a very attractive market opportunity for solid oxide. In a near-term opportunity by 2030, we see the potential market for this being about 22 GW. It's a very underserved market today. Probably the only player that's addressing this market today is Bloom Energy in the U.S., which has a multi-billion dollar market cap. We're starting to bring in, through our partnerships, competitors that will actually enter this market.

[Phil Caldwell, Chief Executive at Ceres Power]

We see that as very much the near-term focus. There's a clear market opportunity there. If you look at the 22 GW, about 50% is projected to be data center, but also commercial buildings, industrial power, shipping as well. The split is 50% Asia-Pacific, about 25% U.S., 25% the rest of the world. Why do we believe that solid oxide is a killer app in this market? It's all about time to power. If you look at what's going on today, if you want to buy a gas turbine, you're waiting up to about seven years now for gas turbine. There's been a lot of talk, particularly in the U.K., about small modular nuclear. You're not going to see small modular nuclear until about 2030. If you're lucky, probably 2035. High voltage grid connections, five to 15 years.

[Phil Caldwell, Chief Executive at Ceres Power]

While there's a lot of talk about time to power, there's a gap. There's a near-term gap in the market. You could build a solid oxide fuel cell factory and develop products in under three years. That's what our partners are doing, far faster than you can address this time to power. In terms of resiliency, we have a very mature offering now that gives you 24/7 base load and a long stack life. We have low noise and, very importantly, low emissions. When you're talking about some of the things that you've seen in the data center market, like deployment of gas turbines on a temporary basis, very quickly they come up against emissions regulations. You can't deploy those kinds of things for long. It's a low to zero emission technology. It lends itself very well to carbon capture as well, and it's highly fuel efficient.

[Phil Caldwell, Chief Executive at Ceres Power]

It's over 60% electrical efficiency, as efficient as any gas turbine. When you combine that with the heat or the cooling that you get off the back end of it, you get something which is 85%, 90% efficient. It's fuel flexible, natural gas today, hydrogen tomorrow, and it's modular, which means you can build out rapidly. It's starting to benefit from policy decisions. We've seen this recently in the U.S. You've got the one big beautiful bill, gives a 30% tax credit for solid oxide fuel cells. We see it in places like South Korea, and many other places as well have started to have positive policy decisions to enable this time to power. This is just an illustration of how some of our partners are very much in this ecosystem. You may not be less familiar with Delta. Delta is now the third largest company in Taiwan.

[Phil Caldwell, Chief Executive at Ceres Power]

When you think that the biggest company is TSMC, Taiwan Semiconductors, Delta is a very impressive company. This comes from their website, so you can see that they are already providers of things like power conditioning equipment, UPS equipment that feed into the data center market. This schematic, I think, illustrates it very well. You have a fuel flexible input into solid oxide. You can combine it with carbon capture on the top, absorption chilling for cooling, and with the rest of the equipment, you have a ready-made solution that can service things like microgrids, AI-driven data centers. Semiconductor manufacturing is really interesting as you go down onto lower and lower nanometer kind of wafers. You need more and more power. You're starting to see this whole electrification industrial loading increasing this need for a time to power. We have a lot of experience on this.

[Phil Caldwell, Chief Executive at Ceres Power]

This is with one of our partners that we did a hell of a lot of field work with. We got over 100,000 hours of real-world data center type application data for this and 28,000 load cycles. Because of the nature of our technology, we can load cycle very well. We have a very mature offering for this market. A few words about electrolysis. While we see the data center market and the power market as being the near-term market opportunity, we also are making good progress on electrolysis. I think we've seen headwinds on hydrogen, and I think that will continue for the near term. However, it does open up a window of opportunity for solid oxide, which is a higher efficiency technology than what people are using today. Projections on hydrogen, still we believe that's a bigger market, but it's a longer-term market.

