EXHIBIT 99.3
YELL FINANCE B.V. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED
30 JUNE
-------------------------------
(UNAUDITED) NOTES 2004 2005
-------------- --------------
((POUND) IN MILLIONS)
TURNOVER 2 280.9 313.6
Cost of sales (127.8) (143.0)
-------------- --------------
GROSS PROFIT 153.1 170.6
-------------- --------------
Distribution costs (8.3) (9.4)
Administrative expenses
Ongoing activities (64.6) (67.1)
Exceptional items 4 - 5.0
-------------- --------------
(64.6) (62.1)
-------------- --------------
OPERATING PROFIT 3 80.2 99.1
Net interest payable
Ongoing activities (33.3) (30.0)
Exceptional items 4 - (6.7)
-------------- ---------------
(33.3) (36.7)
-------------- --------------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 46.9 62.4
TAXATION
On ongoing activities 5 (14.3) (22.1)
On exceptional items 4 - 0.7
-------------- --------------
(14.3) (21.4)
-------------- --------------
PROFIT FOR THE FINANCIAL PERIOD 32.6 41.0
============== ==============
STATEMENTS OF RECOGNISED INCOME AND EXPENSE
THREE MONTHS ENDED
30 JUNE
-------------------------------
(UNAUDITED) 2004 2005
----------------- -----------
((POUND) IN MILLIONS)
PROFIT FOR THE FINANCIAL PERIOD 32.6 41.0
-------------- --------------
Exchange differences on translation of foreign 7.0 28.5
operations
Estimated effect of significant changes in
securities markets on retirement benefit
obligations - (20.0)
Change in recorded value of financial
instruments used as hedges - (1.8)
Tax effect of items in other comprehensive income - 6.4
Tax benefit arising (reversing) on unexercised
parent's stock options 1.5 (1.1)
-------------- --------------
Other comprehensive income - net gains not 8.5 12.0
recognised in income statement
-------------- --------------
TOTAL RECOGNISED INCOME FOR THE FINANCIAL PERIOD 41.1 53.0
============== ==============
The accompanying unaudited condensed notes are an
integral part of these financial statements.
F-1
YELL FINANCE B.V. AND SUBSIDIARIES
CONSOLIDATED CASH FLOW STATEMENTS
THREE MONTHS ENDED
30 JUNE
-------------------------------
(UNAUDITED) 2004 2005
--------------- --------------
((POUND) IN MILLIONS)
NET CASH INFLOW FROM OPERATING ACTIVITIES
Cash generated from operations 74.1 88.1
Interest paid (15.4) (12.2)
Interest received 0.3 0.6
Income tax paid (5.3) (6.2)
--------------- --------------
Net cash inflow from operating activities 53.7 70.3
--------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of tangible fixed assets (3.7) (4.7)
Purchase of subsidiary undertakings - (4.8)
--------------- ---------------
Net cash used in investing activities (3.7) (9.5)
--------------- --------------
CASH FLOWS USED IN FINANCING ACTIVITIES
Repayments of borrowings (22.5) -
--------------- --------------
Net cash used in financing activities (22.5) -
--------------- --------------
NET INCREASE IN CASH AND BANK OVERDRAFTS 27.5 60.8
Cash and bank overdrafts at beginning of the
period 18.4 53.1
Exchange gains on cash and bank overdrafts 1.8 4.9
--------------- --------------
CASH AND BANK OVERDRAFTS AT END OF THE PERIOD 47.7 118.8
=============== ==============
CASH GENERATED FROM OPERATIONS
Profit for the financial period 32.6 41.0
Adjustments for:
Tax 14.3 21.4
Depreciation of tangible fixed assets 4.0 5.0
Depreciation of software costs 1.7 1.0
Goodwill adjustment arising from
previously unrecognised tax benefits
acquired 1.5 -
Interest income (0.3) (0.6)
Interest expense 33.6 37.3
Exceptional administrative items - (5.0)
Changes in working capital:
Inventories and directories in development (15.4) (6.3)
Trade and other receivables 25.1 19.2
Trade and other payables (24.3) (25.8)
Other 1.3 0.9
--------------- --------------
CASH GENERATED FROM OPERATIONS 74.1 88.1
=============== ==============
The accompanying unaudited condensed notes are an
integral part of these financial statements.
