ENERGY ACTION LIMITED — Interim / Quarterly Report 2021

Feb 24, 2021

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H1 FY21 Results Presentation

John Tracy Huggart Bucciarelli

February 2021

Chief Executive Officer Chief Financial Officer Energy Action Limited Energy Action Limited

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H1 FY21 results agenda

• Highlights

John Huggart

• Group financial

  • results Tracy Bucciarelli

• Operational performance John Huggart

► H2 FY21 priorities John Huggart

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Building Sales

Building the Business

Building the Technology Platform

Sales increased 25% from prior Future revenues increased $0.3m to Roadmap for next generation energy corresponding period (PCP) $17.1m between Jun 2020 and Dec category management platform 2020, first growth in 5 years commenced Auction volumes up 19% from PCP EBITDA impacted by COVID-19 in Stabilising legacy systems to achieve On track to achieve targets of 1,000 HY21, but improving conditions improved client delivery and auctions and 10,000 sites under expected to support stated target of operational efficiencies management in 1 - 2 years +10% EBITDA in 1-2 years Enhanced technology infrastructure 168% growth in small business Implemented cost reduction measures and associated annualised savings of segment due to sales targeting and achieving $2.1m in savings $1m+ retention Record employee engagement and investment in sales and leadership capability

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Operational highlights

Auction volumes AEX small Significant up business segment growth in 19% revenue growth of corporate client NPS 168% Reduction in avg Net sales order Future electricity price growth of contracted ($/MWh) of revenue up 25% 35% between Jun - Dec 2020 Average load per Net sales order $0.3m auction up growth for Metrics of first time in over 5 years 4% 114%

Employee engagement maintained at record levels

Demonstrated leadership in marketing and customer engagement

Highlights

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“Working with Energy Action was one of the best decisions I have made. Comparing energy contracts yourself and deciphering what every charge is to ensure you get the best deal is a real nightmare. I'm so time poor having Energy Action go through everything so thoroughly made my life so much easier.

My Account Manager is very professional in her approach, and the auction was a great way to ensure a transparent approach to selecting an energy supplier. I highly recommend Energy Action.”

-

Calandra Barrett | Manager Cockburn Ice Arena

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• Energy Action has thousands of clients, across all states and territories

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• Our clients include commercial and industrial users and SMEs in every industry sector

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• Our clients annual energy demand equates to ~10% of the total commercial national electricity market (NEM)

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What sets Energy Action apart? We help businesses make a good decision based on:

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Our expertise
a national team with the
capability to identify better
ways of buying, using and
generating energy
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Our leadership
the buying power to fight for
a better deal from retailers
with independent
comparison
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Our technology
ensures automated and
reliable delivery of valuable
data rich information and
insights
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► Our goal

A category killer for business energy procurement, contract and spend management services

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► What we do

We help businesses reduce costs, the effort to manage energy, and navigate their journey to Net Zero

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► Our advantages

EAX leads in procurement, with scale client base and deep industry and data expertise supported by technology and process

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► How will we get there

Invest in technology to drive efficiencies and commercial scale. Target high growth segments – procurement, managed services, retail services

Performance targets (1-2 years)

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1,000+ Auctions

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10%+ EBITDA

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10,000+ Sites under management

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Horizon 3
Horizon 2
Scale business into new markets
Horizon 1
Nurture emerging growth opportunities
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Maintain and grow core business

: Strategy

• Accelerate leadership in procurement and managed services

• Build Retail Services business

• Bootstrap investment in technology platform to enhance scalability

Strategy:

Strategy:

• Leverage technology platform to ► Leverage local customer base, grow sales and reduce costs partners and technology platform to pursue cross-border expansion

• Introduce additional products such as solar procurement

• Expand microgrid offer and capabilities

Initiatives now complete

• ✓ Launched Bill Buster

• ✓ Wholesale gas and demand response products launched

• ✓ Launched Solar Auctions

• ✓ Next generation platform technology roadmap has commenced

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Group financial results

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“Technology Ski Club located in Perisher Valley NSW used Energy Action to obtain a better power deal for our club. We believe that this new deal will save us between 10% and 15% over our old arrangements.

The service was very easy to use, all we needed to do was to provide our last bill from the then-current supplier. We would recommend that you try and see for yourself what you could save.”

