PRELIMINARY RESULTS for the year ended 31 March 2005 17 May 2005.
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Transcript of PRELIMINARY RESULTS for the year ended 31 March 2005 17 May 2005.
PRELIMINARY RESULTSfor the year ended 31 March 2005
17 May 2005
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 on 8 June 2004. We also draw your attention to our press release which is posted on our web site, for more information on the risks and uncertainties.
Our annual report for the year ended 31 March 2005 will be posted to shareholders and on our web site in June 2005, and at the same time the annual report on form 20-F of our subsidiary, Yell Finance BV, will be filed with the SEC.
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Agenda
FINANCIALS John Davis, CFOResults
IFRS impact
INTRODUCTION John Condron, CEO
STRATEGIC UPDATE John Condron, CEORevenue drivers
Competition CommissionPriorities
JOHN DAVIS CFO
5
Headline Results
Growth
ActualConstant
FX
Turnover £1,285.3m 8.3% 12.8%
Adjusted EBITDA £402.8m 11.9% 15.8%
Adjusted operating cash flow £347.2m 14.4% 17.6%
Cash conversion 86.2%
Dividends £88.3m
Acquisitions £31.8m
Diluted earnings per share before amortisation and exceptional costs
30.4p 20.2%
Dividends per share 12.6p 40.0%
6
Yell Group - Strong Historic Growth
206 210 226 233
28 35
97127
162
241
2001 2002 2003 2004 2005
US
UK
554 581 615 635 664
220284
499552
621
2001 2002 2003 2004 2005
US
UK CAGR 14%
33.2 28.3 29.0 30.3 31.3
EBITDA margin %
CAGR 15%
Adjusted EBITDA excludes 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 and costs from lawsuits associated with a Yellow Book advertising campaign in FY05.
Turnover (£m) Adjusted EBITDA (£m)
7
206 210226 233 241
2001 2002 2003 2004 2005
554581
615 635664
2001 2002 2003 2004 2005
CAGR 4.6%
Turnover (£m) Adjusted EBITDA (£m)
37.2 36.2 36.8 36.7 36.2
EBITDA margin %
Yell UK – Growth Under Regulation
+0.6 -0.4 -4.4 -4.8 -3.3
Effective Yellow Pages price reduction
%
CAGR 4.0%
Adjusted EBITDA excludes 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 and costs from lawsuits associated with a Yellow Book advertising campaign in FY05.
8
Yell US – Organic and Acquisition Growth
2001 2002 2003 2004 2005
331 409 465
868
1149
2001 2002 2003 2004 2005
CAGR 36%
Turnover ($m) Adjusted EBITDA ($m)
12.7 12.3 19.4 23.0 26.1
EBITDA margin %
331409
775
940
1,149
41 50
151
216
300
CAGR 64%
Existing
Acquired
9
11.1
3.1
8.4
0.3
9.8
12.5
22.3
Same marketgrowth
Newlaunches
Acquisitions Rescheduling/ Other
Growthbefore FX
Exchangeimpact
Total growth
US Turnover Growth
% Contribution to turnover growth
10
Building US Margins
3%
16%
32%
26%
1 Year 2-3 Years 4+ Years All Directories
EBITDA margin of new directories since launch
3% 31% 66%
100%
Share of turnover FY 05
11
Cash
GROUP CASH CONVERSION 86%
403
3224
32
230
347
13
72
AdjustedEBITDA
Workingcapital
Capex Operatingcash flow
Cashinterest
Cash tax Exceptionallegal
expenses
Free cashflow
£m
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Analysis of Debt
At 31 March 2005£m
Senior bank (inc Revolver) (851.0)
High yield (309.3)
Cash 55.5
Leases (1.3)
Net debt (1,106.1)38% $ denominated
Natural currency hedgeYear end 31 March
$m
EBITDA originating in US 300
$ interest 55
Net $ earnings exposure before tax
245
Net debt : EBITDA 2.7x
13
Effective Tax Rate
Share of profits
Average tax rate
UK 52% 30%
US 48% 35%
Weighted 32%
US allowable amortisation (4%)
US losses (2%)
Other tax allowable items (1%)
Tax rate on headline PBT 25%
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Diluted EPS Before Amortisation and Exceptional Items
EPS Pence
Contribution to Growth
2004 earnings (pro forma) 25.3
Operating profit growth 4.7 18.6%
Lower interest expense 1.6 6.3%
Higher tax rate (1.0) (3.9%)
Increased shares in issue (0.2)(0.8%)
2005 earnings 30.4 20.2%
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Exceptional Costs
FY 2005
Exceptional costs of £36.5m£22.8m after tax
Verizon law suit settlement
Proposed class action settlement
FY 2004
Exceptional IPO costs of £148.5m£111.3m after tax
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IFRS Impact