F-2
YELL FINANCE B.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT AT
31 MARCH 30 JUNE
(UNAUDITED) NOTES 2005 2005
-------------- --------------
((POUND) IN MILLIONS)
NON CURRENT ASSETS
Intangible fixed assets 1,706.0 1,748.0
Tangible fixed assets 40.1 37.3
Investment 11.8 11.1
Deferred tax assets 6 97.1 97.1
-------------- --------------
TOTAL NON CURRENT ASSETS 1,855.0 1,893.5
-------------- --------------
CURRENT ASSETS
-------------- --------------
Inventories 7.5 9.7
Directories in development 165.1 175.0
Debtors 7 451.3 453.8
Cash at bank and in hand 8 53.1 118.8
-------------- --------------
TOTAL CURRENT ASSETS 677.0 757.3
-------------- --------------
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Loans and other borrowings 8,9 (150.2) (935.6)
Corporation tax (20.7) (34.3)
Other creditors 10 (258.6) (253.8)
-------------- --------------
TOTAL CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (429.5) (1,223.7)
-------------- --------------
NET CURRENT ASSETS (LIABILITIES) 247.5 (466.4)
-------------- --------------
TOTAL ASSETS LESS CURRENT LIABILITIES 2,102.5 1,427.1
CREDITORS: AMOUNTS FALLING DUE AFTER
MORE THAN ONE YEAR
Loans and other borrowings 8,9 (1,548.8) (807.7)
Deferred tax liability 11 (51.3) (57.7)
Retirement benefit obligations 12 (99.7) (113.5)
-------------- --------------
NET ASSETS 402.7 448.2
============== ==============
CAPITAL AND RESERVES
Called up share capital 13 0.1 0.1
Share premium account 13 605.4 605.4
Currency reserve 13 (116.2) (87.7)
Profit and loss account deficit 13 (86.6) (69.6)
-------------- --------------
EQUITY SHAREHOLDERS' FUNDS 402.7 448.2
============== ==============
The accompanying unaudited condensed notes are an
integral part of these financial statements.
F-3
YELL FINANCE B.V. AND SUBSIDIARIES
UNAUDITED CONDENSED NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION AND CONSOLIDATION
The principal activity of Yell Finance B.V. and its subsidiaries is
publishing classified advertising directories in the United Kingdom and the
United States.
This unaudited financial information for the three months to 30 June 2005
has been prepared in accordance with the Yell Finance B.V.'s International
Financial Reporting Standards ("IFRS") accounting policies as set out in
the conversion statements for the periods ended 31 March 2005. These
accounting policies are the policies we expect to apply in the financial
statements for the year ended 31 March 2006, which will be prepared in
accordance with IFRS.
In preparing the financial information we used our best knowledge of the
expected standards and interpretations, facts and circumstances and
accounting policies that will be applicable at 31 March 2006. These may
change before 31 March 2006. The expected standards and interpretations are
subject to ongoing review by the European Union, and the International
Accounting Standards Board may issue amended or additional standards or
interpretations. Therefore, until we prepare our first full IFRS financial
statements, the possibility cannot be excluded that the accompanying
financial information may have to be adjusted.
The amounts presented for the three months ended 30 June 2004 and at 30
June 2004 and 31 March 2005 have been restated from the amounts previously
presented under UK GAAP. Details can be obtained from the IFRS conversion
statements published on 13 June 2005 on our website.
Subsequent to publishing the IFRS conversion statements we have improved
our analysis of deferred taxes and other items, which has given rise to
adjustments to amounts presented on the face of the balance sheet at 31
March 2005. These adjustments have increased our deferred tax assets and
deferred tax creditors by (pound)4.5 million. These changes have not
affected the previously reported profit and loss or cash flows.
The foregoing information 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 statement 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 Yell Finance B.V.'s Form 20-F filed with the SEC on 13
June 2005, which includes the audited consolidated financial statements of
Yell Finance B.V. and its subsidiaries for the year ended 31 March 2005.
The preparation of the consolidated financial statements 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 statements 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 doubtful debts, depreciation, retirement benefit
obligations and the related employee pension costs, acquisition accounting
and taxes.
F-4
YELL FINANCE B.V. AND SUBSIDIARIES
UNAUDITED CONDENSED NOTES TO THE FINANCIAL STATEMENTS (continued)
2. TURNOVER
THREE MONTHS ENDED 30 JUNE
-----------------------------------
2004 2005
---------------- ------------------
((POUND) IN MILLIONS)
UK printed directories 138.9 143.9
Other products and services 11.7 16.5
---------------- ------------------
TOTAL UK TURNOVER 150.6 160.4
TOTAL US TURNOVER 130.3 153.2
---------------- ------------------
GROUP TURNOVER 280.9 313.6
================ ==================
3. OPERATING PROFIT
THREE MONTHS ENDED 30 JUNE
-----------------------------------
2004 2005
---------------- ------------------
((POUND) IN MILLIONS)
UK printed directories 48.8 48.3
Other products and services 3.0 10.9
---------------- ------------------
TOTAL UK OPERATING PROFIT 51.8 59.2
TOTAL US OPERATING PROFIT 28.4 39.9
---------------- ------------------
OPERATING PROFIT 80.2 99.1
================ ==================
We do not allocate interest or taxation charges
by product or geographic segment.
