Leclanché SA (LECN) Earnings Call Transcript & Summary

Good morning. Welcome to Leclanché 2021 AGM, and thank you for attending. [Foreign Language] I would like to mention a few technical points before we start. [Foreign Language] If you would like to change the language, you can choose from the menu on the link at the bottom of the window. [Foreign Language] [Operator Instructions] In order to change the view, you can choose live video to see the speaker or only -- or presentation to see the speaker and the presentation as well. So now I would like to leave the floor to Mr. Stefan Müller, our Chairman.

Dear shareholders, dear ladies and gentlemen, [Foreign Language]. Welcome to this Annual General Meeting of the Shareholders of Leclanché SA. The unprecedented circumstances caused by the coronavirus pandemics are the reason that this Annual General Meeting takes place for the second time an unusual form, an Annual General Meeting without any shareholders physically present. In accordance with Article 8 of the Federal Act on the Statutory Principles for the Federal Council Ordinance on Combating the COVID-19 Epidemic and Article 27 of the Ordinance 3 on Measures to Combat the Coronavirus, the Board of Directors has, therefore, decided that the shareholders of Leclanché SA may exercise their rights at the Annual General Meeting on the 30th of June 2021, exclusively through the independent representative. Personal attendance of shareholders or shareholders’ representatives other than the independent representative is not permitted. However, this measure made it possible to hold the Annual General Meeting despite the current COVID-19 situation. There are only a limited number of persons here today, and we all follow the guidance from the Federal Office of Public Health. In particular, we make sure that the social distancing measures are respected. Physically present in the room are Mr. Anil Srivastava, Chief Executive Officer; Mr. Hubert Angleys, Chief Financial Officer and Chief Operating Officer; Madam Corinne Pointet, Partner at PricewaterhouseCoopers audit; Me. Manuel Isler, attorney-at-law, the independent representative of the shareholders; Me. Gabriel Cottier, notary public, who will notarize some of the resolutions of today's meeting; Mr. Jean-François Stenger, Secretary, that will take the minutes of this meeting. The Annual General Meeting will be conducted in English, which has simultaneous translation into French and German. The formal part of this Annual General Meeting will be divided into 2 parts. Our Chief Executive Officer, Mr. Anil Srivastava, will provide you with an overview of the 2020 achievements and outlook for 2021; and our Chief Financial Officer, Mr. Hubert Angleys, will give you some explanations on the financial statements and report of 2020. We will then proceed with agenda items 1 to 11. Please note that we will have the opportunity to address your questions in writing during the meeting through the webcast. Questions will be answered orally during a Q&A session. The Q&A session will be limited to 45 minutes. If you feel that your question has not been properly answered, you will have the possibility to ask it again by mail at info@leclanche.com. There will be a 30-minute break between the end of the formal Annual General Meeting and the Q&A session to notarize agenda items 7, 8 and 9.2. I will now hand over to Mr. Srivastava followed by Mr. Angleys.

Thank you, Mr. Chairman. [Foreign Language] and good morning. We have a lot to share with you. But first of all, I want to start by hoping that you and your loved ones, our dear shareholders, you are all fine during this current pandemic time. It's been strange last 12 to 18 months for almost everybody in the world. But what I can say that we kept a complete focus on the business by not stopping the production in 2020, though we had to reduce. We kept the focus on customer deliveries even though some deliveries indeed got delayed. And importantly, if I can say so, our colleagues, the employees of Leclanché SA, they all kept safe during this pandemic for now nearly 18 months. We have organized the day into 3 parts. First part will be covered by our Chief Financial Officer to commentary, summarize the 2020 financials. Then we would come back and give you a very detailed business operations update, assisted by my colleagues, CTO, Pierre Blanc; and EVP for Customer Management, Phil Broad. And then the last section in terms of 2020 and beyond, we will cover that and leave you with the key takeaways. That's how the day is organized. If I may, without further delay, I would like to request Hubert Angleys, our Chief Financial Officer, to present 2020 financial summary.

