Exhibit 99.1
YELL
13 February, 2003
NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE
YELL FINANCIAL RESULTS FOR THE NINE MONTHS ENDED 31 DECEMBER, 2002
ANOTHER QUARTER OF STRONG GROWTH IN REVENUE, PROFITABILITY AND CASH CONVERSION
HIGHLIGHTS
STRONG SALES MAINTAINED
o Group turnover up 31.6% to(pound)787.1 million
- 9.8% excluding Yellow Book West (McLeod, acquired April 16, 2002)
and at prior year US exchange rates
o UK: Yellow Pages up 7.0%. 11.4% underlying increase before the 4.4%
decrease in advertising rates as a result of the regulatory price cap
o US: Yellow Book East up 17.6% in constant US dollar terms
o US: Yellow Book West integration progressing rapidly. Sales synergies
expected in the next financial year
CONTINUING IMPROVED PROFITABILITY
o Group adjusted EBITDA up 35.0% to (pound)234.7 million
- 23.6% excluding Yellow Book West and at constant US exchange rates
o Yellow Book East adjusted EBITDA margin up from 13.5% to 22.2%
STRONG OPERATING CASHFLOW
o Operating cashflow, excluding exceptional items, after capex up 67.8%
to(pound)222.9 million
o 95.0% adjusted EBITDA converted to cash, up from 76.4%
YELL.COM BREAK EVEN, A YEAR AHEAD OF EXPECTATIONS
o Turnover up 39.6% to(pound)14.8 million and EBITDA of(pound)0.2 million up
from a loss of(pound)8.2 million
US EXPANSION INTO KEY TERRITORY
o $69.0m ((pound)42.9m) acquisition of leading western US directory
publisher National Directory Company, enhancing our national coverage and
expanding our footprint
Yell Group plc. Registered Office: Queens Walk, Oxford Road, Reading,
Berkshire RG17PT. Registered in England No. 4180320.
JOHN CONDRON, CHIEF EXECUTIVE OF YELL, SAID:
"Yell continues to deliver results ahead of expectations. Our strategy to win,
keep and grow customers, coupled with the strength of our customer offering,
underpins our growth in revenues, profitability and cash flows. We have forward
visibility and are confident of meeting expectations for the full year.
"We have added considerably to the scale and momentum of Yell's business through
our acquisitions in the US and our programme of new directory launches in the
preceding years. We are building on our platform and as the new directories
mature their margins grow. This helps fuel our profitability and we expect it
will continue to do so.
"In the UK, Yellow Pages continues to perform strongly. Customer retention rates
remain high and stable; new customer gains are on track to exceed 100,000 for
the third year running; and average customer spend and yield continue to grow
with the progressive take-up of colour advertising and the impact of our
customer programmes.
"Yell.com, our online classified directory service, continues to grow and we
have achieved breakeven a year ahead of expectations.
"In the US, revenue growth during the quarter was driven by strong same-market
growth while the year-to-date has also benefited from the launch of new
directories. The profitability of Yellow Book East almost doubled as we
progressively realise the value of past investment in our existing directory
portfolio.
" We have improved cash recovery and conversion in both the UK and US and the
cash generative qualities of our businesses can clearly be seen in these
results.
"We have already combined the US managements and are rapidly integrating
processes and systems. We are seeing the benefits with improved morale and
retention of our salespeople and we expect these to feed through increasingly
into revenue in the coming financial year. We will report US performance as a
single unit next financial year.
"Following the acquisition of National Directory Company, our US presence now
extends across 40 states and Washington DC, giving us a wider platform for
further geographic expansion.
"In the longer term, as a business, we will continue to drive revenue growth in
the UK and US. In addition, we will grow in the US through book launches and
acquisitions."
2
JOHN DAVIS, CHIEF FINANCIAL OFFICER OF YELL, SAID:
"Group revenues, at (pound)787.1 million, grew strongly by 31.6% demonstrating
the scale increase from the acquisition of Yellow Book West and continued strong
organic revenue growth. Excluding the acquisition and the significant exchange
rate impact, revenue growth was 9.8%.
