Rural broadband provider Imagine posts €50m loss amid move to scale back growth plans
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Rural broadband provider Imagine has posted a nearly €50m loss for the 2023 financial year as it is forced to scale back its growth plans in light of the rollout of the National Broadband Plan and a dynamic market environment.
According to the company’s latest financial statement, it posted turnover of just under €32.6m during 2023 with a gross profit of €16.4m. Its earnings before interest, taxes, depreciation, and amortisation (EBITDA) came to €3.6m.
The company’s cost of sales stood at just over €16m while its administrative expenses came to just shy of €24m.
The statement goes on to detail a number of steps the company has taken to maintain its earnings during 2024, including a restructuring and redundancy programme which concluded at the end of March resulting in significant reduction in payroll costs, a significant reduction in selling, general, and administrative expenses, as well as a price increase in line with other operators.
“With these measures in place, the directors are confident that the strong adjusted EBITDA will be maintained in 2024,” the company said.
“However, due to the overall reduction in new customers adds and being prudent about the impact of the National Broadband Ireland rollout, the growth plans of the business over the next five years have been scaled back to reflect the dynamic market environment.”
As a result of the increasingly challenging market environment, the company decided to “impair the value of the fixed assets and investment in subsidiaries” which resulted in a write down in the group’s accounts of €32.7m.
This impairment resulted in the company posting a €49.8m loss for 2023 - up significantly from the loss of €12.2m reported in 2022.
Imagine also has external debt due to third party banks to the tune of €26.6m. The bank is due for repayment in December this year.
“In February 2024, the banks confirmed a standstill agreement in relation to interest repayment until June 2024. Whilst the banks are keen to support the business, there has been no extended debt agreement to date. The Directors continue to explore alternative funding options for the business,” the company said.
In relation to the future funding of the company, the directors said they continue to work with their external lenders and ultimate parent company to fund the working capital.
In March this year, the company sold its Coolwave business with the proceeds being set aside in an escrow account, following agreement with the banks, so the business can work through its strategic review.
However, the directors now intend to apply to drawdown some of the funds in order to fund the working capital of the business for the next 12 months. It cannot say yet whether this will be permitted.
The company acknowledged that while there is “significant uncertainty” surrounding its future funding but the directors “continue to build new customers to generate more revenue from existing sites, to maintain the adjusted EBITDA of the business and generate cash”.