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Annual Report

2011

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Contents

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Overview

01 Key numbers 02 Welcome to Yell – Chairman’s statement 04 Our markets and channels

Performance

08 Chief Executive Officer’s strategic overview 10 Key operational metrics and

Five year financial summary11 Performance review 16 Principal risks20 Other risks

Governance

26 Board of directors 30 Corporate responsibility35 Chairman’s governance report and

Chairman of the Nomination Committee report37 Chairman of the Audit Committee report39 Chairman of the Remuneration Committee report51 Statement of application of principles of the

UK Corporate Governance Code55 Relations with shareholders55 Other statutory and regulatory information

Financial statements

62 Independent auditors’ report to the members of Yell Group plc 64 Financial statements 69 Notes

Shareholder information

119 Notice of Annual General Meeting 131 Calendar and contacts

For further information

The Overview, Performance and Governance sections make up the Directors’ Report in accordance with the Companies Act 2006.

Cautionary statement: All statements other than statements of historical fact included in this document, including, without limitation, those regarding the financial condition, results, operations and businesses of Yell and its strategy, plans and objectives and the markets and economies in which it operates, are forward-looking statements. Such forward-looking statements which reflect management’s assumptions made on the basis of information available to it at this time, involve known and unknown risks, uncertainties and other important factors which could cause the actual results, performance or achievements of Yell or the markets and economies in which Yell operates to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Nothing in this document shall be regarded as a profit forecast. Yell Group plc and its directors accept no liability to third parties in respect of this report save as would arise under English law.

Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with schedule 10A of the Financial Services and Markets Act 2000. It should be noted that schedule 10A and section 463 Companies Act 2006 contain limits on the liability of the directors of Yell Group plc so that their liability is solely to Yell Group plc.

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Yell Group plc » Annual Report 2011 1

Overview£1,878m

Group revenue

2011 £1,878m2010 £2,123m

£457mGroup digital media revenue

2011 £457m2010 £415m

£330mReduction in net debt

2011 £2.8bn2010 £3.1bn

£514mGroup EBITDA

2011 £514m2010 £620m

(a)

56mInternet yellow pages unique users in March

2011 56m2010 46m

£265mFree cash flow

2011 £265m2010 £342m

1.3mTotal customers

2011 1.3m2010 1.4m

(a) Throughout this document, EBITDA is defined as earnings before exceptional items, interest, tax, depreciation and amortisation. EBITDA is reconciled to the

operating profit in note 2 to the financial statements from page 75.

(b) All statutory financial information in this document is presented in accordance with the International Financial Reporting Standards (IFRSs) as adopted by

the European Union and IFRSs as issued by the International Accounting Standards Board unless specified otherwise.

Year ended 31 March

£m, unless noted otherwise 2011 2010

Revenue 1,877.6 2,122.7

EBITDA(b) 513.6 619.6

Cash generated from operations 611.6 753.3

Free cash flow 264.7 342.2

Profit after tax 46.7 46.8

Diluted earnings per share (pence) 2.0 3.4

Group statutory results(b)

6mmobile applicationsdownloaded to date

Key numbers

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2 Yell Group plc » Annual Report 2011

Chairman’s statement continued

Challenges and opportunitiesJohn Condron, our previous CEO and John Davis, ourprevious CFO left the Group at the end of 2010. Onbehalf of the Board, I wish to thank John and Johnfor their long service and commitment to Yell andfor their work in ensuring an efficient handover toour new executive directors, Mike Pocock, CEO andTony Bates, CFO.

I welcome Mike and Tony, who were bothexceptional candidates amongst very strongcontenders for their roles, and the Board looksforward to working with them as they lead thebusiness in developing, launching and deliveringan ambitious but deliverable new strategic plan.

Mike Pocock is currently leading the team reviewingthe Group’s strategy to identify how best to utiliseour assets to seize the opportunities that exist in ournew, significantly larger, very fragmented market.This strategy will be presented to the market in midJuly and I am confident that when it is, shareholderswill be excited about the potential for the Group inthis rapidly evolving marketplace. This digital worldhas no geographical boundaries and so we are alsoworking on structuring the Group to work as oneglobal business, with a shared set of objectives,more efficient processes and increased focus oncustomer satisfaction.

The year ahead is going to be an exciting one forthe Group as it launches its new strategy and weseek to put Yell back on the front foot. I would liketo thank our major shareholders for their supportduring this transition period and I remaincommitted to supporting the new managementteam in delivering a more prosperous future for Yell.

The challenges the business has faced over recentyears have been significant, but our people havenever doubted the Group’s potential and haveremained dedicated to finding the right solutions forconsumers and businesses alike. I would like to takethis opportunity to thank everyone at Yell for thisdedication and effort.

Welcome to YellChairman’s statement

When I became Chairmanin July 2009, Yell facedsome very majorchallenges including adebt burden of £3.8bn, adeclining print businessand in due course, weneeded to find newleadership.In November 2009, the Group raised new equity andrescheduled its debt giving us the time to refresh theBoard, find a new management team and managetheir transition into Yell.

Since then, we have recruited a new non-executivedirector with international internet experience,recruited a world class Chief Executive Officer (CEO)and Chief Financial Officer (CFO), made significantprogress in developing our strategy to accelerate ourtransition to the digital world and throughout thisperiod managed the Group to continue generatingstrong cash flow despite the more difficult thanexpected trading environment.

Bob WigleyChairman

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Chairman’s statement continued

CashflowanddebtmanagementThe Group continued to generate significant freecash flow of £265m and, importantly, used this withmovements in exchange rates to help reduce netdebt by £330m since March 2010. Net debt nowstands at £2,765m and continuing to reduce our debtload remains a priority. This focus on lowering ourlevel of debt means that reinstating a dividend is notappropriate at this time.

Supporting enterpriseWe have continued to make significant advances inthe digital world with a greater focus on productsaccessed via mobile phones and new productsaimed at meeting the online needs of the smallbusiness community including websites. Tocomplement the development of our mobile anddigital products, this year we have implemented anumber of initiatives, such as mentoring andbusiness briefings, to enable small or medium-sizedenterprises (SMEs) to gain the most value from theiradvertising programme. In 2010, we became apartner to Race Online 2012, to spread the word tosmall businesses about the importance of beingonline as well as providing easy, cost-effective waysfor them to get online. In the US, we launchedYellowbook 360 Business Center, an online resourcethat offers a spectrum of tools and services to helpsmall businesses succeed.

We are currently talking to and working with theUK Government to see how we can support the SMEcommunity with briefings about how to take theirbusinesses online, how to export, and to providedetailed feedback to Governments from ourcustomers about their issues and needs. We intendto become much more vocal on behalf of our SMEcustomer base to support them during thischallenging economic period.

Board and Committee changesI have started to refresh the non-executive directorcomponent of the Board to ensure there is theappropriate level of skills and experience aroundthe table for the future. I recruited Toby Coppel asnon-executive director in October 2009. Previously

he was Managing Director of Yahoo! Europe &Canada. Kathleen Flaherty was appointed as non-executive director in October 2010. Along with ourexecutive director appointments, Kathleen bringsexperience and insight on the informationtechnology and digital media challenges andopportunities facing Yell.

Tim Bunting and Joe Eberhardt resigned as non-executive directors of Yell in February 2011. Onbehalf of the Board, I would also like to thank themfor their valued contribution to the work of theBoard and its Committees.

Toby Coppel succeeded Tim Bunting to becomeChairman of the Remuneration Committee, andCarlos Espinosa became a member of the AuditCommittee in February 2011. Kathleen Flahertybecame a member of the Remuneration Committeein November 2010.

The Davies report on women on Boards waspublished in February. At the time of this report,we have one female Board member (12.5% femaleBoard representation). I am personally committed toretaining at least 20% female Board representationby 2013, and 25% by 2015. I hope to be able to makean appointment which will further enhance ourBoard diversity later this year. Reflecting ouraspiration to attract more women into Yell andultimately increase the number of women in seniorexecutive roles, Yell recently launched its Benefitingfrom Diversity at Yell programme, with the fullsupport of Mike Pocock and Tony Bates.

We continue to work to establish and embed thehighest standards of governance across the Groupand further details on the work of the Board andits Committees can be found within our Governancestatement starting on page 35.

Annual General MeetingAt the end of this report, you will find the notice ofour Annual General Meeting, which gives full detailsof the meeting and resolutions on which I ask you tovote. Your Board looks forward to meeting as manyof you as possible at the meeting.

Overview



Our markets and channels

USShare of revenue: 50%EBITDA: £217.7mEmployees: 5,628Customers: 520k

UKShare of revenue: 28%EBITDA: £159.5mEmployees: 2,888Customers: 338k

Latin AmericaShare of revenue: 8%EBITDA: £50.7mEmployees: 1,347Customers: 204k

AdworksEmployees: 2,575

SpainShare of revenue: 14%EBITDA: £85.7mEmployees: 976Customers: 254k



Our markets and channels continued

What do we do?Yell helps businesses to be found by consumers.

Who are our customers?Our customers are the consumers who use ourproducts, and the 1.3m businesses who benefit frombeing found.

How this is done is changing, and so are we. Ourconsumers are using a wider variety of media tofind information, and in turn businesses arepresenting themselves across a wider selectionof formats.

We have introduced enhanced digital mediaproducts that sit alongside our legacy print offeringsto provide a complete package of products for bothour advertisers and our consumers.

How do we create andsustain value?Yell provides millions of leads to businesses eachyear. We help consumers find businesses and makepurchase decisions – a critical role in any economy.

We present information to our consumers, howeverthey choose to search for it, ensuring our advertisersalways get found, and acting as a direct driver totheir revenue generation. We can help ouradvertisers measure the success of their marketingby monitoring the response generated from it.

We tailor our cost effective advertising programmesand solutions to fit all budgets for our advertisers.We showcase their business information acrossa range of media in the best fit for theirmarketing needs.

Overview




What products and servicesdo we provide?Internet yellow pagesWe have online directories such as Yell.com,Yellowbook.com and Paginasamarillas.es.These internet yellow pages sites give businessesadditional facilities to increase content and onlinepresence whilst ensuring flexibility to suit budgetand scale. 900,000 customers pay for prominencein their chosen classification.

56m consumers used our sites in March 2011 to findbusinesses or services, read reviews from otherconsumers, get directions or read expert adviceon products and services.

Mobile yellow pagesOur services are also available on mobile. We havestate of the art applications that offer more than asearch function and, with over 6m downloads tosmart phones and tablets, deliver an optimalconsumer experience on the go.

The growing usage from our mobile productsensures businesses benefit from this additionalfunctionality.

Digital mediaWebsite productionWe help to give our advertisers’ businesses aprofessional presence online, with our tailoredwebsite creation and management service. Theypay an upfront charge for the site build, and amonthly fee for ongoing support and amendments.

The 230,000 websites we have built help ourconsumers gain extra information about a productor service, enabling them to make a more informedpurchase decision.

VideoWe offer our advertisers the option to include avideo into their online advertising, either providedby themselves, or fully produced by us.

Video is another insightful tool helping users to getuseful information on product and service offerings,coverage areas and pricing information, withouthaving to visit a website or make additionalenquiries before purchase.




Presence and reachWe work with Google and other search engines tohelp our advertisers connect with this rich source ofcustomers and get the most out of search marketingand pay per click. We fully manage the wholeprocess which can be complex and time consuming.

Additionally, through our online display product, weput our advertisers’ online adverts on our partners’websites, increasing presence and reach.

Yellow pages directoriesOur 1,266 business to consumer directories featureclassified advertising through a range of adverttypes. Businesses pay for adverts based on size,colour and artwork ranging from a black and whitequarter column advert to a full page colour spread.

Millions of people use our yellow pages printedproducts every day to find the businesses they arelooking for.

White pages directoriesProduced in four of our territories, a directory thatalphabetically lists all the telephone numbers forcompanies and individuals in the country.

A useful tool for quick reference for consumers whoknow whose number they require, or which businessthey wish to contact.

Directory assistanceWe provide telephone based informationservices that serves callers seeking informationon businesses and services over the phone.

For consumers seeking information quickly on thego, or without access to our online products, this isoften a solution.

Overview

SM


� Yell Group plc » Annual Report 2011

Chief Exective Officer’s strategic overview continued

I have spent time with each operation to fullyunderstand its competitive landscape, strategy,financials and people in order to identify thestrengths of the Group and the challenges itfaces today.

Challenges remainIn no uncertain terms, many challenges remain.The economic environment is still tough for ourcore customer base, the SME. We have seen verylittle recovery in business confidence in any of thecountries in which we operate over the last year.Despite the fact that we have started to see someupward trend in GDP, growth is fragile. SMEadvertising budgets remain tight, as is their accessto credit, and in the main, their focus continues tobe on base level trading in the short term amidstincreases in tax and regulation, rather thancustomer acquisition and future growth.

The use of technology also continues to evolve, andwhilst traditional print usage is still strong, wecontinue to see migration to digital media in theform of online search, mobile and socialnetworking. We have already been responding tothis movement through the development of ourdigital media offerings, which are gaining tractionin a market that we believe holds vast opportunity.Our internet yellow pages products contribute asignificant amount of revenue to the Group and ournew digital products are growing quickly. The take

Chief Executive Officer’sstrategic overview

I am delighted to join Yell.Since joining the Group, Ihave been conducting acomprehensive review ofthe whole business.

up of our website design and lead generationservices continues to increase as we improve speedof delivery and product range and we now haveover 200,000 live sites across the Group.

At the same time, our print product remains a highlycost effective solution for our advertisers, and wewill continue to prove its value to advertisersthrough dedicated phone lines and enhance theproduct through developments such as the recentchange in format. However, we do expect the printrevenue to continue to decline as the market evolvesand it is this that has driven our revenueperformance over the year.

Despite a 9% growth in digital revenue, which nowrepresents 24% of total revenue, print declined 19%,leaving total revenue down 12%. Despite a numberof improvements in efficiency, EBITDA also declinedto £514m. Importantly, even after all our interestpayments, we remain very profitable and cashgenerative, generating £265m over the year, whichwe used to reduce our net debt to below £2.8bn.

But clear strengthsDespite the challenges the business faces, our newCFO, Tony Bates, and I joined Yell because weidentified the opportunity to lead the business

Mike PocockChief Executive Officer


Yell Group plc » Annual Report 2011 �

Chief Executive Officer’s strategic overview continued

through a transformation to turn it around andregain top line growth. Yell continues to benefit fromleading market positions in the UK, Spain and LatinAmerica, and we are the leading independentdirectory publisher in the United States. Our 6,600strong salesforce has built solid relationships with our1.3m customers, who look to us and the integrityof our brands to provide them with the advertisingtools they need to showcase their businesses throughthe most relevant and advanced media types.

The strength of our brand is clear in the impressiveusage across both our print and digital mediaproducts. Indeed, we had 56m users visit our sitesacross the Group in March alone and we arereinforcing this usage with additional features anduser generated content. In addition, with over 6mdownloads to date, our smart phone and tabletapplications are also proving very popular.

Since joining, I have been impressed by another ofour core assets – our people. I have met talentedand dedicated people who are willing to embracechange and work hard to drive Yell forward in thisevolving world. My thanks goes to them for theirindividual contributions this year.

Strategy and the futureGiven the numerous strengths Yell has, and ourstrong market positions, I believe there is significantopportunity for the future. Local search remainsunconsolidated, and Yell’s extensive arsenal oflistings is already the source of much of the contentserved up by general search engines. Whilst ourstrategy of delivering marketing solutions to smallbusinesses will continue to be important to theGroup, the evolving market offers significantly moreopportunities. The digital marketplace is rapidlygrowing and is highly fragmented in many areas. Insuch a vast market, even a small share can meanbig business and strong growth.

For that reason, since joining Yell, I have begun acomprehensive strategic review to identify theappropriate future direction of the Group. Weexpect to present this review in July. It is too earlyto go into the detail, but our early research suggests

that many significant opportunities exist as there isa convergence between the SME and the consumerto better meet their wider needs – offering widersolutions to small businesses and consumers andmore effectively monetising the consumerrelationship.

We intend to make Yell more relevant in the digitalage than even Yellow Pages was in the print age aswe focus on mobile, social and ecommerce taking usinto new markets and business streams, buildingpartnerships, changing our structure, products,systems, culture and prospects.

We have also been taking significant actions toposition the business for the new opportunities.In February, I was pleased to announce theappointment of Mark Payne as Group ChiefOperating Officer. Mark is working with us to shapethe business for future growth and operate as onebusiness rather than several autonomousgeographies. The digital world means we candevelop global solutions and this offers significantefficiencies. We are also rationalising the businessto act more efficiently and dynamically to realise ourdigital vision.

In March, we were joined by Bob Gregerson asChief Consumer Officer to help drive our focus onthe convergence happening between consumerand SME. Bob is bringing his consumer and SMEinsights to enable Yell to take advantage of theopportunities available and fully assist all ourcustomers as SME and consumer space cometogether.

It is these multiple future opportunities that lead usto believe that we have an exciting digital mediabusiness ahead of us. We recognise we have a debtload that we have to manage, but we believe wehave a business that can regain top line growth andsustain profitability.

I look forward to updating you through the comingmonths and years with how our new strategy isunfolding and how we are progressing with utilisingour considerable strengths.

Performance



Key operational metricsYear ended 31 March

US UK Spain Latin America2011 2010 2011 2010 2011 2010 2011 2010

Digital Media

Revenue (£m) 194.6 168.7 179.9 176.2 60.5 52.5 22.0 17.7

Growth (%)(a) 12.7 2.1 19.5 21.5

Unique live advertisers(b)

at period end (thousands) 373 362 204 202 184 158 141 141

Average annualised digitalmedia revenue peradvertiser (£) 548 462 909 827 357 386 158 117

Growth (%)(a) 15.9 9.9 (5.3) 29.3

Unique visitors for monthof period end (m)(c) 34.5 25.7 9.2 9.7 7.4 6.6 4.7 4.3

Websites(d), live at periodend (thousands) 190 30 16 6 23 1 1 1

Print, excluding White Pages

Revenue (£m) 752.4 885.3 313.1 409.4 118.4 157.5 84.2 80.3

Growth (%)(a) (17.1) (23.5) (23.9) 1.7

Unique advertisers(thousands) 506 546 283 335 231 253 175 185

Print revenue per uniqueadvertiser (£) 1,487 1,621 1,106 1,222 513 623 493 431

Growth (%)(a) (10.6) (9.5) (16.6) 10.9

Unique advertiserretention rate (%) 72 68 73 72 80 77 68 71

Directory editions published 1,005 1,002 104 104 65 86 92 83

(a) All growth rates are at constant currency and are not adjusted for rescheduling or acquisitions.

(b) Unique live advertisers is the number of digital media customers at period end. The prior year UK figure has been restated from 199,000 due to a minor

definition change.

(c) US figures include visitors to the Yellowbook.com network.

(d) Excluding landing pages.

Five year financial summaryYear ended 31 March

£m 2011 2010 2009 2008 2007

Group revenue 1,877.6 2,122.7 2,397.9 2,218.7 2,075.1

Group EBITDA 513.6 619.6 816.1 738.9 677.5

Profit (loss) for the financial year 46.7 46.8 (1,141.4) 206.8 216.3

Total assets 5,697.3 6,036.2 6,512.9 6,809.7 6,410.1

Net debt 2,765.1 3,094.6 4,207.2 3,759.4 3,662.6

Net assets 1,513.5 1,385.6 691.0 1,666.6 1,448.6

Free cash flow 264.7 342.2 328.9 185.0 (1,952.5)

Key operational metrics andFive year financial summary

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Group tradingSmall business confidence has remained lowthroughout the year. Yell’s market has alsocontinued to evolve. Whilst the use of printedproducts remains significant and highly cost-effective for the advertising customer, the migrationto digital alternatives continues, thus providingchallenges for the print business but alsoopportunities for digital media growth. Grouprevenues reflected these issues, falling by 12.4% onan underlying basis to £1,877.6m, with the ongoingdecline in print being only partially offset by thegrowth in digital media.

The Group must develop new products and enternew markets in order to address the changingenvironment and grasp the opportunities that thisoffers. Yell’s strategic review is now well advancedand the extensive and thorough work to datereinforces Yell’s confidence in this business. TheGroup will leverage its key assets, primarily thestrong brands and customer relationships, to benefitfrom the large and fast growing digital marketcementing Yell’s place as a champion of the SMEand providing material new value to the consumer.The Group’s strong market positions and profitablebusinesses in print and local search will neverthelessremain important for some time.

Gross margins were improved to 56.3% from 55.0%with increasing price pressure and the increased mixof lower margin products more than offset by lowerbad debts and cost of sale savings.

The Group’s focus on efficiency allowed Yell topartially offset the £245.1m decline in revenue andan increase in digital investment to leave EBITDAdown £106.0m at £513.6m.

In the face of declining revenues the business hascontinued to take action to reduce cost, resulting in£49.7m of restructuring charges over the year. Thiswas substantially offset by a £35.6m gain from theclosure of the UK defined benefit pension schemeto future accrual.

Profit after tax remained broadly flat as thedecrease in EBITDA was offset by an £18.5mreduction in acquired intangible amortisation anda £75.4m decrease in interest charges due to thereduced net debt and the unwinding of interest ratehedges.

Cash generation remained very strong. Free cashflow of £264.7m together with movements inexchange rates reduced net debt, which declinedby £329.5m.

The following review discusses the Group’s financialresults in more detail.

Income statement£m 2011 2010

Revenue 1,877.6 2,122.7

EBITDA 513.6 619.6

Exceptional costs (14.1) (20.1)

Depreciation and amortisation (169.6) (190.2)

Operating profit 329.9 409.3

Net interest expense (263.6) (321.8)

Exceptional interest expense – (17.2)

Taxation (19.6) (23.5)

Profit after tax 46.7 46.8

Group revenueIn order to begin to capitalise upon the much largeraddressable market that is available through digitalmedia, the Group has expanded its core offer andnow provides digital media solutions to over900,000 customers. Over the year, digital mediarevenues grew by 9.4% to £457.0m and nowaccount for 24.3% of total Group revenue (2010 –19.6%). The rate of growth slowed over the year, asinternet yellow pages growth turned negative in thefourth quarter. Other digital media revenuecontinues to grow strongly and Yell has built nearly200,000 customer websites over the year,predominantly in the US. The Group has alsosignificantly increased its provision of videos andsearch marketing services. New products, includinggroup buying, social media, reputationmanagement and mobile are also being trialled.

Performance

Performance review



Performance review continued

Usage of the internet yellow pages remains strongwith 55.8m users through the web of the Group’sprimary internet yellow pages sites in March. Inaddition, the Group now provides search accessthrough mobile applications and has recorded over6m app downloads to date.

The rate of print customer decline improved duringthe year, driven generally by slower loss ofcustomers rather than by increased acquisition.Print revenues nevertheless continued to decline,falling by 18.6% on an underlying basis over theyear and by 19.0% in the fourth quarter, reflectingthe continuing net loss of customers and reducedaverage revenue per customer.

Other revenue consists mainly of declining directoryenquiries revenue and the fee paid for theproduction of White Pages in Spain and LatinAmerica.

OperationsRevenue£m 2011 2010 Change(1)

Printed directories 1,317.1 1,596.1 (18.2%)

Digital mediaproducts and services 457.0 415.1 9.4%

Other 103.5 111.5 (4.5%)

Group revenue 1,877.6 2,122.7 (12.1%)

US 947.0 1,054.0 (12.4%)

UK 516.9 608.0 (15.0%)

Spain 269.8 326.3 (13.7%)

Latin America 143.9 134.4 7.0%

Group revenue 1,877.6 2,122.7 (12.1%)

(1) Change percentages are calculated at constant exchange rates.

EBITDA£m 2011 2010 Change(1)

US 217.7 253.1 (16.7%)

UK 159.5 225.2 (29.2%)

Spain 85.7 95.1 (5.7%)

Latin America 50.7 46.2 12.6%

Group EBITDA 513.6 619.6 (17.3%)

(1) Change percentages are calculated at constant exchange rates.

The US provided 50.4% of the Group’s revenue.US revenue was 12.4% lower in US dollar terms, butwas down 10.2% in sterling terms due to thepound’s weaker weighted average annual exchangerate. Revenue from digital media grew 12.7%,primarily driven by a 15.9% increase in averageannualised digital media revenue per advertiser.Print advertisers declined 7.3%, and this, combinedwith a 10.6% decrease in average revenue drovea 17.1% decline in print revenue. The rate of declinein print advertisers was a significant improvementon the prior year as both customer retention andacquisition rates improved. US EBITDA of £217.7mwas 16.7% lower in US dollar terms, but was down14.0% in sterling terms. The EBITDA margin of 23.0%was down from 24.0% last year.

The UK provided 27.5% of the Group’s revenue.Revenue from digital media grew 2.1% as averageannualised digital media revenue per advertiserwas up 9.9%. Print revenue declined 23.5% dueto a continued decrease in the rate of customerretention, acquisition and spend. UK EBITDA of£159.5m was down 29.2% and the EBITDA marginof 30.9% was down from 37.0% last year.




Spain provided 14.4% of the Group’s revenue. Thepound against the euro was stronger year-on-yearresulting in a 17.3% sterling denominated revenuedecrease against a 13.7% decrease at constantexchange rates. Revenue from digital media grew19.5% primarily reflecting an increase in the numberof advertisers. Print revenue was down 23.9% asboth average spend and customer numbersdeclined, despite a three percentage pointimprovement in print retention. Spain’s EBITDA of£85.7m was 5.7% lower in euro terms, but was down9.9% in sterling terms. The EBITDA margin of 31.8%was up from 29.1% last year.

Latin America provided 7.7% of the Group’s revenue.Sterling denominated revenue increased 7.1%against a 7.0% increase at constant exchange rates.Revenue from digital media grew 21.5% primarilydriven by a 29.3% increase in average annualiseddigital media revenue per advertiser. Print revenueincreased marginally as an increase in spend wasoffset by a decrease in customers. Latin America’sEBITDA of £50.7m was 12.6% higher in constantcurrency terms, but was up 9.7% in sterling terms.The EBITDA margin of 35.2% was up from 34.4%last year.

Exceptional items£m 2011 2010

Restructuring programmes 49.7 23.9

Gain from closure of pension schemeto future accrual (35.6) –

Release of exceptional accrualsno longer required – (3.8)

Exceptional items within operating profit 14.1 20.1

Early settlement of hedge contracts – 17.2

Tax credits (4.1) (9.0)

Net exceptional costs 10.0 28.3

During the year, the Group invested £49.7m torestructure the Group, some of the benefit of whichwill not be seen until next year. Furthermore, the UKdefined benefit pension scheme was closed to futureaccrual, giving rise to a £35.6m exceptional credit.Taken together, there was a £14.1m net exceptionalcharge in the year.

InterestOur underlying net interest expense at £258.5m waslower than the £316.1m in the prior year, mainly asa result of lower debt after the refinancing inNovember 2009. The average interest rates wereflat year on year reflecting the unwinding of interestrate hedges over the year offset by marginincreases agreed with the refinancing of debt on30 November 2009.

£m 2011 2010 Change

Average net debt 2,909.9 3,552. 0 18.1%

Average interest rate 8.9% 8.9%

Underlying netinterest expense 258.5 316.1 18.2%

Underlying net interest does not include exceptionalcosts in the prior year related to early settlement ofhedge contracts as part of the refinancing and doesnot include charges from hedges that do not qualifyfor hedge accounting in either year.

We expect interest rates to be lower next year, asthe Group settled most amounts owing on interestrate swaps before 31 March 2011. Any changes inmarket rates in fiscal year 2012 should have alimited effect, because interest rates are fixedor capped on around 70% of debt until December2011 and around 50% of debt thereafter untilDecember 2012.

Performance




Tax£m 2011 2010 Change

Profit before tax 66.3 70.3 (5.7%)

Effective tax rate 29.6% 33.4%

Tax charge 19.6 23.5 16.6%

Corporate tax rates were approximately 39% in theUS, 28% in the UK, 30% in Spain and approximately35% in Latin America. Our effective tax rate reflects,and will continue to reflect, the relative weightingof taxable profit from different tax jurisdictions.

Group cash flows£m 2011 2010 Change

Group EBITDA 513.6 619.6 (17.1%)

Exceptional itemswithin operating profit (14.1) (20.1)

Decrease inworking capital 112.1 153.8 (27.1%)

Net interest paymentsand purchase ofinterest rate caps (232.1) (313.7) 26.0%

Corporate income tax paid (24.6) (30.1) 18.3%

Capital expenditure (77.4) (63.2) (22.5%)

Purchase of subsidiaries (12.8) (4.1)

Free cash flow 264.7 342.2 (22.6%)

The Group continued to generate significant freecash flow thus delivering a material reduction innet debt.

The £112.1m reduction in working capital was duemainly to the release of working capital resultingfrom lower print revenues. Cash interest fell by£81.6m due to the lower level of debt.

The Group had £200.5m of cash at the end of theyear after the £150.0m early repayment of seniordebt in December and £66.5m of scheduledrepayments during the year. The remaining £41.0mof the Minimum Reduction Amount that had to berepaid by the 27 May 2011 deadline and thescheduled £65.0m repayment of old facility debtwere both repaid at the end of April 2011.

Balance sheetThe table below summarises the main assets andliabilities of the Group:

£m 2011 2010

Goodwill andother intangible assets 4,280.9 4,485.2

Property, plant, equipment andother assets 110.4 111.6

Working capital 459.6 608.7

Pension surplus (deficit) 37.3 (63.3)

Current and deferred taxes, net (596.1) (564.9)

Derivatives at fair value (13.5) (97.1)

Net debt (2,765.1) (3,094.6)

Net assets 1,513.5 1,385.6

Intangible assetsGoodwill and other intangible assets are the largestitems on Yell’s balance sheet. These mainly arosefrom business acquisitions. The book value ofintangible assets is a historical cost figure largelybased on third-party valuations at the time ofacquisition. Goodwill is presented net ofimpairments and is the value attributed to ourpeople and the expected synergies and growth ofthe acquired operations at the valuation dates.

Working capitalWorking capital has reduced largely due to thedecline in print revenues reinforced by tight controlover supplier payment terms and collectionprocesses.

PensionsYell operated a defined benefit pension scheme until31 March 2011 for people employed in the UK before1 October 2001. The primary reasons for the reductionin the pension deficit in the year ended 31 March 2011are the closure of the scheme to future accruals ofservice benefits and the actuarial gain on liabilities.The actuarial gain was primarily the result of the UKGovernment’s announcement changing the rate atwhich deferred benefits are accrued to the ConsumerPrice Index instead of the Retail Price Index and anincrease in real interest rates.




Net debtNet debt at year end was 5.5 times pro formaEBITDA at consistent exchange rates compared with4.9 times on the same basis last year. The reductionin net debt over the year was due to:

£m

Net debt at 1 April 2010 3,094.6

Free cash flow (264.7)

Currency movements (86.9)

Net financing costs increasing debt 22.7

Own shares issued netof own shares purchased (0.6)

Net debt at 31 March 2011 2,765.1

Yell’s debt is intentionally denominated in the samecurrency proportions as its earnings and cash flows,thus protecting its ability to service the debt. Yellraised equity of £660m and extended its bank debton 30 November 2009. Yell’s new bank facilities arecommitted until 2014. Yell has operated within itsdebt covenants since the extension. Please refer toa detailed discussion of the risks associated withmeeting these covenants in the section ‘Principalrisks’ on page 19 and refer to the covenantthresholds set out in the section ‘Other risks’ onpages 20 and 21.

Managing riskYell believes it is a well controlled group because itundertakes various activities within a riskmanagement framework to ensure that risk anduncertainty are properly managed and thatappropriate internal controls are in place. Pleaserefer to a detailed discussion of this topic in thesections ‘Principal risks’ and ‘Other risks’ on pages16 through 25.

Changes to future reportingYell intends to issue an Interim ManagementStatement for the three months ending 30 June 2011and 31 December 2011, in place of the full earningsrelease that has been presented in the past. Yellexpects to disclose key financial and operationalmetrics plus commentary that together will give aclear indication of performance against strategyand the full year guidance.

Forward-looking statementsThe financial information in Yell’s business reviewshould be read in conjunction with the auditedfinancial statements. Readers are cautioned thatforward-looking statements are not guarantees offuture performance and involve risks anduncertainties. The discussion of estimated amountsgenerated from the sensitivity analyses is forward-looking and also involves risks and uncertainties.Caution should be exercised in relying on theseanalyses. Actual results may differ materially fromthose in forward-looking statements.

Performance


�� Yell Group plc » Annual Report 2011

In this section Yell sets outhow it manages potentialrisks and uncertaintiesthat could have a materialeffect on the Group’s long-term performance andcould cause actual resultsto differ materially fromhistorical results.

Risk managementYell undertakes various activities within a riskmanagement framework to ensure that risk anduncertainty are properly managed and thatappropriate internal controls are in place.

• The directors have overall responsibility forestablishing and maintaining the systems ofinternal control and risk management, and forreviewing their effectiveness. These systems aredesigned to manage, rather than eliminate, therisk of failure to achieve business objectives. Thesystems also provide reasonable, but notabsolute, assurance against materialmisstatement or loss.

• Yell carries out an annual detailed riskassessment to formally identify and documentthe nature and extent of key operational andfinancial risks facing the Group. Yell considers thelikelihood of these risks materialising anddevelops mitigation plans where it believes theyare appropriate. This process has been in placefor the reporting periods covered by this reportand up to the date of approval of this AnnualReport.

• Yell has developed a risk-based internal auditplan to evaluate the overall provision ofassurance provided by the processes managingeach key risk.

• The Audit Committee and senior managementregularly review the risk assessment and internalaudit plan.

• Yell has designed and implemented financialreporting controls in line with what it believes arebest practices. The financial framework comprisesprocesses that represent a set of coordinatedtasks and activities, conducted by both peopleand IT systems, where significant classes oftransactions are initiated, recorded, processedand reported. Yell has fully documented thesystems, processes and key controls that producefinancial reporting. Key controls are thosecontrols that have a significant effect on reducingthe risk of misstatement and will affect one ormore financial statement assertions and reducethe risk of financial misstatement in relation tothose assertions, to a relatively low level. Yellupdates its documentation and tests theidentified key controls annually. This testing is inaddition to, and runs parallel with, the internalaudit plan and risk assessment programme.Results of internal audit plan testing and testingof the key controls are provided to the AuditCommittee for review.

• The Board, with advice from the Audit Committee,has completed its annual review of theeffectiveness of the system of internal controls. Inthe Board’s view, the information it received wassufficient to enable it to review the effectivenessof the Group’s system of internal controls inaccordance with the Internal Control RevisedGuidance for Directors in the Combined Code(Turnbull) and the Board is satisfied that thesystem complies with that guidance.

Principal risks


Yell Group plc » Annual Report 2011 ��

Principal risks continued

Principal risksYell has outlined in the tables below the risks anduncertainties that it believes are principal. Thetables are arranged to separate risks between thosethat are strategic in nature from those related todebt and financing. It is not possible to identifyevery risk that could affect Yell’s business, and theactions taken to mitigate identified risks cannotprovide absolute assurance that a risk will notadversely affect Yell’s business or financialperformance.

�. Strategic risk factorsYell aims to deliver quality business leads to itsadvertisers, regardless of media channel, bycontinuing to meet the changing demands of

advertisers and consumers, and by takingadvantage of new technologies and communicationmethods. A significant part of Yell’s revenue comesfrom selling advertising to small and medium-sizedenterprises in markets where there is significanteconomic uncertainty.

2. Debt and financing risk factorsNet debt at 31 March 2011 was 5.5 times annualisedpro forma adjusted EBITDA at consistent exchangerates compared with 4.9 times on the same basisat 31 March 2010. About £144m of Yell’s long-termbank debt will contractually fall due on or prior to31 March 2012. Details of the Group’s borrowingsare disclosed in note 18.

Performance

Risk from: Changing technology and customerneeds

At present the majority of Yell’s revenue comes fromprinted classified directories, which is declining inimportance. Increasingly, consumers are using awider variety of channels to find local businesses,most notably the internet and mobile devices. Yell’sfuture revenues will depend on its success inenhancing and expanding product offerings to meetchanging demands.

Potential effect: Lost revenue and profits, assetimpairments and funding issues

Yell constantly monitors changes in technology anduser preferences to ensure its channels remain thebest place to search for local businesses.Accordingly, Yell continues to innovate and invest inline with these changing trends so as to improve allchannels and products. Millions of users find Yell’sadvertisers each day through Yell’s digital media,accounting for 24.3% of the Group’s revenue.Looking forward, Yell expects usage behaviour tocontinue to change. Yell has seen mobile becomingincreasingly popular and consequently, Yell has beenactively improving its mobile offerings. Yell hasbegun selling its products in packages, which willbroaden customers’ product holdings and allow Yellto benefit from growth in usage whatever thechannel.

Yell is currently undertaking a full strategic review toidentify the market opportunities available in, andactions required to address, this changingenvironment.

