Exhibit 99.1
YELL
23 MAY 2006
NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE NEWS RELEASE
YELL GROUP PLC FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2006
STRONG GROWTH ACROSS ALL BUSINESSES. SUCCESSFUL INTEGRATION OF TRANSWESTERN
o Group revenue up 26.1% to (pound)1,621.3 million
o Group adjusted EBITDA up 28.0% to (pound)502.9 million
o Adjusted profit after tax up 26.1% to (pound)233.6 million
o Group operating cash conversion of 88.9% compared to 88.4% last year
o Adjusted diluted earnings per share up 25.2% to 32.8 pence
o Proposed final dividend up 21.4% to 10.2 pence per share
- -------------------------------------------------- -------------------- --------------------- -------------------
STATUTORY RESULTS (Unaudited) 2005 2006 CHANGE
(POUND)M (POUND)M
o Revenue 1,285.3 1,621.3 26.1%
o Operating profit 327.7 449.9 37.3%
o Profit after tax 162.5 212.3 30.6%
o Cash generated from operations 357.8 411.5 15.0%
o Diluted earnings per share (pence) 22.9 29.7 29.7%
- -------------------------------------------------- -------------------- --------------------- -------------------
Notes:
o Unadjusted EBITDA was up 41.2% to (pound)503.5 million.
o Results previously reported for the year ended 31 March 2005 were reported
under UK GAAP. All figures reported here are reported under International
Financial Reporting Standards as adopted by the European Union ("IFRS"). A
detailed reconciliation between UK GAAP and IFRS can be obtained in the
IFRS conversion statements published on our website on 13 June 2005.
Updates to the published IFRS conversion statements are set out on page 13.
JOHN CONDRON, CHIEF EXECUTIVE OFFICER, SAID:
"Yell has delivered another excellent performance, exceeding expectations.
Yellow Book in the US has achieved significant organic growth including an
increasing contribution from Yellowbook.com. The integration of TransWestern is
complete and we expect an uplift in its performance to begin to flow through
next financial year. The UK's growth has been driven by Yell.com's outstanding
performance.
"We continue to present to the Competition Commission evidence of the real
competition for all forms of classified advertising in the UK, including
directories, and to show that the strength of our performance derives from
investment and excellence of execution and not from the weakness of competition.
"We believe our proposed acquisition of TPI, announced since the year end, will
create significant value for shareholders as we transfer our tried and tested
skills into the fast-growing economy in Spain, working with the TPI people whom
we have long known and respected to refocus on the core print and online
products."
Yell Group plc. Registered Office: Queens Walk, Oxford Road, Reading,
Berkshire RG1 7PT.
Registered in England No. 4180320.
JOHN DAVIS, CHIEF FINANCIAL OFFICER, SAID:
"These results benefit from our past investment, achieving balanced growth from
revenue, profits and cash generation. Our focus on investment will continue as
we drive revenue growth in our businesses.
"We converted 88.9% of adjusted EBITDA to operating cash, ahead of expectations.
Net debt now stands at 3.8 times EBITDA, down from 4.2 at the time of the
TransWestern acquisition, demonstrating our ability to rapidly reduce our
leverage.
"We are proposing a final dividend of 10.2 pence per share, an increase of
21.4%, reflecting our confidence in the future."
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, revenue, 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 2005 annual
report on Form 20-F filed with the US Securities and Exchange Commission (the
"SEC") on 13 June 2005, 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
2
YELL GROUP PLC SUMMARY FINANCIAL RESULTS
--------------------------- --------------------------
YEAR CHANGE AT
ENDED 31 MARCH CONSTANT
--------------------------- EXCHANGE
UNAUDITED 2005 (A) 2006 CHANGE RATE (B)
-------------- ------------ ----------- --------------
(POUND)M (POUND)M
- ----------------------------------------------- -------------- ------------ ----------- --------------
Revenue (c) 1,285.3 1,621.3 26.1% 23.1%
Adjusted EBITDA (c) (d) 393.0 502.9 28.0% 25.3%
Operating cash flow (c) (e) 347.4 447.0 28.7% 26.3%
Cash conversion (c) (f) 88.4% 88.9%
Free cash flow (g) 230.1 253.3 10.1%
Adjusted profit after tax (d) 185.3 233.6 26.1%
Adjusted diluted earnings per share (pence) (d) 26.2p 32.8P 25.2%
(a) Results previously reported for the year ended 31 March 2005 were reported
under UK GAAP. Figures above are reported under International Financial
Reporting Standards. A detailed explanation of these changes can be
obtained in the IFRS conversion statements published on our website on 13
June 2005. Updates to the published IFRS conversion statements are
described on page 13 of this release.
(b) Change at constant exchange rate states the change in current year results
compared with the previous year as if the current year results were
translated at the same exchange rate as that used to translate the results
for the previous year.
(c) Revenue, 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.
(d) Adjusted EBITDA for the year ended 31 March 2006 is stated before
exceptional costs of (pound)4.4 million arising From the TransWestern
acquisition, and an exceptional credit of (pound)5.0 million from releasing
a provision for IPO costs. Adjusted profit after tax used to calculate
adjusted earnings per share is stated before these exceptional items, a
charge of (pound)7.8 million from accelerated amortisation of finance fees
related to the bank debt refinanced on 15 July 2005 and (pound)29.5 million
amortisation on intangible assets acquired in the year, offset by related
tax of (pound)15.4 million. Adjusted EBITDA for the year ended 31 March
2005 is stated before exceptional costs of (pound)36.5 million which was
the total cost of litigation brought against our US operations. Adjusted
profit after tax and adjusted diluted earnings per share for the year ended
31 March 2005 are stated before these exceptional costs, offset by related
tax of (pound)13.7 million.
(e) Cash generated from operations before payments of exceptional costs and
pension deficit repair, less capital expenditure.
(f) Operating cash flow as a percentage of adjusted EBITDA.
(g) Cash generated from operations less payments for net interest, income tax
and capital expenditure.
REVIEW OF OPERATING PERFORMANCE
REVENUE
Group revenue increased 26.1% to (pound)1,621.3 million, or 23.1% at a constant
exchange rate, from (pound)1,285.3 million for last year. In the US,
TransWestern, which was acquired on 15 July 2005, contributed revenue of
(pound)162.7 million. Excluding all acquisitions, Group revenue increased by
10.0%, at a constant exchange rate.
