Financial Statements Bulletin January-December 2014

Transcription

1 European Directories Group, European Directories Midco S.à r.l and European Directories Bondco S.C.A Financial Statements Bulletin January-December 27 February 2015

2 Financial Summary Financial Statements Bulletin January-December (Comparative 2013 numbers in brackets, excl Polish operations) October-December - Group revenues are EUR 82m (EUR 92m) - EBITDA is EUR 29m (EUR 29m), loss for the period after taxes is EUR 52m and includes a EUR 68m impairment loss recorded on intangible assets - Cash flow before financing activities is EUR 12m (EUR 8m) January-December - Group revenues are EUR 318m (EUR 373m) - EBITDA is EUR 79m (EUR 96m), loss for the period after taxes is EUR 186m and includes a EUR 201m impairment loss recorded on intangible assets - Cash flow before financing activities is EUR 15m (EUR -3m) - Net debt excluding shareholder loans is EUR 86m (EUR 99m) Key events during the fourth quarter - After acquiring a further shareholding in InnerBalloons Consulting B.V. in October, DTG divested its entire 51% shareholding in InnerBalloons Consulting B.V. to US based Yext Inc. in December. - In October Fonecta acquired a minority shareholding in Taputa Oy, a Finnish company that has developed a customer experience interaction tool. - In November European Directories Midco S.à r.l. acquired a minority shareholding in Boka Direkt I Sverige AB, a company that has developed an online booking service solution. - Fonecta Oy purchased an aggregate amount of EUR 20.6m of the European Directories EUR 160m senior secured bonds in November. As per 31 December this amount was kept on the balance sheet. - The prospectus regarding listing of the bonds issued by European Directories BondCo S.C.A. was approved by the Swedish Financial Supervisory Authority and published on 27 October. The listing of the bonds occurred on 5 December at NASDAQ OMX Stockholm. Page 1

3 Events after the end of the period - In January European Directories Services B.V. and European Directories (DH7) B.V., each a European Directories Group company, disposed their shareholding in HB Förlaget 1, a Swedish partnership, to Userkaf Inter AB and Muscle Machine Förvaltnings AB. - In February Herold Business Data GmbH, agreed to divest its business unit secondary entries (a part of its print revenue stream with an initial impact on revenues in 2015 of approximately EUR 3.5m) for EUR 10m to a consortium of investors led by Austrian based financial institution, Oberbank AG. Page 2

4 Report of the Board of Directors October-December Group revenues for the fourth quarter totalled EUR 82m, a EUR 10m or 11% decline compared to This decline is mainly due to the structural decline of traditional print and directory assistance revenues, and the prevailing challenging economic environments across all Group countries. This remains the case particularly in Finland, resulting in lower spending among the main customer segment of small and medium sized enterprises (SMEs). 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. Page 3

5 Profile services revenues declined as expected and new media revenues, mainly website and marketing services, increased and now represented 28% of the total revenue of the Group. The share of online products in the Group s product portfolio totalled 60% - an increase of 4 percentage points driven by the fore mentioned growth in the new media products. Mobile usage continued to grow in all markets. Print revenues totalled EUR 10m, a decline of 32%. 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 totalled EUR 18m, a decline of EUR 1m, representing 22% of total revenues. Consumer services are provided only by Fonecta in Finland. Group EBITDA for the quarter amounted to EUR 29m (EUR 29m), a margin of 36% (31%) The Group continues to take actions to lower the fixed cost base, offsetting the decline in traditional revenues and accelerating the transition to an online and digital product portfolio. Cash flow before financing activities was EUR 12m (EUR 8m). January-December Group revenues totalled EUR 318m, a EUR 55m decline (-15%). Digitalization continues to decrease the volumes of traditional print and directory assistance revenues, which is the main reason for the decline in these product lines. Print revenues totalled EUR 46m decreasing by 43%, or EUR 34m. Consumer services (Finland only) declined by 9% to EUR 75m. Within the Online revenue, Profile services declined with 13% to EUR 108 m and New media revenues increased with 13% to EUR75m. From a strategic perspective the growth in the new media/digital services is very positive. As such overall Online revenues declined by 4% to EUR 183m. The decline in the Netherlands was for large part a result of divestments in Scoot Media and Werkspot, while Finland and Austria showed a 3% and a 6% growth respectively. 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. Page 4

