29th Jun 2010 16:32
Yell Group plc ("Yell")
2010 Annual Report, Notice of Annual General Meeting and Proxy Card
The above documents were posted to shareholders on 29 June 2010. Copies of the above documents have been submitted to and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility which is situated at:
The Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
Tel: 020 7066 1000
These documents (with the exception of the Proxy Card) are also available to view on Yell's website at:
http://www.yellgroup.com/annualreport
Furthermore, in accordance with Disclosure and Transparency Rule 6.1.2, copies of the proposed new Articles of Association have been forwarded to the Document Viewing Facility.
The unaudited condensed set of financial statements for the year ended 31 March 2010, were published on 18 May 2010. These were prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRSs") and in accordance with the Listing Rules of the Financial Services Authority.
Set out below in this announcement is additional information reproduced for the purposes of compliance with the Disclosure and Transparency Rules, including related party transactions, principal risks and uncertainties and a responsibility statement. This information is extracted from the audited Annual Report and financial statements for the year ended 31 March 2010, and therefore, page and note references relate to that document. This announcement should not be regarded as a substitute for reading the full Annual Report and financial statements.
ADDITIONAL INFORMATION
Related party transactions
Company
There were no transactions with Group companies in the years ended 31 March 2010 and 2009 other than the following transactions with Yell Finance B.V., ESOP trust and SIP trust:
Year ended 31 March
|
£ millions |
2010 |
2009 |
|
Finance income from Yell Finance B.V. |
27.0 |
34.8 |
|
Net finance income |
27.0 |
34.8 |
Year ended 31 March
|
£ millions |
2010 |
2009 |
|
Amounts charged by the Company for employee share plans |
15.2 |
29.8 |
At 31 March
|
£ millions |
2010 |
2009 |
|
Non-current assets |
|
|
|
Amounts owed by Yell Finance B.V. |
978.1 |
641.1 |
|
Amounts owed by ESOP trust, net of £22.2 million provisions (2009 - £22.2 million) |
27.4 |
9.5 |
|
Amounts owed by SIP trust |
- |
0.1 |
|
Total amounts owed by Group companies |
1,005.5 |
650.7 |
Subsidiary undertakings
Brief details of principal subsidiary undertakings at 31 March 2010 and 2009, all of which are unlisted, are disclosed in note 14.
Key management compensation was as follows:
Year ended 31 March
|
£ millions |
2010 |
2009 |
|
Salaries and other short-term employee benefits |
5.8 |
6.5 |
|
Post-employment benefits |
0.5 |
0.6 |
|
Share-based payments |
3.3 |
5.4 |
|
Total key management compensation |
9.6 |
12.5 |
Risk Factors
In this section we set out how we manage potential risks and uncertainties that could have a material effect on the Group's long-term performance and could cause actual results to differ materially from historical results. We have quantified the risks arising from market fluctuations and our use of estimates under the heading 'Sensitivity analyses' at the end of this section.
Forward-looking statements
Our commentary regarding financial information in this business review should be read in conjunction with the audited financial statements. Readers are cautioned that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The discussion of estimated amounts generated from the sensitivity analyses is forward-looking and also involves risks and uncertainties. Caution should be exercised in relying on these analyses. Actual results may differ materially from those in forward-looking statements.
Risk management
We undertake various activities within a risk management framework to ensure that risk and uncertainty are properly managed and that appropriate internal controls are in place:
• The directors have overall responsibility for establishing and maintaining the systems of internal control and risk management, and for reviewing their effectiveness. These systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives. The systems also provide reasonable, but not absolute, assurance against material misstatement or loss.
• We carry out an annual detailed risk assessment to formally identify and document the nature and extent of key operational and financial risks facing the Group. We consider the likelihood of these risks materialising and we develop mitigation plans where we believe they are appropriate. This process has been in place for the reporting periods covered by this report and up to the date of approval of this Annual Report.
• We have developed a risk-based internal audit plan to evaluate the overall provision of assurance provided by the processes managing each key risk.
• The Audit Committee and senior management regularly review the risk assessment and internal audit plan.
