Energy Mad nearly halves first-half loss by slashing staff costs, sales commissions and fees

Energy Mad [NZX: MAD], the unprofitable lightbulb maker that counts NZX's SuperLife as its biggest shareholder, almost halved its first-half loss, after slashing staff costs and winding back sales commissions and other external fees.

The net loss narrowed to $656,000, or 1c per share, in the six months ended September 30, from a loss of $1.2 million, or 3c, a year earlier, the Christchurch-based company said in a statement. Revenue dropped 37% to $2.5 million, while the cost of sales shrank 40% to $1.4 million. Energy Mad trimmed its administration and general expenses bill by 31% to $1.1 million and its sales and distribution expenses more than halved to $482,000.

Last year the company overhauled its business model, cutting costs and focusing sales on LED light bulbs and a direct-to-consumer approach, while securing funding lines from SuperLife and Australia's Bibby Financial Services.

"Energy Mad is focused on becoming profitable and then delivering profitable growth through an increased Australian energy efficiency scheme and New Zealand direct-to-consumer ecobulb LED sales," the company said.

The shares were unchanged at 4.6c, valuing the company at $3.6 million. The stock has slumped from the $1 price it sold at in a 2011 initial public offering after consistently missing forecasts.

Energy Mad had cash and equivalents of $75,000 as at Sept. 30, after burning through $1.2 million of cash in the period, compared to an outflow of $235,000 a year earlier when it got an injection from shareholder SuperLife through a convertible note and secured a short-term loan from Bibby.

The company owed Bibby $276,000 at balance date, with the loan attracting an 8.98% interest rate and had $2.5 million of outstanding convertible notes in two tranches, which receive annual interest of 12.5% and 13.5% respectively.

A separate $500,000 term loan facility with SuperLife was drawn down $50,000 at September 30. The facility receives annual interest of 14% for its first two years, and 15% in the third year.

The funding lines more than doubled Energy Mad's net finance costs to $171,000 in the half, and the company was in negative equity of $743,000 at balance date.

Its directors adopted a going concern basis for the accounts due to the headroom available in the loan facility and forecast trading activity for the rest of the financial year.

(BusinessDesk)