�. Strategic risk and potential effect Mitigation




Risk from: Increasing competition

Yell operates in competitive markets, competing forusage and advertiser spend against traditional printmedia, a host of internet search companies andmany other businesses such as internet searchoptimisation and marketing agencies.

In the US, Yell faces particular competition fromincumbent and independent directory publishers,who are increasingly competing on price.


Yell meets these challenges by maintaining closerelationships with its customers through highlytrained sales forces and by proving the excellentvalue of its products to its customers.

Yell addresses competitive forces when they arise inall markets through product design, technologicalinnovations, promotional techniques, pricingpropositions and approach to sales; Yell intends, inparticular, to manage and grow its digital mediausage and revenue share.

In all Yell markets the Group focuses on the valueoffered to advertisers relative to that offered bycompetitors.

Yell is currently undertaking a full strategic review toidentify the market opportunities available in, andactions required to address, this changingenvironment.

�. Strategic risk and potential effect Mitigation

Risk from: Economic uncertainty

In times of economic uncertainty and tight creditmarkets, many small and medium-sized businessesmay spend less money on advertising than theyhave in the past.

Yell also operates in economies where it expects togrow market penetration. Economic uncertainty inthose markets may affect this growth strategy.


The Group mitigates the effect of economicuncertainty by providing evidence of the value thatthe customer receives from advertising with Yell. Yellis also offering an increasing value in packagedproducts to strengthen its base and to increaseretention rates.

Yell is currently undertaking a full strategic reviewto identify the market opportunities available in,and actions required to address, this changingenvironment.




Performance

Risk from: Financial covenants

Yell has contractual debt obligations and covenantsthat reflect its level of borrowing. The financialcovenants are described in the section ‘Other risks’ onpages 20 and 21. The debt cover covenant requiresthat the ratio of net debt at the testing date toadjusted EBITDA for the previous twelve month periodshould not exceed specific threshold ratios at specifictest dates. These covenants tighten over time with asignificant change taking place at 30 September 2011.

There is a risk that in the future, the Group wouldneed to reset its financial covenants with, or obtaina waiver from its lenders, either of which wouldrequire a two-thirds majority vote.

If the Group were required but not able to reset itsfinancial covenants with, or obtain a waiver from,its lenders such that undertakings to the Group’slenders were breached, the lenders’ facility agentmay, and must if directed by two-thirds of lenders(by reference to debt held) demand immediaterepayment of all amounts due to them. Whilst thiseventuality would, if it arose, cast doubt on thefuture capital funding of the Group, the Group’s cashflow forecasts show that in the year ending 31 March2012 interest payments will be fully met, with furthercash generated to meet debt repayment obligations.

Potential effect: Debts falling due earlier thanplanned

Yell is currently in full compliance with the financialcovenants contained in its borrowing agreements.

Yell actively monitors progress against thecovenants and when required can take correctiveaction by cutting discretionary costs to reduce therisk of a breach occurring. The Group is cashgenerative and profitable.


2. Debt and financing risk and potential effect Mitigation

Risk from: Refinancing debt

Yell has funded the business largely from cash flowsgenerated from operations and bank debt in theform of term loans. Yell will require access tofunding before 30 April 2014 in order to refinanceits term loans, the vast majority of which matureat that time. Whilst Yell enjoys sound relationshipswith its lenders and is currently able to service itslevel of debt, there is a risk, given current globaleconomic conditions, that the debt markets willremain fragile and sometimes illiquid, such that thecost of diversifying debt is relatively high and accessis either restricted or not possible at all.

Potential effect: Payment default and insufficientcash to fund the working capital and investmentneeds of the business

Yell recognises refinancing risk and continuallymonitors the financial markets for opportunitiesto diversify its debt portfolio.



TreasuryOperationsThe financial risks faced by the Group includeliquidity, credit risk and the effects of changes inforeign currency exchange and interest rates. Theprimary role of Yell’s treasury functions is to ensurethat adequate liquidity is available to meet theGroup’s funding requirements as they arise and thatfinancial risk arising from Yell’s underlyingoperations is effectively identified and managed.

The treasury function also monitors the keyobjective of remaining within ratios covenantedwith the lenders of its bank debt.

The treasury function is not a profit centre and itsobjective is to manage risk at optimum cost. Yell’streasury function conducts its operations inaccordance with policies and procedures approvedby the Board. Derivative financial instrumentsare executed only for hedging purposes, andtransactions that would be speculative in natureare expressly forbidden.

There has been no change in the role that financialinstruments have in creating or changing theGroup’s risk between 31 March 2011 and the date ofthese financial statements.

Capital managementYell manages the capital requirements of the Groupby maintaining leverage within the terms of its debtfacilities agreement. Yell manages capital in orderto safeguard the entity’s ability to continue as agoing concern, so that it can continue to providereturns for shareholders and benefits for otherstakeholders, and to provide an adequate return toshareholders.

The Group sets the amount of capital in proportionto risk. The Group manages the capital structureand makes adjustments to it in the light of changesin economic conditions and the risk characteristicsof the underlying assets. In order to maintain or

2� Yell Group plc » Annual Report 2011

Other risks

adjust the capital structure, the Group may adjustthe amount of dividends paid to shareholders,return capital to shareholders, issue new shares,or sell assets to reduce debt.

Consistently with others in the industry, the Groupmonitors capital on the basis of a debt-to-profitratio. This ratio is calculated as net debt divided byadjusted profit. Net debt is calculated as total debt(as shown in the balance sheet) less cash and cashequivalents. Adjusted profit is twelve months’EBITDA adjusted for certain items defined by thelending institutions in Yell’s Facilities Agreement.The ratio has increased from 4.9 : 1.0 for the yearended 31 March 2010 to 5.5 : 1.0 for the year ended31 March 2011.

Liquidity and fundingYell maintains sufficient facilities to meet its normalfunding requirements over the medium term. At31 March 2011 Yell had access to an undrawn,committed revolving credit facility (subject tocovenant adherence) of £193.2m until 30 June 2011,£173.9m until 30 June 2012, £165.2m until 30 June2013 and £156.9m until 30 April 2014 that Yell coulduse to mitigate the potential operational risks. Yellalso had cash of £200.5m at 31 March 2011. Yellbelieves that the Group has sufficient access toworking capital to meet its operating and capitalexpenditure requirements in the 2012 financial year.

Yell has contractual debt obligations and relatedcovenants that reflect its level of borrowing. Thecovenants could restrict Yell’s flexibility in using itsfinancial resources. These covenants includerequirements for net cash interest cover and debtcover. The net cash interest cover covenant requiresthat the ratio of EBITDA (adjusted for exceptionalitems) for the latest twelve month period to net cashinterest payable for the latest twelve month perioddoes not fall below specific threshold ratios atspecific test dates. The debt cover covenant requiresthat the ratio of net debt (excluding deferredfinancing fees and restated at the calculated averageexchange rate for the relevant EBITDA, at the testingdate) to EBITDA for the latest twelve month periodshould not exceed specific threshold ratios at specific


Yell Group plc » Annual Report 2011 2�

Other risks continued

70% of its indebtedness under the term bankfacilities until December 2011 and around 50%fixed or capped thereafter until December 2012.

• At 31 March 2011, Yell had £13.5m net mark-to-market liabilities primarily on interest rate swapsthat will be recognised as an increase in interestexpense when settled in the future if marketinterest rates remain unchanged.

Foreign currency exchange ratesThe Group is exposed to currency fluctuations onthe translation of its overseas operations intosterling. Yell mitigates this exposure by borrowing inthe same currencies as its income generating assets.Group borrowings are drawn down in the principalcurrencies of its operations, namely US dollar, euroand sterling.

The Group does not currently intend to usederivative instruments to hedge any foreignexchange translation rate risk relating to foreigncurrency-denominated financial liabilities, althoughYell will continue to review this practice.

Yell has operations in countries where the functionalcurrency is not pounds sterling. Significant cashinflows and outflows associated with the Group’soperations within a country are generallydenominated in local currency to limit the risks offoreign exchange movements on the local results.However, in certain situations, some contracts haveto be denominated in currencies other than thelocal functional currency. Yell uses derivativefinancial instruments to hedge transactional foreignexchange rate risk on significant transactions thatare not denominated in local currency.

CounterpartiesCash deposits and the use of derivative financialinstruments, including interest rate swaps, interestrate caps and forward foreign exchange contracts,for hedging purposes give rise to credit risk onamounts due from counterparties. Yell manages thisrisk by limiting the aggregate amounts and theirduration, depending on the external credit ratingsof the relevant counterparty.

Performance

test dates. The threshold ratios at 31 March 2011 andfor each test date until 30 June 2014 are as follows:

Cashinterest Debt

Test date cover ratio cover ratio

31 March 2011 1.66 : 1 7.50 : 1

30 June 2011 1.69 : 1 7.62 : 1

30 September 2011 2.06 : 1 6.23 : 1

31 December 2011 2.14 : 1 5.99 : 1

31 March 2012 2.25 : 1 5.72 : 1

30 June 2012 2.27 : 1 5.37 : 1

30 September 2012 2.32 : 1 5.08 : 1

31 December 2012 2.40 : 1 4.85 : 1

31 March 2013 2.49 : 1 4.60 : 1

30 June 2013 2.55 : 1 4.32 : 1

30 September 2013 2.63 : 1 4.10 : 1

31 December 2013 2.73 : 1 3.98 : 1

31 March 2014 2.84 : 1 3.77 : 1

30 June 2014 2.91 : 1 3.66 : 1

Yell operated within its debt covenants for allperiods presented in this financial information withheadroom for the twelve month period ended31 March 2011 of 26% on the cash interest coverratio and 26% on the debt cover ratio. A discussionof the risks associated with the future tightening ofdebt covenants is presented on page 19.

Interest ratesYell’s policy is to minimise the exposure tofluctuating interest rates by ensuring an appropriatebalance of floating and fixed interest rates. TheGroup’s primary funding is through its senior creditfacilities, on which interest is payable at floatingrate based on LIBOR or EURIBOR plus a margin.

In order to manage the associated interest rate risk,Yell fixes a portion of its interest rates throughhedging arrangements:

• At the end of each quarter Yell reviews its futureinterest payment obligations in assessing theappropriate amount of hedging for at least thenext 27 months.

• Yell has fixed or capped interest rates on around




Business operationsInsuranceYell operates a policy of buying cover againstmaterial risks the business faces where it is possibleto purchase such cover on reasonable terms. Wherethis is not possible, or where the risks would nothave a material effect on the Group as a whole, Yelldoes not purchase third party insurance.

Key suppliersYell relies on suppliers who work in partnership withit to deliver its products. Yell has longstandingrelationships with most of its key suppliers, the mostimportant of which are its printing and papersuppliers UPM-Kymmene Corporation, CatalystPaper, Inc., RR Donnelley, World Color Press, Inc. andEinsa Print International. Yell limits its exposure tomarket fluctuations through contracts and pricingarrangements with its paper and printing suppliers.

Sales forceYell also relies on its sales force to drive revenuegrowth in its competitive markets. Yell uses profilingbased on its most successful sales people to ensureit recruits those most likely to be successful. Yellaims to retain high-quality people throughremuneration, training and developmentprogrammes. Yell is also investing in technologiesto aid the sales force and to make it easier forcustomers to place advertisements with Yell.

Environmental regulationLocal governments in some of the Group’s marketsare considering initiatives that could limit or restrictYell’s ability to distribute printed directories orrequire Yell to bear the costs of and responsibilitiesfor disposal of discarded directories. Yell is workingwith local governments, recycling networks,non-governmental organisations and charities bothto educate them on the benefits and relevanceof printed directories and to actively promotedirectory recycling.

UK regulationIn the 2011 financial year, 17% of the Group’srevenue (Yellow Pages revenue in the UK) wassubject to regulation, compared with 20% duringthe 2010 financial year. This regulation reducedYell’s ability to respond to competitive pressures byrestricting its pricing flexibility. The price cap limitedprice increases to the prevailing rate of the UK retailprice index (RPI). A review of the undertakings givenby the Group to the UK’s Competition Commissioncould take place in the coming year. Yell willcontinue to present its case that regulation is notjustified in the prevailing competitive environment.

Financial reportingYell has quantified the risks arising from marketfluctuations and its use of estimates under theheading ‘Sensitivity analyses’ at the end ofthis section.

Yell recognises revenue and costs directly related tosales, production, printing and distribution fromadvertisement sales for a printed directory editionwhen Yell has completed delivery of that directoryedition. Because the number of editions and type ofdirectories are not evenly distributed during the yearor published in the same quarter every year, itsrevenue and profits do not arise evenly over the year:

• During Yell’s 2011 financial year the four financialquarters accounted for, respectively, 24%, 24%,24% and 28% of Group revenue.

• Different directories may grow at different rates,such that growth may not be evenly distributedbetween quarters.

• Yell sometimes needs to rephase its timing ofdistributions into a later period for operationalreasons, such as when the Group re-scopesdirectories or integrates acquisitions.

The Group also make subjective and complexjudgements, giving due consideration to materiality,when estimating inherently uncertain amounts




included in the financial statements. Yell mitigatesthe risk of results being materially different byregularly reviewing its estimates and updating themwhen appropriate. A description of what Yellconsiders to be the most significant estimates areprovided below. Actual results could be different,but Yell does not believe materially different unlessotherwise indicated.

Bad debtsYell reduces receivables by an allowance for amountsthat may not be collectible in the future. Yelldetermines the allowance by estimating the futurecash flows from the receivables based on historicalloss experience. A receivable is written off againstthe provision when it is believed to be entirelyuncollectible. Any monies recovered subsequent towrite off are recorded as adjustments to the baddebt provision and considered in the historicalloss experience.

Carrying value of goodwillYell reviews goodwill annually for impairment orwhenever events or changes in circumstancesindicate that the carrying amounts may not berecoverable, and at the end of the first full yearfollowing acquisition. Yell compares the carryingvalue of its operations to their estimatedrecoverable values to determine whether goodwill isimpaired. Yell estimates the recoverable value usinga discounted cash flow model that relies onsignificant key assumptions, including after-tax cashflows forecasted over an extended period of years,terminal growth rates and discount rates.

Yell is currently undertaking a full strategic review,and over the medium term Group EBITDA andcashflows are expected to return to growth as aresult of substantial changes in the business. Thesechanges include the development of material newincome streams from consumer and SME productswith margins that are expected to be lower thanthose historically earned in print. Therefore, theGroup will require significantly higher revenues thanhave been historically achieved. If the expected

benefits in the strategic plan either run later or inthe aggregate deliver less than currently expected,then the Group may need to consider animpairment charge in the future.

Carrying value of long-livedtangible and intangible assetsOther non-current intangible assets and plant andequipment are long-lived assets that Yell amortisesor depreciates over their useful lives. Useful livesare based on management’s estimates of the periodover which the assets will generate benefits. Yellreviews the values of property, plant, equipmentand assets with indefinite lives annually forimpairment. Yell reviews other non-currentintangible assets for impairment whenever eventsor changes in circumstances indicate that theircarrying amount may not be recoverable, and atthe end of the first full year following acquisition.Historically, Yell has not reduced the value of theseassets as a result of the impairment analyses, norhas Yell realised large gains or losses on disposalsof property, plant and equipment.

Yell is currently undertaking a full strategic review,and over the medium term Group EBITDA andcashflows are expected to return to growth as aresult of substantial changes in the business. Thesechanges include the development of material newincome streams from consumer and SME productswith margins that are expected to be lower thanthose historically earned in print. Therefore, theGroup will require significantly higher revenues thanhave been historically achieved. If the expectedbenefits in the strategic plan either run later or inthe aggregate deliver less than currently expected,then the Group may need to consider animpairment charge in the future.

Pension liabilitiesYell closed its defined benefit scheme in the UK tofuture accrual on 31 March 2011, thus reducing Yell’sexposure to future changes in salaries and employeeservice years. The determination of Yell’s obligation,expense and contribution rate for pensions is

Performance


2� Yell Group plc » Annual Report 2011


dependent on the selection of assumptions that itsactuaries use in calculating such amounts. Thoseassumptions include, amongst others, expectedmortality rates of scheme members, the rate atwhich future pension payments are discounted tothe balance sheet date, and inflation expectations.Differences in Yell’s actual experience or changes inits assumptions can materially affect the amount ofreported future pension obligations and futurevaluation adjustments in the statement ofcomprehensive income. Yell seeks expert actuarialadvice in setting its assumptions.

Yell’s defined contribution schemes are managedseparately from the assets and liabilities of theGroup and therefore do not expose the Group toany risk.

Pension assetsYell values the portfolio of assets held by the UKdefined benefit pension scheme at market valuewhen calculating the net pension asset or deficit.Values will increase and decrease as markets rise andfall. The trustees and management have an agreedstrategy to mitigate the risk of having insufficientfunds, if markets fall. The trustees annually match thelow-risk asset portfolio against the cash outflows forthe following 12 years. Against longer-term cashpayouts they match a combination of investments inindex-linked gilts to mitigate inflation risk, and higherrisk assets to get higher rates of growth. The trusteesalso work with management to ensure sufficientassets will be available to settle obligationsextending beyond 12 years.

TaxationThe determination of Yell’s obligation and expensefor taxes requires an interpretation of tax law.

Yell recognises deferred tax assets and liabilitiesarising from temporary differences where Yell has ataxable benefit or obligation in the future as a resultof past events. Yell records deferred tax assets to theextent that Yell believes they are more likely than notto be realised. Should Yell determine in the futurethat it would be able to realise deferred tax assets in

excess of the recorded amount or that the liabilitiesare different to the amounts recorded, then Yellwould increase or decrease income as appropriatein the period such determination was made.

Yell seeks appropriate, competent and professionaltax advice before making any judgements on taxmatters. Whilst Yell believes that its judgements areprudent and appropriate, significant differences inactual experience may materially affect future taxcharges.

Sensitivity analysesThe following analyses illustrate the effect thatspecific changes to management’s estimates couldhave had on Yell’s results in the 2011 financial year.The analyses do not consider secondary effects orsteps that could be taken to mitigate the primaryeffects and are only valid when all other factors areheld constant. The estimated amounts generatedfrom the sensitivity analyses involves risks anduncertainties. Caution should be exercised in relyingon these analyses.

EBITDA would have been £18.8m higher or lower ifthe bad debt charge as a percentage of revenue hadbeen 1% lower or higher, respectively. Operatingprofit would have been £16.0m higher or £23.0mlower if the useful economic lives of all intangibleassets had been one year shorter or longer,respectively. Operating profit would have been £8.5mhigher or £17.4m lower if the useful economic lives ofall plant and equipment had been one year shorteror longer, respectively. Operating profit would havebeen £82.4m lower if the assumed discount rates inanalysing goodwill impairment had been 1% higher.Operating profit would have been £18.9m lower if theterminal growth rates in analysing goodwillimpairment had been 1% lower. Operating profitwould have been unchanged if the the assumeddiscount rates in analysing goodwill impairment hadbeen 1% lower or if the terminal growth rates inanalysing goodwill impairment had been 1% higher.

The actuarial gain of £55.3m in the statement ofcomprehensive income would have been £8.9mhigher or lower if the real interest rates used in




Performance

calculating the pension liabilities had been 0.1%higher or lower, respectively. Furthermore, anincrease of one year in the life expectancies used tocalculate the pension liability would have decreasedthe actuarial gain by £8.2m.

IFRS 7 disclosuresThe only commodity exposing Yell to market risk ispaper, which would have increased or decreased

EBITDA by £9.3m if paper prices had been 10% loweror higher, respectively.

Financial instruments affected by market risk includeborrowings, deposits, and derivative financialinstruments. The following table, required by IFRS 7,is intended to illustrate the sensitivity to changes inmarket variables, being interest rates and the USdollar and Euro to sterling exchange rate on Yell’sfinancial instruments. The analyses are only validwhen all other factors are held constant.

IFRS 7 analyses 2011 2010

Income Shareholders’ Income Shareholders’£m (loss) gain at 31 March statement equity statement equity

Variable interest rates 1% higher, taking into account hedging arrangements (5.6) 13.9 (6.5) 55.7

Variable interest rates 1% lower, taking into account hedging arrangements 5.9 (11.0) 4.4 (55.3)

Variable interest rates 1% higher, without taking into account hedgingarrangements (30.2) – (30.6) –

Variable interest rates 1% lower, without taking into account hedgingarrangements 30.5 – 17.6 –

US dollar to pounds sterling exchange rate 10% higher 9.8 0.7 11.1 4.5

US dollar to pounds sterling exchange rate 10% lower (11.9) (0.9) (13.5) (5.6)

Euro to pounds sterling exchange rate 10% higher 4.7 – 5.4 1.9

Euro to pounds sterling exchange rate 10% lower (5.8) – (6.6) (2.1)



Bob was until January 2009, Chairman of Merrill Lynch Europe,Middle East and Africa. During his time at Merrill Lynch, healso sat on the Boards of LCH. Clearnet plc and Euroclear plc.Between 2006 and 2009, Bob was a member of the Court ofthe Bank of England and of its Risk Policy and AuditCommittees. Bob is an investor in, and on the Advisory Boardof, the venture capital firm Bluegem Capital Partners LLP and isthe European financial services operating partner of AdventInternational plc. Currently, he is on the Advisory Council ofBusiness for New Europe and a Visiting Fellow of OxfordUniversity. Bob is also Chairman of Oxford University SaïdBusiness School Centre for Corporate Reputation, Chairman ofthe Green Investment Bank Commission and Chairman of theNational Employers’ and Education Taskforce. He is theImmediate Past Master of the Worshipful Company ofInternational Bankers. He is non-executive Chairman ofeXpansys plc, a director of Orca Exploration Group Inc, andnon-executive Chairman of Stonehaven Search LLP. In January2011, Bob became a Trustee of the Peter Jones Foundation.

Bob is a graduate of Bath University with a business degreeand an honorary doctorate.

Bob is a member of the Remuneration Committee and isChairman of the Nomination Committee.

Mike joined Yell in December 2010. From 2006 to 2009, Mikewas Senior Vice President and General Manager of Linksys, theconsumer and SME networking division of Cisco Systems. Priorto Linksys, Mike was President and Chief Executive of PolaroidCorporation, which he joined in 2003. From 1996 to 2002, Mikeworked with Compaq Computer Corporation, in roles includingSenior Vice President of its Commercial PC business and SeniorVice President for Worldwide Strategy. Prior to that, from 1993to 1996, he was Vice President and General Manager of thePersonal Computing Business of Digital EquipmentCorporation.

Mike started his career with General Electric Company and hasalso held senior positions in Epson America, Murata BusinessSystems and Xerox Corporation. From 2003 to 2007, he was onthe Board of Stratus Technologies and, from 2005 to 2007, hewas on the Board of Wyse Computer.

Mike took a BA in Telecommunications at the University ofKentucky and undertook MBA studies at the University ofDallas.

Board of directorsDirectors seeking election andre-election to the Board

Bob WigleyChairman

Mike PocockChief Executive Officer



Prior to joining Yell in November 2010, Tony was ChiefOperating Officer of Colt Group S.A., the pan-Europeanbusiness telecoms operator. Tony was responsible for the Coltfinance function from 2003 to 2009.

Tony was with EMI Group plc from 1990 to 2002, becomingExecutive Vice President and CFO of EMI Recorded Music in1998, and additionally Group Finance Director in 2000.Previously, he worked at Storehouse and Philip Morris. Hewas a non-executive director of Mitchells & Butlers plc untilJanuary 2010.

Tony took a BSc in Management Sciences at ManchesterUniversity. He is a Fellow of the Institute of CharteredAccountants in England and Wales, qualifying with ArthurAndersen in 1980.

John is Chairman of Inchcape Shipping Services, and a non-executive director of postal/courier company, DX Group, bothprivate equity-owned businesses. He is a non-executivedirector of Ashley House plc, an AIM-listed company involvedwith the primary care sector of the NHS in the UK. John is alsoa non-executive director of Freight Transport Association Ltd.

John is former Deputy Chief Executive and Group FinanceDirector of Exel plc, where he spent 11 years. Prior toExel/Ocean Group plc, he spent seven years with Tomkins plcin various financial roles, having joined them after eight yearswith Arthur Andersen, where he qualified as a CharteredAccountant. John is a graduate of University College Cork.

John is Chairman of the Audit Committee and is a member ofthe Nomination Committee.

Governance

Board of directors continued

Tony BatesChief Financial Officer

John CoghlanIndependent, non-executive director



Toby is a partner at Virgin Green Fund (VGF), a private equityfund that invests growth capital in renewable energy andresource efficiency businesses. Prior to VGF, he spent eightyears in senior executive roles at Yahoo!, including ManagingDirector of Yahoo! Europe & Canada (2007-2008), ChiefStrategy Officer (2006-2007) and Senior Vice PresidentCorporate Development (2001-2006). Prior to Yahoo!, Tobywas a co-founder of Windsor Media, a media-focusedinvestment company and also previously held finance andinvestment roles with Allen & Company and Goldman SachsInternational. Toby is a Henry Crown Fellow at the AspenInstitute and a member of the Advisory Board of the OxfordInternet Institute. Toby has a Master of Arts degree fromOxford University and an MBA from Harvard Business School.

Toby is Chairman of the Remuneration Committee, and amember of the Nomination Committee.

Carlos is the former President and CEO of Mercedes-BenzEspana, SA. Carlos is a director of the following companies:Acciona, Schindler Espana, La Fraternidad, INDITEX, andARCADIS. He was formerly a director at DaimlerChryslerEspana, SA and Gonzalez-Byass.

He has worked as a Professor of Economy at ICADE in Madridand as a consultant for the European Union for the study ofthe future of the aeronautic industry. He was a member of theNATO “Wisemen Group” for the analysis of European industry.

He trained as a lawyer, graduating in Law and CorporateManagement and Marketing. He is a graduate in BusinessScience (ICADE). He holds an MBA from NorthwesternUniversity, Chicago and is a Senior State Economist.

Carlos is a member of the Audit Committee.


Toby CoppelIndependent, non-executive director

Carlos Espinosa de los MonterosIndependent, non-executive director



Kathleen is currently a non-executive director of Inmarsat plc,a position she has held since 2006. Kathleen was ChiefMarketing Officer of AT&T Corporation from 2004 to 2005 withfull marketing responsibility including product, pricing,promotion and placement. She was President and ChiefOperating Officer of Winstar International from 1998 to 2001and held a variety of roles at MCI CommunicationsCorporation from 1981 to 1998. She was associated with BTGroup plc, first as Senior Vice President of Worldwide Salesand Marketing for Concert (a BT and MCI joint venture) from1993 to 1995, then as Marketing Director for BT Business from1995 to 1997.

Kathleen was an independent, non-executive director of CMSEnergy and its subsidiary, Consumers Energy from 1995 to2004, and an independent director of Gentek Inc from 2003 to2009 and a non-executive director of Marconi Corporation plcfrom 2003 to 2006.

She graduated from Northwestern University, Evanston, Illinois,with a Ph.D. in Industrial Engineering and ManagementSciences.

Kathleen is a member of the Remuneration Committee.

Richard Hooper is Senior Independent Director of VocaLinkHoldings Ltd, a privately owned company. He is Chairman ofthe Broadband Stakeholder Group and a lead mentor for Bird& Co Board and Executive Mentoring. Richard chaired theIndependent Review of the Postal Services Sector for both theformer Labour Government and the coalition Government.

Until May 2007, Richard was the Chairman of Informa plc andspent nine years on the Board. From 2002 to 2005 he wasDeputy Chairman of Ofcom and Chairman of its ContentBoard. From 2000 to 2003 he was Chairman of the RadioAuthority.

Richard Hooper is a member of the Nomination Committeeand the Audit Committee.

Governance


Kathleen FlahertyIndependent, non-executive director

Richard HooperSenior Independent Director



Our vision for corporate responsibility is to provideour shareholders and other stakeholders withconfidence that Yell is a well-managed andresponsible company.

This section summarises our approach and ourachievements in corporate responsibility during thelast year.

Corporate responsibility is embedded throughoutYell – in our dealings with advertisers and suppliers,our approach to recruitment, the contribution wemake to our communities and to charities, and ourapproach to customer service – corporateresponsibility is a part of everyone’s role. We believethis is vital to ensure good workplace management,marketplace responsibility, community engagement,environmental stewardship and to sustain financialperformance. We continue to ensure our approachto corporate responsibility is relevant to ourbusiness, realistic in its objectives and that itcontributes to business performance.

Our corporate responsibility strategy concentrateson three areas:

• Minimising our effect on the environment• Supporting local businesses• Enhancing our employee volunteering

opportunities

Our Code of Ethics which had been in place acrossthe Group for a number of years, was revised thisyear and is available on our websitewww.yellgroup.com. Our Code ensures we operatewith the highest ethical standards in all we do.

We continue to share best practice with otherorganisations. We are members of Business in theCommunity, London Benchmarking Group, CorporateResponsibility Group and the Media CSR Forum.

In 2011 we were included in the FTSE4Good index forthe sixth year running.

EnvironmentYell is committed to reducing its impact on theenvironment. From sourcing paper for ourdirectories from sustainably managed forests tothe recycling of office waste, we continue to makeprogress in this area.

Directory production and recyclingLike many businesses, we face increasing scrutinyabout the sustainability of our products.

All our directories are made with a very low weightpaper (34-36gsm). The remaining virgin fibre used inthe paper production process is derived fromsustainably managed forests, so that when a tree isharvested, new trees are always replanted. In theUK and Spain our directories also contain anaverage of 55% recycled fibre content.

Over the years we have given much time and effortto further improve the production of our directories.Over the last two years, we have rolled out a newsmaller directory across the majority of our deliveryareas as part of our commitment to minimising theresources used in our directories and reflecting thepreferences of our consumers.

In order to encourage users of our directories torecycle their old directory alongside other house-hold waste, we include recycling information inrelevant classifications in all our directories acrossthe Group, including what, where and how torecycle. Old directories are recycled into cardboardpackaging, newsprint, egg boxes, insulation andanimal bedding.

As a signatory to the environmental guidelinesproduced by the Directory Publishers Associationin the UK, and the Local Search Association andAssociation of Directory Publishers in the US, Yell iscommitted to best practices relating to sourcereduction, manufacturing and recycling.

Corporate responsibility



Corporate responsibility continued

Yellow Woods Challenge

Since its launch in 2002, the Yellow WoodsChallenge has helped nearly 3m children across theUK to learn about the environment andsustainability, and encouraged them to recycle oldYellow Pages directories.

After a successful decade of helping to educatechildren, Yell has made a strategic business decisionto bring the Yellow Woods Challenge to a close inApril 2011. The decision reflects Yell’s developmentfrom a print and online directory publisher to amarketing solutions company, where localbusinesses are at the heart of all our businessactivities.

“The Yellow Woods Challenge has been a delightfuleco-educational campaign that has enabled theWoodland Trust to educate children across the UKabout native woodland and how to care for theenvironment. We have enjoyed a positive andrewarding relationship with Yell over the past tenyears in delivering the Yellow Woods Challenge.”Yasmine Davies, Woodland Trust.

Since 2007 we have run the ‘Paginas Amarillas:Recycle with us’ campaign in Spain whichencourages schoolchildren to recycle. The children

bring in their old directory into school once theirnew one has been delivered and these are used tobuild art sculptures. Yell Publicidad people also givetalks in participating schools about the importanceof protecting the environment. Our dedicatedwebsite resource also allows the children to findlocal services and to learn about differentprofessions and industries.

Reducing the environmental effectof our businessWe moved into our new headquarters building atOne Reading Central in September 2010. Thebuilding has an ‘excellent’ BREEAM (BuildingResearch Establishment Environmental AssessmentMethod) rating, the most widely usedenvironmental assessment method for property.

Our UK offices have been registered to theenvironmental standard ISO 14001 since 1998 andtwo of our three offices in Spain have beenregistered to ISO 14001 since 2007. Our environmentpolicies for all our operations show our commitmentto reducing, reusing and recycling resources. Forexample, in Chile, our investment in new lightingtechnology and a more efficient use of energy hasresulted in a 16% decrease in electricity consumptionand in Spain an employee awareness campaignhas reduced electricity use by 12% and water useby 26%.

Governance




In the last few months as Yell has continued todevelop within a complex digital marketplace, wehave made good progress in one aspect of the waywe liaise with local businesses – by reducing theamount of paperwork we send out to them. In theUS our goal of going paperless has almost entirelybeen achieved, with more than 97% of all ordersprocessed using an automated system. In January2011 we sent out around 240,000 less pieces ofpaper to our UK customers than in January 2010.Our overall plan is to send around 3m less pieces ofpaper by the end of this calendar year, saving anexpected £1m. By cutting back on the paperworkand enabling customers to manage their accountsonline, this is an early important step in our quest tobecome an easier organisation to do business with.

In Spain we continue to reduce the paperwork wesend to customers. We have begun capturingcustomer email addresses and we haveimplemented electronic invoicing includingelectronic signature. We are currently developinga self-serve portal for all our customers.

In 2011, Yellowbook won a Green Award forResource Reduction in the Corridor BusinessJournal’s 2nd Annual Environmental and EnergyLeadership awards, in recognition of the officewaste reduction programmes in place at our CedarRapids office.

Climate changeYell is in the media sector and is classified as a lowimpact company with regards to climate change. Inthe last financial year we emitted 258,568 tonnes ofCO2e. Since 1998, we have reduced total CO2operational emissions in the UK by 61%. In the lasttwelve months we have reduced Group CO2emissions by 17%. We aim to reduce our Groupemissions by a further 5% by 2012.

Supporting local businessesOur business has been built in partnership with localbusinesses – building our business by bringingmarketing solutions to theirs. The economicenvironment is still tough for our core customerbase, the SME. We continue to develop newproducts aimed at meeting the needs of the smallbusiness community such as producing websites andwe remain focused on helping, guiding andsupporting them through the challenging phases ofbusiness growth.

Supporting users and advertisersThe majority of our advertisers are SMEs employingfewer than ten people. Our products represent asignificant source of sales leads for many smallbusinesses that in turn support local economies.

It is important that our advertisers have the rightinformation to make an appropriate decision abouttheir advertising. Businesses need to invest in

Yell (including on-site Pre-press) Business travelPre-press (off site only) Raw materials Printers

End-of-life waste disposalDistribution

Yell Group – 2010/11 Emissions by activity




advertising that provides them with a good returnand with our free call monitoring services we canprove that advertising with us does just that.

Our sales consultants have built solid relationshipswith our 1.3m customers and are trained to givepractical advice about choosing the right Yellproducts. During the sale we offer customers returnon investment figures based on third-party researchor actual figures for online or telephone usage. Thisenables our advertisers to assess the likely returnfrom their expenditure with us, in terms of businessleads, depending on their classification and location.

The leads generated by advertising in ourproducts are an important source of income formany businesses. We take great care to ensurethese adverts are accurate and appropriate forour customers.

We have more than 6,000 sales people across theGroup to service our advertisers and we aim toensure they conduct themselves with the higheststandards of professionalism and integrity. We runsales compliance campaigns to ensure we maintainour ethical approach to selling and to ensure theinformation collected from our advertisers is correct.Each year our sales people are asked to reaffirmtheir commitment to our high ethical standards.

Working with key suppliersOur ethical guidelines for suppliers ensure bestpractices in diverse aspects of the supply chain: fairand equal labour standards, compliance andgovernance practices, environmental excellence,and responsible products and services.

Supporting enterpriseTo complement the development of our mobile anddigital products, this year we have continued tofocus on initiatives to enable SMEs to gain the mostvalue from their advertising programme. In 2010,we became a partner to Race Online 2012, to spreadthe word to small businesses about the importanceof being online as well as providing easy, cost-effective ways for them to get online. In the US, welaunched the Yellowbook360 Business Center, anonline resource that offers a spectrum of tools andservices to help small businesses succeed.

Employee volunteeringYell is committed to supporting and encouragingour people who get involved in fundraising andvolunteering for local causes. This year, Yell Groupcontributed more than £529,000 to thecommunities in which it operates through cash, timeand in-kind support.

Supporting national charitiesIn the UK our chosen charities are Red BalloonLearner Centres and the Woodland Trust, led by thefundraising efforts of our people. We run a payroll-giving scheme in the UK called Give as You Earnand last year, Yell UK people donated more than£38,000 through their salaries, to charities oftheir choice. Yell covers the cost of administeringthe programme.

Charities across the UK can now benefit fromdonations raised through Yell Reviews, which turnsconsumer reviews of local businesses on Yell.cominto charity donations. Reviewers simply select theirchosen charity as the recipient of the donation andwrite a consumer review of a restaurant, hotel,shop, bar or any other business they have used.Each charity will receive 25p for each review. In 2011,more than £2,000 was donated to charities throughthis scheme.

For the second year running, Yell Publicidad in Spainsupported SOS Childrens Villages in Mar de Plata inArgentina. The partnership ensures a family homeis provided to vulnerable children at risk of socialexclusion. Yell Publicidad people participate inblood donations three times a year for the SpanishRed Cross.

