25th Jul 2006 07:00
Yell Group plc25 July 2006 Yell Group plc financial results for the three months ended 30 June 2006 Strong first quarter. On track to meet full year expectations. • Revenue up 18.6% to £371.9 million • Adjusted EBITDA up 18.7% to £118.8 million • Adjusted profit before tax up 8.0% to £78.2 million • Adjusted profit after tax up 9.0% to £52.1 million • Operating cash flow £83.4 million (2005 - £84.0 million). Cash conversion 70.2% (2005 - 83.9%) • Adjusted diluted earnings per share up 0.1 pence at 6.8 pence Three months ended 30 JuneStatutory results (unaudited) 2005 2006 Change £m £m % Revenue 313.6 371.9 18.6Operating profit 99.1 102.5 3.4Profit before tax 70.7 32.4 (54.2)Profit after tax 46.8 21.3 (54.5)Cash generated from operations 88.1 90.6 2.8Diluted earnings per share (pence) 6.6 2.7 (59.1) Notes:Unadjusted EBITDA was up 13.0% to £118.8 million. John Condron, Chief Executive Officer, said: "Yell has made a very good start to the year. In the UK, Yell.com's outstandinggrowth drove a strong overall performance, despite the expected decline inprinted directory revenue due to continued competition. In addition to theimpact of TransWestern books publishing for the first time since acquisition,the impressive organic growth in the US continued, including excellentperformances in like-for-like markets and online. "Our acquisition of TPI is expected to complete early in August, and we areactively working on the plans for integration and transferral of best practice." John Davis, Chief Financial Officer, said: "These results place Yell well on course to meet expectations for the full yearwith a strong operational performance also demonstrating the resilience of ourbusiness. "As expected, first quarter earnings per share are impacted by the one-offeffects of the phasing of TransWestern's directories, the raising of new equityto finance the acquisition of TPI in advance of the completion, and the writingoff of costs arising on the refinancing of our debt, while cash generated wasreduced by the timing of payments around the quarter end and the plannedbuild-up of working capital in TransWestern." Enquiries Yell - Investors Jill SherrattTel +44 (0)118 950 6984Mobile +44 (0)7764 879808 Yell - Media Jon SalmonTel +44 (0)118 950 6656Mobile +44 (0)7801 977340 Citigate Dewe Rogerson Anthony CarlisleTel +44 (0)20 7638 9571Mobile +44 (0)7973 611888 This news release contains forward-looking statements. These statements appearin a number of places in this news release and include statements regarding ourintentions, beliefs or current expectations concerning, among other things, ourresults of operations, revenue, financial condition, liquidity, prospects,growth, strategies, new products, the level of new directory launches and themarkets in which we operate. Readers are cautioned that any suchforward-looking statements are not guarantees of future performance and involverisks and uncertainties, and that actual results may differ materially fromthose in the forward-looking statements as a result of various factors. Youshould read the section entitled "Risk" in Yell Group plc's 31 March 2006 annualreport for a discussion of some of these factors. We undertake no obligationpublicly to update or revise any forward-looking statements, except as may berequired by law. A copy of this release can be accessed at: www.yellgroup.com/announcements YELL GROUP PLC SUMMARY FINANCIAL RESULTS Change at Three months constant ended 30 June exchangeUnaudited 2005 2006 Change rate (a) £m £m % % Revenue (b) 313.6 371.9 18.6 18.4Adjusted EBITDA (b) (c) 100.1 118.8 18.7 18.9 Operating cash flow (b) (d) 84.0 83.4 (0.7) (1.8)Cash conversion (b) (e) 83.9% 70.2% Adjusted profit after tax (f) 47.8 52.1 9.0Adjusted diluted earnings per share (pence)(f) 6.7 6.8 1.5 (a) Change at constant exchange rate states the change in current period results compared with the same period in the previous year as if the current period results were translated at the same exchange rate as that used to translate the results for the same period in the previous year. (b) 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. (c) EBITDA was not adjusted in the three months ended 30 June 2006. Adjusted EBITDA for the three months ended 30 June 2005 is stated before an exceptional credit of £5.0 million from releasing a provision for IPO costs. (d) Cash generated from operations before payments of exceptional costs, less capital expenditure. (e) Operating cash flow as a percentage of