Debt Pressures and Losses Raise Going Concern Questions for Energy Technologies

Financial Performance and Revenue Decline

Energy Technologies Limited (ASX: EGY) has released its half-year results for the period ending 31 December 2025, revealing a net loss after tax of $5.63 million. This represents a 13% increase in losses compared to the same period last year. The company’s revenue plummeted by 53% to $2.3 million, reflecting a strategic pivot away from volume growth towards maintaining manufacturing margins and repositioning its product offerings within the renewable energy sector.

The decline in revenue is largely attributed to operational restructuring and a shift in business planning, including a focus on purchased imported products to supplement the company’s traditional manufacturing base. These changes have impacted cash flow and production capacity, with ongoing challenges in staff retention and commissioning of new manufacturing facilities.

Operational Restructuring and Capital Management

During the half-year, Energy Technologies continued efforts to reduce cash outflows, achieving a 40% reduction in operating cash burn compared to the previous corresponding period. The company raised $3.78 million in loans to support working capital needs, converting $1.55 million of these loans into equity through the issuance of over 53 million shares. Additionally, $400,000 in loans were repaid during the period.

Despite these measures, the company’s balance sheet remains under pressure, with net liabilities of $18.15 million and current liabilities exceeding current assets by $25.12 million. Convertible notes and short-term loans totaling over $19 million are due within the next 12 months, though subsequent to the reporting date, a significant portion of these debts have been extended to March 2027, providing some breathing room.

Governance Changes and Strategic Outlook

The half-year period also saw notable board changes, with long-serving executive director Alfred Chown resigning in January 2026. He was succeeded by non-executive director Doron Eldar, who is expected to help guide the company through its next growth phase. The board has completed a review of strategic opportunities and remains focused on unlocking value through operational improvements and capital structure optimisation.

Energy Technologies is advancing the commissioning of its new manufacturing facility in Rosedale, Victoria, and progressing the construction of a silicone line shed expected to be completed in the 2027 financial year. However, supply chain constraints and cash limitations continue to affect production capacity.

Going Concern and Market Implications

The company’s auditors have highlighted a material uncertainty regarding Energy Technologies’ ability to continue as a going concern, given the current financial position and operating losses. The directors remain confident in their ability to manage working capital, extend debt facilities, and raise additional capital if necessary. The company’s future hinges on successfully executing its revised business strategy and stabilising its financial footing.