Yell UK Group Busi… · (1) According to M-Brain, 2017, Yell is #1 for managed digital marketing...

CONFIDENTIAL

APRIL 2018

Yell UK Group

1

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TABLE OF CONTENTS

2

Historical financials

Key highlights

Recent history overview 1

2

3

1. Recent history overview

4

EXECUTIVE SUMMARY

Yell UK Group (“Yell” or the “Company”) is the UK’s leading digital marketing champion for local businesses

− #1 provider of managed digital marketing services to SMEs in the UK(1), with 132k paying digital customers(2)

− Provider of the UK’s leading online business directory(3) – Yell.com

− High revenue visibility with more than 85%(4) subscription revenue

− For the twelve months ended 31 December 2017, Yell generated Normalised Digital Revenue of £197m(5) and Digital EBITDA of £62m(5) (32% margin)

− Strong cash generation, supported by a capex-light business model leveraging partnerships with third party technology providers

(1) According to M-Brain, 2017, Yell is #1 for managed digital marketing services for all types of local businesses in the UK. (2) Yell UK financial data, December 2017. Customers with a live digital product as of December 2017. (3) Based on visits. (4) Yell UK financial data, FY18 Q3. (5) Yell UK financial data. Combined digital revenue of the UK Group less a one-off non-cash valuation adjustment to deferred digital revenue of £1.9m in LTM Dec ‘17.

2. KEY HIGHLIGHTS

6

KEY HIGHLIGHTS

A leading player in a large growing digital advertising market

Distinct value proposition to SMEs through a one stop shop solution

Defensible competitive advantages and barriers to entry

Growing, highly cash generative digital business

Accelerated growth opportunities going forward

1

5

2

3

4

LTM Dec ’17 Normalised Digital Revenue breakdown by product(3)

Print 15%

Digital Marketing Services (DMS) 37%

Yell.com 47%

DIY 1%

7

YELL IS THE UK’S LEADING MANAGED DIGITAL MARKETING CHAMPION FOR SMEs

A digital focused business

(1) According to M-Brain, 2017, Yell is #1 for managed digital marketing services for all types of local businesses in the UK. (2) Based on visits. (3) Yell UK financial data. Combined digital revenue of the UK Group less a one-off non-cash valuation adjustment to deferred

digital revenue of £1.9m in LTM Dec ’17. (4) Annualised from H1 2017 figure. Sourced from IAB Digital Ad Spend Market Report. (5) Yell internal data, February 2018.

Announced end

of print in 2017

To be phased

out completely

by March 2019

Digital 85%

(6) Yell internal calculation (based on revenue), based on 2014 surveys and internal business databases. (7) Omniture, December 2017. Average monthly visits from January to December 2017. The comScore average

monthly visits from January to December 2017 was 8.6m. (8) Yell internal data, December 2017. (9) Yell internal data, December 2017. Customers with a live digital product as of 31 December 2017.

Yell is the local business champion

UK’s #1 provider of managed digital marketing services(1), helping small business to be successful online

Provides consumers with the leading online business directory(2) – Yell.com

Yell

brand since 1996

12m Yell.com

visits/month

981 sales force &

customer

services

£197m Normalised

Digital Revenue

LTM Dec ’17

132k Digital

customers

(9)

(7)

£62m Digital EBITDA

LTM Dec ’17

(8)

(3) (3)

Operating in a large and growing addressable market

Growing ~£11bn digital advertising market(4)

Target market of 2.7m(5) UK SMEs, with estimated annual spend on marketing amounting to £2.8bn(6),

Yell has a 7%(6) share of revenue in a highly fragmented market

Opportunity as SMEs shift towards online channels

1

Establishing an effective digital presence is a sophisticated, time-consuming proposition…

8

PROVIDES AN INTEGRATED SOLUTION WHICH SIMPLIFIES AN INCREASINGLY COMPLEX DIGITAL ECOSYSTEM

Digital marketing requires dedicated time, knowledge & resources, which SMEs do not have

…Yell is the ‘one-stop-shop’ solution

SMEs and self–employed professionals can focus on their field of expertise and receive a high quality digital marketing service

Know‐how and expertise in digital marketing

Own online assets (Yell.com)

Significant scale to deliver cost efficient services

Source: Local Pulse report, Thrive Analytics, 2017.