"The UK business continues to perform strongly with Yellow Pages revenues up
7.0% representing an 11.4% growth before the reduction of 4.4% reflecting the
impact of the RPI-6 price cap.
"In the US, Yellow Book East revenue grew 17.6% in constant US dollars, with
same-market growth up 6.8% excluding the Manhattan directory. The other
significant impact was new launches.
"Group Adjusted EBITDA, at (pound)234.7 million, grew by 35.0%. Excluding the
Yellow Book West acquisition and the exchange rate impact, EBITDA growth was
23.6%.
"The UK business grew EBITDA 11.6%, benefiting from strong revenue growth and
Yell.com's breakeven with positive EBITDA a year early. In the last quarter we
are running a significant marketing programme which will further reinforce our
position.
"In the US, Yellow Book East almost doubled EBITDA to (pound)45.4 million and
margins from 13.5% to 22.2%, helped by non-recurrence of prior year costs, but
also reflecting improving profitability of past investments without a
corresponding increase in costs.
"We converted 95.0% of Adjusted EBITDA into cash, growing operating cashflow
67.8% after capex to (pound)222.9 million. This more than covered the cash costs
of interest amounting to (pound)105.6 million and principal repayments of
(pound)26.4 million. In addition, we funded the purchase of National Directory
Company out of our cash flow."
3
CONTACT
YELL
MEDIA
Richard Duggleby
Tel +44 (0)118 950 6206
Mobile +44 (0)7860 733488
richard.duggleby@yellgroup.com
Jon Salmon
Tel +44 (0)118 950 6656
Mobile +44 (0)7801 977340
jon.salmon@yellgroup.com
INVESTORS
Jill Sherratt
Tel +44 (0)118 9506 984
Mobile +44 (0)7764 879 808
jill.sherratt@yellgroup.com
CITIGATE DEWE ROGERSON
Anthony Carlisle
Tel +44 (0) 20 7638 9571
Mobile +44 (0) 7973 611888
This news release contains forward-looking statements. These statements appear
in a number of places in this report and include statements regarding our
intentions, beliefs or current expectations concerning, among other things, our
results of operations, revenue and cost synergies, financial condition,
liquidity, prospects, growth, strategies, new products (such as colour
advertising), the level of new directory launches and the markets in which we
operate. Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those in the forward-looking
statements as a result of various factors. You should read the section entitled
"Risk Factors" in our annual report on Form 20-F filed with the SEC on 19 July
2002 for a discussion of some of these factors. We undertake no obligation to
publicly update or revise any forward-looking statements, except as may be
required by law.
YELL FINANCE BV
Yell Finance BV today announces its financial results for the nine months to
December 31, 2002 reported under Form 6-K to the SEC. A full copy of the
results, together with the related operating and financial review, which
contains additional important information, can be accessed at:
www.yellgroup.com/goto/announcements.html
4
REVIEW OF RESULTS
The results for the nine months ended December 31, 2002 include the acquisition
on April 16, 2002 of McLeodUSA Media Group ("McLeod"), which we currently refer
to internally as Yellow Book West. The acquisition of National Directory Company
was completed on December 31, 2002.
TURNOVER
Total Group turnover for the nine months rose 31.6% to (pound)787.1 million, up
from (pound)598.0 million for the same period last year. Excluding Yellow Book
West, Group turnover grew 7.3% or 9.8% if Yellow Book East's results are
included at a constant US dollar exchange rate.
UK OPERATIONS
Turnover from UK printed directories, including both Yellow Pages and Business
Pages, increased by 6.5% to (pound)405.4 million from (pound)380.6 million last
year. Yell.com grew revenues by 39.6% to (pound)14.8 million from (pound)10.6
million.
Yellow Pages
Yellow Pages achieved another excellent performance in driving volume and yield,
which together grew by 11.4%. After an average 4.4% decline in prices resulting
from the regulatory price cap of RPI-6%, turnover grew 7.0% to (pound)396.7
million from (pound)370.6 million.
