Good morning from Oslo, and welcome to Nel's Fourth Quarter and Full Year 2024 Results Presentation. My name is Hakon Volldal. I am the CEO of Nel. With me today, I have Kjell Christian Bjornsen, our CFO; and Wilhelm Flinder, Head of Investor Relations. The agenda for today looks as follows. Short explanation of Nel and what we do, then we jump immediately into the fourth quarter highlights and the full year 2024 highlights. We have a commercial update, a technology update, and we end with a summary and outlook before we turn to questions and answers. Now Nel in brief. Some of you have seen this 20, 30 times, but for those of you that are new to Nel, Nel is a fully dedicated electrolyser technology company. We started back in 1927 as part of Norsk Hydro, became listed on the Oslo Stock Exchange in 2014, and we have sold more than 7,000 electrolysers to more than 80 countries since our founding in 1927. We have 1.5 gigawatts of manufacturing capacity annually, 1 gigawatt in Norway for alkaline electrolysers and 500 megawatts in the U.S. for PEM electrolysers. We are now roughly 400 employees. We continue to invest heavily into R&D to develop next-generation technologies in addition to advancing our current platforms. We have a global reach through a network of sales offices. We are the preferred partner with industry leaders across a wide variety of sectors, and we have close to NOK 1.9 billion in cash reserves. So we're well funded. Our value proposition. The reason we exist is that we have an unrivaled track record. There is no other electrolyser company that can trace its roots back almost a century. So all these decades of experience and our large installed base consisting of thousands of electrolysers that give Nel an unrivaled track record. In addition, we have leading technology. We have multiple platforms. We have both alkaline and PEM. We're not a one-trick pony. We can choose the best technology for any project out there. We can give guaranteed and proven performance, and we also work on game-changing next-generation solutions that we will touch on later in this presentation. And finally, we have cost and scale leadership, front-runner in cost reductions through automation and also market-leading production capabilities. If we then look at the fourth quarter and full year 2024 highlights, we are pleased with the fourth quarter. Good momentum, resulting in revenue from contracts with customers of NOK 416 million. EBITDA, minus NOK 36 million, big improvement over previous quarters. Order intake, NOK 148 million. Order backlog ended at NOK 1.6 billion, and we have a cash balance of NOK 1.9 billion. The key highlights in the quarter included some purchase orders, one from Samsung C&T in Korea for 10 megawatts of alkaline electrolysers. We had a purchase order for a containerized PEM solution from Trillium in the U.S. We were selected for a EUR 135 million grant to industrialize a next-generation pressurized technology in Norway. And we also announced that we have started a process to adjust capacity to market demand by reducing the size of the organization and temporarily halting production at Heroya. After closing of the quarter, we received good news from the U.S. that we have an additional USD 29 million in tax credits for a plant in Michigan, should that be built. And we also have a purchase order from the U.S. for 5 megawatts of containerized PEM for $7 million. Group financials. If you look at the full year revenues or the quarter first revenues in the quarter, positively impacted by increased deliveries of PEM electrolyser equipment and the Reliance IP sharing agreement in the Alkaline segment. Flat versus fourth quarter '23 on a full year basis, we were slightly up compared to '23. EBITDA improved year-on-year in the quarter, NOK 42 million in improvement. For the full year, almost NOK 100 million in improvement with positive results in the Alkaline segment, as I will soon show you. The improvement is due to execution that resulted in a positive cash flow also from operations in the fourth quarter. Now when people talk about the fact that hydrogen is not happening, it's important to put things into perspective. If we go back to 2020, Nel had NOK 279 million in revenue from the Electrolyser division. And in the past 2 years we've been close to NOK 1.4 billion. We would have liked to see '24 exceed '23 by a bigger margin. But it's important also to look at the bottom line. We have improved our execution. We have improved the margin on our products. And we have, therefore, also gone from almost minus NOK 300 million in EBITDA to minus NOK 173 million this year. Over this year, over this period, we have improved results from '22 to '24 during the 2 past years where we've had full capacity at Heroya. We have almost doubled revenues, and we have cut EBITDA losses by 60%. And I think that's a good achievement. Going into the details, we can look at the Alkaline Electrolyser segment first. Revenues up 10% in the quarter versus fourth quarter '23 and 15% on a full year basis. EBITDA also improved NOK 26 million year-on-year due to higher revenues and also solid gross margins on equipment deliveries. And not to forget, also technology license milestone payments from Reliance. The Alkaline segment has delivered close to NOK 100 million in accumulated EBITDA during the past 2 years. And in quarters where we have good factory utilization at Heroya, this segment is profitable. The business model is proven in the way that it scales well, and we are able to deliver positive EBITDA when we get above a certain activity level in the factory. The challenge is to reach that activity level consistently. This is the development on the alkaline side. You can see the journey from 2020 to 2024 from rounding error in '20 and '21 to NOK 1 billion in revenues in '24 with good margin from minus 55% in 2020 to plus 13% in 2024. I think that's a good achievement. And again, it proves that the business model works. For PEM, the story is slightly different, substantial improvement in revenues quarter-on-quarter, but still down 12% year-on-year. EBITDA improved versus '23, and also full year EBITDA was reduced by NOK 35 million compared to fiscal year '23, actually worsened by NOK 35 million compared to '23. In the Alkaline segment, as I said, the business model is proven. In PEM, we have more to prove, but project margins in general are up compared to previous years due to more favorable terms and conditions in our contracts and also better execution of production and delivery projects. Similar positive scaling effects expected in this segment over time when production volumes come up, and that's why we have invested in a new facility in the U.S. to get these volumes up. On an annual basis, '20 to '24, PEM has not shown the progress that we had hoped, but '25 will be a good year. We already know based on the backlog and the contracts we have recently won that '25 will be a much better year than '24. And now we need to convert all the investments that we have done into new production technology and technology development into better margins and better execution so that we can get the results also in this division up. And the benefit to Nel having both alkaline and PEM is that alkaline has really carried Nel in the past years. And as we go into '25, we see that there is more headwinds in the Alkaline segment, but that the PEM segment is performing well. But that gives us some flexibility in our business. We're not dependent on one product or platform only. We have 2 legs to stand on. Order intake and backlog. NOK 148 million in the fourth quarter. And most of that came in -- or actually it was not most, NOK 87 million in Alkaline and NOK 61 million in PEM. And I think it's fair to say that we do expect order intake to increase in '25 compared to '24. '24 was a tough year, a difficult year. Already by the end of January, based on the announced orders, we have a higher order intake in January than we had in the fourth quarter in total last year. So things seem to be coming around. Order backlog has come down from NOK 2.4 billion first quarter '23 to NOK 1.6 billion at the end of the fourth quarter. Most of that related to Alkaline, NOK 1.3 billion and PEM roughly NOK 300 million. We wanted to show you this. There has been a lot of turbulence in the market. Some of our customers struggle to