UK businesses may have missing or incorrect information online

51%

think social is too complicated or time

consuming to manage

45%

of websites aren’t mobile optimised

70%

don’t have a process to capture ratings & reviews

Digital presence

•45% of SMEs say they

don’t have enough time

•36% say not enough

knowledge

•21% say not enough

resources

42%

don’t have a website

55% of SMEs would prefer to work with one trusted provider

2

Multi product offering

‘Proven value’ demonstrated through dashboard

Average of 1.6 products per digital customer

Opportunity to retain and upsell

ARPA increase of 49% in LTM Dec ’17 vs. FY15

9

A WINNING GO-TO-MARKET STRATEGY

Nationwide sales reach

Value based service

Data on 2.7m(1) SMEs across the UK

Supplemented by ~26k new leads per month from diversified channels

– ~50% direct from Yell.com

– ~50% from third party sources

Rich SME database

1 2 3

2

981 salesforce and customer service agents

– Manage 132k digital customers

– Make calls to ~760k existing or potential customers (FY18)

– Acquire ~30k new customers p.a.

(1) Yell internal data, February 2018.

10

A ONE STOP SHOP OFFERING HELPING SMEs ESTABLISH A DIGITAL PRESENCE…

Yell.com Websites

Connect Stores

Prominence listings on the UK’s No. 1 online business directory

12m average monthly visits(1)

Fully managed website design, build, and hosting service

Mobile-optimised, search engine friendly and personalised

Ensures business details are published & correct on hundreds of websites & online directories - all from a single dashboard

Managed e-commerce website design & build service with online ordering & payment functionality

Monthly subscription

12 month minimum term Monthly subscription

12 month minimum term





(1) Omniture, December 17. Average monthly visits from January to December 2017. The comScore average monthly visits from January to December 2017 was 8.6m.

2

11

…AND GET FOUND ONLINE

Videos

Search

Social / Display

Search Engine Optimisation (SEO)

Range of videos to suit every budget, including production services, script-writing, location shoots and even drone footage

Published on YouTube and distributed to other key online locations

Managed AdWords campaigns from Google

Managed Facebook advertising campaigns targeting potential customers based on location, age, gender, interests and more

Design service & campaign management of online banner advertising

Published across a large network of popular sites including eBay, YouTube, AOL, Facebook, Yahoo and Yell.com

Ongoing search engine optimisation to boost website visibility in Google search results (organic not paid)

Google search term




4-6 month min. term


6 month min. term


6 month min. term

High revenue visibility with more than 85%(1) revenues from subscription based services, leading to low digital customer churn of 2.5% p.c.m.(2)

Google search term

(1) Yell UK financial data, FY18 Q3. (2) Yell UK financial data, LTM Dec ’17.

2

Appearance of new search channels (such as voice) where Google is not

dominant

12

A SYMBIOTIC RELATIONSHIP WITH GOOGLE

Google search term

Yell.com

Yell Website SEO

Connect PPC Plus

Yell is often responsible for the content that is

made available on Google search results

2

Siri

Yell provides content driving Google search results Search options alternatives for Google

13

YELL.COM IS THE LEADING ONLINE PROPRIETARY PLATFORM, CONNECTING CONSUMERS WITH LOCAL BUSINESSES

2

8.6

8.6

6.2

4.2

3.6

1.1 0.7 0.6 0.5

8.6

12.2 All traffic is organic(4) (i.e. not paid for by Yell)

(Millions of visits per month(3))

(4)

(1) Yell internal data, February 2018. (2) Yell internal data. Customers with a live Yell.com advert as of December 2017. (3) comScore. Average monthly visits from January to December 2017. (4) Omniture, December 17. Average monthly visits from January to December 2017. The comScore average monthly visits from January to December 2017 was 8.6m. Monthly traffic includes both desktop & mobile. Due to incomplete traffic

tagging leading to understated usage, the source of externally reported usage changed from comScore to Omniture audited data in 2017. Organic traffic is defined as excluding usage from PPC search.

