fy 08 preliminary results for the year ended 31march 2008 20 may 2008
TRANSCRIPT
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FY 08 preliminary resultsfor the year ended 31March 2008
20 May 2008
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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 posted on our website.
We also draw your attention to our press release which is posted on our website, for more information on the risks and uncertainties.
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Agenda
Introduction John Condron
Financials John Davis
Strategic update John Condron
John Condron
John Davis
Joe Walsh
Ana Garcia Fau
Q&A
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FinancialsJohn Davis CFO
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Headline results
Adjusted earnings figures stated before exceptional items and amortisation throughout this presentation
Year ended 31 March 2008 (£m) Actual Growth
Growth at constant
FX
Revenue 2,218.7 6.9% 8.5%
Adjusted EBITDA 738.9 9.1% 10.1%
Adjusted EBITDA margin 33.3%
Operating cash flow 626.2 15.6% 16.5%
Cash conversion 84.7%
Free cash flow before refinancing cost and exceptionals
293.8 16.5%
Adjusted diluted earnings per share 37.5p 5.6%
Underlying adjusted diluted earnings per share
37.8p10.5%
Interim dividends per share 6.3p 10.5%
Final dividends per share 5.7p (50%)
Total dividends per share 12.0p (30%)
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The Yell Group
Yell Publicidad 25%
Yellow Book USA45%
Yell Publicidad 22%
Yell UK 33%
FY 08 revenue FY 08 EBITDA
Organic revenue up 2.5%
Yell UK 35%
Yellow Book USA40%
Cash conversion 85% of EBITDA
EBITDA margin 33.3%
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Internet revenue
RevenueGrowth
% of total revenue
UK £139.2m 45% 19%
US $115.1m 68% 6%
Spain €44.1m 14%* 9%
LatAm €11.1m 43% 7%
Total £235.7m 45% 11%
Note: Spain excludes Noxtrum. Publicom excluded in LatAm growth. * Lower growth rate reflects current unbundling of print and online prices
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FY 04* FY 05 FY 06 FY 07 FY 08
Printed products Yell.com and other
FY 04* FY 05 FY 06 FY 07 FY 08
Yell UK
Revenue (£m) Total adjusted EBITDA (£m)
-4.8 -3.3 -2.9 -2.8 -3.3
Effective Yellow Pages price reduction %
36.7 34.9 35.0 35.1 35.6 Adjusted EBITDA margin %
* Figures reported under UK GAAP
261233 232
245635 664 699 720 253732
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FY 04* FY 05 FY 06 FY 07 FY 08
Yellow Book USA
Revenue ($m) Total adjusted EBITDA ($m)
FY 04* FY 05 FY 06 FY 07 FY 08
Print Aquired print Online
23.0 25.9 28.0 29.3 29.2 Adjusted EBITDA margin %
940
1,149
1,636
1,932 2,010
216
297
458
566 587
* Figures reported under UK GAAP
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2.4
1.9
(1.3)
4.1(5.4)
(0.9)
5.0
(0.8)
2.0
(0.5)
3.1
Yellow Book USA revenue growth
Organic growth 3.1%
Same market print
Launches Internet Dis-continued
Organic Acquisitions Growth before
rescheduling
Rescheduling Total $ FX Total
Contribution to revenue growth %
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Yell Publicidad
€m
Pro forma FY 07 base 650
Organic revenue 16 +2.4%
Acquisitions 19
Latin American FX (14)
Continuing 671
Non-core 12
Total revenue 683
EBITDA €262 million, EBITDA margin 38.3%
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Adjusted diluted earnings per share
Year ended 31 March 2007pence
2008 pence Change
Actual diluted EPS 27.3 26.3 (3.7%)
Exceptional 5.3 0.7
Amortisation 8.9 9.4
Exceptional Deferred tax (6.0) 1.1
Adjusted diluted EPS 35.5 37.5 5.6%
Yell Publicidad pro forma (1.3)
FX 0.3
Underlying adjusted diluted EPS 34.2 37.8 10.5%
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Effective tax rate
Effective tax rate 31% of adjusted PBT of £429 million
Cash tax paid in year 19% of adjusted PBT
Key difference is US allowable amortisation
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Exceptional costs
£mP&L
exceptional
Yell UK restructuring 7.4
Yell Publicidad restructuring 7.1
US Class Action credit (11.8)
Other 2.8
Total 5.5
Tax on the above (0.7)
Other – mainly deferred tax on shares 9.2
Net 14.0
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Cash conversion 85%
739626
286
6350
251
294
881
AdjustedEBITDA
Workingcapital
Capex Operatingcash flow
Cash interest Cash tax Free cashflows beforeexceptionals
Exceptionals Free cashflows
Cash
£m
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Analysis of movement of debt
Increase in debt driven by £129m of FX movement
£m
Net debt at 31 March 2007 (3,663)
Free cash flow 294
Net debt after free cash flow (3,369)
Dividend (137)
FX (129)
Acquisitions including minority interests
(100)
Other (24)
Net debt at 31 March 2008 (3.759)
5.1x EBITDA
