RedFlow Limited (RFX) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to our 2021 Annual General Meeting. My name is Brett Johnson, the Non-Executive Chairman of Redflow. Due to the ongoing COVID-19 pandemic, we are holding a virtual AGM again this year to allow as many shareholders as possible to participate. Today's meeting is being held online via the Lumi platform, which allows shareholders, proxies and guests to watch a live webcast of the meeting. In addition, shareholders and proxies can ask questions and submit online votes. If we experience any technical issues, a short recess or an adjournment may be required depending on the number of shareholders being affected. If this occurs, I'll let you know. Additionally, I'd like to introduce your directors who are over here in Brisbane or online. Tim Harris who's sitting beside me, is our Chief Executive Officer and Managing Director; and online are David Brant, John Lindsay and David Knox. David also Chairs Redflow's Audit and Risk Committee. Also present with us today is our Chief Financial Officer and Company Secretary, Trudy Walsh. I'd like to thank the Board and the company secretary for their support in the last 12 months. I table the Notice of Meeting dated 14 September 2021, and note that there is a quorum present. As such, I declare the meeting open. The agenda for the meeting today will be a brief address by me, an operational update by the CEO and that will be followed by the formal business of the meeting, which includes the resolutions that need to be considered and which are contained in the Notice of Meeting. Online attendees can submit questions at any time. [Operator Instructions]. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on the same topic, combined into one question. For those shareholders who wish to ask a verbal question, an audio question facility is available during this meeting. [Operator Instructions]. If you have any issues or using this system, please return to the Lumi platform. Finally, due to time constraints, we may not get to answer all questions. Voting today will be conducted by way of a poll on all items of business. To provide you with enough time to vote, I will shortly open voting for all resolutions. I will formally close voting at the end of the meeting. I remind key management personnel and their closely related parties of the applicable voting exclusions and it is their responsibility to ensure they do not cast any votes in breach of those exclusions. If you are eligible to vote, a voting table will appear when I open voting. Selecting this tab will bring up a list of resolutions and present you with voting options. To cast your vote, please simply select one of the options, for, against or abstain. There is no need to hit a submit button as the vote is automatically recorded. You can change your vote at any time until I declare voting closed. I now declare voting open on all items of business. The voting tab will soon appear, please vote at any time. I will give you a warning before I close voting. The result of each resolution will not be declared at the meeting but will be announced on the ASX once the results have been finalized. A number of valid proxies have been received by Redflow, and I'll provide proxy details for each resolution at the appropriate time. In relation to the proxies which I am holding as Chairman, I note that if a shareholder has directed me to vote in a certain way, I will vote in accordance with that direction as required by law. If I have not been directed to vote in any way, I intend to vote in favor of resolutions 1 to 15. I'll move now to my brief address. I really don't think that a nonexecutive director should provide a detailed operational update, so I will leave that to your CEO, Tim Harris. We also have a very full agenda today. So I'll keep my comments short. However, before I hand over to Tim, I wanted to take this opportunity to let you, our shareholders, know how much Tim and his management team have truly been able to transform Redflow in the last 12 months. Despite the travel and commercial restrictions imposed on the business by the continuing COVID pandemic, the team has continued to develop the Gen3 battery to a point where we have -- where we're putting it into production over the next 6 months. At scale, this new battery can be produced at a significantly lower cost and has been developed so we can implement automation in the manufacturing process. The team has also increased our installed base of batteries by 60%. It's materially growing our sales pipeline with significant opportunities being identified in the United States, the largest global market for energy storage. This includes Redflow being named as an RFI -- sorry, in an RFI issued by a large, listed U.S. corporate as an approved supplier of flow batteries on a preliminary basis. If we are ultimately selected, proposed scope of work has the potential to be very material for Redflow. We received our single largest order to date, the 2-megawatt system being installed by Anaergia in California. They've broadened our focus from sales of smaller battery installations, which we continue to support to the megawatt hour market opportunity that Tim will outline in his presentation. They've also committed to establishing a small manufacturing capacity in Brisbane, principally designed to prove our design and manufacturing process prior to being transferred through our Thai manufacturing facility. We have committed the capital required to ensure that the Thai manufacturing facility can manufacture Gen3 batteries in the numbers we are hoping will be ordered in the next 12 to 24 months. Tim and his team have also identified 2 strategic investors and completed, with our shareholder's support, a nearly $16 million capital raising, which will permit us to implement our manufacturing and sales strategy. And based on that capital raising, we've now commenced to hire a technical and sales personnel required to execute our growth strategy. As you can tell, Redflow has made significant progress in the last 12 months, and this is clearly reflected in our share price, which has approved by more than 100%. The Board is confident that there is a real global market for the Redflow battery and that there is now a demand of technology other than lithium ion. We are hoping that, that confidence will result in significant orders over the next 12 to 24 months. None of this progress would have occurred without the leadership of Tim and his executive team, and I'd like to thank them for their efforts. I'd also like to thank you, our shareholders, for your continued support as without that support, Redflow would not be in a position now to exploit these its current market opportunities. Should the sales opportunities in our pipeline materialize, we will lead to make significant additional investments in manufacturing, sales, marketing, maintenance and support infrastructure. This is a challenge we welcome. Tim will now provide a detailed commentary focusing on the last year as well as our plans for the next 12 months.