6 In addition to the structural decline in traditional print and directory assistance services, the transition to online and digital services is impacted by a challenging economic environment in all key markets. Within the online segment the growth of new media services is very promising and supports the management s believe to continue to invest in this segment. Overall economic growth expectations in the whole of Europe remain moderate also in Taking all of this into consideration, the midterm business plans for all the three countries have been revised down, leading to an impairment loss of EUR 201m in intangible assets, for the full year. Group EBITDA amounted to EUR 79m (EUR 96m), a margin of 25% in line with the margin% achieved over The Group continues to take actions to lower the fixed cost base, in order to offset the decline in revenues driven by lower print volumes and accelerating the transition to an online product Page 5

7 portfolio. Total fixed or indirect costs were EUR 50m lower compared to the same period last year, mainly due to the disposed Polish operations and reduction of the cost base in all Group countries. Cash flow before financing activities was EUR 15m (EUR -3m). Despite lower operative results, net cash from operating activities increased by EUR 5m to EUR 38m due to lower working capital outflows and lower interest costs paid. Net cash used in investing activities of EUR -23m was considerably lower than last year s level of EUR -36m mainly due to lower acquisition payments. The liquidity position of the Group is strong with an end year cash balance of EUR 51m. Net-interest bearing debt at 31 December was EUR 86m, 1.1x EBITDA, excluding subordinated shareholder loans. Hannu Syrjänen, Chairman of the Board European Directories Midco S.à r.l. Page 6

8 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 December the total headcount of the Group was (FTE), a reduction of 184 (FTE) compared to end of December 2013, driven by the disposal of Polish operations. 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 Germon Knoop ir@europeandirectories.com The financial statements bulletin has been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted by the EU. The figures in this financial statements bulletin are unaudited. European Directories Financial Statements for will be published on 2 April European Directories will publish three interim reports in 2015: - January-March on 29 May January-June on 31 August January-September on 30 November 2015 Interim reports will be released on the European Directories Group web site: Page 7

9 Condensed consolidated income statement 1000 EUR Note Q4 Q Revenues 4 81,754 96, , ,632 Other income 3, ,134 2,093 Cost of production -15,191-16,870-62,069-73,202 Personnel expenses -28,340-39, , ,091 Other operating expenses -11,872-10,997-49,875-66,637 EBITDA *) 4 29,399 29,443 79,473 95,795 Gain/(loss) from sale of subsidiaries 1, ,646-1,565 Depreciation, amortisation and impairment charges 4-84, , , ,341 Operating loss 4-53,642-76, ,330-62,111 Finance income 1, , Finance expense -6,793-8,281-26,363-19,270 Finance costs - net -5,273-8,304-24,605-19,070 Loss before income tax -58,915-85, ,935-81,181 Income taxes 6,649 23,906 12,436 27,360 Loss for the period -52,266-61, ,499-53,821 Attributable to: Owners of the parent -52,292-61, ,624-53,864 Non-controlling interests ,266-61, ,499-53,821 *) EBITDA is defined as operating profit/loss before depreciation, amortisation and impairment charges and gain/(loss) from sale of subsidiaries. Page 8

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12 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 Q4 Q ,266-61, ,499-53,821-6,649-23,906-12,436-27,360 5,273 8,304 24,605 19,070 84, , , ,341-1, ,646 1,565-2, , ,873-5,363-11,734-21, ,756 22,506 65,234 73,515-8,274-8,323-27,410-40,493 15,482 14,183 37,824 33,022 Cash flow from investing activities Acquisitions of subsidiaries and businesses, net of cash acquired -1, ,001-15,331 Purchases of associated companies Purchases of available-for-sale investments -1, , Purchases of intangible assets and property, plant and equipment -6,224-5,981-16,142-18,634 Sales of subsidiaries and businesses, net of cash 3, ,803-1,963 Proceeds from sales of intangible assets and property, plant and equipment Proceeds from other interest-bearing receivables Net cash used in investing activities -5,330-5,542-22,950-35,600 Cash flow before financing activities Cash flow from financing activities Proceeds from long-term liabilities Payments of long-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 10,152 8,641 14,874-2, ,000 3, ,000-18, ,900-18, , ,786-1,678-13, ,899-15,686-17,964-15,686-8,747-7,045-3,090-18,264 59,511 60,894 53,854 72, ,764 53,854 50,764 53,854 Page 11

