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FY 08 preliminary results for the year ended 31March 2008

FY 08 preliminary results for the year ended 31March 2008. 20 May 2008. Disclaimer.

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FY 08 preliminary results for the year ended 31March 2008

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  1. FY 08 preliminary resultsfor the year ended 31March 2008 20 May 2008

  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 posted on our website. • We also draw your attention to our press release which is posted on our website, for more information on the risks and uncertainties.

  3. Introduction John Condron Financials John Davis Strategic update John Condron Agenda Q&A John Condron John Davis Joe Walsh Ana Garcia Fau

  4. Financials John Davis CFO

  5. Headline results Adjusted earnings figures stated before exceptional items and amortisation throughout this presentation

  6. The Yell Group FY 08 revenue FY 08 EBITDA Yell Publicidad 22% Yell Publicidad 25% Yellow Book USA45% Yellow Book USA40% Yell UK 33% Yell UK 35% Organic revenue up 2.5% EBITDA margin 33.3% Cash conversion 85% of EBITDA

  7. Internet revenue Note: Spain excludes Noxtrum. Publicom excluded in LatAm growth. * Lower growth rate reflects current unbundling of print and online prices

  8. Yell UK Revenue (£m) Total adjusted EBITDA (£m) 732 261 253 720 245 699 664 233 232 635 -4.8 -3.3 -2.9 -2.8 -3.3 Effective Yellow Pages price reduction % 36.7 34.9 35.0 35.1 35.6 Adjusted EBITDA margin % * Figures reported under UK GAAP

  9. Yellow Book USA Revenue ($m) Total adjusted EBITDA ($m) 587 2,010 1,932 566 1,636 458 1,149 297 940 216 23.0 25.9 28.0 29.3 29.2 Adjusted EBITDA margin % * Figures reported under UK GAAP

  10. Yellow Book USA revenue growth Contribution to revenue growth % Organic growth 3.1% Same market print Launches Internet Dis-continued Organic Acquisitions Growth before rescheduling Rescheduling Total $ FX Total

  11. Yell Publicidad EBITDA €262 million, EBITDA margin 38.3%

  12. Adjusted diluted earnings per share

  13. Effective tax rate • Effective tax rate 31% of adjusted PBT of £429 million • Cash tax paid in year 19% of adjusted PBT • Key difference is US allowable amortisation

  14. Exceptional costs

  15. Cash £m Cash conversion 85%

  16. Analysis of movement of debt • Increase in debt driven by £129m of FX movement

  17. Debt Currency denomination of debt (%) • Fixed 96% for rolling two years • Cost of debt 7% • Currently operating well within covenant headroom • £115m drawn on revolver and short term facilities for working capital and in-fill acquisitions

  18. Dividend • Proposed final dividend halved compared with last year’s final to 5.7 pence per share to increase financial flexibility • Proposed total dividend for year down 30% to 12 pence per share • Interim dividend intended to be halved

  19. Q1 revenue guidance • Yell UK flat • Yellow Book USA organic up around 3% in $(traditionally a strong quarter) • Yell Publicidad organic up around 1% in local currencies • Total around 2% down on rescheduled revenue due to reductions from discontinued products and LatAm FX

  20. Yell Publicidad revenue rescheduling

  21. Group guidance for FY 09 • Adjusted Group EBITDA flat at constant exchange rates • Yell UK flat • Yellow Book USA marginally down in $ • Yell Publicidad up in local currencies • Cash conversion around 85% to 90% • Cost of debt around 7% • Tax rate around 31% and cash tax rate around 20% of adjusted PBT • Restructuring exceptional cost c £25m

  22. Financial priorities • Continued investment for online growth funded by improved efficiencies • Achieve EBITDA and cash guidance • Reduce leverage towards 4 times target

  23. Strategic update John CondronCEO

  24. The Yell proposition • Online growth in line with SME needs • Print usage still generating high ROIs • Out-performing US incumbents • Benefits of new regulation in UK • Spanish approach to sales delivering • Relatively recession resilient in SME market Unique relationship with SME customer base

  25. Group wide online approach • Creating content • Importance of the salesforce • Depth and quality of content • Overcoming SME resistance to online advertising • Generating usage • Brand • Search engine marketing and optimisation • Distribution • Functionality Content → Usage → Revenue

  26. Yell’s online usage growing Unique users(millions) Unique visitors(millions) Unique visitors (millions) Yell.com Yellowbook.com network Paginasamarillas.es 8.5 13.5 10.4 6.2 Up 37% Up 30% Up 10% Source: Yell.com ABCe Yellowbook.com network from ComScore Paginasamarillas.es network OJD Rapid growth in Yell’s online usage