Governance




In 2010, Yellowbook people contributed more than$263,000 to its charity partner, United Way. UnitedWay of America works with more than 1,250 localUnited Way offices throughout the country in acoalition of charitable organisations to pool effortsin fundraising and support, focusing mainly oneducation, income and health. Yell Adworkspartnered with Yellowbook to support United Wayagain this year, with Yell Adworks people raisingnearly $15,000.

We also support a number of local activities acrossthe Group, details of these can be found atwww.yellgroup.com in the Governance andresponsibility section.

Our peopleAcross Yell Group we employed 13,414 people. Bynurturing their talent and dedication, we can seizethe significant opportunities that exist in our new,significantly larger, very fragmented market.

TalentAttracting and retaining the best talent to deliver ourstrategic plan is key to the sustainability of Yell. Wehave identified additional skill set requirements,particularly in IT and online product development, inorder to build and ready ourselves for the future. Weare now actively recruiting and developing the peopleto deliver our future plans to transform our business.

DevelopmentWe have redesigned our learning and developmentofferings to train the next generation of leaders, aswell as to ensure talented people within ourbusiness are given the opportunity and

encouragement to develop. We have devised a setof leadership behaviours that sets out how oursenior people are expected to behave in deliveringour strategy and achieving high performance. Allour people are given stretching personalperformance targets against which they aremeasured and rewarded.

Rewarding and retaining ourpeopleWe recognise that it is important to make peoplefeel motivated and well-cared for, and that Yelloffers a good work-life balance. We offer a varietyof benefits, such as health insurance, childcarevouchers, welfare services and incentive schemes.

Other benefits include pension provision and sharesave schemes.

Recognition of our people’s achievements isimportant to us, and we run award schemes thatcelebrate exceptional achievements in each of ourlocations by individuals and teams who act as rolemodels for their peers.

DiversityYell is an organisation that has embraced andbenefited from a diverse workforce, valuing thecontribution of all our people. We have always hada good track record in this area and our employeesurveys, for instance, have always received positivescores for the extent to which the company has aworking environment that is accepting of differentages, cultural backgrounds, lifestyles and gender.

As part of our ongoing approach to realise thebenefits of diversity in the workplace we have begunto create a set of mentoring relationships, networksand forums, initially in the UK and focusing on theadvancement of women in the workplace. We aremaking the workplace as international as possible,and we are encouraging everyone to takeadvantage of the opportunities available to them.We aim to benchmark best practice and learn fromother companies’ approach.

Further details of our corporate responsibilityprogrammes can be found at www.yellgroup.com.



Governance

Chairman’s governancereport and Chairman of theNomination CommitteereportAs mentioned in my opening statement to thisAnnual Report, this has been a year of considerablechange within the Board and the executivemanagement of the Group. Last year, Icommissioned an independent evaluation of Boardeffectiveness facilitated by Egon Zehnder, anindependent third party and several items wereidentified for improvement. In my roles as Chairmanof both the Board and the Nomination Committee,I have worked with the Board during this reportingperiod, to address them as follows:

2010 Board evaluation outcomesBoard composition reviewed to ensureappropriate level of skills and experiencearound the Board tableThe Nomination Committee has responsibility forconsidering the size, structure and composition ofthe Board, the retirement and/or appointment ofdirectors and ensuring that the Board has the rightblend of skills and experience.

We reached an agreement with executive directorsJohn Condron and John Davis under which theywould leave the Group, but would remain in postuntil we recruited suitable replacements. Followinga handover period to Mike Pocock and Tony Bates,Mr Condron and Mr Davis left the Board at the endof 2010. Non-executive directors Joe Eberhardt andTim Bunting also left the Board in February 2011, topursue their other business interests.

Led by the Nomination Committee, the recruitmentof the CEO – Mike Pocock, the CFO – Tony Bates andindependent non-executive director, KathleenFlaherty was conducted through several externalsearch agencies, and their appointment approvedby the full Board.

The appointment of Mike Pocock brings impressiveleadership skills and experience from a range of

businesses. This appointment is complemented bythat of Tony Bates, who brings to Yell financialexperience and strategic insight from a range ofsubstantial quoted public companies.

Kathleen Flaherty’s technical, financial and salesand her deep marketing skills also strengthen ourBoard.

Next generation talent issues addressed, withbroad succession and nomination processeselevated to Board agendaSuccession planning across the Group had not beenfully explored by the Board at the time of theevaluation. Following the appointment of MikePocock and Tony Bates, a detailed review of theexecutive management team was overseen by theBoard, resulting in a restructuring of the executiveteam that will implement the new group globalstrategy. Our senior management team details canbe found on our website www.yellgroup.com.

As well as Board meetings, managementpresentations and discussions have been held withBoard members at the offices of Yellowbook, YellPublicidad and Yell UK. This has improved theBoard’s line of sight of Yell’s high performingindividuals and ‘bench strength management’.

In August 2010, Christian Wells succeeded HowardRubenstein as Company Secretary, his appointmentbeing a matter for the full Board. I would like tosincerely thank Howard, on behalf of the Board, forthe excellent service and guidance provided to theBoard during his tenure.

Strategy more formally addressed atBoard levelFollowing last year’s evaluation of Boardeffectiveness, we took steps to address groupstrategy more formally at Board level. Boardstrategy days were held in September 2010 and May2011. Mike Pocock, Tony Bates and I also met withmajor investors in February 2011, to share ouremerging thinking on the development of groupstrategy. We will present our resulting group global



Chairman’s governance report and Chairman of the Nomination Committee report continued

strategy in mid-July 2011 and we will seek theirsupport for its implementation at these meetings.

Key metrics for the Group’s global strategy will bereviewed and reported from July 2011 onwards.

Separately, the agenda and duration of our Boardmeetings have been extended to include morestrategic discussion alongside operational reportsfrom Yell’s management team. I think it is importantfor the Board to be particularly alert to thechallenges and opportunities facing the Group atthis time of rapid transition.

Continue progress on timely preparationand submission of Board papers andpresentationsWe continued progress on improving the flow ofinformation to the Board, primarily through ouronline Board portal. A standardised Board papertemplate and associated guidance was agreed bythe Board. This directs the author of each Boardpaper to provide a comprehensive exploration andexplanation of all options for action, with arecommendation to the Board for decision.

The CEO and CFO now provide substantive writtenreports in advance of each Board meeting, as wellas verbal commentary on them at the meeting.

The internal timetable for the submission of papersto the Board has been tightened, so that thedirectors have sufficient time before the meeting toanalyse the decisions they are required to make.

Remuneration CommitteeFollowing the resignation of Joe Eberhardt from theCommittee in July 2010, the Nomination Committeedecided it appropriate for a UK based chairman ofthe Committee to be appointed and even closerinvestor contact established and maintained inrespect of remuneration. The NominationCommittee therefore recommended theappointment of Tim Bunting, and subsequently,(following Mr Bunting leaving the Board in February2011), the appointment of Toby Coppel as Chairmanof the Remuneration Committee.

Board diversityPrior to the publication of new UK CorporateGovernance Code and the Davies Report findings,we acknowledged that there was insufficientgender and ethnic diversity in our Board. The firststeps towards our commitment to improve Boarddiversity were taken with the appointment ofKathleen Flaherty. We will continue to ensure thatany recruitment consultancy we use will endeavourto provide a wide range of suitable Boardcandidates, who will be assessed strictly on theirindividual merits.

2011 Board evaluationThis year’s Board evaluation was conducted throughan online questionnaire developed internally, andderived from the work of Board evaluationconsultants, Independent Audit Ltd. The evaluationfocused on the Board, and Board Committeesperformance, as well as the Chairman. Theevaluation confirmed the outcomes from theprevious evaluation had been progressed. Theoutputs from this year’s review have beenincorporated in the Board’s plans for the comingyear. I confirm that following the evaluation, alldirectors will be standing for election or re-electionand are effective and committed to their roles, andthe Senior Independent Director, Richard Hooper,confirms the same in my case.



Governance

Other work undertaken bythe Board this yearWe received briefings on the implementation of theBribery Act 2010 and subsequently agreed to thedevelopment of an online training programme, tobe delivered to all Group employees. We alsotightened our purchase terms and conditions ofcontract, and affirmed our zero-tolerance approachto bribery and fraud. At the same time, it wasrecognised that it was an appropriate time torefresh the Group’s Code of Ethics policy, which hasbeen in place for some years. This new policy, whichconsiders all our stakeholders, can be found atwww.yellgroup.com.

We approved comprehensive group wide delegatedauthorities, governance and compliance policies, inorder to embed consistent good practice across theGroup. An internal committee has been establishedto oversee the implementing of these policies andmonitor that they are being adhered to.

The Board was briefed about the new UK CorporateGovernance Code, and UK Stewardship Code.Analysts and brokers research and other relevantnews and opinions are already provided to alldirectors through the Board’s dedicated website.

Bob WigleyChairman

Chairman of the AuditCommittee reportI, John Coghlan, present my report on the work ofthe Audit Committee in the reporting period. Theother members during the year were RichardHooper, Joe Eberhardt (until his resignation on9 February 2011) and Carlos Espinosa de losMonteros, who succeeded Mr Eberhardt on10 February 2011. The Committee consists entirelyof independent non-executive directors. As aqualified Chartered Accountant, I am deemed tohave relevant and recent financial experience bythe Board.

During the year, we completed the followingnon-standard Committee activities:

• Reviewed and implemented changes to thestanding agenda for Audit Committee meetings.

• Rotated the senior audit partner of externalAuditors in June 2010, to ensure the continuingindependence of the external Auditor, as theincumbent had been in place since June 2005.

• Approved the early repayment to our lenders of£150m in December 2010.

• Assessed our Going Concern status each quarter,as part of our review of all quarterly, half yearand full year financial results releases prior toapproval by the full Board.

• Reviewed (with the external auditor) provisioningagainst potential tax exposures.

• Reviewed Whistleblowing report for the year;issues are mainly related to HR matters, ratherthan serious financial impropriety.

• Proposed changes to external financial reporting,so that we will release Interim ManagementStatements at Q1 and Q3.

• Established a Group Compliance and Ethicsfunction to implement the Group complianceprogramme.

The Board has an established process by which theeffectiveness of the system of internal control isreviewed as required by provision C.2.1 of the 2008Combined Code, and the main features of thosecontrols are also set out in the Principal Risks section



Chairman of the Audit Committee report continued

starting at page 16. On behalf of the Board, theAudit Committee examined the effectiveness of theGroup’s internal controls and risk managementthrough a formal review conducted at the start ofthe year and updated quarterly at the AuditCommittee meetings. A further formal review willbe conducted once the strategic review has beenfinalised in early summer. Risk managementprocesses are given on pages 16 to 25.

We reviewed the risks and associated controls of theconsolidation process of the annual and interimfinancial statements and the nature and scope of theexternal audit. The key controls over consolidationinclude internal audit checks over Group processesand review of the financial statements bymanagement and the Committee. A description ofthe main features of our internal controls and riskmanagement systems in relation to the financialreporting process are set out in the Principal riskssection starting at page 16.

The Committee reviewed the Internal Audit reportsat each Committee meeting, and the scope of theInternal Audit plan at half year and full year, for theforthcoming year, following risk assessment activity.

In the Board’s view, the information it received wassufficient to enable it to review the effectiveness ofthe Company’s system of internal control inaccordance with Turnbull guidance. The Board issatisfied that, where significant failings orweaknesses in internal controls were identifiedduring the year, appropriate remedial actions weretaken or are being taken.

The Committee also reviewed the independence andobjectivity of our external auditors. Our auditors arealso required to confirm their independence at leastannually. We considered the quality of servicereceived from PricewaterhouseCoopers LLP (‘PwC’)during the past year, the proposed fee structure,that the senior audit partner had been rotated in2010 and audit engagement terms for financial year2012, and we recommended to the Board that thereappointment of PwC as external auditors beproposed to shareholders at the 2011 AnnualGeneral Meeting.

To further ensure external auditor independenceand objectivity, we have in place a policy for theprovision of non-audit services by our auditors. Thepolicy defines the nature of non-audit work thatmay be undertaken and establishes a financial limit(up to £5m per annum) on this work. Included in this£5m, is a pre-approved financial limit of £1.5m forroutine tax compliance and advisory services thatmay be provided by the external auditors. All non-audit projects above a financial limit of £250,000must be approved by the Committee prior to theproject commencing. Proposed work is reviewed forcompliance with regulatory requirements thatpreclude auditors from performing certain types ofwork and to assess if the nature of the work wouldcreate a conflict of interest. Regular updates areprepared for the Committee on the nature,cumulative costs and extent of non-audit servicesprovided by our auditors.

Non-audit services that may be provided by theexternal auditor are:

• Tax compliance services.• Tax advisory services.• Due diligence services relating to acquisitions of

new businesses or significant investments inbusinesses, joint ventures or strategic alliances.

• Public reporting on investment circulars.• Private reporting to sponsors or similar parties in

connection with investment circulars (includingcomfort letters and reporting on working capitalstatements).

• Preparing information for third parties relating toacquisitions and disposals.

• Liquidation services in respect of redundantsubsidiaries or associate companies.

• Accounting advice.

The Committee met four times during the reportingperiod. The CFO and our external and internalauditors attend all meetings. The Audit Committeeperiodically meets with both internal and externalauditors in private session.

John CoghlanChairman of the Audit Committee



Governance

Chairman of theRemuneration CommitteereportI, Toby Coppel, present the RemunerationCommittee’s yearly report.

I confirm that this report has been prepared inaccordance with the requirements of The Large andMedium-sized Companies and Groups (Accounts andReports) Regulations 2008.

MembersThe members of the Committee for the year ended31 March 2011 were:

Joe Eberhardt (who resigned from the Committee on29 July 2010), Tim Bunting (who resigned from theBoard and its Committees on 9 February 2011), BobWigley, Kathleen Flaherty (appointed to theCommittee on 1 November 2010) and me, TobyCoppel. I succeeded Tim Bunting as Chairman of theCommittee on 10 February 2011.

Kathleen and I are independent non-executivedirectors of the Company. Bob Wigley, the Chairmanof the Company, was independent on hisappointment as Chairman.

Executive directors attend Committee meetings byinvitation only, and no director is involved indetermining their own remuneration.

The Remuneration Committee is responsible forYell’s executive director remuneration and approvingany share based incentive schemes and theperformance conditions attached to them. TheCommittee’s terms of reference are available onYell’s website (www.yellgroup.com) or from ChristianWells, the Company Secretary.

We formally met six times during the year andreceived advice from:

• The new CEO, Mike Pocock• The departing CEO, John Condron

• The Head of Human Resources UK• The Company Secretary• Deloitte LLP (‘Deloitte’)

Deloitte were appointed by us to provide advice onremuneration and also provided tax, HR consultancyand risk management services to the Companyduring the year. The Committee is satisfied that theother services provided by Deloitte to the Companywere technical in nature and do not create conflictsof interest.

Executive remunerationFollowing the announcement in May 2010, thatexecutive directors John Davis and John Condronwere intending to leave the Group, the Committeeagreed the appropriate remuneration packages torecruit and incentivise our new executive directors,Mike Pocock and Tony Bates and the remunerationterms on Mr Davis’ and Mr Condron’s departure inNovember and December 2010 respectively.

Remuneration structure 2011We reviewed our remuneration structure in thereporting period. Historically Yell has offeredextensive share participation at many levels throughthe Company. Consequently there is now limitedcapacity in terms of new issue shares available touse for future incentive plans. To address this issue anumber of actions were approved by theRemuneration Committee including:

• The future award population will be reduced andawards will be more focused on top talent;

• Where equity is used, awards will be expressed asa number of shares rather than as a multiple ofsalary; and

• A long term incentive for junior members of theteam, who had historically been granted shareawards, to be delivered in the form of cash.

All of the Company’s share plans are operatedtaking account of the dilution limits set out in theABI guidelines. Due to our more extensiveapplication of discretionary share plan awards toour employees, we are seeking shareholder


�0 Yell Group plc » Annual Report 2011

Chairman of the Remuneration Committee report continued

approval at the 2011 Annual General Meeting toamend the rules of the Yell Group plc ExecutiveShare Option Scheme and the Yell Group plc LongTerm Incentive Plan. The Company will continue tooperate the “10% in ten year dilution limit” for allof the employees’ share plans that it operates. Theproposed resolution seeks to remove the “5% in tenyear dilution limit” for discretionary plans. A fullexplanation as to why this approval is sought is setout in the explanatory notes to resolution 15 of theNotice of Annual General Meeting on page 122.

The broad basis of our remuneration structure isillustrated by the diagram below:

For our executive directors the annual bonus if paidoperated with an element of deferral (other than inexceptional circumstances). This is described indetail on page 41.

Current executive directorsIndividual elements of their remunerationMike Pocock’s and Tony Bates’ remunerationpackages comprise the following fixed and variableelements:

Fixed remuneration• Salary• Salary supplement in lieu of pension• Benefits

Variable remuneration• Discretionary annual and deferred bonus• LTIP participation

The variable elements of remuneration are subjectto the achievement of performance targets. Webelieve that there is an appropriate balancebetween fixed and variable remuneration. Excludingpensions and benefits, for on-target performance,variable pay makes up approximately 54% of thetotal remuneration package. This increases toapproximately 78% for maximum performance.

Base salaryBase salaries are set taking account of theindividual’s:

• Role and responsibility• Experience• Market positioning• The need to recruit top talent to transform the

business

Prior to the appointment of the executive directors,the Committee reviewed salary benchmark data forcompanies of a similar size and complexity to Yell.

Mr Pocock’s and Mr Bates’ salaries are detailed inthe table on page 46.

Executive directors andsenior executive group

Management group

All employees

All employees

LTIP

Long-termcash awards

UK ShareSave andUS Stock Purchase Plan

and UK Share Incentive PlanAnnual Bonus Plan

ExecutiveOptions




Governance

Annual bonusThe maximum bonus opportunity is 150% of basesalary. Any bonus awarded in excess of 100% ofbase salary is (other than in exceptionalcircumstances as determined by the RemunerationCommittee) deferred into shares. The deferralperiod is three years.

On the appointment of Mr Pocock and Mr Bates,Yell’s bonus arrangements for 2011 were based onthree historic performance measures – revenue,EBITDA and cash conversion. These measures wereestablished in early 2010 taking into account thebudget prepared by previous executive management.

It became clear, at the end of the financial year, dueto the prevailing trends in the economic andbusiness environment, that two of the performancetargets that had been based on the previousmanagement’s budgets had not been met and thiswas clearly not due to any lack of performance bythe new executive team.

Following consultation with major shareholders ofthe Company, the Remuneration Committee decidedto exercise discretion to link the award of any bonusto Mr Pocock and Mr Bates, for this year only, to thedelivery of a strategic plan satisfactory to the Board,the level of bonus to be dependent on theCommittee’s assessment of the quality of the plan.

As the Board had not signed off the new strategicplan at the date of this report, the bonus forfinancial year 2011 had not yet been agreed. Anybonus that the Remuneration Committeedetermines for Mr Pocock and Mr Bates for financialyear 2011 will be disclosed in the 2012 statutoryaccounts.

Although Mr Pocock and Mr Bates joined during thelatter part of the measurement period of financialyear 2011, as a recruitment incentive the Companyhad agreed that in the event annual bonuses werepaid in relation to financial year 2011, then any suchproportion of bonus that was determined would not

be pro-rated against the time employed in financialyear 2011.

The 2012 annual bonus performance conditions willbe established at the first Remuneration Committeemeeting after adoption of the strategic plan by theBoard expected to be on 30 June. It is envisaged thatthe performance condition will be based on keybusiness metrics consistent with those used for awider group of senior executives as part of a newapproach to bonuses across the Company.

Long-Term Incentive PlanIn March 2011, Mike Pocock and Tony Bates eachwere granted awards under the Long-Term IncentivePlan (LTIP), to the value of 150% of base salary inline with commitments made at the time of theirrecruitment.

The Committee decided that in order to ensure thenew executive team be appropriately motivated todeliver a successful turnaround in the Company, theawards should have two sets of performanceconditions:

i) 50% of the award to vest subject to theachievement of Yell’s relative TSR growth againstthe constituents of FTSE 250; and

ii) 50% to the satisfaction of performance conditionsbased on the strategic plan. These conditions willbe set after the strategic plan review is adoptedby the Board.

PensionExcept for life assurance cover provision, Mike Pocockand Tony Bates do not participate in any Yell Pensionarrangements. Instead they receive a cashsupplement in lieu of employer pension contributions,of 25% and 20% of base salary respectively.

Further details of pension arrangements can befound in the table on page 47 with respect toprevious management.




One-off share option awardsIn accordance with the agreed terms of theirappointment, Mike Pocock and Tony Bates wereeach given a one-off option grant upon theirappointment. The options were granted on1 December 2010 and 9 November 2010 in respect of3m and 2m shares respectively, with an exerciseprice per share equal to the prevailing share price atthat time. Options will become exercisable afterthree years subject to the achievement of stretchingshare price targets as detailed in the table on page48. Options will lapse in the event of summarydismissal or resignation. These awards were madespecifically to aid recruitment of the two executivedirectors and were designed to directly align theirinterests with those of our shareholders. Thesebenefits are not pensionable.

Other remunerationThe other elements of remuneration that ourexecutive directors receive are as follows:

• Relocation assistance• Life assurance• Private health and dental cover• Annual medical evaluation• Long-term disability insurance• Provision of a car or car allowance• Health club membership• Allowance for personal tax and financial advice

Our executive directors also receive reimbursementfrom the Company for reasonable expenses incurredin the carrying out of their duties (including receiptof professional advice where necessary).

Minimum shareholding requirementExecutive directors are expected to maintain aminimum shareholding requirement equivalent to200% of post tax salary. New directors will have afive year period in which to build up such a holding.Vested but not transferred awards under theDeferred Bonus Plan will count towards this limit.

External directorshipsMr Bates and Mr Pocock may currently assume onenon-executive directorship with prior notice to theChairman (subject to no conflict of interest), and

both directors may retain fees in relation to suchroles.

Mike Pocock and Tony Bates hold no externaldirectorships.

Service contractsBoth Mike Pocock and Tony Bates have a rollingtwelve month service contract. The key terms of theirservice contracts are shown in the following table:

Aspect Policy

Date of Contract Mike Pocock – 8 November 2010Tony Bates – 1 October 2010

Notice period (ontermination by the Twelve monthsCompany or the director)Termination payments Payment if the notice period isif contract is terminated served:without cause Discretionary bonus may be

paid on a pro-rata basis inrespect of the part of thefinancial year for which theexecutive is employed.Payment in lieu of notice:Basic salary multiplied by 1.25 (toreflect the value of benefits)(Exit Payment) may be paid inrespect of the unexpired portionof the notice period. In line withABI/NAPF guidelines and bestpractice, the Exit Payment issubject to mitigation andphased monthly payments overthe period. Discretionary bonusmay be paid on a pro-rata basisin respect of the part of thefinancial year for which theexecutive is employed.Any such bonus would be at ontarget level (or equivalent) if thetermination date falls in the firstsix months of the financial year.If the termination date fallswithin the second six months ofthe financial year, any bonuswould be at a level determinedon the basis of projectedforecasts.

Change of Control On a change of control of theCompany taking effect on orbefore 31 July 2014 theexecutives can terminate theiremployment on three months’notice and would be entitled toan Exit Payment as above (andsubject to mitigation andphased payment).




Governance

Former executive directorsIn May 2010, Yell reached an agreement with its twoexecutive directors at the time, John Condron andJohn Davis, that they leave Yell by May 2011.

In the months following the announcement, whenthe search and recruitment of the two newexecutive directors took place, the Board placedconsiderable value on being able to call upon JohnCondron and John Davis, in addition to their normalduties, to ensure the orderly transition to the newexecutive directors.

Service contractsJohn Condron’s service contract was varied on17 May 2010 to provide a departure date of no laterthan 31 May 2011 and to set out arrangements forthe handover to Mr Condron’s successor. Followingthe recruitment of Mr Pocock, a further variationwas agreed on 1 December 2010 to provide anactual departure date of 31 December 2010 and forMr Condron’s ongoing assistance where required.John Davis had a rolling twelve month servicecontract. The key terms of their service contracts(as varied for Mr Condron) are shown in thefollowing table:

Aspect Policy

Date of Contract 10 July 2003Notice period (on John Condron - as abovetermination by the John Davis - twelve monthsCompany or the director)Termination payments John Davis - Payment for thatif contract is terminated part of the notice periodwithout cause served:

Pro-rated bonus paid on thegreater of on-targetperformance and projectedperformance by the Board.John Davis - Payment for anyunexpired portion of noticeperiod if employment isterminated by the Companyearly:95% of annual salary, benefits,pension contributions and on-target bonus (such sum reducedpro-rata in respect of any partof the notice period served) plusall conditional awards of sharesand share options vestimmediately on termination.John Condron - Payment of sumequivalent to value of basic salaryand value of benefits in respect ofany unexpired period of theservice contract (to 31 May 2011).Payment of any annual bonusreferable to the anticipatedperiod of the service contract (to31 May 2011). Subject to certainconditions, retention of car andcomputing equipment andprovision of officeaccommodation and secretarialsupport.

Further details specific to John Condron and JohnDavis are set out below.

Chief Executive OfficerOn 17 May 2010, the Company agreed the termsupon which John Condron would retire as ChiefExecutive Officer of the Company by 31 May 2011.Mr Condron subsequently retired, and resigned as adirector, on 31 December 2010 following a period ofhandover to Mike Pocock. John Condron received apayment of £479,789 in relation to salary, cash sumsin lieu of pension contributions and other benefits(excluding bonus) in respect of the unexpired periodof the service contract to 31 May 2011 in accordancewith the terms of his service contract.




Mr Condron also received a payment of £531,000under the 2010/2011 annual bonus scheme withrespect to the period from 1 April 2010 to31 December 2010 on the basis of the audited halfyear financial results of the Company, namely thatRevenue targets were not met, superior performancelevel targets were met in EBITDA and maximumperformance level targets were met in Cash.

In respect of the period from 1 January 2011 to31 May 2011 the bonus of £138,218 was paid at theon-target level on the terms agreed on 1 December2010.

Mr Condron’s outstanding rights under the YellExecutive Share Option Scheme, the Deferred BonusPlan and SAYE plan were exercisable for a period ofsix months after the termination of his employmentin accordance with the relevant scheme rules, aswere his vested LTIP Options. The RemunerationCommittee also authorised the transfer of shares toMr Condron equivalent to his 2008 and 2010 LTIPawards, pro-rated on a time basis to 31 May 2011.

Chief Financial OfficerOn 17 May 2010, John Davis gave notice of hisresignation from the Company and ceased to be anemployee and a director on 30 November 2010. Hereceived a payment of £357,357 in respect of hiscontractual notice period in relation to salary andbenefits (excluding bonus) in accordance with theterms of his service contract (applying the 5% earlypayment reduction).

John Davis also received a payment of £280,000under the 2010/2011 annual bonus scheme withrespect to the period between 1 April 2010 and30 November 2010 on the basis of the audited halfyear financial results of the Company and in respectof the remaining part of his notice period (ending on16 May 2011), the Remuneration Committeeauthorised payment of £85,722 at the on-target levelas provided for in his service contract (applying the5% early payment discount).

As permitted under the terms of the Executive ShareOption Scheme rules, the Remuneration Committeeallowed Mr Davis’ options to remain exercisableuntil the second anniversary of the end of his noticeperiod. As permitted under the rules of the DeferredBonus Plan, the Remuneration Committee allowedDeferred Awards to vest on the date of terminationand options to remain exercisable for six monthsthereafter. Under the terms of the Long-TermIncentive Plan, previously vested LTIP Optionsremained exercisable for a period of six monthsfrom the date of termination. All other awardsunder the LTIP and options under the SAYE planlapsed in accordance with the relevant rules.

PensionsPension details for former directors are shown onpage 47.

External directorshipsDuring John Davis’ period of employment within thereporting period, John Davis remained a non-executive director of Informa plc. He did not holdany other external directorships during this time.During Informa’s financial year ended 31 December2010, John received £56,000 in fees from Informaplc. He continued to hold 14,000 Informa sharespurchased at market value and during a rights issuein May 2009.




Governance

Performance graph

The graph above shows our performance relative tothe FTSE 250 index and FTSE SmallCap index. Weconsider this to be an appropriate comparison asYell was a constituent of both indices during thereporting year.

The graph also shows our performance relative toquoted media companies in the publishing sector.We consider this to be an appropriate comparisonas Yell is a classified advertising publisher.

We have prepared the performance graph inaccordance with the The Large and Medium-sizedCompanies and Groups (Accounts and Reports)Regulations 2008. The performance graph is not anindication of the likely vesting of awards grantedunder any incentive plans.

The non-executive directorsLetters of appointmentNon-executive directors each have a letter ofappointment setting out the details of theirappointment. Each has an initial term of twelvemonths and a three month notice period. The date

of appointment of each of the non-executivedirectors is shown below:

Director Date of appointment

Bob Wigley 24 July 2009Tim Bunting 18 May 2007 (resigned

9 February 2011)John Coghlan 1 July 2003Toby Coppel 12 October 2009Joachim Eberhardt 1 July 2003 (resigned

28 February 2011)Carlos Espinosa 18 May 2009Kathleen Flaherty 1 October 2010Richard Hooper 13 March 2006

Individual elements of their remunerationThe Company aims to pay non-executive directors amarket competitive rate.

In the year ended 31 March 2011, non-executivedirectors’ fees were as follows:

• Bob Wigley (as non-executive director andChairman), £250,000 per annum.

• Richard Hooper (as Senior Independent Director),£60,000 per annum.

• All other non-executive directors, £50,000 perannum.

A further fee of £10,000 per annum was paid toeach non-executive director who chaired acommittee and £5,000 per annum was paid forordinary membership of committees. Bob Wigleyhas waived his fee as member of the RemunerationCommittee and Chairman of the NominationCommittee.

Non-executive directors are not eligible toparticipate in the Company’s share plans and theCompany does not make any benefits available tothem under any other employment benefitarrangements or make any contributions to theirpersonal pension plans.

0

40

80

120

160

Yell GroupFTSE 250 Index

FTSE Small Cap IndexTSR Comparator Group

Mar06

Mar07

Mar08

Mar09

Mar10

Mar11




Audited informationRemuneration in the years ended 31 March 2011 and 31 March 2010

Performance Payment for Salary atSalary/fees related bonus loss of office Other benefits (d)(e)(f)(g) Total 1 April

£’000 2011 2010 2011(a)(b) 2010 2011(c) 2011 2010 2011 2010 2011

Executive directors

Mike Pocock(appointed1 December 2010) 208 – – – – 111 – 319 – 625

Tony Bates(appointed1 October 2010) 177 – – – – 52 – 229 – 425

John Condron(retired31 December 2010) 664 885 669 451 591 232 310 2,156 1,646 –

John Davis(ceased30 November 2010) 350 525 366 267 357 190 304 1,263 1,096 –

Non-executive directors

Bob Wigley 250 172 – – – 10 5 260 177

Tim Bunting(ceased9 February 2011) 50 55 – – – – – 50 55

John Coghlan 65 65 – – – – – 65 65

Toby Coppel 60 23 – – – – – 60 23

Joachim Eberhardt(ceased28 February 2011) 58 65 – – – – – 58 65

Carlos Espinosa 50 43 – – – – – 50 43

Kathleen Flaherty(appointed1 October 2010) 27 – – – – – – 27 –

Richard Hooper 70 69 – – – – – 70 69

(a) Current executive directors - as the Board had not signed off the new strategic plan at the date of this report, the bonus for financial year 2011 had not yetbeen agreed. Any bonus that the Remuneration Committee determines for the current executive directors for financial year 2011 will be disclosed in the 2012statutory accounts.

(b) Former executive directors - Bonus payment for John Condron covered period from 1 April 2010 to 31 May 2011. Bonus payment for John Davis coveredperiod from 1 April 2010 to 16 May 2011.

(c) In connection with John Condron’s departure, the following payments were made to John Condron in accordance with his legal rights: (i) payment of a cashsum equivalent to five months’ basic salary and benefits (including cash sums in lieu of pension contributions but excluding car allowance); and (ii) payment oflegal fees incurred by Mr Condron in connection with his departure arrangements. The figure also includes the value of Mr Condron’s company car,ownership of which was transferred to him. Mr Davis was paid a cash sum equivalent to five and one half months’ basic salary and benefits, to which a 5%discount was applied for accelerated receipt in accordance with his service agreement.

(d) Current executive directors’ benefits mainly comprise car allowance, private health and dental cover allowance, supplement in lieu of pension, relocationexpenses (Mike Pocock only) and financial advice allowance (Tony Bates only).

(e) Former executive directors’ benefits mainly comprise company cars, life assurance, private health cover, health club membership, security, computerequipment and allowances for personal tax and financial advice.

(f) With effect from 5 April 2006, the former executive directors elected to cease accruing benefits in the Yell Pension Plan (“UKPP”) Accordingly, since that datethey instead received cash payments calculated to be broadly equivalent to Yell’s cost of their future benefits had they continued accrual in the UKPP.

(g) Non-executive director’s car allowance.




Governance

Retirement benefits at 31 March 2011 and 31 March 2010 with respect to former directors

Changed in Change Change inAccrued benefit Accrued benefit accrued benefit in accrued benefit Transfer

2011 2010 during the year transfer net of inflation value ofOne-off One-off One-off Transfer Transfer value One-off change

Annual cash Annual cash Annual cash value at value at during Annual cash in£’000 pension sum pension sum pension sum 2011 2010 year(a) pension sum benefit

John Condron(b) 403 1,196 395 1,184 8 12 9,373 9,403 (30) – – –

John Davis(c) 97 – 97 – – – 1,543 1,450 93 – – –

(a) Net of member contributions. With effect from 1 March 2005, both John Condron and John Davis participated in ‘SMART pensions’. This is an option available

to all members of the UKPP, whereby members accept a reduction in their pay, in return for non-contributory membership. The reduction in each member’s

pay is equal to the contributions that the member would otherwise have paid. Yell’s contributions are increased by a corresponding amount.

(b) John Condron is a member of Section 2 of the UKPP and prior to 5 April 2006 he accrued a pension of 1/80th of his Final Pensionable Earnings for each year of

Pensionable Service. In addition, he accrued a one-off cash sum of 3/80th of his Final Pensionable Earnings for each year of Pensionable Service.

As a result of changes in the taxation of pensions after 5 April 2006, John Condron chose to cease accrual in the UKPP after that date, although his pension

and cash sum remain linked to his Final Pensionable Earnings at leaving, retirement or death. Since 5 April 2006, he has received cash payments of 27% of

Basic Salary per annum, a rate calculated to be broadly equivalent to Yell’s costs of his future benefits had he continued accrual in the UKPP. He left service on

31 December 2010.

(c) John Davis is a member of Section 3 of the UKPP. Until 5 April 2006, he was also a member of Section 1. Under each of those Sections, he accrued an annual

pension of 1/60th of his Final Pensionable Earnings up to the HM Revenue and Custom’s Earnings Cap for each year of pensionable service (total accrual of

1/30th each year). As he was subject to the Earnings Cap, John Davis also received part of this pension through an unfunded, unapproved pension promise.

This increased his overall entitlement to 1/30th of his Pension Scheme Salary for each complete year of Pensionable Service and in proportion for a part year.

To determine the transfer value of the unapproved pension we have used the standard cash equivalent transfer basis adopted by the UKPP.

As a result of changes in the taxation of pensions after 5 April 2006, John Davis chose to move his unapproved and Section 1 benefits into Section 3 of the

UKPP and then cease accrual in the UKPP after that date, although his pension remains linked to his Pension Scheme Salary at leaving, retirement or death.

Since 5 April 2006, he has received cash payments of 48% of basic salary per annum; this rate has been calculated to be broadly equivalent to Yell’s cost of his

future benefits had he continued accrual in the UKPP. For the purposes of the pension Mr Davis left service with Yell on 29 October 2010.




Share optionsThe information summarised in the table below shows the directors’ share options under the existing shareoption schemes and arrangements.

MarketAt price at

At 1 April 31 March Exercise date of Date fromType of 2010 Granted Exercised Lapsed 2011 price exercise which first Date ofoptions (number) (number) (number) (number) (number) (pence) (pence) exercisable expiry

Mike Pocock Appointment(a) - 3,000,000 – – 3,000,000 12.01 – 1 Dec 2013 30 Nov 2020

Tony Bates Appointment(a) - 2,000,000 – – 2,000,000 12.37 – 9 Nov 2013 8 Nov 2020

John Condron EXEC(b)(c) 905,220 – – – 905,220 273.20 – 15 Jul 2006 30 June 2011

SAYE(d) 2,322 – – 2,322 – 406.76 – 1 Nov 2009 1 May 2010

EXEC(c)(e)(f) 2,743,499 – – – 2,743,499 64.52 – 1 Jan 2011 30 June 2011

SAYE(d) 28,665 – – – 28,665 31.65 – 1 Jan 2011 30 June 2011

John Davis EXEC(b) (g) 559,590 – – – 559,590 273.42 – 15 Jul 2006 16 May 2013

SAYE(d) 11,371 – – 11,371 – 84.42 – 1 Nov 2011 30 Nov 2010

EXEC(e)(g) 1,627,449 – – – 1,627,499 64.52 – 1 Dec 2010 16 May 2013

(a) The extent to which the options will vest will depend upon the Company’s average share price, as follows:

Company’s average share price % of Options that shall become exercisable

Less than 32p 0%

£0.32 25%

£2.00 100%

and between these points on a straight line basis.

