Share Investor Q & A: Questions for Ecoya's Geoff Ross

I have been very critical of Ecoya Ltd [ECO.NZ] since their early May 2010 IPO because of the over inflated value that ECO management put on the company and the scant financial information revealed to the investing public leading up to the IPO. The full year 2010 profit result out a few weeks back does nothing to sooth my critical soul.

Many of you have also had critical things to say about the company (it is more interesting to read someone sticking the knife in)and I have seen little positive written about the company except from the company itself and organising brokers for the IPO.

I think it is time we heard from management directly to get some issues hopefully cleared up and maybe put me in my place.

The ECO PR company contacted me over a mistake that I made with some figures from the 2010 result and one thing led to another and I managed to jack up a Q & A with Executive Chairman, Geoff Ross.

With this in mind, I would like my readers to submit questions that they might have surrounding the company and its IPO.

I will give you a week to submit them and I will include them with mine in the Q & A.

Please submit them here where they will appear at the bottom of this post or email them directly to me here.

Read the ECO Q & A here.




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


Ecoya Ltd @ Share Investor

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

Share Investor Q & As

Share Investor Q & A: Ecoya's Geoff Ross
Xero's Rod Drury
Mainfreight MD Don Braid
Burger Fuel Director Josef Roberts
Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY


From Fishpond.co.nz



Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz




c Share Investor 2010

Burger Fuel 2010 Full Year Profit Preview

Burger Fuel Worldwide [BFW.NZ] should be releasing its 2010 full year results soon, if not this week and BFW investors and the market as a whole will be looking for a vast improvement on the 2009 result.

A $700,000.00 loss on revenue of $8 million for last year should be pared back markedly given the fortunes of other fast food companies operating in New Zealand. McDonalds, Restaurant Brands Ltd [RBD.NZ], Subway and a whole host of other quick service restaurant icons have done well during the current recession as consumers have moved downmarket from eating out at more expensive food offers as wallets and budgets have been squeezed.

Look though for an impact on the bottomline because of expansion costs in the Middle East and a subsequent evaporation of cash in the bank as a result.

More capital could be needed for any further significant expansion and the 2007 prospectus indicated that most of the growth would come from growing store numbers rather than sales per unit.

BFW gets its revenue from a percentage cut (around 8%) of sales per store and on current form the company would need to at least double revenue from the current $8 million to start making a decent profit in the low seven figure range.

That sort of result depends on opening more stores and that means more capital needed to expand, even though it is a franchisee/franchisor model.

The company is coming up to its 3 year anniversary of being listed on the NZAX board and has yet to turn a profit or show any of the overwhelmingly positive promise for results that management shouted from the rooftops pre IPO.

The 2010 result will show us whether the company is closer to achieving that and it will give investors an opportunity to compare 3 years of financials to help get a more accurate view as to whether BFW is moving in that direction or in fact has the potential to do that sometime in the future.

BFW shares are currently priced at 39c and are rarely traded.


Footnote  BFW are releasing their 2010 full year results Monday 14 June.



Burger Fuel Worldwide @ Share Investor


Burger Fuel Worldwide: 2009 Half Year profit analysis
Stock of the Week: Burger Fuel Worldwide
Download full company analysis from Thomson First-Call
Burger Fuel doesn't rule out capital raising
Burger Fuel Worldwide: Closer look at Company Accounts
Analysis - Burger Fuel Worldwide: FY profit to 31/03/09
Burger Fuel: Running on Empty
Burger Fuel leaves investors hungry
Burger Fuel management cagey over company progress
Burger Fuel cooks up Dubai deal
NZX share trades with strings attached
Don't buy Burger Fuel, yet
Burger Fuel: Inside info?
Burger Fool IPO: Burger Fool?
Exclusive Interview with Burger Fuel's Josef Roberts
Burger Fuel's Daytime drama
Burger Fuel share price out of gas
Beefing up store numbers
Director explains share price drop
Burger Fuel slims down in value
Burger Fuel and Coke
Marketing Burger Fuel's future
Pumpkin Patch VS Burger Fuel
Burger Fuel results and commentary

Discuss BFW @ Share Investor Forum - Register free



c Share Investor 2010

Michael Hill Downsizes USA Operation

I had an uneasy feeling about Michael Hill International [MHI.NZ] moving into the United States in 2008. Not because of the move to the USA but the price paid for the distressed assets that they bought to get a foothold there.

From my piece at the end of 2008:

"I'm worried because this type of expansion activity veers slightly away from the tried and tested way that the company entered Australia then Canada.

The company set up a handful of stores when they entered their two overseas markets just to test the water".

