EXHIBIT 99.1
YELL
NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE
FOR IMMEDIATE RELEASE 13 NOVEMBER 2003
YELL GROUP PLC FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2003
CONTINUING STRONG UNDERLYING PERFORMANCE
o Group turnover up 7.1% to(pound)568.6 million; 10.6% at a constant exchange
rate
o Group EBITDA up 13.3% to(pound)187.6 million; 15.7% at a constant exchange
rate
o Group profit after tax(pound)22.1 million ((pound)17.3 million loss H1
2002)
o Group operating cash flow less capital expenditure up 6.8% to(pound)153.7
million
o Pro forma diluted earnings per share before amortisation 12.3 pence
o Interim dividend of 3.0 pence per share
Note: Earnings and cash flow figures stated before exceptional costs
arising on IPO. Including exceptional costs, the Group made a
statutory loss after tax of (pound)89.2 million ((pound)30.0
million loss H1 2002).
JOHN CONDRON, CHIEF EXECUTIVE OFFICER, SAID:
"Yell has produced another strong set of results. As always, our focus is on
winning, keeping and growing customers. In the UK, we continued to grow core
turnover after the price reduction resulting from the regulatory price cap
applied to Yellow Pages. In the US, we continued to increase the rate of
same-market growth, as well as to launch and acquire new directories and to
realise integration benefits. We are well on track to meet expectations for the
full year."
JOHN DAVIS, CHIEF FINANCIAL OFFICER, SAID:
"Yell's good results reflect our strong organic growth, increasing profitability
and cash generation, as well as the benefits of our new capital structure. As
planned, our debt structure also partially offsets the dollar exchange rate
impact. We have achieved bottom-line profit before exceptional costs - the
latter arising from the capital-raising and refinancing of the Group, as well as
from the management incentive scheme and other fees which were triggered by the
IPO. As promised, we are declaring our first interim dividend at 3.0 pence per
share."
Yell Group plc. Registered Office: Queens Walk, Oxford Road,
Reading, Berkshire RG1 7PT. Registered in England No. 4180320.
ENQUIRIES
YELL - INVESTORS
Jill Sherratt
Tel +44 (0)118 950 6984
Mobile +44 (0)7764 879808
jill.sherratt@yellgroup.com
- ---------------------------
YELL - MEDIA
Richard Duggleby
Tel +44 (0)118 950 6206
Mobile +44 (0)7860 733488
richard.duggleby@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 news release and include statements regarding our
intentions, beliefs or current expectations concerning, among other things, our
results of operations, turnover, financial condition, liquidity, prospects,
growth, strategies, new products, 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 Yell Finance B.V.'s 31 March 2003 annual
report on Form 20-F filed with the SEC on 1 July 2003, 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.
A copy of this release can be accessed at:
www.yellgroup.com/goto/announcements.html
Our subsidiary, Yell Finance B.V., filed its results for the six months ended
30 September 2003 with the US Securities and Exchange Commission on Form 6-K.
This filing can also be accessed on the Yell Group website.
An interim report will be posted to all shareholders and
will also be available on the Yell Group website.
2
YELL GROUP PLC SUMMARY FINANCIAL RESULTS
- -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
30 SEPTEMBER
2002 2003
- -------------------------------------------------------------------------------------------------------------------------
CHANGE AT
CONSTANT
EXCHANGE
(POUND)M (POUND)M CHANGE RATE
- -------------------------------------------------------------------------------------------------------------------------
Turnover 530.9 568.6 7.1% 10.6%
- -----------------------------------------------------------------------------------
Gross profit (1) 297.1 317.5 6.9% 9.6%
- -----------------------------------------------------------------------------------
Operating profit (1) 105.9 127.0 19.9% 21.5%
- -----------------------------------------------------------------------------------
Profit / (loss) after taxation (1) (17.3) 22.1
Exceptional items after taxation (12.7) (111.3)
- -----------------------------------------------------------------------------------
Loss for the period (30.0) (89.2)
- -----------------------------------------------------------------------------------
EBITDA (1) 165.6 187.6 13.3% 15.7%
- -----------------------------------------------------------------------------------
Operating cash flow (2) 143.9 153.7 6.8% 9.0%
- -----------------------------------------------------------------------------------
Cash conversion (3) 86.9% 81.9%
- -------------------------------------------------------------------------------------------------------------------------
(1) Before exceptional costs
(2) Cash inflow from operations before exceptional costs, less capital
expenditure
(3) Operating cash flow as a percentage of EBITDA before exceptional costs
REVIEW OF OPERATING PERFORMANCE
TURNOVER
During the first half of this year, group turnover increased 7.1% to
(pound)568.6 million, or 10.6% at a constant exchange rate, from (pound)530.9
million last year.
UK operations
UK turnover increased 2.7% to (pound)314.6 million in the first six months and
excluding discontinued products turnover rose by 3.4% from last year.
Printed directories turnover grew 3.0% to (pound)295.2 million, after the impact
of the 4.7% price reduction that Yellow Pages is subject to under the RPI-6%
regulation. In the second quarter, our London Central directory saw lower
turnover mainly as a result of a reduction of its sales from neighbouring
directory areas. Underlying growth of books excluding London Central was 3.9%,
with the other metro directories performing in line with non-metro directories.
