##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 20-F



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| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended March 31, 2005.



| ̈ | TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -----------------------------------------------------------------------------------------



For the transition period from  to



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Commission file number: 333-13860



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YELL FINANCE B.V.

(Registrant)



Yellow Pages Limited

(Additional Registrant)

(Exact name
of Registrants as specified in their charters)



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THE NETHERLANDS

(Jurisdiction of incorporation or organization of Registrant)



ENGLAND AND WALES

(Jurisdiction of incorporation or organization of Additional Registrant)



QUEENS WALK, OXFORD ROAD

READING, BERKSHIRE RG1 7PT

UNITED
KINGDOM

(Address of principal executive offices)



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Securities registered or to be registered pursuant to Section 12(b) of the Act:



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|None                |  | None                                     



Securities
registered or to be registered pursuant to Section 12(g) of the Act:



None

(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:



10 3/4% Senior Sterling Notes
due 2011

10 3/4% Senior Dollar Notes due 2011

13 1/2% Senior Discount Dollar Notes due 2011

Guarantee relating to the Senior Sterling Notes, Senior Dollar Notes and Senior Discount Dollar Notes

(Title of Class)



---



Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:



360 ordinary shares of 100 each



Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.



Yes  x        No ̈



Indicate by check mark which financial statement item the registrant has elected to follow.



Item 17 ̈Item 18  x



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##### Table of Contents

TABLE OF CONTENTS



|          |  |                                                                              |  |     
|--------- |  | ---------------------------------------------------------------------------- |  | ----
|          |  |                                                                              |  | Page
|PART I   
|          |  |                                                                             
|ITEM 1.   |  | Identity of Directors, Senior Management and Advisers                        |  | 2   
|          |  |                                                                             
|ITEM 2.   |  | Offer Statistics and Expected Timetable                                      |  | 2   
|          |  |                                                                             
|ITEM 3.   |  | Key Information                                                              |  | 2   
|          |  |                                                                             
|ITEM 4.   |  | Information on the Company                                                   |  | 16  
|          |  |                                                                             
|ITEM 5.   |  | Operating and Financial Review and Prospects                                 |  | 41  
|          |  |                                                                             
|ITEM 6.   |  | Directors, Senior Management and Employees                                   |  | 61  
|          |  |                                                                             
|ITEM 7.   |  | Major Shareholders and Related Party Transactions                            |  | 75  
|          |  |                                                                             
|ITEM 8.   |  | Financial Information                                                        |  | 76  
|          |  |                                                                             
|ITEM 9.   |  | The Offer and Listing                                                        |  | 76  
|          |  |                                                                             
|ITEM 10.  |  | Additional Information                                                       |  | 76  
|          |  |                                                                             
|ITEM 11.  |  | Quantitative and Qualitative Disclosures About Market Risk                   |  | 91  
|          |  |                                                                             
|ITEM 12.  |  | Description of Securities Other than Equity Securities                       |  | 91  
|         
|PART II  
|          |  |                                                                             
|ITEM 13.  |  | Defaults, Dividend Arrearages and Delinquencies                              |  | 92  
|          |  |                                                                             
|ITEM 14.  |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 92  
|          |  |                                                                             
|ITEM 15.  |  | Controls and Procedures                                                      |  | 92  
|          |  |                                                                             
|ITEM 16.  |  | [Reserved]                                                                   |  | 92  
|          |  |                                                                             
|ITEM 16A. |  | Audit Committee Financial Expert                                             |  | 92  
|          |  |                                                                             
|ITEM 16B. |  | Code of Ethics                                                               |  | 92  
|          |  |                                                                             
|ITEM 16C. |  | Principal Accountant Fees and Services                                       |  | 93  
|          |  |                                                                             
|ITEM 16D. |  | Exemptions from the Listing Standards for Audit Committees                   |  | 93  
|          |  |                                                                             
|ITEM 16E. |  | Purchases of Equity Securities by the Issuer and Affiliated Purchasers       |  | 93  
|         
|PART III 
|          |  |                                                                             
|ITEM 17.  |  | Financial Statements                                                         |  | 94  
|          |  |                                                                             
|ITEM 18.  |  | Financial Statements                                                         |  | 94  
|          |  |                                                                             
|ITEM 19.  |  | Exhibits                                                                     |  | 94  
|          |  |                                                                             
|          |  | Signatures                                                                   |  | 97  



1



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##### Table of Contents

PART I



ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS



Not applicable.



ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE



Not applicable.



ITEM 3. KEY INFORMATION



BASIS OF PRESENTATION
OF INFORMATION



Certain Definitions and Presentation of Financial and
Other Information



Unless otherwise indicated, all
references in this annual report to:



| |  |  | the Company are to Yell Finance B.V., a company incorporated with limited liability under the laws of the Netherlands; the parent are to Yell Group plc
(formerly Yell Group Limited); the guarantor are to Yellow Pages Limited;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we, us, our, Yell, Group and the Yell Group are to the Company and, where the context requires, its
consolidated subsidiaries, except as otherwise indicated; these terms also refer to the Yellow Pages and Yellow Book businesses and companies acquired from British Telecommunications plc (BT); after 16 April 2002, the business of
McLeodUSA Media Group, Inc.; after 31 December 2002, the business of National Directory Company; and after 31 March 2004, Feist Publications, Inc., except as otherwise indicated;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | McLeod are to McLeodUSA Media Group, Inc. and its subsidiaries acquired on 16 April 2002;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | NDC are to National Directory Company acquired on 31 December 2002;
| | - |  | ---------------------------------------------------------------------



| |  |  | Feist are to the yellow pages telephone directories published by Feist Publications, Inc. and Feist Directories, L.L.C. acquired on 26 March 2004;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Apax Partners are to each and any of Apax Partners Holding Ltd., its subsidiaries and Apax Partners, Inc;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | Hicks Muse are to Hicks, Muse, Tate & Furst Incorporated;
| | - |  | -----------------------------------------------------------



| |  |  | the Former Sponsors are to Apax Partners and Hicks Muse, with respect to the acquisition of Yell from BT;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | Former Sponsor Funds are to funds managed or advised by the Former Sponsors;
| | - |  | ------------------------------------------------------------------------------



| |  |  | financial year are to a given 12-month period ended on 31 March of the year; for example, the 2005 financial year refers to the 12 months ended 31 March
2005;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | United Kingdom and UK are to the United Kingdom of Great Britain and Northern Ireland;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | EU are to the European Union;
| | - |  | -------------------------------



| |  |  | United States and US are to the United States of America, its states, territories, possessions and all areas subject to its jurisdiction;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | pound sterling, pounds sterling, sterling and £ are to the lawful currency of the United Kingdom;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | euro or e are to the single currency of the Member States of the European Union that have adopted such currency as their lawful currency in accordance with
legislation of the European Union relating to European Economic and Monetary Union; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | dollar, dollars, US$ and $ are to the lawful currency of the United States.
| | - |  | -----------------------------------------------------------------------------------



2



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##### Table of Contents

Yellow Pages, Business Pages, Yell, Yell.com and Yellow Pages 118 24 7 are trademarks we use in the United Kingdom. Yellow Book, McLeodUSA®, McLeod USA®,
Yell and Yell.com are trademarks we use in the United States.



We present our financial statements and financial information in pounds
sterling. Unless otherwise indicated, financial information in this annual report has been prepared in accordance with accounting principles generally accepted in the United Kingdom (UK GAAP). UK GAAP differs in certain significant
respects from US generally accepted accounting principles (US GAAP). See note 28 of the notes to our audited consolidated historical financial statements included elsewhere in this annual report for an explanation of these differences.



Market Share Information



Information regarding market share, market position and industry data
pertaining to our business contained in this annual report consists of estimates based on data and reports compiled by industry professional organisations and analysts and our knowledge of our sales and markets.



We take responsibility for compiling and extracting, but have not
independently verified, market data provided by third parties, or industry or general publications, and take no further responsibility for such data. Similarly, while we believe our internal estimates to be reliable, they have not been verified by
any independent sources and we cannot assure you as to their accuracy.



Cautionary Statement Regarding Forward-Looking Information



This annual report includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including
the terms believes, estimates, anticipates, expects, intends, may, will or should or, in each case, their negative or other variations or comparable
terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this annual report and include statements regarding our intentions, beliefs or current expectations
concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, new products, the level of new directory launches and the markets in which we operate.



By their nature, forward-looking statements involve risks and uncertainties
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 that our actual results of operations, financial condition
and liquidity, new products, the level of new directory launches and the development of the markets in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this annual report. In
addition, even if our results of operations, financial condition and liquidity, and the development of the markets in which we operate are consistent with the forward-looking statements contained in this annual report, those results or developments
may not be indicative of results or developments in subsequent periods. Important factors that could cause those differences include, but are not limited to:



| |  |  | our substantial leverage and our ability to meet our debt obligations;
| | - |  | ----------------------------------------------------------------------



| |  |  | further changes in our regulatory environment in the United Kingdom;
| | - |  | --------------------------------------------------------------------



| |  |  | our ability to continue to attract new advertisers;
| | - |  | ---------------------------------------------------



| |  |  | our ability to compete with other printed directories businesses; and
| | - |  | ---------------------------------------------------------------------



| |  |  | general local and global economic conditions.
| | - |  | ---------------------------------------------



We urge you to read Item 3.D. Key InformationRisk Factors, Item 4. Information on the Company and Item 5. Operating
and Financial Review and Prospects for a more complete discussion of the factors that could affect our future performance and the industries in which we operate. In light of these risks, uncertainties and assumptions, the forward-looking
events described in this annual report may not occur.



We
undertake no obligation to update publicly or publicly revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. All subsequent written and oral forward-looking statements
attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this annual report.



3



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##### Table of Contents

| | A. | Selected Financial Data
| | -- | -----------------------



Selected Yell Group Financial Information



The table below sets out selected historical combined and consolidated financial information for the Yell Group for the periods indicated.



Unless otherwise noted, the Yell Group historical combined and consolidated
financial information presented and discussed below has been prepared in accordance with UK GAAP. UK GAAP differs in certain important respects from US GAAP. For a description of these differences, and a reconciliation to some of the US GAAP
financial information presented below, see note 28 of the notes to the financial statements included elsewhere in this annual report.



|                                                                |  |                                |   |  |                          |   |  |                               |   |  |                           |   |  |          |   |  |         |  
|--------------------------------------------------------------- |  | ------------------------------ | - |  | ------------------------ | - |  | ----------------------------- | - |  | ------------------------- | - |  | -------- | - |  | ------- | -
|                                                                |  | Combined (Predecessor)         |   |  | Consolidated (Successor) |  
|                                                                |  | Year ended or at 31 March 2001 |   |  | 1 April to22 June 2001   |   |  | 22 June 2001 to 31 March 2002 |   |  | Year ended or at 31 March |  
|                                                                |  |                                |   |  | 2003                     |   |  | 2004                          |   |  | 2005                      |  
|                                                                |  | (in £ millions)                |  
|UK GAAP                                                         |  |                                |   |  |                          |   |  |                               |   |  |                           |   |  |          |   |  |         |  
|Combined and Consolidated Condensed Profit and Loss Information |  |                                |   |  |                          |   |  |                               |   |  |                           |   |  |          |   |  |         |  
|Group turnover                                                  |  | 774.3                          |   |  | 169.1                    |   |  | 696.3                         |   |  | 1,114.0                   |   |  | 1,186.9  |   |  | 1,285.3 |  
|Group operating profit                                          |  | 187.5                          |   |  | 32.9                     |   |  | 118.7                         |   |  | 183.4                     |   |  | 150.4    |   |  | 244.7   |  
|Net interest payable                                            |  | (24.5                          | ) |  | (5.8                     | ) |  | (158.6                        | ) |  | (236.6                    | ) |  | (194.5   | ) |  | (125.0  | )
|Profit (loss) on ordinary activities before taxation            |  | 163.0                          |   |  | 27.1                     |   |  | (39.9                         | ) |  | (53.2                     | ) |  | (44.1    | ) |  | 119.7   |  
|Tax (charge) credit on profit (loss) on ordinary activities     |  | (60.3                          | ) |  | (11.3                    | ) |  | (7.3                          | ) |  | 12.6                      |   |  | (7.0     | ) |  | (49.3   | )
|Profit (loss) for the financial year                            |  | 102.7                          |   |  | 15.8                     |   |  | (47.2                         | ) |  | (40.6                     | ) |  | (51.1    | ) |  | 70.4    |  
|EBITDA(1)                                                       |  | 222.6                          |   |  | 42.7                     |   |  | 199.8                         |   |  | 304.3                     |   |  | 270.0    |   |  | 366.3   |  
|Combined and Consolidated Condensed Balance Sheet Information   |  |                                |   |  |                          |   |  |                               |   |  |                           |   |  |          |   |  |         |  
|Current assets                                                  |  | 390.4                          |   |  |                          |   |  | 528.3                         |   |  | 637.2                     |   |  | 630.9    |   |  | 704.4   |  
|Total assets                                                    |  | 864.3                          |   |  |                          |   |  | 2,200.9                       |   |  | 2,510.3                   |   |  | 2,409.7  |   |  | 2,399.0 |  
|Creditors: amounts falling due within one year                  |  | (230.2                         | ) |  |                          |   |  | (200.1                        | ) |  | (348.7                    | ) |  | (358.7   | ) |  | (429.3  | )
|Net current assets                                              |  | 160.2                          |   |  |                          |   |  | 328.2                         |   |  | 288.5                     |   |  | 272.2    |   |  | 275.1   |  
|Total assets less current liabilities                           |  | 634.1                          |   |  |                          |   |  | 2,000.8                       |   |  | 2,161.6                   |   |  | 2,051.0  |   |  | 1,969.7 |  
|Loans and other borrowings falling due after more than one year |  | (239.8                         | ) |  | (2,050.7                 | ) |  | (2,286.0                      | ) |  | (1,987.1                  | ) |  | (1,548.8 | ) |  |         |  
|Net assets (liabilities)/equity shareholders funds (deficit)   |  | 394.3                          |   |  |                          |   |  | (49.9                         | ) |  | (124.4                    | ) |  | 63.9     |   |  | 420.9   |  
|Other Financial Information                                     |  |                                |   |  |                          |   |  |                               |   |  |                           |   |  |          |   |  |         |  
|Depreciation and amortisation                                   |  | (35.1                          | ) |  | (9.8                     | ) |  | (81.1                         | ) |  | (120.9                    | ) |  | (119.6   | ) |  | 121.6   |  
|Capital expenditure(2)                                          |  | (23.1                          | ) |  | (16.9                    | ) |  | (8.6                          | ) |  | (16.0                     | ) |  | (24.5    | ) |  | (24.0   | )
|Net cash inflow from operating activities                       |  | 194.1                          |   |  | 37.6                     |   |  | 158.7                         |   |  | 309.1                     |   |  | 253.5    |   |  | 355.1   |  



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##### Table of Contents

|                                                      |  |                                |   |  |                          |   |  |                              |   |  |                           |   |  |         |   |  |         |  
|----------------------------------------------------- |  | ------------------------------ | - |  | ------------------------ | - |  | ---------------------------- | - |  | ------------------------- | - |  | ------- | - |  | ------- | -
|                                                      |  | Combined (Predecessor)         |   |  | Consolidated (Successor) |  
|                                                      |  | Year ended or at 31 March 2001 |   |  | 1 April to22 June 2001   |   |  | 22 June2001 to 31 March 2002 |   |  | Year ended or at 31 March |  
|                                                      |  |                                |   |  | 2003                     |   |  | 2004                         |   |  | 2005                      |  
|                                                      |  | (in £ millions)                |  
|US GAAP                                               |  |                                |   |  |                          |   |  |                              |   |  |                           |   |  |         |   |  |         |  
|Combined and Consolidated Profit and Loss Information |  |                                |   |  |                          |   |  |                              |   |  |                           |   |  |         |   |  |         |  
|Net income (loss)                                     |  | 84.8                           |   |  | (18.2                    | ) |  | (147.9                       | ) |  | (79.1                     | ) |  | (21.3   | ) |  | 96.0    |  
|Adjusted net income (loss)(3)                         |  | 159.9                          |   |  | (16.6                    | ) |  | (92.3                        | ) |  | (79.1                     | ) |  | (21.3   | ) |  | 96.0    |  
|Combined and Consolidated Balance Sheet Information   |  |                                |   |  |                          |   |  |                              |   |  |                           |   |  |         |   |  |         |  
|Total assets                                          |  | 789.0                          |   |  |                          |   |  | 2,361.5                      |   |  | 2,647.4                   |   |  | 2,309.9 |   |  | 2,317.2 |  
|Total shareholders equity (deficit)                  |  | 319.0                          |   |  |                          |   |  | (150.7                       | ) |  | (295.7                    | ) |  | (77.0   | ) |  | 292.6   |  
|Other Financial Information                           |  |                                |   |  |                          |   |  |                              |   |  |                           |   |  |         |   |  |         |  
|Net cash provided by operating activities             |  | 176.5                          |   |  | 28.8                     |   |  | 48.3                         |   |  | 143.8                     |   |  | 56.1    |   |  | 181.6   |  
|Net cash used in investing activities                 |  | (72.0                          | ) |  | (16.9                    | ) |  | (1,890.9                     | ) |  | (486.9                    | ) |  | (139.2  | ) |  | (62.4   | )
|Net cash provided by (used in) financing activities   |  | (84.7                          | ) |  | 12.4                     |   |  | 1,942.7                      |   |  | 273.9                     |   |  | 74.3    |   |  | (82.5   | )

---

|(1) | EBITDA comprises total Group operating profit before depreciation and amortisation, both being non-cash items. EBITDA is not a measurement of performance under UK or US GAAP and you
should not consider EBITDA as an alternative to (a) operating income or net income (as determined in accordance with generally accepted accounting principles), (b) cash flows from operating, investing or financing activities (as determined in
accordance with generally accepted accounting principles), or as a measure of our ability to meet cash needs or (c) any other measures of performance under generally accepted accounting principles. EBITDA is not a direct measure of our liquidity,
which is shown by the Groups cash flow statement and needs to be considered in the context of our financial commitments. EBITDA may not be indicative of our historical operating results and is not meant to be predictive of our potential future
results. We believe that EBITDA is a measure commonly reported and widely used by investors in comparing performance on a consistent basis without regard to depreciation and amortisation, which can vary significantly depending upon accounting
methods (particularly when acquisitions have occurred) or non-operating factors. Accordingly, EBITDA has been disclosed in this annual report to permit a more complete and comprehensive analysis of our operating performance relative to other
companies and of our ability to service our debt. Because all companies do not calculate EBITDA identically, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. See the reconciliation of Group operating
profit to EBITDA to profit (loss) in the financial year in Item 5 - Operating and Financial Review and Prospects and the reconciliation of operating profit to net cash inflow from operating activities in the financial statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Capital expenditure represents cash expenditure on tangible fixed assets, which in the period from 1 April to 22 June 2001 includes £11.7 million in payments to BT relating to
the transfer of a car fleet to the Group.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Effective 1 April 2002, the Group prospectively adopted SFAS 142 for US GAAP reporting purposes, which eliminated the requirement to amortise goodwill. Adjusted net income (loss)
presents the prior periods net income (loss) after eliminating the effect of goodwill amortisation from 1 April 2000.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



5



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##### Table of Contents

Selected Unaudited Yell Group Operational Information



The table below sets out selected unaudited operational data for the Yell
Group for the periods indicated.



|                                                              |  |                           |  |       |  |      
|------------------------------------------------------------- |  | ------------------------- |  | ----- |  | -----
|                                                              |  | Year ended or at 31 March
|                                                              |  | 2003                      |  | 2004  |  | 2005 
|Yell Group Operational Information                            |  |                           |  |       |  |      
|UK information                                                |  |                           |  |       |  |      
|Unique advertisers (thousands)(1)                             |  | 451                       |  | 480   |  | 478  
|Directory editions published                                  |  | 94                        |  | 99    |  | 111  
|Turnover per unique advertiser (pounds)                       |  | 1,272                     |  | 1,237 |  | 1,280
|Unique advertiser retention rate (%)(2)                       |  | 78                        |  | 77    |  | 75   
|US information                                                |  |                           |  |       |  |      
|Unique advertisers (thousands)(1)(3)                          |  | 363                       |  | 386   |  | 455  
|Directory editions published                                  |  | 525                       |  | 536   |  | 565  
|Turnover per unique advertiser (dollars)                      |  | 2,135                     |  | 2,434 |  | 2,525
|Unique advertiser retention rate (%)(3)                       |  | 70                        |  | 70    |  | 71   
|Other UK products and services                                |  |                           |  |       |  |      
|Yell.com searchable advertisers as at 31 March (thousands)(4) |  | 75                        |  | 103   |  | 141  
|Yell.com page impressions for March (millions)(5)             |  | 39                        |  | 67    |  | 68   
|Yell.com page searches for March (millions)                   |  | n/a                       |  | 19    |  | 21   

---

|(1) | Number of unique advertisers in printed directories that were recognised for turnover purposes and have been billed. Unique advertisers are counted once only, regardless of the
number of advertisements they purchase or the number of directories in which they advertise.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The proportion of unique advertisers that have renewed their advertising from the preceding publication. As a result of improvements to our systems, we are now able to include
national and key accounts in our measurement of retention. If we had continued to exclude these accounts, the retention rate for the year ended 31 March 2005 would have been 74%. We have not adjusted previously reported figures for the years ended
31 March 2004 and 2003. These improvements to our systems have not affected the reporting of our financial results.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | As a result of the progress in the United States towards integrating our customer databases, we have been able to make improvements in the ways in which we capture, record and
analyse customer information. This has led to a significant overall elimination of duplicate records of unique advertisers. We have not adjusted the previously reported figure for the year ended 31 March 2004 and 2003 for any duplicated records in
that period. There remains some overlap in reporting unique advertisers between Yellow Book and acquired businesses that we expect to be removed. These improvements to our systems have not affected the reporting of our financial results. Retention
in the US is based on unique directory advertisers.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Unique customers with a live contract at month end. These figures refer to searchable advertisers only, i.e., advertisers for whom users can search on Yell.com. They exclude
advertisers who purchase products such as banners and domain names.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Growth in page impressions is lower than in previous periods as a result of a site redesign that has reduced the number of pages a user has to access when searching Yell.com.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Currency and Exchange Rate Data



The table below sets forth, for the period indicated, certain information regarding the noon buying rates in New York City
for cable transfers in pounds sterling, as certified for customs purposes by the Federal Reserve Bank of New York expressed in dollars per pound sterling:



|                           |  |                 |  |        |  |           
|-------------------------- |  | --------------- |  | ------ |  | ----------
|                           |  | £1.00 = dollars
|Month and year             |  | High            |  | Low    |  | Period end
|November 2004              |  | 1.9073          |  | 1.8323 |  | 1.9073    
|December 2004              |  | 1.9482          |  | 1.9125 |  | 1.9160    
|January 2005               |  | 1.9058          |  | 1.8647 |  | 1.8850    
|February 2005              |  | 1.9249          |  | 1.8570 |  | 1.9249    
|March 2005                 |  | 1.9292          |  | 1.8657 |  | 1.8888    
|April 2005                 |  | 1.9197          |  | 1.8733 |  | 1.9122    
|May 2005                   |  | 1.9048          |  | 1.8205 |  | 1.8321    
|June 2005 (through 3 June) |  | 1.8156          |  | 1.8119 |  | 1.8119    



The following table
sets forth the average of the noon buying rates in New York City for cable transfers in pounds sterling on the last full day of each full month during each of the last five years ended 31 March 2005; and for the period from 1 April 2005 through 3
June 2005 as certified for customs purposes by the Federal Reserve Bank of New York expressed in dollars per pound sterling:



|                                  |  |                
|--------------------------------- |  | ---------------
|Year                              |  | £1.00 = dollars
|2001                              |  | 1.4737         
|2002                              |  | 1.4320         
|2003                              |  | 1.5541         
|2004                              |  | 1.7051         
|2005                              |  | 1.8506         
|1 April 2005 through 3 June 2005. |  | 1.8491         



We make no
representation that any amount translated in this annual report could have been or could be converted at any of the rates indicated above or at any other rates.



|B. | Capitalisation and Indebtedness
|-- | -------------------------------



Not applicable.



|C. | Reasons for the Offer and Use of Proceeds
|-- | -----------------------------------------



Not applicable.





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|D. | Risk Factors
|-- | ------------



Our regulatory environment restricts our revenue growth in the United Kingdom.