• We have voluntarily designed and implemented financial reporting controls in line with what we believe are best practices. Our financial framework comprises processes that represent a set of coordinated tasks and activities, conducted by both people and IT systems, where significant classes of transactions are initiated, recorded, processed and reported. We have fully documented the systems, processes and key controls that produce financial reporting. Key controls are those controls that have a significant effect on reducing the risk of misstatement and will affect one or more financial statement assertions and reduce the risk of financial misstatement in relation to those assertions, to a relatively low level. We update our documentation and test the identified key controls annually. This testing is in addition to, and runs parallel with, the internal audit plan and risk assessment programme. Results of internal audit plan testing and testing of the key controls are provided to the Audit Committee for review.
• The Board, with advice from the Audit Committee, has completed its annual review of the effectiveness of the system of internal controls. In the Board's view, the information it received was sufficient to enable it to review the effectiveness of the Group's system of internal controls in accordance with the Internal Control Revised Guidance for Directors in the Combined Code (Turnbull) and the Board is satisfied that the system complies with that guidance.
A comprehensive and detailed list of risks was presented in our Firm Placing and Placing and Open Offer prospectus, which is available on our website at http://www.yellgroup.com/english/investorsdebtrefinancingandequityraising on pages 12 to 28.
It is not possible to identify every risk that could affect our business, and the actions taken to mitigate identified risks cannot provide absolute assurance that a risk will not adversely affect our business or financial performance. We have outlined by risk type in the tables below the risks and uncertainties that we believe are principal
Strategic risk factors
We aim to deliver quality business leads to our advertisers, regardless of media channel, by continuing to meet the changing demands of advertisers and consumers, and by taking advantage of new technologies and communication methods. This is an important step in becoming the best provider of marketing solutions for small and medium-sized businesses in our markets. The following items pose risks to our strategy.
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Risk and potential effect |
Mitigation |
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Risk from: Changing customer needs
At present the majority of our revenue comes from printed classified directories. Increasingly, consumers are using a wider variety of channels to find local businesses, most notably the internet. Our future revenues will depend on our success in enhancing and expanding our product offerings to meet changing demands.
Potential effect: Lost revenue and asset impairments |
We constantly monitor changes in technology and user preferences to ensure our channels remain the best place to search for local businesses. Accordingly, we continue to innovate and invest in line with these changing trends so as to improve all our channels and products. The success of this can be seen in the internet, where millions of users find our advertisers on our sites each day, and online revenue in the 2010 financial year accounted for 20% of the Group total. Looking forward, we expect usage behaviour to continue to change. We have seen mobile becoming increasingly popular and consequently, we have been actively improving our mobile offerings. We have begun selling our products in packages, which will broaden our customers' product holdings and allow us to benefit from growth in usage whatever the channel. |
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Risk from: Increasing competition
We operate in competitive markets, competing for usage and advertiser spend against traditional print media, a host of internet search companies, most notably Google, and many other businesses such as internet search optimisation and marketing agencies. In the US, we face particular competition from incumbent and independent directory publishers, who are increasingly competing on price.
Potential effect: Lost revenue and asset impairments |
We meet these challenges by retaining hard to replicate close relationships with our customers through our highly trained sales forces and by proving the excellent value of our products to our customers.
We address competitive forces when they arise in all our markets through our product design, technological innovations, promotional techniques, pricing propositions and our approach to sales; we intend, in particular, to manage and grow our online usage and revenue share.
In all our markets we focus on the value we offer to advertisers relative to the value offered by competitors. |
Operational risk factors
A significant part of our revenue comes from selling advertising to small and medium-sized enterprises in markets where there is significant economic uncertainty. Our businesses are reliant on our sales forces, certain key suppliers and brand recognition. The following items pose risks to our business operations.
|
Risk and potential effect |
Mitigation |
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Risk from: Economic uncertainty
In times of economic uncertainty and tight credit markets, many small and medium-sized businesses may spend less money on advertising than they have in the past.
We also operate in economies where we expect to grow market penetration. Economic uncertainty in those markets may affect this growth strategy.
Potential effect: Revenue lower than planned and asset impairments |
We mitigate the effect of economic uncertainty by providing evidence of the value that the customer receives from advertising with us. We are also offering an increasing value in packaged products to strengthen our base and to increase retention rates. |
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Risk from: Bad debts
Small and medium-sized enterprises tend to have limited financial resources and experience higher failure rates than large businesses. It is a normal and necessary business practice for us to offer credit terms to these customers. As a result, not all of the amounts owed to us will be collected.
