EXHIBIT 99.1
28 JULY 2004
NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE
YELL GROUP PLC FINANCIAL RESULTS FOR THE THREE MONTHS ENDED 30 JUNE 2004
STRONG PERFORMANCE SETS YELL ON TRACK TO MEET FULL YEAR EXPECTATIONS
o Group turnover up 7.1% to(pound)280.9 million; 12.7% at a constant exchange
rate
o Group EBITDA up 12.3% to(pound)89.8 million; 16.9% at a constant exchange
rate
o Group profit after tax(pound)20.7 million ((pound)6.3 million loss last
year, excluding IPO Costs)
o Group operating cash flow less capital expenditure(pound)70.7
million;(pound)72.9 million at a constant exchange rate ((pound)49.6
million last year)
o Diluted earnings per share before amortisation 6.4 pence (5.0 pence last
year on a pro forma basis)
JOHN CONDRON, CHIEF EXECUTIVE OFFICER, SAID:
"Yell's growth momentum continues and places us on track to meet full year
expectations. We are maintaining our robust performance in the UK, including the
very rapid growth of Yell.com and in the US, we are delivering very strong
organic growth as well as securing the benefits of the acquisitions made last
year."
JOHN DAVIS, CHIEF FINANCIAL OFFICER, SAID:
"We continue to deliver good balanced growth in revenue, EBITDA and cash
generation and to invest in our business in order to ensure growth continues.
Coupled with the benefits of our post-flotation capital structure, the result is
a strong increase in net profit and earnings 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
YELL - MEDIA
Jon Salmon
Tel +44 (0)118 950 6656
Mobile +44 (0)7801 977340
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 2004 annual
report on Form 20-F filed with the US Securities and Exchange Commission (the
"SEC") on 8 June 2004, for a discussion of some of these factors. We undertake
no obligation publicly to 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/announcements
-------------------------------
Our subsidiary, Yell Finance B.V., will file its results
for the three months ended 30 June 2004 with the SEC
on Form 6-K on 28 July 2004.
This filing can also be accessed on the Yell Group website.
2
YELL GROUP PLC SUMMARY FINANCIAL RESULTS
- ----------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED 30 JUNE
2003 2004
- ----------------------------------------------------------------------------------------------------------------------------------
CHANGE AT CONSTANT
(POUND)M (POUND)M CHANGE EXCHANGE RATE (5)
- ----------------------------------------------------------------------------------------------------------------------------------
Turnover (1) 262.2 280.9 7.1% 12.7%
- ---------------------------------------------- --------------------- ---------------------
80.0 89.8 12.3% 16.9%
Adjusted EBITDA (1) (2)
Operating cash flow (1) (3) 49.6 70.7 42.5% 47.0%
- ---------------------------------------------- --------------------- ---------------------
Cash conversion (1) (4) 62.0% 78.7%
- ---------------------------------------------- --------------------- ---------------------
Adjusted operating profit (2) 49.7 59.3 19.3% 22.1%
- ---------------------------------------------- --------------------- ---------------------
Adjusted (loss) profit after tax (2) (6.3) 20.7
Exceptional items (49.5) -
- ---------------------------------------------- --------------------- ---------------------
(Loss) profit on ordinary
activities after tax (55.8) 20.7
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Turnover, adjusted EBITDA, operating cash flow and cash conversion are the
key financial measures that we use to assess the growth in the business and
operational efficiencies.
(2) Adjusted items in the period ended 30 June 2003 are stated before
exceptional costs arising on IPO. There were no adjustments in the period
ended 30 June 2004.
(3) Cash inflow from operations before payments of previously accrued
exceptional items, less capital expenditure.
(4) Operating cash flow as a percentage of adjusted EBITDA.
(5) Change at constant exchange rate states the change in current period
results compared to the same period in the previous year as if the current
period results were translated at the same exchange rate as that used to
translate the results for the same period in the previous year.
REVIEW OF OPERATING PERFORMANCE
TURNOVER
Group turnover increased 7.1% to (pound)280.9 million, or 12.7% at a constant
exchange rate, from (pound)262.2 million last year.
