Commerce Energy Group Inc · OTC:CMNR
Commerce Energy — Shareholder Meeting (January 2005)
33 slides from Commerce Energy's shareholder meeting presentation, Jan 12, 2005
Slide 1: 2005 Annual Shareholder Meeting: Dawning of a New Day
ommerce ENERGY GROUP — 2005 Annual Shareholder Meeting January 12, 2005 Dawning of a New Day ‘9comme Group 2005 Annual Shareholder Mesting — January 12,2005 ole
Slide 2: Financial Overview
2005 Shareholder Meeting "Dawning of a New Day" FINANCIAL OVERVIEW Presented by Richard Boughrum Chief Financial Officer
Slide 3: Results for the FY ended July 31, 2004
Results for the FY ended July 31, 2004 $ millions 2004 Revenue $210.6 Net Income ($21.7) Notable Expenses: Summit ($10.3 non-cash) Reorganization ($3.3) Severance ($1.9) Litigation ($1.6) ($17.1) PG&E Bankruptcy Recovery $2.2 Management's Operating View ($6.8) 2003 $165.5 $5.4 ($1.5 non-cash) - - ($
Slide 4: Quarterly Margin Analysis
Quarterly Margin Analysis 2004 2004 2004 2004 2004 2005 1Q 2Q 3Q 4Q Year 1Q Gross Margin $4.3 $3.3 $5.7 $6.1 $19.4 $6.1 SG&A Expenses $6.6 $7.9 $9.2 $9.6 $33.3 $6.0 Operating Income ($2.3) ($4.6) ($3.5) ($3.5) ($13.9) $0.1 Non-Operating Expenses $1.2 ($3.1) ($2.1) ($3.8) ($7.8) ($1.2) Net Income ($1
Slide 5: Balance Sheet Strength
Balance Sheet Strength October 31, 2004 $ millions 2004 Cash $54 Restricted Cash $4 Deposits $5 Total Cash $63 Long Term Debt -0- Shareholders Equity $74 2003 $41 $21 $4 $66 -0- $93 - Book Value per Share $2.42 $3.36 - Cash Value per Share $2.06 $2.39
Slide 6: Summit Energy Ventures Investments 2001-2004
Summit Energy Ventures Investments 2001-2004 Encorp (Envenergy) $2,030 Turbocor $4,311 Power Efficiency $3,509 $9,850 Expenses Management Fees $3,600 Legal, Audit, Accounting, etc. $350 $3,950 Return of Cash $1,200 Total Cash Expended $15,000
Slide 7: Summit Energy Ventures: What we own today
Summit Energy Ventures What we own today: Encorp (Envenergy) (2.3%) Private company Envenergy merged with Encorp in April, 2004 Eight venture capital funds are also invested in Encorp Turbocor (9.3%) Joint venture with Danfoss announced in July, 2004 Danfoss is a Danish supplier of air conditioning
Slide 8: Saline and O'Gundiji Settlement
Saline and O'Gundiji Settlement December 27, 2004 Financial Elements Recognize Mr. Saline's 704,000 shares Pay Mr. Saline $1,200,000 Repurchase Mr. O'Gundiji's stock for $222,400 160,000 shares at $1.39 market Benefits Cost / benefit analysis of continuing litigation Removes the overhang of litigati
Slide 9: SEC and AMEX Events Timeline
SEC and AMEX Events Timeline October 29, 2004 Related Party Transaction Review by Audit Committee Notification of Late Filing - SEC Form 12B-25 November 5, 2004 AMEX Compliance Letter Failure to Satisfy Continued Listing Rule 3 independent audit committee members required November 11, 2004 CEO Admin
Slide 10: SEC and AMEX Events Timeline
SEC and AMEX Events Timeline November 16, 2004 Added New Directors Craig and Bayless Bayless joins Audit Committee AMEX Compliance Restored December 3, 2004 Proxy statement names new nominee, Mark Pocino December 15, 2004 Q1 10-Q filed SEC Filings Back on Schedule
Slide 11: Daily EGR Closing Price
Daily EGR Closing Price $3.00 9250 $200 $150 $100 $0.50 $0.00 ee § &§ § FC & & F&F @Commaroe Energy Group 2006 Annual Shareholder Meeting —January 12,2005 ~11= Source: Yahoo
Slide 12: Challenges & Initiatives
Challenges & Initiatives Shareholder liquidity/share value Sarbanes-Oxley compliance Legal costs Commodity markets Product mix/risk Infrastructure Organizational streamlining
Slide 13: Stock Volume Record
Stock Volume Record 365,000 Shares Jan. 7, 05 Source: Yahoo
Slide 14: Operations & Strategy Report
2005 Shareholder Meeting "Dawning of a New Day" OPERATIONS & STRATEGY REPORT Presented by Peter Weigand President
Slide 15: Topics Covered
Topics Covered 2004 Highlights Challenges and Initiatives Future Vision and Strategy
Slide 16: 2004 Highlights
2004 Highlights AMEX listing New management team Skipping Stone acquisition New retail licenses in MD, NY, OH, TX, VA End of Saline/O'Gundiji litigation
Slide 17: Shareholder Liquidity/Share Value
Shareholder Liquidity/Share Value Challenge: Lack of liquidity/perceived value Management Solutions/Initiatives: AMEX listing (completed) Attract new investors (in progress) Clean up historic issues (in progress) Resolve major litigation (completed) Return to profitability (in progress) Implement gr
Slide 18: Legal Costs
