Blue Freeway – we lost $14.6m and the previous management lumbered us

Troubled digital marketing group Blue Freeway this evening announced a $14.6m loss – and blamed some of it on the previous management.  

In an announcement to the Australian Stock Exchange, the company said that the loss was more than twice the same period 12 months ago. It said it came despite bringing in more revenue, and was because of having to write down the value of some of  its assets and being contractually obliged to make payments to the previous owners of some of the companies it bought .

After the group listed with a market capitalisation of around $60m  just over two years ago (although it is now worth about a tenth of that) the firm made a string of acquisitions. Among the companies still in the portfolio are digital outfits MassMedia, Holler, Blackglass and JSA Digital, and PR firms Max and Spectrum.

In today’s announcement, released after the ASX closed for the weekend, the company said that its earnings before interest, tax, depreciation and amortisation were a “satisfying” $3.5m, up from a loss of $1.2m in the same period a year before. But the write downs – including goodwill of $8.6m – took it to the loss.

The group took what appeared to be a swipe at co-founder Richard Webb, who was ousted more than a year ago.

The update said: “The performance of the parent company remains handicapped by significant legacy issues from decisions made by previous management.”

It cited “earn-out obligations previously struck at top-of-market conditions which are very dilutive at current share prices and/ or involve significant cash outlays.”

It also flagged up an increase in bad debts and an “uncomfortable level of debt and convenants which currently leave little flexibility.”

Blue Freeway chairman Michael Hannan said: “Despite significant reductions in head office costs, we continue to work on additional restructuring initiatives to lower costs even further. Overall, the cash position has been very tight, and it will remain so.”


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