Our UK printed consumer classified directories, which represent our largest product offering in terms of turnover and profits, are subject to undertakings
we have given to the UK Secretary of State for Trade and Industry. These undertakings regulate the prices we may charge for classified advertisements, and were revised from January 2002 to reduce further the prices that we may charge for classified
advertisements in the United Kingdom following acceptance by the Secretary of State of the advice of the Director General of Fair Trading that a stronger price cap was needed to address the concerns expressed in his review. The revised undertakings
limit any annual price increase to a percentage equal to the inflation rate as measured by the official UK Retail Price Index (RPI) minus six percentage points. This means that our prices for these advertisements are required to be
reduced in absolute terms each year that the inflation rate is less than 6% and that, relative to inflation, these prices are reduced every year so long as the undertakings remain in effect. Our new undertakings to the UK Secretary of State for
Trade and Industry remain in effect. The Enterprise Act 2002 (the competition provisions of which came into force on 20 June 2003) brings about changes to the UK competition regime, including, in general, removing the role of the Secretary of State
for Trade and Industry in competition proceedings and transferring her functions to the Office for Fair Trading and the Competition Commission. The competition authorities have the power to review the effectiveness and appropriateness of the
undertakings at any time and may at any time request revised terms, which may be more restrictive. In 2004 the Office of Fair Trading began a review of the undertakings. In April 2005 the Supply of Classified Directory Advertising
Services in the UK was referred to the Competition Commission for investigation. This investigation is underway. Based on the current timetable, the Competition Commission expects to report its conclusions at the latest by April 2007, but we
believe it is more likely to report within the next 12 to 15 months. For a further description of these matters and of other regulatory factors that could affect our business, including the advice of the Director General of Fair Trading concerning
the 2002 revision of the undertakings, see Information on the Company  Competition Laws. From 6 May 2005 the Secretary of State for Trade and Industry is known as the Secretary of State for Productivity, Energy and Industry.



Our results may vary from quarter to quarter and may not be indicative of
our results for the full year.



Because the different
editions of our classified directories are published and distributed at different times throughout the year, our business does not experience significant seasonality. In accordance with our accounting policies, we do not recognise turnover or the
costs directly related to sales, production, printing and distribution for any given directory until delivery of that directory has been completed. This means that because the number and type of directories are not evenly distributed during the year
or published in the same quarter every year, our turnover and profits do not arise evenly over the year. Any delay in the publication and distribution of a significant directory, or a number of directories that either singly or together generate
significant turnover, could have the effect of postponing the recognition of turnover and costs from that directory or those directories to the following financial period. Similarly, an earlier distribution of directories during the year could
result in recognition of turnover and costs in an earlier period as compared to the prior year, making year-to-year comparisons more difficult. Finally, due to timing differences among the recognition of revenues and costs, the payment of costs and
invoicing our advertisers, operating profit, EBITDA and other financial indicators generally relied on by investors to evaluate a companys financial performance may not, in our case, reflect actual cash received or expended during a given
period. See Operating and Financial Review and Prospects.



Our
business may be adversely affected by our reliance on, and our extension of credit to, small and medium-sized businesses.



A significant portion of our turnover is derived from selling advertising to small and medium-sized businesses. In the ordinary course of our business, we
extend credit to these advertisers for advertising purchases. Small and medium-sized businesses, however, tend to have fewer financial resources and higher financial failure rates than large businesses. We believe these limitations are a significant
contributing factor to having advertisers in any given year not renew their advertising in the following year. Bad debt expense as a percentage of Group turnover was 6.0% and 5.6% for the financial years ended 31 March 2004 and 2005, respectively,
and has been and currently is higher in the United States, where churn rates are higher. In addition, full collection of delinquent accounts can take an extended period of time. Consequently, we could be adversely affected by our dependence on and
our extension of credit to small and medium-sized businesses.





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Increased paper prices may have a material adverse effect on our business.



Paper represents our single largest raw material expense. In the 2005
financial year, paper costs represented approximately 3.9% of turnover and 10.6% of our total cost of sales in the United Kingdom. Paper costs represented 9.5% of turnover and approximately 17.0% of our total cost of sales in the 2005 financial year
in the United States. In the past, paper prices have fluctuated significantly. For example, during the past five years, the directory-grade paper prices (linked to newsprint increases) we have paid in the United Kingdom have fluctuated by 10%, and
may significantly increase in the future. We estimate that a 10% change in paper prices during the 2005 financial year would have had an annual impact of approximately £8.5 million on our Group operating profit. We seek to limit our exposure
to market fluctuations through maximum or fixed price arrangements with our suppliers. Our current arrangements in the United Kingdom expire in March 2007. Historically, Yellow Book had no fixed price arrangements and, instead, obtained paper at
prevailing market rates. In the United States we have executed an agreement with a US-based supplier Katahdin Fraser, who will provide a maximum of 81,600 tonnes for the next four years until August 2009. We have a contract with UPM-Kymmene for a
minimum amount of 54,500 tonnes. This would enable growth in UPM-Kymmenes tonnage at a fixed ceiling price until the end of the agreement in August 2007. Additional requirements are met by our supplier Norske, based on a geographical plan to
keep tonnage applied to west coast destinations. The amount will vary depending on the titles we are printing. We have an arrangement with Norske for a minimum of 18,100 tonnes until the end of 2005. We may not be able to renew these arrangements on
satisfactory terms, if at all. The failure to deliver by any of our major suppliers could require that we make purchases in the spot market, at potentially higher prices, during the period it takes to replace such major suppliers.



If we cannot expand through acquisitions and integrate our acquisitions and new directory
introductions successfully, our ability to expand our business may be adversely affected. Material acquisitions by us may have a material adverse effect on our business.



We have expanded in the United States through several acquisitions of classified directory publishers and new directory
introductions or launches. As part of our strategy, we actively evaluate and intend to continue from time to time to evaluate potential acquisitions, some of which may be material. Any future material acquisition may affect significantly the nature
of an investment in our 103/4% Senior Sterling Notes due 2011, 103/4% Senior Dollar Notes due 2011 and 131/2% Senior Discount Dollar Notes due 2011 (collectively, the Notes). Further, any future new acquisitions, and recent and future directory launches will require the attention of our management and the diversion of
other resources. We cannot assure you that we will be able to identify, acquire, launch or profitably manage additional classified directory publishers or directory launches or successfully integrate such publishers without substantial costs, delays
or other problems, if at all. In addition, we cannot assure you that any companies acquired or directories launched will be profitable at the time of their acquisition or launch or that they will achieve levels of profitability that will justify the
investment we made in them. We cannot assure you in the case of acquisitions that we will successfully overcome disparities between our corporate strategies and cultures and those of the businesses we acquire in the future. See Operating and
Financial Review and Prospects  Post Balance Sheet Event concerning our proposed acquisition of Transwestern Holdings, L.P. in the United States. We may also seek to expand into geographic areas where we currently have no operations and
where we may encounter cultural differences. In addition, we expect that we will encounter additional competitors pursuing acquisitions of classified directories businesses. These competitors may include the Regional Bell Operating Companies,
recently divested directory publishing businesses and smaller independent publishers with aggressive growth strategies. Our ability to expand our business in the future may be affected if we are unable to identify and consummate acquisitions and
integrate our acquisitions or directory launches successfully.



If we lose the services of our key executive officers, we may not succeed in implementing our business strategy.



Our Chief Executive Officer and certain other senior managers are key to the successful implementation of our business strategy in the near to medium
term. Our executive and senior managers have extensive experience and knowledge of our industry and its potential. The loss of their services could have a material adverse effect on our ability to implement our business strategy.



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The loss of important intellectual property rights could adversely affect our competitiveness.



Some of our trademarks, such as our Yellow Pages brand name in
the United Kingdom and our Yellow Book brand name in the United States, and other intellectual property rights are important to our business. We rely upon a combination of copyright and trademark laws as well as, where appropriate,
contractual arrangements, including licensing agreements, to establish and protect our intellectual property rights. We are required from time to time to bring lawsuits against third parties in order to protect our intellectual property rights.
Similarly, we are, and expect from time to time to be, party to proceedings where third parties challenge our rights. We cannot be sure that any lawsuits or other actions brought by us will be successful or that we will not be found to infringe the
intellectual property rights of third parties. As the internet grows, it may prove more onerous to protect our trademarks such as Yell.com from domain name infringement or to prevent others from using internet domain names that associate their
business with ours. Although we are not aware of any material infringements of any trademark rights that are significant to our business, any lawsuits, regardless of their outcome, could result in substantial costs and diversion of resources and
could have a material adverse effect on our business, financial condition or operating results. In addition, we do not have rights to the Yellow Pages brand name, or its local-language equivalent, in any countries in which we might
operate other than in the United Kingdom, the Republic of Ireland and some of the former and current British territories overseas. The loss of important trademarks could have a material adverse effect upon our business, financial condition and
results of operations.



Foreign exchange rate fluctuations may adversely
affect our business, financial condition and results of operations.



As our reporting currency is the pound sterling, any movement in foreign currency exchange rates in relation to pounds sterling, particularly the movements in the dollar/pound sterling exchange rate, could have an
impact on our business, financial condition and results of operations. If the average dollar/pound sterling exchange rate used for reporting purposes had been $0.10 higher during our 2005 financial year, then our reported turnover would have been
£31.8 million lower. Any dilution of our earnings reported in pounds sterling as a result of the weakening US dollar is partially offset by a natural hedging within the Group as a result of our having a significant amount of debt denominated
in US dollars. Nevertheless, in the future, we may also experience exchange gains or losses upon translation of our dollar-denominated liabilities relating to a portion of the Notes or upon translation of our US assets or results of operations, and
we may incur foreign exchange transaction losses to the extent we are required to fund payments on the dollar-denominated Notes with pounds sterling. We do not currently hedge against foreign exchange risk, although we may choose to do so in the
future.



Additional regulation regarding information technology may increase
our costs.



In addition to our printed directories, we
also offer internet-based products and services. General advertising laws and regulations and data protection legislation may apply to our internet-based activities in the same way in which they apply to our activities generally. As our business in
this area develops, specific laws and regulations relating to the provision of internet services and to the use of the internet and of related applications may become more relevant. Regulation of the internet and related services is itself still
developing. If our regulatory environment becomes more restrictive, including increased internet content regulation, our profitability could decrease.



Our exposure to defamation and privacy claims could have a material effect on our operating results or financial condition.



We are exposed to defamation and breach of privacy claims relating to our
directories business as well as methods of collection, processing and use of personal data. The subjects of our data and users of data collected and processed by us could also have claims against us if our data were found to be inaccurate, or if
personal data stored by us were improperly accessed and disseminated by unauthorised persons. Although we have not had any material claims relating to either defamation or breach of privacy to date, we may be party to litigation matters that could
have a material adverse effect on our business, financial condition or results of operations or otherwise distract our management.





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If we cannot adapt our business to technological change, we may be unable to maintain our competitive position.



We anticipate that the classified advertising industry
may experience significant changes arising from rapid developments in technology and users technology preferences. We currently derive substantially all of our revenue from our printed classified directories. However, increasing use by
business and residential users of internet-based and other technologically advanced products and services may cause our future turnover mix to shift in favour of products and services other than our printed classified directories, such as our
internet-based products and services. Turnover derived from our printed classified directories may decline and may not be offset by turnover derived from our other products and services. Our ability to maintain our competitive position may depend
upon our ability to enhance existing products and services, develop and market new products and services and attract and retain key managers and employees to respond to the growing presence of internet-based and other technologically advanced
products in our industry. If we fail to anticipate or to respond adequately to changes in technology and user preferences, or incur significant delays or costs in product development or introduction, we may be unable to maintain our competitive
position. As a result of the growing use of internet-based and other technologically advanced products and services, we may face increased competition from new as well as existing providers of services similar to ours.



Our reliance on technology could have a material adverse impact on our business.



Most of our business activities rely to a significant
degree on the efficient and uninterrupted operation of our computer and communications systems and those of third parties. Any failure of current or, in the future, new systems could impair our collection, processing or storage of data and the
day-to-day management of our business. This could have a material adverse effect on our business, financial condition and results of operations.



Our computer and communications systems are vulnerable to damage or interruption from a variety of sources. Despite precautions taken by us, a natural
disaster or other unanticipated problems that lead to the corruption or loss of data at our facilities could have a material adverse effect on our business, financial condition and results of operations.



Our dependence on three principal suppliers may have a material adverse effect on our
business.



We depend on two principal suppliers in the
United Kingdom for many of our printing and pre-press needs. To that end, we have several long-term contracts with both RR Donnelley, for printing and binding our classified directories, and Pindar Set Ltd., for pre-press needs, including preparing
artwork and paginating the directories. In the United States, we depend on Pindar Set Ltd. for substantially all of our pre-press needs and also on RR Donnelley and Quebecor Printing, Inc. for substantially all of Yellow Books printing needs.
These contracts are for services that are integral to our business. Should our suppliers be unable to fulfil their contractual obligations under these agreements, this could result in a material adverse effect on our business until we find
replacement suppliers for these services. However, these suppliers have developed extensive and robust Business Continuity Plans which would become effective in the unlikely event of any adverse circumstances which would affect the continuation of
our business operations.





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Our substantial leverage could adversely affect our financial wellbeing.



At 31 March 2005, we had total third-party debt, before the allocation of
deferred finance costs, of £1,713.0 million, including £859.6 million of secured debt under our senior credit facilities and £314.7 million in Notes issued, and a subordinated parent company loan of £537.4 million. We
anticipate that we will continue to maintain considerable debt for the foreseeable future. Our substantial leverage poses the risk to our noteholders that:



| |  |  | a significant portion of our cash flow from our operations will have to be dedicated to servicing our debt;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | our ability to obtain additional financing for working capital, capital expenditures or business opportunities may be impaired;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | we may have a much higher level of debt than certain of our competitors, which may put us at a competitive disadvantage and may make it difficult for us to pursue our business
strategy; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our debt level may render us unable to adequately plan for or react to changing market conditions, changes in our business and the industry in which we operate.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



Our debt agreements contain significant
restrictions limiting our flexibility in operating our business.



Various covenants contained in our debt instruments limit or may limit our ability to:



| |  |  | borrow money;
| | - |  | -------------



| |  |  | use assets as security in other transactions;
| | - |  | ---------------------------------------------



| |  |  | make certain asset dispositions;
| | - |  | --------------------------------



| |  |  | make investments;
| | - |  | -----------------



| |  |  | enter into transactions with subsidiaries other than on arms-length terms; and
| | - |  | -------------------------------------------------------------------------------



| |  |  | pay dividends or make other distributions.
| | - |  | ------------------------------------------



These restrictions could hinder our ability to carry out our business strategy and make payments of principal or interest on the Notes. A breach of the
covenants of the indentures under which the Notes were issued could cause a default under the terms of the other financing arrangements of our subsidiaries, causing all debt under those financing arrangements to become due.



Our ability to generate the cash needed to service our debt depends on certain factors
beyond our control.



The future success of our operations
will in large part dictate our ability to make scheduled payments on, and satisfy our obligations under, our debt, including our senior credit facilities and the Notes. Our future operating performance will be affected by general economic,
competitive, market, business and other conditions, many of which are beyond our control. To the extent we are not able to fund any principal payment at maturity with respect to the senior credit facilities, the Notes or any interest payment when
due from cash flow from operations, we will be required to refinance this debt pursuant to credit facilities and/or the issue of new debt and equity securities into the capital markets. Any failure to raise the additional funds necessary to achieve
this would result in a default under the senior credit facilities and/or a default under the Notes. We anticipate that we will have to refinance in part the repayment of the Notes at maturity. We cannot assure you that we will be able to refinance
any of our debt, obtain additional financing or sell assets on commercially reasonable terms or at all.



Both the Company and the guarantor are holding companies with no revenue-generating operations of their own.



The Companys and the guarantors only assets are in each case an intercompany interest receivable loan and shares in each of their direct
wholly owned subsidiaries, which are themselves holding companies. We are therefore entirely dependent on intercompany interest receipts, dividends and other distributions from our operating subsidiaries that are indirectly held through our holding
company subsidiaries. The ability of these operating subsidiaries to make payments to us is dependent on their cash flow and earnings. Our operating company subsidiaries may not generate cash flow sufficient to enable us to meet our payment
obligations.





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The terms of the intercreditor deed and the senior credit facilities as well as local corporate law restrict our
subsidiaries ability to provide funds to us.



The
Company, our parent, the guarantor and most of our subsidiaries are parties to an intercreditor deed with, among others, the lenders under the senior credit facilities. The intercreditor deed contractually subordinates each of the Companys and
the guarantors rights to receive payments from subsidiaries under intercompany loans to the subsidiaries obligations under the senior credit facilities. In addition, prior to the time the senior credit facilities are repaid, the
intercreditor deed prohibits our subsidiaries from making payments to the Company and guarantor except to fund interest due on the Notes[, certain permitted investor payments] and administrative expenses. In the case of a default under
the senior credit facilities, payments to the Company and guarantor from their subsidiaries, including payments under the Companys and the guarantors intercompany loans, will be suspended in the event of a payment default or in the event
of any other default if a blockage notice is issued by the senior facility agent under the senior credit facilities. These payments may be resumed when the default is cured, waived or ceases to exist, when any acceleration has been rescinded or when
the senior facility agent terminates the blockage notice. The intercreditor deed also provides that, in addition to the payment blockage, prior to the time the senior credit facilities are repaid, enforcement action may not be taken by the Company
or guarantor in relation to their intercompany loans without the consent of a majority of lenders under the senior credit facilities.



In addition, the terms of the senior credit facilities as well as local corporate law restrict our subsidiaries ability to provide funds to us.
Dividends are typically limited to accumulated earnings of the relevant subsidiary. Further, dividends and other distributions from our operating company subsidiaries will be applied to amounts owing under the senior credit facilities before any
surplus is available for payment to the Company to satisfy its obligations under the Notes. As a result of these restrictions we may not have sufficient funds to pay the principal of and interest on the Notes.



The Notes and the guarantees are structurally subordinated to the obligations of our
subsidiaries and you may not be repaid if we become insolvent.



Our obligations under the Notes are structurally subordinated to the obligations of our subsidiaries, including at 31 March 2005 approximately £851.0 million of debt, net of deferred finance costs (including the revolving credit
facility) under the senior credit facilities. Our subsidiaries are separate and distinct legal entities. Other than the guarantor, which is also a holding company without independent operations, our subsidiaries will have no direct obligation,
contingent or otherwise, to pay any amount due under the Notes. In the event of an insolvency, liquidation or other reorganisation of any of our subsidiaries (other than the guarantor), our creditors (including you) will have no right to proceed at
law against our subsidiaries assets. Creditors of these subsidiaries will be entitled to payment in full from the sale or other disposal of these assets in priority to the Company, except to the extent that the Company may be a distinct
creditor with recognised claims against those subsidiaries.



The Notes and the guarantees are unsecured obligations of the Company and the guarantor, respectively. Debt under the senior credit facilities is secured by liens on substantially all of the assets of the guarantor, including its
intercompany loans to its direct subsidiary and payments made under them and the shares and assets of our material operating subsidiaries. In the event of a default under the senior credit facilities or an insolvency, liquidation, winding-up or
similar proceeding relating to the guarantor or any of the Companys other material subsidiaries, the guarantors assets would be available to satisfy obligations under the senior credit facilities before any payment would be made on the
Notes or under the guarantees. Any future secured indebtedness, whether of the Company or any of its subsidiaries, including the guarantor, would effectively rank senior to the Notes and the guarantees.



We may not be able to finance a change of control offer required by the indentures.



Upon a change of control (as defined under the indentures
governing the Notes), the noteholders may require us to offer to purchase all of the Notes then outstanding at prices set forth in the indentures. The change of control provision in the indentures requires the occurrence of a rating decline to
become effective. If a change of control were to occur, we cannot assure the noteholders that we would have sufficient funds to pay the purchase price of the outstanding notes, and we expect that we would require third-party financing to do so. We
cannot assure the noteholders that we would be able to obtain this financing on favourable terms, if at all. In addition, the senior credit facilities impose restrictions on distributions from our subsidiaries that will restrict our ability to
repurchase the Notes, including pursuant to an offer in connection with a change of control. A change of control may result in an event of default under the senior credit facilities and may cause the acceleration of other debt which may be senior to
the Notes. Our future debt also may contain restrictions on repayment requirements with respect to specified events or transactions that could constitute a change of control under the indentures.



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Dutch insolvency laws may adversely affect a recovery by the holders of the Notes.



We are organised under the laws of the Netherlands. Dutch insolvency laws
differ significantly from insolvency proceedings in the United States and may make it more difficult for holders of the Notes to effect a restructuring of us or to recover the amount they would have recovered in a liquidation or bankruptcy
proceeding in the United States. There are two primary insolvency regimes under Dutch law; the first, moratorium of payment (surséance van betaling), is intended to facilitate the reorganisation of a debtors debts and enable the
debtor to investigate the possibilities for continuing its business as a going concern. The second, bankruptcy (faillissement), is primarily designed to liquidate and distribute the assets of a debtor to its creditors.



If a company applies for a moratorium of payment, the court will grant the
moratorium provisionally and appoint a trustee administrator (bewindvoerder), who, jointly with the companys management, will be in charge of the company and its business undertakings. A definitive moratorium will generally be granted
upon the approval of a qualified majority of the unsecured creditors. In both cases, certain creditors will be precluded from attempting to recover their claims from the assets. A provisional or definitive moratorium of payment will be withdrawn and
in most cases be converted into a bankruptcy if, among others, the assets or financial condition of the debtor is such that continuation of the moratorium is no longer desirable or the prospect that the debtor may eventually satisfy its creditors,
appears not to exist. The moratorium does not apply to claims of secured creditors (such as pledgees and mortgagees), claims which are accorded preferential rights (such as tax, social security duties and employee wages) or any debts arising after
the date of the moratorium. Unlike chapter 11 proceedings under US bankruptcy law during which both secured and unsecured creditors are generally barred from seeking to recover on their claims, during a Dutch moratorium of payment secured creditors
and preferential creditors may proceed against the assets that secure their claims or to which they have preferential rights, in order to satisfy their claims. A recovery under Dutch law, therefore, could involve a sale of the assets of the debtor
in a manner that does not reflect the going-concern value of the debtor. Consequently, Dutch insolvency laws could preclude or inhibit the ability of the holders of the Notes to effect a restructuring of us and could reduce the recovery in a Dutch
insolvency proceeding.



On 31 May 2002 the European Union (EU)
Council Regulation on Insolvency Proceedings (No. 1346/2000 of 29 May 2000) came into force for all EU member states with the exception of Denmark. In relation to a company or legal entity, the place of the registered office shall be presumed to be
its centre of main activities in the absence of proof to the contrary. The Companys registered office is situated in Amsterdam, The Netherlands, and the Company has offices at Queens Walk, Oxford Road, Reading, Berkshire RG1 7PT, England. The
regulation provides that the courts of the EU member state within the territory of which the centre of a debtors main interest is situated has jurisdiction to open insolvency proceedings in that respect of such debtor. English courts may rule
that the centre of the Companys main interest is situated in England and that the English court will have jurisdiction under the Regulation to open insolvency proceedings in respect of the Company. In that case the laws of England, being the
state of the opening of insolvency proceedings, shall determine the conditions for the opening of those proceedings, their conduct and their closure in accordance with the regulation, save for the exceptions mentioned in the regulation.



In connection with Dutch bankruptcy proceedings, the assets of a debtor
are generally liquidated and the proceeds distributed to the debtors creditors in accordance with their respective ranks and, to the extent claims of certain creditors have equal ranking, in proportion to the amount of such claims. Certain
parties (such as secured creditors and preferential creditors) will have special rights that may adversely affect the interests of holders of the Notes. Secured creditors such as pledgees and mortgagees may enforce their rights separate from the
bankruptcy. Other creditors need to submit their claims to the receiver for verification. The claim of a creditor may be limited depending on the date the claim becomes due and payable in accordance with its terms. Generally, claims of holders of
Notes which were not due and payable by their terms on the date of a bankruptcy of the Company will be accelerated and become due and payable on that date. Each of these claims will have to be submitted to the receiver of the Company to be verified
by the receiver. Verification under Dutch law means that the receiver determines the existence, ranking and value of the claim and whether and to what extent it will be admitted in the bankruptcy proceedings. The valuation of claims that
otherwise would not have been payable to the time of the bankruptcy proceedings may be based on a net present value analysis. Creditors that wish to dispute the verification of their claims by the receiver will need to commence a court proceeding.
These verification procedures could cause holders of Notes to recover substantially less than the principal amount of their notes or less than they could recover in a US liquidation. Such verification procedures could also cause payments to the
holders of Notes (if any) to be delayed compared with holders of undisputed claims.





