ENERGY ACTION LIMITED — Capital/Financing Update 2011

Oct 10, 2011

Prospectus

Energy Action Limited A.C.N: 137 363 636

Prospectus for the offer of up to 3,800,000 ordinary shares issued at \$1 per share to raise up to \$3,800,000

12 September 2011

®Registered Trade Mark

IMPORTANT NOTICE

Lodgement and listing

This Prospectus is dated 12 September 2011 and was lodged with the ASIC on that date.

This Prospectus expires on 12 October 2012, 13 months after the date of this Prospectus ("Expiry Date"). No Shares will be issued on the basis of this Prospectus after the Expiry Date.

Energy Action Limited ("Energy Action" or "Company") will apply to ASX within seven days of the date of this Prospectus for admission to the Official List and for Official Quotation of the Shares on issue as at the date of this Prospectus and the Shares issued under the Offer.

Neither ASIC nor ASX take any responsibility for the contents of this Prospectus, or the merits of the investment to which this Prospectus relates.

Note to Applicants

The Prospectus does not provide investment advice. You should seek your own financial advice. The Offer contained in this Prospectus does not take into account your investment objectives, financial situation and particular needs. It is important that you read this Prospectus carefully and in full before deciding to invest in Energy Action. In particular, in considering the prospects of Energy Action, you should consider the risk factors that could affect the financial performance of Energy Action in light of your personal circumstances (including financial and taxation issues) and seek professional advice from your stockbroker, accountant or other professional financial adviser before deciding to invest.

Section 9 outlines some material risk factors that may impact on the prospects of the Company. Further, any number of known and unknown risks, uncertainties and other factors could have material adverse effects on the actual results, performance or achievements of the Company.

Disclaimer

No person named in this Prospectus, nor any other person, guarantees the performance of Energy Action, the repayment of capital or the payment of a return on the Shares.

No person is authorised to give any information or make any representation in connection with the Offer which is not contained in this Prospectus. Any information or representation not contained in the Prospectus may not be relied on as having been authorised by Energy Action or the Directors.

This Prospectus contains forward looking statements, which are identified by words such as "may", "could", "believes", "estimates", "expects", "intends" and other similar words that involve risks and uncertainties.

Other than as set out in this Prospectus, and as otherwise required by law or the Listing Rules, the Company has no intention to update forward looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus.

Investment risks and assumptions

Before deciding to invest in the Company, it is important that you read the entire Prospectus and consider the risk factors that could affect the financial performance of the Company and the assumptions underlying the forecast financial information.

Special considerations for New Zealand investors

The Offer is being extended to New Zealand investors under the mutual recognition of securities offerings regime applicable to public offers of securities in Australia and New Zealand. Any New Zealand investor considering this Prospectus should be aware that there are considerations particular to you. Some (but not all) of them are described throughout this Prospectus or referred to under this 'Important notice' and under 'Information for New Zealand investors'.

A copy of this Prospectus and other documents relating to the Offer have been, or will be, lodged with the New Zealand Companies Office under the mutual recognition of securities offerings regime.

No overseas registration

This Prospectus does not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. No action has been taken to register or qualify the Shares or the Offer, or to otherwise permit a public offering of Shares, in any jurisdiction outside Australia or New Zealand. The distribution of this Prospectus (including in electronic form) outside Australia may be restricted by law and persons who come into possession of this Prospectus outside Australia should seek advice and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of the applicable securities laws.

In particular, the Shares have not been, and will not be, registered under the US Securities Act, and may not be offered or sold in the United States or to, or for the account or benefit of, US Persons (as defined in Regulation S under the US Securities Act) unless the Shares are registered under the US Securities Act, or an exemption from the registration requirements of the US Securities Act is available.

Electronic Prospectus

This Prospectus (without an application form) may be viewed online at www.EnergyAction.com.au. However, it cannot be used to apply for Shares. Selected Applicants who are given access to an electronic version of this Prospectus (and Application Form) must be resident in Australia or New Zealand. Persons who access the electronic version of this Prospectus should ensure that they download and read the entire Prospectus.

Persons having received a copy of this Prospectus in its electronic form may, during the Offer Period, obtain a paper copy of this Prospectus (free of charge within Australia) by contacting the Energy Action Share Offer Information Line on 1800 451 641 (from within Australia) or 61 2 8280 7786 (from outside Australia). Applications for Shares may only be made on the Application Form attached to or accompanying this Prospectus or by way of an online Application Form for select Applicants. The Corporations Act prohibits any person from passing on to another person the Application Form unless it is attached to or accompanies a hard copy of the Prospectus or a complete and unaltered electronic copy of this Prospectus.

Exposure period

The Corporations Act prohibits Energy Action from processing Applications in the seven day period after the date of lodgement of this Prospectus ("Exposure Period"). This period may be extended by ASIC by up to a further seven days. This period is an exposure period to enable this Prospectus to be examined by market participants prior to the raising of funds. Applications received during the exposure period will not be processed until after the expiry of that period. No preference will be conferred on Applications received during the exposure period.

Photographs

Photographs used in this Prospectus which do not have descriptions are for illustration only and should not be interpreted to mean that any person shown endorses this Prospectus or its contents or that the assets shown in them are owned by Energy Action.

Financial amounts

Money as expressed in this Prospectus is in Australian dollars unless otherwise indicated.

Glossary

Certain terms and abbreviations used in this Prospectus have defined meanings which are explained in the Glossary of this Prospectus.

Privacy

By filling out an Application Form to apply for Shares, you are providing personal information to Energy Action through Energy Action's service provider, the Share Registry. Energy Action, and the Share Registry on its behalf, collect, hold and use that personal information in order to process your Application, service your needs as a Shareholder, provide facilities and services that you request and carry out appropriate administration.

If you do not provide the information requested in the Application Form, Energy Action and the Share Registry may not be able to process or accept your Application.

Your personal information may also be used from time to time to inform you about other products and services offered by Energy Action which it considers may be of interest to you.

Your personal information may also be provided to Energy Action's agents and service providers on the basis that they deal with such information in accordance with Energy Action's privacy policy. Energy Action's agents and service providers may be located outside Australia where your personal information may not receive the same level of protection as that afforded under Australian law. The types of agents and service providers that may be provided with your personal information and the circumstances in which your personal information may be shared are:

• » the Share Registry for ongoing administration of the Shareholder register;
• » the Corporate Advisor in order to assess your Application;
• » printers and other companies for the purpose of preparation and distribution of statements and for handling mail;
• » market research companies for the purpose of product development, product planning and analysing Energy Action's Shareholder base; and
• » legal and accounting firms, auditors, contractors, consultants and other advisers for the purpose of administering, and advising on, the Shares and for associated actions.

You may request access to your personal information held by (or on behalf of) Energy Action. You may be required to pay a reasonable charge to the Share Registry in order to access your personal information. You can request access to your personal information by writing to, or telephoning, the Share Registry as follows:

Link Market Services Limited ABN 54 083 214 537 Level 12, 680 George Street Sydney NSW 2000

Telephone: +61 2 8280 7786 Fax: +61 2 9287 0303 Email: privacy.officer@linkmarketservices.com.au If any of your information is not correct or has changed, you may require it to be corrected.

Information for New Zealand investors

This Offer to New Zealand investors is a regulated offer made under Australian and New Zealand law. In Australia, this is Chapter 6D of the Corporations Act and its Regulations.

In New Zealand, this is Part 5 of the Securities Act 1978 (NZ) and the Securities (Mutual Recognition of Securities Offerings – Australia) Regulations 2008 (NZ).

This Offer and the content of this Prospectus are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act and its Regulations (Australia) set out how the Offer must be made.

There are differences in how securities are regulated under Australian law. For example, the disclosure of fees for collective investment schemes is different under the Australian regime.

The rights, remedies, and compensation arrangements available to New Zealand investors in Australian securities may differ from the rights, remedies and compensation arrangements for New Zealand securities.

Both the Australian and New Zealand securities regulators have enforcement responsibilities in relation to the Offer.

If you need to make a complaint about this Offer, please contact the Financial Markets Authority, Wellington, New Zealand. The Australian and New Zealand regulators will work together to settle your complaint.

The taxation treatment of Australian securities is not the same as for New Zealand securities.

If you are not certain whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial adviser.

If the securities are able to be traded on a securities market and you wish to trade the securities through that market, you will have to make arrangements for a participant in that market to sell the securities on your behalf. If the securities market does not operate in

New Zealand, the way in which the market operates, the regulation of participants in that market, and the information available to you about the securities and trading may differ from securities markets that operate in New Zealand.

This Offer may involve a currency exchange risk. The currency for the securities is not New Zealand dollars. The value of the securities will go up or down according to changes in the exchange rate between that currency and New Zealand dollars. These changes may be significant.

If you expect the securities to pay any amounts in a currency that is not New Zealand dollars, you may incur significant fees in having the funds credited to a bank account in New Zealand in New Zealand dollars.

Contacts

If you require assistance to complete the Application Form, require additional copies of this Prospectus, or have any questions in relation to the Offer you should contact the Share Registry, Link Market Services Limited on 1800 451 641 (from within Australia) or +61 2 8280 7786 (from outside Australia), or go to the Company's website at www.EnergyAction.com.au.

If you are uncertain as to whether the Company is a suitable investment for you, you should seek professional advice from your accountant, stockbroker or other professional financial adviser.

The Opportunity at a Glance

Energy Action is Australia's leading energy auction procurement business and a major player in the broader energy management services market. Electricity prices are forecast to rise. Energy Action provides services which reduce the impact of rising electricity prices for Australian businesses.

The business has been operating for 11-years, has no material bank debt and has a track record of reliably paying fully franked dividends. Future revenue is supported by commissions and fees on "Forward Sold Contracts". In essence this is revenue received and recognised in future years based on contracts entered into in an earlier year.

Energy Action intends to continue its successful organic growth and investigate opportunities for expansion through the acquisition of complementary Australian businesses.

Energy Action benefits from management with substantial experience in the sector and a clear vision for delivering shareholder value. The Company's listing on the ASX is an opportunity for investors to share in its future growth prospects.

Key offer information

Important dates*
Offer opens	Tuesday, 13 September 2011
Offer closes	Offer closes 5:00pm (Sydney Time) Friday, 30 September 2011
Allotment of Shares	Thursday, 6 October 2011
Expected despatch of shareholder statements	Monday, 10 October 2011
Shares expected to begin trading on the ASX	Thursday, 13 October 2011

Notes:

* These dates and times are indicative only and may change. Energy Action reserves the right to vary the dates and times of the Offer without prior notice including closing the Offer before the scheduled Closing Date. Investors are encouraged to submit their Application Forms as soon as possible after the Offer opens.

Key Offer statistics
Offer Price	\$1.00 per share
Total number of Shares offered under the Offer	Up to 3.8 million
Total number of Shares on issue following the Offer¹	25.1 million
Amount to be raised under the Offer²	Up to \$3.8 million
Market capitalisation at the Offer Price3	\$25.1 million
Net cash4	\$4.3 million

Notes:

• 1. The total number of Shares on issue following the Offer will be the sum of the number of Shares issued under the Offer assuming \$3.8m is raised and the number of Shares held by the Existing Shareholders.
• 1. The amount targeted to be raised under the Offer is up to \$3.8m The Company reserves the right to proceed to allotment and listing by raising a lesser amount than the \$3.8m and therefore issuing a smaller number of Shares.
• 1. Calculated as the total number of Shares on issue following the Offer assuming \$3.8m is raised, multiplied by the Offer Price. The trading price may be different to the Offer Price and the actual market capitalisation may be different.
• 1. Calculated as cash and cash equivalents based on the reviewed Pro Forma Balance Sheet at 30 June 2011.

Summary financial information (\$'000) unless otherwise stated	FY 2009 Historical	FY 2010 Historical	FY 2011 Historical	FY 2012 Forecast
Total revenue	7,788	10,241	13,992	17,314
EBITDA	2,357	3,619	4,537	5,933
EBITDA %5	30%	35%	32%	34%
NPAT	1,561	2,373	2,935	3,834
Price / earnings ratio6				6.5
Earnings per share7				15.3 cents

Notes continued:

1. EBITDA divided by Total Revenue.

2. Price earnings ratio based the Market Capitalisation at the Offer Price divided by the NPAT.

3. Calculated as NPAT divided by the total number of Shares on issue following the Offer.

How to invest

Applications to subscribe for Shares can only be made by completing and lodging an Application Form attached to, or accompanying this Prospectus.

Instructions on how to apply are set out in Section 3 and on the back of the Application Form. Applications must be for at least 2,000 Shares (\$2,000) and in multiples of 100 shares (\$100) thereafter.

Letter from the Chairman and the CEO

Dear Investor

We are pleased to provide you with an opportunity to become a Shareholder in Energy Action Limited (Energy Action).

Energy Action was founded in February 2003 following a management buy-out of the previous Energy Auctions business which had been started in March 2000. The buy-out and founding of Energy Action was carried out by three members of the existing Executive team and two members of the current Board. As such, senior executives and Directors have shown a commitment to the success of the business model which has operated for 11-years in total.

Since then the Company has developed extensive specialist experience in energy management services, including the establishment of the Australian Energy Exchange, Australia's only reverse auction energy procurement platform. Energy management services include electricity and gas procurement, compliance, analysis, efficiency and advisory services.

The Company has procured over \$3 billion in energy contracts, experienced revenue growth around 30% year on year, and has traded profitably with no material bank debt to date since FY06.

The Directors of Energy Action believe that the demand for third party energy management services is likely to grow due to rising energy prices. Energy Action intends to continue its successful organic growth and investigate a number of strategic acquisitions.

This Prospectus sets out the Offer to raise up to \$3.8 million at \$1.00 per share. It also contains detailed information about Energy Action and the risks associated with an investment in the Company. We encourage you to read this Prospectus carefully and in its entirety before deciding whether to invest in Energy Action.

To apply for Shares, you will need to fill out the relevant Application Form attached to, or accompanying, this Prospectus. If you have any questions about how to apply for Shares, please call the Energy Action Share Offer Information Line on 1800 451 641 (from within Australia) or +61 2 8280 7786 (from outside Australia) or contact your stockbroker, accountant or other professional financial adviser. If applying under the Broker Firm Offer, your Application should be made in accordance with the directions of your Broker. If applying under the Priority Offer, your Application should be made in accordance with the instructions provided by Energy Action.

On behalf of the Directors, it is our pleasure to invite you to become a shareholder in Energy Action and participate in its future growth prospects.

Yours sincerely

Dr Ronald Watts Valerie Duncan

Chairman Chief Executive Officer Energy Action Limited Energy Action Limited

	Investment highlights 10
	Drivers for growth 10
	Key investment risks11
1	Investment overview 13
2	Answers to key questions 17
3	Details of the Offer 20
4	Industry overview 26
5	Company overview 30
6	Board and management 39
7	Financial information 48
8	Investigating accountant's report 63
9	Risk factors 69
10	Additional information 73
	Glossary 83
	Corporate directory 86

Investment highlights

• » Energy Action is Australia's leading energy auction procurement business and a major player in the broader energy management services market.
• » It is Australia's only provider of online reverse auctions for energy.
• » The business has been operating for 11-years, has no material bank debt and has a track record of reliably paying fully franked dividends.
• » Future revenues are supported by commissions and fees on Forward Sold Contracts that Energy Action arranges between the customer and the electricity retailer.
• » Experienced management with a clear vision for delivering shareholder value.

Drivers for growth

» Delivered Electricity Prices have risen over time as shown below:

Source: Australian Bureau of Statistics

• » Energy Action has an 11-year history of successfully developing a broad and competitive service offering in the electricity procurement and management sector.
• » The Company expects to benefit from an increased demand for its services as a result of rising electricity prices and a push toward energy efficiency.
• » Energy Action has identified a number of additional services which can be retailed to its installed customer base.

Key investment risks

Potential investors should be aware that there are risks associated with investing in Energy Action. The risks are both encapsulated in the business run by Energy Action itself and the risk associated with investing generally in the stock market.

Some of these risks are beyond the control of Energy Action, its directors and management and may have a material impact on Energy Action's financial performance and position.

All potential investors should before deciding whether to apply for Shares read this Prospectus in its entirety and carefully consider all risk factors as set out herein and generally that could affect the future performance of Energy Action. We strongly recommend potential investors to seek independent professional advice from their stockbroker, accountant or other professional financial adviser before they decide to apply for Shares.

Some of the potential risks identified as key risks of investing in Energy Action include but are not limited to the following:

Reliance on staff and management capability

Energy Action's capability depends in part on the experience and talent of key management and staff. Although Energy Action has contracts of employment in place with all staff and key management insurance there is always a risk of management or staff leaving.

Reliance on Agreements with Licensed Energy Retailers and Metering Data Providers

Energy Action has in place agreements with more than 15 Licensed Energy Retailers and/or Metering Data Providers. Maintaining these agreements is an essential part of Energy Action's business model.

Actions of competitors

Energy Action operates in a competitive market sector and there are a number of other service providers offering competing products and services and geographically diverse presence.

Energy management trends

Energy Action's growth, in part, depends on the continuation of volatility of the energy market and the growing trend of outsourcing of energy management services.

Regulatory risk

Some aspects of energy supply are heavily regulated, and the future course of such regulation is unclear. Regulatory changes may impact positively or negatively on Energy Action's profitability.

Liquidity risk

After the Offer is made, up to 83% of shares will remain in the ownership of Existing Shareholders and some of these shares will be subject to a voluntary Escrow Agreement. These arrangements will reduce the liquidity of the Company's Shares until the release of the Company's results for the financial year ending 30 June 2012.

Transaction risk

Part of the strategy of Energy Action is to investigate, identify, acquire and integrate complementary value accretive businesses. Acquisitions may perform below expectations, or come with other inherent risks depending upon the acquisition.

General Risks

An investment in Energy Action is exposed to many risks which may include share market movements, changes in economic conditions, regulatory changes and other general business risks.

See Section 9 of this Prospectus for further information on detailed risk factors.

1 Investment overview

1.1 The opportunity

Energy Action is Australia's leading energy auction procurement business and a major player in the broader energy management services market. The Company provides procurement, compliance, analysis, efficiency and advisory services (collectively 'energy management services') to medium and large Australian companies. The Company created the market for online reverse auctions for energy and have settled more than \$3 billion worth of electricity contracts on behalf of clients since 2005.