execute on projects. If we look at our order backlog, NOK 300 million in PEM and NOK 276 million on the alkaline side for a total of NOK 600 million are planned to be delivered in '25 with limited risk. Then we have NOK 360 million that will be delivered after '25. So in '26 or '27 or '28, can be long-term service agreements, et cetera. In the Alkaline segment, there are some projects that are at risk that we have communicated. There's one large project in the U.S., and there's also one project in Germany that had a total revenue potential of NOK 650 million. These projects are at risk for cancellation. And that means out of the NOK 1.6 billion in our backlog, NOK 600 million at risk, NOK 1 billion looks very healthy. On 15th of January '25, we agreed with an undisclosed U.S. customer that have had large invoices that they have not been able to pay from Nel, to let Nel use the collateral as consideration for the receivables. So the collateral value will offset the receivables from this customer, no expected P&L impact. Another customer of Nel entered administration of bankruptcy proceedings in November '24. A provision for expected credit losses has been recognized in the fourth quarter of '24, no additional P&L impact expected. Our accounts have been audited. They're clean. We expect no more negative impact from these 2 contracts on Nel's results. Of course, it's a pity that we had to make a provision for credit losses in the fourth quarter because then EBITDA would have been even better, but at least no additional impact expected. What we have reported in '23 and '24 will stay as it has been reported. On to the commercial update. Just wanted to point out that when we talk about contracts, there are different delivery methods or different delivery strategies. One strategy is, of course, that Nel handles everything towards the client. The client gets a full turnkey solution. That's what we do with our containerized PEM solutions. And it's important to bear in mind that the value of these PEM contracts is therefore much higher per megawatt than when we just sell the stack or balance of stack, which we can do also. For a PEM containerized system, a 2.5 megawatt containerized solution can be $4 million, $5 million worth to Nel. That's when we do everything. Then we have 3 other ways of delivering Nel's core technology to the market. We can partner with other OEMs, meaning other companies producing peripherals or equipment needed to operate the electrolysers, can be power solutions, can be compressors, et cetera. Together, we can package this and sell it to the client as a turnkey solution consisting of some products from Nel and some products from other companies. Then we have also partnered with preferred EPCs. Saipem is one example. That's when the EPC or engineering company designs a complete solution around Nel's core technology. It's almost Nel inside and then they wrap it. That concept can be sold to the customer as a full turnkey solution and then either delivered by the EPC that designed it or somebody else. Nel can also work with customer EPCs. Some customers have a strong preference to use certain engineering companies when they want to build hydrogen factories, and we can work also with these smaller often regional EPCs to implement our equipment into the factories. And then we sell off the stack balance of stack, what you see on the picture below. And then the EPC, the customer EPC will provide the rest, piping, fittings, other modules and do all the procurement. So there are different ways of delivering Nel's preferred scope to the market. This is an example of when we sell stack balance of stack to someone who will do all the engineering work and integration work themselves. And this is Samsung C&T in Korea, second 10-megawatt purchase for pink hydrogen or nuclear energy to convert nuclear energy into hydrogen. So the aim is to produce hydrogen from excess nuclear power generation, allowing to utilize energy that otherwise would be wasted in periods of oversupply and therefore, also increasing the overall energy efficiency. The partnership with Samsung C&T is very promising. We hope we can do more business with them going forward for pink hydrogen. Second contract we wanted to talk about is also the second purchase order from Trillium Transportation Fuels. They purchased full containerized PEM solutions from Nel. So that's a complete solution from Nel with a high value per megawatt to fuel buses. The containerized electrolyzer will support the clients' expansion and be part of a USD 20 million initiative to scale up hydrogen production and fleet capacity with the goal of enhancing clean and efficient public transportation for the mass transit authorities. So this is a repeat customer where Trillium's continued trust highlights Nel's reliability. Two contracts involving customers that buy Nel equipment for a second time. And actually, there's a third purchase order from a major U.S. steel producer that has also purchased equipment from Nel in the past. We're not at liberty to disclose who this customer is, but it's one of the largest U.S. steel producers. They already use Nel's PEM electrolysers to generate hydrogen at 2 other sites in the U.S., and they continue to see an increasing demand. They have bought this 2.5 or 5-megawatt solution from Nel for a combined value of $7 million. And this represents a trend that we see in the market that there is an increasing demand for this type of solution for smaller installations. It's a reliable, easy concept to install outdoor and also full scope from Nel. We have become a preferred supplier for a 25-megawatt project in Norway that I think creates some emotions inside the Nel organization because this is where we built back in the days 167-megawatt electrolyser facility. This is Vemork power station at Rjukan. We have signed a letter of intent with Norwegian Hydrogen, where they named Nel as the preferred supplier for their Rjukan project using our next-generation alkaline concept. The plan is to supply over time a 25-megawatt pressurized alkaline electrolyzer in phases to this site. And the technology will be manufactured at Heroya using also then part of the grant that we have been selected for, the EUR 135 million grant that we will comment on later. And this beautiful building, if it could again be home to Nel's technology, that would be a great win for us and hopefully also for Norwegian hydrogen and bring back large-scale electrolysers to Telemark and Norway. We signed an MOU with Korea Hydrogen and Nuclear Power for developing pink hydrogen globally. It's a partnership that combines Nel's alkaline electrolysis expertise with Korea Hydrogen and Nuclear Power's power experience. So together, we plan to pursue more projects involving pink hydrogen. KHNP has researched nuclear production of clean hydrogen since 2022. They have constructed a pilot in Korea and leads the world's largest demonstration project. On to the technology update. Just to summarize our technology strategy, we have the alkaline -- atmospheric alkaline platform, and we have the PEM platform. The current product portfolio is on the left-hand side and the next-generation technologies on the right-hand side. There will be opportunities to continue to reduce cost and to further improve efficiency on a stack level for the atmospheric alkaline product. There is more work Nel can be done -- Nel can do. But we will probably see the biggest improvement on a system level. There is still large cost down potential on a system level through standardization and through a closer collaboration with other product OEMs and with EPC partners to come up with smart designs, save money on buildings, save money on piping, reduce interface risk exposure, take away margin on margin and contingencies and just get better at evaluating risk, mitigating risk and pricing risk towards the end customer. There's more work to be done. But for Nel, there will be some continued investments into the atmospheric alkaline platform, but I would say, selected initiatives rather than a broad range of improvement work. For PEM, PEM is slightly behind alkaline in terms of maturity. There are continued cost-down opportunities and also ideas we are working on to further improve or enhance energy efficiency on a stack level. And we expect that the new platform in Wallingford will