Our campaigns to attract new customers again raised the number of unique
advertisers. We gained 56,574 new advertisers compared with 51,612 for the same
period last year, increasing the total by 7.6% to 250,621 unique advertisers.
As expected, this focus on new advertisers resulted in lower yield, although our
experience is that the value of retained new advertisers grows over future
years. This, together with the anticipated reduction in growth in the uptake of
colour advertising following its first full year of introduction, the
performance of the London Central directory and the 4.7% price reduction,
resulted in a 4.2% decrease in turnover per unique advertiser to (pound)1,178.
3
Yell.com grew turnover by 17.3% to (pound)11.5 million on the back of strong
growth in the number of advertisers and usage. This increase was somewhat offset
following the sale of Yell Data, our data-service business, and the ending of
our contract with BT to sell advertising in their phone books.
US operations
US turnover, at (pound)254.0 million increased 21.3% at a constant exchange
rate, or 13.1% after taking into account the (pound)18.4 million reduction in
turnover as a result of the weaker US dollar. The effective exchange rates were
approximately $1.62 : (pound)1.00 against $1.51 : (pound)1.00 in the previous
year.
Unique advertisers increased by 6.4% to 209,866 with average turnover per unique
advertiser up 14.0% to $1,960.
Same-market growth was 9.3%, up from 4.5% last year. Excluding the Manhattan
directory published in the first quarter due to its unique market conditions,
same-market growth was 10.5%, up from 6.2% last year.
The former McLeod directories are now achieving same-market growth in line with
the rest of Yellow Book, excluding Manhattan, reflecting the expected benefits
of integration. We relaunched four former McLeod directories and their turnover
achieved growth in excess of 40%. There is one more relaunch planned for the
third quarter.
In addition to same-market growth, Yellow Book's turnover growth included the
launch of three new directories (contributing 1.5% to the growth), one directory
publishing for the first time after acquisition and the inclusion of a full six
months of the McLeod and NDC acquisitions (contributing 12.7% to the growth).
This was partially offset by the rescheduling of a few directories to future
periods (reducing growth by 2.4%) for inclusion in rescopes and to balance
production schedules as a result of the integration of the former McLeod
directories.
EBITDA BEFORE EXCEPTIONAL COSTS
Group EBITDA increased 13.3% to (pound)187.6 million, or 15.7% at a constant
exchange rate. The Group EBITDA margin increased 1.8 percentage points to 33.0%,
reflecting a strong trend of rising margins in the US as our directory portfolio
develops and integration benefits are realised.
UK EBITDA rose 3.0% to (pound)128.9 million, including the continued progress of
Yell.com, which increased EBITDA to (pound)2.1 million from a loss of (pound)0.3
million in the same period last year. UK EBITDA margin was 41.0%, compared to
40.9% last year.
US EBITDA was (pound)58.7 million, an increase of 45.3%, or 55.2% at a constant
exchange rate. The US EBITDA margin increased from 18.0% to 23.1%.
OPERATING CASH FLOW
Net cash inflow from operating activities, before exceptional costs and after
capital expenditure, was (pound)153.7 million, compared with (pound)143.9
million last year. We converted 81.9% of EBITDA before exceptional items to
cash.
4
NET RESULTS
PROFIT AFTER TAX
Profit after tax before exceptional costs was (pound)22.1 million, compared with
a loss of (pound)17.3 million last year. As well as EBITDA growth, this reflects
lower interest payments arising from the new capital structure put in place at
the time of the IPO on 15 July 2003. Net interest payable before exceptional
costs was (pound)88.2 million, compared with (pound)115.8 million last year.
Taxation before exceptional costs was (pound)16.7 million this period, compared
with (pound)7.4 million last year.
The loss after tax and after exceptional costs was (pound)89.2 million, compared
with a loss of (pound)30.0 million last year.
EXCEPTIONAL COSTS
Exceptional costs incurred before tax during the period amounted to (pound)148.5
million of which (pound)71.2 million was incurred in the second quarter. Of
these half-year costs, (pound)63.0 million were cash costs and (pound)85.5
million were non-cash costs. The breakdown is:
Cash costs
o (pound)28.9 million for management fees payable to previous owners upon IPO
o (pound)14.4 million for fees and commissions
o (pound)19.7 million for premiums paid on early redemption of high-yield
debt
Non-cash costs
o (pound)49.3 million expensed for employee incentive and share schemes
o (pound)36.2 million for the accelerated amortisation of financing fees
The bulk of these exceptional costs arose from the structure of the buy-out of
Yell from BT in 2001 and establishing the current capital structure. The
recognition of these costs was triggered by this year's IPO.
In addition, (pound)23.9 million of fees, payable primarily to advisers, were
charged to the share premium account.
EARNINGS PER SHARE
The IPO had a significant impact on earnings per share. Pro forma earnings per
share was 12.3 pence on a diluted basis before exceptional costs and
amortisation. Basic loss per share for the period was 20.0 pence.
