$7m loss despite revenue increase

Australian
Monday 31/8/2009 Page: 21

Jackgreen Energy executive chairman Greg Martin expects the renewable energy retailer to more than double profit and revenue in the next two years despite handing down a fullyear net loss of more than $7 million for 2008-09. The company announced late on Friday that its net loss had swollen to $7.08 million in the 12 months to June 30, in part due to a squeeze on margins from revised electricity prices in Queensland and a build-up of costs in its solar hot water business Easy Being Green. That loss compared with $32m in the previous financial year.

But the result showed strong revenue growth, up 50% to $65.7m, reflecting the increasing number of Jackgreen Energy customers, up 20,000 in the year to 70,000, and the development of the Easy Being Green business. According to management, the company is on the edge of a turnaround, promising a continuation of strong revenue growth in 2009-10 and the achievement of "a maiden profit and positive cashflow". "There are now over a million electricity consumers in the country who have chosen to buy all, or in part, their electricity from a renewable source," Mr Martin said.

Jackgreen Energy sells greenpower accredited electricity only. We know there is a strong market," Mr Martin said. "There is no reason why, that three years from now the company isn't serving more than 250,000 customers." Until now, Jackgreen Energy had been selling into the residential market only but over the next 12 months the company was planning to move into the commercial market, he said. "We think.., we can grow our revenue by 50%.., in each of the next two years and we think we can increase our profit by 50% in each of those two years as well," Mr Martin said.

Underlying earnings before interest, tax and depreciation were, however, crunched by higher significant items that led to earnings diving 45% to a loss of $2.1m. Significant items increased to $6.6m from an $876,000 loss in 2007-08 because of doubtful debt write offs, and the company's operating costs ballooned by 35% as staff numbers rose.

Mr Martin said on Friday that the latest result reflected the board's decision to deal with a number of legacy issues, the most notable of which related to bad and doubtful debts. He said the company remained committed to its Mark II growth blueprint, including its target of 100,000 signed customers in 2009-10 and an EBITDA of $10m for the year. Jackgreen Energy shares closed steady on Friday at 11.5c.