enable us to harvest those improvements going forward. We're also seeing that the PEM products are increasingly more standardized, moving from projects to products. The containerized solution that we sold to Trillium and to this U.S. steel company are 2 examples of fairly standardized solutions where we provide everything based on one concept. On the right-hand side, you see where we will spend most of our time and money going forward, and that's on the next-generation technologies. We have a pressurized alkaline system where we expect significant CapEx reduction on system level, driven by new technology developed by Nel and a smarter modular design that allows capacity to be installed with a smaller footprint with less piping, fittings and with less construction and engineering work. It's standardized, it modularized. There aren't that many variations that will be allowed. It comes like this, and it basically simplifies the whole process of building out hydrogen production. Substantially improved OpEx or efficiency also compared to the current alkaline generation. Then we have the next-generation PEM. We also expect significant CapEx reduction on stack level, driven by new technology breakthroughs. This is happening in collaboration with General Motors, which is our development partner for this product. We also expect substantially improved OpEx or efficiency from -- compared to the current PEM generation when we put this product out. And this new product, part of the reason why CapEx comes down dramatically is through the reduction of platinum group metals, which is good for cost, but also good for the environment and supply chain risk. A few more comments on the pressurized alkaline product. The pressurized alkaline product is more mature than the new stack PEM technology. We expect to -- a lot to happen in '25 on the pressurized alkaline technology. That's the year for this platform and then a lot of action on the GM stack in '26. Not that we won't work on it in '25, but in terms of visualizing when these 2 technologies will be presented to you, a lot of the focus in '25 will be on this platform, whereas I expect the PEM -- next-generation PEM to be a main focus in '26. For this product that you see here, full cell stack has been assembled and pressure tested. All long lead components are now in-house, including transformer rectifier. We are fabricating the processing skid, the gas separation skid. And initial testing will be performed at Heroya in the first half of '25. We will produce gas using this technology. Another important part in addition to driving this concept forward and validating that it works. We've done all the analysis and test protocols that you can imagine, but there's something about seeing it in real life and making sure that it also works, that it produces gas, not just in a simulation tool, but in real life. And then, of course, when you have proven that, you need to scale up. And that's why we were very happy that we were selected for a EUR 135 million program in support of industrializing the pressurized alkaline concept from the EU Innovation Fund. This will enable us to go-to-market much faster with the technology. It reduces the cost and risk to Nel of scaling up the manufacturing. And then I should also add that compared to the alkaline atmospheric solution that we have at Heroya today, creating 1 gigawatt of manufacturing capacity for this product is a lot less expensive. We'll come back to the details, but you can build 1 gigawatt of production capacity for pressurized alkaline at a significantly lower cost than it took to create 1 gigawatt of capacity at Heroya. The technology development is not new. It has been ongoing for many years, dates back to 2017, '18 and builds on Nel's electrolyser expertise accumulated over almost 100 years. The production line will be built out in steps at Heroya. We will not go full-blown to 4 gigawatts in one step. We will build out according to market demand. And the final investment decision depends, of course, on successful prototype and also pilot testing as well as market acceptance of the technology. So far, feedback from customers when we present this concept is really, really positive. It addresses a lot of the main concerns they have with the existing platforms and technologies, and it sort of lives up to our slogan of making green hydrogen simple. Summary and outlook. Market perspective. The market is showing signs of recovery and projects continue to mature towards FID. Not as many as we expected in '23 and first part of '24, but still a significant number of projects continue to advance and mature. We read stories in the media about all the projects that are canceled or postponed. We rarely read about all the projects that do happen that actually start to produce hydrogen. So there is almost a tendency to only focus on the negative news and not on the positive news. But we do see a lot of the projects that we have in our pipeline that they continue to mature, that we signed FEED contracts and that we, steady, but slowly approach FID. Increased clarity around regulations, both in Europe and the U.S. helps in combination with national hydrogen auctions. A good development that we see specifically in Europe is that in addition to the EU-driven hydrogen bank auctions, we have country-specific auctions where they use the auction system developed by the EU as a service to do -- to promote projects in their respective home markets, and they award money from national budgets to projects happening in these specific countries only. So it comes on top of the EU funding. Many of Nel's target projects are expected to take FID in the next quarters. These projects are generally in the 20 to 100 megawatt range. We're not talking about 500 megawatt or gigawatt projects. These have been pushed out in time. We're talking more about midsized projects in the next quarters. We are quite positive that order intake in '25 for Nel will be higher than in '24. '24 was a disappointment. '25 is expected to be much better. And also on the positive side, the quality of the projects is also generally higher given the more rigid and demanding requirements to reach FID. When clients make FIDs and they take FIDs today, it's based on a much more solid foundation than when they took FIDs a couple of years ago. As I commented previously, healthy near-term demand for PEM containerized products where we will deliver as Nel more of the total scope compared to alkaline solutions. So bear that in mind, if you analyze Nel that you actually assign a larger per megawatt value to the PEM orders than the alkaline orders. We have announced that we will adjust capacity to market demand. I think that's the responsible thing to do, although we have a solid cash balance of almost NOK 2 billion. It's irresponsible to keep a lot of people on our payroll if there isn't a need for these employees. And we're talking about the fact that canceled or delayed projects, of course, means that there is less need for project execution resources and also the fact that we have seen a lower order intake in '23 and '24, means that we don't need to produce a lot of new equipment, and we also have a couple of customers that have taken equipment back that we can resell. So although negative with respect to new production, cash conversion of those electrodes will be great. In January, we, therefore, announced that we will adjust the organizational capacity of Nel and that we will temporarily have production at Heroya. And that's due to the fact that we saw a lower order intake in '23 and '24. We have secured overdue receivables by retaining control over the delivered equipment and that builds up inventory, but we can sell this inventory, as I said, at high cash conversion. Continued focus on cost discipline going forward, while still investing into strategic sales opportunities and technology investments, the pressurized alkaline platform and the new PEM platform. So with that behind us, we have executed on the downsizing initiative. I think we have cut capacity if you include all the consultants and the employees that we've terminated of almost 25%. We are now a lean and mean organization. We have also, I think, during '24, laid the foundation for a good '25 and years to come. Some of the measures that we took in '24 to set the company up for future success are