Good morning. Good morning to you all to all participants and to our respected shareholders. Kind of a 3 bullet point summary of the financial performance of the year for the company would be really, we still, I mean, managed to win a lot of new customer contracts, and Anil Srivastava will elaborate on that in the second part of this presentation. We have benefited for a continuous and very strong support from our majority shareholder, and I will elaborate on that during my presentation. And the results that we have delivered in 2020 are really confirming that the strategy, which has been approved by our Board of Directors a couple of years ago, I think, was definitely the right one, and we will also elaborate on this later on during this presentation. The consolidated income for the year 2020 was around CHF 24 million, which is an increase of 46% compared to 2019. That's a substantial improvement, and we will get back to this also during this presentation. The net loss, although lower than in 2019, remains very high, and we are still working on this to address this situation. It is, unfortunately, I think, just confirming what we have said already several times that the battery business is a scale business. And until we can reach the required production level volumes, I think, it's going to be very difficult for the company to be profitable. From a production perspective, good news is that we have reached a record production level in our cell factory in Willstätt, Germany of 180,000 cells. This is an unprecedented numbers, never produced by Leclanché in the past. This has contributed to reduce our production costs. But again, it is not sufficient considering that we have a nominal capacity in Willstätt of around 800,000 cells. And finally, I think we have enjoyed a continuous financial support of SEFAM, our majority shareholder. They have done it in different ways. The first one is, obviously, through an ongoing financing of the company's growth plan during the year 2020. And I will say a few words about 2021 as well. And finally, I think they have approved different balance sheet restructuring steps in the form of debt to equity conversion. They have converted almost CHF 51 million of loans, so debt of Leclanché to SEFAM in 2020. Another CHF 34 million of debt has been converted in March this year. And we have at the agenda of this AGM, a request made it to the shareholder to approve an additional conversion of almost CHF 30 million, which will have to be completed by the end of September 2021. Now like I did in the previous years, I'm going to provide you a few words of explanations behind each of the key lines of our profit and loss account and balance sheet. So let's start with the profit and loss account and the total income line. The increase in revenues of the plus 46% that I've mentioned earlier is stemming essentially from the eTransport business unit, which has delivered batteries for 6 vessels to Kongsberg Maritime. It is one of the several customers that we have delivered, but the growth comes essentially from deliveries in this marine segment to Kongsberg Maritime, one of our key customers. The stationary storage solution, especially battery system, BU was slightly behind 2019. This is due first to a slowdown in the grant of stationary projects partially due to the pandemic. We've seen a lot of projects being rescheduled or at least the decision schedule being extended due to the situation. And we have done a lot of work with big accounts, big customers in the specialty business unit, but we now start to see that similarly to what is happening in the eTransport BU. We are facing long development lead time for projects, especially in the military segment. If we look at the split of 2020 revenue by BU, we can clearly see that eTransport has been now our prevailing BU with more than CHF 13 million revenue in 2020, which is a shift from the previous years. You may remember that stationary has, I mean, been historically the main revenue provider of the company. It is also the consequence, I think, the lower revenue in stationary of the adoption of the BOO model, build-own-operate, for the St. Kitts project, and we will also get back to this during this presentation this morning. This -- I mean the substantial growth in eTransport is, as I said, I think, definitely validating the strategy, which was to invest massively over the past 5 years in R&D production, equipment and engineering. We have been able to be selected as the battery supplier of choice for -- by key customers and key system integrators. This is also something that will be detailed later on by Anil Srivastava in his presentation. eTransport revenue, I've mentioned it. So it's a Kongsberg, it's Damen. Damen is a Dutch shipyard. We delivered a vessel, which now is in operations in Canada on the Lake Ontario. And we have developed a lot of prototypes for customers like Bombardier and Toyota, the U.S. branch of Toyota -- truck branch of Toyota in United States. And the specialty business unit is still highly dependent upon military and medical customers. And as I said, we are facing significant development time, which we -- again, we are confident that we are going to build a strong customer network for the next few years. Moving on to the raw materials and consumable use. So this is obviously a line which raised many, many questions. We have restated this line to isolate what is the true gross margin. So specifically in this particular case, why are we selling our products at a loss and what's the impact of the 2 factories or Willstätt in Germany for the cell part and Yverdon for the module part, the underutilization of those 2 plants. So you can see that the amount is fairly significant. Out of the CHF 36 million negative gross margin, we count that CHF 10 million, I think, is directly coming from the underutilization of our production capacity. On stationary project, we have, I mean, delivered revenue of CHF 4 million with a cost of material of negative CHF 7 million, which means that gross margin negative CHF 3 million. It is essentially coming from the payment of liquidated damages for projects which have already a low margin. And it's also for projects which had been delivered in 2019 for some of them. So we do not have the corresponding revenue to put in front of the liquidated damages that had been paid for these projects. We have and, again, delivered eTransport project at a loss, and this was done -- I mean I should not say on purpose, but again, we are facing the issue of high cell cost and high module cost due to the under capacity utilization. And finally, we have faced, I think, delays in funding in 2020, which have resulted in additional costs for some projects. Typically, I think we had to pay some late delivery penalties to some of our customers, which obviously have impacted adversely our gross margin in 2020. On the positive side, we can clearly see that the specialty battery business remains a quite sustainable business despite the fact that it has a lower growth potential at least we estimate that growing in this business, I think, will take probably slightly longer than initially expected, but we delivered a north of 26% gross margin in 2020 in this business. And finally, we have been working very hard in 2020 in rebuilding the capacity of our Willstätt factory to what it was before the April 2016 fire. It is essentially by investing in additional formation towers, which was the equipment, which was destroyed by the fire in 2016, and we estimate that the plant will be back to full capacity before the end of this year. Moving on to operating expenses with a particular emphasis on personnel costs. You can see on this slide, a CHF 6 million increase, and I'm going to provide you with more details. So what I would like to first comment on is the small schedule on the bottom right part of this slide, you can see that the salary line has increased only by CHF 1.5 million, CHF 1.6 million and the social charges are by a kind of a proportionate amount. This is really reflecting the true cost impact of the additional 39 head count that we have hired in 2020. The pension cost line is an accounting entry, which is the result of the actuarial calculation of the Swiss pension plan. We had a significant credit to the P&L in 2019, which was offset by a significant increase in 2020, essentially due to the recruitments that we have done in 2020. So in terms of additional head count, 39 people. Because of the increase in production volume, we had to introduce 24/7 shifts in Germany to again maximize the use of our current production capacity, and we have introduced the 3 shift in Switzerland to produce our M2 modules, which, again, I think has been done through the recruitments of several operators and through the strengthening of the production management staff, both in Germany and in Switzerland. We have paid a particular attention on the industrialization part of our business. This is something where we were, let's say, a bit weak, and we have created several functions in this organization, which will allow us to address some of the quality problems that we have faced in the past by moving too quickly from the prototyping phase to the industrial phase. And finally, I think we have continued to strengthen our engineering teams for eTransport, and we are also -- we have still, and we are still investing in R&D and development resources to prepare the company for the future. Other operating expenses remained flat in 2020. I have provided on this slide the detail of each line. We have a few plus and minuses compared to 2019. We still have a high consulting fees line. The cost, I mean, appearing on this line is not entirely due to the recruitment of so-called consultants. We have used a lot of people, which we have -- whom we have treated as consultant, but in fact, they were replacing positions. And in most cases, it is because we were struggling to hire the profile that we needed for some of these positions. Therefore, in order for us to get access to immediate competencies, we have to go through consulting firms, and this is why this cost, I think, has been shown on this consulting and IP cost line. Travel cost. I mean we can obviously see that the immediate effect of the travel freeze due to the pandemic. We had a slight increase in our IP licenses and IT costs, which is stemming again from an increase in software licenses, also reflecting the additional number of engineers working for the company. And finally, transport and packaging has increased proportionately with the increased revenues. Finance cost remains quite high, CHF 7.6 million in 2019, almost CHF 8.7 million in 2020. It is coming from interests. Interests are ranging from 7.73% with the BCV/COVID-19 loan that we received backed by the Swiss Confederation and could go up to 12% for some of the loans, which have been granted by SEFAM in 2020. And finally, the finance fees, the CHF 3 million that you can see on this line have been paid to SEFAM and its financial advisers for, again, arranging the funding of the company in 2020. Financial results. So still, I think what I've tried to show you on this slide is how the company has been financed in 2020. So in 2019, we received almost CHF 50 million of cash inflows from our majority shareholder. And this amount increased to north of CHF 55 million in 2020. You have the breakdown between convertible loan, almost CHF 28 million and nonconvertible loan, almost CHF 31 million. We have received loans from different sources. The main one obviously has been SEFAM. We have received also a EUR 5 million loan from Eneris, and we have received a almost a CHF 5 million loan also from the Swiss Confederation through the Banque Cantonale Vaudoise, or BCV, as I mentioned earlier. The SEFAM loans are secured with the existing security package of the company. It is a pledge over the company's assets. There's no change from the previous years. And again, the security package allows the lenders to satisfy the secured claims with priority over creditors and shareholders in case we have to call upon this package. A few words about what is going to happen in 2021. Our majority shareholder or SEFAM has undertaken to continue support of the company, and they're going to do it, as I said, in different ways. They have accepted to convert 38 -- CHF 33.8 million of loans to Leclanché into equity. So this conversion took place in March 2021. As mentioned earlier, you would be asked to approve an additional conversion of debt of -- an amount of CHF 29.7 million, which will happen in 2021. These 2 conversions, and I will show you a few figures in a minute, I think allows the company to be almost in a positive equity as we speak, but will not be sufficient to allow the company to remain in a positive equity situation until the end of 2021, but we will get back to this in a few minutes. We have finally undertaken to provide an additional financing of CHF 60 million in 2021. To date, we have received almost CHF 33 million from SEFAM, as we speak. And finally, it is a recent development. They have committed to provide us a project loan for the St. Kitts project in an amount of CHF 12 million and this CHF 12 million have been already provided to the company on the 21st of May. However, I want to stress that the remaining CHF 27 million that we expect to receive from SEFAM are difficult to obtain. And the main reason for that is that from a compliance perspective, Luxembourg sub-funds, which we summarized with the acronym, SEFAM, have maxed out their investment of Leclanché. So there's clearly -- I mean a compliance issue in Luxembourg, which makes the use of this source of funds more difficult than what it has been in the past. So we are still working very actively with a very strong support from our majority shareholder with SEFAM, with their IFM, with their financial advisers to find different ways of routing funds to Leclanché so that we can continue deploying our growth plan. In order to prepare for the future but also to put in place a kind of a backup solution to this -- the difficulties we're experiencing with SEFAM, as mentioned before, Leclanché has engaged BTIG. BTIG is a U.S.-based investment bank, and we have mandated this bank to raise between CHF 250 million to CHF 300 million to deploy the growth plan of the company until 2025. This fundraising will obviously dilute our current majority shareholder who has agreed in principle to this capital increase. And Anil Srivastava will come back in his presentation on what is behind this CHF 250 million to CHF 300 million and what is the medium-term, long-term strategy of the company. So the CHF 60 million I've mentioned earlier are the results of 5 different new credit facilities that we have secured with the SEFAM. As mentioned earlier, we have received out of the almost CHF 60 million we expect to receive this year, we have received already almost CHF 33 million, and we are still looking for new investors in the form of debt or equity, who could relieve SEFAM of the financing of Leclanché until the end of 2021. Moving on to the balance sheet. Noncurrent assets increased slightly by almost CHF 9 million in 2019 versus 2020. It is the results of several events. The first one is increase in our property, plant and equipment. This is obviously the immediate result of investments in the Willstätt formation towers that I have mentioned earlier and in the new M3 module assembly line, which we have inaugurated 2 weeks ago. This asset has not been entirely capitalized. We're not entirely paid for it, but most part of the cost of this line appears in the CHF 17.7 million that you have in front of you. The increase in right-of-use assets, it's an IFRS 16 entry, it is the valuation of the lease contracts. And we have almost the corresponding amount sitting in the balance sheet on the liability side. Finally, intangible assets have also increased. It is the result of the capitalization of all the development work done on our functional safe BMS, battery management system, and also all the development work that has been done in parallel to the new module assembly line we have invested massively in the development of a new M3 module, which will become our baseline module as soon as in the coming weeks. And this amount is around CHF 1.8 million in total. The financial assets remained almost stable. It is primarily performance guarantees and other deposits that we have to provide to our customers in the stationary business units. And finally, the investment accounted for using the equity method is our almost 20% stake in Nexcharge, share capital, the Indian joint venture created in June 2018. Moving on to current assets where we see a slight reduction by almost the same CHF 9 million as with noncurrent assets. We've done a lot of work on inventories, trying to reduce our inventories, which is still fairly high. We have managed to eliminate some of our obsolete inventory. We also have to admit that we had to book in 2020 a CHF 2.4 million obsolescence reserve. Most part of this provision is the result of the alignment of modules that we have in our inventories now for several years with the new market price of the same modules. Trade receivables is slightly down, but is, again, reflecting the work that we have done on the business side. We still have loans to projects and another receivable line in an amount of CHF 1.9 million. We have still, although, I mean, lower by CHF 3 million than last year, we have still to make prepayment to suppliers. To be very honest with you, I think given the financial situation of the companies, it is difficult to follow Leclanché to enjoy terms from suppliers. So most of them asked for prepayment. And this is what is, I mean, reflected on this line. The project asset -- contract asset line remains stable. It is projects or goods, which have been delivered but not yet invoiced to the end customer. And finally, the cash and cash equivalent is the amount that we had on the bank account at the end of 2020. On the -- moving on to the liability side, with the loan, convertible and nonconvertible. This slide is more kind of the reference slide. I think it provides you with the detail of the loans that I've mentioned earlier between those provided by SEFAM and those provided by other sources of funding. So one is Eneris. You can see the CHF 5.4 million, which is the EUR 5 million loan I've mentioned earlier, and we have the CHF 504.4 million loan provided by BCV and backed by the Swiss Confederation. It is part of the support provided by Switzerland, 2 companies through the pandemic. Trade and other payables increased substantially. It is, on one side, reflecting capital expenditures and raw materials invoices that we have. So reflecting as they are increased activities of the company. The other lines, I think, are, I mean, self-explanatory. I think we have managed to reduce the accruals that we booked, I think, for various operational reasons. So on the accrual line and the payroll and social charges are proportionate to higher payroll. And finally, the contract liabilities went substantially up, and it is the direct effect of prepayments received from customers, which are also reflecting the increased activities of the company. Other liabilities, almost stable compared to last year. We have the effect of the defined benefit pension liability. Again, it is the difference between the Leclanché Swiss pension plan funded obligations and the planned fair value as of 31st December 2020. It is the technical entry based on the calculation done by our actuary. The lease liability is the counterparty to the same amount you've seen in the balance sheet in the asset part of the balance sheet. And finally, I think the provision is a provision that we have to book on for known losses on future projects. That's also an IFRS obligations. As soon as we know that the projects will be delivered at a loss, we have to accrue for these losses, therefore, meaning that we have not yet recognized necessarily the revenue for these projects. The total equity of the company was negative at the end of 2020 by CHF 21 million. I want to stress that the compliance -- or regulatory calculation of compliance of the company with the article of the Swiss Code of Obligations 725.2 has to be made on the statutory account of the Swiss entity. What you have in front of you is the consolidated balance sheet. The statutory accounts are, I mean, very similar. And the amount is not very much different in, again, the books of Leclanché SA, the Swiss entity. What I've tried to summarize on this chart is the different balance sheet restructuring measures, which have been taken in 2020 and will be taken in 2021. I have already alluded to those measures. So we have processed a capital increase of CHF 33.8 million in March this year. If we add up the losses of first quarter of 2021, the estimated net equity of the company at the end of March was around CHF 2 million. Adding the estimated Q2 and Q3 2021 losses to the 30th of September 2021 conversion, which we expect the shareholders to approve during this AGM, we will be almost in a kind of a neutral position in terms of net equity as of the end of September this year. And if we add up the estimated Q4 '21 losses, we will be negative an amount of around CHF 16 million at the end of December 2021. So that definitely calls for an additional capital increase of at least CHF 20 million to be in a position to present 2021 accounts with a positive equity. What I want to stress is that the different conversions that have been approved by our majority shareholder by SEFAM have resulted, I think, in saving of around CHF 9.5 million in interest payments until 31st December 2022. So I think that's an important statement. And we should be really grateful to our majority shareholders for accepting such a conversion. On one side, we pay them some fees to remunerate the work that they are doing on arranging financing of the company, arranging conversion of company's debt into equity. But on the other side, I think the payback is significant. As a conclusion, so I would like to say that despite, I think, the financial conditions, I think, which you have seen, I think, are still pretty much adverse. The pandemic has also not helped the company in 2020. But we are confident that we're still working to really lay the foundations to become a leading company in the field of energy storage. Today, there is nothing which tells us that the strategic decisions, which have been made and approved by our Board of Directors a few years ago, I think, have been wrong. We have faced, as mentioned, in 2020, a solid and sustainable development of the eTransport business. There is definitely a strong endorsement from our customers in the marine, the rail and in the truck segment. The Willstätt cell production capacity has almost returned to normal after the investment that we've made in a new formation tower. We have a lot of hope and expectations in the design of our new M3 module and in the line, which has been inaugurated a couple of weeks ago, which will really allow us to max out our capacity. As mentioned during this inauguration, I think the capacity will be increased by almost 6x. This only working in one shift. If we start talking about increasing the number of ships, I think it will be almost 12x capacity that we will have at our disposal. Finally, I think we have signed a lot of framework supply agreements in the eTransport sector in 2020 and '21. And again, I think Anil Srivastava will elaborate on that in his presentation. And this will really set the foundations for an exponential increase in revenues in 2022 and beyond.

