Photon Group confirms $87.5m loss
Photon Group has moved from a reported profit of $38m last year to a loss of $87.5m for the 2010 financial year, the company has announced.
Setting aside one-off costs, the company’s EBITDA (earnings before interest tax depreciation and amortisation) profits fell from $89.3m to $46.7m.
Much of yesterday’s announcement had already been flagged up in market updates.
Photon’s shares have fallen around 30% since last Wednesday when they briefly rallied to 14c. They are now trading at just below 10c. Before the company left the ASX for the fund raising its share price had been above $1.
Photon owns some of Australia’s best known agencies including BWM, BMF and Naked Communications. It ran into trouble when it became apparent that it would struggle to pay the full earnout payments to the founders of the agencies it had bought. It led to the departure of founder Tim Hughes.
The company is currently in the final stages of a recapitalisation.
Photon said the drop was “primarily driven by the decline of the Internet and Ecommerce division.” Its international internet division fell from an EBITDA profit of $19.7m to a loss of $6.5m.
However, Photon’s figures show that every division did worse than in the previous financial year. Australian field marketing fell from an EBITDA profit of $25m to $19.3m. Australian agencies fell slightly from $28.9m to $28.1m and international agencies fell from $24.6m to $24.3m.
The company’s profit margins fell from 20.3% to 12.3%
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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this is a record loss for any oz advertising/marketing services group. $1.68 million lost every week for 52 weeks. they had an MD, a CFO and and a Chairman and none of them knew???? where’s the rope?
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This is what happens when people place the digital hat on when it does not quite fit. If you don’t understand the beast seek people that do with out the ego cargo.
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$87M loss Vs nearly a Billion dollar profit in the article above – makes that Photon “end of year video” poking fun at Sir Martin look a little silly now…..
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I find these news from Mumbrella are usually very short and misleading. Mumbrella take bits and pieces from the facts and make it sound like that’s the entire true.
Photon did reported $87.5 loss, but we need to keep in mind $87.5 million are from ‘impairment of intangible assets’. The rest is from Photon’s internet & Ecommerce division together with restructuring of Photon and its companies (One of Cost).
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Impairment of intangible assets means money spent on things that don’t really have any value being written off.
Don’t fool yourself: an intangible asset write down is simply the accounts catching up with the cash that’s been spent, or committed, previously.
I suppose you think the sub prime crisis was a bit of bad luck and loss of confidence, also?
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@ Anon
Cost for ‘Impairment of intangible assets’ includes a portion of from the lost of Internet and e-commerce division, and most of it is from lost of Goodwill. First it was Geekversity, then it was Photon been suspended from ASX, then capital raising. It’s not surprising that Photon’s goodwill have gone down this year.
The SubPrime crisis are not due to bad luck, but it is due to lost of confident because of bad cash management and bad acquisition.
Photon reported a shit load of negatives this year, but keep in most if not all of their current business is still profitable. Their current state is far from what Mumbrella continue to imply.
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Hi Some Dude,
I do feel some sympathy for the current management with this round of reporting (which is a giant leap backwards on the previous period in every conceivable metric) because I suspect their reported numbers this time are less, um, optimistic in the areas that were, shall we say, open to interpretation, than Photon’s previous reporting stance.
By comparing a now realistic reporting stance to an arguably over-rosy stance, then yes, the numbers are going to be particularly dreadful this time round.
And if you take out all the worst things then yes, the numbers are better. Just like if you take out all the goals scored against my football team last week, we actually won. Unfortunately that’s not how it actually works. Those bad things did actually happen. Geekversity was a get-rich-on-the-internet scheme that went wrong. Investment goodwill in the company has really been dented.
You seem to be suggesting that the comparison should not be made, simply because the previous management isn’t there any more. Assuming (and I think it probably will) the management gets through this, then they’ll benefit from those same comparisons in a year’s time.
Cheers,
Tim – Mumbrella
Cheers,
Tim – Mumbrella
Tim,
My point been, when people read this article, all they hear is Photon made $38 million last year, and made a lost of $87.5 million this year. And the underlining message that people get from reading news like this is, “Oh this company is making a shit load of lost! It’s got no hope! Don’t invest in them! Run as far from them as possible!”
One thing I forgot to mentioned before, is that in the last paragraph of this article, you mentioned that each of Photon’s new division is making a lost, but you didn’t mentioned that 2 out of those 3 divisions contain companies from Photon’s previous Internet & Ecommerce division.
As far as giving a reader’s opinion goes, I will say, this article is very misleading in every possible way.
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In that case, I suggest you read the last paragraph again. I didn’t say that every division made a loss (or “a lost”) – they didn’t. I said that every division did worse than last year, which is correct.
Cheers,
Tim – Mumbrella
Photon will scale back to a handful of businesses and become a shadow of its former self. The business was run by muppets. Jeremy has a lot of cleaning to do.
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