Hibu Group Investor Presentation › c0e9065d › files... · 2018-11-05 · Group Overview •...

Hibu GroupInvestor Presentation

15 May 2018

hibu confidential / © hibu 2018 1

2hibu confidential / © hibu 2018

DisclaimerThis announcement is for information purposes only and does not constitute a prospectus or any offer to sell or the solicitation of an offer to buy any security in the United States of America, the United Kingdom or in any other jurisdiction. Securities may not be offered, sold or transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1933, as amended.

The information contained in this announcement does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2017 have been filed with the Registrar of Companies. The auditor has reported on those accounts and its report was unqualified and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the year ended 31 March 2018 will be filed with the Registrar of Companies. The auditor has not yet reported on those accounts but is expected to do so prior to filing.

This announcement may include forward-looking statements within the meaning of the securities laws of certain applicable jurisdictions. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts, including, without limitation, those regarding our intentions, beliefs or current expectations concerning, among other things, our future financial conditions and performance, results of operations and liquidity, our strategy, plans, objectives, prospects, growth, goals and targets, future developments in the markets in which we participate or are seeking to participate, and anticipated regulatory changes in the industry in which we operate. These forward-looking statements can be identified by the use of forward-looking terminology, including, but not limited to, terms such as “aim”, “anticipate”, “assume”, “believe”, “continue”, “could”, “estimate”, “expect”, “forecast”, “guidance”, “intend”, “may”, “outlook”, “plan”, “predict”, “project”, “should”, “will” or “would” or, in each case, their negative, or other variations or comparable terminology.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and are based on numerous assumptions. Our actual financial condition, results of operations and cash flows, and the development of the industry in which we operate, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this announcement. In addition, even if our financial condition, results of operations and cash flows, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. We undertake no obligation publicly to update or revise any forward-looking statements, except as may be required by law.

Agenda

• Group Overview

• Hibu US

• Yell UK

• Group Financial Summary

• Q&A


Group Overview

• Solid FY18, EBITDA £177m, £13m above budget, up £5m on previous forecast (in constant currency)

• Entering a period of significant transition in the US; see a path to a $500m revenue / $100m EBITDA digital business

• Essentially fully digital in the UK with strong financials and a robust competitive position

• Maintain focus on cost and investment discipline, and operational excellence, across the Group

• UK and US operationally standalone with a separate debt structure following bond issue, providing strategic flexibility

• Markets remain highly competitive; however believe the Group enters FY19 stronger than ever


Hibu US

hibu confidential / © hibu 2018

FY18 Summary

• Digital marketing services $279m / +5% YoY

• Digital contribution margins >60%

• EBITDA $151m / $8m over budget

• Continue to evolve the business• Digital now 50% of total revenues• Launched Print to Digital (P2D) program• Sales and service model aligned to digital business


Yell UK


Key credit highlights


A leading player in a large growing digital advertising market1

Accelerated growth opportunities going forward5

Distinct value proposition to SMEs through a one stop shop, subscription based solution2

Defensible competitive advantages and barriers to entry3

Growing, highly cash generative digital business4

Future‐proofing led by experienced board and management team6


LTM Dec ’17 Normalised Digital Revenue breakdown by product(3)

Print15%

DigitalMarketingServices(DMS)37%

Yell.com47%

DIY1%

YELL IS THE UK’S LEADING MANAGED DIGITAL MARKETING CHAMPION FOR SMEs

A digital focused business

(1) According to M-Brain, 2017, Yell is #1 for managed digital marketing services for all types of local businesses in the UK.

(2) Based on visits.(3) Yell UK financial data. Combined digital revenue of the UK Group less a one-off non-cash

valuation adjustment to deferred digital revenue of £1.9m in LTM Dec ’17.(4) Yell UK financial data, FY18 Q3.(5) Annualised from H1 2017 figure. Sourced from IAB Digital Ad Spend Market Report.

Announced end of print in 2017

To be phased out completely by March 2019

Digital 85%

(6) Yell internal data, February 2018.(7) Yell internal calculation (based on revenue), based on 2014 surveys and internal business

databases.(8) Omniture, December 2017. Average monthly visits from January to December 2017. The comScore

average monthly visits from January to December 2017 was 8.6m.(9) Yell internal data, December 2017.(10) Yell internal data, December 2017. Customers with a live digital product as of 31 December 2017.

