Carbon Revolution Public Limited Company (CREVF) Earnings Call Transcript & Summary

Good morning, shareholders and guests. My name is James Douglas, and I am the Chair of Carbon Revolution. On behalf of the Board and Management of Carbon Revolution, I extend a warm welcome to all of you to the company's second Annual General Meeting after our listing. I'm informed that we have a quorum present, and accordingly, I declare this meeting open. I'm disappointed that we cannot be together in person, but in response to government restrictions and the potential health risks arising from the COVID-19 pandemic, the Board determined to hold this year's Annual General Meeting virtually. We very much appreciate your understanding at this time, and we thank you for joining our virtual meeting. We've published on our website and on the ASX an online AGM guide. This is also available to download at the bottom of your screen. I'll go through the procedural and technical matters for the AGM shortly. But before proceeding with the formal parts of the meeting, I would like to acknowledge the many traditional owners of the lands, which we are joining the meeting from today. For those of us here at Coventry Street, Southbank, we acknowledge the traditional owners of the land on which we are meeting, the Wurundjeri People. And we also acknowledge the Wadawurrung People, the traditional owners of the land, where our Geelong facility is located. We pay our respects to elders, past, present and emerging of all the traditional owners of the many lands we are joining the meeting from today. I'd like to start by introducing our Board of Directors who are all present with me today. Jake Dingle, our Chief Executive Officer and Managing Director; Lucia Cade; Dale McKee; Mark Bernhard. Also joining us by phone today is Stephen Roche from our external auditor, Deloitte Touche Tohmatsu. He is available to answer questions shareholders might have concerning the conduct of the audit, preparation and content of the auditor's report, the company's accounting policies and the auditor's independence. We welcome and thank Stephen for his attendance today. I'll now talk through the procedural matters for this meeting. Firstly, in relation to shareholder questions, we are only taking questions from shareholders today or their representatives. You can submit questions at any time. You do not need to wait until the relevant item of business, and we encourage you to submit your questions as soon as possible. We will then seek to address your questions during the discussion on the appropriate item of business. We will endeavor to address -- to answer as many questions from shareholders as we can. [Operator Instructions]. You will need to provide your details, including shareholder reference number, your SRN, or holder identification number, the HIN, to be verified as a shareholder or proxy holder. Questions sent via the online meeting platform will be moderated to avoid repetition. And if questions are particularly lengthy, we may need to summarize them in the interest of time. David Nock, our Company Secretary, will be the moderator, and I ask that all questions be directed to me as Chair in the first instance. Secondly, voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, polling on all items is open now. Shareholders attending the meeting via this online platform will be able to cast their vote using the electronic voting card, which you'll receive after clicking the Get a Voting Card button. Please refer to the online portal guide or use the help line specified. Again, you will need to provide your details, including shareholder reference number or holder identification number to be verified as a security holder or proxy holder. You can change your vote up until the time I declare the voting closed. I will give you a warning before I close voting towards the end of the meeting. Any appointed proxy, who has been given discretion on how to vote, should vote in the same manner. Any appointed proxy that has been directed to vote in a certain manner and has no discretionary votes to cast does not need to vote as those votes will automatically be accounted in accordance with those directions. If you experience any difficulties with the online platform, the helpline number is displayed at the top of the page and is 1800-990-363. If we do experience technical difficulties during the meeting, we will assess the next steps based on the nature of the problem. In the event of a complete failure of technology, our share registrar, Link Market Services, will contact shareholders directly via e-mail and text to advise a recess or adjournment, and we'll also provide an update on the ASX. I'll now give you a short overview of the past year, after which Jake will provide a more detailed presentation on the business and its performance and expectations for 2022. Carbon Revolution is a proud Australian technology company, with a strong heritage in Geelong. Our vision is to be the world leader in lightweight wheels. We plan to build a business that disrupts the existing global wheel market, and ultimately, to produce millions of wheels a year. We are delivering on this vision, with a growing track record of production and sales as the global innovator and first-to-market for single-piece carbon fiber wheels. Our carbon fiber wheels are better than aluminum and steel wheels in every important element. They are materially lighter, reduce road noise, deliver significant efficiency gains, and, frankly, just look incredible. If you want an example of that, take a look at the wheels on the new Corvette Z06 released this week. But ultimately, our wheels are an efficiency