Electricity prices are rising. Energy Action provides services that reduce the impact of rising prices for Australian businesses.

1.2 Business overview of Energy Action

Energy Action provides integrated energy management services to a diverse base of commercial and industrial customers. Its core services are:

• » The Australian Energy Exchange: specialised electricity procurement via online reverse auctions with gas due to commence Q2 FY12;
• » Activ8: independent energy monitoring and contract management; and
• » Activ8+: energy efficiency and sustainability partnering.

Initially founded in 2000 it has grown rapidly with year on year revenue growth around 30% since FY06.

Energy Action is one of few energy management companies to hold an AFSL licence to advise customers and deal on their behalf in electricity financial derivatives.

Energy Action is highly profitable with strong recurring revenues, cash flows and balance sheet, employing 64 people. The head office is located in Sydney with other offices in the eastern states.

The Company has achieved significant commercial success to date and prior to this Offer was privately owned by management and a small number of external investors and staff.

Highlight	Commentary
Financial strength	» Strong historical year on year organic revenue growth.
	» Majority of future revenues are supported by commissions and fees paid and recognised in future years based on Forward Sold Contracts that Energy Action arranges in earlier years between the customer and the Licensed Electricity Retailer and Metering Data Provider.
	» The estimated value of future revenues to be recognised by Energy Action from these contracts as at 30 June 2011 is \$54 million.
	» Highly profitable – NPAT exceeds 20% of revenue.
	» Growth to date funded via operating cash flows.
	» No material bank debt at present.
	» Track record of paying fully franked dividends, with a substantial reserve of franking credits.

1.3 Energy Action highlights

Highlight	Commentary
Unique offering	» The only online reverse energy auction platform in the Australian energy market.
	» Proprietary technology for auction and customer support platform.
	» Significant add-on efficiency, advisory and monitoring services.
	» Holder of an AFSL licence to advise and deal in electricity derivatives.
	» Diverse SME and large corporate customer base.
Experienced operator	» Successful 11-year history in energy procurement and management services.
	» Arrangements in place with major Licensed Energy Retailers.
	» Effective and efficient customer acquisition team.
Beginning of rapid value creation process	» Privatised retail electricity market, forecast increasing and volatile energy prices and environmental trends are driving demand for procurement and efficiency advisory services.
	» Complementary players in the energy management services market create opportunities for growth through acquisitions.
Experienced and motivated executive team	» Executives comprised of senior managers from ex-state owned electricity corporations.
	» Senior executives currently have a substantial shareholding.

1.4 Key offer statistics

Key Offer statistics
Offer Price	\$1.00 per share
Total number of Shares offered under the Offer	Up to 3.8 million
Total number of Shares on issue following the Offer¹	25.1 million
Amount to be raised under the Offer²	Up to \$3.8 million
Market capitalisation at the Offer Price3	\$25.1 million
Net cash4	\$4.3 million

Notes:

1. The total number of Shares on issue following the Offer will be the sum of the number of Shares issued under the Offer assuming \$3.8m is raised and the number of Shares held by the Existing Shareholders.

2. The amount targeted to be raised under the Offer is up to \$3.8m The Company reserves the right to proceed to allotment and listing by raising a lesser amount than the \$3.8m and therefore issuing a smaller number of Shares. The minimum subscription amount required for the Offer to proceed is \$2 million, subject to the minimum shareholder spread provisions of the ASX being satisfied.

3. 1. Calculated as the total number of Shares on issue following the Offer assuming \$3.8m is raised, multiplied by the Offer Price. The trading price may be different to the Offer Price and the actual market capitalisation may be different.
4. 1. Calculated as cash and cash equivalents based on the reviewed Pro Forma Balance Sheet at 30 June 2011.

1.5 Purpose of the Offer

The purpose of the Offer is to:

• » achieve a listing on the ASX and to broaden the Shareholder base;
• » pay for costs associated with the Offer and listing;
• » provide a more liquid market for Shares than presently exists;
• » improve Energy Action's competitiveness to win customers from government and large companies; and
• » provide funding for expansion including by organic means and to investigate acquisitions.

1.6 Business funding

Energy Action is currently free of any material bank debt and generates strong positive operating cash flows. The Directors believe that the current business operation of Energy Action does not require any injection of capital to maintain the business at its present breadth of activity and rate of growth.

However the Directors believe Energy Action is strategically placed to grow and expand. Its Directors intend to use the listing and part of the proceeds from the Offer to carry out this purpose.

The Directors contemplate investigating the opportunity to make acquisitions of complementary value-accretive businesses. There is a preference to make such acquisitions using the publicly listed Shares of Energy Action as a component of the consideration. However, the Directors may also contemplate using borrowed funds or a combination of both to fund further acquisitions as part of its expansion plans.

In addition to the investigations of potential acquisitions the Directors intend to continue to grow Energy Action organically and part of the proceeds and funds from the Offer may be used to ramp up the business organically and be used for the hiring of additional staff and the expansion of the Energy Action business generally.

1.7 Shareholding structure

The ownership structure of Energy Action immediately prior to, and after completion of the Offer is shown in the table below:

	Immediately prior to the Closing Date		On completion of the Offer
	Number of shares, (million)	Ownership interest (percentage)	Number of shares, (million)	Ownership interest (percentage)
Existing Shareholders	20.9	100.0%	20.9	83.2%
New Shareholders1	0.0	-%	4.2	16.8%
Total	20.9	100.0%	25.1	100.0%

Notes:

1. Assuming 3.8m Shares are issued under the Offer and 0.4m Shares are issued to the Company's Corporate Advisor on the success of the IPO. Refer to Section 10.14 for more details.

Further details of the shareholding structure and the rights attaching to Shares is set out in Section 10 of this Prospectus.

1.8 Escrow and restrictions

Other than in a voluntary Escrow Agreement as described in Section 10.11 and any escrow imposed by ASX, no Shares are subject to escrow or other restrictions at the completion of the IPO.

1.9 Dividend policy

Energy Action has paid a fully franked dividend for the last 5 years including a dividend to the Existing Shareholders for the financial year to 30 June 2011 just ended. The Company's dividend policy in the past has been to pay a dividend equal to approximately half of the annual net profit after tax. This policy has led to an accumulation of franking credits.

Energy Action expects to pay interim and final dividends in line with the historical dividend policy, subject to a variety of factors such as available cash flows, financial conditions, taxation position and future capital requirements, as well as general business and financial conditions. The first such dividend potentially payable after the date of this Prospectus will be in respect of the half year to 31 December 2011.

The ability to pay a dividend will also depend upon a number of other factors including the risk factors set out in Section 9, some of which are beyond Energy Action's and the Directors' control.

1.10 Enquiries

If you require assistance to complete the Application Form, or require additional copies of this Prospectus, contact the Share Registry.

If you require advice as to whether to invest in the Company, you should seek professional advice from your stockbroker, accountant or other professional financial adviser.

2 Answers to key questions

Question	Answer	More information
Who is the Issuer of this Prospectus?	Energy Action Limited, a company incorporated in Australia (ACN 137 363 636) being the holding company of the Energy Action group.
What does Energy Action do?	Energy Action provides energy procurement and other energy management services to businesses in Australia.	Section 5
What is being offered?	The Offer is an initial public offering (IPO) of up to 3.8 million new fully paid ordinary Shares in Energy Action Limited.
What is the Offer Price?	The Offer Price is \$1.00 per Share.
What is the Offer size?	The gross proceeds of the Offer will be up to \$3.8 million.	Section 3.2
Where will the Shares be listed?	Within seven days of the date of this Prospectus, Energy Action will make an application to the ASX for admission to the Official List of ASX and quotation of the Shares under ASX code EAX.
What will the Market Capitalisation of the Company be upon listing on ASX?	The market capitalisation of Energy Action on listing is estimated to be approximately \$25.1 million, calculated at the Offer Price.
What is the purpose of the Offer?	The Offer is being undertaken to achieve a Listing on the ASX so as to increase the Company's shareholder spread, increase the liquidity of the shares, and to aid the Company's growth and other objectives.	Section 3.7
How will the proceeds of	The proceeds of the Offer will be used to:	Section 3.7
the Offer be used?	» Pay for costs associated with the Offer.
	» Fund organic growth.
	» Initiate acquisitions.
Who can participate in the Offer?	The Offer is open to Australian and New Zealand residents and institutions only.	Section 3.3
What is the structure of the Offer?	The Offer comprises a Broker Firm Offer, and a Priority Offer.	Section 3.3
How do I apply for Shares?	By submitting the valid Application Form attached to, or accompanying this Prospectus in accordance with the instructions set out on the Application Form.	Section 3.4
What is the minimum Application under the Offer?	Applicants must apply for a minimum of 2,000 Shares representing a minimum investment of \$2,000. Applicants applying for additional Shares must apply for Shares in multiples of 100 shares (representing a further investment of \$100).	Section 3.5

Question	Answer	More information
What is the allocation policy?	All decisions regarding the allocation of Shares under the Offer will be made by Energy Action.
	Firm stock, which has been allocated to a Broker for allocation to their Australian and New Zealand resident investors, will be issued or transferred to the Applicants nominated by the Broker. It will be a matter for the Broker how it allocates firm stock among its retail clients with the aim of achieving a broad shareholder spread.
	Energy Action reserves the right, in its absolute discretion, to allot the Shares applied for under any Application under the Offer in full or in the event of an over subscription to scale back any Application to allot any lesser number or to decline any Application. Energy Action may in its absolute discretion give preference to certain investors in accepting Applications under the Priority Offer.
Is there any brokerage, commission or stamp duty payable by the Applicants?	No brokerage, commission or stamp duty is payable by Applicants on shares allotted under the Offer.	Section 3.12
Is the Offer underwritten?	No, the Offer is not Underwritten. In the event that the Offer fails to raise the targeted amount covered in this Prospectus, then Energy Action reserves the right to modify defer or withdraw the Offer.	Section 3.10 Section 10.7
	The minimum subscription amount required for the Offer to proceed is \$2 million, subject to the liquidity provisions of the ASX being satisfied.	Section 10.6
What are the risks associated with an investment in Energy Action?	A summary of risks factors associated with an investment in Energy Action is contained in Section 9 of this Prospectus.	Section 9
What are the tax implications of making an investment in the Company?	The taxation implications of investing in Energy Action will depend on an investor's individual circumstances. Applicants should obtain their own tax advice prior to making an investment in Energy Action.	Section 3.17 Section 10.16
Will I receive dividends?	Energy Action expects to pay interim and final dividends in line with the historical dividend policy of paying approximately half of the annual NPAT, subject to a variety of factors such as available cash flows, financial conditions, taxation position and future capital requirements, as well as general business and financial conditions. The first such dividend potentially payable after the date of this Prospectus will be in respect of the half year to 31 December 2011.	Section 1.9
	The ability to pay a dividend will also depend upon a number of other factors including the risk factors set out in Section 9.

Question	Answer		More information
What are the key dates of	The key dates for the Offer are:		Section 3.1
the Offer?	» Offer opens:	13 September 2011
	» Offer closes:	30 September 2011
	» Despatch of shareholder statements:	10 October 2011
	» Anticipated ASX trading:	13 October 2011
How can further information be obtained?	If you require assistance or additional copies of this Prospectus, please contact the Broker or the Share Registry. For advice on the Offer, you should speak to your stockbroker, accountant or other professional financial adviser.
Contact details	For contact details, refer to the Corporate Directory.

3 Details of the Offer

3.1 Important Dates

Important dates*
Offer opens	Tuesday, 13 September 2011
Offer closes	Offer closes 5:00pm (Sydney Time) Friday, 30 September 2011
Allotment of Shares	Thursday, 6 October 2011
Expected despatch of shareholder statements	Monday, 10 October 2011
Shares expected to begin trading on the ASX	Thursday, 13 October 2011

Notes:

* These dates and times are indicative only and may change. Energy Action, reserves the right to vary the dates and times of the Offer without prior notice including closing the Offer before the scheduled Closing Date. Investors are encouraged to submit their Application Forms as soon as possible after the Offer opens.

3.2 Description of the Offer

The Company invites Applicants to apply for a total of up to 3.8 million Shares in Energy Action at a price of \$1.00 per Share. The amount targeted to be raised under the Offer is therefore up to \$3.8m. The Company reserves the right to proceed to allotment and listing by raising a lesser amount than the \$3.8m and therefore issuing a smaller number of Shares. The minimum subscription amount required for the Offer to proceed is \$2 million, subject to the minimum shareholder spread provisions of the ASX being satisfied.

On completion of the Offer, the Shares offered under this Prospectus to new investors will represent 15% of the issued capital of the Company as set out in the table in Section 5.2.

3.3 Structure of the Offer

The Offer comprises:

• » a Broker Firm Offer to Australian and New Zealand resident investors who receive a firm allocation of Shares from the Broker ("Broker Firm Offer"); and
• » a Priority Offer to Australian and New Zealand resident investors as identified by Energy Action ("Priority Offer").

Broker Firm Offer

The Broker Firm Offer is only open to Australian and New Zealand resident investors who have received a firm allocation from the Broker. Broker Firm Applicants must lodge their Application Forms and Application Monies in accordance with the directions of their Broker in order to receive their firm allocation.

Applications to acquire Shares under the Broker Firm Offer will only be accepted on the Broker Firm Offer Application Form attached to or accompanying this Prospectus. The Application Form must be completed in accordance with the instructions set out on the back of the Application Form.

If you elect to participate in the Broker Firm Offer, your Broker will act as your agent in submitting your Application Form and Application Monies to the Share Registry (which receives them on behalf of Energy Action). Brokers who receive Application Monies from Broker Firm Applicants do so as the agent of the Broker Firm Applicant.

Energy Action will accept payment of Application Monies from Brokers on behalf of Broker Firm Applicants at the Closing Date or such later date as Energy Action agrees. Energy Action and the Share Registry take no responsibility for any acts or omissions in connection with your Application, Application Form or Application Monies.

Priority Offer

The Priority Offer is open to Australian and New Zealand resident investors as identified by Energy Action.

Priority Offer Applicants must lodge their Application Forms and Application Monies in accordance with the instructions provided by Energy Action.

Applications to acquire Shares under the Priority Offer will only be accepted on the Application Form attached to or accompanying this Prospectus. The Application Form must be completed in accordance with the instructions set out on the back of the Application Form.

Energy Action will accept payment of Application Monies at the Closing Date or such earlier or later date as Energy Action agrees. Energy Action and the Share Registry take no responsibility for any acts or omissions in connection with your Application, Application Form or Application Monies.

3.4 How to apply for Shares in the Offer

Applications for Shares can only be made by completing and lodging a paper copy of an Application Form, or for select Applicants, in accordance with the instructions given if you receive the Prospectus in electronic form.

An Application Form is attached to this Prospectus. An Application Form must be accompanied by a cheque or bank draft in Australian dollars for the value of Shares applied for. Cheques or bank drafts should be drawn up in accordance with the instructions provided on the relevant Application Form. Cheques should be crossed 'Not Negotiable'.

An Application Form may only be distributed attached to a complete and unaltered copy of this Prospectus. The Application Form included with this Prospectus contains a declaration that the investor has personally received the complete and unaltered Prospectus prior to completing the Application Form. Energy Action will not accept a completed Application Form if it has reason to believe that the Applicant has not received a complete paper or electronic copy of this Prospectus or if it has reason to believe that the Application Form or electronic copy of the Prospectus has been altered or tampered with in any way.

While Energy Action believe that it is extremely unlikely that during the period of the Offer the electronic version of the Prospectus will be tampered with or altered in any way, the Company cannot give any absolute assurance that this will not occur. Any investor in doubt concerning the validity or integrity of an electronic copy of the Prospectus should immediately request a paper copy of the Prospectus directly from Energy Action or the Share Registry.

Application Forms should be lodged in accordance with the instructions set out on the Application Forms and in the table below.

Applicants	Lodgement
Broker Firm Offer Applicants	Lodge your Application Form and Application Monies with the Broker from whom you received a firm allocation, in accordance with that Broker's directions.
Priority Offer Applicants	Lodge the Application Form and Application Monies with the Share Registry in accordance with the directions provided by Energy Action.

An electronic version of the Prospectus (without an application form) is available from Energy Action's website at www.EnergyAction.com.au. However, it cannot be used to apply for Shares.

Lodgement of an Application Form constitutes an irrevocable offer made in accordance with the provisions of the guidelines to the Application Form.

If you have any enquiries about the Offer, you should contact your Broker or Link Market Services on 1800 451 641 (from within Australia) or +61 2 8280 7786 (from outside Australia).

3.5 Minimum Application Amount

Applicants in the Offer must apply for a minimum of 2,000 shares (\$2,000) and in multiples of 100 shares (\$100) thereafter. There is no maximum value of Shares which may be applied for under the Broker Firm Offer or Priority Offer. However, the Company reserves the right to scale back Applications, either collectively or individually in the circumstances outlined in Section 3.9. For this purpose, Energy Action reserves the right to aggregate any Applications which the Company believes may be multiple Applications from the same person or associated persons.

3.6 Shareholding structure

The ownership structure of Energy Action immediately prior to, and after completion of the Offer is shown in the table below:

	Immediately prior to the Closing Date		On completion of the Offer
	Number of shares, (million)	Ownership interest (percentage)	Number of shares, (million)	Ownership interest (percentage)
Existing Shareholders	20.9	100.0%	20.9	83.2%
New Shareholders1	0.0	-%	4.2	16.8%
Total	20.9	100.0%	25.1	100.0%

Notes:

1. Assuming the issue of 3.8m Shares under the Offer plus the issue of 0.4m Shares to the Company's Corporate Advisor on the success of the IPO. Refer to Section 10.14 for more details.

Further details of the shareholding structure and the rights attaching to Shares is set out in Section 10 of this Prospectus.

3.7 Purpose of the Offer and Use of proceeds

The purpose of the Offer is to:

• » achieve a listing on the ASX to broaden the Shareholder base;
• » pay for costs associated with the Offer;
• » provide a more liquid market for Shares;
• » improve Energy Action's competitiveness to win customers from government and large companies; and
• » provide funding for expansion including by organic means and to investigate acquisitions.

