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For Immediate Release 12 February, 2013
("hibu" or the "Group")
Interim management statement for the quarter ended
31 December 2012
· Group revenue of £314m decreased by 14%
- Digital services revenues grew by 31% to £45m
- Digital directories revenue fell by 7% to £69m
- Print and other directory revenues fell by 22% to £200m
· EBITDA(2) of £55m was down £52m
· Free cash flow of £59m decreased by £12m
· Profit after tax increased by £2m to £19m
· Constructive discussions on capital structure continue
· Total digital revenue increased from 30% to 36% of revenue
· Digital services
- Customers increased by 10% to 391,000
- Annual digital services revenue per customer was £432
- Live customer websites increased by 12% to 352,000
· Digital directories
- Advertisers fell by 7% to 832,000
- Annual digital directory revenue per advertiser was £324
- Visitors(3) declined 11% to 40.7m in December
· Yellow Pages
- Yellow Pages advertisers reduced by 20% to 189,000
- Yellow Pages revenue per advertiser decreased by 5.3% to £933
Mike Pocock, Chief Executive Officer, said:
"The Group continues to make significant progress in executing its digital strategy and preparing for a capital restructure. Digital services revenue is now at an annual run rate of £180m and continues to grow, up 31% on the prior year reflecting the digital expertise that we are now able to offer our local businesses. Total digital revenue is now 36% of revenue, equivalent to a run rate of over £450m per annum.
"Our new strategic products are progressing well from development to market readiness. Community magazines are being sold into more than 600 markets and generating orders of more than half a million pounds a week. Pilots are well underway for a range of new digital products and services to support business owners in promoting, commercialising and running their ventures. These will help them accept card payments, offer loyalty programmes and benefit from affinity schemes as well as better connect with their consumers. Further launches are expected over the coming months.
"In the quarter, we reached a settlement with the remaining 2006 lenders resulting in a £39m pre-tax gain, which together with our cash generation, reduced net debt by £83m to just over £2 billion. We continued constructive discussions with lenders and hope to reach agreement on a new capital structure for the Group in the near future.
"There has been no material change to the trading outlook for the current financial year since the market update in September."
Forward looking statements
This news release contains forward-looking statements regarding hibu's intentions, beliefs or current expectations concerning, among other things, hibu's results of operations, revenue, financial condition, liquidity, prospects, growth, strategies, new products, the level of new directory launches and the markets in which hibu operates. Readers are cautioned that any such forward-looking statement is not a guarantee of future performance and involves risks and uncertainties, and that actual results may differ materially from those in the forward-looking statement as a result of various factors. These factors include any adverse change in regulations, unforeseen operational or technical problems, the nature of the competition that hibu will encounter, wider economic conditions including economic downturns, the final outcome of addressing hibu's capital structure and changes in financial and equity markets. Readers are advised to read pages 22 to 29, page 116 and notes 1 and 16 to the financial statements included in Yell Group plc's 2012 annual report (Yell Group plc changed its name to hibu plc on 27 July 2012). hibu undertakes no obligation to publicly update or revise any forward-looking statements, except as may be required by law.
hibu's risks and uncertainties include strategic and operational risks faced by hibu's businesses; debt and financing risks faced in funding Group operations and the financial reporting and related risks faced in reporting hibu's results. Readers are advised to read pages 22 to 29, page 116 and notes 1 and 16 to the financial statements included in Yell Group plc's 2012 annual report for the financial year ended 31 March 2012, a copy of which is available on hibu's website at http://www.hibu.com.
The audit opinion on the statutory accounts for the year ended 31 March 2012 was unqualified and unmodified, and included an emphasis of matter concerning the ability of the company to continue as a going concern. The financial information herein should be read in conjunction with Yell Group plc's 2012 annual report published in June 2012, which was prepared in accordance with the International Financial Reporting Standards as adopted by the European Union, IFRIC Interpretations and the Companies Act 2006. The financial information contained herein has been prepared on a going concern basis.
The majority of hibu's debt matures in April 2014. The Group announced in July 2012 that it was seeking to form a co-ordinating committee of the lenders (the "CoCom") under its facilities agreement dated 30 November 2009 (as amended) (the "2009 lenders") to represent the interests of the 2009 lenders during the process of determining an appropriate new capital structure. The CoCom was formed, and with its support, the Group obtained certain waivers in August and September from the 2009 lenders to enable, among other things, substantive discussions to take place around a balance sheet restructuring.
