Hello, everyone. And welcome to Fusion Fuel Green’s Fourth Quarter 2022 Investor Update. My name is Ben Schwarz and I’m Head of Investor Relations at Fusion Fuel.

I would first like to remind everyone this call may contain forward-looking statements, including but not limited to, the company's expectations or predictions of financial and business performance which are based on numerous assumptions around sales, margins, competitive factors, industry performance and other factors which cannot be predicted.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions and they are not guarantees of performance. I encourage you to read the disclaimer slide in the investor presentation for a discussion of the risks that may affect our business or may cause our assumptions to prove incorrect.

The company's under no obligation and expressly disclaims any obligation to update, alter or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. So thank you again for joining us today. I'll just quickly run through our agenda for the next hour.

So we'll kick things off with an overview of our value proposition. Then the management team will share fourth quarter highlights, financial results, the technology update and then latest on our commercial strategy before wrapping with a discussion of our milestones for 2023. We'll then open up the floor for a half hour of facilitated Q&A.

And as in our previous quarterly calls, questions can be entered in the chat box in the webcast platform at any point in the next hour. You can also submit your questions to the Investor Relations mailbox, at ir@fusion-fuel.eu. So with that let’s proceed to the following slide.

So we’ll begin with an overview of how we at Fusion Fuel are creating value in nascent green hydrogen market. At Fusion Fuel we are in the business of developing and delivering cost effective cleaning hydrogen solutions to accelerate the global energy transition.

At the heart of our value proposition is our patented miniaturized PEM electrolyzer, the HEVO. Our simplified and scalable technology democratizes access to green hydrogen and gives us a material advantage in the markets in which we play.

And this in a number of ways, by unlocking the advantages of mass production, by positioning us to create bespoke, fit-for-purpose solutions and by enabling co-located and integrated deployment of our hydrogen generators.

We will talk further about some of the innovations that are within the HEVO itself, but what it comes to down to is that we're able to deliver highly competitive levelized costs for small-to-midscale green hydrogen projects.

This is a segment that's often overlooked, but aligns with where much of the commercial demand is today, particularly for the verticals that ascribe the highest value to green hydrogen.

I also want to drive home the reality that despite progress distribution infrastructure for hydrogen remains a key downstream bottleneck and an available solution for moving hydrogen from sources of large scale production to demand centers as add both meaningful cost and complexity, we've estimated north of $2 per kilogram for the cost of last mile distribution and logistics.

So we believe that co-located, scalable production is and will remain an extremely attractive offer for the foreseeable future. So with that, I'll, I'll pass it over to Frederico Chaves Co-Head of Fusion Fuel for an update on the fourth quarter and subsequent events..

Great. Thanks very much Ben. And thank you everyone for joining us today. I just want to start with some highlights of first quarter, the fourth quarter and also from the first quarter as of today. So first, in the fourth quarter, we announced €7 million of tech sales that have been contracted. We also announced our first project in the U.S. and Italy.

In addition, we were awarded a €36 million grant from Portugal’s C-05 agenda, and we completed the €9 million sale-and-leaseback of our Benavente facility’s real estate. In the first quarter we signed Portugal’s first green hydrogen offtake contract with Dourogás. We also signed our €10 million grant for our C-14 project in Portugal.

And from our joint venture partners in Spain we have exciting news recently that we were selected for a €2.5 million tech sales tender in Spain, and we were awarded a €3.4 million grant for a project in Spain as well under the PERTE program.

Lastly, as part of our efforts to develop strategic partnerships we signed and spend well, an MOU with a leading [indiscernible]. This is truly a really exciting strategic move and we hope to be able to disclose more details to you all about this partnership in the near future. Now on to the financials.

In the fourth quarter, we recorded an operating loss of €13 million. This is an increase of €5 million from the third quarter, driven by significant non-cash items. Our cost of goods sold consist of two main items, Exolum related impairments of €2.5 million relating to further cost incurred on this first third party project that we undertook.

