European Directories Group, European Directories Midco S.à r.l and European Directories BondCo S.C.A Interim report January-June August 2015

Transcription

1 European Directories Group, European Directories Midco S.à r.l and European Directories BondCo S.C.A Interim report January-June 31 August

2 Interim report January-June (Comparative numbers in brackets) Financial Summary April-June - Group revenues are EUR 74m (EUR 81m, 9% below last year) - EBITDA is EUR 10m (EUR 17m, 41% below last year) - Loss for the period after taxes is EUR -5m (EUR -1m) - Net cash from operating activities is EUR -1m (EUR 8m) January-June - Group revenues are EUR 145m (EUR 159m, 9% below last year) - EBITDA is EUR 18m (EUR 31m, 42% below last year) - Loss for the period after taxes is EUR -12m (EUR -5m) - Net cash from operating activities is EUR 5m (EUR 11m) - Net debt excluding shareholder loans is EUR 78m (EUR 100m) Key events during the second quarter - 5 June : According to the financial report as per 31 December, the European Directories group held cash and cash equivalents in excess of EUR 50,000,000, which constituted a Mandatory Cash Sweep Event. A partial prepayment at the Prepayment Amount will be executed on 9 September, by way of reducing the Nominal Amount of each Bond pro rata with the Mandatory Cash Sweep Amount, EUR 640,000. The Nominal Amount of each Bond will be EUR 99,600 after prepayment. Events after the end of the period - The European Directories Group CFO Germon Knoop has resigned. Neil Robson joined the Group on 3 August and will succeed Germon as Group CFO as of 1 September. Neil has held a number of CFO roles in European groups including Game Digital in UK prior to its listing on the London market. - Fonecta Oy, a European Directories Group company based in Finland, has in August acquired 100% of the shares in Kontaktia Oy. Kontaktia Oy is a Finnish digital marketing agency which offers a variety of digital marketing solutions and directory services. 2

3 Report of the Board of Directors April-June Group revenues for the second quarter totalled EUR 74m, a EUR 7m or 9% decline compared to the previous year. This decline is due to the structural decline of traditional print revenues and Fonecta s consumer business. Neither revenues in new media nor in profile services have grown and thus been able to compensate for the decline in the traditional business. Revenue in the Netherlands (DTG) is positively impacted by c. EUR 3m as compared with the treatment in prior periods due to a change in the terms of customer contracts with a resultant change to timing of revenue recognition. DTG has changed the Terms & Conditions for Profile services (Online profiles) sales. From 1 January revenue recognition starts from the delivery date instead of the book publication date, which has been the case before due to Print & Online profiles bundle sales. 3

4 Product groups: New media is mainly consisting of web presence and marketing services, Profile services are mainly internet yellow pages (IYP), Consumer services (only in Finland) are directory assistance and sms data information services, Print is traditional printed directories and Other consists of mixed revenue streams. Profile services revenues remained at last year s level. New media revenues, mainly website and marketing services totalling EUR 17m, a decline of EUR 1m versus last year s level. The share of online products in the Group s product portfolio totalled 59%. Print revenues totalled EUR 9m, a decline of 29% to last year s level. Print revenues represented 12% of total revenues, showing a decrease of 3 percentage points. Consumer services consisting of directory assistance and SMS data information services declined by 13% and totalled EUR 18m, representing 24% of total revenues. Consumer services are provided only by Fonecta in Finland. In addition to the structural decline in traditional print, the transition to online and digital services has proved to be difficult and is taking longer to achieve in all three markets in which the group operates. Group EBITDA for the quarter amounted to EUR 10m (EUR 17m). EBITDA margin was 14% (21%). This decline in EUR as well as in margin is driven by a shift in product mix from traditional high margin print to lower margin online and digital services products. The Group continues to take actions to slow the decline in traditional revenues and to grow the online and digital product portfolio. Overall EBITDA is positively impacted by c. EUR 3m due to the change in terms of customer contracts in the Netherlands discussed above. This change has no cash impact. January-June Group revenues for the first half of the year totalled EUR 145m, a EUR 14m or 9% decline compared to previous year. This decline is mainly in the categories of print revenues, Fonecta s consumer business and profile services. Revenue in the Netherlands (DTG) is positively impacted by c. EUR 4m caused by the change in customer contract terms discussed above. 4