112k(2)

Yell.com paying customers

2.7m(1)

listings

1.5m(1)

reviews

.com

Trades 30%

Professional services

11%

Automotive 8%

Retail 7%

Health 6%

Other 38%

Top 10% 57%

Next 10% 16%

Next 30% 19%

Next 50% 9%

Yell.com 55%

Digital Marketing Services (DMS) 45%

Eastern & Home Counties

32%

London & SE 17%

Midlands & NW 20%

Scotland, NE & Yorkshire

17%

SW & Northern Ireland 14%

14

Diversified customer base High customer stickiness through subscription model

>85% subscription

based services

(1) Yell UK financial data, December 2017. 5 largest verticals by digital customer volume, representing 62% of total digital customers (94k out of 132k digital customers).

(2) Yell UK financial data, based on customer invoices in the month of December 2017. (3) Includes DIY websites (SSL). (4) Yell UK financial data, FY18 Q3’. (5) Yell internal data, as of 31 December 2017.

Top 10% highest spending customers

Highest spending digital customers are the most stable

14 years

median tenure

90% ARPA

growth over five years(6)

Dec ’17 Digital Revenue breakdown by customer spend (2)

Excl. DIY websites

Yell.com only 38%

DMS only 14%

Multi-product 48%

1.6 average number of products per

customer

Opportunity to cross-sell amongst Yell’s existing customer base

% of customers (9)

33% in FY15

2.9 average # of products

1.2% monthly churn(8)

2.5% monthly churn

among all digital customers

vs.

LTM Dec ’17 Normalised Digital Revenue breakdown by product Dec ’17 customer breakdown by classification(1) Dec ’17 Digital Revenue breakdown by region(2)

(7)

(7)

YELL SERVES A DIVERSIFIED AND LOYAL CUSTOMER BASE

(6) Average Revenue per Advertiser of top 10% digital customers in 2012 compared to 2017. (7) Yell internal data, as of December 2017. Excludes print products. (8) Monthly churn average LTM Dec ’17. (9) Yell internal data, December 2017. Some digital customers may also subscribe to print products. Calculated

as a % of total customers excluding DIY websites (SSL) and print-only customers as of December 2017.

(4)

(8)

(3)

(5) 132,000 digital

customers

2

15

YELL IS THE PRE-EMINENT PLAYER IN A DISTINCT SEGMENT OF THE MARKET

2

Large scale

Targeting SMEs

INDEPENDENT WEB DESIGNERS

#1 Managed digital marketing services for local business in the UK

High level of service

Yell offers a distinct proposition & enjoys a defensible market position with growth opportunities in multiple directions

INTEGRATED PRODUCT & SERVICE SUITE

Integrated product & service suite…

3

16

Yell.com SEO

Social Adverts Search Display Advertising

Yell Merchant app

Connect Stores Websites

Videos

Presence Performance

…tailored to the needs of SMEs, in one single place…

‘Presence’ & ‘Performance’ services are highly interdependent

Customers often rely on Yell to both get them online and to also get them found online

…leveraging third-party technology partners

Reduces capital expenditure and provides the flexibility to choose and change, as needed

Comprehensive platform agnostic product suite, differentiated from

Google or Facebook DIY proposition

Social Adverts Stores Websites Connect Search Websites

Selective in-house development & integration

Yell.com Merchant app Consumer app

# of active customer leads:

SALES MODEL SUPPORTED BY ADVANCED DATA ANALYTICS

Data driven & technology enabled sales model…

2.7m(1) businesses on database, including proprietary profile and behavioural data

CRM system rolled out company wide in 2016/17

Marketing automation system integrated with CRM in 2017, driving sales and service efficiency

New opportunities contacted via Telesales

Advanced profiling, segmentation and modelling for optimal conversion & ARPA

Scanning tools for websites, online presence & social

Mapping tools and value dashboard

3

17

(1) Yell internal data, February 2018.