we restructured Nel. We completed the spinout or spin-off of Cavendish Hydrogen to make Nel a pure electrolyser company with one goal, and that is to develop the most reliable and efficient electrolysers in the world. We have improved our financial performance, as I said, doubled revenues from '22 to '24 and cut EBITDA losses by 60% through better cost control, margins and, of course, higher sales. We have significantly improved safety performance from being, I would say, way behind the expected level and the Norwegian average or U.S. average, we are now ahead of the same benchmarks. And that's due to a lot of disciplined work in the organization to get lost time injury rates and recordable incidents down. We have partnered with industry leaders such as Reliance, Saipem and Korea Hydro and Nuclear Power. We have expanded our manufacturing capacity to 1.5 gigawatt and it's all fully automated, 1 gigawatt in Norway, 500 megawatts now in the U.S. And the good thing about this is that CapEx will come down, not because we have to reduce CapEx levels, but we don't need to spend as much money when we have this capacity already. Now it's time to harvest from prior investments. We communicated in our reports that CapEx is expected to come down by 50%, putting less pressure on our cash balance and also prolonging our runway. Organization adjusted by 25%, as I mentioned, but we're not sacrificing on the speed at which we progress our next-generation technologies. We continue to invest, I would say, even more in these platforms than we've done in the past. And that's what we aim to do, improve what we already have, but also bring these new technologies to market as soon as possible. So that concludes my presentation. We will now, or I will now invite Kjell Christian Bjornsen, our CFO, to join me on stage. And Wilhelm, you will run your usual script on how the Q&A session will work.

