Yellow Pages still awash in red ink, writes off remaining goodwill

Yellow Pages, the directory company whose lenders seized control in 2010, was tipped into the red in the latest financial year by writedowns that wiped out remaining goodwill.

Holding company NZ Directories Holdings narrowed its net loss to $78 million in the 12 months ended June 30, from $353 million in a five-month trading period a year earlier, financial statements lodged with the Companies Office show.

A $112.9 million impairment charge on the value of its brand, goodwill and customer relationships unwound its trading profit of $64.3 million on revenue of $209.7 million. The company had made a trading loss of $3.9 million on sales of $111.4 million in the shortened 2011 period.

Yellow Pages booked a $55.4 million charge on its goodwill, adding to the $329.3 million impairment it took in 2011, completely wiping out that intangible asset.

The directory company wrote down its brand by $45.8 million, valuing that intangible at $212.2 million, while customer relationships wore a $12.1 million impairment charge.

Notes in the financial statements characterise goodwill as "the excess of the cost of an acquisition over the fair value of the group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition".

In 2010, Yellow Pages' lenders took control after its private equity owners saddled it with too much debt after buying the business from Telecom three years earlier for $2.24 billion in a leveraged buy-out.

The company was forced to book a $1.6 billion charge to its goodwill and brand name in a restructuring agreement to hand it over to the banks that valued the company at $750 million.

The financial statements were tagged by auditor PwC, which gave an "emphasis of matter" on the company's ability to continue as a going concern relying on its future profitability, securing sufficient working capital to meet its operational needs and being able to service its debt.

The directors were satisfied the company could continue as a going concern "based on the substantial commonality between lenders and ultimate equity shareholders" and that it will be able to meet its interest and principal debt repayments based on its two-year forecasts.

"The group's trading operations remain profitable, with the two-year forecast and strategic plan supporting the continued profitability of the trading group," the company says.

Yellow Pages paid $39.3 million in finance costs and had $461.9 million in interest bearing liabilities as at June 30. In the 2011 and 2012 years it complied with its financial covenant, which relates to earnings, before interest, tax, depreciation and amortisation.

With accumulated losses of $430.9 million, Yellow Pages was in negative equity of $180.9 million as at June 30. The company's gearing ratio, representing its debt as a proportion of total capital, was 174.6%, up from 130.6% a year earlier.

Under new management, the company has refocused online, becoming Google's largest Ad Words partner, overhauling its own search engine, and offering help for small businesses looking to promote themselves online.


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Any company they've featured in their online ads only has about nine likes on their Facebook page. This company still is light years behind the times with how to properly help SMEs with their online presence.


They must be doing something right, though, as this shows that they posted a trading profit of $64.3 million. The loss to shareholders is from write downs of intangible assets, meaning in real terms that it was simply overvalued to begin with.


Yellow online and White pages have been down for "temporary maintenance" for the past two days...


A spokeswoman for Yellow said the outage had been since mid-morning. More:


Probably worth letting the news desk know as there will be thousands of businesses who pay through the nose for their services missing out and no statement about this form YP Group...


YP are doing much better since getting rid of that Glubb guy who seems to be destroying NZ Post's balance sheet with multi-million $$ loans on big ideas that don't seem to work.


A lot of stuff Telecom does, in my opinion as a customer, seems pretty poor. But no one can disagree that them flogging off this side of the business for $2 billion way back when must have been one of their smartest moves ever.


I wonder what would happen to Yellow's year-end financials if they adjusted readership and advertising rates to reflect people who only use their product as a monitor stand?


This will be one of the next prominent identities to go belly-up.
Since they took over the phone books, they have completely screwed everything up and made everything smaller - so much so that 9/10ths of the population cannot read them. So they might as well not print them. And they are so arrogant they take absolutely no notice of complaints.
I used to advertise via the yellow pages but not any more, simply because of the public reaction. My advertising dollars are better spent elsewhere.


"And they are so arrogant they take absolutely no notice of complaints."

So you didn't notice that the latest book reverted to large print on higher quality paper? Although I suppose the problem was initially created by them listening to other people complaining about the amount of paper used, so a no-win for them, I guess.


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