13 Notes to the condensed consolidated interim financial statements 1. Basis of preparation These condensed 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 2013 except for the policies and presentation described below. The presentation in these condensed interim financial statements have changed from the presentation of latest consolidated financial statements. The condensed consolidated statement of profit and loss presents expenses by nature. The presentation of Consolidated statement of profit and loss will be changed in Consolidated Financial statements for accordingly. IFRS amendments Of the amended International Financial Reporting Standards (IFRS) and interpretations mandatory as of 1 January the following are applicable on the Group reporting: IFRS 10 Consolidated financial statements, IFRS 11 Joint arrangements and IFRS 12 Disclosure of Interests in Other Entities, as well as the related amendments to IAS 27 and IAS 28. IFRS 10 builds on the principle of identifying the concept of control as the determining factor whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. IFRS 11 replaces IAS 31 Interests in joint ventures. Joint control under IFRS 11 is defined as the contractual sharing of control of an arrangement, which exists only when the decisions about the relevant activities require unanimous consent of the parties sharing control. The standards have no significant impact to the results of financial position of the Group. IFRS 12 will expand the information disclosed in the consolidated financial statements regarding interests in other entities. Amendment to IAS 32 Financial Instruments: Presentation on offsetting the financial assets and financial liabilities. This amendments clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms. The amended standard is to be applied retrospectively. The amendments changed the presentation of certain cash pool items on the consolidated balance sheet. The Group has notional cash pool arrangement in the Netherlands. The balances in those accounts are not netted physically, therefore the balances are presented gross in the face of the balance sheet. The negative balances are presented as bank overdrafts in the current liabilities and the positive balances are presented in cash and cash equivalents in the current assets. The balance sheet as of 31 December 2013 has been restated. 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 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 Page 12

14 Revenues by segment 1000 EUR Q4 Q Fonecta 37,534 40, , ,317 DTG 18,624 23,994 80, ,006 Herold 25,596 27,564 79,576 85,660 Other - 3, ,649 Total 81,754 96, , ,632 Operating loss by segment 1000 EUR Q4 Q Fonecta -17,685-26,214-41,326-4,725 DTG -16,901-42,774-39,553-37,243 Herold -12, ,654-1,819 Other -6,843-8,379-11,797-18,324 Total -53,642-76, ,330-62,111 EBITDA by segment 1000 EUR Q4 Q Fonecta 9,306 9,196 43,803 50,351 DTG 14,625 10,460 26,062 30,637 Herold 10,279 11,037 17,597 22,801 Other -4,811-1,250-7,989-7,994 Total 29,399 29,443 79,473 95,795 EBITDA is calculated by adding back depreciation, amortisation and impairment charges and gain/(loss) from sale of subsidiaries to operating loss. Depreciation, amortisation and impairment charges by segment 1000 EUR Q4 Q Fonecta 26,991 35,410 85,129 55,076 DTG 33,026 55,772 67,115 69,589 Herold 22,492 10,530 99,251 24,620 Other 2,032 3,706 3,954 7,056 Total 84, , , ,341 Including EUR 201m (EUR 83m) impairment loss relating to intangible assets, of which EUR 133m was recognised in Q3 (EUR 0m) and EUR 68m in Q4 (83m). Capital expenditure by segment 1000 EUR Q4 Q Fonecta 1,988 1,931 4,763 6,036 DTG 1,729 2,306 6,147 7,894 Herold 2,495 2,050 5,093 4,583 Other Total 6,224 5,981 16,142 18,634 Page 13