[Phil Caldwell, Chief Executive at Ceres Power]

This data is out to 2040. We're very committed to the industrial applications, steel, ammonia, synthetic fuels. That's some of the work we've been doing with companies like Shell recently. The Shell milestone, we demonstrated 37 kWh per kilo. What does that mean in real terms? A typical low-temperature electrolyzer would need between 50 kWh and 55 kWh per kilo. To generate the same amount of power, you'd need 50 wind turbines. In our case, you'd only need 37, or you'd get 30% more production from the same renewable assets. Because you can integrate this into industrial processes, as we've done with Shell, this lends itself very much to 50% of that electrolysis market, which is the industrial decarbonization. We are moving ahead with our partnership with Thermax in India. That's important to us because we have to compete with things like Chinese electrolysers longer term.

[Phil Caldwell, Chief Executive at Ceres Power]

Establishing low-cost manufacturing in hubs like India is very key to us. Also, it's a key market in terms of the ability to combine with renewable assets that they're putting in there, and that's servicing things like the ammonia and the green steel markets in the future. This is an interesting piece of news that came out yesterday from one of our partnerships with DENSO. We began our relationship with DENSO a year ago. We're very pleased that DENSO has announced the installation of their first solid oxide electrolysis cell hydrogen production with JERA, one of the biggest utilities in Japan. What this is doing is producing hydrogen for thermal power plants to reduce emissions there. You can see quite a lot of progress, I think, in the first six months of the year.

[Phil Caldwell, Chief Executive at Ceres Power]

We're seeing this near-term market opportunity coming towards us on the power side, which we're very much focused on near term, and we continue to make very good progress on the electrolysis side. I'm going to hand over to Stuart to talk you through the financials.

[Stuart Paynter, CFO at Ceres Power]

Thanks, Phil. Good morning, everyone. Let me just take you through the financials for the first half of the year and a little bit about our plans going forward. Financial review, revenue number just over GBP 20 million, and we'll point at the gross margin percentage, which is industry-leading high gross margins given the fact we're pursuing a licensing model. It needs to remain high, gives us flexibility, which we'll take you through, generating a good gross profit number. We're still a loss-making company, right? We're still investing in our stack platform, as Phil mentioned, and we'll take you through a little bit of the trend around that spend and how we're going to manage that going forward. Also, as Phil mentioned, we've been cash-generative in the first half. This is a working capital internal financial efficiency play.

[Stuart Paynter, CFO at Ceres Power]

I think what we've done is we've managed to preserve more than GBP 100 million in cash at the half year through really tidying up the balance sheet. Of course, now we need to continue to deliver on the top line in order to drive future cash flows. The bottom right-hand number is an interesting one. This time last year, we came out and said that we were going to realign the business and do a little bit of a restructuring and generate about 15% of savings, both in OpEx and CapEx. That measurement, as you can see, is a slight increase on that, 17% compared to the targets we set ourselves. That now forms the baseline of our costs. Anything you'll see from now on is based on this lower cost level.

[Stuart Paynter, CFO at Ceres Power]

Just a bit on revenue and gross profit, you can see that we had a jump at the beginning of 2024, and that represents the signing of Delta. We followed that up last year with the signing of DENSO, and we're managing to maintain a relatively high revenue number given we're working our way through the backlog and the milestone generations for those two projects. This trend needs fuel, and that fuel is signing of manufacturing license agreements, and we are 100% focused on so doing. We'll take you through a little bit of the plan about how we're going to optimize that going forward. Licensing model, of course, enables a sort of flexible cost base. Here we're just talking about the OpEx in the last few halves and how it's come down. Like we said, we would deliver a 15% reduction in OpEx and CapEx.

[Stuart Paynter, CFO at Ceres Power]

That translated to a 13% OpEx reduction, as you can see there. This now forms the baseline for which we go forward. We've done a few, you'll notice if you're looking at the detailed interims report that we've started writing off some of the R&D that was previously being capitalized. That's a slightly inflated number, so we've adjusted it there, and we'll continue to do that going forward. This is a very important piece of the business model, the ability to keep a flexible cost base, and we'll go through a bit more of that in a moment. In terms of cash flows, I think this is a really interesting chart. This backs up what Phil was saying. We raised quite a lot of money in 2021, and you can see there that the peak spend on the hydrogen investment we made was 2022.