adjusted EBITDA. (f) Adjusted profit after tax and adjusted diluted earnings per share for the three months are stated before exceptional items and amortisation of acquired intangibles, all net of related tax. A reconciliation to the related statutory figures is presented in note 6 to the financial information. REVIEW OF OPERATING PERFORMANCE Revenue Group revenue increased 18.6% to £371.9 million, or 18.4% at a constant exchangerate, from £313.6 million for the same period last year. UK operations UK revenue increased 4.9% to £168.2 million driven entirely by a 71.2% increasein revenue by Yell.com. Revenue from printed directories fell by 1.0% to £142.5 million, as the totalnumber of unique print advertisers declined by 3.0% to 131,000 compared to theprior year, due to continued competition. However, this was partly offset bythe 2.1% increase in average revenue per unique advertiser to £1,088. Thisincrease was largely the result of the customer service improvements discussedat the year end. Retention was stable at 74%. The effect of our regulatoryundertaking of RPI-6% was to reduce Yellow Pages rate card prices by an averageof 2.5%. Yell.com's revenue grew 71.2% to £20.2 million. Searchable advertisers grew18.5% at the end of the period to 179,000 and recognised revenue per averagesearchable advertiser grew 40.7%, reflecting revenues from new product offeringsintroduced since the first quarter of the prior year. Searches rose 20.8% onthe same period last year. This first quarter out-performance is in line with previous years' trends anddoes not alter our guidance of full year UK revenue growth of 3% driven entirelyby Yell.com. US operations Total US revenue grew 33.0% to £203.7 million, or 32.5% at a constant exchangerate. The average exchange rate was approximately $1.83: £1.00 against $1.86:£1.00 in the same period last year. Organic revenue growth contributed 13.8% to the total revenue growth of 32.5%and comprised the following: • Same market growth on a like-for-like basis of 11.5% which contributed 10.3% to organic growth; • Launches which contributed 1.1% to organic growth; • Yellowbook.com which contributed 2.4% to organic growth with revenue of $14.0 million. This excellent performance is in line with past trends of strong first quartersand our guidance for the full year remains for organic growth of 10%. Revenue from directories acquired last year, mainly TransWestern, contributed23.0% to the total revenue growth. (For the full year, we expect revenue fromdirectories acquired last year to be $125 million, predominantly in the firsthalf of the year.) Underlying revenue growth was offset by 4.3% from rescheduling directories intolater months resulting from the integration of TransWestern. Yellow Book increased unique advertisers by 35.6% to 179,000 and average revenueper unique advertiser decreased by 3.4% to $2,017 reflecting the lower averagevalue of TransWestern advertisers. Retention was slightly up at 73%. Adjusted EBITDA Group adjusted EBITDA increased by 18.7% to £118.8 million, or 18.9% at aconstant exchange rate. The Group adjusted EBITDA margin was stable at 31.9%,reflecting the balance of the Group with the expected margin decline in UKprinted products offset by the performances of Yell.com and Yellow Book USA. EBITDA was not adjusted by any exceptional items in the three months ended 30June 2006; adjusted EBITDA for the same period last year is stated before anexceptional credit of £5.0 million from releasing an over-provision for IPOcosts. UK adjusted EBITDA rose 5.3% to £60.1 million, reflecting the sustained progressof Yell.com, which almost doubled adjusted EBITDA to £8.2 million from £4.4million. In line with guidance, the overall UK adjusted EBITDA margin was35.7%, compared with 35.6% in the same period last year. Printed directories'EBITDA margins declined to 34.9% from 35.2% in the same period last year,reflecting the investment required to grow revenue under the regulatory pricecap. In the US, adjusted EBITDA grew 36.5% to £58.7 million, a 37.0% increase at aconstant exchange rate. The US adjusted EBITDA margin increased from 28.1% to28.8% in line with guidance. Cash flow and net debt The Group converted 70.2% of adjusted EBITDA to cash, as compared with 83.9%last year. Operating cash flow decreased 0.7% to £83.4 million, or 1.8% at aconstant exchange rate. The reduction was due to the timing of payments in thefirst quarter and the planned investment in TransWestern working capital. Wecontinue to expect full