UK OPERATIONS
UK revenue increased 5.2% to (pound)698.9 million. This growth was driven by a
64.6% increase in revenue by Yell.com to (pound)59.6 million.
Revenue from printed directories grew 1.2% to (pound)619.4 million. The total
number of unique print advertisers in the year dropped 3.3% to 462,000
reflecting increased competition. Retention was the same as last year at 75%.
The 4.7% growth in yield (average revenue per unique advertiser) to (pound)1,341
resulted from service quality improvements reducing the credit notes we issue to
advertisers, and higher spend as advertisers increased their programmes. The
effect of RPI-6% was to reduce Yellow Pages rate card prices by an average of
2.9%.
3
Yell.com's revenue growth of 64.6% to (pound)59.6 million was driven by growth
in customer numbers and yield. Average searchable advertisers grew 29.5% to
174,000 at the end of the year. Yield (recognised revenue per average searchable
advertiser) grew 28.1%, as usage increased, with a 52.4% growth in searches
compared with last year.
The Yellow Pages rate card reductions have once again been set at RPI-6% for the
next financial year. Overall we expect the UK business to achieve revenue growth
of 3%, with Yell.com providing this growth.
US OPERATIONS
Total US revenue grew 48.6% to (pound)922.4 million, or 42.4% at a constant
exchange rate. The effective exchange rate was approximately $1.77: (pound)1.00
against $1.85: (pound)1.00 last year.
Excluding the new advertisers from TransWestern, Yellow Book increased unique
advertisers by 7.5% to 489,000 and average revenue per unique advertiser by 8.7%
to $2,693. Retention was down from 71% to 70%.
Organic revenue growth contributed 15.1% to the total revenue growth of 42.4%
and is made up of same market growth, launches and internet revenue growth.
o On a like for like basis, same market growth was 8.6% and contributed
8.3% to organic growth.
o Launches contributed 5.9% to organic growth.
o Yellowbook.com grew 46.8% to $32.6 million, contributing 0.9% to
organic growth. Total internet revenue, including Worldpages.com (part
of TransWestern), was $42.2 million.
Looking forward to the next financial year, we expect to achieve organic growth
of 10%, driven by same market growth, as the benefits of the integration of
TransWestern flow through, and by internet growth.
Revenue from acquired books publishing for the first time contributed 27.3% to
the total revenue growth. This included (pound)162.7 million from TransWestern
which performed in line with expectations, providing 24.9% of overall revenue
growth. A further 2.4% of the overall revenue growth came from in-fill
acquisitions, the largest of which was Clarke Directory Publications in
California. In the year, we invested $121.2 million on these in-fill
acquisitions, adding revenue in the period since the dates of acquisition of
$27.3 million.
ADJUSTED EBITDA
Group adjusted EBITDA increased by 28.0% to (pound)502.9 million, or 25.3% at a
constant exchange rate. The Group adjusted EBITDA margin increased 0.4
percentage points to 31.0%, reflecting the strong performances of Yell.com and
the US business. Adjusted EBITDA for the year ended 31 March 2006 is stated
before a net exceptional credit of (pound)0.6 million comprising costs of
(pound)4.4 million relating to the TransWestern acquisition, and a credit of
(pound)5.0 million from releasing a provision for IPO costs in the UK.
UK adjusted EBITDA rose 5.3% to (pound)244.5 million, reflecting the growth
momentum of Yell.com, partially offset by our continued investment across the UK
business to support revenue growth. Adjusted EBITDA rose (pound)7.5 million to
(pound)16.6 million for Yell.com and (pound)2.0 million to (pound)219.8 million
for printed directories. The overall UK adjusted EBITDA margin was 35.0%, up
slightly from 34.9% last year.
4
As investment in the highly competitive environment in which we operate
continues during the next financial year, we expect a decline in the printed
directories' margins. However, we expect Yell.com's adjusted EBITDA margin to
offset this decline.
In the US, we grew adjusted EBITDA by 60.7% to (pound)258.4 million, a 54.1%
increase at a constant exchange rate. Apart from the contribution from
TransWestern, this reflected the strong organic revenue growth, the continued
transferral of best practice from the UK and within the US itself, and
operational leverage. The US adjusted EBITDA margin increased from 25.9% to
28.0%.
We plan to continue investing in the US business. The investments planned for
TransWestern will, as anticipated, slightly slow down margin growth during 2007.
We expect US adjusted EBITDA margins to increase by 1 percentage point during
the next financial year.
CASH FLOW AND NET DEBT
The Group converted 88.9% of adjusted EBITDA to cash, well ahead of guidance,
compared with 88.4% last year. Group operating cash flow increased 28.7% to
(pound)447.0 million, or 26.3% at a constant exchange rate. This is before the
pension deficit repair payment of (pound)64.8 million in the third quarter.
YEAR ENDED YEAR ENDED
31 MARCH 31 MARCH
-------------------- ---------------------
Unaudited 2005 2006
-------------------------------------------
(POUND)M (POUND)M
CASH GENERATED FROM OPERATIONS 357.8 411.5
Cash payments of exceptional items 13.6 3.6
Pension deficit repair payment - 64.8
Purchase of property, plant and equipment (24.0) (32.9)
-------------------- ---------------------
Operating cash flow 347.4 447.0
Adjusted EBITDA 393.0 502.9
-------------------- ---------------------
CASH CONVERSION 88.4% 88.9%
==================== =====================
Cash generated from operations was (pound)411.5 million (2005 - (pound)357.8
million). Free cash flow was (pound)253.3 million (2005 - (pound)230.1 million)
after taking into account net interest and tax payments of (pound)125.3 million
(2005 - (pound)103.7 million) and the purchase of property, plant and equipment
for (pound)32.9 million (2005 - (pound)24.0 million).
5
Net debt, at (pound)1,994.0 million, was 3.8 times adjusted EBITDA on a pro
forma basis (as if TransWestern and Clarke had been part of the Group for the
entire period) for the last 12 months. The movement in net debt for the year
ended 31 March 2006 arose as follows:
NET DEBT
---------------
Unaudited (POUND)M
AT 31 MARCH 2005 1,106.1
Free cash flow (253.3)
Acquisitions, net of cash acquired 968.2
Purchase of own shares 9.7
Proceeds of shares issued (2.4)
Dividends paid to shareholders 94.5
Net finance costs increasing debt 29.5
Currency movements 41.7
---------------
AT 31 MARCH 2006 1,994.0
===============
NET RESULTS
AFTER TAX RESULTS AND EXCEPTIONAL ITEMS
Profit after tax for the financial year ended 31 March 2006 was (pound)212.3
million, compared with a profit after tax for last year of (pound)162.5 million.