(b) Yell Group plc Executive Share Option Scheme. These options were granted on flotation. The extent to which the grants were exercisable was dependant

upon two conditions:

(i) the Company’s Earnings Per Share (EPS) growth in relation to the growth in EPS over a three year period. 100% of the grant became exercisable.

(ii) the Company’s Total Shareholder Return (TSR) growth in relation to the TSR growth of the companies making up the FTSE 100. 75% of the grant became

exercisable.

(c) In accordance with the rules of the Executive Share Option Scheme, John Condron is permitted six months from date of termination to exercise his option.

(d) Yell Group plc Sharesave Plan.

(e) Yell Group plc Executive Share Option Scheme. The extent to which options were exercisable was dependant on the ratio of Net Debt to EBITDA being less

than or equal to four, measured over a three year period.

(f) In accordance with the rules of the Executive Share Option Scheme, the performance condition was waived on retirement.

(g) Following Remuneration Committee approval, the performance condition was waived and John Davis is permitted until the second anniversary of the end of

his notice period within which to exercise his option.

The closing market price of an ordinary share on 31 March 2011 was 6.66 pence. During the year the highestand lowest market prices were 59 pence and 5.83 pence respectively.




Governance

Long-Term Incentive PlanThe information summarised in the table below shows the directors’ Long-Term Incentive Plan awards and options.

At 1 April At 31 March Market price2010 Granted Exercised Lapsed 2011 at date of

(number) (number) (number) (number) (number) grant (pence) Vesting date Date of expiry

Mike Pocock LTIP(a) – 12,159,533 – – 12,159,533 7.71 29 Mar 2014 28 Mar 2021

Tony Bates LTIP(a) – 8,268,482 – – 8,268,482 7.71 29 Mar 2014 28 Mar 2021

John Condron LTIP(b)(c) 166,961 – 166,961 – – 401.75 11 Nov 2007 30 June 2011

LTIP(c)(d) 68,123 – 68,123 – – 589 9 Nov 2009 30 June 2011

LTIP(e) 158,311 – – 158,311 – 419.75 n/a 8 Nov 2010

LTIP(f) 158,311 – – 158,311 – 419.75 n/a 8 Nov 2010

LTIP(g) 1,646,099 – 1,371,749 274,350 – 67.25 n/a 31 Dec 2010

LTIP(h) 3,870,907 – 1,505,352 2,365,555 – 40.01 n/a 31 Dec 2010

John Davis LTIP(b)(c) 96,322 – 96,322 – – 401.75 11 Nov 2007 30 May 2011

LTIP(c)(d) 40,701 – 40,701 – – 589 9 Nov 2009 30 May 2011

LTIP(e) 94,055 – – 94,055 – 419.75 n/a 8 Nov 2010

LTIP(f) 94,055 – – 94,055 – 419.75 n/a 8 Nov 2010

LTIP(i) 976,498 – – 976,498 – 67.25 n/a 30 Nov 2010

LTIP(j) 2,296,300 – – 2,296,300 – 40.01 n/a 30 Nov 2010

(a) The extent to which the award will vest is dependant on two sets of performance condition:(i) 50% of the award to vest subject to the achievement of Yell’s relative TSR growth against the constituents of the FTSE 250.(ii) 50% of the award to vest subject to the satisfaction of performance conditions based on the strategic plan.

(b) The extent to which the awards vested was dependant upon the Company’s TSR growth performance relative to the TSR growth of the FTSE 100 constituents(excluding investment trusts) over a three year period. 99% of this award vested subject to this performance condition and Remuneration Committeediscretion.

(c) John Condron exercised options on 23 March 2011 when the share price was 5.98 pence. John Davis exercised options on 14 March 2011 when the share pricewas 6.13 pence.

(d) The extent to which the awards vested was dependant upon the Company’s EPS growth in relation to the growth in RPI over a three year period. 64.56% ofthe award vested subject to this performance condition.

(e) The extent to which the awards vested was dependant upon the Company’s TSR growth relative to the TSR growth of the FTSE 100 constituents (excludinginvestment trusts) over a three year period. This performance condition was not achieved and the awards lapsed.

(f) The extent to which the awards vested was dependant upon the Company’s EPS growth in relation to growth in RPI, over a three year period. Thisperformance condition was not achieved and the awards lapsed.

(g) The extent to which the awards vested was dependant upon the Company’s TSR growth relative to the TSR growth of an international comparator group ofquoted publishing companies, over a three year period. Under the rules of the scheme, these awards lapsed on the cessation of employment. However, theRemuneration Committee exercised discretion on John Condron’s retirement and authorised the transfer of shares equivalent to the 2008 award, pro-rated ona time basis to 31 May 2011. The transfer of shares occurred on 23 March 2011 when the share price was 5.98 pence.

(h) The extent to which the awards vested was dependant upon the Company’s TSR growth relative to the TSR growth of the FTSE 250 contitutents, over a threeyear period. Under the rules of the scheme, these awards lapsed on cessation of employment. However, the Remuneration Committee exercised discretion onJohn Condron’s retirement and authorised the transfer of shares equivalent to the 2010 award, pro-rated on a time basis to 31 May 2011. The transfer ofshares occurred on 23 March 2011 when the share price was 5.98 pence.

(i) The extent to which the awards vested was dependant upon the Company’s TSR growth relative to the TSR growth of an international comparator group ofquoted publishing companies, over a three year period. Under the rules of the scheme, these awards lapsed on cessation of employment.

(j) The extent to which the awards vested was dependant upon the Company’s TSR growth relative to the TSR growth of the FTSE 250 constituents, over a threeyear period. Under the rules of the scheme, these awards lapsed on cessation of employment.




Deferred Bonus PlanThe information summarised in the table below shows the directors’ awards made under the Deferred Bonus Plan.

MarketAt price at

At 31 March date of1 April 2010 Awarded Released Lapsed 2011 grant Vesting Date of

(number) (number) (number) (number) (number) (pence) date expiry

Mike Pocock(a) – – – – – – – –

Tony Bates(a) – – – – – – – –

John Condron(b)(c) 31,642 – 31,642 – – 428.25 22 June 2008 30 June 2011

29,113 – 29,133 – – 490.50 23 June 2009 30 June 2011

138,533 – 138,533 – – 478.54 25 June 2010 30 June 2011

310,435 – 310,435 – – 91.17 1 Jan 2011 30 June 2011

– 354,827 354,827 – – 29.93 1 Jan 2011 30 June 2011

John Davis(b)(d) 18,255 – 18,255 – – 428.25 22 June 2008 31 May 2011

17,000 – 17,000 – – 490.50 23 June 2009 31 May 2011

82,771 – 82,771 – – 478.54 25 June 2010 31 May 2011

184,434 – 184,434 – – 91.17 1 Dec 2010 31 May 2011

– 210,491 210,491 – – 29.93 1 Dec 2010 31 May 2011

(a) Current executive directors - as the Board had not signed off the new strategic plan at the date of this report, the bonus has not yet been agreed. Any bonus

for FY11 which the Remuneration Committee determine, will be disclosed in the 2012 statutory accounts.

(b) A proportion of annual bonus was compulsorily deferred into shares for a period of three years. Awards made under the Deferred Bonus Plan were granted as

nil cost options and will lapse to the extent they are not exercised by the date of expiry.

(c) In accordance with the rules of the Deferred Bonus Plan, John Condron is permitted six months from the date of termination of employment to exercise his

options. John Condron chose to exercise his options on 23 March 2011 when the share price was 5.98 pence.

d) Following Remuneration Committee approval, John Davis is permitted six months from the date of termination of employment to exercise his options. John

Davis chose to exercise his options on 14 March 2011 when the share price was 6.13 pence.

Directors’ interestsThe directors’ beneficial and non-beneficial interests in shares in the Company at 31 March 2011 and at7 June 2011, the date of this document, are shown below.

7 June 2011 31 March 2011 1 April 2010(number) (number) (number)

Bob Wigley 537,407 537,407 390,780

Tony Bates – – –

Tim Bunting (resigned 9 February 2011) 458,400 458,400 458,400

John Coghlan 382,896 382,896 352,896

John Condron (retired 31 December 2010) 8,652,661 8,652,661 4,385,926

Toby Coppel 148,239 148,239 99,818

John Davis (resigned 30 November 2010) 1,658,856 1,658,856 1,008,882

Joachim Eberhardt (resigned 28 February 2011) 157,896 157,896 157,896

Carlos Espinosa 201,738 201,738 60,496

Kathleen Flaherty (appointed 1 October 2010) – – –

Richard Hooper 30,000 30,000 30,000

Mike Pocock – – –

On behalf of the Board

Toby CoppelChairman of the Remuneration Committee


Yell Group plc » Annual Report 2011 �1

Statement of application ofprinciples of the UK CorporateGovernance CodeThe following report details how the Board hasapplied the principles in the Financial ReportingCouncil’s 2008 Combined Code (the “Code”), asrequired by the UK Listing Rules. In June 2010, arevised code, the UK Corporate Governance Code,was published. Whilst reporting against theadditional and revised principles contained withinthe Code is not required until next year, the Boardhas measured its practices against it and identifiedwhere additional work will need to take place inthe next year. Consequently, the following reportincludes information on the application of theadditions and revisions to the Code.

Where we are not compliantThe Remuneration Committee composition hasfluctuated following recent appointments to andresignations from the Board. In the periods 1 April2010 to 29 July 2010, and 1 November 2010 to9 February 2011, it was compliant with the Code.The Committee members are currently Toby Coppel,Kathleen Flaherty and Bob Wigley. A thirdindependent non-executive director needs to beappointed to the Committee. During the periodswhen the Committee was not compliant with theCode, all decisions were ratified by the Board.

Where we were not compliant inthe period, but the matter hasnow been rectifiedThe Nomination Committee composition wasadjusted in the period and currently meets the UKCorporate Governance Code requirements. Themembers are John Coghlan, Toby Coppel, RichardHooper and Bob Wigley. John Condron was amember of the Committee until he ceased to bea director of the Company on 31 December 2010.

Until 29 June 2010, when Toby Coppel wasappointed to the Committee, the Committeecomposition was not in compliance with the Code,as independent non-executive directors composedhalf of the Committee membership, rather than amajority. John Condron was in attendance duringthe Committee meetings to discuss the appointmentof his successor as CEO of the Group, but due to thesubject matter, was not part of the quorum forthose meetings.

The BoardThe Board comprises two executive directors andsix non-executive directors. Five out of the sixnon-executive directors are considered independentby the Company. The Chairman, Bob Wigley, wasindependent upon his appointment.

The executive directors are Mike Pocock (CEO) andTony Bates (CFO).

Richard Hooper is the Senior Independent Director.Mr Hooper and all non-executive directors areavailable to shareholders who wish to raise issues.Richard Hooper aims to provide a sounding boardfor the Chairman and to serve as an intermediaryfor the other directors when necessary.Confirmation that he met this new Coderequirement will be sought at the next evaluation ofBoard effectiveness.

It has always been our policy that all directors standfor re-election (or, in the case of newly appointeddirectors, election) each year.

Biographies of all our directors seeking election orre-election at the 2011 Annual General Meetingappear on pages 26 to 29.

The Nomination Committee, on behalf of the Boardalso reviews the extent of our directors’commitments outside Yell, to ensure that thosecommitments are not detrimental to Yell or theefficiency of the Board. Both Mike Pocock and TonyBates (executive directors) are full-time directors ofcompanies within the Yell Group and have no othercommitments to external companies.

Governance



Statement of application of principles of the UK Corporate Governance Code continued

Details of our executive directors’ service contractsand our non-executive directors’ letters ofappointment can also be found in the Chairman ofthe Remuneration Committee report on pages 39 to50. Non-executive directors’ letters of appointmentset out fixed time commitments of at least one dayper month and all our directors are expected todemonstrate their commitment to the work of theBoard on an ongoing basis. In the case of ourChairman, his contracted time commitment is atleast 25 days per year, although during therefinancing and management succession, he hasbeen engaged on Yell business on considerablymore days than this.

Operation of the BoardThe Board has overall responsibility for leading andcontrolling Yell and is accountable to shareholdersfor financial and operational performance. OurBoard is also responsible for the open andtransparent communication of information relevantto this performance.

Our Board recognises the division in responsibilitybetween our Chairman (who ensures the effectiveworking of the Board) and our Chief ExecutiveOfficer (who runs the Company). The Board hasagreed and reviewed a schedule of matters reservedfor its decision, which includes the approval offinancial statements, significant acquisitions, Groupstrategy, and governance policies. The writtenschedule also sets out the extent of the variousdelegated authorities granted by our Board to ourcommittees and our senior management team.

Training and inductionOn joining the Group, both Mike and Tonyundertook a detailed induction programme. Thisincluded meeting individuals and teams across theGroup, meetings with our top investors, analysts,suppliers and members of the press, andaccompanying our Sales Consultants and meetingour customers.

The Company Secretary provided an induction packand briefing to all new directors, setting out theirdirectors’ duties and responsibilities, the terms ofreference of the Board and its Committees, andother regulatory and legal information.

Independent adviceOur directors are entitled to take independentprofessional advice, at Yell’s expense, about fulfillingtheir duties. Yell has also arranged appropriateDirectors’ and Officers’ insurance cover in respect oflegal action against the directors.

Meeting frequencyOur Board is scheduled to meet at least six times inany calendar year: January/February, March/April,May, July, September and November.




Governance

The following table shows the individual attendance by our directors at the Board and Committee meetings,during the reporting period ended 31 March 2011. Various ad hoc meetings held by telephone and sub-committee meetings are not detailed in the table below.

Audit Remuneration NominationBoard Committee Committee Committee

Attended Absent Attended Absent Attended Absent Attended Absent

Throughout reporting period

Bob Wigley 6 – 6 – 2 –

John Coghlan 6 – 4 – 2 –

Toby Coppel 5 1 6 – 1 –

Carlos Espinosa 5 1 1 –

Richard Hooper 5 1 4 – 2 –

Directors who joined in thereporting period

Tony Bates 3 –

Kathleen Flaherty 3 – 3 –

Mike Pocock 2 –

Directors who left in thereporting period

Tim Bunting 5 – 4 –

John Condron 4 –

John Davis 4 –

Joachim Eberhardt 6 – 4 – 2 –




CommitteesThe following Committees have been established under the overall direction of our Board. Each Committeehas written terms of reference that are published on our website at www.yellgroup.com. The chairmanship,membership and terms of reference of each Committee are reviewed on an annual basis.

The following table shows the chairman and members of each Committee.

Audit Remuneration NominationName Status Committee Committee Committee

Bob Wigley Chairman, Member Chairmannon-executive director

John Coghlan Independent, Chairman Membernon-executive director

Toby Coppel Independent, Chairman (promoted Membernon-executive director from member on

9 February 2011)

Carlos Espinosa Independent, Memberde los Monteros non-executive director (appointed

9 February 2011)

Kathleen Flaherty Independent, Membernon-executive director (appointed

1 November 2011)

Richard Hooper Non-executive, Member MemberSenior IndependentDirector



Governance

Relations with shareholdersYell is committed to ongoing communication with itsshareholders and other stakeholders. This wasachieved through:

• Regular dialogue and presentations throughoutthe year to our institutional investors. Thesepresentations were subsequently made availableon our website, www.yellgroup.com

• Yell’s Investor day, held on 20 May 2010 inLondon, attended by our Chairman, executivedirectors, Senior Independent Director and seniormanagement from all our operations.

• Engagement with major investors, following theappointment of our CEO and CFO.

• Consultation with major investors in relation tothe removal of the ABI 5% in ten years limit ondiscretionary share plans. The resolution (withexplanatory note) seeking full shareholderapproval of the change in plan rules can be foundat page 122.

• Our executive directors, Press Office, CompanySecretary’s office, investor relations and CRmanager engaging with stakeholders on widerissues relating to the Group.

• The issuing of quarterly, half year and full yearresults releases.

• Timely announcements made through the LondonStock Exchange regulatory news service, whereour shares are listed.

• Our Annual General Meeting, which gives all ourshareholders the opportunity to hear first handfrom our Board of Directors and to raisequestions. At our 2010 Annual General Meeting,our directors (including the Chairmen of eachCommittee) were present, and informally met withour shareholders after the meeting. All proposedresolutions are put to a poll vote. Shareholderswho might not be able to attend the meeting areencouraged to vote by proxy. The Annual GeneralMeeting voting results were published through theLondon Stock Exchange and on our websiteimmediately after the meeting.

• Sections dedicated to our shareholders on theCompany’s corporate website, www.yellgroup.com

Other statutory andregulatory informationPrincipal activitiesYell Group plc is the parent company of a Groupwhose principal activity is the sale of qualitybusiness leads and marketing solutions to SMEs inthe UK, US, Spain and some countries in LatinAmerica through an integrated portfolio of simple-to-use, cost effective advertising. Yell’s products areavailable through printed, online, telephone andmobile based media.

DividendsNo dividends were proposed to be paid toshareholders in the reporting period. Our focus onreducing our level of debt means that we are notin a position to consider reinstating the dividend.

Share capital and shareholder rightsYell’s share capital consists of ordinary shares of£0.01 each (‘Yell shares’), which are fully paid upand quoted on the London Stock Exchange. Fulldetails of the movements in the issued share capitalof Yell during the reporting period are provided innote 21 to the financial statements.

The holders of Yell shares are entitled to attend,speak and vote at any general meeting of Yell andto appoint a proxy or proxies to exercise theserights. At a general meeting, every shareholderpresent in person, by proxy or (in the case of acorporate member) by corporate representative,has one vote on a show of hands and on a pollhas one vote for every share held.

To decide who can attend or vote at a generalmeeting, the notice of the meeting can give a time,which must not be more than 48 hours before themeeting, by which shareholders must be entered onthe register in order to have the right to attend orvote at the meeting.

If a shareholder has been properly served withnotice under section 793 of the Companies Act 2006requiring information about interests in shares, andhas failed to supply such information within 14 days



Other statutory and regulatory information continued

after service of the notice, then the shareholder isnot entitled to attend and vote at a shareholdermeeting.

Where the participants under Yell’s employee shareplans may be the beneficial owners, but not theregistered owners of shares, the voting rights arenormally exercised at the discretion of theparticipants.

Holders of Yell shares may, by ordinary resolution,declare dividends but may not declare dividendsin excess of the amount recommended by thedirectors. The directors may also pay interimdividends if it appears that such dividends arejustified by the profits available for distribution.

Any shareholder may transfer all or any of hisshares in certificated form by instrument of transferin the usual common form or in any other form thatthe directors may approve. The transfer instrumentshall be signed by or on behalf of the transferorand, except in the case of fully-paid shares, by or onbehalf of the transferee. Where any class of share isfor the time being a participating security, title toshares of that class that are recorded as being heldin uncertificated form, may be transferred by therelevant system concerned.

The directors may in their absolute discretion refuseto register any transfer of shares in certificated form(being shares that are not fully paid or on which Yellhas a lien), provided that, if the share is listed on theOfficial List of the UK Listing Authority, such refusaldoes not prevent dealings in the shares from takingplace on an open and proper basis. The directorsmay also refuse to register a transfer of sharesunless the transfer instrument: (a) is lodged at theregistered office, or such other place as the directorsmay appoint, accompanied by the relevant sharecertificate(s); (b) is in respect of only one class ofshare; and (c) is in favour of not more than fourpersons jointly.

The directors may refuse to register the transfer of ashare in uncertificated form in any case where Yell isentitled to refuse under the Uncertificated Securities

Regulations 2001 to register the transfer, providedthat such refusal would not prevent dealings in theshares taking place on an open and proper basis.

No person holds Yell securities carrying specialrights with regard to control of Yell. Yell is not awareof any agreements between holders of securitiesthat may result in restrictions on the transfer ofsecurities or on voting rights.

Yell’s articles of association may only be amendedby a special resolution of Yell’s shareholders.

Significant agreementsOn 27 April 2006, Yell and certain of its subsidiaries,as borrowers, entered into a senior facilitiesagreement (the ‘Old Facilities Agreement’) withCitigroup Global Markets Limited, Deutsche BankAG, Goldman Sachs International and HSBC Bank plcand certain other financial institutions, as lenders,pursuant to which the lenders agreed to makeavailable to the Group certain term loans and arevolving credit facility, details of which are set outin note 18 to the financial statements. As part of therefinancing of Yell’s debt arrangements completedon 30 November 2009, the lenders under the OldFacilities Agreement agreed to exchange theirparticipations under the Old Facilities Agreement forindebtedness under a new facilities agreement (the‘New Facilities Agreement’), and the facilities madeavailable thereafter (the ‘New Facilities’), which wasentered into on 30 November 2009 between Yelland certain of its subsidiaries, as borrowers, HSBCBank plc, as facility agent and security trustee, andthose financial institutions who were party to theOld Facilities Agreement, as lenders. Under theterms of the New Facilities Agreement, lendersholding more than 66.66% of total commitmentscan cancel the New Facilities and require allamounts outstanding under the New FacilitiesAgreement to be immediately repaid if there is achange of control of Yell.

No other agreements that take effect, alter orterminate upon a change of control of Yell followinga takeover bid are considered to be significant interms of their potential effect on Yell’s business.




Governance

Details of the change of control provisions in Yell’semployee share plans may be found within note 26to the financial statements. There are no otheragreements between Yell and its directors otherthan in the service agreements of the executivedirectors or employees providing for additionalcompensation for loss of office or employment thatoccurs because of a takeover bid.

Substantial shareholdersYell maintains a record of substantial shareholdingsin accordance with the provisions of the Disclosureand Transparency Rules of the Financial Services

Authority. At 3 June 2011, Yell had receivednotifications from the following parties that theyhave an interest in 3% or more of the Company’sissued share capital:

Number of % of issuedShareholder voting rights share capital

Invesco Asset Management Ltd 567,618,591 23.97

Fidelity International Ltd 236,230,526 9.98

Standard Life Investments 188,644,242 7.97

Taube, Hodson & Stonex Partners 135,361,582 5.72

Deutsche Bank AG 120,932,192 5.11

Norges Bank 79,207,885 3.35

Directors, their powers and appointments, their interests and indemnity arrangementsOur directors will submit themselves for re-election (or in the case of newly appointed directors, election)at the Annual General Meeting on 21 July 2011. Biographical details of the directors seeking election orre-election are shown on page 26 onwards.

The table below shows directors of the Company during the year:Appointed Resigned

Bob Wigley Chairman 24 July 2009

Mike Pocock Chief Executive Officer 1 December 2010

Tony Bates Chief Financial Officer 1 November 2010

John Condron Chief Executive Officer 10 July 2003 31 December 2010

John Davis Chief Financial Officer 10 July 2003 30 November 2010

Tim Bunting Independent non-executive director 18 May 2007 9 February 2011

John Coghlan Independent non-executive director 1 July 2003

Toby Coppel Independent non-executive director 12 October 2009

Joe Eberhardt Independent non-executive director 1 July 2003 28 February 2011

Carlos Epinosa Independent non-executive director 18 May 2009

Kathleen Flaherty Independent non-executive director 1 October 2010

Richard Hooper Senior Independent Director 13 March 2006

resolutions were passed so that the directors of theCompany were authorised and sanctioned, inaccordance with article 146 of the Company’sarticles of association, to exceed the restriction ontheir powers to incur borrowings as set out in article146, provided that at any time the aggregateprincipal amount outstanding of all moneysborrowed by the Yell Group (the ‘Group’) may notexceed an amount equal to £4,920,000,000 (fourthousand nine hundred and twenty million pounds).This authority shall end at the conclusion of the 2011Annual General Meeting of the Company. For thesepurposes, moneys borrowed shall be determined in

The Board of directors is responsible for leading andcontrolling Yell and may exercise all the powers ofthe Company subject to the provisions of thememorandum and articles of association. Thedirectors must limit Yell’s borrowings and exercise allvoting and other rights or powers of controlexercisable by Yell in relation to its subsidiaryundertakings, so as to ensure that the total amountof all moneys borrowed by Yell and its subsidiaryundertakings outstanding at any time will notexceed five times the Adjusted Capital and Reserves(as defined in Yell’s articles of association) at thattime. At the 2009 Annual General Meeting,




accordance with articles 147 to 154 of the Company’sarticles of association except that foreign currencyborrowings shall be translated into sterling usingthe rates of £1=US$1.43280 and £1=€1.08130, beingthe relevant closing exchange rates on 31 March2009. A further resolution extending theauthorisation is sought at the 2011 Annual GeneralMeeting and full details can be found in the Noticeof AGM at page 119.

The directors require the approval of Yell’sshareholders in order to increase or reduce Yell’sshare capital or to buy back Yell shares.

Directors may be elected, removed and replacedby an ordinary resolution of the shareholders orappointed by the Board. A director appointed bythe Board shall retire and may be re-elected by theshareholders at the next Annual General Meetingafter his appointment.

At no time during the year did any director hold amaterial interest in any contract of significance withYell, or any of its subsidiary undertakings.

Our directors’ emoluments are disclosed onpage 46.

Details of our directors’ service contracts aredisclosed on pages 42 and 43.

The beneficial interests of our directors and theirimmediate families in Yell’s issued share capital aregiven on page 50. No director had a materialinterest at any time during the year in any derivativeor financial instrument relating to Yell’s shares otherthan as disclosed on page 50.

Yell amended its articles of association in July 2008to deal with the provisions in the Companies Act2006 on directors’ conflicts of interest. Theamendments included adding a provision to thearticles of association giving the Board power toapprove situations in which a director has aninterest that conflicts, or possibly may conflict, withthe interests of Yell. Since then, Yell has put in placeprocedures for the disclosure and review of any

conflicts, or potential conflicts, of interest and forthe authorisation of such conflict matters by theBoard. In deciding whether to authorise a conflict orpotential conflict the directors must have regard totheir general duties under the Companies Act 2006.

Article 224.1 of the Company’s articles of associationpermit the Company, subject to the Companies Act2006 and other applicable legislation, to indemnifyany of the directors against any loss or liability inconnection with any proven or alleged negligence,default, breach of duty or trust by him, in relation tothe Company or any of its subsidiaries. Inaccordance with this provision, in November 2009the Company entered into deeds of indemnity infavour of the current and former executive and non-executive directors and officers of the Company, itssubsidiaries and any other companies to which theCompany or any of its subsidiaries has nominated orappointed any such person as a director or officer.The deeds of indemnity, which remain in force, arequalifying third party indemnities for the purposesof section 234 of the Companies Act 2006.

Charitable donationsDuring the past financial year, Yell has madecharitable donations totalling £0.529m, (2010 –£0.675m), which support various community relatedcharities and projects.

Political donationsNo political donations were made during the year.

People with disabilitiesYell is an Equal Opportunities Employer. We arecommitted to the employment of people withdisabilities and guarantee an interview for thosewho meet minimum selection criteria. We providetraining and development for people withdisabilities, tailored where appropriate, to ensurethey have the opportunity to achieve their potential.If a Yell person becomes disabled while in ouremployment, we will do our best to retain them,including consulting them about their requirements,making appropriate adjustments, and providingalternative suitable provisions.




Governance

Information provision to our peopleWe seek feedback from our people on a wide rangeof topics through day-to-day contact, teammeetings and, in the UK, through our annualemployee feedback survey ‘Tell Yell’, where oursurvey results are benchmark best.

We also conduct an annual employee feedbacksurvey in the US and are working on improvementsto the workplace as a result.

Each year we make a significant investment inemployee communications to ensure that everybodyknows and understands Yell’s objectives, to ensureeveryone is kept up-to-date with progress againstplans, and to ensure comprehensive communicationof local and Group news.

Health and safetyWe are committed to providing our people with asafe and healthy working environment. We have ateam of professionals within Yell UK who manageour health and safety responsibilities. The teamdevelops and maintains our health and safetypolicies and procedures and provides guidance onsafe working.

Our people and our contractors are required toreport all health and safety incidents and accidentson our online system. In 2011, our accident rate forthe UK at 0.011 was extremely low.

Approach to share ownershipWe actively encourage our people to share in thefuture of Yell. An employee ShareSave schemeoperates in the UK, and a Stock Purchase Planoperates for our people in the US.

Financial instrumentsPlease see notes 16 and 17 to the financialstatements for details in relation to Yell’s use offinancial instruments.

Policy and practice on payment of creditorsIt is Yell’s policy to use its purchasing power fairlyand to pay promptly and as agreed. Payment terms

for purchases under major contracts are settled aspart of the contract negotiations. In the UK and US,it is Yell’s practice to make payments for otherpurchases at the end of the month following theend of the month in which a correct and validinvoice is received. In other countries in which weoperate, payment terms are usually longer and aredictated by local custom.

At 31 March 2011, trade payables represented28 days (2010 – 31 days) of purchases. Yell Group plchas no significant trade creditors.

Post-balance sheet eventsThere are no post-balance sheet events.

Purchase of own sharesYell is, until the date of the next Annual GeneralMeeting, generally and unconditionally authorisedto buy back up to 10% of its issued share capital at7 June 2010 (236,081,643 shares). No such purchasehas been made.

Going concernIn adopting the going concern basis for preparingthe financial statements, the directors haveconsidered the business activities as well as theGroup’s principal risks on pages 16 to 25. The Groupis in full compliance with the financial covenantsand undertakings contained in all its borrowingagreements and the Directors do not expect thatthere will be a covenant breach during the twelvemonths from 7 June 2011 to 7 June 2012. The Groupis cash generative and profitable. For these reasons,the Group continues to adopt the going concernbasis in preparing its financial statements.

Statement as to disclosure of information toauditorsEach director of Yell confirms that: (a) so far as he/sheis aware, there is no relevant audit information ofwhich Yell’s auditors are unaware; and (b) that he/shehas taken all the steps that he/she ought to have takenas a director in order to make himself/herself aware ofany relevant audit information and to establish thatYell’s auditors are aware of that information.




For these purposes, relevant audit informationmeans information needed by Yell’s auditors inconnection with preparing their report set out onpages 62 and 63.

AuditorsResolutions to reappoint PricewaterhouseCoopersLLP as auditors of Yell and to authorise thedirectors to determine their remuneration willbe proposed at the Annual General Meeting.PricewaterhouseCoopers LLP have confirmed theirwillingness to continue in office.

Annual General MeetingThe Notice of the Annual General Meeting, to beheld on 21 July 2011, together with an explanationof the business to be dealt with at the meeting,appears from page 119 onward.

By order of the Board

Christian WellsCompany Secretary7 June 2011

Description of directors’ responsibilities inrespect of the Annual Report, the Chairman ofthe Remuneration Committee report and thefinancial statementsThe directors are responsible for preparing theAnnual Report, the Chairman of the RemunerationCommittee report and the financial statements inaccordance with applicable law and regulations.Company law requires the directors to preparefinancial statements for each financial year. Underthat law the directors have elected to prepare theGroup and parent company financial statements inaccordance with International Financial ReportingStandards (IFRSs) as adopted by the EuropeanUnion and IFRSs as issued by the InternationalAccounting Standards Board (IASB). Under companylaw the directors must not approve the financialstatements unless they are satisfied that they give atrue and fair view of the state of affairs of the Groupand the Company and of the profit or loss of theGroup for that period. In preparing these financialstatements, the directors are required to:

• Select suitable accounting policies and then applythem consistently.

• Make judgements and accounting estimates thatare reasonable and prudent.

• State whether applicable IFRSs as adopted by theEuropean Union have been followed, subject toany material departures disclosed and explainedin the financial statements.

• Prepare the financial statements on a goingconcern basis unless it is inappropriate topresume that the Company will continue inbusiness.

The directors are responsible for keeping adequateaccounting records that are sufficient to show andexplain the Company’s transactions and disclosewith reasonable accuracy at any time the financialposition of the Company and the Group and enablethem to ensure that the financial statements andthe Chairman of the Remuneration Committeereport comply with the Companies Act 2006 and,


Yell Group plc » Annual Report 2011 �1


Governance

as regards the Group financial statements, Article 4of the IAS Regulation. They are also responsible forsafeguarding the assets of the Company and theGroup and hence for taking reasonable stepsfor the prevention and detection of fraud andother irregularities

The directors are responsible for the maintenanceand integrity of the Group’s website and financialstatements. Legislation in the United Kingdomgoverning the preparation and dissemination offinancial statements may differ from legislation inother jurisdictions.

Responsibility statementEach of the current directors, whose names andfunctions are set out on page 57 confirm that, tothe best of each person’s knowledge and belief:

• The financial statements, prepared in accordancewith IFRSs as adopted by the EU, give a true andfair view of the assets, liabilities, financial positionand profit of the Group and Company.

• The directors’ report contained in the AnnualReport includes a fair review of the developmentand performance of the business and the positionof the Company and Group, together with adescription of the principal risks and uncertaintiesthat they face.

The directors are responsible for the maintenanceand integrity of the Group website,www.yellgroup.com. Legislation in the UK governingthe preparation and dissemination of financialstatements may differ from legislation in otherjurisdictions.

Signed on behalf of the Board by:

Tony BatesDirector7 June 2011



We have audited the financial statements of YellGroup plc for the year ended 31 March 2011 whichcomprise the Group income statement, the Groupstatement of comprehensive income, the Group andCompany cash flow statements, the Group andCompany balance sheets, the Group statement ofchanges in equity, the Company statement ofchanges in equity and the related notes. Thefinancial reporting framework that has been appliedin their preparation is applicable law andInternational Financial Reporting Standards (IFRSs)as adopted by the European Union and, as regardsthe Parent Company financial statements, asapplied in accordance with the provisions of theCompanies Act 2006.

Respective responsibilities ofdirectors and auditorsAs explained more fully in the Directors’Responsibilities Statement set out on page 60, thedirectors are responsible for the preparation of thefinancial statements and for being satisfied thatthey give a true and fair view. Our responsibility isto audit and express an opinion on the financialstatements in accordance with applicable law andInternational Standards on Auditing (UK andIreland). Those standards require us to complywith the Auditing Practices Board’s Ethical Standardsfor Auditors.

This report, including the opinions, has beenprepared for and only for the Parent Company’smembers as a body in accordance with Chapter 3of Part 16 of the Companies Act 2006 and for noother purpose. We do not, in giving these opinions,accept or assume responsibility for any otherpurpose or to any other person to whom thisreport is shown or into whose hands it may comesave where expressly agreed by our prior consentin writing.

Scope of the audit of thefinancial statementsAn audit involves obtaining evidence about theamounts and disclosures in the financial statementssufficient to give reasonable assurance that the

financial statements are free from materialmisstatement, whether caused by fraud or error.This includes an assessment of: whether theaccounting policies are appropriate to the Group’sand the Parent Company’s circumstances and havebeen consistently applied and adequately disclosed;the reasonableness of significant accountingestimates made by the directors; and the overallpresentation of the financial statements. Inaddition, we read all the financial and non-financialinformation in the Annual Report to identifymaterial inconsistencies with the audited financialstatements. If we become aware of any apparentmaterial misstatements or inconsistencies weconsider the implications for our report.

Opinion on financialstatementsIn our opinion:• the financial statements give a true and fair view

of the state of the Group’s and of the ParentCompany’s affairs as at 31 March 2011 and of theGroup’s profit and Group’s and Parent Company’scash flows for the year then ended;

• the Group financial statements have beenproperly prepared in accordance with IFRSs asadopted by the European Union;

• the Parent Company financial statements havebeen properly prepared in accordance with IFRSsas adopted by the European Union and as appliedin accordance with the provisions of theCompanies Act 2006; and

• the financial statements have been preparedin accordance with the requirements of theCompanies Act 2006 and, as regards the Groupfinancial statements, Article 4 of the lASRegulation.

Separate opinion in relationto IFRSs as issued by theIASBAs explained in note 1 to the Group financialstatements, the Group in addition to complying withits legal obligation to apply IFRSs as adopted by theEuropean Union, has also applied IFRSs as issued bythe IASB.

Independent auditors’ report to themembers of Yell Group plc



Independent auditors’ report to the members of Yell Group plc continued

In our opinion the Group financial statementscomply with IFRSs as issued by the IASB.

Opinion on other mattersprescribed by the CompaniesAct 2006In our opinion:• the part of the Chairman of the Remuneration

Committee report to be audited has been properlyprepared in accordance with the Companies Act2006;

• the information given in the Directors’ Report forthe financial year for which the financialstatements are prepared is consistent with thefinancial statements; and

• the information given in the Principal risks sectionset out on page 16 with respect to internal controland risk management systems and theinformation given in the Other Statutory andRegulatory Information section on page 55 aboutshare capital structures is consistent with thefinancial statements.