It is intended to apply funds raised from the Offer as follows:

Use of Proceeds	Total \$
Cash costs associated with the Offer	\$0.6 million
Working capital	\$3.2 million
Total	\$3.8million

Energy Action plans to apply Working capital to investigate and acquire potential strategic acquisitions and fund the organic growth. The Company at this stage has a strong preference for using the publicly listed Shares of Energy Action as a substantial component of the consideration of any potential acquisition. However, such decision as to the make-up of the funding of any acquisition will be made by the Directors, dealing with the acquisition on its merit at the time and equally may be acquired using borrowed funds or a combination of both as part of its expansion plans.

3.8 Rights attaching to Shares

All of the Shares offered under this Prospectus will rank equally with Shares currently on issue, other than with respect to the dividend for the now completed financial year to 30 June 2011.

The rights attaching to Shares are detailed in the Company's Constitution. A summary of the major provisions of the Constitution is set out in Section 10 of this Prospectus.

3.9 Allotment

Shares applied for under this Prospectus will be issued as soon as practicable after the Closing Date. Application Monies will be held in a trust account until Shares are issued. Interest on Application Monies will be for the benefit of Energy Action and will be retained by Energy Action, irrespective of when Shares are issued.

No allotment of Shares will be made until permission has been granted by ASX for the quotation of the Shares on terms acceptable to the Directors.

All Applicants should note that, in the event that the Offer is oversubscribed, or a Broker submits Applications in the Broker Firm Offer of more than \$1.7m, Energy Action retains an overriding right to accept any Application in full, allot a lesser number of Shares than subscribed for by an investor or decline any Application altogether. Applicants must not assume that the Shares they apply for, or any number of Shares, will be issued to them in response to their Application. Before dealing in any Shares, Applicants must satisfy themselves as to their actual holding of Shares.

3.10 No Underwriting

The Offer is not underwritten. The amount targeted to be raised under the Offer is up to \$3.8m. The Company reserves the right to proceed to allotment and listing by raising a lesser amount than the \$3.8m and therefore issuing a smaller number of Shares.

3.11 ASX listing

Within seven days after the date of issue of this Prospectus, Energy Action will apply for admission to the Official List of ASX and for the quotation of its Shares on ASX.

Trading of Shares is expected to commence on Thursday, 13 October 2011.

The fact that ASX may admit Energy Action to the Official List is not to be taken in any way as an indication of the value or merits of the Company or the Shares offered for subscription. If the Company has not been admitted to the Official List of ASX within three months after the date of this Prospectus, all Application Monies will be refunded without interest in accordance with the Corporations Act.

3.12 Brokerage, commission and stamp duty

No brokerage, commission or stamp duty is payable by Applicants on acquisition of Shares under the Offer. See Section 10 for details of various fees payable by Energy Action to the Corporate Advisor and to the Brokers.

3.13 CHESS and issuer sponsored sub-register

Energy Action will apply to participate in CHESS in accordance with the Listing Rules and the ASTC Settlement Rules. In accordance with the Listing Rules and the ASTC Settlement Rules, the Company will maintain an electronic CHESS sub-register (for Shareholders who are participants in CHESS or sponsored by such a participant) and an electronic issuer sponsored register (for all other Shareholders).

Following the allocation of Shares to successful Applicants, Shareholders will be sent an initial statement of holding that sets out the number of Shares that have been allocated and the Shareholder's Holder Identification Number ('HIN'), or in the case of issuer sponsored holders, the Shareholder Reference Number ('SRN').

The Company will not issue certificates to Shareholders.

Following distribution of the initial holding statements and CHESS notifications to all Shareholders, a holding statement will be provided to a Shareholder at the end of any subsequent month during which there has been a movement in their shareholding.

Shareholders may also request Energy Action to provide a statement at other times, although the Company may charge an administration fee in these circumstances.

3.14 Foreign selling restrictions

No action has been taken to register or qualify the Shares or the Offer, or otherwise to permit a public offering of the Shares, in any jurisdiction outside Australia or New Zealand.

The Prospectus does not constitute an offer or invitation in any jurisdiction where, or to any person to whom, such an offer or invitation would be unlawful. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Each Applicant will be taken to have represented, warranted and agreed that such person:

• » is an Australian or New Zealand citizen or resident in Australia or New Zealand, is located in Australia or New Zealand at the time of such Application and is not acting for the account or benefit of any person in the United States, a United States person or any other foreign persons; and
• » will not offer or sell the Shares in the United States or in any other jurisdiction outside Australia or to a United States person, except in transactions which are exempt from registration under the United States Securities Act of 1993 as amended, and in compliance with all applicable laws in the jurisdiction in which such Shares are offered and sold.

3.15 Withdrawal of the Offer

The Company reserves the right not to proceed with the Offer at any time before the allotment of Shares to successful Applicants. If the Offer does not proceed, the Company will return all Application Monies within 21 days of giving notice of its withdrawal. Any interest earned on Application Monies prior to withdrawal will belong to Energy Action.

3.16 Electronic Prospectus

This Prospectus (without an application form) may be viewed online at www.EnergyAction.com.au. However, it cannot be used to apply for Shares.

Selected Applicants who are given access to an electronic version of this Prospectus (and Application Form) must be resident in Australia or New Zealand. Persons who access the electronic version of this Prospectus should ensure that they download and read the entire Prospectus. A paper copy of this Prospectus will be provided free of charge to any person eligible to apply for Shares who requests a copy by contacting the Share Registry.

3.17 Taxation

The tax treatment and consequences of the Offer will vary depending on the particular circumstances of the Applicant. Energy Action accepts no liability or responsibility in relation to any taxation consequences connected to the Offer. Therefore, it is the responsibility of each Applicant to determine the appropriate tax treatment for itself.

3.18 Enquiries

If you require assistance to complete the Application Form or require additional copies of this Prospectus, contact the Share Registry.

If you require advice as to whether to invest in the Company, you should seek professional advice from your stockbroker, accountant or other professional financial adviser.

4 Industry overview

4.1 Australian energy market

All Australian states have adopted largely market based systems to extract, generate, transmit, retail and distribute gas and electricity to industrial and commercial customers. A federal government agency exists to operate the wholesale energy markets and to manage them with the objective of promoting stability of supply and long term supply planning.

A wholesale market for natural gas exists between Victoria and Tasmania. In September 2010 another market linking the South Australian and New South Wales gas hubs was established, with a Queensland hub being added later in 2011.

Since 1998 the generation, distribution and supply of electricity in five interconnected regional market jurisdictions including Queensland, New South Wales, Victoria, South Australia and Tasmania has been amalgamated under the National Electricity Market (NEM). The NEM runs for more than 5,000 kilometres from Port Douglas in Queensland to Port Lincoln in South Australia and supplies more than \$10 billion electricity annually to meet the demand of more than 8 million end users. The Northern Territory and West Australian markets are contestable but are not connected or part of the NEM.

The numerous private, semi-government and government owned participants in the Australian electricity market broadly consist of:

• » Generators;
• » Transmission network suppliers;
• » Distribution network suppliers;
• » Wholesale and very large commercial and industrial customers;
• » Licensed Energy Retailers;
• » Metering Data Providers;
• » Third Party intermediaries; and
• » Federal and State government agencies.

Energy Action interacts with 15 main Licensed Energy Retailers and Metering Data Providers. A number of the large retailers are also generators (called "Gen-tailers").

With the December 2010 sale of the retail businesses of Energy Australia, Country Energy and Integral Energy by the NSW government to the Gen-tailers, TRUenergy and Origin Energy respectively, there has been some consolidation in the sector.

Rising electricity prices

Nationwide, Delivered Electricity Prices have risen over time as shown below:

Source: Australian Bureau of Statistics

The recent trend shows a steep rise in electricity costs as an input to the manufacturing sector of more than 44% since 2006.

Similarly, for households, electricity prices nationwide have outstripped inflation increasing 62% since 2006, nearly four times the rate of the CPI increase of 16% over the same period.

The trend in rising electricity prices is consistent with a trend in rising demand for the third-party intermediary energy management services as provided by Energy Action.

Rising demand for third-party energy management services

Utility Market Intelligence (UMI) reported in March 2011 on the results of a survey of 700 large commercial and industrial customers. Commercial and industrial customers of retailers in NSW, ACT, Victoria, Queensland and South Australia spending over \$16,000 per year on electricity were interviewed. Findings include:

• » Over the last four years, customer satisfaction with their electricity retailer has declined.
• » To fill the gap in account management left by the retailers, more and more customers are relying upon consultants to help them, not only with energy contract negotiation, but also in other areas such as bill checking, energy management and sustainability.
• » The use of a third-party consultant, advisor or broker to handle electricity contract negotiation has increased by one third since 2006. In contrast, commercial and industrial customers choosing to negotiate directly with a retailer, has decreased by one fifth.

The trends seen in the survey results are broadly consistent with the growth witnessed in Energy Action's business.

4.2 Impact of a proposed carbon tax in Australia

On Sunday 10 July 2011, the Australian Government announced the "Securing a Clean Energy Future" policy package. This package is intended to levy, initially through a tax, a price on carbon for large industrial emitters including generators of electricity. Electricity generators are expected to pass the cost of the tax on to customers through higher prices. In turn higher prices are expected to provoke rational buyers of energy to look to reduce their energy bills by using less energy. Energy Action anticipates that this policy package, if implemented, may have an overall positive impact on the energy management services industry, including Energy Action's business. This is primarily due to rising customer energy bills creating more demand for energy management services. However, due to the uncertain outcomes of this policy package, the financial forecasts of Energy Action contained in this Prospectus do not factor in any such additional positive impact.

4.3 Description of the energy management services industry

Energy Action describes the energy management services industry based upon customer size and breadth of services offered.

The breadth of services offered by the energy management services industry extends from complex engineering solutions provided by energy service companies, to complex procurement and financial risk management services provided by third party intermediaries.

The industry and opportunity for Energy Action is summarised in the following table:

Energy Action presently has a strong breadth of service, with engineering consulting and advice at one end of the spectrum, and some financial product advice and dealing at the other end facilitated by their AFSL licence. Nevertheless, there is some scope to expand further in these product and service areas, both organically and potentially through acquisitions.

Similarly Energy Action is presently focused mainly on medium sized businesses, but there is likely to be an opportunity for growth with larger businesses and government whose in-house functions lack the depth of expertise of Energy Action. Energy Action aims to become the Tier-1 provider of services to this segment.

Whilst much of Energy Action services can be automated, small business and households are perhaps less attractive due to the cost of customer management, unless this can be achieved efficiently through the acquisition of a brand heavy competitor who is more focused on this area.

4.4 Barriers to entry in the energy management services industry

Depending upon the breadth and type of services offered, barriers to entry in the energy management services industry can be material.

For example, third-party customer origination services require a brokering relationship to be established with one or more of the approximately 15 main Licensed Energy Retailers or Metering Data Providers. In the case of Energy Action, these relationships have been built up over the last decade. Energy Action understands that some of the larger Licensed Energy Retailers are presently seeking to limit the number of brokers they deal with.

Services such as the transacting of energy contracts and the ongoing reporting and monitoring of energy usage to customers is most efficiently performed using an IT platform. In the case of Energy Action, this platform has been developed in-house over the last decade. Energy Action's platforms and technology are designed to deal with significant amounts of data, and also a dynamic regulatory environment. The Company's platform also depends upon maintaining relationships with Metering Data Providers to receive customer energy usage data feeds.

Engineering and efficiency services require specialist knowledge, brand credibility and depth of resources to provide continuity of services and standards. The successful recruitment and retention of staff with the necessary technical and corporate knowledge, experience and qualifications presents a challenge for new and existing competitors.

Providing advice in trading energy derivatives requires staff with specialist knowledge and experience, an AFSL licence and professional indemnity insurance. The tests required to be met to obtain an AFSL licence are significant.

4.5 International developments in the energy management services sector

A strongly developed energy management services sector exists in Europe, which features transnational generation and higher energy prices than Australia. Recently a number of equity deals in Europe have occurred which indicates a degree of investor interest and deal flow in this sector. For example:

• » One UK based global firm made a number of acquisitions in 2010, including the acquisition in December of an energy management consultancy here in Australia. That global firm offers energy management services including purchasing, environmental solutions, engineering and auditing of energy and utilities markets. It is headed up by a private equity firm in the UK and services clients in over 40 countries.
• » Another large UK based company has acquired a portfolio of energy management services businesses including a 14 country European energy procurement business, a brokerage and an energy efficiency consulting group. In December 2010, the company was acquired by another European private equity firm.

5 Company overview

5.1 History

The business was formed in March 2000 by a team of specialists who recognised the need for tailored energy procurement and proactive customer service in Australia's fast evolving energy markets. Since a management buy-out in February 2003 by that team, including members of the current Board, Energy Action has become a leading provider of energy management services.

Energy Action has developed Australia's only online exchange for conducting reverse auctions for energy. Using a web based technology platform developed in-house and refined over the last decade, since 2005 the Company has conducted more than 5,000 reverse auctions with a Delivered Electricity Price value in excess of \$3 billion, yielding savings for its customers of more than 7%. An upgrade to this system is planned to be released in Q2 FY12, and the system is designed to be highly scalable in terms of volumes handled and to be able to handle other utility service contracts such as gas and water.

In addition to the auction platform, Energy Action has developed a package of energy efficiency and support services branded as "Activ8". The Activ8 service has been evolving since 2002 and it is the core of Energy Action's energy monitoring and contract management services. This product stream is built around a largely automated customer centric monitoring and reporting system developed and refined in-house by Energy Action. This enables the Company to send to customers, for example monthly, (or even daily) reports on their energy consumption, alerts on excess demand, an overlay of the day's temperature and other details. This aspect of the business is also highly scalable.

More recently, services have been expanded into "Activ8+" which is a range of energy efficiency and sustainability services provided by a team of technical and engineering specialists.

The Active8 services have grown strongly and contribute more than 60% of the revenue, with the balance of income from Auctions and fee for service consultancy work.

In 2010 Energy Action was granted an Australian Financial Services Licence, which enables the Company to give advice to customers and trade on their behalf in electricity financial products such as electricity futures contracts.

The management team and staff at Energy Action draw upon a combined background in energy procurement, energy markets, consultancy, engineering and technology to provide innovative integrated energy management services. Due to the high level of automation, the Company is comprised of just 64 employees, of which nearly half are dedicated to sales. Offices are located in Sydney with sales offices in Brisbane, Melbourne, Adelaide, Canberra and Newcastle. Presently the majority of revenue is generated in NSW, with an opportunity to expand in the other markets.

Customers of Energy Action comprise both commercial and industrial businesses across Australia, with diverse energy needs and site requirements, generally with a power bill greater than \$25,000 per year. Customers are often characterised by having multiple sites across states; which creates a burden of managing electricity procurement and therefore drives demand for Energy Action's services. Key customer sectors are, food manufacturing, data centres, healthcare, food retail, and property management.

Energy Action has arrangements in place with Licensed Energy Retailers and Metering Data Providers to provide third party customer origination services. The arrangements provide that Energy Action is entitled to receive upfront and / or time based payments for introducing a customer to the Licensed Energy Retailer and Metering Data Provider. Energy Action's fee entitlement is for the duration of the Forward Sold Contract that is made between the Licensed Energy Retailer and Metering Data Provider and the energy customer. The Forward Sold Contracts vary in length per customer from generally one to five years.

The Company has grown strongly and profitably to date and expects to continue to do so regardless of any possible acquisition transactions. Revenue in FY10 was \$10.2m, \$14.0m in FY11 and is forecast to grow to \$17.3m in FY12, based upon current trends and supported by Forward Sales Contracts already made. The estimated value of future revenues to be recognised over the coming years by Energy Action from these contacts as at 30 June 2011 is \$54 million. Net profit after tax (NPAT) was \$2.4m in FY10, \$2.9m in F11 (or 23% and 21% of revenue respectively) and is forecast to increase to \$3.8m over the next year. Growth has been funded to date by strong internal operating cash flows, and the Company presently has no material bank debt.

Energy Action is in a strong position to both grow organically and to investigate and execute on an acquisition to add further value to the business.

5.2 Corporate structure

Energy Action Limited

Energy Action Ltd is the holding company of the Energy Action group. It converted to a public company prior to lodgement of this Prospectus. Energy Action will raise up to \$3.8 million in equity and gain the required shareholder spread under this Offer. Upon listing, the shareholding structure of Energy Action is expected to be:

Shareholder	% shareholding
Existing Energy Action shareholders	83.24%
New investors under this Prospectus	15.16%
Moss Capital	1.60%

The Energy Action group corporate structure and shareholders are described below.

Energy Action group

Energy Action's activities are currently conducted through a number of entities which make up the Energy Action consolidated group. Energy Action (Australia) Pty Ltd is the main operating company. The current corporate structure is as follows:

Prior to this Offer, the group was owned by the Directors, senior executives and select staff, as well as some external investors (generally via personal investment companies or trusts). The shareholders own shares in the holding company, Energy Action, which in turn wholly owns the operating subsidiaries.

The Existing Shareholders listed are as follows, (ultimate owners or controllers are shown for Directors and executives):

Existing Shareholders	Position	% shareholding pre-IPO
Paul Meehan	Non-Executive Director	25.43%
Ron Watts	Chairman	13.54%
Valerie Duncan	Chief Executive Officer	11.57%
Steve Twaddell	Non-Executive Director	11.01%
J &C Allen	External investor	6.83%
Edward Hanna	Executive Director – Business Development	6.25%
Barry Denton	Executive – Sales director	5.47%
Bill Moss	Non-Executive Director	2.49%
Other	Staff and other external investors with individual shareholdings less than 5%	17.41%

With a substantial ownership of the business by management and the board, the shareholders are highly motivated to drive the success of the business.

The investors in Energy Action are currently bound by a shareholders' agreement which terminates upon the IPO.

5.3 Operational advantages

Business management systems

Energy Action has a highly effective technology platform and other procedures for managing the business.

The online reverse Auction system allows the Company to effectively manage a large number of auctions, including follow up and ongoing contract management. The reverse auction service is explained further in Section 5.5.

Similarly, post contract settlement bill monitoring and reporting services (Action or Activ8) are highly systematised with over 3,000 customers managed by a small team of analysts, two customer service support staff and two accounts receivable staff.

Energy Action's reporting and monitoring systems are integrated via data feeds with Licensed Electricity Retailers (or the Metering Data Providers) and also the customer.

