Yell UK Business Presentation...Statutory accounts for the year ended 31 March 2019 will be filed with the Registrar of Companies. The auditor has not yet reported on those accounts

Yell UK

Business Presentation

15 May 2019

hibu confidential / © hibu 2019

Disclaimer

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This presentation is for information purposes only and does not constitute a prospectus or any offer to sell or the solicitation of an

offer to buy any security in the United States of America, the United Kingdom or in any other jurisdiction. Securities may not be

offered, sold or transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the U.S. Securities Act of 1933, as amended.

The information contained in this presentation does not comprise statutory accounts within the meaning of Section 434 of the

Companies Act 2006. Statutory accounts for the year ended 31 March 2018 have been filed with the Registrar of Companies. The

auditor has reported on those accounts and its report was unqualified and did not contain a statement under Section 498(2) or 498(3)

of the Companies Act 2006. Statutory accounts for the year ended 31 March 2019 will be filed with the Registrar of Companies. The

auditor has not yet reported on those accounts but is expected to do so prior to filing.

This presentation may include forward-looking statements within the meaning of the securities laws of certain applicable jurisdictions.

These forward-looking statements include, but are not limited to, all statements other than statements of historical facts, including,

without limitation, those regarding our intentions, beliefs or current expectations concerning, among other things, our future financial

conditions and performance, results of operations and liquidity, our strategy, plans, objectives, prospects, growth, goals and targets,

future developments in the markets in which we participate or are seeking to participate, and anticipated regulatory changes in the

industry in which we operate. These forward-looking statements can be identified by the use of forward-looking terminology, including,

but not limited to, terms such as “aim”, “anticipate”, “assume”, “believe”, “continue”, “could”, “estimate”, “expect”, “forecast”,

“guidance”, “intend”, “may”, “outlook”, “plan”, “predict”, “project”, “should”, “will” or “would” or, in each case, their negative, or other

variations or comparable terminology.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to

events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not

guarantees of future performance and are based on numerous assumptions. Our actual financial condition, results of operations and

cash flows, and the development of the industry in which we operate, may differ materially from (and be more negative than) those

made in, or suggested by, the forward-looking statements contained in this presentation. In addition, even if our financial condition,

results of operations and cash flows, and the development of the industry in which we operate, are consistent with the forward-looking

statements contained in this presentation, those results or developments may not be indicative of results or developments in

subsequent periods. We undertake no obligation publicly to update or revise any forward-looking statements, except as may be

required by law.


Business commentary

• Transition to fully digital business now complete; last print book delivered January

• Revenue challenges, especially in Q3 and Q4; operational actions already underway to address this

• Yell.com strengthened: underlying traffic stabilised at around 10 million monthly visits; partners adding

additional c. 25m1 monthly usage; strong growth in reviews; messaging capability being rolled out

• Pension deficit at April 2018 covered by subsequent contributions, no further regular contributions

required before the next valuation expected in 2021

• Operations and capital structure separate from US and Group

• Raised £225 million bond May 2018

Financial commentary

• Digital revenue in Q4 was £3m lower than Q3 for a variety of reasons largely relating to the final

transition from print to digital. These include the roll-off of some Yell.com spend from customers

transitioned a year earlier from print to digital; the loss of certain national digital customers with the

end of print; the loss of some high revenue (but low margin) search campaigns; the short term impact

of sales force reorganisation; and headcount being below target

• Digital EBITDA margins held up well at 34% with lower costs offsetting the revenue decline

• Trading operating cash flow in Q4 was £4m lower than Q3 due to the timing of payments

FY19

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1. Searches for businesses via Yell’s content syndication partners, where Yell data was used in the search results provided. Source: Syndicated partner stats, January to March 2019.


