CASH EVOLUTION: REFLECTING STRONG COMMERCIAL AND INDUSTRIAL INVESTMENT

Cash flow statement in €k	2022/2023 12 months	S2 2023/2024	2023/2024 12 months
Cash flow before cost of financial debt and tax	(7,365)	(5,689)	(11,909)
Change in WCR	6,698	(1,319)	(4,217)
NET CASH FLOW FROM OPERATING ACTIVITIES (I)	(667)	(7,008)	(16,126)

O/W net acquisitions of fixed assets	(16,246)	(4,418)	(11,845)
NET CASH FLOW FROM INVESTING ACTIVITIES (II)	(16,229)	(4,412)	(11,839)

O/W net change in borrowings	12,769	+2,278	4,111
NET CASH FLOW FROM FINANCING ACTIVITIES (III)	12,769	+2,278	4,115
CHANGE IN CASH FLOW (I + II + III)	(4,126)	(9,137)	(23,850)
CASH AND CASH EQUIVALENTS: CLOSING	30,543	6,694	6,694

Cash flow from operating activities amounted to -€16.1 million on June 30, 2024, comprising -€11.9 million in cash flow from operating activities before cost of net debt and tax, linked to earnings for the period, and a €4.1 million increase in WCR, linked mainly to the increase in trade receivables.

At the same time, CAPEX amounted to -€11.8 million, mainly linked to the completion of the development of the company's industrial facilities and new headquarters, in particular the unique European test area at the new production site, and to R&D efforts to the tune of €7.7 million.

Cash flow amounted to €4.1 million, mainly due to the subscription of €7.4 million in new loans, dedicated to the financing of industrial facilities opposite to €2.8 million loan repayments over the period.

As a result, HRS had gross cash and cash equivalents of €6.7 million on June 30, 2024, compared with €30.5 million on June 30, 2023. However, this one-off low point does not reflect the financial reality of the company. In fact, HRS has a significant customer receivables position, with €32 million still to be collected, of which approximately one third have to be settled by our customers during the current financial year, as well as €19 million of invoices to be issued (FAE), which represent future revenues that will strengthen our cash position, part of which will also be paid in the current financial year as the station installation work progresses.

This situation, while temporarily affecting our liquidity, also testifies to HRS' strong resilience, with its proven ability to withstand significant WCR during its ambitious investment cycle, which is now complete. From now on, station deliveries will be made once payments have been settled for 80-90% of the station price, further strengthening the financial position.

To improve its cash position, HRS will also be able to count on the expected clear reduction in industrial CAPEX and the optimization of R&D expenditure, notably outsourced, now that the industrial tool and test area are fully operational. In general, the Group has demonstrated its ability to mobilize financial resources from financial partners, including its majority shareholder, through a cash management agreement.

These steps demonstrate HRS ' commitment to the efficient management of its trade receivables, while maintaining solid relationships with its business partners.

BALANCE SHEET

In k€	30 June 2023	30 June 2024		30 June 2023	30 June 2024
Non-current assets	43,327	53,351	Total shareholders' equity	59,897	50,905
Intangible assets	3,284	5,829	Non-current liabilities	21,872	22,895
Property, plant and equipment	27,235	32,255	Non-current debt	19,346	21,953
Long-term investments	6,176	6,231	Current liabilities	34,765	44,197
Current assets	73,206	64,645	Trade accounts payable	17,306	21,862
Inventories and work-in-progress	3,816	1,833	Other current liabilities	15,277	17,843
Accounts receivable	36,172	50,355	TOTAL EQUITY & LIABILITIES	116,533	117,996
Cash and cash equivalents	30,543	6,694
Other current assets	2,676	5,764
TOTAL ASSETS	116,533	117,996

The financial structure on 30 June 2024 shows total assets of around €118 million. This structure reflects an increase in capital expenditure (capex) with a direct impact on fixed assets, with a major focus relating to the management of trade receivables.

On the assets side of the balance sheet, non-current assets rise from €43.3 million in 2023 to €53.4 million in 2024, mainly due to the increase in property, plant and equipment (from €27.2 million to €32.3 million), which is attributed to the end of the investment cycle (capex) for the new state-of-the-art industrial site and test area.

In line with the announcement made at the time of the half-year results at the end of April 2024, trade receivables will increase to €50.3 million in 2024, compared with €36.2 million in 2023. This reflects future invoicing and amounts to be collected: €19 million in invoices to be issued and €32.4 million to be collected.

Of the €50.3 million trade accounts receivable, around €25 million relates to two specific customers, as already announced on April 30, 2024. Concerning the first customer, HRS communicated on June 20, 2024, announcing the signature of an amendment to the framework agreement with pHYnix for the delivery of 6 stations by the end of 2027, with a total value of €12.5 million. For the second customer, the renegotiation process aimed at facilitating this customer's cash management is continuing, as announced at the time of the half-year results. It is important to note that HRS has complied with its contractual obligations. Thus, in accordance with the provisions of the framework agreement signed with this customer, HRS has already ordered the components needed to manufacture the hydrogen stations covered by the framework agreement, and has begun assembling them, but has not delivered any stations pending payment. In the absence of any factual indications that these receivables may become uncollectible, HRS has decided not to depreciate this customer's receivables.