…helps optimise the sales model(1)

3 Key components – Value, type / fit and engagement

0.4m 1.1m 0.6m 0.2m

Farmers

Builders

Hairdressers

Electricians & Electrical Contractors

Painters & Decorators

Plumbers

Garage Services

Schools & Colleges

Take Away Food

Driving Schools

Carpenters & Joiners

Charitable & Voluntary Organisations

Beauty Salons & Consultants

Accountants

Grocers & Convenience Stores

Roofing Services

Plastering & Screeding

Internet Web Design & Development

Pubs

Computer Services

Building Maintenance & Repairs

Recruitment Consultants

Central Heating Services

Estate Agents

Landscapers

Solicitors

Removals & Storage - Domestic

Dentists

Financial Advisers

Locksmiths

Day Nurseries

Security Services & Equipment

SIZE

CONVERSION

High

HighLow

LowV

alu

e

Senior Sales 1 Face to Face Sales 3

Telesales 4 Freemium / Online 2

High conv/value (e.g. Locksmiths)

Face to Face Sales

Low conv/Low value (e.g. Pubs)

Freemium / Online

High conv/Low value (e.g. Day Nurseries)

Telesales

Low conv/High value (e.g. Security Services

& Equipment)

Senior Sales 1 2 3 4

Face to Face 36%

Customer services

25%

Telesales 39%

18

HIGHLY SKILLED NATIONAL SALESFORCE AND STRONG FOCUS ON CUSTOMER SERVICE

100% Google AdWords

qualification training

Award winning individuals at

annual BESMA(1) awards ceremony

Average length of service of face to

face salesforce = 8.0 years(2)

Rated as #13 of the best places to

work in the UK by Glassdoor in

2018

Sales expertise & experience Highly efficient sales organisation

(1) Yell internal data, February 2018. (2) Yell internal data, December 2017. (3) Yell internal data, December 2017. Excluding 251 customer service agents.

~65% of total employees are focused on sales and customer service

Sales split between:

380 Telesales agents

350 Face to Face sales people

251 customer service agents

Yell offers customers a tailored service, delivered through personal engagement

3

A strong face to face presence across the UK

155

269

FY14 LTM Dec '17

Digital revenue / sales head, £ in ’000s(3)

181 155

Digital customers per head(3)

Yell offices

Yell Face to Face

coverage

NORTHERN IRELAND

SCOTLAND

Aberdeen

Liverpool

Edinburgh Glasgow

Dublin Manchester

Leeds

Bristol Cardiff London

Cambridge

Brighton

Southampton

Plymouth

WALES

ENGLAND

Reading

Scarborough Belfast

Birmingham

981 sales force &

customer services

15

47

59 62

(7)

26

34

42

FY15 FY16 FY17 LTM Dec '17

Digital EBITDA OCF

172

183

193 197


19

A GROWING, HIGHLY CASH GENERATIVE DIGITAL BUSINESS… 4

Strong Digital EBITDA growth and cash flow generation

Normalised Digital Revenue growth at 5% CAGR between FY15 – LTM Dec ’17

Operational improvements have led to a substantial increase in profitability

Strongly cash generative business

Sizeable and growing Normalised Digital Revenue(1)

(£ in millions)

Source: Yell UK financial data, December 2017. Includes Yell Limited and SSL, unless otherwise specified. (1) Combined digital revenue of the UK Group less a one-off non-cash valuation adjustment to deferred digital revenue of £1.9m in LTM Dec ’17. (2) Change in Working Capital excluded in OCF due to limitation regarding splitting out working capital for Digital vs. Print business. Cash flow presented is calculated as EBITDA – capex – pension payments – exceptional costs. (3) Excludes £18m one off management incentive plan settlement.

