HE new chief executive of Photon Group, Jeremy Philips, has ordered a thorough examination of the marketing services group's books before announcing a profit downgrade and launching a capital raising.
It is understood Mr Philips, a former News Corporation executive, who joined Photon last week, is keen "to clear the decks" and provide investors with a reliable earnings forecast before proceeding with a capital raising later this week.
The Photon board met on Monday after trading in the company's shares was halted and has investment banks Macquarie Group and UBS standing by to assist with the recapitalisation.
Both investments banks are likely to need at least a day to conduct their own due diligence before committing to the capital raising.
Photon has tested the patience of investors in the past two years with two capital raisings and three profit downgrades. Mr Philips has made it clear that the company -- which owns more than 50 different marketing, research and public relations firms -- needs to provide the market with reliable accounts and forecasts if it is to win back the confidence of shareholders. He is also likely to change the way executives report to the chief executive as part of a push to inject more discipline into the company's governance, accounting and communications structures. Photon founder and executive chairman Tim Hughes will also stand back from executive duties.
Start of sidebar. Skip to end of sidebar. Related Coverage
* UBS, Macquarie in line for Photon gig The Australian, 19 hours ago * Asahi bid for Foster's a long shot The Australian, 1 day ago * Market awaits Photon's update The Australian, 2 days ago * Photon's digital CEO choice Perth Now, 20 Apr 2010 * Marketing firm Photon Group's profit down Daily Telegraph, 16 Feb 2010
End of sidebar. Return to start of sidebar.
Photon's long-term adviser, KPMG, is helping Mr Philips go through the company's books, with another profit downgrade likely. It is understood the company has encountered tough trading conditions in the past two months, traditionally a strong contributor to the overall result, while the strength of the Australian dollar has crimped earnings from Photon's businesses in Europe and the US.
Mr Hughes said in February that the company would be "in sight of last year's earnings" if markets continued to improve. Photon posted earnings before interest, tax, depreciation and amortisation of $89.3 million in 2008-09.
Reg Grundy owns 24 per cent of Photon while James Packer holds 4.5 per cent. Mr Philips was a senior executive at Mr Packer's online company Ecorp before moving to News Corp, which publishes The Australian.
PGA Price at posting:
$1.02 Sentiment: None Disclosure: Not Held