UK operations
UK turnover increased 3.9% to (pound)150.6 million, or 5.0% excluding last
year's discontinued products (the sale of Yell Data, our data-service business,
and the ending of our contract with BT to sell advertising in its phone books).
This result reflected the continued good progress of our printed directories and
the rapid growth of Yell.com.
Printed directories' turnover increased 3.0% to (pound)138.9 million, after the
impact of the 3.9% price reduction to Yellow Pages under the RPI-6% price cap.
Yell.com's turnover grew 41.1% to (pound)7.9 million.
The total number of unique print advertisers increased by 1.5% to 138,000. We
continued to add new advertisers to printed directories, and we believe we are
on track to meet our full year target of over 100,000 new customers.
Our retention rate has declined from 78% to 76% (or 78% to 75% if we continued
to exclude national advertisers). Our success in attracting over 100,000 new
customers in each of the last four years has diluted overall retention as new
advertisers are more difficult to retain than more established advertisers. Our
strategy to increase the customer base has contributed to sustained growth in
customer numbers and revenue.
3
Average turnover from unique advertisers improved 1.5%, after the 3.9% price
reduction, to (pound)1,004.
As part of our strategy to grow our advertiser base, we rescoped two directories
into four during the first quarter, reflecting changes in shopping and trading
patterns. Typically, these rescoped directories achieve little or no growth in
their first year. The second quarter will include three London rescopes and we
expect first half revenue growth to be below first quarter levels.
Yell.com continued to grow rapidly, increasing the number of searchable
advertisers by 35.8% to 110,000 at 30 June 2004.
Overall, UK turnover remains on course to meet full year expectations.
US operations
US turnover grew strongly to (pound)130.3 million - up 23.4% at a constant
exchange rate, or 11.1% after taking into account the (pound)14.5 million
reduction in turnover which resulted from the weaker US dollar. The average
exchange rate was approximately $1.81: (pound)1.00 against $1.63: (pound)1.00 in
the same period last year.
Unique advertisers increased by 18.1% to 124,000 with average turnover per
unique advertiser up 4.5% to $1,902.
Organic turnover growth was 13.9%, to which same-market growth contributed
10.6%, and growth from four new launches contributed 3.3%. We expect the growth
momentum in the US business to continue into the second quarter.
Acquisitions, primarily Feist which we acquired in March this year, contributed
11.1% of the growth. This reflects a heavy first quarter publishing schedule for
Feist.
Overall turnover growth was slightly offset by the continuing planned running
down of the CCD partnership, which we acquired as part of McLeod.
EBITDA
Group EBITDA increased 12.3% to (pound)89.8 million, or 16.9% at a constant
exchange rate. The Group EBITDA margin increased 1.5 percentage points to 32.0%,
driven by the strong US performance.
UK EBITDA rose 3.5% to (pound)56.7 million, reflecting the continued progress of
Yell.com, which increased EBITDA to (pound)2.4 million from (pound)1.1 million
last year. The UK EBITDA margin was 37.6%, compared with 37.8% last year, with
Yell.com's margin increase offsetting the decline in the printed directories'
margin.
US EBITDA was (pound)33.1 million, an increase of 31.3%, or 46.0% at a constant
exchange rate, after taking into account the (pound)3.7 million reduction in
earnings from the weaker US dollar. The US EBITDA margin increased from 21.5% to
25.4%, driven by the strong revenue growth and operational leverage.
4
OPERATING CASH FLOW AND NET DEBT
Net cash inflow from operating activities before cash payments for previously
accrued exceptional items and after capital expenditure was (pound)70.7 million
after the negative (pound)2.2 million exchange rate impact. This compares with
(pound)49.6 million last year which was lower than normal as a result of the
timing of payments. The cash conversion rate was 78.7% (62.0% last year).
Net debt, at (pound)1,181.3 million, represents a multiple of 3.2 times adjusted
EBITDA for the last 12 months.