Thank you. Thank you, Hubert. Thank you for a very short summary of our 2020 accounts. Let's get started now to the second section of management update presentation, if you will, which is to take you through the whole business operations. I will do that with my colleagues, as I mentioned at the start of the meeting. Let's take a look at what is the state of the business today as we speak, Leclanché at a glance. Our shareholders who have been with the company for a long time would recall that back in 2015, we made a pivotal decision to focus the company on what we call medium and heavy transport. So these are basically vehicles in train. Give me a second please. These are vehicles in trains, locomotive, marine vessels of all kind, bus, commercial trucks, medium and heavy transport. That's the decision we made back in 2015 and started to build a new business, which we today call eTransport business unit. The eTransport business unit is built on the vision and following executions from 2015. We also decided to focus the company on stationary energy storage systems, which we believe is complementary infrastructure to make the green mobility happen. Dear shareholders, your company is at the heart of energy transition. Your company is at the heart of energy transition, and we are addressing large markets. The eTransport market, we have chosen, medium and heavy transport is 115 gigawatt hours annual market growing at about 60% compound annual growth rate since past few years through to the year 2030. The energy storage business happens to be much larger, but also very fragmented. In energy storage business, we are selectively focused on certain segments of the market, which I will take you through during today's presentation. Important point to recap, the strategy Hubert mentioned earlier, eTransport strategy. Our markets are these: trains/locomotives, marine vessels, bus, commercial trucks. They have 2 common attributes, which is the basis of our strategy, 2 common attributes, 2 common attributes. Number one, most vehicles in this segment tend to operate in fleet; number two, they do on an average 6x, 6x more mileage than a passenger car. So the 2 key attributes: fleet operation and large mileage. That pretty much form the basis for our product development since 2015. By the time we arrived in 2018, we have emerged to be one of the largest vertically integrated battery systems provider in the world. I say with utmost respect, in the world. Our offer covers electrochemistry cells, battery modules, battery packs and energy management software. Along the way, we have developed a very strong portfolio of patents, more than 200 patents. Our technology is protected by more than 200 patents. We have gained an unrivaled experience of building large-scale lithium cells in Europe over the course of last 9 years. The product development and the superiority of our product, if I can say so, superior performance of our product is measured by one big thing, that is customer trust. We have won contracts with some of the world's largest OEMs in the different sectors of the market we have chosen to be in. Our contracted revenue, I will take you through more details of this. Our contracted revenue for delivery between today, 2021 through to the year 2026, is more than USD 500 million. I repeat more than USD 500 million of contracted revenue to be delivered in 2021 through to the year 2026. Second part, if you can see on technology, the products we have developed with huge amount of investment from you, shareholders, is the proof in the field. I’m pleased to share with you that our battery packs in the field have completed more than 1 million kilometers of run time, 1 million kilometers of run time. That is the best proof of any product technology one develops, how it performs in the marketplace. In addition to taking technology leadership, in addition to maturing as an industrial enterprise, in addition to winning customers, we also continue to innovate. We also continue to look at what else is happening in energy transition. We are in the business of heavy and -- heavy transport, particularly. Heavy transport requires complementary technologies for energy, such as hydrogen, hydrogen fuel cell. We have selectively chosen projects, which my colleague, Phil Broad, can define to you. We have our battery packs integrated with hydrogen fuel cells for marine application for trucks and also for train, all of the above. Last not the least, we already are looking at the next step for the company, which is expanding into automotive sector. Until this AGM, we have never mentioned this to you, but I'm going to declare that as clearly as I can that the company is ready to enter the automotive sector by licensing its technology and know-how. That's where the business today is. This is the pictorial representation of your -- what your investment has done in the area of technology and products. We are not a chemical company. Having said that, we know how to formulate what we need in chemical and our ability to mix those chemicals in order to produce unique lithium cells, the cells go into mechanical housing with electronics control called module. As Hubert mentioned earlier, 2 weeks back, we announced one of the most advanced battery module facility in Europe. The modules and cells together form a common building block with the control electronics to go into different battery packs. This is the end product customers buy. It looks different. This is a bus pack, if you will, or a truck pack. A marine rack will look different, but all of them have same common building block of cells and modules. The company continues to feel that no energy transition would complete without adding the upper layer software, the energy management software. We have one of the most leading energy management software suite. This is the software, which controls energy flow. If you're talking stationary storage system, this is the energy from grid to the battery, battery to the grid. If you're talking in transport, it means it's from battery to the propeller, if you're in marine or battery to the wheel, if you are in ground transport. The company continues to reinforce its research and development in 3 different locations: Germany, predominantly in electric industry; Switzerland, predominantly in mechanical and electronics; and United States, predominantly in software, energy management software. Our 2 production facilities are well known to our shareholders. We produce ourselves in Willstätt, Germany, and we produce our modules here in Yverdon-les-Bains in Switzerland. Dear shareholders, I mentioned about the trust of the customers we win. Hubert mentioned about validation of eTransport strategy. Take a look at this from the pivotal decision we made back in 2015. By the time we arrived in 2018, 2019, we started to win customers. We won customers and delivered big time in marine segment, all electric ferries, all electric cargo vessel, hybrid with hydrogen, hybrid with LNG, many number of applications, we have delivered already and we continue to deliver in the marine segment. I'm particularly pleased to share with you that one of the largest ferry operators, which all of us know here in Switzerland, CGN has selected Leclanché using Leclanché technology for hybrid all electric ferries here in Switzerland. In the ground transport, we continue to gain momentum, big time in the train locomotive sector. You are aware already from our previous announcements, we have a significant long-term supply agreement with Bombardier Transport, which is now acquired by Alstom. Recently, when we announced a deal for a retrofit of diesel locomotive with Canadian Pacific Railways in Canada. We continue to win business in the train segment, and now we are seeing a momentum in the commercial truck segment, which my colleague Phil will share with you. As far as the business of stationary storage is concerned, as I mentioned earlier, through the -- some mistakes, which we have made, we have mentioned this to you earlier, implementation of energy storage systems, we have learned, we have focused our energy storage business on few applications. And I'm pleased to say that now the business is turning around and growing profitably. If you want to see the power of Leclanché's products and offering, this is the chart to look at it. Battery packs for our different medium and heavy transport vehicles; infrastructure to enable fast EV electric vehicle charging, be it be for Amherst Island in Ontario, Canada through our partner, customer Damen; or be it be for electric cars for rapid -- ultra rapid charging for our British Petroleum bp pulse, a deal we announced a couple of months back. And as I mentioned earlier, company is giving a push to enter into the automotive sector using our in-house, ultra-high-energy density cells, which is in the production trial stage. I mentioned about industrial maturity. I'll let you take a look at this. And to the left is standard corporate certifications, if you will. But on the right is recognition of maturity, industrial maturity of our products, highest level of certification in marine, multiple of them, highest level of certification in railway. And we continue to deliver certified products for our commercial segments, such as bus and truck. At this point in time, it will be appropriate for my colleague, Phil Broad, to take over and share some further details about eTransport customers. Phil, over to you. [Technical Difficulty] I would suggest that I will continue. Okay. Phil, you can join at the question-and-answer sessions. So sorry for this interruption, dear shareholders, let's get back. This is giving you a little bit more proof points focused on 2020 and a bit on 2021 and beyond. This is a recap. We have delivered. We have delivered multiple vessels to our customers in 2020. You can read it from here that we have delivered multiple vessels for Grimaldi. We have delivered all electric ferry Yara Birkeland -- cargo vessel, I'm sorry. And we have delivered a number of projects in other parts of the world, such as in Singapore. Our experience base in this industry is growing leaps and bounds by month, by year. Today, we have experience our working with different shipyards, be in China, Romania, Norway, Scotland and so on. This is an invaluable experience the company is gaining, as we speak. The total deliveries of 7 vessels adds up to more than 30-megawatt hours of vessels delivered, commissioned in 2020. Coming from with all due respect, 0 until 2018, 3.2 megawatt hours in 2019 and 30 megawatt hours, 3-0, 30 megawatt hours in 2020. If we look at the success in the ground segment, shareholders may recall, we put out an announcement of a new range of our product for commercial vehicle segment, if you will. We call it INTEG in short INT 39, 53, 105 kilowatt hours of standard certified packs. That's the pack we use in the commercial market segment. That product is now gaining significant momentum in the marketplace, as we speak. We continue to win success in the rail segment, which is very strong for us. Marine and rail are the 2 strong segments within eTransport business for the company. We continue to sign long-term supply agreements with customers. Recently, we are not yet able to announce. Recently, we have signed a 5-year master supply agreement, long-term supply agreement with one of the largest refuse truck manufacturer in Europe. As soon as that customer will allow, we'll be very pleased to share that details with you. What we can say, we have been selected, and we are delivering prototypes. Last point I'd like to make, we have already delivered prototypes to Toyota Motors North America for a hybrid hydrogen fuel cell Leclanché lithium titanate battery pack, which is right now under testing and trial by Toyota and a large truck manufacturer in the U.S. If you look at marine segment now, clearly, with the experience we have gained of delivering more than 33-megawatt hours of vessels, all kinds of application, all electric cargo, all electric ferry, hybrid. Here is an example of hybrid, Grimaldi, for Grimaldi, you may or may not be able to read that. But if you can, please read that we’re zero emissions in port. This is, ladies and gentlemen, my dear shareholders, this is a Leclanché's first innovation. We have been able to work with our partner, Kongsberg and the customer, Grimaldi, to build this architecture in a way when these hybrid vessels will come to the port, they can go in 100% electric mode, zero emission mode while at the port. Imagine the reduction in CO2 emissions, NOx emissions, sulphur emission. This is the leadership company has taken. We continue to be optimistic, bullish about our growth in marine and train segment. Talking about the train segment and commercial vehicles as such. We are fascinating -- we are finding so much interest now from mining segment. Those of you who follow the energy transition debate, the reduction of greenhouse gas emissions, you would see within transport, one of the most polluting sector happens to be mining. We are seeing so much of interest from mining segment customers. At this point in time, we have been selected by one of the largest European OEM for mining vehicles who appears on -- as MoU partner for a lot of start-ups, but a real customer for us. As soon as we will be able to announce their name with their permission, we'll share this with you. This is the new foray into specialized vehicles for our mining segment. Our products are absolutely ideally designed for that segment. I will switch the gear now and talk about stationary storage business. On the stationary storage business, we started actually in 2017 about 2 years earlier than eTransport business. As my colleague, Hubert already mentioned to you, 2020 was the year when eTransport has grown and will continue to grow, I can confirm, bigger than other business units within Leclanché. But in this business, energy storage business, after some initial mistakes of implementation, we have certainly matured. Our products are installed in the field, battery-based energy storage system using multiple technologies, Leclanché battery, third-party batteries such as LG Chem, Samsung SDI, CATL to mention a few, a number of different inverters. But 2 things which are common. Number one, the brain of battery-based energy storage system, energy management software is Leclanché. The company has made a strategic decision to work