Thank you, Brett, and good morning, everyone. Thank you all for joining this morning's Annual General Meeting, the second of which we have held virtually. You will see a slightly different format, which we hope will be an improvement on last year's structure. As per ASX Listing Rules, Redflow has released both the Chairman's and my address on the ASX today, will also be available on our website. As many of you attending today's meeting will understand, last year has again been one of managing various lockdowns, navigating a highly uncertain business environment and ensuring we are well positioned for when the dark clouds brighten. From my position, I'm confidently saying that Redflow has emerged from this period in a significantly stronger and positive position than where we were 12 months ago. Some highlights on the financial year 2021 and recent months have included: revenue up 14% to over $2.23 million for FY '21 despite the ongoing challenges of COVID-19 in Australia and other critical markets. We also note this excludes the backlog of nearly 180 batteries as of the end of June, which we've been busy delivering; a high -- a set of high-profile orders and deployments, including the 600-kilowatt hour Semini Grains order in Western Australia through our core partner TIEC, our partnership with Optus for bushfire resiliency across Australia and our 2-megawatt hour lighthouse project, Anaergia in California, the single largest battery order in Redflow's history; the development of new capabilities, including our hibernation mode, which has been used for our Optus battery bushfire deployment and our new Energy Pod Z, which will serve as a core building block for larger energy storage systems; we've proven our recycling credentials through taking a selection of end-of-life batteries via standard recycling pathways, reinforcing an important differentiation versus various lithium chemistries; we've made ongoing significant progress in our Gen3 battery, including customer trials but whose introduction into production has been impacted by recent COVID-19 dynamics; and finally, we've prudently managed our cost and production during this uncertain period to reduce net cash outflows by 30%. Outside of these important headlines, the Redflow teams continue to put significant efforts into diligently building on the core foundations necessary for our technology leadership and commercial success. This has included accelerated activities to diversify some of our core material suppliers, further enhancements of our battery management system, optimization of the operational management of batteries in the field and further insight into our core zinc bromine chemistry. We are confident these efforts will materially enhance long-term shareholder and customer value, noting we also received significant tax rebates on a number of these activities. Growing confidence in our strategy and growth plans has enabled us to execute on a capital raise in June and July and subsequent shortfall placement, which raised nearly $16 million. Importantly, this capital raise included institutional investment from New Technology Capital Group and also FUND4SE, both of which are subject to final shareholder approval today. These investments have been designed to align these investor interests with other shareholders and enhance our ability to secure and execute on key strategic opportunities. I would like to thank all shareholders, including all Redflow directors who participated and supported this investment round. We are now in a strong position to build further on the capabilities we have built over the past few years and enhance the confidence of our partners and end customers in our world-leading energy storage solution. From a market perspective, the energy storage market continues to grow exponentially with the global energy storage market forecast to be 36x larger in 2030 and 2020. More importantly, whereas a few years ago, flow batteries were treated as an outlier. We have seen new levels of industry and end customer inquiries who are keen to understand the potential role of flow battery solutions in combination with or instead of other battery chemistries. Our differentiation remains strong and clear across a number of factors, notably: sustained energy output across the battery life time; our modular approach, which enables scalability, redundancy and economies of scale; proven recyclability; no thermal runaway risk; flexibility and discharge up to 12 hours and the ability to put a fully changed battery into hibernation for extended periods without self-discharge; higher energy density, efficiency and smaller physical footprint versus other flow battery chemistries; proven field deployments at scale across a number of diverse customer profiles; and excellent tolerance for high temperature conditions. When combined with high profile projects such as Optus and Anaergia, we are now engaged with a number of EPCs, end customers and energy generators who are now actively seeking alternatives to lithium solutions. As well as being in a market that is growing rapidly, we believe this trend has been influenced by 2 factors. Firstly, we are seeing increasing concerns around safety and energy storage systems as evidenced by recent high-profile lithium fires in Victoria, Queensland, Beijing and Illinois in the United States. We are also hearing increasing signals of a shortage -- supply shortage in some stationary energy storage markets. In the U.S., this environment has also been enhanced by growing concerns around the security of energy storage and global supply chain dynamics, an area where we believe we have strong competitive differentiation. Secondly, we are seeing growing industry recognition that lithium is not the solution for all storage needs, particularly with regards to medium- to longer-term energy storage. It is clear that as renewable energy penetration increases, challenges of negative pricing and the need for curtailment is accelerating the requirement for solutions that can effectively and efficiently ship their energy to peak demand times. We believe there is a need to dramatically increase levels of medium- to longer-term storage to effectively