Yell is the local business champion

Yell brandsince 1996

12mYell.com

visits/month

981sales force &

customer services

£197mNormalised

Digital Revenue LTM Dec ’17

132kDigital customers

(10)

(8)

£62mDigital EBITDA

LTM Dec ’17

(9)

(3) (3)

Operating in a large and growing addressable market

Growing ~£11bn digital advertising market(5)

Target market of 2.7m(6) UK SMEs, with estimated annual spend on marketing amounting to £2.8bn(7),

Yell has a 7%(7) share of revenue in a highly fragmented market

Opportunity as SMEs shift towards online channels

>85%(4) subscriptionbased revenue

UK’s #1 provider of managed digital marketing services(1), helping small business to be successful online

Provides consumers with the leading online business directory(2)

– Yell.com

1


Establishing an effective digital presence is a sophisticated, time-consuming proposition…

PROVIDES AN INTEGRATED SOLUTION WHICH SIMPLIFIES AN INCREASINGLY COMPLEX DIGITAL ECOSYSTEM

Digital marketing requires dedicated time, knowledge & resources, which SMEs do not have

…Yell is the ‘one-stop-shop’ solution

SMEs and self–employed professionals can focus on their field of expertise and receive a high quality digital marketing service

Know‐how and expertise in digital marketing Own online assets (Yell.com) Significant scale to deliver cost efficient services

Source: Local Pulse report, Thrive Analytics, 2017.

51%think social is too

complicated or time consuming to manage

45%of websites aren’t mobile

optimised

70%don’t have a process to

capture ratings & reviews

Digitalpresence

•45% of SMEs say they don’t have enough time

•36% say not enoughknowledge

•21% say not enough resources

42%don’t have a website

55% of SMEs would prefer to work with one trusted provider

2


Multi product offering

‘Proven value’ demonstrated through dashboard

Average of 1.6 products per digital customer

Opportunity to retain and upsell

ARPA increase of 49% in LTM Dec ’17 vs. FY15

A WINNING GO-TO-MARKET STRATEGY

Nationwidesales reach

Value basedservice

Data on 2.7m(1) SMEs across the UK

Supplemented by ~26k new leads per month from diversified channels

– ~50% direct from Yell.com

– ~50% from third party sources

Rich SMEdatabase

1 2 3

981 salesforce and customer service agents

– Manage 132k digital customers

– Make calls to ~760kexisting or potential customers (FY18)

– Acquire ~30k new customers p.a.

(1) Yell internal data, February 2018.

2


Trades30%

Professionalservices

11%

Automotive8%

Retail7%

Health6%

Other38%

Yell.com55%

DigitalMarketingServices(DMS)45%

Eastern & Home Counties

32%

London & SE17%

Midlands & NW20%

Scotland, NE& Yorkshire

17%

SW & Northern Ireland14%

YELL SERVES A DIVERSIFIED AND LOYAL CUSTOMER BASE

Diversified customer base High customer stickiness through subscription model

>85% subscription

based services

(1) Yell UK financial data, December 2017. 5 largest verticals by digital customer volume, representing 62% of total digital customers (94k out of 132k digital customers).

(2) Yell UK financial data, based on customer invoices in the month of December 2017.(3) Includes DIY websites (SSL).(4) Yell UK financial data, FY18 Q3’. (5) Yell internal data, as of 31 December 2017.

Top 10% highest spending customers

Highest spending digital customers are the most stable

14years

median tenure

90%ARPA

growth over five years(6)

Dec ’17 Digital Revenue breakdown by customer spend (2)

Excl. DIY websites

Yell.com only38%

DMS only14%

Multi-product48%

1.6average number of products per

customer

Opportunity to cross-sell amongst Yell’s existing customer base

% of customers (9)

33% in FY15

2.9average # of products

1.2%monthly churn(8)

2.5%monthly churn

among all digital customers

vs.