5 Product groups: New media is mainly consisting of web presence and marketing services, Profile services are mainly internet yellow pages (IYP), Consumer services (only in Finland) are directory assistance and sms data information services, Print is traditional printed directories and Other consists of mixed revenue streams. Profile services revenues declined by 5%. New media revenues, mainly website and marketing services remained at last year s level totalling EUR 35m and representing 24% of the total revenue of the Group, an increase of 2 percentage points. The share of online products in the Group s product portfolio totalled 60%. Print revenues totalled EUR 18m, a decline of 28%. Print revenues represented 13% of total revenues, showing a decrease of 3 percentage points. Consumer services consisting of directory assistance and SMS data information services declined by 9% and totalled EUR 34m, representing 24% of total revenues. Consumer services are provided only by Fonecta in Finland. 5

6 In addition to the structural decline in traditional print products and Fonecta s consumer business, the transition to online and digital services is impacted by a challenging economic environment in all key markets. Group EBITDA for the first half of the year amounted to EUR 18m (EUR 31m). EBITDA margin was 12% (20%). The Group continues to slow the decline in traditional revenues and to accelerate the transition to an online and digital product portfolio. However, the decline in high margin traditional business (print and consumer business) has a negative impact on margin and EBITDA in all countries. Other represents central costs which are level year-on-year (EUR 2m). Overall EBITDA is positively impacted by c. EUR 4m due to a change in contract terms in the Netherlands. This change has no cash impact. Cash flow before financing activities was EUR 9m (EUR 2m). Due to the lower operating results, net cash from operating activities decreased by EUR 6m to EUR 5m despite lower working capital outflows and lower interest payments. Net cash used in investing activities was positive EUR 5m (EUR -9m) mainly from the divestment of business unit secondary entries by Herold (EUR 10m) and divestment of the Swedish partnership, HB Förlaget (EUR 1m). The liquidity position of the Group at the end of June was EUR 60m. Net-interest bearing debt at 30 June was EUR 78m, 1.2 x EBITDA (LTM), excluding subordinated shareholder loans (compared to EUR 100m at the end of June in ). In summary, H1 revenue and profitability have declined significantly compared to previous year, in line with the performance of other similar companies. The Board and the management believes that some markets for the companies products and services will continue to decline while it has been difficult to generate profitable growth in the digital businesses. It has accordingly been decided to perform a review to consider how to address the situation. Hannu Syrjänen, Chairman of the Board European Directories Midco S.à r.l. 6

7 Other Information About European Directories Group European Directories Group is an online partner for SMEs offering local search and lead generation with a scalable business model. The Group operates through three main brands: Fonecta in Finland, Herold in Austria and DTG in the Netherlands. At the end of the June the total headcount of the Group was (FTE), a decrease of 37 (FTE) compared to end of June. The Parent company of the Group is European Directories Midco S.à r.l. in Luxembourg. European Directories BondCo S.C.A., a subsidiary of European Directories Midco S.à r.l., issued senior secured callable floating rate bonds in the amount of EUR 160m in December 2013 which were listed in December at Nasdaq Stockholm. For further information, please contact: Group CFO ir@europeandirectories.com The interim report for January-June has been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the EU. The information presented in this interim report has not been audited. Publication of interim reports in : - January-September on 30 November Interim reports will be released on the European Directories Group web site: 7

8 Legal structure CONTACT INFORMATION Head quarter of European Directories Group: Herikerbergweg 88 Postbus LL Amsterdam The Netherlands European Directories BondCo S.C.A.: 46A, Avenue J.F. Kennedy L-1855 Luxembourg The Grand Duchy of Luxembourg 8

9 European Directories Group January-June Interim Financial Statements are unaudited Condensed consolidated income statement 1000 EUR Note Q2 Q2 Q1-Q2 Q1-Q2 LTM Revenues Other income Cost of consumables Personnel expenses Other operating expenses EBITDA *) Gain/(loss) from sale of subsidiaries Depreciation, amortisation and impairment charges Operating profit/loss Finance income Finance expense Finance costs - net Loss before income tax Income taxes Loss for the period Attributable to: Owners of the parent Non-controlling interests *) EBITDA is defined as operating profit/loss before depreciation, amortisation and impairment charges and gain/(loss) from sale of subsidiaries. 9

