Auditors raise concerns over financial health of GrowthOps and Pureprofile
Online survey company Pureprofile and AJF Partnership’s parent company GrowthOps have both released auditors’ warnings that their futures are uncertain as going concerns.
The updates from both companies came on Friday evening after the ASX had closed for the weekend. In both cases, the information was included in statements from the auditors accompanying the companies’ accounts for the last financial year.
GrowthOps “material uncertainty”
GrowthOps, originally known at Trimantium GrowthOps or TGO, only floated on the ASX 18 months ago, in a move masterminded by entrepreneur Phillip Kingston.
What do Pure Profile do?
In a sea of mediocrity and poor governance, Pureprofile remains an excellent market research and customer intelligence business. Poor judgement on past acquisitions shouldn’t detract from the fundamentals of the business. It’s tech is market leading, and there’s more to come.
Pureprofile is clear only surviving on debt and hopefully all shareholders are properly informed as to their impending doom.
They simply cannot pay back all their loans by the maturity date of late next year so I would expect they are delisted from the ASX and sold off.
They don’t have a CEO at the moment either; their finance lead is running it. All this info is publicly available BTW. In other words their company is being managed by an accountant. This story doesn’t end well for anyone.
Same old story, related party trading draining a distressed business of its liquidity. How on earth could the three smart AJFs have been talked into this. AJF is an excellent agency with highly principled and highly talented people doing outstanding work. I hope they can extract themselves from this nightmare without too much pain.
The answer @thecynic is that the 3 smart AJFs took 50% out of the deal in cash at the time of the float. So, they’ll be fine.
Wouldn’t that mean they sold for 50% what the market value was? Kinda not so smart IMO…
The 50% cash in the deal just covers the tax bill. They are heavily underwater on the value of the shares.
AJF would’ve taken about $24m up front but since then …..
Probably very little if any dividends
Probably on the bottom end of normalized salaries
Probably zero access to AJF cash when a quick bridging loan needed
(Imagine how much the AJF guys must love paying the TGO their salaries!)
So, let’s say the 4 x partners end up with $30m in total.
That’s $7.5m each.
Then pay the ATO their share.
Maybe get $5.5m each after tax.
Sounds good, but a lot less than what they could’ve ended up with if they’d just stayed independent, or sold to someone who could help grow them as opposed to lean on them.
Hi Really,
What follows is slightly back-of-the envelope because I have to draw the info from a few different places on the ASX, but I think your guesstimates are possibly a tad low.
In total, the vendors of all the companies purchased as part of the float received $47.8m in cash, and the promise of a further 47.8m shares (Half after one year, another 25% a year later and the final 25% a year after that.) At the time these preference shares were issued, the shares were valued at $1, although the share price has of course since fallen to 17c.
Based on the number of shares the four AJF partners currently hold after the one year anniversary – about 16m shares – this implies that they’ll perhaps get 32m shares in total after the third anniversary is up. It also implies that they were paid up to $32m in cash for the first tranche.
So between them, about $8m each upfront, pre-tax.
If the share price falls no further (an optimistic call, I know) the partners would see their shares worth a further $5m.
Was $37m a fair price for AJF? You tell me…
Cheers,
Tim – Mumbrella
You’re talking about AJF…have a look at APD!
Why GrowthOps bought that business astounds me. Those who were part of the APD sale must be sitting back and laughing!
20 million for that …
Good one Tim. Other things to consider.. AJF have to date had various restrictions preventing them from buying back shares (e.g. share buy back in the ASX announcements, the normal insider trading blackouts I assume would be in place). Best case they can sell 50% of their shares for (now) 10% of the original value. Importantly though .. unless AJF have found a new tax loophole .. they’ll already have paid (cash) tax on the full $1 value of all their shares. Finally, keep in mind no one is buying shares, so they can’t sell them. Certainly not in those volumes.
Give GrowthOPs 1 year before they get sold!
Can’t believe I’ve watched 4 complete seasons of this disaster in 6 months. Hanging for season 5 although rumour has it that it will be the finale.
It took an auditor to figure this out? If you looked at the full accounts released only a month ago it was in plain sight it’s a sinking ship.