[Stuart Paynter, CFO at Ceres Power]

That investment has been continuing but reducing. We believe that with the cell Phil showed you and the next generation of technology that's going to be available very soon, that we're going to commercially launch in 2026. We've crystallized a lot of the effort that's been made in 2022, 2023, and 2024. Whilst I'm not going to sit here and promise we're going to be cash generative like we were in the first half, we're going to see a lesser amount of cash burn as we move forward because even though we're going to continue to innovate, it's very important as a licenser. We're talking about lifetime and cost and very, very focused programs based on that single stack platform that we're going to launch in early 2026. Here's the licensing model, and the orange signpost is really where we are.

[Stuart Paynter, CFO at Ceres Power]

Licensing fees are everything for us, and they'll continue to be very important for the next few years. As Phil mentioned, Doosan have now reached the start of mass production, and we expect royalties to flow thereon. We'll see that royalty base build, and that is sustainable profitability, the royalty base. The royalty stack is what we're after. In the meantime, we're going to continue to try and generate license fees as well. It's very important to make the maximum impact for our technology in the world as we're aiming for this technology to become the industry standard in solid oxide. The orange signpost is where we are, and we believe that's a really important inflection point for us because we're sort of through the R&D phase and into the commercialization phase now. What does that mean?

[Stuart Paynter, CFO at Ceres Power]

In this morning's announcement, we did announce a business transformation program that we're going to launch within Ceres. That's going to take 12 months, and the aim is to utilize the fact that we've reached these various inflection points, the product that we've been talking about, Doosan's launch and royalty generation, to really align the business resources around being more commercially focused and being able to maximize the impact of our product in terms of signing more MLAs. We're going to support our existing partners, we're going to gain more partners, and we're going to restructure ourselves so we're in the right space to be able to achieve that goal. We believe the output of that is going to be a reduction in operating expenses of around about 20%.

[Stuart Paynter, CFO at Ceres Power]

That will lead us on that clear path to profitability that we're looking for as royalties become a bigger part of the revenue streams. The first phase of this program will be done by the end of this calendar year. There's a three-month reorganization which will go first, and then we'll work very hard on the ways of working and culture alignment on the business for the next nine months post that. That kicks off today, and I think that's an important part of the position we are in in the market at the moment. I think, you know, it's a real opportunity for us to maximize the position we currently find ourselves in. With that, I'll hand back to Phil on summary.

[Phil Caldwell, Chief Executive at Ceres Power]

Thanks, Stuart. Yeah, just a few words in closing on the outlook for the year. As Stuart said, this landmark start of production at Doosan means we are transitioning from the very much, you know, 20+ years of R&D through product development now into actually having products that are coming to market. Big milestone for us. We are seeing more and more incoming on power. We'll just respond to that market opportunity. That's being targeted by our partners as first product launches. If you look at Doosan, if you look at Delta, it's all about the power market to begin with, and then electrolysis will follow. We are making very good progress on electrolysis as well. As I mentioned, the relationship with Shell has been fantastic. Great results there. Great, you know, news coming out of Japan on progress there.

[Phil Caldwell, Chief Executive at Ceres Power]

It really validates the capability of this technology to be a real step change in electrolysis in the future. Stuart's already talked about the business transformation plan. I think we have that continued discipline on growing top line, but also managing our resources to really respond flexibly to the opportunities that we see. We maintain a strong balance sheet with cash management and the cash inflows in the period, and that will continue. We did this morning adjust the revenue expectation for the year. I think it's very hard to predict the signing of new MLAs. When you look at our revenues, they come from engineering services, signing technology transfers, and then ongoing royalties. For the year to date now, we are expecting a minimum of GBP 32 million, and anything that we sign now will be upside to that.

[Phil Caldwell, Chief Executive at Ceres Power]

The reason for the change here is we honestly cannot predict exactly when we sign these deals, and also that also has an impact on revenue recognition, which, as you can imagine, is not trivial when you're actually dealing with these kinds of contracts. We are continuing to pursue several opportunities, and we'll keep you updated on progress as and when they arrive. With that, I think, Patrick, we may take some questions from.