year cash conversion to be between 75% and 80%. Three months ended 30 June 2005 2006Unaudited £m £m Adjusted EBITDA 100.1 118.8 Exceptional items 5.0 -Working capital movements and non-cash charges (17.0) (28.2) Cash generated from operations (see page 11) 88.1 90.6 Cash payments of exceptional items 0.6 -Purchase of property, plant and equipment (4.7) (7.2)Operating cash flow 84.0 83.4Adjusted EBITDA 100.1 118.8 Cash conversion 83.9% 70.2% Net debt, at £1,580.5 million, is net of the £344.8 million proceeds from sharesissued in relation to funding the TPI acquisition. Net debt before the proceedsof shares issued would be £1,925.3 million, or 3.7 times adjusted EBITDA overthe last twelve months. The movement in net debt for the three months ended 30June 2006 arose as follows: Net debtUnaudited £m At 31 March 2006 1,994.0Operating cash flow (83.4)Interest and tax payments, net of £46.7 million accreted interest settled by refinancing 46.0Redemption premiums paid 22.5Purchase of subsidiary undertakings 9.6Purchase of own shares 0.3Proceeds of shares issued (344.8)Finance costs increasing debt 13.5Currency movements (77.2) At 30 June 2006 1,580.5 NET RESULTS Profit before tax and exceptional items Adjusted profit before tax of £78.2 million, 8.0% up from £72.4 million lastyear, is stated before exceptional items and amortisation of acquired intangibleassets. After these items, profit before tax was £32.4 million, compared with£70.7 million last year. Exceptional items include accelerated finance fees and redemption premiums paidtotalling £36.3 million (£24.9 million net of tax), as a result of refinancingour debt prior to the TPI acquisition. Amortisation of acquired intangible assets is £9.5 million (£5.9 million net oftax). After tax results The effective tax rate in the three month period ended 30 June 2006 was 34.4%,compared with 33.8% last year. Profit after tax for the period ended 30 June 2006 was £21.3 million, comparedwith £46.8 million for the same period last year. Adjusted profit after tax of£52.1 million is stated before exceptional items net of tax and amortisation netof tax. Earnings per share Adjusted diluted earnings per share were 6.8 pence before exceptional items andamortisation of acquired intangible assets, up from 6.7 pence last year. Firstquarter earnings per share were dampened by the phasing of TransWestern profitsand the raising of equity to finance the acquisition of TPI in advance ofcompleting the acquisition. Adjusted basic earnings per share for the three months ended 30 June 2006 were6.9 pence before exceptional items and amortisation of acquired intangibleassets, up from 6.8 pence last year. UK REGULATION The Competition Commission published the Notification of Provisional Findings inJune 2006. The Commission expects to publish its final report in November 2006.We continue to contribute fully to the process. We have provided the Commission with evidence of the increasing and diversifyingcompetition in the market including the impact that we expect the entry of BTand the growth of internet usage to have in the future. We believe that we havedemonstrated the excellent value we give advertisers, reducing prices since 2001far beyond that required by regulation and improving our customer service froman already high base. We believe that the body of evidence we have providedsupports the view that regulation is no longer required. All published information relating to the investigation can be found on theCommission's website at www.competition-commission.org.uk. TPI ACQUISITION AND REFINANCING On 28 April 2006, the Yell Group announced that it had entered into an agreementwith Telefonica S.A. ("Telefonica") to acquire its 59.905% stake in TelefonicaPublicidad e Informacion, S.A. ("TPI") by way of an all cash public tender offerfor the entire issued share capital of TPI. The acquisition is expected tocomplete in early August. The acquisition will be financed using the proceeds from new shares placed on 28April 2006, which raised £344.8 million, and by refinancing our existing debt.On 2 May 2006, we refinanced our existing senior debt and replaced it with newsenior debt. A portion of the proceeds of the new debt was used to fully repaythe Senior Notes on 2 June 2006. Exceptional interest of £36.3 million arose onthe refinancing, comprising £13.8 million accelerated amortisation of financingfees and £22.5 million premium on the redemption of our Notes. KEY OPERATIONAL INFORMATION Unaudited Three months ended 30 June 