(£ in millions)

31%

59%

25%

56%

32%

68%

Digital EBITDA margin (%) Cash Flow conversion (%)

8%

(47%)

(2)

(3)

92% of invoiced amount(3)

…DRIVEN BY STRONG FOCUS ON TIERED CUSTOMER SEGMENTATION STRATEGY

6% 11%

17%

21%

18%

20%

59%

48%

Mar ’14 Dec ’17

£3,000+ £1,000–£2,999 £500–£999 £0–£499

20

Yell repositioned towards the higher value customers…

ARPA FY14

£911(2)

Yell strategy

Lower cost to serve

Website freemium offering

Continued Yell.com freemium service

Market dynamic

Cost conscious

DIY approach

Lower economic value

Lower value segment

…with further growth opportunities across market segments

ARPA LTM Dec ’17

£1,454(2)

% of total customers in spend band(1)

1

2

1

Higher value segment

Market dynamic

Requires specialised knowledge

Market too fragmented for larger scale players

Yell strategy

Increased acquisition volumes

Improved service model to increase retention

Strengthened product & service capability to support larger multi branch customers

Focus on merchant app adoption

Tiered Strategy model within the higher value segment

2

(1) Yell UK financial data. Spend band categorisation based on customer invoices in the months of March 2014 and December 2017, respectively, multiplied by twelve. Includes only paying customers. (2) Yell Limited digital revenue (minus £1.9m one-off non-cash valuation adjustment to deferred revenue in LTM Dec ’17) divided by average of digital customers at the end of each month during period. Excludes 40k low spending DIY

website (SSL) customers. (3) Yell UK financial data, share of total amount invoiced to customers in the month of December 2017.

4

8% of invoiced amount(3)

21

SUSTAINABLE YELL.COM REVENUES DESPITE TRAFFIC TRENDS

(1) Yell UK financial data, December 2017. (2) Omniture, December 2017. Traffic for each financial year is average monthly visits between April – March. LTM Dec ’17 refers to average monthly visits in calendar year from January to December 2017. Monthly traffic includes both

desktop & mobile. (3) Yell internal calculation. Based on YouGov survey of 156 users.

Sticky revenues

Yell.com revenues generated on a subscription model vs. pay per click

Outstanding value

UK’s #1 digital directory

Higher quality traffic, exhibiting stronger intentions to transact

Yell.com offers attractive average ROI of approximately 20:1 for paying advertisers(3)

Usage initiatives

With increased fragmentation in how information is found e.g. mobile apps, Siri, voice search etc, focus on:

New partnerships and further content & technology enhancements

A new consumer app to improve visitor stickiness and offer new features

End-of-print promotions to drive new traffic and consumer app users

(2) (1)

Stable revenues

Yell.com revenue and average monthly traffic

107 108 107 107

18.9m

16.4m 14.2m

12.2m

FY15 FY16 FY17 LTM Q3-18

Yell.com revenue Yell.com traffic (m)

(£ in millions, unless otherwise specified)

4

22

…through the development of B2B and B2C mobile, commerce and social applications

Merchant app

allows merchants to edit and manage Yell.com listing

48k app users(1)

55% of users are

using >1 a day(1)

Consumer app

allows consumers to search & engage with merchants and local SMEs

3 Approx. # of times

consumer uses App per month(1)

43k unique app users per Month(1)

Chat added

Booking & payment added

Keep your business up to date

Read, respond, and get notified of new reviews

Upload and manage your photos

Search the largest UK business directory

See detailed information about local businesses

Share your experiences by leaving a review

ACCELERATED GROWTH OPPORTUNITIES & USAGE INITIATIVES 5

Yell accelerated growth opportunities…

Enhance Yell.com –

Search & find

Enhance Yell.com –

Booking, Chat & Payments

New proposition – ‘One-stop-shop’

Localised recommendations

using big data

1 2 3

(1) Yell internal data, December 2017.