[Patrick Yau, Head of Investor Relations at Ceres Power]

Yes, we've got a lot of questions from the room. If you have any questions, please wait for the roving microphone to arrive and ask your question, and then we'll have time, hopefully, for some questions online.

[Patrick Yau, Head of Investor Relations at Ceres Power]

Thank you, Alex, here from Berenberg. Just the focus on the power market, and you mentioned kind of the news flow in the U.S. and Bloom Energy. Are you seeing the pipeline of potential partners with that kind of U.S. tint that you showed, that pie chart of how big the Asian market is as well for the power data center AI market? Give a bit more color on what that pipeline is coming on. You mentioned a bit more incoming. That'd be great. Yeah.

[Phil Caldwell, Chief Executive at Ceres Power]

Sure. Look, I think what's happening with Bloom Energy has definitely attracted interest, and also the whole time to power thing has become pretty acute. I think when you look at the partnerships that we have, when you look at companies like Doosan, like Delta, you have to also remember they have U.S. operations. They're already servicing those markets for a lot of the products that we talked about in the data center market. We have ways already into that market, but also we're looking for U.S. partners as well for that particular market. I think there's clearly a power gap there, and I think that does open the opportunity.

[Phil Caldwell, Chief Executive at Ceres Power]

I think what's interesting as well is on the electrolysis side, for example, the IRA bill has obviously had a lot of headwinds in the U.S., and we've really seen the U.S., I think, is now moving towards blue hydrogen rather than green hydrogen. Also, what the Trump administration has done on the one big beautiful bill is definitely enable power generation for solid oxide, particularly with natural gas and carbon capture. I think that's a 10-year initiative that's just come in. Some of the uncertainty around which way the U.S. was going, I think it's pretty clear now. We don't really see the U.S. as a market for green hydrogen. That's not where we're putting our commercial efforts, but we do see it as a potential market for power.

[Phil Caldwell, Chief Executive at Ceres Power]

Good morning, gentlemen. Thank you for the presentation this morning. Just a couple of questions from me, if I may. You mentioned that it's quite hard to kind of predict when you might be able to recognize revenue when you do indeed sign an MLA. Can you just give us a bit more color around that in terms of the mechanics? I know that's probably hard to summarize, but just kind of a bit of an idea would be helpful. The second one was just on the business transformation. I think that makes a lot of sense and kind of preparing the business for its next kind of step. Can you just give us an idea of kind of what the cash costs might be around that to implement it?

[Phil Caldwell, Chief Executive at Ceres Power]

Yeah, so when we talk about signing an MLA, and an MLA is a manufacturing license, it's a very complex sell. You are also not just selling a license, in our case, you know, GBP 40 million, GBP 50 million type deal. You're actually convincing a partner potentially to invest several hundred million in facilities, in product development to enter a market. It really is a corporate development type activity. Any of you that have worked in that kind of sphere realize that those decisions go all the way up to board level, and therefore they take time, and they are subject to a calendar that you don't control. The difficulty that we have as a business is if we're trying to forecast revenue based on, you know, very discrete events, it gets somewhat difficult.

[Phil Caldwell, Chief Executive at Ceres Power]

Once we have those contracts, as you've seen with the likes of Delta and DENSO, that gives us pretty predictable revenue flowing into the first half of this year, for example. That's what makes it difficult. We obviously have at any one time several of these kinds of conversations going on, but it's very difficult to forecast exactly when they will come. I think the second complication, which is Stuart's world, which he knows and loves now, is once you actually get these kinds of contracts, you have IFRS 15 and all kinds of moving, thank you, standards which seem to change quite dramatically. When we have a contract, we have to also be very careful about how we recognize that. It's not just the winning of a deal.

[Phil Caldwell, Chief Executive at Ceres Power]

You have to then be able to specify or forecast how much of that deal you can recognize by when, is quite an art. That's part of it as well.

[Stuart Paynter, CFO at Ceres Power]

I'll just follow up by saying, look, single words in those contracts can make big differences in when revenue is recognized. We diligently work through those contracts, but contracts are a negotiation, and there are gives and takes in those contracts. When you come to the end, you've then got to do a full review and see when your performance obligations are and try and decode that into revenue recognition. It's not easy. As we do more and more deals, we become more experienced. We try and standardize the contracts where we can, but as Phil said, these are big corporate development deals, so it becomes tricky. For the second part of your question on the costs of the first step of our transformation plan, which is the three-month reorganization, this will be done by Christmas.