Yes. Thank you. Thank you, Hakon. I see we have some questions coming in already. [Operator Instructions] If we have time, we will also take written questions submitted through the Q&A function. And if there's questions we don't have time to answer, please reach out to us on ir@nelhydrogen.com. And as a reminder from previous quarterly presentations, we will not comment on outlook-specific targets, detailed terms and conditions on contracts as well as questions on specific markets. In addition, modeling questions, we would also appreciate is taken offline. So, the first question comes from Rajpal Kulwinder.

So I had a question on the order intake outlook for Nel. What gives you the confidence that the order intake will be much better? Is it your discussions with the customer? Is it because financing costs are gradually getting lower? Or are you more confident about the national auction programs?

I would say, in general, it's based on specific discussions with customers, knowing what our customers are looking for and what they plan to do. So I would say customers now have a much more realistic view on the cost of green hydrogen. They have a much more realistic view on what the market is willing to pay for that green hydrogen. And the projects that we work on now very often have -- permitting is done, engineering is done. There is an offtaker. It's about really making sure that the business case is solid given certain external shocks. So I would say it's not down to specific subsidy programs. It's based on real client conversations, feed work that we have done or are doing and the timeline indicated to us by customers on when they will take FID and also our knowledge of where in the pecking order Nel is when it comes to which supplier they will choose.

