Leclanché SA (LECN) Earnings Call Transcript & Summary

Ladies and gentlemen, I would like to welcome you to Leclanché General Meeting 2022. I will open this meeting with a few technical comments. [Operator Instructions] And now I would like to hand over to the Chairman of the Board, Mr. Stefan Müller.

Thank you, [ Anik ]. Dear shareholders, dear ladies and gentlemen, welcome to this Annual General Meeting of the shareholders of Leclanché SA. This Annual General Meeting takes place for the third time in an unusual form, an Annual General Meeting without any shareholders physically present. As described in our invitation to the Annual General Meeting, in accordance with Article 27 of the Ordinance 3 on Measures to Combat the Coronavirus, the Board of Directors has decided that the shareholders of Leclanché SA may exercise their rights at the Annual General Meeting on September 30, 2022, exclusively through the elected independent representative. Personal attendance of shareholders or shareholders' representatives other than the independent representative is not permitted. Physically present in the room are Mr. Anil Srivastava, Chief Executive Officer, to my right; Mr. Pasquale Foglia, Chief Financial Officer, is in the background; Ms. Corinne Pointet and Mr. Hanspeter Gerber, partners at PricewaterhouseCoopers Audit, here sitting also on the table; Mr. Michael Ackermann, partner at Mazars is coming in a few minutes. We have changed the building and this has created some problems in the organization. Me. Manuel Isler, attorney-at-law, the independent representative of the shareholders also sitting beyond the table. Mr. Gabriel Cottier, Notary Public, who will notarize some of the resolutions of today's meeting. Mr. François Jager, Secretary, that will take the minutes of this meeting. Dr. Lluís M. Fargas Mas, Board member; Mr. Bénédict Fontanet, incoming Board member; Mr. Alexander Rhea, incoming Board Member; Mr. Shanu Sherwani, incoming Board Member; Mr. Marc Lepièce, incoming board member; Mr. Pierre Blanc, CTIO; Mr. Phil Broad, Executive Vice President, E-Mobility -- the business unit E-Mobility that is today an entity; Mr. Guido Guidi, Senior Vice President, Stationary; Mr. [ Serge Mariller], Vice President, Specialty Business Unit; Mr. Cameron McClure, Marketing Specialist; Mr. Emmanuel Fragniere, IT Manager. The Annual General Meeting will be conducted in English with a simultaneous translation into French and German. The formal part of the Annual General Meeting will be divided into 2 parts: our Chief Executive Officer, Mr. Anil Srivastava, and the management team will provide you with an overview of the 2021 achievements and an outlook for 2022; and our Chief Financial Officer, Mr. Pasquale Foglia, will give you some explanations on the financial statements and annual report of 2021. We will then proceed with the agenda items 1 to 12. Please note, and this is a repetition to what [ Anik ] just told you before, you will have the opportunity to address your questions in writing during the meeting by e-mail with the address agm2022@leclanche.com. [Operator Instructions] The Q&A session will be limited to 45 minutes. [Operator Instructions] There will be a 20-minute break between the end of the formal part of the Annual General Meeting and the Q&A session to notarize agenda Items 7, 8, 9, 10, 10.1.2 and 10.2. I will now hand over to Mr. Srivastava, Mr. Foglia, and the management team. Anil?

Thank you, Mr. Chairman. Good morning, ladies and gentlemen, or good afternoon, good evening, if you are joining from other parts of the world. As Chairman mentioned, I'll take you through the business in 2021 very briefly with my team, and then we'll focus on 2022 and beyond. So let's get started. Today's management presentation is organized on these 3 topics. Indeed, we have to go through, it's our duty to summarize for you the financial results in 2021. Bulk of the time we'll spend will be to give you business update by each of our business lines, what we call business units. Then I'll come towards the end of management presentation to wrap up and set the priorities for 2022 and beyond. So without further delay, I would like to request, our new CFO, Pasquale Foglia, to take you through the financial results. Pasquale?

Thank you, Anil. Good morning, ladies and gentlemen. I'm very happy to be here. This is my first Annual General Meeting in Leclanché, having joined a month ago. Today, I will take you through some -- give you few explanations about the financial results and statement for 2021. So we take questions, as Chairman said, at the end of the meeting. Let me move on to first one. There are 2 key points to take away from 2021 results. The first one is that the EBITDA loss in 2021 has been significantly lower than prior year, 27% lower, despite an income reduction of 9%. This is driven largely by gross margin improvement, thanks to investment in the past years in innovation, engineering and industrial capacity. The second point is that the level of over indebtedness that we had in 2021 has been cured with the decisive support of our shareholders, SEFAM, the largest shareholder of the company. Now let me move to the profit and loss statement. Looking at the profit and loss, starting with the income, I mentioned 9% decline, income came at CHF 21.8 million. Moving down the cost of goods, we have a benefit of production in 2021 together with building some stock for 2022. Operating loss, CHF 63.4 million, it includes impairment loss for approximately CHF 12 million. And this impairment loss are coming behind the selected investment, for which we have had timing and technical issues. And some of this would be already reversed in this year 2022. Now looking at it on an EBITDA basis, the EBITDA loss, it was 44.9% compared to 61% in the prior year, and this is a 27% improvement that we had in this year. Moving on to last slide, which is the balance sheet. The balance sheet, we continue to restructure in 2021, and in particular, the debt-to-equity conversion. We have made 2 debt-to-equity conversions in 2021, first 1 in March '21, second in September '21, and for a total of CHF 63.5 million total in 2021. Now in 2022, we have a commitment to convert additional CHF 41.3 million and looking into 2022, we also have received continued support from the larger shareholders through different financing, which to date, until September, January 2022 to September accumulates to CHF 42.6 million. So this is everything that I have for financials. Thank you, and let me hand over to Anil.