2005 2006 Change %UK printed directories Unique advertisers (thousands) (a) 135 131 (3.0)Directory editions published 29 29Unique advertiser retention rate (%) (b) 74 74Revenue per unique advertiser (£) 1,066 1,088 2.1 US printed directories Unique advertisers (thousands) (a) (c) 132 179 35.6Directory editions published 128 181Unique advertiser retention rate (%) (c) 71 73Revenue per unique advertiser ($) 2,089 2,017 (3.4) UK internet Yell.com searchable advertisers at 151 179 18.530 June(thousands)(d)Yell.com unique visitors for June (millions) 24 29 20.8Yell.com revenue per average searchable 81 114 40.7advertiser (£)(e) US internet Yellowbook.com searchable advertisers at 209 404 93.330 June(thousands)(f)Yellowbook.com unique visitors for June (millions) (g) 1.6 2.9 81.3 (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 an overall elimination of duplicate records of unique advertisers. We have not adjusted the previously reported figure for the three months ended 30 June 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 in the three month period by the average number of searchable advertisers in that period. (Yell.com 2005 - 146,000; 2006 - 177,000.) (f) Represents searchable advertisers appearing on the Yellowbook.com website. Includes advertisers 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. In the three months ended 30 June 2006 we changed our data provider; we have not adjusted the previously reported figure for the three months ended 30 June 2005. YELL GROUP PLC AND SUBSIDIARIES UNAUDITED CONSOLIDATED INCOME STATEMENT Three months ended 30 June Notes 2005 2006 £m £m Revenue 2 313.6 371.9 Cost of sales (143.0) (167.3) Gross profit 170.6 204.6 Distribution costs (9.4) (11.1) Administrative expenses (62.1) (91.0) Operating profit 3 99.1 102.5 Finance costs (29.0) (73.7) Finance income 0.6 3.6 Net finance costs (28.4) (70.1) Profit before taxation 4 70.7 32.4 Taxation 5 (23.9) (11.1) Profit for the financial period 4 46.8 21.3 (in pence) (in pence) Basic earnings per share 6 6.6 2.8 Diluted earnings per share 6 6.6 2.7 See notes to the financial information for additional details. UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Three months ended 30 June 2005 2006 £m £m Profit for the financial period 46.8 21.3 Exchange differences on translation of foreign operations 28.5 (38.2) Actuarial (losses) gains on defined benefit pension schemes (20.0) 13.3 Change in fair value of financial instruments used as hedges (1.8) 6.2 Tax effect of net expenses (income) not recognised in the income statement 6.4 (5.8) Deferred tax on share based payments (1.1) (2.2) Net income (expense) not recognised in the income statement 12.0 (26.7) Total recognised income (expense) for the period 58.8 (5.4) 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 - 56.9 (5.4) See notes to the financial information for additional details. UNAUDITED CONSOLIDATED BALANCE SHEET At At 31 March 30 June Notes 2006 2006 £m £m Non-current assets Goodwill 2,486.0 2,402.4 Other intangible assets 200.3 181.5 Property, plant and equipment 53.8 49.8 Deferred tax assets 7 139.6 124.9 Investment and other assets 5.0 2.4 Total non-current assets 2,884.7 2,761.0 Current assets Inventories 6.7 13.9 Directories in development 226.0 235.9 Trade and other receivables 8 586.3 572.0 Cash and cash equivalents 28.5 428.9 Total current assets 847.5 1,250.7 Current liabilities Loans and other borrowings 9 (292.9) (14.3) UK corporation and foreign income tax (58.5) (51.3) Trade and other payables 10 (374.7) (345.9) Total current liabilities (726.1) (411.5) Net current assets 121.4 839.2 Non-current liabilities Loans and other borrowings 9 (1,729.6) (1,995.1) Deferred tax liabilities 11 (130.8) (129.5) Retirement benefit obligations 12 (39.9) (27.4) Total non-current liabilities (1,900.3) (2,152.0) Net assets 1,105.8 1,448.2 Capital and reserves Share capital 13 1,192.3 1,192.7 Other reserves 13 (103.7) (130.4) Retained earnings 13 17.2 385.9 Equity shareholders' funds 1,105.8 1,448.2 See notes to the financial information for additional details. UNAUDITED CONSOLIDATED CASH FLOW STATEMENT Three months ended Notes 30 June 2005 2006 £m £m Net cash inflow from operating activities Cash generated from operations 88.1 90.6 Interest paid (12.2) (85.6) Interest received 0.6 3.6 Redemption premium paid - (22.5) Net income tax paid (6.2) (10.7) Net cash inflow (outflow) from operating activities 70.3 (24.6) Cash flows from investing activities Purchase of property, plant and