£2.6

£3.7

2018E 2022E

SME DIFM Digital Marketing Services(£ Billions)

Market Overview

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Source: ONS, PwC E&M outlook, PwC merchant survey, Management Information, PwC Analysis

• £2.6bn market growing at c. 8%

(although management view is

this may be softening)

• Yell is number one provider of

managed digital marketing

services with c. 7% share

• Fragmented market dominated

by small service providers


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MeasurementTracking, Measuring &

adapting via Y4B App

PresenceStrong & Synchronized

ConnectMaintain & Update your

business info

PerformanceDrive qualified traffic &

re-marketing to existing

customers

ReputationManage reviews and

distribute dynamic relevant

content

Digital Marketing Made Easy

• Businesses lack the time,

knowledge and resources to

manage their digital marketing

• Yell offers the ‘one stop shop’

to be successful at digital

marketing

• Compelling market

proposition – broad range,

local service and leading

technology

• Partnering with the leading

providers in the industry


Yell.comConnecting Businesses & Consumers

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• Yell.com is more than an online directory

• Omnichannel platform (Mobile, Web & App)

• Voice search enabled

• Messaging & booking with AI & Chat bots

• Leading data & rich content

• Over 2m reviews

• Total monthly usage has grown to 36m

throughout FY19 through partner usage

• Usage partnerships with Apple & Bing

driving growth10.1 10.5 10.3 10.8

9.1

17.9

25.9

FY19 Q1 FY19 Q2 FY19 Q3 FY19 Q4

Average Monthly Usage (m)

Yell.com Core Traffic

Syndicated Partner Usage


Technology and Data Evolution

7hibu confidential / © hibu 2019

Manual error prone and inefficient processes

Efficient AI assisted automated processes

Reactive approach with limited capability

Proactive approach with advanced tooling

Fragmented data and irregular MI reporting

Single version of truth for an Insight driven business

In house hosting creating cost and obsolescence

Efficient, modern and leading cloud services

Standard content on Business Listings

Rich content with Omnichannel experience

Siloed Tools with duplication and complexity

Simple Tools and Self-Serve Digital journeys

Processes

Cyber

Security

Data and MI

Hosting

Yell.com

Tools

From To

UK FY20 Priorities

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• Continuing priority is to address revenue trend

• Organisational stability and improved execution are key: focusing on priorities; removing

distractions; getting sales headcount up to strength; optimizing territory allocations and

sales commission plans; sales training and performance management

• HQ cost reduction program initiated, reducing costs by up to £8 million annual run rate over

course of year, to help protect profitability and ensure the business is “leaner and fitter”

• Opportunity to simplify and improve the customer journey, automate, and leverage scale

advantage in technology and data

• UK CEO recruitment process well advanced


Priorities

Strategic Outlook

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• First major YP company to transition to fully digital

• Significant transition; addressing challenges

• Number 1 provider in growing, fragmented market1

• Yell.com a high usage and increasingly differentiated platform

• Opportunities to improve customer journey and to automate

• Opportunities to leverage scale advantage in technology and data

• Challenge is to out-compete the many small service providers and grow above market


1. Managed digital marketing services for SMEs

Appendix


UK: FY19 Quarterly

11

£m

Actualvs

Prior YrActual

vs

Prior YrActual

vs

Prior YrActual

vs

Prior YrActual

vs

Prior Yr

Digital revenue

Digital directories 27.2 0.4 27.7 0.4 26.9 0.2 24.7 (3.0) 106.5 (1.9) Growth 1.6% 1.5% 0.9% (10.7)% (1.7)%

Digital marketing services 21.4 (0.2) 21.3 (1.6) 20.8 (2.7) 19.8 (3.3) 83.2 (7.8) Growth (0.8)% (6.9)% (11.5)% (14.5)% (8.7)%

Total digital revenue 48.6 0.2 49.0 (1.2) 47.6 (2.5) 44.5 (6.3) 189.7 (9.7) Growth 0.5% (2.4)% (4.9)% (12.4)% (4.9)%

Digital product contribution

Digital directories 27.1 0.6 27.5 0.2 26.7 0.2 24.5 (3.0) 105.8 (2.0)% of revenue 99.6% 99.4% 99.4% 99.4% 99.3%

Digital marketing services 11.4 (0.3) 11.9 (0.6) 11.1 (2.2) 10.8 (2.1) 45.2 (5.2)% of revenue 53.4% 55.6% 53.6% 54.4% 54.3%

