Trimantium GrowthOps posts $65m loss
Trimantium GrowthOps – which now trades as GrowthOps – has revealed it brought in $69.003m in revenue in the 2019 financial year, a climb of 253.7% from the year prior. Its total loss for the year after tax was $65.010m, significantly more than its loss of $13.6m for the 2018 financial year.
GrowthOps was formed in March 2018 with eight technology, advertising, strategy, marketing companies coming together, including Khemistry and AJF Partnership.
GrowthOps’ revenue and losses for the year (Click to enlarge)
The company found $9.5m in annualised cost savings by integrating the foundation companies. $7.5m of this was staff costs. It cost the organisation $2.0m in redundancy payments.
I think the accountants at Growth Ops could teach the creatives a thing or two about being creative.
“No dividends will be paid to shareholders”
because there ain’t any dividends.
This just gets more entertaining by the minute.
Who can forget the start stop start stop start again lead-up to the ASX listing?
Who can forget the reports of waiting for an Asian investor’s funds?
Who could forget some people’s reaction to the price paid for APD?
Who could ever forget the Khemistry CEO’s video?
And you have to admire the chairman Dominque Fisher’s and Phillip Kingston’s eternal optimism.
But would anyone be surprised if their biggest revenue earner ended up being paid by Netflix for the series rights to ‘The Growth Ops Mysteries’?
This result makes Blue Freeway and Issues & Images look like Berkshire Hathaway.
The fyre festival done by ad folk
$2M paid in redundancies – at least some people made money off this sinking ship!
Strains of Photon here….
Oh dear, what a shame our business is run by this type of people these days.
As someone inferred above, the only creativity required is from the finance department.
From the minute I saw Philip Kingston’s first media appearance with Growth Ops I knew [Edited under Mumbrella’s comment moderation policy]
The ” GrowthOps story” gets better by the minute! As a client, you go to their office and realise how much good talent they’ve lost….there’s no fact hiding empty seats in the office. I won’t be surprised if I smell sale by next fin year!
I feel sorry for the founders of those businesses that sold into the float. Assuming they took escrowed shares as part of their consideration, they are down significantly. The stock listed at around $1.20 and is now around $0.38. That’s quite a haircut!
One consolation is that despite the ugly headline numbers, on a cash flow basis, cash generated from operations was nearly $1.0m in positive territory. Perhaps the underlying business is not as dire as it all sounds.
This is what happens when the sole and cynical purpose of a comms business is making money. In a creative industry, profit is a byproduct of success, it comes from great work (viz Clemenger, BWM, Monkees, et al). Even Sir Martin Sorrell took pride in great work and was interested in its creation. Dominque Fisher has no experience in the ad industry; she and her partners merely thought that by cobbling together a gaggle of unrelated businesses, with no common culture, was the way to a fast buck. How the likes of the AJF partners ever got involved is beyond me – and now beyond them, I suspect.
I believe Ms.Fisher does have ad experience through Paddl, another company she’s involved in.
She’s also on the Australia Post Board.
I don’t think Paddl and being on the board of Aus post constitutes to a heavy ad background…not knocking her experience but I wouldn’t be harping on about how experienced she is. I do think Paul Mansfield is a smart guy, but there might be a few things in incompetent leaders within each division who aren’t transparent to him
Can someone please explain the whole APD purchase?
I can’t figure it out.
What did TGO pay or exchange for the APD purchase and what has APD contributed since being purchased?
Any assistance would be greatly appreciated.
At the time of the offer (June 2018), it was reported that TGO made an all-scrip “off-market takeover bid to acquire 100 per cent of Asia Pacific Digital (ASX:DIG) shares… GrowthOps is offering one share for every 8.9 Asia Pacific Digital fully paid ordinary shares, which values the company’s equity at almost $20 million. GrowthOps also intends to enter into private treaty arrangements with company placement option holders to acquire or cancel their options in exchange for GrowthOps shares.”