LTM Dec ’17 Normalised Digital Revenue breakdown by productDec ’17 customer breakdown by classification(1) Dec ’17 Digital Revenue breakdown by region(2)

(7)

(7)

(6) Average Revenue per Advertiser of top 10% digital customers in 2012 compared to 2017.(7) Yell internal data, as of December 2017. Excludes print products.(8) Monthly churn average LTM Dec ’17.(9) Yell internal data, December 2017. Some digital customers may also subscribe to print products. Calculated

as a % of total customers excluding DIY websites (SSL) and print-only customers as of December 2017.

(4)

(8)

(3)

(5)132,000digital

customers

Top 10%57%

Next 10%16%

Next 30%19%

Next 50%9%

2


INTEGRATED PRODUCT & SERVICE SUITE

Integrated product & service suite…

Yell.com SEO

Social AdvertsSearch Display Advertising

Yell Merchant app

ConnectStoresWebsites

Videos

Presence Performance

…tailored to the needs of SMEs, in one single place…

‘Presence’ & ‘Performance’ services are highly interdependent

Customers often rely on Yell to both get them online and to also get them found online

…leveraging third-party technology partners

Reduces capital expenditure and provides the flexibility to choose and change, as needed

Comprehensive platform agnostic product suite, differentiated from

Google or Facebook DIY proposition

Social AdvertsStoresWebsites Connect SearchWebsites

Selective in-house development & integration

Yell.com Merchant appConsumer app

3


Face to Face36%

Customer services

25%

Telesales39%

HIGHLY SKILLED NATIONAL SALESFORCE AND STRONG FOCUS ON CUSTOMER SERVICE

100% Google AdWords qualification training

Award winning individuals at annual BESMA(1) awards ceremony

Average length of service of face to face salesforce = 8.0 years(2)

Rated as #13 of the best places to work in the UK by Glassdoor in 2018

Sales expertise & experience Highly efficient sales organisation

(1) Yell internal data, February 2018. (2) Yell internal data, December 2017.(3) Yell internal data, December 2017. Excluding 251 customer service agents.

~65% of total employees are focused on sales and customer service

Sales split between:

380 Telesales agents

350 Face to Face sales people

251 customer service agents

Yell offers customers a tailored service, delivered through personal engagement

155

269

FY14 LTM Dec '17

Digital revenue / sales head, £ in ’000s(3)

181155

Digital customers per head(3)Yell offices

Yell Face to Facecoverage

NORTHERN IRELAND

SCOTLAND

Aberdeen

Liverpool

EdinburghGlasgow

Manchester

Leeds

BristolCardiff London

Cambridge

Brighton

Southampton

Plymouth

WALES

ENGLAND

Reading

ScarboroughBelfast

Birmingham

981sales force &

customer services

A strong face to face presence across the UK

3


# of activecustomer leads:

SALES MODEL SUPPORTED BY ADVANCED DATA ANALYTICS

Data driven & technology enabled sales model…

2.7m(1) businesses on database, including proprietary profile and behavioural data

CRM system rolled out company wide in 2016/17

Marketing automation system integrated with CRM in 2017, driving sales and service efficiency

New opportunities contacted via Telesales

Advanced profiling, segmentation and modelling for optimal conversion & ARPA

Scanning tools for websites, online presence & social

Mapping tools and value dashboard

(1) Yell internal data, February 2018.

…helps optimise the sales model(1)

3 Key components – Value, type / fit and engagement

0.4m1.1m 0.6m0.2m

Farmers

Builders

Hairdressers

Electricians & Electrical Contractors

Painters & Decorators

Plumbers

Garage Services

Schools & Colleges

Take Away Food

Driving Schools

Carpenters & Joiners

Charitable & Voluntary Organisations

Beauty Salons & Consultants

Accountants

Grocers & Convenience Stores

Roofing Services

Plastering & Screeding

Internet Web Design & Development

Pubs

Computer Services

Building Maintenance & Repairs

Recruitment Consultants

Central Heating Services

Estate Agents

Landscapers

Solicitors

Removals & Storage - Domestic

Dentists

Financial Advisers

Locksmiths

Day Nurseries

Security Services & Equipment

SIZE

CONVERSION

High

HighLow

LowVa

lue

Senior Sales1 Face to Face Sales3

Telesales4Freemium / Online2

High conv/value(e.g. Locksmiths)

Face to Face Sales

Low conv/Low value(e.g. Pubs)

Freemium / Online

High conv/Low value(e.g. Day Nurseries)

Telesales

Low conv/High value(e.g. Security Services

& Equipment)

Senior Sales1 2 3 4

3

16

SUSTAINABLE YELL.COM REVENUES DESPITE TRAFFIC TRENDS

(1) Yell UK financial data, December 2017.(2) Omniture, December 2017. Traffic for each financial year is average monthly visits between April –

March. LTM Dec ’17 refers to average monthly visits in calendar year from January to December 2017. Monthly traffic includes both desktop & mobile.