10 European Directories Group January-June Interim Financial Statements are unaudited Condensed consolidated statement of comprehensive income 1000 EUR Q2 Q2 Q1-Q2 Q1-Q2 LTM Loss for the period Other comprehensive y income subsequent periods p Exchange differences on translating foreign operations Items that will not be reclassified to profit or loss in subsequent periods Actuarial gains/losses on defined benefit plans Tax on actuarial gains/losses on defined benefit plans Other comprehensive income for the period, net of tax Total comprehensive income for the year Total comprehensive income attributable to Owners of the parent Non-controlling interests Total comprehensive income for the year

11 European Directories Group January-June Interim Financial Statements are unaudited Condensed consolidated balance sheet 1000 EUR Note June 30 June 30 Dec 31 ASSETS Non-current assets Goodwill 6, Other intangible assets Investment property Property, plant and equipment Investments in associates Available-for-sale financial assets Other financial assets Loan receivables from related parties Deferred tax assets Total non-current assets Current assets Inventories Trade and other receivables Cash and cash equivalents (excluding bank overdrafts) Assets held-for-sale Total current assets Total assets EQUITY Equity attributable to owners of the parent Share capital Share premium Other reserves Retained earnings Total Non-controlling interests Total equity LIABILITIES Non-current liabilities Bond Shareholder loan and accrued interest Other non-current financial liabilities Deferred tax liabilities Pension obligations Total non-current liabilities Current liabilities Trade payables Deferred revenues Provisions Other current liabilities Bank overdrafts Total current liabilities Total liabilities Total equity and liabilities

12 European Directories Group January-June Condensed consolidated statement of changes in total equity Share capital Share premium Other Translation reserves reserve Retained earnings Owners of the parent Noncontrolling interests Total equity 1000 EUR Total equity 31 December Loss for the period Other comprehensive income Total comprehensive income for the period Put option arising on business combination *) Non-controlling interest arising on business combination Dividends to non-controlling interests Total equity 30 June Total equity 31 December Loss for the period Other comprehensive income Total comprehensive income for the period Dividends to non-controlling interests Total equity 30 June *) The Group has recognised a financial liability for a put option relating to the acquisition of non-controlling interest in Dogado GmbH. The put option entitles the non-controlling interest of Dogado GmbH to sell their shares to the Group during See note 6 and

13 European Directories Group January-June Condensed consolidated cash flow statement 1000 EUR Cash flow from operating activities Loss for the period Adjustments for: Income tax expenses Finance costs - net Depreciation, amortisation and impairment charges Gain/(loss) from sale of subsidiaries Adjustment for post-employment benefits Gains/losses from sale of fixed assets Interest received Interest paid Realised foreign exchange gains and losses and other financial items Taxes paid Operating cash flow before movements in working capital Net change in working capital Net cash from operating activities Q2 Q2 Q1-Q2 Q1-Q2 LTM (2 843) Cash flow from investing activities Acquisitions of subsidiaries and businesses, net of cash acquired Purchases of associated companies Purchases of available-for-sale investments Purchases of intangible assets and property, plant and equipment Sales of subsidiaries and businesses, net of cash Proceeds from sales of intangible assets and property, plant and equipment Net cash used in investing activities Cash flow before financing activities Cash flow from financing activities Proceeds from long-term liabilities Payments of long-term liabilities Payments of short-term liabilities Refinancing costs paid Dividends paid to non-controlling interests Loans granted to related parties Net cash used in financing activities Net increase (+) / decrease (-) in cash and cash equivalents Cash and cash equivalents at the beginning of period Foreign exchange differences in cash and cash equivalents Cash and cash equivalents at the end of period

14 European Directories Group January-June Notes to the condensed consolidated interim financial statements 1. Basis of preparation These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the EU. The condensed interim financial report should be read in conjunction with the consolidated financial statements for the year ended 31 December. All figures in the consolidated interim financial statements have been rounded and consequently the sum of individual figures may deviate from the sum presented. 2. Accounting policies The same accounting policies have been followed in these condensed interim financial statements as were applied in the preparation of the consolidated financial statements for the year ended 31 December. 3. Critical accounting estimates and judgements The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December. 14