NET RESULTS
AFTER TAX RESULTS
Profit after tax for the three months to 30 June 2004 was (pound)20.7 million,
compared with an adjusted loss, excluding exceptional IPO costs, of (pound)6.3
million for the same period last year. This reflects strong EBITDA growth, as
well as lower interest charges arising from the new capital structure put in
place at the time of the IPO on 15 July 2003.
There were no exceptional items in the first quarter. Exceptional costs, which
arose on IPO, during the same period last year amounted to (pound)77.3 million
before tax and (pound)49.5 million after a tax credit of (pound)27.8 million.
Including these costs the loss after tax for the three months ended 30 June 2003
was (pound)55.8 million.
The tax charge was (pound)14.9 million this year, an effective rate of 24.7% of
adjusted profit before tax, compared with a tax charge before exceptional
activity of (pound)3.1 million last year.
EARNINGS PER SHARE
Basic earnings per share before amortisation for the three months ended 30 June
2004 was 6.5 pence. This compares with pro forma (as if the IPO had occurred
before the start of last year) earnings per share of 5.1 pence for the same
period last year, before exceptional costs. Diluted earnings per share before
amortisation for the three months ended 30 June 2004 was 6.4 pence compared to
pro forma diluted earnings per share of 5.0 pence last year.
5
KEY OPERATIONAL INFORMATION
-------------------------------------------------
THREE MONTHS ENDED 30 JUNE
-------------------------------------------------
2003 2004 CHANGE
- ------------------------------------------------------------------------------------------------------------------------------------
UK PRINTED DIRECTORIES
Unique advertisers (thousands) (1) 136 138 1.5%
Directory editions published (2) 26 28
Unique advertiser retention rate (%) (3) 78 76
Turnover per unique advertiser ((pound)) 989 1,004 1.5%
US PRINTED DIRECTORIES
Unique advertisers (thousands) (1) (4) 105 124 18.1%
Directory editions published 121 126
Unique advertiser retention rate (%) (4) 68 70
Turnover per unique advertiser ($) 1,820 1,902 4.5%
OTHER UK PRODUCTS AND SERVICES
Yell.com page impressions for June (millions) 43 63 46.5%
Yell.com searchable advertisers at 30 June (thousands)(5) 81 110 35.8%
- ------------------------------------------------------------------------------------------------------------------------------------
(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.
(2) The number of directory editions published in the United Kingdom has
increased due to the rescoping of Glasgow North and Glasgow South.
(3) The proportion of unique advertisers that have renewed their advertising
from the preceding publication. As a result of improvements to our systems,
we are now able to include national and key accounts in our measurement of
retention. If we had continued to exclude these accounts, the retention
rate for 2004 would have been 75% and last year's number would have been
unchanged at 78%. These improvements to our systems have not affected the
reporting of our financial results.
(4) As a result of the progress in the United States towards integrating our
customer databases, 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. We have not adjusted the previously reported 2003 figure for
any duplicated records in 2003. There remains some overlap in reporting
unique advertisers between Yellow Book and the former McLeod that we expect
to be removed. These improvements to our systems have not affected the
reporting of our financial results.
(5) 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.
6
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
THREE MONTHS ENDED
30 JUNE
-----------------------------------
NOTES 2003 2004
---------------- ----------------
(POUND)M (POUND)M
TURNOVER 2 262.2 280.9
Cost of sales (117.7) (127.8)
--------------- ---------------
GROSS PROFIT 144.5 153.1
--------------- ---------------
Distribution costs (9.3) (8.3)
Administrative expenses
Ongoing activities (85.5) (85.5)
Exceptional items 4 (47.3) -
--------------- ---------------
(132.8) (85.5)
--------------- ---------------
OPERATING PROFIT 3 2.4 59.3
Net interest payable
Ongoing activities (52.9) (23.7)
Exceptional items 4 (30.0) -
--------------- ---------------
(82.9) (23.7)
--------------- ---------------
(LOSS) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION (80.5) 35.6
TAXATION
Before exceptional items (3.1) (14.9)
On exceptional items 4 27.8 -
--------------- ---------------
24.7 (14.9)
--------------- ---------------
(LOSS) PROFIT FOR THE FINANCIAL PERIOD (55.8) 20.7
=============== ===============
(IN PENCE) (IN PENCE)
Basic (loss) earnings per share 5 (20.9) 3.0
Diluted (loss) earnings per share 5 (20.9) 2.9
EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS AND GOODWILL
AMORTISATION (A)
Basic 5 5.1 6.5
Diluted 5 5.0 6.4
(a) Earnings per share before exceptional items and goodwill amortisation for
the three months ended 30 June 2003 are calculated on a pro forma basis as
though our IPO and debt refinancing had occurred before 1 April 2003.