Kelly Burke Technology Ski Club

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Income statement H1 FY21
Statutory NPAT of $0.03m
109% increase compared to H1 FY20
Operating loss of $0.15m
3% decline from PCP
Revenue down 17% from PCP
22% decline including discontinued products
OPEX and COGS down $2.27m
22% in further reductions compared to PCP
Government grants of $0.79m
Primarily Jobkeeper treated as significant item
Onerous contracts $0.57m
Technology infrastructure and rental premises
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	H1 FY21	H1 FY20	% Variance
Revenue	8,078,363	10,418,670	-22%
COGS	403,368	905,654	55%
Gross margin	7,674,995	9,513,017	-19%
OPEX - excl D&A	7,347,019	8,967,739	18%
EBITDA	327,976	545,278	-40%
Depreciation and amortisation	399,788	544,583	27%
EBIT	(71,812)	695	-10433%
Financing costs	127,117	194,429	35%
Profit before tax	(198,929)	(193,734)	-3%
Tax expense	(46,484)	(45,521)	2%
Underlying net profit (loss) after tax	(152,445)	(148,213)	-3%
Significant items:
Strategic review	-	45,284	100%
Restructuring costs	(19,692)	149,606	113%
Government support	(793,990)	-	100%
Onerous contracts	572,492	-	-100%
Tax expense on Significant items	62,709	(53,595)	-217%
Total significant items	(178,481)	141,295	226%
Statutory profit (loss) after tax	26,036	(289,509)	109%

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Future contracted
revenue growing
▶May 2020 lowest point on future
contracted revenue
▶Growth of $1.5m in May 20 to
$17.1m in Dec 20
▶Long term contract roll-offs
stabilising with managed services
sites under management down by
only 119
▶Net sales for metrics up 98% from
PCP
▶Managed Services utilised on
pathway to Net Zero
Increased success in cross-sell of
▶
Managed Services
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Turnaround for future contracted revenue
$42.7M – first time in 5 years
$40M
$35M
$32.7M
$30M
May - Dec
+1.5M +10%
$25M
$21.6M
$20.8M
$20M
$16.8M $17.1M
$15.6M
$15M
$10M
$5M
$0M
FY17 FY18 FY19 H1 FY20 May-20 FY20 H1 FY21
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• While revenues continue to decline, future contracted revenue have been trending upwards over the past 8 months

• This demonstrates the success over the past year of lifting sales acquisitions and improving retentions

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Reduction in Consolidation of Offshoring Technology Cost employment costs locations resources control ▶ A reduction of FTE as a ▶ Melbourne reduction in ▶ Growth in offshore ▶ Reduction in computer ▶ Reduced travel and result of Advisory exit space with rent now resourcing, replacing maintenance with costs due to COVID-19 represented in on-shore transactional improved technology ▶ A reduction of FTE with amortisation (AASB16) roles as appropriate infrastructure resulting ▶ Directors numbers improved integration with 26 FTE in FY20 in more than $1m in reduced from 4 to 3 and efficiency ▶ South Australia end of annualised savings effective 1 May 2020. lease and transition to ▶ A temporary and flexible serviced office ▶ Lower capitalisation of ▶ Ongoing strict cost voluntary salary internal resources, with control across all reduction of 20% ▶ Perth serviced office the completion of Core discretionary spend adopted the vast exit with employees Customer & Contract areas majority of staff until working remotely Management Platform September 2020 ▶ Lower makegood and other occupancy costs with reduced contracted premises

