Half year figures at Opus show a $35m loss, after it was forced to write down the value of its goodwill and Australian publishing assets, ahead of capital raising efforts to pay off its bank.
The print group, which is facing a June 31 deadline to repay $27.5m in debt to the Commonwealth Bank, wrote down the assets by more than $34m, with a non‐cash goodwill impairment charge of $30,148,000 and a non‐cash write down of deferred tax assets of $4,139,000.
This put the company $35.3m in the red for 2013, compared to only $3.8m the year before, according to its half year report released at 8pm Friday.
When asked why the assets were written down and why by so much, chief executive Cliff Brigstocke said: “The write downs were appropriate ahead of the capital raising.”
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The write-down came as Opus achieved a half year five per cent revenue increase of $2.9m, up to $62.2m, which Brigstocke attributes to “the increasing trend of global publishers to engage local publishers to print and distribute their content”.
He says, “This has resulted in higher revenue compared to the previous period, with a shift in production back to the Opus Australian operations.
“However against this volume uplift, there has been a continuation of increased margin pressure within the traditional long run publishing services business.
“This supports the direction and strategy that the group has embarked upon in the print on demand segment, and supplemental content delivery and fulfilment platforms.”
The group’s EBITA was down seven per cent to about $7m while revenue for its publishing operations increased five per cent to $51.2m but its EBITA fell six per cent to $7.1m.
Similarly, revenue for its outdoor media arm, branded Cactus and Omnigraphics, was up four per cent to almost $11m but EBITA fell 10 per cent to $1.8m.
Net debt fell 7.8 per cent to $52.5m but thanks to the asset write-down total equity fell almost $30m to $2.1m. The company had $2.2m in cash, down from $3.2m in June 2013.
Opus’ bottom line was further hampered by its loss of a major Australian book publishing house as a long-term client after it merged with another publishing group, Opus unexpectedly lost the tender for the combined company last month.
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The company says it is in the early stages of capital raising to increase its equity capital and reduce the current gearing.
Brigstocke says: “We will provide shareholders with further details as this process progresses. We are encouraged by our bank and our major shareholders who endorse and support our recapitalisation and growth plans.”
When asked how much capital would be raised and when it would be offered, Brigstoke said it was not appropriate to comment further, post release of the half year results, saying, “The market is informed.”
The company also says it has restructured its debt facility with CBA through to September 2016, but Brigstocke declined to provide any details or say if that means Opus has longer to pay the $27.5m due on June 31.
The company expects market conditions will remain challenging but that the continued changes to the global publishing industry will provide opportunities for it, given its geographic footprint, digital platform and capacity.
“The Asia Pacific strategy continued to deliver benefits to customers and the Group. A significant volume of work is being shared across the network which provides a varied cost to speed proposition for customers,” Brigstock says.
“We have had to make some hard decisions in light of industry and market consolidation and we will continue to take steps to improve operations and efficiencies over the next twelve months.”
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