preliminary results for the year ended 31 march 2006 23 may 2006
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Preliminary Resultsfor the year ended 31 March 2006
23 May 2006
2
Disclaimer
During this presentation we will be discussing Yell’s business outlook and making certain forward-looking statements. Any statements that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially.
We urge you to read the Risk Factors and cautionary language in the annual report on Form 20-F of our subsidiary, Yell Finance BV, that was filed with the SEC in June 2005 and is posted on our website.
We also draw your attention to our press release which is posted on our web site, for more information on the risks and uncertainties.
Annual reports for Yell Group plc are posted on our web site.
FinancialsJohn Davis CFO
4
Headline results
Growth
Year ended 31 March 2006 ActualConstan
t FX
Revenue £1,621.3m
26.1% 23.1%
Adjusted EBITDA£502.9m
28.0% 25.3%
Adjusted operating cash flow £447.0m
28.7% 26.3%
Cash conversion 88.9%
Free cash flow £253.3m
Dividends £114.1m
Acquisitions £978.3m
Adjusted diluted earnings per share 32.8p 25.2%
Total dividends per share 15.3p 21.4%
Earnings and cash flow figures stated before exceptional items and amortisation
5
Yell Group - strong historic growth
581 615 635 664 699
284499 552 621
922
2002 2003 2004 2005 2006
US
UK CAGR 17%
* Figures for years 1-3 reported under UK GAAPAdjusted EBITDA is stated before exceptional costs arising from the buyout arrangement under BT ownership in FY02; IPO costs and restructuring costs relating to the closure of a Yellow Book West production site in FY03; IPO costs in FY04; costs from lawsuits associated with a Yellow Book advertising campaign in FY05; and costs arising from the TransWestern acquisition, and an exceptional credit from releasing a provision for IPO costs in FY06
Revenue (£m) Adjusted EBITDA (£m)
210 226 233 232 245
35
97127 161
258
2002* 2003* 2004* 2005 2006
US
UK
28.3 29.0 30.3 30.6 31.0EBITDA margin %
CAGR 20%
6
2002* 2003* 2004* 2005 2006
Yell UK growth under regulation
Revenue (£m) Adjusted EBITDA (£m)
36.2 36.8 36.7 34.9 35.0 EBITDA margin %
2002 2003 2004 2005 2006
Yell.com and otherPrinted products
210 226 233 232
* Figures for years 1-3 reported under UK GAAP
CAGR 4.7%
581 615 635 664 699
-0.4 -4.4 -4.8 -3.3 -2.9Effective Yellow Pages price
reduction %
245
CAGR 3.9%
7
2002* 2003* 2004* 2005 2006
Existing
Yell US organic and acquisition growth
Revenue ($m) Adjusted EBITDA ($m)
12.3 19.4 23.0 25.9 28.0EBITDA margin %
2002 2003 2004 2005 2006
Acquired
Existing
CAGR 41%
409
775940
1,149
1,636
50
151
216
297
458
CAGR 74%
* Figures for years 1-3 reported under UK GAAP
8
8.3
42.448.6
6.2
27.3
0.9
5.9
Same marketgrowth
Newlaunches
Internet Acquisitions Growthbefore FX
Exchangeimpact
Total growth
US revenue growth
% CONTRIBUTION TO REVENUE GROWTH
Organic Growth 15.1%
9
Building US margins
EBITDA margin of new directories since launch
19%
28%
35%
28%
-2%
1 Year 2-3 Years 4-5 Years 6+ Years AllDirec tories
8% 14% 29% 49% 100%48 books 81 books 205 books 265 books 599 books
Share of revenue FY 06
10
Cash
GROUP CASH CONVERSION 88.9%
503
33
253
23
3
447
65
10224
AdjustedEBITDA
Workingcapital
Capex Operatingcash flow
Cashinterest
Cash tax Pensions Excep-tionals
Free cashflows
£m
11
Analysis of Debt
At 31 March 2006£m
Senior bank (inc Revolver) (1,682.9)
High yield (339.0)
Cash 28.5
Leases (0.6)
Net debt (1,994.0)66% $ denominated
12
Effective tax rate
Share of profits
Rate on Adj PBT
Rate on PBT
UK 57% 30% 29%*
US 43% 38% 38%
Effective tax rate (statutory basis) 34% 33%
Allowable amortisation and acquisition adjustments (12%)
US losses (4%)
Prior year refund and timing of payments (8%)
Other tax allowable items (1%)
Cash tax paid in year 8%
Tax paid as a percentage of tax charge 23%
*Release of Exceptional IPO provision is not taxable
13
Exceptional costs
FY 2006
Net exceptional costs of £7.2m (£3.0m after tax)– TransWestern acquisition costs
– Release of provision for IPO costs
– Accelerated amortisation of refinancing fees
FY 2005
Net exceptional costs of £36.5m (£22.8m after tax)– Verizon law suit and class action settlements
14
Guidance
UK Revenue growth 3% Adjusted EBITDA margin flat
US Organic revenue growth 10% Acquisition books publishing for the first time $125m revenue Adjusted EBITDA margin growth 100 basis points
Group Cash conversion 75% – 80% Interest c 7% P&L tax 34%, cash tax 27% of PBT
Strategic UpdateJohn CondronCEO
16
UK revenue drivers
Printed directories only
Unique advertisers (000s) ARPA (£)
-0.4 -4.4 -4.8 -3.3 -2.9Effective Yellow Pages price