It was also reported that “Asia Pacific Digital’s chairman, Roger Sharp will join the Trimantium GrowthOps board as part of the acquisition.” But that never seemed to happen…
So, what did TGO get for $20m in shares? Wouldn’t the $20m in shares given to APD automatically reduce the number of shares held by AJF and the other original partners?
Or am I showing my ignorance?
Intriguingly, in April the CEO of TGO, Paul Mansfield, became a major stakeholder in the company by buying 17m shares for $17m from Forci Alternative Strategies Pty Ltd (now renamed TGO Holdings 2 Pty Ltd), giving him 13 per cent of the company. Phillip Kingston also bought $1.8m in shares at the same price.
Both bought the stock at $1 a share in off-market trades. The stock was trading under 50c at the time. In fact, if they’d bought on market when the trades went through, they’d have paid $7.65m and $823,070 for their shares respectively – over $8m less than the total amount they actually paid for the shares…
Could you explain that again please and yes, you can assume I’m sharemarket illiterate.
The question is why would someone buy shares for a price that is incredibly more than they are actually worth…one would think there is something fishy…
Ok – I’ve taken the below directly from the 30th August TGO Financial Results announcement, which may (or may not!) make things clearer.
Executive summary:
– they paid $19,436,000 in TGO shares for APD (which would have been around 16 million shares, based on the TGO share price at the time of approx $1.20)
– no this share issue did not “reduce the number of shares held by AJF and the other original partners”, as they all still owned the exactly same number of shares before and after the deal
– however (and I think this is what you meant), yes it would have reduced their shareholding as a % of their ownership of the company, probably by somewhere between 10%-15%, because there were now an extra 16m-ish in total company shares. So if an individual shareholder owned, for example, 10% of the total company before the deal, they would have owned more like 8-9% after the deal.
– “what did TGO get for $20m in shares?” Additional revenue of $18m up to June 30, 2019, on which they lost (before tax) an additional $6m
– they also inherited a bunch of debt, plus cumulative tax losses in Australia of approximately $32 million, against which “management have recognised a deferred tax asset of $2 million that relates to tax loss available for use in the foreseeable future”
– in summary, for their $19.5m, they diluted their existing shareholders in return for a major loss-making entity with a lot of debt and a minor tax benefit
– why? Good question! But I think we can assume that this is not what they thought they were getting at the time. They would have instead been hoping the acquisition would boost their share price, rather than deliver A Price Decimation (see what I did there?)
Here’s the full statement:
“On 2 August 2018 the Group obtained control of Asia Pacific Digital Limited (‘APD’) for the total consideration of $19,436,000 settled in Trimantium Growth Ops Limited ordinary shares. The acquisition of APD will help cement the Group’s position as an independent, regional provider of integrated consulting, creative and technology-driven services with the scale and local market experience to serve multinational corporate and government clients. The expansion of APD’s technology services and geographic footprint within the Asia Pacific market will diversify GrowthOps’ client base and strengthen its competitive edge against global players that operate in the region. The goodwill of $26,607,000 is attributable mainly to the workforce and APD’s footprint in Asia. APD contributed revenue of $18,133,000 and loss before tax of $6,114,000 to the Group for the period from 2 August 2018 to 30 June 2019…
On acquisition date, APD had cumulative tax losses in Australia of approximately $32 million. Management have recognised a deferred tax asset of $2 million that relates to tax loss available for use in the foreseeable future.
Following the acquisition, management have re-assessed and implemented strategies and initiatives to transition APD to a profit-neutral contributor to the Group in the short-term. As a result of this assessment, management have recognised an impairment of goodwill of $22,250,000 for the financial year ended 30 June 2019.”
I think just spent a good 5 minutes writing an explanation for the the wrong thing. Anyway, this one’s quicker.