  27. Group wide online approach • Creating content • Importance of the salesforce • Depth and quality of content • Overcoming SME resistance to online advertising • Generating usage • Brand • Search engine marketing and optimisation • Distribution • Functionality • Monetising usage • ROI – transparency of pricing • Product development – including pay per performance Revenue lags usage

  28. Realising the internet opportunity Yell.com Yellowbook.com Paginasamarillas.es Searchable advertisers at 31 March (000s) Revenue per average searchable advertiser Up 36% Up 43% Up 48% ($) (£) (€) Revenue up 68% in US, 45% in UK, 14% in Spain

  29. Print usage holding up UK usage occasions monthly average (m) US usage references pa (bn) Spain average monthly users (m) Internet Print 87% of US population used print in 2007 62% of those who shopped online also used print in the US Searches for unknown businesses up 9% in the UK Average £25 of new business for every £1 invested in the UK 8 out of 10 searches resulted in a contact to an advertiser in Spain Sources: UK: Regular Study Saville Rossiter-Base. YP comparable inc Yell.com. US: KN/SRI (YPA) and comScore. Spain: GFK and Yell. Used Spanish print classified directories monthly in past 12 months (%)

  30. UK revenue drivers – win, keep and grow Total unique advertiserslive at 31 March (000s) Print ARPA and onlineRASA* (£) 499 492 486 76 75 74 Print retention % -2.9 -2.8 -3.3 Effective Yellow Pages pricereduction % (print only) Online ‘as well as’ rather than ‘in stead of’ * RASA: Revenue per average searchable advertiser

  31. Yell UK initiatives • Driving usage • Brand – Yell.com • SEO and SEM • Print product awareness promotions • Focus on customer base • ROI – Call Counter Geo • Large Media Players • Print pricing initiatives • Monetising usage • NetReach – 220m listings onpartner sites • Pay per call trail – roll out August netReach capsule on the Zoomf site Focus on the internet

  32. Not an incumbent in the US Incumbents vs Yellow Book revenue growth (%) • Leads for less • Average usage in 49 recent markets surveyed 38%** • Rate card still lower • Brand awareness • Nationwide • Print and internet Yellowbook brand • “Say Yellow to the Future” campaign • Entrepreneurial sales approach • Recruitment, training, targeting incentives, face-to-face Source incumbent growth rates: The Kelsey Group, April 08. Estimate for CY 2008. Current CY 08 guidance for RHD and Idearc “mid single digit decline”. Yellow Book USA organic growth rates for FY 06, FY 07 and FY 08 as reported Print usage share 23% - up from 20% in 05* * Knowledge Networks/SRI - Based on all measured YPMR DDAs in 2005 (21,000+ interviews/ 161 DDAs) versus 2007 (32,000+ invterviews / 190 DDAs. ** 2007 YPMR Syndicated Usage - KN/SRI

  33. Not an incumbent in the US (2) • Online growth • Fastest growing usage for an IYP • Revenue lags usage • WebReach • National footprint • Online access • Spreads risk • Lower exposure to national advertisers • National revenue growing rapidly – faster than average Unique visitors (m) Unique visitors growth March 08 vs Dec 07 (%) Source: comScore December 07 and March 08

  34. Yellow Book USA win, keep and grow Unique advertisers (000s) Print ARPA and online RASA ($) 70 69 70 Print retention % Online yield still lags usage growth

  35. Paginas Amarillas win, keep and grow Unique advertisers (000s) Print ARPA and online RASA (€) 85 Print retention % Unbundling to generate future ARPA growth

  36. Yell Publicidad initiatives • New sales organisation • Improved remuneration; higher quality sales force • Rescheduling publication to release sales time • Investment in usage – brands and user experience • New print initiatives eg 2D codes • Online enhancements – search engine, syndication network • Revitalised market approach • Higher online prices to reflect usage growth • Online unbundling • Adapting ad range to customer needs • Latin America – transferring best practice • Publicom integrated successfully • Focus on internet Building on ‘Back to Basics’ foundation

  37. Directories in economic downturn Share of purse from SMEs in UK • Outperformed other advertising media in previous recessions • Online adds flexibility for advertiser • Diversity of classifications • National revenue has most discretion about spend • UK 20%; US 8%; Spain 4% • 25% of UK SMEs’ advertising spend with Yell products Source: *FDS 2007 Base: All companies/businesses known to Yell excluding National accounts No-fuss, high return, trusted advertising

  38. Key drivers • Grow usage • Develop online offering • Win, keep and grow – trusted relationship with SMEs • Monetise usage based on returns of advertiser investment Leaner, fitter and stronger

  39. Appendix

  40. US shareshift continues % Revenue growth for publishers % Independents’ market share Source: The Kelsey Group, April 08

  41. Yellow Book USA – 984 markets 61% of Independent segment; 12% of US market

  42. 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

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