Total digital contribution 38.5 0.3 39.3 (0.4) 37.8 (1.9) 35.3 (5.1) 151.0 (7.1)79.2% 80.4% 79.4% 79.4% 79.6%

Total semi-var & indirect (23.0) 0.1 (23.3) 0.7 (24.2) (0.6) (20.1) 5.0 (90.6) 5.3

DIGITAL EBITDA 15.5 0.4 16.0 0.3 13.7 (2.5) 15.2 (0.1) 60.4 (1.9)% of revenue 31.9% 32.7% 28.7% 34.2% 31.8%

Print revenue 3.5 (1.6) 3.9 (3.4) 3.0 (3.8) 1.2 (7.1) 11.5 (15.8)underlying growth (31.0)% (46.7)% (56.2)% (85.2)% (57.8)%

Print contribution 0.9 (1.9) 0.6 (2.6) (0.2) (3.0) 0.0 (5.0) 1.4 (12.5)% of revenue 27.1% 16.8% (8.3)% 0.5% 11.7%

Print costs recharged (0.3) 0.3 (0.4) 0.2 (0.3) (0.2) (0.4) 0.6 (1.4) 0.9

PRINT EBITDA 0.6 (1.6) 0.3 (2.3) (0.6) (3.2) (0.4) (4.4) (0.1) (11.5)

TOTAL UK EBITDA 16.1 (1.2) 16.3 (2.0) 13.1 (5.7) 14.8 (4.5) 60.3 (13.4)% of revenue 30.9% 30.9% 25.9% 32.4% 30.0%

Exceptional cash flows (0.4) (0.4) (0.8) 0.2 (0.4) 0.2 (2.3) (1.5) (3.9) (1.5)

Working capital movement (0.0) - (5.6) (6.9) 2.6 4.4 (1.5) 0.4 (4.5) (2.1)

Pension contributions (2.5) 0.7 (2.5) - (0.8) 2.2 - 2.2 (5.8) 5.1

Capital expenditure (1.7) (1.0) (2.1) (0.7) (1.7) 0.0 (2.2) (0.4) (7.7) (2.0)

Trading operating cash flow 11.5 (1.9) 5.3 (9.5) 12.7 1.1 8.8 (3.7) 38.3 (13.9)

Q1 Q2 Q3 Q4 Full Year

UK: FY19 Cash Analysis

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1. Management costs recharged from the Hibu Group.

2. Included £0.9m outflow classified as part of cash generated from operations for statutory purposes.

3. Legacy PIK repayment.

£m Q1 Q2 Q3 Q4 FY

Actual Actual Actual Actual Actual

Trading operating cash flow 11.5 5.3 12.7 8.8 38.3

Hibu Group management costs1 (2.7) 0.9 (0.8) (0.9) (3.5)

Hibu brand Transfer to US - - 1.5 - 1.5

Pension (one off contribution) (10.0) - - - (10.0)

Adjusted operating cash flow (1.2) 6.2 13.4 7.9 26.3

Cash tax (0.2) (0.4) (0.5) (0.2) (1.2)

Withholding tax on US dividends (0.7) - - - (0.7)

Refinancing Costs2 (8.8) (0.0) (0.0) (0.2) (9.1)

UK bond interest - (7.1) - (9.6) (16.6)

RCF commitment fee - (0.1) (0.1) (0.1) (0.2)

Excess cash flow (11.0) (1.2) 12.7 (2.1) (1.6)

Opening cash balance 33.6 12.0 10.7 23.4 33.6

Excess Cash flow (11.0) (1.2) 12.7 (2.1) (1.6)

Cash returns to shareholders3 (11.4) - - - (11.4)

Intercompany - - - (1.7) (1.7)

Foreign exchange movement 0.6 0.0 (0.1) 0.0 0.6

Closing cash balance 12.0 10.7 23.4 19.6 19.6

Documents

Yell UK Business Presentation...Statutory accounts for the year ended 31 March 2019 will be filed with the Registrar of Companies. The auditor has not yet reported on those accounts