The effective tax rate in the year ended 31 March 2006 was 33.1% as expected,
compared with 30.7% last year.
Adjusted profit after tax for the financial year of (pound)233.6 million is
stated before exceptional items net of tax and amortisation net of tax.
Exceptional items include costs of (pound)4.4 million ((pound)2.8 million net of
tax credit) arising from the TransWestern acquisition, a credit of (pound)5.0
million from releasing a provision for IPO costs in the UK, and an additional
charge of (pound)7.8 million ((pound)5.2 million net of tax credit) from the
accelerated amortisation of finance fees related to bank debt refinancing.
Amortisation of acquired intangible assets is (pound)29.5 million ((pound)18.3
million net of tax credit).
EARNINGS PER SHARE AND DIVIDEND PER SHARE
Diluted earnings per share increased 25.2% to 32.8 pence before exceptional
items and amortisation. We are now adding back amortisation net of tax in
accordance with current best practice. On this basis, last year's adjusted
diluted earnings per share for the full year were 26.2 pence, compared with 27.0
pence when adding back gross amortisation.
Basic earnings per share before exceptional items and amortisation were 33.1
pence, as compared with 26.4 pence last year before exceptional items.
A final dividend of 10.2 pence per share has been proposed bringing the total
dividend for the year to 15.3 pence per share. This represents an increase of
21.4% over last year. The ex-dividend date will be 26 July 2006 and the dividend
will be paid on 25 August 2006 to shareholders registered on 28 July 2006.
The AGM will be held on 20 July 2006.
6
UK REGULATION
The Competition Commission has again extended its timetable for the
investigation of the Classified Directories Advertising Services. We expect the
next publication, the Notification of Provisional Findings, to be published in
June 2006. The Commission has not extended the date that it expects to publish
its final report, which is September 2006.
We have provided the Commission with evidence of the increasing and diversifying
competition in the market including the impact that we expect the entry of BT
and the growth of internet usage to have in the future. We believe that we have
demonstrated the excellent value we give advertisers, reducing prices since 2001
far beyond that required by regulation and improving our customer service from
an already high base. We believe that the body of evidence we have provided
supports the view that regulation is no longer required.
We will continue to contribute fully to the process.
All published information relating to the investigation can be found on the
Commission's website at www.competition-commission.org.uk.
7
KEY OPERATIONAL INFORMATION
---------------------------------
YEAR ENDED
UNAUDITED 31 MARCH
---------------------------------
2005 2006 CHANGE
- ------------------------------------------------------------------- ------------------ -------------- -------------
UK PRINTED DIRECTORIES
Unique advertisers (thousands) (a) 478 462 (3.3%)
Directories published (editions) 111 113
Unique advertiser retention rate (%) (b) 75 75
Revenue per unique advertiser ((pound)) 1,281 1,341 4.7%
US PRINTED DIRECTORIES (YELLOW BOOK)
Unique advertisers (thousands) (a) (c) 455 489 7.5%
Directories published (editions) 565 599
Unique advertiser retention rate (%) (c) 71 70
Revenue per unique advertiser ($) 2,477 2,693 8.7%
US PRINTED DIRECTORIES (TRANSWESTERN)
Unique advertisers (thousands) (a) (c) 133
Directoried published (editions) 236
Unique advertiser retention rate (%) (c) 69
Revenue per unique advertiser ($) 2,086
UK INTERNET
Yell.com searchable advertisers at 31 March (thousands)(d) 141 174 23.4%
Yell.com searches for March (millions) 21 32 52.4%
Yell.com revenue per average searchable
advertiser ((pound))(e) 295 378 28.1%
US INTERNET
Yellowbook.com advertisements online at 31 March (thousands)(f) 562 1,415 151.8%
Yellowbook.com unique visitors for March (millions) (g) 1.3 2.4 84.6%
(a) Number of unique advertisers in printed directories that were recognised
for revenue 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.
(b) The proportion of unique advertisers that have renewed their advertising
from the preceding publication.
(c) 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 figure for the
year ended 31 March 2005 for any duplicated records in that period. There
remains some overlap in reporting unique advertisers between Yellow Book
and acquired businesses that we expect to be removed. These improvements
to our systems have not affected the reporting of our financial results.
Retention in the US is based on unique directory advertisers.
(d) 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. They exclude advertisers who purchase only products
such as banners and domain names.
(e) Yell.com revenue per average searchable advertiser is calculated by
dividing the recognised revenue for Yell.com in the year by the average
number of Yell.com searchable advertisers (2006 - 158,000; 2005 -
122,000) in the year.
(f) Represents all paid for searchable advertisements appearing on the
Yellowbook.com website. Includes advertisements appearing on
Worldpages.com, acquired with TransWestern.
(g) The number of individuals who have visited Yellowbook.com at least once
in the month shown. Includes visitors to Worldpages.com, acquired with
TransWestern.
8
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED INCOME STATEMENT
YEAR ENDED
31 MARCH
----------------------------------
NOTES 2005 2006
------------------ ---------------
(POUND)M (POUND)M
REVENUE 2 1,285.3 1,621.3
Cost of sales (592.3) (751.4)
------------------ ---------------
GROSS PROFIT 693.0 869.9
Distribution costs (38.3) (49.5)
Administrative expenses (327.0) (370.5)
------------------ ---------------
OPERATING PROFIT 3 327.7 449.9
------------------ ---------------
Finance costs (94.6) (134.9)
Finance income 1.3 2.4
------------------ ---------------
NET FINANCE COSTS (93.3) (132.5)
------------------ ---------------
PROFIT BEFORE TAXATION 4 234.4 317.4
Taxation 5 (71.9) (105.1)
------------------ ---------------
PROFIT FOR THE FINANCIAL YEAR 4 162.5 212.3
================== ===============
(IN PENCE) (IN PENCE)
Basic earnings per share 6 23.2 30.1
Diluted earnings per share 6 22.9 29.7
(POUND)M (POUND)M
Declared and paid interim ordinary dividend of 5.1
pence per share (2005 - 4.2 pence) 7 29.4 35.6
Proposed final ordinary dividend of
10.2 pence per share (2005 - 8.4 pence) 58.9 78.5
See notes to the financial information for additional details.