only on those projects where Leclanché EMS, energy management software, is included. We lead this software, EMS, and we lead with the same design of a new product enclosure design we announced called LeBlock. I'll take you through that. So that's really what the lead of the company is in energy storage system. Let me take you through very quickly some of the focus areas. As I mentioned at the beginning of the presentation, I would like to say slowly and emphasize the point. In energy storage system, we selectively address part of the market. We do not go after everything. It's a very fragmented market. We focus where we add value using our energy management software and our LeBlock enclosure design. Here is an example of customers. Shareholders, of course, remember the first project we did one of the first in the world, a 2 micro grid, integrating wind and solar in the island of Graciosa for customer EDA in Azores. That was back in 2017. And now we are building Caribbean's largest project, a green power plant for SKELEC St. Kitts electricity company as our customer. The common is the fact that energy management software is at the heart of these implementations. Dear shareholders, ladies and gentlemen, can you imagine the impact it has on energy transition. We would be displacing, reducing millions of liters, gallons of diesel as we implement this on an annual basis. Another focus area in energy storage system is enabling fast and ultrafast EV charging. All of you are reading or using cars, so you know what I'm going to say, the power for the charges for standard chargers, so-called chargers, 75-kilowatt for electric car is set to quadruple, 4x increase. By the time we come to 2030, the charges will be more like 300 kilowatt. No grid in the world, no matter where you are is designed for this. The biggest impediment or the requirement for adoption of electric vehicles is not the batteries which go in the car, it is the charging infrastructure, which needs to be in place to take on so many electric cars with powers going from 75-kilowatt to 300-kilowatt. That requires significant demand for energy storage system. We are at the heart of it. We have delivered with Ontario Power Corporation, a charging infrastructure for our ships in Ontario, Canada. We have been selected by bp pulse through our partner, EV Networks, in the U.K. to build energy storage system to enable ultrafast charging in the U.K. We are at the forefront of this large growing market. Lastly, to wrap up energy storage system customer side of it. Most of these implementations are in 2020 and before. The point I would like to make is that we have gained significant experience through early implementation into 2017, '18 and even 2019 time frame. The installed base of more than 150 megawatt hours around the world gives us the basis, the knowledge that led us to design essentially the product we have, LeBlock, we announced recently. In summary, I've already made the point, we lead this market through the software, energy management software. We provide a safe modular enclosure design, LeBlock, and we deliver select applications where our energy management software is at the heart and adds the value. A very quick look for you for LeBlock. We are so excited in the company about it, okay? We have, without meaning to kit, we have made energy storage systems modular, transportable and safe. These 20-foot containers come pre-installed with batteries and you do the cabling plug-and-play, if you will, on site safely and build from small few hundred kilowatt hours installation to few hundreds of megawatt hours, if you like. Same architecture. It delivers the best levelized cost of electricity. It delivers the least carbon footprint of any enclosure design we are aware in the marketplace. Here is an example without boring you too much into detail, that is important to see. The key point in energy storage business without being negative, but facts have to be spoken, companies large and small, companies large and small have had, unfortunately, serious fire accidents. Public information likes of, if you will, LG Chem or even CATL recently in Beijing. Safety is a concern, more energy you pack, more power you drive from battery-based energy storage system generates more heat, that's science. You have to design in a way that you're efficient in temperature management of the batteries. This architecture allows us to smartly, safely manage the operation of the batteries within the safe temperature arenas. We can go from very small energy pack to as much as 744 kilowatt hours packed in 1 20-foot container. That is the beauty of this design. It is one of the safest design in the world. With that, I would like to kind of sort of pause and take you to the last bit of business unit, which is specialty battery system. It is important to recap our shareholders, the market knows. Last year, we announced our intent to make a strategic sale of this business unit. We will continue to seek strategic partners for a full sale or joint venture, but only when we find a partner who will truly support the customer base Leclanché has built in Switzerland and outside of Switzerland. We have built this customer base over more than a decade. We want a serious partner, who will continue to support these customers and continue to keep a significant base of operation in Switzerland. Despite announcing a potential carve-out or sale, we continue to win business in 2021. I will not go through all the customers in the interest of time, but you can see we continue to bring business in drones in hardcore defense business, [ Rhine ] metal, and so on and so forth. So this business, ladies and gentlemen, the dear shareholders, continues to grow and we will sell this business or JV this business only when we find a strategic partner. With that, I believe we have covered the aspects of a business update primarily focused on customer side of the equation. We can go now into a little bit more detail on operations side, where we are, where we are taking the business. I hope that you are able to follow the presentation. I know it's difficult to understand remotely, and please continue to type your questions, which we'll try and address as much as we can towards the back end of this presentation. Moving on to the next section. Our key priorities for 2021 and beyond. First and foremost, with utmost respect and indeed your patience, I would like to put things in perspective a little bit. We have made huge investments over the course of, frankly, last 10 years or more, was certainly huge investments since 2015 when I joined the company. I want to put the loss reported by the company in 2020 and before in the perspective of the investment. We will take you through a little bit more details about why we continue to believe passionately that we are set for delivering profitable growth. It is driven from the customer trust and a contracted pipeline of $0.5 billion. It is driven from the competitive cost base we had developed, which my colleague, Pierre Blanc, will take you through. And lastly, we will comment a little bit more about our strategic expansion into the automotive sector. So these are the priorities for 2021. Let's get on with it now. This is the first time we are going into this level of detail, but we have to. First and foremost, as Hubert mentioned earlier, and we have repeatedly mentioned this to you in almost every interaction with shareholders and the Board. Battery business is a scale business. Battery business is a scale business. It is a fair question I've heard that the company has changed the turnover, the revenue level required to deliver breakeven, EBITDA breakeven. It is indeed correct. We had estimated the breakeven level to be CHF 125 million numbers -- CHF 100 million to CHF 125 million in 2020. And now we estimate that the breakeven level is between CHF 175 million to CHF 200 million in 2023. So a, the breakeven levels have increased; two, it is delayed. I will address both the points. As far as breakeven levels increasing, unfortunately, that's the nature of the business for everybody in the industry. The average selling price, 2020 volume-weighted battery pack price for the automotive sector, according to Bloomberg, has fallen by 53% over last 5 years. Frankly, last 3 years have been very accelerated for all in the price. When the average sales price falls, naturally, mathematically the turnover it required to breakeven also increases. I want to be absolutely crystal clear on this point. I also understand that they can be fair what you call ground for skepticism, I respect that. I would like to now share a public information of a recent merger between Microvast Inc., and Tuscan Holdings Corp., a SPAC, a publicly traded special purpose acquisition company, in the U.S. The company reported that it estimated its 2020 revenue to be $100 million -- $101 million and adjusted EBITDA, okay, although it says EBITDA, adjusted EBITDA of negative 11%. So even with $100 million turnover, the EBITDA loss is 11% or more, depending on what is in the adjusted. Dear shareholders, our company deserves similar treatment, similar respect. This company, Microvast Inc., is valued at more than USD 3 billion pro forma equity valuation as per their public filing, USD 3 billion. The journey of Microvast and journey of Leclanché is 2 years apart. The $100 million turnover we will hit between end 2022, middle of 2023. That's how far or close we are to Microvast. In many ways, this company is a close comparison to what Leclanché is. So first point, I'd like to emphasize why the breakeven point has changed from CHF 100 million, CHF 125 million to CHF 175 million to CHF 200 million. I hope I've been able to give you some data points on that. The second point we have to go into the details. I apologize, there's too much information. I'll summarize for you. Thanks to your patient and large investments, in particular from SEFAM. We have made huge investment in R&D, engineering. The investment in R&D, engineering is about 65% of CHF 110 million, more than CHF 65 million, CHF 70 million investment over the last 5 years; 2/3 in R&D, engineering; about 15% in M&A; and about 20% in capital expenses. Close to CHF 110 million invested in less than 5 years to build the portfolio of technology and the products, which we will share in further detail with you through our CTO shortly. Other question I have been asked why the EBITDA breakeven is delayed. It's a very fair question, completely understand the disappointment and frustration of shareholders. Having said that, it is important to note that despite the huge investment made by SEFAM, advised by Golden Partner as an investment adviser, of more than CHF 300 million of large patient capital invested in the company, thanks to them, we are in this room today. Thanks to them, we have developed the company to the point we have developed. But these were annual agreements. We, so far, I accept that responsibility with my Board that we have been unable to fund our business plan in one go, 2-, 3-year business plan in one go. Why is that important? Let me give a simple example, which everybody can connect to. If I place order for 2, 3 years with my supplier, with different call off, I get price x much better price than to place a small volume order quarter-by-quarter depending on when the working capital is available. That makes a huge difference. Dear shareholders, we can take you through the numbers, you'll be able to see that material procurement, which is the largest part of cost base, okay, you get a better deal when you buy in large volumes and when you buy in a long-term contract. We have been buying on quarterly, sometimes on 6 monthly basis. That's a huge, huge cost to pay. That's the difference between funding a business plan for 2 to 3 years with committed capital or funding a business plan on an annual basis, which is what we have done for the last 5 years. Having said that, we are so thankful to SEFAM and the Golden Partner, their investor adviser. Without them, the company will not simply exist. Very thankful to them. That's -- let's draw the line under that, once we draw the line under, what's next? Now is the opportunity to monetize this investment in R&D and engineering. We are monetizing through the negotiation we are having to license our technology and know-how in the automotive sector. We are monetizing this through the CHF 500 million contracted revenue the customer has. To that point, let's talk about the contracted revenue. First of all, for the sake of clarity, even though we have clearly defined this in our press release, I would like to emphasize. When we say contracted revenue, we are following the terms used in recent M&As in the United States. It means the company has long-term supply agreement, company has general terms and conditions, the company has MoU with those customers, giving us a visibility of a multiyear revenue. On that basis, we have a contracted revenue of USD 562 million. About 60% plus is in the transport business and the balance is in the stationary business. If you look at the total, this can be verified in our customer relationship database, the total opportunities, whatever the probability is more than $3 billion. Without meaning to make it a hard comparison with Microvast, but I have to make the point, our contracted revenue is $562 million. The contracted revenue reported by Microvast is $1 billion. Yes, we are 0.5% vertical, about 50% of their contract revenue, but the company is on the good way, not very dissimilar from likes of Microvast. If there are questions, we'll be happy to answer. The graph at the below essentially shows what percentage of the contracted revenue is our business plan is. This is the first time I'm sharing with you, but I'm going to share with you. This is the first time we are sharing with you. Our projected revenues are at the bottom, starting with an outlook of $42 million to the left in 2021. We expect the business to grow to $739 million in the year 2026. The breakeven year of 2023, we expect to reach a revenue of $275 million. We have so far talked about trying to put the loss in perspective. Then we have talked about some detail about our contracted pipeline. I would now request my colleague, Pierre Blanc, Chief Technology Officer of the company, to take you through the competitive cost base the company has built. Pierre Blanc, can you please take over?

