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Xerocon 2017 in Melbourne
Xerocon 2017 in Melbourne

BusinessNovember 9, 2017

Hero to Xero? Our most exciting technology company is exiting the NZX

Xerocon 2017 in Melbourne
Xerocon 2017 in Melbourne

Cloud accounting technology company Xero just announced two things: a very positive half-year financial result, and that it is exiting the New Zealand stock exchange. Rebecca Stevenson considers what this means for our investment landscape.

New Zealand cloud accounting firm Xero announced its half-year result today and it was a ripper for the company – and yet a fizzer for the New Zealand investing community.

The company booked positive EBITDA (earnings before interest, taxes, depreciation and amortisation) of $5.4 million. This is the first time it has entered such territory since it was founded by Rod Drury in 2006. EBITDA sounds complex, but it’s really just a simple measure of company performance, a proxy for its operating profitability.

Clearly, since Xero has never achieved a positive EBITDA before, this has got to be a good thing. Of particular note, the company says, is that its operating revenue (that’s money earned from sales) grew 37% over the same period last year to $187.8m. It also reached a number of milestones in multiple markets; it ticked over 500,000 subscribers in Australia, 270,000 at home in New Zealand, 253,000 in the United Kingdom and even clocked up more than 100,000 in the competitive – but slow to adopt cloud accounting software – market that is North America.

ROD AND FAN. PHOTO: SUPPLIED

Drury said in a press release, “Xero delivered another strong half-year result, achieving positive EBITDA for the first time, and is emerging as one of the largest and fastest growing listed technology companies in Australasia. We continue to cement our position as the cloud accounting leader in Australia, New Zealand and the UK”.

So far so chipper! But then came the let-down. Xero, which is currently listed on both the NZX (New Zealand stock exchange) and the ASX (the Aussie one), also announced it would no longer be listed on the NZX in a move that has been described as “disappointing”. Drury claimed the company was seeking increased liquidity (more money) and a broader base of potential investors.

“Xero is an ambitious New Zealand company. We will remain headquartered in Wellington and domiciled in New Zealand. We thank the NZX for providing a valuable platform to support Xero’s first decade as a public company. Our success wouldn’t be possible without the support of the NZX and our shareholders,” Drury said.

AUSSIE AUSSIE AUSSIE! PHOTO: SUPPLIED

NZX shares reacted quickly, dropping about 3%. Xero is one of the genuine players on the NZX; it leaving the NZX makes the exchange less attractive to investors, much like how a shop’s stock entices customers to buy. If an exchange doesn’t have big, growing exciting companies on offer, investors will take their money where the action is. And, starting in February 2018, NZX is missing a big chunk of that action.

Investment advisor Grant Davies from Christchurch-based financial advisor Hamilton Hindin Greene says he “didn’t see that one coming” and the move off the NZX was “a bit of a kick in the pants” for the exchange. He says it’s unusual for a company to drop the NZX in favour of the ASX, rather than stay listed on both. He says investing on the ASX  is a bit more complicated, and expensive for Kiwis. “You now have to deal with the Australian share registry, and go through a few more hoops with the Aussies.” Xero says Kiwis who own Xero shares won’t have to lift a finger as they “will be automatically transferred to the ASX”. (More information is available on a dedicated section on Xero’s website).

But it’s a significant loss from our investment landscape – Davies says there are a few wannabe companies on the exchange, but not many “big league growth companies”. He said the NZX will be disappointed, as will Kiwi investors.

rebecca@thespinoff.co.nz @bex_stevenson


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Lucy Foundation Roberta Francis Supplied
Lucy Foundation Roberta Francis Supplied

BusinessNovember 8, 2017

From Mexico to Cuba St: One woman’s mission to create inclusive coffee

Lucy Foundation Roberta Francis Supplied
Lucy Foundation Roberta Francis Supplied

They’re helping Mexican farmers grow sustainable coffee, but The Lucy Foundation’s next step is to give disabled Kiwis employment chances. Maria Slade caught up with founder Robbie Francis to find out how she is building a business model with inclusiveness at its core.

Heaven knows how New Zealand would keep functioning if its citizens didn’t get their morning macchiato or trim flat white. 

A young Dunedin woman is using the power of the Kiwi coffee culture to prove it’s possible to run a business that is good for the community and the environment, while at the same time offering opportunities to people with disabilities.

Robbie Francis set up The Lucy Foundation two years ago, named after her own prosthetic limb which she dubbed ‘Lucy Leg’ as a child. Its aim is to create a ‘bean to cup’ value chain from the coffee plantations of southern Mexico through to the cafes of New Zealand, opening up training and employment opportunities for differently abled people in both countries along the way.

Robbie Francis in Mexico (far right). Image: supplied

It’s less about fixing the world than it is about designing an operating model, Francis says. “The lessons we’re learning and insight we have working with products in a place of origin and people with disabilities, and for us working in an indigenous community as well, are things that we can share. If someone else could run with this in a different industry that would be the greatest compliment, I think.”

Francis is doing all of this while completing her PhD at Otago University’s National Centre for Peace and Conflict Studies, and living with phocomelia syndrome which results in undeveloped limbs. She is a well-deserved finalist in this year’s Attitude Awards, and has had to cut short her latest trip to Mexico to get back in time for the awards ceremony on November 9.

The Lucy Foundation works with farming families in the mountainous Oaxaca region of Mexico to produce coffee for export back to New Zealand. The brand is called Pluma, after the nearest town Pluma Hidalgo. “The reason we chose coffee is because it’s such a big industry in New Zealand, and we love this idea that coffee brings people together, regardless of ability, gender, religion,” Francis says.

Lucy Foundation members Jessica Pantoja-Sanders, who is half Mexican, her husband Ryan Sanders and their two children are now living in Pluma Hidalgo. Their knowledge of the local coffee industry is key, and the couple has run around 30 agricultural workshops teaching farmers ways of improving the productivity of their crops, such as composting and beekeeping. Like many parts of Latin America the area has been affected by climate change and environmental disasters, and new practices are needed to ensure the ongoing health of the coffee plants, Francis says.

Lucy Foundation coffee suppliers in Mexico. Image: supplied

Whereas before it was all about survival from one harvest to the next, the local farmers are starting to implement the practices and plan a future with coffee as their main source of income, she says.

The foundation has also been teaching the locals about coffee making. In partnership with the Lower Hutt-based enterprise Coffee Educators, three deaf Kiwi baristas spent a month in Pluma Hidalgo passing on their skills. The training sessions, in sign language and English, were wildly popular.

The Lucy Foundation has just completed a second round of funding on PledgeMe, raising $20,000, and will now regroup to plan its next moves. So far the focus has been on the Mexico end “because we had to start somewhere”, but the next step is creating opportunities for disabled New Zealanders as baristas and in the hospitality industry generally, Francis says.

The first batch of Pluma coffee was roasted by Flight Coffee and sold in New Zealand with support from both Flight Coffee and Coffee Educators earlier this year. They are now waiting on the new harvest. It envisions expanding on such partnerships, and building the Pluma brand around the stories of the people who produce it. It wants its customers to know that when they buy the product they are investing their money in human rights and ethical enterprise, she says.

“We’re not trying to do everything ourselves, we’re trying to show people how we did it in the hope that they also will become inclusive and accessible and diverse within their business models and industries,” Francis says.


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