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Energy Mad shares drop to four-month low after posting wider annual loss

Shares in Energy Mad [NZX: MAD] were the biggest decliner on the stock exchange today after the energy efficient light bulb marketer more than doubled its full year loss and signalled it may lose access to $7.7 million of tax losses.

The Christchurch-based company made a loss of $5.7 million, or 13 cents a share, in the year ended March 31, from a loss of $2.5 million, or 7 cents, a year earlier, it said in a statement. Revenue fell 19 percent to $7.5 million. The company's shares dropped 9.1 percent to a four-month low of 30 cents.

In the past year, Energy Mad wrote down the value of its research and development by $1.4 million to $400,000, reflecting that its new range of Ecobulb LEDs supersede its compact fluorescent lamps, and wrote down the value of its existing lamp stock by $200,000.

The company also wrote down a $2 million deferred tax asset off its balance sheet and signalled it may lose access to that asset upon becoming profitable because one of its long-standing shareholders may sell their stake, meaning it will no longer comply with minimum shareholder continuity requirements.

The company is set to lose access to $7.7 million of its $12.4 million gross tax losses should the shareholder exit its stake, it said.

In the US, sales fell to $200,000 in the year through March from $2.5 million a year earlier as retailer Walgreens failed to order more stock. Walgreens has now placed two reorders for a total of $140,000 for the coming financial year, Energy Mad said.

In Australia, sales dropped to $4 million from $4.6 million the year earlier as a large customer reduced their order by $1.4 million, the company said. European revenue rose to $400,000 from $20,000 a year earlier, it said.

New Zealand direct installation revenue, where the company sells and installs Ecobulb downlights and associated insulation in homes, increased to $2.9 million from $2 million a year earlier.

The company said it plans to step up its New Zealand operation which will see an outsourced field force demonstrating LED Ecobulb light bulbs in homes and estimating savings to be made from making the switch.

The new LED Ecobulbs use as much as 90 percent less electricity than the inefficient light bulbs they replace, while lasting up to 25 times longer, the company said. Some 900,000 New Zealand homes use inefficient incandescent and halogen downlights, it said.

"The current low uptake of LEDs in New Zealand, combined with little competition in the direct to consumer space, creates a significant market opportunity that Energy Mad is well positioned to take advantage of," the company said.

Energy Mad plans to outsource elements of its operations to an international third party field force, it said.

The company won't pay a dividend, consistent with the year earlier.


Comments and questions

Energy Mad is a bad joke - it has been from the day it floated

No more excuses - time for the founders to hand over to someone who can actually run the company - they obviously have major inadequacies and their projections are unreliable and in cuckooland.

Their business model is broken.

Will the last investor please turn out the lights?

Re second to last paragraph. Is this a form of licensing initiative ? ..and if not what's the Board/CEO doing re such a strategy for both manufacture and sales ??

I thought all high growth start-ups were a license to print money. I wish someone had pointed out they were very risky and listed at very high valuations

Everyone is environmentally friendly until they have to pay for it. Herein lies the problem, the bulbs might have a lower total life cost, but the average supermarket shopper just looks at the headline price they are too expensive.

The only way this will make money is if the government legislates for the use of these bulbs. Assuming labour / green can win not even sure they would do an Aunty Helen (water use) to save this one.

Agree with earlier comments. the Governance and executive need to take a close look at their own performances and seriously consider getting out of the way to see what can be salvaged. They might believe that they owe it to shareholders to stay, tough it out and turn it around, but if they do it is time to rethink.