As disclosed in our September financials, we together with Exolum are working to pursue innovation awards to partially offset this contract loss. We are also taking an inventory provision of €2.9 million. This has been the case for us as well as others in the industry.

The speed of technology evolution means that we have items that the value needs discounting and in certain cases rework to be suited for the relating to tech developments. First of these non-cash expenses.

During the fourth quarter our operating expenses increased by €2.3 million driven by significant non-recurring items listed in Footnote 3 that I will address shortly. Before I do so, I just want to highlight the operating costs for the full year. So for 2022, we provided guidance of operating costs of around €14 million.

But given a significant one-offs the total operating cost for 2022 are around €18 million. The €4 million difference is mainly driven by the cost identified here in the Q4 figures.

Firstly, we reserved certain production capacity with our production partner, which given project delays we did not use mainly to avoid spending more money on raw material purchases. But this has led to a €1.5 million charge. The production agreement for 2023 has been altered to avoid this potential charge in the future.

In Q4, we also started advertising our HEVO Gen 1 development costs and we'll amortize this over a suspected useful life of three years. In addition, we had €700,000 of R&D costs related to our demonstration plants in Q4. And this totals around €1 million for the full year for the same cost item.

During Q4, we saw service and professional fees of €700,000, again, one-off, mainly driven by the sale of lease back transaction costs, some strategic partner engagements and also legal fees. These are significant one-off item items, which we were not able to proceed when we first provided our 2022 guidance.

At the end of the presentation, we'll provide the guidance for 2023. To note, and I think both may hopefully that the slide will develop incoming quarters. In Q1 of this year, we have already started invoicing clients for technology sales.

During the fourth quarter, we strengthened our cash resources with following activities, principally our sales lease efforts, we were able to secure net flow of €7.5 million which we received net of the security deposit and some of the first considerations. So the €7.5 million was the net on the €9 million sale-and-leaseback sale.

We also, from VAT, we saw in flows of €3.8 million mostly on reimbursement claims that we've made to the Portuguese authorities. We have submitted additional claims in the first quarter for significant portion of the €3.7 million receivable balance as of the year-end.

In addition, we received [indiscernible] million as a prepayment of a portion of the C-5 grant awarded, the very fast turnaround time of this payment so we were awarded the grant in December, and we actually received the reimbursement cash in December.

Reemphasized this Portugal commitment to the hydrogen business and to operationalize it as quickly as possible. During the fourth quarter, we raised €1.5 million through the ATM shelf and a further – sorry $1.5 million through the ATM shelf.

And a further $2.3 million was raised prior to mid-February this year We continue to see an increased efficiency in the grant process in Portugal.

Recently, the Portuguese Prime Minister signed in terms of the acceptance of our €10 million C-14 grant award, and our team is already working on submitting the prepayment application for this project, similar to the C5 process. In addition, we expect to be able to operationalize additional drawdowns under our C5 grant award as 2023 progresses.

Grants bring substantial value to our projects and in the early stage of this emerging green hydrogen market, it makes many projects viable. We'll continue to secure grants where possible and we'll continue to add for the nearly €65 million grants already awarded us.

I would to now take a moment to truly drive home what makes our technology so special, as we are unique in the market. Our technology centers around the HEVO, as you see picture there on the slide, it is at the heart of both HEVO-Solar and the HEVO-Chain.

It has a unique membrane and electrochemical cell design that allows for reduced power system costs, [indiscernible] system degeneration, and issues as our membranes operate independently and not in the traditional stack.

It allows for a modular approach using this miniaturized electrolyzer, which reduces O&M costs and complexity, as well as system downtime these modules can be replaced individually. We can use inexpensive structural materials and simplified engineering and assembly, which reduces costs further.

All of this enables us to create an industry leading cost of green hydrogen, which Ben showed previously, an advantage that is amplified further in small to mid-scale projects. To note we had two core products. We have our HEVO-Solar, which is for those of you who have been following us for some time are hopefully very familiar with.