Next question comes from Erwan Kerouredan.

So I have a question on the PEM near-term outlook. So thanks for providing some information on expectations that on the NOK per megawatt, it will be higher. How can we think about lead times and cash inflow and outflow for a typical project, assuming a similar size versus alkaline, please?

So, on the lead times, we have seen that the projects mature more. So when they push the FID on these, they want the equipment rather rapidly. We have worked with our supply chain to take down the lead times. And we see that we are ready to move as fast as the customer wants. Typically, I would say that, that's more of a 9 to 15 months from signature to everything up and running on containerized PEM solutions, whereas it tends to be longer on the alkaline side.

Interesting. And then in terms of net cash consumption for a typical project?

So on the cash side, we do see that our contract structure is such that we get paid as we go. So we would stay neutral to positive on an individual project basis. Did that answer your question?

I think it did, yes. And my follow-up will help with specific questions.

Next in line is Anders Rosenlund.

On the NOK 35 million of other income, can you please break that down?

So the other income is mainly grants. We will shortly be issuing the annual report and there you have a full breakdown. But this is not revenue from customers. So it's typically grant income. There's a bit of subletting income and other income in there as well, but it's typically grant and contract research. So it's a reduction of the cost of our R&D facilities basically.

So there is no cancellation fees or warranty payments of Fortescue and so forth?

No.

Next in line Yoann Charenton.

A quick question based on developments seen to date. How much revenue from grant income have you yet to recognize? And how much revenue as well from licensing remains to be recognized, again, based on developments seen to date?

So on the grant side, the current challenge is actually that we need to spend the money to get the money on the grant side. And to get the money, we need to have enough of a demand so that we will actually build facilities. We would love to build a facility in the U.S., really love to build a facility in Michigan, but we can't build that until we have a market where we can place what we produce there in. So that's the main topic on the grant side. On the licensing side, we have taken some milestone payments up to now. The key cash flow from the technology licensing will be when Reliance starts actually producing, and that is something that we'll have to come back with when they actually start producing.

Next in line is James Carmichael.

I just had one on the next-generation alkaline system. In the report, it says that you expect the LCOH to be competitive with other solutions currently available in the market. So I was just wondering if you could sort of give a bit of color here? Are you saying you'll be sort of competitive with gray hydrogen or that you're not currently competitive and you expect this just to sort of play catch up with other electrolyser technology? What's the sort of read from that sentence?

That's a good question. I think it's tough to be competitive with gray hydrogen at the moment. And bear in mind that 70% to 80% of the cost of producing 1 kilogram of green hydrogen is related to the cost of electricity. But if we compare the next-generation technologies to what's currently available in the market, I think we might want to rephrase that sentence if you refer to that correctly because the whole idea of launching a next-generation platform is, of course, not to play catch-up with what is out there. We believe that what we have today is on par or better than what is out there today. The next-generation platforms will significantly improve CapEx and OpEx compared to what we as Nel offer in the market today and what we understand other customers, be it from China or be it from Europe or be it from the U.S. are offering today.

Next question comes from Elliott Geoffrey Peter Jones.

Just on the backlog details you gave, so around, I think, NOK 600 million of revenues coming in for sure in 2025. As you see the market now, what would you say, is it kind of a general lead time for getting an order versus that order coming into the revenue line item?

That depends a lot on what you get in. So first of all, we expect to sell much more engineering hours that are currently not in the backlog, and those will typically be signed and then go on and some of it will be on a pay-as-you-go basis. Then you have the small industrial systems on the PEM side, which typically have very short lead times. On containerized PEM Solutions, what we signed this year, you could typically do some milestone revenue recognition this year even if the project isn't fully delivered. If we talk about alkaline, it's typically a longer lead time. So what is currently not in the backlog, yes, it might go into current year, but most likely a later time period.

Next question comes from Chris Leonard.