[Stuart Paynter, CFO at Ceres Power]

We're looking, as we said, we think on the back end of the reorganization to get an optimal structure, we can be about 20% less cost. To get there, there may be a one-off cost, but it's going to be relatively trivial compared to the saving. Maybe it's GBP 1 million.

[Stuart Paynter, CFO at Ceres Power]

A good payback then in terms of an investment.

[Stuart Paynter, CFO at Ceres Power]

Yeah, we are not here searching for cost savings. What we're doing is making sure the company is optimally structured, given the inflection we're going through. We believe the output of that will be the cost reduction rather than chase it. We're not chasing a cost reduction. It's definitely a transformation rather than a right sizing or anything like that.

[Stuart Paynter, CFO at Ceres Power]

Super helpful. Thank you.

[Patrick Yau, Head of Investor Relations at Ceres Power]

Are there any more questions from the floor before we move on to our online audience? No, okay. Let me ask a couple of questions from the participants online. Phil, you mentioned that 2025 is a landmark year for the business. What are the key milestones that investors should be looking out for to mark progress?

[Phil Caldwell, Chief Executive at Ceres Power]

I think it's continued milestones with existing partners. If you look at the partner progress this year with each of our partners, you're seeing the evidence coming through Shell, Delta, Doosan. I think that's continuing. I think it's also the potential to sign new partnerships as well.

[Patrick Yau, Head of Investor Relations at Ceres Power]

On Doosan, do we have any visibility into their sales pipeline at all? Can you elaborate on the types of markets that they're focusing on?

[Phil Caldwell, Chief Executive at Ceres Power]

Doosan's a public company in South Korea, so I think, you know, obviously I can't speak for them, but I think it's clear what their first markets. When you look at the Korean market, it's again a highly stimulated market, as in SOFC is treated as quasi-renewable energy, and they have very clearly laid out targets in South Korea about, I think it's 16 GW of power by 2040. Every year there's a process, there's auctions that are bid into, and Doosan has been in the past very successful in those markets. They tend to be grid reinforcement type activities, commercial power, basically supporting electrification.

[Patrick Yau, Head of Investor Relations at Ceres Power]

Thank you, Phil. Question for you, Stuart. We're starting another cost savings program. Can you give an update on thoughts around cash burn, excluding licensing agreements in 2025 and 2026? How would cash burn look with one or two license wins respectively?

[Stuart Paynter, CFO at Ceres Power]

Respectfully, I would correct the premise of the question. We're not going into a cost-saving exercise. We're going to transform the business so we can commercially face into the power opportunities in front of us. That will lead to a reduction in operating costs. For this to be most useful, given some of the uncertainty around revenue recognition and timings of deals, which Phil mentioned, I would just encourage the person who asked the question to go back and look at our operating cost base, which is clear for the first half of the year, and look at a roundabout 20% reduction on that. That's going to be the cost base. What we can't do is sit here and predict accurately what revenue is going to be.

[Stuart Paynter, CFO at Ceres Power]

We believe that that step, the optimization step leading to a 20% reduction, will obviously reduce the cash burn on an average basis by a significant amount. It's almost impossible to predict with the manufacturing license agreements coming in.

[Patrick Yau, Head of Investor Relations at Ceres Power]

Thanks, Stuart. A question on the Bosch announcement earlier in the year. Can you give an update on where we are with Bosch and what your latest thoughts are, please?

[Phil Caldwell, Chief Executive at Ceres Power]

There's not a great deal more to say regarding Bosch, really. We've obviously more or less concluded the exit of Bosch. They still have some shareholding, which they've begun to sell, but that's really up to Bosch to sell. I think we've already been over the reasons behind that. Bosch just this week announced a further 12,000 layoffs. They're very clear this was not about the technology. This is more to do with a Bosch restructuring of priorities, and we're just working with Bosch to conclude that. The fact that we're not even really discussing Bosch, I think, shows you the progress that we're making with other partners.