This is an integrated solar hydrogen generator. It integrates the CTV technology to our miniaturized PEM electrolyzer, the HEVO and allows to have a grid independent and modular solution that requires good solar radiation levels and available land.

In addition, we also have our other HEVO-Chain, which is also modular and scalable and are highly efficient end solution. The HEVO-Chain is a containerized PEM solution that uses our miniaturized PEM electrolyzer, the HEVO working in a series. The interesting thing is it becomes location and power agnostic.

It can be deployed, connected, to any source of energy. So we have received questions what are the European Union’s – what are the implications of European Union’s consideration of nuclear power as renewable, but HEVO-Chain can work with any source of energy, including nuclear. So we actually have a product that fits for several types of requirements.

I'll now pass onto Zach. .

Portugal, Spain, Italy, USA, and Canada. Our development strategy will be to continue titling our projects through securing strategic real estate, grants were available and licensing these projects. Secondly, we'll commercialize our pipeline by securing offtake agreements and signing EPC contracts to de-risk the construction.

We recently signed our first agreement with Dourogás and we plan to continue building off this by signing additional offtake agreements as our projects move towards final investment decision. This approach will increase shareholder value by monetizing the grants, the land and selling our technology.

We'll also potentially capture upside in development, while controlling our own destiny through having our own project portfolio we've created that gives a credible backlog of tech sales.

As part of creating this development entity we'll opportunistically look to bring in third-party capital to support the funding of the projects, both in the development phase and the construction phase.

The more we entitle and commercialize our portfolio projects, the more attractive the portfolio will be to third-parties Fusion will balance how far it takes the portfolio prior to bringing in third-party capital to maximize shareholder value by also keeping an eye on our financial exposure.

This will be managed by myself, Frederico and other senior managers of the current team and will be adding additional members to support in this effort. Frederico, back to you..

Great. Thank you Zach. So now I'm going to provide some overview and forward guidance on 2023 and outlook for 2024, 2025 quarterly guidance. So want to note that for 2023, we're providing guidance that will be seeking to achieve €25 million of revenues. This is based on five projects of which €13 million of those have already been contracted.

As mentioned before, we've already invoiced clients for technology sales at this point in time with invoice little over €1 million. For some of these projects we're also selling the balance of [indiscernible] equipment, so increases the revenue for megawatt we're able to secure.

I want to make that clear just that people don't simply divide these megawatt by revenues to try and calculate the cost of megawatt of our system. We'd like to note that for 2024 we're aiming for €80 million in revenues of 2025, over €140 million in revenues. These are largely driven by projects that we are developing ourselves.

This is partly by development effort of ourselves and the development partnerships that we have. So those projects are clearly identified as that the overall pipeline 1.5 gigawatts and we're talking about 220 megawatts for both 2024 and 2025 of pure tech sales.

As noted we just – we have not reflected any additional income, but we expect to revise from our development activities such as fees for possible equity returns or shares. The reason for that is that at this stage, it's too early.

The value of such fees or such or efficacy returns we might have [indiscernible], so at the moment it's too early to be able to accurately forecast what those revenues or income would be. Only to note that we are aiming to be cash flow self sufficient and be able to deliver positive net income in 2024.

If successful, we'll be one of the first companies in this industry to do so. Also want to highlight as we always have some – our core milestones for 2023. Naturally I have not included booking of first revenues, but that is obviously implied with the previous targets that I noted earlier.

So from our production, we want to keep expanding our production capacity and build out the number of facility Benavente. We want to finalize the development of HEVO-Chain as we've announced we want to be putting it out in the market commercially in the first half of 2024.

From our commercial side, we want to make sure we have obviously all revenue 2023 contracted. As noted, we are well advanced on that phase is already 13 million there, and the remainder coming from very specific projects that are very advanced at this stage. And as well to convert 2024 pipeline into confirmed orders.

We've clearly done a good job of securing the grants the company advanced already at this stage. I'd say we've outperformed any expectations on the amount of grants that we could hope to secure for our projects. We'll keep developing projects that are in our pipeline and of course it also requires license and downloads for our portfolio.