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Fraudulent conveyance legislation is also in force in the Netherlands. Portions of the legislation
provide generally that certain transactions with a creditor entered into voluntarily by the debtor are subject to avoidance if both parties to the transaction know or should have known that the transaction would prejudice other creditors or that the
debtor has previously made an application for bankruptcy. Knowledge that the transaction would prejudice other creditors is presumed by law for all transactions performed within one year of the adjudication before bankruptcy or within one year
before the date the claim of fraudulent conveyance is made, if it is also established that one of the conditions mentioned in Article 43 of the Dutch Bankruptcy Act or, respectively, Article 46 of Book 3 of the Dutch Civil Code is fulfilled. These
conditions include, but are not limited to, situations in which: (1) the value of the obligation of the debtor materially exceeds the value of the obligation of the creditor, (2) the debtor pays or grants security for debts that are not yet due, (3)
an agreement is made between legal entities or an obligation arises from one legal entity towards another if a director of one of these legal entities is also a director of the other or (4) an agreement is made or an obligation would arise with a
Group company. Accordingly, if a court of competent jurisdiction in a suit by an unpaid creditor of the Company or a representative of such a creditor were to find that the issue of the Notes met the foregoing criteria, the court could avoid the
Notes. A consequence of such avoidance could be the subordination of claims of holders of the Notes to existing and possibly future debt of the Company. We cannot assure you as to what standards a court would apply to determine whether the Company
was solvent at the relevant time or whether, whatever standard was applied, the Notes would not be avoided on another of the grounds set forth above.



UK insolvency laws are not as favourable to unsecured creditors as US insolvency laws.



The procedural and substantive provisions of English insolvency laws generally are more favourable to secured creditors than
the comparable provisions of US law. These provisions afford debtors and unsecured creditors only limited protection against the rights of secured creditors and it will generally not be possible for the Company, as an unsecured creditor under
intercompany loans, or the holders of the Notes, as unsecured creditors of the Company under the Notes, or unsecured creditors of the guarantor under the guarantees to prevent the secured creditors from enforcing their security to repay the debts.
After an event of default occurs, the security agent under the senior credit facilities will have the effective right to direct the disposition of any collateral. In addition, under English insolvency law, the Companys debt under the Notes and
the guarantors debt under the guarantees will, in a winding-up, rank after the claims of certain creditors which are entitled to priority under English insolvency law. The claims of these preferred creditors include:



| |  |  | expenses of the relevant insolvency proceedings;
| | - |  | ------------------------------------------------



| |  |  | amounts owed under occupational pension schemes; and
| | - |  | ----------------------------------------------------



| |  |  | amounts owed to employees.
| | - |  | --------------------------



Under English insolvency law, an administration order can be made if the court is satisfied that the relevant company is or is likely to become
unable to pay its debts for the purpose of the relevant statute and that the administration order is reasonably likely to achieve the purpose/objective of administration. A company may also in certain circumstances be placed into an
administration by the company, its directors or by the holder of a qualifying floating charge. Administrators are required to carry out their functions with the primary objective of rescuing the company as a going concern. If this primary objective
is not achievable the administrators must carry out their functions with the objective of achieving a better result for the companys creditors as a whole than would be likely if the company was wound up or realising property in order to make a
distribution to one or more secured or preferred creditors. The administration regime is in some respects similar to the regime under chapter 11 of the US Bankruptcy Code as no steps may be taken to enforce security over a companys property
and no proceedings or other legal process may be commenced or continued against a company in administration except with the consent of the administrator or court. It is possible, however, for a secured creditor that has the power to appoint an
administrative receiver (which will generally be the case where the secured lender has security in the form of a floating charge, granted before 15 September 2003, over all or substantially all of the companys property, as is the case of the
lenders under the senior credit facilities) to prevent the appointment of an administrator and, as a result, that secured creditor and other secured creditors will be able to enforce their security. The Financial Collateral Arrangements (No. 2)
Regulations 2003 came into force on 26 December 2003. This enables security holders to enforce their security rights over shares, other financial instruments and securities or cash, regardless of the usual moratorium imposed by administration and
without being affected by the various rights of administrators and liquidators relating to disposal of property. The application of these new regulations is, however, still untested. As a result, the protection given to unsecured creditors under
English insolvency law will in most cases be less than the protection that would be given to unsecured creditors under chapter 11 of the US Bankruptcy Code. It is possible that we could be subject to insolvency proceedings in other jurisdictions in
which we operate. The insolvency laws of those jurisdictions may also differ from US insolvency laws.



15



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##### Table of Contents

ITEM 4. INFORMATION ON THE COMPANY



A. History
and Development of the Company



Yell is a leading
international directories business that includes the Yellow Pages and Business Pages directories in the United Kingdom and the Yellow Book directories in the United States, as well as Yell.com, Yellowbook.com and Yellow Pages 118 24 7.



The Company was incorporated on 19 June 2001 as a private company with
limited liability under the laws of the Netherlands with its registered office at Frederik Roestestraat 123, 1076EE Amsterdam, the Netherlands, and is registered with the commercial register under number 341578 95. Our principal offices are located
at Queens Walk, Oxford Road, Reading, Berkshire RG1 7PT, England, our telephone number is +44 (0) 118 959 2111, and our facsimile number is +44 (0) 118 950 9888.



Our business originated in 1966, when the General Post Office, a department of the UK government and the predecessor to BT,
first published a classified advertising book, later to be called Yellow Pages, as part of the Brighton telephone directory. As well as expanding our coverage and products and services in the United Kingdom, we expanded into the United States with
our purchase of Yellow Book in August 1999. We have since expanded in the United States through organic growth and through further acquisitions notably of McLeod in April 2002, NDC in December 2002 and the yellow pages directories published by Feist
Publications, Inc. and Feist Directories L.L.C. in March 2004, as well as several smaller directory businesses. On 17th May 2005 we announced that we had entered into a definitive agreement, subject to shareholder approval, for the purchase of
Transwestern Holdings L.P. This will expand our presence to 45 states and Washington DC and positions us as the fifth largest directory publisher in the United States.



As part of our ongoing strategy to focus on generating business leads for advertisers through connecting buyers and sellers,
we decided to sell our Yell Data operation, which contributed £5.5 million of revenue in the 2003 financial year. As of June 2003 we transferred our ownership of Yell Data to Experian, a major UK data services company. We have licensed
Experian to use our data and certain trading names for a five year period.



Yell operated as a business within BT prior to 22 June 2001, when funds managed or advised by the Former Sponsors purchased BTs equity interests in Yellow Book USA, Inc. and Yellow Pages Sales Limited and the
net assets and operations of BTs subsidiary Yell Limited.



Following an Initial Public Offering in July 2003, we are now owned by private shareholders and a variety of institutional funds.



During the 2005 financial year, we published a total of 676 directories in the United Kingdom and the United States and distributed approximately 112
million copies containing advertisements on behalf of over 933,000 unique advertisers. For a breakdown of our total turnover by category of activity and geographic market for each of the last three financial years, see Operating and Financial
Review and Prospects  Year Ended 31 March 2005 Compared to Year Ended 31 March 2004  Group Turnover and Operating and Financial Review and Prospects  Year Ended 31 March 2004 Compared to Year Ended 31 March 2003 
Group Turnover.





16



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##### Table of Contents

B. Business Overview



Our activities are organised into the following areas:



| |  |  | UK printed directories. In the United Kingdom, we are the largest classified directory publisher with approximately 28.1 million copies of the Yellow Pages directories
distributed during our 2005 financial year. We published 102 regional Yellow Pages directories throughout substantially the whole of the United Kingdom, which together contained approximately 1,187,000 advertisements on behalf of approximately
473,000 unique advertisers during the same period. We also published nine Business Pages directories, which are targeted at the business-to-business market, and which together contained approximately 31,500 advertisements on behalf of approximately
23,800 unique advertisers during our 2005 financial year. In total, our UK printed directories contained advertisements on behalf of 478,000 unique advertisers and contributed 47.6% of Group turnover during the 2005 financial year. Yellow Pages
directories, excluding Business Pages, are delivered mainly to consumers and form part of our UK printed directories business. They are the only part of our business that is subject to specific price and other regulatory controls.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | US printed directories. In the United States, through our publication of the Yellow Book directories, we are the leading independent publisher of classified directory
advertising and, according to industry sources, the fifth-largest overall publisher of classified directories based on Yellow Book turnover for the 2005 financial year. We served 43 states and Washington, DC during the same period. Yellow Book
published 565 directories during our 2005 financial year. We also offer online directory services in the United States through our Yellowbook.com site.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other products and services. Our other products and services, which contributed 4.1% of our Group turnover during the 2005 financial year, principally include:
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Online services. Yell.com, our online products and service business, is our UK online advertising medium; it offers comprehensive directory services and provides access to a
database of approximately 2.0 million businesses. Users can also access our services on iDTV and through SMS messaging over mobile phones. Advertisers can buy web links, template websites (including design and hosting), other online advertising
products and services and domain names.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Yellow Pages 118 24 7. Yellow Pages 118 24 7 is our 24-hour, telephone-based, operator-assisted service that provides up-to-date information throughout the United Kingdom on
businesses and services through a single telephone number. Yellow Pages 118 24 7 had approximately 70,600 paying advertisers as at 31 March 2005.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





17



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##### Table of Contents

Industry Overview



The following are important characteristics of the classified directories business:



| |  |  | Classified directories are a widely used and highly effective form of advertising. Classified directories are simple to use, and are frequently used by a wide variety
of consumers and businesses to search for a broad range of products and services. Because most directory users have already made a decision to purchase, or at least are seriously considering purchasing, a product or service when they use a
directory, we believe that classified directory advertising frequently has a higher probability of leading to a purchase than other traditional forms of advertising such as direct mail, telemarketing and television, and thus represents a
cost-effective solution for advertisers.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Virtuous circle model.A key characteristic of the classified directories business is the virtuous circle model. In this model, the greater the number of
advertisers that advertise in a directory, the more useful it becomes to users. Users refer to the directory more frequently in their search for a supplier, which in turn provides more leads, and therefore better value, to advertisers, who are thus
encouraged to pay for more advertising. Publishers facilitate this process by promoting the use of directories, and brand reputation grows as a result, which in turn contributes to increased usage and advertising.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Valuable form of advertising for small and medium-sized businesses.Given the effectiveness and value for money of classified directory advertising
compared to other forms of advertising, we believe that a large number of small and medium-sized businesses view classified directory advertising as a very valuable form of advertising which forms a significant part of their marketing budget.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | High start-up costs.New entrants require significant investment to obtain up-to-date databases, recruit and train a sales force, build brand recognition, acquire an
advertiser base sufficiently large to justify directory use, and acquire and operate the necessary infrastructure before they can viably offer a large-scale service.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Strong financial characteristics and resilience in an economic downturn.Given the characteristics described above, once successfully established, classified
directories businesses, including Yells, have historically been characterised by strong cash flow generation, relatively low ongoing capital expenditure requirements after business start-up and a relatively stable advertiser base. In addition,
given the importance of classified directory advertising to a broad and relatively stable base of small and medium-sized businesses and the low exposure of classified directory advertising to cyclical advertising, such as offers for employment,
automotive sales and property sales, we believe that the classified directories business is more resilient to economic downturns than other forms of advertising.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





18



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##### Table of Contents

We believe that the following industry trends are important in evaluating Yells growth potential:



| |  |  | Continued growth potential in the United Kingdom.The UK directories sector has experienced continuous real growth during the past 12 years. We believe that the sector
will continue to grow and that this growth will be driven primarily by increased volumes and the entry of new directory publishers into the market place. Turnover growth in the sector is expected to be achieved as penetration among the potential
advertiser base of small and medium-sized businesses increases, as existing advertisers increase their advertising spend on additional or larger advertisements, and as the result of the introduction of new product offerings.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | High growth rates of independent yellow pages directories in the United States.Within the classified advertising market in the United States, the revenues of all
telephone directory publishers were approximately $15.0 billion in 2004 and are forecast to continue to grow. These revenues are generated by the incumbent and recently sold directories divisions of telecommunications companies (81%), independent
publishers (16.5%) and online publishers (around 2.5%). According to industry sources, US independent telephone directory revenues grew from $1.0 billion in 1998 (representing an 8% share of the overall US telephone directory sector) to $2.5 billion
in 2004 (representing a 16.5% share). Within the printed sector, the independent segment is the faster growing and is forecast to grow at a compound rate of 11.6% a year to 2009.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expanded revenue opportunities through advances in technology.Most participants in the classified directories industry have expanded beyond their traditional printed
directories business and are delivering directory content and services through a broader range of media, including fixed and mobile internet and voice telephony. We expect that this trend will continue and that the directories sector will grow as
new media forms are introduced and improved, and as users become more familiar with these new technologies.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Increased opportunities for consolidation.We believe that the directories sector generally is fragmented in nature. For example, industry sources estimate that in the
United States there were 262 yellow pages publishers in 2004. Further, there are telecommunications companies in Europe and the United States that have recently divested their classified directories businesses. As a result, we believe there is
potential for further consolidation in the industry, notwithstanding the additional buyers pursuing acquisitions in this industry.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For a more detailed description of our competitive environment, see Information on the CompanyCompetition.



Products and Services



UK Printed Directories



UK printed directories contributed 47.6% to Group turnover in the 2005 financial year. The following table sets forth certain information regarding our
Yellow Pages and Business Pages directories for the 2005 financial year:



|                                 |  |              |  |               
|-------------------------------- |  | ------------ |  | --------------
|                                 |  | Yellow Pages |  | Business Pages
|Directory editions(1)            |  | 102          |  | 9             
|Copies distributed (in millions) |  | 28.1         |  | 2.2           
|Unique advertisers(2)            |  | 473,000      |  | 23,800        
|Advertisements(3)                |  | 1,187,000    |  | 31,500        

---

|(1) | Number of editions that have been recognised for revenue purposes.
|--- | ------------------------------------------------------------------

|(2) | Number of unique advertisers in printed directories that were recognised for turnover purposes and have been billed. Unique advertisers are counted once only, regardless of the
number of advertisements they purchase or the number of directories in which they advertise.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | This number is not comparable with figures reported prior to 2003 due to an improvement in our systems that now allows us to count all advertisements accounted for in our
directories.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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##### Table of Contents

Yellow Pages Directories



Yellow Pages is a series of annual regional classified directories that list the name, address and telephone number of substantially all business
telephone subscribers in the United Kingdom. The listings are currently organised into over 2,200 available classifications, with more than one classification potentially applicable to a business. We published 102 regional directories in the 2005
financial year, covering substantially the whole of the United Kingdom.



Businesses are offered a free-line entry, which is a listing on a discretionary basis at no charge in the relevant edition of our Yellow Pages directories. The entry includes only the name, address and telephone number of the
business, which is listed in alphabetical order in the relevant classification in a three-columns-to-a-page format. We maintain the information that forms the basis of these listings as part of our proprietary database, which is derived from raw
data purchased in the United Kingdom from BT, which includes BTs and other telecommunications providers (Telcos) subscriber information and is supplemented with further information we obtain from our field sales and customer
service employees. See OperationsCustomer Service and Credit Control.



A range of additional paid advertising options are available in our Yellow Pages directories, as follows:



| |  |  | Light-faced entriesAn additional line of contact information in standard text that appears underneath the free-line entry. It can be a web address, email address,
mobile phone number or fax number.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Bold entriesAn advertisers name is printed in bold text and in a larger font than in free-line entries.
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Semi-displayAn advertisers line entry is separated from surrounding entries in a box format, sometimes including limited additional information and logos.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | DisplayA full display enables advertisers to include a wide range of information, illustrations and logos. The cost of display advertisements depends on the size and
type of advertisement purchased. The following types of display advertisements are available:
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Columncovers all or part of one of the three columns on a page.
| | - |  | ----------------------------------------------------------------



| |  |  | Part pagetwo or three columns wide, for greater prominence on the page.
| | - |  | ------------------------------------------------------------------------



| |  |  | Full pagecovers an entire page for greater prominence within a business classification.
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | White Knock-OutWe print our Yellow Pages directories using yellow ink on white paper to create the yellow background characteristic of our directories, as a more
cost-effective and environmentally friendly alternative to printing on yellow paper. Businesses may pay to have all or a portion of their advertisement printed against a white background for increased visibility in contrast to surrounding
advertisements that are printed against a yellow background.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | ColourSince October 2001, we have offered a complete range of colour advertisement options in all of our published directories. All colour advertisements are priced at
a premium to our normal advertisements and give advertisers even greater prominence on a page.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Bound insertsInclusion of a full-page, double-sided, heavyweight, full-colour insert that is bound inside the directory. These inserts enable advertisers to achieve
prominence and increase the amount of information displayed to directory users. Technical considerations limit the number of bound inserts to approximately six per directory.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | CoverPremium location advertisements are available on the inside and outside back covers and spines of Yellow Pages directories.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | GuidesA range of unclassified advertising options within the Yellow Pages Guides such as the Late Night Guide and the Wedding Guide.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Branded FillersThe opportunity to display an advertiser logo in filler spaces that are generated at the pagination stage.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



In addition, we sell artwork services to our directory advertisers in Yellow
Pages.





20



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##### Table of Contents

Business Pages



In addition to our Yellow Pages directories, we published nine Business Pages directories in the 2005 financial year. We began publishing Business Pages
directories in 1984. Business Pages is an annual classified business-to-business directory that carries the name, address and telephone number of selected businesses across all of England, Scotland and Wales together with information on general
business topics such as security, office technology and taxation. The Business Pages directory is designed for businesses that supply goods and services to other businesses. Information on Business Pages advertisers is also available through
Yell.com.



As with our consumer Yellow Pages directories,
Business Pages offers free-line entries, bold entries and a range of display advertisements in approximately 1,300 available classifications.



US Printed Directories



US printed directories contributed 48.3% to Group turnover in the 2005 financial year. During the 2005 financial year, our US printed directories were
published in 43 US states and Washington, DC under the Yellow Book brand.



The following table sets forth certain information regarding our Yellow Book directories for the 2005 financial year:



|                                 |  |            
|-------------------------------- |  | -----------
|                                 |  | Yellow Book
|Directory editions               |  | 565        
|Copies distributed (in millions) |  | 82         
|Unique advertisers(1)            |  | 455,000    

---

|(1) | As a result of the progress in the United States towards integrating our customer database, we have been able to make improvements in the ways in which we capture, record and
analyse customer information. This has led to a significant overall elimination of duplicate records of unique advertisers. We have not adjusted previously reported figures for any duplicated records in that period. There remains some overlap in
reporting unique advertisers between Yellow Book and acquired businesses that we expect to be removed. These improvements to our systems have not affected the reporting of our financial results.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our classified directories list the name, address and telephone numbers of
business telephone subscribers in the geographic areas covered by our directories. The listings are currently organised into over 6,700 available classifications with more than one classification potentially applicable to a business. As is the case
with our UK printed directories, businesses in the geographic areas covered by our directories are offered free-line entries at no charge.



Our US printed directories offer advertisers a range of paid advertisement types and sizes similar to those available in our UK printed directories.
Advertisers may choose to buy bold text, semi-display, a range of display advertisements (including graphics) and/or premium-location advertisements on the spine and front and back covers of our directories.



Due to a more fragmented market, we believe that there is a much greater
opportunity for the introduction of new directories and geographic expansion in the United States compared to the United Kingdom. The large number of US directory publishers could also provide further opportunity for acquisitions. Since we acquired
Yellow Book in August 1999, we have pursued a strategy of rapid geographic expansion and we have launched 69 new directories to increase our geographic coverage in the United States.



Yellow Book telephone directories typically include:



| |  |  | a yellow classified directory section, which contains display advertisements in two columns and listings of businesses under approximately 6,700 available classifications;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a white pages section, which lists in alphabetical order the names, addresses and telephone numbers of businesses and individuals located in the geographic area covered by
the directory;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a community information section,which includes maps and other reference information about general community services such as listings for government offices, schools and
hospitals; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | coupons and advertising inserts.
| | - |  | --------------------------------



We also generate turnover from our Yellowbook.com website through selling templated advertisements, print directory advertisements online (INT), and
banner advertising, mainly to existing printed directory customers for a monthly fee.





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##### Table of Contents

The Acquisition and Integration of McLeod, NDC and Feist



We acquired McLeod, in April 2002, NDC in December 2002 and Feist in March
2004.



With the integration of these businesses, we have
implemented a single management structure over all of our US printed directories. We believe that these integrations include the following benefits:



| |  |  | improved sales force utilisation and management in contiguous or overlapping markets;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | the ability to more effectively target national customers by offering wider national coverage;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | significant cost savings through an improvement in volume discounts for general expenses, such as paper, pre-press costs and printing;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | cost savings on the closure of one of four production sites;
| | - |  | ------------------------------------------------------------



| |  |  | the transfer of strengths and best practices such as improved marketing performance through the transfer of sales strengths and improved standardisation and process management in
back-office and production systems;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a broader base in the United States into which some of Yell UKs more sophisticated sales and production processes and technologies can be introduced, creating the possibility
of a single customer service and production platform offering substantial economies of scale.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In connection with the McLeod acquisition, we entered into a publishing, branding and operating agreement with McLeods former parent companies.
Under this agreement, we were obliged for a period of three years to publish the directories previously published by McLeod prior to its acquisition under McLeod trademarks, and also retain some aspects of McLeods trade dress. The trade
dress of the directory cover is a black background with a yellow star in its centre; in the star is a map of the region covered by the directory; and the names of the towns and the directorys date, amongst other things, appear in
specific colours in specific places on the cover and spine of the directory. This agreement has now been renegotiated, and Yellow Book is no longer obliged to publish directories under the McLeod trade dress. Instead, for no fee, McLeod receive a
credit-card sized advertisement on the cover of each directory, up to four pages within the community section and advertising under various headings. See Additional InformationMaterial Contracts.



Other Products and Services



Other products or services contributed 4.1% to Group turnover in the 2005
financial year. In addition to our printed directories, we provided other associated products and services such as online services and Yellow Pages 118 24 7.



Online Products and Services



In the United Kingdom, our online products and services are based on our internet site, Yell.com, which is designed to complement our off-line products
and services. They include a directory search engine, web links, template websites (including design and hosting), other online advertising products and services and domain names. These products and services are designed to generate sales leads for
our advertisers by enabling consumers and businesses to identify appropriate suppliers of goods and services and by facilitating contact.



The following table sets forth certain information regarding Yell.com:



|                                                    |  |           |  |           |  |          
|--------------------------------------------------- |  | --------- |  | --------- |  | ---------
|                                                    |  | March2003 |  | March2004 |  | March2005
|Yell.com searchable advertisers(1)(in thousands)    |  | 75        |  | 103       |  | 141      
|Yell.com page impressions per month(2)(in millions) |  | 39        |  | 67        |  | 68       
|Yell.com searches for March (in millions)           |  | n/a       |  | 19        |  | 21       

---

|(1) | Unique customers with a live contract at month end. Figures refer to searchable advertisers only, i.e. advertisers who can be searched for by users on Yell.com. It excludes
advertisers who purchase such products as banners and domain names.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Growth in page impressions is lower than in previous periods as a result of a site redesign that has reduced the number of pages a user has to access when searching Yell.com.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Charges for our online services are currently
largely based on annual fees or costs per thousand views. We currently generate most of our turnover for our online services from advertising, and in the future we expect increased revenue from those sources and from the development of other
lead-generating services such as enhanced listings.



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##### Table of Contents

Yellow Pages 118 24 7



The Yellow Pages 118 24 7 phone service is our telephone-based, operator-assisted directory service that is available 24 hours a day, seven days a week.
The service was launched on 3 March 2003, in connection with the deregulation of the UK directory enquiries market, to replace the Talking Pages service. Yellow Pages 118 24 7 provides up-to-date information on businesses and services throughout the
United Kingdom through a single telephone number accessible from fixed and mobile lines in the United Kingdom. Yellow Pages 118 24 7 operators are able to access our Yellow Pages database and perform searches based on classifications, geographic
locations and key words to identify businesses, shops and services that match criteria specified by the caller. The service also provides full business and residential listings, as well as film and cinema information. Advertisers can update their
information as frequently as they wish, giving them the ability to highlight special promotions, new services or changes in their business details.



As at 31 March 2005, we had approximately 2.0 million free-line entries for businesses on Yellow Pages 118 24 7 and approximately 70,600 paying
advertisers whose information is given out on a preferential basis to the free-line entries. In the 2005 financial year, Yellow Pages 118 24 7, received over 7.2 million enquiries. Yellow Pages 118 24 7 provides a complementary information source
for users of our printed and online products and services and, therefore, provides an additional source of sales leads for advertisers. As at 31 March 2005, approximately 90% of our Yellow Pages 118 24 7 advertisers also advertised in Yellow Pages.