The growth in Yellow Pages directories turnover reflected:
o remaining on track to meet our target of 100,000 new advertisers this year
for the third successive year, with 71,466 new customers in the nine
months and a 3.3% increase in the number of unique advertisers from
321,320 to 332,103;
o a stable retention rate of 79%; and
o continuing strong advertiser yield driven by a 19.4% take-up of colour
advertising and such initiatives as "Move Up", which offers discounts for
trading up for existing advertisers, and "Move In", which attracts new
advertisers while also encouraging them to start higher on the
advertisement ladder. As a result, turnover per unique advertiser rose to
(pound)1,221 from (pound)1,184 after the impact of the 4.4% price
reduction.
In addition, through redefining the geographic boundaries of some of our books
to reflect changing demographic patterns better, we have introduced five new
directories.
We will continue to drive volumes and yield in the United Kingdom by pursuing
innovative product initiatives. In October we embarked on the national roll-out
of new offers to advertisers renewing for the first time to encourage retention.
5
US OPERATIONS
Turnover from US printed directories almost doubled to (pound)350.3 million from
(pound)186.7 million, reflecting a strong performance by Yellow Book East and
the impact of including Yellow Book West for the first time.
Yellow Book East
Yellow Book East grew turnover by 17.6% in constant US dollar terms, or 9.7% as
reported in sterling to (pound)204.9 million from (pound)186.7 million. The
17.6% growth includes the following:
o 35% or (pound)11.2 million ($16.0 million) from same-market growth of 6.8%
excluding the Manhattan book which was directly affected by September 11.
Same-market growth including this book was 5.7%. Three other books
contiguous to Manhattan were affected by reduced cross-selling into
Manhattan following September 11;
o 39% or (pound)12.6 million ($18.0 million) from the strong performance of
three new launches and two books in their first year following prototype
publication last year ;
o 19% or (pound)6.3 million ($9.0 million) from rescopes which could not be
included in same-market growth as the original directories did not cover
the same geographic scope;
o the planned movement of books primarily from the third quarter to the
second so as to achieve smoother production phasing, as previously
reported, had a (pound)1.8 million ($2.5 million) positive net effect in
the nine month period, but a negative (pound)7.7 million ($11.0 million)
effect in the third quarter; and
o first time publication of directories following their acquisition
contributed an additional (pound)1.0 million ($1.4 million).
The 14.0% increase in the number of unique advertisers from 102,332 to 116,629
reflects mainly same-market growth and new launches. Average turnover per unique
advertiser grew 3.1% from $2,614 to $2,696.
Yellow Book West
Yellow Book West turnover of (pound)145.4 million for the period from its
acquisition on April 16, 2002, reflected same-market growth of 2.1%. Turnover
during the nine months was still largely the result of sales made by the McLeod
sales organisation prior to, or shortly after, the acquisition. The results do
not therefore reflect the benefit of integration with the Yellow Book East sales
organisation which we do not expect to come through before the first quarter of
next financial year.
6
ADJUSTED EBITDA
Group Adjusted EBITDA increased by 35.0% to (pound)234.7 million from
(pound)173.9 million (28.6% to (pound)219.7 million, from (pound)170.9 million,
before the adjustments). Excluding Yellow Book West, Group Adjusted EBITDA rose
21.5% and taking out the impact of the exchange rates as well, Group Adjusted
EBITDA rose 23.6%.
Group Adjusted EBITDA margins were slightly above last year's at 29.8% compared
with 29.1%.
UK EBITDA rose 11.6% to (pound)165.9 million reflecting the growth of our
directories and the move of Yell.com into profit with EBITDA of (pound)0.2
million compared with a loss of (pound)8.2 million last year. The performance of
Yell.com drove the rise in UK margins from 36.2% to 38.0%.
Yellow Book East improved its profitability with an 80.2% increase in EBITDA to
(pound)45.4 million from (pound)25.2 million, or 94.8% in constant US dollar
terms. We increased EBITDA margins from 13.5% to 22.2% as we increased the
profitability of our directories by leveraging off our existing operations' cost
base. The non-recurrence of costs arising from parallel pre-press running and
prototype launches in the previous year also contributed to the improvement.