Safety is always a core for us, and this is we want to make sure that we keep safety – forefront of our mind as we make sure that we keep that here in our key priorities for 2023 as always.

Note, as the industry market takes shape and is taking shape, we've noticed that there are advantage in our technology solution for a particular market needs become clearer and clearer. In addition, the advantage of our project development pipeline sets us apart from our competition.

We hope that with our ability to be delivering revenues and delivering on the products we have in 2023, but the market and the industry recognizes the clear value that Fusion Fuel has and we're able to change the course of our – our market cap and our share has taken over the recent history. So with that, I'll pause and I'll open up to Q&A..

Frederico, and thanks to everyone who have submitted questions thus far. We have quite a few. So we'll begin with some questions from Chris Tsung of Webber Research.

He asks about the Dourogás off-take agreement, which was announced a couple weeks back specifically around the duration of that agreement, the volumes considered in price, and also how will the hydrogen be transported from Evora where it's being produced, to where it will be injected?.

Would you like to take that Frederico? I'll work, thanks man. I'll work in the inverse. So we plan to take it from Evora and connect it via pipeline. We were working with the local pipeline operator flow in on connecting to the grid. The agreement is a market based price contract. It's based on forward-looking natural gas pricing and carbon offsets.

And the volume is based on us nominating volume from the project. So right now, we have sufficient volume out of the Evora project, and that's what it was. That was what the plan was, but we could have opportunity to expand with future projects through having this be a good solution for selling our merchant capacity..

Thanks, Zach. Second question was around the C5 funding, which as a reminder was $36 million to the Fusion Fuel Consortium of which Fusion Fuel would receive $22.5 million for its HEVO-SUL and SINES project.

Will the company receive all of that $22.5 million when FID is reached or will it be distributed as certain milestones are achieved?.

So it’s distributed when certain milestones are achieved actually as equipment is delivered, there is a certain amount that is available and we have actually received related to expenses that we expect to have for development costs of the project. That is the case for C-5 and also the C-14..

Yes. Finally, this one for Zach.

Any updates on the Bakersfield project in California with electives, what is needed to reach FID and when is your expectation of when that’s achieved?.

Thanks, Ben. So we are concluding our concept study with Black & Veatch.

We plan to do that next month, and then we’ll make a decision with our partners at electives to move to the next phase of work, which is pre-feasibility and feasibility, which is permitting at on the subsequent calls and the first quarter call will provide more guidance on timing.

So I don’t have the report just yet, but our anticipation is a late 2024 early – in California..

Moving now to some questions from Erwan Kerouredan at Royal Bank of Canada. He asked about the revenue recognition timeline for Exolum.

Frederico, if you can touch on that?.

So we can start recognizing revenues for Exolum once the acceptance of the project starts that will be dependent on the how the commissioning process goes. As noted, we – during March, we will start the commissioning process..

And there’s a separate question around what are those – the expected revenues related to that project, if we can share..

So $13 million primarily already contracted just by $2 million is related to Exolum..

Thanks.

Second question from Erwan is with respect to impairment charges, is there any expectation of additional impairment in the first quarter of 2023 and beyond?.

Not at this stage. In fact if we had – we would’ve had – we would’ve already had to recognize it in Q4, even if it was – even if we only learned about it subsequently. So at this stage we believe we had taken the advance..

Great. Last question here.

What’s your view on latest policy developments in the EU in response to the Inflation Reduction Act here in the U.S.? Do you expect additional funding potential in the near-term or incremental commercial opportunities as a result of the latest developments, whether that’s the EU green industrial plan or the delegated acts? I know we touched on that somewhat in our shareholder letter, but if you have any thoughts on that..

So I can start and then Zachary just add. But actually the one that far on high level note say that the IRA has been phenomenal for the industry. I know this is not regarding Europe, but obviously it has pushed Europe another markets.