With the exception of the profit for the financial period detailed above and the
currency movements detailed in note 8, there have been no other recognised gains
or losses.
See notes to the financial information for additional details.
7
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
THREE MONTHS ENDED 30 JUNE
----------------------------------------
NOTES 2003 2004
--------------- ---------------
(POUND)M (POUND)M
NET CASH INFLOW FROM OPERATING ACTIVITIES 55.1 74.1
RETURNS ON INVESTMENTS AND SERVICING
OF FINANCE
Interest paid (18.8) (15.1)
--------------- ---------------
NET CASH OUTFLOW FOR RETURNS ON INVESTMENTS AND SERVICING OF
FINANCE (18.8) (15.1)
--------------- ---------------
TAXATION (1.0) (5.3)
--------------- ---------------
CAPITAL EXPENDITURE AND FINANCIAL
INVESTMENT
Purchase of tangible fixed assets, net of sales proceeds (5.9) (3.7)
--------------- ---------------
NET CASH OUTFLOW FOR CAPITAL EXPENDITURE
AND FINANCIAL INVESTMENT (5.9) (3.7)
--------------- ---------------
ACQUISITIONS
Purchase of subsidiary undertakings, net of cash acquired (1.4) -
--------------- ---------------
NET CASH OUTFLOW FOR ACQUISITIONS (1.4) -
--------------- ---------------
NET CASH INFLOW BEFORE FINANCING 28.0 50.0
FINANCING
Borrowings repaid 6 - (22.5)
--------------- ---------------
NET CASH OUTFLOW FROM FINANCING - (22.5)
--------------- ---------------
INCREASE IN NET CASH IN THE PERIOD 28.0 27.5
=============== ===============
RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW
FROM OPERATING ACTIVITIES
Total operating profit 2.4 59.3
Depreciation 5.7 5.7
Goodwill amortisation 24.6 24.8
Increase in stocks (12.0) (15.4)
Decrease in debtors 29.7 25.1
Increase (decrease) in creditors 4.7 (26.0)
Other non-cash expenses - 0.6
--------------- ---------------
NET CASH INFLOW FROM OPERATING ACTIVITIES 55.1 74.1
=============== ===============
NET CASH INFLOW FROM OPERATING ACTIVITIES 55.1 74.1
Cash payments of previously accrued exceptional items 0.4 0.3
Purchase of tangible fixed assets, net of sale proceeds (5.9) (3.7)
--------------- ---------------
NET CASH INFLOW FROM OPERATING ACTIVITIES BEFORE PAYMENTS OF PREVIOUSLY ACCRUED
EXCEPTIONAL ITEMS AND AFTER CAPITAL EXPENDITURE 49.6 70.7
=============== ===============
See notes to the financial information for additional details.