23



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##### Table of Contents

Operations



Publishing Cycle



We publish our directories on a 12-month cycle and in general produce each directory once each year. The nature of the publishing process means that there
is a long lead time between the first sales activity and final distribution of a directory.



| |  |  | SellingSales activity for a specific directory typically starts six months prior to publication. Our sales team focuses on a directory region and commences selling
advertisements for the home directory of each advertiser as well as selling advertisements for all of our other directories. Utilising a canvass-based approach, they contact existing advertisers and encourage them to renew and increase
their advertising programme and to purchase other products in our portfolio. At the same time they approach new business prospects and leads generated by our customer service group and by our marketing activities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The main activity of our sales force is to agree with an advertiser the
content of their advert. Our sales people are the primary contact between Yell and our advertisers.



| |  |  | Book closureTwo months prior to publication, the sales activity for a particular directory is halted and the directory is considered to be closed. At this stage we
continue to process orders, but the sales team does not actively sell advertisements. During this period we concentrate on amendments to sold advertisements.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Final Amendment dateOne month prior to publication the directory is finally closed. This is the deadline date for all amendments and cancellations. After this date all
advertisements booked on or before this date will be published. As these dates are critical to the publication process they are clearly shown on our rate cards.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pre-pressThe preparation, proofing and amendment of customer advertisements takes place throughout the sales process. When completed, directory content is finalised and
directories are paginated.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Printing and distributionOn completion of the pre-press activities, printing, binding and poly-bagging of the directories commences. Distribution begins as soon as the
first completed directories are produced and takes on average three weeks per directory.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Although we recognise our revenues for accounting purposes when each published directory has been delivered, the long lead time of the publishing process
gives us early visibility of revenue flows. We monitor sales on a book-by-book basis and are able to forecast the performance of each directory early in the sales cycle. This allows us to make changes to the sales activity in a particular region in
response to initial sales performance and allows more accurate forecasting of final revenue flows.



Marketing and Sales



We continually seek to increase both the number of advertisers and the number of users of our directories, with success in one area generating success in the other area in accordance with the virtuous circle model characteristic of our
industry. Our marketing and sales activities include promotion of our brands, our direct sales activity and specific sales promotions.



Brand Awareness



We believe that the strength of our brands facilitates our ability to increase usage of our directories, as well as increases our number of advertisers
and the volume of advertisements our advertisers purchase.



We
promote the Yell, Yellow Pages, Yellow Book, Yell.com and Yellowbook.com brand names and our other individual products through a variety of media, including television, newspapers,
billboards, magazines, radio publicity and the internet. Our advertising campaigns are designed to build brand awareness among users of our products and among advertisers that advertise in our directories. In the United Kingdom, in particular, we
have a reputation for clever, amusing advertisements and have won numerous awards for our advertising campaigns.



In the United States brand awareness is at the heart of our advertising and our focus this year has been on advertising campaigns which elevate national
awareness of the Yellow Book brand in line with our expanded geographical footprint.



24



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##### Table of Contents

Sales Force



We currently have a sales force of more than 5,300 employees in the United Kingdom and the United States. We believe that this extensive sales force is
both experienced and well trained and that it constitutes one of our key business resources. Our sales force is divided into three principal groups in both the United Kingdom and the United States:



| |  |  | Field sales focus on advertisers for new and repeat medium-sized and large advertisements in the United Kingdom. In the United States, we target most of our advertisers
through our field sales force. All of our field sales force in the United Kingdom are equipped with laptop computers, which provide them access to up-to-date advertiser information and market data and enable them to assist advertisers in developing
advertising programmes and designing their own advertisements. Our field sales force in the United Kingdom has access to a proprietary software application which allows them to design advertisements in the field. We expect that we will be well
positioned in the future to adopt those practices and technologies used by the UK field sales force that would be appropriate for our US field sales force.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Telephone salesfocus on new and repeat advertisers for smaller advertisements and represents our principal source of new advertisers in the United Kingdom. Historically,
Yellow Book has not maintained a significant telephone sales force. In the future, we expect that telephone sales will be an increasing and cost-effective source of new advertisers in the United States.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | National account sales in both the United Kingdom and the United States focus on larger businesses that place advertisements in multiple directories. We believe that we have
attracted more national accounts in the United States due to our increased geographic coverage resulting from the McLeod, NDC and Feist acquisitions.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Each of these groups work together in a co-ordinated fashion within a region and focuses its efforts on a rotating basis on
specific geographical areas based on the publishing cycles of directories within the region whilst focusing on our sales strategy of encouraging our existing advertisers to allocate more of their advertising budget to our products, of increasing the
number of our products they use and of winning new advertisers and retaining new and existing advertisers. We continually review the structure of our sales force and re-allocate accounts to maximise both service and added value.



Given our experience that average turnover per advertiser generally increases
with the duration of our advertiser relationship, we focus on promoting a stable sales force that will help build and maintain advertiser relationships. To that end, in the United Kingdom we pay our sales force largely on a fixed-salary basis with
an open-ended element that is commission based. In the United States, we pay our sales force on a similar basis, but with a higher level of variable commission.



We believe that overall we have a loyal and mature sales force, as demonstrated by the fact that the average age of our sales force, including relevant
management, in the United Kingdom is 35, with an average length of service of 5 years. The average age of our Yellow Book field sales force in the United States is 40 years, with an average length of service of 3.4 years.



In order to ensure that we maintain a competitive sales force, we seek to be
very selective in recruiting from amongst the large number of applicants we consider, and our sales representatives undergo continual training programmes and have regular appraisals to ensure that they are able to give advertisers high-quality
service and advice on appropriate advertising products and services.



Promotions



As part of our marketing and sales
effort, we have also engaged from time to time in specific promotional initiatives. In April 2002, we introduced our Move In programme, which offers a discounted rate for one year on quarter-column display advertising and semi-display advertising.
Also in April 2002 we introduced our Move Up programme, offering discounted rates for the take-up of larger display advertisements. In October 2003, we introduced our First Year Packages programme that offers discounted rates to existing customers
about to enter their second year of advertising. In May 2004 we replaced Move In with our Prospect Package programme offering discounted rates to new advertisers.



In the United States, Yellow Book offers a number of promotions to encourage advertisers to promote their businesses in
additional headings and additional directories. The programs are geared towards driving content into advertisements that consumers will find useful when they are shopping for a product or service.



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Customer Service and Credit Control



Our ability to retain and increase sales to existing advertisers and to increase our penetration amongst potential
advertisers is substantially dependent on the quality of our customer service and the business records and databases we maintain. Our customer service groups, particularly in the United Kingdom, maintain and update our business records and databases
by capturing data from lists purchased from Telcos and from our existing advertisers and potential advertisers. Our customer service groups enhance the raw data by contacting businesses, verifying the validity of the data and collecting further
information about the business. They also generate sales leads for our sales force. We take the commercially available data and transform it into a proprietary database, which we then use as the basis for the majority of our products and services.



Our customer service groups in the United Kingdom also manage
pre- and post-sales order processing, respond to advertiser enquiries, and provide information and support to our sales teams. In addition, our customer service groups monitor advertiser cancellations, requests for additional directories and
advertisement errors, and determine the types and causes of errors.



Our customer service groups in the United Kingdom are also responsible for billing and collection. We continue to manage our exposure to bad debt through initial credit checking of new advertisers. Our credit check of new advertisers
focuses on known areas of bad debt expense risk, such as certain directory classifications and levels of amounts spent. All new orders for existing advertisers are automatically checked for outstanding debt prior to confirmation. Both internal and
external data are used to arrive at a decision on whether or not to extend credit to an advertiser. Where doubts about an advertisers creditworthiness exist, we require the advertiser to pre-pay part or all of the value of its order.



Some of our bad debt may be written off through uncontrollable
loss for a number of reasons such as liquidation, bankruptcy, voluntary arrangement and death. Our remaining bad debt arises when collection efforts are judged to be no longer viable or economical. See Item 3.D. Key InformationRisk
FactorsOur business may be adversely affected by our reliance on, and our extension of credit to, small and medium-sized businesses.



Production, Pre-press and Printing



The following table sets out certain information regarding our publishing activities in the 2005 financial year:



|                    |  |                           |  |        |  |                 
|------------------- |  | ------------------------- |  | ------ |  | ----------------
|Printed directories |  | Editions                  |  | Copies |  | Metrictonnage(1)
|                    |  | (distributed in millions)
|Yellow Pages        |  | 102                       |  | 28.1   |  | 56,230          
|Business Pages      |  | 9                         |  | 2.2    |  | 2,631           
|Yellow Book         |  | 565                       |  | 82.0   |  | 145,915         

---

|(1) | Metric tonnage is paper used in the production process. One tonne equals 2,204.6 lbs.
|--- | -------------------------------------------------------------------------------------



Pre-press



Pre-press activities include preparing the artwork, format and layout of advertisements, implementing customer amendments, proof reading and paginating
the directories. At the end of the pre-press stage, directory pages are sent in digital format to the printers for printing. In the United Kingdom, we outsource most of our pre-press activities to Pindar Set Ltd., with whom we have maintained
ongoing relations for over 20 years. Our operational contract with Pindar Set Ltd. for pre-press services commenced on 1 May 1995 and was fundamentally updated on 21 October 2004 to reflect new working practices. Contract amendments are negotiated
on an annual basis. In the United Kingdom, we also maintain a graphic arts studio for some pre-press services, currently employing approximately 62 full-time employees and six part-time employees to design display advertisements for our large
advertisers. In the 2005 financial year, our graphic arts studio produced approximately 235,276 designs for advertisers. This includes speculative visuals used to support the recommendation of a new programme of advertising through to final artwork
and amendments.



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Historically, pre-press activity in the United States was either outsourced to a number of suppliers or worked in-house.
Following a trial period, in order to improve our US pre-press capability, we entered into an agreement on 5 April 2002 to outsource our pre-press activities in the United States to Pindar Set Ltd. In January 2004 we completed the conversion known
as the Business System Unification project which gives Yellow Book a common set of systems, across the business, to operate on a single integrated platform. Our contract with Pindar Set Ltd. has been extended and is now fully integrated
across the business. The only exception to this is the Feist business acquired in March 2004.



Printing



Because of the large print volume and binding requirements, the printing of directories requires a high level of specialisation. We outsource our printing in the United Kingdom to RR Donnelley, who print and bind all of our Yellow Pages and
Business Pages directories and with whom we have had a relationship for over 20 years. We entered into a new five-year contract with RR Donnelley (subsequently extended to eight years), which commenced in August 2001 and includes the printing of
colour advertising. In the United States, we have entered into fixed, long-term contracts with our principal printers who are RR Donnelley and Quebecor Printing, Inc. These contracts run to 31 March 2007 and 31 December 2007, respectively.



Distribution



We typically aim to deliver our directories free of charge door-to-door to
all of the residences and businesses in all of the geographical areas for which we produce directories. We currently outsource our directory distribution to four independent distribution companies in the United Kingdom pursuant to three-year
agreements from 1 April 2005 to 31 March 2008. In the United States, 38% of initial distribution is outsourced to four independent distribution companies pursuant to short and long term agreements, which expire over the next three years. The
remaining 62% of initial distribution is managed internally from a highly automated distribution facility based out of Cedar Rapids, Iowa. This facility organizes the routing, mapping, hand-delivery and mailing of directories and also works directly
with the US Postal Service to ensure cost-effective mailing methods.



Paper Supplies



Paper is our largest
raw material and one of our largest variable-cost items. In the 2005 financial year, we purchased approximately 204,776 tonnes of paper for our directories. Our principal paper suppliers in the United Kingdom are UPM-Kymmene, who provided 91% of our
paper requirements in the 2005 financial year. Our principal paper suppliers in the United States were Norske Skog Canada, Kruger and UPM-Kymmene, which together supplied over 90% of our paper requirements in the 2005 financial year. From September
2004 we have contracted for the supply of paper from three different paper suppliers Katahdin Fraser, UPM-Kymmene and Norske. The Katahdin Fraser agreement has a maximum tonnage of 81,600. The contract with UPM-Kymmene is for a minimum amount of
54,400, with no maximum given. This will enable growth in UPM-Kymmenes tonnage at a fixed ceiling price until the end of the agreement in August 2007. The tonnage taken from our suppliers, Norske, is based on a geographical plan to keep
tonnage supplied to west coast destinations (Merced, California and Portland, Oregon). The amount of tonnes from Norske will vary depending on the titles that are printing at these plants, with a minimum tonnage agreed of 18,100 until the end of
2005.



To realise economies of scale, we tend to concentrate
our paper purchases with a small number of suppliers. To help limit our exposure to fluctuating paper purchase prices, we have fixed-price arrangements with our main suppliers. In the United Kingdom, the current maximum-price arrangement with
UPM-Kymmene expires on 31 March 2007. See Item 3.D. Key InformationRisk FactorsIncreased paper prices may have a material adverse effect on our business.



We have worked with our printers in the United Kingdom to achieve reductions in the amount of paper wasted in the production
process. The use of special typefaces and advanced pagination and production techniques, including digital formatting, coupled with effective wastepaper management, enables us to further optimise paper usage and costs in the United Kingdom.



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Intellectual Property



We have made significant investments in our brand names and logos, including our Yellow Pages, Walking Fingers, Yell,
Yell.com, Business Pages, Yellow Pages 118 24 7, Yellow Book, Yellowbook.com and Talking Pages brand names and logos. We currently use 147 trademark registrations in the United
Kingdom, including Yell, Yell.com, Yellow Pages, Yellow Pages 118 24 7, Business Pages and the Walking Fingers logo. There are 11 pending UK trademark applications. We have
eight registered community trademarks which cover the European Union, and 11 pending community trademark applications. In addition, we have two registered trademarks in the United States and 5 trademark applications pending. This number excludes the
brand name Yellow Pages and the Walking Fingers logo, which are generic terms in the United States and therefore in the public domain in the United States. We do not have exclusive rights to the Yellow Pages brand
name, or its local-language equivalent, in any countries in which we might operate, other than the United Kingdom, (including Northern Ireland) and some of the former and current British territories overseas. We have registered over 1,000 internet
domain names, of which we currently use 14 to connect to our websites in the United Kingdom, including Yell.com, which provides a link to Yellowbook.com.



We have registered the Yellow Book trademark in the United Kingdom and the European Union and have applied to register the mark in the United
States. We cannot assure you that our applications for registration will be granted. However, we are actively pursuing our registration on the primary register.



We actively protect our brand names, internet domain names and logos in the countries in which we operate. For example, we have protested the use by
third parties of certain internet domain names that include the words Business Pages, Yell, Yellow Pages and the number 118247. In doing so, we are from time to time obliged to bring legal proceedings
against third parties in order to protect our intellectual property rights. See Item 3.D. Key InformationRisk FactorsThe loss of important intellectual property rights could adversely affect our competitiveness.



We are the proprietor of the database rights in the databases we have
developed. As the proprietor of the database rights in our databases, we are entitled to prevent third parties from extracting or re-utilising all or a substantial part of the contents of our databases without our consent. In addition, we believe
that we are the proprietor of the copyright in the databases we have developed to the extent that copyright subsists in them. As the proprietor of copyright in a database, we are entitled to prevent third parties from doing certain things, including
copying the database, issuing copies of the database to the public or renting or lending the database to the public. In the United States, we also have copyrights in each edition of our directories.



We also own the copyright in software, artwork and literary work created by
our employees during the course of their employment or assigned to us by contractors.





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Competition



We compete in the United Kingdom with other producers of classified and local advertising, such as Thomson directories, local, regional and national
newspapers and classified advertising magazines, such as Exchange & Mart. As well, in early 2003 our former parent, BT, started to include a classified advertising section within its telephone directory publications and to gradually change the
life span of these directories from 18 months to 12 months. Furthermore, in late 2004 the largest regional newspaper group, Trinity Mirror, launched its own directory product, the One Directory, initially in Scotland, but with plans to roll out
nationally in the UK. In the United Kingdom, our price-setting is constrained by price controls imposed under the terms of undertakings given to the UK Secretary of State for Trade and Industry in 1996, which were revised in 2001. Our competitors
are not constrained by such undertakings. We sell our advertisements for printed directories on a fixed annual sales cycle and publish an advanced price list well before we publish a directory. In the United Kingdom, unlike in the United States,
price differentials between classified directory publishers are not significant. We believe we are price competitive with other media.



In 2005 the Office of Fair Trading referred the Supply of Classified Directory Advertising Services to the Competition Commission for
Investigation. This review is underway. Based on the current timetable, the Competition Commission expects to report its conclusions at the latest by April 2007, but we believe it is more likely to report within the next 12 to 15 months.



In the United States, Yellow Book is the oldest and largest independent
publisher of classified directories and we believe that we hold strong competitive positions in a number of markets in which we have published directories for several years. We are a relatively new entrant in many of the other areas in which we
publish our directories, and we are seeking to establish our market position in these areas. We compete and may compete in the future primarily with telecommunication company publishers such as the Regional Bell Operating Companies, SBC, Verizon and
BellSouth (the RBOCs), as well as recently divested directory publishing businesses, such as those previously belonging to Sprint and Qwest, both of whom have sold all or part of their directory businesses to private equity investors,
and smaller independent publishers with aggressive growth strategies. These remain key competitors. We compete with these businesses on the basis of price and quality. Our prices are in general substantially lower than those of the RBOC publishers.
In the United States, we are not subject to any government-imposed price restrictions.



In the United States, the relatively small size of the independent yellow pages publishers compared to the RBOCs has allowed them to compete on the time taken to bring a directory to the market and, particularly, on
price. The following table compares prices charged by Yellow Book with prices charged by its main utility competitor in six areas:



Rate comparison: Incumbent vs Independent



|                               |  |                    
|------------------------------ |  | -------------------
|Market                         |  | Full-page mono rate
|                               |  | (in dollars)       
|New York                       |  |                    
|Manhattan (Verizon)            |  | 92,699             
|Manhattan (Yellow Book)        |  | 41,064             
|North Carolina                 |  |                    
|Charlotte (BellSouth)          |  | 61,668             
|Charlotte (Yellow Book)        |  | 25,956             
|Pennsylvania                   |  |                    
|Pittsburgh (Verizon)           |  | 35,117             
|Pittsburgh (Yellow Book)       |  | 19,020             
|Tennessee                      |  |                    
|Jackson (BellSouth)            |  | 18,720             
|Jackson (Yellow Book)          |  | 6,840              
|Colorado                       |  |                    
|Colorado Springs (Dex Media)   |  | 33,528             
|Colorado Springs (Yellow Book) |  | 15,768             



Source: Yellow Pages
Association (YPA) (formerly known as YPIMA, and previously as YPPA), Rates and Data, April 2005.



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The internet is an increasingly attractive medium for advertisers. Internet advertising enables companies
to deliver messages to targeted audiences with specific demographics and interests. Although advertising on the internet still represents only a small part of total advertising turnover, we believe that as the internet grows it may become
increasingly important as an advertising medium. We compete through our internet sites Yell.com and Yellowbook.com, with search engines such as Google, Yahoo!, Ask Jeeves etc. and the traditional online classified directory sites such as in the
United Kingdom, to a greater or lesser extent, www.thomsonlocal.com, www.118500.com, www.kellysearch.com, www.google.co.uk and in the United States, to a greater or lesser extent, www.smartpages.com (RBOC), www.dexonline.com, www.superpages.com
(RBOC), www.worldpages.com (independent publisher) and www.google.com.



Regulation



The Group is subject to the
regulations that apply generally to businesses in the countries in which we operate. We conduct most of our business in the United Kingdom and in the United States.



The following summary relates to those regulations in force that are material in the context of our principal business
activities.



Competition Laws



UK Competition Laws



In the United Kingdom, and prior to 20 June 2003, the Secretary of State for
Trade and Industry and the Director General of Fair Trading had power under the Fair Trading Act 1973 to investigate monopoly situations, which could occur when a company supplied or purchased 25% or more of all the goods or services of a particular
description in the United Kingdom or a defined part of it, or when a group of companies, which together supplied or purchased 25% or more of all the goods or services of a particular description in the United Kingdom or a defined part of it, behaved
in ways that adversely affected competition. If the UK Secretary of State for Trade and Industry or the Director General of Fair Trading considered that a monopoly situation may exist, he had the power to decide to refer the matter to the UK
Competition Commission (formerly known as the Monopolies and Mergers Commission).



Since 20 June 2003, the provisions of the Fair Trading Act 1973 described above have been repealed and replaced with new provisions under the Enterprise Act 2002. These provisions, in general, remove or reduce the
role of the Secretary of State from competition matters and replace the Director General of Fair Tradings functions with those of the Office of Fair Trading. By virtue of the Enterprise Act the Office of Fair Trading has become a corporate
body and the Director General is now the chairman of the board of directors. From 20 June 2003 the Office of Fair Trading has power under the Enterprise Act to make a reference to the Competition Commission of any feature or features of a market in
the United Kingdom which prevents, restricts or distorts competition in connection with the supply or acquisition of goods or services into the United Kingdom or a part thereof (market references). The Secretary of State also has the
power to make references where she is not satisfied with a decision of the Office of Fair Trading not to make a market reference or she has brought to its attention information which she considers to be relevant but is not satisfied that the Office
of Fair Trading will decide whether to make a reference within a period of time she considers to be reasonable.



In 1995, the UK Director General of Fair Trading asked the Monopolies and Mergers Commission under the Fair Trading Act to investigate and report on
classified directory advertising services relating to directories that are distributed directly to consumers, predominantly free of charge in the United Kingdom. The publication of advertisements in voice-assisted services, such as our then Talking
Pages, and online services, such as Yell.com, were excluded from the terms of reference of this investigation. The Monopolies and Mergers Commission concluded that BTs Yellow Pages division enjoyed a dominant situation in relation to the
supply of printed consumer classified directory services in the United Kingdom. The Monopolies and Mergers Commission found that this dominant situation operated against the public interest in some respects, for example, in that the prices charged
by BTs Yellow Pages division were higher than would have been the case in a competitive environment. Following the publication of the Monopolies and Mergers Commission Report in March 1996, BT gave undertakings to the Secretary of State for
Trade and Industry in respect of its printed consumer classified directories, Yellow Pages. The Secretary of State requested that the Director General of Fair Trading report in three years time, or earlier if necessary, on the effectiveness of the
undertakings.



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The undertakings imposed a price cap on advertising rates, under which the prices which could be charged for advertising
in our UK printed consumer classified directories could not increase by more than the annual change in the official UK RPI, minus a percentage determined by the Secretary of State for Trade and Industry. For directories published in the period from
September 1996 until the end of December 2001, the maximum price increase in each annual edition of a Yellow Pages directory was fixed at RPI minus 2%.



In 2000, the Director General of Fair Trading announced he was conducting a review of the undertakings, with a view to making a recommendation to the
Secretary of State for Trade and Industry as to whether the undertakings were still necessary, or whether they should be varied or superseded. Following this review, the Director General of Fair Trading recommended to the Secretary of State for
Trade and Industry that the Group be required to amend the rates for its UK printed consumer classified directories in order to bring the return on sales from that business towards that which could, in his view, be expected in a competitive market
and that, in order to do so by 2005, the Yell Group be required to cut those rates by 15% on 1 January 2002, and then by RPI minus 4% on 1 January 2003, 2004 and 2005. On 11 May 2001, the Office of Fair Trading announced that the Secretary of State
for Trade and Industry had decided that the price cap should be RPI minus 6% every year for a period of four years for directories published from January 2002. This means, for example, that if inflation as measured by RPI is 2% at the time prices
are set for given directories in each of the next four years from January 2002, then advertisement prices would be reduced in absolute terms by 4% in each of the next four years and the prices in the fourth year would be approximately 15% lower than
they are currently. We are only able to increase prices in absolute terms if inflation exceeds 6% and our prices relative to inflation will continue to decline so long as the undertakings remain in effect. It should also be noted that the four-year
period is entirely at the discretion of the Office of Fair Trading, which has the power to advance or delay a review and is likely to decide any future price controls.



Our subsidiary, Yell Limited, has signed a set of revised undertakings that it has given to the Secretary of State for Trade
and Industry. The undertakings continue to operate, unchanged by the entry into force of the competition provisions of the Enterprise Act on 20 June 2003. In addition to the price cap, these revised undertakings (which affect only our UK printed
directories business) require us to observe certain other conditions:



| |  |  | publication of a price list that covers all Yellow Pages directories and sets out the charges for advertisements, including any discounts;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a prohibition on publishing more than one printed consumer classified directory in each distribution area except as allowed in certain limited areas;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an obligation to prepare and make available financial statements in respect of the printed consumer classified directory business; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a requirement that, if we publish new directories as a result of altering distribution areas, we must not, when calculating rates for the new directories, exceed prices determined
with reference to a specified formula.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
revised undertakings, unlike those given in 1996, permit us, after two years, to publish local directories in areas where no other supplier operates and do not require us to obtain consent from the Director General of Fair Trading (whose functions
since 20 June 2003 are carried out by the Office of Fair Trading) for withdrawal of discount schemes or changes in certain business practices, such as the introduction of new features.



On 18 August 2004, the OFT announced that it was to review the undertakings given by Yell Limited. This review was concluded
on 5th April 2005, when the OFT announced that the classified directory advertising services market was not working effectively and was being referred, under its powers under section 131 of the Enterprise Act 2002, to the Competition Commission for
investigation. The Commissions administrative timetable allows for the publication of its final report by the end of June 2006. It is not bound in the remedies it can apply and therefore a wide range of outcomes is possible.