integrate required levels of renewable energy penetration to have any chance of reaching minimum Paris Agreement targets by 2040. This is a market which has the potential to grow exponentially, and we strongly believe it's set to receive further recognition by energy suppliers, governments and corporates over the next 12 months. Evidence of this dynamic can be seen in the growing levels of visible support for flow batteries by people such as the U.S. Secretary of Energy, Jennifer Granholm, and U.S. Congresswoman, Diana DeGette, reflecting critical recognition of opportunity and validation of flow battery technologies. At a practical level, one has only to look at the increasing levels of curtailment in California and the state government's widespread media campaign urging customers to curtail their energy use between the hours of 4 to 9 p.m. to really understand the importance of magnitude of the challenge of this transition to a renewable energy future and the enormous opportunity that it presents us. Redflow, with its combination of higher energy density and efficiency versus other long-duration competitors and our proven hibernation capability, which we believe is unique amongst our flow battery family, and our proven deployment experience puts us in a very strong position to target this market. As a result of this increasing demand, growth and recent investment, we are accelerating our business development and marketing capabilities. This includes recruiting new commercial and marketing personnel in Australia and additional resources to lead up efforts in the United States. We will be selectively increasing our market participation, visibility and engagement across the industry, both in Australia and internationally. This will include taking a more active role to engage and encourage Australian state and federal stakeholders to increase their support for domestically developed and supplied energy storage solutions. While we're not in a position to give guidance around battery sales for this year, I can confirm that our current pipeline is the best it has ever been. This includes total battery numbers, the potential size of deployments and the quality of end customers who we are currently commercially and technically engaged. We also -- we have also in the portfolio of sales opportunities that are spread across the sales cycle, including several exciting opportunities that we are targeting to close by the end of this financial year, both here in Australia and in our target international markets. We're also actively currently engaged with several parties to have the potential to be important strategic partners and who are investing significant effort to understand our business and technology. When I delivered this address at last year's AGM in November, I announced we had surpassed over 100 active deployments in the field. Today, I'm delighted to announce that we now have over 160 active deployments, a 60% increase in less than 12 months and a 400% increase since the beginning of 2019. These range from single battery to multi-kilowatt hour systems. We remain confident that this is one of the highest total deployments of any flow battery company in the world. It provides us with a strong differentiation through our operational experience that other flow batteries and long-duration energy storage companies simply do not have. Nothing beats real-life customer deployments to building market credibility as a mature technology, which is now capable of rapid scale up. As we often state to our customers, we wear the gray hair that we accumulated over the years with pride as they provide clear and differentiated evidence of a company that has successfully addressed the inevitable challenges of introducing a world-leading energy storage technology that many new energy companies have yet to face. You simply can't get that experience in the lab. Our current and future deployments are serving as critical reference points for a number of exciting sales and partnership opportunities to Redflow. One clear example of this dynamic is with our Optus deployment for the Australian government's bushfire resiliency program. The deployment of our batteries across 56 targeted sites is nearly complete. Across the systems currently live, we now have several examples in Victoria and South Australia where mains power has been lost and our batteries were able to be woken from hibernation and support the load on this critical infrastructure for nearly 12 hours. This has helped to reinforce the value of our core battery and additional hibernation features. It has directly led us to be engaged with a number of U.S. telco companies who face similar challenges in managing wildfires in the U.S., particularly in California. Proven field performance remains our best marketing tool to our target customers. As communicated a number of times to investors, our 2-megawatt hour system for Anaergia represents a critical beachhead for entry into the Californian and U.S. market. The project also led to the development of our Energy Pod Z, which enables us to target high-voltage applications and megawatt hour systems and is generating considerable interest. As a direct result of the Anaergia sale, we have developed a number of exciting sales opportunities in the U.S. including with some large multinationals with a very ambitious renewable energy targets. A number of these are targeted to close by the end of the financial year. Significant time and effort has been focused on these opportunities as they have the potential to be transformational in our visibility, credibility and growth trajectory in the largest energy storage market in the world. Specifically with reference to the Anaergia project, the latest update is a little frustrating. 