3. HISTORICAL FINANCIALS

107 108 107 107

66 76 86 89

172 183

193 197


Yell.com Digital Marketing Services

15

47

59 62

(7)

26

34

42


Digital EBITDA OCF

24

DIGITAL HISTORICAL FINANCIALS SNAPSHOT

Strong Digital EBITDA growth and cash flow generation Normalised Digital Revenue(1)

(£ in millions)

Source: Company information, Yell UK financial data, December 2017. Includes Yell Limited and SSL, unless otherwise specified. (1) Combined digital revenue of the Group less a one-off non-cash valuation adjustment to deferred digital revenue of £1.9m in LTM Dec ‘17. (2) Revenue less direct costs including costs related to delivery of digital marketing products and website development. (3) DMS includes DIY website (SSL); total digital includes Yell.com, DMS and DIY website (SSL). (4) Excludes £18m one off management incentive plan settlement. (5) Change in Working Capital excluded in OCF due to limitation regarding splitting out working capital for Digital vs. Print business. Cash flow presented is calculated as EBITDA – capex – pension payments – exceptional costs.

(£ in millions)

31%

59%

25%

56%

32%

68%

Digital EBITDA margin (%)

Cash Flow conversion (%)

8%

(47%)

(5)

(4)

Digital Contribution(2)

(£ in millions, unless specified, FYE 31 March)

79-81%

99%

52-55%

(3) Yell.com DMS Total

Broadly stable

FY15 LTM Dec ‘17

(3)

12 13 13 15

30 27 26 28

32 30 28 26

92

76 66 64

165

146 133 132


£3,000+ £1,000–£2,999 £500–£999 £0–£499

2.5% 2.5% 2.5% 2.5%

Monthly churn

£976

£1,167

£1,361 £1,454


ARPA

DIGITAL KEY HISTORICAL PERFORMANCE DRIVERS

25

(1) Paying customers only. Digital customers are total digital advertisers with a live product at the period end, excluding SSL customers. (2) Excludes 40k low spending DIY website (SSL) customers. (3) Combined digital revenue of the UK Group less a one-off non-cash valuation adjustment to deferred digital revenue of £1.9m in LTM Dec ‘17.

Stable higher spend band customer base(1)

(thousands, unless specified)

Active customer management translates to higher revenue

165

146 133

132

172

183

193 197


Digital customers (thousands) Normalised Digital Revenue

(£ in millions, unless specified)

Increasing revenues per customers and stable churn

(2) (2)

Comments

Active customer management led to a decrease of overall digital customer base from 165k as of Mar ’15 to 132k as of Dec ’17

The active pricing and customer management resulted in significant ARPA increase (up by 49% in LTM Dec ’17 vs. FY15)

Churn rate remains stable

Overall, the increase in ARPA more than offset the decrease in customer numbers

Source: Company information.

Customer churn by

spend band

£0 – 499 2.4%

£500 – 999 2.6%

£1,000 – 2,999 2.0%

£3,000+ 1.4%

(3)

HISTORICAL CASH FLOW OVERVIEW (PRINT + DIGITAL)

26

(1) Conversion: defined as Operating Cash Flow / EBITDA. (2) Includes £18m one off management incentive plan settlement.

FY15 FY16 FY17 LTM Q3-18 CAGR '15-'17

Digital EBITDA 15 47 59 62 101%

Margin % 8% 25% 31% 32%

Digital Capex (3) (4) (9) (7)

% of revenue (2%) (2%) (5%) (3%)

Digital Working Capital (8) 3 (5) (12)

Pension Payments (6) (10) (10) (11)

Exceptional Costs (13) (16) (2) (2)

Digital Operating Cash Flow (16) 20 33 30 n.a.

Conversion %(1)

(108%) 43% 56% 49%

Print EBITDA 58 41 27 17 (32%)

Margin % 67% 66% 61% 52%

Print Working Capital 11 7 5 3

Print Operating Cash Flow 69 47 31 20 (33%)

Conversion %(1)

119% 116% 118% 118%

Central group cost (11) (8) (9) (6)

Combined UK operating cash flow 43 60 55 44 14%

Working capital items TBU (could consider move this to appendix)

Source: Company information.

