Energy Mad narrows annual loss in drive to cut costs, auditor tags accounts

Wednesday 27th May 2015

Energy Mad, the unprofitable lightbulb maker which counts NZX's SuperLife as its biggest shareholder, narrowed its annual loss in the 2015 financial year after stripping out costs, although the accounts were still tagged by the company's auditor over its ability to generate cash.

The Christchurch based company reported a net loss of $3.2 million, or 7 cents per share, compared to a loss of $5.7 million, or 13 cents, a year earlier, it said in a statement. The year earlier loss included a $1.4 million write down on research and development costs. Revenue fell 21 percent to $5.9 million in the latest year on weaker Australian and New Zealand sales. Administration and general expenses dropped 17 percent to $2.9 million.

Energy Mad was in negative equity of $56,250 as at March 31 after generating losses totalling $19.7 million, and its operational cash outflow widened to $2.8 million in the year, from an outflow of $1.5 million a year earlier. It raised $2.2 million through share issues and $1.8 million from a convertible note sale during the year, and held $1.3 million of cash as at March 31.

The accounts were tagged by auditor PwC, which said there was a fundamental uncertainty over its ability to remain a going concern.

"The ability of the group to continue in operational existence is dependent upon their ability to generate positive cash flows from operations," the auditor said. "These conditions indicate the existence of a material uncertainty that may cast significant doubt about the group's ability to continue as a going concern."

Energy Mad's audit fees for the financial statements rose to $57,750 from $55,125 a year earlier.

The company's directors retained their going concern assumption based on existing cash on hand, the 2016 forecast for increased sales, primarily in Australia, a significantly lower cost base, and support from shareholders. They noted uncertainties arose from Australian sales falling short of expectations, from securing appropriate supply from the firm's Chinese manufacturing, and generating enough activity in New Zealand.

In a separate statement, chairman Rick Ramsay, who signed off on the accounts, said he wouldn't be standing for re-election as a director at the company's July 22 annual meeting in Christchurch.

SuperLife's stake in the company has risen to about 45.6 percent, reflecting the fund manager's role in underwriting capital raisings.

The company focused on stripping out costs in the latest year after struggling to gain traction since listing in 2011, consistently missing prospectus forecasts.

It anticipates administration and general expenses will fall to $2 million in the 2016 financial year, bringing it closer to break even.

The shares last traded at 6.5 cents, and have dropped 33 percent this year. The stock was sold at $1 a share in its 2011 initial public offering.

BusinessDesk.co.nz

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