ASX-listed publishing company CommStrat collapses

An Australian publishing and conference provider that has been operating for more than 50 years has collapsed into voluntary administration.

CommStrat was established in 1963 and listed on the Australian Securities Exchange in 1986. The company provides publishing services and manages events and conferences for both the private and public sector in a range of industries, including IT, finance, engineering, education and sustainability.

CommStrat has previously been linked to the SME Association of Australia through “a service agreement … for the provision of administration, education and membership services to its members”. The company also published the SMEAA’s official publication MyBusiness, although the SMEAA chief executive Steve Maidens confirmed to SmartCompany this morning the SMEAA no has not had a relationship with CommStrat for a number of years. 

CommStrat also has an online jobs advertising arm and chairman Alexander McNab said in a statement on February 13 structural change in this part of CommStrat’s business was one of the factors that led to the company collapsing.

“In the last 12 months, CommStrat’s operations have been negatively affected by sharp reductions in discretionary spend in key customers segments, particularly local government, and structural change in CommStrat’s online job advertising business,” McNab said.

“These challenges have been compounded by CommStrat’s obligations under its senior debt facility.”

CommStrat called in administrators Deloitte on February 13, with Richard Hughes and Glen Kanevsky appointed to oversee the administration of CommStrat and its subsidiary Hallmark Editions, which was incorporated in 2002.

Administrator Glen Kanevsky told SmartCompany CommStrat is continuing to trade and all 25 employees have been retained. The administrators expect all existing business with clients to be fulfilled. 

“It’s very early days as far as our appointment is concerned,” Kanevsky says. 

“We have begun an assessment of the company’s financial position and are looking at possible strategies to realise the most value for all stakeholders.”

While Kanevsky says “selling the business as a going concern is always the preference because it inherently preserves the most value”, the administrators will consider all available options. 

“The business is diverse and has a number of significant media and IP assets,” he says. 

“Potential transactions could involve existing industry players or funds looking for a transaction to recapitalise the corporate shell.”

CommStrat recorded revenue of $6.126 million for the 2013-14 financial year, a slight decline on the $6.129 million reported for the year before. Earnings before interest, tax and amortisation dropped by 77% to $220,000 for the 12 months.

CommStrat booked a net loss of $651,438 for 2013-14, down from a net profit of $325, 208 the year before.  

While the 2013-14 CommStrat annual report said the company’s primary lender National Australia Bank was “supportive of the business strategy” and had extended its loan agreement until March 2015, McNab said last week CommStrat sought “accommodation from its senior lender and other creditors” after being hit by “weaker than expected trading” in December 2014 and January.

“The directors are now of the opinion that CommStrat will not receive sufficient accommodation to continue trading as a going concern,” he said.

Shares in CommStrat are currently priced at 5 cents.

*This article was updated on Wednesday 18 February at 2.50pm to include comments from Deloitte.