Thank you, Pasquale. Let's now move to the business update to actually begin by reiterating the strategic positioning of our company, your company. After the rich heritage of being in the battery business for 113 years, 1-1-3, 113 years, we are right at the center of energy transition. Energy transition to low carbon, energy transition finally to net zero greenhouse gas emissions. Our products and solutions address primarily transport sector and electricity and heat. These 2, transport and electricity, combined contribute, shall I say, are accountable to more than 50% of greenhouse gas emissions in the world. Ladies and gentlemen, our company is at the center of energy transition with the rich heritage of 113 years to back it up. On a day-to-day basis, we operate through 3 business units, now called Leclanché Mobility, primarily focused on electrification of medium and heavy transport sector. We'll take you through the details of that. The second business unit is Energy Storage Solutions. Here we focus more on integration of renewal energy, making sure that renewable energy is dispatchable, available when needed. Last but not the least, the third business unit, Specialty Battery Systems, is more about industrial machines really. Here we focus on things like robotics, defense, medical, leading towards IoT platforms, but primarily we build low-voltage battery packs. Again, I would like to reiterate, before we go into details, your company is at the center of energy transition. We are part of the solution for the daunting task of addressing this challenge for our planet, for all of us, and generations to come. From that goal to more details, let's start with Leclanché E-Mobility. Back in 2015, the eTransport solution was a vision. Today it's reality. We have created Leclanché E-Mobility as a high-growth business. Within Leclanché E-Mobility, we target everything around electrification of train locomotive; marine vessels are all kind, the maritime sector, if you will; off-highway, this would be mining, agriculture, construction, defense; on-highway, bus and truck, delivery trucks. Collectively, these markets are growing at 10x, 10x between the year 2020 through to the year 2030. In 2030, this market will reach 115 gigawatt hours. I will translate that -- on an average basis, that translates to about $30 billion to $40 billion addressable market. May I say it again, $30 billion to $40 billion of addressable market just for Leclanché E-Mobility. People have often asked the question to my colleagues and to me that are you in automotive business, passenger car business? The first answer is no. And the second answer is yes. It's not a trick answer. Primarily, we do not address passenger car market directly. The yes part of the answer is, we have active work going on to license our powerful lithium cell technology to OEMs, who will then build it at scale. So we do not address passenger car market, but we have the technology to license it to OEMs, who will then address that market. Next, quickly on Leclanché E-Mobility business. The value chain we control in mobility is complete battery value chain. We build cells, we will module, we build all-control electronic software, we build battery packs and rack, all of them. It's highly industrial capital intensive business. Switching to the second business unit, Energy Storage Solutions, it is very different. This is a software and systems integration business, less capital intensive because most of the capital is at the project level and it is a market which is even bigger than our addressable market in mobility, but highly diversified. If I were to request one thing for you to take away from this slide, it would be the following: our products and solutions are differentiated and competitive. I'm going to say it again, our products and sources are differentiated and competitive. You want a proof point? Proof point is very simple, it's on your screen. Our order book and pipeline collectively is more than $1.5 billion and growing and growing. How is that possible? That's possible thanks to the trust by the customers. You see some of the world's leading OEMs systems integrator as Leclanché's customer. In the space of mobility, you see all these customers. We have won them over the course of the last 3 years. Over the course of last 3 years, we have won all these customers. These are not logos I have put here for bragging, right. With all humility, I think we deserve some of the bragging. Having said that, we have solid commercial contracts with these customers: purchase orders, long-term supply agreement, recurring business, all of the above. So the journey for E-Mobility is about 3 years from a commercial sense, although the work started in 2015. As far as Energy Storage Solutions is concerned, we have been commercial since about 2016 time period. Hope it gives you an overview of the business units. And what we do in business units, let's go further into details. We are going to take you through the order book pipeline I mentioned earlier. We'll share with you the plans to restart our production and prepare for maximizing the year 2023. We have been often giving you press updates for the last 6, 9 months about ongoing M&A process. I will elaborate that further. Last but not the least, like any business, we too have risk. We'll share with you how we plan to manage them prudently. With that, here is the numbers for each of the business units behind $1.5 billion I just mentioned. I'll let you take a few minutes to go through it. Obviously, E-Mobility is our largest business, followed by Energy Storage Solutions and, indeed, after that Specialty business. People have asked the question, it's a fair question shareholders ask, market asks, journalists ask, that it's a big number, what is the real stuff you have? The real stuff is 27%, 28%, more than $416 billion between orders on hand, what is called backlog, [Foreign Language] in French, and what we call committed pipeline. Committed means opportunities which have probability of 80% and more to become a purchase order in the planned period. That's a significant number. That's a significant number. I hope you share the excitement, dear shareholders, with my team as we are excited. Thanks to your support, we've been able to do this. Continuing with this theme, I would request our business unit leadership team to come and share some details about this pipeline and, again, why we are competitive, why our offers are differentiated. To start that, we will start with E-Mobility, who better than Phil to take you through customers. Phil?

