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CONFIDENTIAL
APRIL 2018
Yell UK Group
1
Disclaimer The information in this document (unless otherwise indicated) has been compiled by the management of Hibu Group Limited (together with its subsidiaries, the “Hibu Group”) and Owl Finance Limited (together with its
subsidiaries, the “UK Group”) and their advisors in good faith and to their best knowledge based on information of the Hibu Group. For the purposes of this notice, the presentation that follows shall mean and include the
slides that follow (the “Presentation”). By viewing this Presentation, or having access to the corresponding information, you are agreeing to be bound by the following conditions.
THIS PRESENTATION IS FOR THE RECIPIENT’S USE ONLY. THIS PRESENTATION (OR ANY PART OF IT) IS NOT TO BE REPRODUCED, DISTRIBUTED, PASSED ON, OR THE CONTENTS OTHERWISE
DIVULGED, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON WITHOUT THE PRIOR WRITTEN CONSENT OF THE UK GROUP.
To the extent available, the industry, market and competitive position data contained in this Presentation come from official or third party sources. Third party industry publications, studies and surveys generally state that the
data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. In addition, certain industry, market and competitive position
statements contained in this Presentation come from the UK Group’s internal estimates based on the knowledge and experience of the UK Group’s management in the markets in which the UK Group operates. These
estimates and their underlying methodology and assumptions have not been verified by any independent source for accuracy or completeness and there can be no assurance that the assumptions or estimates are accurate.
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affiliates, advisors or representatives or any other person as to the fairness, accuracy, correctness, reasonableness or completeness of such information’s portrayal of the financial condition or results of operations by the UK
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the UK Group, may not be comparable to similarly-titled measures as presented by other companies, nor should they be considered as an alternative to the historical financial results or other indicators of the UK Group’s
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measures are commonly used by investors, they have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of the UK Group’s financial position or results of
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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
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
Monthly subscription
12 month minimum term
Monthly subscription
4-6 month min. term
Monthly subscription
6 month min. term
Monthly subscription
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
FY15 FY16 FY17 LTM Dec '17
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
FY15 FY16 FY17 LTM Dec '17
Yell.com Digital Marketing Services
15
47
59 62
(7)
26
34
42
FY15 FY16 FY17 LTM Dec '17
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
FY15 FY16 FY17 LTM Dec '17
£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
FY15 FY16 FY17 LTM Dec '17
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
FY15 FY16 FY17 LTM Dec '17
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)
FY15 FY16 FY17 LTM Dec '17
Pension Exceptional Costs Group Central costs
Pension and other costs
(£ in millions, unless specified, FYE 31 March)
Operating Cash Flow performance
38
60 58
27
18
FY15 FY16 FY17 LTM Dec '17
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)
FY15 FY16 FY17 LTM Dec '17
Capex Change in Working Capital
(£ in millions, unless specified, FYE 31 March)
(£ in millions, unless specified, FYE 31 March)
15
47 59 62
58
41 27 17
72
87 85 80
FY15 FY16 FY17 LTM Dec '17
Digital EBITDA Print EBITDA
EBITDA performance
(£ in millions, unless specified, FYE 31 March)
(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.