technology that deliver enhanced range for electric vehicles, increased fuel economy for internal combustion engine vehicles, and better performance for any car. We originally commercialized them on high-performance sports cars, like the Ford GT, the GT350R, the Ferrari Pista, and the Corvette Z06. But the major applications in the future will be on electric vehicles, where the efficiency gains, range enhancement and road noise reduction potentially have the greatest impact. For designers, we've just made wheels much cooler. We are only starting to work with our design partners at the OEMs now on a whole new design language made possible by carbon fiber's characteristics. Larger sizes, different shapes and aerodynamic structures that are not viable in metal can be done in carbon. Designers are beginning to understand this and incorporate it in future designs. And we believe this will drive further demand for our wheels in the future. Our wheels are on cars made by Ford, Ferrari, Renault and General Motors, and we have contracts to supply wheels to existing and new customers for future programs. We are confident that our long-term growth prospects continue to be very strong. During the past year, Ferrari launched 2 new cars that feature our carbon fiber wheels, the 296 GTB and the 812 Competizione. These new wheels are now in production. Carbon Revolution was recognized as a partner of Ferrari at the 812 Competizione launch. And at the launch of the 296 GTB later in June, Ferrari highlighted the potential of our technology when they said, "the carbon fiber wheel option sets a whole new performance benchmark." And for those who might not have seen the news earlier this week, I'm pleased to announce that on Tuesday night, General Motors released their new Corvette Z06 with our carbon fiber wheels. GM will be a key partner for us in the future, and this is our first program with them on a critically important halo car. Our wheels are a disruptive technology. And you will see this more and more as we announce new programs in the future. We are seeing strong demand for much more than high-performance sports cars, particularly in the emerging EV and EV truck, SUV segments, and we believe that this will drive very strong growth in new programs and sales over the next 5 years. And we're just getting started. There are broader applications beyond automotive. For example, we're working with the Australian Defense Force on the design of the wheels for the CH-47 Chinook helicopter as part of our expansion into the aerospace sector. But there is no escaping that this past year has been a challenging one for the company. We were heavily impacted by issues related to the COVID-19 pandemic. We saw factory closures by our key customers as a result of it, and consequential impacts such as the ongoing supply chain issues, particularly for computer chips. As a result, our financial year 2021 revenue of $34.9 million was 10% below the previous year. While the operational issues were disappointing and difficult to manage, we are confident that our long-term growth prospects are very strong. During the financial year, we were successful in securing formal agreements to initiate detailed design and engineering for 4 new wheel programs. The expected volumes for these 4 new programs are significant and underpinned our design to invest in the development of the Mega-line. In April, we raised $95 million in new equity, primarily to fund the Mega-line expansion, and I want to thank all our investors for supporting us in this important capital raising. The Mega-line is expected to provide a step change in production scale and economics that will enable the company to deliver larger volume programs to a broader cross section of the market. On behalf of the Board, we'd like to thank each and every member of the Carbon Revolution team for their considerable efforts and achievements throughout the financial year, particularly in the face of continued challenges of COVID-19. During the year, Bruce Griffiths and Peter Lewinsky stepped down from the Board. Bruce retired in November 2020. And I want to thank Bruce for his 8 years of leadership, guidance and mentoring as we move from a start-up to commercialization and completed our IPO. He was a partner to me and the founders for almost a decade, helping guide us through early commercialization of our technology. Peter Lewinsky also stepped down from the Board in July this year, and I thank Peter for the insight and guidance he provided, especially in respect of capital markets and managing complex financial and operational issues from before our IPO and through our first 19 months as a listed company. We now have a Board that is the right size for us. It is efficient and capable and focused on maximizing the opportunities before us. I'd also like to thank our other nonexecutive directors, Lucia, Dale and Mark. I'd like to thank our customers, suppliers, partners, financiers and advisers for their contribution and collaboration through the year. Finally, thank you to our Carbon Revolution shareholders who've recognized the strategic growth opportunities ahead for the company and invested to help us execute on our plans. This past year was a challenging one, and there remains significant uncertainty in relation to the ongoing impacts of the COVID-19 pandemic on the global economy and automotive supply chains. However, we are really excited about the year ahead and confident about the long-term potential of our technology and our business. We look forward to keeping you updated on our progress. I now want to hand over to our Chief Executive Officer and Managing Director, Jake Dingle. Thanks, Jake.