15 Assets by segments 1000 EUR Dec 31 Dec Fonecta 247, ,627 DTG 102, ,962 Herold 95, ,179 Other 48,477 37,585 Total 494, ,353 Unallocated Deferred tax assets 4,662 7,207 Loan receivables 1,511 - Total assets in the balance sheet 500, ,560 Liabilities by segments 1000 EUR Dec 31 Dec Fonecta 62,279 69,926 DTG 96,669 91,422 Herold 42,900 45,650 Other 37,730 39,331 Total 239, ,329 Unallocated Deferred tax liability 49,309 63,869 Interest-bearing liabilities 255, ,783 Total liabilities in the balance sheet 544, , 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 Bond Dec 31 Dec , ,578 Shareholder loan and accrued interest (Preferred Equity Certificates) 112, ,205 Total 258, ,783 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 Page 14

16 1000 EUR Assets as per balance sheet Trade and other Available-forsale receivables 31 Dec Cash and cash equivalents Total Trade and other receivables 64,624-64,624 Cash and cash equivalents ,308 92,308 Available-for-sale financial assets - 1,655-1,655 Other financial assets 1,511-1,511 Total 66,135 1,655 92, , Dec 1000 EUR Interestbearing liabilities Bank overdrafts Trade and other payables Total Liabilities as per balance sheet Bond 137, ,051 Shareholder loan 118, ,215 Trade payables ,299 12,299 Other current liabilities ,295 47,295 Bank overdrafts - 41,544-41,544 Total 255,266 41,544 59, , EUR Assets as per balance sheet Trade and other Available-forsale receivables 31 Dec 2013 Cash and cash equivalents Total Trade and other receivables 73, ,954 Cash and cash equivalents ,748 92,748 Available-for-sale financial assets Other financial assets Total 73, , , Dec EUR Liabilities as per balance sheet Interestbearing liabilities Bank overdrafts Trade and other payables Total Bond 153, ,578 Shareholder loan 104, ,205 Trade payables ,068 19,068 Other current liabilities ,420 65,420 Bank overdrafts - 38,894-38,894 Total 257,783 38,894 84, ,165 Page 15

17 6. Acquisitions, disposals and assets held for sale Acquisitions 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 2m arising from the acquisition is attributable to company's current customer base and market position. None of the goodwill recognised is expected to be deductible for income tax purposes. The effects of this business combination are as follows: 1000 EUR Non-current assets 5,149 5, Current assets Non-current liabilities -1,265-1,265 - Current liabilities Total net assets acquired 3,872 3, Transaction costs 0 Goodwill on acquisition 2,195 Consideration price, satisfied in cash 6,067 Consideration price, deferred consideration at FV Fair value recognised on acquisition -750 Cash acquired -423 Net cash outflow 4,894 Fair value changes Changes towards European Directories Group accounting policies Original reporting amounts acquired The fair value of non-current assets is including acquired identifiable intangible assets of EUR 5,149. The amount of the acquired identifiable intangible assets (including brands and customer relationships) is provisional pending receipt of the final valuations for those assets. In February, Group acquired Verkossa Media Business. The acquisition provided the group with increased market share in display advertising business in Finland. The goodwill of c. EUR 0.3m from the acquisition consists of synergies and personnel and is deductible for income tax purposes. The effects of this business combination are as follows: 1000 EUR Non-current assets 1,188 1, Current assets Non-current liabilities Current liabilities Total net assets acquired 1,188 1, Transaction costs 40 Goodwill on acquisition 312 Consideration price, satisfied in cash 1,540 Consideration price, deferred consideration at FV Fair value recognised on acquisition Cash acquired - Net cash outflow 1,540 - Fair value changes Changes towards European Directories Group accounting policies Original reporting amounts acquired Page 16