equipment 14 (4.7) (7.2) Purchase of subsidiary 15 (4.8) (9.6) undertakings Net cash outflow from investing activities (9.5) (16.8) Cash flows from financing activities Proceeds from issuance of ordinary shares 0.1 344.8 Purchase of own shares (0.2) (0.3) Net payments on revolving credit facility - (241.1) Acquisition of new loans - 2,025.2 Repayment of borrowings - (1,656.3) Financing fees paid - (29.5) Net cash (outflow) inflow from financing activities (0.1) 442.8 Net increase in cash and cash equivalents 60.7 401.4 Cash and cash equivalents at beginning of the period 55.5 28.5 Exchange gains (losses) on cash and cash equivalents 4.9 (1.0) Cash and cash equivalents at end of the period 121.1 428.9 Cash generated from operations Profit for the period 46.8 21.3 Adjustments for: Tax 23.9 11.1 Finance income (0.6) (3.6) Finance costs 29.0 73.7 Depreciation of property, plant and equipment and amortisation of software costs 6.0 6.8 Amortisation of other non-current intangible assets - 9.5 Changes in working capital: Inventories and directories in development (6.3) (28.3) Trade and other receivables 19.2 44.1 Trade and other payables (30.8) (47.3) Share based payments and other 0.9 3.3 Cash generated from operations 88.1 90.6 See notes to the financial information for additional details. UNAUDITED NOTES TO THE FINANCIAL INFORMATION 1. Basis of preparation and consolidation The principal activity of Yell Group plc and its subsidiaries is publishingclassified advertising directories in the United Kingdom and the United States. This unaudited financial information for the year to 31 March 2006 has beenprepared in accordance with International Financial Reporting Standards asadopted by the European Union ("IFRS") accounting policies as set out in ourannual report for the year ended 31 March 2006. The information contained herein does not constitute statutory financialstatements within the meaning of section 240 of the Companies Act 1985. In the opinion of management, the financial information included herein includesall adjustments necessary for a fair presentation of the consolidated results,financial position and cash flows for each period presented. The consolidated results for interim periods are not necessarily indicative ofresults for the full year. This financial information should be read inconjunction with Yell's 2006 annual report published in June 2006, whichincludes the audited consolidated financial statements of Yell Group plc and itssubsidiaries for the year ended 31 March 2006. The preparation of the consolidated financial information requires management tomake estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial information and the reported amounts of income and expenditureduring the period. Actual results could differ from those estimates. Estimatesare used principally when accounting for doubtful debts, depreciation,retirement benefit obligations and the related employee pension costs,acquisition accounting and taxes. 2. Revenue Three months ended 30 June Change 2005 2006 % £m £m UK printed directories 143.9 142.5 (1.0) Other products and services 16.5 25.7 55.8 Total UK revenue 160.4 168.2 4.9 US revenue: US revenue at constant exchange rate (a) 153.2 203.0 32.5 Exchange impact (a) - 0.7 Total US revenue 153.2 203.7 33.0 Group revenue 313.6 371.9 18.6 (a) Constant exchange rate states current period results at the sameexchange rate as that used to translate the results for the same period in theprevious year. Exchange impact is the difference between the results reportedat a constant exchange rate and the results using current period exchange rates. 3. Operating profit and EBITDA information Adjusted EBITDA by geographic segment Three months ended 30 June Change 2005 2006 % £m £m UK printed directories 50.6 49.8 (1.6) Other products and services 6.5 10.3 58.5 Total UK operations 57.1 60.1 5.3 US operations: US operations at constant exchange rate (a) 43.0 58.9 37.0 Exchange impact (a) - (0.2) Total US operations 43.0 58.7 36.5 Group adjusted EBITDA 100.1 118.8 18.7 Reconciliation of group operating profit to EBITDA (a) Three months ended 30 June 2005 2006 Change £m £m %UK operationsOperating profit 59.2 57.0Depreciation and amortisation ofnon-current assets 2.9 3.1 UK operations EBITDA 62.1 60.1 (3.2)xceptional items (5.0) - UK operations adjusted EBITDA 57.1 60.1 5.3 UK operations adjusted EBITDA margin 35.6% 35.7% US operations Operating profit 39.9 45.5 Depreciation and amortisation ofnon-current assets 3.1 13.2 