Yes. So thank you very much, Anil, and good morning to everyone. So Anil, I'll just ask you to change the slides. Thank you. So let me -- I mean I think you've all heard the discussion about the effects of scale, the volume. So let me just help you put this a little bit in perspective to understand what is driving the cost difference between low scale and large scale. We run a very detailed analysis with a reputed engineering firm in Germany called Umlaut AG to do a deep dive into the cost structures of the cell components, the cell manufacturing processes and the impact of the scale on these different costs. Just to give you an illustration here, I'm showing on the graph on the left, cost at a very low scale, so a low volume, partial utilization of a capacity and the cost with a gigawatt hour scale. What you can see is in low volume scale, your manufacturing costs and your overhead costs have a very heavy impact on the overall cost. Now this is driven by the fact that no matter what your scale is, you need competencies in the company. You need engineers, you need R&D, you need management. So you have a very heavy overhead cost when you're in low volume. As you go to gigawatt scale and as you improve the performance, so with new chemistries coming up, which I'll present to you in the next slide, you can see the cost being driven down. So moving, first of all, to full utilization, you will reach costs in the region of $200, $220 per kilowatt hour. By going 2 gigawatt hour scale, we're going to save costs through the cell improvement by making it faster, making it more efficiently, by material prices, getting a higher bargaining power in material purchasing, by reducing your scrap rates, running the machines more efficiently, continuously. So all of these aspects will contribute a small amount each. But put together, this will -- this does represent a massive impact. And what the graph on the right shows you is going from a 400-megawatt hour capacity to about 4-gigawatt hour capacity. So multiplying by factor 10, the production capacity, you get approximately 60% cost reduction. Now this is not small, going from $200 to $80 per kilowatt hour without going into optimistic calculations where you reckon with even lower material costs and so on, which could bring you even further, but that's becoming very hypothetical because there are a lot of conditions around it. But the $80 are based on known figures today and achievable today. So this gives you a little bit of an impact -- a view on the impact of the scale and how important it is for us to create the scale so that the costs continue to be driven downwards. Maybe Anil, we can move to the next slide. Yes. Thank you. So over the past few years, as it has been mentioned to you in the previous slides, we've invested a lot in the development, development of technology, development of the products and development of manufacturing processes. Historically, if we go way back, when we first introduced the cells on the line in 2012, we were producing LTO batteries. We -- these batteries are destined for very much niche applications. We introduced the graphite NMC at a commercial level in 2018 with, let's say, an introductory technology, which was reaching around 160 watt hours per kilo. So these are the 43 amp hour cells. We continue developing this going to novel materials, NMC622, driving down the cobalt content going towards more and more sustainable supply of the materials. To achieve this year, cells that are in production today of 65 amp hour or 225 watt hours per kilo. So a substantial increase in capacity and energy density in the space of less than 3 years. This obviously is a big driver for cost reduction as well. But it's also a big driver in reducing our overall carbon footprint through more efficient use of the machinery. So a higher output in terms of watt hours for machine times, less energy used for production. So all of this is driving towards a more sustainable future. And we are continuing to do this, working currently on the next generation, which should be available next year in commercial applications, where we are going even further down in the cobalt content, going into composite anodes to help increase the energy density, including silicon into the anode materials. And this will give us another, let's say, about 25% to 30% increase in energy density by 2022, bringing us to roughly depending on the configuration of the cell, roughly 270 watt hours per kilo, setting the base for further improvement, more destined for the automotive industry and the larger volumes going to 300 watt hours per kilo probably in time frame of 2024. Now all of this is driven by a view on having a low impact on the environment and reducing our carbon footprint, using materials coming out of an efficient manufacturing process or preparation process, using water-based processes to reduce our emissions, to reduce our energy consumptions and removing as much as possible materials that could be problematic, such as cobalt. So it's driven by technology improvements, process improvements, product performance improvements and a more sustainable approach to the sourcing of materials. Next slide, Anil. So that was a little bit on the cell. Now as we've been saying throughout the presentation, we've also invested very heavily in the development of the system side. All of these projects that you've been shown are system projects, so we've delivered systems, cells integrated into modules into packs with all the electronics on top. But to further increase our footprint and to further grow, we needed to further enhance our systems performance in terms of product performance and production performance. And we set off on the design of a new module technology, for which we went through a simultaneous engineering process with Comau, Comau is the engineering division of former Fiat Chrysler Group, now it's Stellantis, where we codeveloped the module with the engineering and the manufacturing processes so that we optimize the module design for high-volume manufacturing. Now this enabled us also to increase the energy density of 15% to 20%, depending on the configuration of the module, have a very high flexibility in terms of product on that production line. So a single line will be able to produce approximately 47 configurations. We're reducing the volume of the module. So the volume is smaller, more compact, about a 7% gain. And obviously, using much more modern and precise and optimized processes and control functions on the line, which I'll detail to you a little bit more further in the presentation. Now in addition to that, we've also added the functional safe, BMS. I think this was also mentioned earlier on in the presentation. These are the requirements for -- these are the automotive requirements, which are also spinning off into other transport applications, where the functionality of electronic board has to be safe. So we have to be -- sorry, we have to be able to guarantee that failures are controlled and failures do not lead to unsafe situations at the battery. So assuming an electronic component fails, fails it should not create an unsafe situation. So these are automotive standards that have been applied to these new developments and which are included in this new M3 module. Perhaps the next slide, Anil. So yes, this is a little bit more of an overview of the BMS, for the battery management system and its ecosystem around it. So there are a number of battery management systems that we develop and supply today. We don't manufacture them. We have them manufactured by a third party, but we do all the design of the hardware, software and own all of the IP around it. Now because we're dealing with relatively large systems, we work in master/slave configuration, so slave being at the module level, master being at the system level or pack, rack, depending on the applications. We include these with our algorithms that are developed. So we developed the software and the algorithms in the software that will optimize the usage of the batteries to better calculation of its state of health, state of charge, state of power and so on. And we add on top of this an IoT platform for remote monitoring so that we can keep track of the batteries in the field, monitor them, either we can or our clients can do it directly as well. Saving time on maintenance or intervention and giving a much more simple access to the information and the visual access to the information coming from the battery, which is also very useful for the clients for them to understand how the battery is being used and how it's aging. And if something needs to be done, how they can address that. So all this package has been developed within the BMS team. So covering all of the different boards to software and the upper layer control systems and diagnostic systems. Next slide, that's -- yes, maybe briefly touch on the EMS, the energy management system part. So this is a higher level. This is more at a plant level. I think Anil touched on that as well. So bringing different components together outside of the battery. So connecting the battery with consumers generated -- sorry, energy generators, energy sources and so on. This may be wind. It could be solar. It can be diesel generators and consumers and the grid basically. So the EMS contains a number of functionalities depending on the application. Overall, it's an energy management system. So it's going to manage the energy flow, optimize the energy flow. This will be different in cases of connection to transmission grids or micro grids or EV fast charges where the functionalities will be a little bit different. You can stack different functions. Many of them being revenue functions, so you can do function stacking, revenue stacking. So there are a number of different software segments in this, which will contribute to its deployment in the applications today, mainly in the stationary where we're seeing a lot of our applications relying on this software to -- for its integration and optimization of the revenues. Next slide, perhaps. Yes. So regarding the industrial ramp-up, as we were talking about earlier, the importance of scale in our business. I'll just touch a little bit shortly on both the cell and the module in the next slide. So cell ramp-up and we installed the line in 2012. We haven't upgraded its capacity since. But when we installed the line, it was designed within the buildings for an expansion. We're now looking at this expansion, which we call a brownfield expansion, which will bring us up to -- from 3 million cells per year to -- from -- sorry, excuse me, from 1 million cells a year to 3 million cells a year in the existing building. So this is the brownfield. And then the second step, looking at the further greenfield expansion or an automotive joint venture. So this will depend a little bit on the discussions that are ongoing to either triple the capacity from 3 million to 9 million in greenfield expansion or to directly go to a multi gigawatt hour plant in the joint venture with partners for the automotive OEM approach. Now what is being contemplated now is something for those joint ventures, something in the region of 10 gigawatt hours of production capacity. But these are ongoing discussions. So we're still seeing how to refine the exact volumes that we want to implement. Now all of these expansions also go along with, as I was mentioning earlier, optimization of the processes so that we get more lean processes, faster processes, reduce the overall energy consumption per cell produced, reducing the overall carbon footprint the cell produced and continuing to integrate as much as possible renewable energy into our manufacturing to have the lowest environmental footprint as possible in this manufacturing. Next slide for the modules. Yes. So some of you might have seen this, many may not. We inaugurated the new module assembly line in Yverdon a few weeks ago. This is a much -- well, it's an enhanced line with a much higher level of automation with a lot of robots doing the manipulation. We're multiplying the capacity by factor 6 basically going to 0.5 gigawatt hour per year of production capacity, which can be further expanded to reach. We could probably increase it to nearly double that capacity with further expansion of the automation of the line. As I said previously, this has been done in a simultaneous engineering process, which is really there to make sure that we design the product and the processes together to optimize the manufacturing. So really have a product that is designed to be manufactured at scale. We bring the product design know-how, but people like Comau bring the manufacturing and the scale manufacturing and automation know-how. So the combination of the 2 strengths is very important to make an efficient line. Beyond the scale of the line and its automation, we've also included a lot of new features in terms of quality control and process control, incorporating artificial intelligence into the line, in particular, for welding processes. As some of you may know, a welding process is extremely critical for the quality of the product, but it's also something that's extremely difficult to control without using disruptive measurements. Now with Comau we developed a process to do a 100% check of the mechanical and electrical quality of the weld through an optical measurement using artificial intelligence. So there's no more disruptive measurements, so we don't have scrap, call it like that, in quality control, but we have a 100% quality control on these very critical process steps. And this is very novel. So this is really technology that has been initially developed by Comau to address automotive applications where the quality standards are also extremely high. On top of the in-line measurement systems, we're also introducing with Comau their IoT systems and the manufacturing execution system to really optimize the manufacturing line, control the processes real time and really gain on every part of the process that we can. It's going to go through a learning phase, but this is really bringing us towards the Industry 4.0 standards where we have a fully integrated line. And this line is integrated with the manufacturing line in those [ sector of ] the cells so that we have complete traceability of all the steps from the powder to the end product or the end system in an overall control system that will allow us really to monitor and optimize every single step. Maybe to the next slide, Anil. Yes. Thank you. So -- and this is maybe to give you a bit of an understanding of the contribution of the different components to an overall solution that we deliver. As I said earlier, what we deliver our systems. These systems contain cells, modules, BMS, cooling systems and so on. What we have tried to do in the design of the manufacturing is to really standardize as much as we can what needs to be -- what is the most important and what is the most critical in manufacturing. So cells and modules where you need high levels of automation to meet your cost structures and to meet your quality targets. And this represents approximately 80% of the overall value of the products that we deliver. So we're delivering products where the critical components are coming off high-volume production lines and the tailoring of the product or the system for the client is really just the 20% that are remaining, which are, to a large extent, a little bit less automated because they need higher flexibility, so there are some manual interventions here, which we are doing for the moment at the plant in Switzerland. As volumes increase, in particular for railway and road applications, we're looking at working with partnerships or to set up a third plant in lower cost areas where the manpower will be a bit cheaper for these labor-intensive processes, which are really the assembly and cabling of these systems. But as I said, this represents only a small fraction of the overall value of the product that we're delivering and the quality and cost part of the product is driven by the highly automated steps that are required for the cell and module manufacturing. So I think -- and these are really the building blocks that we have now designed and manufactured for the rail, the bus, the truck and also the marine applications. So industrial applications requiring high performance, high cycle life. And we're seeing these volumes really picking up in a very quick way. And it's -- yes, it's exciting to see this really coming into place. So with that, I hand the floor back to you, Anil, for the next part of the presentation.