Yellow Book West reported EBITDA of (pound)23.4 million with margins at 16.1%.
Cost synergies from the US integration are coming through and those relating to
paper, printing and binding amounted to an estimated (pound)4.7 million in the
nine months.
CASHFLOW
95.0% of Group Adjusted EBITDA was converted into cash, and operating cashflow
after capex rose 67.8% to (pound)222.9 million, from (pound)132.8 million. This
strong cash inflow was driven by good cash management in both the UK and the US
operations. We expect that the continuing rapid growth in US turnover will
increase the investment in working capital in the fourth quarter.
Operating cash inflow more than covered cash interest payments amounting to
(pound)105.6 million and principal repayments of (pound)26.4 million. These
payments arose as a result of the capital structure put in place last year to
enable the purchase of Yell from BT.
CAPITAL RESOURCES
Yell had cash amounting to (pound)21.8 million and net debt of (pound)2,368.7
million as at December 31, 2002.
7
SUMMARY RESULTS
- -------------------------------------------- -----------------------------------------------------------------------
NINE MONTHS ENDED DECEMBER 31
- -------------------------------------------- -----------------------------------------------------------------------
2001 2002
(POUND)M (POUND)M CHANGE
- -------------------------------------------- ----------------------- ----------------------- -----------------------
Group turnover 598.0 787.1 31.6%
- -------------------------------------------- ----------------------- ----------------------- -----------------------
Group Adjusted EBITDA (1) 173.9 234.7 35.0%
- -------------------------------------------- ----------------------- ----------------------- -----------------------
Operating profit before exceptional
administration charge and goodwill
amortisation 158.6 217.8 37.3%
- -------------------------------------------- ----------------------- ----------------------- -----------------------
Operating cash flow, excluding exceptional
items, after capex 132.8 222.9 67.8%
- -------------------------------------------- ----------------------- ----------------------- -----------------------
Cash conversion (2) % 76.4% 95.0%
- -------------------------------------------- ----------------------- ----------------------- -----------------------
(1) Adjusted EBITDA comprises EBITDA adjusted to exclude the expenses of
the withdrawn initial public offering of (pound)15.0 million in the
nine months ended December 31, 2002 (2001 - (pound)nil) and the
non-recurring expENSES of a management incentive plan of (pound)3.0
million in the nine months ended December 31, 2001. The plan was
terminated as part of the Yell Purchase.
(2) Cash conversion represents cash flow from operations, excluding
exceptional items, less capital expenditures as a percentage of
Adjusted EBITDA.
8
TURNOVER
- -------------------------------------------- -----------------------------------------------------------------------
NINE MONTHS ENDED DECEMBER 31
- -------------------------------------------- -----------------------------------------------------------------------
2001 2002
(POUND)M (POUND)M CHANGE
- -------------------------------------------- ----------------------- ----------------------- -----------------------
UK printed directories
Yellow Pages 370.6 396.7 7.0%
Business Pages 10.0 8.7 (13.0)%
- -------------------------------------------- ----------------------- ----------------------- -----------------------
Total UK printed directories 380.6 405.4 6.5.%
- -------------------------------------------- ----------------------- ----------------------- -----------------------
US printed directories
Yellow Book East at constant exchange
rates (1) 186.7 219.6 17.6%
Exchange impact (1) (14.7)
Yellow Book East 186.7 204.9 9.7%
Yellow Book West - 145.4
- -------------------------------------------- ----------------------- ----------------------- -----------------------
Total US printed directories 186.7 350.3 87.6%
- -------------------------------------------- ----------------------- ----------------------- -----------------------
Other UK products and services
30.7 31.4 2.3%
- -------------------------------------------- ----------------------- ----------------------- -----------------------
GROUP TURNOVER 598.0 787.1 31.6%
- -------------------------------------------- ----------------------- ----------------------- -----------------------
ADJUSTED EBITDA
- -------------------------------------------- -----------------------------------------------------------------------
NINE MONTHS ENDED DECEMBER 31
- -------------------------------------------- -----------------------------------------------------------------------
2001 2002
(POUND)M (POUND)M CHANGE