The majority of revenue is collected from each customer's Licensed Electricity Retailer or the Metering Data Provider, with each customer Forward Sold Contract providing commission or fee revenue on each such contract for around 1 - 5 years from the date the contract is entered into.

The Company has clear reporting lines and accountability. The Board regularly reviews financial and operation data and key performance indicators. An example of the types of key performance indicators tracked is listed below and is tracked by month to date and year to date for actual, budget and last year:

Example key performance indicators tracked
Statistical Information	Financial information
Average Contract Duration	EBIT % of Sales
- Auction (Months)	NPAT % of Sales
- Action (Months)	Employment Costs % of Sales
Average Action Contract Selling Price	Selling, General & Administration % of Sales
Auction Contract Sales	Occupancy % of Sales
- New Contracts (%)
- Repeat Contracts (%)
Action Contract Sales
- New Contracts (%)
- Repeat Contracts (%)
Average Auction Contract Selling Price (MWh) by state
Average Contract Lead Time
- Auction - New Contracts (Months)
- Action - New Contracts (Months)

Organisational structure

The Board oversees the business of Energy Action. The Company plans to expand its Board in due course following the IPO when it identifies any additional skills required at Board level. The day-to-day running of the business is managed by functional areas, overseen by the Chief Executive Officer Valerie Duncan.

The key functional areas are:

• » Sales (including regional sales offices & energy markets, (see below))
• » Operations, (Auction support, Business support, Technical service support, Efficiency specialists, and Customer service support)
• » Product development (IT)
• » Business development, (including sustainability services)
• » Finance and administration
• » Marketing & business intelligence

A further description of management and staff is provided in Section 6.

AFSL Licence attained

In November 2010 Energy Action was granted an Australian Financial Services License, (AFSL) issued by the Australian Securities and Investment Commission, (ASIC), licence number 362843. This licence governs the activities of the energy markets business division (within the sales division) at Energy Action.

Attaining this licence required Energy Action and its key personnel to demonstrate in detail their knowledge of the financial product area and the Company's procedures for compliance with the licence conditions. The attainment of this licence was a significant achievement for Energy Action and enables the Company to, on behalf of customers,

trade electricity futures in energy markets such as d-cypha or the ASX, or to offer advice and develop energy price hedging strategies for customers. The Company does not trade in its own right or take a financial position or risk in energy derivatives.

Specifically, the licence authorises Energy Action to carry on a financial services business to:

• » provide financial product advice for the classes of financial products limited to derivatives relating to the wholesale price of electricity only; and
• » deal in a financial product by applying for, acquiring, varying or disposing of a financial product on behalf of another person in respect of:
• derivatives relating to the wholesale price of electricity;
• other derivatives which are entered into for the purpose of managing a financial risk that arises in the ordinary course of the activities of the person;
• ancillary services as defined under the "National Electricity Code" issued by the Electricity Code Administrator Limited;

to wholesale customers.

Presence

Energy Action maintains offices in the main eastern states of Australia which are part of the NEM electricity grid, except for Tasmania which can be serviced from Melbourne. Apart from the head office in Sydney, the other offices are for regional management and sales staff only.

Details on the sales offices are:

Office	Year office opened	Regional Manager head count	Corporate sales head count
Sydney (sales)	2000	2	4
Newcastle	2008	1	5
Brisbane	2001	1	5
Melbourne	2007	1	5
Adelaide	2007	1	1
Canberra	2010	1	1

The Company has commenced its entry into the WA market and provides some services to customers from Sydney. An office is expected to be opened in Perth within the next 2 years.

5.4 Key alliances

Energy Action has a number of key alliances with 15 major Licensed Energy Retailers and Metering Data Providers. Arrangements with these entities relate to the third-party origination and ongoing management services provided by Energy Action.

A further description of the arrangement with these parties is in Section 10.13.

5.5 Services offered by Energy Action

The services offered by Energy Action are diagrammatically represented as:

The elements above are delivered by the core product offerings which are:

• » The Australian Energy Exchange specialised electricity procurement via online reverse auctions, with gas auctions due to commence Q2 FY12;
• » Activ8 independent energy monitoring and contract management; and
• » Activ8+ energy sustainability partnering.

These are covered in further detail below.

The Australian Energy Exchange

The reverse auction process starts with Energy Action staff gaining an understanding of the customer's electricity needs, and drafting terms into a standard form suitable for online bidding. This "Auction specification" is posted online for participating Licensed Energy Retailers to view in advance of the auction.

Key elements of the specification include location and meter numbers (NMIs), a full history of consumption, preferences for renewable energy and desired contract terms.

The panel of Licensed Energy Retailers is then invited to bid on the auction at a scheduled date, generating online real-time competitive but transparent price tension.

Experience to date is an average price reduction of more than 7% and auctions completed in as little as 10 minutes, which significantly reduces the time taken to procure energy contacts from traditional tendering and negotiation methods.

Energy Action and the participating Licensed Energy Retailers view online a live auction board which shows for example:

• » Client summary and auction specification;
• » Time and date of auction;
• » Count-down timer;
• » Summary of terms; and
• » A bid-stack showing current and previous bids.

Immediately following the Auction, an online report is generated, including charts, which shows the run of bids made by the Licensed Energy Retailers and details about each bid. An extract example from this online report is shown as below. Note the decrease in bid prices as shown in the chart from the first bid at 11:51am and the last at 11:53am.

For The Australian Energy Exchange auction service, customers are charged an initial fee plus a commission on the value of the energy contract. An upfront portion is recognised for revenue purposes at the time of the Auction, and the rest quarterly in arrears as energy is consumed.

Energy Action considers that the Auction service is a lead product to open the opportunity to sell additional services to the customer, such as Activ8.

Apart from using reverse auctions for procurement, Energy Action will also help customers manage energy buying risk by developing other strategies including the use of financial instruments.

Active8 – independent energy monitoring and contract management

This is a package of energy efficiency and support services via largely automated monitoring and contract management. Services provided are:

• » Energy and emissions monitoring monitored daily and exception alerts provided to customers when certain target thresholds are approached or exceeded.
• » Contract administration and monthly detailed technical reporting including bill validation, on energy demand, power factor, load factor and weather temperature overlay.
• » A desktop energy efficiency review in accordance with Australian Standard for a level 1 Energy audit, AS3598:2000, Energy Audits.
• » Additional reporting and monitoring including industry benchmarking and market watch update. Customers receive a monthly report which shows (amongst other things): energy used by time of use; daily chart(s) on usage overlaid with weather; peak and average load profiles and power factors; carbon emissions and historical data.

This service is charged to customers at a small daily rate per supply point.

Activ8+: Energy sustainability partnering

Activ8+ is a range of fee based advisory services provided by energy and engineering specialists on sustainability and efficiency. Services provided include:

• » Metering intelligence greater data analysis and monitoring than that provided under the Activ8 service.
• » Sub-metering this means measuring energy usage of individual parts of plant and equipment such as air conditioners or machinery with small smart-meters placed within the customer's circuit behind the main NMI meter. This provides greater data accuracy and granularity for controlling power use. Energy Action expects that automated sub-metering will become an increasingly important part of large power users' strategy for energy cost control.
• » Carbon footprint measurement and reduction advice.
• » Australian Standard Level 2 compliance energy audits.
• » Project feasibility studies and onsite power generation consulting, such as for co-generation and tri-generation units.
• » Coordination of project finance and risk management strategies for large capital expenditure projects related to energy generation and energy efficiency.
• 5.6 Revenue mix by service offering

Revenue mix for FY11 by service offering is split as:

Revenue mix in FY10 was similar, but with Auction having slightly more weighting in the mix. The Activ8 services are planned to grow strongly.

5.7 Key customers of Energy Action

Energy Action target customers who have an energy bill in excess of \$25,000 per annum. This covers many medium sized businesses in diverse sectors from food, retail, healthcare and property, but with a particular focus on customers with multiple sites.

Energy Action has around 3,000 active customers and is not dependent upon any particular large customer. The top 10 customers combined make up slightly less than 10% of total annual revenues.

Major customers include:

• » A national meat processor and an internationally owned producer of processed foods.
• » State-wide and city wide strata property managers.
• » National retail fast food restaurants and furniture stores.
• » Building products manufacturers.
• » Internationally owned pharmaceutical manufacturers.
• » IT and media companies.

A common feature of many of the above customers that Energy Action assists is that they have complex energy requirements across a large number of sites or metering points.

5.8 Effective sales function

Nearly half the organisation's head count is dedicated to the sales function, which is headed by the senior executive sales director, Barry Denton, and consists of 28 staff including the 6 office regional managers.

Features of the sales function are:

• » Around 80% of the corporate sales staff time is focused on new business acquisition, with the remaining 20% of time spent on existing customers.
• » New business lead generation is nearly all based upon proactive cold calling from internally generated lists, stale contacts lists, existing opportunities, and a small amount of leads coming from referrals and industry segments.
• » Regional managers work closely with corporate sales staff to manage and maintain call pattern activity. Energy Action recently replaced its CRM system with Microsoft Dynamics CRM to assist with sales lead management.
• » Each regional manager and corporate sales staffer has an annual target broken up between fees, Auction commission and Activ8 sales.
• » Corporate sales staff are paid a base salary plus a commission.

The sales team is stable and effective, with a low incidence of turnover and an average tenure of 3 years.

6 Board and management

6.1 Board of Directors

Energy Action is led by a highly experienced Board, which aims to continue to drive the success of the Company. Biographies of Energy Action's board are included below.

Dr Ronald Watts – Chairman

Ronald Watts has worked at chief executive and board levels across a range of technology-based enterprises and at senior level in government. His management experience covers software and telecommunications industries and, as a consultant, he has worked with companies on strategy and fund-raising in biotechnology, utilities, food processing, and energy.

Ronald served recently on the Australian Business Foundation's Research Advisory Committee and he has had previous science advisory appointments. He was also Adjunct Research Fellow at the University of South Australia and supervised doctoral students.

He has a science honours degree from UNSW and a PhD from Cambridge. He has also completed a graduate diploma in business, majoring in finance.

Steve Twaddell – Non-executive Director

A graduate of Brown University, Steve served two years of active duty in the US Navy.

Having worked in the computer industry since 1959, holding a number of technical positions, Steve moved into sales, then management. With experience in insurance, defence, computer hardware (IBM) and software, health and finance, Steve transferred to Australia in 1980 to set up a subsidiary of

a US parent company. The subsidiary quickly became the major profit contributor to the parent by 1985.

Steve serves on several company boards in both Australia and New Zealand. In addition to Energy Action these include Australian Fresh Seafood, Toveelen and Aerial Surveys Limited, which he chairs.

Paul Meehan – Non-executive Director

Paul Meehan is the Principal of Meehans Solicitors, a large firm in the Macarthur area south west of Sydney. Paul has over 20 years-experience in the Law and his firm under his guidance has grown from a small suburban practice to one of the largest in the Macarthur area with international standards organisation certification, (ISO Law 9000 Legal Best Practice).

In addition to the Law, Paul has interests in and has been instrumental in real estate developments and the creation of a leading commercial real estate office.

Paul's exceptional leadership and communication skills together with his dedication to personal service have seen him develop and mentor businesses from start-up to major operations.

Bill Moss – Non-executive Director

Bill Moss AM is an Australian businessman and philanthropist with expertise in real estate, banking, funds and asset management. Bill spent 23 years as a senior executive and Executive Director with Macquarie Group, the pre-eminent Australian investment bank, where Bill managed The Global Banking and Real Estate businesses. Bill founded, grew and led Macquarie Real Estate Group to a point where it managed over \$23 billion worth of investments around the world. Bill currently co-chairs

the Territory 2030 Steering Committee, is a member of the ASIC External Advisory Panel, and is Chairman of Moss Capital and Chairman and Founder of The FSHD Global Research Foundation.

Other board members, who are also part of the executive senior management, are as follows. Biographies on each are covered in the next section.

• » Valerie Duncan Chief Executive Officer & Company Secretary
• » Edward Hanna Executive Director

The Company plans to expand its Board in due course following the IPO.

6.2 Senior management

Energy Action is led by highly experienced management, which will drive the success of the Company. Biographies of Energy Action's management are included below:

Valerie Duncan – Director, Chief Executive Officer and Company Secretary

Valerie has been Chief Executive Officer of Energy Action Pty Ltd since July 2002. She has presided over year on year revenue growth around 30% since FY06.

Valerie has 25 years energy industry experience including 19 years in senior management positions at Integral Energy across all aspects of the business including: financial management and accounting,

energy trading and retailing, strategic planning, human resource management, project management, corporate governance and company secretarial. Valerie also holds the following professional memberships: Fellow AICD, Fellow Australian Institute of Energy, ASCPA, Fellow CSA.

Edward Hanna – Executive Director, Sustainability and Business Development

Edward has a background in energy pricing and energy trading and in his previous role with the Company developed and refined the systems and processes which support the growth of the Energy Action business.

Edward has been involved in the energy industry since the deregulation of the NSW electricity market commenced in 1997. His experience in bringing complex ideas to market in a dynamic marketplace keeps Energy Action at the forefront of change in the Australian energy market.

He is currently a fellow of the Australian Institute of Energy, a member of the Alternative Technology Association, and a member of the CEO Institute. Along with his honours degree from the University of Sydney, he holds a diploma in financial management, specialising in electricity derivatives.

Other senior executives, who are not directors of Energy Action Limited, are described below.

Barry Denton – Executive, Sales Director

Barry has been with Energy Action since its inception in 2000 and has seen the Company grow from very small beginnings to the strong Company it is today.

He began his working life in Australian Army, serving with the 5th 7th Battalion Royal Australian Regiment. Barry served overseas with the Battalion. After leaving the military Barry began his sales

career, working in finance and manufacturing and before joining Energy Action worked in both electricity and gas sales within Integral Energy.

Helge Sangkuhl – General Manager, Operations

Helge joined Energy Action in 2010 to deepen the business's capability to manage the large and growing volume of Energy Auctions and Activ8 contracts under management.

He has spent 30 years working within sales and operations in both private and public sector organisations including the NSW Office of State Revenue (project management), 8 years in a

major NSW energy retailer (Integral Energy) and for 6 years as the operations manager in a professional services consultancy with energy retailers as major customers. He holds a Bachelor of Arts Degree, Industrial Relations major from the University of NSW.

Jey Jeyasothy – Chief Financial Officer

Jey joined Energy Action in 2008 as the CFO. He brings extensive financial experience to Energy Action with previous senior positions in Australia, the United Kingdom and Sri-Lanka.

He has more than 15 years of experience in senior management positions across all aspects of financial management in various industries including a publicly listed multinational manufacturing

company. Jey is responsible for planning, budgeting, reporting and financial control of Energy Action. Jey is a CPA and CIMA (UK) and holds a Degree in commerce.

Troy Davis – General Manager, Product Development and IT

Troy joined Energy Action in 2005, bringing to the business his extensive knowledge of refrigeration, air conditioning and information technology.

During this time Troy has been made a substantial contribution to growing and evolving Energy Action's business products, systems, processes and capabilities.

Rebecca Seamons – Marketing and Communications Manager

Rebecca leads the Company's marketing department. She has spent over 10 years marketing for organisations in both the private and public sectors including market leaders in electronics, security, agriculture, and cleaning and sanitation services. Rebecca's role within the senior management team provides an extensive background, across a diverse range of industries. Her experience encompasses all facets of marketing including advertising, public relations, e-marketing, product management and corporate branding specific to business-to-business environments.

6.3 Other staff

Energy Action currently employs 64 staff in total, (excluding non-executive Directors). The average length of service is 3 years and the average age of staff is 30. Staff turnover is low.

Total		Functional Area
Job Level Head Count	Sales	Operations	Energy Markets	Product Dev. (IT)	Sustainability & Business Dev.	Finance, Marketing & Admin.
CEO	1						1
Executive	2	1				1
General Managers	4		1		1		2
Regional Managers/ Manager / Senior Professional Staff	13	6	3	1		1	2
General staff	44	21	18		1	1	3
Totals	64	28	22	1	2	3	8

Staff are divided into the key functional areas of the firm as follows:

Included in operational general staff above are 5 technical service support staff and 4 energy efficiency specialists. These staffers deliver the Activ8 and Activ8+ products such as energy audits, contract management, bill validation, tariff advice and meter installation, retailer transfer management, onsite generation solutions and the design and implementation of energy management systems.

Sales staff are discussed further in Section 5.8 above.

6.4 Scope of responsibility of the Board

Responsibility for the Company's proper corporate governance rests with the Board. The Board's guiding principle in meeting this responsibility is to act honestly, conscientiously, fairly and in accordance with the law, with a view to building sustainable value for Energy Action's Shareholders, employees and other stakeholders.

The Board's function is to:

• » determine strategy and set financial targets for the Company;
• » identify principal risks of the Company's business;
• » monitor the implementation and execution of strategy and performance against financial and non-financial targets; and
• » appoint and oversee the performance of executive management and generally to take and fulfil an effective leadership role.

6.5 Composition of the Board

The Board performs its roles and functions, consistent with the above statement of its overall corporate governance responsibility, in accordance with the following principles:

• » the Board should comprise of no less than three at any one point in time;
• » Directors (other than the managing director) may hold their office for a continuous period of no more than three years or past the third annual general meeting following the Director's appointment, without being submitted for re-election.

The company plans to expand its Board in due course following the IPO.

6.6 Board Charter

The Board has recently adopted a charter (which will be kept under review and amended from time to time as the Board may consider appropriate) to give formal recognition to the matters outlined above. This charter sets out various other matters that are important for effective corporate governance including the following:

• » the composition, key functions and procedures of the Board;
• » permanent Board committees established to streamline the discharge of the Board's responsibilities;
• » description of the role of the Chairman, CEO and management and the ability for the Board (where appropriate) to delegate tasks to these individuals; and
• » a detailed description of independence.

These initiatives, together with other matters provided for in the Board's charter, are designed to institutionalise good corporate governance and generally build a culture of best practice in Energy Action's own internal practices and in its dealings with others.

Each permanent committee established by the Board has also adopted a charter detailing the committee's delegated responsibilities and its proposed interaction with the Board.

6.7 Risk Management and Audit Committee

The purpose of this committee is to advise on the establishment and maintenance of a framework of internal control and risk management for the Company. It is intended that the committee will comprise the following members:

• » Steve Twaddell (Chair);
• » Ed Hanna;
• » Bill Moss; and
• » Valerie Duncan (Secretary).