Potential effect: Lower than expected cash collections |
We mitigate the risks of incurring bad debts and longer collection times through tailored credit vetting procedures. In new markets, we accept higher levels of customer churn and bad debts, because this is a necessary investment in establishing an initial presence. The diversity and size of our customer base mitigate material shifts in customer churn and increases in bad debt expense. |
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Risk from: Salesforce churn
We rely on our sales force, which comprises 54% of our employees, to drive revenue growth in our competitive markets.
Potential effect: Revenue lower and training costs higher than expected |
We use profiling based on our most successful sales people to ensure we recruit those most likely to be successful. We aim to retain high-quality people through our remuneration, training and development programmes. We seek feedback from employees to identify sales force issues that we follow up through local and individual action planning. We are also investing in technologies to aid our sales force and to make it easier for customers to place advertisements with us. |
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Risk from: Commodity market and key suppliers
We rely on our suppliers who work in partnership with us to deliver our products. We have longstanding relationships with most of our key suppliers, the most important of which are UPM-Kymmene Corporation, Catalyst Paper, Inc., Katahdin, RR Donnelley, World Color Press, Inc. and Einsa Print International.
Potential effect: Production costs higher than expected |
Paper is our single largest raw material expense, but in the 2010 financial year paper costs were equivalent to only 5% of Group revenue. Printing costs represented only 4% of Group revenue. We limit our exposure to market fluctuations through contracts and pricing arrangements with our paper and printing suppliers. |
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Risk from: Environmental regulation
Local governments in some of our markets are considering initiatives that could limit or restrict our ability to distribute printed directories or require us to bear the costs of and responsibilities for disposal of discarded directories.
Potential effect: Revenue lower than planned, increased costs and asset impairments |
We work with local governments, recycling networks, non-governmental organisations and charities both to educate them on the benefits and relevance of printed directories and to actively promote directory recycling. |
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Risk from: UK market regulation
In the 2010 financial year, 20% of our revenue (Yellow Pages revenue in the UK) was subject to regulation, compared with 21% during the 2009 financial year. This regulation reduced our ability to respond to competitive pressures by restricting our pricing flexibility. The price cap limited price increases to the prevailing rate of the UK retail price index (RPI). A review of the undertakings given by the Group to the UK's Competition Commission could take place in the coming year.
Potential effect: Missed revenue opportunities |
We will continue to present our case that regulation is not justified in this competitive market. |
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Risk from: Changes in brand recognition and Reputation
We depend on our trademarks and intellectual property rights, such as our Yellow Pages and Yell.com brand names in the UK, Páginas Amarillas in Spain and our Yellowbook brand name in the US. Failure to protect, promote or reinforce trust in our brands, or negative publicity regarding our products, could impair our business.
Potential effect: Revenue lower than in past |
We spent more than 4% of our revenue on advertising and promotion in 2010. We rely upon a combination of copyright and trademark laws, contractual arrangements and licensing agreements to establish and protect our rights. If necessary we will use all legal remedies available to protect our rights. |
Debt and financing risk factors
Net debt at 31 March 2010 was 4.9 times annualised pro forma adjusted EBITDA at consistent exchange rates compared with 4.7 times on the same basis at 31 March 2009. About £67 million of our long-term bank debt will contractually fall due on or prior to 31 March 2011. Details of the Group's borrowings are disclosed in note 15. The principal financing and treasury risks faced by the Group arise from working capital management, the financing of acquisitions and property, plant and equipment, the management of interest rates on the Group's debt and the investment of surplus cash. The treasury function manages those risks and monitors the key objective of remaining within ratios covenanted with the lenders of its bank debt. The Group normally purchases or sells derivative contracts for hedging purposes only (as referred to below) and does not use derivative contracts for trading or speculative purposes.
The Group's treasury function's primary role is to fund investments, manage debt-related liabilities and to manage liquidity and financial risk, including risk from volatility in currency and interest rates and counterparty credit risk. The treasury function is not a profit centre and its objective is to manage risk at optimum cost.
The Board sets the treasury function's policy and its activities are subject to a set of controls relative to the size of the investments and borrowings under its management. There has been no change in the role that financial instruments have in creating or changing the Group's risk between 31 March 2010 and the date of these financial statements.