Just thinking on the production being halted at Heroya for 2025, should we take the sort of guidance on deliveries being around NOK 275 million in 2025 against what you delivered in '24 of NOK 1 billion and see that effectively, that means that you'd have the factory underutilized for almost sort of 1/4 of the year or 1/3 of the year would be when you need to have it online? Is that the right way to think about it? Or do you need [indiscernible] [rework] on inventory that you've taken back from customers, the top line projects that you need to resell and the production you need to resell? Does that have rework associated? Just trying to get a timing of that halt?

So the backlog -- so just to be specific, we haven't given guidance on current year revenue. We have said which part of the backlog we expect to deliver in current year, and then there's always the opportunity to sell some more. But what is currently in the backlog for current year is more than covered by what we already have in inventory. So from that perspective, there's no need to switch the factory back on again, and that's why we're saying it's new order intake that will determine when we switch it on. So even if we get something for 2026 delivery or later, that may need to start production in 2025.

So there's no need to do any rework on the inventory taken back? You don't need to...

No.

It's in wood boxes. Almost like good wine.

Next question comes from Martin Karlsen.

I had a question on the PEM stack you are developing together with GM. Could you please remind us on the economics and margin potential for Nel when these stacks are commercialized as I think it was supposed to be a licensing fee to GM if you are successful? And also, when is it fair to assume these stacks are commercialized?

Yes. So it will be something that we produce, market and sell. And then as you say, it's a licensing fee to GM, which is not substantial compared to the cost-out potential that we're jointly addressing. So for us, success here will mean a step change on the cost on the PEM platform. As was said earlier in the presentation, this is later in the development cycle. Therefore, we're not talking prototype and pilot this year. That is more later. So that means that commercial launch is a bit out in time, but not 5 years.

I think we have indicated a cost down potential of 70% to 80% on PEM compared to '24 cost levels CapEx.

But just to be clear, would it be fair to assume that despite this licensing fee to GM, would it be accretive to your PEM margins? Or will it be dilutive to your current?

It's 75% down, including license payment.

Okay. So it would most likely lead us to significantly higher revenues, but then by giving away some of that cost out, of course, to drive a bigger market.

And lastly, just on the timing, I think when this was launched, it was supposed -- the development was supposed to run for 3 years, and that was back in 2022, if I remember correctly?

Yes, on the final stretch with the R&D work, meaning building a mini stack and then a full stack. And then for PEM specifically, it's important to have some calendar time to validate the design. There's also a need to work on the sourcing strategy and set up also the manufacturing process. So as I said, I expect '25 for Nel's -- I think the pressurized alkaline you will see some market activity and physical products out in the market in '25. Let's say, the PEM platform is 1 year behind that.

Next question comes from Sean McLoughlin.

Just on the NOK 1 billion of backlog, which you say is less at risk, can you talk about how safe that is? I mean, how would you define, first of all, the quality compared to the better quality projects that you mentioned that are reaching FID today? And what guarantees, if any, are in place in case of delays or cancellation?

So when we put something into the backlog, it's on the basis of a firm contract typically with cancellation fees, and we would typically also get some money upfront. So even the projects that are now in the at-risk category are some of them or actually the majority of them projects where we have actually already received substantial amounts of money. And then is the project falling apart during the financing stage. So I would say the difference is when you signed the contract on the equipment. A few years ago, there was a general concern that there might not be enough electrolysers available. So some clients then signed up to engineering work and concept work and the equipment package at the same point in time before they had the full funding stack in place. What we see now is that you get the full funding stack in place. You also have typically the banks and/or other lenders into the picture when you place the equipment order. And that's the major difference.

Next question comes from Arthur Sitbon.

The first one is, I was wondering on your revenues in 2024, if you've already booked all the revenues linked to the upfront fee on the licensing agreement with Reliance or if there is more to come on that? And same for the capacity reservation with Hy Stor Energy, I think there was a fee due as well here.

So the Hy Stor project did not move forward. So we're done with the payments that we will receive on that one. For the technology licensing fee, we're booked less than 50% of the upfront fee.

Next question is from Yoann Charenton.

We have seen some of your Western PEM-focused peers securing a number of orders year-to-date and especially in Europe. Yourself last month you said that you were seeing good near-term opportunities to sell containerized PEM systems. So I'm just trying to understand how competitive U.S.-made PEM equipment are on the European market?

