BRR - Straight from the source

MR. ANDREW RANDALL, MANAGING DIRECTOR OF JACKGREEN LIMITED (JGL)

“Corporate Update”

http://www.brr.com.au/event/51704

THURSDAY, SEPTEMBER 25, 2008, 11:15 AM.

            JGL      Hello.  This is Andrew Randall.  I’m the Managing Director of Jackgreen and I’d like to get through our latest Corporate Update presented today.

10                    Starting on the first slide looking at our vision, it’s -- the company is about making a difference.  From the start, we knew that if we could get a lot of people to make some incremental change then we can make some significant difference.  Having a large customer base environmentally of aware energy users, we’ll make a difference to our future but also will provide substantial

15                    returns for our business and our shareholders.  To do that, we are building a recognised household brand for complete sustainable lifestyle solutions and the way we do that is offering very simple green solutions that take the hurdles out such as extra cost for people to take them up, at the same time just taking advantage of current regulatory framework rather than looking for

20                    any changes.  In a nutshell, we want to be Australia’s pre-eminent provider of GreenPower and carbon credits.

                        Next slide -- so looking at an overview, the market context, clearly, there is a very increased focus on climate change.  There’s an increasing awareness in

25                    the market and within consumers for affordable sustainable solutions.  People do want to make a change.  Our concept is around a diversified environmental products portfolio, very simple green solutions.  We’ve set up cross-selling platform so once you take one of our solutions, whether it be  GreenPower or solar hot water, then we want you to sign up to the other

30                    simple solutions that we provide, changing buying behaviour by taking away barriers and probably the key barriers to make sure that these simple low cost solutions.  Our unique differentiators in an energy sense, we’re the only Australian retailer to have GreenPower accreditation on every product that we sell.  Very unique, that way we don’t sell just pure black product and

35                    combining our businesses with Jackgreen energy being green to supply a range of low cost products that facilitate sustainable lifestyles.  We have a very experienced team, up to 30 years of experience in the executive management and board experience, I’ll just go through to the board with you at a later stage, and we do have a genuine dedication to reducing climate

40                    change.  We have scalable revenue model.  We’ve been doubling our revenue over the last two years.  We plan to double that again over the following two years, and by 2010, we’ll have serious efficiencies by those numbers.

45                    Next slide -- looking in a market context, we currently have about 7.5% market share of the residential GreenPower customer base.  GreenPower being the government authorized renewable energy solution.  We want to extend that to 10% to 15% of market share into the coming years.  To put that into perspective, we have currently more GreenPower customers than AGL, Country Energy, Integral Energy, Ergon Energy -- all very large energy companies.  We think that business customers on GreenPower, at the moment there is only 30,000, we think there’s a very large opportunity for us there as we launch into a suite of business products, which we’ll talk about a

5                      bit later.  There is a currently under 5% of Australian households using solar energy for water heating.  We think that’s a ridiculously low number and we think there’s huge upside potential for us to make dramatic change to that number and profit to our company.  There is clear increased consumer demand for low cost environmentally beneficial products.  We can come up

10                    with environmental products that actually save customers’ money, which is really important in the environment that we’re currently in.  With the introduction of new carbon reduction schemes both for the state and a federal level, it keeps providing further opportunity for our energy efficiency company, Easy Being Green.

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                        Next slide -- Looking at our sales strategy, it is about a complete sustainable lifestyle solution and then on that, a cross promotional platform to make sure that if we get one sign up on Jackgreen or Easy Being Green, that we’d make sure that we do our best efforts to sign them up on similar products through

20                    that platform.  Our first product, clearly, was energy where as we mentioned before, we have a GreenPower accreditation on every product we sell and we were the first to come out with a no cost, also no extra cost GreenPower solutions and we continue to be the at the forefront of that and we’ve had Choice magazines and others that have shown surveys where we are the

25                    best priced in the market. 

                        Our next product under Easy Being Green, we started with the Energy Saver Light Globes and pushing that into thousands of households whereby we create carbon credit certificates by doing that, and then once again when we

30                    talk about thing cross-selling over to Jackgreen or other products.  Solar hot water is our next major initiative.  Our product that we have offers free product of solar hot water using currently rebates and renewable energy certificates that they produce.  There is huge upside for us to make positive change and very profitable business for the Jackgreen and Easy Being

35                    Green.

                        On the left-hand side, the corporate program will be something that we’ll be pushing out.  We think it’s got very strong opportunity.  Currently, corporate land needs to start determining what their emissions are.  We will be

40                    providing very simple self-evaluation, emission assessments alongside to that GreenPower products, energy efficiency products, carbon offset arrangements, and then importantly for us, is to make sure that we offer our full array of product under the staff program schemes.  We do a lot of work with education especially into schools whereby we promote sustainable

45                    futures as well as programs for schools to be able to do fund raising by getting their both parents and teachers to sign up to join GreenPower and other energy efficiency products.  The residential carbon offset markets, we’re increasingly pushing and we think that overtime, will be quite a good market for us.