Thank you, James, and good morning, everyone. Good afternoon and good evening also to those that we know are dialing in from overseas today. Before I recap on FY '21, I want to reemphasize why we believe Carbon Revolution has such an exciting and high-growth future. Our customers are incredibly excited about carbon fiber wheels. It's clear that carbon fiber wheels are now already seen as the performance technology of choice for making cars perform at the highest level. So the Ferrari SF90 Stradale recently broke 2 new and significant records, including fastest lap at the Indianapolis track. This was done on our wheels as was their 0 to 100 time of 2 seconds flat. This adds to the records that have already fallen to vehicles like the Ferrari Pista and the Renault Megane. This has been done with our wheels on tracks like the Nürburgring and Hockenheim over the past couple of years. In exciting recent news at 3 AM Wednesday morning our time, the Z06 Corvette was launched in Detroit by General Motors, sporting, again, wheels developed and supplied by Carbon Revolution. General Motors is quoted as saying that wheels provide a 1 to 1.5 second advantage on a 2-minute lap in back-to-back trials, which is an enormous number. They've said this transforms the driving experience. Even more importantly for us, they talked about how incredibly strong the wheels are, and how they outperform aluminum wheels in some of the harshest durability testing that's performed on all of their wheels. So what we offer is really very much more than just a performance technology. Our wheels are an efficiency technology, efficiency can be delivered as enhanced performance, and it can be delivered as better economy. Our wheels deliver both at once, while, at the same time, offering something that can be stronger than a conventional wheel and with incredible aesthetics that are truly desirable to end customers across many different vehicle applications. What's becoming more and more clearly understood by our customers as the EV replacement cycle takes hold globally are the range extension and noise reduction benefits that come from our technology. When we combine our significant mass and inertia benefits with the ability to create aerodynamically efficient shapes without weight or durability trade-offs, the value equation is huge. Vehicles are getting heavier due to battery mass and range anxiety is a key driver of the major OEMs development programs and their decision-making. We are, therefore, very well positioned for this transition in the global automotive space. To add to this, the size of wheels has been increasing for at least the past 25 to 30 years, and this trend is continuing. We're well progressed with launching 23-inch wheels for our first SUV program, and we have 24-inch wheels coming down the pipeline as part of our first Mega-line suite of programs. To do wheels of this size in aluminum is prohibitively heavy. As wheels get bigger and as they need to take these heavier and heavier vehicle loads, our technology extends its leave even further. 50% weight savings are certainly feasible. And for these bigger wheels, that can mean remarkable weight reductions across the vehicle of well over 50 kilos, and even more like 70 kilograms in cases where 5 wheels are offered. That's a really enormous and exciting amount of weight reduction for any vehicle design and engineering team. It's very hard to find anything that can deliver that much weight reduction. It's unheard of for it to also provide knock-on benefits such as NVH or noise reduction, aerodynamics, enhanced durability and the amazing styling opportunities that our customers design studios love to work with. So momentum certainly building in terms of demand, both with existing and new customers. Just in the past week, we have signed another formal agreement to kick off the design and engineering work for a new and exciting SUV program. This agreement is very similar to the Ford that underpinned our decision to kick off the Mega-line earlier this year. So hopefully, now you'll better appreciate why our customers are very excited about our carbon fiber wheels. As James stated earlier, Carbon Revolution's vision is to be the global leader in lightweight wheels and to establish our technology as a true disruptor in the global automotive market. We intend to be disruptive for all the right reasons. What we can provide is a range extension leg up for all of the global OEMs that are now transitioning with increasing rapidity to an all-electric future. Range is the currency that everyone is now dealing in. To quote 1 of our customers recently ranges the currency of the realm. Despite the enormous progress that's been made with our customers and our technology since we listed the company, the past year, as James said, has been a very challenging one. Along with the majority of the global automotive industry, we've been heavily impacted by issues relating to the COVID-19 pandemic. In FY '21, we reported a loss after tax of $32 million. Our FY '21 revenue of $35 million was 10% below the previous year. The company sales were negatively impacted in the first half of the year when 1 key customer was significantly impacted by COVID-19. It closed part of its manufacturing operation and canceled forecast purchases for approximately 6 months. We were further impacted in the second half when another key customer's forecast orders were canceled due to extended plant shutdown. This was driven by the global semiconductor chip shortage. While there's ongoing uncertainty in global automotive supply chains, each of these customers have resumed production. A change in our product sales mix, reduced production volumes and costs associated with finishing work in progress had a negative impact on our gross margins during FY '21. As expected, we took significant steps forward on key industrialization activities throughout FY '21, though. The early part of the year included the commissioning of new industrialized equipment, delivering new capacity required for awarded and not yet announced programs. The key items in that category included additional high-pressure molding