5
GLOBAL OFFER AND REFINANCING
On 15 July 2003, we raised (pound)433.6 million (gross proceeds) through a
global offer of shares to institutional investors. As a result of the IPO, we
also refinanced our senior bank facility on 15 July 2003 and redeemed 35% of our
high-yield notes on 18 August 2003. Net debt on a pro forma basis at the
beginning of the year was approximately (pound)1,340 million and has since been
reduced to (pound)1,227 million at 30 September 2003. The composition of our
debt partially hedges exchange rate fluctuations, because 39% of our net debt
and a similar proportion of our net interest expense are denominated in US
dollars, thereby reducing our US dollar EBITDA exposure by approximately 40%.
DIVIDEND
As declared in the Listing Particulars relating to our IPO, the total dividend
for the current year will be around (pound)63 million to be paid in the
approximate ratio of one-third interim and two-thirds final.
In line with this, an interim dividend of 3.0 pence per share will be paid on 21
December 2003 to shareholders registered on 21 November 2003.
OUTLOOK
These results, coupled with good forward visibility, give confidence that Yell
is well on track to meet full-year expectations.
6
KEY OPERATIONAL INFORMATION
-----------------------------------
SIX MONTHS ENDED 30 SEPTEMBER
-----------------------------------
2002 2003 CHANGE
- -----------------------------------------------------------------------------------------------------------------------------------
UK PRINTED DIRECTORIES
Unique advertisers (units) (1) 233,005 250,621 7.6%
Directory editions published (units) (2) 49 50
Unique advertiser retention rate (%) (3) 78 78
Turnover per unique advertiser ((pound)) 1,230 1,178 (4.2)%
US PRINTED DIRECTORIES
Unique advertisers (units) (1) 197,314 209,866 6.4%
Directory editions published (units) 248 250
Unique advertiser retention rate (%) (3) 70 70
Turnover per unique advertiser ($) 1,719 1,960 14.0%
OTHER UK PRODUCTS AND SERVICES
Yell.com page impressions for September (in millions) 39 51 30.8%
Yell.com searchable advertisers (units) as at 30 September (4) n/a 86,508
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Number of unique advertisers in printed directories that were recognised
for turnover purposes and have been billed. Unique advertisers are counted
once only, regardless of the number of advertisements they purchase or the
number of directories in which they advertise.
As a result of the progress in the United States towards integrating our
customer database, we have been able to make improvements in the ways in
which we capture, record and analyse customer information. This has led to
a significant overall elimination of duplicate records of unique
advertisers, which has resulted in a restatement of the prior year unique
advertisers. There remains some overlap in reporting unique advertisers
between Yellow Book and the former McLeod directories that we expect to be
removed during the second half of the 2004 financial year. However, these
improvements have not affected the reporting of our financial results.
(2) The Yellow Pages directory editions increased as a result of rescoping the
Colchester directory into two directories, Ipswich and Colchester.
(3) The 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. The
2002 retention rate is for Yellow Book only, prior to the acquisition of
McLeod, while the 2003 retention rate is for Yellow Book, including the
former McLeod directories.
(4) Unique customers with a live contract at month end. These figures refer to
searchable advertisers only, i.e. advertisers for whom users can search on
Yell.com. It excludes advertisers who purchase products such as banners and
domain names. This information is not available for 2002 because new
systems were being put in place during that period.
7
YELL GROUP PLC AND SUBSIDIARIES
CONSOLIDATED PROFIT AND LOSS ACCOUNTS
SIX MONTHS ENDED 30 SEPTEMBER
-----------------------------------------
(UNAUDITED) NOTES 2002 2003
------------------ --------------------
(POUND)M (POUND)M
TURNOVER 2 530.9 568.6
Cost of sales (233.8) (251.1)
------------------- -------------------
GROSS PROFIT 297.1 317.5
------------------- -------------------
Distribution costs (17.5) (17.2)
ADMINISTRATIVE COSTS
Ordinary items (173.7) (173.3)
Exceptional items 4 (15.0) (90.1)
------------------- -------------------
(188.7) (263.4)
------------------- -------------------
OPERATING PROFIT 3 90.9 36.9
NET INTEREST PAYABLE
Ordinary items (115.8) (88.2)
Exceptional items 4 - (58.4)
------------------- -------------------
(115.8) (146.6)
------------------- -------------------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (24.9) (109.7)
TAXATION
Before exceptional items 5 (7.4) (16.7)
On exceptional items 4,5 2.3 37.2
------------------- -------------------
(5.1) 20.5
------------------- -------------------
LOSS FOR THE FINANCIAL PERIOD 9 (30.0) (89.2)
Interim dividend 6,9 - (20.8)
------------------- -------------------
RETAINED LOSS FOR THE FINANCIAL PERIOD (30.0) (110.0)
=================== ===================
(IN PENCE) (IN PENCE)
BASIC AND DILUTED LOSS PER SHARE 10 (11.6) (20.0)
(IN PENCE) (IN PENCE)
PRO FORMA EARNINGS PER SHARE BEFORE
EXCEPTIONAL ITEMS AND AMORTISATION (a)
Basic 10 8.3 12.5
Diluted 10 8.2 12.3
(a) Pro forma earnings per share before exceptional items and amortisation
as though our initial public offering and debt refinancing had
occurred on 31 March 2002.
