Destra Corporation has slumped to a loss of $76.9 million for 2007-08 after savagely writing down the value of goodwill, intellectual property and investments.
Destra Corporation has slumped to a loss of $76.9 million for 2007-08 after savagely writing down the value of goodwill, intellectual property and investments.
The company has also announced plans to sell its entertainment division in the next 12 months, after the company’s music and video divisions were smashed by falling sales and the poor performance of recent movie releases.
The company’s executive chairman David Gordon, who was bought in by Destra’s 44% shareholder Prime Media Group to review and improve the company’s strategy, says the board now intends to focus the company’s energies on the media sales representation and brand funded content production businesses within its media division.
Gordon’s review of Destra’s poor performance lays the blame at the feet of the previous management, led by former chief executive Dominic Carosa who stepped down in April.
In a tersely-worded statement, the board says its review found Destra had made 13 acquisitions in three years as it tried to build a media and entertainment group spanning video, music, magazine, online community, media sales representation and brand-funded content production activities.
But it was too much, too fast.
“The rapid expansion in the range of business activities of the company had created a portfolio of businesses that were not well integrated and which in the main lacked critical mass in their chosen market segments.”
To make matters worse, the use of funding to make these deals had hamstrung the company, which is now struggling with high debt levels in a high-interest environment.
“The key recommendation of the review is to focus Destra’s future on a narrower range of businesses, properly integrated and which deliver synergies and the capacity for a significant share of their market.”
Prime Media Group, which is backed by billionaire media and health entrepreneur Paul Ramsay, took a writedown of $16.8 million on the value of its investment in Destra.
Prime posted a 4.6% increase in net profit from continuing operations to $31.8 million.
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