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Cash flow statement
Operating cash flow of $0.14m
Before interest and tax
Positive conversion of
Operating EBITDA to operating cash flow of 42%
Neutral revenue not invoiced
Strong sales orders now equivalent to invoicing
Government grants of $1.1m
Jobkeeper, cash boost and payroll tax benefit
treated as significant items
Government relief repayment of
$1.2m
Repayment of GST, PAYG, payroll tax & FBT deferral
from prior fiscal year
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1H FY21 1H FY20 Operating EBITDA 327,977 545,278 Share based payments 4,936 2,313 Trade debtors 114,909 765,909 Other debtors 349,953 (86,013) Work in progress 202,880 516,724 Revenue not invoiced 114 401,559 Right of use asset (338,674) (992,365) Trade creditors (326,336) (260,263)	1H FY21 1H FY20 Operating EBITDA 327,977 545,278 Share based payments 4,936 2,313 Trade debtors 114,909 765,909 Other debtors 349,953 (86,013) Work in progress 202,880 516,724 Revenue not invoiced 114 401,559 Right of use asset (338,674) (992,365) Trade creditors (326,336) (260,263)	1H FY21 1H FY20 Operating EBITDA 327,977 545,278 Share based payments 4,936 2,313 Trade debtors 114,909 765,909 Other debtors 349,953 (86,013) Work in progress 202,880 516,724 Revenue not invoiced 114 401,559 Right of use asset (338,674) (992,365) Trade creditors (326,336) (260,263)	1H FY21 1H FY20 Operating EBITDA 327,977 545,278 Share based payments 4,936 2,313 Trade debtors 114,909 765,909 Other debtors 349,953 (86,013) Work in progress 202,880 516,724 Revenue not invoiced 114 401,559 Right of use asset (338,674) (992,365) Trade creditors (326,336) (260,263)
	1H FY21	1H FY20
Operating EBITDA	327,977	545,278
Share based payments	4,936	2,313
Trade debtors	114,909	765,909
Other debtors	349,953	(86,013)
Work in progress	202,880	516,724
Revenue not invoiced	114	401,559
Right of use asset	(338,674)	(992,365)
Trade creditors	(326,336)	(260,263)
Other creditors	(294,207)	(358,735)
Lease liability	96,589	807,684
Working capital movements	(189,836)	796,813
Operating cash flow before interest and tax	138,141	1,342,091
Net financing costs	(121,735)	(174,829)
Income taxes paid	(19,105)	29,690
Operating cash flow	(2,699)	1,196,952
Cash flow related to other significant items	(292,031)	(360,413)
Cash flow related to government assistance	1,087,133	-
Significant items working capital – government relief	(1,181,764)	-
Significant items working capital – other	(206,443)	-
Statutory net cash from operating activities	(595,804)	836,539
Capital expenditure	(451,867)	(1,321,456)
Bank loans	-	1,200,000
Net increase/(decrease) in cash held	(1,047,671)	715,083
Operating cash flow as a % of EBITDA	42%	246%

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Debt structure and
key financial ratios
Prudent financial management
Of cash and debt
3 year extension on loan facility
To October 2023
$3.05m liquidity
Under reduced debt facilities
Current net debt at $4.24m
Increased primarily due to settling deferred
government payments from prior fiscal year
Completion of placement to raise
$300,000 subsequent to H1 FY21
Placement of 1,034,483 fully paid ordinary shares at 29c
per share
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8M
Credit Card Facility
7M
Liquidity : Liquidity : Unutilised
$4.04M $3.05M Cash Unrestricted
6M Non Cash Guarantees
Borrowings
5M
Net Debt :
$3.19M Net Debt :
4M $4.24M
3M
2M
1M
0
FY20 - Loan FY20 - Cash FY21 Dec - Loan FY21 Dec - Cash
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▶ Bank agreement extended for 3 years to October 2023

▶ Terms include agreed gearing, interest and asset covenants, and an amortisation schedule resulting in a reduction of the facility by $1m between March 2022 and Sept 2023, with the remaining terms and conditions largely the same

Operational performance

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“We have been a client of Energy Action’s since 2013 and recently used their services to take advantage of the low pricing in the market as advised by our Account Manager.

Following the advice from our Account Manager, we took our sites across NSW and QLD to auction and were delighted to save approximately $290,000, which represented over 30% in savings on the retail portion of our electricity bill.

I would have no hesitations recommending Energy Action’s services to any aged care facility that is looking for a trusted partner for their energy management needs.” _

Rob Hall | CFO / Secretary Christadelphian Aged Care

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► Leading the market ► Auction Blitz with ‘net zero at Initiative to help clients achieve more competitive least cost’ pricing through having campaign retailers bid on 80% of clients want to concurrent auction loads. achieve net zero, only This has attracted new 30% have a plan. Energy clients to Energy Action. Action have released a whitepaper on how to achieve net zero at least cost following a roundtable with sustainability and procurement leaders.

• How to buy energy and save like the

experts

Our webinars have continued to be a source of thought leadership. These free webinars have offered expert advice to help entry level business owners make positive changes through using Energy Action’s services.