With the exception of loss for the financial period detailed above and the
currency movements detailed in note 9, there have been no other recognised gains
or losses.
See notes to the financial information for additional details.
8
YELL GROUP PLC AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
SIX MONTHS ENDED
30 SEPTEMBER
-------------------------------------------
(UNAUDITED) NOTES 2002 2003
--------------------- -------------------
(POUND)M (POUND)M
NET CASH INFLOW FROM OPERATING ACTIVITIES 145.9 133.2
RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE
Interest paid 7 (68.2) (78.9)
Redemption premium paid - (19.7)
Finance fees paid 7 (11.8) (16.1)
--------------------- -------------------
NET CASH OUTFLOW FOR RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE (80.0) (114.7)
--------------------- -------------------
TAXATION (7.6) (4.6)
--------------------- -------------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (7.9) (10.6)
--------------------- -------------------
NET CASH OUTFLOW FOR CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT (7.9) (10.6)
--------------------- -------------------
ACQUISITIONS
Purchase of subsidiary undertakings, net of
cash acquired 7 (423.7) (3.1)
--------------------- -------------------
NET CASH OUTFLOW FOR ACQUISITIONS (423.7) (3.1)
--------------------- -------------------
NET CASH (OUTFLOW) INFLOW BEFORE
FINANCING (373.3) 0.2
FINANCING
Issue of ordinary share capital 7 0.1 433.6
Expenses paid in connection with
share issue 7 - (22.8)
New loans issued 7 408.7 1,031.0
Borrowings repaid 7 (26.4) (1,378.4)
--------------------- -------------------
NET CASH INFLOW FROM FINANCING 382.4 63.4
--------------------- -------------------
INCREASE IN NET CASH IN THE PERIOD 9.1 63.6
===================== ===================
Total operating profit 90.9 36.9
Depreciation 11.0 11.4
Goodwill amortisation 48.7 49.2
Exceptional employee costs settled
in shares - 49.1
Increase in stocks (11.2) (21.6)
(Increase) decrease in debtors (21.5) 20.8
Increase (decrease) in creditors 28.0 (12.6)
--------------------- -------------------
NET CASH INFLOW FROM OPERATING ACTIVITIES 145.9 133.2
===================== ===================
NET CASH INFLOW FROM OPERATING ACTIVITIES 145.9 133.2
Cash payments for exceptional costs
included in operating profit 5.9 31.1
Purchase of tangible fixed assets (7.9) (10.6)
--------------------- -------------------
NET CASH INFLOW FROM OPERATING ACTIVITIES
BEFORE PAYMENTS OF EXCEPTIONAL COSTS
AND AFTER CAPITAL EXPENDITURE 143.9 153.7
===================== ===================
See notes to the financial information for additional details.
9
YELL GROUP PLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT AT
31 MARCH 30 SEPTEMBER
2003 2003
NOTES (AUDITED) (UNAUDITED)
----------------- ---------------------
(POUND)M (POUND)M
FIXED ASSETS
Intangible assets 1,824.1 1,740.5
Tangible assets 47.1 42.4
Investment 1.9 2.3
----------------- ----------------------
TOTAL FIXED ASSETS 1,873.1 1,785.2
----------------- ----------------------
CURRENT ASSETS
Stocks 145.8 162.9
Debtors 461.4 458.1
Cash at bank and in hand 7 30.1 92.5
----------------- ----------------------
TOTAL CURRENT ASSETS 637.3 713.5
----------------- ----------------------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Loans and other borrowings 7,8 (112.8) (81.1)
Other creditors (235.9) (237.0)
----------------- ----------------------
TOTAL CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR (348.7) (318.1)
----------------- ----------------------
NET CURRENT ASSETS 288.6 395.4
----------------- ----------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 2,161.7 2,180.6
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Loans and other borrowings 7,8 (2,286.0) (1,238.4)
----------------- ----------------------
NET (LIABILITIES) ASSETS (124.3) 942.2
================= ======================
CAPITAL AND RESERVES
Called up share capital (694,990,220(pound)0.01 ordinary
shares at 30 September 2003; 7,100,000(pound)0.01 ordinary
shares and 106,949,900(pound)0.0001 B ordinary shares
issued and outstanding at 31 March 2003) 9 0.1 4.4
Share premium account 9 1.0 1,182.6
Other reserves 9 0.1 0.1
Profit and loss account deficit 9 (125.5) (244.9)
----------------- ----------------------
EQUITY SHAREHOLDERS' (DEFICIT) FUNDS (124.3) 942.2
================= ======================
See notes to the financial information for additional details.
10
YELL GROUP PLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL INFORMATION
1. BASIS OF PREPARATION AND CONSOLIDATION
The principal activity of Yell Group plc and its subsidiaries is
publishing classified advertising directories in the United Kingdom
and the United States.