Matters on which we arerequired to report byexceptionWe have nothing to report in respect of thefollowing:

Under the Companies Act 2006 we are required toreport to you if, in our opinion:• adequate accounting records have not been kept

by the Parent Company, or returns adequate forour audit have not been received from branchesnot visited by us; or

• the Parent Company financial statements andthe part of the Chairman of the RemunerationCommittee report to be audited are not inagreement with the accounting records andreturns; or

• certain disclosures of directors’ remunerationspecified by law are not made; or

• we have not received all the information andexplanations we require for our audit; or

• a corporate governance statement has not beenprepared by the Parent Company.

Under the Listing Rules we are required to review:• the directors’ statement, set out on page 59, in

relation to going concern;• the parts of the Statement of application of

principles of the UK corporate governance coderelating to the Parent Company’s compliance withthe nine provisions of the June 2008 CombinedCode specified for our review; and

• certain elements of the report to shareholdersby the Board on directors’ remuneration.

Emphasis of matter –uncertainty regardingcarrying value of goodwillIn forming our opinion on the financial statements,which is not modified, we have considered theadequacy of the disclosures made in note 8 to thefinancial statements concerning the carrying valueof goodwill. The carrying value, which is includedin the financial statements at £3,123.9m, requiressubstantial changes in the business arising from theimplementation of the directors’ strategic plan,including the development of material new incomestreams from consumer and small and medium-sized enterprise products. If the expected benefitsin the strategic plan, including significantly higherrevenues than the Group has historically achieved,either run later or in aggregate deliver less newvalue than currently expected, then the directorsmay need to include an impairment charge in thefuture. No provision for any impairment has beenmade in the current financial statements.

Pauline Campbell(Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLPChartered Accountants and Statutory AuditorsUxbridge

7 June 2011

FinancialStatements



Group income statement

Year ended 31 March

All figures in £m unless otherwise stated Notes 2011 2010

Revenue 2 1,877.6 2,122.7

Cost of sales (820.7) (955.3)

Gross profit 1,056.9 1,167.4

Distribution costs (76.6) (84.7)

Administrative expenses (650.4) (673.4)

Operating profit 2 329.9 409.3

Finance costs (265.5) (340.8)

Finance income 1.9 1.8

Net finance costs 4 (263.6) (339.0)

Profit before taxation 66.3 70.3

Taxation 5 (19.6) (23.5)

Profit for the year 46.7 46.8

Basic and diluted earnings per share

Basic 6 2.0p 3.4p

Diluted 6 2.0p 3.4p

Group statement of comprehensive income

Year ended 31 March

£m Notes 2011 2010

Profit for the year 46.7 46.8

Exchange loss on translation of foreign operations (47.0) (14.2)

Actuarial gain (loss) on defined benefit pension schemes 20 55.3 (58.8)

Gain in fair value of financial instruments used as hedges 22 89.4 99.9

Tax effect of net gains not recognised in the income statement 5 (37.2) (13.4)

Comprehensive income not recognised in the income statement 60.5 13.5

Total comprehensive income for the year 107.2 60.3

Financial statements



Financial statements continued

Group and Company cash flow statements

Year ended 31 March

Group Company

£m Notes 2011 2010 2011 2010

Net cash flows from operating activities

Cash generated from (used in) operations 611.6 753.3 (0.3) (0.3)

Interest paid (234.0) (302.9) – –

Purchase of interest rate caps – (11.6) – –

Interest received 1.9 0.8 0.5 25.8

Corporate income tax (paid) refunded (24.6) (30.1) 0.1 –

Net cash generated from operating activities 354.9 409.5 0.3 25.5

Cash flows from investing activities

Acquisition of subsidiary undertakings, net of cash acquired 23 (12.8) (4.1) – –

Increased investment in subsidiary undertakings – – – (317.4)

Purchase of property, plant and equipment and software (77.4) (63.2) – –

Loans made to Group companies – – (1.2) (346.4)

Net cash used in investing activities (90.2) (67.3) (1.2) (663.8)

Free cash flow 264.7 342.2 (0.9) (638.3)

Cash flows from financing activities

Net proceeds from share issues 0.8 637.8 0.8 637.8

Purchase of own shares (0.2) (18.3) – –

Treasury shares sold by trust – 0.1 – –

Repayment of borrowings (216.5) (719.5) – –

Net payments on revolving and short-term credit facilities (6.6) (69.2) – –

Financing fees paid (0.4) (60.6) – –

Net cash (used in) generated from financing activities (222.9) (229.7) 0.8 637.8

Net increase (decrease) in cash and cash equivalents 41.8 112.5 (0.1) (0.5)

Cash and cash equivalents at beginning of the year 160.4 51.1 0.1 0.6

Exchange losses on cash and cash equivalents (1.7) (3.2) – –

Cash and cash equivalents at year end 200.5 160.4 – 0.1

Cash generated from operations

Year ended 31 March

Group Company

£m 2011 2010 2011 2010

Profit for the year 46.7 46.8 25.3 19.1

Adjustments for:

Taxation 19.6 23.5 9.7 7.5

Finance income (1.9) (1.8) (35.3) (27.0)

Finance costs 265.5 340.8 – –

Depreciation of property, plant and equipment

and amortisation of software 63.0 65.1 – –

Amortisation of acquired other intangible assets 106.6 125.1 – –

Changes in working capital:

Inventory and directories in development 6.3 43.6 – –

Trade and other receivables 126.4 184.7 – –

Trade and other payables (40.7) (89.7) – 0.1

Share-based payments and other 20.1 15.2 – –

Cash generated from (used in) operations 611.6 753.3 (0.3) (0.3)

FinancialStatements




Group and Company balance sheets

At 31 March Group Company

£m Notes 2011 2010 2011 2010

Non-current assets

Goodwill 8 3,123.9 3,218.3 – –

Other intangible assets 9 1,157.0 1,266.9 – –

Property, plant and equipment 10 100.5 104.6 – –

Deferred tax assets 11 69.3 114.5 – –

Retirement benefit surplus 20 37.3 – –

Investments and other assets 12 9.9 7.0 1,787.4 1,787.4

Financial assets – derivative financial instruments 16 1.1 6.2 – –

Trade and other receivables 13,25 – – 1,046.1 1,005.5

Total non-current assets 4,499.0 4,717.5 2,833.5 2,792.9

Current assets

Inventory 14 10.4 8.9 – –

Directories in development 15 223.7 242.4 – –

Trade and other receivables 13 763.1 905.1 – 0.1

Financial assets – derivative financial instruments 16 0.6 1.9 – –

Cash and cash equivalents 17,18 200.5 160.4 – 0.1

Total current assets 1,198.3 1,318.7 – 0.2

Current liabilities

Financial liabilities – loans and other borrowings 18 (125.3) (54.6) – –

Financial liabilities – derivative financial instruments 16 (13.1) (97.8) – –

UK corporation and foreign income tax (73.4) (85.2) – –

Trade and other payables 19 (521.8) (534.1) – (0.1)

Total current liabilities (733.6) (771.7) – (0.1)

Net current assets 464.7 547.0 – 0.1

Non-current liabilities

Financial liabilities – loans and other borrowings 18 (2,840.3) (3,200.4) – –

Financial liabilities – derivative financial instruments 16 (2.1) (7.4) – –

Deferred tax liabilities 11 (592.0) (594.2) – –

Retirement benefit obligations 20 – (63.3) – –

Trade and other payables 19 (15.8) (13.6) – –

Total non-current liabilities (3,450.2) (3,878.9) – –

Net assets 1,513.5 1,385.6 2,833.5 2,793.0

Capital and reserves attributable to owners

Share capital 21 1,858.2 1,848.8 1,880.5 1,878.3

Other reserves 22 229.1 154.7 61.4 46.0

(Accumulated deficit) retained earnings (573.8) (617.9) 891.6 868.7

Total equity 1,513.5 1,385.6 2,833.5 2,793.0

Company registered in England and Wales No. 4180320.

The financial statements on pages 64 to 118 were approved by the Board of directors on 7 June 2011.

Mike Pocock Tony BatesDirector and Chief Executive Officer Director and Chief Financial Officer




Group statement of changes in equity

Share Other Accumulated£m capital reserves deficit Total

At 31 March 2009 1,226.5 128.9 (664.4) 691.0

Comprehensive income not recognised in the income statement – 13.5 – 13.5

Profit on ordinary activities after taxation – – 46.8 46.8

Total comprehensive income for 2010 – 13.5 46.8 60.3

Value of services provided in return for share-based payments – 15.2 – 15.2

Capital duty paid on additional share capital in Spanish holding company – (0.5) – (0.5)

Ordinary share capital issued to employees 1.9 (0.9) – 1.0

Treasury shares issued to employees 0.4 (0.1) (0.3) –

Own shares purchased by employee benefit trusts (18.3) – – (18.3)

Treasury shares sold by employee benefit trusts at a loss 1.5 (1.4) – 0.1

Share placings, net 636.8 – – 636.8

622.3 25.8 46.5 694.6

At 31 March 2010 1,848.8 154.7 (617.9) 1,385.6

Comprehensive income not recognised in the income statement – 60.5 – 60.5

Profit on ordinary activities after taxation – – 46.7 46.7

Total comprehensive income for 2011 – 60.5 46.7 107.2


Ordinary share capital issued to employees 2.2 (1.4) – 0.8

Treasury shares issued to employees 5.8 (3.2) (2.6) –

Own shares purchased by employee benefit trusts (0.2) – – (0.2)

Treasury shares sold by employee benefit trusts at a loss 1.6 (1.6) – –

9.4 74.4 44.1 127.9

At 31 March 2011 1,858.2 229.1 (573.8) 1,513.5

See notes 21 and 22 for a further analysis of share capital and other reserves.

FinancialStatements




Company statement of changes in equity

Share-based

Share payments Retained£m capital reserves earnings(a) Total

At 31 March 2009 1,239.6 31.8 849.9 2,121.3

Profit on ordinary activities after taxation(b) – – 19.1 19.1

Total comprehensive income for 2010 – – 19.1 19.1

Value of shares provided in return for share-based payments – 15.2 – 15.2

Ordinary share capital issued to employees(c) 1.9 (0.9) – 1.0

Treasury shares issued to employees – (0.1) (0.3) (0.4)

Share placings, net 636.8 – – 636.8

638.7 14.2 18.8 671.7

At 31 March 2010 1,878.3 46.0 868.7 2,793.0

Profit on ordinary activities after taxation(b) – – 25.3 25.3

Total comprehensive income for 2011 – – 25.3 25.3


Ordinary share capital issued to employees(c) 0.8 – – 0.8

Treasury shares issued to employees 1.4 (4.7) (2.5) (5.8)

2.2 15.4 22.8 40.4

At 31 March 2011 1,880.5 61.4 891.5 2,833.4

(a) Retained earnings include the capital reserve from which dividends have been paid.

(b) The directors have taken advantage of the exemption available under section 408 of the Companies Act 2006 and have not presented an income statement

for the Company alone.

(c) Ordinary share capital does not include 51.4m (2010 – 57.2m) of shares held by the ESOP and SIP trusts (see note 22).

See notes 21 and 22 for further analysis of share capital and other reserves.



Notes continued

FinancialStatements

Notes

1. Basis of preparation and consolidation,accounting policies and critical accountingestimates and judgements

Basis of preparation andconsolidationYell Group plc (the ‘Company’) is a public limitedcompany incorporated, listed and domiciled inthe UK.

The financial statements have been prepared underthe historical cost convention as modified by therevaluation of financial instruments (includingderivative instruments) at fair value in accordancewith International Financial Reporting Standards(IFRSs) as adopted by the European Union (EU),IFRSs as issued by the International AccountingStandards Board and the Companies Act 2006.Accordingly, these financial statements have beenprepared in accordance with IFRSs as adopted bythe EU and therefore comply with Article 4 of the EUIAS Resolution. A summary of the more importantGroup accounting policies is set out below.

The Group financial statements consolidate thefinancial statements of the Company and allsubsidiaries for the year ended 31 March 2011.

The directors have taken advantage of theexemption available under section 408 of theCompanies Act 2006 and have not presentedan Income Statement for the Company alone.

Where the financial statements of subsidiaryundertakings do not conform with the Group’saccounting policies, appropriate adjustments aremade on consolidation in order to present theGroup consolidated financial statements on aconsistent basis. All significant companies withinthe Yell Group during the period of ownership havecoterminous financial years. All transactionsbetween the Group’s businesses have beeneliminated in the preparation of these consolidatedfinancial statements. The results of companies andbusinesses acquired during the year are included inthe consolidated financial statements from theirrespective dates of acquisition. Intra-group

transactions, which have been eliminated onconsolidation of the Group, have not beendisclosed, other than those shown in note 25,Related party transactions.

The financial statements have been prepared on agoing concern basis. The Group is currently in fullcompliance with the financial covenants containedin all its borrowing agreements. The financialcovenants are explained on pages 20 and 21 of thisAnnual Report. The risks and uncertaintiesassociated with the debt covenants are discussed inthe sections ‘Primary risks’ and ‘Other risks’beginnning on page 16. These risks include strategicrisks, as well as debt and refinancing risks. A newstrategic direction for the Group may have a positiveeffect on these uncertainties. However, there is arisk that in the future the Group would need to resetits financial covenants with, or obtain a waiver fromits lenders, either of which would require a two-thirds majority vote.

If the Group were required but not able to reset itsfinancial covenants with, or obtain a waiver from,its lenders such that undertakings to the Group’slenders were breached, the lenders’ facility agentmay, and must if directed by two-thirds of lenders(by reference to debt held) demand immediaterepayment of all amounts due to them. Whilst thiseventuality would, if it arose, cast doubt on thefuture capital funding of the Group, the Group’scash flow forecasts show that in the twelve monthsending 31 March 2012 interest payments will be fullymet, with further cash generation to repay debt.

Brief details of principal subsidiary undertakings ateach year end, all of which are unlisted, are shownin note 12 to the financial statements.



Notes continued

Significant accounting policies(a) RevenueGroup revenue, after deduction of sales allowances,value added tax and other sales taxes, comprisesthe value of products provided by Groupundertakings. Revenue from classified directoriesand other directories, mainly comprising advertisingrevenue, is recognised in the income statementupon completion of delivery to the users of thedirectories. Other revenue, principally from internetand voice products, is recognised from the point atwhich service is first provided over the life of thecontract.

(b) Cost of salesCost of sales comprises the costs incurred indeveloping directories and other Group products.Provisions for impairment of trade receivables arealso included within cost of sales.

(c) AdvertisingThe Group expenses the costs of advertising its ownproducts and services as the costs are incurred.

(d) Finance costs and incomeFinance costs payable are charged as incurred usingthe effective interest rate basis. Finance income isrecognised on an accruals basis.

(e) Exceptional itemsExceptional items are transactions that by virtue oftheir incidence, size, nature, or combination of allthree, are disclosed separately in the notes to thefinancial statements.

(f) Foreign currenciesOn consolidation, the assets and liabilities of foreignundertakings are translated into sterling at year-endexchange rates. The results of foreign undertakingsare translated into sterling at average rates ofexchange for the year to the extent that these ratesapproximate the actual rates.

Exchange differences arising from the retranslationat period-end exchange rates of the net investmentin foreign undertakings, and on borrowings

designated as hedges of such investments, aretaken to equity through the statement ofcomprehensive income.

Trading transactions denominated in foreigncurrency are translated locally at the rate ofexchange when the transactions were entered into.Exchange differences are included in the incomestatement in the period in which they arise.

(g) GoodwillGoodwill arising from the purchase of subsidiaryundertakings represents the excess of the fair valueof the purchase consideration over the fair value ofthe net assets. Goodwill arising on acquisitions iscapitalised and is subject to impairment review,both annually and when there are indicationsthat the carrying value may not be recoverable.Goodwill is carried at cost less accumulatedimpairment losses.

(h) Other non-current intangible assetsOn the acquisition of a business, fair values areattributed to the assets and liabilities acquired.These net assets may include software developmentcosts, brand names, non-compete agreements,contracts, customer commitments and customerlists, all of which are recorded as intangible assetsand held at cost less accumulated amortisation.

Software, including internally developed software, isamortised on a straight-line basis over its usefuleconomic life, which does not generally exceed fouryears. Brand names are amortised on a straight-linebasis over their useful economic lives, which do notexceed 40 years. Non-compete agreements areamortised on a straight-line basis over the term ofthe agreement. Contracts are amortised on astraight-line basis over the term of the contract.Customer commitments are amortised as thedirectories to which the commitments relate arepublished. Customer lists are amortised on a basisthat takes into account the estimated customerretention rate at the date of acquisition. The usefuleconomic lives of customer lists do not generallyexceed eight years. The amortisation period andmethod are reviewed and adjusted, if appropriate,at each balance sheet date.

1. Basis of preparation and consolidation,accounting policies and critical accountingestimates and judgements continued



Notes continued

FinancialStatements

Internally developed software that is capitalisedincludes the employee costs of developing thesoftware and an appropriate portion of overheads.

(i) Property, plant and equipmentProperty, plant and equipment is stated at historicalcost less depreciation. Cost comprises the purchaseprice and other costs of bringing an asset into use.Depreciation is provided on property, plant andequipment on a straight-line basis from the timethey are available for use, so as to write off theircosts over their estimated useful economic livestaking into account any expected residual values.

Reviews are made annually of the estimatedremaining lives and residual values of individualproductive assets and adjusted prospectively, ifappropriate, taking account of commercial andtechnological obsolescence as well as normalwear and tear.

The estimated lives assigned to property, plant andequipment were:

Buildings 10 – 40 yearsLeasehold improvements Five years or life of lease

if less than five yearsOffice equipment Two to six yearsLand Not depreciated

(j) Asset impairmentAssets with indefinite useful lives are not subject toamortisation and instead are tested for impairmenton an annual basis and whenever events or changesin circumstances indicate that the carrying amountmay not be recoverable. Assets subject toamortisation are tested for impairment when anevent that might affect asset values has occurred.An impairment loss is recognised to the extent thatthe carrying amount cannot be recovered either byselling the asset or by the discounted futureearnings from operating the assets.

For the purposes of assessing impairment, assetsare grouped at the lowest level for which there areseparately identifiable cash flows (cash generatingunits, or CGUs). Where assets do not generateindependent cash flows and their carrying valuecannot be attributed to a particular CGU, CGUs aregrouped together at the level at which these assetsreside, and the carrying value of this group of CGUs

is compared with the recoverable amount of thatparticular group. The recoverable amount is thehigher of an asset’s fair value less cost to sell andvalue in use.

If an impairment loss is recognised for a CGU, it isallocated to reduce the carrying amounts of theassets of the unit in the following order:

i) First, to reduce the carrying amount of anygoodwill allocated to the CGU; and

ii) Then, to the other assets of the CGU pro rata onthe basis of the carrying amount of each assetin the CGU

If an asset’s fair value less costs to sell exceeds itscarrying amount before the impairment test of aCGU, then none of the impairment loss arising onthe impairment test is allocated to that asset.

(k) InvestmentsThe carrying value of the investments in subsidiaryundertakings in the financial statements of theCompany is based upon a valuation at 31 March2003. Under the transition rules of IFRS 1, thiscarrying value is deemed to be cost and is subjectto the policy on asset impairment.

Any impairment would be charged to the incomestatement account to the extent that it is notcovered by amounts previously credited toshareholders’ equity through the revaluationsurplus.

(l) Leased assetsRentals in respect of operating leases, under whichsubstantially all the benefits and risks of ownershipremain with the lessor, are charged to the incomestatement on a straight-line basis over the life ofthe lease.

Assets held under finance leases where substantiallyall the benefits and risks of ownership aretransferred to the Group are capitalised in property,plant and equipment at the present value of theminimum lease payments payable during the leaseterm and depreciated over the shorter of theiruseful economic lives or the lease term. The capitalelement of the future obligations under the lease isincluded as a liability in the consolidated balance



Notes continued

sheets, classified as appropriate as a payable duewithin or after one year. Lease payments are splitbetween capital and interest elements using theinterest rate implicit in the lease. Interest is chargedto the income statement.

(m) InventoryInventory is stated at the lower of cost and netrealisable value. Inventory comprises paper stocks.

(n) Directories in developmentThe cost of directories in development is recognisedas a current intangible asset where the costs directlyattributable to the development of the directory canbe measured reliably. When directories arelaunched on a non-paid basis the costs areexpensed as incurred. The development costs mainlycomprise the direct costs of certain personneldedicated to developing adverts and creating thecontent for directories, certain customercommitments in acquired businesses, artwork andother directory production and development costs,including appropriate and directly attributableoverheads. The asset is amortised to cost of saleswhen the related revenue is recognised oncompletion of delivery of the relevant advertising.

(o) Trade receivablesTrade receivables are recognised initially at fairvalue. A provision for impairment of tradereceivables is established when there is objectiveevidence that the Group will not be able to collectall amounts due according to the original terms ofreceivables. The provision is calculated byestimating future cash flows from trade receivableson the basis of historical loss experience.

(p) Cash and cash equivalentsCash and cash equivalents represent cash in hand,bank deposits repayable on demand, and othershort-term highly liquid readily convertible into cashinvestments with original maturities of three monthsor less.

(q) BorrowingsAll borrowings are initially stated at the fair valueof consideration received after deduction of issuecosts. Borrowings are subsequently stated atamortised cost. Issue costs are charged to theincome statement together with the coupon, asfinance costs, on a constant-yield basis over theterm of the borrowings, or over a shorter periodwhere the lender can require earlier repayment.

(r) Share capitalOrdinary shares are classified as equity.

Incremental costs directly attributable to the issueof new shares or options are shown in equity as adeduction, net of tax, from the proceeds.

The shares held in an ESOP Trust for employees untilissued are presented as treasury shares in the Groupbalance sheet. Where the Trust or any Groupcompany purchases the Company’s equity sharecapital (treasury shares), the consideration paid,including any directly attributable incremental costs(net of income taxes), is deducted from equity untilthe shares are cancelled, reissued or disposed.

(s) Employee benefitsThe Group expenses employee benefits as employeesrender the services that give rise to the benefits inaccordance with IAS 19, Employee Benefits.

The Group operated a defined benefit pensionscheme for its UK employees employed before1 October 2001 (sections 1, 2, and 3 of the ‘UKPP’),and operates defined contribution pension schemesfor its UK employees employed subsequent to1 October 2001 and its US employees. Yell closed itsdefined benefit scheme in the UK to future accrualon 31 March 2011, thus reducing Yell’s exposure tofuture changes in salaries and employee serviceyears. Employees employed before 1 October 2001became members of a defined contribution schemefrom 1 April 2011. There are no pension schemescurrently in place for Yell Publicidad employees.

All pension schemes are independent of the Group’sfinances. Actuarial valuations of the defined benefitscheme are carried out as determined by thetrustees at intervals of not more than three years,the rates of contribution payable and the pensioncost being determined on the advice of the




Notes continued

FinancialStatements

actuaries, having regard to the results of thesevaluations. In any intervening years, the actuariesreview the continuing appropriateness of thecontribution rates. The next full actuarial valuationwill be carried out as at 5 April 2011.

The balance sheet includes the surplus or deficit inthe defined benefit scheme taking assets at theiryear-end market values and liabilities at theiractuarially calculated values discounted at the year-end AA corporate bond interest rates. The cost ofbenefits accruing during the year in respect ofcurrent and past service is charged againstoperating profit. The expected return on theschemes’ assets and the increase in the presentvalue of the schemes’ liabilities arising from thepassage of time are included in other finance costsor income. Actuarial gains and losses on pensionschemes are recognised immediately in thestatement of comprehensive income.

Payments to the Group’s defined contributionschemes are charged against profit as incurred.

(t) Employee share schemesThe fair value of employee share-based payments iscalculated using the Black-Scholes model. Inaccordance with IFRS 2, Share-based Payments, theresulting cost is charged against income over thevesting period of the awards. The value of the chargeis adjusted to reflect expected and actual levels ofoptions vesting when the vesting conditions are notmarket related. When the ESOP trust acquires andholds shares of the Company, the Group presentsthem as a deduction (treasury shares) in arriving atowners’ funds. We account for the issuance oftreasury shares on a first-in, first-out basis.

(u) TaxationThe charge or credit for taxation is based on theprofit or loss for a year and takes into accountdeferred taxation where transactions or events giverise to temporary differences between the treatmentof certain items for taxation and for accountingpurposes. Provision is made in full for deferred taxliabilities. Deferred tax assets are recognised to theextent that it is probable that future taxable profitwill be available against which the benefit canbe realised.

Current tax is provided for the amounts expected tobe paid or recovered under the tax rates that havebeen enacted or substantially enacted by the balancesheet date. Deferred tax is measured at the tax ratesthat are expected to apply in the periods in which thetemporary differences are expected to reverse, basedon tax rates and laws that have been enacted orsubstantially enacted by the balance sheet date.Deferred tax assets and liabilities are not discounted.

No provision is made for unremitted earnings offoreign subsidiaries or temporary differencesrelating to investments in subsidiaries whererealisation of such differences can be controlled andis not probable in the foreseeable future.

(v) Financial assetsThe Group shows its financial assets as loans orreceivables where they are non-derivative with fixedor determinable prices and they are included incurrent assets. The Group has no non-derivativefinancial assets held at fair value through theincome statement as no such assets are held fortrading. All derivative assets are accounted for asset out below.

(w) Derivative financial instrumentsDerivatives are initially recognised at fair value onthe date a derivative contract is entered into andthe fair value is subsequently remeasured at periodend. The method of recognising the resulting gainor loss depends on whether the derivative isdesignated as a hedging instrument and, if so, thenature of the item being hedged. The Groupdesignates certain derivatives as either:

• Hedges of the fair value of recognised assets orliabilities or a firm commitment (fair value hedges).

• Hedges of highly probable forecast transactions(cash flow hedges).

• Hedges of net investments in foreign operations(net investment hedges).



Notes continued

The Group has not designated any derivatives asfair value hedges. Changes in the fair value ofderivatives that qualify as fair value hedges wouldbe recorded in the income statement, together withany changes in the fair value of the hedged asset orliability that are attributable to the hedged risk.

The effective portion of changes in the fair value ofderivatives that are designated and qualify as acash flow hedge is recognised in equity. The gain orloss relating to the ineffective portion is recognisedimmediately in the income statement. Amountsaccumulated in equity are recycled to the incomestatement in the period when the hedged itemaffects income (for instance, when the forecasttransaction that is hedged takes place).

Foreign currency borrowings are used as hedges fornet investments in foreign operations. Any gain orloss on foreign currency borrowings used as ahedge is recognised in equity.

Amounts deferred in equity or hedges of netinvestments are recycled when the underlyinginvestment is disposed of.

The Group does not hold or issue derivativefinancial instruments for speculative purposes.Changes in the fair value of derivative instrumentsor elements of derivative instruments that do notqualify for hedge accounting are recognisedimmediately in the income statement.

(x) DividendsInterim dividends are recognised when they arepaid. Final dividends are recognised when they areapproved by shareholders.

(y) Contingent liabilitiesThrough the normal course of business, Yell isinvolved in legal disputes, the settlement of whichmay involve cost to the Group. These costs areaccrued when payment is probable and associatedcosts can be reliably estimated.

Critical accounting estimates andjudgementsIn general, the Group’s accounting policies underIFRSs as adopted by the European Union areconsistent with those generally adopted by othersoperating within the same industry in the UK.

In preparing the consolidated financial statements,the Group’s management have made their bestestimates and judgements of certain amountsincluded in the financial statements, giving dueconsideration to materiality. The Group regularlyreviews these estimates and updates them whenrequired. Actual results could differ from theseestimates. Unless otherwise indicated, the Groupdoes not believe there is a great likelihood thatmaterially different amounts would be reportedrelated to the accounting policies described below.The Group has presented a description of the mostsignificant estimates, which require management tomake subjective and complex judgements, andmatters that are inherently uncertain on pages 22to 25.

Standards that have been adoptedduring the current periodIFRS 3, Business combinations (revised)The standard continues to apply the acquisitionmethod to business combinations, with somesignificant changes. For example, all payments topurchase a business are to be recorded at fair valueat the acquisition date, with some contingentpayments subsequently remeasured at fair valuethrough income. Goodwill may be calculated basedon the parent’s share of net assets or it may includegoodwill related to the non-controlling interest. Alltransaction costs will be expensed. The Group’saccounting policy on acquisitions has been changedto reflect the adoption of the standard.

The following standards, interpretations andamendments became effective and were notmaterial to the Group: Amendment to IFRIC 14,Amendments to IFRSs 2 and 9, Amendments to IASs24, 27, 32 and 39, IFRICS 15, 16, 17, 18 and 19 andAnnual improvements to IFRSs (2009 and 2010).




Notes continued

FinancialStatements

Standards, interpretations andamendments to publishedstandards that are not yet effectiveCertain new standards, amendments andinterpretations to existing standards have beenpublished that are mandatory for accounting periodsbeginning on or after 1 April 2011 or later periods butwhich the Group has chosen not to adopt early. Thenew standard that could be relevant to the Group’soperations is IFRS9, financial instruments. This is thefirst part of a new standard on classification andmeasurement of financial assets that will replaceIAS 39.

2. Segmental analysis and managementreporting

The principal activity of the Group is the sale ofquality business leads and marketing solutions tosmall and medium sized enterprises in the UnitedKingdom (UK), the United States (US), Spain andsome countries in Latin America through anintegrated portfolio of simple-to-use, cost effectiveadvertising. Yell’s products are available throughprinted, online, telephone and mobile based media.The Group’s operating segments, as reported to theChief Operating Decision Makers, the executivedirectors, are based on the management structure ofthe Group, which also approximates to thegeographical location of where these entitiesoperate. Segmental information is provided below inrespect of US (Yellowbook), UK (Yell UK and Adworksbusinesses), Spain and Latin America (YellPublicidad). Spain and Latin America are shownseparately in these notes as Latin America is makinga growing contribution to our results. Thegeographical analysis is stated on the basis of originof operations, although it would not be different hadit been stated on the basis of customer origin. TheGroup manages geographically its tradingoperations and working capital down to EBITDA andcentrally manages its group taxation and capitalstructure, including net equity and net debt. Thereare no material inter-segmental trading transactions.



Notes continued

2. Segmental analysis and management reporting continued

Year ended 31 March 2011

Latin Centrally£m US UK Spain America managed Total

Revenue

Revenue at constant exchange rates(a) 923.6 516.9 281.6 143.8 – 1,865.9

Change at constant exchange rates(a) (12.4)% (15.0)% (13.7)% 7.0% – (12.1)%

Effect of exchange rates(a) 23.4 – (11.8) 0.1 – 11.7

Net revenue 947.0 516.9 269.8 143.9 – 1,877.6

EBITDA

EBITDA at constant exchange rates(a) 210.9 159.5 89.7 52.0 – 512.1

Change at constant exchange rates(a) (16.7)% (29.2)% (5.7)% 12.6% – (17.3)%

Effect of exchange rates(a) 6.8 – (4.0) (1.3) – 1.5

EBITDA 217.7 159.5 85.7 50.7 – 513.6

EBITDA margin 23.0% 30.9% 31.8% 35.2% – 27.4%

Change in EBITDA (14.0)% (29.2)% (9.9)% 9.7% – (17.1)%

Exceptional (expenditure) credits(b) (3.0) 5.8 (12.1) (4.8) – (14.1)

Depreciation and amortisation charges (50.2) (23.4) (79.8) (16.2) – (169.6)

Operating profit (loss) 164.5 141.9 (6.2) 29.7 – 329.9

Net external finance costs – – – – (263.6) (263.6)

Profit (loss) before tax 164.5 141.9 (6.2) 29.7 (263.6) 66.3

Taxation – – – – (19.6) (19.6)

Profit (loss) after tax 164.5 141.9 (6.2) 29.7 (283.2) 46.7


Latin Centrally£m US UK Spain America managed Total

Net revenue 1,054.0 608.0 326.3 134.4 – 2,122.7

EBITDA 253.1 225.2 95.1 46.2 – 619.6

EBITDA margin 24.0% 37.0% 29.1% 34.4% – 29.2%

Exceptional credits (expenditure)(b) 3.8 (23.9) – – – (20.1)

Depreciation and amortisation charges (53.5) (25.9) (97.3) (13.5) – (190.2)

Operating profit (loss) 203.4 175.4 (2.2) 32.7 – 409.3

Net external finance costs – – – – (339.0) (339.0)

Profit (loss) before tax 203.4 175.4 (2.2) 32.7 (339.0) 70.3

Taxation – – – – (23.5) (23.5)

Profit (loss) after tax 203.4 175.4 (2.2) 32.7 (362.5) 46.8

(a) Constant exchange rate states current year results at the same exchange rate as that used to translate the previous year’s results. The effect of exchange rates is

the difference between the results reported at a constant exchange rate and the results using current year exchange rates.

(b) See note 7 for explanation of the exceptional items.



Notes continued

FinancialStatements


Latin£m US UK Spain America Total

Capital expenditure on:

Software, property, plant and equipment during the year 27.8 38.0 6.3 5.0 77.1

Other intangible assets during the year – – 0.3 – 0.3

Cash paid for capital expenditure 27.8 38.0 6.6 5.0 77.4

Increase (decrease) in accrued capital expenditure 0.6 (4.8) (1.0) – (5.2)

Additions to software, other intangible assets, property, plant andequipment during the year 28.4 33.2 5.6 5.0 72.2

Capital expenditure committed at the year end 5.7 1.5 – 4.5 11.7

Goodwill from acquisitions during the year 5.7 0.2 – – 5.9

Significant non-cash expenses relating to share-based payments 10.1 8.5 1.5 – 20.1


Latin£m US UK Spain America Total

Capital expenditure on:

Software, property, plant and equipment during the year 26.4 20.7 7.3 7.2 61.6

Other intangible assets during the year 1.6 – – – 1.6

Cash paid for capital expenditure 28.0 20.7 7.3 7.2 63.2

Increase (decrease) in accrued capital expenditure 0.4 4.3 – (0.2) 4.5

Additions to software, other intangible assets, property, plant andequipment during the year 28.4 25.0 7.3 7.0 67.7

Capital expenditure committed at the year end 4.4 4.8 0.2 5.0 14.4

Goodwill from acquisitions during the year 1.5 – – – 1.5

Significant non-cash expenses relating to share-based payments 7.3 7.0 0.9 – 15.2



Notes continued

Assets and liabilities by segmentAt 31 March 2011

Latin Centrally£m US UK Spain America managed(a) Total

Non-current assets 1,821.2 1,109.7 1,354.6 144.2 69.3 4,499.0

Total assets 2,313.4 1,356.4 1,518.8 238.9 269.8 5,697.3

Total liabilities (135.9) (229.1) (156.3) (31.5) (3,631.0) (4,183.8)

Net assets (liabilities) 2,177.5 1,127.3 1,362.5 207.4 (3,361.2) 1,513.5

At 31 March 2010

Latin Centrally£m US UK Spain America managed(a) Total

Non-current assets 1,939.0 1,062.6 1,282.1 319.3 114.5 4,717.5

Total assets 2,529.0 1,339.5 1,470.2 416.9 280.6 6,036.2

Total liabilities (145.7) (370.5) (153.8) (46.2) (3,934.4) (4,650.6)

Net assets (liabilities) 2,383.3 969.0 1,316.4 370.7 (3,653.8) 1,385.6

(a) The centrally managed assets and liabilities include net tax liabilities of £577.7m (2010 – £559.2m) and total net debt of £2,765.1m (2010 – £3,094.6m).

RevenuePrinted directories include our Yellowbook directories in the US, Yellow Pages directories in the UK, PáginasAmarillas in Spain and various directories in Latin America. Other products and services mainly compriseyellowbook.com, Yell.com, PaginasAmarillas.es, 118 24 7, and other digital media.

Year ended 31 March

£m 2011 2010

Printed directories 1,317.1 1,596.1

Digital media products and services 457.0 415.1

Other products and services 103.5 111.5

Group revenue 1,877.6 2,122.7



Notes continued

FinancialStatements

3. Employees

Year ended 31 March

2011 2010

Average monthly number of employees in the Group (including executive directors):

US 5,628 5,829

UK(a) 5,463 4,386

Spain 976 1,038

Latin America 1,347 1,356

Total employees 13,414 12,609

Marketing and sales 7,186 7,177

Other 6,228 5,432

Total employees 13,414 12,609

(a) Includes 2,575 Adworks employees (2010 – 1,460 employees).

£m 2011 2010

Staff costs for the Group during the year:

Wages and salaries 515.2 558.1

Social security costs 52.7 48.6

Other pension costs (note 20) 20.7 16.0

Severance costs 33.1 18.0

Exceptional credit on curtailment of defined benefit pension scheme (35.6) –

Share-based payments 20.1 15.2

Total staff costs payable for the year 606.2 655.9

Net change in staff costs deferred into directories in development 4.9 21.2

Total staff costs expensed to the income statement 611.1 677.1

The Company had nil employees in the year ended 31 March 2011 (2010 – nil).

Details of the Company’s various share option plans are given in note 26.