Thank you very much, Anil. Good morning, ladies and gentlemen. I'd like to start off by giving you some of the highlights since the last AGM. A bit more visibility this time. I have a few videos to show, videos to share. It was back in 2019 August, you can see the picture on the top left-hand side, that was when our first vessel with our battery system went into operation. Since then, Leclanché has successfully not just been nominated, but also installed 17 vessels. For those of you who are lucky enough to live in Switzerland, the MS Jungfrau, that's been in operation for more than a year now on Lake Brienz. And then next summer on Lake Lugano with CGN, you have the Naviexpress that will be running between Lausanne and Evian. All of this 17 vessels, we've taken a lot of learning. The marketplace does not stay still. It changes rapidly. And what we've done is take in all the learning, the service team, the customer feedback, engineers, and we've basically made an enhancement into our next-generation MRS-3 product. That goes into production Q1 next year. And even though it's not into production yet, you can see the 4 vessels on the bottom of this slide. They are some of the new business awards that we've already seen. But that's next year. So what I would like to share is the huge visibility that we're getting with one of our vessels, in particular, which is Yara Birkeland. I have customers as far as New Zealand, Canada, who ask me about the Yara Birkeland project. It's got some great visibility. And even the BBC have done a shorter article about that. [Presentation]

So as I said, it gets great visibility, the Yara Birkeland. Since then, now we're getting more and more vessels, bigger vessels, 10 megawatts was our largest. Within 1 month, two vessels of 11.2 megawatt hours. So we have inquiries for 40 and 80 megawatt hours now. So this business is not only growing in battery size, but the market is growing as well in terms of the change and conversion of ships with battery power. So second and equally important piece of our business is the rail business. Now historically, in previous AGMs, I've talked about Bombardier and Alstom, and since the last AGM, we've won more business with Alstom Group. What's happened now is we've seen interest from other segments of the rail business, the locomotives and also maintenance vehicles. I want to just spend a quick moment about Canadian Pacific Rail. Canadian Pacific Rail, we've now got 3 purchase orders from Canadian Pacific Rail with a standard product to retrofit the fleet of their locomotives that travel goods around North America. So now we've reached a point where we are in, let's say, prototype trials, and you can see the locomotive in operation with Leclanché batteries. [Presentation]

Again, it's impressive. I mean it's a hybrid with a fuel cell and these locomotives will be traveling thousands of kilometers across North America. Finally, the commercial vehicle project. We group specialist truck, bus, agriculture and defense into the commercial vehicle. So far, we have 34 megawatt hours and a specialized truck business of nearly 260 megawatt hours. And as you can see from the pictures here, we put the battery pack in front of each of the applications. So you can see there's at least 5 applications now with our standard INTEG-39 pack, which is a 39 kilowatt hour pack. But for large year-on-year big development projects, sometimes customers ask for bespoke packs to fit the vehicle envelope space that they have, such as the defense project and also the specialized truck in the bottom left-hand corner. Now with one of our customers, [indiscernible], you can already see this is now being put on trucks for production use and a short video again to demonstrate it in operation. [Presentation]

So the INTEG-39 packs and the INTEG-53 packs, because they're a standard generic product now, on vehicles, we get much more visibility, and we expect significant incremental revenue coming from these projects. With that, I would like to hand over to Pierre Blanc, who's our CTIO, who can give you further update on our differentiated product.

Thank you, Phil. Good morning, ladies and gentlemen. So let me try to recap a little bit. I think many of you will know this, but I'll recap a little bit how the company is structured in a very vertical way to cover technology from the very beginning, so cell manufacturing to the end, which is a system delivery or system implementation, which can go as far as implementing the energy management systems for Stationary projects. So we are structured in such a way that we have R&D at the cell level in order to develop technologies that are going to be very specific to the applications that we need and bring benefits to the clients. Now you've heard that several times, we differentiate our technology from others. We do it in a way to address the needs of the applications and not try to push a technology randomly into an application. So there's a lot of work done at the cell R&D integration. Integration is to -- unfortunately, from a cell onwards, it's all downhill. So you start losing the property. So integration is important to maintain the highest level of performance with the starting product. And we do that in a way that we can address the different markets. So there, again, development teams at the module level and development teams at a system level, and all this supported by the manufacturing of the cells, which is located at our German plant in Willstaett, and systems level, which is today located in Switzerland. But this gives us a vertical integration of the technology, control over the performance, and control over the costs as well, and a very big driver for our clients in terms of the total cost of ownership. So maybe I'll just go quickly to show you a study that we've done with an external partner, which was done late 2020, early 2021, which was basically to make sure that our assumptions, our decisions, and our developments are in line with the cost reductions which are required for the market. Now we did this with a company called umlaut, which is part of the group at Accenture Industry X, which studied the scaling effect of our technology. So its linked scaling effect and development for future developments that are in the development phase, not the R&D phase. So these are preproduction technologies running on production lines, and how we can go from low-scale costing to larger scale costing and where are the gains that can be achieved. So this is a demonstration that with scaling, the technology is very competitive in the market and meets the market targets as we scale. Now obviously, in small scale, costs are high, you have a lot of -- you can see on the graph on the left, the proportion of overheads, indirect cost to the material cost is very high when you're in low volume. And as you go to larger scale, the proportion of material costs represents a very high portion of your overall cost. These are the scale effects. It's not only scale. There are also development aspects that are required. And I'll maybe give you an overview on this slide, focusing more on the developments on the graphite or the high energy density sales. We have a differentiating technology not only in what we supply to the customers, but also in the way we manufacture it. We are today amongst -- and I say it carefully because you can never be sure of everything, but we're amongst the only companies capable of producing, in a water-based process, all of the electrodes. So reducing our carbon footprint and our environmental footprint in the manufacturing. We are driving the development in the direction of reducing the use of cobalt in the materials. We started with NMC which had 30% cobalt, cathode materials which had 30% cobalt. We're down to 20%. We are now running, in preproduction trials, materials with 3%. So we're going in the direction of removing cobalt without compromising the energy density or the cycle life. And this is extremely important for us because our added value to the customers is the longevity of the batteries and their capability of performing in heavy-duty applications. And that you can see with the cycle lives that I have put at the bottom of the slide. We remain at the very top of the industry in terms of life cycle of our systems, which brings the lowest total cost of ownership for our clients in their applications. So this is an overview of what we're doing. It's a driver for the cost reduction. It's a driver for entrance into new markets. Anil mentioned in his opening remarks, we are addressing heavy-duty applications today, but we are also putting into preproduction the technologies which are adapted to automotive, and that you can see in the bottom side, right side of the graph here. So this gives you an overview of the transport and the technology, mainly driven for transport, although in some cases it's used in energy storage. But I will pass on to my colleague now from the Stationary business, Bryan Urban, who will be joining us remotely. He's based at our U.S. operations, and he will give you an overview with his colleagues of the Stationary business. So on to you, Bryan. Thank you very much.