18 7. Changes in intangible assets 1000 EUR Dec 31 Dec Opening balance Acquisitions Capital expenditures Disposals Amortisation Impairments Translation differences and other adjustments Closing balance 556, ,121 8,828 8,527 14,058 16, ,673-46,900-67, ,253-84, , ,109 Goodwill included in closing balance Change in goodwill during the period due to impairments 208, , ,629-10,188 EUR 39.8m (EUR 37.0m) of the impairment loss was allocated to brands, EUR 15.3m (EUR 35.9m) to customer relationships and EUR 145.6m (EUR 10.2m) to goodwill. In also an impairment of EUR 3.5m (EUR 1.7m) was recognised in other intangible assets. Impairment tests for goodwill The carrying amount of the cash-generating unit was determined to be higher than its recoverable amount in all reporting segments. The impairment loss of EUR 145.6m was allocated fully to goodwill reducing the goodwill included in Fonecta to EUR 144.0m in DTG to EUR 47.3m and in Herold to EUR 16.9m. The recoverable amount lf all cash-generating units have been determined based on value-in-use calculations. The cash-generating units equal the reporting segments. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a three-year period. The preparation of the forecast requires a number of key assumptions such as volume, price, product mix, which will create basis for future growth and gross margin. These figures are set in relation to the historic figures and external reports on market growth. The cash flow for the third year is used as the base for the fourth year and onwards in perpetuity. Cash flows beyond the three-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the business in which the cash-generating unit operates. Value in use was determined by discounting the future cash flows expected to be generated from the continuing use of the units. Value in use as at 31 December was determined similarly to the 31 December 2013 goodwill impairment test and was based on the following key assumptions. Cash flows were forecast based on past experience, actual operating results and the three-year business plan. Cash flows beyond three-year forecast period were extrapolated using a constant growth rate between 1.0 and 1.7% ( %), which does not exceed the long-term average growth rate for the industry. Pre-tax discount rates used were within a range of 17.9 to 19.0%. ( %) Goodwill is monitored by the management at the reporting segment level. The following is a summary of goodwill allocation for each reporting segment: 1000 EUR Opening Addition Disposal Impairment Other adjustments Closing Fonecta 174, , ,972 DTG 98,295 2, , ,318 Herold 78, ,411-16,887 Total 351,248 2, , , EUR Opening Addition Disposal Impairment Other adjustments Closing Fonecta 171,752 2, ,657 DTG 108, , ,295 Herold 78, ,296 Total 358,564 2, , ,248 Page 17

19 The impairment charge of EUR 145.6m arose in all reporting segments. The structural decline in traditional print and directory assistance services and the transition to online and digital services is behind plan due to a challenging economic environment in all key markets. Overall economic growth expectations in the whole of Europe remain very moderate in Therefore the business plans for all the three countries were revised down, which lead to an impairment loss. A rise in the discount rate to 16.5% would result in additional goodwill impairment of c. EUR 10m for Fonecta, EUR 3m for Herold and EUR 4m for DTG. 10% decrease in the forecast EBITDA level would result in additional goodwill impairment of c. EUR 11m for Fonecta, EUR 7m for DTG and EUR 5m for Herold. 8. Changes in property, plant and equipment 1000 EUR Opening balance Acquisitions Capital expenditures Disposals Depreciation, amortisation and impairment Translation differences and other adjustments Closing balance Dec 31 Dec ,358 10, ,052 1, ,945-2,706-3, ,660 6, Cash and cash equivalents 1000 EUR Cash at bank and in hand Short-term bank deposits Cash and cash equivalents (excluding bank overdrafts) Dec 31 Dec ,845 91, ,308 92,748 Cash and cash equivalents include the following for the purposes of the statement of cash flows: 1000 EUR Cash and cash equivalents Bank overdrafts Cash and cash equivalents Dec 31 Dec ,308 92,748-41,544-38,894 50,764 53,854 Page 18

20 10. Interest-bearing liabilities Interest-bearing debt 1000 EUR Carrying amount Dec 31 Fair value Dec 31 Carrying amount Dec Fair value Dec 31 Bonds Shareholder loan and accrued interest Total 137, , , , , , , , , , , ,783 During Q4 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. 11. Other provisions Restructuring provision Other provisions Tax provisions 1000 EUR Dec 31 Dec Dec 31 Dec Dec 31 Dec Opening balance ,838 9,459 13,092 15,000 15,000 Increase in the provisions 3, Provisions used -1,720-7,575-2,433-4, Unused provisions reversed - -3, Unwinding of discount Disposals Other (*) ,880 - Exchange rate differences Closing balance 1, ,556 9,459 24,447 15,000 Current provisions 1, ,556 9,459 24,447 15,000 * The group reclassified c. EUR 8.9m of tax provisions from other current liabilities to provisions in. This reclassification has been presented as other movements in. 12. Operating lease commitments 1000 EUR Due within a year Due after one year and within five years Due after five years Total Dec 31 Dec ,502 10,127 19,331 16,643 4,344 6,853 33,177 33, 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. Page 19