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We have a variety of measures in place to ensure compliance with the undertakings given to the Secretary of State that
continue to be in force while the Competition Commission carries out the investigation referred to above and our other regulatory obligations. In particular, Yell regularly submits to the Office of Fair Trading a draft of the rate card for its
Yellow Pages directories, to provide an opportunity for the Office of Fair Trading to verify before the rate card is released that Yells proposed rates comply with its undertakings. Once Yells rates have been set, Yells systems
ensure that advertisements can only be sold at those rates. Yell is also required each year to prepare accounts for its UK printed directories business and to submit those accounts to the Office of Fair Trading. The Office of Fair Trading has never
initiated any investigations (other than during its formal review of the undertakings in 2000-2001 and 2004-2005) concerning the Yell Groups compliance with any aspects of Yells undertakings. Compliance with Yells regulatory
obligations more generally is assisted by the work of Yells regulatory compliance officer, who provides regular training to Yells employees regarding the regulatory obligations, and by procedures designed to ensure that all the Yell
Groups business plans are developed taking into account the groups regulatory obligations.



In addition, in the United Kingdom we are required to comply with the UK Competition Act 1998, the main provisions of which came into force in March 2000.
The UK Competition Act 1998 prohibits anti-competitive agreements and concerted practices which may affect trade within the United Kingdom and have as their object or effect the prevention, restriction or distortion of competition within the United
Kingdom or a substantial part of the United Kingdom. It also prohibits conduct that unilaterally, or jointly with others, amounts to the abuse of a dominant position in a market in the United Kingdom. Behaviour that the Office of Fair Trading
Guidelines indicate might be abusive includes excessive prices, price and other discrimination, predation and the imposition of certain vertical restraints (such as exclusive purchasing or tie-in sales). Breaches of the UK Competition Act 1998 by a
company could lead to fines of up to 10% of its worldwide revenue for the previous year, could result in directions by the Office of Fair Trading as to conduct (including the modification or termination of agreements), could result in claims for
damages and additionally or alternatively could result in agreements found to be anti-competitive becoming void and unenforceable in whole or in part. Alongside these civil sanctions, the UK Enterprise Act 2002 introduced a criminal offence for
participation in hardcore cartel activity. Directors found guilty of cartel participation can also be disqualified from acting as a director.



EU Competition Laws



Provisions similar to the provisions of the UK Competition Act 1998 apply under EU competition laws. Article 81 of the EU Treaty prohibits all agreements
and concerted practices which have the object or effect of preventing, restricting or distorting competition within the common market and may affect trade between EU Member States. Article 82 of the EU Treaty prohibits the abuse of a dominant
position by one or more businesses within the common market, or in a substantial part of it, insofar as the abuse may affect trade between EU Member States. Breaches of the EU competition rules could lead to fines of up to 10% of a companys
worldwide turnover for the previous year, could result in claims for damages in national courts and additionally or alternatively could result in agreements found to be anti-competitive becoming void and unenforceable in whole or in part.



US Competition Laws



While there are competition and antitrust laws in the United States that
prohibit anti-competitive practices, no restrictions have been imposed on our business in the United States, and we do not anticipate any such restrictions being imposed unless these laws change or the Yell Group grows substantially.



In the United States, our activities are subject to various competition and
antitrust laws, including the Sherman Act, the Clayton Act and the Federal Trade Commission Act, all of which generally prohibit parties from engaging in anti-competitive activities that restrain trade, substantially lessen competition or tend to
create a monopoly. At present, no restrictions under any of these laws have been imposed on our business activities in the United States. Future business activities of the Yell Group, including future acquisitions, will be subject to these laws, the
violation of which can result in government enforcement actions which may seek fines, injunctive relief and/or imprisonment of individuals, as well as civil lawsuits which may seek damages and/or injunctive relief.



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Data Protection



The Yell Groups ability to collect, use and process personal data of advertisers, users and employees is constrained by EU and UK legislation.



At the EU level, the Data Protection Directive (EC Directive
95/46/EC) and the Directive Concerning the processing of personal data and the protection of privacy in the telecommunications sector (C2002/58/EC) set out the underlying requirements for processing personal data within the European
Union. In the United Kingdom, personal data are data relating to living individuals who can be identified from those data or from those data and other information available to the person processing the data. Persons whose personal data are processed
in the European Union have several rights, including the right of access to their personal data, the right to recourse in the event of unlawful processing of personal data and the right to withhold permission for the use of their personal data for
direct marketing.



In the United Kingdom, the Data Protection
Act 1998, the main provisions of which came into force on 1 March 2000, affects the Yell Groups activities. The Data Protection Act 1998 provides that personal data must be: (1) processed fairly and lawfully, usually with the consent of the
data subject; (2) obtained only for specified and lawful purposes; (3) adequate, relevant and not excessive in relation to those purposes; (4) accurate; (5) not kept longer than is necessary for those purposes; (6) processed in accordance with the
data subjects rights; (7) protected against accidental loss or destruction by measures appropriate to the sensitivity of the data concerned and the harm that might result from that loss or destruction; and (8) not transferred to countries
without adequate protection.



The Data Protection Act 1998
impacts on our activities to the extent that it deals with data relating to identifiable living individuals. Although our activities relate primarily to printed directories of business information, rather than to individual or personal data, we also
process data concerning individuals, such as sole traders, partnerships, individual users and employees. We must also comply with requirements relating to a data subjects rights of access to personal information we hold.



The Data Protection Act 1998 also requires that personal data must not be
transferred to a country or territory outside the European Economic Area unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects or an exemption applies. In this context, the
European Commission has determined that an arrangement put in place by the US Department of Commerce, under which US companies can voluntarily adhere to a set of data protection principles recognised by the European Commission, provides adequate
protection for personal data transferred from the European Union to such US companies.



We continue to monitor our data protection practices and will continue to evaluate potential improvements or changes to our practices and policies. To the extent we make or are required to make further changes to our
compliance procedures, we may be required to incur additional costs, which may be significant.



If the Data Protection Act 1998 is breached, a violator may be subject to a regulatory enforcement action. Failure to comply with an enforcement order or to co-operate with the Information Commissioner in this regard
is a criminal offence. A breach may also render the violator liable to pay compensation if any individual suffers damage or, in certain circumstances, distress.



Under the Directive Concerning the processing of personal data and the protection of privacy in the electronic communications sector
(2002/58/EC), the European Union introduced new rules on data protection regarding the processing of personal data and the protection of privacy in the electronic communications sector. This Directive repeals the earlier Directive 97/66/EC of the
same name and is implemented into UK law by the Privacy and Electronic Communications (EC Directive) Regulations 2003, as amended by the Privacy and Electronic Communications (EC Directive) (Amendment Regulations 2004).



Under this Directive, directory publishers are obliged to obtain the consent
of a subscriber to a publicly available electronic communications service in order to process traffic data relating to that subscribers use of electronic communications and data relating to that subscribers location. This is
the case whether the subscriber is an individual or an entity such as a company. Consent will also be required in order to send unsolicited electronic communications, including e-mail, for direct-marketing purposes to an individual. Received opinion
is that provisions may also apply to sending emails to individuals in a business context which could have an impact on our business if we sought to increase our levels of internet marketing. Subscribers who are natural persons, as referred to in
Article 12 of the Directive, have a right to be informed about usage possibilities based on search functions in electronic versions of directories. The costs of compliance with the Directive currently are not substantial as we do not currently
undertake or expect to undertake many of the activities covered by the new provisions contained in the Directive and, in so far as these new provisions do apply, our existing business practices are largely compliant with them.



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Protection of Databases



The Yell Groups business uses a number of databases, both licensed to it and developed by it. For further information see Item 4.D.
Property, Plant and EquipmentInformation Systems. Directive 96/9/EC harmonises the laws of EU Member States relating to the protection of copyright in databases and introduces a specific right to prevent extraction and
re-utilisation of the contents of a database. The Copyrights and Rights in Databases Regulations 1997 have implemented Directive 96/9/EC in UK law. These regulations provide a right for the maker of a database in which there has been a substantial
investment in obtaining, verifying or presenting database content, to prevent extraction and re-utilisation of the whole or a substantial part of a database.



Database rights subsist in all databases completed on or after 1 January 1983, provided there has been substantial investment. Under the Directive and the
Regulations, where a company has database rights in a database and the database was completed before 1 January 1998, these database rights subsist for a period of 15 years commencing 1 January 1998 or, if the database was completed on or after 1
January 1998, for a period of 15 years from the end of the calendar year in which the database was completed. However, if there is a substantial change to the contents of the database after its compilation such that the resulting database would be
considered to be a substantially new investment, in terms of the quantity or quality or a combination of both, then the database rights in that database will subsist for a period of 15 years from the date on which the substantially new investment
was made. We are continually updating our databases and believe that we have made sufficient investment since 1 January 1983 in obtaining, verifying and presenting the data in its databases for database rights to subsist in them.



In addition, we believe that we are the proprietor of the copyright in the
databases we have developed to the extent that copyright subsists in them. In the United Kingdom, to the extent that copyright does not subsist in any of our proprietary databases, our rights in these databases are protected as confidential
information and/or under database rights. Any copyright in our databases will subsist in those databases for a period of 50 years from the end of the calendar year in which the database was created, if the database was computer generated, or 70
years from the end of the calendar year in which the last person responsible for creating the database died, if the database was not computer generated.



Advertising



Our principal activity is the sale of advertising in, and the preparation and publication of, our classified directories. As with other publishers of
advertisements, we are subject to advertising laws and regulations. The Advertising Standards Authority has also produced a code of conduct for advertising in the United Kingdom. Although this code of conduct does not have the force of law, failure
to comply with its directions can result in soft sanctions such as naming the offending company publicly. Under EU directives, UK regulations and general UK advertising industry standards, we could be required to cease publishing any
misleading advertisements which our advertisers may have placed in our directories. Further, in the United Kingdom, specific rules, broadly intended to ensure that consumers are protected, apply to publishers of particular types of advertisements,
such as advertisements for financial services under the terms of the Financial Services and Markets Act 2000, or advertisements offering consumer credit under the terms of the Consumer Credit (Advertisements) Regulations 2004. Some of these specific
rules are enforced by criminal sanctions.



We have put in place
extensive programmes and procedures designed to ensure that we comply with the advertising laws and regulations that impact on our operations. We have internal advertisement compliance policies that our employees and advertisers are required to
follow. Our internal advertisement compliance policies contain details of the legal requirements that apply to advertising. In specific sectors we take particular care: for example, we check and require that advertisements include any prescribed
warnings; and we obtain written confirmation that investment business advertisers are regulated by their relevant regulatory body.





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Telecommunications



The UK government has established a new regime for the regulation of electronic communications under four EU Communications Directives which were
implemented in the United Kingdom by provisions of the Communications Act 2003 (the Act) which came into force on 25 July 2003.



In the United Kingdom, the Act has had an impact on our telecommunications services such as Yellow Pages 118 24 7 as it abolished current licences and
replaced them with a number of general conditions (very similar to the old licence regime) that apply to operators of electronic communications networks and the service providers that use them. These conditions are set in the United Kingdom by the
industry regulator, the Office of Communications. Our Yellow Pages 118 24 7 services currently comply with these conditions.



In certain circumstances additional specific obligations may apply to those undertakings found by the UK Office of Communications to have Significant
Market Power (as defined in The Communications Act 2003) in certain specified markets. The Group does not believe it is likely that it will be found to have Significant Market Power in any of these markets.



Internet Regulation and E-commerce



The internet has emerged as an attractive new medium for advertisers.
Internet advertising allows companies to deliver messages to targeted audiences with specific demographics and interests. Although advertising on the internet still represents only a small part of total advertising revenues in Europe, we believe
that as the internet grows it will become increasingly important as an advertising medium. We offer internet-based products and services in addition to printed consumer classified directories. General advertising laws and regulations and data
protection legislation apply to our internet-based activities in the same way in which they apply to our activities generally. As our business in this area develops, specific laws relating to the provision of internet services and to the use of the
internet and of internet-related applications may become relevant. Regulation of the internet and internet-related services is itself still developing, both formally by, for instance, statutory regulation, and also less formally by such methods as
industry self-regulation.



Depending on the scope and timing of
these developments, they could have a material impact on our internet operations. The main issues are set out below.



Content Regulation and Content Liability



We publish third-party content on our website, in the form of content and links to advertisers websites. We intend to develop our content offerings.
Future internet content regulation, such as any measures that may be adopted by the European Union under the Safer Internet Action Plan, and the possibility of service provider liability for information distributed over the internet or
contained on websites hosted by such a provider, may become relevant to our business.





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Internet Domain Names



A domain name is part of a websites internet address. The current system for registering, allocating and managing
internet domain names has given rise to litigation, including trademark litigation, since internet domain names are allocated in many countries on a first-come, first-served basis to any person who requests that allocation, whether or not a third
party owns the rights to a trademark incorporated in that domain name.



Abusive registrations of internet domain names may be subject to cancellation or transfer to a trademark proprietor where, amongst other things, a domain name registrant has been found to have registered the domain name in bad faith. Most
domain name administrators have a dispute resolution policy in place for dealing with abusive registrations of internet domain names. For example, ICANN, the organisation that coordinates generic top-level domains, including .com, requires all
generic top-level domain name registrants to submit to a Uniform Domain Name Dispute Resolution Policy. In the event that a trademark proprietor alleges that the domain name registrant has abusively registered a domain name, the trademark proprietor
may select an arbitrator from a panel of arbitral bodies available under the domain name resolution policy which includes the World Intellectual Property Organisation. In the event that the arbitrators decide that the domain name has been abusively
registered, ICANN will cancel the domain name registration and/or transfer it to the trademark proprietor.



We have registered a large number of internet domain names, both on our own behalf and for our advertisers, in the United Kingdom and internationally,
including Yell.com and Yell.co.uk. All of our domain name registrations are composed of words in which we have registered or unregistered trademark rights in one or more jurisdictions around the world. Consequently, we do not
consider any of our domain name registrations to have been made abusively. We are not aware of any challenges to our domain name registrations under ICANNs Uniform Domain Name Dispute Resolution Policy or any similar policy offered by other
domain name administrators.



E-commerce and Electronic Signatures



In addition to providing an attractive new advertising
medium, the internet has begun to have an impact on the way consumers and businesses buy and sell goods and services. The internet allows sellers to reach a vast global audience and enables buyers to benefit from increased product information and
price comparison power. We conduct intermediary e-commerce activities by renting hyperlinks on our Yell.com internet site to external online retailers, and we may expand our offering of online products and services in the future. We offer an online
hotel booking service via a partnership with Active Hotels in the UK.



At the EU level, Directive 2000/31/EC (the E-Commerce Directive), is part of a Europe-wide initiative to promote e-commerce. This has now been implemented in the United Kingdom. Currently in the United Kingdom, the Electronic
Communications Act 2000 creates a legal framework for e-commerce and the use of technology. Directive 1999/93/EC provides a European Community framework for electronic signatures and was adopted on 13 December 1999. It was implemented in the United
Kingdom as the Electronic Signature Regulations 2002, which came into force on 8 March 2002.



These legislative measures set up a framework for legal recognition of electronic contracts and electronic signatures. Under the terms of the E-Commerce Directive, generally, service providers are subject to the laws
of the country in which they are established. Further, of particular relevance to our business are those provisions in the E-Commerce Directive that provide that advertising must be identifiable clearly and unambiguously as such as soon as it is
received.



Consumer Credit



Yell Limited has a licence from the Office of Fair Trading to conduct
regulated consumer credit business. Regulated Credit Agreements are written by Yell Limited in respect of instalment payments made by individuals, partnerships and unincorporated associations that place advertisements in our publications. Procedures
are in place to ensure that the agreements used are prepared and executed in compliance with the Consumer Credit Act 1974. Breaches of the detailed requirements of the Consumer Credit Act 1974 may lead to the agreements in question being
unenforceable without a court order or, in some instances, totally unenforceable. Should the Office of Fair Trading at any time determine that Yell Limited is no longer a fit and proper person to hold the licence, the licence may be
revoked, preventing Yell Limited from writing any further, or administering our existing agreements. Certain specific rules under the Consumer Credit Act 1974 are reinforced by criminal sanctions.



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C. Organizational Structure



The principal subsidiaries of the Company are as follows:



|                                     |  |                                                   |  |                                               |  |                             |  |                              
|------------------------------------ |  | ------------------------------------------------- |  | --------------------------------------------- |  | --------------------------- |  | -----------------------------
|Name and country of incorporation    |  | Registered office                                 |  | Class of share capital(issued and fully paid) |  | Proportion of share capital |  | Nature of business           
|Yell Limited (England)               |  | Queens Walk,Oxford Road,Reading, BerkshireRG1 7PT |  | 73 ordinary shares of £1 each                 |  | 100% (indirect)             |  | classified directorypublisher
|                                     |  |                                                   |  |                                              
|Yellow Pages Sales Limited (England) |  | Queens Walk,Oxford Road,Reading, BerkshireRG1 7PT |  | 2 ordinary shares of £1 each                  |  | 100% (indirect)             |  | provision of salesservices   
|                                     |  |                                                   |  |                                              
|Yellow Book USA, Inc. (Delaware, US) |  | 398 EAB PlazaUniondale,New York11556              |  | 500 shares of common stock of $0.01 each      |  | 100% (indirect)             |  | classified directorypublisher
|                                     |  |                                                   |  |                                              
|Yellow Pages Limited (England)       |  | Queens Walk,Oxford Road,Reading, BerkshireRG1 7PT |  | 81 ordinary shares of £1 each                 |  | 100% (indirect)             |  | intermediate holdingcompany  



D. Property, Plant and Equipment



Property



We operate from 39 leasehold properties in the United Kingdom, in each case,
held on rack rent full repairing leases. Legal title to two of the properties, including one of the Yell Groups principal establishments, 54, Hagley Road, Birmingham, is not yet vested in the Yell Group. The landlord has consented to the
assignment but the assignment has not to date been completed. A number of these leases will come to the end of their contractual term within the next five years and consequently there may be a financial burden with regard to potential dilapidations
claims by the relevant landlord in relation to these leases. In addition, the Group may have contingent liabilities under leases previously held but which have been assigned. The annual rent in respect of a number of these leases are currently under
review or are due to be reviewed in the next year and consequently rental liabilities may increase in the immediate future. In the United States, we operate from over 300 locations.





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No property of the Yell Group accounts for 10% or more of the Yell Groups net turnover. Details of
the Groups registered office and principal places of business are as follows:



|                                                                                                           |  |           |  |      |                |      |                                                                                    |                        |             
|---------------------------------------------------------------------------------------------------------- |  | --------- |  | ---- | -------------- | ---- | ---------------------------------------------------------------------------------- | ---------------------- | ------------
|Location                                                                                                   |  | Tenure    |  | Rent |                | Term |                                                                                    | Approximate floor area
|Yellow Pages House, Queens Walk,Reading, England                                                           |  | leasehold |  | £    | 1,165,500 p.a. |      | 25 years expiring24 March 2009                                                     |                        | 70,000 sq.ft
|                                                                                                           |  |           |  |     
|First and Second Floors,Bridge Street,Reading, England                                                     |  | leasehold |  | £    | 935,000 p.a.   |      | 24 and 25 yearseach expiring24 December 2012                                       |                        | 55,000 sq.ft
|                                                                                                           |  |           |  |     
|Directories House,Wellington Street,Slough, England                                                        |  | leasehold |  | £    | 1,530,000 p.a. |      | 25 years expiring24 March 2015                                                     |                        | 56,659 sq.ft
|                                                                                                           |  |           |  |     
|Second and Fourth Floors,Whitefriars, Lewins Mead,Bristol, England                                         |  | leasehold |  | £    | 432,690 p.a.   |      | 10 years expiring31 December 2008                                                  |                        | 33,922 sq.ft
|                                                                                                           |  |           |  |     
|Ground, Fourth and Part FourthFloor, Jackson House, Sale,Cheshire, England                                 |  | leasehold |  | £    | 283,220 p.a.   |      | 25 years expiring(together withrevisionary lease10 years expiring12 November 2011) |                        | 25,355 sq.ft
|                                                                                                           |  |           |  |     
|Block C, 54 Hagley Road,Birmingham, England                                                                |  | leasehold |  | £    | 311,673 p.a.   |      | 25 years expiring20 March 2013                                                     |                        | 23,956 sq.ft
|                                                                                                           |  |           |  |     
|Sixth, Seventh, Eight, and Ninth floors180 St Vincent StreetGlasgow, Scotland                              |  | leasehold |  | £    | 458,772 p.a.   |      | 28 May 2018                                                                        |                        | 27,956 sq.ft
|                                                                                                           |  |           |  |     
|Fourth Floor180 St Vincent StreetGlasgow, Scotland                                                         |  | leasehold |  | £    | 127,431 p.a.   |      | 28 May 2018                                                                        |                        | 5,800 sq.ft 
|                                                                                                           |  |           |  |     
|Fourteenth, Fifteenth, Sixteenth andSeventeenth floorsQuayside TowerBroad StreetBirmingham, EnglandBH1 2HF |  | leasehold |  | £    | 379,728 p.a.   |      | 15 years expiring22 February 2019                                                  |                        | 21,096 sq.ft
|                                                                                                           |  |           |  |     
|2004 Renaissance Blvd, King ofPrussia, Pennsylvania, USA                                                   |  | leasehold |  | $    | 683,760 p.a.   |      | 10 years expiring31 January 2011                                                   |                        | 28,490 sq.ft
|                                                                                                           |  |           |  |     
|2008 Renaissance Blvd, King ofPrussia, Pennsylvania, USA                                                   |  | leasehold |  | $    | 383,003 p.a.   |      | 5 years expiring 30April 2009 (1stfloor 30 April2009, 2nd floor 30November 2009)   |                        | 21,720 sq.ft
|                                                                                                           |  |           |  |     
|2540 Renaissance Blvd, King ofPrussia, Pennsylvania, USA                                                   |  | leasehold |  | $    | 273,989 p.a.   |      | 5 years expiring 31May 2008                                                        |                        | 14,700 sq.ft
|                                                                                                           |  |           |  |     
|2560 Renaissance Blvd, King ofPrussia, Pennsylvania, USA                                                   |  | leasehold |  | $    | 910,998 p.a.   |      | 10 years expiring30 April 2010                                                     |                        | 35,000 sq.ft



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|                                                                                           |  |           |  |      |              |      |                                                                    |                        |                                      
|------------------------------------------------------------------------------------------ |  | --------- |  | ---- | ------------ | ---- | ------------------------------------------------------------------ | ---------------------- | -------------------------------------
|Location                                                                                   |  | Tenure    |  | Rent |              | Term |                                                                    | Approximate floor area
|193 EAB Plaza, Uniondale,New York, USA                                                     |  | leasehold |  | $    | 953,247 p.a. |      | 5 years expiring31 January 2007and 10 yearsexpiring31 January 2012 |                        | 7,385 sq.ft23,028 sq. ft30,413 sq. ft
|                                                                                           |  |           |  |     
|Cedar Rapids, IA-Tech Park andIA Distribution, 6300 C Street SW,Cedar Rapids IA 52406, USA |  | owned     |  |      | N/A          |      | N/A                                                                |                        | 215,000 sq.ft                        
|                                                                                           |  |           |  |     
|2201 Willenborg Avenue,Effingham, IL 62401, USA                                            |  | leasehold |  | $    | 692,431 p.a. |      | expires 20 March2009                                               |                        | 56,520 sq.ft                         
|                                                                                           |  |           |  |     
|3020 North CypressSuite 200 Wichita, Kansas67226, USA                                      |  | leasehold |  | $    | 289,377 p.a. |      | 10 yearsexpiring30 July2011                                        |                        | 18,000 sq.ft                         
|                                                                                           |  |           |  |     
|316 Main StreetSpearville, Kansas 67876,USA                                                |  | owned     |  |      | n/a          |      | n/a                                                                |                        | 5,000 sq.ft.                         
|                                                                                           |  |           |  |     
|4314 South Loop 289Suite 100 Lubbock, Texas79413, USA                                      |  | owned     |  |      | n/a          |      | n/a                                                                |                        | 10,000 sq.ft.                        
|                                                                                           |  |           |  |     
|4045 Northwest 64th StreetSuite 400Oklahoma City,Oklahoma 73116, USA                       |  | leasehold |  | $    | 138,224 p.a. |      | 10 yearsexpiring30 September 2009                                  |                        | 11,000 sq.ft.                        
|                                                                                           |  |           |  |     
|4210 Shawnee Mission ParkwaySuite 400A Fairway,Kansas 66205, USA                           |  | leasehold |  | $    | 165,042 p.a. |      | 15 yearsexpiring28 February2010                                    |                        | 9,200 sq.ft.                         



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Information Systems



Our key business processes are highly automated, and we believe that our information systems are key operational and management assets. Our information
systems are an integral part of our business processes and support systems and we use them to help sell and deliver our products, and to maintain our databases.