(6) (10) (10) (12)

(12) (7) (6)

(20)

(20)

(9) (4)

(4)

(38)

(25)

(20)

(36)


Pension Exceptional Costs Group Central costs

Pension and other costs


Operating Cash Flow performance

38

60 58

27

18


56% Conversion

%(1) 68% 68% 52%

34%

Capex and Change in Working Capital

(4) (4) (9) (7)

7 2 1

(11)

3

(3)

(8)

(17)


Capex Change in Working Capital



15

47 59 62

58

41 27 17

72

87 85 80


Digital EBITDA Print EBITDA

EBITDA performance


(1)

LTM Dec ’17 working capital impacted by customer move to monthly subscription contracts

(2)

£18m one off management incentive plan settlement

Conversion % excluding the one-off management incentive

32% 31%

25%

8%

% Digital margin %

Digital EBITDA includes £22m annual cost reduction achieved in FY15-LTM Dec ’17

APPENDIX

DIGITAL EBITDA RECONCILIATION

28

DIGITAL EBITDA RECONCILIATION

(£ in millions, FYE 31-Mar) FY15 FY16 FY17Nine months to 31

Dec '16

Nine months to 31

Dec '17LTM Dec '17

Yell Limited

Operating profit 27.8 68.5 73.0 47.1 44.9 70.8

Depreciation & amortisation 23.5 2.9 5.8 4.3 4.9 6.4

EBITDA 51.3 71.4 78.8 51.4 49.8 77.2

Restructuring costs 10.8 6.9 5.4 5.3 1.5 1.6

Non-cash valuation adjustments (8.0) (0.1) (4.2) – – (4.2)

Preliminary Adjusted EBITDA 54.1 78.2 80.0 56.7 51.3 74.6

SSL

Operating (loss) profit (3.7) 0.5 1.2 0.7 0.4 0.9

Depreciation & amortisation 0.7 0.0 0.0 0.0 0.0 0.0

EBITDA (3.0) 0.5 1.2 0.7 0.4 0.9

Restructuring costs 1.0 0.0 0.2 0.2 – –

Non-cash valuation adjustments 0.4 (0.0) (0.4) 0.0 – (0.4)

Preliminary Adjusted EBITDA (1.6) 0.5 1.0 0.9 0.4 0.5

Combined

Preliminary Adjusted EBITDA 52.5 78.7 81.0 57.6 51.7 75.1

Group management costs and other 20.0 8.8 4.4 2.6 2.6 4.4

Combined Adjusted EBITDA 72.5 87.5 85.4 60.2 54.3 79.5

Remove print EBITDA (58.0) (40.9) (26.6) (16.7) (7.4) (17.3)

Digital EBITDA 14.5 46.5 58.8 43.5 46.9 62.2

1

2

3

4

1

2

3

4

Restructuring costs are the costs associated with programmes that reduced headcount in the organisation

Non-cash valuation adjustments are primarily adjustments releasing valuation reserves against working capital items, many of which were in place at the time of the financial restructuring that took place on 3 March 2014

Group management costs are primarily an estimate of group management costs (costs occurring above the Group) that are charged to the operations based upon transfer charging principles. Share based payments and other small rounding adjustments have been included with the group management costs and described as other

Combined Adjusted EBITDA has been separated between digital and print products by applying costs directly attributed to printed directories against revenue relating to print and other non-digital products. The only costs that have been allocated to the printed directories on an apportioned basis are the costs of sales units that sell both digital and print products. These costs have been allocated to print products on the basis of (1) the number of print customers compared to the number of digital customers served by the sales units in a given period and (2) the number of contacts that the sales units make with print versus digital customers in a given period. Certain of the costs allocated to print products will remain in the business going forward to support further growth of the digital business. All other costs are attributed to digital products and are applied against revenue relating to digital products.

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