► Bill Buster

The continued success of our Bill Buster campaign has led to significant acquisition of SME clients and small sites under management.

► Solar auctions launched

The launch of Energy Action’s unique solar auction platform helps clients minimise the cost of and maximise the instillation of rooftop solar through a technologydriven reverse auction platform.

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H2 FY21 priorities

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“Our experience with the Energy Action Bill Buster campaign was a very positive one, with all the hassle of trying to source the most competitive provider taken care of for us. Steven was easily contactable and most helpful, with responses to all queries being prompt.

The summary we were provided with was clear and concise and made the decision-making process a very simple one. We are making significant savings as a result of Energy Action’s campaign, and wouldn’t hesitate to recommend them in future.”

Christine Harrop Moses & Son

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Technology milestones

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Building the future

• Stabilised legacy systems to improve client service via speed, accuracy and reliability

• Automated and streamline workflow to improve operational efficiencies and reduce costs

• Improved technology infrastructure and lower annualised savings in excess of $1million

• Cyber security review complete and recommendations implemented

• Product development roadmap for next generation energy category management platform in place with implementation underway

• Roadmap benefits : enhance client value and simplify market complexity, improve integration with client and partner systems and provide ability to scale locally and internationally

► Roadmap includes :

• Unification of EAX products into a single platform

• EAX’s development spend focused on value for all customers

• Deliver data, analytics, insights and reporting for both clients and Energy Action team

• Building the foundation for future value add product launches

• Open APIs enable integration into client financial and environmental reporting systems

• ► Jurisdiction agnostic, enabling a platform for global deployment

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Share placement
and new director
Bruce Macfarlane
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• Bruce Macfarlane to join Energy Action Board as non-executive director following completion of subscription agreement

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• Mr Macfarlane is one of the co-founders of BidEnergy (ASX: BID) and was instrumental in structuring their solution architecture

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• Mr Macfarlane has agreed to subscribe for 1,034,483 fully paid ordinary shares to raise $300k taking his interest in EAX to 10.84%

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• Over the past year, Mr Macfarlane has been working in the Energy Action Solution Design team advancing the technology roadmap

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Operational

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Financial

► Sales: Accelerate ► Technology: Build leadership in team capability and procurement and invest in platform to managed services enhance scalability and build retail services ► People: Continued focus on building ► Service: Improve employee

• Service: Improve employee Net Promoter Score, engagement scores client retention rates and driving high and quality of long performance culture term relationships

Target: Return to 1,000 auctions and 10,000 sites under management

► Profit: Disciplined revenue, cost and Target: cash management Return to 10% EBITDA

► Guidance: remains withdrawn with continued uncertainty due to COVID-19

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1300 553 551
info@energaction.com.au
energyaction.com.au
@EnergyActionAUS
linkedin.com/company/energy-action
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Appendix

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“…I am really impressed with Energy Action’s performance in embedded network management. Energy Action sorted out all the problems that we could not resolve over the past 12 months and corrected all the billing errors that we have since we took over the site.

For Dandenong Plaza, just the revenue and saving that Energy Action recovered from the billing errors already covered the setup fee.”

Ping Chai | Operations Manager Armada Dandenong Plaza

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Procurement
Revenue of $3.2m (4% down YoY)
AEX auction volumes up 19% from PCP.
4% increase in average annualised load
per auction
The business has been impacted by
COVID-19 as clients deferring decisions,
especially in Victoria with prolonged
lockdown
Growth in AEX tariff up 168% with
strong retentions and Bill Buster
launch for small sites
Solar Auction launch during the
period with significant client interest
aligned with net zero pathway
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	H1 FY21	H1 FY202	Variance
No. of successful AEX auctions	450	378	19%
Average AEX contract duration	30.6	28.3	2.3months
TWhs procured via auction	0.57	0.45	27%
Average annualised MWhs per successful AEX	1,247	1,204	4%
Average $/MWh	$55.3	$84.48	-35%
Total auction bid value1	$79.1m	$90.5m	-12.6%
No. of electricity tenders	11	14	-21%
No. of gas tenders	13	18	-28%

1 Electricity component of contract only, i.e. excluding network and other charge 2 Some FY20 comparable key performance indicators have been restated