On 25 October 2012, the Group announced that it would be suspending all further payments of principal and interest to lenders until such time as a restructuring of its balance sheet could be concluded. This decision affects only the lenders to the Group and in no way affects payments to employees, partners, suppliers, trade or other creditors or any other counterparty. At 31 December 2012, the Group held cash balances of £135m.
On 22 November 2012, hibu requested from its 2009 lenders a number of waivers and an amendment to allow the Group to proceed with the restructuring. On 17 December 2012, the Group announced that it had obtained approval for the requests, which included a waiver allowing hibu to continue to negotiate with the lenders on a capital restructure.
On 1 February 2013, the waivers were extended to 28 February 2013 and a further waiver request has been made to 2009 lenders for the period of the waivers to be further extended to 29 March 2013. The necessary majority for this waiver request and the waivers already obtained is the number of lenders holding two-thirds of the debt outstanding under the 2009 facilities agreement.
In line with the announcement made on 25 October 2012, the Group is not expecting to make the interest payment of approximately £49m due to 2009 lenders on 28 February 2013 and the £25m repayment of principal due to certain 2009 lenders on 28 March 2013. These non-payments would amount to an event of default under the 2009 facilities agreement. In this case, the lenders' facility agent may, and must if directed by two-thirds of lenders, demand immediate repayment of all amounts due. Such a default can only be waived by the unanimous approval of all 2009 lenders. As this is not considered likely in the current circumstances, a waiver request for this default is not being made. Notwithstanding this, the Group remains in active and constructive dialogue with the CoCom.
In addition to the requests made to the 2009 lenders, the Group also sought to negotiate a settlement with lenders under the 2006 facilities agreement (the "2006 lenders") of amounts that had fallen due for repayment to the 2006 lenders on 29 October 2012. On 7 December 2012, the Group announced that those negotiations had been completed and on 11 December 2012, the 2006 lenders received c.39% of the amount owing to them in full and final satisfaction of all debts due to them.
There remains a risk that the Group will not be successful in negotiating a capital restructuring with its 2009 lenders. However, the Group is cash generative and the directors believe that the 2009 lenders will receive a higher recovery on their loans by letting the business continue to operate as a going concern rather than by any other course of action. The Board therefore concluded that adoption of the going concern basis in preparing the financial information contained herein is appropriate. Nevertheless, the directors are making full disclosure to indicate the existence of a material uncertainty in regard to the Group's ability to continue as a going concern. The financial information does not include the adjustments that would result if the Group was unable to continue as a going concern.
A number of capital structure options are being considered. The Group confirms that the options being considered are likely to result in little or no value being attributed to the Group's ordinary shares. The Group net assets of £299m include goodwill and other intangible assets totalling £2,463m. The Group faces challenges and material uncertainties that may affect the carrying value of these intangible assets.
hibu helps communities thrive by facilitating millions of connections each year between consumers who want to find products and services locally and the merchants who provide them.
hibu helps consumers find local businesses and shop in new, innovative ways. Its dedicated online hibu markets provide comprehensive, convenient access to local goods and services. hibu helps merchants compete in the digital world with a broad range of marketing and commerce solutions delivered online and through hibu's direct sales teams. Building on its heritage as a premier directories provider, hibu continues to offer a full range of print- and distribution-based marketing services.
hibu operates in the UK, US, Spain, Argentina, Chile, Peru and US Hispanic markets. In the year ended 31 March 2012, hibu had 1.2m SME customers and total revenues of £1.6 billion.
For further information about hibu, visit hibu.com.
hibu - Investors RLM Finsbury
Andrew Clatworthy Andrew Dowler or Charles Chichester
Tel: +44 (0) 118 358 2838 Tel: +44 (0) 207 251 3801
Tel: +44 (0) 118 358 2656
(1) Results are for the third quarter, unaudited and compared with the same period in the prior year. The changes in revenue, revenue per advertiser and EBITDA are stated at constant currency. Revenue percentage changes are also adjusted for rescheduling, changes in bundled revenue allocation in the US and acquisitions.
(2) EBITDA is profit before interest, tax, depreciation, amortisation and exceptional items.
(3) Visitors include mobile users
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