It has been announced this morning that MHI are closing 8 of the 17 stores they bought from Whitehall Jewelers Holdings to consolidate and grow from this position:

"After a full review of the business, including results achieved to date as well as operational and real estate issues, the company has made the decision to consolidate to a smaller platform of 9 stores, all of which are within the greater Chicago area. These stores will immediately be refurbished to bring all of them up to the company's latest global concept. This group of stores will then give the company the best possible platform and opportunity to position the brand in the US. The remaining 8 stores will be closed at the end of June 2010 with exit terms having been negotiated with the various landlords." Michael Hill Business Review 8/6/10

To be sure MHI bought the stores at a time when retailing in the US was a dead dog and it hasn't improved much since then but the company made a mistake getting into the US so soon and even Michael Hill himself said in a June 2009 interview that he had tripped up in his quest to expand.

A mistake made but good to see the company making a decision to quit and Hill fronting up.

I still feel uneasy about the US and Canadian businesses in the short to medium term but like MHI management remain very optimistic that the model that has made them such a success in Australasia will work in the land of bling and endless shopping malls.

I would have started to business off in Texas though, my favourite State and the home of serious jewelry buyers.


Disclosure I own Michael Hill International shares in the Share Investor Portfolio.


Michael Hill International @ Share Investor

Michael Hill International: 2010 half year profit commentary
Michael Hill Makeover kicks off
Michael Hill International: 2009 full year profit commentary
Toughen Up: What I have learned from the hard times
Stock of the Week: Michael Hill International
Michael Hill TV3 60 Minutes Interview
Long VS Short: Michael Hill International
Marketwatch: Michael Hill International
Michael Hill's profit shines
Michael Hill takes on the windy city
Why did you buy that stock? [Michael Hill International]
MHI has defined growth strategy
MHI profit sparkles

Discuss MHI @ Share Investor Forum

Download MHI Company Reports


Buy Toughen Up: What I've Learned About Surviving Tough Times



Toughen Up - Fishpond.co.nz


c Share Investor 2010

Kathmandu's 2011 Results Under Pressure from Jan Cameron

I have given Kathmandu Holdings Ltd [KMD.NZ] alot of criticism since its IPO and float back in November 2009 and its result 2010 interim result out in March doesn't really change much for me.

Its results for this period are largely academic because they cannot be accurately compared to last years figures with were calculated using pro-forma figures. Pro-forma accounting is calculated by removing "irregular" business transactions and smoothing out the balance sheet to make things look better to investors - a great way to hide bad news. Pro-forma is generally accepted as misleading.

The increases in revenue and profit for the 2010 half year look spectacular at first glance but the comparison to last year means little as I have outlined above and the headline figures of the NZX release omit significant IPO costs - $21.3 million, $6.3 million more than budgeted. The profit result then is a $13.3 million dollar loss not an $8 million profit.

Of particular interest to shareholders should be the figure tucked away in the 2010 Interim Report of the net tangible asset backing per share. It is 12c.

A better comparison on how well Kathmandu is going will be able to be made this time next year when we can accurately compare like for like figures (we still have to add the IPO costs to get a good comparison) and then perhaps I will stop my criticism if it is a good result.

Of further concern to Kathmandu shareholders will be the possible re-entry of the former owner of the Company, Jan Cameron, back into the same retail sector sometime in 2011.

She is currently in talks with Macpac, an outdoor equipment and clothing retailer, to establish some kind of competition against the former brand that she built up and as I have said before she is one smart cookie whose business acumen in retailing should never be underestimated by her competitors.

Kathmandu as a strong in your face brand have the outdoor sector mostly to themselves in New Zealand and Cameron's expertise and contacts in retail will be a formidable challenge to Kathmandu if she decides to make a move back into this area of retailing.

Kathmandu shares have traded as high as NZ$2.56 earlier in 2010 but finished trading last Friday at $1.90.

Kathmandu @ Share Investor

Kathmandu IPO: Prospectus Analysis
Kathmandu IPO: Jan Cameron lands a blow to IPO
Kathmandu IPO: What is it worth?
Kathmandu IPO: Retail Interest High
Kathmandu IPO: A tough mountain to climb
Kathmandu No.1 but IPO should get the Bullet
Download the detailed Kathmandu Value Cruncher Report - Requires free registration at Share Investor Forum to download
Download Kathmandu IPO Prospectus
KMD Investor Presentation to Macquarie

Discuss Kathmandu @ Share Investor Forum

Download KMD Company Reports


From Fishpond.co.nz



Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz




c Share Investor 2010