The unaudited interim financial information has been prepared in
accordance with generally accepted accounting principles in the UK
("UK GAAP") and on the basis of the accounting policies set out in the
audited consolidated financial information of Yell Group plc for the
year ended 31 March 2003.
The foregoing information does not constitute statutory financial
statements within the meaning of s240 of the Companies Act 1985.
In the opinion of management, the financial information included
herein includes all adjustments necessary for a fair presentation of
the consolidated results, financial position and cash flows for each
period presented. The consolidated results for interim periods are not
necessarily indicative of results for the full year. This financial
information should be read in conjunction with the consolidated
financial statements of Yell Group plc and its subsidiaries for the
year ended 31 March 2003.
The preparation of the consolidated financial information requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial information and the
reported amounts of income and expenditure during the reporting
period. Actual results could differ from those estimates. Estimates
are used principally when accounting for income, provision for
doubtful debts, depreciation, employee pension costs and management
incentive schemes and taxes.
11
YELL GROUP PLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
2. TURNOVER BY SEGMENT
SIX MONTHS ENDED
30 SEPTEMBER CHANGE
-------------------------------------------------------
2002 (1) 2003 %
--------------------- --------------------------------
(POUND)M (POUND)M
UK printed directories 286.5 295.2 3.0%
Other products and services 19.8 19.4 (2.0)%
--------------------- --------------------
TOTAL UK TURNOVER 306.3 314.6 2.7%
--------------------- --------------------
US printed directories:
US printed directories at constant
exchange rate (2) 224.6 272.4 21.3%
Exchange impact (2) - (18.4) -
--------------------- --------------------
TOTAL US TURNOVER 224.6 254.0 13.1%
--------------------- --------------------
GROUP TURNOVER 530.9 568.6 7.1%
===================== ====================
(1) Prior year results include McLeod from 16 April 2002, when it was
acquired, and exclude NDC which was not acquired until 31
December 2002.
(2) Constant exchange rate states current year results at the same
exchange rate as that used to translate the previous period's
results for the corresponding period. Exchange rate impact is the
difference between the results reported at a constant exchange
rate and the actual results using current year exchange rates.
3. OPERATING PROFIT AND EBITDA BEFORE EXCEPTIONAL ITEMS
EBITDA BEFORE EXCEPTIONAL ITEMS BY SEGMENT
SIX MONTHS ENDED
30 SEPTEMBER CHANGE
-------------------------------------------------------
2002 (1) 2003 %
--------------------- --------------------------------
(POUND)M (POUND)M
TOTAL UK OPERATIONS 125.2 128.9 3.0%
--------------------- --------------------
US operations:
US printed directories at constant
exchange rate (2) 40.4 62.7 55.2%
Exchange impact (2) - (4.0) -
--------------------- --------------------
TOTAL US OPERATIONS 40.4 58.7 45.3%
--------------------- --------------------
GROUP EBITDA BEFORE EXCEPTIONAL ITEMS 165.6 187.6 13.3%
===================== ====================
(1) Prior year results include McLeod from 16 April 2002, when it was
acquired, and exclude NDC which was not acquired until 31
December 2002.
(2) Constant exchange rate states current year results at the same
exchange rate as that used to translate the previous period's
results for the corresponding period. Exchange rate impact is the
difference between the results reported at a constant exchange
rate and the actual results using current year exchange rates.
12
YELL GROUP PLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
3. OPERATING PROFIT AND EBITDA BEFORE EXCEPTIONAL ITEMS (CONTINUED)
RECONCILIATION OF GROUP OPERATING PROFIT TO EBITDA BEFORE EXCEPTIONAL ITEMS
SIX MONTHS ENDED 30 SEPTEMBER
--------------------------------------------------------------------------
2002 2003 CHANGE (%)
--------------------------------------------------------------------------
(POUND)M M
UK OPERATIONS
OPERATING PROFIT, INCLUDING
EXCEPTIONAL ITEMS 75.5 58.8
Depreciation and amortisation 35.0 34.8
---------------------------------------------------
UK OPERATIONS EBITDA 110.5 93.6
Exceptional items 14.7 35.3
---------------------------------------------------
UK OPERATIONS EBITDA BEFORE
EXCEPTIONAL ITEMS 125.2 128.9 3.0%
---------------------------------------------------
UK OPERATIONS EBITDA MARGIN BEFORE
EXCEPTIONAL ITEMS 40.9% 41.0%
===================================================
US OPERATIONS
OPERATING PROFIT (LOSS), INCLUDING
EXCEPTIONAL ITEMS 15.4 (21.9)
Depreciation and amortisation 24.7 25.8
---------------------------------------------------
US OPERATIONS EBITDA 40.1 3.9
Exceptional items 0.3 54.8
Exchange impact (1) - 4.0
---------------------------------------------------
US OPERATIONS EBITDA BEFORE EXCEPTIONAL
ITEMS AT CONSTANT EXCHANGE RATE (1) 40.4 62.7 55.2%
Exchange impact (1) - (4.0)
---------------------------------------------------
US OPERATIONS EBITDA BEFORE
EXCEPTIONAL ITEMS 40.4 58.7 45.3%
---------------------------------------------------
US OPERATIONS EBITDA MARGIN BEFORE
EXCEPTIONAL ITEMS 18.0% 23.1%
===================================================
GROUP
OPERATING PROFIT, INCLUDING
EXCEPTIONAL ITEMS 90.9 36.9
Depreciation and amortisation 59.7 60.6
---------------------------------------------------
GROUP EBITDA 150.6 97.5 (35.3)%
Exceptional items 15.0 90.1
Exchange impact (1) - 4.0
---------------------------------------------------
GROUP EBITDA BEFORE EXCEPTIONAL ITEMS AT
CONSTANT EXCHANGE RATE(1) 165.6 191.6 15.7%
Exchange impact (1) - (4.0)
---------------------------------------------------
GROUP EBITDA BEFORE EXCEPTIONAL ITEMS 165.6 187.6 13.3%
===================================================
GROUP EBITDA MARGIN BEFORE
EXCEPTIONAL ITEMS 31.2% 33.0%
===================================================
(1) Constant exchange rate states 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 a constant
exchange rate and the actual results reported using current
year exchange rates.