Thank you, Pierre. Thank you very much. Dear shareholders, please allow me to wrap up this presentation by covering 2 topics. I'll do that very quickly. First and foremost, a little bit more detail about expansion into automotive sector. It is a massive big news for the shareholders. So I would like to handle this in 2 parts. What's in it for Leclanché? Why are we doing that? So obviously, we are doing that for, a, monetizing investments already made in R&D and engineering. That's a shorter-term goal. Longer-term goal is to gain the scale of procurement, okay, therefore, reduce the overall cost of goods, overall cost of product and make our business profitable. Accessing this scale is absolutely important for the company for competitivity today and in the long term to come. So the move into automotive is driven, obviously, by monetizing as well as need to be competitive on a long-term basis. In return, what do we offer to the multi-gigawatt hours announcements made in Europe around the world. First and foremost, we bring our technology, which is protected by more than 200 patents. We are not hiring people from 10 different companies and creating in these so-called startups, some sexy new technology for future based on knowledge of people from other companies. These are innovated, developed in Leclanché, protected by 200 patents, over 13 families, and we bring about 350 people trained in battery business. This pool of manpower of 350 people trained in battery industry is unique in Europe. Others have plans, aspirations, recruitment campaign. We have them here. That's what we bring in addition to the fact that with this experience, we can give a time-to-market advantage to any multi-gigawatt hour facility, okay. They can invent all of this on their own and take, with all due respect, 5 to 10 years to get there or work with Leclanché, we get you there in 3 years. That's really our value proposition. With that, to the last slide of the management presentation, I would like to recap very quickly. Dear shareholders, with utmost solemn commitment made on behalf of my team and myself and indeed the Board, the company is poised for profitable growth. We have contracted revenue of more than $0.5 billion. Hope we have been able to demonstrate to you that we have built a competitive cost base largely driven by innovation and improvement in production processes. I remind you, in 2018 beginning, we were at 43 amp hour cell. Today, we are at 65. Next year, we are going to deliver 85. 50% increase in energy density equals more than 50% reduction in cost as in euro, dollars per kilowatt hour. That's what company has done today, not talking about what we may do in 2030. Clearly, to deliver such a large contracted revenue of projects and pipeline, we will need capital. The Board has authorized a U.S. investment bank. The name is BTIG. I can -- I'm happy to announce that, okay, BTIG has been requested to raise capital for 3 years business plan through at least to the end of year 2023. Please recall my comment I made earlier, 2 reasons why EBITDA breakeven moved, a, average selling price decreased, so we had to go to a higher turnover level; second, we now need a full funding of the business plan for a 2 to 3 years business plan in one go at onetime commitment rather than doing incremental annual funding raise we have done despite being very, very thankful for more than CHF 300 million investment provided by SEFAM through their adviser, Golden Partner. It absolutely is a must for us to deliver the base we have built on customer side and indeed on the product and technology side. Last not the least, the company, the management and I are committed to monetize the investments we have made. Thank you for your large patient investment. The expansion into automotive sector will give us long-term competitive edge in the marketplace. With that, I would like to wrap up the management presentation. Thank you for listening. Thank you for your attention. Mr. Chairman, back to you.