The following items pose risks to our finances.
|
Risk and potential effect |
Mitigation |
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Risk from: Covenants
We have contractual debt obligations and covenants that reflect our leverage. The net cash interest cover covenant requires that the ratio of adjusted EBITDA to net cash interest payable as defined in the facility agreement for the twelve-month period to the date of the covenant test should not be below specific threshold ratios at specific test dates. The debt cover covenant requires that the ratio of net debt at the testing date to adjusted EBITDA for the previous twelve-month period not exceed specific threshold ratios at specific test dates. These covenants tighten over time with the first significant change taking place at 30 September 2011. If we do not comply with covenants such that undertakings to the Group's lenders are breached, then the syndicate of lenders would have the right, but would not be obliged, to demand immediate repayment of all amounts due to them subject to a two-thirds majority of the voting lenders approving such action.
Potential effect: Debts falling due earlier than planned |
We are currently in full compliance with the financial covenants contained in our borrowing agreements.
We have presented our financial covenants on page 186 of our Firm Placing and Placing and Open Offer prospectus, which is available on our website at http://www.yellgroup.com/english/investorsdebtrefin ancingandequityraising.
We actively monitor progress against the covenants and when required we take corrective action to prevent a breach from occurring. |
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Risk from: Covenants
We have contractual debt obligations and covenants that reflect our leverage. These could restrict flexibility in our use of financial resources to: • Carry out our business. • Finance working capital, capital expenditures or other business opportunities. • React to changing market conditions, changes in our business or changes in the industry in which we operate.
Potential effect: Restricted liquidity |
We have access to a £196.8 million revolving credit facility, of which £193.2 million is committed (subject to covenant adherence) until 30 April 2014 and £3.6 million is committed until 30 April 2011, uncommitted facilities of £7.1 million in Spain and Latin America and cash of £160.4 million that we can use to mitigate the potential operational risks. We believe that we have sufficient access to working capital to meet our operating and capital expenditure requirements in the 2011 financial year.
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Risk from: Refinancing debt
We have funded the business largely from cash flows generated from operations and bank debt in the form of term loans. We will require access to funding before 30 April 2014 in order to refinance nearly two-thirds of our term loans, which mature at that time. Whilst we enjoy sound relationships with our lenders and are currently able to service our level of debt, there is a risk, given current global economic conditions, that the debt markets will remain fragile and sometimes illiquid, such that the cost of diversifying debt is relatively high and access is either restricted or not possible at all.
Potential effect: Not having enough cash to pay debts |
We recognise refinancing risk and continually monitor the financial markets for opportunities to diversify our debt portfolio.
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Risk from: Counterparties to derivative transactions
We normally only use derivative financial instruments, including interest rate swaps, interest rate caps and forward foreign exchange contracts, for hedging purposes. We rely on the counterparties to pay us when market rates go beyond contractual thresholds.
Potential effect: Uninsured losses |
Counterparty credit risk is closely monitored and managed within controls set by the Board.
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Risk from: Interest rates
Interest is payable under our senior credit facilities at a variable rate based on LIBOR or EURIBOR plus a margin. We could be adversely affected if the interest rates we pay were to rise significantly.
Potential effect: Fluctuations in earnings per share |
We mitigate this risk by fixing a portion of our interest rate through hedging arrangements: • At the end of each quarter we review our future interest payment obligations in assessing the appropriate amount of hedging for at least the next 27 months. • We have fixed or capped interest rates on around 95% of our indebtedness under the term bank facilities until September 2010, with around 70% fixed or capped until December 2011 and around 50% fixed or capped thereafter until December 2012. • At 31 March 2010, we had £104.5 million net mark-to-market liabilities on interest rate swaps that were available for recognition as an increase of interest expense when settled in the future. |
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Risk from: Translating results of operations outside UK
Our financial statements are presented in pounds sterling, and changes in the exchange rate between the US dollar and the pound sterling and the euro and the pound sterling will affect the translation of the results of our businesses with US dollar, euro or Latin American functional currencies.
