Photon Clears Debts through Agency Sales

Australian research and marcoms group Photon - which owns MR agencies The Leading Edge and Jigsaw Research - has cleared its debts through the sale of its field marketing and retail agencies to equity firm Navis Capital Partners for the sum of $AUD 146.5m.

Last year, the group announced it was struggling to pay the $AUD 176m worth of earn-out payments due to the owners of several agencies it had acquired. By September, the company had completed a recapitalisation through the issue of $AUD 103m worth of new shares, and began simplifying its management and company structure under new CEO Jeremy Phillips (pictured).

While Photon reported a 6% decline in revenue to $AUD 289.4m for the 10 months to April 2011, compared with last year's 4% drop, Phillips said that both the Leading Edge and its London-based media strategy consultancy Naked were 'heading in the right direction' and that there was momentum in both companies.

The sale to Navis includes agencies Demonstration Plus, Club Sales & Marketing, Powerforce, Ausrep, and REL, as well as related businesses Artel and Retail Insight. Once the deal closes, the group will be left with 14 agencies, compared with the 45 it held a year ago, and with $AUS 15m left in the bank.

In a statement to the ASX (Australian Stock Exchange), Photon said it will now focus on organic growth with an emphasis on digital initiatives, as opposed to acquisitions.

For the three months to the end of September 2011, group revenue fell 7% and earnings declined 25% compared with the prior year period. Photon attributes these results to the sale or closure of 'underperforming' agencies, and the loss of a major account.

Web site: www.photongroup.com .