Isentia posts $34m loss for CEO Ed Harrison’s first financial year

Media intelligence and data technology company Isentia has posted a $34.341m loss, a 2,772.5% decline from its profit of $1.285m for the 2018 financial year. The loss included a $40.959m impairment, $18.777m of which related to a write down in the value of brand names.

The challenging operating environment in Australia and New Zealand also resulted in an impairment charge of $18.975m relating to goodwill.

Revenue was also down 10.7% to $122.467m.

Isentia’s financial reporting (Click to enlarge)

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was also down from $33.111m in the 2018 financial year, to $23.060m – a decline of 30.4%.

Net profit after tax and amortisation (NPATA) was $9.2m.

The company managed to get its net debt down from $43.1m as at 30 June, 2018, to $28.3m by 30 June, 2019.

Isentia’s financial highlights (Click to enlarge)

Managing director and CEO Ed Harrison said that he was “pleased” to deliver in line with previous guidance despite a “challenging competitive environment”.

“In FY19, we pointed the company in a different direction with the appointment of a new leadership team and the launch of a new strategy. We realised significant operational efficiencies across the organisation through increased automation and the use of our Asia-Pacific network to optimise resource allocation. This ongoing shift from investment in operations to investment in technology continues to improve productivity, reduce costs and, most importantly, deliver higher-quality services to our clients,” he said.

“Moving the focus of our development pipeline to one of continuous, incremental product delivery has de-risked our investments and generated good results. The number of product and feature releases more than tripled to 66 in FY19.

“Major product launches during the year included Live Alerts, a large suite of on-platform analytics tools and a new mobile app which we are currently beta testing with clients. In Asia, we established regional product and tech teams, as well as new multi-market sales capabilities.”

Harrison was paid $1.14m, including a base salary of $590,820.

Isentia’s financials (Click to enlarge)

Chairperson Doug Snedden said the appointment of Harrison as CEO in July 2018 and a new strategy has meant FY19 “continued the turnaround commenced in 2018”. Snedden, who was paid $211,200, noted that Isentia did not pay a dividend in order to invest in technology and other strategic initiatives.

“Ed Harrison has driven cultural and operational change, appointed a new leadership team, improved sales productivity and stepped up innovation and investment in product development,” said Snedden.

“As a client of Isentia’s for over 10 years, Ed brings a unique understanding of the user experience and what our customers want. During the year, we have started to see the benefits of these changes with stronger growth in new clients.”

Isentia’s action in the Copyright Tribunal is ongoing. In April, the Tribunal granted Isentia an interim copyright licence to apply from 1 December 2018, which means that, for the first time since 2016, its copyright costs include a volume-based fee component. A final hearing date for Isentia’s application has been set for late 2020.

Under its new strategy, Snedden noted that EBITDA is set to recover over a three year period. Isentia’s FY20 EBITDA guidance is $20-23m.

The strategy includes focusing on “incremental, low risk, shorter payback projects” in order to “meet our clients’ expectations for ever faster delivery of content and for products that are innovative and market leading”.

Snedden added that Isentia’s remuneration policy includes management incentives tied to execution of the strategic plan. He concluded by stating that FY19 was one of “acceptable progress”.

“The Board and leadership team worked hard to reset the business for future growth,” he said.

“The new strategy is crucial in providing a roadmap for responding to the challenges of the marketplace but also builds on the reputation and expertise within the organisation.”


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