capacity, taking our total number of high-pressure molding stations to 4; a new automated face layout conveyor line, which introduces new process automation and eliminates the manual movement of work in progress. There's an additional multi-head tailored fiber placement machine. There's additional machining -- it was an additional machining center and a second thermal barrier coating cell all added during the period. The first of our third-generation automated rim layup machines, or ARL 3s, were installed as well. This brings further automation and cycle time improvements to what is a very key production step. These automated manufacturing processes are the key building blocks of the Mega-line technology. Phase 1 Mega-line orders for long lead items have now been placed, and our principal construction partner has been contracted. We expect assets to be constructed offsite during the remainder of this calendar year and installed for the first phase to commence from early calendar year '22. We've now enhanced the Mega-line design process to incorporate an earlier inclusion of the existing high-pressure molding equipment and certain other existing equipment. This is scheduled to occur during calendar '22. This will enable the existing high-pressure molding equipment to benefit from the increased operational efficiencies of the Mega-line technology, and it enables an earlier validation of new program parts on the Mega-line. This approach allows for timely installation of new capacity, in line with new program capacity requirements, and accordingly, better utilization of all high-pressure molding as volumes grow. We're confident that this enhancement to the plan will provide multiple benefits, including the improved economics of existing programs and a smoother launch of the new programs that underpin the Mega-line investment. These are expected to come into production from calendar year '23, as we've previously said. We strengthened our company's technology platform during the year by completing the development and rollout of a key foundation technology called Diamond Weave. This was previously referred to as fascia. This technology dramatically improves the first-time aesthetic quality of the wheels, and in turn, it drives a significant improvement in part flow and reduction in labor cost per wheel. We've applied for a patent for this technology, which will be added to the valuable intellectual property portfolio developed and owned by the company. Research and development continues to be a focus for us and is critical to the success of the company. As James highlighted, through FY '21, we were successful in securing formal agreements to initiate detailed design and engineering to 4 new wheel programs. These programs, once through the engineering and design phases, are expected to enter production in calendar year '23 and calendar year '24. Since the end of FY '21, we've secured an additional 2 such formal agreements, and I mentioned 1 of those earlier. Importantly, a significant proportion of these new programs involve higher volume vehicle platforms and are for electric vehicles with large wheel formats. They represent the next phase of the market's adoption of our technology. As I mentioned earlier, the most recent of these was just this week from another SUV program, which just emphasizes how exciting the future is for Carbon Revolution. As a team, we're very excited to have embarked on this next phase in our development as a company at a time of transition by major global carmakers towards an EV future. We significantly strengthened our leadership capability to support our growth strategy through the year as well, with a focus on operational delivery and enhancement of our OEM relationships. We welcomed Ron Collins in North America as Vice President of North America; Jo Markham as Director of Customer Excellence; and Andrew Higginbotham as Director of Operations. They all join us after long careers with leading global OEMs. We also enhanced our foundation business systems through implementation of a new enterprise resource planning system, or ERP, payroll system, time and attendance and an integrated human resource management system during the year. These transformational activities enable the support, management and reporting functions to efficiently scale as production volumes are expected to increase rapidly over the coming years. As we look forward to the short term, or in the short term, the company's key focus areas for this financial year are to deliver production ramp of recently launched programs, one of which you've just seen launched in the past week, to deliver operational efficiencies in our current processes to lower our wheel cost, to progress the programs underpinning the Mega-line development through engineering and design phases and to progress the Phase 1 Mega-line project through detailed design, equipment procurement and commencement of commissioning activities. We plan to take the increasing opportunities that our customers are now presenting to us to drive our technology into the larger scale and exciting electric vehicle programs that now dominate their planning horizons. We're increasingly confident in the major disruptive role that we can play in the automotive wheel industry. So again, echo James' comments, we really are only just getting started. I would like to thank you all as fellow shareholders for your support and for investing in Carbon Revolution to be part of our exciting future. And finally, I want to acknowledge and thank the remarkable team of people that make up Carbon Revolution. The passion and tenacity shown by this team continues to be quite incredible. In the face of a very challenging global and domestic environment, the progress that's been made in key areas of building the future of this business has been truly impressive. I look forward to you all being able to see and sharing the outcomes of this team's efforts and achievements over the coming months and years as we push ahead with our plan of disrupting the global automotive wheel industry. I'll now hand back to James for any Q&A and the formal items of business. Thank you.