                        Next slide -- so looking at the Easy Being Green strategy -- Easy Being Green, being our energy efficiency business, we want that to be one of the largest creators of carbon credits in Australia and we’re well underway to

5                      being that.  To date, there have been 650,000 households that have had a product provided by Easy Being Green.  We have that customer database to our benefit to then offer other energy efficiency products as well as looking to up sales these people to Jackgreen Green Power products.  We want to roll out a diverse range of profitable product.  To meet our scale, it has to make a

10                    difference.  It has to be profitable and we have to have that opportunity then to cross-sell to Jackgreen and other products, and we’ve made further investments into companies like “The Green Pages“ where we can create other cross-promotional opportunities.

15                    Next page -- very quickly, looking at the Board of Directors, are very experienced team.  John Smith who is our Chairman was the CEO of Australian Energy Limited, which was the first I guess, independent energy company to be successful and sold to Ergon, before that had many years in senior executives within energy companies for the past 15 years.  Peter Vines

20                    is Non-Executive Director, was an Executive Director at Origin Energy and is currently a Director of Melbourne Water Corporation and the Northern Territory Water and Power Corporation.  You have myself, who is I guess, has been involved since the founding of the business, and Andrew Woodward, the Finance Director, is also the Finance Director and Executive

25                    Director of the company.

                        Moving to financial forecasts -- as you can see this business is being growing quite rapidly.  There’s been around 100% revenue increase for the last two years.  With the addition of the Easy Being Green business, that trend will

30                    continue into 2009 and 2010.  We’re increasing the spread of product to the diversification of product which obviously reduces risk, and by the fact of being a large creator of carbon credits like renewable energy certificates that offset certain risks for the Jackgreen business, for instance.  There’s going to be a great size and operational efficiencies reached in 2010.  So by this year

35                    in 2009, we’re on track to be profitable, we’re EBIT positives to the second half of 2008.  In 2009, we’re continuing the build, we’re turning into a profitable business, and then if you look at by 2010, we start getting full efficiencies and start trying some serious profit numbers.  So we’d see as a growth continues -- it continues being at the forefront position as

40                    environmental change agent, this business will flourish.

                        So, just looking at valuation comparisons, the previous acquisition of energy companies, we look at Queensland, where they sold the two large energy retailers and the pricing range there was between $1,000 and $1,300 up per

45                    customer.  Previously, there is mooted price in New South Wales of about $1,200 a customer.  So, if you look at that just as a comparative valuation, you’ll see we currently have 60,000 customers which I guess, we’re announcing today.  If you look at that on a comparative valuation on the basis that we’re looking to grow to 100,000 customers within the year and 200,000 customers within three years, there’s obviously a significant upside in the stock.  Our current market cap is around $25 million with 60,000 customer sales.  That doesn’t provide any valuation of the Easy Being Green business which we think has got has much more upside in, I think, the Jackgreen

5                      business.  Then if you look across to clearly 2010 where we start looking at $15 million to $20 million type net profits, we think there’s a pretty significant upside value in our stock.

                        Next slide -- so I’d like to conclude with looking at the company moving

10                    forward.  We’ve reached over 60,000 customer sales in our Jackgreen business.  We have an intention to grow that to 100,000 customer sales in around the end of this financial year, and we believe we can double that to 200,000 customers by 2011.  Based on the ’08 results, the company is well in line now to have its first annual profit this year and is would set to sometime

15                    now, 2010 will be our first significantly profitable year.  Purchasing Easy Being Green has really set the course of the businesses as we wanted it to and that is to be a provider of a diverse product of energy efficient and energy products.  The cross promotion vehicle is already set up and it’s doing very well, so you know, we’re really are on path to become a leading

20                    environmental business in Australia.  Easy Being Green and investment in Green Pages, it certainly consolidates the strategic position of the business as the full climate change agenda is continually unfolding.  Of note for our company to prosper, we have to be a low cost operator and we will achieve those numbers and are very much at the top end of best practice with a very

25                    low cost to acquire and a very low cost to serve in the Jackgreen business.

                        Thank you very much for listening to this information.

INTERVIEW CONCLUDED

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