F-5
YELL FINANCE B.V. AND SUBSIDIARIES
UNAUDITED CONDENSED NOTES TO THE FINANCIAL STATEMENTS (continued)
4. RESULTS BEFORE AND AFTER EXCEPTIONAL ITEMS
THREE MONTHS ENDED 30 JUNE
---------------------------------------------------------------------------
2004 2005
------------------------------------------- -------------------------------
ORDINARY EXCEPTIONAL ORDINARY EXCEPTIONAL
ITEMS ITEMS TOTAL ITEMS ITEMS TOTAL
---------------------------------------------------------------------------
((POUND) IN MILLIONS)
GROSS PROFIT 153.1 - 153.1 170.6 - 170.6
Distribution costs (8.3) - (8.3) (9.4) - (9.4)
Administrative expenses (64.6) - (64.6) (67.1) 5.0 (62.1)
---------------------------------------------------------------------------
OPERATING PROFIT 80.2 - 80.2 94.1 5.0 99.1
Net interest payable (33.3) - (33.3) (30.0) (6.7) (36.7)
---------------------------------------------------------------------------
PROFIT (LOSS) BEFORE
TAXATION 46.9 - 46.9 64.1 (1.7) 62.4
Taxation (14.3) - (14.3) (22.1) 0.7 (21.4)
---------------------------------------------------------------------------
PROFIT (LOSS) FOR THE
PERIOD 32.6 - 32.6 42.0 (1.0) 41.0
============================================================================
There were no exceptional items in the three months ended 30 June
2004. The exceptional administrative credit for the three months ended
30 June 2005 relates to the release of a provision for IPO costs.
Exceptional interest costs relate to the accelerated amortisation of
deferred financing fees on our senior debt, which was redeemed at the
date of the TransWestern acquisition.
5. TAXATION
The effective tax rate for the three months ended 30 June 2005 and
2004 is different from the standard rate of corporation tax in the
United Kingdom (30%) as explained below.
THREE MONTHS ENDED 30 JUNE
---------------------------------
2004 2005
--------------- --------------
((POUND) IN MILLIONS)
Profit on ordinary activities before taxation
multiplied by the standard rate of corporation
tax in the United Kingdom (30%) 14.1 19.2
Effects of:
Higher rate taxes in US 1.6 2.9
Previously unrecognised US tax losses recognised in
period (1.4) -
--------------- --------------
NET CHARGE ON ORDINARY PROFIT BEFORE TAX 14.3 22.1
Net tax benefit on exceptional items - (0.7)
--------------- --------------
NET CHARGE ON PROFIT BEFORE TAX 14.3 21.4
=============== ==============
F-6
YELL FINANCE B.V. AND SUBSIDIARIES
UNAUDITED CONDENSED NOTES TO THE FINANCIAL STATEMENTS (continued)
6. DEFERRED TAXATION ASSETS
The elements of deferred tax assets recognised in the accounts were as
follows:
AT AT
31 MARCH 30 JUNE
2005 2005
--------------- --------------
((POUND) IN MILLIONS)
Tax effect of timing differences due to :
Retirement benefit obligations 29.9 34.1
Bad debt provisions 25.1 26.7
Recognised net operating losses 20.9 17.1
Depreciation 9.2 9.2
Unrealised benefit on unexercised stock options 6.5 5.3
Accrued expenses and other items 5.5 4.7
-------------- -------------
RECOGNISED DEFERRED TAX ASSETS 97.1 97.1
============== =============
7. DEBTORS
AT AT
31 MARCH 30 JUNE
2005 2005
--------------- ----------------
((POUND) IN MILLIONS)
Trade debtors 429.3 419.0
Other debtors 8.1 9.0
Accrued income 4.7 8.0
Prepayments 9.2 17.8
--------------- ----------------
TOTAL DEBTORS 451.3 453.8
=============== ================
All amounts above fall due within one year.