9
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
YEAR ENDED
31 MARCH
---------------------------------------
2005 2006
------------------ --------------------
(POUND)M (POUND)M
PROFIT FOR THE YEAR 162.5 212.3
------------------ --------------------
Exchange differences on translation of foreign
operations (13.5) 47.8
Actuarial losses on defined benefit pension schemes (32.3) (3.5)
Change in fair value of financial instruments used
as hedges - 10.8
Tax effect of net losses (gains) not recognised in
the income statement 9.7 (2.9)
Tax benefit on intrinsic value of stock options 3.3 8.1
------------------ --------------------
Net (losses) gains not recognised
in the income statement (32.8) 60.3
------------------ --------------------
TOTAL RECOGNISED INCOME FOR THE YEAR 129.7 272.6
================== ====================
Adoption of IAS32/39 - Initial recognition of
financial instruments used as hedges - (2.9)
Adoption of IAS32/39 - Tax effect of initial
recognition of financial instruments used as
hedges - 1.0
------------------ --------------------
TOTAL (LOSSES) GAINS RECOGNISED IN EQUITY (32.8) 58.4
================== ====================
See notes to the financial information for additional details.
10
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED
NOTES 31 MARCH
------------------------------------
2005 2006
------------------ -----------------
(POUND)M (POUND)M
NET CASH INFLOW FROM OPERATING ACTIVITIES
Cash generated from operations 357.8 411.5
Interest paid (73.5) (103.9)
Interest received 1.3 2.4
Net income tax paid (31.5) (23.8)
------------------ -----------------
Net cash inflow from operating activities 254.1 286.2
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (P,P&E) 8 (24.0) (32.9)
Purchase of subsidiary undertakings, less
cash acquired 9 (31.8) (968.2)
------------------ -----------------
Net cash used in investing activities (55.8) (1,001.1)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of ordinary shares 3.4 2.4
Purchase of own shares (6.6) (9.7)
Net new borrowings on revolving credit facility - 242.7
Acquisition of new loans - 1,440.8
Repayment of borrowings (85.0) (885.0)
Financing fees paid - (14.0)
Dividends paid to company's shareholders 7 (71.3) (94.5)
-------------------------------------
Net cash (used in) provided by financing activities
(159.5) 682.7
------------------ -----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
38.8 (32.2)
Cash and cash equivalents at beginning of the year
18.7 55.5
Exchange (losses) gains on cash and cash equivalents
(2.0) 5.2
------------------ ----------------
CASH AND CASH EQUIVALENTS AT END OF THE YEAR 55.5 28.5
================== ================
CASH GENERATED FROM OPERATIONS
Profit for the year 162.5 212.3
Adjustments for:
Tax 71.9 105.1
Finance income (1.3) (2.4)
Finance cost 94.6 134.9
Depreciation of P,P&E and amortisation of
software costs 23.0 24.1
Amortisation of other intangible assets - 29.5
Goodwill adjustment arising from previously
unrecognised tax benefits acquired 5.8 -
Changes in working capital:
Inventories and directories in development (23.0) (21.3)
Trade and other receivables (38.4) (51.4)
Trade and other payables 54.0 33.7
Pension deficit repair - (64.8)
Share based payments and other 8.7 11.8
------------------ -----------------
CASH GENERATED FROM OPERATIONS 357.8 411.5
================== =================
See notes to the financial information for additional details.
11
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET
AT AT
31 MARCH 31 MARCH
NOTES 2005 2006
-------------------- --------------------
(POUND)M (POUND)M
NON CURRENT ASSETS
Goodwill 1,692.0 2,486.0
Other intangible assets 14.7 200.3
Property, plant and equipment 39.4 53.8
Deferred tax assets 10 115.0 139.6
Other assets 2.0 5.0
------------------- --------------------
TOTAL NON CURRENT ASSETS 1,863.1 2,884.7
------------------- --------------------
CURRENT ASSETS
------------------- --------------------
Inventories 7.5 6.7
Directories in development 165.1 226.0
Trade and other receivables 11 451.2 586.3
Cash and cash equivalents 12 55.5 28.5
------------------- --------------------
TOTAL CURRENT ASSETS 679.3 847.5
------------------- --------------------
CURRENT LIABILITIES
Loans and other borrowings 12 (91.3) (291.5)
Corporation tax (28.8) (57.9)
Trade and other payables 13 (258.1) (374.7)
------------------- --------------------
TOTAL CURRENT LIABILITIES (378.2) (724.1)
------------------- --------------------
NET CURRENT ASSETS 301.1 123.4
NON-CURRENT LIABILITIES
Loans and other borrowings 12 (1,070.3) (1,731.0)
Deferred tax liabilities 14 (68.5) (130.8)
Retirement benefit obligations 15 (100.3) (39.9)
------------------- --------------------
NET ASSETS 925.1 1,106.4
=================== ====================
CAPITAL AND RESERVES
Called up share capital 16 7.0 7.1
Share premium account 16 1,191.0 1,207.3
Accumulated deficit 16 (272.9) (108.0)
------------------- --------------------
EQUITY SHAREHOLDERS' FUNDS 925.1 1,106.4
=================== ====================
See notes to the financial information for additional details.
12
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.
This unaudited financial information for the year to 31 March 2006 has
been prepared in accordance with IFRS as adopted by the European Union
("IFRS") accounting policies as set out in our conversion statements
for the year ended 31 March 2005.
The amounts presented for the year ended 31 March 2005 and at 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
other intangible assets by (pound)0.7 million and reduced our property,
plant and equipment by (pound)0.7 million, decreased trade receivables
by (pound)0.1million, and increased our deferred tax assets by
(pound)22.4 million, deferred tax liabilities by (pound)21.7 million,
retirement benefit obligations by (pound)0.6 million, the equity
shareholders' funds by (pound)0.1 million and corporation tax payable
by (pound)0.6m, and decreased trade payables by (pound)0.7 million.
These changes are presentational in nature and do not affect the
previously reported results or cash flows. We also changed our
methodology for calculating adjusted earnings per share ("EPS") to what
we consider to be current best practice. We now add back amortisation
net of tax, as opposed to adding it back gross. The adjusted EPS for
the year ended 31 March 2005 was 26.2 pence under the new methodology,
compared to 27.0 pence presented in the IFRS conversion statements.
