Energy Mad fined $30k for NZX breach

Chris Mardon, co-founder of Christchurch-based company Energy Mad, speaking in 2008. Photo / Dean Purcell

Listed company Energy Mad, which manufactures energy efficient lighting, has been fined $30,000 and slapped on the wrist for breaching NZX rules last year.

The NZ Markets Disciplinary Tribunal announced today that it had approved a settlement agreement between New Zealand Stock Exchange (NZX) and Energy Mad Limited, known as Mad.

Mad began trading on the NZX in October 2011, at which time it immediately became subject to certain rules which all listed companies must follow.

On January 23 last year, Mad announced that various factors meant the company expected a downgrade in its ebitda (earnings before interest, taxes, depreciation and amortization) to about $1.1 million, from its IPO forecast of $3.5 million.

In response to the news, Mad's share price plummeted 21.4 per cent that day, down from $0.70 to $0.55.

NZX Regulation then launched an investigation, which found Mad possessed material information on December 20 2011, that should have been disclosed to the market immediately.

"The material information was the existence of production and dispatch delays at its Chinese factory that manufactured its light bulbs, which meant Mad would not achieve $1.5 million of the $3.5 million EBITDA forecast in its IPO prospectus," the tribunal said in a statement today.

Christchurch-based Mad has acknowledged that a disclosure obligation existed on December 20 and accepted that it breached its continuous disclosure obligation.

The Tribunal today publicly censured Mad and handed the company a $30,000 fine.

The fine was a "significant penalty" given Mad's "relatively small market capitalisation", the Tribunal said.

"The Tribunal considers a breach of the continuous disclosure provisions of the
rules to be a very serious matter.

"Timely disclosure of market sensitive information is essential to maintaining the
integrity of the market. Compliance with continuous disclosure requirements
ensures that the market is informed of relevant information at all times."

On top of the penalty, Mad was also told to pay the costs of the tribunal and contribute $3,575 to the NZX Regulation's costs.