▶ Average $/MWh declined 35% with market stabilising after reaching 5 year lows

▶ Fixed fee tender decline with product mix switch to auction

▶ 4% increase in average annualised load per auction

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Managed services
Revenue of $4.3m (down 27% YoY)
6,322 sites currently under
management
Metrics gross sales order growth
up 98% compared PCP
Decline in sites under management
stabilising with significant sales
order growth offsetting long-term
contract expiries
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Sites Under Management - Managed Services

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7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Energy Metrics Sustain Data Only (MP/MDA)
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• Sites under current contract does not included contracts which are signed, but yet to commence service delivery * Jun 20 Bureau sites have been restated and reclassed as “Sustain”

• Sites under management stabilising with smaller decline -123

• Decline in sites from reduced proportion of long term contact expiry and the loss of Corporate retention sites, offset by corporate acquisition and strong metering sites

• Key strategy to invest in value added technology, service and delivery and expand customer value

• Focus on improve the customer value of the managed service, and enhance attachment rate of Metrics to procurement

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Retail services
Revenue of $0.7m (flat overall YoY)
3,451 sites currently under
management
Decrease in sites under
management of 119 sites in Retail
Services
COVID-19 impact with less active
sites for billing and delayed
projects
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Sites Under Management - Retail Services

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4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
Retailer Billing (CSE) Embedded Networks
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• Sites under current contract does not included contracts which are signed, but yet to commence service delivery

• Small decline in Embedded Network sites of 172 with COVID-19 impacting large shopping centres and other corporate tenancies

• Small increase of 53 retailer billing sites with growth in existing clients

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Operating profit drivers

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Reduction in NPAT driven by lower revenue offset by COGS and OPEX savings

500,000

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Lower OPEX excl.
lower revenue offset by
D&A improved by +18%
COGS and OPEX savings
with lower employment
0
67,312 963 costs, occupancy costs,
144,796
148,213 1,620,720 152,444 computer maintenance
and travel
-500,000
Financing
Revenue
Lower interest rates
Procurement -$0.1m -1,000,000
resulting in interest
Managed Services -$1.6m
savings
Retail Services flat
-1,500,000 Lower in D&A with
lower software
Repositioned revenue
depreciation
502,285
Advisory Services -2,000,000 1,713,920
discontinued -$0.6m
-2,500,000
626,387
COGS
Revenue related
decline predominately
-3,000,000
H1 FY20 NPAT Revenue Repositioned COGS Opex excl D&A D&A Financing Tax H1 FY21 NPAT
Advisory Services
Revenue
discontinued
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	NPAT	NPAT	NPAT	EBITDA	EBITDA	EBITDA
	H1 FY21	H1 FY20	Variance	H1 FY21	H2 FY20	Variance
Statutory results	26,036 (289,509)		109%	569,166	350,388	62%
Add back significant Items after tax:
Strategic review	-	32,831	100%	-	45,284	100%
Restructuring cost*	(14,572)	108,464	113%	(19,692)	149,606	113%
Government Support**	(587,553)	-	100%	(793,990)	-	100%
Onerous Contract***	423,644	-	(100%)	572,492	-	(100%)
Operating profit (loss) after tax	(152,445)	(148,214)	(3%)	327,976	545,278	(40%)

• Operating profit (loss) is reported to give information to shareholders that provides a greater understanding of operating performance by removing significant items and therefore facilitating a more representative comparison of performance between financial periods

• Costs associated with restructuring offset by reversal of legal costs from prior year

• ** Jobkeeper & cash boost government grant

• *** Onerous contracts relating to technology infrastructure and rental premises

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Revenue not invoiced
Strong asset “Revenue not invoiced” of
$6.2m holds the cash to be received in
the future for revenue recognised in
current and previous fiscal periods
Balance stable with growth in new
sales orders offsetting the
reduction in the balance from
invoicing
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$7.3M
$7M
$6.2M $6.2M $6.2M
$6M $5.9M
$5M
$4M
$3M
$2M
$1M
0
1H FY19 FY19 1H FY20 FY20 1H FY21
Net current WIP Net non Current WIP
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• Revenue from Auction and Commission based Tenders are recognised upfront once the Auction is complete and the contract signed between the retailer and customer

• The payments are received over the life of the contract

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