3 of our energy 12 pods have been unloaded in port last week. And this week, yesterday, I'm pleased to announce those final pods have now been unloaded at the Port of Long Beach in Los Angeles after considerable shipping delays. We remain focused on installing and commissioning the system later in October and early November, and we've secured Australian government approval to travel to the U.S. for this purpose. We remain positively engaged with Anaergia in the California Energy Commission on this project and other potential opportunities across California. As well as highlighting some of the achievements over the last 12 months, we believe we also have an obligation to our shareholders to call out some of the lessons from our business and implications on strategy going forward. There's little doubt that the COVID environment has made it extremely difficult at times to make the best possible decisions in an environment of high uncertainty. Overall, the impact from this situation has been on driving progress on a number of commercial opportunities, especially in some overseas markets of South Africa and progress on our Gen3 battery launch. As noted on our full year results presentation in August, after a relatively benign COVID impact in 2020 and early 2021, the situation in Thailand deteriorated significantly over the last 8 months. The Chon Buri province, which is where our factory is located, has been materially affected. The situation has an impact across 4 areas. Firstly, direct impact on the Thailand Redflow team with a small number of staff, including management, being infected. All have now recovered, and we have extensive COVID prevention measures in place. Secondly, it has met extended delays to the supply for our some critical materials. Thirdly, delay to some of the timely servicing and maintenance of critical equipment by Thailand service companies. And lastly, the ability of our Brisbane engineering team to travel to Thailand, including the disappointment of having our travel request for our engineering team to travel to Thailand rejected by the Australian government. This situation has had a short-term impact on Gen2.5 production. More importantly, it has pushed back the introduction of the Gen3 battery into next year. Our revised program is now forecasting the introduction of Gen3 into production in Q4 of FY '22. As our long-term shareholders will know, we've worked hard to learn from and move forward from manufacturing experiences in the past. We are confident this time line is both achievable and enables us to appropriately manage the program without introducing unacceptable levels of risk that we will only regret afterwards. These experiences have also led us to conclude that we require additional capabilities and equipment in Brisbane to enable us to test and iterate specific aspects of the Gen3 agent stack more rapidly. Relying on Thailand facilities, the associated impacts from freight costs, delays and the ability to travel on the main causes of our revised Gen3 time lines. We are, therefore, making selective investments in Australia that will mean we can produce full batteries at small scale in our Brisbane facility and iterate designs more rapidly than we are today. In addition, we'll be making selective investments in Thailand, notably, new presses and automation of rib stitching of our separator that will help us to better manage some of the critical machinery that is nearing its end of life and enable a rapid ramp-up of capacity for Gen3 production next year. We continue to believe that Thailand represents the best option today and over the medium term for manufacturing of Redflow batteries. Rapid increases in our order book and sales pipeline will influence the next stage of our manufacturing strategy, and we've already begun scoping what the next stage of manufacturing capability and capacity looks like, which will be in the 100-megawatt hours capability per annum. We want to have a clear picture of our ramp-up plans, so we are well prepared with some of the commercial opportunities that are currently in our pipeline are realized. There's little doubt that Redflow sits at the heart of a transition to a renewable energy-based energy system. The authoritative Intergovernmental Panel on Climate Change, the IPCC, published its report in August which clearly states that climate change is human-caused and "unequivocal". As noted by the UN Secretary General Antonio Guterres, the report is a red code, a code red for humanity. This means that we have an important role to play in addressing the biggest existential challenge of our generation. But we also have a potential market in energy storage that can conceivably be measured in the multiple gigawatt hours in the next 2 to 5 years. I cannot emphasize enough the fact that we have many years of experience on our chemistry and our proven deployments puts Redflow in a unique and strong position in this exciting market. Looking forward, we remain focused on converting some of our sales opportunities, ensuring successful installation of our Anaergia system and focus on progressing our Gen3 program to launch. We'll be accelerating our U.S. presence and positioning our manufacturing deployment capabilities for a significant uplift in battery orders. We are also building additional capabilities such as UL certification and independent testing that we believe will be necessary for long-term success in our target markets. We, therefore, remain highly ambitious for Redflow and are increasingly confident about our value proposition and the role we can play in the global energy storage market. Now is the time to be bold. At the same time, we are conscious that to truly enable our potential, we must focus on the right opportunities in the right markets, allocate our scarce resources prudently and execute flawlessly. The last 12 months have been about navigating Redflow through the choppy waters created by the ongoing COVID-19 pandemic while positioning ourselves for the pivot point of accelerated growth. As the adage goes, a smooth sea never made a skilled sailor. There is still much work to do, but the next 12 months promises to be one of the most exciting and important times in Redflow's history. I would like to thank Brett, and the Redflow Board, our world-class Redflow team and you, shareholders, for your ongoing efforts and support. Our recent achievements and capital injection are enabling us to invest in necessary capabilities and actively plan for the next stage of our growth. I remain very confident of a bright future for Redflow and I'm excited about the road ahead. Thank you.