I would like to thank Mr. Srivastava and Mr. Angleys for their presentation. They have provided you with a lot of very interesting information. Some of you may perhaps already become battery engineers or at least battery specialist. We will meet them in the future. I also would like to thank that what Anil and Hubert has presented to you has been done in the team and a very important team, and I also would like to thank them that they have made what you have just heard possible. And of course, also the support of the investors, especially the majority investor that has made it possible to do that. It has been a very long presentation, very into details. And if I can give you a few keywords to remember for the ones that are not a specialist, keywords would be for Leclanché fleet vehicles. It would mean stationary, EMS means a lot of software and, to remember, we have CHF 500 million contractual revenue from now to 2026. And this means trust of customers, big customers of worldwide brands. If you have now questions relating to this presentation, please address them in writing and we plan to answer them orally during the Q&A session. Before now moving to the second part of the meeting, the following preparatory measures and formal statement that we made, the minutes of this meeting will be taken by Mr. Jean-François Stenger. Due to the exceptional circumstances of the coronavirus pandemic, shareholders are not permitted to attend the Annual General Meeting in person. Shareholder voting rights can only be exercised through the independent representative, Mr. Manuel Isler, attorney-at-law, acts as independent representative that will present the result of each agenda item of today's Annual General Meeting. Mr. Isler will announce the result of the votes according to voting instructions provided by all shareholders duly registered for today's Annual General Meeting. Mr. Isler sits here with us at the table. Now for the formal statements, I will proceed the following. I note that today's Annual General Meeting was called according to the Articles of Association and the statutory provisions via publication in the Swiss Official Gazette of Commerce of 9th of June 2021 and by letter to all shareholders registered in the share register on June 21, 2021, at 5:00 p.m. CET. The 2020 annual report, the report of the auditors and the group auditors, the 2020 compensation report and the proposals of the Board of Directors to the Annual General Meeting have been available for inspection since June 9, 2021, at Leclanché's registered office and are also accessible on Leclanché's website. The following detailed information on the participation at the Annual General Meeting has been provided. The share capital of the company as of the closing date of the share registered amounts to CHF 29,967,882.90 and is divided into 299,678,829 fully paid up registered shares with a nominal value of CHF 0.10 each. The representation today is as follows: the independent representative pursuant to Article 689c of the Swiss Code of Obligations is representing 237,350,313 shares. In total, 237,350,313 shares, both representing an aggregate nominal value of CHF 23,735,031.30, which corresponds to 79.2% of the share capital are present. The proposals to be resolved on the Agenda Item 1 to 6, 10 and 11 require a majority of the share votes cast. The proposals to be resolved under Agenda Item 7, 8 and 9.2 require a qualified majority of at least 2/3 of the share votes represented and the absolute majority of the nominal value represented. The qualified majority is 158,233,542 share votes and CHF 15,823,354.20 of the nominal value. As I mentioned before, you will have the opportunity to address your questions in writing during each agenda item during the meeting through the webcast. Questions will be answered orally during the Q&A session. On the basis of all these statements, I declare today's Annual General Meeting duly constituted and authorized to validly resolve on the agenda items. We will now proceed to the agenda items of today's meeting. Agenda Item #1. Proposal, the Board of Directors proposes to approve the annual report 2020, the consolidated financial statements 2020 and the statutory financial statements 2020 of Leclanché SA. I note that business development and certain aspects of the financial statements relating to the business year 2020, which also relates to the annual report 2020 have been discussed in detail by Mr. Srivastava and Mr. Angleys. And I ask the representative of our auditors, Ms. Corinne Pointet whether she wishes to address the General Meeting.