[Patrick Yau, Head of Investor Relations at Ceres Power]

Great. Thank you. We've got a few questions on the data center power market. Firstly, can you talk a little bit more about our competitors in fuel cells within the market? Obviously, you've talked to, you mentioned Bloom. Are any of our partners, do you know, thinking about solid oxide fuel cells plus carbon capture technologies to make the energy greener? You know, how does the cost of power for solid oxide compare to other costs of power for other solutions?

[Phil Caldwell, Chief Executive at Ceres Power]

Sure. When you look at the market for solid oxide for power generation, there is only really one player at the moment, which is Bloom Energy. I think Ceres' licensees are probably the next wave of entrants into that market. That is quite a difference when you look at the electrolysis market. In China alone, there are 60 electrolyser companies of PEM and alkaline, and then you have solid oxide, and then you've got four or five players in solid oxide in the electrolysis market. In terms of competition, I think our competition is clear. It's Bloom Energy. I think they've done a fantastic job in pioneering that market. What's interesting when you look at the economics is the cost of conventional power generation now has gone up quite dramatically.

[Phil Caldwell, Chief Executive at Ceres Power]

When you look at lead time of gas turbines, lead time of [V.C.I.P.S.], etc., the cost of those power generation equipment assets is secondary to the availability of power. You're starting to see, I think, a very clear window and potentially a crossover where you can see solid oxide coming down the cost curve at the same time that conventional power generation is actually getting more expensive. That window may be, you know, you can debate how long that is, but the order book for gas turbines, etc., now is full to 2030. That window is clearly there. I think that once you actually enter that market with solid oxide, you will get that scale effect. When you talk about cost of power, that really depends on which part of the world you're operating in.

[Phil Caldwell, Chief Executive at Ceres Power]

It comes back to your spark spread, your difference between your gas price and your power price. When you look at the key geographies that we operate in, the most attractive markets for this kind of technology are our U.S. with cheap gas, U.K. because we have very high power prices, Germany, ironically, even though maybe Bosch didn't see that. I think that's unfortunate. I think they would see it. Taiwan, Japan, Korea, all of these nations that are somehow energy-constrained, there is a clear advantage. You can generate power more efficiently than you can actually currently source grid power. They're the near-term geographic markets that we see for this. In terms of the ability to combine with carbon capture, I think it's an excellent question.

[Phil Caldwell, Chief Executive at Ceres Power]

When you take a conventional centralized power plant, your carbon that comes off the back end of it is about a 4% or 5% carbon concentration because we're not using combustion. What comes off the air side of a solid oxide has a much higher concentration of carbon, 40%-50% concentration. Therefore, it lends itself very well to a more efficient carbon capture. You saw it in some of the thinking of people like Delta. It lends itself very well to power generation with natural gas, with biogas, with blends if you end up with putting hydrogen into the system, but with carbon capture.

[Patrick Yau, Head of Investor Relations at Ceres Power]

Okay, thanks, Phil. One for you, Stuart, could you remind us of the mechanism for royalty payments? How does that work? If you can just explain what goes behind that.

[Stuart Paynter, CFO at Ceres Power]

Sure. Our first royalty stream is going to come from Doosan. It's based on them making sales into the marketplace. There's a mechanism, and actually some of the mechanisms are different across many of our partners. Ultimately, it leads to either an exact pecent of their net sales or a proxy percent to their net sales. The more successful they are commercially, the more royalties we get. Supporting them to launch and trying to help generate demand for them is well worth it for Ceres.

[Patrick Yau, Head of Investor Relations at Ceres Power]

One more question for you, Stuart. In the slide deck, we talk about a GBP 0.9 million order intake at present compared to a larger number last year. Can you just elaborate a little bit on what's behind that difference?

[Stuart Paynter, CFO at Ceres Power]

Yeah, sure. I mean, last year in the first half, we concluded the Delta deal. The Delta deal was what you see there, that number, G40-something million worth of orders coming in. That's what we're generating the revenues on now. Orders are super important for us because they build our backlog. In those times where we're pursuing the MLAs, that's going to be the revenue stream and the cash flow for us. Even though we have been successful in signing an MLA in the first half, one of the reasons we go through the transformation process now is so we can make sure we're optimally structured to pursue these opportunities and execute.