21 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. 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 2013 Short-term benefits Transactions with related parties 1000 EUR 2013 Interest on loan receivables 1 - Purchases Long-term interest-bearing loan receivables 1, Events after the reporting period In January 2015 Group divested its shareholding in Swedish partnership, HB Förlaget 1 Ab. The sale resulted in a minor loss in the Group. In February 2015 Group divested a business unit secondary entries in Herold segment for EUR 10m. Page 20

22 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 Page 21

23 European Directories Midco S.à r. l. Interim financial statements for the period of 1 January to 31 December R.C.S Luxembourg B A avenue J.F. Kennedy L-1855 Luxembourg Subscribed capital: EUR 100,000

24 European Directories Midco S.à.r.l. Interim financial statements for the year ended 31 December Table of contents Interim balance sheet 2 Interim statement of profit and loss and other comprehensive income 3 Interim statement of cash flows 4 Interim statement of changes in equity 5 Notes to the interim financial statements 6

25 European Directories Midco S.à r.l., Interim Financial Statements for the year ended 31 December Interim financial statements are unaudited Interim balance sheet Note(s) 31 December 31 December January 2013 All amounts are in 1000 Euro unless otherwise stated ASSETS Non-current assets Investments in subsidiaries Investments in other shares 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 Profit (loss) brought forward (25 527) (25 966) (28) Profit (loss) of the year (6 728) 440 (25 938) Total equity 9 (15 697) (8 968) (9 407) 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 20 form an integral part of these interim financial statements 2

26 European Directories Midco S.à r.l., Interim Financial Statements for the year ended 31 December Interim financial statements are unaudited Interim statement of profit and loss and other comprehensive income Note(s) Q4 Q All amounts are in 1000 Euro unless otherwise stated Board fees 3 (166) (199) (743) (566) Other expenses 4 (121) 239 (394) (293) Operating loss (287) 40 (1 137) (860) Finance income Finance costs 10 (3 638) (1 141) (13 771) (1 145) Net finance costs (1 568) (5 586) Profit (loss) before income tax (1 855) (6 723) 442 Income tax 5 (5) (1) (5) (2) Profit (loss) for the period (1 860) (6 728) 440 Total comprehensive income (1 860) (6 728) 440 The notes on page 6 to 20 form an integral part of these interim financial statements 3

27 European Directories Midco S.à r.l., Interim Financial Statements for the year ended 31 December Interim financial statements are unaudited Interim statement of cash flows Q4 Q All amounts are in 1000 Euro Cash flow from operating activities Net profit (loss) for the period (1 860) (6 728) 440 Adjustments for: Income tax expenses Finance costs, net (1 306) (1 302) Operating loss (287) 40 (1 137) (860) Realised foreign exchange gains and losses and other finance items - 4 (5) - Taxes paid (8) (1) (8) - Operating cash flow before movements in working capital (295) 43 (1 150) (860) Net change in working capital 96 (339) 153 (406) Net cash from operating activities (199) (296) (998) (1 266) Cash flow from investing activities Acquisitions of subsidiaries and businesses, net of cash acquired - (43) - (43) Purchases of available-for-sale investments (1 133) (1 133) - Net cash used in investing activities (1 133) (43) (1 133) (43) Cash flow before financing activities (1 332) (340) (2 130) (1 310) Cash flow from financing activities Proceeds from current liabilities Proceeds from non-current liabilities Loans granted to related parties (107) (359) - Net cash used in financing activities Net increase (+) / decrease (-) in cash and cash equivalents Cash and cash equivalents at beginning of period Foreign exchange differences in cash and cash equivalents Cash and cash equivalents at the end of period The notes on page 6 to 20 form an integral part of these interim financial statements 4

28 European Directories Midco S.à r.l., Interim Financial Statements for the year ended 31 December Interim statement of changes in equity Interim financial statements are unaudited All amounts are in 1000 Euro unless otherwise stated Equity attributable to owners of the parent Note(s) Share capital Share premium Other reserves Retained earnings Total equity Balance 1 January 2013 Impact from transition to IFRS IFRS balance 1 January (25 966) (9 407) (25 966) (9 407) Total comprehensive income for the financial year Balance at 31 December (25 527) (8 968) Total comprehensive income for the financial year (6 728) (6 728) Balance at 31 December (32 255) (15 697) The notes on page 6 to 20 form an integral part of these interim financial statements 5