reduction %
80 78 77 75 75Retention %
101 102 116 117 104
2002 2003 2004 2005 2006
New advertisersRetained c ustomers
438 451480 478 462 1,234 1,272 1,237 1,281
1,341
2002 2003 2004 2005 2006
17
UK print
Win – 462,000 print advertisers– 104,000 new print advertisers
Keep – retention 75%– Retention stabilised
– Proven value
Grow – ARPA up 4.7%– Improved customer service
– Further growth in advertisers’ programmes
Usage– Continued investment to drive usage
18
Competition Commission’s current timetable
Notifying provisional findingsJune 2006
Notifying and considering possible remedies (if required)
June
Remedies hearings (if required) June
Statutory deadline4 April 2007
Final deadline for all parties’ responses / submissions
14 July
Publish reportSeptember
19
56
75
103
141
174
2002 2003 2004 2005 2006
Yell.com
Average advertisers up 30%– Yell.com only advertisers up
34% to 32,000
Spend increased– ARPA up 28% at £378
Searches up 52% – Site enhancements
– Advertising
Searchable advertisers at 31 March (000s)
20
US platform
Source Yell, TransWestern
Yellow Book
60% SHARE OF INDEPENDENTS
21
Yellow Book revenue drivers
166
363386
455489
2002 2003 2004 2005 2006
Unique advertisers (000s) ARPA ($)
70 70 70 71 70Retention %
2,450
2,135
2,434 2,4772,693
2002 2003 2004 2005 2006
Printed directories only
22
US print
Win, Keep, Grow– YB Advertisers up 7.5%; retention 70%; ARPA up 8.7%
Same market growth – 8% of the growth– Share shift continues
32 launches – 6% of the growth– Average revenue per copy more than $13
15 in fill acquisitions - 2% of the growth
Usage study– Average usage more than 30% in markets surveyed
23
Yellowbook.com
0.5
1.3
2.4
2004 2005 2006
Visitors for March (m)* Adverts online at 31 March (000s)*
* Includes Worldpages.com acquired with TransWestern
228
375
562
1,415
2003 2004 2005 2006
24
TWP integration
Sales– Compensation plan and training in place
– Churn down from c 100% to c 70% but more to come
– Sales per rep already c $220,000 – up from $190,000
Operations– All 5 databases converted
Relaunches– Tucson closed ahead in competitive overlap market
– 8 more to come
25
Priorities for FY07
Yell UK– Win, keep and grow print, online and voice
– Strong arguments to Competition Commission
Yellow Book – Win, keep and grow print and online
– Continued expansion
TPI– Complete acquisition
– Initiate integration and transferral of best practice
26
Appendix
28
Yell Group P&L
2005£m
2006£m Change
Revenue 1,285.3 1,621.3 26.1%
Cost of sales (592.3) (751.4)
Gross profit 693.0 869.9 25.5%
Distribution costs (38.3) (49.5)
Administrative costs
Ordinary items (290.5) (371.1)
Exceptional items (36.5) 0.6
Operating profit 327.7 449.9 37.3%
Net interest payable
Ordinary items (93.3) (124.7)
Exceptional items - (7.8)
(Loss)/profit before taxation 234.4 317.4
Taxation
Before exceptional items (85.6) (109.3)
On exceptional items 13.7 4.2
(Loss)/profit for the period 162.5 212.3
29
Yell Group revenue and EBITDA
Revenue
2005£m
2006£m Change
UK 664.4 698.9 5.2%
US at constant exchange 620.9 883.9 42.4%
Exchange impact - 38.5
Total US 620.9 922.4 48.6%
Group total 1,285.3 1,621.3 26.1%
Group total at constant exchange
1,285.3 1,582.8 23.1%
Adjusted EBITDA
2005£m
2006£m Change
232.2 244.5 5.3%
160.8 247.8 54.1%
- 10.6
160.8 258.4 60.7%
393.0502.9 28.0%
393.0492.3 25.3%
Margin
UK 35.0%
US 28.0%
Group31.0%
30
UK and US revenue
Year ended 31 March 20062005£m
2006£m Change
UK
Printed directories 612.1 619.4 1.2%
Yell.com 36.2 59.6 64.6%
Other 16.1 19.9 23.6%
Total UK 664.4 698.9 5.2%
US
Printed directories before TransWestern (at constant exchange)
620.9 721.2 16.2%
TransWestern - 162.7
Exchange impact - 38.5
Total US 620.9 922.4 48.6%
Group total 1,285.3 1,621.3 26.1%
31
UK and US EBITDA
Year ended 31 March 20062005
£m2006
£m Margin
UK
Printed directories 217.8 219.8 35.5%
Yell.com 9.1 16.6 27.9%
Other 5.3 8.1
Total UK 232.2 244.5 35.0%
US
Printed directories (at constant exchange)
160.8 247.8 28.0%
Exchange impact - 10.6
Total US 160.8 258.4 28.0%
Group total 393.0 502.9 31.0%
32
Shareshift in US market
4.0 4.03.0 3.0
-0.4 -0.2-2.0 -1.5
-0.4
25
20
25
910
19
1312
13
1998 1999 2000 2001 2002 2003 2004 2005 2006E
IncumbentsIndependents
% Revenue growth for publishers
% Independents’ market share
8
10 1011
12
15
1718
20
1998 1999 2000 2001 2002 2003 2004 2005 2006E
Source: The Kelsey Group, March 2006
Investor Relations: Jill Sherratt +44 (0)118 950 6984
www.yellgroup.com
Yell, Queens Walk, Oxford Road, Reading, Berkshire RG1 7PT
™Trade mark of Yell Limited
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