Eco Investor April 2016

Pre-Dividend Securities

International Deals for Pacific Environment

Pacific Environment's work to commercialize its EnviroSuite software offshore is paying off with two new deals: in England with Thames Water Utilities Ltd and in Spain with Libelium.

Thames Water has 15 million customers and is the UK's largest water and wastewater services company. However, traditional approaches in wastewater do not give an adequate understanding of the impacts of odour on local communities, and this can adversely affect the social licence to operate. EnviroSuite will allow for proactive management and enable alternative operating options instead of expensive engineering controls.

The software will be deployed at two key sites for an initial one year contract with an option to significantly extend the term and number of sites. The software will provide real-time monitoring, analysis, modeling, forecasting and incident intelligence for odour complaints. This will be done through three modules: Modelling of weather and air quality; Monitoring of weather and indicators of odour risk; and Incident Investigation with analysis of complaints and peak events.

The Thames Water deal will allow for the first time the software to demonstrate its usefulness to the wastewater industry, which has over 100,000 public wastewater facilities around the world. Pacific Environment said the project has the potential to set the benchmark for environmental management technology in the industry. The wastewater sector also doubles the size of the global market for EnviroSuite.

Pacific Environment offers the software as a service with pricing based on the number of modules used and a typical cost is about $60,000 to $80,000 per annum per site. The initial Thames Water contract for two sites for one year will earn a project fee of $300,000. The future potential could be for over 30 sites.

Chief executive Peter White said EnviroSuite was selected after a competitive worldwide tender. "We intend to use this cornerstone client to build our business in the water services sector in the UK and Europe. We will be looking at establishing a permanent office in the UK in due course."

In Spain, Libelium is an Internet of Things (IoT) platform provider that designs and manufacturers hardware and software for wireless sensor networks. It enables fast, efficient delivery of IoT, M2M and Smart Cities solutions. The new partnership allows Pacific Environment to be a member of the Libelium IoT Marketplace Partner Program. The aim is to commercialize IoT kits that combine Libelium's hardware with the EnviroSuite technology. The companies will collaborate to produce hardware/software solutions to sell to Libelium's customer base.

Libelium is building a global distribution network and has resellers in Asia, North and South America, Europe and Oceania. Alicia Asín, chief executive of Libelium, said the potential for the application of EnviroSuite and Libelium solutions across a diverse range of industries around the world is huge. "We are excited to collaborate with EnviroSuite to create world- leading proactive environmental management solutions. The combination of EnviroSuite's industry-leading dashboard and Libelium sensors will empower the user with real-time environmental monitoring, forecasting and archived data in order to make the best possible decisions."

Libelium joins other EnviroSuite resellers: Odournet in the UK, France and Spain; blacktogreen consulting in Spain; SigmaSpace in the US; EET in Malaysia; and ESC in Singapore.

For investors, it is encouraging that Pacific Environment won the Thames Water deal in a competitive tender and that Libelium is growing its worldwide distribution network. Data released by Pacific Environment shows how large is EnvironSuite's addressable market and how early is its penetration so far.

For example, in wastewater there are 7,000 potential clients but only one signed up so far; in bulk ports there are circa 1,800 potential clients with only 8 as current clients. It is the old venture capital story of entrepreneurs trying to win a slice of a huge, potentially company- making market. Investors who like the story will have a realistic and fun way of measuring their progress. The current score is 35 clients in Australia, SE Asia and Europe.

Another score is Pacific Environment's half year revenue. To 31 December it was $9.7 million, up 34 per cent on the previous December half. (ASX: PEH)

Pacific Environment executive chairman Murray d'Almeida and chief executive Peter White sign the partnership agreement with Libelium chief executive Alicia Asin at the Mobile World Congress, in Barcelona.





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