15 European Directories Group January-June 4. Segment information The Board of Directors is the group's main strategic decision making body. Management has determined the operating segments based on the information reviewed by the Board of Directors for the purposes of allocating resources and assessing performance. The Board of Directors considers the business from a geographic perspective in Finland (Fonecta), Austria (Herold) and the Netherlands (DTG). - Fonecta reporting segment consists of print, consumer services, profile services, new media and other online product lines in Finland. - DTG reporting segment consists of print, profile services, new media and other online product lines in the Netherlands. - Herold reporting segment consists of print, profile services, new media and other online product lines in Austria - "Other" is not a reporting segment, but consists of corporate headquarters costs and Polish business, which was divested in Q1 Revenues by segment 1000 EUR Q2 Q2 Q1-Q2 Q1-Q2 LTM Fonecta DTG Herold Other Total Operating profit/loss by segment Q2 Q2 Q1-Q2 Q1-Q2 LTM Fonecta DTG Herold Other Total EBITDA by segment 1000 EUR Q2 Q2 Q1-Q2 Q1-Q2 LTM Fonecta DTG Herold Other Total EBITDA is calculated by adding back depreciation, amortisation and impairment charges and gain/(loss) from sale of subsidiaries to operating loss. 15

16 European Directories Group January-June Depreciation, amortisation and impairment charges by segment 1000 EUR Q2 Q2 Q1-Q2 Q1-Q2 LTM Fonecta DTG Herold Other Total Depreciation, amortisation and impairment charges in includes EUR 201m impairment loss relating to intangible assets. Capital expenditure by segment 1000 EUR Q2 Q2 Q1-Q2 Q1-Q2 LTM Fonecta DTG Herold Other Total Assets by segments 1000 EUR June 30 Jun 30 Dec 31 Fonecta DTG Herold Other Total Unallocated Deferred tax assets Loan receivables Other financial assets Total assets in the balance sheet Liabilities by segments 1000 EUR June 30 Jun 30 Dec 31 Fonecta DTG Herold Other Total Unallocated Deferred tax liability Interest-bearing liabilities Total liabilities in the balance sheet

17 European Directories Group January-June 5. Financial risk management The Group has not made any significant changes in policies regarding risk management during the period. Aspects of the Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements for the year ended 31 December. Fair value of financial assets and liabilities measured at amortised cost The fair value of non-current interest-bearing liabilities are as follows: 1000 EUR June 30 Jun 30 Dec 31 Bond Shareholder loan and accrued interest (Preferred Equity Certificates) Other non-current financial liabilities Total The fair value of the following financial assets and liabilities approximate their carrying amount: - Trade and other receivables - Other financial assets - Cash and cash equivalents (excluding bank overdrafts) - Trade payables - Other current liabilities Financial Instruments by category 30 Jun 1000 EUR Assets as per balance sheet Loans and receivables Availablefor-sale Cash and cash equivalents Total Trade and other receivables Cash and cash equivalents Available-for-sale financial assets Other financial assets Total Jun 1000 EUR Interestbearing liabilities Bank overdrafts Trade and other payables Total Liabilities as per balance sheet Bond Shareholder loan Other non-current financial liabilities Trade payables Other current liabilities Bank overdrafts Total

18 European Directories Group January-June 30 Jun 1000 EUR Assets as per balance sheet Loans and receivables Availablefor-sale Cash and cash equivalents Total Trade and other receivables Cash and cash equivalents Available-for-sale financial assets Other financial assets Total Jun 1000 EUR Liabilities as per balance sheet Interestbearing liabilities Bank overdrafts Trade and other payables Total Bond Shareholder loan Trade payables Other current liabilities Bank overdrafts Total

19 European Directories Group January-June 6. Acquisitions, disposals and assets held for sale Acquisitions On 10 March, Group acquired 51% of the shares and votes in Dogado GmbH. As a result European Directories gained control in the company. The acquisition allows the Group to enter the webhosting and SaaS (Software-as-a-service) sector. In addition the Group will through its existing sales force in Austria (but also increasingly in Germany) be an important customer and sales channel for Dogado's products and solutions. Consideration transferred 10 March Cash Total consideration transferred Cash in the acquired company Net cash outflow from acquisition Recognised amounts of identifiable assets acquired and liabilities assumed Fair value recognised on acquisition 1000 EUR 10 March Non-current assets Current assets Non-current liabilities Current liabilities Total identifiable net assets Non-controlling interest -955 Goodwill Total consideration The fair value of non-current assets is including acquired identifiable intangible assets of EUR 891. The Group has recognised a financial liability for a put option relating to the acquisition of non-controlling interest in Dogado GmbH. The put option entitles the non-controlling interest of Dogado GmbH to sell their shares to the Group during The financial liability with nominal value of EUR 10,000 was discounted and recorded at its net present value of EUR 8,188 as of 31 March. The unwind of the discount of EUR 151 was included in other financial expenses in Q2 and the carrying amount of the liability was EUR 8,339 as of 30 Jun. 19