Well, good morning. Hopefully, you can hear me and see me. Again, my name is Bryan Urban and I lead Leclanché's Energy Storage Solutions business in the Americas, and I'm coming to you now from the United States. Just as a refresher, our Energy Storage Solutions business, which was formally known as the Stationary Storage sector or business unit, provides high-quality batteries, storage units for a variety of applications and customers, mainly including electric utility support, renewable energy integration, essentially making baseload power for intermittent wind and solar generation sources, and industrial EV charging. Those are the primary areas we focus on. We currently have an order book and pipeline of over $275 million and that's frankly, increased by about -- our pipeline has increased by about 35% since the beginning of the year. It's a very vibrant market, and we're continuing to see opportunities in many sectors throughout that market. Currently, our team is executing 8 separate energy storage systems globally, including a $68 million project that's solar plus storage project in Saint Kitts, which happens to be the largest of its kind in the Caribbean and really a landmark project for island locations worldwide. It's an opportunity to reduce diesel emissions and provide a baseload of power to this island location to serve pretty much the bulk of their need during the day and throughout the evening with the battery storage system. In that project, we take that intermittent solar, utilize it in the battery and supply the utility with clean and efficient power and also manage the grid effectively for all the fluctuation that it has. So the battery serves 2 purposes there. Our expert team has completed a number of complex projects across a broad range of storage applications, and really the heart of our business is the expert team that we've put together. We've completed this over the last 5 to 6 years, roughly 18 different projects. In addition to that, we've developed 2 very important core technologies in-house that help us really advance the whole energy storage solutions business that we have. And those 2 technologies include what you're seeing on the screen here, LeBlock, which is a modular battery system that is built principally on safety, first of all; and then secondly, on being widely adaptable to different types of opportunities; and then thirdly, providing a very simple and quick installation. This has been a design that is modular, can be expanded block by block. As you can see, there's certain battery blocks combined with some of the control systems, and we can use it for a broad range of different applications. The other key technology and a very important technology for us is our energy management system software known as Leclanché EMS or LEMS, for short. And this hand-tools the full integration of all the battery systems in the various generation sources that we have, along with the coordination with the utility grid, or a commercial customer electric microgrid. And so this is a very important part of our system. And it's a key differentiator for Leclanché, and it's really an essential part of the value for our business unit. I think the video that we'll show here in a minute will show that where these applications are being used, both the hardware and the software, for a grid services project in Germany, and utilizing the LeBlock system, along with our EMS platform. After the video, we'll pass it on to Guido Guidi to explain further about energy storage.

Hello, everybody. My name is Guido. I think the video will come later, after my speech. And I'm Guido Guidi. I'm responsible for the EMEA region, or Europe, Middle East and Africa. And as Bryan said, our business unit was formally called Stationary. Now it has been renamed as Energy Storage Solutions. And the reason is that we are focusing on providing solutions to our customers, full solutions, starting from the engineering, packaging all the design into enclosure, full of batteries, put those enclosure close to our power conversion system to convert the DC energy to AC and inject to the grid. And the main reason is that the grid needs to be stable. And always, the demand should match the offer. So the grid operators, so-called utilities, are very focused on making sure that this grid stays stable. And the best way to do that is to use batteries at the moment. The batteries can react in 200 milliseconds, they can inject energy, they can absorb energy. They can do a much better job of the gas peakers that have been used using gas and that takes 30 minutes to run. So the move, the evolution is in progress, is ineluctable, and will wipe out all these old technologies. Battery will replace in every corner, in a distributed approach, the stabilization of the grid. So our main customers are really the operators, the so-called utilities. To mention a few, you see in the upper part left, Enel, which is a transmission system operator in Italy; or EDA, which is Electricidade dos Açores, which operates in the Island of Azores. Those gentlemen are requiring us to provide them full projects. And our projects are large projects, large-scale megawatt-hour batteries that are worth several million each. And that requires something like 12, sometimes 15 months, to be put in operation. At the moment, we have 18 projects under operation and the majority of them are serving the grids, doing grid ancillary service. You may see, in some of them, there is grid ancillary service, GAS. And like in Germany, for Enel 34 megawatt hour, in operation since 2019, or in Graciosa, which is an island lost in the middle of Atlantic Ocean in front of the Portugal. In that case, the utility required us to provide a battery to help the renewable energy that has been put in place in the island, which is wind turbines and solar that are intermittent. And being intermittent, the grid doesn't like that. So we put a battery as a buffer to smooth out all what is injected or absorbent from the grid. This kind of application are called microgrids, are generally targeting all those locations that are off-grid and they run under diesel, which is not good. It's very expensive, it's very polluting, not only atmospheric pollution, but also noise pollution. So microgrid is a market that we have been targeting. And Bryan mentioned that we are about to start a large project in an island in the Caribbean. As I said, grid ancillary service for customers like Enel and EDA, or some other customers like independent power producers that put together projects to provide these services, like S4 Energy in Netherlands, we have put in operation something like 70 megawatt hours. And last, but not the least, we are solicited to provide charging infrastructure for heavy-duty electric vehicles. We have started with a large project in Canada by providing charging infrastructure for a ferry boat that goes back and forward between island and the mainland, and we are providing this infrastructure, and it falls into the segment that is called EVCI, electric vehicle charge infrastructure. This year, the latest project that we have secured is a project, as mentioned by Bryan, in Germany, in the Municipality of Sandbach, and this project is for grid ancillary services with a company that is called [indiscernible]. It's an independent power producer. And this project will use LeBlock, which is our new solution that is, as Bryan mentioned, modular, scalable, highly safe, and that will use, of course, our proprietary Leclanché Energy Management Software as a glue. I will show you a video that you will see how this project will look like. [Presentation]

