Hibu PLC : Financial update for the six months ended 30 September 2013

Financial update for the six months ended 30 September 2013

29 Oct 2013

Financial headlines(1)

• Group revenue of £584m decreased by 12%
    - Digital services revenues grew by 19% to £99m
    - Digital directories revenue fell by 6% to £127m
    - Print and other directory revenues fell by 19% to £358m
• EBITDA(2) of £107m was down £45m
• Free cash flow of £88m increased £1m
• Constructive discussions on capital structure continue

Operational headlines(3)

• Total digital revenue increased from 33% to 39% of revenue
• Digital services
    - Customer numbers decreased by 2% to 433,000
    - Annual digital services revenue per customer increased by 17% to £464
    - Live customer websites increased by 3% to 408,500
• Digital directories
    - Advertisers fell by 12% to 671,000
    - Annual digital directory revenue per advertiser increased by 1% to £365
    - Visitors increased by 6% to 37m in September
• Yellow Pages
    - Yellow Pages advertisers reduced by 21% to 377,000
    - Yellow Pages revenue per advertiser decreased by 3% to £802

(1) Results are for the six months ended 30 September 2013, 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, including revenue per customer, are also adjusted for rescheduling and acquisitions.
(2) EBITDA is profit before interest, tax, depreciation, amortisation and exceptional items.
(3) Operational metrics continue to be refined to more accurately measure the underlying performance of the business. Where adjustments have been made, which this quarter includes adjusting for the Moonfruit acquisition in June 2012, the prior year comparatives have been adjusted to ensure that they are on a consistent basis.

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, exchange rates, 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 the Risk Statement below. hibu undertakes no obligation to update or revise publicly any forward-looking statements, except as may be required by law.

Nature of report

This document does not constitute a half year report, second interim report, preliminary announcement or interim management statement (as defined in the Listing or the Disclosure and Transparency Rules) in respect of the six month period to 30 September 2013 or any part of that period. The consolidated financial information contained herein is unaudited and does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006.

As noted in RNS announcements made by the Group on 25 July 2013, hibu plc will be placed into administration if the restructuring takes place as agreed with the CoCom. The directors therefore are not able to make any assertions regarding the basis of the presentation of the financial information for the six months to 30 September 2013. The financial information does not include all adjustments that would be required if the businesses or the Group in its current structure were unable to continue as a going concern. The financial information is not audited and only serves as a trading update of the businesses on a like-for-like basis in comparison with the six months ended 30 September 2012, presented in such a way that stakeholders can understand the results.

The preparation of the consolidated financial information requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial information and the reported amounts of income and expenditure during the period. Actual results could differ from those estimates. Estimates are used principally when accounting for doubtful debts, depreciation, retirement benefits, acquisitions, impairment testing and taxation.

Where change at constant currency is stated in this document it states the change in the current period compared with the previous period as if the current period results were translated at the same exchange rates as those used to translate the results for the previous period. Figures reported at constant exchange rates are stated at the same exchange rates as those used to translate the comparative figures for the previous period. Exchange impact is the difference between the results reported at constant exchange rates and the results reported using current period exchange rates. The average effective exchange rates for the six months to 30 September 2013 were $1.54: £1.00 and €1.17: £1.00 as compared to $1.58: £1.00 and €1.25: £1.00 for the same period last year.

Readers are advised to read the Risk Statement below.

Risk statement

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 (Yell Group plc changed its name to hibu plc on 27 July 2012) for the financial year ended 31 March 2012, a copy of which is available on hibu's website at http://www.hibu.com.

The majority of hibu's debt matures in April 2014. The Group has been in negotiations with 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 Group obtained certain waivers, with CoCom support, from the 2009 lenders to enable, among other things, substantive discussions to take place around a balance sheet restructuring.

The Group is currently in default under the 2009 facilities agreement. The lenders' facility agent may, and must if directed by two-thirds of lenders, demand immediate repayment of all amounts due. The 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. As announced on 25th July 2013, the principal terms for the restructuring of the Group's debt have been agreed in principle with the CoCom subject to clearance from the UK Pensions Regulator. The members of the CoCom together represent approximately 30.3 per cent of the Group's financial debt. The restructuring will be implemented through schemes of arrangement that will require the approval of lenders that hold at least 75 per cent of the debt. Closing of the transaction is expected to take place in the first quarter of the next calendar year.

The financial restructuring will not result in any payment being made to shareholders or leave hibu shares with any value. The Group therefore announced on 25 July 2013 that it had suspended the listing of hibu's shares and the trading of those shares on the London Stock Exchange. The restructuring will result in a Group reorganisation that will lead to hibu plc and some other Group holding companies being placed into administration. The listing of hibu's shares will be cancelled when hibu plc is placed into administration.

Also, as announced on 25 July 2013, the Group changed its accounting reference date to 30 September. As a consequence, the accounting period that commenced on 1 April 2012 covers the 18 months ended on 30 September 2013.

The Group is cash generative and the directors believe that the lenders will receive a higher recovery on their loans through a restructuring that allows the business to continue to operate as a going concern rather than by any other course of action. Therefore, the financial information has been prepared on a going concern basis and does not necessarily include all adjustments that would be required if the business were unable to continue as a going concern. At 30 September 2013, the Group held cash balances of £265m.

The Group net liabilities of £1,428m include goodwill and other acquired intangible assets totalling £446m which is supported by the Group's strategic plans. It is clear that the Group faces challenges and material uncertainties that may affect the carrying value of these intangible assets.

About hibu

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 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 twelve months to 31 March 2013, hibu had one million SME customers and total revenues of £1.3 billion.

Enquiries

hibu - Investors
Andrew Clatworthy
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hibu - Media
Jon Salmon
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RLM Finsbury
Charles Chichester
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