Dear Ms.Fisher and Mr.Kingston,
Could you please explain;
1) why a business that’s just posted a $65m loss decided to enter the money-lending business?
(And for the recipient of that money-lending to be Sargon, a company controlled by Phillip Kingston).
2) what services and value does Paddl (a company Dominique Fisher is CEO) bring that justifies TGO paying them. $100K?
3) how do you explain the $22.5m write down of APD, a company whose purchase you both so proudly heralded just 12 months ago?
Do you think GrowthOps was a bit of an ambitious name for the venture? Maybe they should have gone for something a little more attainable like MoneyOffTheTableOpps.
Is there something to be investigated here about how they managed to raise money from their off-shore investor with no track record of having done this before and little chance of making good on their commitments. Is the big investor concerned or did they have other motives of getting money in to the country and we’re not concerned about losing their investment?
As to why TGO bought APD – I think it was [Edited under Mumbrella’s comment moderation policy] some money.
On the one hand, I’ve never thought that a cyclical industry like advertising has any business going public – it’s just asking for trouble.
On the other, I think judging any business too harshly in its first year of existence is really shortsighted.
Let’s all just take a breath and see where it goes from here, yeah?
I would not be encouraging the Senior Secured Creditor to play that game!!
Yeh you’re right. I mean i only just lost $10M that fell off a cliff in less than 12 months. But yeh you right. I gotta chill… We just all gotta chill! 😐
Fourth biggest shareholder is “Pattani Private Capital Pty Ltd”.
Did a search. No website.
Found one employee on Linkedin – a Director by the name of Nina Thaicharoen.
Looked at her Linkedin profile and her last job was Admin Assistant at… Phil Kingston’s Trimantium. Prior to that she was a photographer at the Henley Club.
So a photographer/admin assistant is the director of the fourth biggest shareholder in TGO. I don’t know what that means… but it’s interesting.
Thanks Monica.
So now we have TGO loaning money to Kingston’s Sargon,
paying Fisher’s Paddl $100K for who knows what
and the possibility of a former photographer and TGO Admin Assistant being TGO’s 4th largest shareholder.
No doubt there’s a perfectly good explanation for all the above.
I look forward to hearing it.
Did you take a look at the second largest shareholder behind Phillip Kingston?
It’s a company called “Asia Selangor Investments Pty Ltd” which is also run by one of his ex-employees, Managing Director Vonny Tjhin, who was previously General Manager of his company KDIS…
The mismanagement of cash has been happening in both these organisations for a very long time!
Both companies have big offices in the cbd with hefty leases…GrowthOps are paying for two other buildings!
I think the real mismanagement from GrowthOps really stems from the top…the CFO must [Edited under Mumbrella’s comment moderation policy]
Down to 19c.
Imagine what it would be worth without AJF?
No doubt Dominque Fisher and Phillip Kingston can provide a perfectly good explanation.
I’d be fascinated to understand more of the behind-the-scenes on all this and it seems to me Steve Jones is just the person to dig deeper.
I’d be particularly interested to know more about where Phillip Kingston has come from and what this tangled web of companies, transactions and related interests really means.
I’ve had a quick look online at Kingston’s track record, his previous ‘deals’, interviews and statements and frankly can’t make sense of any of it. As an active stock-market investor and regular reader of the financial pages, I find it all rather baffling.
Perhaps Kingston commands a corporate intellect and financial literacy so far beyond my own (and of other ASX-listed CEO’s who I seem to understand just fine) that I’m simply incapable of comprehending his genius. Or perhaps not.
I am not sure if he is in the Steve Jobs mould, more a Billy McFarland or Elizabeth Holmes style operator.
Could make a great Netflix special one day…
Share price down to 17 cents!
17c! Another new low.
Dominque Fisher and Phillip Kingston have some explaining to do.
I can’t wait to hear how they spin this one.
Maybe they’ll loan more money to the Kingston-related Sargon?
Who knows, they might make enough money to pay for some more services from the Fisher-related Paddl?
Any news on what’s happening, share price now 15c or 1/10 of the listing price.