agm report

All
I attended the AGM yesterday with about 30 other attendees. A couple of suit and tie types there, including a broker from Tolhurst who seemed impressed (let’s wait for his clients to start buying).

Below are my observations in bullet form as Stephen Black took us through the presentation. My overall impression is still positive – assuming their technology is one of the best (and no reason to doubt it isn’t), the tie-in with PRI could land major opportunities outside of Australia in places like India and Malaysia. I’m cool with that, as there are 1.3 Billion Indians compared with 21 Million Australians – much greater potential in overseas markets.

-Currently tendering with PRI in India for contracts with an Indian Utility (not sure if there is only one government owned utility or not)

- PRI have 3 factories in India, employ 350 R&D engineers alone and have 70% of the Indian market already (imagine if INT technology is tied in to this space) as well as 50% of Malaysian market

- Black specifically said with the Victorian govt DPI trials, INT was the best-performing DLC solution

- Trials are still running with Alinta and energyAustralia – whilst the utilities usually spread the work across multiple meter suppliers (like PRI or Ampy), they only choose 1 communication supplier (who can interface to all meters) and this is what INT is aiming for

- Just commenced a new 500 meter trial with Alinta (I think it was Alinta)

- On the short-list for Alinta contract (1.5 Million meters) and waiting for Citipower proposal to be issued (3 Million meters)

- Trials currently underway in India and UK (London Electricity)

- Integrated PRI/INT products due for commercial delivery in Q1 2008

- Recent contract awarded at DFO Essendon (big shopping mall); more and more of these contracts are coming through, as it allows the landlord/owner to manage supply on their terms

- Powersave business can deliver 30% savings to organizations off their lighting bill (pretty sure one of the directors let slip the banking contract was with NAB)

- Expect to announce financial forecast/guidance for 2008 Calendar Year in February 2008

- No substantial capital investments are envisaged. All future growth coming from revenues (I take this to mean that the huge R&D drain on funds over the past 5 years has slowed or stopped)

- Bennett mentioned that they are almost cash-flow positive in the INT standalone business, before taking into account the effect of the acquisitions

- All acquisitions are cash-flow positive businesses

- My view is that the acquisitions are being made not only because they meet the “growth envelope� of INT, but because they provide near-term revenue streams to keep INT’s books healthy – the core INT business can take some years for revenue to flow from contracts to be awarded in the present

- Still looking at adding non-Executive directors

– current directors are flat-out integrating the new businesses and may need some help

Jaydeep Biswas then gave a talk about Energy Mad and AEL and their experience in the NZ market, as well as overseas opportunities.

- Energy Mad ecobulb is a High-Power Factor bulb. Utilities like this type of bulb over and above the cheaper Low-Factor Bulbs as the LFBs cause instability (and brown-outs in trials) on the network. They also cause more electricity to be used and higher CapEx spend by Utilities on their network for repairs/maintenance

- An $8 ecobulb can generate $370 savings in the ‘value chain’, through carbon credits (20-30 Euro per tonne of emission saved by 1 bulb, reduced spend by Utilities on their networks etc.)

- Energy Mad will look to partner/JV with Govts/Councils/Utilities for roll-outs of the bulbs, then receive their portion of the value chain savings over a 7 year period

- ecobulb outsells other fluoro bulbs in NZ 11:1 (brand strength). Also MD of Energy Mad (Jaydeep Biswas) was ex-Shell, and ecobulbs are sold heavily in Shell outlets under some joint agreement (http://www.energymad.com/nz/Files/Media_ShellPR_280607.pdf)

- ecobulb has just been endorsed by the ETU in Australia – seems like they are getting ready to push/promote ecobulb in Australia Q1 2008 using the NZ model/approach

- Potentially a JV in India between AEL and a large Indian family-owned industrial company (someone like Tata ??)

- Energy Mad bulbs/proposition has been taken to all Australian Utility CEOs and they are very receptive (helps that Harvey Parker is ex-CEO of United Energy and Black is also ex-United Energy – contacts into industry)

That’s about it. I was concerned they are buying too many companies too quickly, but they did stress that each company has its own Board and is already cash-flow positive which is much easier to manage and integrate. India, Malaysia etc. has enormous upside using the PRI alliance – imagine a contract for a lazy100 million meters !!!)