Eco Investor August 2016

Pre-Profit Securities

Big Revenue Rise for Greenearth Energy

Could Greenearth Energy's energy efficient lighting business finally be coming good? In the June quarter, Greenearth's revenue was $3.32 million, up from only $59,000 in the March quarter.

The company said the result was due to growing success in its industry focused energy efficiency business, Vivid Industrial, which now includes Ilum-a-Lite which it acquired in March. The June quarter results consolidate the two businesses.

Greenearth said the increase in revenue was driven primarily by the existing Vivid Industrial business which saw a large increase in receipts from current and previous quarter lighting upgrade sales; and there was a significant contribution to receipts from Ilum-a-Lite lighting upgrade projects following its acquisition.

It would have been handy if Greenearth had broken out how much of the increased revenue was contributed respectively by Vivid and Ilum-a-Lite. All we know is that on acquisition Ilum-a-Lite had a project order book worth $5 million. Shareholders will have to keep an eye out to see if more information is forthcoming over time. Meanwhile, the numbers and trend are positive.

The company said its opportunity pipeline continues to grow, as does conversions into sales where customers have multiple sites and start with one site as a trial. Based on the current sales pipeline, Greenearth is targeting strong revenue growth in FY17. This will be supported with the combined product ranges and expanded customer bases of the combined businesses.

Looking further forward, Greenearth has entered a collaboration with CSIRO to develop and improve the manufacturing methods, materials and technologies used by Vivid Industrial. The collaboration is expected to result in substantial productivity and quality benefits for Vivid's locally designed and manufactured Matrixx intelligent LED lighting products, and allow the company to compete in a global market that is dominated by products made in low-cost countries.

The collaboration has already seen the development of technology that will reduce a current best practice manufacturing process used by Vivid Industrial from 24 hours to one minute.

To assist with growth, Greenearth raised $3.8 million at 7.5 cents per share in a placement to institutional and sophisticated investors. The placement was oversubscribed and was scaled back to the maximum regulations would allow. Managing director, Samuel Marks said the funds will accelerate the growth of Vivid Industrial.

Greenearth Energy is a speculative cleantech stock that is also a partner in commercializing an Israeli technology that produces fuel from waste carbon dioxide, water and solar energy. But this is early stage and pre-revenue. The local energy efficiency business is its immediate revenue maker and it has been trying to ramp up Vivid's revenue for some time. The latest quarter shows it is finally getting some solid numbers. (ASX: GER)





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