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.
This financial information should be read in conjunction with Yell's
2006 annual report which will be published in June 2006, and will
include the audited consolidated financial statements of Yell Group Plc
and its subsidiaries for the year ended 31 March 2006.
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,
retirement benefit obligations and the related employee pension costs,
acquisition accounting and taxes.
13
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
2. REVENUE
YEAR
ENDED 31 MARCH CHANGE
----------------------------------------------
2005 2006 %
------------------ --------------------------
(POUND)M (POUND)M
UK printed directories 612.1 619.4 1.2%
Other products and services 52.3 79.5
------------------ --------------
TOTAL UK REVENUE 664.4 698.9 5.2%
------------------ --------------
US revenue:
US revenue at constant exchange rate (a) 620.9 883.9 42.4%
Exchange impact (a) - 38.5
------------------ --------------
TOTAL US REVENUE 620.9 922.4 48.6%
------------------ --------------
GROUP REVENUE 1,285.3 1,621.3 26.1%
================== ==============
(a) Constant exchange rate states current year results at the same
exchange rate as that used to translate the results for the
previous year. Exchange impact is the difference between the
results reported at a constant exchange rate and the actual
results using current year exchange rates.
See Note 9 for an analysis of the effect of acquisitions in the year
on our results.
3. OPERATING PROFIT AND EBITDA INFORMATION
ADJUSTED EBITDA (A)
YEAR
ENDED 31 MARCH CHANGE
-------------------------------------------
2005 2006 %
-------------- ----------------------------
(POUND)M (POUND)M
UK printed directories 217.8 219.8 0.9%
Other products and services 14.4 24.7
-------------- ----------------
TOTAL UK OPERATIONS 232.2 244.5 5.3%
-------------- ----------------
US operations:
US operations at constant exchange rate (b) 160.8 247.8 54.1%
Exchange impact (b) - 10.6
-------------- ----------------
TOTAL US OPERATIONS 160.8 258.4 60.7%
-------------- ----------------
GROUP ADJUSTED EBITDA 393.0 502.9 28.0%
============== ================
(a) EBITDA is one of the key financial measures that we use to
assess the growth in the business and operational
efficiencies.
(b) Constant exchange rate states current year results at the same
exchange rate as that used to translate the results for the
previous year. Exchange impact is the difference between the
results reported at a constant exchange rate and the actual
results using current year exchange rates.
14
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 EBITDA
YEAR
ENDED 31 MARCH CHANGE
-------------------------------------------------------
2005 2006 %
-------------------------------------------------------
(POUND)M (POUND)M
UK operations
OPERATING PROFIT 220.5 238.3
Depreciation and amortisation of
non-current assets 11.7 11.2
-------------------- ---------------------
UK OPERATIONS EBITDA 232.2 249.5 7.5%
Exceptional items - (5.0)
-------------------- ---------------------
UK OPERATIONS ADJUSTED EBITDA 232.2 244.5 5.3%
-------------------- ---------------------
UK OPERATIONS ADJUSTED EBITDA MARGIN 34.9% 35.0%
==================== =====================
US operations
OPERATING PROFIT 107.2 211.6
Depreciation and amortisation of
non-current assets 17.1 42.4
-------------------- ---------------------
US OPERATIONS EBITDA 124.3 254.0 104.3%
Exceptional items 36.5 4.4
Exchange impact (a) - (10.6)
-------------------- ---------------------
US OPERATIONS ADJUSTED EBITDA AT CONSTANT 160.8 247.8 54.1%
EXCHANGE RATE (a)
Exchange impact (a) - 10.6
-------------------- ---------------------
US OPERATIONS ADJUSTED EBITDA 160.8 258.4 60.7%
-------------------- ---------------------
US OPERATIONS ADJUSTED EBITDA MARGIN 25.9% 28.0%
==================== =====================
Group
OPERATING PROFIT 327.7 449.9
Depreciation and amortisation of
non-current assets 28.8 53.6
-------------------- ---------------------
GROUP EBITDA 356.5 503.5 41.2%
Exceptional items 36.5 (0.6)
Exchange impact (a) - (10.6)
-------------------- ---------------------
GROUP ADJUSTED EBITDA AT CONSTANT EXCHANGE 393.0 492.3 25.3%
RATE (a)
Exchange impact (a) - 10.6
-------------------- ---------------------
GROUP ADJUSTED EBITDA 393.0 502.9 28.0%
==================== =====================
GROUP ADJUSTED EBITDA MARGIN 30.6% 31.0%
==================== =====================
(a) Constant exchange rate states current year results at the same
exchange rate as that used to translate the results for the
previous year. Exchange impact is the difference between the
results reported at a constant exchange rate and the actual
results reported using current year exchange rates.
We do not allocate interest or taxation charges by product or
geographic segment.
15
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
4. RESULTS BEFORE AND AFTER EXCEPTIONAL ITEMS
YEAR ENDED 31 MARCH
------------------------------------------------------------------------------------
2005 2006
------------------------------------------ ------------------------------------------
ORDINARY EXCEPTIONAL TOTAL ORDINARY EXCEPTIONAL TOTAL
ITEMS ITEMS ITEMS ITEMS
-------------- ---------------- ---------- ------------- ---------------- -----------
(POUND)M (POUND)M (POUND)M (POUND)M (POUND)M (POUND)M
GROSS PROFIT 693.0 - 693.0 869.9 - 869.9
Distribution costs (38.3) - (38.3) (49.5) - (49.5)
Administrative expenses
(290.5) (36.5) (327.0) (371.1) 0.6 (370.5)
-------------- ---------------- ---------- ------------- ---------------- -----------
OPERATING PROFIT 364.2 (36.5) 327.7 449.3 0.6 449.9
Net finance costs (93.3) - (93.3) (124.7) (7.8) (132.5)
-------------- ---------------- ---------- ------------- ---------------- -----------
PROFIT (LOSS) BEFORE
TAXATION 270.9 (36.5) 234.4 324.6 (7.2) 317.4
Taxation (85.6) 13.7 (71.9) (109.3) 4.2 (105.1)
-------------- ---------------- ---------- ------------- ---------------- -----------
PROFIT (LOSS) FOR THE YEAR 185.3 (22.8) 162.5 215.3 (3.0) 212.3
============== ================ ========== ============= ================ ===========
The exceptional items for the year ended 31 March 2006 include
restructuring and other costs of (pound)4.4 million arising from the
TransWestern acquisition, and a credit of (pound)5.0 million from
releasing a provision for IPO costs in the UK. Exceptional finance
costs for the year ended 31 March 2006 relate to the accelerated
amortisation of deferred financing fees on our senior bank debt, which
was redeemed at the date of the TransWestern acquisition. Exceptional
administrative costs in the year ended 31 March 2005 are costs relating
to litigation brought against our US operations (see note 17).