Thanks, Tim. I'll now move to the formal part of the meeting. The first item business is the financial statements and reports for the year ended 30 June 2021. The following are now laid before the meeting: the financial report of Redflow for the year ended 30 June 2021, the director's report and the auditor's report. [ Stephen Boschelbek ], a partner from Redflow's auditor, PricewaterhouseCoopers, is present to answer any questions that shareholders may have in relation to contact the audit and the preparation and content of the auditor's report.

At this point, I would like to ask shareholders -- sorry, I'd like to provide shareholders with the opportunity to ask all questions or make comments that you may have in relation to the financial statements, reports, audit or the management and operation of the Redflow generally. Please note that this is your only opportunity to ask general questions about the management or operation on Redflow as there is no -- there will be no general Q&A at the end of the meeting. I have a number of -- I have 2 questions on screen, and we had 2 questions which were actually provided prior to the meeting. So I'm going to start with the 2 of which were provided. The first one is from a shareholder, [ Mehta Lee ], and [ Mehta ] asked, "I'm a long-term shareholder and believe in Redflow technology. Maybe a silly question. Is it possible to increase the size of the Redflow battery to container-sized batteries to take advantage of the need for backup rig-scale power, large-scale vanadium flow batteries are getting publicity. Could zinc flow batteries have the same large-scale potential?" Tim?