Thank you, Jake. That was terrific. I believe we have a question?

Thanks, James. There are no questions online, but I understand that 1 question has come through on the phone line. I'm not sure if the call operator is able to put that through, if not?

[Operator Instructions]

Go ahead with the question, if you could.

Mr. Markus, your line is open.

In order with the question, introduce themselves and then ask the question, please.

I think we may come back to that. So I might turn to the formal items of business and we'll come back to questions as we go through the resolutions. Or at the end, we'll have time for further questions if there's things that we need to cover off. So turning to the formal items of business. Our Company's Secretary has confirmed that the notice of meeting was made available to all shareholders and other persons entitled to receive it within the required period. It's also accessible for download at the bottom of your screen. The matters requiring resolution are set out in detail in the notice of meeting. I will note that the renewal of the proportional takeover bids provision resolution requires a special resolution to be passed. This means more than 75% of the votes cast by shareholders entitled to vote must be received for this item to pass. Otherwise, all items requiring resolution today require only an ordinary resolution, meaning that to pass, it must be approved by more than 50% of the votes cast by shareholders entitled to vote. The proxy votes, which have been submitted in relation to each resolution, will be shown on the slide relating to that resolution before the item is voted. For context, there are approximately 206 million Carbon Revolution shares on issue, and 40% of the shares on issue have been cast as proxy votes. Where shareholders have appointed the Chair of today's meeting, that being me, as proxy, and have given the Chair discretion as to their vote, as indicated in the notice of meeting and proxy form, my intention is to vote all available proxies held by me in favor of each resolution. Please do submit any questions as soon as you can so that we can deal with questions relating to each resolution during the discussion on that resolution. The first item of business is the consideration of the financial report of the company... [Audio Gap] resolution for this item, it is an opportunity for shareholders to ask questions, and we have our auditor, Stephen Roche from Deloitte Touche Tohmatsu available to answer any questions you have on the conduct of the audit. I'll now respond to any questions or comments we have received on this item. Please note that we will focus specifically on the remuneration report later in the meeting.

There are no questions on this item, James.

Thank you. I understand that there are no questions on this item. So we'll now move to Item 2, the reelection of directors. Dale McKee and Mark Bernhard stand for reelection today. I want to start with Dale. Dale joined the Board in September 2018. He's the Chair of the Audit and Risk Committee, and he brings broad and extensive experience to the Board, particularly in areas of listed company governance. Dale's contributions are invaluable and enhance the effectiveness of the Board. Dale's profile is detailed in the notice of meeting, and I don't intend to elaborate further on it. But I will ask Dale to say a few words about himself and his contribution and vision for Carbon Revolution. Dale?

Thanks, James. Good morning, shareholders. It's great to have the opportunity to address you, although disappointing we're unable to physically be together yet. I'm an accountant by profession and was a partner at PwC serving the firm's largest listed clients in audit, accounting, transaction support, corporate governance and capital markets matters. I've worked at Pricewaterhouse in London, and whilst based in Melbourne, spent extended periods working on clients in Asia, the U.S. and Europe. Our career highlight was leading the creation of the risk management consulting practice at Pricewaterhouse. This business is now a very significant practice area for the firm. I also worked in the automotive sector in Australia for a number of years, in particular as lead PwC partner on the Ford Australia account. In 2018, I retired from the PwC partnership after 25 years as a partner. I was really thrilled to have the opportunity to serve as a Director of Carbon Revolution for several reasons. The qualities of the product itself really excite me. James and Jake have both talked of these qualities. The wheel is so fundamental to the way we live and the carbon fiber wheel is simply superior to every -- in every way to the current wheel technologies. It's lighter, stronger, quieter, more aerodynamic and is beautiful to look at. Mobility is proceeding rapidly to a new world, where these qualities will be highly relevant to reduce fuel use for internal combustion engines and to extend the range and utility of new electric vehicles. Opportunities for the technology in adjacent industries like aerospace are also significant. I was also very attracted to working with the team at Carbon Revolution who are an amazing group, and they're great at what they do and always want to do things the right way. And then there's the prospect of playing a role developing world-leading manufacturing technologies here in Australia. I was the auditor of Ford Australia during the period of the closure of car manufacturing in Australia, and this affected me profoundly. Also through the Ford role, and as auditor of Target, when I was the auditor of Coles Myer, I had developed an empathy for the Geelong community. So to have the opportunity to play a role in creating something truly meaningful for Australian manufacturing, especially in Geelong was extremely appealing. I joined the Board about 16 months prior to the listing in 2018. In my role since listing as Chairman of the Audit and Risk Committee, first and foremost, I am concerned with the company doing things the right way, integrity in the way we do business, respect in the way we treat each other and all stakeholders and honesty and transparency in reporting on how we're doing. As you would expect, for an emerging company like Carbon Revolution, especially during the recent disruption and volatility, there have been plenty of challenges for the whole team to be true to those qualities. But I'm confident that if you were sitting where I am, you would approve of the way your company has conducted itself. I'm as convinced as I've ever been, the Carbon Revolution can be very special in a global context, let alone for Australian manufacturing. I'm excited to be a shareholder, and I'm so very grateful to have had the opportunity to represent all shareholders as a Director. With your support, I would be very pleased to continue in that role. Thanks, James.

