Monday, May 31, 2010

Ecoya 2010 Full Year Profit: More of the same to come?

Ecoya Ltd [ECO.NZ] had its IPO listing on May 3 2010 and its 2010 full year profit snuck out to the market late last Friday isn't going to blow out all the candles on your celebratory cake.

For starters the loss indicated by management in its prospectus, at $2.35 million, is almost $100,000.00 more than forecast on revenue of $3.9 million.

The loss is around 250% more than the previous year.

These forecasts were stated in the Ecoya Prospectus just 2 months ago.

The differences in forecasts and actual results were explained variously as unexpected stocktaking and variances in customer receipts.

There is also some more expense for shareholders down the line with up to $675,000 to be lent to "employees" (see directors) to buy ECO shares. This sum is 6.5% of the $10.1 million raised.

To be fair the company is in its listed infancy but it has been operated by the current management for a number of years as a private business so they should have an accurate handle of the way the business operates by now and quite clearly they don't.

I would rather have seen the company under promise and therefore over deliver but the current result would put a sout taste in the mouth of shareholders, especially considering ECO shares are down more than 10% thus far.

Having been a negative bugger, their first profit report as a listed company shouldn't rule out any sort of recovery in company fortunes sometime in the future but to kick off business in this manner isn't a good look.


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Ecoya main shares are trading at 89c on extremely low volumes, its low for the year.


Ecoya Ltd @ Share Investor


Ecoya IPO lights only one end of the candle
Ecoya IPO: A Closer Look
Ecoya Prospectus Requires free registration
Ecoya.co.nz

Discuss ECO @ Share Investor Forum

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c Share Investor 2010

9 comments:

  1. The whole concept of the company loaning money to directors to buy shares of the same company is just so disgusting to me I do not know how to express my disgust.

    What faith do they have in the company they are directing if they can not even use their own money to invest in it.

    Why does the company need the extra burden of loans to the people who should be managing the company instead of milking it for every penny they can get.

    ReplyDelete
  2. This should be especially grating when the company is newly listed and looking at losses for a number of years.

    The incentive alone should be for them to make a success of the company and for shareholders, including those who already own shares but who want to borrow money(interest free)off other shareholders to do buy more.

    Old boys will be old boys SB.

    ReplyDelete
  3. Through the hoopsJune 1, 2010 at 4:18 PM

    Is this the same guy doing Xero?

    ReplyDelete
  4. If when you say "doing" you mean commenting on Xero, yep that is me :)

    ReplyDelete
  5. Darren: I am sure that it not what "Through the hoops" meant.

    I am sure he meant the entrepreneur behind the names Ecoya and Xero. Are they the same?

    I believe the correct answer to the question would be "NO".

    ReplyDelete
  6. Ahh, little Sophia has cooked my brain.

    I am feeling more self important than I usually do...

    ReplyDelete
  7. Through the hoopsJune 2, 2010 at 1:20 PM

    Cheers ShortBus, yes that was my question. Thanks for the answer.

    Darren you are important, definately not impotent and always a pleasure to read

    Cheers

    ReplyDelete
  8. I have to just add that David Paine, ECO public relations man, contacted me over an error that I made over revenue figures for the 2010 full year:

    He points out my mistake here:

    The information regarding revenue is incorrect. In fact, the actual revenue for the year was $3.906m, not $3.58m as you claim. Therefore the year’s revenue achieved was only $11,000 below the forecast. We would appreciate a correction in an upcoming blog.

    I don't know where the hell I got the lower figure from and would like to rectify my mistake by including this comment,

    The figure in the blog piece has now been corrected.

    Apologies to ECO.

    ReplyDelete
  9. TTH, Thank you. My sense of deflation has now been replaced by a stiffened robustness.

    ReplyDelete

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