20 European Directories Group January-June Acquisitions in In July, Group acquired 100% of the shares and votes in Klantenvertellen Media Group. As a result European Directories gained control in Klantenvertellen Media Group. The acquisition allows the Group to extend its added value services offering to its SME customer base. The goodwill of c. EUR 3.5m arising from the acquisition is attributable to company's current customer base and market position. Consideration transferred Cash Contingent consideration 750 Total consideration transferred Recognised amounts of identifiable assets acquired and liabilities assumed 1000 EUR Non-current assets Current assets Non-current liabilities Current liabilities Provisional fair value recognised on acquisition Adjustment in Q1 Fair value recognised on acquisition Total identifiable net assets Goodwill Total consideration The fair value of non-current assets is including acquired identifiable intangible assets of EUR 3,420. The fair values of the acquired net assets were measured on a provisional basis in and the final valuation was received in Q1, which resulted in adjustment to the amount goodwill of EUR 1,317. Disposals Disposals during During January the Group sold its Swedish partnership, HB Förlaget 1 Ab. The company owns a property in Halmstad, Sweden, which was classified as an investment property in the Group. The entity was reclassified as assets held-for-sale and its assets and liabilities were presented as held for sale as of 31 Dec. Disposals during The remaining Polish operations, ClearSense S.A, was disposed of in Q1. The sale resulted in a minor gain in the Group. 20

21 European Directories Group January-June 7. Changes in intangible assets 1000 EUR June 30 Jun 30 Dec 31 Opening balance Acquisitions Capital expenditures Disposals Amortisation Impairments Translation differences and other adjustments Closing balance Goodwill included in closing balance Change in goodwill during the period due to impairments In EUR 39.8m of the total impairment loss was allocated to brands, EUR 15.3m to customer relationships and EUR 145.6m goodwill. In also an impairment of EUR 3.5m was recognised in other intangible assets. to Reconciliation of carrying amount of goodwill 1000 EUR June 30 Jun 30 Dec 31 Cost Balance at the beginning of period Acquisition through business combination *) Balance at end of period Impairment losses Balance at the beginning of period Impairment loss Balance at end of period Carrying amounts Balance at the beginning of period Balance at end of period *) Acquisitions during January-June (EUR 2,323) includes adjustment of EUR 1,317 relating to acquisitions made in. 8. Changes in property, plant and equipment 1000 EUR June 30 Jun 30 Dec 31 Opening balance Acquisitions Capital expenditures Disposals Depreciation, amortisation and impairment Translation differences and other adjustments Closing balance

22 European Directories Group January-June 9. Cash and cash equivalents 1000 EUR June 30 Jun 30 Dec 31 Cash at bank and in hand Short-term bank deposits Cash and cash equivalents (excluding bank overdrafts) Cash and cash equivalents include the following for the purposes of the statement of cash flows: 1000 EUR June 30 Jun 30 Dec 31 Cash and cash equivalents Bank overdrafts Cash and cash equivalents Interest-bearing liabilities Interest-bearing debt 1000 EUR Carrying amount Jun 30 Bonds Shareholder loan and accrued interest Other non-current financial liabilities Total Carrying amount Jun 30 Carrying amount Dec In Fonecta purchased 20.6m bonds from the market with the market value of EUR per EUR 1 nominal. The amortised cost of the bond as of 31 Dec was EUR 157m. The purchase resulted in reduction of the carrying value of the bonds and in gain of c. EUR 1.5m, which was recognised in other financial income. The Group has recognised a financial liability for a put option relating to the acquisition of non-controlling interest in Dogado GmbH. The put option entitles the non-controlling interest of Dogado GmbH to sell their shares to the Group during The financial liability with nominal value of EUR 10,000 was discounted and recorded at its net present value of EUR 8,188 as of 31 March. The unwind of the discount of EUR 151 was included in other financial expenses in Q2 and the carrying amount of the liability was EUR 8,339 as of 30 Jun. 22