Thank you for your question. The short answer is yes. We believe that the potential for our core chemistry and the design of our battery does enable us to target the larger megawatt system and utility-based markets. However, we have to be prudent to understand the building blocks for us to get there. Hence, our focus and our continued reference to the 2-megawatt hour project that we're doing for Anaergia in California, which represents our single, big megawatt hour order that will become operational next month. So based on the economies of scale, the economics and the Energy Pod Z that we have developed as part of that program, we're confident about our ability to go and operate at that larger scale.

Thanks, Tim. The second question is from [ Ned Dowling ]. This is probably a bit -- the exact opposite of the last [indiscernible] which can -- [ Ned ] has asked, "Reading an article from today's AFR, there appears to be a case to pivot to the residential market. Please address this at the next AGM."

Well, thank you, [ Ned ] for your question. And short answer, look, we still continue to sell batteries into what we call high-end residential customers. I think it's fair to say that we believe that, that market is strong at large. But compared to the other opportunities that we're currently seeing before us, we believe that it represents a good market but more positive opportunities exist in other markets. So in essence, we continue to sell our batteries through our integrated partners here in Australia. We don't believe it's the best solution for the end customers. But at the same time, we're going to pivot and start to focus in on some of those larger opportunities that are currently in our pipeline. I think it's worth noting that our experience is, in terms of the residential space, yes, we've taken very strong competition against lithium in that space at very aggressive pricing. Previously, we have not had access to any of the subsidy programs at the state level because those programs had, unfortunately, orientated explicitly around lithium. And the maintenance cycle of our batteries means that if you're wanting true UPS for some of those residential spaces, you need 2 batteries. So combine those together, our focus -- we still continue to sell to residential but at the high end that people will be comfortable with that kind of profile. But we believe that some of the opportunities that are in front of us and those larger commercial industrial systems probably present the greater critical mass of our pipeline going forward.

Thanks, Tim. That answers the question, which was asked during the meeting by Ms. [ King ]. Ms. [ King ] has another question. "Thank you for highlighting the climate situation and Redflow's role in turning it around. That's why I'm an investor in Redflow. Is Redflow briefing elected representatives, particularly those publicly opposing renewable energy and storage?"

I'm not -- well, first, Ms. [ King ] thank you for your question. I'm not too sure about the -- if there's any one specifically that you are referring to there, either federal or state [ public ].

Probably the national.

Look, I think it's fair to say, as I've noted before, there's a major difference between a signal and a noise. And if you look through the noise, the strong signals that are coming out at a state level and internationally is that a move to renewable energy -- renewable energy systems is a commercial model and technical opportunity that should not have barriers in its way. Look, we understand that there's political complexities around navigating that transition to a renewable energy future. What we are focused on is engaging with shareholders who understand that pathway and can work with us to achieve those goals. That includes continuing to engage with important stakeholders like Dr. Alan Finkel, who is our -- I think I understand our sort of Australian ambassador for climate change on an international basis and also stakeholders at the federal and state level, including engagements with people like our local MP. So look, we're continuing to focus on some of those elements. And I think as I noted in my address, one area that I'd like us to improve more and that we'll put in some more focus into is getting those stakeholders to understand that there is a world-class energy storage solution that has been developed throughout here in Queensland. It's a company and a solution that has massive global opportunity, but also massive opportunity here in Queensland and in other states. And hopefully, through that dialogue, we can start to see some ongoing support from some of those stakeholders.

I'll just add that Tim is working very hard with the -- particularly with the Queensland government to try and convince them that they should support a homegrown product. I'm not seeing any more questions. I'll give -- I'll just give shareholders an opportunity to ask any questions if they want to. Otherwise, we'll move on. Okay. Thank you. I'll move on. If any other [indiscernible]. Here's a question, thank you. From [ Christina Wood ]. The question is, "Container shipping costs have increased dramatically. What are your plans to meet these costs?"

[ Christina ], that's a very good question and thank you for asking that. I mean I think we found out some of our freight costs have kind of increased by over 200% over the last kind of 8 to 12 months because of the COVID situation and other factors. I think there's 2 components to that. One is the cost factor, but the other one is the delay factor. And I think I've mentioned that before about some delays about getting some critical supplies through to our Thailand facility. Look there's really 2 ways that we can address that. One is pass them on that cost to customers. So often, when we're quoting to our customers, it's works from Thailand. So we're not exposed to that cost. And then secondly, it's having probably a high level of predictability around shipping, particularly for some of our suppliers. And as we start to grow our volumes, our ability to import regular orders into our suppliers will also help to address that. But certainly that steel costs for our Energy Pod Z are probably 2 sort of cost factors that we're continuing to keep a very close eye on.

Thanks, Tim. Okay. If shareholders do have any other questions on -- during the course of the meeting, don't hesitate to ask because -- and we'll address them as we go through.