5. TAXATION
The tax charge is based on the estimated effective tax rate for the
year. The effective tax rate for the year is different from the
standard rate of corporation tax in the United Kingdom (30%) as
explained below:
YEAR ENDED
31 MARCH
----------------------------------
2005 2006
--------------- ---------------
(POUND)M (POUND)M
Profit before tax multiplied by the standard rate of
corporation tax in the United Kingdom (30%)
70.3 95.2
Effects of:
Higher tax rates in US 1.3 10.5
Disallowed items 0.8 0.4
Adjustment from prior year 0.4 (1.4)
Other (0.9) 0.4
--------------- ---------------
TAX CHARGE ON PROFIT BEFORE TAX 71.9 105.1
=============== ===============
Current tax 44.0 50.6
Deferred tax 27.9 54.5
--------------- ---------------
NET CHARGE ON PROFIT BEFORE TAX 71.9 105.1
=============== ===============
16
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
6. EARNINGS PER SHARE
The calculation of basic and diluted earnings per share is based on the
profit for the relevant financial period and on the weighted average
share capital during the period.
EXCEPTIONAL
ITEMS, AMORTISATION,
ACTUAL NET OF TAX (A) NET OF TAX (B) ADJUSTED
---------- ---------------- ------------------- -------------
YEAR ENDED 31 MARCH 2006
Group profit after tax ((pound)m) 212.3 3.0 18.3 233.6
Weighted average number of issued ordinary shares
(millions) 705 705
---------- -------------
BASIC EARNINGS PER SHARE (PENCE) 30.1 33.1
Effect of share options (pence) (0.4) (0.3)
---------- -------------
DILUTED EARNINGS PER SHARE (PENCE) 29.7 32.8
========== =============
YEAR ENDED 31 MARCH 2005
Group profit after tax ((pound)m) 162.5 22.8 - 185.3
Weighted average number of issued ordinary shares
(millions) 701 701
---------- -------------
BASIC EARNINGS PER SHARE (PENCE) 23.2 26.4
Effect of share options (pence) (0.3) (0.2)
---------- -------------
DILUTED EARNINGS PER SHARE (PENCE) 22.9 26.2
========== =============
(a) Exceptional items are explained in note 4.
(b) Amortisation of (pound)29.5 million in 2006 arose from
acquisitions in the period and is added back net of
(pound)11.2 million for tax. A goodwill charge of (pound)5.8
million in 2005 arose from the recognition of tax net
operating losses from acquisitions in the United States and
had nil effect on adjusted earnings per share because the tax
benefit was of equal amount.
7. INTERIM AND FINAL DIVIDEND PER SHARE
Dividends paid in the year were as follows:
YEAR ENDED
31 MARCH
----------------------------------
2005 2006
--------------- ---------------
(POUND)M (POUND)M
Final dividend of 6.0 pence and 8.4 pence per share for 2004
and 2005, respectively 41.9 58.9
Interim dividend of 4.2 pence and 5.1 pence per share for 2005
and 2006, respectively 29.4 35.6
--------------- ---------------
Dividends paid 71.3 94.5
=============== ===============
The proposed final dividend for the 2006 financial year of 10.2 pence
per share will be paid on 25 August 2006 to shareholders registered at
the close of business on 28 July 2006.
8. CAPITAL EXPENDITURE
Capital expenditure on property, plant & equipment in the year to 31
March 2006 and 2005 was (pound)32.9 million and (pound)24.0 million,
respectively. Proceeds on the sale of property, plant & equipment were
(pound)nil in the same periods.
Capital expenditure committed at 31 March 2006 and 2005 was
(pound)nil.
17
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
9. ACQUISITIONS
In the year to 31 March 2006, the Yell Group acquired a number of
directories businesses in the US for consideration totalling $1,716.5
million ((pound)978.3 million). The purchases were accounted for as
acquisitions. The largest acquisition was that of TransWestern
Publishing on 15 July 2005 for a purchase price of $1,573.8 million
((pound)897.6 million) plus expenses of $21.5 million ((pound)12.3
million). The purchase price of TransWestern was allocated to the
acquired assets and liabilities as follows:
DEBT AND OTHER
ACQUIREE'S FAIR VALUE LIABILITIES PROVISIONAL
CARRYING AMOUNT ADJUSTMENTS EXTINGUISHED FAIR VALUE
----------------- ----------------- ----------------- --------------
(POUND)M (POUND)M (POUND)M (POUND)M
NON CURRENT ASSETS
Intangible assets 84.9 111.8 - 196.7
Property, plant and equipment 2.7 (0.1) - 2.6
Deferred tax assets 31.8 0.2 - 32.0
----------------- ----------------- ----------------- --------------
TOTAL NON CURRENT ASSETS 119.4 111.9 - 231.3
----------------- ----------------- ----------------- --------------
CURRENT ASSETS
Directories in development 26.2 - - 26.2
Trade and other receivables 53.6 (0.6) - 53.0
Cash and cash equivalents 1.1 - - 1.1
----------------- ----------------- ----------------- --------------
TOTAL CURRENT ASSETS 80.9 (0.6) - 80.3
----------------- ----------------- ----------------- --------------
CURRENT LIABILITIES
Loans and other borrowings (3.6) - 3.6 -
Corporation Tax (0.7) - - (0.7)
Trade and other payables (88.6) - 27.7 (60.9)
----------------- ----------------- ----------------- --------------
TOTAL CURRENT LIABILITIES (92.9) - 31.3 (61.6)
----------------- ----------------- ----------------- --------------
TOTAL ASSETS LESS CURRENT LIABILITIES 107.4 111.3 31.3 250.0
NON-CURRENT LIABILITIES
Loans and other borrowings (386.3) - 386.3 -
Deferred tax liabilities (4.0) (17.3) - (21.3)
----------------- ----------------- ----------------- --------------
IDENTIFIABLE NET (LIABILITIES) ASSETS (282.9) 94.0 417.6 228.7