Our advertiser database enables us to identify market potential and allocate advertisers to appropriate sales channels, develop sales campaigns and
compile advertiser data for use by our sales force. In the United Kingdom, our field sales force is equipped to allow remote working and reduced travel downtime. Their equipment includes standard templates to enable sales consultants to assist
advertisers to design their own advertisements. We have developed specialised proprietary applications for market analysis as well as to support our telephone sales and field sales forces. For example, we have developed a sophisticated application
for analysing the advertiser base and developing sales strategies for each directory area.



We have developed advanced systems to support our business processes. We operate wide-area networks in the United Kingdom and the United States to provide nationwide access to data. In the United Kingdom, we have
direct data links with our pre-press supplier. In the United Kingdom, we have implemented management information systems provided by SAP for management accounting, human resources, core sales order processing, customer services and billing
activities. Our total storage capability in the UK is over 130 terabytes. Our Information Services department has over 200 employees.



In the United States, our storage capacity is over 35 terabytes and our Information Technology Department has over 129 employees. We use DIAD, Clipper and
PagEntry as our standard production system and Lawson as our platform for accounting and human resources. The McLeod and NDC acquisitions have now been integrated onto that standard platform. The recent Feist acquisition runs on a proprietary
AS400/Miles 33 system and remains the only area of the business not operating on our standard platform.



We expect to continue to undertake significant expenditures in developing and integrating our information systems in the future to support continuing
operational efficiencies within the Group. In the United Kingdom, we have developed significant expertise in the development and implementation of our information systems and we intend to facilitate development of our US systems by transferring this
expertise on a project-by-project basis.



Environment



In both the United Kingdom and the United States, we actively seek to
minimise the impact of the production of our directories on the environment. In particular, we have been increasing the percentage of recycled paper fibre used in our printed directories. All of the new paper for the production of Yellow Pages and
Business Pages is sourced from sustainable forestry and our paper suppliers are registered with The Finnish Forest Certification Scheme which is endorsed by the Pan European Forest Certification Council (PEFC). In the United States we are working
with our suppliers to ensure we use sustainable forestry. We work closely with our printing suppliers to minimise paper wastage in our directory production process and have successfully reduced wastage to very low industry-leading levels. In the
2005 financial year, the recycled fibre content of our UK Yellow Pages directories was approximately 46%. We actively promote the collection and recycling of used directories in the United Kingdom through links with, and by providing financial
support to, local authorities. In the United States, we have partnered with earth 911, an environmental information network, to provide community-specific recycling. Our activities in the United Kingdom are registered to ISO 14001, the environmental
standard of the International Standards Organisation.





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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS



A. Operating Results



The following
information should be read in conjunction with the audited financial statements for the Yell Finance B.V. and its subsidiaries. The financial statements have been prepared under the historical cost convention in accordance with accounting principles
generally accepted in the United Kingdom (UK GAAP). UK GAAP differs in certain important respects from accounting principles generally accepted in the United States (US GAAP). See the reconciliation of UK GAAP to US GAAP in
note 28.



Factors Affecting Results of Operations



Group Turnover



We are the leading provider of classified directory advertising and associated products and services in the United Kingdom
and the leading independent provider of classified directory advertising in the United States. We currently derive our turnover principally from sales of advertisements in our printed directories, Yellow Pages, Yellow Book and Business Pages. We
also generate turnover from online-related activities such as online advertising, website design and domain-name sales and from Yellow Pages 118 24 7. Our sales and publishing cycle requires us to agree to an advertising sale often months in advance
of the actual delivery of the directories and recognition of the corresponding revenues. Therefore, we have better visibility of our expected near-term financial results than might otherwise be the case.



We recognise turnover from advertisement sales for a printed directory when
we have completed delivery of that directory, in accordance with UK GAAP. Because the number and type of directories are not evenly distributed throughout the year, turnover and profits do not arise evenly over the year. Therefore, certain periods
have higher-than-average levels of turnover and profits, while others have lower-than-average levels. For example, during our 2005 financial year, the four financial quarters accounted for 22%, 25%, 23% and 30% of Group turnover, respectively.
Different directories may grow at different rates, such that growth may not be evenly distributed between quarters. The re-phasing or timing of distribution into an earlier or later period also affects the quarterly distribution of turnover. By the
same token, our sales and publishing cycle requires us to agree to an advertising sale often months in advance of the actual delivery of the directories and recognition of the corresponding revenues, and hence provides better visibility of our
expected near-term financial results than might otherwise be the case. We recognise turnover from non-printed directories and other activities over the life of the contract from the point at which the service is first provided or, in the case of a
single delivery, at the time of delivery.



Growth in our
turnover is driven primarily by the volume of advertisement sales to new and existing advertisers and by new product offerings. In the United States, we have also experienced growth in turnover as a result of acquisitions of other independent
directory publishers and new printed directory launches.



Our
ability to increase turnover in the United Kingdom during most of the period under review was limited by the undertakings given to the UK Secretary of State for Trade and Industry in 2001, under which, from January 2002 we were required to limit the
annual growth in advertising rates in our UK printed Yellow Pages directories to RPI less 6%, for an expected period of four years. This has restricted our ability to raise prices on advertisements within our printed Yellow Pages directories in the
United Kingdom.



When RPI is less than 6%, this new price cap
requires us to reduce the price in absolute terms that we can charge our advertisers for placing advertisements in our UK printed consumer classified directories. Relative to inflation, our prices will decrease each year that the price cap remains
in effect. For example, if inflation as measured by RPI were 2% at the time prices are set for given directories in each of the four years commencing January 2002, then advertisement prices would be reduced in absolute terms by 4% each year, and the
prices in the fourth year would be approximately 15% lower than they were when the new price cap took effect. During our 2005 financial year, the average price of advertising in our Yellow Pages directories decreased by 3.3%, as compared to a
decrease of 4.8% during our 2004 financial year. We are not subject to any regulatory price constraints in the United States.



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In the 2005 financial year, approximately 46% of our Group turnover was affected by a price cap, as compared to 49%
during the 2004 financial year and 50% during the 2003 financial year. In the 2005 financial year, 52% of our turnover came from UK operations compared with 53% in the 2004 financial year.



While the current Competition Commission review of the market is underway, we
will continue to cut prices for advertising in our UKYellow Pages directories in line with the RPI less 6% formula.



Cost of Sales



Our cost of sales consists principally of costs associated with the publication of directories, including advertising sales, paper, printing and pre-press
production, as well as bad debt expense. The principal components of advertising sales costs, which represent a significant portion of our cost of sales, are employee costs of the sales force, including salaries, benefits and commissions, and
associated direct costs. We recognise the cost of sales for each directory on completion of delivery of that directory.



We anticipate that cost of sales will increase as we expand and introduce new directories and other products. Our expansion into new markets in the United
States also increases our employee costs. In addition to requiring a larger sales force, the commissions we pay to our sales force tend to be higher in new markets, as our commission structure pays higher remuneration for new advertisers.



Paper is our largest raw material and one of our largest
variable-cost items. In recent years paper prices have fluctuated significantly. In the 2005 financial year, paper costs were equivalent to 6.6% of Group turnover and represented 10.6% of our total cost of sales in the United Kingdom and 17.0% of
our total cost of sales in the United States.



Cost of sales
also includes bad debt expense. Our UK business currently has low bad debt expense relative to our US business due to our established market position in the United Kingdom. Our Yellow Book directories business operates in a number of markets in
which we are a relatively new entrant, and as a result a higher proportion of our advertisers are new advertisers, a category in which historically we have intentionally accepted a higher rate of bad debts. We believe that the benefits of our growth
strategy in the United States outweigh any risks associated with the credit profile of our advertisers, and over time, as our newer directories become more established in their respective markets, we expect that bad debt expense as a percentage of
turnover in the United States will decrease. Nevertheless, because we expect to continue our growth strategy in the future, we expect our bad debt expense as a percentage of turnover in the United States to remain higher than in the United Kingdom.



Distribution Costs and Administrative Costs



Our distribution costs consist principally of amounts payable to third-party
delivery companies with which we contract for the delivery of our printed directories. Our distribution costs related to a directory are recognised when the directory is delivered.



Our administrative costs consist principally of amortisation and depreciation, advertising, promotion and marketing
expenses, administrative staff expenses, information technology costs and staff training. Advertising, promotion and marketing expenses represent our most significant discretionary expenses.



Gross Profit Margins



The change of the geographic mix of our business, as well as the strategy we
have pursued of rapid growth and geographic expansion of our business in the United States, has had an important effect on our financial results during the periods under review, including our profit margins. These factors are expected to continue
affecting our financial results in the future.



Our printed
directories business in the United Kingdom, which we view as more developed and which covers substantially all of the United Kingdom, has historically had higher gross profit margins than those in the United States.



In the United States, the different market dynamics and the younger portfolio
result in lower gross profit margin. In the 2005 financial year, for example, the gross profit margin for our UK business was 62.9%, compared to 44.3% for our US business. Our overall gross profit margin is therefore affected and will continue to be
affected to the extent our US operations continue to form an increasing portion of the geographic mix of our business.



We intend to increase our focus on enhancing our operating efficiencies and organic growth in the United States, and we believe there will be
opportunities to improve our US gross profit margins as our US operations become more established.



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Year Ended 31 March 2005 Compared to Year Ended 31 March 2004



Group Turnover



|                                                    |  |                         |  |                         |  |                 |   |  |        |  
|--------------------------------------------------- |  | ----------------------- |  | ----------------------- |  | --------------- | - |  | ------ | -
|                                                    |  | Year ended 31 March2004 |  | Year ended 31 March2005 | 
|                                                    |  | (£ in millions)         |  | (%)(a)                  |  | (£ in millions) |   |  | (%)(a) |  
|UK printed directories                              |  | 593.9                   |  | 50.0                    |  | 612.1           |   |  | 47.6   |  
|Other UK products and services                      |  | 41.0                    |  | 3.5                     |  | 52.3            |   |  | 4.1    |  
|Total UK turnover                                   |  | 634.9                   |  | 53.5                    |  | 664.4           |   |  | 51.7   |  
|US printed directories:                             |  |                         |  |                         |  |                 |   |  |        |  
|US printed directories at constant exchange rate(b) |  | 552.0                   |  | 46.5                    |  | 675.0           |   |  | 52.5   |  
|Exchange impact(b)                                  |  |                        |  |                        |  | (54.1           | ) |  | (4.2   | )
|Total US turnover                                   |  | 552.0                   |  | 46.5                    |  | 620.9           |   |  | 48.3   |  
|Group turnover                                      |  | 1,186.9                 |  | 100.0                   |  | 1,285.3         |   |  | 100.0  |  

---

|(a) | The percentage of total group turnover.
|--- | ---------------------------------------

|(b) | Constant exchange rate states the results of the most recent year presented at the same exchange rate as that used to translate the results of the previous year presented. Exchange
impact is the difference between the results reported at a constant exchange rate and the actual results reported using current year exchange rates.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Group turnover increased by £98.4 million, or 8.3%, from £1,186.9 million in the 2004 financial year to
£1,285.3 million in the 2005 financial year, reflecting increased turnover during the period from each business segment.



UK turnover



UK printed directories increased by 3.1%, or £18.2 million during the 2005 financial year. We added almost 117,000 new advertisers, exceeding our
target of 100,000 new advertisers for the fifth successive year. We retained 75% of existing customers (74% excluding national and key accounts). The decline from 77% last year primarily reflects increased competition and the substantial growth in
our advertiser base over the last five years as new customers typically dilute retention. As a result, the total number of unique print advertisers was 478,000 compared with 480,000 last year.



Turnover per unique advertiser increased for all UK printed directories by
3.5% to £1,280 from £1,237, after the effect of the 3.3% price reduction on our Yellow Pages directories.



We rescoped 13 directories into 25 during the year, addressing changes in demographic, shopping and trading patterns and enabling us to compete more
effectively with the wide range of alternative classified information available to the user. We now publish 102 Yellow Pages directories and offer full coverage of the United Kingdom, following the publication of the Hull directory for the first
time.



Turnover from Yell.com, our UK online directory service,
increased by £10.4 million, or 40.3%, from £25.8 million to £36.2 million. This increase reflected the 36.9% increase in searchable advertisers to 141,000, including 23,000 who do not advertise in our printed products. This brings
our total UK unique advertisers to 501,000 (498,000 last year). Through our channel-neutral approach, Yell.com has successfully captured new advertisers from new markets, taking advantage of the widening usage of the internet within the classified
advertising market.



In the year ahead we expect total UK
turnover to grow at approximately 3% with a significant contribution from Yell.com.



43



---

##### Table of Contents

US turnover



Turnover from US printed directories increased by £68.9 million, or 12.5%, from £552.0 million in the 2004 financial year to £620.9
million in the 2005 financial year. Turnover was negatively affected by £54.1 million from a weakening US dollar. On a constant US dollar basis, US turnover grew by £123.0 million, or 22.3%. The average exchange rates were approximately
$1.85 to £1.00 in the year ended 31 March 2005 and $1.69 to £1.00 in the prior year.



The Group had 455,000 unique advertisers in the United States in the year ended 31 March 2005 compared to 386,000 in the prior year. Average turnover per
unique advertiser grew 3.7% from $2,434 to $2,525. Customer retention increased from 70% to 71%.



Of the 22.3% growth in turnover, excluding the effect of exchange rate movements, 14.2% was from organic turnover growth. This included 11.1% from
same-market growth, which benefitted from the successful relaunch of several major former McLeod directories, as compared to 9.0% last year. Directories from acquisitions that published for the first time in the most recent year are not included in
the same market growth results.



Same-market growth is derived
by comparing the turnover from directories (including rescoped directories) that we published in a period with turnover from these same directories or predecessor directories covering substantially the same geographic area published in the previous
publishing cycle, which is not necessarily the same period in the prior financial year. Rescoped directories are directories where we redefined the geographic boundaries covered by one or more directories, which could include replacing one directory
with multiple directories or combining multiple directories into fewer directories.



Remaining growth was due to 19 new directory launches (contributing 3.1% to the growth) and 32 directories publishing for the first time after acquisition (contributing 8.4% to the growth) offset by the effect of
winding down certain operations (0.3% reduction).



In the year
ahead, we expect organic turnover growth of approximately 12%, helped by a heavy schedule of launches in the first half. We also expect our 2005 acquisitions to contribute an extra 1.5% of turnover in 2006.



44



---

##### Table of Contents

Cost of Sales



|                                                    |  |                         |  |                         |  |                 |   |  |       
|--------------------------------------------------- |  | ----------------------- |  | ----------------------- |  | --------------- | - |  | ------
|                                                    |  | Year ended 31 March2004 |  | Year ended 31 March2005
|                                                    |  | (£ in millions)         |  | (%)(a)                  |  | (£ in millions) |   |  | (%)(a)
|UK printed directories                              |  | 228.0                   |  | 38.4                    |  | 231.7           |   |  | 37.9  
|Other UK products and services                      |  | 12.4                    |  | 30.2                    |  | 14.6            |   |  | 27.9  
|Total UK cost of sales                              |  | 240.4                   |  | 37.9                    |  | 246.3           |   |  | 37.1  
|US printed directories:                             |  |                         |  |                         |  |                 |   |  |       
|US printed directories at constant exchange rate(b) |  | 312.5                   |  | 56.6                    |  | 375.2           |   |  | 55.6  
|Exchange impact(b)                                  |  |                        |  |                        |  | (29.2           | ) |  | 54.0  
|Total US cost of sales                              |  | 312.5                   |  | 56.6                    |  | 346.0           |   |  | 55.7  
|Total cost of sales                                 |  | 552.9                   |  | 46.6                    |  | 592.3           |   |  | 46.1  

---

|(a) | The percentage of related turnover.
|--- | -----------------------------------

|(b) | Constant exchange rate states the results of the most recent year presented at the same exchange rate as that used to translate the results of the previous year presented. Exchange
impact is the difference between the results reported at a constant exchange rate and the actual results reported using current year exchange rates.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Total cost of sales in the 2005 financial year increased by £39.4 million, or 7.1%, compared to the 2004 financial
year.



The £3.7 million, or 1.6%, increase in cost of
sales for UK printed directories from £228.0 million in the 2004 financial year to £231.7 million in the 2005 financial year reflected higher advertisement volumes. Cost of sales for other UK products and services increased by £2.2
million, or 17.7%, from £12.4 million in the 2004 financial year to £14.6 million in the 2005 financial year.



Cost of sales for US printed directories as a percentage of related turnover decreased slightly to 55.6% in the 2005 financial year, as compared to 56.6%
in the 2004 financial year.



Our consolidated bad debt expense
was £72.6 million, or 5.6% of Group turnover in the 2005 financial year, as compared with £71.0 million, or 6.0% of Group turnover in the 2004 financial year. The charge for UK bad debts was 4.1% of UK printed directories and other
products and services turnover in 2005 and 4.5% in the 2004 financial year. The US bad debt expense was 7.3% of US printed directories turnover in the 2005 financial year as compared to 7.7% in the 2004 financial year.



45



---

##### Table of Contents

Gross Profit and Gross Profit Margin



|                                                    |  |                         |  |                         |  |                 |   |  |        |  
|--------------------------------------------------- |  | ----------------------- |  | ----------------------- |  | --------------- | - |  | ------ | -
|                                                    |  | Year ended 31 March2004 |  | Year ended 31 March2005 | 
|                                                    |  | (£ in millions)         |  | (%)(a)                  |  | (£ in millions) |   |  | (%)(a) |  
|UK printed directories                              |  | 365.9                   |  | 57.7                    |  | 380.4           |   |  | 54.9   |  
|Other UK products and services                      |  | 28.6                    |  | 4.5                     |  | 37.7            |   |  | 5.4    |  
|Total UK gross profit                               |  | 394.5                   |  | 62.2                    |  | 418.1           |   |  | 60.3   |  
|US printed directories:                             |  |                         |  |                         |  |                 |   |  |        |  
|US printed directories at constant exchange rate(b) |  | 239.5                   |  | 37.8                    |  | 299.8           |   |  | 43.3   |  
|Exchange impact(b)                                  |  |                        |  |                        |  | (24.9           | ) |  | (3.6   | )
|Total US gross profit                               |  | 239.5                   |  | 37.8                    |  | 274.9           |   |  | 39.7   |  
|Gross profit                                        |  | 634.0                   |  | 100.0                   |  | 693.0           |   |  | 100.0  |  
|Gross profit margin (%)                             |  |                         |  |                         |  |                 |   |  |        |  
|UK operations                                       |  |                         |  | 62.1                    |  |                 |   |  | 62.9   |  
|US operations                                       |  |                         |  | 43.4                    |  |                 |   |  | 44.3   |  
|Group total (%)                                     |  |                         |  | 53.4                    |  |                 |   |  | 53.9   |  

---

|(a) | The percentage of total gross profit.
|--- | -------------------------------------

|(b) | Constant exchange rate states the results of the most recent year presented at the same exchange rate as that used to translate the results of the previous year presented. Exchange
impact is the difference between the results reported at a constant exchange rate and the actual results reported using current year exchange rates.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The increase in gross profit as a percentage of Group turnover from 53.4% in the 2004 financial year to 53.9% in the 2005
financial year principally reflected improved margins from both the UK and US operations.



Distribution Costs and Administrative Expenses



Distribution costs increased by £3.8 million, or 11.0%, from £34.5 million in the 2004 financial year (2.9% of Group turnover) to £38.3 million in the 2005 financial year (3.0% of Group turnover).
Excluding the effects of the weakening dollar, distribution costs would have increased by £6.0 million.



Administrative expenses decreased by £39.1 million, or 8.7%, from £449.1 million in the 2004 financial year to £410.0 million in the
2005 financial year. Excluding exceptional costs, detailed in note 4 to the financial statements, administrative expenses increased by £14.5 million or 4.0% from £359.0 million to £373.5 million.



46



---

##### Table of Contents

Group Operating Profit and EBITDA



|                                     |  |                     |   |  |        |   |  |       
|------------------------------------ |  | ------------------- | - |  | ------ | - |  | ------
|                                     |  | Year ended 31 March |   |  |       
|                                     |  | 2004                |   |  | 2005   |   |  | Change
|                                     |  | £                   |   |  | £      |   |  | (%)   
|                                     |  | (in millions)       |   |  |        |   |  |       
|UK operations                        |  |                     |   |  |        |   |  |       
|Operating profit                     |  | 129.8               |   |  | 170.6  |   |  |       
|Depreciation and amortization        |  | 69.4                |   |  | 70.1   |   |  |       
|EBITDA(a)                            |  | 199.2               |   |  | 240.7  |   |  | 20.8  
|US operations                        |  |                     |   |  |        |   |  |       
|Operating profit                     |  | 20.6                |   |  | 74.1   |   |  |       
|Depreciation and amortisation        |  | 50.2                |   |  | 51.5   |   |  |       
|Exchange impact(b)                   |  |                    |   |  | 14.3   |   |  |       
|EBITDA at constant exchange rate     |  | 70.8                |   |  | 139.9  |   |  | 97.6  
|Exchange impact(b)                   |  |                    |   |  | (14.3  | ) |  |       
|EBITDA(a)                            |  | 70.8                |   |  | 125.6  |   |  | 77.4  
|Group                                |  |                     |   |  |        |   |  |       
|Total operating profit               |  | 150.4               |   |  | 244.7  |   |  |       
|Depreciation and amortisation        |  | 119.6               |   |  | 121.6  |   |  |       
|Group EBITDA(a)                      |  | 270.0               |   |  | 366.3  |   |  | 35.7  
|Depreciation and amortisation        |  | (119.6              | ) |  | (121.6 | ) |  |       
|Net interest payable                 |  | (194.5              | ) |  | (125.0 | ) |  |       
|Taxation                             |  | (7.0                | ) |  | (49.3  | ) |  |       
|(Loss) profit for the financial year |  | (51.1               | ) |  | 70.4   |   |  |       

---

|(a) | EBITDA comprises total operating profit before depreciation and amortisation, both being non-cash items. EBITDA is not a measurement of performance under UK or US GAAP and you
should not consider EBITDA as an alternative to (a) operating profit or net profit (loss) (as determined in accordance with generally accepted accounting principles), (b) cash flows from operating, investing or financing activities (as determined in
accordance with generally accepted accounting principles), or as a measure of our ability to meet cash needs or (c) any other measures of performance under generally accepted accounting principles. EBITDA is not a direct measure of our liquidity,
which is shown by the Groups cash flow statement and needs to be considered in the context of our financial commitments. EBITDA may not be indicative of our historical operating results and is not meant to be predictive of our potential future
results. We believe that EBITDA is a measure commonly reported and widely used by investors in comparing performance on a consistent basis without regard to depreciation and amortisation, which can vary significantly depending upon accounting
methods (particularly when acquisitions have occurred) or non-operating factors. Accordingly, EBITDA has been disclosed in this annual report to permit a more complete and comprehensive analysis of our operating performance relative to other
companies and of our ability to service our debt. Because all companies do not calculate EBITDA identically, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. EBITDA is one of the key financial
measures that we use to assess our success in achieving growth and operational efficiencies (see note 2 to the financial statements, segmental analysis).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Constant exchange rate states the results of the most recent year presented at the same exchange rate as that used to translate the results of the previous year presented. Exchange
impact is the difference between the results reported at a constant exchange rate and the actual results reported using current year exchange rates.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Group EBITDA for the financial year ended 31 March 2005 increased by £96.3, or 35.7%, compared to the 2004 financial
year. Excluding the exceptional and other one-off items in 2005 and 2004, Group EBITDA would have increased by £42.7 million, or 11.9%, and the margin would have increased one percentage point to 31.3%, reflecting the strong US performance. If
we also exclude the effect of exchange rate movements of £14.3 million, Group EBITDA would have increased by £57.0 million, or 15.8%.



47



---

##### Table of Contents

EBITDA from the UK operations increased 20.8% to £240.7 million from £199.2 million in the
2004 financial year, which includes charges of £33.9 million in connection with the initial public offering of our parent company in July 2003. Excluding exceptional costs, EBITDA from the UK operations increased by £7.6 million, or
3.3%. Growth in EBITDA before exceptional costs primarily reflects the increased profitability of Yell.com. Yell.com reported EBITDA of £9.6 million (operating profit of £7.8million adding back depreciation of £1.8 million) for the
2005 financial year as compared to £5.3 million (operating profit of £3.6 million adding back depreciation of £1.7 million) in the prior year. The printed directory EBITDA margin, after excluding exceptional costs, decreased from
38.3% to 36.8%, and the overall UK EBITDA margin, after excluding exceptional costs, was 36.2% coming down from 36.7% the year before. In the year ahead, we expect the UKEBITDA margin to reflect increasing competitive pressure and additional charges
under International Financial Reporting Standards.