The committee performs a variety of functions relevant to risk management and internal and external reporting. The committee reports to the Board regularly to make its recommendations.

Among other matters for which the committee will be responsible, the committee shall:

• » oversee the Company's financial reporting process on behalf of the Board;
• » assess accounting, financial and internal controls;
• » perform corporate risk assessment and ensure compliance with internal controls to identify and manage risks in accordance with the risk management framework;
• » ensure the internal audit function and management processes support external reporting;
• » review the effectiveness of the audit function;
• » appoint external auditors and scope of external audit;

• » review of the performance and independence of the external auditors; and
• » ensure the Company complies with any relevant laws and regulations.

Meetings are held at least three times each year but may be held more frequently if required. The committee invites the external auditors and the Head of Internal Risk and Audit to attend a meeting per year in which management is not present. If required, the external auditors may request the chair to convene a meeting of the committee.

6.8 Remuneration Committee

The purpose of this committee is to assist the Board and make recommendations in relation to remuneration packages of senior executives, non-executive Directors, executive Directors and equity-based incentive plans. It is intended that the committee will comprise the following members:

Remuneration committee

• » Paul Meehan (Chair);
• » Steve Twaddell;
• » Bill Moss; and
• » Valerie Duncan (Secretary).

The Remuneration Committees will review and make recommendations to the Board with respect to (among other matters):

• » the level and structure of remuneration of executive directors, non-executive directors and senior management;
• » any executive incentive plan or policy (whether equity based or otherwise);
• » the disclosure of remuneration in the Directors' Report and all other public statement; and
• » appropriate remuneration policies.

The Remuneration Committee will meet as often as necessary, but must meet at least twice a year.

6.9 Nomination Committee

The purpose of this committee is to assist the Board and make recommendations to the Board in relation to the composition of the Board and the appointment of new Directors (both executive and non-executive) and senior management. It is intended that the committee will comprise the following members:

Nomination committee

• » Bill Moss (Chair);
• » Paul Meehan;
• » Ron Watts; and
• » Steve Twaddell.

Functions performed by the Nomination Committee will include the following:

• » review composition and size of the Board; assess the necessary and desirable competencies of Directors to ensure the Board has a broad range of skills, expertise and experience;
• » make recommendations regarding Board membership with regard to the effectiveness of succession plans and the Diversity Policy;
• » establish policies and procedures for the selection and appointment of Directors;
• » identify, consider and recommend to the Board possible candidates qualified for the appointment as Director;

• » ensure that an effective induction program is available to new Directors to ensure they understand their responsibilities and the business activities of the Company;
• » assist the Board in relation to the performance evaluation of committees, individual Directors and the Board itself; and
• » develop and implement plans to identify, assess and enhance Director competencies.

The Nominations Committee will meet as often as necessary and at least annually.

6.10 Best practice commitment

The Company is committed to achieving and maintaining the highest standards of conduct and has undertaken various initiatives, as outlined in this section that are designed to achieve this objective.

Independent professional advice

With the prior approval of the Chairman, which may not be unreasonably withheld or delayed, each Director has the right to seek independent legal and other professional advice concerning any aspect of the Company's operations or undertakings in order to fulfil their duties and responsibilities as Directors. Any costs incurred are borne by Energy Action.

Code of Conduct

Energy Action has developed and adopted a Code of Conduct to guide Directors and employees in the performance of their duties.

Trading Policy

Energy Action has developed and adopted a Trading Policy to regulate dealings in Shares by Directors and senior management and their associates. This is designed to ensure fair and transparent trading in accordance with both the law and best practice.

Corporate Governance disclosure

The Board Charter, Code of Conduct, Diversity Policy, Trading Policy and various other policies will be available for inspection on the Company's website at www.EnergyAction.com.au once Energy Action begins to trade on the ASX.

Compliance with ASX corporate governance guidelines and best practice recommendations

The ASX document, "Corporate Governance Principles and Recommendations" ("Guidelines") applying to listed entities was published in 2007 by ASX Corporate Governance Council with the aim of enhancing the credibility and transparency of Australia's capital markets. The Guidelines were subsequently amended in 2010.

The Board has assessed the Company's current practice against the Guidelines and outlines its assessment below:

Principle 1 – Lay solid foundations for management and oversight

The role of the Board and delegation to management have been formalised as described above in this section and will continue to be refined, in accordance with the Guidelines, in light of practical experience gained in operating as a listed company. Energy Action complies with the Guidelines in this area.

Principle 2 – Structure the Board to add value

Together the Directors have a broad range of experience, expertise, skills, qualifications and contacts relevant to the business of the Company. The Board has established a Nomination Committee to review and make recommendations with respect to the structure of the Board. The Nomination Committee does not consist of a majority of independent Directors as recommended by the Guidelines. In addition, the chair of the Nomination Committee, Bill Moss, is a nonexecutive Director but is not independent of the Company.

The Board currently consists of six Directors, including two executive Directors, giving the Board a majority of nonexecutive directors. The non-executive directors are either substantial Shareholders, or in the case of Bill Moss, associated with the Company's Corporate Adviser, Moss Capital. Accordingly the Board does not consist of any "independent" Directors. As there are no "independent" Directors on the Board, the Company has not met the recommendation in the Guidelines that a majority of the Board be independent directors. The Board intends to seek to recruit one or more suitably qualified independent directors after the IPO.

Principle 3 – Promote ethical and responsible decision making

The Board has adopted a detailed Code of Conduct as a model of the Company's vision and culture. In addition, the Board has adopted a Trading Policy to regulate the circumstances in which the Directors and management, and their respective associates, are permitted to deal in Shares in the Company.

The Board will ensure that restrictions on dealings in Shares are enforced. Each of the Code of Conduct and the Trading Policy has been designed with a view to ensuring the highest ethical and professional standards, as well as compliance with legal obligations, and by their existence and operation the Company shall comply with the Guidelines.

Principle 4 – Safeguard integrity in financial reporting

The Risk Management and Audit Committee (with its own charter) does not adhere to the Guidelines to the extent that it does not consist of only non-executive Directors, does not have a majority of independent Directors and is not chaired by an independent Director. Valerie Duncan and Ed Hanna, who are executive Directors, are members of the Risk Management and Audit Committee to ensure the committee has the relevant technical expertise required by the Guidelines. Steve Twaddell, the chair of this Committee is a non-executive Director who is not the chair of the Board. All the members of the Risk Management and Audit Committee are financially literate.

Principle 5 – Make timely and balanced disclosure

Energy Action's current practice on disclosure is consistent with the Guidelines. Compliance with ASX Listing Rule disclosure requirements are included in the Company's Continuous Disclosure Policy.

Principle 6 – Respect the rights of Shareholders

The Board recognises the importance of this principle and strives to communicate with Shareholders both regularly and clearly – both by electronic means and using more traditional communication methods. Shareholders are encouraged to attend and participate at general meetings. The Company's auditors always attend the annual general meeting and are available to answer Shareholders' questions. The Company's Communication Policy has been adopted in accordance with the Guidelines in relation to the rights of Shareholders.

Principle 7 – Recognise and manage risks

The Board, together with management, has constantly sought to identify, monitor and mitigate risk. Internal controls are monitored on a continuous basis and, wherever possible, improved. The whole issue of risk management is formalised in the Company's Risk Management and Audit Policy and will continue to be kept under regular review. Review will be undertaken by the Risk Management and Audit Committee, who holds meetings at least three times a year, and by regular reports of that committee to the Board.

Principle 8 – Remunerate fairly and responsibly

Remuneration of Directors and executives will be fully disclosed in the annual report and any changes with respect to key executives announced in accordance with the Company's Continuous Disclosure Policy. The Remuneration Committee has been established with its own charter to enable the committee to regularly review remuneration and provide recommendations to the Board. The Remuneration Committee does not consist of a majority of independent directors and is not chaired by an independent director, as recommended by the Guidelines. Paul Meehan, the chair of this committee is a non-executive director.

7 Financial information

7.1 Introduction

This Section contains a summary of the following historical and forecast information of Energy Action (together, the 'Financial Information').

• » The Historical Financial Information comprises the:
• Audited Income Statements for FY09, FY10 and FY11 (Section 7.3)
• Audited Cash Flow Statements for FY09, FY10 and FY11 (Section 7.4)
• Audited Balance Sheet as at 30 June 2011 (Section 7.5)
• » The Forecast Financial Information comprises the:
• Directors' forecast Income Statement for FY12 (Section 7.3)
• Pro-forma Cash Flow as at 30 June 2011 (Section 7.4)
• Pro-forma Balance Sheet as at 30 June 2011 (Section 7.5)
• Directors' best estimate assumptions underlying the Forecast Financial Information (Section 7.6)
• Key sensitivities in respect of the FY12 forecast Income Statement (Section 7.7)
• » The basis of preparation of the Financial Information (Section 7.2)
• » Significant accounting policies applied in the Financial Information (Section 7.8)

The Historical Financial Information has been audited by Crowe Horwath. The Forecast Financial Information has been reviewed by Crowe Horwath Corporate Finance Ltd, whose Investigating Accountant's Report is contained in Section 8.

The information in this Section should also be read in conjunction with the risk factors set out in Section 9 and other information contained in this Prospectus.

All amounts disclosed in the tables are presented in thousands of Australian dollars and, unless otherwise noted are rounded to the nearest thousand dollars.

7.2 Basis of preparation of the Financial Information

The Financial Information has been prepared in accordance with the recognition and measurement principles of the Australian Accounting Standards, although it is presented in an abbreviated form insofar as it does not include all the disclosures, statements or comparative information as required by Australian Accounting Standards applicable to annual financial reports prepared in accordance with the Corporations Act. Energy Action's accounting policies relevant to the Financial Information are included in Section 7.8.

7.3 Consolidated Historical and Forecast Income Statement

Set out below is a summary of Energy Action's audited historical Income Statements for FY09, FY10, FY11 and the forecast Income Statement for FY12.

\$'000's	Audited FY09	Audited FY10	Audited FY11	Forecast FY12
Revenue	7,788	10,241	13,992	17,314
Other income	21	45	45	192
Employee benefits expense	4,477	5,355	7,331	8,803
Depreciation and amortisation expense	167	264	402	648
Net finance costs	-	-	-	-
Rental and occupancy costs	212	246	365	610
Telephone and internet	133	173	170	216
Travel	177	170	217	192
Other expenses	432	678	1,372	1,560
Profit before income tax	2,211	3,400	4,180	5,477
Income tax expense	650	1,027	1,245	1,643
Profit attributable to members of the parent entity	1,561	2,373	2,935	3,834

7.4 Consolidated Historical and Pro Forma Cash Flow Statement

Set out in the table below is a summary of Energy Action's audited historical Cash Flow Statements for FY09, FY10, FY11 pro-forma Cash Flow Statement for FY11. The pro-forma Cash Flow Statement is the FY11 statement adjusted for assumptions applied to it as if the Offer had taken place during that year.

\$'000's	Audited FY09	Audited FY10	Audited FY11	Pro Forma FY11
Cash flows from operating activities
Receipts from customers	8,595	9,703	15,282	15,282
Payments to suppliers and employees	(5,956)	(7,204)	(11,174)	(11,174)
Interest received	21	45	45	45
Finance costs	-	-	-	-
Income tax paid	(602)	(894)	(1,441)	(1,441)
Net cash provided by (used in) operating activities	2,058	1,650	2,712	2,712
Cash flows from investment activities
Purchase of property, plant and equipment	(96)	(88)	(154)	(154)
Purchase of intangible assets	(249)	(642)	(644)	(644)
Net cash provided by (used in) investing activities	(345)	(730)	(798)	(798)
Cash flows from financing activities
Proceeds from borrowings	(35)	35	-	-
Proceeds from issue of shares	-	-	-	3,195
Share buy-back payment	(33)	(4)	-	-
Dividends paid by parent entity	(1,001)	(1,353)	(1,323)	(1,793)
Net cash provided by (used in) financing activities	(1,069)	(1,322)	(1,323)	1,402
Net increase in cash held	644	(402)	591	3,316
Cash at beginning of financial year	734	1,378	976	976
Cash at end of financial year	1,378	976	1,567	4,292

The following assumptions have been applied in calculating a pro-forma Cash Flow Statement for FY11:

a) the issue of the maximum offered of 3,800,000 Shares at an issue price of \$1.00 per Share, to raise \$3,800,000 under the Offer offset by the fees to be paid in cash for the following:

Offer Expenses	\$'000's
Legal fees	125
Investigating Accountant's Report	30
Tax due diligence	15
ASX Listing Fees	61
Broker fees	174
Corporate Advisor Fees	200
	605

b) Payment of the final dividend for FY11 for \$470,000.

7.5 Consolidated Balance Sheet

Set out in the table below is a summary of Energy Action's audited historical Balance Sheet at 30 June 2011 and adjustments to reflect the capital raising and the associated costs. These adjustments result in the pro-forma Balance Sheet as at 30 June 2011 which shows the amounts as if the Offer had taken place on that date.

\$'000's	Audited 30-Jun-11	Notes	Pro Forma Adjust.	Pro Forma 30-Jun-11
Cash and cash equivalents	1,567	a, b, c	2,725	4,292
Trade and other receivables	2,540		-	2,540
Other assets	257	b	(75)	182
Total current assets	4,364		2,650	7,014
Property, plant and equipment	196		-	196
Deferred tax assets	286		-	286
Intangible assets	1,435		-	1,435
Other non-current assets	29		-	29
Total non-current assets	1,946		-	1,946
Total assets	6,310		2,650	8,960
Trade and other payables	1,168		-	1,168
Current tax liabilities	387		-	387
Short term provisions	144		-	144
Total current liabilities	1,699		-	1,699
Other long-term provisions	51		-	51
Total non-current liabilities	51		-	51
Total liabilities	1,750		-	1,750
Net assets	4,560		2,650	7,210
Issued capital	449	a, b	3,085	3,534
Reserves	-	b	35	35
Retained earnings	4,111	c	(470)	3,641
Total equity	4,560		2,650	7,210

The following assumptions have been applied in calculating a pro-forma Balance Sheet at 30 June 2011:

Offer adjustments

• a) the issue of the maximum offered of 3,800,000 Shares at an issue price of \$1.00 per Share, to raise \$3,800,000 under the Offer;
• b) payment of expenses of the Offer as set out as:

Offer Expenses	\$'000's
Legal fees	125
Investigating Accountant's Report	30
Tax due diligence	15
ASX Listing Fees	61
Broker Fees	174
Corporate Advisor Fees1	710
	1,115

1 Corporate Advisor Fees include a cash component of \$275,000 (of which \$75,000 was prepaid at 30 June 2011), the issue of 400,000 shares to at an issue price of \$1.00 and 200,000 options with a strike price of \$1.20 (at a value of \$35,000). The value of the options was calculated using the binomial option pricing model applying the following inputs:

• I. Option term: 3 years
• II. Vesting conditions: none (i.e. can be exercised immediately after issue)
• III. Volatility: 40%
• IV. Dividend payout scenarios: 50%
• V. Risk free rate: 4.76%
• c) Final dividend paid for FY11 of \$470,000.

7.6 Best Estimate Assumptions underlying the Forecast Financial Information

The Forecast Financial Information is based on various best estimate assumptions, including those set out below. These assumptions should be read in conjunction with the sensitivity analysis set out in Section 7.7 and the risk factors set out in Section 9.

The Directors believe that the Forecast Financial Information has been prepared with due care and attention, and consider all best estimate assumptions when taken as a whole to be reasonable at the time of preparing this Prospectus.

The Forecast Financial Information is intended to assist investors in assessing the reasonableness and likelihood of the assumptions occurring, and is not intended to be a representation that the assumptions will occur. Investors should be aware that the timing of actual events and the magnitude of their impact might differ from that assumed in preparing the Forecast Financial Information, and that this may have a material positive or negative effect on Energy Action's actual financial performance or financial position.

The basis of preparation and presentation of the Forecast Financial Information, to the extent relevant, is consistent with the basis of preparation and presentation for the Historical Financial Information.

General assumptions

The following general assumptions are relevant to the Forecast Financial Information:

• » there is organic growth only and no material acquisitions or disposals;
• » there is no material change in the competitive operating environment;

• » there is no change in applicable Australian Accounting Standards and International Financial Reporting Standards that would have a material impact on Energy Action's accounting policies, financial reporting or disclosure requirements;
• » there is no material change to Energy Action's operating or regulatory environment. As noted in Section 4.2 the financial forecasts of Energy Action do not factor in the additional positive impact that may result from the carbon tax.
• » there is no material amendment to any material agreement relating to Energy Action's business other than as disclosed in this Prospectus;
• » there are no significant disruptions to the continuity of operations of Energy Action and there are no other material changes in Energy Action's business;
• » there is no material litigation that will arise or be settled to the benefit or detriment of Energy Action;
• » there are no contingent liabilities that will arise or be realised to the detriment of Energy Action;
• » there are no material losses of customers or contracts;
• » there is no loss of key management personnel;
• » Energy Action will maintain the ongoing ability to recruit and retain required personnel; and
• » the corporate income tax rate is 30%.

Specific assumptions and comments

The following specific assumptions and comments are relevant to the Forecast Financial Information:

Revenue

» Revenue in FY12 is expected to increase by 24% or \$3.3 million over FY11. This growth is expected from both newly generated business, as well as time based payment business from Forward Sold Contracts arranged in prior years.

New business revenue is from new Forward Sold Contracts expected to be won in-line with an increase in sales staff and Directors' view of improving market opportunities.

Business revenues recognisable from prior year Forward Sold Contracts are calculated using estimated values and expiry dates when the contracts were executed. As at 30 June 2011 the Company estimates there is \$54.0 million in total business due to be recognised as revenue over the next five years, part of which is expected in FY12.

» In terms of mix, revenue is assumed to continue to be comprised of the core service offerings of the Australian Energy Exchange, Activ8 and Activ8+.

Australian Energy Exchange revenue from new contracts won is calculated on a similar win ratio as achieved as in FY11 and the long term historical average contract durations. The upfront commission component is based on either the contracted or anticipated rates payable by each of the Licenced Energy Retailers under the Marketers Agreements (refer Section 10.13).

Activ8 revenue from new contracts won is calculated using contract prices increased by 17% over FY11.

