The Market Herald to axe Germany operations, various publications and undertakes layoffs

Would you call it a mid-life crisis or rebirth? For media house and now classifieds company The Market Herald (ASX: TMH), it has signals of both. With a new CEO, new strategy and new sources of revenue, it has set itself on a path that it hopes is the right one.

The Company has progressed a comprehensive evaluation of the Perth and Canadian businesses and has decided to pull the plug on select underperforming activities.  

These include The Market Herald Germany, and a number of publications which are not contributing to TMH’s revenue. As a result, there have been a number of redundancies made in respect to these discontinued activities. Thus, the Company also undertook layoffs.

This revamp will not provide benefits in FY23; but, it is expected to generate recurring cost savings and improved annualized earnings of about $1.4 million come FY24.   

Commenting on these decisions, CEO Mr Tommy Logtenberg highlighted “A clear outcome from The Market Herald’s strategic review is the significant value opportunity available to The Market Herald by executing well on our core businesses. 

“In line with this strategy, the initiatives announced today will help the Company focus on its core activities. We will continue investing in initiatives that support our core, driving sustainable and profitable growth to deliver superior shareholder returns.” 

Logtenberg’s appointment as permanent CEO was confirmed recently on March 13 after taking on the interim tag.  His appointment marked the culmination of the Company’s turmoil with Jag Sander’s resignation after shareholders requested to remove him from the Company’s Board. 

The Company finished H1 2023 with total revenues of $33.7 million and an EBITDA of $6.5 million, with The Gumtree, Carsguide and Autotrader (“GCA”) businesses, acquired in October last year, ruling the roost. In fact, Logtenberg was the CFO of these businesses before taking the helm at TMH.

Cash receipts from customers increased by 236% to over $47.5 million as cash flow from operating activities rose by 174% to over $6 million.

Even though the financials paint a positive picture, the layers within tell a different story. The Company has loans of $71,895,058 that it needs to repay in the next 12 months. As at 31 December 2022, TMH has net current liabilities of $59.8 million and cash equivalents of only $9.6 million.

Moreover, the significant revenue growth is not from The Market Herald’s primary business but its Gumtree acquisition, accounting for over $22 million of the revenue. In fact, TMH suffered losses over $700k in H1 FY23. The Company’s expenses also increased by about two-fold, driven by employee expenses and marketing costs.

Its impending commitments and Company restructure might validate its decisions to end its Germany business and streamline its Canadian operations. However, it does not allay all fears just yet.

The Company remains confident that it can pull itself out of debt. For shareholders, however, the jury is still out.