8
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET
AT AT
31 MARCH 30 JUNE
NOTES 2004 2004
(POUND)M (POUND)M
---------------- ----------------
FIXED ASSETS
Intangible assets 1,725.3 1,710.2
Tangible assets 45.9 42.8
Investment 1.8 2.2
---------------- ----------------
TOTAL FIXED ASSETS 1,773.0 1,755.2
---------------- ----------------
CURRENT ASSETS
---------------- ----------------
Stocks 151.9 167.6
Debtors 460.6 435.3
Cash at bank and in hand 6 18.7 48.0
---------------- ----------------
TOTAL CURRENT ASSETS 631.2 650.9
---------------- ----------------
CREDITORS: AMOUNTS FALLING DUE WITHIN
ONE YEAR
Loans and other borrowings 6,7 (85.8) (63.3)
Other creditors (273.0) (258.6)
---------------- ----------------
TOTAL CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
(358.8) (321.9)
---------------- ----------------
NET CURRENT ASSETS 272.4 329.0
---------------- ----------------
TOTAL ASSETS LESS CURRENT LIABILITIES 2,045.4 2,084.2
CREDITORS: AMOUNTS FALLING DUE AFTER
MORE THAN ONE YEAR
Loans and other borrowings 6,7 (1,155.9) (1,166.0)
---------------- ----------------
NET ASSETS 889.5 918.2
================ ================
CAPITAL AND RESERVES
Called up share capital 8 7.0 7.0
Share premium account 8 1,184.7 1,184.7
Profit and loss account deficit 8 (302.2) (273.5)
---------------- ----------------
EQUITY SHAREHOLDERS' FUNDS 889.5 918.2
================ ================
See notes to the financial information for additional details.
9
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED 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 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 that were set out in the audited
consolidated financial information of Yell Group plc for the year ended 31
March 2004.
The information contained herein does not constitute statutory financial
statements within the meaning of section 240 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 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 period. Actual results could
differ from those estimates. Estimates are used principally when accounting
for doubtful debts, depreciation, employee pension costs and taxes.
10
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
2. TURNOVER
THREE MONTHS
ENDED 30 JUNE CHANGE
------------------------------------------------------------
2003 2004 %
------------------------ --------------------------------
(POUND)M (POUND)M
UK printed directories 134.9 138.9 3.0%
Other products and services 10.0 11.7 17.0%
------------------------ -------------------
TOTAL UK TURNOVER 144.9 150.6 3.9%
------------------------ -------------------
US printed directories:
US printed directories at constant exchange rate (a) 117.3 144.8 23.4%
Exchange impact (a) - (14.5)
------------------------ -------------------
TOTAL US TURNOVER 117.3 130.3 11.1%
------------------------ -------------------
GROUP TURNOVER 262.2 280.9 7.1%
======================== ===================
(a) Constant exchange rate states current period results at the same exchange
rate as that used to translate the results for the same period in the
previous year. Exchange impact is the difference between the results
reported at a constant exchange rate and the actual results using current
period exchange rates.
3. OPERATING PROFIT AND EBITDA INFORMATION
ADJUSTED EBITDA BY SEGMENT
THREE MONTHS
ENDED 30 JUNE CHANGE
------------------------------------------------------------
2003 2004 %
------------------------ ---------------------------------
(POUND)M (POUND)M
UK printed directories 53.5 52.9 (1.1)%
Other products and services 1.3 3.8 192.3%
------------------------- ---------------------
TOTAL UK OPERATIONS 54.8 56.7 3.5%
------------------------ ---------------------
US operations:
US printed directories at constant exchange rate (a) 25.2 36.8 46.0%
Exchange impact (a) - (3.7)
------------------------ ---------------------
TOTAL US OPERATIONS 25.2 33.1 31.3%
------------------------ ---------------------
GROUP ADJUSTED EBITDA 80.0 89.8 12.3%
======================== =====================
(a) Constant exchange rate states current period results at
the same exchange rate as that used to translate the
results for the same period in the previous year.
Exchange impact is the difference between the results
reported at a constant exchange rate and the actual
results using current period exchange rates.