We -- I think we -- it's fair to say that there is a premium for Nel products, containerized PEM products compared to the lowest bidders in the market, but we believe we deserve that premium because we can back the performance of our products with performance guarantees and also proven field operation for this equipment for many, many years, and we're not willing to sacrifice margins just to get down to the same cost level. There has to be a value in reliability. Right now, I would say the premium is acceptable if there will be tariffs, we will work around that by doing more of the container integration work in Europe. So we are constantly looking into our supply chain strategy to make sure that we are competitive, both in the U.S. and in Europe for these platforms. Currently, there's -- I would say we are competitive. It doesn't mean that we will win all contracts. These are sometimes quite small projects, and it's difficult to know all of these projects that appear here and there. So I expect competitors to win quite a few containerized PEM orders as well, which is good because it helps create the market for hydrogen.

We have 2 more questions in the line. We're going to take those 2 and then end the Q&A session. Anders Rosenlund, please go ahead.

Could you just explain to us why you bought shares in Cavendish in -- during Q1?

We wanted to help stabilize the situation around the company. It is a company where we do have some shared customers and historical customer relationships. There's further detail around that in the prospectus at the time of listing. And Cavendish was put on the market to develop fueling equipment, and now it's going to do that.

And you will remain an owner there?

We are happy with being at less than 5% of the shares outstanding at that company. It's not a strategic investment for us where we need to sit long-term. But of course, if you need to stabilize the situation, it might be safe to be there for some time at least.

And do you feel that Nel's position and potential is misunderstood by the capital markets? That's a question for Hakon.

I think there's a narrative. There has been -- it was a very positive narrative in '21, '22. And now that narrative is very negative. There's a tendency to focus on everything that goes wrong, all the projects that are canceled or delayed and nobody writes about the projects that do actually happen. So I wouldn't say misunderstood. I just see that when we had an all-time share price, most of you said buy Nel, which was obviously not a good recommendation. And now we are at almost an all-time low and nobody says buy Nel. So you can read into that whatever you want. Our job is not to comment on the capital market perspective of Nel. We need to develop a good and solid company. And I understand that there's a job that we need to do in terms of proving that there is a market for our equipment. And the only way we can do that is by getting firm purchase orders that we can deliver on and not the MOUs, LOIs, a lot of vague stuff and third-party projections on how the market will develop. So I think both the capital markets and management of Nel agree that we need to win more contracts. And I think if we start to do that, hopefully, also the perception about the future of this industry, the need for it grows. I think the narrative is very negative these days, but it's our job to turn that around. And hopefully, we can convince you by just winning more contracts and putting technology out there that allows our customers to make more FIDs because the business cases are more solid.

We're going to take one last question from James Carmichael.

Just a quick one on the EUR 135 million EU grant funding, I guess, sort of given where you are in terms of project development -- sorry, product development on that with testing this half and your commentary around the cost of manufacturing capacity, it seems like quite a lot of money. So just wondering what specifically you can sort of draw that down against and over what time frame you expect to do that?

Yes. So that's covering up to 60% of not only the investment, but also our running losses on the introduction of this new technology. So within that, we can put also some other expenses. Will we use all of it? I'm sure, and it's also depending on reaching certain milestones. The application is written on the basis of getting to 4 gigawatts of production capacity. So that's at least an indication of what needs to happen for us to access all that money.

Very good. And with that, we will end the presentation. Please reach out to us on ir@nelhydrogen.com for further questions. And with that, I will give the word back to management for any final remarks.

Well, thank you for listening in. I think we're quite happy with '24 compared to '23 and '22. We're happy with the trajectory that we have shown. '25 will be more of a difficult year on the financial side, given the low order intake in '23 and '24. I think the job we have is to make sure that we don't lose more money in '25 than we have to, that we take care of that cash balance, which is important, spend that wisely, that we win more orders so that '26 and '27 and '28, et cetera, can be good years for Nel and that we also continue to advance the new platforms in order to unleash more market demand because the reason we're not seeing more FIDs is, of course, that the business cases don't always work out now more than ever because the appetite to go green seems to be less than it was 2 years ago. The business case is more important than ever. And that's why we continue to pursue new technology breakthroughs relentlessly to get the cost down for our clients. And I am firm in my belief that we will make that happen. It's not a straight line. It's a bit of a bumpy road. But I think, again, '24 is a good signal of what we can do if we can continue to win orders and fill our factories. So thank you for listening in, and see you back in April. Isn't it, Wilhelm?

Yes.

Thank you.