Ann: Strategy Update, page-34

I sat down and wrote a transcript of what appears to be the sole mention of the warranty issues (I'll acknowledge that I haven't yet sat through the whole thing - I'm currently at the 14 minute mark, and don't really have time to sit and watch the remaining half hour or so at the moment.) Bits noted with a (?) are points where I'm not quite certain exactly what Tim is saying, though I think the general thrust of the information is accurate. Thus:

"But we need to recognise that you know, the end of last year was, we did have some of those challenges with glass filled sheets(?) that are used in our side panels and our collectors, and that issue will be well known to investors. I think we want to emphasise that we now have injection moulded collectors and side panels that have successfully addressed those issues. But we have seen a few instances in previous gen 2.5 and ZBM 3 batteries that used that previous depression(?) moulded approach that started to exhibit a few signs of stress around that after a significant amount of cycles in the field. And that’s really especially prevalent in single battery type installations where it looks like they are subject to sudden sharp spikes in voltage on a regular basis. And we have a few other instances with early ZBM 3 batteries where a particular batch of materials particularly around our separator didn’t quite get the performance that we were expecting or wanting."

I'm honestly not comfortable with this description of the problem. It doesn't align with my experience with the battery: the number of maintenance cycles it had been through when it started to exhibit issues was fairly low, and the issues appeared to be related to a low battery voltage, not a "sudden sharp spike" in voltages. It's possible that the message got garbled on its way up to Tim, but given the size of the company, I can't give that possibility much credence - it's much more likely in a larger company where there's a greater separation between the people at the coal face, and the company executives.

Based specifically upon my experience, this explanation smells very much of the company trying to sweep the problem under the carpet, rather than giving an honest and detailed explanation of what's going on. Now, I'll be the first to acknowledge that my experience with the product is a sample size of one, out of I don't know how many. It's possible that it's an aberration (and one aspect of the explanation that does fit in with my experience is that my installation was a single battery installation.) But the idea that a single battery is "subject to sudden sharp spikes in voltage on a regular basis", whilst multiple batteries don't have that... it doesn't pass the smell test for me. It doesn't make sense in the context of what I know about electricity (two years of electrical engineering, so I'll willingly defer to any tradespeople or engineers who actually work with this stuff in the field, but more knowledge than the typical member of the general public.)

That said, I think that the shift in focus is the right one for the company, for reasons that I'll go into in a subsequent post. I'm just feeling very uncomfortable with the explanations that are forthcoming and the feeling it gives me of the company glossing over highly relevant details. It means that next time there's a capital raise - and I'm absolutely certain that there will be - I'll be that much less likely to put my hand in the pocket, and that is something that should make the company sit up and take notice. If shareholders feel that the company isn't being honest with them, the likelihood of the company continuing on as a going concern drops - significantly.