DirectorsYear ended 31 March

£m 2011 2010

Aggregate emoluments 4.7 3.3

Aggregate gains made on the exercise of share options 0.3 –

Total directors’ emoluments 5.0 3.3

As a result of changes in the taxation of pensions after 5 April 2006, cash payments have been made to twodirectors at a rate broadly equivalent to the cost of future benefit accruals. Details of individual directors’emoluments are given in the audited section of the Chairman of the Remuneration Committee report onpages 39 to 50, which forms part of these financial statements.



Notes continued

4. Net finance costs

Year ended 31 March

2011 2010

Senior bank debt and other credit lines 131.9 128.2

Underlying fair value losses on cash flow hedges transferred from equity 98.3 155.3

Amortisation of deferred finance fees 22.7 23.9

Underlying interest charges on credit facilities 252.9 307.4

Fair value losses on cash flow hedges transferred early from equity and treatedas exceptional (notes 6 and 7) – 17.2

Fair value charge for the time value of interest rate caps (note 6) 5.1 5.7

Net finance cost on retirement benefit obligations (note 20) 2.6 4.6

Other 4.9 5.9

Total finance costs 265.5 340.8

Finance income (1.9) (1.8)

Net finance costs 263.6 339.0

5. Taxation

The tax charge for the year is different from the standard rate of corporation tax in the United Kingdomof 28% (2010 – 28%). The differences are explained below:

Year ended 31 March

£m 2011 2010

Profit before taxation multiplied by the standard rate of corporation tax in the United Kingdom 18.6 19.7

Effects of:

Differing tax rates on foreign earnings 6.1 7.2

Deferred tax assets (recognised) not recognised (3.2) 5.1

Adjustments in respect of prior years (2.7) (10.5)

Exceptional deferred tax from tax rate changes (0.3) –

Other 1.1 2.0

Tax charge on profit before tax 19.6 23.5

Effective tax rate on profit before tax 29.6% 33.4%



Notes continued

FinancialStatements

The tax on the Group’s profit before tax is analysed as follows:

Year ended 31 March

£m 2011 2010

Current tax

Current year UK corporation tax 11.9 21.4

Current year foreign corporate income tax 0.6 23.8

Adjustments in respect of prior years (2.1) (16.8)

10.4 28.4

Deferred tax

UK 5.8 (0.6)

Foreign 3.4 (4.3)

Tax charge on profit before tax 19.6 23.5

Taxation (charged) credited directly to equity is as follows:

Year ended 31 March

£m 2011 2010

Current tax on actuarial losses 3.1 4.8

Deferred tax on actuarial (gains) losses (17.6) 11.7

Current tax arising on foreign exchange reserves 6.6 –

Deferred tax on fair valuations of financial instruments used as hedges (29.3) (30.0)

Deferred tax on share-based payments – 0.1

Total taxation recorded in equity (37.2) (13.4)

6. Earnings per share

Basic earnings per share (EPS) is calculated by dividing the earnings attributable to ordinary shareholders bythe weighted average number of ordinary shares in issue during the year. For diluted earnings per share, theweighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutivepotential ordinary shares. The Group has two classes of dilutive potential ordinary shares: those shareoptions granted to employees where the exercise price is less than the average market price of the ordinaryshares during the year and the contingently issuable shares under the Group’s Long-term Incentive Plan.


6. Earnings per share continued

Reconciliations of the earnings and weighted average number of shares used in the calculations are setout below.


Exceptional OtherAll values in £m unless otherwise stated Actual items(a) items(b) Adjusted

Operating profit 329.9 14.1 – 344.0

Amortisation of acquired intangibles – – 106.6 106.6

Net finance costs (263.6) – 5.1 (258.5)

Group profit before tax 66.3 14.1 111.7 192.1

Taxation (19.6) (4.1) (36.1) (59.8)

Group profit for the financial year 46.7 10.0 75.6 132.3

Weighted average number of issued and outstandingordinary shares (m) 2,304.9 2,304.9

Basic earnings per share (pence) 2.0 5.7

Effect of share options (pence) – –

Diluted earnings per share (pence) 2.0 5.7


Exceptional OtherAll values in £m unless otherwise stated Actual items(a) items(b) Adjusted

Operating profit 409.3 20.1 – 429.4

Amortisation of acquired intangibles – – 125.1 125.1

Net finance costs (339.0) 17.2 5.7 (316.1)

Group profit before tax 70.3 37.3 130.8 238.4

Taxation (23.5) (9.0) (42.1) (74.6)

Group profit for the financial year 46.8 28.3 88.7 163.8

Weighted average number of issued and outstandingordinary shares (m)(c) 1,384.9 1,384.9

Basic earnings per share (pence)(c) 3.4 11.8

Effect of share options (pence) – (0.1)

Diluted earnings per share (pence)(c) 3.4 11.7

(a) Details of exceptional items are set out in note 7.

(b) Other items include amortisation of acquired intangibles and the fair valuation charge for the time value of interest rate caps taken directly to the income

statement.

(c) The basic and diluted earnings per share reflect the firm placing of 785.9m shares and the placing and open offer of 785.9m shares on 30 November 2009.

The basic and adjusted diluted earnings per share for the year ended 31 March 2010 have been adjusted to reflect an adjustment to outstanding shares

arising from the discount in the firm placing and the placing and open offer of shares on 30 November 2009 as though the adjustment was effective

on 1 April 2008. The balance of the equity raising was taken into account from 30 November 2009.

Supplementary basic and diluted EPS have been calculated to exclude the effect of exceptionals and otheritems net of tax. The adjusted numbers have been provided in order that the underlying earnings of thebusiness operations can be fully appreciated.

The calculation of basic and diluted earnings per share is based on the profit for the relevant financial periodand on the weighted average share capital during that period.

Notes continued




Notes continued

FinancialStatements

7. Exceptional items

Exceptional items are transactions that by virtue of their incidence, size or a combination of both, aredisclosed separately.

Exceptional items comprise the following:

Year ended 31 March

£m 2011 2010

UK restructuring programme 29.8 23.9

Credit on curtailment of UK defined benefit scheme (note 20) (35.6) –

US restructuring programme 3.0 (1.2)

US net litigation accrual no longer required – (2.6)

Spain and Latin America restructuring programme 16.9 –

Costs of early settlement of interest rate hedge contracts to avoid overhedged position after early payment of bank debt – 17.2

Net exceptional expenses in Group profit before tax 14.1 37.3

Net tax credits (3.8) (9.0)

Effect of tax rate changes on deferred tax (0.3) –

Net exceptional expenses in Group profit after tax 10.0 28.3

8. Goodwill

Year ended 31 March

£m 2011 2010

Cost

Balance at beginning of year 4,502.5 4,651.7

Additions 5.9 1.5

Currency movements (107.6) (150.7)

Total cost at 31 March 4,400.8 4,502.5

Impairment

Balance at beginning of year (1,284.2) (1,322.5)

Currency movements 7.3 38.3

Total impairment at 31 March (1,276.9) (1,284.2)

Total net book value at 31 March 3,123.9 3,218.3

Goodwill and other intangible assets have been allocated to the Group’s cash generating units (CGUs), eachof which comprises all the operations based within a country.



Notes continued

8. Goodwill continued

Goodwill is not amortised but is tested for impairment at least annually. Yell determines the recoverableamount of a CGU using a discounted cash flow model. In previous years these were value-in-use calculationsusing cash flow projections based on financial plans approved by management covering a five year period indeveloped markets and longer in underdeveloped markets, reflecting the need to develop brand awarenessand to increase market penetration.

Yell is carrying out a strategic review and is anticipating a material change in its medium term financialperformance as a consequence of this strategic review. Yell management believe that estimating the fair valueless cost to sell of the CGUs is appropriate given the expected changes in the business. In the year ended31 March 2011, recoverable amounts were determined by estimating the fair market value of the operationsusing the latest Board reviewed preliminary four year cash flow projections from the ongoing strategic reviewand extrapolated for another six years reflecting the cash flows a willing market participant would assume incalculating fair value.

It should be noted that the change in the business will entail running the business increasingly as a Group,and therefore, the preliminary amounts used for the calculations involved an allocation of the benefits acrossthe CGUs. Group EBITDA and cashflows are expected to return to growth over the medium term. This growthwill require a substantial change in the business including the development of material new income streamsfrom consumer and SME products. Margins in digital market sectors are typically lower than those historicallyearned in print. Consequently, in order to deliver this growth, the Group will require significantly higherrevenues than have been historically achieved. If the expected benefits in the strategic plan either run later orin aggregate deliver less new value than currently expected, then the Group may need to consider animpairment charge in the future.

Cash flows beyond the ten year period are calculated using the terminal growth rates stated below. Inaddition, revenue growth over the ten year period ending 31 March 2021 is a key assumption in the 31 March2011 valuation as discusssed above. The carrying value of goodwill after impairments and the key assumptionsused for estimating the value of each CGU are as follows:

Detail by CGU US UK Spain Chile Peru Argentina Group(a)

2011

Carrying value of goodwill (£m) 1,681.7 1,012.0 272.4 79.4 43.1 35.3 3,123.9

Revenue compound annual growth rate 9.4% 12.8% 13.4% 11.5% 10.6% 8.4% 11.1%

Revenue terminal growth rate 2.0% 1.8% 2.1% 3.6% 3.8% 2.5% 1.7%

Post-tax discount rate 8.0% 9.0% 9.0% 9.0% 11.0% 15.0% 8.3%

2010

Carrying value of goodwill (£m) 1,771.5 1,011.8 274.5 76.6 44.9 39.0 3,218.3

Revenue terminal growth rate 2.0% 1.8% 2.1% 3.6% 3.8% 2.5% 1.4%

Pre-tax discount rate 11.6% 11.8% 11.9% 11.7% 13.9% 20.7% 12.2%

(a) The disclosed figures are presented as though the Group were one CGU.

The discounted cash flow calculations are sensitive to changes in the long-term growth rates and discountrates. The long-term growth rates used are consistent with the forecasts of long-term national growth ratesincluded in industry reports. The discount rates used are based on estimated weighted average costs ofcapital in each country before tax and reflect specific risks relating to the relevant segments.



Notes continued

FinancialStatements

The following table sets out how far certain assumptions would have to change before goodwill wouldbe impaired.

Detail by CGU US UK Spain Chile Peru Argentina Group(a)

2011

Percentage recoverable valuewould have to fall 16.3% 29.4% 6.3% 13.0% 23.7% 34.7% 23.1%

Percentage compound annualgrowth rates would have to fall 2.7% 5.0% 0.9% 1.9% 4.0% 8.0% 3.1%

Percentage terminal growthrates would have to fall 2.5% 7.1% 0.7% 1.4% 5.5% n/a 3.1%

Percentage post-tax discountrates would have to increase 1.3% 4.1% 0.4% 0.8% 2.2% 7.0% 1.5%

2010

Percentage recoverable valuewould have to fall 22.9% 55.8% 18.5% 35.5% 27.8% 57.9% 33.9%

Percentage all growth rateswould have to fall 1.7% 7.7% 1.5% 2.7% 2.5% 11.9% 3.0%

Percentage post-tax discountrates would have to increase 1.8% 8.8% 1.6% 2.8% 2.6% 13.8% 3.3%

(a) The disclosed figures are presented as though the Group were one CGU.



Notes continued

9. Other non-current intangible assets


Non- Customer Brand Other Software£m Contracts competes lists names(a) intangibles costs Total

Cost

Balance at beginning of year 60.0 14.4 626.1 1,022.6 1.6 193.4 1,918.1

Acquisitions – – 2.3 0.8 0.5 0.4 4.0

Additions – – – – 0.3 42.4 42.7

Disposals and write offs – – – – (0.9) (12.5) (13.4)

Currency movements (2.1) (0.2) (16.8) (6.0) – (4.3) (29.4)

Total cost at 31 March 57.9 14.2 611.6 1,017.4 1.5 219.4 1,922.0

Amortisation

Balance at beginning of year 17.4 14.2 374.1 124.7 1.2 119.6 651.2

Charge for the year 10.1 – 65.7 30.1 0.7 32.3 138.9

Disposals and write offs – – – – (0.5) (11.8) (12.3)

Currency movements – – (9.5) (0.5) (0.2) (2.6) (12.8)

Accumulated amortisation at 31 March 27.5 14.2 430.3 154.3 1.2 137.5 765.0

Net book value at 31 March 30.4 – 181.3 863.1 0.3 81.9 1,157.0


Non- Customer Brand Other Software£m Contracts competes lists names(a) intangibles costs Total

Cost

Balance at beginning of year 62.6 14.9 651.9 1,051.5 – 171.7 1,952.6

Acquisitions – – 0.7 – 1.3 – 2.0

Additions – – – – 1.6 44.1 45.7

Disposals – – – – (1.4) (18.0) (19.4)

Currency movements (2.6) (0.5) (26.5) (28.9) 0.1 (4.4) (62.8)

Total cost at 31 March 60.0 14.4 626.1 1,022.6 1.6 193.4 1,918.1

Amortisation

Balance at beginning of year 13.0 13.0 299.0 96.8 – 107.3 529.1

Charge for the year 4.8 1.6 85.7 30.5 2.5 32.6 157.7

Disposals – – – – (1.4) (18.0) (19.4)

Currency movements (0.4) (0.4) (10.6) (2.6) 0.1 (2.3) (16.2)

Accumulated amortisation at 31 March 17.4 14.2 374.1 124.7 1.2 119.6 651.2

Net book value at 31 March 42.6 0.2 252.0 897.9 0.4 73.8 1,266.9

(a) Brand names have, on average, approximately a remaining economical useful life of thirty years before being fully amortised.

See note 8 for details of value-in-use calculations for cash generating units.



Notes continued

FinancialStatements

10. Property, plant and equipment

Property, plant and equipment is summarised as follows:


Leasehold Computersimprove- and

£m Land Buildings ments equipment Total

Cost

Balance at beginning of year 17.3 32.4 27.6 179.9 257.2

Additions – 0.4 9.9 19.2 29.5

Acquisitions – – 0.2 0.1 0.3

Disposals and write offs (0.3) – (1.8) (32.0) (34.1)

Currency movements (0.3) (1.0) (0.7) (4.7) (6.7)

Total cost at 31 March 16.7 31.8 35.2 162.5 246.2

Depreciation

Balance at beginning of year – 5.2 13.4 134.0 152.6

Charge for the year – 1.1 5.4 24.2 30.7

Disposals and write offs – – (1.6) (31.4) (33.0)

Currency movements – (0.1) (0.3) (4.2) (4.6)

Total depreciation at 31 March – 6.2 16.9 122.6 145.7

Net book value at 31 March 16.7 25.6 18.3 39.9 100.5


Leasehold Computersimprove- and

£m Land Buildings ments equipment Total

Cost

Balance at beginning of year 17.9 33.9 28.5 184.7 265.0

Additions – – 2.6 19.4 22.0

Disposals and write offs – (0.1) (2.5) (18.0) (20.6)

Currency movements (0.6) (1.4) (1.0) (6.2) (9.2)

Total cost at 31 March 17.3 32.4 27.6 179.9 257.2

Depreciation

Balance at beginning of year – 4.4 10.5 130.3 145.2

Charge for the year – 1.1 5.5 25.9 32.5

Disposals and write offs – (0.1) (2.4) (17.5) (20.0)

Currency movements – (0.2) (0.2) (4.7) (5.1)

Total depreciation at 31 March – 5.2 13.4 134.0 152.6

Net book value at 31 March 17.3 27.2 14.2 45.9 104.6

The net book value of property, plant and equipment included amounts of £0.2m (2010 – £3.2m) in respect ofassets held under finance leases.



Notes continued

11. Deferred taxation

Deferred tax assetsYear ended 31 March

£m 2011 2010

Balance at beginning of year 114.5 142.6

Charged to income statement (4.8) (4.0)

Charged directly to equity (37.2) (18.1)

Reclassifications – 0.2


Balance at 31 March 69.3 114.5

The elements of all net deferred tax assets recognised in the financial statements, including the cumulativeeffect of net operating losses, were as follows:

At 31 March

£m 2011 2010

Tax effect of timing differences due to:

Bad debt provisions 30.3 34.8

Other allowances and accrued expenses 13.4 12.3

Depreciation 7.9 7.8

Financial instruments 5.2 35.4


Recognition of revenue and expenses 0.8 1.0

Recognised tax net operating losses 0.2 0.2

Defined benefit pension scheme – 17.7

Other 10.6 3.1

Recognised deferred tax assets 69.3 114.5

Deferred income tax assets are recognised to the extent that the realisation of the related tax benefitthrough future taxable profits is probable. The Group did not recognise deferred income tax assets of£378.6m (2010 – £386.1m) in respect of tax loss carry forwards of £1,261.7m (2010 – £1,286.7m). The benefitsavailable in respect of £1,258.2m of these tax loss carry forwards expire between 2021 and 2026 if not usedand the remaining £3.5m do not time expire.



Notes continued

FinancialStatements

Deferred tax liabilitiesYear ended 31 March

£m 2011 2010

Balance at beginning of year 594.2 624.8

Charged (credited) to income statement 4.4 (8.9)

Charged directly to equity 9.8 0.1


Balance at 31 March 592.0 594.2

The elements of all net deferred tax liabilities recognised in the financial statements were as follows:

At 31 March

£m 2011 2010

Tax effect of timing differences due to:

Intangible assets 510.2 522.4

Directories in development 30.5 32.3

Deferred selling costs 12.4 13.2

Unremitted earnings 12.0 10.0

Defined benefit pension scheme 9.8 –

Recognition of revenue and expenses 2.3 2.2

Financial instruments 0.3 0.3

Other 14.5 13.8

Recognised deferred tax liabilities 592.0 594.2

During the year, legislation to reduce the UK corporation tax rate from 28% to 26% with effect from 1 April2011 was substantively enacted at the balance sheet date. The effect of this change has been to reducedeferred tax assets by £1.2m and deferred tax liabilities by £1.4m, reduce profit after tax by £0.4m in the yearand increase other comprehensive income not recognised in the income statement by £0.6m.

In addition, a number of further reductions in the UK corporation tax rate were announced in the March 2011Budget Statement. Legislation to reduce the main rate of corporation tax from 26% to 25% from 1 April 2012is expected to be included in the Finance Act 2011. Further legislation would reduce the rate by 1% per annumto 23% by 1 April 2014. These further changes had not been substantively enacted at the balance sheet dateand, therefore, are not included in these financial statements.

The proposed further 1% per annum reductions to the main rate of UK corporation tax are expected to beenacted separately in advance of each affected year. The estimated overall effect of these proposed ratereductions, if applied to the deferred tax balances at 31 March 2011, would be to reduce deferred tax assetsby £0.6m (being, if enacted when expected, £0.2m in each of the years ending 31 March 2012, 2013 and 2014)and to reduce deferred tax liabilities by £0.6m (being, if enacted when expected, £0.2m in each of the yearsending 31 March 2012, 2013 and 2014).

During the year, legislation was enacted to increase the corporate income tax rate in Chile from 17% to 20%effective from 1 January 2011, then reduce it to 18.5% from 1 January 2012 and back to 17% from 1 January2013. The effect of these changes has been to increase deferred tax assets by £0.8m, deferred tax liabilitiesby £0.1m and profit after tax by £0.7m in the period.


12. Investments and other assets

Year ended 31 March

Group Company

£m 2011 2010 2011 2010

Shares in Group undertakings

Balance at beginning of year – – 1,787.4 1,470.0

Additions – – – 317.4

Balance at end of year – – 1,787.4 1,787.4

Investments and other assets(a)

Balance at beginning of year 7.0 6.5 – –

Additions 4.3 2.5 – –

Write offs (1.4) (2.0) – –

Balance at end of year 9.9 7.0 – –

Total investments and other assets 9.9 7.0 1,787.4 1,787.4

(a) Investments and other assets include deferred finance costs on our revolving credit facilities.

Subsidiary undertakingsBrief details of principal subsidiary undertakings at 31 March 2011 and 2010 (unless otherwise noted), all ofwhich are unlisted, are as follows:

Group interest inActivity allotted capital(a) Countries of operation(b)

Yell Finance BV(c) Intermediate holding company 100% ordinary United Kingdom

Yell Limited Classified advertising publisher 100% ordinary United Kingdom

Yell Finance (UK) Limited(d) Intermediate finance company 100% ordinary United Kingdom

Yellowbook, Inc. Classified advertising publisher 100% common United States of America

YB (USA) LLC(d) Intermediate finance company 100% common United States of America

Yell Publicidad S.A.U. Classified advertising publisher 100% ordinary Spain

Yell Finance S.A.U.(d) Intermediate finance company 100% ordinary Spain

(a) The proportion of voting rights held corresponds to the aggregate interest percentage held by the Company and subsidiary undertakings, unless otherwise

stated.

(b) Incorporated in its country of operation except Yell Finance BV, which is incorporated in The Netherlands.

(c) Directly held by the Company.

(d) Incorporated during the 2010 financial year.

All significant subsidiary undertakings have the same year end as the Company and all the above companieshave been included in the Group consolidation. The companies listed include those that materially affect theamount of net profit and net assets of the Group. A full list of all the Group’s subsidiary undertakings at thedate of this document is available for inspection at the registered office of the Company.

Notes continued




Notes continued

FinancialStatements

13. Trade and other receivables

At 31 March

Group Company

£m 2011 2010 2011 2010

Amounts falling due within one year

Net trade receivables 677.5 817.7 – –

Other receivables 17.8 25.0 – –

Accrued income 29.9 36.7 – –

Prepayments 19.5 20.0 – 0.1

Corporate income tax recoverable 18.4 5.7 – –

763.1 905.1 – 0.1

Amounts falling due after more than one year

Amounts owed by Group undertakings – – 1,046.1 1,005.5

Total trade and other receivables 763.1 905.1 1,046.1 1,005.6

Trade receivables are non-interest bearing and generally have terms of between thirty days and ten months.Due to their short maturities and the non-interest bearing nature of these financial assets, the fair value oftrade and other receivables approximates their book value. The maximum exposure to credit risk at thereporting date is the fair value of each class of receivable mentioned above. Concentrations of credit riskwith respect to trade receivables are limited due to the Group’s customer base being large, geographicallydiverse and unrelated. The Group does not hold any collateral as security.

The carrying amounts of trade and other receivables, other than recoverable taxation, are denominated inthe following currencies, which are the functional currency of the respective subsidiaries. We do not have anyother significant exposure to currency risk on these amounts.

At 31 March

Group Company

£m 2011 2010 2011 2010

Sterling 202.6 222.3 1,046.1 1,005.6

US dollar 319.2 427.7 – –

Euro 138.2 151.8 – –

Latin America(a) 84.7 97.6 – –

Total receivables 744.7 899.4 1,046.1 1,005.6

(a) Latin American currencies are those of Chile, Peru and Argentina.

The carrying amounts of the Group’s trade receivables and accrued income are stated after deducting aprovision of £168.5m at 31 March 2011 (2010 – £214.6m) for doubtful debts and sales allowances. The carryingamount of the Company’s receivable from group undertakings is stated after deducting a provision of £22.2mat 31 March 2011 (2010 – £22.2m).



Notes continued

13. Trade and other receivables continued

The movements in the provision for doubtful debts were as follows for the years ended 31 March 2011and 2010:

Group Company

£m 2011 2010 2011 2010

At beginning of year 214.6 205.4 22.2 22.2

Charged to income statement 92.7 161.9 – –

Write offs/exchange movement (138.8) (152.7) – –

Balance at 31 March 168.5 214.6 22.2 22.2

The Company has no trade receivables. The gross receivables of £1,068.3m in the Company are notconsidered to be past due.

Trade receivables can become impaired, generally when customers are in financial distress, before beingconsidered uncollectible.

Trade receivables are considered impaired only after completion of collection processes designed locally tocollect monies from slow payers or, if earlier, when amounts are more than one year past due. At 31 March2011, the carrying value and estimated recoverable amount of trade receivables past due and impaired was£6.2m (2010 – £5.5m), after deducting the related provision of £72.7m (2010 – £91.1m) for doubtful debts. Theageing analysis of the £78.9m (2010 – £96.6m) gross trade receivables past due and impaired is as follows:

At 31 March

£m 2011 2010

Up to one month past due 0.7 0.7

One to three months past due 1.6 1.7

Three to nine months past due 8.5 10.4

Over nine months past due 68.1 83.8

Total gross receivables past due and impaired 78.9 96.6

The other classes of receivables do not contain impaired assets.

At 31 March 2011, gross trade receivables of £140.6m (2010 – £209.2m) were past due but not impaired. Theageing analysis of these gross trade receivables is as follows:

At 31 March

£m 2011 2010

Up to one month past due 53.7 71.8

One to three months past due 36.1 56.5

Three to nine months past due 40.8 58.8

Over nine months past due 10.0 22.1

Total gross receivables past due but not impaired 140.6 209.2



Notes continued

FinancialStatements

The credit quality of trade receivables past due but not impaired is assessed using a statistical approach todetermine the historical allowance rate for each ageing tranche. This allowance rate is then applied to thedebt tranches at the end of the reporting period and a provision for doubtful debts recognised. At 31 March2011, £62.0m (2010 – £78.9m) of the total provision for doubtful debts related to trade receivables that arepast due but not impaired.

Trade receivables not yet due of £626.5m (2010 – £726.5m) have a provision of £33.8m (2010 – £44.6m) setagainst them. The Group does not hold any collateral as security.

14. Inventory

Inventory comprises paper stocks of £10.4m (2010 – £8.9m), which are recognised as an expense when booksare completed. The cost of paper recognised as an expense and included in cost of sales amounted to£93.5m (2010 – £112.0m).

15. Directories in development

£m 2011 2010

Cost at beginning of year 242.4 291.9

Additions 556.4 569.6

Amortisation into cost of sales (566.2) (606.9)


Cost at 31 March 223.7 242.4

16. Derivative financial instruments and hedging activities

The Group’s approach to management of financial risks together with sensitivity analysis is set out onpages 20 to 25.

The Group has entered into interest rate swaps and caps for the purpose of hedging future floating interestrate movements on its term bank debt. The Group has fixed or capped interest rates on around 74% of theinterest rate exposure on the indebtedness under the senior credit facilities using interest rate swaps over theperiod to December 2011 and around 52% to December 2012. The Group has also entered into foreignexchange contracts to hedge known cross-border cash flows early in the next financial year.



Notes continued

16. Derivative financial instruments and hedging activities continued

The hedges give rise to the following balances reported on the balance sheet:

At 31 March

2011 2010

Fair Fair£m Book value value(a) Book value value(a)

Derivatives(b)

Interest rate caps – Non-current assets 1.1 1.1 6.2 6.2

Foreign exchange contracts – Current assets 0.6 0.6 1.9 1.9

– Current liabilities – – (0.6) (0.6)

Interest rate swaps – Current liabilities (13.1) (13.1) (97.2) (97.2)

– Non-current liabilities (2.1) (2.1) (7.4) (7.4)

(a) The fair values of the derivative financial instruments are the amounts at which the instruments could be exchanged in a current transaction between willing

parties, other than in forced liquidation or sale.

(b) The gross notional amount of interest rate swaps and caps was £3.6bn fixing rates on average for 324 days (2010 – £11.5bn fixing rates on average for 191

days) and the gross notional amount of foreign exchange contracts was £38.6m (2010 – £223.8m).

The carrying value of the above derivative financial instruments equals their fair value. Fair values arederived using observable market data.

The maximum exposure to credit risk relating to derivative financial instruments at the reporting date is thefair value of the derivative assets in the balance sheet.

The Group has reviewed all its material contracts for embedded derivatives, for which separate accountingwould be required, and has concluded that there are no material embedded derivatives.

17. Financial instruments and risk management

A detailed description of the Group’s approach to managing its capital is set out in Yell’s risk managementdisclosures on page 20. The accounting classification of each class of the Group’s financial assets andfinancial liabilities, together with their fair values, is as follows:

At 31 March 2011

Fair value Amortisedderivatives cost loans

used as and other Total book Total fair£m hedges Receivables liabilities value value

Assets

Derivative financial instruments 1.7 – – 1.7 1.7

Trade and other receivables(a) – 763.1 – 763.1 763.1

Cash and cash equivalents(a) – 200.5 – 200.5 200.5

Total financial assets 1.7 963.6 – 965.3 965.3

Liabilities

Derivative financial instruments (15.2) – – (15.2) (15.2)

Trade and other payables(a) – – (537.6) (537.6) (537.6)

Short-term borrowings(b) – – (125.3) (125.3) (133.6)

Long-term borrowings(b) – – (2,840.3) (2,840.3) (2,620.6)

Total financial liabilities (15.2) – (3,503.2) (3,518.4) (3,307.0)



Notes continued

FinancialStatements

At 31 March 2010

Fair value Amortisedderivatives cost loans

used as and other Total book Total fair£m hedges Receivables liabilities value value

Assets

Derivative financial instruments 8.1 – – 8.1 8.1

Trade and other receivables(a) – 905.1 – 905.1 905.1

Cash and cash equivalents(a) – 160.4 – 160.4 160.4

Total financial assets 8.1 1,065.5 – 1,073.6 1,073.6

Liabilities

Derivative financial instruments (105.2) – – (105.2) (105.2)

Trade and other payables(a) – – (547.7) (547.7) (547.7)

Short-term borrowings(b) – – (54.6) (54.6) (38.8)

Long-term borrowings(b) – – (3,200.4) (3,200.4) (2,429.5)

Total financial liabilities (105.2) – (3,802.7) (3,907.9) (3,121.2)

(a) The fair value of trade and other receivables, cash and cash equivalents, and trade and other payables approximated their carrying value due to the short

maturity of the instruments.

(b) Total book values and total fair values both include unamortised deferred financing fees at amortised cost, which approximates fair value.

There are no material monetary assets or liabilities denominated in currencies other than pounds sterling, USdollars, Euros and Latin American currencies (Chile, Peru and Argentina).

Movements in the fair values of derivative financial instruments designated as cash flow hedges (to theextent they are effective) are recognised in equity and will be recognised in the income statement when theunderlying hedged transactions are settled.

The Company has net inter-company receivables of £1,046.1m (2010 – £1,005.5m), all denominated insterling.

Borrowings in currencies other than pounds sterling are hedges of investments in foreign operations (netinvestment hedges). Movements in the fair value of these financial instruments (to the extent they areeffective) are recognised in equity. The fair value of loans is split by currency as follows: GBP £799.8m (2010 -£722.8m); US dollars £1,251.7m (2010 – £1,171.5m); Euro; £702.7m (2010 – £660.8m); total £2,754.2m (2010 –£2,555.1m). The cash flow hedges are linked to the interest on the external borrowings whose maturityprofiles are shown below.

The ineffective portion of interest rate hedges and foreign exchange hedges recognised in the incomestatement for the year ended 31 March 2011 amounted to £nil (2010 – £nil). There was no ineffectivenessto be recorded from net investment in foreign entity hedges.

More detail on the Group’s accounting for financial instruments is included in the Group’s accounting policieson pages 69 to 75.



Notes continued

17. Financial instruments and risk management continued

Currency profile and interest rate riskThe interest rate profile of the Group’s financial assets and liabilities, after taking into account interest rateswaps, is as follows:

At 31 March 2011

NetFinancial liabilities(a) financial

Financial assets Fixed or Floating (liabilities)£m floating rate capped rate rate Total assets

Currency

Sterling 146.6 (633.0) (244.8) (877.8) (731.2)

US dollar 18.4 (996.1) (384.6) (1,380.7) (1,362.3)

Euro 10.4 (551.4) (219.8) (771.2) (760.8)

Latin American currencies(b) 25.1 – – – 25.1

Total 200.5 (2,180.5) (849.2) (3,029.7) (2,829.2)

At 31 March 2010

NetFinancial liabilities(a) financial

Financial assets Fixed Floating (liabilities)£m floating rate rate rate Total assets

Currency

Sterling 135.5 (926.3) (23.9) (950.2) (814.7)

US dollar 8.5 (1,489.2) (65.5) (1,554.7) (1,546.2)

Euro 2.5 (763.5) (73.4) (836.9) (834.4)

Latin American currencies(b) 13.9 – – – 13.9

Total 160.4 (3,179.0) (162.8) (3,341.8) (3,181.4)

(a) Financial liabilities are presented gross; before unamortised finance costs that amounted to £64.1m at 31 March 2011 (£86.8m at 31 March 2010). See further

details in note 18.

(b) Latin American currencies are those of Chile, Peru and Argentina.



Notes continued

FinancialStatements

Details of year-end interest rates on borrowings are set out in note 18. For the financial liabilities with fixedrates of interest, after taking into account interest rate swaps, the average interest rates and the averageperiods for which the rates are fixed are:

At 31 March

2011 2010

Weighted WeightedWeighted period for Weighted period for

period which rate period which rateinterest rate is fixed interest rate is fixed

% Years % Years

Currency

Sterling 7.3 1.1 7.7 1.9

US dollar 6.7 1.1 7.2 1.8

Euro 6.3 1.1 6.7 1.8

Total borrowings 6.8 1.1 7.3 1.8

The floating rate financial liabilities bear interest at rates fixed in advance for periods ranging, at the Group’soption, from one month to six months by reference to LIBOR or EURIBOR. The Group expects to continue tofix or cap its floating rate financial liabilities at the end of each month by reference to one month LIBOR orEURIBOR at that time.

Borrowing facilities and liquidity riskWe manage our liquidity requirements by the use of both short- and long-term cash flow forecasts. TheGroup has maintained committed banking facilities to mitigate any liquidity risk it may face. There werecommitted senior debt facilities at 31 March 2011 and 2010 of £196.8m, of which £nil had been drawn downat 31 March 2011 (2010 – £nil). Details of related debt covenants and the management of the risks associatedwith meeting those covenants are set out in our risk management disclosures on pages 20 and 21.

The following table analyses the contractual undiscounted cash flows payable (calculated using forward/spotinterest rates); the carrying values and the fair values of Group borrowings at the balance sheet date. TheGroup also has short-term receivables and payables that arise in the normal course of business and these arenot included in the following table. Any cash flows based on floating rate interest are based on interest ratesprevailing at 31 March in the relevant year. All derivative amounts are shown gross, although amounts aresettled net wherever possible. The fair values of borrowings are based on clean market prices at year end or,where these are not available, on the quoted prices of comparable debt issued by other companies.



Notes continued

17. Financial instruments and risk management continued

At 31 March 2011

Due DueDue between between

Due between two and three Due Total Deferredwithin one and three and four four years amounts finance Carrying Fair

£m one year two years years years and later owed costs value value(a)

Due within one yearTerm loans – old facilities(b)

Sterling 19.3 – – – – 19.3US dollar 25.4 – – – – 25.4Euro 21.1 – – – – 21.1

Term loans – new facilities(c)


143.8 – – – – 143.8 (21.2) 122.6 130.9Revolving loan(d) – – – – – – – – –Other loans and finance leases 2.7 – – – – 2.7 – 2.7 2.7

Total due within oneyear, or on demand 146.5 – – – – 146.5 (21.2) 125.3 133.6

Due after one yearTerm loans – old facilities(b)

Sterling – – – – – –US dollar – 28.0 – – – 28.0Euro – 40.0 – – – 40.0


Sterling – 23.0 23.0 781.1 – 827.1US dollar – 16.0 16.0 1,263.9 – 1,295.9Euro – 11.0 11.0 670.2 – 692.2

Total due after one year – 118.0 50.0 2,715.2 – 2,883.2 (42.9) 2,840.3 2,620.6

Total loans and otherborrowings 146.5 118.0 50.0 2,715.2 – 3,029.7 (64.1) 2,965.6 2,754.2

Floating rate interest(e) 134.7 152.4 178.5 32.9 – 498.5Interest rate swap outflows(e) 19.7 4.8 – – – 24.5Interest rate swap inflows(e) (7.5) (2.9) – – – (10.4)

Total payments 293.4 272.3 228.5 2,748.1 – 3,542.3

Contractual paymentsanalysed between:

Sterling 94.2 70.0 75.0 785.4 – 1,024.6US dollar 119.5 106.6 96.4 1,283.2 – 1,605.7Euro 79.7 95.7 57.1 679.5 – 912.0

Total payments 293.4 272.3 228.5 2,748.1 – 3,542.3


Fixed 166.3 122.8 50.0 2,715.2 – 3,054.3Floating 127.1 149.5 178.5 32.9 – 488.0

Total payments 293.4 272.3 228.5 2,748.1 – 3,542.3



Notes continued

FinancialStatements

At 31 March 2010

Due DueDue between between

Due between two and three Due Total Deferredwithin one and three and four four years amounts finance Carrying Fair

£m one year two years years years and later owed costs value value(a)

Due within one yearTerm loans – old facilities(b)




66.9 – – – – 66.9 (21.4) 45.5 51.1Revolving loan(d) – – – – – – – – –Other loans and finance leases 9.1 – – – – 9.1 – 9.1 9.1

Total due within oneyear, or on demand 76.0 – – – – 76.0 (21.4) 54.6 60.2

Due after one yearTerm loans – old facilities(b)

Sterling – 19.3 – – – 19.3US dollar – 27.0 29.5 – – 56.5Euro – 21.3 40.3 – – 61.6


Sterling – 22.6 22.6 22.6 835.8 903.6US dollar – 16.6 16.6 16.6 1,422.6 1,472.4Euro – 10.8 10.8 10.8 720.0 752.4

Total due after one year – 117.6 119.8 50.0 2,978.4 3,265.8 (65.4) 3,200.4 2,494.9

Total loans and otherborrowings 76.0 117.6 119.8 50.0 2,978.4 3,341.8 (86.8) 3,255.0 2,555.1

Floating rate interest(e) 177.8 211.3 215.8 235.1 42.9 882.9Interest rate swap outflows(e) 111.4 20.2 5.0 – – 136.6Interest rate swap inflows(e) (41.6) (24.0) (6.7) – – (72.3)

Total payments 323.6 325.1 333.9 285.1 3,021.3 4,289.0


Sterling 100.5 104.1 86.1 88.9 841.3 1,220.9US dollar 143.2 141.6 146.9 134.0 1,449.7 2,015.4Euro 79.9 79.4 100.9 62.2 730.3 1,052.7

Total payments 323.6 325.1 333.9 285.1 3,021.3 4,289.0


Fixed 187.4 137.8 124.8 50.0 2,978.4 3,478.4Floating 136.2 187.3 209.1 235.1 42.9 810.6

Total payments 323.6 325.1 333.9 285.1 3,021.3 4,289.0

(a) At 31 March 2011 the fair value of the total amounts owed has been calculated using a discount rate based on current projections of future floating interest

rates plus a credit margin determined by reference to margins observed on the debt of comparable businesses. This discount rate has been used to derive the

present value of contractually scheduled interest and principal payments. At 31 March 2010 the fair value was determined by reference to secondary market

prices.