================= ================= =================
Goodwill 681.2
--------------
Total cost 909.9
==============
18
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
9. ACQUISITIONS (CONTINUED)
The results of TransWestern reduced the group profit before tax by
(pound)19.1 million in the period from the date of acquisition to 31
March 2006. In the same period, the results of TransWestern increased
the group adjusted profit before tax, amortisation and exceptional
costs by (pound)12.5 million (loss of (pound)19.1 million with
(pound)27.2 million and (pound)4.4 million added back for amortisation
and exceptional costs, respectively). The consolidated financial
information of the Yell Group consolidates the financial results of
TransWestern for the 260 days ended 31 March 2006. The unaudited
condensed pro forma financial information for the Yell Group,
estimated as if TransWestern was purchased on 1 April 2004, for the
year ended 31 March 2005 and 2006 is as follows:
YEAR ENDED
PROFORMA 31 MARCH
-------------------------------------------
2005 2006
-------------------------------------------
(POUND)M (POUND)M
Group revenue 1,482.4 1,680.9
Profit for the year 154.7 222.5
On 3 January 2006, we acquired the assets of Clarke Directory
Publications (Clarke) for a purchase price of $72.0 million
((pound)40.8 million). The purchase price of Clarke was allocated to
the acquired assets and liabilities as follows:
ACQUIREE'S
CARRYING FAIR VALUE PROVISIONAL
AMOUNT ADJUSTMENTS FAIR VALUE
--------------- ----------------- --------------
(POUND)M (POUND)M (POUND)M
NON CURRENT ASSETS
Intangible assets - 11.6 11.6
Property, plant and equipment 0.9 0.1 1.0
--------------- ----------------- --------------
TOTAL NON CURRENT ASSETS 0.9 11.7 12.6
--------------- ----------------- --------------
CURRENT ASSETS
Directories in development 0.7 0.3 1.0
Trade and other receivables 3.5 - 3.5
--------------- ----------------- --------------
TOTAL CURRENT ASSETS 4.2 0.3 4.5
--------------- ----------------- --------------
CURRENT LIABILITIES
Trade and other payables (0.7) - (0.7)
--------------- ----------------- --------------
TOTAL CURRENT LIABILITIES (0.7) - (0.7)
--------------- -----------------
IDENTIFIABLE NET ASSETS 4.4 12.0 16.4
=============== =================
Goodwill 24.4
--------------
Total cost 40.8
==============
19
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
9. ACQUISITIONS (CONTINUED)
We also made other acquisitions in the year that are not considered
material for separate presentation. We paid cash of $49.2 million
((pound)27.6 million). The purchase price of these acquisitions was
allocated to the acquired assets and liabilities as follows:
ACQUIREE'S
CARRYING FAIR VALUE PROVISIONAL
AMOUNT ADJUSTMENTS FAIR VALUE
--------------- ----------------- --------------
(POUND)M (POUND)M (POUND)M
NON CURRENT ASSETS
Intangible assets - 4.9 4.9
Property, plant and equipment - 0.1 0.1
--------------- ----------------- --------------
TOTAL NON CURRENT ASSETS - 5.0 5.0
--------------- ----------------- --------------
CURRENT ASSETS
Directories in development 0.3 0.1 0.4
Trade and other receivables 1.3 - 1.3
Cash 0.2 - 0.2
--------------- ----------------- --------------
TOTAL CURRENT ASSETS 1.8 0.1 1.9
--------------- ----------------- --------------
CURRENT LIABILITIES
Trade and other payables (0.9) - (0.9)
--------------- ----------------- --------------
TOTAL CURRENT LIABILITIES (0.9) - (0.9)
--------------- ----------------- --------------
IDENTIFIABLE NET ASSETS 0.9 5.1 6.0
=============== =================
Goodwill 21.6
--------------
Total cost 27.6
==============
The reconciliation of the cost of acquisitions to the cash paid for
acquisitions in the year is as follows:
YEAR ENDED 31
MARCH
----------------
2005
----------------
(POUND)M
TOTAL COST OF ACQUISITIONS 978.3
Cash paid for acquisitions in prior year 0.2
Costs accrued at 31 March 2006 (9.0)
----------------
Cash paid 969.5
Less cash acquired (1.3)
----------------
NET CASH OUTFLOW IN PERIOD 968.2
================
20
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
10. DEFERRED TAX ASSETS
The elements of deferred tax assets recognised in the accounts were as
follows:
AT AT
31 MARCH 31 MARCH
2005 2006
---------------- -------------------
(POUND)M (POUND)M
Tax effect of timing differences due to:
Retirement benefit obligations 30.1 26.6
Bad debt provisions 25.2 38.3
Recognised tax net operating losses 20.9 20.5
Depreciation 9.2 6.9
Share options 6.4 15.9
Accrued expenses and other allowances 12.6 20.4
Other 10.6 11.0
---------------- -------------------
RECOGNISED DEFERRED TAX ASSETS 115.0 139.6
================ ===================
Tax losses of (pound)56.0 million are available to use against taxable
income arising in the US in future years. The benefits available in
respect of tax net operating losses arising from US operations expire
between 2010 and 2023 if not used.
11. TRADE AND OTHER RECEIVABLES
AT AT
31 MARCH 31 MARCH
2005 2006
---------------- -------------------
(POUND)M (POUND)M
Trade receivables (a) 429.2 555.5
Other receivables 8.1 19.0
Accrued income (a) 4.7 1.4
Prepayments 9.2 10.4
---------------- -------------------
TOTAL TRADE AND OTHER RECEIVABLES 451.2 586.3
================ ===================
(a) The Group's trade receivables and accrued income are stated
after deducting a provision of (pound)157.8 million at 31
March 2006 (2005 - (pound)112.8 million).