If you’re asking why Paul M would pay $17m ‘off market’ (that is, in a private agreement between the buyer and seller) for shares that were worth only $7.65m ‘on market’ (that is, publicly traded on the share market) – I have no idea. In fact, that’s not quite true, I have a few ideas. But if I write any of them here, all you’ll see is “Edited under Mumbrella’s comment moderation policy”.
Surely this was written on the wall…if anyone who’s smart would have seen this when TGO was making “noise” with all these purchases. One feels for the shareholders…sell whilst you have a chance, don’t want to leave it to a situation where your stock price is lower than 5 cents! *cough cough PureProfile cough cough*
The amazing thing about this is the AJF guys are the nicest straightest guys you’d ever meet. Phil [Edited under Mumbrella’s comment moderation policy]
It almost feels like execs are Peter Pan in his own fantasy world of neverland aka GrowthOps. $2 million of redundancies…one can only wish the current employees would get something similar. At the rate the financial reports are showing, they’ll be needing a bailout.
Really feel for AJF…pulled the short straw with this merger. Let’s hope they don’t change their name and inherit the bad rash that is GrowthOps
If anyone has changed their name to ‘Growth ops’, they have made a very big error. It’s difficult to sell ‘growth’ as a service when your own company is doing the opposite. I wish them well in their efforts to turn this around.
The loss is caused by APD leaders selfishly taking advantage of TGO, having their salaries raised by more than a hundred percent, without having a single contribution to the company. TGO should have promoted capable leaders who can walk the talk and not those that are only interested in filling their own pockets. Tsk.
I can’t imagine Phillip Kingston, Dominique Fisher and the other board members not doing due diligence on APD.
But 12 months later, the price paid [whether in cash or shares] seems very costly.
Maybe there’s more to the story.
Only time will tell.
Clue please (wink wink)
No idea if anything else has happened.
Just trying to unscramble TGO’s omelette.
I can confirm Trimantium GrowthOps did NO due diligence at all on APD and literally a week after the purchase went through they were surprisingly gob-smacked at what they had just purchased.
You can’t blame APD for that. The redundancies were wide spread across APD as well as the former companies that formed TGO. I note more recently they have made more redundancies for the new people they hired less than 12 months ago.
That leaders area on their new website needs a crosshair mouse over.
That’s a pretty big statement. Surely, at the very least, TGO would have done some due diligence beforehand. People don’t just appear out of nowhere and say ‘Hey, you don’t know me, but here’s $Xm for your business!’
There was No due diligence at all and when I say 0, I actually mean negative. Other potential buyers looked under the hood and walked away. TGO blindly and optimistically made an offer and purchase.
Most of the APD team was made redundant or has since quit. My former colleague was on mat leave and they made her redundant before she stepped a foot in the door! The day she received a payout they put up a post on LinkedIn about they support working moms coming back into the work force. The irony was not lost on her…..
Shocking!!
not to mention the boys club that oozes out of senior management meetings…and what does the business do, bring in a “Chief Culture Officer”
If TGO did any due diligence they would never have purchased APD. That was already a sinking ship with a complete lack of competent leadership from the top down. Good staff and clients were already exiting in droves. Leadership just buried their heads and took the first out they could find.
Hmm…actually perhaps they are a good fit for each other – dumb and dumber.
I still don’t get it. TGO just didn’t buy APD ‘out of there blue’.
Someone from TGO had to have been in discussions with APD for an extended period.You’d assume Phillip Kingston, Dominique Fisher, or other board members, or third part advisors would have met APD management multiple times before any purchase.
I know it’s impossible to believe, however very true. The leaders of TGO are [Edited under Mumbrella’s comment moderation policy].
Advisors would have been a smart idea. Maybe they learnt a lesson and might bring in some externals next time they have $20M+ to flush.