US operations EBITDA 43.0 58.7 36.5 Exchange impact (b) - 0.2 US operations EBITDA at constant exchange rate (b) 43.0 58.9 37.0 Exchange impact (b) - (0.2) US operations EBITDA 43.0 58.7 36.5 US operations EBITDA margin 28.1% 28.8% Group Operating profit 99.1 102.5 Depreciation and amortisation ofnon-current assets 6.0 16.3 Group EBITDA 105.1 118.8 13.0 Exceptional items (5.0) - Exchange impact (b) - 0.2 Group adjusted EBITDA at constant exchange rate (b) 100.1 119.0 18.9 Exchange impact (b) - (0.2) Group adjusted EBITDA 100.1 118.8 18.7 Group adjusted EBITDA margin 31.9% 31.9% (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 period results at the same exchange rate as that used to translate the results for the same period in the previous year. Exchange impact is the difference between the results reported at a constant exchange rate and the results reported using current period exchange rates. We do not allocate interest or taxation charges by product or geographicsegment. 4. Results before and after exceptional items Three months ended 30 June 2005 2006 Ordinary Exceptional Total Ordinary Exceptional Total items items items items £m £m £m £m £m £m Gross profit 170.6 - 170.6 204.6 - 204.6 Distribution costs (9.4) - (9.4) (11.1) - (11.1)Administrative expenses (67.1) 5.0 (62.1) (91.0) - (91.0) Operating profit 94.1 5.0 99.1 102.5 - 102.5Net finance costs (21.7) (6.7) (28.4) (33.8) (36.3) (70.1) Profit before taxation 72.4 (1.7) 70.7 68.7 (36.3) 32.4 Taxation (24.6) 0.7 (23.9) (22.5) 11.4 (11.1) Profit for the period 47.8 (1.0) 46.8 46.2 (24.9) 21.3 The exceptional interest costs for the three months ended 30 June 2006 comprise£13.8 million for accelerated amortisation of deferred financing fees and £22.5million premium on the redemption of our Notes, which were refinanced prior tothe TPI acquisition. The exceptional administrative credit of £5.0 million inthe prior year relates to the release of a provision for IPO costs in the UK.Exceptional interest costs in the prior year relate to the acceleratedamortisation of deferred financing fees on our senior debt, which was redeemedat the date of the TransWestern acquisition. 5. Taxation The tax charge is based on the estimated effective tax rate for the year. Theeffective tax rate for the three month period is different from the standardrate of corporation tax in the United Kingdom (30%) as explained below: Three months ended 30 June 2005 2006 £m £mProfit before tax multiplied by the standard rate of corporationtax in the United Kingdom (30%) 21.2 9.7 Effects of:Higher tax rates in US 2.7 1.2Disallowed items - 0.2Tax charge on profit before tax 23.9 11.1 Current tax 12.0 3.6Deferred tax 11.9 7.5Net charge on profit before tax 23.9 11.1 6. Earnings per share The calculation of basic and diluted earnings per share is based on the profitfor the relevant financial period and on the weighted average share capitalduring the period. Amortisation of Exceptional acquired Actual items (a) intangibles Adjusted Three months ended 30 June 2006 Group profit before tax (£m) 32.4 36.3 9.5 78.2Taxation (£m) (11.1) (11.4) (3.6) (26.1)Group profit after tax (£m) 21.3 24.9 5.9 52.1Weighted average number of issued ordinary shares (millions) 751.4 751.4 Basic earnings per share (pence) 2.8 6.9 Effect of share options (pence) (0.1) (0.1) Diluted earnings per share (pence) 2.7 6.8 Three months ended 30 June 2005 Group profit before tax (£m) 70.7 1.7 - 72.4Taxation (£m) (23.9) (0.7) - (24.6) Group profit after tax (£m) 46.8 1.0 - 47.8 Weighted average number of issued ordinary shares (millions) 704.3 704.3 Basic earnings per share (pence) 6.6 6.8 Effect of share options (pence) - (0.1) Diluted earnings per share (pence) 6.6 6.7 (a) Exceptional items are explained in note 4. 7. Deferred tax assets The elements of deferred tax assets recognised in the accounts were as follows: At At 31 March 30 June 2006 2006 £m £mTax effect of timing differences due to:Depreciation 6.9 6.7Bad debt provisions 38.3 37.8Other allowances and accrued expenses 20.4 18.6Defined benefit pension scheme 26.6 21.1Share options 15.9 14.4Recognised tax net operating losses 20.5 14.5Other 11.0 11.8 Recognised deferred tax assets 139.6 124.9 8. Trade and other receivables At At 31 March 30 June 2006 2006 £m £m Net trade receivables (a) 555.5 506.0Other receivables 19.0 23.5Accrued income (a) 1.4 2.8Prepayments 10.4 39.7 Total trade and other receivables 586.3 572.0 (a) The Group's trade receivables and accrued income are stated after deducting a provision of £151.8 million at 30 June 2006 (31 March 2006 - £157.8 million). 