poor result, page-16

Stefanis, long time no chat.

You've hit the nail squarely on the head.

When I plugged their financial statements into my spreadsheet today, I had to do a double take to make sure I hadn't mistyped a few numbers.

So bad was the JH performance.

This is one of those "build-it-and-they-will-come" corporate strategies.

Going into today's result, my thinking was that it would probably be weak, but that the business model as I udnerstood it to be would still be intact, and I was fully expecting to be able to buy the stock on any ensuing weakness.

Well, having analysed the result in some depth, re-analysed it, rubbed my eyes to make sure they were seeing right, and then gave the financial statement diagnostics one final analysis, I ended up - not buying the stock - but selling it!

I mean, in JH12 these guys generated underlying EBITDA of some $10m (that's using MY definition of EBITDA, if I may be so brazen, as opposed to some accounting alchemy-style definition that makes use of "opportunity cost" as justification for adjustments...that's a first for me!)

Half-year EBITDA of $10m is a level last seen in 2009. And yet between then and now they've thrown almost $65m at the business in terms of capex and acquisitions.

As for the increase in the net debt...I've seen junior explorers in the resource space burn balance sheets at a more conservative pace then these guys have done in the past 12 months.

How on earth does NIBD-EBITDA go from 0.4x to 1.7x in just 12 months? And that's even without any acquisitions.

They've built The Cloud and they're hoping the customers will come.

Problem for me is that there's a word in that strategy that I have been taught is an anathema to good investing practice: that word is HOPE.

Not often that one wakes in the morning with the intention of buying a stock but goes to bed having sold it instead!

Cam