13
YELL GROUP PLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
4. RESULTS BEFORE AND AFTER EXCEPTIONAL ITEMS
An analysis of our results for the six months ended 30 September 2002
and 2003 separating out exceptional items is as follows:
SIX MONTHS ENDED 30 SEPTEMBER
----------------------------------------------------------------------------------------------
2002 2003
----------------------------------------------------------------------------------------------
ORDINARY EXCEPTIONAL ORDINARY EXCEPTIONAL
ITEMS ITEMS TOTAL ITEMS ITEMS TOTAL
----------------------------------------------------------------------------------------------
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
GROSS PROFIT 297.1 - 297.1 317.5 - 317.5
Distribution costs (17.5) - (17.5) (17.2) - (17.2)
Administrative costs (173.7) (15.0) (188.7) (173.3) (90.1) (263.4)
----------------------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) 105.9 (15.0) 90.9 127.0 (90.1) 36.9
Net interest payable (115.8) - (115.8) (88.2) (58.4) (146.6)
----------------------------------------------------------------------------------------------
(LOSS) PROFIT BEFORE TAXATION
(9.9) (15.0) (24.9) 38.8 (148.5) (109.7)
Taxation (7.4) 2.3 (5.1) (16.7) 37.2 20.5
----------------------------------------------------------------------------------------------
(LOSS) PROFIT FOR THE PERIOD
(17.3) (12.7) (30.0) 22.1 (111.3) (89.2)
==============================================================================================
Exceptional administrative costs in the six months ended 30 September 2003
relate to costs incurred in connection with our global offer. Of the
(pound)90.1 million exceptional administrative costs, (pound)35.3 million
relates to our UK business and (pound)54.8 million to our US business.
Exceptional administrative costs in the six months ended 30 September 2002
relate to costs incurred in connection with the initial public offering
withdrawn in July 2002. Of the (pound)15.0 million exceptional
administrative costs, (pound)14.7 million was charged to our UK business
and (pound)0.3 million was charged to our US business. The exceptional
interest payable in the six months ended 30 September 2003 comprises
(pound)19.7 million bond redemption premium and (pound)38.7 million
accelerated amortisation of deferred financing fees on our debt repaid in
July and August 2003 and arrangement fees for the undrawn revolving credit
facility. The exceptional tax credits in the six months ended 30 September
2003 and 2002 represent the effective tax on the exceptional items before
tax. We do not allocate interest or taxation charges by product or
geographic segment.
5. TAXATION
The effective tax rate for the period is different from the standard rate
of corporation tax in the United Kingdom (30%) as explained below:
SIX MONTHS ENDED 30 SEPTEMBER
--------------------------------------------
2002 2003
------------------- --------------------
(POUND)M (POUND)M
Profit (loss) on ordinary activities before exceptional items and
taxation multiplied by the standard rate of corporation
tax in the United Kingdom (30%) (3.0) 11.6
Effects of:
Non-allowable goodwill amortisation 10.0 10.5
US tax losses - (3.7)
Other permanent differences 0.4 (1.7)
------------------- --------------------
7.4 16.7
------------------- --------------------
Exceptional items multiplied by the standard rate of
corporation tax in the United Kingdom (30%) (4.5) (44.6)
Effects of:
Items not allowed for tax purposes 2.2 7.4
------------------- --------------------
(2.3) (37.2)
------------------- --------------------
Net charge on profit before tax 5.1 (20.5)
=================== ====================
14
YELL GROUP PLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
6. INTERIM DIVIDEND PER SHARE
The interim dividend of 3.0 pence per share (2002 - (pound) nil) is
payable on 21 December 2003 to shareholders registered at the close
of business on 21 November 2003 and will amount to (pound)20.8
million (2002 - (pound) nil).