£m
FY05 Reporte
dOption
sPensio
n TaxFY05IFRS
Change
UK adjusted EBITDA 240.7 (1.6) (6.7) - 232.4(3.4%)
US adjusted EBITDA 162.1 (1.5) - - 160.6(0.9%)
Group adjusted EBITDA
402.8 (3.1) (6.7) - 393.0(2.4%)
Interest (91.0) - (2.3) - (93.3)(2.5%)
Ordinary Tax (73.2) 1.1 2.7 (16.2) (85.6) (16.9%)
Adjusted PAT 215.6 (2.0) (6.3) (16.2) 191.1 (11.4%)
Adjusted EPS 30.4p(0.3p) (0.9p) (2.2p) 27.0p
(11.2%)
Operating Cash 347.2 - - - 347.2 -
Based on current IFRS practice
JOHN CONDRONCEO
18
UK Revenue Drivers
1,239 1,234
1,272
1,237
1,280
2001 2002 2003 2004 2005
107101 102
116 117
2001 2002 2003 2004 2005
New advertisersRetained c ustomers
Unique advertisers (000s) Average turnover per unique advertiser (£)
Printed directories only
+0.6 -0.4 -4.4 -4.8 -3.3
Effective Yellow Pages price reduction %
418 438 451480 478
83 80 78 77 75
Retention %
19
UK Win, Keep and Grow
117,000 new advertisers– 14% growth in advertisers over five years
Retention 75%– Competition
– New advertiser dilution
ARPA up 3.5%
25 new directories after rescoping
Portfolio approach
20
Yell.com – 40% turnover growth
37% growth in searchable advertisers
23,000 on-line only advertisers
Searches grown 11%
Advertiser proposition enhanced through Google distribution
Yell.com Mobile
56
75
103
141
2002 2003 2004 2005
Searchable advertisers (000s)
21
8
10 1011
12
15
17
1998 1999 2000 2001 2002 2003 2004
4.0 4.0 3.0 3.0
-2.0
25.0
20.0
25.0
9.0 10.0
19.0
13.0
-0.2 -0.4
1998 1999 2000 2001 2002 2003 2004E
Inc umbents
Independents
% Revenue growth for publishers % Independents’ market share
US Share Shift Continues
Source: The Kelsey Group. Independents exclude online only publishers.
22
US Revenue Drivers
2,135
2,450
2,135
2,4342,525
2001 2002 2003 2004 2005
152 166
363386
455
2001 2002 2003 2004 2005
Unique advertisers (000s) Average turnover per unique advertiser ($)
Printed directories only
74 70 70 70 71
Retention %
23
US Win, Keep and Grow
Organic growth contributed 14.2% to overall turnover growth of 22.3%– Same market growth – 11.1% including relaunches
– New launches – 3.1%
Acquisitions contributed 8.4% to overall turnover growth– Integration of Feist
Usage and brand – Continuing national branding campaign
Yell.com working with Yellowbook.com
24
47% US Independent Market Share
565 OUT OF 6,500 US DIRECTORIES
Yellow Book (acquired August 1999)
McLeodUSA (acquired April 2002)
NDC (acquired December 2002)
Feist (acquired March 2004)
New Launches
25
Competition Commission Investigation
Changes under new regime – Enterprise Act
One of first companies under new regime (excluding mergers)
Secretary of State no longer involved
Publication of CC thinking as process unfolds giving opportunity for fresh input
Possible route to Competition Appeals Tribunal if not satisfied
26
Timetable for Investigation
Gathering information; issuing questionnaires; assessing evidence from parties
Statement of issues published
Issues hearings
Notifying emerging thinking
Deadline for parties’ responses / submissions required before provisional findings
Notifying provisional findings
Notifying and considering possible remedies
(if required)
Remedies hearings (if required)
Publish report
Statutory deadline
April to July
August
September to October
Mid November
13 January 2006
Early February 2006
February 2006
March / April 2006
End June 2006
4 April 2007
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Approach to Competition Commission Investigation Hands-on leadership by Yell top team
Premier professional advisers– Legal, economics, finance, public affairs
Consistent key themes – Competition is real not theoretical
– Prices have declined by more than rate cap– Discounts
– Rescoping
– Margins driven by quality, efficiency and volume
– Regulation impeding innovation
28
Priorities
UK
Build on proven success of revenue drivers
Rapid growth of Yell.com continued
Strong arguments to Competition Commission
US
Strong organic growth continues
Expansion through launches accelerating
Build on Yell.com expertise at Yellowbook.com
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