For sale: Ovato’s Geebung site on the market

A 28,000-square metre industrial site that houses Ovato’s Geebung operation in Brisbane is on the market through CBRE in Brisbane.

Ovato’s lease on the site, which according to a 2019 Ovato Annual Report, is owned by Rathdrum Property Trust – an entity related to Ovato chairman Michael Hannan, expires on 30 June 2024.

Ovato chairman Michael Hannan
Ovato chairman Michael Hannan

The advertisement, which was last updated on April 29, describes the landholding as an infill printing facility of 14,044 square metres on a substantial 27,630 square metre site within Brisbane’s northern suburb of Geebung.

Ovato CEO Kevin Slaven told Sprinter that the property is owned by an entity that sits outside of the Ovato group and the actions of the landlord are a matter for them.

He also confirmed Ovato has no intention of closing or moving company operations in Queensland.

Ovato CEO Kevin Slaven
Ovato CEO Kevin Slaven

“Ovato has no intention of closing the site or moving our operations in Queensland at this time,” Slaven told Sprinter.

“As you have correctly identified, the property is owned by an entity that sits outside of the Ovato group. The actions of the landlord are a matter for them.”

The sale comes after Ovato provided a quarterly update to the ASX on April 30 for the three months to March 30, 2021. This update indicated, at that time, it had an estimated one quarter of funding available.

The statement said the March quarter was negatively impacted by a number of significant non-recurrent outflows amounting to $7 million arising from the implementation of restructuring activities undertaken in December last year.

“As clearly explained in our Appendix 4C, the first quarter of calendar 2021 had a number of one-off, non-recurring items relating to the finalisation of the corporate restructure we undertook at the end of 2020,” Slaven said.

“The estimated cash available for future operating activities calculation in the 4C is a mechanical calculation that uses the last quarter’s cashflow and calculates now many quarters funding you have available if you were to spend the same amount in the coming quarter.

Slaven also said the company is continuing with several initiatives to strengthen the balance sheet post-restructure.

“The restructure was necessary to strengthen our balance sheet and provide a solid platform for the evolution of our company in a post-COVID environment,” Slaven said.

“As set out in the 4C, Ovato is continuing with several initiatives to strengthen its cash position and is confident they will be achieved.”

In its statement to the ASX, Ovato said it is taking steps to raise further cash and is confident these steps will be successful.

The options listed are:

  • Sale of assets/businesses
  • Implementing improved trading terms with suppliers
  • Short-term funding options.

In further explanation, Ovato said it expects to be able to continue its operations and to meet its business objectives as the benefits of the corporate restructure are realised, along with the actions noted above and with further improvement in trading performance flowing from increased revenue as the broader economy continues to recover from the COVID-19 pandemic.

Continuing to execute “fit for market” strategy

The update said management are continuing to execute “fit for market” strategic initiatives and invest in new technology that will enhance core commercial print operations.

It also said the board is continuing to to review the appropriate capital structure of the company with its advisers.

Ovato also reported that sales in books, packaging, retail distribution and marketing services have all performed solidly and as expected in the quarter.

But it said decreases in catalogue printing and residential distribution are continuing to impact the heatset printing side of the business.

“Decreasing volumes as a result of Covid-19 continue to impact heatset catalogue printing and residential distribution, and it is expected that the normalising of volumes post COVID-19 may now not occur until the first half of FY22 resulting in FY21 revenue being less than previously expected,” the statement said.

“Tight cost control will help mitigate the impact of this reduced revenue on the underlying trading results of the Group for the last quarter of FY21.”

The company added that its debt profile and balance sheet “was significantly enhanced by the restructuring activities undertaken late last year.”

Operating cashflow

Ovato said cashflow from operating activities was negatively impacted by a number of significant non-recurring outflows amounting to $7 million arising from the successful implementation of the restructuring initiatives undertaken during the December quarter.

Cash and equivalents as at 31st March were $15.3 million, the company said.

Comment below to have your say on this story.

If you have a news story or tip-off, get in touch at  

Sign up to the Sprinter newsletter

One thought on “For sale: Ovato’s Geebung site on the market

  1. The board signed off on 1 more quarter of cash left in the bank from 31st March.

    Total net cash outflow was $15.327 million for 3 months and OVT have $15.279 million left in the bank.

    $7 million weren’t recurring net cash outflows. Understood and taken on board. What about the other $8.327 million?

    Do we run 15.279 / 8.327 = 1.84 quarters of cash to go. 5 1/2 months. Starting from April 1st… so no more cash mid September on current cash burn? Or what are we missing?

    Someone needs to ask now if that $15.279 million is enough to pay out all staff entitlements?

    Three options OVT have in their plan according to the 4C are:

    1. Sale of assets/businesses
    – who is going to buy what? Is anything of value left when you look at the asset shifting that was done in the Scheme of Arrangement/Restructure? Really? Or are the Hannan’s selling Geebung to lend the money to OVT? That would be a good thing to do and would build back respect.

    2. Implementing improved trading terms with suppliers
    – the main suppliers took a 50% haircut on millions of dollars, highly unlikely them or other smaller suppliers will extend trading terms beyond current market norms. If anything they will be doing the opposite now. Those suppliers would then be providing an unfair playing field for the market right?

    3. Short-term funding options
    – Against what collateral? Debtor finance is already done and there’s nothing else to borrow against unless someone wants some printing gear, paper and ink as collateral? Credit Cards maybe?

    Or is above accurate and The Hannan’s want to offload an asset to detangle their wealth from the business they once loved?

    As an aside, good on you Kevin for continuing to front up and at least making a comment. You must be going through hell but you keep turning up.

Leave a comment:

Your email address will not be published. All fields are required


Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from our team.