Potential effect: Fluctuations in earnings per share |
Our exposure to currency fluctuations will depend on the mix of foreign currency and pounds sterling denominated indebtedness and the extent of any hedging arrangements: • The composition of our debt partially hedges exchange rate fluctuation, because 49% of our debt and 45% of our net interest expense are denominated in US dollars, thereby reducing our US EBITDA exposure by approximately 60%. Additionally, 26% of our debt and 23% of our net interest expense are denominated in euros, thereby reducing our Euro EBITDA exposure by approximately 54%. • We do not currently intend to use derivative instruments to hedge any foreign exchange translation rate risk relating to foreign currency-denominated financial liabilities, although we will continue to review this practice.
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Risk from: Transactions denominated in foreign currencies
We have operations in countries where the functional currency is not pounds sterling. Significant cash inflows and outflows associated with the Group's operations within a country are generally denominated in local currency to limit the risks of foreign exchange movements on the local results. However, in certain situations, some contracts have to be denominated in currencies other than the functional currency.
Potential effect: Fluctuations in earnings per share |
We use derivative financial instruments to hedge transactional foreign exchange rate risk on significant transactions that are not denominated in local currency.
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Financial reporting and related risk factors
We report a reconciliation of our operating profit to EBITDA in note 2 on page 71. Operating profit, EBITDA and other financial indicators generally relied on by investors to evaluate a company's financial performance may not, in our case, reflect actual cash received or expended during a given period:
• The period in which we recognise revenue may be different to the period in which our advertisers receive and pay our invoices.
• The period in which we recognise expenses may be different to the period in which we pay the supplier.
We recognise the revenue and costs directly related to sales, production, printing and distribution from advertisement sales for a printed directory edition when we have completed delivery of that directory edition. Because the number of editions and type of directories are not evenly distributed during the year or published in the same quarter every year, our revenue and profits do not arise evenly over the year:
• During our 2010 financial year the four financial quarters accounted for, respectively, 22%, 24%, 26% and 28% of Group revenue.
• Different directories may grow at different rates, such that growth may not be evenly distributed between quarters.
• We sometimes need to rephase our timing of distributions into a later period for operational reasons, such as when we rescope directories or integrate acquisitions.
We also make subjective and complex judgements, giving due consideration to materiality, when estimating inherently uncertain amounts included in the financial statements. We mitigate the risk of results being materially different by regularly reviewing our estimates and updating them when appropriate. A description of what we consider to be the most significant estimates are included in the table below. Actual results could be different, but we do not believe materially different unless otherwise indicated.
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Risk and potential effect |
Mitigation |
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Risk from: Estimating bad debts
We reduce receivables by an allowance for amounts that may not be collectible in the future. Bad debts as a percentage of revenue in the US at 10.3% reflects the market conditions in the US, when compared with the 4.4% in Spain and 5.5% in the UK where the directories are more mature. Our consolidated bad debt expense was £162 million during the 2010 financial year and at 7.6% of revenue was higher than the previous year (5.6%).
Potential effect: Fluctuations in earnings per share |
We continuously monitor collections and payments from our customers and maintain a provision for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. We have demonstrated the ability to make reasonable and reliable estimates of allowances for doubtful accounts based on significant historical experience.
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Risk from: Value of goodwill
We review goodwill annually for impairment or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable, and at the end of the first full year following acquisition. We compare the carrying value of our operations to their estimated recoverable values to determine whether goodwill is impaired. We estimate the recoverable value using a discounted cash flow model that relies on significant key assumptions, including after-tax cash flows forecasted over an extended period of years, terminal growth rates and discount rates.
Potential effect: Fluctuations in earnings per share |
We use financial projections from our five-year plan, which is reviewed and approved by senior management and the Board. We use published statistics or professional advice where appropriate when determining the other assumptions we use.
We last recorded impairment charges in 2009, when we recognised an impairment loss (£1,272.3 million) on goodwill related to our operations in Spain (£1,103.9 million), Chile (£120.1 million), Argentina (£40.8 million) and Peru (£7.5 million). Details of the Group's impairment reviews and sensitivities to changes in assumptions are disclosed in note 10 on page 79. |
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Risk from: Value of long-term tangible and intangible assets
Other non-current intangible assets and plant and equipment are long-lived assets that we amortise over their useful lives. Useful lives are based on management's estimates of the period over which the assets will generate benefits.
