This is my notes I took from my phone. Sorry about the format, grammar, spelling etc.
Melbourne Presentation
There were approximately 30 people in attendance.
MO presented and started with a short video which (IMO) was as boring as bat sheet. He stated that yesterday they wanted it shown again, all I can say is thank F&^% I don’t live in Sydney.
He projected that he would talk for 30-40 minutes and then take questions (He actually talked for close to 55 minutes and had very little time for questions which I think may have been strategic).
The company made a decision three years ago to diversify.
The Final phase of that decision-making process is upon us and it is to obtain financial stability
Currently have an order book of 30million dollars worth
He then went through each slide of the presentation. I won’t repeat the slide information but rather what he said that I thought was interesting. I was rushed so the number of the slide may be slightly out with the presentation and as such is only there as a guide to what he was talking about.
Slide 1.
elaborated on the unique competency that CCE have and that they have a competitive advantage as it is all under one company
2.
we will become profitable by doing what we do well
Focussed on 2 to 20 million
No competitive advantage to do rooftop solar
20 million is too small for bigger companies so this could be our niche. (I think there is a real contradiction here; why the 100 mw solar farm and why bid for sa battery?)
BOO is like an annuities stream of revenue and in order to do that we need a healthy balance sheet. Our competitive advantage is that we can finance internally
Spoke about Wave, nothing new but no mention of review that took place a year or so ago.
3
captain obvious
Long term it is looking at wave in Europe. I took it that Albany is just a “proof of concept” project and then it is off to Europe to make money. They have 1 billion set aside for wave in the next three years alone.
4
Microgrid Australia
MO wanted to focus on the Graph in particular as it shows a point of inflection where solar became cheaper than diesel
Microgrid cheaper than diesel
5
Ceto slide – got very technical, you would have loved it MEGAFAUNA
3 legs - creates twice the power (hoped to do three times but doesn’t work out that way)/ smaller loads as weight distributed and can share foundations in grid format
Generation inside unit
Pto- hydraulic fluid, (6 kilometres of fluid being pumped in onshore version), control system allows one unit to be changed rather than an average effect, pipes are more expensive than cable
25 m wide – size of local swimming pool
Pulled out by tug boat but all intelligent deployment
6
aust won over Europe because of funding
7 - blah
8
CCE strategy is slow and steady
They have de-risked through their onshore work
Conducted Billions of computer modelling tests
9
animation of ceto being hit by 12 m wave, that was cool
10 videos – I liked them
Plymouth university 500 tests with 1/20 scale model
You can see the Unit kisses the surface in 12 meter waves. He explained why this was important but at this stage I wanted to know about the MONEY!!! So lost a bit of interest
Most energy is at surface at extreme levels kisses surface by design
Epc - lend lease offices are next door. EMC is the brain and lend lease is the brawn. Surprising equitable relationship
pipeline is very healthy
Delaware
all building is done at factory in Belmont, testing etc all happens there. Clients are taken to Belmont, see that everything works and then whole lot transported up to site.
13
14
3rd defence project that CCE have done. Department of Defence have only ordered three and Carnegie/EMC has done them all. All defence bases moving towards this model. Long lead times obviously but the opportunity is self evident.
15 csiro - completed it is radio frequency silent and as such all batteries are actual faraday cages - another 18 need to be produced next three years. You would think that CCE are in box seat!
16 - stand alone power systems
12 in wa western power and horizon cce has done them all
CCE - do operation maintenance which is another source of ongoing funding and keeps clients in contact with us.
Next 60 for western out for tender soon they want 15000 next decade
20 for horizon which will be out soon
17 BOO
Hold onto the system
We can do everything in-house
Find site, finance, design, build by lend lease, we take over with maintenance etc
A number of revenues
Building a pipeline - north of 200mw of projects...
18 garden island
Defence made them stop because of base upgrade
Turned on in a few weeks time
Base is getting bigger and therefore expansion. Another opportunity
19/20 Northam
farmer gets lease deal
Very quick project for a power plant - 18 months up until now and in six months operating
IBA have a huge amount of capital. Indigenous communities biggest user of diesel
21- The photos are from last week
2 BOO by end of year
22/23 O and M - 30 sites they monitor and maintain
24 Looking forward
Kalbarri - construction 2h
This half record revenue double what we have ever done.
Questions
When do you Estimate we will see a profit? Profitable in fy 19 - need 40 million in revenues
Our competitors have deeper pockets than us can you comment on who you see as the main threats?
RCR downer UGL 100 mW size- There is little profit margin in these projects because they are easy to do.
Our niche is the Defence/CSIRO market - 3 or 4 competitors - none of them winning more work.
Interestingly (unprompted) he mentioned partnerships and acquisition. He is not ruling that out.
Questioner He had trouble reconciling that the emc interim revenue from a couple of years seemed to be the same story we are getting spun today. What is in the pipeline has changed? Do we need to target mining. Why are we funding more?
It has been 15 months since bought emc - jv lend lease was a little after that
- emc needed focus they were trying to do everything as a start up. Their pipeline didn’t materialise as quickly as we hoped
Took a while to understand how to work with lend lease, we can make a decision in a second they can’t.
Customers are complex, they have complex needs.
Mining has changed attitude, genuine engagement. Half dozen conversations on going at the moment.
Biggest shareholders are on the board
Garden island produced150 litres of water a day. What about Ceto 6?
Ceto 5 desal sold to navy
Wave to water - proved that we can do it however, it is Easier and cheaper to separate the two. Use the Wave energy to produce electricity to power desal.
Economically not way to go
IP - are you following mass customisation models?
Risk appetite of lend lease?
Bespoke solution. Huge customisation is possible in developing world. In wa we had three different designs. We don’t want 60 different designs(referring to western power’s upcoming tender) as to expensive to do. In talks with western power to try to get three.
Lend lease like low risk jobs with low margins we are opposite. We don’t have to do all jobs. We take jobs to them they say yea or nay and generally 50% they say no!
This questioner was feisty. I like it. Same spot year ago more info about revenues? Trust not there in the market. Your Language is slippery.
Valid feedback.
Revenue this quarter.
Revenues right now. It will be a record.
Three year - jv agreement, one year into it where to from here? Global opportunity
review next month
Both feel like hitting the straps
Deal with lend lease services and only Australia division.
We are immaterial to them
We need to educate the rest of lend lease on what we do.
There is a dedicated jv lens lease consultant doing that now (only in place last two months)....
Team of six just focus on projects..,
Need to do it nationally jl
Mauritius - still happening government slow confident it will convert to CSIRO Delaware type project
Ran out of time....
I would have loved to ask about potential share consolidation and if the need for another SPP would be likely.
One major point that wasn’t raised and he didn’t answer is “Why are we doing SPP?” Sometimes we overlook the simple points.
CCE Price at posting:
3.0¢ Sentiment: Hold Disclosure: Held