Good. Thank you very much. I will hand over now to [ Serge ], my colleague, who'll speak about the Specialty business unit. Thank you.

Thank you, Guido. Good morning, ladies and gentlemen. My name is [ Serge Mariller ]. I'm the Head of Specialty Batteries and I'm pleased to share some information about this business unit. Today, we have resumed the growth, and this is the result of our efforts over the last 2 years to develop new markets, and in the same time, to preserve our long-term relationships with key customers such as Amazfit and Linde. The development in robotics, in general, creates an important battery market, which we want to address. Thanks to this, we already have a significant order book, over [ $30 million ] for the next 3 years. Here we have some examples of new customers we recently won. On the left, the battery of 28 kilowatt, developed for a German company, Himetal. This permits to address and to expand our market to other countries in addition to France, where we are already well implemented. In the middle, we see one [indiscernible]. In that case, it's designed for [indiscernible] and forestry analysis. This example shows the importance of robotics and automatic guided vehicles in our business. On the right, there is a defibrillator made by SCHILLER Medical, the same one you can find in any sports area. This project in medical and defense sector would guarantee revenue for the next 10 years. So thank you for your time. I hand over to Anil for the rest of the presentation.

Thank you, [ Serge ]. Dear shareholders, ladies and gentlemen, please allow me now to switch the gear, if you will, from customers, product, technology, to more operational aspects of it. During the course of this year, we have been providing you regular market updates in terms of our production. Let me try to elaborate and recap that today for you. At the start of the year, we had built sufficient stock of our lithium cells, at least to cover deliveries until summer of this year. Then we made a decision to reduce the production level to the minimal, I am talking about production of lithium cells. This has been primarily driven by 2 reasons: one, the fact that the worldwide supply chain issues had increased the cost as well as the time of delivery. Time, we have negotiated, and in most cases, almost all cases, I would say, the customers have been understanding and gave us more time. However, we did not want to incur additional cost to produce if we could avoid it. The second reason, very honestly and frankly, is the fact we have shared with you, the business has been in a tight liquidity situation, and we wanted to conserve the capital as much as possible. So those are the reasons why we stopped the production in Germany for our lithium cells. It has been intermittent, but [indiscernible], it does not mean we did nothing on the production line. Not true. In fact, we have been able to accelerate our R&D road map, R&D of cells I'm talking about. We have been able to test our advanced cell designs right on the production line. So yes, we have not produced for commercial delivery, if you will, but we have been able to increase, accelerate testing of our new generation of cell technologies. Going forward today and next months, as you are aware, we had notified to the market that thanks to our largest shareholder, the group of shareholders, as we call them SEFAM, they had provided us a comfort letter, which can give a funding up to CHF 50 million. I'm pleased to share with you that we have activated that request as of a couple of days back. We are working with our largest shareholder to even extend that support to cover all deliveries from today through to December 2023, for next, shall we say, 15 months. As we secure those fundings and start receiving that, we will resume our production. We are confident that the lithium cell production will resume by December of this year. We will then prioritize all orders on hand for delivery, and where possible, we will go beyond that and inject additional growth, such as the plans we have for Specialty Battery System. Hope this provides you a clarity beyond our press release, what we have been doing with our production. My colleagues in Germany, if they are listening to it, I would like to address this to them as well that production will start in foreseeable couple of months. Thanks for your patience and thanks for continuing to accelerate the R&D road map. Second operational aspect, probably the most important one, on the mind of every shareholder, I'm going to personalize this a little bit. I'm cautious of the significant large and patient investment shareholders have made. In the case of SEFAM, with whom I'm very thankful, that investment is well north of CHF 400 million. I'm cautious of that, the Board is, my colleagues are, and what we decided to do is, we approached the unlocking value of the shareholder in a very structured manner. For that, the Board approved Carve-Out of the transport business, now known as Leclanché E-Mobility. We started the work in summer of last year. In record time, we were able to complete their Carve-Out with all the relevant technology patents, production assets, personnel into brand-new entity, Leclanché E-Mobility. Following the new process, as required by the law and even beyond just the law, we requested one of the big 4 firms to do a fair market valuation of this entity, Leclanché E-Mobility. I'm pleased to share with you, the fair market valuation received for this entity is significantly higher, I repeat, is significantly higher than the average market cap of Leclanché Group since 2020. Hope it gives you the confidence, not because of what I'm saying alone, it's a third-party reputable Big Four firm has done a deep analysis and has concluded this business has value. It's one of those cases where party is more valuable than the sum, if you will. Okay. So hope you share that excitement, as we do, the Board does, I do, my team does. With the Carve-Out, we had a strategy, okay, which is providing a clean entity, if you will, for a potential M&A