9. Loans and other borrowings and net debt At At 31 March 30 June 2006 (a) 2006 (a) £m £mAmounts falling due within one year Term loans under senior credit facilities 50.1 13.6Revolving loan under senior credit facilities 242.2 -Net obligations under finance leases 0.6 0.7 Total amounts falling due within one year 292.9 14.3 Amounts falling due after more than one year Senior credit facilities 1,390.6 1,995.1Senior notes:Senior sterling notes 161.8 -Senior dollar notes 74.4 -Senior discount dollar notes 102.8 - Total amounts falling due after more than one year 1,729.6 1,995.1 Net loans and other borrowings 2,022.5 2,009.4 Cash and cash equivalents (28.5) (428.9) Net debt at end of period 1,994.0 1,580.5 (a) Balances are shown net of deferred financing fees of £29.4 million at 30 June 2006 (31 March 2006 - £10.8 million). 10. Trade and other payables At At 31 March 30 June 2006 2006 £m £mTrade payables 32.9 18.3Other taxation and social security 17.3 16.6Accruals and other payables 163.3 164.9Deferred income 161.2 146.1 Total trade and other payables falling due within one year 374.7 345.9 11. Deferred tax liabilities The elements of deferred tax liabilities recognised in the accounts were asfollows: At At 31 March 30 June 2006 2006 £m £mThe effect of timing differences due to:Amortisation 76.1 75.2Directories in development 32.9 31.8Financial instruments 3.3 5.6Other and deferred costs 18.5 16.9 Recognised deferred tax liabilities 130.8 129.5 12. Retirement benefit obligations The £12.5 million decrease in retirement benefit obligations from £39.9 millionat the year end to £27.4 million at 30 June 2006 is largely the result ofactuarial gains of £13.3 million that arose in the quarter due to an increase inreal interest rates. 13. Statement of changes in equity Share Other Retained capital reserves earnings Total £m £m £m £m Balance at 31 March 2006 1,192.3 (103.7) 17.2 1,105.8Profit on ordinary activities after taxation - - 21.3 21.3Net losses recognised directly in equity - (26.7) - (26.7)Total recognised income for the period - (26.7) 21.3 (5.4) 1,192.3 (130.4) 38.5 1,100.4 Share placement and capital restructuring 0.7 - 344.1 344.8Value of services provided in return for share based payments - - 3.3 3.3Own shares purchased by ESOP trust (a) (0.3) - - (0.3) Balance at 30 June 2006 1,192.7 (130.4) 385.9 1,448.2 (a) Purchase of shares held in an ESOP trust for employees. Cumulative foreign currency losses at 30 June 2006 are £106.6 million (31 March2006 - £68.4 million). 14. Capital Expenditure Capital expenditure on property, plant and equipment in the three months to 30June 2006 and 2005 was £7.2 million and £4.7 million, respectively. Proceeds onthe sale of property, plant and equipment were £nil in the same periods. Capital expenditure committed at 30 June 2006 and 2005 was £7.6 million and £4.0million, respectively, mainly in respect of computers and office equipment. 15. Acquisitions In the three months to 30 June 2006, the Yell Group paid £9.6 million (2005 -£4.8 million) for acquisitions, which included a number of directoriesbusinesses in the US. 16. 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 USstates and the District of Columbia. In these actions, the plaintiffs allegedviolations of consumer protection legislation and placed reliance on findings ofthe New York Court in the now settled suit. On 26 August 2005, the court in NewJersey approved a comprehensive national settlement, with no admission ofliability. The Yell Group fully accrued for the estimated costs arising fromthis class action in the year ended 31 March 2005. NOTES TO EDITORS Yell Group Yell is an international directories business operating in the classifiedadvertising market through printed, online and telephone-based media. In the year ended 31 March 2006, Yell published 113 directories in the UnitedKingdom and 835 in the United States; in the United Kingdom, where it is aleading player in the classified advertising market, it served 462,000 uniqueadvertisers. In the United States, where it is the leading independentdirectories business, it served 622,000 unique advertisers. Yell's brands in the United Kingdom are Yellow Pages, Business Pages, Yell.comand Yellow Pages 118 24 7, and in the United States are Yellow Book andYellowbook.com, all of which are trademarks. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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