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.”
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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At some point you have to stop blaming your predecessors and take responsibility.
Nice job sneaking it out on a Friday night, by the way.
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if the car is broken when you buy it you fix it. You don’t blame the previous owner for the dodgy motor.
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i’m confused, head office costs were $4m but now …
the bluefreeway sales team has gone, the plush offices have gone, the portal development team has gone, the group marketing team has gone, the support organisation has gone, the exec team has gone …
leaving a small head office team, of two execs plus a small team of junior accountants …
.. and they’re still spending $2m .. WTF?
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The problem continues to be the lack of a cohesive sales strategy which delivers revenue growth, 65% of which drops to the earnings line. Can Hannan provide a like for like comparison for revenue/EBITDA growth like Tim Hughes at Photon? Looks like negative revenue/earnings growth if you take out the acquisitions made during the comparative reporting period like Holler, Fivia, Sagemetrics, Clear Light Digital, Spectrum, and BlueArc.
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Having spoken off the record with some inside the group, whilst many have put the problems of the last year behind them and have individual strategies, there is great concern over the “dead weight” which companies such as BlueCentral are having (both on the bottom line as well as the market reputation).
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Over 13 months have passed and Hannan still hides behind excuse after excuse. Its amazing that Hannan and the execs that work for him spent 2 million since the restructure.
Surely Hannan and the 2 Exec’s at the Bluefreeway HO can devise a better story than to refer to previoous management. Its time Mr Hannan to stand up and be counted.
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After removing the previous management and promising to promote transparency and collaboration across the group of businesses the new ‘owners’ have failed to put forward any sort of clear strategy, hire a CEO, provide an independent management team who are not just looking after their own companies (shane/Steve) and generally behaved in ways that for many look like attempts to drive the stock value down to make acquiring the entire business cheaper.
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