I do not further comments to add. Thank you, Mr. Chairman.

Thank you, Madam Pointet. I note that there is not the case. Go to the voting. Due to the exceptional circumstances of the coronavirus pandemic, shareholder voting rights are only exercised through the independent representative. Consequently, I am glad to hand over to Mr. Manuel Isler, attorney-at-law to announce results on the votes related to Agenda Item 1.1.

Thank you, Mr. Chairman. Votes in favor of the proposal, 231,477,550. Votes against the proposal 176,243. Abstentions 5,696,555.

Thank you, Mr. Isler. I declare that the proposal of the Board of Directors has been approved with the required majority. We go to Agenda Item 1.2. The Proposal, the Board of Directors proposes to approve, on a consultative basis, the compensation report 2020. The company compensation 2020 report has been made available to shareholders, together with our annual report in accordance with the recommendations of the Swiss Code of Best Practice for Corporate Governance and with best practice the Board of Directors has decided to submit the compensation report to our consultative vote. To the voting. Due to the exceptional circumstances of the coronavirus pandemic shareholder voting rights are only exercised through the independent representative. Consequently, I am glad to hand over to Mr. Manuel Isler, attorney-at-law, to announce results on the votes related to Agenda Item 1.2.

Votes in favor of the proposal, 229,565,552. Votes against the proposal, 1,944,316. Abstentions, 5,840,545.

Thank you. Mr. Isler, I declare that the proposal of the Board of Directors has been approved. We go now to Agenda Item 2. The Board of Director proposes to grant discharge to all the members of the Board of Directors. The members of the Board of Directors as well as persons who, in any way, participate in the managerial capacity shall have no voting rights. I propose that we vote on the discharge of all members of the Board of Directors. Voting -- let's say, just last time, I will repeat the whole text, not to make it too heavy for everybody here, that due to the exceptional circumstances of the coronavirus pandemic, shareholder voting rights are only exercised through the independent representative. Consequently, I am glad to hand over to Mr. Manuel Isler.

Votes in favor of the proposal 230,859,348. Votes against the proposal 677,806. Abstention 5,805,069.

Thank you, Manuel Isler. I declare that the proposal of the Board of Directors has been approved with the required majority. And I go to Agenda Item 3. This is the decision relative of appropriation of losses resulting from the balance sheet. The proposal of the Board is to abrogate the loss for the year 2020 of CHF 879,137,532.79 with the balance brought forward from previous years amounting to CHF 17,525,909.79. The balance to be carried forward will amount to minus CHF 96,663,442.58. We go to the voting, as I said, to these exceptional circumstances, Mr. Isler.

Votes in favor of 231,379,978. Votes against 219,181. Abstentions 5,751,154.

Thank you, Mr. Isler. I declare that the proposal of the Board of Directors has been approved towards the required majority. We go now to Agenda Item #4. This is the election -- reelection and election of the Board of Directors. I changed the item to 4.1, deals with the election to the Board of Directors. All Board members have declared acceptance in the event of the reelection prior to the Annual General Meeting. The following members of the Board of Directors are proposed for reelection to the Board of Directors until the end of next Annual General Meeting of Shareholders. Mr. Toi Wai David Suen, Mr. Axel Joachim Maschka and Mr. Lluis Fargas Mas. The Board of Director proposes to reelect Mr. Benedict Fontanet, Mr. Tianyi Fan and Mr. Christophe Manset, who are proposed for reelection at the request of Stefan, the controlling shareholder of Leclanché and myself, Stefan Müller. The Board of Director propose to reelect me to the Board of Directors until the end of the next Annual General Meeting of Shareholders. Voting, due to the exceptional circumstances of the coronavirus, I give the word to Mr. Manuel Isler, attorney-at-law, that is our independent representative.

Thank you, Mr. Chairman. Votes in favor 230,867,295. Votes against 638,634. Abstention 5,844,384.

Thank you, Mr. Isler. I declare that the proposal of the Board of Directors has been approved with the required majority. Thank you. The Board of Directors proposes to reelect Mr. Toi Wai David Suen to the Board of Directors until the end of the next Annual General Meeting of Shareholders. With the voting, I give the words to Mr. Isler, our independent representative.

Votes in favor of 230,482,465. Votes against 1,129,825. Abstentions 5,770,033.

Thank you, Mr. Isler. I declare that the proposal of the Board of Directors has been approved with the required majority. Congratulations. The Board of Directors proposes to reelect Mr. Axel Joachim Maschka to the Board of Directors until the end of the next Annual General Meeting of Shareholders. Due to the coronavirus circumstances, I give the words to our independent representative.

Yes. Votes in favor of 230,418,902. Votes against 1,186,857. Abstentions 5,744,554.

Thank you, Mr. Isler. I declare that the proposal of the Board of Directors has been approved with the required majority. So congratulations to Mr. Maschka. The Board of Director proposes to reelect Mr. Lluis Fargas Mas to the Board of Directors until the end of the next Annual General Meeting of Shareholders. Due to the coronavirus circumstances, I give the word to our independent representative.

Votes in favor of 230,857,507. Votes against the proposal 747,752. Abstentions 5,745,054.

Thank you, Mr. Isler. I declare that the proposal of the Board of Directors has been approved with the required majority, and congratulations to Mr. Fargas. The Board of Directors upon request of the majority shareholder proposes to reelect Mr. Benedict Fontanet to the Board of Directors until the end of the next Annual General Meeting of Shareholders. Due to the coronavirus circumstances, I give the word to the independent representative.

Votes in favor of 230,506,960. Votes against the proposal 1,100,927. Abstentions 5,742,426.

Thank you, Mr. Isler. I declare that the proposal of the Board of Directors has been approved with the required majority. Congratulations to Mr. Fontanet. The Board of Directors upon request of the majority shareholder proposes to reelect Mr. Tianyi Fan to the Board of Directors until the end of the next Annual General Meeting of Shareholders. Due to the coronavirus circumstances, I give the word to the independent representative, Mr. Isler.

The votes in favor of the proposal is 230,419,861. Votes against 1,108,739. Abstentions 5,740,733.

Thank you, Mr. Isler. I declare that the proposal of the Board of Directors has been approved with the required majority. Congratulations to Mr. Fan. The Board of Directors upon request of the majority shareholder proposes to reelect Mr. Christophe Manset to the Board of Directors until the end of the next Annual General Meeting of Shareholders. Due to the coronavirus circumstances, I give the word to the independent representative, Mr. Isler.

The votes in favor of the proposal 230,533,746. Votes against 1,076,641. Abstentions 5,739,936.

Thank you, Mr. Isler. I declare that the proposal of the Board of Director has been approved with the required majority. Congratulations to Mr. Manset. Now to the Agenda Item 4.2. This is the selection of the Chairman of the Board of Directors. And I move to the proposal. The Board of Director proposes to reelect me, Stefan Müller as Chairman of the Board of Directors for a term of office until the end of the next Annual General Meeting of Shareholders. Due to the exceptional circumstances of the coronavirus pandemic, I give the word to the independent representative.