Media Release 29 November 2012
Australian Ecobulb Downlight issues overshadow United
States Growth and result in half yearly forecast shortfall
In its half yearly unaudited results, Energy Mad has shown a 47% revenue growth for
the last 6 months to 30 September 2012 relative to the prior comparable 2011 period,
following its successful market establishment in the United States.
However issues in manufacturing halogen replacement Ecobulbs for the Australian
market and the consequent reduction in revenue has resulted in Energy Mad falling
short of its IPO forecasts.
Revenues were $4.8 million compared with the IPO forecast of $9.8 million.
Depending on the rate of growth, Energy Mad’s FY2013 revenues could vary from $13
million to $20 million, versus the FY2013 IPO forecast of $21.3 million.
Energy Mad expects to see continued revenue growth in the United States, Australia
and in the New Zealand Direct Installation business.
Highlights

47% revenue growth for the six months to 30 September 2012 relative to the
prior comparable period (the six months to 30 September 2011).

Growth of quarter two revenue to $3.5 million, up from quarter one revenue of
$1.3 million.

Significant growth in the United States, where:
 It delivered its first order of $1.6 million worth of energy efficient light bulbs
to United States drug store chain Walgreen, with these stocked in 8,200
Walgreens stores across the United States.
 Walgreens placed two further orders with a total value of $0.9 million.
These were delivered in October and November 2012, despite Walgreens
not stocking the first order of bulbs in their stores until early November.
Energy Mad expects Walgreens orders to grow with time as outlined later
in this report.
 Walgreens launched Energy Mad’s energy efficient light bulbs on 4
November 2012 as part of a new marketing initiative.
 Energy Mad is about to commence electricity utility projects with 14
United States utilities that are heavily discounting the Walgreens light
bulbs in 800 Walgreens stores for the remainder of 2012.
 Energy Mad commenced an energy efficiency project with Efficiency
Vermont (the state government energy efficiency agency) through 40
Champlain Farm convenience stores in November 2012.

New Zealand Direct Installation monthly contracted sales grew from $100K per
month in April 2012 to $320K per month in October 2012.

Australian spiral sales grew from $89K per month in April 2012 to an average of
$383K per month over August to October 2012.

Development of the new 12V Ecobulb that is dimmable and does not require an
electrician to install.
15W Spiral Ecobulb
Lowlights

Issues in manufacturing halogen replacement Ecobulbs at acceptable quality
levels have held back Australian revenues where:
 Delays due to design changes to improve the 12V Ecobulb, that replaces
halogen lamps, meant there was no production and therefore no 12V
Ecobulb sales during the six month period.
 A manufacturing quality issue with the 240V Ecobulb Downlight, that
replaces halogen downlights, restricted sales to 18% of that projected for
these downlights over the last six months.
12V Ecobulb
240V Ecobulb Downlight
FY2013 Six Month Financial Performance
The operating revenues were $4.8 million for the six months ending 30 September
2012, compared to $3.2 million for the September 2011 half year and to the $9.8 million
for the IPO forecast.
This resulted in a six month loss of $0.5 million, compared to a loss of $0.3 million for
the September 2011 half year and to the $1.7 million profit for the IPO forecast. This
decrease in six month profit was due to a 91% increase in expenses to $2.5 million as
Energy Mad built a deeper organizational structure to allow it to pursue its growth
opportunities, and due to Energy Mad investing in its New Zealand Direct Installation
operation, which contributed $0.7m to the overall expenses as the operation was being
scaled up rapidly.
The combined revenue of $4.5 million from New Zealand, the United States and from
the sale of spiral Ecobulbs in Australia was $0.9 million ahead of the IPO forecasts for
those revenue lines.
The six month $5.1 million shortfall of revenue relative to the IPO forecasts was
primarily due to issues in manufacturing halogen replacement Ecobulbs at acceptable
quality levels, resulting in:
 No 12V Ecobulb sales in Australia ($3.1 million shortfall); and
 Reduced sales of 240V Ecobulb Downlights in Australia ($1.3 million shortfall).
Energy Mad expects it would have met the six month IPO forecast had the halogen
replacement products being available as planned, because there was sufficiently strong
customer demand for these Ecobulbs to have meet Energy Mad’s sales projections.
Twelve Month Financial Performance to 30 September 2012
The operating revenues were $7.7 million for the twelve months ending 30 September
2012, compared to $19.5 million for the IPO forecast.
This resulted in a twelve month loss of $1.3 million, compared to the $3.6 million profit
for the IPO forecast.
The twelve month $11.8 million shortfall of revenue relative to the IPO forecasts was
predominantly due to:






No 12V Ecobulb sales in Australia ($5.1 million shortfall);
EECA energy efficiency lighting projects that did not eventuate in New Zealand
($1.6 million shortfall);
Reduced sales of the spiral Ecobulb in Australia prior to the 20,000 hour lifetime
accreditation in the Victorian energy efficiency scheme being received earlier
this year ($1.3 million shortfall);
Later than forecast commencement of large-scale sales in the United States
($1.3 million shortfall);
Reduced sales of 240V Ecobulb Downlights in Australia ($1.1 million shortfall);
and
Projects in Europe which stalled due to the current state of the European
economy ($1.0 million shortfall).
Product Development and Manufacturing
Energy Mad has now developed and extensively tested a new 12V Ecobulb design that
is dimmable, has a higher light output and does not require an electrician to install.
Energy Mad has submitted the 12V Ecobulb for Australian energy efficiency scheme
accreditation. Completion of the 12V Ecobulb tooling to allow mass manufacture is
expected in early 2013.
The quality issues for the 240V Ecobulb Downlight arose from a poor connection of the
spiral tube into the downlight fitting, resulting in higher than acceptable premature
failures of the Ecobulb downlight. The design of the 240V Ecobulb Downlight has now
been revised to eliminate this type of connection.
As a result of this 240V Ecobulb Downlight quality issue, Energy Mad’s Australian
customers for this Ecobulb have lost confidence in the 240V Ecobulb Downlight and so
Energy Mad does not now expect to receive the level of orders that were projected for
this Ecobulb for the remainder of FY2013.
However, the upside is that these same customers have shown a strong interest in
ordering the new Dimmable 12V Ecobulb as an alternative. The 12V Ecobulb also
significantly increases the size of the Australian market for Energy Mad, because it is
dimmable and does not require an electrician to install.
Energy Mad’s focus is therefore on migrating the projected FY2013 Australian sales
volume for the 240V Ecobulb Downlight to the new 12V Ecobulb.
The initial production runs of the 240V Ecobulb Dimmable Downlight proved popular
with customers.
240V Ecobulb Dimmable Downlight
This downlight uses only 20% of the electricity of the incandescent and halogen
downlights it replaces, has a long life, and will be less expensive than competing
products. It is also fully dimmable and operates at such low temperatures that it can be
fully covered by ceiling insulation.
Energy Mad will manufacture larger production runs of the 240V Ecobulb Dimmable
Downlight in 2013 once the Chinese factory has completed the redevelopment of this
production line that it relocated from South Korea to China.
Energy Mad has historically relied on outsourced contractors and its Chinese factory to
design, develop and test its new Ecobulbs.
However this has contributed to Energy Mad’s development delays and quality issues
for the halogen replacement Ecobulbs that have impacted Energy Mad’s sales over the
last year.
To overcome this, Energy Mad recruited two key Technical team members to
Christchurch earlier this year with strong electrical engineering expertise in developing
new energy efficient light bulbs.
This is now allowing Energy Mad to more rapidly design, develop and test its new
Ecobulbs in Christchurch. This is also yielding more robust Ecobulb designs that can
be manufactured reliably at high quality levels.
The United States
Sales of energy efficient lighting are growing in the United States, primarily being driven
by the phasing out of incandescent light bulbs since the start of 2012 and by increased
electricity utility funding into energy efficient light bulb projects. There have been 598
United States electricity utility efficient lighting programs in 2012, which is a 43%
growth from 2011.
Energy Mad’s ability to enter this electricity utility market had been hampered until now
by the lack of a nation-wide retail partner in the United States. Energy Mad’s
relationship with Walgreens now gives it distribution in 8,200 retail locations across all
50 states.
Recent Colmar Brunton market research shows that 64% of the main householder
shoppers in the United States shop at Walgreens at least once a year. This research
also showed that Energy Mad’s market potential with Walgreens is significantly higher
than previously thought by Energy Mad.
Energy Mad is therefore focused on expanding its relationship with Walgreens and the
number of electricity utility energy efficiency projects it completes in partnership with
Walgreens.
Energy Mad is also working with Walgreens to expand the range of energy efficient
light bulbs it supplies to Walgreens.
As a result, Energy Mad expects to build on its recent initial projects with United States
electricity utilities, and to supply larger restocking orders to Walgreens to match the
associated sales growth.
Australia
Australia will continue to provide excellent growth potential for Energy Mad, due to the