So we are now seeing Europe, we’re also seeing Australia start developing similar activities and start beefing up their support for the hydrogen industry. So we find this into the exciting the movement in Europe. Naturally, there has been obviously some pressure from the nuclear side to include nuclear energy under the renewable cap.

Again, for us, this is indifferent for us from a HEVO-Chain perspective, that is power source agnostic. So we’re thrilled to see the developments. We believe this will continue. We’ve already been hearing from Spain that they are actually increasing the grants available.

In fact, they are already reopening some of the current lead programs to consider funding some of the projects that were not awarded. So we do expect that trend in Europe to continue. Hopefully similar to the U.S., there will also be more support on the demand side and not only on the CapEx front.

In Portugal, that is expected to take shape with a hydrogen auction later this year where similar to the energy market, there will be a sort of, let’s call it, speed and tariffs for green hydrogen blended into the natural gas grid. We do expect to see more of that also emerge in Europe. Zach, you want to add any color to that..

No. In fact, two things. So also another market that we’re in Canada is also kind of counterbalancing against what the Inflation Reduction Act has been doing by working to pass a 40% investment tax credit in hydrogen, which will help reduce CapEx. And I’d say the last piece would be California as a leader in the U.S.

and just general even in environmental and renewable markets and the low-carbon fuel standard credit that has really helped drive the mobility market in California for hydrogen refueling infrastructure.

We’re seeing that replicated or being discussed be replicating other states throughout the United States, which will help expand mobility which is a kind of a core market for Fusion Fuel..

Thanks. There’s a question here about the green hydrogen tender that Portugal recently announced and in Puerto Rico, you just spoke to that. The question was whether we – Fusion Fuel intends to apply for parts of this tender. I think you might will answer that explicitly, even though you already did..

So, I mean the hydrogen tender, yes, absolutely. We expect to not only participate for our own projects, but also likely participate together with partners as well..

Pivoting to HEVO-Chain briefly, a couple questions here around customer reaction to or early indications of interest from prospective customers regarding the HEVO-Chain?.

I think there’s been significant interest in HEVO-Chain, with even existing partners that were already familiar with HEVO-Solar as well as new. Obviously the fact that it opens up substantial additional markets for us helps. But the HEVO-Chain solution, the fact that it is modular, scalable seems to be [indiscernible].

Yes. Only thing I would add is the unnamed recent announcement of a global equipment provider really is a good fit with our HEVO-Chain product. And what we think that there’ll be a lot of opportunities that come out of that in the logistic and mobility market. So what we’re excited about the product, the advantages the product has.

And we’re also seeing opportunities in just based on the design of HEVO-Chain as Frederico said that it’s quite unique compared to our peers.

We’re seeing a lot of opportunity within curtailed power and mineral offer solutions that makes us quite unique putting costs aside compared to any of our peers, just based on the fundamental design of the system.

So what we’re excited about the mobility market and really tapping into curtail power opportunities within the European market and gas blending and other applications..

Thanks. Question here from Amit Dayal at H.C. Wainwright.

How much do you expect from development economics on a per megawatt basis? And can you talk about the cost that will be incurred upfront and potentially supported by the balance sheet?.

Yes. So it’s a great question.

As I’m smiling because every project’s unique, right? So what the plan is, and I should addressed it in the front end of the presentation is, the plan going forward on future quarterly calls is, as projects reached a final investment decision or we close the final investment decision, we’re going to highlight those in the presentation, so that way we can talk about, what it means to Fusion Fuel from a technology sales standpoint? What does it mean, how do we finance it? Did we get development fees? Did we get equity returns out of it or an equity ownership interest? And then I think the last piece is the plan for the company is to continue seeding the development of the projects until there’s a balance, as I noted in my in my remarks.

There’s a balance of seeding the projects until a point where we can create enough value to bring in third-party capital. But we, the entire plan is to bring in a third-party capital on the development and fund the projects once they reach final investment decision. That is not in our plan for Fusion Fuel to do that and take on that capital exposure.

Fred, do you want to add anything?.