11
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
3. OPERATING PROFIT AND EBITDA INFORMATION (CONTINUED)
RECONCILIATION OF GROUP OPERATING PROFIT TO ADJUSTED EBITDA (a)
THREE MONTHS
ENDED 30 JUNE CHANGE
------------------------------------------------------------
2003 2004 %
------------------------------------------------------------
(POUND)M (POUND)M
UK operations
OPERATING PROFIT 31.9 39.2
Depreciation and amortisation 17.3 17.5
---------------- ----------------
UK OPERATIONS EBITDA 49.2 56.7
Exceptional items 5.6 -
---------------- ----------------
UK OPERATIONS ADJUSTED EBITDA 54.8 56.7 3.5%
---------------- ----------------
UK OPERATIONS ADJUSTED EBITDA MARGIN 37.8% 37.6%
================ ================
US operations
OPERATING (LOSS) PROFIT (29.5) 20.1
Depreciation and amortisation 13.0 13.0
---------------- ----------------
US OPERATIONS EBITDA (16.5) 33.1
Exceptional items 41.7 -
Exchange impact (b) - 3.7
---------------- ----------------
US OPERATIONS ADJUSTED EBITDA AT
CONSTANT EXCHANGE RATE (b) 25.2 36.8 46.0%
Exchange impact (b) - (3.7)
---------------- ----------------
US OPERATIONS ADJUSTED EBITDA 25.2 33.1 31.3%
---------------- ----------------
US OPERATIONS ADJUSTED EBITDA MARGIN 21.5% 25.4%
================ ================
Group
OPERATING PROFIT 2.4 59.3
Depreciation and amortisation 30.3 30.5
---------------- ----------------
GROUP EBITDA 32.7 89.8 174.6%
Exceptional items 47.3 -
Exchange impact (b) - 3.7
---------------- ----------------
GROUP ADJUSTED EBITDA AT CONSTANT
EXCHANGE RATE (b) 80.0 93.5 16.9%
Exchange impact (b) - (3.7)
---------------- ----------------
GROUP ADJUSTED EBITDA 80.0 89.8 12.3%
================ ================
GROUP ADJUSTED EBITDA MARGIN 30.5% 32.0%
================ ================
(a) Adjusted EBITDA is one of the key financial measures that we use to assess
the success of our people in achieving growth in the business and
operational efficiencies.
(b) Constant exchange rate states current period results at the same exchange
rate as that used to translate the results for the same period in the
previous year. Exchange impact is the difference between the results
reported at a constant exchange rate and the actual results reported using
current period exchange rates.
We do not allocate interest or taxation charges by product or geographic
segment.
12
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
4. RESULTS BEFORE AND AFTER EXCEPTIONAL ITEMS
Exceptional administrative expenses in the three months ended 30 June 2003
relate to costs incurred in anticipation of the IPO on 15 July 2003. Of the
(pound)47.3 million exceptional administrative costs, (pound)39.0 million
were non-cash costs relating to a terminated US management incentive plan.
The exceptional interest payable of (pound)30.0 million in the three months
ended 30 June 2003 relates to accelerated amortisation of deferred
financing fees on debt that was repaid in the second quarter. Exceptional
tax credits in the three months ended 30 June 2003 of (pound)27.8 million
represent the tax on the exceptional items before tax.
13
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
5. EARNINGS (LOSS) PER SHARE
PRO FORMA
INTEREST EXCEPTIONAL
ADJUSTMENTS COSTS NET
ACTUAL NET OF TAX (A) OF TAX (B) AMORTISATION(C) ADJUSTED
-------------------------------------------------------------------------------
THREE MONTHS ENDED 30 JUNE 2003
Group (loss) profit for the financial
period ((pound)m) (55.8) 16.8 49.5 24.6 35.1
Weighted average number of issued ordinary
shares (millions) (d) 266.8 425.7 692.5
-------------- --------------
BASIC (LOSS) EARNINGS PER SHARE (PENCE) (20.9) 5.1
Effect of share options (pence) - (0.1)
-------------- --------------
DILUTED (LOSS) EARNINGS PER SHARE (PENCE) (20.9) 5.0
============== ==============
THREE MONTHS ENDED 30 JUNE 2004
Group profit for the financial period ((pound)m) 20.7 - - 24.8 45.5
Weighted average number of issued ordinary
shares (millions) (d) 697.8 - 697.8
-------------- --------------
BASIC EARNINGS PER SHARE (PENCE) 3.0 6.5
Effect of share options (pence) (0.1) (0.1)
-------------- --------------
DILUTED EARNINGS PER SHARE (PENCE) 2.9 6.4
============== ==============
(a) Group losses for the three months ended 30 June 2003 have been
adjusted to exclude interest charges on the long-term debt we repaid
as a result of the IPO. Interest has been added back by referring to
the effective interest rates applied to the borrowings repaid from the
proceeds of the IPO over the period. All interest adjustments have
been tax effected at the UK corporation tax rate of 30%. The weighted
average number of shares for the three months ended 30 June 2003 has
been adjusted as though the IPO happened before 1 April 2003.