29 European Directories Midco S.à r.l., Interim Financial Statements for the year ended 31 December Notes to Interim Financial Statements for the period ended 31 December Note 1. Summary of significant accounting policies 1.1 General information European Directories Midco S.à r.l., Luxembourg (hereafter referred to as "the Company") is an intermediate parent company of the European Directories group ("the Group" or "European Directories" or "ED Group") and has its registered address at 46A, Avenue J.F. Kennedy, L-1855 Luxembourg. The Company was incorporated on 27 August 2010 for an unlimited period, under the laws of the Grand Duchy of Luxembourg as European Directories Midco S.à r.l., Luxembourg, on 7 December 2012 it became European Directories Midco S.à r.i. The Company is a holding company and is registered with the Luxembourg register of commerce under number B The principal accounting policies applied in the preparation of these interim financial statements are set out below. 1.2 Basis of preparation The interim financial statements for the three month ended 31 December 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 accounting policies set out below have been applied consistently to all periods presented and in preparing an opening IFRS balance sheet as at January 1, 2013, for the purposes of the transition from LuxGaap to IFRS. 1.3 Going concern The supervisory board of the Company (the "Board") have considered the future expected cash flows of the Company s existing business and believe the Company will continue to operate in the foreseeable future. The Group has contracts with customers and suppliers across different geographic areas and industries, the Managers believe that the Group is able to manage its business risks. The Managers have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future and will be able to realise its assets and discharge its liabilities and commitments in the normal course of business. Therefore the going concern basis of accounting has been adopted in preparing these interim financial statements. 6

30 European Directories Midco S.à r.l., Interim Financial Statements for the year ended 31 December 1.4 Basis of measurement These interim financial statements are prepared under historical cost convention or otherwise at fair value as disclosed in accounting policies thereafter. 1.5 Functional and presentation currency Items included in the interim financial statements are measured using the currency of the primary economic environment in which the entity operates (the functional currency). These interim financial statements are presented in Euro (EUR), which is the Company s functional currency. Transactions denominated in foreign currencies are translated using the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies outstanding at the balance sheet date are translated to Euro using the exchange rate quoted on the closing date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated at the functional currency at the exchange rate when the fair value is determined. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Exchange rate differences are recognised in the statement of comprehensive income. Net translation differences relating to financing are presented under finance income or expenses. The balance sheet date rate is based on the exchange rate published by the European Central Bank for the closing date. The average exchange rate is calculated as an average of each month's ending rate from the European Central Bank during the year and the ending rate of the previous year. 1.6 New accounting principles New standards, amendments and interpretations issued, but not yet effective for the reporting and not early adopted The Company has not yet adopted the following new and amended standards and interpretations already issued by the IASB. The Company will adopt them as of the effective date or, if the date is other than the first day of the financial year, from the beginning of the subsequent financial year. The Board anticipate that the adoption of the following standards, amendments and interpretations listed below in future periods will have no material financial impact on the interim financial statements. * = not yet endorsed for use by the EU as of 31 December. - New IFRS 12 Disclosure of Interests in Other Entities - Amendments to IAS 32 Financial Instruments: Presentation Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 27 Equity Method in Separate Financial Statements * - New IFRS 9 Financial Instruments* 1.7 Presentation of current and non-current assets and liabilities Current assets and liabilities are settled within twelve months whereas non-current assets and liabilities are settled within more than twelve months. 7

