Ann: FY2010 results , page-107

Dirtyharry

WARNING LONG POST:

I am inclined not to answer your question because in some ways I do see the company as having an IP that is proprietary and at this time no-one truly in its space. However how do you sell something to a company if you dont or wont tell them what they are buying.

So let me try to overcome my fear and tell you what they are offering as I see it. - others of greater research can add or tell me I am misinformed.

Some time back we had a water meter reader , a gas reader and an electricity consumption reader. To try and read these meters and fill the space as a retail participant was too expensive as the Utlities had their own staff.

Along comes technology and now you can have software and hardware that allows you to remotely read meters and provide services to all of these industries. (Note not sure about Gas as use bottles in our current location) However the specialist water meters are sold to utility companies and both that and gas industries are regulated as I understand it.

In the past developers paid for the utility infrastructure but handed it over to the Utility and the wholesaler supplied it to the retailer who sold it to the customers.

The margins were based upon the infrastructure and capital needed to play in this arena. Technology has changed all that and up pops a company that sells and distributes an intelligent meter that can send information back to a computer and programs that can read the usage and charge the customer.

So up pops INT: Now it can offer anyone with a potential of underlying customers a service level that bills customers for multiple services and take a bulk services charge from a Utility. It can therefore fill the space as a hardware provider and/or software provider or full service one stop shop.

Now the developer is in business the margin that the retailer gets in various services is very good. Lets take one Electricity - In what other industry do you pay more per unit the more you use - Its a social constructed framework that tries to restrict peoples usage but offers large corporate users discounts for higher usage.

So now you can give the developer a deal for the individual that's far better than he would get as an individual and keep the retail margin without the huge asset investment needed to have a fleet of meter readers.

You can extend the offer to Internet , telephony and any other service that is wired into the complex.

The IP is in the ability to aggregate bill and receive data from hardware , supply the design and hardware to do this and ultimately collect from customers as well.

Nothing unique in individual services but aggregate them and I as a customer (I Presume this) get one bill from one source and get a better deal than I could get elsewhere.

When I saw this I sold my Origin shares immediately.

There is so much inefficiency in the industries. I get an ETSA meter reader who still comes here despite having a smart meter (as I have Solar) to read a manual meter because the smart meter has not been programmed to record the Off peak tariff although the exact same meter is used in other states to do just that.

Have you ever tried to talk to a retailer of electricity - They cannot help you sort anything out. I have tried a few times. Ever phoned Telstra - we get two bills because they they cannot consolidate the big pond bill into the phone at our business only due to be done next year. It was due to be done last year. cannot move as they own the exchange equipment and no-one has access yet to put own equipment in.

Big gap for INT IMO. Just need scale to kick to profits almost there if not already there. However caution annuity style companies take a long time to get over the infrastructure costs so that economies of scale drop big numbers to the bottom. buy the share if you like but oput in bottom drawer for 5 years. some disagree and think it will be far quicker.