23 European Directories Group January-June 11. Other provisions Tax provisions Other provisions 1000 EUR June 30 Jun 30 Dec 31 June 30 Jun 30 Dec 31 Opening balance Increase in the provisions Provisions used Unused provisions reversed Disposals Other *) Closing balance Current provisions *) The group reclassified c. EUR 8.9m of tax provisions from other current liabilities to provisions in. The reclassification has been presented as other movements in. Uncertain tax positions/tax provisions The Group is involved in various discussions with local tax authorities. Austria In a recent Austrian tax audit (years ), the tax authority denied Herold tax deduction for goodwill amortization relating to a previous acquisition. The tax authority considers the transaction a related party transaction (thereby disqualifying interest deduction as of 2011). In addition, the tax authority questions the arm s length nature of certain intercompany interest expenses. The financial impact for all years up to is estimated in a range between EUR 5 and 10 million (including interest and penalties). Herold has appealed the decision to the local court and provided for the full amount claimed. In the event that a final ruling would be issued consistent with tax authority s view, this could potentially further increase tax costs (depending on the future Group s financing structure) by EUR 2 to 4 million annually (depending if goodwill amortization deduction or full interest deduction is disallowed). Finland The Finnish tax authority has issued a decision relating to capital gains following the 2005 divestment of Fonecta Holding B.V. qualifying them as indirect private equity activity. The decision required Fonecta to pay additional EUR 29.3 million plus interest. The decision was subsequently revoked by the Supreme Administrative Court. The dispute is still ongoing on secondary grounds. In two other disputes relating to 2005 and 2006, certain financing cost and intragroup interests charges were challenged for tax deductibility (with a maximum exposure of approx. EUR 4 million plus interest and penalties). Fonecta disagrees with the tax authority and has claimed for adjustment. For the years regarding Fonecta Services Oy and Fonecta Corporations Oy, tax deductability of certain financing costs and intragroup interest charges were challenged. In addition, the tax authorities requested a reclassification of debt into equity in Fonecta Corporations Oy (disqualifying interest tax deductibility). The aggregate exposure relating to the claim amounts to EUR 13.4 million plus interest and possible penalties. A court case relating to the liquidation of Finderia Oy (a dormant subsidiary of Fonecta Oy) is pending in the Administrative Court. The tax authority claimed that within the liquidation valuable business assets were transferred to Fonecta Oy and the realized gain on the disposal of these assets should be added to Finderia s 2004 taxable income. The tax authority was initially of the opinion that Finderia s tax liability in relation to the proceeds would have amounted to maximum EUR 38.7 million; but the eventually added amount corresponded to the amount proposed based on a valuation report by Finderia, i.e. EUR 3.7 million whereof the tax liability of EUR 1.0 million has already been paid in The Representative of the State disagreed with the tax reassessment and claimed for adjustment; the claim was revoked entirely by the Board of Adjustment at the Corporate Taxation Unit in February. The Representative of the State has appealed the Board of Adjustment's decision to the Administrative Court where the case is pending. Fonecta Oy has pending tax disputes for the taxation years These cases also refer to the deductibility of financing costs and intragroup interest expenses. The aggregate exposure relating to the claim on financing costs amounts to EUR 1.6 million plus interest and possible penalties. In the condensed consolidated interim financial statements of the Group, a provision of EUR 15 million has been recognised for the Finnish tax cases and EUR 9.4 million has been recognised for the Austrian tax cases. 23

24 European Directories Group January-June 12. Operating lease commitments 1000 EUR June 30 Jun 30 Dec 31 Due within a year Due after one year and within five years Due after five years Total Contingent liabilities Guarantees European Directories Midco S.à.r.l is a guarantor for the obligations of European Directories BondCo S.C.A. under the bond (see note 10). No other Group companies are guarantors. European Directories Midco S.à.r.l. and European Directories BondCo S.C.A. have provided security for certain assets (loan receivables and accounts) to secure the obligations of European Directories BondCo S.C.A. under the finance documents. 24

25 European Directories Group January-June 14. Legal actions and official proceedings Group companies No new legal actions and official proceedings were commenced against Group companies during the period. 15. Related party transactions Related parties are described in the annual financial statements as of the year ended 31 December. No material changes have occurred during the period. Managers remuneration The Board of Managers are considered as key personnel who have authority and responsibility for planning, directing and controlling the activities of the European Directories Group. For the purpose of determining related parties under IAS 24, local management is not considered as key personnel. The Board of Managers received the following benefits: 1000 EUR Q2 Q2 Q1-Q2 Q1-Q2 Short-term benefits Transactions with related parties 1000 EUR Q1-Q2 Q1-Q2 Interest on loan receivables 1-1 Purchases Long-term interest-bearing loan receivables Events after the reporting period There are no material events after the reporting period. 25