- -------------------------------------------- ----------------------- ----------------------- -----------------------
Group operating profit and Adjusted EBITDA
Group operating profit 106.2 129.1 21.6%
Goodwill amortisation 49.4 73.7 49.2%
Depreciation 15.3 16.9 10.5%
- --------------------------------------------------------------------------------------------------------------------
EBITDA 170.9 219.7 28.6%
Non-recurring charges 3.0 15.0
- --------------------------------------------------------------------------------------------------------------------
ADJUSTED EBITDA 173.9 234.7 35.0%
- --------------------------------------------------------------------------------------------------------------------
Adjusted EBITDA by segment
UK operations 148.7 165.9 11.6%
Yellow Book East at constant exchange 25.2 49.1 94.8%
rates (1)
Exchange impact (1) - (3.7)
Yellow Book East 25.2 45.4 80.2%
Yellow Book West - 23.4
- --------------------------------------------------------------------------------------------------------------------
GROUP ADJUSTED EBITDA 173.9 234.7 35.0%
- --------------------------------------------------------------------------------------------------------------------
ADJUSTED EBITDA MARGIN (%) 29.1% 29.8%
- --------------------------------------------------------------------------------------------------------------------
(1) Constant exchange rates state current year results at the same exchange
rate as that used to translate the previous year's results for the
corresponding period. Exchange rate impact is the difference between the
results reported at constant exchange rates and the actual results reported
using current year exchange rates.
9
KEY OPERATIONAL INFORMATION
NINE MONTHS ENDED DECEMBER 31
--------------------------------------------------
2001 2002
----------------------- --------------------------
UK printed directories
Unique advertisers (units) (1) 321,320 332,103
Number of directories published (units) 62 67
Unique advertiser retention rate (%) (2) 80 79
Turnover per unique advertiser ((pound)) 1,184 1,221
US printed directories (Yellow Book East)(3)
Unique advertisers (units) (1) 102,332 116,629
Number of directories published (units) 192 180
Unique advertiser retention rate (%) (2) 70 70
Turnover per unique advertiser ($) 2,614 2,696
US printed directories (Yellow Book West) (4)
Unique advertisers (units) (1) - 185,800
Number of directories published (units) - 204
Unique advertiser retention rate (%) (2) - 72
Turnover per unique advertiser ($) - 1,292
Other UK products and services
Yell.com page impressions for December (in millions)(5) 22 30
(1) Number of unique advertisers in printed directories that were recognised
for revenue purposes and have been billed. Unique advertisers are counted
only once regardless of the number of advertisements they purchase or the
number of directories in which they advertise.
(2) Proportion of unique advertisers that have renewed their advertising from
the preceding publication. In the United Kingdom, this measure excludes
national and key accounts where retention is very high. In the United
States this measure is based on unique directory advertisers. In 2002 we
improved our systems and methodology for determining retention rates in
the United Kingdom. Although we have not restated the rates disclosed for
the prior period, we believe that had we continued using the previous
methodology the retention rate for the first nine months of this financial
year would be closely comparable to the rate disclosed for the same period
in the prior financial year.
(3) Data for unique advertisers and turnover per unique advertiser differ from
previously reported numbers following further integration of our Yellow
Book East information systems which eliminated duplication in calculating
the number of unique advertisers. This restatement has had no effect on
the Group's reported earnings.
(4) The financial results of Yellow Book West have been included in the Yell
Group's results from the date of its acquisition on April 16, 2002.
Operational information for Yellow Book West is provided for the period
from April 16, 2002, with the exception of turnover per unique advertiser
which is based on the full nine months from April 16, 2002.
(5) A file or a combination of files sent to a user as a result of that user's
request being received by the server.
- ends -
10
NOTES TO EDITORS
YELL GROUP
Yell is an international directories business operating in the classified
advertising market through printed and online media. Yell's products in the
United Kingdom include the Yellow Pages and Business Pages directories,
Yell.com, Talking Pages and Yell Data and in the United States, Yellow Book.
----------------------------------------------------
11