7. NET DEBT
ANALYSIS OF NET DEBT
AT AT
31 MARCH 30 SEPTEMBER
2003 2003
------------------------ ---------------------
(POUND)M (POUND)M
Long-term loans and other borrowings
falling due after more than one year 2,286.0 1,238.4
Short-term borrowings and long-term loans and
other borrowings falling due within one year 112.8 81.1
------------------------ ---------------------
Total debt 2,398.8 1,319.5
Cash at bank and in hand (30.1) (92.5)
------------------------ ---------------------
NET DEBT AT END OF PERIOD 2,368.7 1,227.0
======================== =====================
RECONCILIATION OF MOVEMENT IN NET DEBT
DEBT DUE
WITHIN ONE
TOTAL YEAR
CASH EXCLUDING DEBT DUE
LESS BANK BANK AFTER
OVERDRAFT OVERDRAFT ONE YEAR NET DEBT
-------------------------------------------------------------------
(POUND)M (POUND)M (POUND)M (POUND)M
AT 31 MARCH 2003 30.1 (112.8) (2,286.0) (2,368.7)
Cash inflow from operating activities less
interest, redemption premium and taxation
paid and capital expenditures 19.4 - 19.0 (a) 38.4
Cash outflow on acquisitions (3.1) - - (3.1)
Net proceeds from shares issued 410.8 - - 410.8
Loans converted to equity - - 737.4 737.4
Borrowings repaid (1,378.4) 112.8 1,265.6 -
New loans acquired 1,031.0 (81.1) (949.9) -
Finance fees paid (16.1) - 16.1 -
Non-cash charges - - (69.8) (69.8)
Currency movements (1.2) - 29.2 28.0
---------------- --------------- --------------- ---------------
AT 30 SEPTEMBER 2003 92.5 (81.1) (1,238.4) (1,227.0)
================ =============== =============== ===============
(a) The(pound)78.9 million of interest paid in the financial period
included(pound)19.0 million of interest that had been capitalised
as long-term debt.
15
YELL GROUP PLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
8. LOANS AND OTHER BORROWINGS
AT AT
31 MARCH 30 SEPTEMBER
2003 2003
------------------ -----------------
(POUND)M (POUND)M
AMOUNTS FALLING DUE WITHIN ONE YEAR
Senior credit facilities 111.8 80.0
Net obligations under finance leases 1.0 1.1
------------------ -----------------
TOTAL AMOUNTS FALLING DUE WITHIN ONE YEAR 112.8 81.1
------------------ -----------------
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Senior credit facilities 1,013.7 942.6
Senior notes:
Senior sterling notes 250.0 162.5
Senior dollar notes 126.7 78.2
Senior discount dollar notes 118.2 77.6
Shareholder deep discount bonds 717.2 -
Vendor loan notes 108.3 -
------------------ -----------------
TOTAL AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 2,334.1 1,260.9
Unamortised finance fees (48.1) (22.5)
------------------ -----------------
NET AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 2,286.0 1,238.4
------------------ -----------------
NET LOANS AND OTHER BORROWINGS 2,398.8 1,319.5
=================== =================
9. CHANGES IN EQUITY SHAREHOLDERS' (DEFICIT) FUNDS
SHARE SHARE OTHER PROFIT AND
CAPITAL PREMIUM RESERVES LOSS ACCOUNT (a) TOTAL
----------------------------------------------------------------------------------
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
BALANCE AT 31 MARCH 2003 0.1 1.0 0.1 (125.5) (124.3)
Loss for the period - - - (89.2) (89.2)
Issue of ordinary shares 4.3 1,181.6 - - 1,185.9
Equity offset in respect of
employee share options - - - 10.5 10.5
Currency movements (b) - - - (19.9) (19.9)
Proposed dividend - - - (20.8) (20.8)
------------ --------------- ------------- -------------------- --------------
BALANCE AT 30 SEPTEMBER 2003 4.4 1,182.6 0.1 (244.9) 942.2
============ =============== ============= ==================== ==============
(a) The company Yell Group plc has distributable reserves
of (pound)739.3 million at 30 September 2003.
(b) The cumulative foreign currency translation adjustment was
a (pound)57.6 million loss at 30 September 2003 (31 March 2003 -
(pound)37.7 million loss).
