Triple blow: Aferian shares hit new low, more cuts at Amino division and CEO set to quit
The gloom thickened as it was revealed that CEO Donald McGarva was leaving in October after 14 years.
The AIM-quoted video streaming solutions company failed to comment on whether McGarva’s impending departure and Aferian’s performance were connected. It merely said that a review of the composition of the board was underway, which hardly helped to calm nerves.
Aferian has two operating companies: 24i, which focuses on streaming video experiences, and Amino which connects Pay TV to streaming services.
In the trading update, the company said management actions taken during 2023 to reduce the group's annualised cost base by around $12 million had been successfully implemented but added that a further deterioration in trading at Amino required further restructuring action to be taken. The group will immediately implement further annualised cost reductions of around $3m in the Amino business.
On 5 December, the group reported that it expected to report revenue of approximately $47-48m and a positive adjusted EBITDA of approximately $1.6-2.6m for the year ended November 30. It now expects to report revenue and adjusted EBITDA at the lower end of these ranges. As a result of the deterioration of Amino's current and forecast trading, the group no longer expects adjusted EBITDA for FY2024 to be higher than FY2023.
Net debt at November 30 was $6.1m ($12.9m) but at March 31 it was $12.3m, reflecting what the board called the ‘usual seasonal billing cycle‘ of the group. At both dates, the net debt balance includes $1.4m drawn under a shareholder loan facility with Kestrel Partners LLP.
The group is in advanced discussions with its lenders over a maturity extension of its banking facility; it has reduced to $16.5m from $25.4m and currently matures in November 2024.
Aferian said that its 24i video streaming business was making good progress with key new customer deployments and multiple contract extensions being delivered in the first quarter.
However, there had been a further deterioration in the trading of the Amino business due to lower than expected orders for video streaming devices as customers delayed spending decisions longer than anticipated.
Chairman Mark Wells said: “In the face of unprecedented challenges, this last year has thoroughly tested the resilience of the group. However, our 24i video streaming business has made good progress this quarter and I am confident that the timely management actions taken in the last 12 months have positioned the group on the strongest possible foundation for the future.”