Oh, perfect..

In fact this is a question that I’ve, received on the number of occasions figure we’ll ask it here.

When do you expect news about the in stack [ph] funding decision?.

I will give you, no, I think what we are – we’re on a wasting pattern here. So what we don’t have further guidance as to what that news might come, what we note is that what we’ve done and in all our pipelines and so on, numbers we’ve been giving, we haven’t included it so that it does not significantly distort the figures while we wait for that use.

At this stage and this has been the case right from the beginning. We take this as the first-come first-serve. We continue to develop our own projects. We continue to engage with third-party clients and we’re moving forward with our hydrogen projects as fast as we can.

When we say gets announced, we’ll have to see how we handle our production constraints and plans accordingly.

But at this stage, we don’t know anything else?.

Thanks, Frederico.

Question here around, can you elaborate on your plans for Morocco, Middle East, India, Australia, all places where partnerships have been announced in the past?.

Do you want take that Fred, or you want me to?.

Yes, as I just noted right, we’ve, and again, this kind of goes into the strategy, I just want to be clear on that. We are not – we are, I don’t want this, I don’t want us to be look like we’re signal that we are abandoning Australia or Morocco or North Africa opportunities.

We have finite resources, we have created significant opportunities, momentum in the five markets that we talked about earlier. And there we see most near term opportunities for technology, sales or growth in these development pipeline projects. So, we continue to develop and push forward in Australia and North Africa.

We hope to have some in news in the coming months in those markets, so we can then add them into the pipeline discussion that we've been having.

But we want to make sure that we are being cognizant of where we are and trying to give confidence to the market that we're focused on near term actionable opportunities that have land, have identified customers are in licensing or licensed have grants in order to show a real path to getting to our forecasted pipeline in revenues..

And I will just add is that for that reasons meant the focus that we have our partnerships for those markets.

So in Morocco at least where we have partnerships with TCC, and so on, this is where we're counting on both partners to help us bring the project to a further stage of maturity where will start to disclose the progress on those as well at this stage with [indiscernible] sole principle control right now..

Thanks. Okay. Well, last question here. So if you do have final questions, do get them in. The levelized cost of hydrogen chart on Slide 5, is that for the HEVO-Solar, HEVO-Chain, or both? I'll take that one and you guys can correct me if I'm wrong.

As we are still in the process of industrializing the balance of systems for the HEVO-Chain which will have an impact on the levelized cost or the cost profile of that product, that chart reflects an estimated cost for the HEVO-Solar.

Of course, the levelized cost of hydrogen from that product is highly dependent on where that product is deployed, right? In Northern Europe would look a lot different than in Southern Europe or in California. So, we do assume our benchmark location in southern Portugal.

But again, if that's deployed somewhere with superior solar radiance, that number is below that range that we provided, et cetera. So, that's the answer then. So in the absence of here's one final question here.

With respect to, I think liquidity and financing on in general and in our own project portfolio is the company in discussion with potential capital partners..

So I think that on the, on our capital effort as so we'll, we'll break that onto two pieces on the project side. As I mentioned with the development company, our idea is to have partnerships to fund the development costs of that sort of substantial development portfolio. That's the easy question on that side.

On the corporate side as mentioned before in us before we have several options that we are pursuing and we are considering for the capital and to ensure the company is effectively capitalized. This is something that the board management is acutely keeping an eye on.

And we would like to be able to find a capital solution for the long-term that is strategic at this stage I don't want to say more, and can't give more details on that without getting myself into problems. But this is certainly something that is being looked to be addressed by management and board..

Thanks, Frederico. Last one here is not really a question – a request, is it possible for future presentations to provide insight into how much revenue will be recurring versus one-off? Yes, we will make a note of that for future reference. So in the absence of additional questions, I guess we we'll wrap it up here.

So thanks to everyone who joined and contributed questions. If there are additional questions that come up, please feel free to reach out to me and the IR team at ir@fusionfuel.eu and we look forward seeing you all again in our next update..

Thank you..