On the liabilities side of the balance sheet, non-current liabilities increased slightly, with long-term borrowings rising from €19.3 million to €21.9 million. Equity fell from €59.9 million to €50.8 million, reflecting the net profit for the year.

PIPELINE OF €343M MULTIPLIED BY 2.9 IN 12 MONTHS, WITH DECISION CYCLES LENGTHENING

HRS' commercial pipeline strengthened significantly during the 2023/2024 financial year, driven by the many projects already underway. It is made up of potential orders and identified projects, including 170 stations in shortlist selection or final negotiation on still-active European tenders, representing potential sales of €343 million with deliveries over the 2024-2030 period, naturally requiring in-depth preparatory phases.

The figure of €343 million on July 25, 2024, updated every six months, mainly comprises projects for major accounts in Europe. The company plans to increase this pipeline by actively prospecting in new regions outside Europe.

Indeed, the global drive to decarbonize heavy mobility through a variety of levers, including hydrogen, necessarily implies the development of a global infrastructure. As a result, Europe is currently developing ambitious transnational hydrogen transport projects, such as MosaHYc (France-Germany-Luxembourg) or BarMar-H2Med (France-Spain), to supply the exponential demand for green hydrogen.

In addition, the "Hydrogen Insights 2024" report confirms major opportunities for HRS in the hydrogen sector. Global investments are expected to reach 680 billion USD by 2030, with 68 billion USD specifically dedicated to hydrogen refueling infrastructures.

HRS is ideally positioned to capture a significant share of this market, particularly in key regions such as Europe, the USA and the Middle East.

In Europe, expansion supported by regulations such as AFIR and the deployment of at least 650 high-capacity stations for heavy vehicles give HRS a head start.

In the United States, the creation of HRS-USA enables us to seize opportunities in a fast-growing market, stimulated by federal incentives.

In addition, the inauguration of our first station in the Middle East strengthens our presence in this strategic region.

With our 160 employees and our unique 14,300 m² production site, we are continuing our worldwide development as a pure player in hydrogen refueling infrastructures.

AMBITION: GROWTH REBOUND EXPECTED BETWEEN 20% AND 60% TO REACH SALES OF BETWEEN €30M AND €40M

Given the longer decision-making cycles due to the increasing size of projects and associated financing, HRS is targeting a rebound in sales in 2024/2025 to between €30 and €40 million, representing growth of between 20% and 60% compared with 2023/2024.

HRS will be able to draw on its order book, which stood at €47 million on June 30, 2024, including €19 million worth of work still to be done on hydrogen stations currently in production, most of which should be converted into sales in the 2024/2025 financial year.

Since the end of the year, HRS has also booked new orders for 2 HRS14 stations from Element 2 in the UK and an Italian manufacturer.

HRS maintains its ambition to achieve sales of €85 million with a time horizon to be confirmed, by building on the potential of its pipeline, while aiming for significant profitability with a positive EBIT margin as early as 2026.

HRS continues to lead an ambitious project, with a strong industrial base, an unrivalled installed base of stations with capacities in excess of 200 kg/day, a solid financial structure and the support of numerous commercial partners. Its development is underpinned by expertise that is unique in Europe, where concrete measures to promote the decarbonization of uses will enable hydrogen mobility infrastructures to become a key element in the ecological transition.

ACCELERATED INTERNATIONAL BUSINESS DEVELOPMENT IN HIGH-POTENTIAL REGIONS

At the same time, HRS is continuing to develop its business in highly attractive international regions, which could be new growth drivers for the sales pipeline:

In the Middle East, HRS confirmed at COP28 the strong potential of this market in terms of hydrogen mobility. On June 18, 2024, HRS announced the first order for an HRS14 hydrogen station for a project developer in Saudi Arabia. The station, today operational, will fuel a fleet of 20 buses and light vehicles. This first sale outside Europe, with significant economic opportunities, marks a decisive step in HRS' strategy to expand in high-potential regions such as the Middle East;
North America remains a priority target for commercial development: according to a study published by the Fuel Cell and Hydrogen Energy Association (FCHEA)[4] , entitled "Road Map to a US Hydrogen Economy Full Report", the US hydrogen mobility market is expected to grow strongly, with a projected 4,300 stations specifically for the needs of Heavy Duty Vehicles (HDVs), whereas the country currently has just 68 stations. According to the same report, by 2030, 1.2 million[5] FCEVs are expected to be sold in the USA. Finally, California has set ambitious targets to create a network of 1,000 hydrogen stations by 2030 and has just announced the creation of the 1^er hydrogen hub for the USA. With the recent financial support of BPI France[6] for a total of €1.3 million, HRS aims to open a subsidiary in the United States in 2024, where there is strong political support for the development of hydrogen, with over $50 billion in announced plans;
In China, HRS is continuing its studies of the market, suppliers and local contacts in order to estimate local development potential before possibly committing additional resources;
In Asia-Pacific, with the recruitment of a business developer to address the region where over 20 station projects have already been identified and we are participating in calls for tender.

NEXT PUBLICATION

Half-year sales 2024/2025 end of January 2025 after market close

Ceres Power Reports Interim Results for the Six Months Ended 30 June 2022