16
YELL GROUP PLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
10. EARNINGS (LOSS) PER SHARE
PRO FORMA
PRO FORMA EARNINGS PER
INTEREST EXCEPTIONAL SHARE BEFORE
ADJUST- COSTS AMORTISATION EXCEPTIONAL
LOSS PER MENTS NET NET OF NET OF COSTS AND
SHARE OF TAX (a) TAX (b) TAX (c) AMORTISATION
----------------------------------------------------------------------------------
SIX MONTHS ENDED 30 SEPTEMBER 2003
Group profit (loss) for the
financial period ((pound)m) (89.2) 21.1 111.3 43.5 86.7
Weighted average number of
outstanding ordinary shares
(millions) 446.9 247.9 694.8
------------- -----------------
BASIC EARNINGS (LOSS)
PER SHARE (PENCE) (20.0) 12.5
Effect of share options (pence) - (0.2)
------------- -----------------
Diluted earnings (loss)
per share (pence) (20.0) 12.3
============= =================
SIX MONTHS ENDED 30 SEPTEMBER 2002
Group profit (loss) for the
financial period ((pound)m) (30.0) 32.7 12.7 42.6 58.0
Weighted average number of
outstanding ordinary shares
(millions) 258.2 436.5 694.7
------------- -----------------
BASIC EARNINGS (LOSS) PER SHARE
(PENCE) (11.6) 8.3
Effect of share options (pence) - (0.1)
------------- -----------------
DILUTED EARNINGS (LOSS)
PER SHARE (PENCE) (11.6) 8.2
============= =================
(a) The group losses have been adjusted to reflect what interest
charges might have been had the long-term debt we repaid as a
result of the initial public offering ("IPO") been repaid on 31
March 2002. Interest has been added back in relation to our
shareholder deep discount bonds, vendor loan notes, 35% of our
senior notes redeemed on 18 August 2003 and approximately
(pound)50 million of senior credit facilities repaid at the date
of the IPO. All interest adjustments have been tax affected at
the UK corporation tax rate of 30%. The weighted average number
of shares have been adjusted as though the initial public
offering happened on 31 March 2002.
(b) Exceptional costs are explained in note 4.
(c) Amortisation charges are added back net of the tax effect from
tax allowable amortisation in the United States.
17
YELL GROUP PLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
11. RELATED PARTY TRANSACTIONS
Transaction and monitoring fees charged to the Group from Apax
Partners Managing Entities and affiliates of Hicks, Muse, Tate and
Furst Incorporated were (pound)12.9 million each for the six months
ended 30 September 2003, excluding Value Added Tax.
12. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Our consolidated financial information is prepared in accordance with
accounting principles generally accepted in the United Kingdom ("UK
GAAP"), which differ in certain respects from those applicable in the
United States ("US GAAP"). Differences result primarily from
acquisition accounting, which affects the accounting for directories
in progress, goodwill and other intangibles and taxation. Timing
differences also arise when recognising certain costs associated with
directories in progress, interest that is fixed by derivative
financial instruments, and deferred tax assets associated with net
operating losses in the United States. Differences in accounting for
pensions arise from the requirements to use different actuarial
methods and assumptions.
Under UK GAAP, dividends are recorded in the period in respect of
which they are declared (in the case of interim or any special
dividends) or proposed by the board of directors to the shareholders
(in the case of final dividends). Under US GAAP, dividends are
recorded in the period in which dividends are declared.
The following information summarises estimated adjustments, gross of
their tax effect, which reconcile net loss and shareholders' deficit
from that reported under UK GAAP to that which would have been
recorded had US GAAP been applied.
NET LOSS
SIX MONTHS ENDED 30 SEPTEMBER
-----------------------------------------
2002 2003
------------------- --------------------
(POUND)M (POUND)M
Loss for the financial period under UK GAAP (30.0) (89.2)
Adjustment for:
Directories in progress - -
-Deferred costs (21.0) (21.0)
-Acquisition accounting(a) (24.1) -
Pensions (1.4) (4.3)
Goodwill 50.0 49.2
Other intangible assets (61.3) (48.3)
Derivative financial instruments (16.6) 12.7
Deferred taxation 15.0 (4.6)
Other - 0.9
------------------ --------------------
NET LOSS AS ADJUSTED FOR US GAAP (89.4) (104.6)
================== ====================
(a) Represents adjustments that arose as a result of acquisitions.
18
YELL GROUP PLC AND SUBSIDIARIES
NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
12. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
EQUITY SHAREHOLDERS' (DEFICIT) FUNDS
AT AT
31 MARCH 30 SEPTEMBER
2003 2003
--------------------- --------------------
(POUND)M (POUND)M
Equity shareholders' (deficit) funds under UK GAAP (124.3) 942.2
Adjustment for:
Directories in progress (92.6) (110.8)
Pensions 7.7 3.4
Additional minimum pension liability (35.8) (35.8)
Goodwill (646.7) (589.9)
Other intangible assets 842.0 783.1
Derivative financial instruments (24.9) (12.2)
Deferred taxation (223.9) (228.6)
Dividends proposed - 20.8
Other 2.9 3.8
--------------------- --------------------
EQUITY SHAREHOLDERS' (DEFICIT) FUNDS AS ADJUSTED FOR US GAAP (295.6) 776.0
===================== ====================
19
NOTES TO EDITORS
YELL GROUP
Yell is an international directories business operating in the classified
advertising market through printed, online and telephone-based media in the UK
and the US. During the last financial year ended 31 March 2003, Yell acquired
McLeodUSA Media Group ("McLeod") and National Directory Company ("NDC").
In the financial year ended 31 March 2003, Yell published 94 directories in the
UK and 525 in the US. In the UK, it is a clear market leader, serving more than
450,000 unique advertisers. In the US, it is the leading independent directories
business, serving more than 360,000 advertisers. Approximately 55% of the
Group's turnover currently comes from our UK operations.
Yell's products in the UK include the Yellow Pages and Business Pages
directories, Yell.com and Yellow Pages 118 24 7, and in the US, Yellow Book and
Yellowbook.com.