Blue Star’s final year: big losses, bigger debts, bargain selling price

The figures are taken from a 2011-12 financial report filed with New Zealand Companies' Office, the last-ever filing of the trans-Tasman organisation as a combined group.

They show the trans-Tasman group forecast a profit of NZ$75.6 million during its financial restructure in 2011, helping it win crucial support from bondholders, but instead made a NZ$216 million loss – a difference of NZ$291 million ($232.4 million).

The report also shows that the sale of Blue Star netted less than 20% of the NZ$385 million CHAMP paid in 2006.

The November sale of Blue Star's Australian operations to former managing director Geoff Selig generated net proceeds of NZ$17.6 million for the group.

This month's sale of the New Zealand business to former controlling shareholder Tom Sturgess generated an estimated NZ$18 million net. ProPrint understands the actual sales price was higher than NZ$18 million.

Some NZ$21 million net was raised by the sale of Rapid Labels to Sturgess in July 2012.

The group ended 2011-12 owing NZ$391 million, and the proceeds from all three sales were used to pay down bank debt.

Blue Star released the 2011-12 annual report on 8 January, having announced last year that it would hold back on publishing the results to avoid undermining the sales process.

[Feature: Selig buyout promises stability]

The 2011-12 loss of NZ$215.9 million was a 156% decline from the previous year's loss of NZ$84 million.

The company's gross profit of NZ$85.1 million was dragged deep into the red due to NZ$288 million of write-downs, which included a NZ$173 million goodwill impairment and a NZ$97 million write-down in the value of property, plant and equipment. Blue Star was also hit by NZ$48 million of interest and finance charges.

Revenue fell 6.1% year-on-year to NZ$535 million, which was 12.2% lower than the NZ$609 million forecast before the ballot.

The group reported its results in three distinct divisions, comprising its Australia commercial printing, its New Zealand commercial print and its web offset business.

Webstar was the only division to grow revenue, up 6.5% to NZ$173 million.

Sales for Australian Print fell 14% to NZ$223 million, while New Zealand Print fell 6.1% to NZ$139 million.

Blue Star attributed its disappointing results to weak demand and tight margins resulting from overcapacity.

Blue Star said that partly explained why it had performed below its pre-restructuring forecast. It also blamed a "technical issue" with its new HP digital press and a slower-than-expected recovery from the Christchurch earthquake.

The report shows that 405 staff, excluding directors, earned upwards of NZ$100,000 in 2011-12, including redundancy and termination payments.

Of those, 127 earned at least NZ$150,000 and 51 took home at least NZ$200,000.

[Related: Ups and downs of Blue Star]

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