Potential effect: Fluctuations in earnings per share |
We review the values of property, plant, equipment and assets with indefinite lives annually for impairment. We review other non-current intangible assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable, and at the end of the first full year following acquisition. Historically, we have not reduced the value of these assets as a result of the impairment analyses, nor have we realised large gains or losses on disposals of property, plant and equipment.
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Risk from: Estimating pension liabilities
The determination of our obligation, expense and contribution rate for pensions is dependent on the selection of assumptions that our actuaries use in calculating such amounts. Those assumptions include, amongst others, expected mortality rates of scheme members, the rate at which future pension payments are discounted to the balance sheet date, inflation expectations and average expected increase in compensation over and above inflation. Differences in our actual experience or changes in our assumptions can materially affect the amount of our future pension obligations, future valuation adjustments in the statement of comprehensive income, and our future employee expenses.
Potential effect: Fluctuations in earnings per share and cash contribution rates |
We believe that our assumptions are appropriate because we regularly seek expert actuarial advice.
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Risk from: Fluctuating pension asset values
We value the portfolio of assets held by the defined benefit pension scheme in the UK at market value when calculating our net pension asset or deficit. Values will increase and decrease as markets rise and fall. The determination of our net obligation, expense and contribution rate for pensions is dependent on a selection of assumptions that includes the expected long-term rate of return on plan assets. Differences in our actual experience or changes in our assumptions can materially affect the amount of our future net pension obligations, future valuation adjustments in the statement of comprehensive income, and our future employee expenses.
Potential effect: Fluctuations in earnings per share and cash contribution rates |
The trustees and management have an agreed strategy to mitigate the risk of having insufficient funds, if markets fall. The trustees annually match the low-risk asset portfolio against the cash outflows for the following twelve years. Against longer-term cash payouts they match a combination of investments in index-linked gilts to mitigate inflation risk, and higher risk assets to get higher rates of growth. The trustees also work with management to ensure sufficient assets will be available to settle obligations extending beyond twelve years. We believe that our assumptions are appropriate because we regularly seek expert actuarial advice.
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Risk from: : Taxation
The determination of our obligation and expense for taxes requires an interpretation of tax law. We recognise deferred tax assets and liabilities arising from temporary differences where we have a taxable benefit or obligation in the future as a result of past events. We record deferred tax assets to the extent that we believe they are more likely than not to be realised. Should we determine in the future that we would be able to realise deferred tax assets in excess of our recorded amount or that our liabilities are different to the amounts we recorded, then we would increase or decrease income as appropriate in the period such determination was made.
Potential effect: Fluctuations in earnings per share and cash tax payments
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We seek appropriate, competent and professional tax advice before making any judgements on tax matters. Whilst we believe that our judgements are prudent and appropriate, significant differences in our actual experience may materially affect our future tax charges.
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Sensitivity analyses
The following analyses illustrate the effect that specific changes could have had on our results in the 2010 financial year. The analyses do not consider secondary effects or steps that could be taken to mitigate the primary effects and are only valid when all other factors are held constant. The following discussion of estimated amounts generated from the sensitivity analyses involves risks and uncertainties. Caution should be exercised in relying on these analyses:
Year ended 31 March 2010
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£ millions,unless otherwise stated |
If on average |
Had varied by being |
Reported gain/(loss) |
Equity gain/(loss) |
Could have been |
|
Market risks |
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Adjusted EBITDA |
Paper prices |
10% higher |
619.6 |
|
608.4 |
|
Adjusted EBITDA |
Paper prices |
10% lower |
|
|
630.8 |
|
Net finance costs |
|
|
|
|
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Without hedges |
Variable rate interest |
1% higher |
(339.0) |
|
(369.6) |
|
With hedges |
Variable rate interest |
1% higher |
|
|
(332.4) |
|
Without hedges |
Variable rate interest |
1% lower |
|
|
(321.4) |
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With hedges |
Variable rate interest |
1% lower |
|
|
(343.6) |
|
Net finance costs |
Exchange rate of USD to GBP |
10% higher |