TGO certainly did their due diligence, but with the changes they bought on board with the “new culture” was absurd…You want to be competing with management consultants, yet don’t want to call yourself consultants? The current leadership team has forgotten what their core competencies are and bringing out big initiatives…clients are seeing through this. Look at current staff turnover…alarm bells have been ringing since the beginning of last year
If all these lay-offs, resignations, clients leaving and so on are true, just how many staff does APD now have? I think TGO’s original PR release claimed 300 across Asia. If that was true then, but people have been leaving as fast as you suggest, how many are there now? Seems strange something worth $20m one minute becomes part of a company that loses $65m the next. Any clues?
There’s more layoffs than revenue based work at TGO…all in all, 70% of the APD contingent have gone. They’ve almost all but shut down a Manila office…Sydney office is a far cry to what it was when the sale happened, Singapore had some big changes…almost merged Malaysia and Singapore together.
Not sure if the APD acquisition did TGO any good at all? Don’t think there was much integration within the other businesses…and the other businesses are very reluctant to cross-sell to their clients!
Hold the front page!!
TGO back up to 40c
You get seasick just watching their share price.
Down to 35c. A new low? What a rollercoaster ride!
watch it slide further….unless they do another buy back!
From the August 2019 Financial Results announcement:
“On 15 March 2019 GrowthOps announced an on-market share buyback program of up to $5 million. The share buyback was suspended on 1 May 2019. A total of 108,754 shares were bought back and cancelled during the program for total consideration paid of $65,710.”
Didn’t even cause a blip.
maybe Paul Mansfield should buy another $17 million worth of shares!
Feel sad for AJF to be a part of this calamity…I noticed that they’ve changed their logo too..argh, hopefully AJF’s clients see through the debacle that is GrowthOps
Go to APD’s site and see an APD logo, then what looks like TGO logo on a story on Officeworks. Confusing. Anyway……….
Can TGO confirm that 70% of APD staff [‘contingent’] have left APD since TGO’s purchase of APD, as suggested by ‘layoff season 4 Sept?
And, if not 70%, how many staff have left AFD since TGO purchased it?
Can – Dominique Fisher, Phillip Kingston, or anyone at TGO provide any staff number updates for APD as requested by APD/AJF/TGO 6 September?
Would be keen to see this as well. Apparently there’s been some more structural changes on the way….don’t shoot the messenger!
Dear Mumbrella,
Could you please ask TGO for an update on staffing numbers for APD?
It seems Dominique Fisher, Mr.Phillip Kingston and the TGO team have suddenly gone silent on something they were only too happy to be shouting from the rooftops about hardly a year ago.
And if no response from them, maybe you could do a bit of ‘journalism’ and just phone the APD offices and ask.
I’d doubt that the TGO team would talk about this…I think Mumbrella need to do some investigative journalism or simply head into their office in Sydney/Melbourne to find out more! 😛
Down to 30c.
Surely, Phillip Kingston and Dominique Fisher have to make some sort of comment.
First, no comment by Kingston or Fisher about the rumours of a ‘take-over’.
Second, no comment by Kingston or Fisher on current APD staff numbers, despite announcing there were approx 300 just 12mths ago.
Now, now comment from Kingston or Fisher on what could best be described as the disappointing performance of TGO’s share price.
For two people known for how to spin a good story, their silence is deafening.
Can Mumbrella please try and get Kingston and Fisher in for an interview.
Good luck getting a response from Kingston or Fisher…I doubt they would know whats happening. Mansfield might be someone to really know what’s happening…Mumbrella how about that?
They should know what’s happening ‘no answer?’.
Phillip Kingston has interests in more than TGO.
Sargon being one.
Dominique Fisher was, or is, a Board member of Australia Post and is involved in Paddl in some capacity. [Paddl iOS another interesting story].
And if Ms.Fisher ever needs advice, she only need ask her partner, Alan Stockdale, former President of the Fed Liberal Party and Victorian Treasurer under Jeff Kennett.
*tumble weed*
No comment at all…
Doesn’t bode well for Kingston’s other plaything Sargon.