31 European Directories Midco S.à r.l., Interim Financial Statements for the year ended 31 December 1.8 Investment in subsidiaries and in other shares Shareholdings are carried at cost less impairment losses. The carrying amount of the shares is reviewed at each balance sheet date to determine whether there is any indication of impairment. If such an indication exists, the asset's recoverable amount is estimated and the difference with the carrying amount is recorded as an impairment loss. For further information, see note 1.10 "Impairment of financial assets". 1.9 Loan receivables Loan receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market nor held by the Company for trading. Upon initial recognition loan receivables are measured at fair value, and are subsequently measured at amortised cost using the effective interest method, less any impairment. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. Interest income is recognised by applying the effective interest rate, except for current receivables when the recognition of interest would be immaterial. Transaction costs that are directly attributable to the acquisition or issue of a financial asset are deducted from the asset s carrying value. This is because financial assets are initially recognised at cost, corresponding to the fair value of the sums paid or received in exchange for the asset. The costs are subsequently amortised over the life of the asset, by the effective interest method. The effective interest rate is the rate, which discounts estimated future cash payments up to the maturity or the nearest date of price adjustment to the market rate, to the net carrying amount of the financial liability. The Company derecognises a financial asset when its contractual obligations are discharged, cancelled or expire. 8

32 European Directories Midco S.à r.l., Interim Financial Statements for the year ended 31 December 1.10 Impairment of financial assets A financial asset is impaired when its carrying amount exceeds its recoverable amount. The Company reviews all of its assets at each reporting date for indicators of impairment. The carrying amount of an impaired financial asset is reduced to its estimated recoverable amount and the amount of the change in the current period provision is recognised in the statement of comprehensive income. Recoveries, write-offs and reversals of impairment are included in the statement of comprehensive income as part of change in provisions for impairment. If in a subsequent year, the amount of the impairment on financial assets decreases, due to an event occurring after the write-offs, the amount is reversed by adjusting the impairment and is recognised in the statement of comprehensive income. A financial asset is impaired where there is objective evidence that as a result of one or more events that occurred after the initial recognition of the asset the estimated future cash flows of the asset have been impacted. The Company considers evidence of impairment at both specific and collective level. All individually significant financial assets are assessed for specific impairment. All significant assets found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment by grouping together financial assets (carried at amortised cost) with similar risk characteristics. Objective evidence that financial assets are impaired can include default or delinquency by a borrower, restructuring of a loan or receivable by the Company on terms that the Company would not otherwise consider, indications that a borrower or issuer will enter into bankruptcy, the disappearance of an active market for a security, or other observable data relating to a group of assets such as economic conditions that correlate with defaults in the group Cash and cash equivalents Cash and cash equivalents comprise of cash balances and short-term deposits with an original maturity of three months or less that are subject to an insignificant risk of changes in their fair value, and are used by the Company / Group in the management of its short-term commitments. For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents, net of any bank overdrafts Equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as deduction, net of tax, from the proceeds of the share issue. Dividends on ordinary shares are recognised in the interim financial statements in the period in which they are approved by the Company's shareholders. 9

33 European Directories Midco S.à r.l., Interim Financial Statements for the year ended 31 December 1.13 Interest-bearing liabilities Financial liabilities are classified as either financial liabilities at fair value through profit or loss; or other financial liabilities (financial liabilities recognized at amortised cost). Currently the Company has only financial liabilities classified in the latter category. Interest-bearing loans and borrowings are initially recognized at fair value less transaction costs incurred. Subsequently they are stated at amortised cost with any difference between cost and redemption value being recognised as an interest expense over the period of the borrowings, using the effective interest method. Interest-bearing loans and borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Transaction costs that are directly attributable to the acquisition or issue of a financial liability are deducted from the liability's carrying amount. This is because financial liabilities are initially recognized at cost, corresponding to the fair value of the sums paid or received in exchange for the liability. The costs are subsequently amortised over the life of the liability, by the effective interest method. The effective interest rate is the rate, which discounts estimated future cash payments up to the maturity or the nearest date of price adjustment to the market rate, to the net carrying amount of the financial liability. The Company derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire. Interest-bearing loans and borrowing costs paid on the establishment of loan facilities are recognised to the extent that is probable that some or all of the facility will be drawn down. In this case, the cost is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the cost is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates Trade and other payables Payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method Management remuneration Currently the Company s management remuneration consist of fees paid to members of the Board. Board fees are accrued in the year in which the related service is provided Operating profit IFRS allow the use of additional line items and subtotals in the income statement. The Company has defined operating result to be a relevant subtotal in understanding the Company s financial performance. All other items of the statement of comprehensive income are presented below the operating profit. 10