(b) Exceptional items are explained in note 4.
(c) Amortisation charges presented are not adjusted for tax. The
adjustment would have been (pound)15.1million, as opposed to
(pound)24.8 million, and (pound)13.9 million, as opposed to
(pound)24.6 million, in 2004 and 2003, respectively, if the tax effect
from tax allowable amortisation in the United States had been taken
into account. Accordingly, the diluted earnings per share would have
been 5.0 pence, as opposed to 6.4 pence, in the three months ended 30
June 2004 and 3.4 pence, as opposed to 5.0 pence in the three months
ended 30 June 2003.
(d) The calculation of the basic and diluted earnings (loss) per ordinary
share has been based on the profit (loss) for the relevant financial
period and on 266.8 million shares for the three months ended 30 June
2003, being the weighted average share capital prior to the IPO after
taking into account the restructuring of the existing share capital on
the IPO. For the three months ended 30 June 2004, the calculation was
based on 697.8 million shares, the weighted average share capital
during the period.
14
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
6. NET DEBT
ANALYSIS OF NET DEBT
AT AT
31 MARCH 2004 30 JUNE 2004
------------------ ------------------
(POUND)M (POUND)M
Long-term loans and other borrowings
falling due after more than one year 1,155.9 1,166.0
Short-term borrowings and long-term
loans and other borrowings falling due within one year 85.8 63.3
------------------ ------------------
Total debt 1,241.7 1,229.3
Cash at bank and in hand (18.7) (48.0)
------------------ ------------------
NET DEBT AT END OF YEAR 1,223.0 1,181.3
================== ==================
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 2004 18.7 (85.8) (1,155.9) (1,223.0)
Net cash inflow before financing 50.0 - - 50.0
Borrowings repaid (22.5) 22.5 - -
Non-cash charges - - (3.5) (3.5)
Currency movements 1.8 - (6.6) (4.8)
------------------ ----------------- ----------------- ------------------
AT 30 JUNE 2004 48.0 (63.3) (1,166.0) (1,181.3)
================== ================= ================= ==================
15
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
7. LOANS AND OTHER BORROWINGS
AT AT
31 MARCH 2004 (a) 30 JUNE 2004 (a)
---------------------- --------------------
(POUND)M (POUND)M
AMOUNTS FALLING DUE WITHIN ONE YEAR
Senior credit facilities (b) 80.0 62.5
Revolver loan (b) 5.0 -
Net obligations under finance leases 0.8 0.8
---------------------- --------------------
TOTAL AMOUNTS FALLING DUE WITHIN ONE YEAR 85.8 63.3
---------------------- --------------------
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Senior credit facilities 856.6 861.8
Senior notes:
Senior sterling notes 158.1 158.2
Senior dollar notes 68.1 69.3
Senior discount dollar notes 73.1 76.7
---------------------- --------------------
TOTAL AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 1,155.9 1,166.0
---------------------- --------------------
NET LOANS AND OTHER BORROWINGS 1,241.7 1,229.3
====================== ====================
(a) Balances are shown net of deferred financing fees.
(b) Yell made an early repayment, in the three months ended 30
June 2004, of (pound)17.5 million on amounts owed under the
senior facility as required by the senior facility agreement
and also repaid (pound)5 million that had been drawn down
against the senior revolving credit facility at 31 March
2004.