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Debt
Fixed 96% for rolling two years
Cost of debt 7%
Currently operating well within covenant headroom
£115m drawn on revolver and short term facilities for working capital and in-fill acquisitions
36%
39%
25%
£ $ €
Currency denomination of debt (%)
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Dividend
Proposed final dividend halved compared with last year’s final to 5.7 pence per share to increase financial flexibility
Proposed total dividend for year down 30% to 12 pence per share
Interim dividend intended to be halved
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Q1 revenue guidance
Yell UK flat
Yellow Book USA organic up around 3% in $(traditionally a strong quarter)
Yell Publicidad organic up around 1% in local currencies – Total around 2% down on rescheduled revenue due to
reductions from discontinued products and LatAm FX
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Yell Publicidad revenue rescheduling
FY 08 revenue € Q1 Q2 Q3 Q4
Reported 17.2% 18.1% 36.0% 28.7%
Rebased 17.4% 20.0% 32.0% 30.7%
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Group guidance for FY 09
Adjusted Group EBITDA flat at constant exchange rates– Yell UK flat
– Yellow Book USA marginally down in $
– Yell Publicidad up in local currencies
Cash conversion around 85% to 90%
Cost of debt around 7%
Tax rate around 31% and cash tax rate around 20% of adjusted PBT
Restructuring exceptional cost c £25m
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Financial priorities
Continued investment for online growth funded by improved efficiencies
Achieve EBITDA and cash guidance
Reduce leverage towards 4 times target
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Strategic updateJohn CondronCEO
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Unique relationship with SME customer base
The Yell proposition
Online growth in line with SME needs
Print usage still generating high ROIs
Out-performing US incumbents
Benefits of new regulation in UK
Spanish approach to sales delivering
Relatively recession resilient in SME market
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Group wide online approach
Creating content– Importance of the salesforce
– Depth and quality of content
– Overcoming SME resistance to online advertising
Generating usage– Brand
– Search engine marketing and optimisation
– Distribution
– Functionality
Content → Usage → Revenue
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Rapid growth in Yell’s online usage
Yell’s online usage growing
Dec 07 Mar 08
Up
37
%
Dec 07 Mar 08
5.05.5
Dec 07 Mar 08
Unique users(millions)
Unique visitors(millions)
Unique visitors
(millions)Yell.com Paginasamarillas.
es
Up
30
%
Up
10
%
Yellowbook.com network from ComScore
Paginasamarillas.es network OJDSource: Yell.com ABCe
6.2
8.5
10.4
13.5
Yellowbook.com network
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Group wide online approach
Creating content– Importance of the salesforce – Depth and quality of content– Overcoming SME resistance to online advertising
Generating usage– Brand– Search engine marketing and optimisation– Distribution– Functionality
Monetising usage– ROI – transparency of pricing – Product development – including pay per performance
Revenue lags usage
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112
166
Q3 08 Q4 08
275225
Q3 08 Q4 08
Revenue up 68% in US, 45% in UK, 14% in Spain
Realising the internet opportunity
Yell.com Yellowbook.com Paginasamarillas.es
Searchable advertisers at 31 March (000s)
Revenue per average searchable advertiser
(€)
207 209
Q3 08 Q4 08
504
686
Q3 08 Q4 08
Up
36
%
(£)
212
304
Q3 08 Q4 08
Up
43
%
($)
Up
48
%
374 378
Q3 08 Q4 08
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Print usage holding up
156 159 154
83124
159
FY 06 FY 07 FY 08
UK usage occasionsmonthly average (m)
US usagereferences pa (bn)
14.5 13.4 13.4
2.6 3.3 3.8
2005 2006 2007
87% of US population used print in 2007
Sources: UK: Regular Study Saville Rossiter-Base. YP comparable inc Yell.com. US: KN/SRI (YPA) and comScore. Spain: GFK and Yell. Used Spanish print classified directories monthly in past 12 months (%)
PrintInternet
Searches for unknown businesses up 9% in the UK
62% of those who shopped online also used print in the US
Average £25 of new business for every £1 invested in the UK
Spain averagemonthly users (m)
8 out of 10 searches resulted in a contact to an advertiser in Spain
12.7 11.7 11.3
3.1 4.0 4.6
2005 2006 2007
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Online ‘as well as’ rather than ‘in stead of’
UK revenue drivers – win, keep and grow
* RASA: Revenue per average searchable advertiser
Total unique advertiserslive at 31 March (000s)
Print ARPA and onlineRASA* (£)
300 275 261
161 175 173
38 42 53
FY 06 FY 07 FY 08