I'll move on to resolution 1, the adoption of the remuneration report for the financial year ended 30 June 2021. The purpose of this resolution is to give shareholders an opportunity to ask questions or make comments concerning the remuneration report. By law, the vote on this resolution is advisory only and nonbinding. The remuneration report sets out the remuneration arrangements for the directors, including the managing director and for Redflow's key management personnel. As explained in the remuneration report, Redflow's remuneration strategy is designed to attract, motivate and retain employees, executives and directors by identifying and rewarding high performers and recognizing the contribution of each employee to the continued growth and success of Redflow. Four principles to use when determining employee remuneration. They are: one, fairness. Provide a fair level of reward to all employees; two, transparency, through a culture of achievement by transparent links between reward and performance; three, alignment. Align employees' and shareholders' interest through share ownership; and four, culture. Drive leadership performance and behavior that creates a culture that promotes safety, high performance, diversity, employee satisfaction and shareholder return. I now -- I move that resolution 1, which is now on screen, is passed as an ordinary resolution. Are there any comments or questions regarding this resolution? I don't hear any questions in relation to the remuneration report. As such, I advise that Redflow has received valid proxies for this resolution and details of those proxies are now on screen. I now invite shareholders to vote on the resolution. [Voting]

I note that we received a general question, Tim, from Mr. [ Raymond Johnson ]. The question is, "Is there a scope emphasizing the environmental benefit as for the dangerous materials, e.g., cobalt, et cetera, in the Redflow product?" I actually have to start on this because -- and that's had -- the environmental benefits of our products, I mean, we actually use very, very aggressively in our marketing and in discussions with potential clients. But I'll let Tim add to that.

Yes. [ Ms. Woods ], we support what Brett said. I mean -- thanks for your question, [ Raymond ]. And as you know, we've taken some right batteries through a leading recycling here based in Brisbane that's validated the pathways that we can -- current pathways that we can use. I think as we start to look forward, we will probably put in more emphasis in terms of validating those environmental credentials, not just end of life, but also become the CO2 emissions that come from our manufacturing, which increasingly I think large corporates are wanting to show and demonstrate. So yes, as I think I mentioned before, the environmental recycling, reusability elements on our energy storage system put us in a strong differentiation point. We continue to use those and we'll continue to, I think, heighten some of that differentiation over the coming months.

Thank you. Resolution 2 is the reelection of John Lindsay as a Director. Details of John's qualifications and experience is set out in the Notice of Meeting. John was last elected at the 2018 AGM and, as required by Redflow's constitution, he is required to submit his -- submit for reelection by shareholders at today's meeting. I have no hesitation in recommending John's reelection. He makes a significant contribution to the Board's deliberation process. I move that resolution 2, now on screen, is passed as an ordinary resolution. Are there any comments or questions relating to this resolution? It doesn't appear so. So I advise that Redflow has received valid proxies for this resolution and details of those proxies are on screen. I now invite shareholders to vote on the resolution. [Voting]

Resolution 3 is a reelection of David Brant as a Director. Details of David's qualifications and experience are also set out in the Notice of Meeting. David was last elected at the 2018 AGM and is required by -- Redflow's constitution has required to submit to reelection by shareholders at today's meeting. I also have no hesitation in recommending David's reelection. David makes a strong contribution to the Board, but also, given the significant manufacturing experience, to management. I move that resolution 3, which is now on screen, is passed as an ordinary resolution. Are there any comments or questions regarding this resolution? Thank you. I advise that Redflow's received proxies and valid proxies and they are now on screen. I now invite shareholders to vote on this resolution. [Voting]

Resolution 4 seeks approval for an enhanced share placement capacity. Shareholders approved a special resolution at past AGMs. In general terms, if approved, Redflow will be able to issue an additional 10% of its share capital, resulting in a maximum 25% of Redflow's share capital being available for issue without additional shareholder approval in the next 12 months. The Board has proposed this resolution so it has the flexibility to raise capital quickly and cost effectively if that becomes necessary or desirable. The directors consider this flexibility prudent in Redflow's financial circumstances. The resolution is a special resolution, meaning that it requires the approval from 75% or more of the votes made at today's meeting. I move that resolution 4, now on screen, is passed as a special resolution. Are there any comments or questions regarding this resolution? Thank you. The proxies are -- for this resolution are also on the screen. I now invite shareholders to vote on this resolution. [Voting]