Vocus Group has reported a $1.46 billion net loss after tax for the 2017 financial year.
The loss was due to a once-off goodwill write-down of $1.53 billion of its Australian and New Zealand assets.
Underlying net profit after tax was $152.3 million, up 50% from the prior year but below the company’s guidance of $160-165 million.
Vocus CEO Geoff Horth elected to forego 100% of his short-term incentive (STI) cash payment amid the current challenges facing the company.
The remainder of the board forfeited 50% of their STI remuneration as the group financial performance measure for FY17 wasn’t met.
“Entitlement to the remaining 50% of the potential STI, was based upon KPI achievement, however, the board elected to defer payment of 50% of that STI entitlement for all executives, subject to a further first half FY18 budget earnings achievement hurdle,” Vocus said.
The company released most of its financial results last week when it advised the market of the impending write-downs.
The write-downs were spread across the company’s Australian ($1.33 billion) and New Zealand ($199 billion) operations.
The New Zealand division contributed $323 million to revenue and other income in 2017, while the Australian operations generated $1.498 billion.
Vocus’ financial report said the write-downs were derived from an increase in the discount rate applied to the future cash flows from operations.
“The increase in the discount rate reflects the assessed risks associated with the five year average blended growth rate assumptions for revenue in the detailed business model,” Vocus said.
The company cited ongoing price competition across the Australian telecommunications industry as the primary driver of its reduced revenue forecast.
Vocus shares took a hit earlier this week when prospective private equity bidders pulled out of buying negotiations.
Net operating cash-flows increased to $131.4 million from $72 million in FY16. The company booked a fall in cash flows from investing activities of more than $1 billion due to the purchase of Nextgen in October 2016.
Following the purchase, Vocus assumed control of Nextgen’s Australia to Singapore cable project.
The company announced this morning that it was on track to have the cable up and running by July 2018, ahead of the initial September 2018 forecasts as it attempts to get ahead of a rival group comprised of Telstra, Google and Singtel.
“The Vocus Board has made the decision not to declare a final dividend for the FY17 year in light of the current competing demands and opportunities for capital investment across the business, including the ASC project combined with the focus of the Board on reducing the overall leverage in the business,” the company said in a media release.
A short time ago, Vocus shares were up just over 3% after falling by almost 20% over the previous two days.
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