Well, thank you, Dale. Dale and I will now respond to any questions or comments we've received on this item.

There are no specific questions on this item, James.

Thank you. I understand there are no questions on this item. So if you have not already done so, please cast your vote now on this item. The proxy results are shown on the screen. I'll now turn to Mark Bernhard's reelection. Mark joined the Board in June 2019. He brings knowledgeable insights about the automotive industry and specific skills relevant to the company's business. His contribution is critical to the Board and management. A profile of Mark is detailed in the notice of meeting, and similarly, I don't intend to elaborate further on it. But I have asked Mark to say a few words about his reelection. Mark?

Thank you, James. Good morning, everyone, and thank you for your time today. As James mentioned, I joined the Board back in the middle of 2019. And since then, my resolve around the business has only strengthened. My background is in automotive, having spent over 30 years with General Motors across Europe, the U.S. and Asia, and, of course, here in Australia at Holden. I was the CFO in Australia during the global financial crisis, was CFO in China and at a joint venture at a time when we expanded from 1 to 3 brands, and from 1 to 3 manufacturing locations. I then returned here to Australia as Managing Director at Holden and oversaw the closure of our manufacturing operations back in 2017. My time at GM gives me a unique insight in being able to see our business from our customers' perspective. I've also held Board roles in Australia and China, and I'm currently on the board of Healthy Male, a not-for-profit organization, that provides evidence-based information for men's health, where I also Chair their Audit Committee. As an investor in this business, I'm sure it's well known that carbon fiber wheels allow us the capability to build lighter, stronger and more durable wheels than metal equivalents. And what excites me is being involved in unlocking and capitalizing on that opportunity. When you consider that the global new vehicle market is likely to be around 100 million units at the end of the decade, and each with 4 to 5 wheels depending on the spare wheel strategy, the word significant when we talk about the opportunity is an understatement. I've experienced massive growth during my time in China and being involved in another growth story is truly invigorating. And we're at an inflection point in the auto industry, with a dramatic shift to EVs in the next 10 to 15 years. And Carbon Revolution is ideally placed to support the OEMs in this transformational period. We're already seeing this momentum building highlighted by the new programs that underpin our Mega-line investment. From a personal standpoint, I bring a number of skills to the table, foundational skills of financial acumen and strategy and governance, developed through education and training as an accountant, MBA, and AICD graduate and later in my career at Stanford University, all of this enhanced through a senior management and Board roles. I have the automotive experience working in General Motors, which allows me to bring a different perspective to discussions and the opportunity to leverage contacts across the industry. I have global experience where my role saw me working internationally for about 15 years in diverse markets from mature to rapidly expanding, and in joint ventures and with OEM partners. These skills allow me to not only contribute to the Board, but also the Audit and Risk Committee and the Remuneration and Nomination Committee, where I'm an active member of those teams. When I joined Carbon Revolution, I was excited to again be involved in the Australian manufacturing industry, where we make things, but this business is more than making things. Our technology is world-class, and we're taking that technology to the world, whether that be in our product, which is currently out in front of all the global competitors, or our advanced manufacturing processes through our people, who have a passion, a passion that's infectious and motivation for this business and our product. Lastly, but importantly, is also our approach to ESG, and the frameworks that we're developing this year that I believe will complement and help drive our long-term success. I'm energized to be able to continue for another term and build on what is already a terrific platform to make this Australian business a key supplier of the best wheels on the planet. I really hope I have the support of you, our investors, to do that. Thank you, James.

Thank you, Mark. Mark and I will now respond to any questions or comments we've received on this item.

There are no specific questions for this item, James.

Thank you. I understand there are no questions. So if you've not already done so, please cast your vote now on this item. The proxy results are shown on the screen. The third item is the adoption of the 2021 remuneration report. The remuneration report on Pages 37 to 73 of the company's 2021 annual report sets out the remuneration policies of the company and reports on the remuneration arrangements in place for the company's key management personnel during the year ended 30 June, 2021. Lucia Cade, Chairs our Remuneration and Nominations Committee, and I've asked her to provide some commentary on our approach to remuneration. Lucia?