(b) The final payment for tranche A is due 30 April 2011 and the final maturity date for tranche B is 29 October 2012.

(c) The final payment for tranche A is due 30 April 2014 and the final maturity date for tranche B is 31 July 2014.

(d) £193.2m of the Group’s revolving credit facilities is committed until 30 April 2014. £3.6m is committed until 27 April 2011.

(e) The critical terms of all the Group’s interest rate swaps precisely match the terms of the underlying floating rate debt obligations. The Group’s interest rate

swaps are designated as cash flow hedges and accordingly amounts deferred in equity are recognised in the income and cash flow statements at the same

time as the interest is recognised and paid on the underlying hedged debt.



Notes continued

18. Loans, other borrowings and net debt

We manage the capital requirements of the Group by maintaining leverage of the Group within the terms ofour debt facilities agreement.

Our new bank facilities became effective on 30 November 2009 and are committed until 2014. The terms ofthe new Facilities Agreement contain covenants over net cash interest cover and debt cover. Details of theseratios and the management of the risks associated with meeting the requirements are set out in our riskmanagement disclosures on pages 20 and 21.

The following table sets out the borrowings and total net debt of the Group:

At 31 March

£m Interest rate %(a) 2011 2010


Term loans under secured credit facilities(b) 2.8 – 4.6 122.6 45.5

Revolving loan under secured credit facilities(b) – –

Net obligations under finance leases and other short-term borrowings 2.7 9.1

Total amounts falling due within one year 125.3 54.6


Senior credit facilities(b) 3.3 – 4.6 2,840.3 3,200.4

Total amounts falling due after more than one year 2,840.3 3,200.4

Total loans and other borrowings 2,965.6 3,255.0

Cash and cash equivalents (200.5) (160.4)

Total net debt 2,765.1 3,094.6

(a) Floating rate interest at 31 March 2011 on the underlying debt instrument (before taking into account interest rate swaps).

(b) The Group’s financing facilities primarily comprise a series of term loans in pounds sterling, euros and US dollars, (see table below). These term loans were

refinanced under a new Facilities Agreement dated 30 November 2009, which also includes a revolving credit facility of £196.8m. At 31 March 2011, £nil was

outstanding under the revolving credit facility (2010 – £nil). The term loans and the revolving credit facility under the new Facilities Agreement are secured by

guarantees given by the Group’s principal operating and holding companies and by pledges over the shares of principal operating or holding companies.

The carrying amounts of borrowings are denominated in the following currencies:

At 31 March

2011 2010

Deferred DeferredPrincipal finance Net Principal finance Net

£m amount costs balance amount costs balance

Sterling 877.8 (28.3) 849.5 950.2 (37.5) 912.7

US dollar 1,380.7 (19.7) 1,361.0 1,554.7 (27.6) 1,527.1

Euro 771.2 (16.1) 755.1 836.9 (21.7) 815.2

Total loans and borrowings 3,029.7 (64.1) 2,965.6 3,341.8 (86.8) 3,255.0

Details of the currency denomination of interest and maturity profiles of borrowings are given in note 17.There are no material borrowings denominated in currencies other than pounds sterling, US dollars or euros.

The Company has no external borrowings.



Notes continued

FinancialStatements

Credit quality of cash and cash equivalents based on actual or inferred Standard & Poor’s ratings at31 March 2011 was:

Other£m AAA AA A BBB unrated(a) Total

Sterling 137.8 8.8 – – – 146.6

US dollar – 18.4 – – – 18.4

Euro – 0.8 9.6 – – 10.4

Latin American currencies(b) 0.1 18.4 – 4.2 2.4 25.1

Total cash and cash equivalents 137.9 46.4 9.6 4.2 2.4 200.5

(a) Includes cash in hand and in bank current accounts.

(b) Latin American currencies are those of Chile, Peru and Argentina.

19. Trade and other payables

At 31 March

£m 2011 2010


Trade payables 56.9 51.5

Other taxation and social security 15.0 16.6

Accruals and other payables(a) 219.2 213.7

Deferred income 230.7 252.3

Total amounts due within one year 521.8 534.1


Accruals and other payables 15.8 13.6

Total amounts due after one year 15.8 13.6

Total trade and other payables 537.6 547.7

(a) The Group has expensed but not paid a restructuring provision of £41.1m (2010 – £36.0m), which is expected to be paid in the coming year.

The Company has trade and other payables of £nil (2010 – £0.1m) denominated in sterling.

Due to their short maturities, the fair value of trade and other payables approximates their book value.The effect of discounting has been considered for payables falling due after more than one year, and thedifference between fair value and book value is not material, therefore the fair value approximates theirbook value.

The carrying amounts of trade and other payables are denominated in the following currencies, which arethe functional currency of the respective subsidiaries. We do not have any other significant exposure tocurrency risk on these amounts.



Notes continued

19. Trade and other payables continued

At 31 March

£m 2011 2010

Sterling 210.7 198.2

US dollar 136.8 146.5

Euro 158.6 156.9

Latin America(a) 31.5 46.1

Total trade and other payables 537.6 547.7

(a) Latin American currencies are those of Chile, Peru and Argentina.

20. Pensions

The Group operates a defined benefit pension scheme for its UK employees who were employed before1 October 2001 and defined contribution schemes for the remaining UK employees and for US employees,which are the only material schemes in the Group. The Group’s income statements and statements ofcomprehensive income for the years ended 31 March 2011 and 2010 included the following charges:

Amounts charged to operating profitYear ended 31 March

£m 2011 2010

Current service cost 10.1 9.7

Termination benefits 6.0 1.2

Amounts expensed for defined benefit scheme 16.1 10.9

Amounts expensed for defined contribution schemes 4.6 5.1

Total operating charge 20.7 16.0

Exceptional credit on curtailment of plan (35.6) –

Net operating (credit) charge (14.9) 16.0

Net finance cost from defined benefit schemeYear ended 31 March

£m 2011 2010

Expected return on pension scheme assets (21.5) (15.2)

Interest cost on pension scheme liabilities 24.1 19.8

Net finance cost from defined benefit scheme 2.6 4.6



Notes continued

FinancialStatements

Amount recognised in statement of comprehensive incomeYear ended 31 March

£m 2011 2010

Actual return less expected return on pension scheme assets 0.4 63.6

Experience gains arising on the scheme liabilities 22.5 7.8

Changes in assumptions underlying the present value of the scheme liabilities 32.4 (130.2)

Actuarial gain (loss) 55.3 (58.8)

Tax on actuarial (gain) loss recognised in equity (14.5) 16.5

Actuarial gain (loss), net of tax 40.8 (42.3)

The cumulative actuarial loss net of tax recognised at 31 March 2011 amounts to £17.2m (2010 – £58.0m loss).

UKPP – Defined benefit sectionsThere are three defined benefit sections of the UKPP, which have been closed to new entrants since 1 October2001. The scheme offers both pensions in retirement and death benefits to members. The full actuarialvaluation at 5 April 2008, updated to 31 March 2011, showed a surplus of £37.3m. Pension benefits are basedon years of qualifying service and final pensionable salary. With effect from 31 March 2011, the defined benefitsections of the Plan were closed to future accrual. Active members at 31 March 2011 were granted leavingservice benefits and offered membership of a new Section 6 of the Plan on a defined contribution basis.

Net obligationThe UKPP net obligation at the balance sheet date represents the present value of scheme liabilities net ofthe fair value of assets held to fund future benefit payments, as follows:

At 31 March

£m 2011 2010

Fair value of plan assets 408.0 375.3

Present value of scheme liabilities (370.7) (438.6)

Net surplus (obligation) 37.3 (63.3)



Notes continued

20. Pensions continued

The following table explains the changes in the net surplus (obligation):

Year ended 31 March

£m 2011 2010

Net obligation at beginning of year (63.3) (21.9)

Current service cost (10.1) (9.7)

Contributions 28.4 32.9

Termination benefits (6.0) (1.2)

Curtailment gain 35.6 –

Finance cost (2.6) (4.6)

Actuarial gain (loss) 55.3 (58.8)

Net surplus (obligation) at 31 March 37.3 (63.3)

The level of contributions is based on the current service costs and the expected future cash flows of thescheme. The Group is required to agree its contributions to the plan with the trustees based on actuarialadvice. Such agreement must be reached in a way that complies with the UK Pensions Regulator’s ‘SchemeSpecific Funding’ guidance. Any failure to agree would result in the intervention of the Pensions Regulatorand, possibly, an imposed settlement. From 1 January 2009, the Group has paid a contribution rate of 29.8%of pensionable earnings (inclusive of expenses and life assurance premiums, but exclusive of the PensionProtection Fund levy). Additionally, with effect from 1 January 2009, the Group agreed to pay contributionstotalling £58m, spread equally over 51 monthly payments, to repair the deficit of £47.6m (plus interest)reported in the full actuarial funding valuation at 5 April 2008. Following closure of the defined benefitsections of the Plan, employer contributions in respect of the deficit remain payable and the Group’s regularcontribution rate has decreased to 2% of pensionable earnings to cover expenses and life assurancepremiums only. The next evaluation of future contribution rates will be after the next full funding valuation,which is expected to have an effective date of 5 April 2011.

Contributions of £23.7m (2010 – £26.4m), plus £4.7m (2010 – £6.5m) in respect of benefit augmentations weremade in the year. Plan participants may accept a reduction in their salary in return for non-contributorymembership of the plan, the reduction being equal to the contributions otherwise payable. The Group makescontributions of a corresponding amount, which have been included in the numbers above. In the yearsended 31 March 2011 and 2010, these amounted to £1.6m (5.5% of pensionable earnings) and £2.0m (5.5% ofpensionable earnings), respectively. Total contributions in financial year 2012 are expected to be around £14m.



Notes continued

FinancialStatements

Valuation assumptionsThe UKPP net surplus at 31 March 2011 and net obligation at 31 March 2010, were based on the valuation at5 April 2008 updated to 31 March 2011 and 31 March 2010 respectively. The updated valuations carried out byprofessionally qualified independent actuaries used the following key assumptions:

At 31 March

All figures in % per annum 2011 2010

Discount rate 5.5 5.5

Expected rate of return on assets 6.0 5.6

Salary increases 4.4 4.5

Pension increases linked to RPI 3.6 3.7

Pension increases linked to CPI 2.7 n/a

Assumptions regarding future mortality experience are set based on advice from published statistics. Theaverage life expectancy (in years) on retirement at age 60 of a member currently aged 45 is as follows:

At 31 March

Years 2011 2010

Male 29.4 29.3

Female 30.9 30.8

The average life expectancy (in years) on retirement at age 60 of a member currently aged 60 is as follows:

At 31 March

Years 2011 2010

Male 27.8 27.7

Female 29.4 29.3

The assumptions used above may need to be adjusted in the future to take into account a full actuarialvaluation at 5 April 2011. Any such changes could materially affect the estimated liabilities of the scheme andfuture contribution rates.

AssetsThe UKPP assets are held in separate trustee-administered funds that are invested in UK and overseasequities, diversified growth funds, property, debt securities and index-linked gilts.

The trustees of the scheme are required to act in the best interest of the scheme’s beneficiaries. Theappointment of trustees to the scheme is determined by the Group in accordance with the scheme’s trustdocumentation, as modified by UK statute. An independent professional trustee and three other trustees areappointed by the Group. Three further trustees are elected by the active members.



Notes continued


Asset values will increase and decrease as markets rise and fall. The trustees and management have anagreed strategy to mitigate the risk of having insufficient funds if markets fall. The trustees annually matchthe low-risk asset portfolio against the cash outflows for the following 12 years. Against longer-term cashpayouts they match a combination of investments in index-linked gilts to mitigate inflation and interest raterisk, and higher risk assets to get higher rates of growth. The trustees also work with management to ensuresufficient assets will be available to settle obligations extending beyond the horizon of 12 years.

The trustees have set their asset allocation approach to split the portfolio into ‘pre-horizon’ and ‘post-horizon’ categories. The ‘pre-horizon’ assets are all debt securities and at 31 March 2011 comprised around28% (2010 – 28%) of the total assets. The ‘post-horizon’ assets have allocation targets of 40% equities, 20%diversified growth funds, 10% property and 30% index-linked gilts.

The expected rates of return of each asset type in the UKPP are set by reference to yields available ongovernment bonds at the measurement date and appropriate risk margins, and are stated net of expectedadministration expenses and the expected levy to the UK Pension Protection Fund. The assets and the annualexpected rates of return were:

At 31 March

2011 2010

% £m % £m

Equities 8.0 124.4 7.3 118.6

Diversified growth funds 7.5 34.6 7.3 26.2

Bonds 5.3 114.8 4.3 105.2

Property 7.0 28.8 6.3 26.6

Index-linked gilts (inflation swaps in 2010) 3.9 103.0 4.6 95.0

Other 0.3 2.4 0.3 3.7

Total assets at fair value 408.0 375.3

Changes in the fair value of plan assets were as follows:Year ended 31 March

£m 2011 2010

Opening fair value of plan assets 375.3 274.3

Expected return 21.5 15.2

Actuarial gain 0.4 63.6

Contributions by employer 28.4 32.9

Contributions by participants – 0.1

Benefits paid (17.6) (10.8)

Fair value of plan assets at 31 March 408.0 375.3



Notes continued

FinancialStatements

The actuarial gain in the years ended 31 March 2011 and 2010 represents the difference between theexpected return on plan assets and the actual return on plan assets as follows:

Year ended 31 March

£m 2011 2010

Expected return on plan assets 21.5 15.2

Actuarial gain 0.4 63.6

Actuarial gain on plan assets 21.9 78.8

LiabilitiesThe present value of scheme liabilities at the balance sheet date are measured by discounting the bestestimate of future cash flows to be paid out by the scheme using the projected unit method. The projectedunit method is an accrued benefits valuation method in which the scheme liabilities make allowance forprojected earnings. Changes in the present value of the defined benefit liabilities were as follows:

Year ended 31 March

£m 2011 2010

Opening present value of defined benefit liabilities 438.6 296.2

Current service cost 10.1 9.7

Past service costs 6.0 1.2

Finance cost 24.1 19.8

Actuarial (gain) loss (54.9) 122.4

Contributions by participants – 0.1

Benefits paid (17.6) (10.8)

Curtailments and settlements (35.6) –

Present value of defined benefit liabilities at 31 March 370.7 438.6

The actuarial gain in the year ended 31 March 2011 was primarily the result of a decrease in RPI inflation, ahigher number of members leaving service than expected, and the switch from RPI to CPI for some pensionincreases under the Plan. The curtailment gain results from the closure of the defined benefit sections of thePlan to future accrual and the granting of leaving service benefits to all active members at 31 March 2011. Inthe year ended 31 March 2010, the actuarial loss was primarily the result of a decrease in the estimated realinterest rate (the reference market rate to which the discount rate is tied, net of expected inflation implied inthe market price of certain government debt) during the year.



Notes continued


The profile of expected undiscounted payments by the scheme for benefits earned up to 31 March 2011 isas follows:

Payments in £m

The Group estimates that the average duration of these cash flows, representing the weighted average termto payment of the undiscounted benefit payments, is 33 years.

The cost of settling all Plan liabilities at the balance sheet date by buying out benefits with a suitable insurerwill generally be higher than the present value of scheme liabilities, because an insurer would expect tocharge a premium for the risks that would be passed to them. The Group estimates that the amount requiredto settle the Plan’s liabilities with an insurance company at 31 March 2011 would have been around £684m,which is around £276m more than the value of plan assets.

HistoryThe history of experience gains and losses is as follows:

Year ended 31 March

All figures in £m unless otherwise stated 2011 2010 2009 2008 2007

Present value of defined benefit obligation (370.7) (438.6) (296.2) (294.9) (329.6)

Fair value of plan assets 408.0 375.3 274.3 308.9 302.4

Surplus (deficit) on the plans 37.3 (63.3) (21.9) 14.0 (27.2)

Difference between the expected and actual returnon scheme assets:

Gain (loss) 0.4 63.6 (64.4) (24.4) 0.2

Gain (loss) as a proportion of scheme assets – 17% (23)% (8)% –

Experience gains (losses) on scheme liabilities andchanges in assumptions:

Gain (loss) 54.9 (122.4) 32.8 68.3 15.9

Gain (loss) as a proportion of present value of scheme liabilities 15% (28)% 11% 23% 5%

£0m

£5m

£10m

£15m

£20m

£25m

£30m

£35m

£40m

£45m

£50m

2011 2021 2031 2041 2051 2061 2071 2081



Notes continued

FinancialStatements

Sensitivity analysisThe present value of pension liabilities at 31 March 2011 was calculated on the basis that the real interestrate at the balance sheet date was 1.9%, which is the difference between the discount rate and expected RPIinflation. The discount rate and expected inflation are determined by reference to specific types of debtinstruments being traded in the open market. Increasing or decreasing the assumed real interest rate to2.0% or 1.8% per annum, respectively, would decrease or increase the present value of pension liabilities byapproximately £9m. The effect on the market value of assets cannot be estimated because the values of thePlan’s investments do not always change in line with changes in real interest rates.

The present value of pension liabilities was determined on assumed life expectancies for men and womenas set out in the assumptions above. We estimate that an increase in life expectancy of one year for allmembers could have increased the present value of pension liabilities by approximately £8m.

Defined contribution schemesIn addition to the defined contribution Section Four, Section Five and Section Six of the UKPP, Yellowbooksponsors a 401(k) plan for the majority of Yellowbook employees in the US. The plan allows employees tocontribute a portion of their pre-tax and/or after-tax income in accordance with specified guidelines.Yellowbook matches a percentage of the employee contributions up to certain limits. The assets of the planare held separately from those of Yellowbook in an independently administered fund.

The pension cost in respect of these schemes represents contributions payable to the funds and amounted to£2.1m in the year ended 31 March 2011 (2010 – £2.2m) for the Yellowbook scheme, and £2.5m (2010 – £2.9m)for Section Four and Section Five of the UKPP. Outstanding contributions amounted to £0.7m at 31 March2011 (2010 – £0.7m).

21. Share capital

Group and Company called up share capitalAt 31 March

£m 2011 2010

Allotted, called up and fully paid share capital

Ordinary shares of £0.01 each 2,367,603,929 (2010 – 2,360,800,414) 23.7 23.6

The share capital history of the Company from 1 April 2009 to 31 March 2011 is as follows:

• During the period from 1 April 2009 to 31 March 2010, 3,149,336 ordinary shares of £0.01 each were issuedby the Company at par value to settle exercised share options and were fully paid up.

• During the period from 1 April 2010 to 31 March 2011, 6,803,515 ordinary shares of £0.01 each were issuedby the Company at par value to settle exercised share options and were fully paid up.

• On 26 November 2009, the Company at an Extraordinary General Meeting removed with immediate effectthe references to authorised share capital from its articles of association as permitted by the CompaniesAct 2006.

• On 30 November 2009, the Group completed a firm placing and placing and open offer of shares.1,571,786,222 ordinary shares of £0.01 each were issued by the Company at a premium of £0.41 perordinary share and were fully paid up.

Movements in share capital subsequent to 31 March 2011 up to the date of this document:

• During the period from 1 April 2011 to 7 June 2011, there have been no movements in ordinary sharecapital.


21. Share capital continued

Movements in share capital for the Group are as follows:

GroupCalled up Share Shares held

£m shares premium in trust Total

At 31 March 2009 7.9 1,231.7 (13.1) 1,226.5

Share placings, net(a) 15.7 621.1 – 636.8

Ordinary share capital issued to employees – 1.9 – 1.9

Treasury shares issued to employees – – 0.4 0.4

Aggregate consideration for shares purchased by ESOP trust – – (18.3) (18.3)

Own shares disposed by ESOP trust – – 1.5 1.5

At 31 March 2010 23.6 1,854.7 (29.5) 1,848.8

Ordinary share capital issued to employees 0.1 2.1 – 2.2

Treasury shares issued to employees – – 5.8 5.8

Aggregate consideration for shares purchased by ESOP trust – – (0.2) (0.2)

Own shares disposed by ESOP trust – – 1.6 1.6

At 31 March 2011 23.7 1,856.8 (22.3) 1,858.2

(a) The firm placing of 785.9m shares and the placing and open offer of 785.9m shares on 30 November 2009 raised £660m before expenses. Net proceeds were

£559.0m after paying £23.2m costs relating to the share issue, £60.6m deferred finance costs and £17.2m of costs on the early settlement of interest rate

hedge contracts to avoid over-hedged positions after early payment of bank debt.

The shares held in an ESOP trust and a SIP trust for employees are accounted for as treasury shares. Movementsin the number of shares held by the trusts in the years ended 31 March 2010 and 2011 were as follows:

Year ended 31 March

Number of shares 2011 2010

Held at beginning of the year 57,150,695 12,523,655

Sold or transferred during the year (6,316,650) (515,414)

Purchased during the year 565,319 45,142,454

Held at 31 March 51,399,364 57,150,695

The nominal value of the shares held in trust was £513,994 at 31 March 2011 (2010 – £571,507). The marketvalue of the shares held in trust was £3.4m at 31 March 2011 (2010 – £23.4m). The number of shares held bythe trusts at 31 March 2011 represents 2.2% of called up share capital (2010 – 2.6%).

Movements in share capital for the Company are as follows:

CompanyCalled up Share

£m shares premium Total

At 31 March 2009 7.9 1,231.7 1,239.6

Share placings, net 15.7 621.1 636.8

Ordinary share capital issued to employees – 1.9 1.9

At 31 March 2010 23.6 1,854.7 1,878.3

Ordinary share capital issued to employees 0.1 2.1 2.2

At 31 March 2011 23.7 1,856.8 1,880.5

Notes continued




Notes continued

FinancialStatements

22. Other reserves

Total other reserves are analysed as follows:

GroupShare-based Total

payments Pensions Hedging Translation Other other£m reserve reserve reserve reserve reserves reserves

At 31 March 2009 40.2 (52.5) (148.9) 367.3 (77.2) 128.9

Net actuarial loss on defined benefit pension schemes – (58.8) – – – (58.8)

Change in fair value of hedges – – 99.9 – – 99.9

Taxation 0.1 16.5 (30.0) – – (13.4)

Currency translation differences – – – (14.2) – (14.2)

Net income (expense) recognised directly in equity 0.1 (42.3) 69.9 (14.2) – 13.5

Value of services provided in return for share-basedpayments 15.2 – – – – 15.2

Ordinary share capital issued to employees (0.9) – – – – (0.9)

Treasury shares issued to employees (0.1) – – – – (0.1)

Capital duty paid on additional share capital inSpanish holding company – – – – (0.5) (0.5)

Treasury shares sold by employee benefit trust at a loss (1.4) – – – – (1.4)

12.9 (42.3) 69.9 (14.2) (0.5) 25.8

At 31 March 2010 53.1 (94.8) (79.0) 353.1 (77.7) 154.7

Net actuarial loss on defined benefit pension schemes – 55.3 – – – 55.3

Change in fair value of hedges – – 89.4 – – 89.4

Taxation (14.5) (29.3) 6.6 – (37.2)

Currency translation differences – – – (47.0) – (47.0)

Net income (expense) recognised directly in equity – 40.8 60.1 (40.4) – 60.5

Value of services provided in return for share-basedpayments 20.1 – – – – 20.1

Ordinary share capital issued to employees (1.4) – – – – (1.4)

Treasury shares issued to employees (3.2) – – – – (3.2)

Treasury shares sold by employee benefit trust at a loss (1.6) – – – – (1.6)

13.9 40.8 60.1 (40.4) – 74.4

At 31 March 2011 67.0 (54.0) (18.9) 312.7 (77.7) 229.1



Notes continued

22. Other reserves continued

CompanyYear ended 31 March

Share-based payments reserve (£m) 2011 2010

At beginning of year 46.0 31.8

Value of services provided in return for share-based payments 20.1 15.2

Share-based payments as ordinary share capital issued to employees – (0.9)

Own shares purchased for settlement of cancelled share plans – (0.1)

Own shares issued as settlement of share option plans (4.7) –

At 31 March 61.4 46.0

23. Acquisitions

Details of the consolidated acquisitions are shown in the table below.

Year ended 31 March

Fair value Fair value£m 2011 2010

Non-current assets

Other intangible assets 4.0 2.0

Property, plant and equipment 0.3 –

Total non-current assets 4.3 2.0

Current assets

Directories in development and inventory 0.3 0.9

Trade and other receivables 2.6 1.1

Total current assets 2.9 2.0

Current liabilities

Trade and other payables (1.3) (2.5)

Total current liabilities (1.3) (2.5)

Identifiable net assets 5.9 1.5

Goodwill 5.9 1.5

Total cost 11.8 3.0

In the year ended 31 March 2011, the Group paid £1.2m for a digital media company in the UK with recordednet assets of £0.3m, £0.4m for the net assets of a pre-press operation in the Philippines with recorded netassets of £0.4m, and £10.2m ($15.3m) for in-fill acquisitions in the US. Fair value adjustments to otherintangible assets relate to the valuation of customer lists and other intangibles. Goodwill of £5.9m isattributable to the expected future synergies, the workforce acquired and expected future growth of thebusiness.



Notes continued

FinancialStatements

For the consolidated results of all acquisitions, it is estimated that Group revenues were increased by £3.3mduring the period of ownership and if the acquirees had been owned for the whole period that revenueswould have been increased by £4.6m. Group EBITDA is estimated to have increased by £2.1m during theperiod of ownership and £3.1m for the whole year. Operating profit of the acquirees would have increasedGroup results by £0.9m during the period of ownership and by £1.7m for the whole year. The profit aftertax would have increased by no more than £0.1m during the period of ownership and by £0.5m for thewhole year.

In the year ended 31 March 2010, the Group acquired one in-fill acquisition in the US for a total of$5.0m (£3.0m). Fair value adjustments to other intangible assets related to the valuation of customer lists.Goodwill of £1.5m is attributable to the expected future synergies, the workforce acquired and expectedfuture growth of the business.

The reconciliation of cash paid to the cash flow statements is as follows:

Year ended 31 March

£m 2011 2010

Total cost of acquisitions 11.8 3.0

Payments related to acquisitions in prior year 1.0 0.6

Capital duty on additional share capital in Spanish holding company – 0.5

Net cash outflow in year 12.8 4.1

24. Financial commitments, contingent liabilities and litigation

Future aggregate minimum operating lease payments for the Group at 31 March 2011 and 2010 areas follows:

At 31 March

£m 2011 2010

Payable

Not later than one year 19.8 27.5

Later than one year and not later than five years 46.6 47.4

Later than five years 78.7 76.4

Total future aggregate minimum operating lease payments 145.1 151.3

Operating lease payments expensed during the year amounted to £22.0m (2010 – £23.3m).

At 31 March 2011, Yell has no material unrecorded litigation settlement obligations. Previous accruals for classaction suits in the US have now been settled.

The Group has £41.1m of restructuring provisions expensed but not yet paid at 31 March 2011 representing theGroup’s best estimate of amounts to be settled (2010 – £36.0m).

There are no contingent liabilities or guarantees other than those referred above and those arising in theordinary course of the Group’s business.

No material losses are anticipated on liabilities arising in the ordinary course of business.



Notes continued

25. Related party transactions

CompanyThere were no transactions with Group companies in the years ended 31 March 2011 and 2010 other than thefollowing transactions with Yell Finance B.V. and ESOP trust:

Year ended 31 March

£m 2011 2010

Finance income from Yell Finance B.V. 35.3 27.0

Net finance income 35.3 27.0

Year ended 31 March

£m 2011 2010

Amounts charged by the Company to subsidiaries for employee share plans 20.1 15.2

At 31 March

£m 2011 2010

Non-current assets

Amounts owed by Yell Finance B.V. 1,024.2 978.1

Amounts owed by ESOP trust, net of £22.2m provision (2010 – £22.2m) 21.9 27.4

Total amounts owed by Group companies 1,046.1 1,005.5

Subsidiary undertakingsBrief details of principal subsidiary undertakings at 31 March 2011 and 2010, all of which are unlisted, aredisclosed in note 12.

Key management compensation was as follows:

Year ended 31 March

£m 2011 2010

Salaries and other short-term employee benefits 3.1 1.5

Post-employment benefits 0.4 0.5


Termination benefits 0.9 –

Total key management compensation 4.8 3.4



Notes continued

FinancialStatements

26. Employee share schemes

The Group has various share option and other share plans for employees and directors. The plans have beenaccounted for in accordance with the fair value recognition provisions of IFRS 2, Share-based Payments. IFRS2 applies to equity-settled awards granted after 7 November 2002 not yet vested by 1 March 2005 and allcash-settled awards outstanding at 1 March 2005.

(a) The Yell Group Limited plansIn March 2002, the Yell Group introduced three share option plans, the Yell Group Limited Employee Plan, theYell Group Limited US Employee Plan and the Yell Group Limited Senior Manager Incentive Plan. The planswere set up to provide employees with option awards over shares that would become exercisable on an exitevent (eg sale or quotation). The option life under these plans is ten years from date of grant. On a Changeof Control, options can be exercised for up to three months following the Change of Control, exchanged foran equivalent option in the acquiring company, or cash-cancelled.

(b) Appointment Share OptionsIn accordance with the agreed terms of their appointment, certain senior executives were granted shareoptions over ordinary shares, each with an exercise price per share equal to the market value on the dateof grant. The options will be exercisable after three years subject to the achievement of an objectiveperformance target. Options will lapse in the event of summary dismissal or (unless the Board permitsotherwise) resignation. Options become exercisable on Change of Control subject to satisfaction of theperformance target.

(c) The Yell Group plc ShareSave PlanThe Yell Group plc ShareSave Plan (the ShareSave) was established in July 2003. Eligible employees who wishto participate must enter into a savings contract for a period of three or five years under which they willcontribute payments of between £5 and £250 per month, and a bonus is added at the end of three, five orseven years. In conjunction with the savings contract, an eligible employee is granted an option to subscribefor ordinary shares of Yell Group plc out of the repayment made under that contract at the end of three, fiveor seven years. The exercise price of any option will not be manifestly less than 80% of the market value ofthe ordinary shares at the date of grant. The ShareSave is HM Revenue and Customs approved. On Changeof Control, options become exercisable to the extent of savings accrued, for up to six months from Change ofControl or can be exchanged for an equivalent option in the acquiring company.

(d) The Yell Group plc Employee Stock Purchase PlanThe Yell Group plc 2003 Employee Stock Purchase Plan (the US ESPP) was established in July 2003. Eligibleemployees are entitled to purchase ordinary shares at the lower of 85% of the fair market value of theordinary shares on the date the ordinary shares are offered and 85% of the fair market value of the ordinaryshares on the date ending the offer period when the ordinary shares are purchased by the employee. Allordinary shares must be purchased through the savings accumulated during an offer period through payrolldeductions. On an asset sale, merger or consolidation, options can be continued, exchanged for anequivalent option in the acquiring company, cancelled (with the return of accumulated payroll deductions)or exercised.

(e) The Yell Group plc Share Incentive PlanThe Yell Group plc Share Incentive Plan was established in July 2003 and permits free, partnership, matchingand dividend shares to be awarded to eligible employees. On a Change of Control, participants are entitledto direct the Trustee in respect of the offer.



Notes continued

26. Employee share schemes continued

(f) The Yell Group plc Executive Share Option SchemeThe Yell Group plc Executive Share Option Scheme (the UK Option Scheme) was established in July 2003, andcontains an unapproved section and a section approved by HM Revenue and Customs. The price per ordinaryshare at which options will be exercised will be not less than the market value of the ordinary shares at thedate of grant. Options will normally be granted within a period of 42 days commencing on the day after thedate on which the Group releases its quarterly, half-yearly or final results for any financial period. In mostcircumstances an objective performance condition must be satisfied before an option can be exercised.Normally, options may only be exercised three years after their initial date of grant. The option life under thisplan is ten years from the date of grant. On Change of Control, options become exercisable for up to sixmonths from Change of Control, subject to achievement of performance conditions or can be exchanged foran equivalent option in the acquiring company.

(g) The Yell Group plc US Equity Incentive PlanThe Yell Group plc 2003 US Equity Incentive Plan (the US EIP) was established in July 2003. It allows theCompany to issue both non-qualified and incentive share options and ordinary shares. The Board has solediscretion to determine who may receive awards under the USEIP and any performance conditions. Theexercise price for incentive share options will not be less than 100% of the fair market value of the ordinaryshares on the date of grant. The option life under this plan is ten years from the date of grant. Share awardsmay be made to officers or employees, and the purchase price, if any, is as established by the Company.On Change of Control, options become exercisable for up to six months from Change of Control andperformance condition requirements fall away. Alternatively, the option can be exchanged for an equivalentoption in the acquiring company.

(h) The Capital Accumulation PlanThe Yell Group plc Capital Accumulation Plan (the CAP) was established in February 2004. It allows theCompany to make awards of ordinary shares, which vest three years from the date of grant, to employees.There are no performance criteria attached to the vesting of these shares, which are awarded to employeeswhom the Company wishes to retain as key talent within the organisation. Awards are satisfied bypurchasing existing shares on the open market rather than by issue of new shares. On Change of Control,awards vest in full.

(i) The Long-term Incentive PlanThe Yell Group plc Long-term Incentive Plan (the LTIP) was established in July 2003 and is not intended to beapproved by HM Revenue and Customs. The Board has sole discretion to determine which executives aregranted awards under the LTIP. Awards are granted in the form of performance shares and in mostcircumstances an objective performance condition must be satisfied before an award vests. Normally, awardsmay only vest three years after their initial date of grant. For further information, see page 41. On Change ofControl, options become exercisable and performance condition requirements fall away but pro-rating fortime applies. Options may be exercised for such reasonable period as the Trustee may determine.

(j) Deferred Bonus PlanThe Yell Group plc Deferred Bonus Plan (the DBP) was established in November 2004. For any bonusawarded to executive directors a proportion of annual bonuses is (other than in exceptional circumstances)subject to deferral into shares for a period of three years. The award of these shares is made under the DBP.On Change of Control, nil cost options become exercisable for up to six months from Change of Control.



Notes continued

FinancialStatements

Options under share schemesOptions granted, exercised and lapsed under the savings related schemes and other share option schemesduring the years ended 31 March 2011 and 2010 and options exercisable at 31 March 2011 and 2010 wereas follows:

Other WeightedSavings share Exercise averagerelated option price exerciseschemes schemes Total range price

Outstanding at 31 March 2009 20,281,131 66,405,416 86,686,547 0p-589p 67p

Granted 26,840,914 32,197,809 59,038,723 0p-40p 17p

Exercised (2,947,583) (518,104) (3,465,687) 0.4p-67p 41p

Open offer adjustment 1,064,205 2,734,357 3,798,562 0p-424p 67p

Forfeited, expired and cancelled (17,232,623) (1,954,299) (19,186,922) 0p-589p 78p


Granted 60,415,262 37,178,015 97,593,277 0p-13p 9p

Exercised (6,416,707) (3,520,897) (9,937,604) 0.4p-38p 22p

Forfeited, expired and cancelled (25,558,021) (13,607,116) (39,165,137) 0p-407p 30p


Exercisable at 31 March 2010 153,156 4,749,359 4,902,515 0p-407p 118p

Exercisable at 31 March 2011 2,869,692 10,751,017 13,620,709 0p-407p 288p

The weighted average fair value of the 97,593,277 options granted in the year ended 31 March 2011 (2010 –59,038,723 options) was 4 pence per option (2010 – 24 pence per option).