transaction, merger and acquisition transaction. We informed the market late last year that we are in a process with special purpose acquisition company called SPAC. Let me elaborate where that stands. We successfully completed the diligence by the SPAC, in fact, 2 SPACs, but by the time all that got completed in the time frame of late April, the market condition in the SPAC market, everybody can read the news, hasn't been favorable, quite the contrary. So we put that process aside. It isn't active right now, but it isn't dead either. And we activated a parallel process we have been already exploring, which is a direct discussion with industrial measures, direct discussion. Today, we are engaged with 2 of them, 1 at a starting block, if you will, and other one fairly advanced. Since it's a price-sensitive topic, when things develop to a point that it needs to be shared with you in the due course of coming weeks, months, we'll share an update for you. But I would like to reassure 1 time, again, that we are approaching the whole thing in a very structured manner, in a way that we will unlock the shareholder value, which all shareholders deserve. I'm cautious of that. Additionally, the Board looked at the other business we have. Energy Storage Solutions and authorized a process to enter into joint venture for Energy Storage Solution. We have given a mandate to a boutique specialized bank in San Francisco for Energy Storage Solutions business. Recently, the Board also decided to do a Carve-Out of Specialty business, just as we have done for E-Mobility business. Dear shareholders, I would like to assure you that we are on it, working very diligently to help unlock the value of the investments you have made in the company. I mentioned that the last topic on the business side was to talk about risk. There is no business which is not having risk. Ours has it, too. Yes, indeed, there is a risk of properly funding the business plan. I think I covered that point. And then there is the risk the world is facing around supply chain. Yes, supply chain issues have somewhat become better, but not really. The delays are still there, the cost is high. Some of the components we have in our battery module and pack, the prices went up by 10x, and then deliveries instead of 3 months, 6 months, 9 months. That has improved slightly, but still not completely where it needs to be. We are so thankful, we are so thankful to our customers. I would like to be on record to thank 2 customers, Alstom and Kongsberg. They stepped in to give access to their suppliers and using their leverage with our current suppliers to accelerate things and hopefully reduce the cost of procurement. Once again, I would like to thank Kongsberg and Alstom for their tremendous support through this very difficult period. Last comment I'd like to make is clearly, there is a number of things I need to do with my management team on operational aspects of it. The operating expenses continue to be quite high compared to the level of revenues we have today. As we do this structured approach of carve-out with joint ventures, we will systematically reduce the operating expense through that mechanism. Closing on to the other fact, you have seen the number of customers we have won in 3 years in E-Mobility like any start-up, and I have been on record to say that this is a 100-year-old startup. You go through a journey when you ramp up so fast and you do some mistakes, okay. And you do rework that to correct the mistake. That's called industrial maturity. What I can say, without going into detail in the interest of time, we are gaining industrial maturity literally week by week, month by month. What used to take 2, 3, 4 times [indiscernible] to make a battery back work, oftentimes it works for short now. So your company is maturing when it comes to industrial processes, quality, quality of delivery. Allow me to wrap up this presentation by setting the priorities for now and beyond. I have already covered the plans to restart the production of our lithium cells and prepared to deliver the projects in 2023. I do want to, one more time, comment on what we have discussed in almost every AGM we have been to, which is the fact that at what point the company will deliver profitability? I don't have a magic answer, but I have a very clear answer, which I've given in the past and I'll give it now. The E-Mobility business breakeven point is around CHF 175 million to CHF 200 million annual turnover. It's a scale business. Battery is a scale business, okay? And if you don't reach that level, you don't deliver profitability. But hopefully, the shareholders now have seen how big our order book is, how big our pipeline is. We have the base, we have the base to reach that scale and deliver the profitability. Pierre Blanc earlier covered, changing the subject here, on our competitive differentiated products and technologies. Let me add one more time what that really means. In Pierre's slide, if you may or may not have noticed, we are the only company, only company in the world, which combines high energy density, in this case we are talking about 200, 225 watt hours per kilo cell with a life of 4,500 cycles. These are numbers that may not make much sense to you, but let me say it again, higher energy density with higher life cycle is unique strength of the Leclanché cells. It is the one which helps us deliver best-in-class total cost of ownership for vehicle owners in train locomotive, marine, off-highway, on-highway vehicles. That's the core of our differentiation. We will continue to invest in R&D. Just this year, we have produced less of lithium cells, as I mentioned earlier, but we have accelerated our R&D roadmap. The innovation shall continue. Lastly, to conclude again, the Board, management team, is fully committed to carry on the work we have started on strategic side of a joint venture and M&A. We shall keep you updated. We are committed to unlock your value. Thank you very much for giving us the time and sharing our excitement with the management team. I hand over to our Chairman, Mr. Muller.