26 European Directories Midco S.à r. l. Interim financial statements for the period of 1 January to 30 June R.C.S Luxembourg B A avenue J.F. Kennedy L-1855 Luxembourg Subscribed capital: EUR 100,000

27 European Directories Midco S.à.r.l. Interim financial statements for the period of 1 January to 30 June Table of contents Interim statement of profit and loss and other comprehensive income 2 Interim balance sheet 3 Interim statement of cash flows 4 Interim statement of changes in equity 5 Notes to the interim financial statements 6

28 European Directories Midco S.à r.l., Interim Financial Statements for the period ended 30 June Interim financial statements are unaudited Interim statement of profit and loss and other comprehensive income 1000 EUR Note Q2 Q2 Q1-Q2 Q1-Q2 LTM Board fees Other expenses Operating loss Finance income Finance costs Net finance costs Loss before income tax Income tax Loss for the period Total comprehensive income The notes on page 6 to 15 form an integral part of these interim financial statements 2

29 European Directories Midco S.à r.l., Interim Financial Statements for the period ended 30 June Interim financial statements are unaudited Interim balance sheet 1000 EUR Note(s) June 30 June Dec ASSETS Non-current assets Investments in subsidiaries Available-for-sale financial assets Loan receivables Total non-current assets Current assets Accrued interest and other receivables Cash and cash equivalents Total current assets Total assets EQUITY Equity attributable to owners of the parent Share capital Share premium Other reserves Retained earnings Total equity LIABILITIES Non-current liabilities Shareholder loan and accrued interests 10 (a) Other financial liabilites 10 (a) Total non-current liabilities Current liabilities Accrued interest 10 (a) Trade and other payables 10 (b) Total current liabilities Total liabilities Total equity and liabilities The notes on page 6 to 15 form an integral part of these interim financial statements 3

30 European Directories Midco S.à r.l., Interim Financial Statements for the period ended 30 June Interim financial statements are unaudited Interim statement of cash flows 1000 EUR Q2 Q2 Q1-Q2 Q1-Q2 LTM Cash flow from operating activities Loss for the period Adjustments for: Income tax expenses Finance costs - net Operating loss Realised foreign exchange gains and losses and other finance items Taxes paid Operating cash flow before movements in working capital Net change in working capital Net cash from operating activities Cash flow from investing activities Purchases of available-for-sale investments Net cash used in investing activities Cash flow before financing activities Cash flow from financing activities Proceeds from current liabilities Proceeds from non-current liabilities Loans granted to related parties Net cash used in financing activities Net increase (+) / decrease (-) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at the end of period The notes on page 6 to 15 form an integral part of these interim financial statements 4

31 European Directories Midco S.à r.l., Interim Financial Statements for the period ended 30 June Interim financial statements are unaudited Interim statement of changes in equity Equity attributable to owners of the parent 1000 EUR Share capital Share premium Other reserves Retained earnings Total equity Balance at 31 December Total comprehensive income Balance at 30 June Equity attributable to owners of the parent 1000 EUR Share capital Share premium Other reserves Retained earnings Total equity Balance at 31 December Total comprehensive income Balance at 30 June The notes on page 6 to 15 form an integral part of these interim financial statements 5

32 European Directories Midco S.à r.l., Interim Financial Statements for the period ended 30 June Notes to Interim Financial Statements for the period ended 30 June Note 1. Basis of preparation The interim financial statements for the three month ended 30 June have been prepared in accordance with the International Accounting Standard (IAS) 34 Interim Financial Reporting. The interim financial statements do not include all the information and disclosures required in the annual financial statements. The same accounting policies have been followed in these interim financial statements as were applied in the preparation of the financial statements for the year ended 31 December. Note 2 Use of judgements and estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these interim financial statements, the significant judgements made by management in applying accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements as at and for the year ended 31 December. 6

33 European Directories Midco S.à r.l., Interim Financial Statements for the period ended 30 June Note 3 Board of Managers fees The Company had no employees during the period (: nil). The Company is paying remuneration to the members of the Board of Managers. Note 4 Other expenses 1000 EUR Q1 Q1 Q1-Q2 Q1-Q2 31 Dec Auditor remuneration Other administrative expenses Total Auditor remuneration Audit fees Total Note 5 Income taxes The Company is subject to taxation under the Luxembourg tax regulation applicable to companies EUR Q1 Q1 Q1-Q2 Q1-Q2 31 Dec Current income taxes Total