Activ8+ revenues: Although relatively small in relation to total revenues, Activ8+ is expected to grow at a faster rate than in previous years as a result of additional staff members to support this business, leading to a slight change in the overall revenue mix.

» Other income is mainly comprised of interest income on cash balances held.

Employee benefits expense

» Employee benefits expense is expected to increase 20% or \$1.5 million over FY11. This is mainly due to an increase in fulltime equivalent staff including commission based sales staff in FY12.

Existing staff salaries are based on the FY12 contracted amount including any agreed increases. Commissions to employees are based upon the forecast revenues to which they relate.

Directors' fees are anticipated to increase primarily due to an additional director joining the board.

Depreciation and amortisation expense

» Depreciation and amortisation expense is expected to increase 62% or \$0.2 million over FY11. This is due to the full year effect of capital expenditure made during FY11 and anticipated capital expenditure of up to \$1.0 million during FY12. The capital expenditure plan for FY12 relates mainly to a CRM contact management system (\$0.3m), customer web portal development (\$0.4m), development of other systems and an upgrade of computer hardware and software. Depreciation on these assets is from when the assets are expected to be ready for use during the course of FY12.

Rent and occupancy costs

» Occupancy costs are estimated to increase \$0.2 million over FY2011 as the Company moved its headquarters in July 2011 to a new floor in the present building, doubling the size of the office to cater for current staffing as well as in anticipation of future expansion. Equipment rental costs are also expected to increase as a result of the increased space and numbers of staff.

Other expenses

» Other expenses are forecast to increase by \$0.2 million over FY11, mainly comprised of additional costs as a result of being a public and listed company.

7.7 Sensitivity analysis

The Forecast Financial Information is based on a number of estimates and assumptions that are subject to business, economic and competitive uncertainties and contingencies, many of which are beyond the control of Energy Action, its Directors and Management, and upon assumptions with respect to future business decisions, which are subject to change.

Set out below is a summary of the sensitivity of certain FY12 Forecast Income Statement key variables. The changes in the key variables as set out in the sensitivity analysis are not intended to be indicative of the complete range of variations that may be experienced.

For the purposes of the analysis below, the effect of the changes in key assumptions on the FY12 Forecast NPAT of \$3.8 million is presented.

Assumption	FY 2012 forecast assumption	FY 2012 variance (+/-)	Impact on FY12 NPAT (+/- \$'000's)
Change in the FY12 average auction price	Based on FY11 average auction price.	10%	114
Change in the average Activ8 contract value price	Average Activ8 contract value has been increased by 17% over the FY11 average actually achieved.	20%	73
Change in amount of MWhs sold	Based on a historic average per headcount of sales team, with an increase in sales headcount in FY12.	10%	115

Care should be taken in interpreting these sensitivities. The estimated impact of changes in each of the variables has been calculated in isolation from changes in other variables, to illustrate the likely impact on the forecast. In practice, changes in variables may offset each other or be additive, and it is likely that Energy Action's management would respond to any adverse change in any one variable to minimise the net effect on Energy Action's NPAT.

7.8 Summary of Significant Accounting Policies

7.8.1 Basis of preparation

The Income Statements, Cash Flow Statements and Balance Sheets have been prepared in accordance with the measurement and recognition requirements of Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the Financial Statements also comply with International Financial Reporting Standards.

The Balance Sheets have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. All amounts are presented in Australian dollars.

7.8.2 Basis of consolidation

The Financial Statements comprise the Financial Statements of Energy Action Limited and its subsidiaries ('the Group').

A controlled entity is any entity over which Energy Action Limited has the power to govern the financial and operating policies so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered.

The assets and liabilities of all controlled entities have been incorporated into the Financial Statements as well as their results for the year then ended. Where controlled entities have entered (left) the consolidated group during the year, their operating results have been included (excluded) from the date control was obtained (ceased).

All inter-group balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity.

Minority interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity interests held by persons outside the Group, are shown separately within the Equity section of the Balance Sheet and in the Income Statement.

7.8.3 Business combinations

Business combinations occur where control over another business is obtained and results in the consolidation of its assets and liabilities. All business combinations, including those involving entities under common control, are accounted for by applying the purchase method.

The purchase method requires an acquirer of the business to be identified and for the cost of the acquisition and fair values of identifiable assets, liabilities and contingent liabilities to be determined as at acquisition date, being the date that control is obtained. Cost is determined as the aggregate of fair values of assets given, equity issued and liabilities assumed in exchange for control together with costs directly attributable to the business combination. Any deferred consideration payable is discounted to present value using the entity's incremental borrowing rate.

Goodwill is recognised initially at the excess of cost over the acquirer's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If the fair value of the acquirer's interest is greater than cost, the surplus is immediately recognised in profit or loss.

7.8.4 Income tax

The income tax expense (revenue) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well unused tax losses.

Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

7.8.5 Property, plant and equipment

Each class and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses.

Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Income Statement during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a straight-line basis over the asset's useful life to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Class of fixed asset	Depreciation rate
Computer equipment	33.3%
Furniture and fittings	20.0% – 33.3%

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Income Statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

7.8.6 Leases

Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the consolidated group, are classified as finance leases.

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

7.8.7 Financial instruments

Recognition and initial measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified 'at fair value through profit or loss', in which case transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Finance instruments are subsequently measured at either fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine the fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

• (a) The amount at which the financial asset or financial liability is measured at initial recognition;
• (b) less principal repayments;
• (c) plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method; and
• (d) less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.

The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments.

(a) Financial assets at fair value through profit and loss

Financial assets are classified at 'fair value through profit or loss' when they are either held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost.

(c) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Group's intention to hold these investments to maturity. They are subsequently measured at amortised cost.

(d) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

(e) Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the Income Statement.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

7.8.8 Impairment of assets

At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the Income Statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

7.8.9 Goodwill

Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business combination exceeds the fair value attributed to the interest in the net fair value of identifiable assets, liabilities and contingent liabilities at date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

7.8.10 Research and development

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project.

7.8.11 Functional and presentation currency

The functional currency of each of the Group's entities is measured using the currency of the primary economic environment in which that entity operates. The Financial Statements are presented in Australian dollars which is the parent entity's functional and presentation currency.

7.8.12 Employee benefits

Provision is made for the company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Those cashflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cashflows.

7.8.13 Provisions

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

7.8.14 Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 3 months or less, and bank overdrafts.

7.8.15 Revenue and other Income

Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue.

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument. Dividend revenue is recognised when the right to receive a dividend has been established.

Revenue recognition relating to the provision of services is recognised in accordance with the contract terms, which matches the commission terms. In essence there is an upfront component that is recognised with the remainder recognised quarterly in arrears.

All revenue is stated net of the amount of goods and services tax (GST).

7.8.16 Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the Cash Flow Statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

8 Investigating accountant's report

Crowe Horwath Corporate Finance Ltd ABN 95 001 508 363 Australian Financial Services Licence No. 239170 Member Crowe Horwath International Level 15 309 Kent Street Sydney NSW 2000 Australia Tel +61 2 9262 2155 Fax +61 2 9262 2190 www.crowehorwath.com.au

A WHK Group Firm

12 September 2011

The Directors Energy Action Limited Level 5 56 Station Street PARRAMATTA NSW 2150

Dear Sirs,

Investigating Accountant's Report on Forecast Financial Information

We have prepared this Investigating Accountant's Report ("the Report") on the Forecast Financial Information of Energy Action Limited and its controlled entities ("Energy Action" or "the Company") for the financial year ending 30 June 2012 for inclusion in the Prospectus dated on or about 12 September 2011 ("the Prospectus").

The nature of this Report is such that it can be given only by an entity which holds an Australian Financial Services Licence ("AFSL"). Crowe Horwath Corporate Finance Ltd ("Crowe Horwath Corporate Finance") holds an AFSL (No. 239170) in accordance with the Australian Securities and Investments Commission requirements for advising and dealing in securities. We have attached at Annexure 1 the Financial Services Guide for the AFSL.

Background

Energy Action has issued the Prospectus in respect of the proposed capital raising, whereby Energy Action intends to issue a Prospectus offering of up to 3,800,000 shares, at an issue price of \$1.00 each to raise up to \$3,800,000.

Scope

You have requested Crowe Horwath Corporate Finance to prepare a Report covering the Financial Information referred to in this Report as set out in section 7.1 to 7.8 of the Prospectus comprising:

» Directors' forecast Income Statement for FY12 (Section 7.3);

Crowe Horwath Corporate Finance Ltd is a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity.

• » Pro-forma Cash Flow Statement for FY11 (Section 7.4);
• » Pro-forma Balance Sheet as at 30 June 2011 (Section 7.5);
• » Directors' best estimate assumptions underlying the Forecast Financial Information (Section 7.6); and
• » Key sensitivities in respect of the FY12 forecast Income Statement (Section 7.7).

(referred to collectively as the "Forecast Financial Statements").

The Directors are responsible for the preparation and presentation of the Forecast Financial Statements, including the best estimate assumptions on which they are based. The Forecast Financial Statements have been prepared for inclusion in the Prospectus. We disclaim any assumption of responsibility for any reliance on this Report or on the Forecast Financial Statements to which it relates for any purposes other than for which it was prepared.

Review of Best Estimate Assumptions

Our review of the best estimate assumptions underlying the Directors' forecasts has been conducted in accordance with Australian Auditing Standard ASAE 3000 "Assurance Engagements other than Audits or Reviews of Historical Financial Information". Our review consisted primarily of discussions with Management and Directors of Energy Action and analytical review procedures. Our procedures included examination, on a test basis, of evidence supporting the assumptions, amounts and other disclosures in the Directors' Forecasts and the evaluation of accounting policies used in the Directors' Forecasts.

These procedures have been undertaken to form an opinion whether anything has come to our attention which causes us to believe that the best estimate assumptions do not provide a reasonable basis for the preparation of the Forecast Financial Statements and whether, in all material respects, the Forecast Financial Statements are properly prepared on the basis of the best estimate assumptions and are presented fairly in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and other mandatory professional reporting requirements in Australia so as to present a view of Energy Action which is consistent with our understanding of its current and future operations.

The Forecast Financial Statements have been prepared by the Directors to provide investors with a guide to Energy Action's potential future financial performance based upon the achievement of certain economic, operating, developmental and trading assumptions about future events and actions that have not yet occurred and may not necessarily occur. There is a considerable degree of subjective judgement involved in the preparation of Forecast Financial Statements. Actual results may vary materially from those forecasts and the variation may be materially positive or negative. Accordingly, investors should have regard to the investment risks and sensitivities set out in Section 9 and Section 7.7 of the Prospectus respectively.

Our review of the Forecast Financial Statements that is based on best estimate assumptions is substantially less in scope than an audit examination conducted in accordance with Australian Auditing and Assurance Standards. A review of this nature provides less assurance than an audit. We have not performed an audit and we do not express an audit opinion on the Forecast Financial Statements included in the Prospectus.

Conclusion

Based on our review of the Forecast Financial Statements, which is not an audit, and based on an investigation of the reasonableness of the Directors' best estimate assumptions giving rise to the prospective financial information, nothing has come to our attention which causes us to believe that:

• (a) the Directors' best estimate assumptions set out in Section 7.6 of the Prospectus do not provide reasonable grounds for the preparation of the Forecast Financial Statements;
• (b) the Forecast Financial Statements are not properly compiled on the basis of the Directors' best estimate assumptions and are presented fairly in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by the Energy Action disclosed in Section 7.8 of the Prospectus; and
• (c) that the Forecast Financial Statements itself are unreasonable.

The underlying best estimate assumptions are subject to significant uncertainties and contingencies often outside the control of the Energy Action. If events do not occur as assumed, actual results and distributions achieved by Energy Action may vary significantly from the Forecast Financial Statements. Accordingly, we do not confirm or guarantee the achievement of the Forecast Financial Statements, as future events, by their very nature, are not capable of independent substantiation.

Subsequent events

Apart from the matters dealt with in this report, and having regard to the scope of our report, to the best of our knowledge and belief no material transactions or events outside of the ordinary business of Energy Action have come to our attention that would require comment on, or adjustment to, the information referred to in the Report or that would cause such information to be misleading or deceptive.

Independence and conflicts of interest

Crowe Horwath Corporate Finance does not have any interests that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to this matter. Crowe Horwath Corporate Finance had no role in the preparation of the underlying financial information.

Crowe Horwath Corporate Finance will receive a fee of \$30,000 (plus GST) based on time costs. This fee is not contingent on the outcome of the proposed listing and capital raising. Crowe Horwath Corporate Finance will receive no other benefit for the preparation of this report.

Crowe Horwath Sydney is the appointed statutory auditor and of Energy Action, for which normal professional fees will be received.

Responsibility and consents

Crowe Horwath Corporate Finance has given consent to the inclusion of this Report in the Prospectus in the form and context in which it appears but has not authorised the issue of the Prospectus. At the date of this Report, consent has not been withdrawn.

The Directors of Energy Action have prepared and are responsible for the Prospectus, and the Financial Information in Section 7 and have authorised the issue of the Prospectus. Crowe Horwath Corporate Finance makes no representation regarding, and takes no responsibility for, any other statements, material in, or omissions from, the Prospectus. Crowe Horwath Corporate Finance disclaims any responsibility for any reliance on the Financial Information for any purpose other than for which they were prepared.

Energy Action has agreed to indemnify and hold harmless Crowe Horwath Corporate Finance and its employees from any claims arising out of misstatement or omission in any material or information supplied by Energy Action.

General advice

The Report has been prepared for inclusion in the Prospectus, to provide its readers with general information only. It does not take account of the objectives, financial situation, or needs of specific shareholders. It is not intended to take the place of professional advice and the readers should not make specific investment decisions solely on the information contained in the Report. Before acting or relying on any information, the readers should consider whether it is appropriate for their individual circumstances having regard to their objectives, financial situation and needs.

Yours faithfully CROWE HORWATH CORPORATE FINANCE LTD

ANDREW FRESSL Principal

ANNEXURE 1 – FINANCIAL SERVICES GUIDE

1 January 2011

The Corporations Act 2001 requires Crowe Horwath Corporate Finance Ltd ("Crowe Horwath Corporate Finance") to provide this Financial Services Guide ("FSG") in connection with its preparation and provision of an Investigating Accountant's Report which is included in the documentation provided to members by the company or other entities ("Entity").

The matters covered by the FSG include:

• » who we are and how we can be contacted;
• » what services and types of products we are authorised to provide to you;
• » how we are remunerated;
• » independence; and
• » complaints handling.

Crowe Horwath Corporate Finance & Contacts

Crowe Horwath carries on business at Level 15, 309 Kent Street, Sydney NSW 2000. Crowe Horwath holds an Australian Financial Services Licence (No. 239170). Crowe Horwath is a public company and is a wholly owned subsidiary of WHK Group Limited. WHK Group Limited is a listed Australian company (ASX code WHG) and provides services primarily in accounting, tax, audit, business and corporate advisory and wealth management.

Services

We are authorised to:

• » provide financial product advice for securities and derivatives; and
• » deal in a financial product by applying for, acquiring, varying or disposing of a financial product on behalf of another person in respect of securities and derivatives to wholesale and retail clients.

Crowe Horwath Corporate Finance does not provide any personal retail financial product advice to retail investors nor does it provide market-related advice to retail investors.

For the specific purposes of preparing and providing the Investigating Accountant's Report Crowe Horwath Corporate Finance has not and does not accept instructions from retail clients, and has not and will not receive any remuneration from retail clients.

The preparation and provision of this Investigating Accountant's Report is known as "general" advice because it does not take into account your personal objectives, financial situation or needs. You should consider whether the general advice contained in our Report is appropriate for you, having regard to your own personal objectives, financial situation or needs.

Remuneration

When providing Reports, Crowe Horwath Corporate Finance's client is the Entity to which it provides the report. Crowe Horwath Corporate Finance receives its remuneration from the Entity. In respect of the report for Energy Action Limited, Crowe Horwath Corporate Finance will receive a fixed fee plus reimbursement of out-of-pocket expenses for the preparation of the report.

No related body corporate of Crowe Horwath Corporate Finance, or any of the officers or employees of Crowe Horwath Corporate Finance or of any of those related bodies or any associate receives any remuneration or other benefit attributable to the preparation and provision of the report.

Independence

Crowe Horwath Corporate Finance is required to be independent of the Entity in order to provide a report. The following information in relation to the independence of Crowe Horwath Corporate Finance is stated in section 8 of the report:

"Crowe Horwath Corporate Finance does not have any interests that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to this matter. Crowe Horwath Corporate Finance had no role in the preparation of the underlying financial information.

Crowe Horwath Corporate Finance will receive a fee of \$30,000 (plus GST) based on time costs. This fee is not contingent on the outcome of the proposed listing and capital raising. Crowe Horwath Corporate Finance will receive no other benefit for the preparation of this report."

Complaints Handling

Crowe Horwath Corporate Finance has internal complaints-handling mechanisms which are designed to facilitate responses to your complaints fairly and quickly. Please address your complaint in writing to:

Head of Compliance Crowe Horwath Corporate Finance Limited Level 15, 309 Kent Street SYDNEY NSW 2000

Crowe Horwath Corporate Finance is only responsible for the report and this FSG. Complaints or questions about the Prospectus should not be directed to Crowe Horwath Corporate Finance which is not responsible for that document. Crowe Horwath Corporate Finance will not respond in any way that might involve any provision of financial product advice to any retail investor.

Crowe Horwath Corporate Finance is a member of the Financial Ombudsman Service (member number 11689) which provides free advice and assistance to consumers to help them resolve complaints relating to members of the financial services industry. Complaints may be submitted by phone on 1300 780 808 or in writing to:

Financial Ombudsman Service GPO Box 3 MELBOURNE VIC 3001

We confirm that in compliance with Section 912B of the Corporations Act 2001(Cth) and ASIC RG 126, we maintain professional indemnity insurance to cover the financial products and services we provide, including any claims in relation to the conduct of our former representatives / employees.

9 Risk factors

9.1 Introduction

Any investment in Energy Action exposes investors to risk factors. This section of this Prospectus endeavours to identify those areas the Board believes to be material risk areas associated with an investment in Energy Action. Energy Action's business activities are subject to risk factors both specific to its business activities and of a general nature. Individually, or in combination, these areas of risk might affect the future operating performance of Energy Action, and the value of an investment in Energy Action. While some of these areas of risk can be mitigated by the use of appropriate safeguards and systems, many are outside the control of Energy Action and cannot be mitigated.