[Patrick Yau, Head of Investor Relations at Ceres Power]

Great, thanks, Stuart. I think we've got time for one more question from the online audience. Phil, can you talk a little bit about India? Obviously, we have our relationship with Thermax there. Where are the main sources of hydrogen for that market, and how do you see that developing over time?

[Phil Caldwell, Chief Executive at Ceres Power]

The Indian market is obviously very interesting, and it's evolving quite rapidly. I was there just two weeks ago, and I was quite surprised how much progress had been made. I think we're often quite skeptical. When you look at India today, it's a big importer of fossil-based energy, and its potential is to be one of the biggest generators of renewable energy. Under Modi, he has a plan to be able to export renewable energy, but you can't export electrons very easily. You have to convert it into a green molecule, and those green molecules that they're looking at are green ammonia, green steel, synthetic fuels. The problem you have in an economy like India is your renewable assets are often quite far away from your means of production, shall we say.

[Phil Caldwell, Chief Executive at Ceres Power]

You can generate solar very cheaply, let's say $15 a megawatt hour, something like that, but it's not where you want to site an ammonia plant or whatever. They've had a recent round of auctions on things like ammonia, and they've achieved very low prices. As in the 12 bids that went in, six of them were around, I think, I'm not an expert on ammonia, but $600-$700 a ton, which is pretty competitive. One thing that's unlocking that is they've now made a more homogeneous power pricing policy, which means that if you're generating hydrogen and you're using renewable assets, you get a lower power price as a combination of renewable power that you're putting in and also conventional power and hydropower. What it means is India actually is progressively moving forwards now in terms of cost of hydrogen.

[Phil Caldwell, Chief Executive at Ceres Power]

It's getting, you know, cost of green hydrogen is coming down, and cost of things like green ammonia is coming down as well. There's a lot of progress being made. You ask about where hydrogen is coming from. I think it's being pushed a lot. If you look at the auctions by companies that previously have been big renewable energy producers and are now moving into some of these areas. It's a fascinating market. I think the interesting thing for India is can they manufacture, can they, you know, have a made-in-India kind of strategy. When we look at, you know, places like Taiwan, Korea, etc., China, it's obvious how they really get down cost curves and supply chains. I think that's the challenge, I think, for the Indian opportunity.

[Patrick Yau, Head of Investor Relations at Ceres Power]

Great. Thank you. I think we're drawing to a close in terms of question time. If there are no more questions from the room, then I'll hand back to Phil just to conclude. Over to you, Phil.

[Phil Caldwell, Chief Executive at Ceres Power]

Yeah, sure. Look, I think we've covered a lot of ground today. I think there's a couple of takeaways. One is the company's made some very significant progress this year. We've hit some big milestones. We've talked about startup production. That's been key. We've talked about our partners investing and making progress. That's key for us. I think also some of the progress that we've made in the hydrogen side is continuing to give us confidence in that market. However, we see the near-term market now coming towards us quite rapidly as this power market, and we have to respond to that. We just follow the market, to be honest. We follow the demand that comes in our pipeline. We follow what our first product launches are with partners, and we're starting to see that. We continue to operate an asset-light model.

[Phil Caldwell, Chief Executive at Ceres Power]

We continue to operate high margins, and we're very confident in the future strategy of this business in terms of signing new partnerships and also bringing in the partnerships that we have to market. I think the company is very well positioned, particularly with what we see ahead of us with this near-term market and the hydrogen market following. I think what we're doing around a single product offering, a single stack platform that services both markets really gives us that opportunity to rationalize some of our activities and really focus now on the commercial launches. Thank you very much for your participation today, and we look forward to updating you again on progress in the future. Thank you.

Participants

Executives

• Phil Caldwell, Chief Executive
• Patrick Yau, Head of Investor Relations
• Stuart Paynter, CFO

Analysts

• Analyst at Berenberg