Yellow Pages' painful rebirth continues
Yellow Pages has written off all its goodwill and reported a loss of $78 million for the year ending June 30.
The directory company made a trading profit, excluding impairment charges, of $64.3m on revenues of $209.7m, according to accounts for its holding company NZ Directories Holdings filed with the Companies Office.
But a $112.9m impairment charge - including a $55.4m charge that wiped out its remaining goodwill, a $45.8m brand writedown and a $12m hit to the value of customer relationships - dragged it into the red.
The company said the impairment charges were "a result of a further deterioration in trading conditions arising from an economic slowdown".
Auditors PricewaterhouseCoopers drew attention to a note in the financials, which said the company's ability to continue as a going concern was dependent on the profitability of its trading operations, having enough working capital to meet operational needs, and its ability to service debt. In that note, the company's directors said they were satisfied it could continue as a going concern.
Trading conditions had been difficult due to the subdued economy, and problems with sales strategies and the group's product mix, but the group had made changes to the strategies, product mix and management.
Yellow Pages, which is transforming itself from a directory book provider to an online business directory, laid off up to 125 staff - mostly in sales - earlier this year. The company has divested non-core businesses such as daily deals site Groupy and Grownups.co.nz, a community website for people aged 50 and over.
The group said its trading operations remained profitable, and its two-year forecast and strategic plan "supported continued profitability".
Directors said it would also be able to meet its principal and interest debt payments, based on that forecast, and the group had the ongoing support of its lenders.
The $78m loss is an improvement on the prior reporting period, when the directory firm's holding company NZ Directories Holdings booked a $353m loss for the five months to June 30 2011 after writing down goodwill by $329.3m.
That result for the five months ending June 2011 came after a prior $1.6 billion impairment of intangible assets in the year to June 2010, leading to a loss of $1.4b.
Yellow Pages' lenders led by Bank of New Zealand assumed control of the company in January 2011. That followed its private equity owners - which bought the business from Telecom in 2007 for $2.2b - overloading it with debt.
The company's finance costs for the financial year ending June were $39.3m.
Interest bearing liabilities totalled $461.9m, while its gearing ratio - net debt divided by capital - was 174.6 per cent, up from 130.6 per cent in June 2011.