Before deciding whether to invest in Shares, prospective investors should carefully consider the risk factors described below, together with all other information contained in this Prospectus.

The following is not intended to be an exhaustive list of risk factors to which the Company is exposed.

9.2 Risks specific to an investment in Energy Action

Risk	Details
Reversal in outsourcing trends	The future growth of Energy Action is dependent on the continuation of the trend towards the outsourcing of risk and services such as third party energy management services. Any reduction in the reliance on third parties to provide outsourced solutions arising from increased cost-effectiveness of in-house operation may negatively affect the growth prospects and financial performance and/or financial position of the Company.
Regulatory environment	Energy Action may benefit from and is exposed to potential future regulations and legislation that apply to both the industry in which it operates and the industries in which its customers operate.
	Of specific relevance to Energy Action is potential new legislation in relation to energy efficiency and carbon pricing schemes. It is the current policy of the Federal Government to attempt to meet an emissions target reduction of 5% over the year 2000, by way of a carbon tax. The carbon tax is to be established by 1 July 2012, which could indirectly or directly affect the price of energy and require additional control and reporting measures. Energy action does not expect that any carbon tax, if introduced, would have an unfavourable impact on the prospects of Energy Action.
	Conversely, a delay in this scheme may reduce the ability of business customer to make effective decisions regarding energy management services provided by Energy Action. Energy Action may not benefit as much as anticipated from increased demand for its service as energy prices rise. If energy prices fail to rise as expected, or actions are taken by governments to reduce the impact of price rises, then this may also reduce the demand for energy management services provided by Energy Action.

Risk	Details
Corporate transactions	Energy Action intends to investigate expansion through the acquisition or merger with complementary businesses. Any acquisition or merger presents various risks including that:
	» Energy Action may pay too much for the business, which may result in lower overall returns for Energy Action.
	» Energy Action may not discover all material matters during the due diligence investigation of the target business, such that matters come to light post acquisition. These matters, such as undisclosed liabilities may have a negative impact on Energy Actions business.
	» Energy Action may not successfully integrate the businesses.
Actions of competitors	Actions of Energy Action's competitors may undermine the results of the business and its strategic plans. In addition, Energy Action may face competition from new entrants in energy management services from competitors that may have significant advantages including greater name recognition, longer operating history, lower operating costs, pre-existing relationships with current or potential customers and greater financial, marketing and other resources.
Reliance on key Licensed Energy Retailers and Metering Data Providers	Energy Action maintains third-party marketing arrangements with more than 15 Licensed Energy Retailers and Metering Data Providers, through which energy Forward Sale Contracts for customers are brokered. Energy Action receives payments from the Licensed Energy Retailers and Metering Data Providers for the customer origination and is therefore dependent upon these arrangements with them for a substantial part of its business. The risk is present that Licensed Energy Retailers or the Metering Data Providers may seek to vary their payment arrangements with Energy Action. Such variation may be adverse to the interests of Energy Action.
Technology	Many of Energy Action's business processes are dependent upon technology. This includes internally developed software, externally developed software, hardware, off-site data storage and services and internet connections. Whilst Energy Action takes steps to mitigate the risk, these technologies may fail to operate correctly or be prone to service interruptions. Should this occur, Energy Action may lose revenue or customers and suffer reputational damage.
Management capability	The success of Energy Action depends upon the ability of management to develop and implement the strategies which achieve the objectives. Subjective decisions made by management may cause Energy Action to incur losses or to miss profit opportunities.
Reliance on key staff	Energy Action depends on the talent and experience of its staff and employees. It is essential that appropriately skilled staff be available in sufficient numbers to support the Company's business. Energy Action requires that staff are skilled in many areas, some of which may be considered niche specialities in which there are limited practitioners available for recruitment. While the Company has initiatives to mitigate this risk, the loss of key staff may have a negative impact on Energy Action. Any loss of key staff to a competitor may amplify this impact.

Risk	Details
Liquidity risk	After completion of the Offer and the IPO, 83% of Shares will be held by the Existing Shareholders. Some of these Shares will be subject to a voluntary Escrow Agreement which may reduce liquidity in the trading of the Company's Shares on the ASX.

9.3 General risks

Risk	Details
Share market risks	Prior to the Offer, there has been no public market for Shares in Energy Action. Share prices, as quoted on ASX, are volatile in that they might rise and/or fall and might trade at prices below or above the Offer Price or any subsequent purchase price or the underlying value of Energy Action's assets. The Shares offered pursuant to the Offer carry no guarantee with respect to a return on capital, dividends or the price at which the Shares will trade, nor can there be any assurances given that an active trading market will develop for the Shares over time. If you are in any doubt as to whether you should invest in Shares in Energy Action you should seek advice from your stockbroker, accountant or other professional financial adviser.
Macro-economic risks	Changes in the general economic outlook both in Australia and globally may impact the performance of the Company and its projects. Such changes may include:
	» contractions in the Australian economy or increases in the rate of inflation resulting from domestic or international conditions (including movements in domestic interest rates and reduced economic activity);
	» increases in expenses (including the cost of goods and services used by the Company);
	» new or increased government taxes, duties or changes in taxation laws; and
	» fluctuations in equity markets in Australia and internationally.

Risk	Details
Broader general risks	There are also a number of broader general risks which may impact on Energy Action's performance. These include:
	» abnormal stoppages in normal business operations due to factors such as war, political or civil unrest, infrastructure failure and / or industrial disruption;
	» higher than budgeted costs associated with the provision of service offerings;
	» customers not renewing contracts, renewing on less favourable terms, or other loss of customers;
	» failure of customers to meet their obligations under their contracts;
	» material litigation – Energy Action is not currently involved in any material litigation and is not aware of any facts or circumstances that may give rise to any material litigation. However, given the scope of Energy Action's activities and the wide range of parties with which it is likely to deal, Energy Action may be exposed to potential litigation from third parties such as customers, regulators, employees and business associates; and
	» foreign exchange – Energy Action may undertake transactions outside of Australia. As such, the Company remains exposed to the impact of foreign currencies. These currencies are subject to fluctuation, which may impact results.
Impact of Australian International Financial Reporting Standards	Australian accounting standards are set by the Australian Accounting Standards Board (AASB) and are outside the Directors' and Energy Action's control. Changes to accounting standards issued by AASB could materially adversely affect the financial performance and position reported in Energy Action's financial statements.
Taxation	There may be tax implications arising from Applications for Shares, the receipt of dividends (both franked and unfranked (if any)) from Energy Action, participation in any on market Share buyback and on the disposal of Shares.
Government actions	The impact of actions by government may affect Energy Action's activities including such matters as, compliance with environmental regulations, taxation and royalties.
Changes in laws and government policy	Changes in laws, regulations and government policy may affect Energy Action and the attractiveness of an investment in Energy Action.

10 Additional information

10.1 Conversion to public company

Prior to lodgement of this Prospectus, Energy Action Pty Ltd changed its name to Energy Action Limited and its company type was changed from a proprietary company limited by shares to a public company limited by shares.

10.2 Company tax status

The Company will be taxed in Australia as a public company.

10.3 Rights and liabilities attaching to Shares

The rights attaching to ownership of Shares are:

• » described in the Constitution; and
• » regulated by the Corporations Act, the Listing Rules and the general law.

The following is a summary of the key provisions in the Constitution and the principal rights of Shareholders as set out in the Constitution. This summary is not exhaustive, nor does it constitute a definitive statement of the rights and liabilities of Shareholders.

Meetings and Notices

Each Shareholder is entitled to receive notice of and to attend general meetings of Energy Action and to receive all notices, financial reports and other documents required to be sent to Shareholders under the Constitution, the Corporations Act or the Listing Rules.

Voting

At meetings of shareholders, every shareholder present in person or by proxy, attorney or representative has one vote on a vote taken by a show of hands, and, on a poll has one vote for every fully paid Share held by him or her, and a proportionate vote for every partly paid Share.

A poll may be demanded by the chairperson of the meeting, by any five Shareholders present in person or by proxy, attorney or representative or by any one or more Shareholders who are together entitled to not less than 5% of the votes that may be cast on the resolution on a poll.

Dividends

Dividends may be declared or determined to be payable by the Directors.

Transfer

A Shareholder may transfer all or any of its Shares by:

• » in the case of an ASTC-regulated transfer, in any manner required or permitted by the Listing Rules or ASTC Settlement Rules; and
• » in other cases, using any written transfer instrument in any common form or form approved or adopted by ASX or the Directors.

The Directors may decline to register any transfer where permitted to do so by the Listing Rules and must decline to register a transfer of:

• » Shares where required by the Listing Rules; or
• » Restricted Securities which may be in breach of the Listing Rules or any escrow arrangement entered into by the Company.

Issue of Further Shares

The Directors may, subject to any restrictions on allotment of shares imposed by the Constitution, the Corporations Act and the Listing Rules, from time to time issue and allot further shares on such terms and conditions as they see fit.

Alteration of Constitution

The Constitution can only be amended by a special resolution (that is, a resolution that has been passed by at least three-quarters of the votes cast by Shareholders entitled to vote on the resolution).

Indemnification of Directors

To the extent permitted by law, the Company indemnifies each person who is an officer, or former officer, of the Company against all liabilities, costs, damages and losses of any kind (including legal costs incurred in defending proceedings) incurred by that person in the conduct of the business of the Company or in the discharge of that person's duties as an officer of the Company.

10.4 Deeds of access, indemnity and insurance

The Company has entered into deeds of indemnity, insurance and access with the Directors on common terms for directors of public listed companies. Under each deed, the Company has undertaken, to the extent permitted by law, to indemnify each Director in certain circumstances and to maintain insurance cover in favour of the Director for a period after the Director has ceased to be a director. The Company has also agreed to provide access to records of the Company while the person is a director and after they cease to be a Director, where such access is required in connection with potential or actual legal proceedings or regulatory action involving the Director.

10.5 Executive Share or Option Plan

Energy Action does not currently have an Executive Share or Option Plan, but may introduce such a plan in the future.

10.6 Targeted and Minimum Subscription

The amount targeted to be raised under the Offer is up to \$3.8m. The Company reserves the right to proceed to allotment and listing by raising a lesser amount than the \$3.8m and therefore issuing a smaller number of Shares.

The minimum subscription amount required for the Offer to proceed is \$2 million, subject to the minimum shareholder spread provisions of the ASX being satisfied. The Offer is not underwritten, see Section 10.7.

10.7 No Underwriting

The Offer is not underwritten. Energy Action reserves the right to modify, defer or withdraw the Offer.

10.8 Dividend reinvestment plan

As provided for in the Constitution, the Directors may implement a Dividend Reinvestment Plan (DRP) to provide Shareholders with the choice of reinvesting some or all of their dividends in shares rather than receiving those dividends in cash. The Directors intend to annually review the operation of the DRP. The DRP may commence at any time or be terminated, suspended or amended at the absolute discretion of the Board at any time. As at the date of the Prospectus, there has been no decision made by the Board to commence the DRP. The DRP is administered by

the Board. Participation in the DRP is optional and open to any member except members whose address or place of residence is outside of Australia or in the opinion of the Directors, participation in the DRP is illegal, impossible or impractical. If the DRP commences, Shareholders will be entitled to nominate a number of their Shares that will participate in the DRP. A Shareholder may nominate all or only some of their Shares. A Shareholder may amend the number of Shares nominated by the Shareholder. The Board may nominate a minimum number of Shares that may be nominated for participation in the DRP (if any).

Dividends on nominated Shares will be used to pay for additional Shares to be issued to the Shareholder. The Company may deduct any withholding that the Company is obliged to make (e.g.; for tax) and to set off any amount owed by the Shareholder to the Company. Only whole Shares will be issued under the DRP so any unused amount will carry forward to the next declaration of dividend. If participation of a Shareholder in the DRP is terminated, the Shareholder will be paid the carried forward balance of the dividend not used to issue additional Shares.

The issue price will be calculated by the Board or another suitable person nominated by the Board, by reference to information that the Board approves for the purpose from time to time. Such determination will be binding on all participants. While the Company is listed, the issue price will be based on the daily volume weighted average market price of all Shares during the five trading days commencing one day after the record date for the dividend or such other period as the Board determines and may be at a discount of up to 10%. Shares issued under the DRP rank equally with existing fully paid Shares.

10.9 Directors' interests

Other than as stated in this section and elsewhere in this Prospectus:

• » no amount has been paid or agreed to be paid and no benefit has been given or agreed to be given to a Director, or proposed Director to induce them to become, or to qualify as, a Director of the Company;
• » no Director or proposed Director of the Company holds or has held at any time in the two years before lodgement of this Prospectus with ASIC, an interest in:
• the formation or promotion of the Company;
• the Offer of the Company's securities; or
• property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer.
• » no Director was paid or given, or agreed to be paid or given, any amount or benefit for services provided by such persons in connection with the formation or promotion of the Company or the Offer.

The Directors are not required to hold any Shares under the provisions of the Company's Constitution. Set out below are details of the interests of the Directors in Shares and Options immediately before lodgement of the Prospectus with ASIC. Interests include those held directly or otherwise.

Director	Shares	Options
Paul Meehan	5.31 million	None
Ron Watts	2.83 million	None
Steve Twaddell	2.30 million	None
Bill Moss	0.52 million	See below
Valerie Duncan	2.41 million	None
Edward Hanna	1.30 million	None

Other interests

Mr Bill Moss is Chairman of the Board of Moss Capital Pty Limited, which is acting as Corporate Advisor to Energy Action. The terms of this arrangement are disclosed in Section 10.14 and include the grant of an option.

10.10 Directors' remuneration

The Constitution provides the following in relation to the remuneration of Directors:

• » Non-Executive Directors are to be paid such aggregate directors' fees as the Company in a general meeting determines, to be divided among them as agreed. The current limit is \$400,000.
• » If a Non-Executive Director performs services, which, in the opinion of the Directors, are outside the scope of the ordinary duties of a Director, the Company may remunerate that Director by payment of a fixed sum determined by the Directors in addition to or instead of the remuneration referred to above. Directors are also entitled to their reasonable travel, accommodation and other expenses incurred in attending Company or Board meetings, or meetings of any committee engaged in the Company's business.
• » Each Executive Director is to be paid an amount of remuneration determined by the Board. The remuneration of executive Directors is determined by the Directors after recommendations are received from the remuneration committee. Under the Listing Rules an Executive Director's remuneration may not be commission on, or a percentage of, operating revenue.

Below is a table detailing the amount of remuneration each Non-Executive Director of Energy Action is entitled to receive as at the date of this Prospectus:

Director	Remuneration per annum (including superannuation)	Value of options
Paul Meehan	\$39,240	None
Ron Watts	\$52,320	None
Steve Twaddell	\$39,240	None
Bill Moss	\$39,240	See 10.14 below in respect of Moss Capital

10.11 Escrow

Shareholders with a shareholding equal to or exceeding 5% of the Company, at the time of release of this Prospectus, and the Corporate Advisor have entered into arrangements whereby they have agreed not to not sell, assign, transfer or otherwise dispose of 50% of the Shares they hold (whether personally or through a related party or associate) for the period beginning on the date the Company is admitted to the official list of the ASX and ending on the date of the announcement of the Company's results for the financial year ending 30 June 2012. Under such Escrow Agreement the restricted Shares may be released before the announcement, in the event of a takeover, scheme of arrangement, or other similar event which is recommended by the directors of the Company and becomes unconditional, or otherwise, as agreed between the restricted Shareholder and the Company.

10.12 CEO employment contract

Energy Action has entered into an executive employment agreement with the Chief Executive Officer, Mrs Valerie Duncan. Under the executive employment agreement, she is entitled to remuneration and other terms as set out below.

Key Terms	Chief Executive Officer – Mrs Valerie Duncan
Term	Mrs Duncan is employed on an ongoing basis, subject to the right of either the Company or Mrs Duncan to terminate the employment agreement as described below.
Total fixed salary per annum (including superannuation)	\$312,300
Bonus / short term incentive	Mrs Duncan may become entitled to a performance bonus (being of a percentage of a fixed sum set at the start of each financial year by the Board) based on meeting some or all of the KPIs set by the Board to be achieved in that financial year. The percentage paid is determined by the KPI's actually achieved in that financial year, as determined by the Board at its sole discretion.
Termination by executive	Mrs Duncan may terminate her employment on three months' notice.
Termination by Company	The employer may terminate Mrs Duncan's employment on six months' notice or payment of six months' base salary in lieu of notice. The employer may become entitled in some circumstances to summarily terminate Mrs Duncan's employment.
	On termination of the employment agreement, Mrs Duncan will be entitled to any accrued and unpaid base salary and statutory amounts, and any bonus accrued but not yet paid under the Employer's bonus scheme (to the extent the bonus is payable under the scheme in the circumstances).
Restrictions	The agreement prohibits Mrs Duncan from attempting in any manner to persuade a client, supplier, employee or contractor of Energy Action to cease or reduce its dealings with Energy Action or from carrying on, or being interested or associated with any business activity that is competitive with Energy Action. The restriction applies throughout Australia, for a period of up to 12 months after the cessation of Mrs Duncan's employment.

10.13 Material Agreements

The Directors consider that certain agreements are significant or material to the Company and are of such a nature that an investor may wish to have particulars of them when making an assessment of the effect of the Offer on the Company or the rights and liabilities attaching to the Shares ("Material Agreements"). The main provisions of the Material Agreements are summarised below. This section is intended only to summarise the Material Agreements. The provisions of each agreement are not fully described.

Generic marketing and distribution retailer arrangements (Marketers Arrangement):

Energy Action has arrangements in place with Licensed Energy Retailers and Metering Data Providers to provide third party customer origination services. The arrangements provide that Energy Action is entitled to receive upfront and / or time based payments for introducing a customer to the Licensed Energy Retailer or Metering Data Provider. Energy Action's fee entitlement is for the duration of the Forward Sold Contract that is made between the Licensed Energy Retailer or Metering Data Provider and the energy customer. The Forward Sold Contracts vary in length per customer from generally one to five years. The Marketers Arrangements with the Licensed Energy Retailers and Metering Data Providers vary in length.