(3) Yell internal calculation. Based on YouGov survey of 156 users.

Sticky revenues

Yell.com revenues generated on a subscription model vs. pay per click

Outstanding value

UK’s #1 digital directory

Higher quality traffic, exhibiting stronger intentions to transact

Yell.com offers attractive average ROI of approximately 20:1 for paying advertisers(3)

Usage initiatives

With increased fragmentation in how information is found e.g. mobile apps, Siri, voice search etc, focus on:

New partnerships and further content & technology enhancements

A new consumer app to improve visitor stickiness and offer new features

End-of-print promotions to drive new traffic and consumer app users

(2)(1)

Stable revenues

Yell.com revenue and average monthly traffic

107 108 107 107

18.9m16.4m

14.2m12.2m

FY15 FY16 FY17 LTM Q3-18

Yell.com revenue Yell.com traffic (m)

(£ in millions, unless otherwise specified)

hibu confidential / © hibu 2018

4


…through the development of B2B and B2C mobile, commerce and social applications

Merchant appallows merchants to edit and manage

Yell.com listing

48kapp users(1)

55%of users are

using >1 a day(1)

Consumer appallows consumers to search & engage

with merchants and local SMEs

3Approx. # of times

consumer uses App per month(1)

43kunique appusers perMonth(1)

Chat added

Booking & payment added

Keep your business up to date

Read, respond, and get notified of new reviews

Upload and manage your photos

Search the largest UK business directory

See detailed information about local businesses

Share your experiences by leaving a review

ACCELERATED GROWTH OPPORTUNITIES & USAGE INITIATIVES

5

Yell accelerated growth opportunities…

Enhance Yell.com –

Search & find

Enhance Yell.com –

Booking, Chat & Payments

New proposition –‘One-stop-shop’

Localised recommendations

using big data

1 2 3

(1) Yell internal data, December 2017.

FY18 UK Financial Summary1


59 62

2612

FY17 FY18Digital Print

74

193 199

44 27

FY17 FY18Digital Print

227

107 108

86 91

FY17 FY18Yell.com DMS

199+5%

Digital Financials £’m

193

Digital Revenue2

+2%

+6%

-4%

59 62

FY17 FY18

Digital EBITDA

64

52

FY17 FY18

Operating Cash3

Total Financials £’m

Revenue2 EBITDA236 85

+14%

-1%

+3%

+3%

-37%

+5%

-30%

-4%

31% 31%

33%36%

EBITDA margin (%)

70%

75%

Cash Flow conversion (%)

(1) Figures are unaudited and compared with the same period in the prior year(2) Combined digital revenue of the UK Group less a one-off non-cash valuation adjustment to deferred digital revenue of £1.9m in FY17(3) Operating cash flow is EBITDA less exceptional operating cash flows, capital expenditure, changes in working capital and pension contribution and excludes central group cost allocations

Group Financial Summary


Group Financial Summary• FY18 EBITDA £177m

• £5m ahead of previous forecast • £13m ahead of budget in constant currency

• FY18 Operating cash flow £131m • £4m ahead of previous forecast • £11m ahead of budget in constant currency

• Q4 Excess Cashflow £24m• £8m ahead of previous forecast

• New capital structure• £225m public bond at 8.5% raised on UK business on 2nd May• Refinanced all existing debt (including equitization of £121m of PIK)• c.390m new shares issued bringing total shares in issue to 1.5bn • Public bond means no forward numbers can be provided for the UK

• US now debt free - excess cash expected to be returned to shareholders


Hibu Group Investor Presentation › c0e9065d › files... · 2018-11-05 · Group Overview •...

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