21
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
12. LOANS AND OTHER BORROWINGS AND NET DEBT
AT AT
31 MARCH 31 MARCH
2005 (A) 2006 (A)
---------------- -------------------
(POUND)M (POUND)M
AMOUNTS FALLING DUE WITHIN ONE YEAR
Senior credit facilities 90.0 48.7
Revolving loan under senior credit facilities - 242.2
Net obligations under finance leases 1.3 0.6
---------------- -------------------
TOTAL AMOUNTS FALLING DUE WITHIN ONE YEAR 91.3 291.5
---------------- -------------------
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Senior credit facilities 761.0 1,392.0
Senior notes:
Senior sterling notes 159.8 161.8
Senior dollar notes 67.4 74.4
Senior discount dollar notes 82.1 102.8
---------------- -------------------
TOTAL AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 1,070.3 1,731.0
---------------- -------------------
NET LOANS AND OTHER BORROWINGS 1,161.6 2,022.5
Cash and cash equivalents (55.5) (28.5)
---------------- -------------------
NET DEBT AT END OF PERIOD 1,106.1 1,994.0
================ ===================
(a) Balances are shown net of deferred financing fees of
(pound)10.8 million at 31 March 2006 and (pound)14.0 miLLION
AT 31 March 2005.
13. TRADE AND OTHER PAYABLES
AT AT
31 MARCH 31 MARCH
2005 2006
---------------------- -------------------
(POUND)M (POUND)M
Trade payables 22.9 32.9
Other taxation and social security 17.4 17.3
Accruals and other payables 126.3 163.3
Deferred income 91.5 161.2
--------------------- ------------------
TOTAL TRADE AND OTHER PAYABLES FALLING DUE WITHIN ONE YEAR
258.1 374.7
===================== ==================
14. DEFERRED TAX LIABILITIES
The elements of deferred tax liabilities recognised in the accounts
were as follows:
AT AT
31 MARCH 31 MARCH
2005 2006
--------------------- -------------------
(POUND)M (POUND)M
The effect of timing differences due to:
Amortisation 41.3 76.1
Directories in development 25.8 32.9
Financial instruments - 3.3
Other and deferred costs 1.4 18.5
-------------------- ------------------
RECOGNISED DEFERRED TAX LIABILITIES 68.5 130.8
==================== ==================
22
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
15. RETIREMENT BENEFIT OBLIGATIONS
The (pound)60.4 million decrease in retirement benefit obligations
from (pound)100.3 million at 31 March 2005 to (pound)39.9 million at
31 March 2006 is the net result of total charges of (pound)19.2
million in the Income Statement and the actuarial loss of (pound)3.5
million within the Statement of Recognised Income and Expense, offset
by annual cash contributions of (pound)18.3 million and a deficit
repair payment of (pound)64.8 million. The (pound)3.5 million
actuarial loss reflects a (pound)30.3 million increase in liabilities
arising from a decrease in real interest rates, as defined by
reference to market rates to which the discount and inflation rate
assumptions are tied, net of (pound)26.8 million of actuarial gains.
16. CHANGES IN EQUITY SHAREHOLDERS' FUNDS
SHARE SHARE ACCUMULATED
CAPITAL PREMIUM DEFICIT TOTAL
------------------------------------------------------
(POUND)M (POUND)M (POUND)M (POUND)M
BALANCE AT 31 MARCH 2005 7.0 1,191.0 (272.9) 925.1
Profit on ordinary
activities after taxation - - 212.3 212.3
Dividends - - (94.5) (94.5)
Ordinary share issue 0.1 16.3 (10.4) 6.0
Capital Accumulation Plan
and other share schemes (a) - - (0.9) (0.9)
Currency movements (b) - - 47.8 47.8
Net gains not recognised in income
statement - - 10.6 10.6
---------- -------------- -------------- ------------
BALANCE AT 31 MARCH 2006
7.1 1,207.3 (108.0) 1,106.4
========== ============== ============== ============
(a) Purchase of shares and amortisation of the costs incurred in
buying shares held in an ESOP trust for employees.
(b) Cumulative foreign currency losses at 31 March 2006 are
(pound)68.4 million (2005 - (pound)116.2 million).
23
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
17. LITIGATION
The lawsuit filed by Verizon was settled in October 2004. In subsequent
months, Yellow Book USA was served with complaints filed as class
actions in five US states and the District of Columbia. In these
actions, the plaintiffs alleged violations of consumer protection
legislation and placed reliance on findings of the New York Court in
the now settled suit. On 26 August 2005, the court in New Jersey
approved a comprehensive national settlement, with no admission of
liability. The Yell Group fully accrued for the estimated costs arising
from this class action in the year ended 31 March 2005.
18. POST BALANCE SHEET EVENT
On 28 April 2006, the Yell Group announced that it had entered into an
agreement with Telefonica S.A. ("Telefonica") to acquire its 59.905%
stake in Telefonica Publicidad e Informacion, S.A. ("TPI") by way of an
all cash public tender offer for the entire issued share capital of
TPI.
TPI is the leading publisher of print and online directories in Spain
where it publishes 182 directories and distributes over 36 million
copies. TPI also has significant positions in a number of Latin
American countries including leadership positions in Peru and Chile.
TPI is a substantial and complementary extension to Yell's existing
business, adding a third leg to our highly successful operations in the
UK and US.
24
YELL GROUP PLC AND SUBSIDIARIES
UNAUDITED NOTES TO THE FINANCIAL INFORMATION (CONTINUED)
18. POST BALANCE SHEET EVENT (CONTINUED)
The acquisition will be financed using the proceeds from new shares
placed on 28 April 2006, which raised approximately (pound)350 million,
and by refinancing our existing debt. On 2 May 2006, we refinanced our
existing senior debt and replaced it with new senior debt. A portion of
the proceeds of the new debt was used to defease our obligations under
the Senior Notes. These will be redeemed and fully repaid in June 2006.
The new senior secured credit facilities of up to (pound)4,650 million
are fully underwritten by Citigroup Global Markets Limited, Deutsche
Bank AG, Goldman Sachs International and HSBC Bank plc. In addition,
these banks will provide Yell with a revolving credit facility of
(pound)400 million.
The acquisition of TPI is conditional on Yell shareholder approval,
authorisation of the public tender offer by the CNMV, Spain's market
regulator, and customary regulatory approvals. Therefore, completion of
the acquisition cannot be assured; however, it is expected to complete
in July 2006.
25
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 2006, Yell published 113 directories in the United
Kingdom and 835 in the United States; in the United Kingdom, where it is a
leading player in the classified advertising market, it served 462,000 unique
advertisers. In the United States, where it is the leading independent
directories business, it served 622,000 unique advertisers.
Yell's brands in the United Kingdom are Yellow Pages, Business Pages, Yell.com
and Yellow Pages 118 24 7, and in the United States are Yellow Book and
Yellowbook.com, all of which are trademarks.
26