EBITDA from
the US operations for the 2005 financial year increased by £54.8 million compared to the 2004 financial year after including exceptional costs of £36.5 million in 2005 relating to litigation brought against our US operations, and costs
in 2004 of £56.2 million relating to our parent companys initial public offering. Excluding the exceptional items, EBITDA from our US operations increased by £35.1 million, or 27.6%, compared to the 2004 financial year. The EBITDA
margin for Yellow Book was 20.2% in the 2005 financial year; excluding exceptional items, the EBITDA margin increased to 26.1%, as we focused on increasing the benefit and yield from our directory investments. We increased the profitability of our
directories by leveraging off our existing operations and administrative cost base to yield additional turnover from our directories without a corresponding increase in costs. In the year ahead, we expect that the US EBITDA margin will continue to
grow.



Net Interest Payable



Net interest expense was £125.0 million, comprising both cash interest
and non-cash interest, in the 2005 financial year, compared to £194.5 million in the 2004 financial year. Net interest expense in the 2005 financial year comprised £74.5 million of net interest paid or to be paid within a six-month
period, £10.4 million of interest rolled-up into our long-term debt, £6.1 million of amortised financing costs and £34.0 million of interest payable on the subordinated parent company loans. Net interest before exceptional items
was £136.1 million in 2004. The exceptional items of £58.4 million in 2004 comprised £36.4 million accelerated amortisation of deferred financing costs in connection with the repayment of the senior credit facilities on 15 July
2003 and senior notes on 18 August 2003; £19.7 million early redemption of 35% of our senior notes on 18 August 2003, and £2.3 million arrangement fee on the undrawn revolving credit facility.



Taxation



Taxation before exceptional items was a charge of £63.0 million for the 2005 financial year and a charge of
£44.2 million in the 2004 financial year. Tax credits in the amount of £13.7 million for the 2005 financial year and £37.2 million in the 2004 financial year were recognised as a benefit arising from exceptional items. Our future
taxation charge will depend on our taxable income in the United Kingdom and the United States. We expect our effective tax rate to be around 30% of profits before amortisation and tax in the 2006 financial year under current UKGAAP and around 33%
under IFRS.



Profit (Loss) Before and After Tax



After charging the exceptional items, the profit on ordinary activities
before tax was £119.7 million in the 2005 financial year as compared to a loss of £44.1 million in the 2004 financial year. Excluding the effect of the exceptional costs, the profit before taxation and profit after taxation for the 2005
financial year would have been £156.2 million and £93.2 million, respectively.



Loss before taxation for the year ended 31 March 2004 was £44.1 million. Excluding the exceptional costs of £148.5 million, profit before taxation for the year ended 31 March 2004 would have been
£104.4 million. The effect on the loss after tax of excluding the exceptional costs is £44.2 million, bringing the profit after tax and before exceptional costs for the year ended 31 March 2004 to £60.2 million.



48



---

##### Table of Contents

Year Ended 31 March 2004 Compared to Year Ended 31 March 2003



Group Turnover



|                                                    |  |                         |  |                         |  |                 |   |  |        |  
|--------------------------------------------------- |  | ----------------------- |  | ----------------------- |  | --------------- | - |  | ------ | -
|                                                    |  | Year ended 31 March2003 |  | Year ended 31 March2004 | 
|                                                    |  | (£ in millions)         |  | (%)(2)                  |  | (£ in millions) |   |  | (%)(2) |  
|UK printed directories                              |  | 573.7                   |  | 51.5                    |  | 593.9           |   |  | 50.0   |  
|Other UK products and services                      |  | 41.2                    |  | 3.7                     |  | 41.0            |   |  | 3.5    |  
|Total UK turnover                                   |  | 614.9                   |  | 55.2                    |  | 634.9           |   |  | 53.5   |  
|US printed directories:                             |  |                         |  |                         |  |                 |   |  |        |  
|US printed directories at constant exchange rate(1) |  | 499.1                   |  | 44.8                    |  | 605.0           |   |  | 51.0   |  
|Exchange impact(1)                                  |  |                        |  |                        |  | (53.0           | ) |  | (4.5   | )
|Total US turnover                                   |  | 499.1                   |  | 44.8                    |  | 552.0           |   |  | 46.5   |  
|Group turnover                                      |  | 1,114.0                 |  | 100.0                   |  | 1,186.9         |   |  | 100.0  |  

---

|(1) | Constant exchange rate states the results of the most recent year presented at the same exchange rate as that used to translate the results of the previous year presented. Exchange
impact is the difference between the results reported at a constant exchange rate and the actual results reported using current year exchange rates.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The percentage of total group turnover.
|--- | ---------------------------------------



Group turnover increased by £72.9 million, or 6.5%, from £1,114.0 million in the 2003 financial year to £1,186.9 million in the 2004
financial year, reflecting increased turnover during the period from each business segment, particularly US printed directories.



UK turnover



UK printed directories increased by 3.5%, or £20.2 million during the 2004 financial year. The growth was primarily the result of an increase in the
number of unique advertisers from approximately 451,000 to approximately 480,000 as a result of the continued success of our first-year advertiser discount programmes and our ability to retain 77% of existing customers. We attracted 116,300 new
advertisers, achieving our target of 100,000 new advertisers for the fourth successive year.



Turnover per unique advertiser decreased for all UK printed directories by 2.8% to £1,237 from £1,272, after the impact of the 4.8% price reduction, on our Yellow Pages directories and the dampening effect
that the increased number of customers had on yield.



Turnover
from Yell.com, our UK online directory service, increased by £5.5 million, or 27.1%, from £20.3 million to £25.8 million. This increase was offset by a reduction in turnover from our other products and services, primarily from
discontinued products resulting from the sale of our data-service business, Yell Data, in June 2003 and the ending of our contract with BT to sell advertising in their phone books in March 2003.



49



---

##### Table of Contents

US turnover



Turnover from US printed directories increased by £52.9 million, or 10.6%, from £499.1 million in the 2003 financial year to £552.0
million for the 2004 financial year. Turnover was negatively affected by £53.0 million from a weakening US dollar. On a constant US dollar basis, US turnover grew by £105.9 million, or 21.2%. The average exchange rates were approximately
$1.69 to £1.00 in the year ended 31 March 2004 and $1.55 to £1.00 in the prior year.



The Group had 386,000 unique advertisers in the United States in the year ended 31 March 2004 compared to 363,000 in the prior year. Average turnover per
unique advertiser grew 14% from $2,135 to $2,434.



Same-market
growth of 9.3% has grown from 6.1%. Directories from acquisitions that published for the first time in the most recent year are not included in the same market growth results. The former McLeod directories performed in line with Yellow Book
same-market growth.



Remaining growth was due to ten new
directory launches (contributing 2.2% to the growth), four directories publishing for the first time after acquisition and the inclusion of a full year of results of McLeod and NDC (contributing 9.4% to the growth).



Cost of Sales



|                                                    |  |                         |  |                         |  |                 |   |  |        |  
|--------------------------------------------------- |  | ----------------------- |  | ----------------------- |  | --------------- | - |  | ------ | -
|                                                    |  | Year ended 31 March2003 |  | Year ended 31 March2004 | 
|                                                    |  | (£ in millions)         |  | (%)(2)                  |  | (£ in millions) |   |  | (%)(2) |  
|UK printed directories                              |  | 207.9                   |  | 36.2                    |  | 228.0           |   |  | 38.4   |  
|Other UK products and services                      |  | 15.0                    |  | 36.4                    |  | 12.4            |   |  | 30.2   |  
|Total UK cost of sales                              |  | 222.9                   |  | 36.2                    |  | 240.4           |   |  | 37.9   |  
|US printed directories:                             |  |                         |  |                         |  |                 |   |  |        |  
|US printed directories at constant exchange rate(1) |  | 287.0                   |  | 57.5                    |  | 343.5           |   |  | 56.8   |  
|Exchange impact(1)                                  |  |                        |  |                        |  | (31.0           | ) |  | (5.8   | )
|Total US cost of sales                              |  | 287.0                   |  | 57.5                    |  | 312.5           |   |  | 56.6   |  
|Total cost of sales                                 |  | 509.9                   |  | 45.8                    |  | 552.9           |   |  | 46.6   |  

---

|(1) | Constant exchange rate states the results of the most recent year presented at the same exchange rate as that used to translate the results of the previous year presented. Exchange
impact is the difference between the results reported at a constant exchange rate and the actual results reported using current year exchange rates.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The percentage of related turnover.
|--- | -----------------------------------



Total cost of sales in 2004 increased by £43.0 million, or 8.4%, compared to the 2003 financial year.



The £20.1 million, or 9.7%, increase in cost of sales for UK printed
directories from £207.9 million in the 2003 financial year to £228.0 million in the 2004 financial year reflected higher advertisement volumes. Cost of sales for Yellow Book directories as a percentage of related turnover remained flat
at 56.6% in the 2004 financial year, as compared to 57.5% in the 2003 financial year.



Cost of sales for other UK products and services decreased by £2.6 million, or 17.3%, from £15.0 million in the 2003 financial year to £12.4 million in the 2004 financial year, reflecting the
products discontinued in the year.



Our consolidated bad debt
expense was £71.0 million, or 6.0% of Group turnover in the 2004 financial year, as compared with £67.6 million, or 6.1% of Group turnover in the 2003 financial year. The charge for UK bad debts was 4.5% of UK printed directories and
other products and services turnover for both the 2003 and 2004 financial years. The US bad debt expense was 7.7% of US printed directories turnover in the 2004 financial year as compared to 8.1% in the 2003 financial year, reflecting the more
developed US profile and the relatively low level of launches in 2004.



50



---

##### Table of Contents

Gross Profit and Gross Profit Margin



|                                                    |  |                         |  |                         |  |                 |   |  |        |  
|--------------------------------------------------- |  | ----------------------- |  | ----------------------- |  | --------------- | - |  | ------ | -
|                                                    |  | Year ended 31 March2003 |  | Year ended 31 March2004 | 
|                                                    |  | (£ in millions)         |  | (%)(2)                  |  | (£ in millions) |   |  | (%)(2) |  
|UK printed directories                              |  | 365.8                   |  | 60.6                    |  | 365.9           |   |  | 57.7   |  
|Other UK products and services                      |  | 26.2                    |  | 4.3                     |  | 28.6            |   |  | 4.5    |  
|Total UK gross profit                               |  | 392.0                   |  | 64.9                    |  | 394.5           |   |  | 62.2   |  
|US printed directories:                             |  |                         |  |                         |  |                 |   |  |        |  
|US printed directories at constant exchange rate(1) |  | 212.1                   |  | 35.1                    |  | 261.5           |   |  | 41.3   |  
|Exchange impact(1)                                  |  |                        |  |                        |  | (22.0           | ) |  | (3.5   | )
|Total US gross profit                               |  | 212.1                   |  | 35.1                    |  | 239.5           |   |  | 37.8   |  
|Gross profit                                        |  | 604.1                   |  | 100.0                   |  | 634.0           |   |  | 100.0  |  
|                                                    |  |                         |  |                        
|Gross profit margin (%)                             |  |                         |  |                         |  |                 |   |  |        |  
|UK operations                                       |  |                         |  | 63.8                    |  |                 |   |  | 62.1   |  
|US operations                                       |  |                         |  | 42.5                    |  |                 |   |  | 43.4   |  
|Group total (%)                                     |  |                         |  | 54.2                    |  |                 |   |  | 53.4   |  

---

|(1) | Constant exchange rate states the results of the most recent year presented at the same exchange rate as that used to translate the results of the previous year presented. Exchange
impact is the difference between the results reported at a constant exchange rate and the actual results reported using current year exchange rates.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The percentage of total group profit.
|--- | -------------------------------------



The decrease in gross profit as a percentage of Group turnover from 54.2% in the 2003 financial year to 53.4% in the 2004 financial year principally
reflected the changing geographic mix of our operations resulting from the increased contribution of our US business.



Distribution Costs and Administrative Expenses



Distribution costs decreased by £1.5 million, or 4.2%, from £36.0 million in the 2003 financial year (3.2% of Group turnover) to £34.5
million in the 2004 financial year (2.9% of Group turnover). Excluding the effects of the weakening dollar, distribution costs would have increased by £0.4 million.



Administrative expenses increased by £64.4 million, or 16.7%, from £384.7 million in the 2003 financial year to
£449.1 million in the 2004 financial year. The increase was largely due to exceptional costs arising as a result of our parent companys initial public offering in July 2003:



| |  |  | £57.0 million for employee incentive plans;
| | - |  | -------------------------------------------



| |  |  | £28.9 million in fees, including VAT, paid to the previous owners; and
| | - |  | ----------------------------------------------------------------------



| |  |  | £4.2 million for other costs.
| | - |  | -----------------------------



These increases were partially offset by the absence of £15.0 million in costs incurred for the withdrawn initial public offering of our parent
company in July 2002 and the effect of the weakening US dollar.



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Group Operating Profit and EBITDA



|                                 |  |                     |   |  |        |   |  |        |  
|-------------------------------- |  | ------------------- | - |  | ------ | - |  | ------ | -
|                                 |  | Year ended 31 March |  
|                                 |  | 2003                |   |  | 2004   |   |  | Change |  
|                                 |  | £                   |   |  | £      |   |  | (%)    |  
|                                 |  | (in millions)       |   |  |        |   |  |        |  
|UK operations                    |  |                     |   |  |        |   |  |        |  
|Operating profit                 |  | 142.3               |   |  | 129.8  |   |  |        |  
|Depreciation and amortization    |  | 69.2                |   |  | 69.4   |   |  |        |  
|EBITDA(1)                        |  | 211.5               |   |  | 199.2  |   |  | (5.8   | )
|                                 |  |                     |  
|US operations                    |  |                     |   |  |        |   |  |        |  
|Operating profit                 |  | 41.1                |   |  | 20.6   |   |  |        |  
|Depreciation and amortisation    |  | 51.7                |   |  | 50.2   |   |  |        |  
|Exchange impact(2)               |  |                    |   |  | 11.4   |   |  |        |  
|EBITDA at constant exchange rate |  | 92.8                |   |  | 82.2   |   |  | (11.4  | )
|Exchange impact(2)               |  |                    |   |  | (11.4  | ) |  |        |  
|EBITDA(1)                        |  | 92.8                |   |  | 70.8   |   |  | (23.7  | )
|                                 |  |                     |  
|Group                            |  |                     |   |  |        |   |  |        |  
|Total operating profit           |  | 183.4               |   |  | 150.4  |   |  |        |  
|Depreciation and amortisation    |  | 120.9               |   |  | 119.6  |   |  |        |  
|                                 |  |                     |  
|Group EBITDA(1)                  |  | 304.3               |   |  | 270.0  |   |  | (11.3  | )
|Depreciation and amortisation    |  | (120.9              | ) |  | (119.6 | ) |  |        |  
|Net interest payable             |  | (236.6              | ) |  | (194.5 | ) |  |        |  
|Taxation                         |  | 12.6                |   |  | (7.0   | ) |  |        |  
|                                 |  |                     |  
|Loss for the financial year      |  | (40.6               | ) |  | (51.1  | ) |  |        |  

---

|(1) | EBITDA comprises total operating profit before depreciation and amortisation, both being non-cash items. EBITDA is not a measurement of performance under UK or US GAAP and you
should not consider EBITDA as an alternative to (a) operating profit or net profit (loss) (as determined in accordance with generally accepted accounting principles), (b) cash flows from operating, investing or financing activities (as determined in
accordance with generally accepted accounting principles), or as a measure of our ability to meet cash needs or (c) any other measures of performance under generally accepted accounting principles. EBITDA is not a direct measure of our liquidity,
which is shown by the Groups cash flow statement and needs to be considered in the context of our financial commitments. EBITDA may not be indicative of our historical operating results and is not meant to be predictive of our potential future
results. We believe that EBITDA is a measure commonly reported and widely used by investors in comparing performance on a consistent basis without regard to depreciation and amortisation, which can vary significantly depending upon accounting
methods (particularly when acquisitions have occurred) or non-operating factors. Accordingly, EBITDA has been disclosed in this annual report to permit a more complete and comprehensive analysis of our operating performance relative to other
companies and of our ability to service our debt. Because all companies do not calculate EBITDA identically, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. EBITDA is one of the key financial
measures that we use to assess our success in achieving growth and operational efficiencies (see note 2 to the financial statements, segmental analysis).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Constant exchange rate states the results of the most recent year presented at the same exchange rate as that used to translate the results of the previous year presented. Exchange
impact is the difference between the results reported at a constant exchange rate and the actual results reported using current year exchange rates.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



EBITDA from the UK operations decreased 5.8% to £199.2 million after charging £33.9 million in connection with
the initial public offering of our parent company in July 2003 and £14.7 million for the postponed initial public offering in July 2002. Excluding exceptional costs, EBITDA from the UK operations increased by £6.9 million, or 3.1%.
Growth in EBITDA before exceptional costs primarily reflects the increased profitability of Yell.com. Yell.com reported EBITDA of £5.3 million (operating profit of £3.6 million adding back depreciation of £1.7 million) for the 2004
financial year as compared to £1.1 million (operating loss of £1.3 million adding back depreciation of £2.4 million) in the prior year.



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##### Table of Contents

EBITDA from Yellow Book for the 2004 financial year decreased by £22.0 million compared to the 2003 financial year
after including exceptional costs of £56.2 million in 2004 relating to our parent companys initial public offering, and costs in 2003 of £4.0 million relating to the postponed initial public offering and a one-off restructuring
cost. Excluding the exceptional items, EBITDA from Yellow Book increased by £30.2 million, or 31.2%, compared to the 2003 financial year. The EBITDA margin for Yellow Book was 12.8% in the 2004 financial year; excluding exceptional items, the
EBITDA margin increased to 23.0%, as we focused on increasing the benefit and yield from our directory investments. We increased the profitability of our directories by leveraging off our existing operations and administrative cost base to yield
additional turnover from our directories without a corresponding increase in costs.



Group EBITDA for the financial year ended 31 March 2004 decreased by £34.3, or 11.3%, compared to 2003. Excluding the exceptional and other one-off items in 2004 and 2003, Group EBITDA would have increased by
£37.1 million, or 11.5%. If we also exclude the effect of exchange rate movements of £11.4 million, Group EBITDA would have increased by £48.5 million, or 15.0%.



Net Interest Payable



Net interest expense was £194.5 million, comprising both cash interest and non-cash interest, in the 2004 financial year, compared to £236.6
million in the 2003 financial year. Net interest before exceptional items was £136.1 million in the 2004 financial year, compared to £236.6 million in 2003. The exceptional items of £58.4 million comprised £36.4 million
accelerated amortisation of deferred financing costs in connection with the repayment of the senior credit facilities on 15 July 2003 and senior notes on 18 August 2003; £19.7 million early redemption of 35% of our senior notes on 18 August
2003, and £2.3 million arrangement fee on the undrawn revolving credit facility. Net interest expense before exceptional items comprised £118.9 million of net interest paid or to be paid within a six-month period, £12.0 million of
interest rolled-up into our long-term debt and £5.2 million of amortised financing costs.



Taxation



Taxation before exceptional items was a charge of £44.2 million for the 2004 financial year and a credit of £10.3 million in the 2003 financial year. Tax credits in the amount of £37.2 million for the 2004 financial year
and £2.3 million in the 2003 financial year were recognised as a benefit arising from exceptional items.



Profit (Loss) Before and After Tax



After charging the exceptional items, the loss on ordinary activities before tax was £44.1 million in the 2004 financial year as compared to a loss of £53.2 million in the 2003 financial year. Excluding
the effect of the exceptional IPO costs, the profit before taxation and profit after taxation for the 2004 financial year would have been £104.4 million and £60.2 million, respectively.



Loss before taxation for the year ended 31 March 2003 was £53.2
million. Excluding the exceptional costs of £15.0 million and the £3.7 million charge for non-recurring restructuring costs as part of the integration of the former McLeod organisation in the United States, loss before taxation for the
year ended 31 March 2003 would have been £34.5 million. The effect on the loss after tax of excluding the restructuring cost is £2.4 million, bringing the loss after tax and before exceptional costs for the year ended 31 March 2003 to
£25.5 million.



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##### Table of Contents

B. Liquidity and Capital Resources



Apart from significant acquisitions which we have funded through a combination of borrowings, cash from contributions from
the investment funds which previously owned our parent company and cash flow from operations, we have funded our existing business largely from cash flows generated from our operations. We believe that we have sufficient working capital to meet our
operating and capital expenditure requirements. In addition, we have access to a £200.0 million revolving credit facility as part of the senior credit facilities, which expires on 7 July 2008, none of which was drawn down at 31 March 2005.



Our net cash inflow from operating activities was £253.5
million in the 2004 financial year and £355.1 million in the 2005 financial year, or a 40.1% increase.



Our net cash inflow from operating activities before payments of exceptional costs (2004£33.8 million; 2005£13.6 million) and
non-cash charges relating to our parent companys initial public offering in 2004 of £40.7 million and after capital expenditure (2004£24.5 million; 2005£24.0 million) increased from £303.5 million in the
2004 financial year to £347.2 million in the 2005 financial year. We made an additional annual pension contribution of £8.2 million in the 2005 financial year, and expect to make an additional annual contribution of approximately
£8.5 million in the next financial year.



Net cash inflow
from operating activities of £355.1 million for 2005 as a percentage of EBITDA of £366.3 million was 96.9% (cash conversion). Excluding the exceptional costs, the cash conversion increased from 84.3% in the 2004 financial
year, to 86.2% in the 2005 financial year. We use the cash conversion excluding exceptional costs measure to monitor the efficiency of our operations in converting earnings into cash. We expect to continue to convert around 80% of EBITDA to cash in
the year ahead.



Net cash outflow from returns on investments
and servicing of finance of £145.7 million for the 2005 financial year comprises £72.2 million of cash pay interest and £73.5 million of interest paid to our parent company.



Net cash outflow for capital expenditures and financial investment comprises
capital expenditure on fixed assets and purchases of shares in our parent company to be held in trust for employees. Capital expenditure was £24.0 million in the 2005 financial year compared to £24.5 million in the 2004 financial year.
The capital expenditure was principally in respect of the acquisition of fixed assets to support our sales force and central administrative staff. We continued to augment our growth in the United States with further selective acquisitions totalling
£31.8 million in the 2005 financial year.



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##### Table of Contents

Capital Resources



At 31 March 2005, we had cash of £53.1 million.



We expect that any significant acquisitions or other significant expenditures, including those related to the development of our online services, would in
the future be financed through any one or more of operating cash flows, credit facilities and the issue of new debt and equity securities.



We had net debt of £1,645.9 million at 31 March 2005, as set out below.



|                                                       |  |                        |  |           |  |           |  |               |  |         |  
|------------------------------------------------------ |  | ---------------------- |  | --------- |  | --------- |  | ------------- |  | ------- | -
|                                                       |  | Payments due by period | 
|Debt                                                   |  | Within 1 year          |  | 1-3 years |  | 3-5 years |  | After 5 years |  | Total   |  
|                                                       |  | £                      |  | £         |  | £         |  | £             |  | £       |  
|                                                       |  | (in millions)          |  |           | 
|Long-term loans and other borrowings                   |  |                        |  |           |  |           |  |               |  |         |  
|Term Loan A1denominated in sterling                   |  | 90.0                   |  | 150.0     |  | 304.0     |  |              |  | 544.0   |  
|Term Loan A2denominated in US dollars                 |  |                       |  |          |  | 315.6     |  |              |  | 315.6   |  
|Senior notes                                           |  |                       |  |          |  |          |  | 314.7         |  | 314.7   |  
|Other                                                  |  | 1.3                    |  |          |  |          |  |              |  | 1.3     |  
|Total debt owed to third parties                       |  | 91.3                   |  | 150.0     |  | 619.6     |  | 314.7         |  | 1,175.6 |  
|Subordinated parent company loans                      |  | 58.9                   |  |          |  |          |  | 478.5         |  | 537.4   |  
|Total debt, including subordinated parent company loan |  | 150.2                  |  | 150.0     |  | 619.6     |  | 793.2         |  | 1,713.0 |  
|                                                       |  |                        |  |           | 
|Unamortised financing costs                            |  |                        |  |           |  |           |  |               |  | (14.0   | )
|Total debt, net of unamortised financing costs         |  |                        |  |           |  |           |  |               |  | 1,699.0 |  
|Cash at bank                                           |  |                        |  |           |  |           |  |               |  | (53.1   | )
|Net debt at end of the period                          |  |                        |  |           |  |           |  |               |  | 1,645.9 |  



We are required to
satisfy interest and principal payments on our borrowings as they become due. To the extent we are not able to fund any principal payment at maturity or any interest payment when due from cash flow from operations, we would be required to refinance
this indebtedness pursuant to credit facilities and/or the issue of new debt and equity securities into the capital markets. Any failure to raise additional funds necessary to achieve this would result in default under our debt covenants. We
anticipate that we will have to refinance in part the repayment of the senior notes at maturity. No one has guaranteed our obligations under the senior notes or has any obligation to provide additional equity financing to us.