Legal Costs Challenge: Legal costs impact on profitability Management Solutions/Initiatives: Resolve major litigation (completed) Adopt tighter control policies (completed) New General Counsel (in progress) Reduce the number of outside firms (in progress)
Slide 19: Sarbanes-Oxley Compliance
Sarbanes-Oxley Compliance Challenge: Compliance required by July, 2005 Management Solutions/Initiatives: Comprehensive project kicked-off in April 04 A majority of the work is being done in-house using our subsidiary, Skipping Stone New and upgraded systems investment is required Ancillary benefits
Slide 20: Commodity Markets
Challenge: Wholesale costs have risen dramatically Management Solutions/Initiatives: Adopt tighter risk management policies (completed) Diversify supplier portfolio (in progress) Upgrade forecasting capabilities (completed) Institute daily control and monitoring (completed) Customer portfolio segmen
Slide 21: Utility Rate Increases Have Not Kept Up With Wholesale Price Increases
Utility Rate Increases Have Not Kept Up With Wholesale Price Increases This chart is illustrative not actual. 2 years
Slide 22: Product Mix/Risk
Product Mix/Risk Challenge: Traditional percentage savings product is unprofitable in high priced commodity markets Management Solutions/Initiatives: Offer new and different products (completed) Fixed Price, Shop and Lock, Base Load Convert existing customers to new products (phase 1 completed, phas
Slide 23: Infrastructure
Infrastructure Challenge: The infrastructure must support both profitability and enable growth Management Solutions/Initiatives: Build the foundation that will do both Settlement Daily Positions Daily P&L Target Market Data Customer Information New Market Matrix Commerce University Price Matrix Syst
Slide 24: Organizational Streamlining
Organizational Streamlining Challenge: The organization must be cost effective and efficient Management Solutions/Initiatives: Reorganize along traditional energy structures (completed) Add energy industry experienced staff (ongoing) Invest in training existing employees (ongoing) Commerce Universit
Slide 25: The New Organization Structure
The New Organization Structure SHORT SALES CYCLE MEDIUM SALES CYCLE LONG SALES CYCLE CONTACT CENTER C&I SALES FORCE CORPORATE DEVELOPMENT 1 to 50 kW Customers Simple Products Phone Sales Low Volume Higher Margin Over 50 kW Customers Product Menu Relationship Sales High Volume Lower Margin Large Deal
Slide 26: Doing More With Less
Doing More With Less Jan Feb Mar April May June July Aug Sept Oct Nov Dec EMPLOYEES in 2004 178 178 183 187 178 177 156 163 163 163 157 159
Slide 27: Future Vision & Strategy
Future Vision & Strategy Mitigate market concentration risk Diversify along the energy value chain Expand our product and service mix Targeted market position
Slide 28: Mitigate Market Concentration
Mitigate Market Concentration Active Pending Delayed Inactive Commerce Energy is active in California, Michigan, New Jersey and Pennsylvania Commerce Energy is licensed in Maryland, New York, Ohio, Texas and Virginia Retail Gas and Electric Deregulation Status STATUS
Slide 29: Mitigate Market Concentration
Mitigate Market Concentration Active Licensed Commerce Energy Status
Slide 30: Diversify Along The Energy Value Chain
Diversify Along The Energy Value Chain Intra and Interstate Pipelines Gas Storage Meter Behind Meter Efficiency Products & Services Wholesale Market Retail Market Gas Reserves Gathering & Processing Gas & Electric Utilities/ Muni's Generators Residential Commercial Industrial Government Institutiona
Slide 31: Building Around the Core
Building Around the Core Gas & Electricity Assets Wholesale Gas & Electricity Retail Gas & Electricity C O M M O D I T Y S U P P L Y ESCO Services Control and Monitoring Services DEMAND MANAGEMENT Efficiency Products and Services Core Customers Small Business C&I Municipalities Utility Mass Market P
Slide 32: Targeted Market Position
Targeted Market Position SINGLE PRODUCT DUAL PRODUCTS PRODUCT SUITE Strategic Energy Tractebel Energy Services Centrica Select Energy Sempra Energy Solutions GEXA Calpine Reliant Energy Texas Commercial Energy Commerce Energy Group (Current) Econnergy ACN Advantage Energy Cirro Energy Amerada Hess C
Slide 33: ommerce
ommerce ENERGY GROUP — 2005 Annual Shareholder Meeting January 12, 2005 Dawning of a New Day ‘9comme (Group 2006 Annual ShareholderMesting —January 12,2008 -33-
Commerce Energy Group — Shareholder Meeting (January 2005) on 6ix