As regards the CEO Employment Contract see 10.12 above.

10.14 Interests of advisers

Except as set out in this Prospectus, no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, and no other promoter of Energy Action:

• » has or has had at any time during the last two years, any interest in the formation or promotion of Energy Action, or in property acquired by Energy Action in connection with its formation or promotion of Energy Action, or the Offer; nor
• » has been paid, or agreed to be paid an amount, and nor has been given, or agreed to be given any benefit for services provided by the person in connection with the formation or promotion of the Company, or the Offer.

Greenwich Legal Services Pty Ltd has acted as legal adviser to Energy Action in relation to the Offer, has advised Energy Action generally in relation to its admission to the Official List, has performed work in relation to due diligence enquiries and provided general advice to the Company. Energy Action has paid, or agreed to pay, approximately \$125,000 for the above services. Greenwich Legal Services Pty Ltd may become entitled to further fees for future work based on its usual hourly charge out rates.

Moss Capital Pty Limited has acted as Corporate Advisor to the Offer. Moss Capital is entitled to a fee comprising 3 components: \$275,000 in cash; 400,000 Shares and 200,000 options with a strike price of \$1.20 and an expiry date of 3 years (at an estimated value of \$35,000) for services in respect of the Offer.

Fat Prophets (Mint Financial Group Pty Ltd) and Bell Potter Securities Limited are joint brokers to the Offer and are paid up to a combined total of \$174,000 assuming a maximum capital raising of \$3.8 million and a minimum spread of 400 shareholders being attained.

Crowe Horwath Corporate Finance Ltd has acted as Investigating Accountant and has prepared the Investigating Accountant's report. Energy Action has paid, or agreed to pay, approximately \$30,000 for the above service.

Crowe Horwath Sydney has acted as Auditor and Crowe Horwath Sydney Pty Ltd has provided tax advice to the Company in relation to the Offer. Energy Action has paid, or agreed to pay, approximately \$115,000 for the above services.

Link Market Services Limited has acted as Share Registry to the Company in relation to the Offer. The Company has paid or agreed to pay Link Market Services Limited approximately \$13,000 in respect of these services.

If the Offer proceeds, the total estimated costs of the Offer, including advisory, legal, accounting, tax, listing and administrative fees, as well as printing, advertising and other expenses are currently estimated to be approximately \$1.1 million and will ultimately be paid by the Company by a mixture of cash, shares and options.

10.15 Litigation

The Directors are not aware of any litigation of a material nature pending or threatened involving the Company.

10.16 Australian Taxation Implications

Set out below is an overview of some of the ongoing Australian tax implications (as at the date of this Prospectus) for Australian residents and non-residents who acquire Shares under the Offer. Given the complexity of tax laws, it does not cover all possible implications for particular Applicants.

Each Applicant's individual circumstances will affect the taxation implications of any acquisition of Shares under the Offer for that Applicant. Before lodging an Application, each Applicant should seek independent professional advice with respect to the tax consequences applicable to their individual circumstances.

Tax Implications for Australian residents

Capital gains or losses

Australian income tax laws impose tax on capital gains (CGT). Resident Shareholders who hold Shares on capital account may become liable to pay CGT if they make a capital gain when they dispose of all or some of their Shares (or another CGT event has occurred in respect of those Shares).

Generally:

• » an Applicant will be taken to have acquired Shares under the Offer when these are issued to the Applicant and to have disposed of them when they transfer (or agree to transfer) them to another person or entity (although tax laws also deem a disposal to have occurred in some other circumstances as well);
• » the capital gain or loss will be calculated as the sale price of the Shares at disposal (or, in some cases, market value) minus the acquisition price of the Shares and other amounts included in the Shareholder's cost base for the Shares (e.g.; transaction costs associated with acquiring and disposing of the Shares). If the calculation results in a negative number, a capital loss may be available;
• » a capital loss cannot be offset against ordinary taxable income but may be offset against current capital gains or may be carried forward and offset against future capital gains;
• » if the Shares are held for at least 12 months, the Shareholder may be entitled to a CGT discount (e.g.; if the Shareholder is an individual or a trust, the capital gain may be discounted by 50% before taxable income is calculated or if the Shareholder is a complying superannuation fund or a similar entity, the discount is 33⅓%. Nontrustee companies are generally not entitled to this form of discount); and
• » the net taxable capital gain after permitted offsets (e.g.; capital losses) and discounts is added to the Shareholder's other assessable income.

Revenue gains or losses

Profits or losses in respect of Shares acquired for the purpose of share trading are likely to be treated for tax purposes as revenue gains or losses without the above mentioned concessions available under the CGT provisions. Applicants who apply for or hold Shares for a share trading purpose should seek independent professional advice as the issues are quite complex.

Dividends

Generally:

• » dividends on Shares will be assessable income of the Shareholder in the tax year in which they are paid (or deemed to be paid) to the Shareholder (e.g.; a dividend will be deemed to be paid where additional Shares are issued under a dividend reinvestment plan);
• » if the dividend carries a franking credit, the dividend paid (or deemed to be paid) plus the franking credit will be included in the Shareholder's assessable income;
• » the Shareholder will be entitled to offset the franking credit against tax payable by the Shareholder (provided the Shareholder is a qualifying person);
• » a qualifying person is a Shareholder who satisfies the holding period rule (i.e.; has held the Shares on which the dividend is paid 'at risk' for at least 45 days) and the related payments rule;
• » individuals, complying superannuation funds and some other taxpayers are entitled to a refund of any part of the franking credits that exceed their tax payable; and
• » there are special rules for Shareholders who are trusts or partnerships.

Australian tax implications for non-residents

Australia has tax treaties and double taxation agreements with many countries. The comments below are subject to the provisions of any applicable tax treaties and double taxation agreements.

Non-resident Applicants should obtain further advice in relation to the tax consequences in the country of their residence and any other relevant jurisdictions, including in respect of The Offer, the acquisition and disposal of Shares and any dividends that might be paid (or deemed to be paid) to them.

Capital gains or losses

Under Australian income tax laws, Shareholders who are foreign residents (or trustees of foreign trusts) might not be subject to Australian CGT (nor be able to offset capital losses) on the disposal of all or some of their Shares (or another CGT event has occurred in respect of those Shares).

Non-resident Applicants should obtain further advice in relation to the tax consequences (especially CGT) of acquiring Shares and any subsequent disposal of all or some of those Shares.

Revenue gains or losses

Profits or losses in respect of Shares acquired for the purpose of share trading are likely to be treated for tax purposes as revenue gains or losses without the concessions available under the CGT provisions. Applicants who apply for or hold Shares for a share trading purpose should seek independent professional advice as the issues are quite complex.

Dividends

Dividends paid (or deemed to be paid) to non-resident Shareholders will generally be subject to a final withholding tax unless the dividend is fully franked. The rate of dividend withholding tax rate is 30% unless Australia has a double taxation agreement with the country in which the Shareholder is a resident (in which case, the rate of dividend withholding tax is usually reduced).

Non-resident Applicants should obtain further advice in relation to the tax consequences of receiving (or being deemed to receive) dividends on Shares.

GST and Stamp Duty

Under current law, goods and services tax and stamp duty is not payable on the issue or transfer of Shares.

Tax File Number (TFN) and Australian Business Number (ABN)

Applicants are not required to disclose their TFN or ABN to Energy Action. However, if a TFN or ABN is not advised to Energy Action and no exemption is applicable, Energy Action must withhold tax at the highest marginal rate (currently 45%) plus Medicare levy (currently 1.5%) from certain dividends and some other payments that might be payable by Energy Action. Generally, no tax is required to be withheld on a fully franked dividend on Shares in a public company or where non-resident withholding tax is payable.

10.17 Consents

Greenwich Legal Services Pty Ltd has given, and has not withdrawn, its consent to be named in this Prospectus as legal adviser to Energy Action in relation to the Offer in the form and context in which it is named. Greenwich Legal has not authorised or caused the issue of this Prospectus and takes no responsibility for any part of this Prospectus other than references to its name.

Moss Capital Pty Limited has given, and has not withdrawn, its consent to be named in this Prospectus as Corporate Advisor in the form and context in which it is named. It has not authorised or caused the issue of this Prospectus and takes no responsibility for any part of this Prospectus other than references to its name.

Fat Prophets (Mint Financial Group Pty Ltd) has given, and has not withdrawn, its consent to be named in this Prospectus as Broker to the Offer in the form and context in which it is named. It has not authorised or caused the issue of this Prospectus and takes no responsibility for any part of this Prospectus other than references to its name.

Bell Potter Securities Limited has given, and has not withdrawn, its consent to be named in this Prospectus as Broker to the Offer in the form and context in which it is named. It has not authorised or caused the issue of this Prospectus and takes no responsibility for any part of this Prospectus other than references to its name.

Crowe Horwath Corporate Finance Ltd has given, and has not withdrawn, its consent to be named in this Prospectus in the form and context in which it is named and to the inclusion of the Investigating Accountant's Report in the form and context in which it is included. It has not authorised or caused the issue of this Prospectus and takes no responsibility for any part of this Prospectus other than references to its name and the Investigating Accountant's Report.

Crowe Horwath Sydney has given, and has not withdrawn, its consent to be named in this Prospectus as Energy Action's Auditor in the form and context in which it is named and to the inclusion in the Prospectus of each statement that is, or refers to, incorporates or is said to be based on, a statement in the audited consolidated financial report of Energy Action for the year ended 30 June 2009, for the year ended 30 June 2010 or for the year ended 30 June 2011, in the form and context it is so included. It has not authorised or caused the issue of this Prospectus and takes no responsibility for any part of this Prospectus other than references to its name and the statements that have been included in the Prospectus with its consent.

Crowe Horwath Sydney Pty Ltd has given, and has not withdrawn, its consent to be named in this Prospectus as Energy Action's Tax Advisor in the form and context in which it is named. It has not authorised or caused the issue of this Prospectus and takes no responsibility for any part of this Prospectus other than references to its name.

Link Market Services Limited has given, and has not withdrawn, its consent to be named in this Prospectus as Energy Action's share registry in the form and context in which it is named. It has had no involvement in the preparation of any part of this Prospectus other than being named as Energy Action's share registry. It has not authorised or caused the issue of this Prospectus and takes no responsibility for any part of this Prospectus other than the references to its name.

UMI has given and has not withdrawn, its consent to be named in this Prospectus, in relation only to the information attributed to it in Section 4.1, in the form and context in which it is named. It has had no involvement in the preparation of any part of this Prospectus other than being named in that context. It has not authorised or caused the issue of this Prospectus and takes no responsibility for any part of this Prospectus other than such references.

Some laws impose obligations that cannot be excluded. To the maximum extent permitted by law, each person named in this section expressly disclaims, and takes no responsibility for, all parts of this Prospectus other than any statement or report attributed to them and included in this Prospectus with their express consent.

10.18 Privacy

If you apply for Shares under this Prospectus, you will provide personal information to the Company (and its Share Registry). If you do not wish to provide this information, the Company may not be able to process your application. Personal information is collected and used in order to process your application, comply with the Company's obligations under Part 2C of the Corporations Act and to administer your investment. In processing and administering your investment information, the Company may disclose your personal information to related bodies corporate,

potential purchasers of interests in the Company or its businesses, the Company's agents, contractors or third party advisers that provide financial, administrative or other services in connection with the Company's business. Furthermore, the Corporations Act requires the Company to allow anyone to inspect its public registers, including the Share Registry, which may (if required by law) contain your personal information. Under the Privacy Act, you may request access to your personal information that is held by, or on behalf of, the Company. You can do this by contacting the Company, or its Share Registry, details of which are set out elsewhere in this Prospectus.

10.19 Governing law

This Prospectus and the contracts that arise from the acceptance of the Applications are governed by the laws applicable in New South Wales and each Applicant submits to the exclusive jurisdiction of the courts of New South Wales.

10.20 Expiry date

No Shares will be allotted or issued on the basis of this Prospectus later than the Expiry Date.

10.21 Authorisation of this Prospectus

Each Director has authorised the issue of this Prospectus and has consented to the lodgement of this Prospectus with ASIC.

Signed:

Valerie Duncan Director, Chief Executive Officer and Company Secretary Energy Action Limited

Glossary

Term	Definition
\$	Australian dollars.
ABS	Australian Bureau of Statistics.
AFSL	Australian Financial Services Licence.
Applicant	a person applying for Shares under this Prospectus.
Application	the lodgement of an Application Form.
Application Form	the form of application for Shares attached to this Prospectus.
Application Monies	the Offer Price multiplied by the number of Shares applied for.
ASIC	Australian Securities and Investment Commission.
ASTC	ASX Settlement and Transfer Corporation Pty Limited ACN 008 504 532.
ASTC Settlement Rules	the ASTC Settlement Rules issued by ASTC.
ASX	ASX Limited ACN 008 624 691.
Board	the board of Directors of the Company.
Broker	Fat Prophets (Mint Financial Group Pty Ltd ACN: 094 448 549) or Bell Potter Securities Limited ACN: 006 390 772.
Broker Firm Applicant	an Applicant pursuant to the Broker Firm Offer.
Broker Firm Offer	has the meaning in Section 3.3.
CHESS	Clearing House Electronics Sub-register System.
Closing Date	in relation to the Offer, the last day on which valid Application Forms may be accepted, as set out in Section 3 of this Prospectus.
Company	Energy Action Limited ACN: 137 363 636.
Constitution	the constitution of the Company.
Corporate Advisor	Moss Capital Pty Limited (A.C.N 135 588 224).
Corporations Act	the Corporations Act 2001.
CRM	Customer Relationship Management.
d-cypha	is a specialist built designer and developer of energy derivative markets and is the official product sponsor of the d-cyphaTrade ASX Australian Electricity Futures market.
Delivered Electricity Prices	means the average cost of electricity per MWh to the household or industrial consumer, being comprised of energy charges, network charges and ancillary costs.
Directors	the directors of the Company.
DRP	the dividend reinvestment plan as described in Section 10.8.
EBITDA	Earnings Before Interest Tax and Depreciation.
Energy Action	Energy Action Limited and where appropriate includes its subsidiaries forming the Energy Action group.
Energy Action Limited	Energy Action Limited ACN: 137 363 636.
Escrow	A voluntary arrangement for the escrow of Shares as described in Section 10.11.
Existing Shareholders	The shareholders listed in Section 5.2.

Term	Definition
Expiry Date	the date on which this Prospectus expires, 12 October 2012.
Forecast and Historical Financial Statements	The Forecast Financial Statements and Historical Financial Statements outlined in Section 7.1 of this Prospectus.
Financial Information	Means Forecast and Historical Financial Statements.
Forward Sold Contracts	Energy Action has arrangements in place with Licensed Energy Retailers and Metering Data Providers to provide third party customer origination services. The arrangements provide that Energy Action is entitled to receive upfront and / or time based payments for introducing a customer to the Licensed Energy Retailer and Metering Data Provider. Energy Actions fee entitlement is for the duration of the contract that is made between the Licensed Energy Retailer and Metering Data Provider and the energy customer. That contract is the "Forward Sold Contract". Such contracts generally vary in length per customer from one to five years.
FY	Financial year ending 30 June 20xx.
Gen-tailer	An industry term used to describe an entity that is both a generator and Licensed Energy Retailer of electricity.
IPO	Initial Public Offering.
Licensed Energy Retailer	An retailer of energy Licensed to participate in any of the state jurisdictions of the NEM.
Listing Rules	the official listing rules of ASX.
Metering Data Provider	A regulated provider of billing quality energy metering and data services upon which the NEM relies for financial settlement.
MWh	Megawatt hour –being 1,000,000 watts of electricity used over 1 hour.
NEM	National Electricity Market, regulated by federal and state agencies.
NMI	National Metering Identifier – for example, the electricity meter identification number at a connection point to the grid.
NPAT	Net Profit After Tax.
Offer	the invitation to participate in the issuance of Shares by Energy Action Limited under the Broker Firm Offer and/or the Priority Offer.
Offer Period	the Period commencing on the Opening Date and ending on the Closing Date.
Offer Price	\$1.00 per Share.
Official List	the official list of entities that ASX has admitted and not removed.
Opening Date	the date the Offer opens, being 13 September 2011 or such other date determined by the Board.
Options	an option to subscribe for one unissued Share in Energy Action, on the terms summarised in Section 10.14.
Priority Offer	the invitation under this Prospectus to Australian and New Zealand resident investors as identified by Energy Action.
Pro forma transactions	Those transactions outlined in Section 7.2 of this Prospectus.
Prospectus	this document.
Share	an ordinary share in Energy Action Limited.
Share Registry	Link Market Services Limited.
Shareholder	a shareholder of Energy Action Limited.

Term	Definition
SME	Small to Medium Enterprises.
Sub-Metering	A meter placed inside a customer's billed circuit to track energy use of a particular machine, circuit, process or area of the business, (e.g. air-conditioning).
UMI	Utility Market Intelligence (UMI) was formed in 1995 as a research company dedicated to the utility sector and is part of the NTF group.

Corporate directory

Energy Action Limited A.C.N: 137 363 636 Level 5 56 Station Street Parramatta NSW 2150

Directors

• » Ronald Watts Non Executive Chairman
• » Paul Meehan Non Executive
• » Steve Twaddell Non Executive
• » Bill Moss Non Executive
• » Valerie Duncan Chief Executive Officer
• » Edward Hanna Executive Director

Company Secretary

Valerie Duncan

Corporate Advisor

Moss Capital Pty Limited Level 26 135 King Street Sydney NSW 2000

Joint Brokers

Fat Prophets (Mint Financial Group Pty Ltd) Level 3 22 Market Street Sydney NSW 2000

Bell Potter Securities Limited Level 28 123 Eagle Street Brisbane QLD 4000

Investigating Accountant

Crowe Horwath Corporate Finance Ltd Level 15 309 Kent Street Sydney NSW 2000

Solicitor to the Company

Greenwich Legal Services Pty Ltd Level 11 50 Margaret Street Sydney NSW 2000

Auditor and Tax Advisor

Crowe Horwath Sydney (Auditor) Crowe Horwath Sydney Pty Ltd (Tax Advisor) Level 15 309 Kent Street Sydney NSW 2000

Share registry

Link Market Services Limited Level 12 680 George Street Sydney NSW 2000

Website

www.EnergyAction.com.au

www.energyaction.com.au