8. CHANGES IN EQUITY SHAREHOLDERS' FUNDS
SHARE SHARE PROFIT AND LOSS TOTAL
CAPITAL PREMIUM ACCOUNT
--------------------------------------------------------------------------------
(POUND)M (POUND)M (POUND)M (POUND)M
BALANCE AT 1 APRIL 2004 7.0 1,184.7 (302.2) 889.5
Profit on ordinary
activities after taxation - - 20.7 20.7
Capital Accumulation Plan (a) - - 0.6 0.6
Currency movements (b) - - 7.4 7.4
-------------- -------------- -------------- --------------
BALANCE AT 30 JUNE 2004 7.0 1,184.7 (273.5) 918.2
============== ============== ============== ==============
(a) Amortisation of the costs incurred in buying shares held in an ESOP
trust for employees.
(b) The cumulative currency translation adjustment was a(pound)95.3
million loss at 30 June 2004 (31 March 2004 -(pound)102.7 million
loss)
16
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
9. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Our consolidated financial information is prepared in accordance with
accounting principles generally accepted in the United Kingdom 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.
Differences in accounting for our share options arise from the
requirement to use option pricing models to value options under US
GAAP in circumstances where the options are valued at (pound)nil value
under UK GAAP. Dividends are recorded, under UK GAAP, in the period in
respect of which they are proposed by the board of directors to the
shareholders. Under US GAAP, dividends are recorded in the period in
which they are declared.
The following information summarises estimated adjustments, gross of
their tax effect, which reconcile net (loss) profit and shareholders'
funds from that reported under UK GAAP to that which would have been
recorded had US GAAP been applied.
NET (LOSS) PROFIT
THREE MONTHS ENDED 30
JUNE
-----------------------------------
2003 2004
--------------- ----------------
(POUND)M (POUND)M
(Loss) profit on ordinary activities
after taxation under UK GAAP (55.8) 20.7
Adjustment for:
Directories in progress
-Deferred costs (11.1) (6.2)
-Acquisition accounting(a) - (4.0)
Pensions (2.3) (3.3)
Goodwill 24.6 24.8
Other intangible assets (22.6) (20.2)
Derivative financial instruments 4.0 6.0
Employee incentive plans 45.7 -
Employee option costs - (0.3)
Amortisation of deferred financing costs 30.0 (0.1)
Deferred taxation (22.1) 9.8
Other (1.0) (0.2)
---------------- ----------------
NET (LOSS) PROFIT AS ADJUSTED FOR US GAAP (10.6) 27.0
================ ================
(a) Represents adjustments that arose as a result of acquisitions.
17
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
9. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)
EQUITY SHAREHOLDERS' FUNDS
AT AT
31 MARCH 2004 30 JUNE 2004
----------------------- --------------------
(POUND)M (POUND)M
Equity shareholders' funds under UK GAAP 889.5 918.2
Adjustment for:
Directories in progress (103.2) (114.2)
Pensions (0.3) (3.6)
Additional minimum pension liability (37.9) (37.9)
Goodwill (562.3) (539.3)
Other intangible assets 746.6 729.4
Derivative financial instruments (3.2) 2.8
Deferred taxation (182.9) (174.1)
Dividends proposed 41.9 -
Other 2.3 1.9
---------------------- --------------------
EQUITY SHAREHOLDERS' FUNDS AS ADJUSTED FOR US GAAP 790.5 783.2
====================== ====================
10. LITIGATION
On 22 January 2004 Verizon filed suit in New York alleging that
sales and marketing communications published by Yellow Book USA are
misleading and have caused Verizon to lose revenue. We believe that
the complaint is without merit and we will vigorously resist any
claim for relief. We believe that a material adverse outcome to the
company is considerably less than likely. We do not believe that the
legal proceedings which have now commenced will have a material
adverse effect on the financial position or results of the Group.
18
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 year ended 31 March 2004, Yell published 99 directories in the UK and 536
in the US. In the UK, it is a clear market leader, serving 480,000 unique
advertisers. In the US, it is the leading independent directories business,
serving 386,000 unique advertisers.
Yell's brands in the UK are Yellow Pages, Business Pages, Yell.com and Yellow
Pages 118 24 7, and in the US are Yellow Book and Yellowbook.com, all of which
are trademarks.
19