Thank you, Anil, for your presentation. Thank you to the management team that also made the very interesting presentations. But I also would like to thank the operators, all the engineers behind, that made this improvement possible, especially these difficult times with supply chain. It has also to be mentioned that operators have to be extremely disciplined. They are working with energy. Energy does not like short-circuits. It not just burn your fingers, but sometimes there will be more. So I would say we have here a company that works under very high quality conditions, safety conditions, and this with success. So thank you very much for the management team and the operators and the engineers and everybody. And now we have to go to the more dry part of the AGM, legal part, I would have to talk a lot, but it is important anyhow also that we can make all these different changes and can build the future. I repeat again that if you have questions to these presentations, please use the agm2022@leclanche.com to put your questions. Before moving on to the second part of this meeting, the following preparatory measures and formal statements must be made. The minutes of this meeting will be taken by Mr. François Jager. In accordance with Article 27 of the Ordinance 3 on Measures to Combat the Coronavirus, the Board of Directors has decided that the shareholders of Leclanché SA may exercise their rights at the Annual General Meeting on September 30, 2022, exclusively through the elected independent representative that is sitting here at the table is Me. Manuel Isler, attorney-at-law, acts as the independent representative and will present the results of each agenda item of today's Annual General Meeting. Me. Isler will announce the results of the votes according to the voting instructions provided by all shareholders duly registered for today's Annual General Meeting. I will proceed to the formal statements. I note that today's Annual General Meeting was called according to the Articles of Association and the statutory provisions by a publication in the Swiss Official Gazette of Commerce of September 9, 2022, and by letter to all shareholders registered in the share register on the 20th September 2022 at 5 p.m. CET. The 2021 annual report, the report of the auditors and group auditors, the 2021 compensation report, and the proposal of the Board of Directors to the Annual General Meeting have been available for inspection since September 9, 2022, at Leclanché's registered office and are also accessible on the Leclanché's website. The following detailed information on the participation at the General Meeting has been provided. The share capital of the company as of the closing date of the share register amounts to 33,519,708.90 and is divided into 335,197,089 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 253,252,897 shares. In total, 253,252,897 shares votes representing an aggregate nominal value of CHF 25,325,289.70, which represents to 75.55% of the share capital are present. You can see here on the -- the proposal to be resolved under Agenda Item 1 to 6, 9, 10.1.1, 11 and 12 require a majority of the share votes cast. The proposals to be resolved under Agenda Item 7, 8 and 10.1.2 and 10.2 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 168,835,265 share votes and CHF 16,883,526.47 of the nominal value. You have these figures on the screen. As I mentioned before, you will have the opportunity to address your questions in writing during each agenda point item during the meeting through the webcast. Questions will be answered orally during the Q&A session at the end or after the end of the meeting. On the basis of all the statements, I declare today's Annual General Meeting duly constituted and authorized to validly resolve all the agenda items. We will now proceed to the agenda items of today's meeting. Agenda Item 1, Point 1. Proposal. The Board of Directors proposes to approve the Annual Report 2021, the Consolidated Financial Statements 2021, and the Statutory Financial Statements 2021 of Leclanché SA. My explanations: I note that the business developments and certain aspects of the financial statements relating to the business year 2021, which also relates to the annual report 2021, have been discussed in detail by Mr. Srivastava and Mr. Foglia. I now ask the representatives of our current auditors, PricewaterhouseCoopers, Ms. Corinne Pointet, whether she wishes to address the General Meeting?

I don't have any additional comments.

Thank you very much, Corinne. I know that this is not the case. So in that case, we move to the vote. In accordance with Article 27 of the Ordinance 3 on Measures to Combat the Coronavirus, shareholder voting rights are only exercised through the independent representative. Consequently, I'm glad to hand over to Me. Manuel Isler, attorney-at-law, to announce the results on the votes related to Agenda Item 1.1.

Thank you, Mr. Chairman. Votes in favor are 247,141,396. Votes against the proposal 410,481. Abstentions 5,701,020.

Thank you. Me. Isler. So I declare that the proposal of the Board of Directors has been approved with the required majority. Agenda Item 1.2. The Board of Directors proposes to approve, on a consultative basis, the Compensation Report 2021. My explanations: Company Compensations 2021 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 a consultative vote. In accordance with Article 27 of the Ordinance 3 on Measures to Combat the Coronavirus, shareholder voting rights are only exercised through independent representative. Consequently, I'm glad to hand over to Me. Manuel Isler, attorney-at-law, to announce the results on the votes related to Agenda Item 1.2.

Votes in favor of the proposal, 242,245,778. Votes against the proposal, 5,156,078. Abstentions, 5,851,041.

Thank you, Me. Isler. I declare that the proposal of the Board of Directors has been approved. Agenda Item 2. This is the discharge of the Board of Directors. The Board of Directors proposes to grant discharge to all the members of the Board of Directors. The member of the Board of Directors as well as persons who in any way participated in a managerial capacity shall have no voting rights. I propose that we vote on the discharge of all members of the Board of Directors. In accordance with Article 27 of the Ordinance and Measures to Combat the Coronavirus, it is Me. Isler that is going to give us the response. I hand over to you, Me. Isler.

Votes in favor, 246,366,856. Votes against the proposal, 1,113,912. And abstentions, [ 5,764,092 ].

Thank you, Me. Isler. I declare that the proposal of the Board of Directors has been approved with the required majority. We now move to Agenda Item 3. The Board of Directors proposes to appropriate the loss for the year 2021 of CHF -75,108,364.06, with the balance brought forward from previous years amounting to CHF -41,498,625.09. The balance is to carry forward will amount CHF -116,606,989.15. Again, in accordance with the Article 27 of the Ordinance 3 on Measures to Combat the Coronavirus, I will let Me. Manuel Isler give us the result of the votes.

