$392m loss and name change for PaperlinX
Paper merchant PaperlinX has reported a loss after tax of $392.3 million for the year following the collapse of its European operation.
The company said its Spicers businesses in Australia, New Zealand and Asia (ANZA) continue to operate profitably and later this year it will seek the support of shareholders to change its corporate name from PaperlinX Limited to Spicers Limited.
During the financial year, PaperlinX withdrew from operations in Europe and sold its Canadian business. The business in Germany continues to trade but the Company is pursuing options to divest or realise the assets of that business.
In an ASX statement, the company said the failure of its European business resulted in losses and write-offs of $303.3 million:
The statutory results include a loss after tax for discontinued operations of $(365.6) million which largely represents:
· The impairment and subsequent write off of the book value of the Group’s two largest European businesses, the UK and Benelux, which entered administration following their continued poor performance, and the subsequent sales of other European businesses – $(300.3) million; and · The net loss from the divestment of Canada – $(64.6) million.
PaperlinX blamed a serious decline in the performance of the European business in the December quarter of FY15 on poor trading and restraint of terms by key suppliers, which triggered a critical decline in the cash and liquidity position of the UK operations and led to a sharp drop in European profitability, which in turn put pressure on Europe-wide liquidity.
The state of the European businesses prompted the Company to commence a Strategic Review announced in December 2014. Once the full impact of the financial position of the European businesses emerged… it was imperative to protect the interests of shareholders and preserve the stability and quality of the ANZA businesses. The businesses in the UK, Benelux and Austria were placed into administration and businesses in Ireland, Poland, Scandinavia (Denmark and Sweden) and Spain were sold. Following the administration of its parent, a Dutch holding company, control of the business in the Czech Republic passed to the Trustee. PaperlinX is pursuing options to divest or realise the assets of its last remaining European business in Germany.
The Company reported an underlying profit for the ANZA businesses of $14.7 million, compared with $15.3 million in the prior corresponding period.
The Spicers merchant businesses in the ANZA region generated sustainable returns in difficult trading conditions within an industry in structural decline. While revenue was down 5 per cent due to Commercial Print, gross revenue from the diversified segment increased by 33 per cent in FY15. This reflects the strong performance and further potential in the Sign & Display segment, which was supported by the recent acquisition of a leading sign industry supplier in New Zealand.
PaperlinX said it would focus on ensuring that its Spicers businesses continue to develop and deliver sustainable profitability.
“Our ANZA businesses have been adapting to changing circumstances for a number of years, making the necessary, hard decisions along the way to right-size costs and invest in new areas like Sign & Display,” said Andy Preece, PaperlinX Managing Director & CEO. “These businesses are now in good shape and provide a solid foundation for the Group to recover its momentum and pursue prudent opportunities to further diversify and grow.”
The net assets of the Group as at 30 June 2015 were $128.7 million, including net cash of $43.0 million.