SYDNEY: Photon has released details of its long-awaited market update including a $90 million write-down related to goodwill impairment in its internet division, a realignment of the group around three business divisions and an end to growth via acquisition.
The group also issued an an earnings downgrade of $21m related to the under-performing internet and e-commerce division, which will now close following a $150 million splurge on new acquistions.
Photon said the “contained underperformance” of its internet and e-commerce division and adverse currency impacts are expected to reduce EBITDA BY $16 million and $5 million respectively.
The group has also announced one-off costs and non-cash impairment charges in the region of $28-31 million related to discontinued businesses, redundancies and other costs.
Following the review, Photon expects its bank debt at 30 June to be approximately $271 million. It has obtained bank waivers through to 30 September, and also agreed the terms of a new three-year facilities of up to $305 million to refinance the debt and provide additional funding.
The group will be re-organised around Australian Agencies, Australian Field Marketing and International.
Photon said the new structure aims to drive greater collaboration around customer needs, improve operational efficiencies and better leverage management expertise.
As reported earlier today by AdNews, Tim Hughes will cease as executive chairman with effect 1 July, but will remain on the Photon Board as a non-executive director.
Photon has instructed Russell Reynolds to conduct a search for three new additional independent, non-executive directors to the Photon Board.
One of the new appointments is expected to become non-executive chairman, while current non-executive director, Brian Bickmore, has accepted the position of interim chairman until a new one is appointed.
In the group's growth plan, Photon said the Agencies will be led by BMF and BWM, with the new structure expected to better capture benefits of domestic scale.
International, led by Naked and Frank PR, will leverage "strong brand platforms", but growth via acquisition "will not be the focus of the company".
Photon's aggressive acquisition policy has drawn criticism from many quarters, leading many to blame its current predicament on an over-zealous growth plan reliant on buying up numerous agencies.
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