growing State Government electricity utility energy efficiency scheme targets in Victoria
and New South Wales.
These energy efficiency schemes have created a $170 million market to replace 12V
halogen downlights in Victorian and New South Wales homes with its energy efficient
alternatives. They have also created a further large, but currently unsized market, to
replace 12V halogen downlights in commercial buildings for these Victorian and New
South Wales schemes.
This market has remained untapped while Energy Mad has been resolving the issues
with its 12V Ecobulb and 240V Ecobulb Downlight.
The main sales growth for Energy Mad in Australia will therefore come when production
volumes of the new Dimmable 12V Ecobulb becomes available in early 2013 to replace
12V halogen downlights in the Victorian and New South Wales energy efficiency
schemes.
The new Dimmable 12V Ecobulb has advantages over competing LED products in
these Australian schemes, where:
 The 12V Ecobulb has a materially lower product cost than LEDs.
 The 12V Ecobulb operates on all 12V transformers and does not require an
electrician to install it. In contrast, most LEDs require an electrician to install an
LED driver, without which these LEDs do not operate on many 12V
transformers.
 Because of the lower 12V Ecobulb cost and because it does not require an
electrician to install, in most cases the consumer will be able to get 12V
Ecobulbs and have them installed in their homes and buildings, for free.
 In contrast, the higher LED cost and the requirement for an electrician install,
means LEDs require a significant customer contribution to purchase.
As a result of Energy Mad’s spiral Ecobulbs receiving 20,000 hour lifetime accreditation
in the Victorian energy efficiency scheme earlier this year, Energy Mad’s spiral Ecobulb
sales in Australia are now running ahead of the IPO forecasts. Energy Mad expects this
growth in Spiral sales to continue.
New Zealand Direct Installations
Direct Installation has seen monthly contracted sales grow from $100K in April 2012 to
$320K in October 2012.
This business sells and installs Ecobulb Downlights and associated insulation in New
Zealand homes, which cuts home power bills by up to 25%. In New Zealand, increasing
power bills and a high installed base of both incandescent and halogen downlights in
homes is providing strong impetus for growth.
Energy Mad is now reviewing the systems and cost structure of Direct Installation at
this stage in its growth, in order to determine the most profitable scaling of this
operation.
Personnel Changes
Co-founder Tom Mackenzie is moving to Auckland at the end of the year due to his
wife’s employment relocating. Tom’s focus in Auckland will be researching light bulb
product developments to keep Energy Mad abreast of what the competition and the
market is developing. This will allow Energy Mad to add the most appropriate of these
to the company’s portfolio of products. Tom will also remain on the Energy Mad board.
Maximizing Energy Mad’s Growth
Energy Mad is focused on maximizing its growth.
Energy Mad expects to see continued revenue growth in the United States, Australia
and in the New Zealand Direct Installation business.
The final financial results for FY2013 will depend on the speed of growth in these
initiatives over the remainder of FY2013.
Depending on the rate of growth, Energy Mad’s revenues could vary from $13 million to
$20 million, versus the FY2013 IPO forecast of $21.3 million.
This would see Energy Mad’s profit vary from $0.1 million to $2.0 million, versus the
FY2013 IPO forecast of $4.0 million.
Energy Mad has been aware there would be a significant shortfall in the FY2013 12V
Ecobulb revenue relative to the $5.1 million projected in the FY2013 IPO forecasts.
However Energy Mad had remained confident until recently that this 12V Ecobulb
revenue shortfall would be replaced in FY2013 through greater than IPO forecast 240V
Ecobulb downlight and Ecobulb spiral sales in Australia, plus through greater
Walgreens United States sales and greater Direct Installation sales.
Unfortunately the recent 240V downlight quality issues plus the length of delay in
bringing the 12V Ecobulb to market mean that the 12V Ecobulb revenue shortfall can
no longer be caught up in FY2013 by increased Walgreens and Direct Installation
sales.
Energy Mad takes its continuous disclosure requirements seriously and is committed to
keeping the market informed over the new few months as Energy Mad gains greater
clarity on the progress being made with its key initiatives and therefore its likely final
financial performance for FY2013.
With the progress being made and the potential Energy Mad has in New Zealand,
Australia and the United States, Energy Mad has never been more excited about its
long term growth prospects.
We would like to thank our team and shareholders for their ongoing efforts and support.
ENDS
For More Information Contact:
Chris Mardon, Managing Director
(021) 041 2981