F-7
YELL FINANCE B.V. AND SUBSIDIARIES
UNAUDITED CONDENSED NOTES TO THE FINANCIAL STATEMENTS (continued)
8. NET DEBT
ANALYSIS OF NET DEBT
AT AT
31 MARCH 30 JUNE
2005 2005
----------------- ---------------
((POUND) IN MILLIONS)
Long-term loans and other borrowings
falling due after more than one year 1,548.8 807.7
Short-term borrowings and long-term loans and
other borrowings falling due within one year 150.2 935.6
----------------- ---------------
Total debt 1,699.0 1,743.3
Cash at bank and in hand (53.1) (118.8)
----------------- ---------------
NET DEBT AT END OF PERIOD 1,645.9 1,624.5
================= ===============
9. LOANS AND OTHER BORROWINGS
AT AT
31 MARCH 30 JUNE
2005 2005
--------------- ---------------
((POUND) IN MILLIONS)
AMOUNTS FALLING DUE WITHIN ONE YEAR
Senior credit facilities 90.0 876.6
Subordinated parent company loan 58.9 58.9
Net obligations under finance leases 1.3 1.4
---------------- ----------------
AMOUNTS FALLING DUE WITHIN ONE YEAR 150.2 936.9
Unamortised finance fees - (1.3)
---------------- ----------------
NET AMOUNTS FALLING DUE WITHIN ONE YEAR 150.2 935.6
---------------- ----------------
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Senior credit facilities 769.6 -
Senior notes:
Senior sterling notes 162.5 162.5
Senior dollar notes 68.8 72.6
Senior discount dollar notes 83.4 90.7
Subordinated parent company loan 478.5 486.4
---------------- ----------------
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 1,562.8 812.2
Unamortised finance fees (14.0) (4.5)
---------------- ----------------
NET AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 1,548.8 807.7
---------------- ----------------
NET LOANS AND OTHER BORROWINGS 1,699.0 1,743.3
================ ================
F-8
YELL FINANCE B.V. AND SUBSIDIARIES
UNAUDITED CONDENSED NOTES TO THE FINANCIAL STATEMENTS (continued)
10. OTHER CREDITORS
AT AT
31 MARCH 30 JUNE
2005 2005
-------------- ---------------
((POUND) IN MILLIONS)
Trade creditors 22.9 12.3
Other taxation and social security 23.1 28.3
Other creditors 4.3 6.0
Accruals 116.8 114.7
Deferred income 91.5 92.5
--------------- --------------
TOTAL CREDITORS FALLING DUE WITHIN ONE YEAR 258.6 253.8
=============== ==============
11. DEFERRED TAXATION LIABILITIES
The elements of deferred tax liabilities recognised in the accounts were as
follows:
At At
31 March 30 June
2005 2005
-------------- ---------------
The effect of timing differences due to : ((pound) in millions)
Amortisation 25.5 30.5
Stocks valuation 25.8 27.2
--------------- --------------
RECOGNISED DEFERRED TAX LIABILITIES 51.3 57.7
=============== ==============
12. RETIREMENT BENEFIT OBLIGATIONS
The (pound)13.8 million increase in retirement benefit obligations is the
net result of total charges of (pound)5.8 million in the Income Statement
and the estimated deficit increase of (pound)20.0 million in the Statement
of Recognised Income and Expense offset by total cash contributions of
(pound)12.0 million. The (pound)20.0 million increase in deficit reflects a
decrease from 5.4% to 4.9% in the reference market rate to which the
discount rate is tied and takes into account changes in asset values by
reference to relevant market indices.
13. CHANGES IN EQUITY SHAREHOLDERS' FUNDS
FOREIGN PROFIT AND
SHARE SHARE CURRENCY LOSS
CAPITAL PREMIUM RESERVE ACCOUNT TOTAL
------------ ------------- ------------- ------------ ------------
((POUND) IN MILLIONS)
BALANCE AT 31 MARCH 2005 0.1 605.4 (116.2) (86.6) 402.7
Profit for the period - - - 41.0 41.0
Currency movements - - 28.5 - 28.5
Other comprehensive income - - - (24.0) (24.0)
------------ ------------- ------------- ------------ ------------
BALANCE AT 30 JUNE 2005 0.1 605.4 (87.7) (69.6) 448.2
============ ============= ============= ============ ============
F-9
YELL FINANCE B.V. AND SUBSIDIARIES
UNAUDITED CONDENSED NOTES TO THE FINANCIAL STATEMENTS (continued)
14. LITIGATION
The lawsuit filed by Verizon was settled in October 2004. In subsequent
months, YellowBook USA was served with complaints filed as class actions in
five US states and the District of Columbia. In these actions, the
plaintiffs allege violations of consumer protection legislation and are
placing reliance on findings of the New York Court in the now settled suit
brought against YellowBook USA by Verizon. On 13 May 2005, the court in New
Jersey gave its preliminary approval to a comprehensive national
settlement, with no admission of liability. Notice of the terms of
settlement was published to class members and the final approval hearing is
expected before we publish our half year results. Yell Finance B.V. fully
provided for the estimated costs in the year ended 31 March 2005 arising
from this class action.
F-10