Thank you, James. Good morning, shareholders. So on behalf of the Carbon Revolution Board of Directors, I'm pleased to present our remuneration report for the 2021 financial year, our first full year of reporting as an ASX-listed entity. As you've heard from James and Jake, while operating conditions have been globally difficult, which has translated locally, it's also been another year of substantial progress towards our industrialization strategy and the increased adoption of our technology across a broader range of vehicles. Our aim with this remuneration report is to explain our remuneration framework and the pay outcomes in a clear and transparent way, our philosophy in the framework design and our governance of its implementation. Carbon Revolution's remuneration framework is designed to be performance-based, market competitive and to pay fairly for achieving the business strategy that we believe will deliver sustainable value to shareholders and to employees. It aims to promote employee ownership from the factory floor to the Board to align the interests of employees and shareholders. The Board's Remuneration and Nominations Committee has designed the balance of financial and nonfinancial incentives and the detail of those incentives to focus on what we believe are the drivers of current and future success of the company. The report outlines the detail of the assessment to award the financial year '21 short-term incentive at 40%, reflecting that while revenue and profitability targets have not been achieved, efforts to preserve cash and achieve the key strategic business development goals appropriately reflect progress towards securing future growth. As shareholders will appreciate, we are in a relatively long lead time business. The report also outlines the performance conditions that we set for the financial year '21 long-term incentive, the review of the overall structure of the long-term incentive, enhancements that we've made to the design of the short-term incentive and the market benchmarking that we've undertaken of all executive remuneration. The final area that I'd like to highlight is that the report also outlines the initiatives that we've implemented during the year to promote further employee ownership throughout the company, including the continuation of the tax exempt employee ownership plan, the introduction of a broadly available employee rights plan and a nonexecutive director fee sacrifice plan. I'd like to close with thanking management and the team and all the employees for their substantial commitment and pioneering achievements towards our future growth and to acknowledge the challenging year for shareholders and my appreciation, all our appreciation of your ongoing support as we implement our exciting growth strategy. So I commend to you the remuneration report for 2021.

Thank you, Lucia. Please note that the vote on this resolution is advisory only and does not bind the directors or the company. I'll now respond to any questions or comments we've received on this item.

There are no specific questions on this item.

Thank you, David. I understand there are no questions on this item. So if you have not already done so, please cast your vote now on this item. The proxy results are shown on the screen. Item 4 is the proposed grant of short-term incentive rights to the Chief Executive in relation to his 2021 Short-term Incentive Award. The company's prospectus dated 8 November, 2019, contained a summary of the short-term incentive awards intended to be granted by the company to the Chief Executive and other executives in respect of the 2019 financial year and future periods. Similar to last year, shareholder approval is being sought because the Board has decided to deliver the Chief Executive's 2021 short-term incentive award entirely in equity as opposed to 50% in cash and 50% in equity. I'll now respond to any questions or comments we've received on this item.

No questions or comments on this item, James.

Thank you, David. As there are no questions on this item. If you have not already done so, please cast your vote now on this item and the proxy results are shown on the screen. Item 5 is the proposed grant of options to the Chief Executive under the financial year 2022 long-term incentive plan. The Board proposes to grant the 2022 options to further align the Chief Executive's reward with long-term shareholder returns and to encourage decisions aimed at accelerating the growth of the company and focusing on creating sustainable results over the long term. The grant of 2022 options follows a strategic review of the company's long-term incentive plan, as noted by Lucia, and is detailed in the remuneration report that was published in August. The notice of meeting contains a summary of the material terms of the options. I'll now respond to any questions or comments we've received on this item.

No questions or comments on the item either, James.

Thank you, David. As there are no questions on this item, I encourage you if you have not already done so, please cast your vote now on this item, and the proxy results are shown on the screen. Now turning to item 6, ratification of the issue of placement shares. On the fifth of May 2021, the company announced it had raised $41.6 million through an underwritten institutional placement and issued 25,977,466 fully paid ordinary shares in the company at a price of $1.60 per share. The proceeds from the placement are being primarily used to fund the construction of the first phase of the Mega-line, which, once complete, will enable the company to produce an additional 75,000 wheels per year. Further details about the equity raise can be found in the materials lodged with the ASX on 23 April, 2021. The company issued the placement shares without prior shareholder approval, pursuant to its 15% annual placement capacity under Listing Rule 7.1. The company now seeks shareholder approval under Listing Rule 7.4 to ratify the issue of the placement shares in order to reinstate the company's placement capacity. I'll now respond to any questions or comments we have received on this item.

