Yellow Pages increases revenue

Fairfax Media

DOING WELL: The Yellow Pages Group has delivered increased annual revenue, kept its bankers happy and is now experiencing improved activity.

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The Yellow Pages Group has delivered increased annual revenue, kept its bankers happy and is now experiencing improved activity, chief executive Bruce Cotterill says.

Cotterill told BusinessDay yesterday Yellow Pages' June year turnover rose 0.7 per cent.

He was happy with this given economically it had been a "very, very difficult" year, especially for advertising-dependent media companies.

"The Fairfax results, the APN results, the TV broadcasters coming out with their revenue levels in that sort of mix we need to be really happy about the outcome," Cotterill said.

The New Zealand publishing arm of Fairfax Media, owner of The Press, posted a 15 per cent fall in annual turnover.

APN News & Media, owner of Auckland's New Zealand Herald newspaper and 50 per cent of the Radio Network, recently recorded a 21 per cent fall in half-year revenue in its New Zealand publishing arm, while radio revenue fell 18 per cent.

And the Television Broadcasters' Council said industry revenue dropped 13 per cent for the six months to June.

Yellow Pages, which in 2007 estimated its overall share of the New Zealand advertising market at 10 per cent, now has 10.9 per cent, Cotterill added.

He declined to provide further details on the group's annual results, because they were not yet finalised.

Yellow Pages was sold by Telecom to Hong Kong's Unitas Capital - formerly CCMP Capital - and Canada's Teachers' Private Capital for $2.24 billion in March 2007.

Cotterill said the firm's revenue line had been challenged by more businesses closing than opening over the past 18 months.

Nonetheless Yellow Pages Group, which includes the Yellow and White Pages phone directories, Local Directories, 018 directory assistance, New Zealand Tourism online and New Zealand Retirement Guide, had benefited through its "recession resistance".

This was because many advertisers relied on it as the primary source of leads for their business.

"While advertisers may walk away from what they might perceive as being a more discretionary advertising spend, we might be seen more as a necessity in a difficult, challenging time."

Nonetheless 0.7 per cent revenue growth is a far cry from the decade-long 7 per cent annual growth Yellow Pages boasted of at the time of its ultimately-aborted 2007 public bond issue.

With its private equity owners borrowing about $1.8b to help fund the acquisition, Yellow Pages has plenty of debt on its books and a syndicate of 36 banks. Net finance costs for the June 2008 year totalled $221.7m.

Cotterill said no banking covenants had been breached and interest payment arrangements locked in when the original deal was done remained in place.

"We've continued to meet the expectations set between the investors and the banking syndicate. And I'm reasonably confident we'll get through the current financial year without any problems," he said.

Although private equity firms are not noted as long-term owners, Cotterill does not expect Yellow Pages' owners to sell for at least three years.

However, the group has made board changes. Chairman Jim Smith, an American veteran of the directories industry, has stepped down and two other directors - Australia's Phillip Bower and Nelson's Harry Mortimore -have also gone.

Unitas partner Eugene Suh, a Hong Kong-based former Ferrier Hodgson director, has joined as chairman. Andrew Day, the former chief executive of Telstra's Sensis and European directory business Truvo, has also joined the board along with Teachers' Private Capital portfolio manager Ashvin Kalkani.

- © Fairfax NZ News