Thank you, Mr. Chairman. Votes in favor, 247,092,304. Votes against the proposal, 454,437. Abstentions, 5,706,156.

Thank you very much, Me. Isler. I declare that the proposal of the Board of Directors has been approved with the required majority. Then I move to Agenda Item 4. It is the reelection of some members of the Board of Directors. Agenda Item 4.1 deals with the reelection to the Board of Directors. The following members of the Board of Directors are proposed for reelection to the Board until the end of next Annual General Meeting of Shareholders. Mr. Christophe Manset and Mr. Benedict Fontanet, who are proposed for reelection at the request of Stefan, the controlling shareholder of Leclanché. I now ask the Board members for verbal confirmation if they wish to accept the nomination. So Mr. Christophe Manset has declared his acceptance in the event of his reelection prior to the Annual General Meeting. And Mr. Benedict Fontanet has declared that due to personal reasons, he has decided not to accept the nomination, but he would be available to assist a smooth transition in an advisory capacity. In agreement with the incoming Board, the outgoing directors have agreed to be also available to assist a smooth transition in an advisory capacity. Now to the votes. 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 next Annual General Meeting of Shareholders. So in accordance with Article 27 of the Ordinance 3 on Measures to Combat the Coronavirus, I hand over the results of this vote to Me. Isler.

Thank you, Mr. Chairman. Votes in favor, 246,424,271. Votes against the proposal, 1,076,813. And abstentions, 5,751,830.

Okay. So thank you very much. I declare that the proposal of the Board of Directors has been approved with the required majority. Congratulations to Mr. Christophe Manset. Agenda Item 4.2 is the election to the Board of Directors. Agenda Item 4.2 deals with the new elections to the Board of Directors. The following new members of the Board of Directors are proposed upon request of the majority shareholders for election to the Board until the end of the next Annual General Meeting of shareholders and have declared acceptance in the event of their election prior to the Annual General Meeting. The Board of Directors proposes, upon request of the majority shareholder, to elect Mr. Alexander Rhea to the Board of Directors until the end of the next Annual General Meeting of Shareholders. In accordance with Article 27 of the Ordinance 3 of the Measures to Combat Coronavirus, I give the word to Me. Isler.

Thank you, Mr. Chairman. Votes in favor, 246,414,196. Votes against the proposal, 1,63,376. Abstentions, 5,775,425.

Thank you, Me. Isler. I declare that the proposal of the Board of Directors has been approved with the required majority. Congratulations, Alexander. Proposal 2, the Board of Directors propose, upon request of the majority shareholder, to elect Mr. Shanu Sherwani to the Board of Directors until the end of the next Annual General Meeting. And in accordance with Article 27 of the Ordinance 3 on Measures to Combat the Coronavirus, I ask Me. Isler what the results are of this vote.

Votes in favor, 143,957,047. Votes against the proposal 3,520,719. Abstentions, 5,775,131.

Thank you, Me. Isler. So I declare that the proposal of the Board of Director has been approved with the required majority. Congratulations. Proposal 3. The Board of Directors proposes, upon request of the majority shareholder, to elect Mr. Bernard Pons to the Board of Directors until the end of the next Annual General Meeting of Shareholders. In accordance with the Article 27 of the Ordinance 3 on Measures to Combat the Coronavirus, Me. Manuel Isler is going to give us the results of the vote.

Votes in favor 246,273,645. Votes against, 1,092,569. Abstentions, 5,786,683.

Thank you. I declare that the proposal of the Board of Directors has been approved with the required majority. Congratulations to Mr. Pons. The Board of Directors proposes, upon request of the majority shareholder, to elect Mr. Marc Lepièce to the Board of Directors until the end of the next Annual General Meeting of Shareholders. Again, I ask Me Isler to give us the vote on this proposal point 4.

Thank you, Mr. Chairman. Votes in favor, 245,739,664. Votes against, 1,759,958. Abstentions, 5,753,476.

Thank you, Me. Isler. So I declare that the proposal of the Board of Directors has been approved with the required majority. Congratulations, Marc. Agenda Item 4.3. The agenda item deals with the election of the Chairman of the Board of Directors. I now move to the proposal. The Board of Directors proposes to elect Mr. Alexander Rhea as Chairman of the Board of Directors for a term of office until the end of next Annual General Meeting of Shareholders. Again, in accordance with Article 27 of the Ordinance 3 and Measures to Combat the Coronavirus, Me. Isler is going to give us the result of the votes.

Votes in favor, 226,299,64l. Votes against, 1,075,694. Abstentions, 5,777,163.

Thank you, Me. Isler. So I declare that the proposal of the Board of Directors has been approved towards the required majority. Congratulations, Alexander, and it is quite a lot of work. Agenda item 4.4. The Agenda Item 4.4 deals with the elections to the Appointment and Remuneration Committee. The Board of Directors recommends the election of the following members of the Appointment and Remuneration Committee: Mr. Shanu Sherwani and Mr. Christophe Manset and Mr. Marc Lepièce. The Board of Directors proposes to elect Mr. Shanu Sherwani to the Appointment and Remuneration Committee until the end of the next Annual General Meeting of Shareholders. Again, I ask Me. Isler to give us the results of the vote.

Thank you, Mr. Chairman. Votes in favor, 243,879,770. Votes against, 1,586,624. Abstentions, 5,792,503.