|
|
(327.9) |
|
Net finance costs |
Exchange rate of USD to GBP |
10% lower |
|
|
(352.5) |
|
Net finance costs |
Exchange rate of USD to GBP |
10% higher |
|
|
(333.6) |
|
Net finance costs |
Exchange rate of USD to GBP |
10% lower |
|
|
(345.5) |
|
Basic earnings per share |
Exchange rate of US Dollar |
10% higher |
3.4 |
|
3.1 |
|
Basic earnings per share |
Exchange rate of US Dollar |
10% lower |
|
|
3.7 |
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Basic earnings per share |
Exchange rate of Euro |
10% higher |
|
|
3.6 |
|
Basic earnings per share |
Exchange rate of Euro |
10% lower |
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3.2 |
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Significant estimates |
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Adjusted EBITDA |
Bad debt expense as a % of revenue |
1% higher |
619.6 |
|
598.4 |
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Adjusted EBITDA |
Bad debt expense as a % of revenue |
1% lower |
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|
640.8 |
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Operating profit |
Useful economic lives of intangible assets |
1 year longer |
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|
429.9 |
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Operating profit |
Useful economic lives of intangible assets |
1 year shorter |
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|
375.2 |
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Operating profit |
Useful economic lives of plant and equipment |
1 year longer |
|
|
416.2 |
|
Operating profit |
Useful economic lives of plant and equipment |
1 year shorter |
|
|
395.1 |
|
Operating profit |
Discount rates on goodwill impairment analysis |
1% higher |
|
|
409.3 |
|
Operating profit |
Discount rates on goodwill impairment analysis |
1% lower |
|
|
409.3 |
|
Operating profit |
Terminal growths on goodwill impairment analysis |
1% higher |
|
|
409.3 |
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Operating profit |
Terminal growths on goodwill impairment analysis |
1% lower |
|
|
409.3 |
|
Actuarial loss |
Real interest rates in calculating pension liabilities |
0.1% higher |
|
(58.8) |
(48.4) |
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Actuarial loss |
Real interest rates in calculating pension liabilities |
0.1% lower |
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|
(69.2) |
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Actuarial loss |
Life expectancy in calculating pension liabilities |
1 year longer |
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|
(68.6) |
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Actuarial loss |
Future salary increases in calculating pension increases |
0.1% higher |
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(61.7) |
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Actuarial loss |
Future salary increases in calculating pension increases |
0.1% lower |
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|
(55.9) |
Financial instruments affected by market risk include borrowings, deposits, and derivative financial instruments. The following analysis, required by IFRS 7, is intended to illustrate the sensitivity to changes in market variables, being interest rates and the US dollar and Euro to sterling exchange rate on our financial instruments. The analyses are only valid when all other factors are held constant.
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2010 |
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2009 |
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£ millions (loss) gain at 31 March |
Income statement |
Shareholders' equity |
Income statement |
Shareholders' equity |
|
Variable interest rates 1% higher, taking into account hedging arrangements |
6.5 |
55.7 |
(1.5) |
70.2 |
|
Variable interest rates 1% lower, taking into account hedging arrangements |
(4.4) |
(55.3) |
1.5 |
(67.7) |
|
Variable interest rates 1% higher, without taking into account hedging arrangements |
(30.6) |
- |
(43.4) |
- |
|
Variable interest rates 1% lower, without taking into account hedging arrangements |
17.6 |
- |
43.4 |
- |
|
US dollar to pounds sterling exchange rate 10% higher |
11.1 |
(4.5) |
11.7 |
(9.1) |
|
US dollar to pounds sterling exchange rate 10% lower |
(13.5) |
5.6 |
(14.3) |
9.1 |
|
Euro to pounds sterling exchange rate 10% higher |
5.4 |
(1.9) |
5.3 |
(4.4) |
|
Euro to pounds sterling exchange rate 10% lower |
(6.6) |
2.1 |
(6.5) |
4.4 |
Responsibility statement
The Annual Report and Accounts for the year ended 31 March 2010 contain, on page 44, a responsibility statement signed on behalf of the Board and stating as follows:
Each of the directors, whose names and functions are set out in the Governance and Responsibility section on pages 31 and 41 confirm that, to the best of each person's knowledge and belief:
• The financial statements, prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company.
• The directors' report contained in the annual report includes a fair review of the development and performance of the business and the position of the Company and Group, together with a description of the principal risks and uncertainties that they face.
The directors are responsible for the maintenance and integrity of the Group website, www.yellgroup.com.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Enquiries:
Howard Rubenstein
Company Secretary
T: +44 (0) 118 950 6192
Related Shares:
HIBU.L