Print only Print and new mediaNew media only
76 75 74 Print retention %
1,341 1,335
378518
686
1,304
FY 06 FY 07 FY 08
499 486492
-2.9 -2.8 -3.3 Effective Yellow Pages price
reduction % (print only)
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Yell UK initiatives
Driving usage – Brand – Yell.com – SEO and SEM– Print product awareness promotions
Focus on customer base– ROI – Call Counter Geo– Large Media Players– Print pricing initiatives
Monetising usage– NetReach – 220m listings on
partner sites– Pay per call trail – roll out August
Focus on the internet
netReach capsule
on the Zoomf site
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Print usage share 23% - up from 20% in 05*
Not an incumbent in the US
Leads for less – Average usage in 49 recent
markets surveyed 38%**
– Rate card still lower
Brand awareness – Nationwide
– Print and internet Yellowbook brand
– “Say Yellow to the Future” campaign
Entrepreneurial sales approach– Recruitment, training, targeting
incentives, face-to-faceSource incumbent growth rates: The Kelsey Group, April 08. Estimate for CY 2008. Current CY 08 guidance for RHD and Idearc “mid single digit decline”. Yellow Book USA organic growth rates for FY 06, FY 07 and FY 08 as reported
15.1
9.8
-1.5 -1.0 -2.1
3.1
2006 2007 2008
Yellow Book Organic Incumbents
Incumbents vs Yellow Book revenue growth (%)
* Knowledge Networks/SRI - Based on all measured YPMR DDAs in 2005 (21,000+ interviews/ 161 DDAs) versus 2007 (32,000+ invterviews / 190 DDAs. ** 2007 YPMR Syndicated Usage - KN/SRI
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Not an incumbent in the US (2)
Online growth– Fastest growing usage for
an IYP
– Revenue lags usage
– WebReach
National footprint – Online access
– Spreads risk
– Lower exposure to national advertisers
– National revenue growing rapidly – faster than average
Source: comScore December 07 and March 08
24.4 25.027.7
23.4
13.510.4
4.03.9
Dec 07 Mar 08
Yellowpages.com network Superpages.com network
Yellowbook.com network DexKnows.com
Unique visitors (m)
Unique visitors growth March 08 vs Dec 07 (%)
2
1830
1
Growth March 08
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Yellow Book USA win, keep and grow
Unique advertisers (000s) Print ARPA and online RASA ($)
489
692 686
391 380 378
FY 06 FY 07 FY 08
Print Online
70 69 70 Print retention %
2,690 2,694
123 178 304
2,762
FY 06 FY 07 FY 08
Online yield still lags usage growth
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Paginas Amarillas win, keep and grow
Unique advertisers (000s) Print ARPA and online RASA (€)
85 Print retention %
321
225
FY 08
Paginas Amarillas
Online
Unbundling to generate future ARPA growth
920
166
FY 08
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Yell Publicidad initiatives
New sales organisation – Improved remuneration; higher quality sales force– Rescheduling publication to release sales time
Investment in usage – brands and user experience– New print initiatives eg 2D codes– Online enhancements – search engine, syndication network
Revitalised market approach– Higher online prices to reflect usage growth – Online unbundling– Adapting ad range to customer needs
Latin America – transferring best practice– Publicom integrated successfully– Focus on internet
Building on ‘Back to Basics’ foundation
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Directories in economic downturn
Outperformed other advertising media in previous recessions
Online adds flexibility for advertiser
Diversity of classifications
National revenue has most discretion about spend– UK 20%; US 8%; Spain 4%
25% of UK SMEs’ advertising spend with Yell products
Source: *FDS 2007 Base: All companies/businesses known to Yell excluding National accounts
Share of purse from SMEs in UK
No-fuss, high return, trusted advertising
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Key drivers
Grow usage
Develop online offering
Win, keep and grow – trusted relationship with SMEs
Monetise usage based on returns of advertiser investment
Leaner, fitter and stronger
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Appendix
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US shareshift continues
% Revenue growth for publishers
% Independents’ market share
3.8 3.62.6 2.6
-0.4 -0.2-2.0 -1.5 -1.5 -1.0
-2.1
25
20
25
9
22
19
1312
16
4 3
1998 2000 2002 2004 2006 2008F
IncumbentsIndependents
8
10 1011
13
1516
18
20
2223
1998 2000 2002 2004 2006 2008F
Source: The Kelsey Group, April 08
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Yellow Book USA – 984 markets
61% of Independent segment; 12% of US market
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Investor Relations: Jill Sherratt +44 (0)118 950 6984
www.yellgroup.com
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