The following table summarises information about share options outstanding at 31 March 2011:

Weighted averageMarket price on remaining

Exercise price date of grant Number contractual life Number(pence) (pence) outstanding (years) exercisable

0 40-583 21,107,024 7 773,150

0 7 20,428,015 10 –

0.4 19-285 227,693 2 227,693

7-8.6 7-8.6 11,750,000 10 –

12 15 45,159,837 5 2,277,400

12-12.4 12-12.4 5,000,000 9 –

12.3 14.5 6,743,274 1 –

32 64 3,712,595 4 412,465

36 38 1,020,231 8 124,107

40-41 40-41 2,671,774 9 –

64 67 52,825,493 8 5,741,11684 72 672,889 3 52,336

249 303 50,158 0 50,158

261 360 2,190 1 –

273 285 2,222,355 3 2,222,355

284 296 1,662,596 3 1,662,596

341 418 70,026 3 60,490

349 483 19,275 2 12,523

407 595 16,334 1 4,320

175,361,759 13,620,709


26. Employee share schemes continued

The Group purchased 565,319 shares (2010 – 45,142,454 shares) under the CAP and DBP during the yearended 31 March 2011. An employee benefit trust held 51,399,364 shares (2010 – 56,785,732 shares) at 31 March2011 to satisfy past awards when they vest in the future. A share incentive plan trust held 364,963 shares at31 March 2010 to satisfy ongoing purchases under the plan as they occur, but none at 31 March 2011.

Option grants made since 7 November 2002 have been fair-valued using the Black-Scholes model. Theweighted-average assumptions used in the estimates of fair value were as follows:

Year ended 31 March

2011 2010

Risk-free interest rate 1.4% 1.9%

Expected dividend yield 1.1% 1.0%

Expected volatility 49.9% 65.7%

Expected life of option – years 3.2 3.1

Volatility as determined based on the historical volatility of our share price.

National Insurance contributions on share options accrued at 31 March 2011 amounted to £0.1m (2010 – £0.3m).

The share-based payments expense in the year ended 31 March 2011 amounted to £20.1m (2010 – £15.2m).

27. Auditors’ remuneration

The following fees were paid or are payable to the Group’s auditors for the years ended 31 March 2011and 2010:

Year ended 31 March

£m 2011 2010

Audit services

Fees payable for the audit of parent company and consolidated financial statements 0.3 0.3

Non-audit services

Fees payable for the audit of the Company’s subsidiaries pursuant to legislation 0.9 1.0

Services relating to taxation 0.5 0.5

Services relating to the comprehensive refinancing – 3.2

All other services 0.1 0.3

Total auditors’ remuneration 1.8 5.3

Notes continued




Shareholderinformation

This Notice of Annual General Meeting is importantand requires your immediate attention. If you haveany doubt as to the action you should take, you arerecommended to seek your own personal financialadvice from your stockbroker, bank manager,solicitor, accountant or other financial adviserauthorised under the Financial Services and MarketsAct 2000. If you have sold or otherwise transferredall your ordinary shares in Yell Group plc, pleasesend this document, together with theaccompanying documents to the purchaser ortransferee, or to the stockbroker, bank or otheragent through whom the sale or transfer waseffected for transmission to the purchaser ortransferee.

Notice is hereby given that the 2011 Annual GeneralMeeting of Yell Group plc (the ‘Company’) will beheld at Exchange House, Primrose Street, LondonEC2A 2HS on Thursday 21 July 2011 at 11.00am toconsider and, if thought fit, pass the followingresolutions:

Ordinary resolutionsResolution 1That the report of the directors and auditors, andthe audited financial statements of the Company,for the year ended 31 March 2011 be received andconsidered.

The directors are required by law to present to theshareholders of the Company at a general meetingthe report of the directors and auditors, and theaudited financial statements of the Company, forthe year ended 31 March 2011. The report of thedirectors and the audited financial statements havebeen approved by the directors, and the report ofthe auditors has been approved by the auditors,and a copy of each of these documents may befound in the 2011 Annual Report of the Companystarting at page 1.

Resolution 2That the report on the remuneration of directorsfor the year ended 31 March 2011 be approved.

Listed companies are required to include certainspecified information on the remuneration of theirdirectors for each financial year in a report and togive their shareholders an opportunity to approvesuch report. The report on the remuneration of thedirectors of the Company for the year ended 31March 2011 may be found in the 2011 Annual Reportof the Company starting at page 39. As the vote isadvisory it does not affect the actual remunerationpaid to any individual director.

Resolution 3That John Coghlan be re-elected as a director.

Resolution 4That Toby Coppel be re-elected as a director.

Resolution 5That Carlos Espinosa de los Monteros be re-electedas a director.

Resolution 6That Richard Hooper be re-elected as a director.

Resolution 7That Robert Wigley be re-elected as a director.

Resolution 8That Tony Bates be elected as a director.

Resolution 9That Kathleen Flaherty be elected as a director.

Notice of Annual GeneralMeeting



Notice of Annual General Meeting continued

Resolution 10That Mike Pocock be elected as a director.

As Tony Bates, Kathleen Flaherty and Mike Pocockwere appointed as directors by the other directors,shareholder consent to their election to the Boardis required at the 2011 Annual General Meeting, thefirst such meeting since their appointments. As amatter of best practice under the UK CorporateGovernance Code, all of the other directors of theCompany will submit themselves for re-election atthe 2011 Annual General Meeting. Biographicaldetails of the directors of the Company may befound in the 2011 Annual Report of the Companystarting at page 26. The Chairman has confirmed,following a performance review that all directorsstanding for election and re-election continue toperform effectively and demonstrate commitmentto their roles.

Resolution 11That PricewaterhouseCoopers LLP be reappointedauditors of the Company to hold office until theconclusion of the next general meeting of theCompany before which financial statements are laid.

The auditors are responsible for examining theannual financial statements of the Company andforming an opinion as to whether they give a trueand fair view of its results and financial position. Itis a requirement of law that the Company appointauditors at each meeting at which financialstatements are presented to its shareholders, suchappointment to continue until the next meeting atwhich financial statements are presented.

Resolution 12That the directors be authorised to determine theremuneration of the auditors.

This resolution, if passed, will give the directors ofthe Company the authority to determine theremuneration of the auditors for the audit work tobe carried out by them in the next financial year.The amount of remuneration paid to the auditorsfor the next financial year will be disclosed in thenext audited financial statements of the Company.

Resolution 13That the directors be generally and unconditionallyauthorised for the purposes of section 551 of theCompanies Act 2006 (the ‘2006 Act’), to exerciseall the powers of the Company to allot shares inthe Company and to grant rights to subscribefor or convert any security into shares in theCompany (‘Rights’):

a) up to an aggregate nominal amount of£7,892,013; and

b) comprising equity securities (as defined insection 560 of the 2006 Act) up to a furtheraggregate nominal amount of £7,892,013 byway of a rights issue to holders of ordinaryshares on the register of members at such recorddates as the directors may determine inproportion (as nearly as may be practicable) tothe respective numbers of ordinary shares heldor deemed to be held by them on any suchrecord dates (and to holders of any other class ofequity securities as required by the rights ofthose securities or as the directors otherwiseconsider necessary), but subject to suchexclusions or other arrangements as thedirectors may consider necessary or appropriateto deal with fractional entitlements, treasuryshares, record dates or legal regulatory orpractical difficulties that may arise under thelaws of, or the requirements of any regulatorybody or stock exchange in, any territory or byvirtue of shares being represented by depositaryreceipts or any other matter whatsoever,

provided that this authority shall expire at theconclusion of the Annual General Meeting of theCompany in 2012 save that the Company maybefore such expiry make any offer or agreementthat would or might require shares to be allotted orRights to be granted after such expiry and thedirectors may allot shares or grant Rights inpursuance of any such offer or agreement as if thisauthority had not expired and all unexercisedauthorities previously granted to the directors toallot shares and grant Rights be and are herebyrevoked.





At the Annual General Meeting held on 29 July 2010,the directors were given authority under section 551of the 2006 Act to allot ordinary shares in the capitalof the Company up to a maximum nominal amountof £7,790,694 (being one-third of the issued sharecapital at that time). This authority expires at theend of the 2011 Annual General Meeting. Part (a) ofresolution 13 seeks to renew the directors’ generalauthority, on broadly the same terms as theauthority granted on 29 July 2010, to allot shares upto an aggregate nominal amount of £7,892,013 aspermitted by the Company’s articles of associationand pursuant to the provisions of section 551 of the2006 Act. This amount is equivalent to 789,201,309shares and represents one-third of the nominalamount of the issued share capital (excludingTreasury shares) at 7 June 2011 (the latest practicabledate prior to the publication of this Notice). This is inline with the guidelines issued by the Association ofBritish Insurers (‘ABI’) in December 2008. Other thanin connection with the Company’s various share-based plans for senior executives and employees,the Board has no present intention of allottingordinary shares.

Part (b) of resolution 13 is an authority that, in linewith the ABI’s guidelines, seeks to authorise thedirectors to allot ordinary shares in connection witha rights issue to existing shareholders in proportion(as nearly as may be practicable) to their existingholdings up to a further aggregate nominal amountof £7,892,013 representing approximately one-thirdof the issued ordinary share capital (excludingtreasury shares) at 7 June 2011 (the latest practicabledate prior to the publication of this Notice).

The directors do not currently intend to exercise thisauthority and no issue of shares will be made thatwould effectively alter control of the Companywithout the sanction of shareholders in generalmeeting. In the event that the Company uses theauthority under part (b) of the resolution in wholeor part the directors would all stand for re-electionat next year’s Annual General Meeting (as is theircurrent practice). The authorities sought underparagraphs (a) and (b) of this resolution willexpire at the conclusion of the Annual GeneralMeeting in 2012.

At 7 June 2011 (the latest practicable date prior topublication of this Notice) the Company held nilordinary shares in treasury.

Resolution 14That in accordance with sections 366 and 367 of the2006 Act the Company and all companies that areits subsidiaries at any time during the period forwhich this resolution has effect be generally andunconditionally authorised to:

a) make political donations to political parties orindependent election candidates (as such termsare defined in the 2006 Act), not exceeding£100,000 in aggregate;

b) make political donations to politicalorganisations other than political parties (assuch terms are defined in the 2006 Act), notexceeding £100,000 in aggregate; and

c) incur political expenditure (as such term isdefined in the 2006 Act), not exceeding£100,000 in aggregate,

during the period beginning on the date of thepassing of this resolution and ending at theconclusion of the Annual General Meeting of theCompany to be held in 2012, provided that themaximum authorised amounts referred to in (a),(b) and (c) may be comprised of one or more sumsin different currencies that, for the purposes ofcalculating the said amounts, shall be convertedinto pounds sterling at such rate as the Board mayin its absolute discretion determine to beappropriate.

Resolution 14 concerns Part 14 of the 2006 Act,which came into force on 1 October 2007, andprovides that political donations made by acompany to political parties, to other politicalorganisations and to independent electioncandidates or political expenditure incurred bya company must be authorised in advance byshareholders.




It is not the policy of the Company to make politicaldonations of the type caught by these provisionsand the directors have no intention of changing thatpolicy. However, as a result of the wide definitions inthe 2006 Act, normal expenditure (such asexpenditure on organisations concerned withmatters of public policy, law reform andrepresentation of the business community) andbusiness activities (such as communicating with theGovernment and political parties at local, nationaland European level) might be construed as politicalexpenditure or as a donation to a political party orother political organisation and fall within therestrictions of the 2006 Act.

This resolution does not purport to authorise anyparticular donation or expenditure but is expressedin general terms as required by the 2006 Act and isintended to authorise normal donations andexpenditure. If passed, resolution 14 would allowthe Company and its subsidiaries to make donationsto political parties, other political organisations andindependent election candidates and to incurpolitical expenditure (as defined in the 2006 Act) upto an aggregate limit of £100,000 during the periodup to twelve months after the passing of theresolution. This will allow the Company to continueto support the community and put forward its viewsto wider business and Government interests withoutrunning the risk of being in breach of the law. Anypolitical donation made or political expenditureincurred that is in excess of £2,000 will be disclosedin the Company’s 2012 Annual Report, as requiredby the 2006 Act.

Resolution 15That the Directors be authorised to arrange for theamendment of the discretionary employees’ shareplans operated by the Company by the removal ofthe “5% in ten year” dilution limit provided that the“10% in ten year” dilution limit will continue toapply in respect of all of the employees’ shareplans operated by the Company under which newlyissued shares may be used to satisfy awards andoptions.

The rules of the Yell Group plc Executive ShareOption Scheme and the Yell Group plc Long TermIncentive Plan contain two shareholder dilutionlimits in accordance with guidelines produced by theAssociation of British Insurers. Under these limits:

a) no more than 5% of the Company’s issued sharecapital may be placed under option or awardunder any discretionary employees’ share plan inany ten year period (“5% in ten year limit”); and

b) no more than 10% of the Company’s issued sharecapital may be placed under option or awardunder any employees’ share plan in any ten yearperiod (“10% in ten year limit”).

Since flotation, Yell has used a number ofdiscretionary employees’ share plans (being the YellGroup plc Executive Share Option Scheme, the YellGroup plc US Equity Incentive Plan, the Yell Groupplc Long Term Incentive Plan and the Yell Group plcCapital Accumulation Plan) to incentivise a broadrange of executives and employees, as well as usingother plans on an all-employee basis (namely, theYell Group plc Sharesave Plan and the Yell Group plcShare Incentive Plan).

Other than the Yell Group plc Capital AccumulationPlan, these plans all operate over new issue shares.A review of these plans has indicated that theCompany has offered its share plans on a broaderbasis than many other companies. Approximately50% of the total awards made to date under thediscretionary employees’ share plans have beengranted to employees other than the formerExecutive Directors, the global Executive Committeeand those who report to the CEO.

Approximately 3% of the issued share capital hasbeen granted under the all-employee plans, makingthe total potential shareholder dilutionapproximately 7%.

The policy of granting awards under thediscretionary employees’ share plans to theCompany’s more junior team members has meantthat operating within the “5% in ten year limit” for





discretionary employees’ share plans has becomea real constraint and is restricting the Company’sability to offer share incentives in the future not onlyto key strategic team members, but also to a widergroup of people including any new recruits that theBoard may wish to hire to help transform thebusiness and rebuild shareholder value.

For this reason, shareholder approval is beingsought to remove the “5% in ten year limit” fordiscretionary plans. The Company will continue tooperate the “10% in ten year limit” for all of theemployees’ share plans that it operates.

The rules of the discretionary employees’ shareplans, as amended, will be available for inspectionat the registered office of the Company duringnormal business hours from the date of thisdocument until the date of the Annual GeneralMeeting and at the meeting itself.

Resolution 16That the directors of the Company be and arehereby authorised and sanctioned, in accordancewith article 93 of the Company’s articles ofassociation, to exceed the restriction on theirpowers to incur borrowings as set out in article 93provided that, at any time, the aggregate principalamount outstanding of all moneys borrowed by theGroup may not exceed an amount equal to£3,500m (three thousand, five hundred millionBritish pounds), provided that this authority shallend at the conclusion of the 2014 Annual GeneralMeeting of the Company. For these purposes,moneys borrowed shall be determined inaccordance with article 93 of the Company’s articlesof association except that foreign currencyborrowings shall be translated into sterling usingthe rates of £1=US$1.6030 and £1 = €1.1296 beingthe relevant closing exchange rates on 31 March2011.

The articles of association contain a borrowingrestriction which, broadly speaking, requires thedirectors to restrict the borrowings of the Group tofive times the Adjusted Capital and Reserves of theGroup (as defined in the articles of association).

In accordance with the articles of association, anordinary resolution was passed at the AnnualGeneral Meeting in 2009, the effect of which was topermit this restriction to be exceeded provided thatthe aggregate principal amount outstanding of allmoneys borrowed by the Group did not exceed£4,920,000,000. This relaxation was necessarygiven a reduction in the Group’s Adjusted Capitaland Reserves arising from a non-cash charge toimpair the goodwill relating to the Group’sinvestment in Yell Publicidad.

This relaxation expires at the conclusion of thisyear’s Annual General Meeting.

Following completion of the refinancing of theGroup’s borrowings in November 2009, the Group’sborrowings are currently less than fives timesAdjusted Capital and Reserves. However, theamount of the Group’s Adjusted Capital andReserves is subject to fluctuation and having regardto the Group’s current debt structure, the directorsconsider it more appropriate for the effective limiton the amount of the Group’s borrowings permittedby the articles of association to continue to be set asa specified amount.

Accordingly, this ordinary resolution is to sanction arelaxation of the borrowing restriction contained inthe Company’s articles of association such that theGroup’s borrowings will, for the period set out in theresolution, be restricted to a maximum of £3,500m.

Accordingly, the directors propose that, as permittedby the articles of association, shareholders be askedto approve the continued suspension of theAdjusted Capital Reserve related restriction onborrowings until the conclusion of the 2014 AnnualGeneral Meeting of the Company. The intention ofthe suspension is to avoid the Company being inbreach of the restriction on borrowings in its articlesof association. It is not intended that the Group’sborrowings be increased beyond the currentfacilities available to the Group.




Special resolutionsResolution 17That the directors be given power pursuant tosections 570 and 573 of the 2006 Act to allot equitysecurities (as defined in section 560 of the 2006Act) in the Company for cash either pursuant to theauthority conferred by resolution 13 or by way of asale of treasury shares for cash, as if section 561(1)of the 2006 Act did not apply to any such allotmentor sale, provided that this power shall be limited to:

a) the allotment of equity securities in connectionwith or pursuant to an offer of securities (but, inthe case of the authority granted underresolution 13 (b) above, by way of a rights issueonly) in favour of holders of ordinary shares onthe register of members at such record dates asthe directors may determine (and to holders ofany other class of equity securities as required bythe rights of those securities or as the directorsotherwise consider necessary) in proportion (asnearly as may be practicable) to the respectivenumber of ordinary shares held or deemed to beheld by them on such record dates but subject tosuch exclusions or other arrangements as thedirectors may consider necessary or appropriateto deal with fractional entitlements, treasuryshares, record dates or legal regulatory orpractical difficulties which may arise under thelaws of or the requirements of any regulatorybody or stock exchange in, any territory or byvirtue of shares being represented by depositaryreceipts or any other matter whatsoever; and

b) the allotment (other than pursuant to sub-paragraph (a) of this resolution) to any personor persons of equity securities or sale oftreasury shares up to an aggregate nominalamount of £1,183,802,

provided that these authorities shall expire at theconclusion of the Annual General Meeting of theCompany in 2012, save that the Company maybefore such expiry make any offer or agreementthat would or might require equity securities to beallotted, or treasury shares to be sold, after such

expiry and the directors may allot equity securities,or sell treasury shares, in pursuance of any suchoffer or agreement as if the power conferredhereby had not expired.

Resolution 17 is a special resolution that will give thedirectors authority to allot shares in the capital ofthe Company pursuant to the authority grantedunder resolution 13 above or to sell treasury sharesfor cash without complying with the pre-emptionrights in the 2006 Act in certain circumstances. Inline with ABI guidelines described in relation toresolution 13 above, this authority will permitdirectors to allot shares:

a) Up to an aggregate nominal value of £15,784,026(being two-thirds of the Company’s issuedordinary share capital at 7 June 2011, the latestpracticable date prior to publication of thisNotice) in an offer to existing shareholders on apre-emptive basis. However, unless the shares areallotted pursuant to a rights issue (rather than anopen offer), the directors may only allot shares upto a nominal amount of £7,892,013 being one-third of the Company’s issued share capital (ineach case subject to any adjustments, such as forfractional entitlements and overseasshareholders, as the directors see fit); and

b) Up to a maximum nominal value of £1,183,802(being approximately 5% of the Company’s issuedordinary share capital at 7 June 2011, the latestpracticable date prior to publication of thisNotice) otherwise than in connection with anoffer to existing shareholders.

If given, this authority will expire at the conclusionof the Annual General Meeting in 2012. The directorsconfirm their intention to follow the provisions ofthe Pre-emption Group’s Statement of Principlesregarding the cumulative usage of authoritieswithin a rolling three year period. The Principlesprovide that, in any rolling three year period,companies should not issue shares for cashrepresenting more than 7.5% of the Company’sissued share capital on a non-pre-emptive basis,without prior consultation with shareholders.





Resolution 18That the Company be generally andunconditionally authorised to make marketpurchases (within the meaning of section 693(4) ofthe 2006 Act) of any ordinary shares of 1.00 penceeach in the capital of the Company on such termsand in such manner as the directors may from timeto time determine, and where such shares are heldas treasury shares, the Company may use themfor the purposes of its employee share plans,provided that:

a) the maximum number of ordinary shares thatmay be purchased is 236,760,393 representingapproximately 10% of the issued ordinary sharecapital at 7 June 2011;

b) the minimum price that may be paid for eachordinary share is 1.00 pence which amount isexclusive of expenses, if any;

c) the maximum price (exclusive of expenses) thatmay be paid for each ordinary share is anamount equal to the higher of: (i) 105% of theaverage of the middle market quotations for theordinary shares in the Company as derived fromthe Daily Official List published by the LondonStock Exchange for the five business daysimmediately preceding the day on which suchshare is contracted to be purchased; and (ii) thatstipulated by article 5(1) of the EU Buyback andStabilisation Regulations 2003 (No. 2273/2003)(being the higher of the price of the lastindependent trade and highest currentindependent bid for an ordinary share in theCompany on the trading venues where themarket purchases by the Company pursuant tothe authority conferred by this resolution 18 willbe carried out);

d) unless previously renewed, revoked or varied bythe Company in general meeting, this authorityshall expire at the conclusion of the AnnualGeneral Meeting of the Company in 2012; and

e) the Company may, before this authority expires,make a contract to purchase its ordinary sharesthat will or might be executed wholly or partlyafter the expiry of this authority, and may makepurchases of its ordinary shares pursuant to anysuch contract as if this authority had not expired.

The directors consider that, in certain circumstances,it may be appropriate and in the best interests ofshareholders generally for the Company to purchaseits own shares. This resolution gives authority forthe Company to purchase up to 236,760,393 of itsordinary shares, which is approximately equivalentto 10% of the issued share capital (excludingtreasury shares) of the Company at 7 June 2011 (thelatest practicable date prior to publication of thisNotice) and sets minimum and maximum prices.

This authority will expire at the conclusion of theAnnual General Meeting in 2012.

The directors have no present plans to exercise anyauthority granted by this resolution in the future,but will keep the matter under review, taking intoaccount the financial resources of the Company, theCompany’s share price and future fundingopportunities. The directors will only exercise thisauthority where, in the light of prevailing marketconditions, they consider it will result in an increasein earnings per ordinary share in the Company andwould be in the interests of shareholders generally.The purchase of shares by the Company under thisauthority would be effected by means of marketpurchases on the London Stock Exchange.

The total number of options to subscribe forordinary shares in the Company outstanding at7 June 2011 (the latest practicable date prior topublication of this Notice) was 175,287,605. Thisrepresents 7.4% of the issued ordinary share capital(excluding treasury shares) of the Company at thatdate. If the Company were to buy back themaximum number of shares permitted pursuant tothe passing of this resolution and cancel them, thenthe total number of options to subscribe for sharesin the Company outstanding at 7 June 2011 wouldrepresent 8.2% of the reduced issued ordinary share




capital (excluding treasury shares) of the Company.The Company does not have any share warrants.

Sections 724 to 732 of the 2006 Act enables listedcompanies to retain any of their own shares theyhave purchased as treasury shares instead ofcancelling them. The Company will consider holdingany of its own shares that it purchases pursuant tothis resolution as treasury shares, which will give thedirectors flexibility in the management of the capitalbase of the Company. No dividends will be paid ontreasury shares while held in treasury, and no votingrights will attach to them.

Resolution 19That a general meeting of the Company, other thanan Annual General Meeting, may be called on notless than 14 clear days’ notice.

At the Company’s 2010 Annual General Meeting,new articles of association were adopted to includea provision allowing general meetings of theCompany to be called on the minimum notice periodprovided for in the 2006 Act. Prior to theamendment of the 2006 Act in August 2009 as aresult of the Companies (Shareholders’ Rights)Regulations 2009 (the ‘Shareholders’ RightsRegulations’) (which implement the EU ShareholderRights Directive in the UK), the minimum noticeperiod permitted by the 2006 Act for generalmeetings, other than Annual General Meetings ofpublic companies, was 14 days. One of theamendments to the 2006 Act made by theShareholders’ Rights Regulations increases theminimum notice period for listed company generalmeetings to 21 days, but with an ability forcompanies to reduce this period back to 14 days(other than for Annual General Meetings) providedthat two conditions are met. The first condition isthat there is an annual resolution of shareholdersapproving the reduction in the minimum noticeperiod from 21 days to 14 days. The second conditionis that the Company must make a means ofelectronic voting available to all shareholders forthat meeting. This condition is met if the Companyoffers a facility, accessible to all shareholders, to

appoint a proxy by means of a website. (Please referto ‘Appointment of a proxy and voting’ below fordetails of the Company’s arrangements forelectronic proxy appointment.)

The directors are therefore proposing resolution 19as a special resolution to approve 14 days as theminimum period of notice for all general meetingsof the Company other than Annual GeneralMeetings. The approval will be effective until thenext Annual General Meeting of the Company, whenit is intended that the approval be renewed. TheBoard will consider on a case by case basis whetherthe use of the flexibility offered by the shorterperiod is merited, taking into account thecircumstances, including whether the business ofthe meeting is time-sensitive

RecommendationThe Board considers that all the resolutionsproposed to be considered at the Annual GeneralMeeting are likely to promote the success of theCompany and are in the best interests of theCompany and its shareholders as a whole. Thedirectors unanimously recommend that you votein favour of the resolutions as they intend to doin respect of their own beneficial holdings, whichamount to 1,300,280 shares representingapproximately 0.06% of the existing issuedordinary share capital of the Company (excludingtreasury shares).

Appointment of a proxy and votingA member of the Company entitled to attend andvote may appoint a proxy (who need not be amember of the Company) to exercise all or any ofhis/her rights to attend and speak and vote at theAnnual General Meeting. A member can appointmore than one proxy in relation to the AnnualGeneral Meeting provided that each proxy isappointed to exercise the rights attached todifferent shares held by him/her.

Your proxy could be the Chairman, another directorof the Company or another person who has agreedto attend to represent you. Your proxy must vote as





you instruct and must attend the Annual GeneralMeeting for your vote to be counted. Appointing aproxy does not preclude you from attending theAnnual General Meeting and voting in person. If youattend the Annual General Meeting in person, yourproxy appointment will automatically beterminated.

A Form of Proxy is enclosed for use in connectionwith the Annual General Meeting, if desired. Noteson completing the Form of Proxy can be found onthe relevant form and should be read carefullybefore the form is completed.

In order to be valid, an appointment of proxy mustbe completed and returned by one of the followingmethods:

• In hard copy form by post, courier or hand to theCompany’s registrars, Equiniti, Aspect House,Spencer Road, Lancing, West Sussex BN99 6ZL.

• By completing it online at www.sharevote.co.ukby following the on-screen instructions to submitit (see further ‘Appointment of proxies online’below).

• In the case of CREST members, by utilising theCREST electronic proxy appointment service (see‘CREST voting’ below).

and in each case the appointment of proxy mustreach the Company’s registrars not later than11.00am on 19 July 2011.

To change your proxy instructions you may return anew Form of Proxy using any of the methods set outabove. When you have appointed a proxy using thehard copy proxy form and would like to change theinstruction using another hard copy proxy form,please contact Equiniti: 0871 384 2049. Calls to thisnumber cost 8p per minute from a BT landline, otherproviders’ costs may vary. Lines open 8.30am to5.30pm, Monday to Friday. If calling from overseasplease dial +44 (0) 121 415 7105. The deadline forreceipt of proxy appointments (see above) alsoapplies in relation to any amended instructions.

Where two or more valid separate appointments ofproxy are received in respect of the same share inrespect of the same meeting, the one that islast sent shall be treated as replacing and revokingthe other(s).

The time by which a person must be entered on theregister of members to have the right to attend orvote at the Annual General Meeting and fordetermining the number of shares held is 6.00pmon 19 July 2011 (or, if the Annual General Meeting isadjourned, 6.00pm on the date that is two daysprior to the adjourned Annual General Meeting).Changes to entries on the register of members afterthat time will be disregarded in determining therights of any person to attend or to vote (and thenumber of votes they may cast) at the AnnualGeneral Meeting.

Appointment of proxies onlineAs noted above, you may, if you wish, register theappointment of a proxy for the Annual GeneralMeeting online by logging ontowww.sharevote.co.uk. You will need to use a 25-digitnumber made up of your Voting ID, Task ID andShareholder reference printed on your proxy form.Full details of the procedure are given on thewebsite. The proxy appointment must be receivedby Equiniti not later than 11.00am on 19 July 2011.The use of the internet service in connection withthe Annual General Meeting is governed byEquiniti’s conditions of use set out on the website,www.sharevote.co.uk, and may be read by loggingonto the site.

Please note that the Company takes all reasonableprecautions to ensure no viruses are present in anyelectronic communications it sends out but theCompany cannot accept responsibility for loss ordamage arising from the opening or use of anyemail or attachments from the Company andrecommend that members subject all messages tovirus checking procedures prior to use. Anyelectronic communication sent to the registrarsthat is found to contain a computer virus will notbe accepted.




CREST votingCREST members who wish to appoint a proxy orproxies through the CREST electronic proxyappointment service may do so for the AnnualGeneral Meeting to be held on 21 July 2011 and anyadjournment(s) thereof by using the proceduresdescribed in the CREST Manual on the Euroclearwebsite (www.euroclear.com/CREST). CRESTPersonal Members or other CREST sponsoredmembers, and those CREST members who haveappointed a voting service provider(s), should referto their CREST sponsor or voting service provider(s),who will be able to take the appropriate action ontheir behalf. In order for a proxy appointment orinstruction made using the CREST service to be valid,the appropriate CREST message (a ‘CREST ProxyInstruction’) must be properly authenticated inaccordance with Euroclear UK & Ireland Limited’s(‘EUI’) specifications and must contain theinformation required for such instructions, asdescribed in the CREST Manual. The message,regardless of whether it constitutes theappointment of a proxy or an amendment to theinstruction given to a previously appointed proxy,must, in order to be valid, be transmitted so as to bereceived by the issuer’s agent (ID RA19) by 11.00amon 19 July 2011. For this purpose, the time of receiptwill be taken to be the time (as determined by thetimestamp applied to the message by the CRESTApplications Host) from which the issuer’s agent isable to retrieve the message by enquiry to CREST inthe manner prescribed by CREST.

CREST members and, where applicable, their CRESTsponsors or voting service providers should notethat EUI does not make available special proceduresin CREST for any particular messages. Normalsystem timings and limitations will therefore applyin relation to the input of CREST Proxy Instructions.It is the responsibility of the CREST memberconcerned to take (or, if the CREST member is aCREST Personal Member or sponsored member orhas appointed a voting service provider(s), toprocure that his CREST sponsor or voting serviceprovider(s) take(s)) such action as shall be necessaryto ensure that a message is transmitted by means of

the CREST system by any particular time. In thisconnection, CREST members and, where applicable,their CREST sponsors or voting service providers arereferred, in particular, to those sections of the CRESTManual concerning practical limitations of theCREST system and timings.

The Company may treat as invalid a CREST ProxyInstruction in the circumstances set out inRegulation 35(5)(a) of the Uncertificated SecuritiesRegulations 2001.

Voting by pollVoting on all resolutions at the Annual GeneralMeeting will be conducted by way of a poll ratherthan a show of hands. This is a more transparentmethod of voting as member votes are to becounted according to the number of shares held.As soon as practicable following the Annual GeneralMeeting, the results of the voting at the AnnualGeneral Meeting, the numbers of proxy votes castfor and against and the number of votes activelywithheld in respect of each resolution (and otherinformation required by section 341 of the 2006 Act)will be announced via a Regulatory InformationService and also placed on the Company’swebsite:www.yellgroup.com.

Corporate representativesAny member of the Company that is a corporationmay authorise one or more corporaterepresentatives who may exercise on its behalf allof the powers that the corporation would beentitled to exercise if it were an individual memberof the Company provided that they do not do so inrelation to the same shares. It is no longer necessaryto nominate a designated corporate representative.





Audit concernsMembers satisfying the thresholds in section 527 ofthe 2006 Act can require the Company to publish onits website a statement setting out any matterrelating to: (i) the audit of the Company’s financialstatements (including the auditor’s report and theconduct of the audit) that are to be laid before theAnnual General Meeting; or (ii) any circumstanceconnected with an auditor of the Company ceasingto hold office since the last Annual General Meeting(in each case) that the members propose to raise atthe Annual General Meeting. The Company cannotrequire the members requesting any such websitepublication to pay its expenses in complying withsection 527 or 528 of the 2006 Act. Where theCompany is required to place a statement on awebsite under section 527 of the 2006 Act, it mustforward the statement to the Company’s auditorsnot later than the time when it makes the statementavailable on the website. The business that may bedealt with at the Annual General Meeting includesany statement that the Company has been requiredunder section 527 of the 2006 Act to publish on itswebsite.

Rights of nominated personsPlease note that if you are an indirect investor andhave been nominated to receive communicationfrom the Company in accordance with section 146 ofthe 2006 Act by a person who holds shares on yourbehalf (the registered shareholder), you do not havethe right to appoint a proxy. However, you may havea right under an agreement with the registeredshareholder to be appointed (or have somebodyelse appointed) as proxy. Alternatively, if you do nothave such a right, or do not wish to exercise it, youmay have a right under such an agreement to giveinstructions to the registered shareholder as to theexercise of such voting rights.

Right to have questions answeredThe Company must cause to be answered at theAnnual General Meeting any question relating tothe business being dealt with at the Annual GeneralMeeting that is put by a member attending theAnnual General Meeting, except (i) if to do so wouldinterfere with the preparation for the AnnualGeneral Meeting or involve the disclosure ofconfidential information, (ii) if the answer hasalready been given on a website in the form of ananswer to a question, or (iii) if it is undesirable in theinterests of the Company or the good order of theAnnual General Meeting that the question beanswered.

Total voting rightsAt 7 June 2011 (being the latest business day prior tothe publication of this Notice), the Company’s issuedshare capital consists of 2,367,603,929 ordinaryshares, carrying one vote each, and the Companydoes not hold any shares in treasury. Therefore thetotal voting rights in the Company are 2,367,603,929.

DocumentsThe following documentation is available forinspection during business hours at the registeredoffice of the Company on any weekday (notincluding public holidays). They will also be availablefor inspection at the Annual General Meeting venue,from 9.30am until the meeting concludes:

• Register of interests of directors (and theirfamilies) in the share capital of the Company.

• Copy of all service contracts between the directorsand the Company.

• Copy of the terms of appointment of non-executive directors.

• Printed copies of this Notice of Annual GeneralMeeting and the Company’s Annual Report 2011.

• Copy of the amended rules of the Yell Group plcExecutive Share Option Scheme and the YellGroup plc Long Term Incentive Plan.




Information available on the Company’swebsiteThe contents of this Notice of Annual GeneralMeeting, details of the total number of shares inrespect of which members are entitled to exercisevoting rights at the Annual General Meeting, and, ifapplicable, any members’ statements, members’resolutions or members’ matters of businessreceived by the Company after the date of thisNotice will be available on the Company’s website:www.yellgroup.com.

Further copies of the Company’s 2011 Annual Reportcan be sent to shareholders on request and free ofcharge, or viewed on the Company’s website atwww.yellgroup.com.

You may not use any electronic address provided inthis Notice of Annual General Meeting (or any otherrelated document including the proxy form) tocommunicate with the Company or Equiniti for anypurposes other than those expressly stated.

By order of the Board

Christian WellsCompany Secretary7 June 2011Registered Office:One Reading CentralForbury RoadReadingBerkshire RG1 3YLUKRegistered in England and Wales No. 4180320




Financial year ended 31 March 2011Annual General Meeting 21 July 2011

Financial year ending 31 March 2012First quarter results 20 July 2011Interim results 8 November 2011

Registrar contact detailsEquiniti LimitedAspect HouseSpencer RoadLancingWest SussexBN99 6DA

Yell contact detailsYell Group plcOne Reading CentralForbury RoadReadingBerkshireRG1 3YLUK

www.yellgroup.comRegistered number: 04180320

Website for online viewing about your holding:www.shareview.co.uk

Registrars’ telephone line for shareholders:0871 384 2049*+44 (0) 121 415 7105

Registrars’ telephone line for employeeshareholders:0871 384 2130*+44 (0) 121 415 7156

Registrars’ text phone for the hard of hearing:0871 384 2255*

*Calls to these numbers are charged at 8p per minute from a BT landline.

Other telephony providers’ costs may vary.

Lines open 8.30am to 5.30pm, Monday to Friday.

Calendar and contacts


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