There are no questions or comments on this item either.

Thank you, David. As there are no questions on this item. I encourage you, if you have not already done so, to please cast your vote now on this item. The proxy results are shown on the screen. I'll now turn to Item 7. The renewal of the proportional takeover bids provision. The Board considers the renewal of the proportional takeover provision to be in the best interest of shareholders. If approved, it will be renewed for a further 3 years from the date of this meeting. The details of the effects, the advantages and disadvantages of the provision are set out in the notice of meeting. And I'll now respond to any questions or comments we've received on this item.

There are no questions on this item either.

Thank you. As there's no questions, again, I'll encourage you if you have not already done so, please cast your vote now on this item, and you can see the proxy results shown on the screen. Shareholders and guests. That concludes our discussion on the formal items of business. And I'll now move to any final questions that have come through online or over the shareholder phone line.

We have received 1 question online on a general business topic from David Horton. And the question is, I'll read it out. My question is related to the share price, which has been dismal, particularly since the latest capital raising. What actions are the Board doing to ensure the market is aware of the company value and more fairly reflected in the share price.

Well, thank you, David. I might make a few comments on that first and then ask Jake to elaborate in more detail. So obviously, I'm a shareholder in the company. And like other shareholders, I'm disappointed in where our share price currently is. And I also believe that the market is grossly undervaluing the future potential and excitement around our company and the disruptive potential we have for the global wheel market. So I'd obviously like to see us in a much better position than we're currently in. I think you can rest assured that we are doing all that we can to make sure that, over time, our share price appreciates to where it should be. But particularly, we're focused on delivering the key elements, both short term and long term, that will set up our company for success. So in the short term, through this year, it's about ensuring the best possible outcome in terms of sales, it's about driving our costs down as quickly and as effectively as we can in terms of production costs, and it's about continuing to deliver the development of the mega line on budget and on time, which is what we're currently doing. Longer term for this company, the key, and we're very focused on this, is delivering new significant wheel programs that will drive very significant uplift in growth over the long term. And as Jake mentioned, we've obviously had an additional one of those through this week. So it really is about delivering what we said we would do consistently quarter-on-quarter, year-on-year and driving to that very, very significant growth. As we said -- as I said at the start, our vision is to be the global leader in lightweight wheels, but importantly, too, to manufacture millions of wheels per year, and that is where our focus is getting to that endpoint. Jake, I don't know if you want to add to that?

I would echo all of those comments, James. I think from the short-term perspective, we are very confident in the plan that we have to deliver operational outcomes, both from a sales point of view and the all-important operating cost perspective through this financial year and doing what we said that we will do. The team is very strong and the plan is very robust, and we're confident in delivering that and the impact that, that will have as that is reported. I think the launches that we have coming up for programs that are awarded and working their way through to the start of production, delivering those. And as they come into the market and are seen publicly, there's a significant impact in terms of the confidence in what the business is doing from us achieving those. We are also confident that we're on track to do those. And then finally, as we've talked about, the long-term pipeline and opportunities for the business as a disruptor and something which is being genuinely supported and accelerated by the shift to an electric vehicle future really underpin the future opportunity and the enormous value we see in the overall application of this technology for the long term. So I think the very immediate operational delivery for this financial year, the delivery of programs that are already awarded that are working their way through to the start of production, and then finally, building out that pipeline, which we are now feeling a pull for rather than feeling that we have to push. We're being pulled into these programs by OEM teams who certainly understand the benefits of significant weight savings and how important that is with vehicles that are just getting heavier. I think those things, once recognized and more visible, will certainly help to support the value and everyone's understanding of the value of what we've created here.

Thank you, Jake.

There are no further questions on the portal, just confirming there's nothing through on the phone line. It appears that there isn't.

Thank you, David. So as we have no further questions from shareholders, I'll then encourage shareholders participating who have not yet voted to now submit their votes via the online platform. [Voting]

Thank you, shareholders and guests. This brings us to the end of the 2021 AGM. I now declare the meeting closed. Thank you for your participation today, and for your support of Carbon Revolution. We're now going to play a short video and then voting will close 5 minutes after the end of the video. Please note as Link Market Services will need time to count and audit all the votes submitted online today, the results of the meeting will be announced to the ASX shortly after the completion of the meeting. Thank you again for your support and for joining us today.