34 European Directories Midco S.à r.l., Interim Financial Statements for the period ended 30 June Note 6 Investments in subsidiaries 1000 EUR 30 June 30 June 31 Dec Balance at the beginning of the period Changes in investments in subsidiaries Balance at the end of the period The Company has shareholdings in the following companies: Name Registered office Proportion of the capital held, % Capital and reserves Profit / loss European Directories BondCo S.C A. ("BondCo") 2C, rue Albert Borschette, L-1246 Luxembourg, R.C.S. Luxembourg 99.99% European Directories GP ("ED GP") 2C, rue Albert Borschette, L-1246 Luxembourg, R.C.S. Luxembourg 100 % 13-8 On 2 December 2013 the Company contributed EUR 2,031 to the share capital of European Directories BondCo S.C.A. and EUR 13 to the share capital of European Directories GP. The first financial period of both European Directories BondCo S.C.A. and European Directories GP S.á.r.I. have ended on 31 December. The amount of capital and reserves and the loss for the latest financial year of the said companies, as presented above, are based on the audited financial statements as at and for the period ended 31 December. European Directories BondCo S.C.A has prepared its financial statements under IFRS and European Directories GP S.á r.i under Lux GAAP. The Company has issued a guarantee as for its own debt for the obligations of European Directories BondCo S.C.A.. under the Bonds. The Company has also pledged the shares it owns in European Directories BondCo S.C.A. and European Directories GP as well as all claims under the PIK intercompany loans as security to the Bonds. Note 7 Available-for-sale financial assets Available-for-sale financial assets comprise of the investment in Bokadirekt i Stockholm AB for an amount of EUR 1,153 which represents 14,83% of total shares. 8

35 European Directories Midco S.à r.l., Interim Financial Statements for the period ended 30 June Note 8 Non-current and current receivables Non-current receivables 1000 EUR 30 June 30 June 31 Dec Loan to European Directories BondCo S.C.A. Original loan amount 10 Dec Set up fee capitalised Interest capitalised 1 January Total Loan to European Directories Parent S.A Loan to European Directories Holdco S.A Loan to Leafy S.á.r.l Total loan rerceivables On 10 December 2013, in order to facilitate the financial restructuring of its group, the Company entered into a EUR 103,314 loan agreement with its immediate subsidiary, European Directories Bondco S.C.A. The loan is bearing an interest rate of 7,24% payable annually in arrears. As of 30 June the Company has a loan receivable totalling EUR 699 from European Directories Holdco S.A., European Directories Parent S.A. and Leafy S.à.r.l. payable on demand. The loans are bearing an interest rate of 0,1% payble in arrears of 30 June and 30 December each year. From the date of the interim financial statements the Company does not have the intention to ask for repayment in the next 12 months. Current receivables 1000 EUR 30 June 30 June 31 Dec Interest income on financial assets classified as loans and receivables Loan to European Directories BondCo S.C.A Total interest income in the statement of profit and loss Interest accrued previous year Set up fee/interest capitalised during the period Total accrued interest Prepayments Total accrued interest and other receivables Other current receivables comprised prepayments made in relation with insurance contracts, recognised in the following years. The Managers assessed that interest receivables approximate their carrying amounts largely due to the short-term maturities of these instruments. 9

36 European Directories Midco S.à r.l., Interim Financial Statements for the period ended 30 June Note 9 Capital and reserves 1000 EUR Number of shares (pcs) Share capital Share premium Other reserves 31 Dec Total 30 June Share capital The issued share capital consists of 10,000,000 shares with a nominal value of EUR 0.01 each, all of which are fully paid up. The share capital is divided into three classes of shares, namely 4,990,000 class A shares, 4,010,000 class B shares and 1,000,000 class C shares. Each share entitles the holder to one vote at the Annual General Meeting. Different shares entitle their holders to a different dividend. Other reserves Legal reserve: In accordance with the Luxembourg company law, the Company is required to transfer a minimum of 5% of its net profit for each financial year to a legal reserve. This requirement ceases to be necessary once the balance on the legal reserve reaches 10% of the issued share capital. The legal reserve is not available for distribution to the shareholders. Note 10 Non-current and current financial liabilities and other liabilities a.) Non-current financial liabilities 30 June 30 June 31 Dec Shareholder loan (preferred equity certificates) Accrued interests on Shareholder loan Total Long term loan from Fonecta Oy Total non-current liabilities