The terms of the senior credit facilities require us to maintain specified
consolidated financial ratios for net total debt to Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA, as defined in the senior credit facilities), EBITDA to net cash interest payable and, until 31 March 2005, net
senior debt to EBITDA. Certain of these financial ratios have to be prepared for the preceding 12 month period and reported to the providers of the senior credit facility on a six-monthly basis. We have maintained the financial ratios for the year
ended 31 March 2005 in compliance with these debt covenants.



Net debt, excluding the subordinated parent company loan, at £1,108.5 million at 31 March 2005 was 2.8 times the £402.8 million of 2005 EBITDA, before exceptional costs of lawsuits. Net debt, excluding the subordinated parent
company loan, at £1,223.3 million at 31 March 2004 was 3.4 times the £360.1 million of 2004 EBITDA, before exceptional costs from our parent companys IPO. Given our strong and steady cash flows, we believe that the Group can
comfortably carry external debt of 3 to 4 times EBITDA and, indeed, that it would be cost effective to do so.



Since the year end, we have agreed a new £2 billion credit facility to refinance our existing bank debt and to fund an acquisition, see Post
balance sheet event below.



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##### Table of Contents

Acquisitions



In the year ended 31 March 2005, we acquired yellow pages directories in the United States for an aggregate purchase price of $60.0 million (£31.8
million). These acquisitions gave rise to £27.0 million of goodwill recorded in the year.



In the year ended 31 March 2004, we acquired yellow pages directories in the United States (including Feist) for an aggregate purchase price of $198.9
million (£108.6 million) plus expenses of $0.5 million (£0.3 million). These acquisitions gave rise to £100.4 million of goodwill recorded in that year.



Post balance sheet event



On 17 May 2005, we announced that our US business had entered into a definitive agreement for the purchase (the Acquisition) of Transwestern Holdings,
L.P. (Transwestern) from Thomas H. Lee Partners, CIVC Partners, LLC and Transwestern management for $1,575 million (£829 million) in cash. Transwestern is a leading independent directory publisher in the US, with an extensive footprint in 25
states, including core positions in California and Texas, which complements Yellow Books footprint. Transwestern published 332 directories during the year ended 31 December 2004. Transwestern has also offers online yellow pages advertising
services through WorldPages.com.



The Acquisition establishes
Yell as the third largest directory publisher globally and Yellow Book as the fifth largest directory publisher in the US, based on US pro forma revenues in excess of $1.4 billion for the financial year 2005. The acquisition further strengthens our
position as a leading independent directory publisher in the US.



At 17 May 2005 we had agreed in principle to a new £2 billion credit facility, (the New Credit Facility), a fully underwritten committment by ABN AMRO, BNP Paribas, Citibank, HSBC and JPMorgan Chase, to refinance all of our existing
bank debt of £860 million and to fund the Acquisition, if the Acquisition is completed. Our senior notes remain unaffected. The New Credit Facility will consist of (i) a Term Loan Facility in the amount of up to £1,400 million and (ii) a
Committed Multi-Currency Revolving Credit Facility in the amount of up to £600 million. The commitment is subject to a number of usual and customary conditions precedent. The terms of the New Credit Facility will be based on the LMA (Loan
Market Association) Multi-Currency Term and Revolving Credit Facilities agreement and the Senior Facilities Agreement. It will be subject to customary covenants and restrictions and events of default and will require us to maintain specified
leverage ratios. The final maturity date will be 5 years from the entering into of a final new credit facility agreement.



Based on Yells and Transwesterns strong cash generation, we expect our leverage ratio (net debt/pro forma EBITDA) to reach 4.0 times by 31
March 2006.



The Acquisition is subject to shareholder approval
and Hart Scott Rodino clearance in the USA. Therefore, completion of the Acquisition cannot be assured.



Litigation



The
exceptional costs of £36.5 million (£22.8 million after tax) in the year ended 31 March 2005 are the estimated costs relating to lawsuits brought against Yellow Book USA in relation to an advertising campaign that finished in 2004.



As we previously disclosed, a lawsuit filed by Verizon was
settled in October 2004. Following publication of our half year results, Yellow Book USA was served with complaints filed as class actions in five US states and the District of Columbia. In these actions, the plaintiffs allege violations of consumer
protection legislation and are placing reliance on findings of the New York court in the now settled suit brought against Yellow Book USA by Verizon. On 13 May 2005, the court in New Jersey gave its preliminary approval to a comprehensive national
settlement, with no admission of liability. Notice of the terms of settlement will be published to class members and the final approval hearing is anticipated to be held in late summer 2005.



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##### Table of Contents

Our Parent Companys Global Offer and Refinancing



On 15 July 2003, our parent company, Yell Group plc, completed raising
£433.6 million (gross proceeds) through a global offer of shares to institutional investors, also referred to as an initial public offering.



Our parent company passed £304.4 million of net proceeds to us. We used these monies to pay £79.6 million of exceptional costs; to repay
£48.3 million of debt under the senior credit facilities; and to redeem 35% (£172.5 million) of the senior notes pursuant to the optional redemption features under the indentures. We replaced our remaining senior credit facilities with
new senior credit facilities of £664 million and $596 million and a revolving credit facility of £200 million of which £5.0 million had been drawn at 31 March 2004. As part of the refinancing, the subordinated parent company loan
ceased bearing interest to reflect the fact that the equivalent amounts borrowed by our parent company were settled upon the initial public offering.



As a result of the capital-raising, we incurred a number of exceptional or one-off costs, including: cash and non-cash interest charges relating to
premiums paid in connection with the redemption of the senior notes and to the write-off of deferred finance costs; charges relating to option grants under existing share ownership plans; fees paid to the owners of our parent company before the
global offer; and other transaction fees and costs arising out of the offering. In addition, participants in a plan implemented for certain key employees of Yellow Book and its subsidiaries were entitled to a payment under the Yellow Book Phantom
DDB Plan, under which the participants as a group are treated economically as if they had invested approximately £32 million in the Yell Group in the same manner as the funds advanced by the owners of our parent company before the global
offer. We recorded a compensation charge of $63 million (£39 million) in connection with this. In satisfaction of those obligations, the plan participants exchanged their interests in the plan for equity in our parent company.



Treasury Policy



Our treasury operations primary role is to manage liquidity, funding investment and our financial risk, including risk
from volatility in currency and interest rates and counterparty credit risk. The treasury operation is not a profit centre and its objective is to manage risk at optimum cost.



Our board of directors sets the treasury departments policy and its activities are subject to a set of controls
commensurate with the magnitude of the investments and borrowings under its management. Counterparty credit risk is closely monitored and managed within controls set by our board of directors. It is likely that derivative financial instruments,
including forward foreign exchange contracts, if entered into, will be used only for hedging purposes.



Policy and practice on payment of creditors



The Groups policy is to use its purchasing power fairly and to pay promptly and as agreed. The Group has a variety of payment terms with suppliers. Payment terms for purchases under major contracts are settled
as part of the contract negotiations.



It is the Groups
policy to make payments for other purchases within 30 days following the end of the month in which a correct and valid invoice is received.



At 31 March 2005 trade creditors represented 15 days of purchases. The Company has no significant trade creditors.



Significant Differences Between UK and US GAAP



Our consolidated financial statements are prepared in accordance with UK
GAAP, which differ in certain respects from US GAAP. Differences result primarily from acquisition accounting, which affects the accounting for directories in progress, goodwill and other intangibles and taxation. Timing differences also arise when
recognising certain costs associated with directories in progress, interest that is fixed by derivative financial instruments, and deferred tax assets associated with net operating losses in the United States. Differences in accounting for pensions
arise from the requirements to use different actuarial methods and assumptions. Under UK GAAP, dividends are recorded in the period in respect of which they are declared (in the case of interim or any special dividends) or proposed by the board of
directors to the shareholders (in the case of final dividends). Under US GAAP dividends are recorded in the period in which dividends are declared. See note 28 of the notes to the financial statements included elsewhere in this annual report on
differences between US GAAP and UK GAAP.



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##### Table of Contents

Recent US GAAP Accounting Pronouncements



In December 2004, the FASB issued a revision of Statement of Financial Accounting Standards No. 123R, Accounting for
Stock-Based Compensation (SFAS 123R). This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. This statement requires a public entity to measure the cost of
employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. We believe that we already comply with this requirement and do not expect adoption of this revision to the standard to have a
material effect on our consolidated financial position or results of operations.



International Financial Reporting Standards



In June 2002, the Council of Ministers of the European Union approved a regulation (the Regulation) requiring all companies that are governed by the law of a Member State of the European Union and whose securities are admitted
to trading on a regulated market of any Member State to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Our parent company and its
subsidiaries are subject to the Regulation, which is effective for each financial year starting on or after 1 January 2005. Accordingly, we have adopted IFRS from 1 April 2005.



Our first results under IFRS will be for the three months ended 30 June 2005. The date of transition to IFRS is 1 April
2004. We have published separately from this annual report on Form 20-F a set of 2005 conversion statements that set out the effects of the transition from UKGAAP to IFRS on our balance sheet at the date of transition and on the quarterly results
since transition. These statements have been prepared on the basis of our best knowledge of what IFRS may require at 31 March 2006. The current standards are subject to ongoing review and interpretation. There is a possibility that IFRS at 31 March
2006 may be different from our current expectations. Therefore, the financial information for the 2005 financial year that we publish in our audited accounts for the year ending 31 March 2006 may be different from that published in our conversion
statements.



The conversion statements include the three months
ended 30 June 2004, the three and six months ended 30 September 2004, the three and nine months ended 31 December 2004 and the year ended 31 March 2005. These statements have been prepared on the basis of IFRS expected to be available at 31 March
2006. These are subject to ongoing review and endorsement by the EU or possible amendment and are, therefore, still subject to change.



We have included our accounting policies as revised under IFRS in the conversion statements. The primary changes to our published results arise from:



| |  |  | discontinuing goodwill amortisation unless the value of goodwill is impaired;
| | - |  | -----------------------------------------------------------------------------



| |  |  | accounting for pensions on a basis similar to what would have been required under FRS17 as described in Note 23 to the financial statements in this annual report;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | including in employee costs the fair value of equity instruments granted to employees; and
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | increasing the tax charge to remove certain benefits recognised under UKGAAP.
| | - |  | -----------------------------------------------------------------------------



Our unaudited EBITDA under IFRS for the year ended 31 March 2005 is 3.0% lower than under UKGAAP at £356.5 million. Our EBITDA before exceptional
items under IFRS for the year ended 31 March 2005 was 2.4% lower than under UKGAAP at £393.0 million. Our unaudited profit before tax was £200.4 million and profit after tax was £138.7 million, 67.4% and 97.0% higher, respectively,
primarily due to discontinuing goodwill amortisation. The adjustments do not affect the reported cash flows from operations. Additional information, including reconciliations to UK GAAP, regarding the effects of IFRS on our 2005 results is provided
on a Form 6-K submitted to the SEC on 13 June 2005.



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##### Table of Contents

Critical Accounting Estimates



In general, our accounting policies are consistent with those generally adopted by others operating within the same industry
in the United Kingdom.



In preparing the consolidated financial
statements, our management has made its best estimates and judgements of certain amounts included in the financial statements, giving due consideration to materiality. We regularly review these estimates and update them when required. Actual results
could differ from these estimates. Unless otherwise indicated, we do not believe that there is a great likelihood that materially different amounts would be reported related to the items described below. We consider the following to be a description
of the most significant estimates, which require our management to make subjective and complex judgements, or matters that are inherently uncertain.



Allowance for doubtful debts. Debtors are reduced by an allowance for amounts that may become uncollectable in the future. We continuously monitor
collections and payments from our customers and maintain a provision for estimated credit losses based upon our historical experience and any specific customer collection issues that we have identified. We have demonstrated the ability to make
reasonable and reliable estimates of allowances for doubtful accounts based on significant historical experience. Whilst such bad debts have historically been within our expectations and the provisions established, we cannot guarantee that we will
continue to experience the same credit loss rates that we have in the past.



If our allowance for credit losses as a percentage of turnover had been 1.0% higher or lower during the year ended 31 March 2005, then profit before tax would have varied by approximately £13 million.



Goodwill and tangible fixed assets. Goodwill and
tangible fixed assets are long-lived assets that are amortised over their useful lives. Useful lives are based on managements estimates of the period that the assets will generate revenue. If the useful economic lives of our goodwill had
increased or decreased by an average of one year during the year ended 31 March 2005, then our amortisation charge would have varied by approximately £5 million. Our depreciation charge would have decreased by approximately £6 million if
the useful lives of our fixed assets had increased by an average of one year, or increased by approximately £13 million if the useful lives had decreased by an average of one year. Long-lived assets are reviewed for impairment whenever events
or changes in circumstances indicate that their carrying amount may not be recoverable and at the end of the first full year following acquisition.



Historically, we have not realised large gains or losses on disposals of fixed assets.



Pensions.The determination of our obligation and expense for pensions is dependent on our selection of certain
assumptions used by actuaries in calculating such amounts. Those assumptions are described in note 23 of the notes to the financial statements included elsewhere in this annual report and include, amongst others, the discount rate, the expected
long-term rate of return on plan assets and rates of increase in compensation. Whilst we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect
the amount of our future pension obligations, future valuation adjustments in the statement of total recognised gains and losses and our future employee expenses.



Taxes.The determination of our obligation and expense for taxes requires an interpretation of tax law. We seek
appropriate competent and professional tax advice before making any judgements on tax matters. Whilst we believe that our judgements are prudent and appropriate, significant differences in our actual experience may materially affect our future tax
charges. We recognise deferred tax assets and liabilities arising from timing differences where we have a taxable benefit or obligation in the future as a result of past events. We record deferred tax assets to the extent that we believe they are
more likely than not to be realised. Should we determine that we would be able to realise our deferred tax assets in the future in excess of our net recorded amount, an adjustment to the deferred tax assets would increase income in the period such
determination was made. In the year ended 31 March 2005, we increased our net profit for the year by £5.8 million when we recognised previously unrecognised deferred tax assets that we believe we will realise in the near future. At 31 March
2005, we have recognised all of our potential deferred tax assets.



Lawsuit costs. The determination of our obligation and expense for the exceptional lawsuits are based on managements best estimates after taking into consideration appropriate advice from legal experts.



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C. Research and Development, Patents, Licenses, etc.



Not applicable.



D. Trend Information



Current Trading and Prospects



Since 31 March 2005, trading has been in line with our expectations.



We have put in place substantial groundwork to ensure that our growth continues in the current financial year. Our strong
cash generation should allow us to continue to finance acquisitions in the US and grow dividends in line with earnings.



E. Off-balance Sheet Arrangements



We do not have any off-balance sheet arrangements other than the hedges discussed in this document.



F. Tabular Disclosure of Contractual Obligations



The following table sets forth our contractual obligations and their
maturity dates as at 31 March 2005:



|                               |  |               |  |                 |  |           |  |               |  |        
|------------------------------ |  | ------------- |  | --------------- |  | --------- |  | ------------- |  | -------
|                               |  | Within 1 year |  | 1-3 years       |  | 3-5 years |  | After 5 years |  | Total  
|                               |  |               |  | (£ in millions) |  |           |  |              
|Long-term debt                 |  | 148.9         |  | 150.0           |  | 619.6     |  | 793.2         |  | 1,711.7
|Operating lease obligations    |  | 13.7          |  | 23.5            |  | 19.0      |  | 29.4          |  | 85.6   
|Finance lease obligations      |  | 1.3           |  |                |  |          |  |              |  | 1.3    
|Estimated interest payments(a) |  | 68.6          |  | 149.8           |  | 85.8      |  | 263.2         |  | 567.4  
|Total                          |  | 232.5         |  | 323.3           |  | 724.4     |  | 1,085.8       |  | 2,366.0

---

|(a) | Interest payments have been estimated based on the assumptions that (1) the long-term debt principal repayments are the same as those presented in this table; (2) floating rate
interest rates are the same as those implicit in the long-term yield curve (one-month LIBOR on UK senior debt remaining at 4.9% in April 2005 to March 2007 and one-month LIBOR on US senior debt increasing from 2.7% in April 2005 to 4.7% by March
2007); (3) floating interest rates do not change after March 2007; (4) the USDollar to British Pound exchange rate is $1.90: £1.00 in all future periods; and (5) the interest rate on subordinated parent company loans is 6.3%. Our estimated
interest payments should not be relied on as fact, because interest rates and exchange rates could vary materially from those that we assumed.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



There were no purchase commitments or other long-term liabilities as at 31 March 2005 other than those stated above.



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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



Directors



A. Directors and Senior Management



The Directors of Yell Group plc, our parent, their dates
of birth and positions are as follows:



|                         |  |                  |  |                                    
|------------------------ |  | ---------------- |  | -----------------------------------
|Name                     |  | Date of birth    |  | Position                           
|Robert Scott             |  | 6 January 1942   |  | Chairman (non-executive)           
|John Condron             |  | 14 November 1949 |  | Chief Executive Officer (executive)
|John Davis               |  | 21 March 1962    |  | Chief Financial Officer (executive)
|Charles Carey            |  | 22 November 1953 |  | Director (non-executive)           
|John Coghlan             |  | 19 April 1958    |  | Director (non-executive)           
|Joachim Eberhardt        |  | 26 August 1963   |  | Director (non-executive)           
|Lyndon Lea               |  | 13 January 1969  |  | Director (non-executive)           
|Lord Powell of Bayswater |  | 6 July 1941      |  | Director (non-executive)           



John
CondronChief Executive Officer John was previously the Managing Director of the Group, when it was a division of BT. He continued as CEO of the Group on its sale by BT. John is a member of the UK Governments Advisory Committee
on Advertising. John joined BT in 1973 in the International Finance Division. He became Strategy Manager for BTs White Pages Division in 1978 before joining Yell in 1980 as New Product Development Manager. In 1987, John became the Marketing
and Sales Controller and, in 1992, he assumed the additional responsibility of Managing Director of Yellow Pages Sales Limited. In January 1994, he was appointed as the Managing Director of the Yellow Pages Group.



John DavisChief Financial Officer Before joining Yell
as CFO in September 2000, John was Group Finance Director at Yahoo! Europe. Prior to that, he worked for Pearson plc from 1997 to 2000 as Chief Financial Officer for their US operations, and as a board director of Pearson Inc. He subsequently became
Finance Director of the Financial Times Group Limited. John began his career at Price Waterhouse, where he qualified as a Chartered Accountant. From 1989 to 1997, he held a variety of positions at EMAP plc, including Director of Corporate
Finance/Treasury and Finance Director of EMAP Radio.



Robert ScottChairman Bob is currently a non-executive director of the Royal Bank of Scotland Group plc, Jardine Lloyd Thompson Group plc, Focus DIY Group Limited and Crimestoppers Trust. He is also a non-executive
director of Swiss Reinsurance Company, Zurich. Bob retired as group chief executive of CGNU plc in 2001, having previously held the same position with CGU plc and General Accident plc, where he had been a director since 1992. He was also chairman of
the Association of British Insurers in 2000-2001, having been a board member for four years and he was a member of the Presidents Committee of the CBI from 1998-2000.



Charles Carey Chase is president and chief executive officer of DIRECTV, Inc, a position he has held since
December 2003. He also is a member of the DIRECTV, Inc. Board of Directors. As president and CEO Chase oversees the operations and strategic direction of the DIRECTV, Inc. companies, which include DIRECTV, Inc. in the United States and DIRECTV Latin
America. Prior to joining DIRECTV, Inc., Chase was co-chief operating officer of News Corp. and president and chief executive officer of Sky Global Networks until his resignation in January 2002. He also served as chairman and chief executive
officer of the Fox Television Group until 2001. In addition to serving on the DIRECTV, Inc. Board and News Corp. Board, Chase is also a member of the Board of Directors of British Sky Broadcasting, and Gateway, Inc. He is a Trustee of Colgate
University and a graduate of Colgate University and Harvard Business School.



John Coghlan John is currently deputy chief executive and group finance director of Exel plc. Prior to joining Exel/Ocean Group plc in 1995, he qualified as a chartered accountant in 1982 and worked for
Arthur Andersen for eight years before joining Tomkins plc, where he spent seven years in various financial roles.



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Joachim Eberhardt Joachim is currently the Executive Vice President of Global Sales, Marketing and Service
for DaimlerChrysler Motors LLC in the US. Until 1 June 2003 he was President and CEO of DaimlerChrysler UK Limited, a position he held since November 1999. He is currently a non-executive director of a number of DaimlerChrylser owned subsidiaries.
Joachim holds a Masters of Arts degree from the Academy for Administration and Economics in Stuttgart, Germany and an MBA from New York University Stern School of Business.



Lyndon Lea Lyndon is a founding partner of Lion Capital. Lyndon currently serves on the boards of Aber Diamond
Corporation, and various Cayman limited companies which wholly-own Jimmy Choo, Weetabix, Materne, Aster City Cable and Burtons Foods. Prior to founding Lion Capital he was a partner and management committee member of Hicks, Muse, Tate &
Furst whose European business he co-founded in 1998. Previously, he served at Glenisla, which was the European affiliate of Kohlberg Kravis Roberts & Co. He previously served in the investment banking division of Schroders in London and in the
mergers and acquisitions department of Goldman Sachs in New York. Lyndon received his BA Honours in Business Administration from the University of Western Ontario, Canada.



Lord Powell of Bayswater Lord Powell is currently Chairman of Sagitta Asset Management and UK Chairman of
Louis Vuitton Moet Hennessy (LVMH). He is also a director of British Mediterranean Airways, Caterpillar Inc., LVMH, Mandarin Oriental Hotel Group, Matheson & Co, Northern Trust Global Services, Schindler Holding and Textron Corporation. Lord
Powell is also a member of numerous international advisory boards, chairman or trustee of several not-for-profit organisations and a cross-bench member of the House of Lords.



Senior Management



Our senior management team (in addition to the executive directors listed above), their dates of birth and positions are as follows:



|                 |  |                   |  |                                         
|---------------- |  | ----------------- |  | ----------------------------------------
|Name             |  | Date of birth     |  | Position                                
|Steve Chambers   |  | 29 September 1953 |  | Chief Commercial Officer                
|Eddie Cheng      |  | 15 March 1952     |  | eBusiness Director                      
|Ann Francke      |  | 2 December 1958   |  | Chief Marketing Officer                 
|Paul Fry         |  | 25 May 1951       |  | Strategy & Business Development Director
|Jim Haddad       |  | 4 March 1957      |  | Chief Financial Officer USA             
|John Satchwell   |  | 11 March 1955     |  | Operations Director                     
|Victoria Sharrar |  | 2 June 1958       |  | Chief Sales Officer USA                 
|Joe Walsh        |  | 15 April 1963     |  | Chief Executive Officer USA             



Steve
Chambers Chief Commercial Officer, Yell UK Steve leads our UK Sales and Customer Service operations, a combined total of over 2,400 people, and is responsible for delivering our win, keep and grow customer acquisition and
development strategy. During the year Steve has overseen significant customer service improvements and a corresponding increase in customer satisfaction. Steve has worked in the directories business for over 20 years. Prior to his appointment as
Chief Commercial Officer he served as head of Sales of Yellow Pages Sales Ltd.



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Eddie Cheng eBusiness Director and President of Yell.comEddie has strategic and operational
responsibility for our New Media developments, including Yell.com. Eddie has recently led the development and launch of Super Search and Yell.com mobile. He is now focused on further improvement of Yells search capabilities in order to ensure
Yell.com supports its rapidly growing advertiser base. He and his team are also working with Yellow Book assisting them in their creation of the next generation of Yellowbook.com. Eddie joined the Group in 1984 as a product development manager.
During 1998 he served on the Department of Trade and Industrys steering committee on electronic publishing.



Ann Francke Chief Marketing Officer, Yell UKAnn leads our UK Marketing teams in customer and product development and marketing
communications. Alongside the development of our win, keep and grow strategy, and responsibility for maintaining our Super Brand status, Ann is driving innovation and the adoption of a portfolio approach to marketing. Prior to joining
Yell in May 2004, Ann was director of strategic marketing at Boots, and before this she was Vice-President, Petcare Marketing Europe at Mars Incorporated from 1999 to 2002. Previously she worked for Proctor and Gamble for 13 years.



Paul Fry Strategy and Business Development Director, Yell UKPaul heads up Yells strategic planning, market research and information activities. He led our winning applications for the European Quality Award in 1999 and 2004 and is responsible for the development and implementation of our Quality
and Standards programmes as well as Corporate Responsibility. Paul has been with the Group since 1974. During this time he has worked in Operations, Marketing and Business Planning and has led a number of key business development projects.



Jim Haddad Chief Financial Officer, Yellow
BookJim has responsibility for all financial, treasury and human resources operations in Yellow Book. He has focused on upgrading the financial systems and processes with significant improvements in reporting and forecasting. Jim has also led
US compliance work for Sarbanes-Oxley. Jim joined McLeod Publishing Co in 1986 where he served as Senior Vice President and its Chief Operating Officer until its acquisition by the Yell Group.



John Satchwell Operations Director, Yell UKJohn leads
Yell UKs technology development and the teams responsible for order processing, printing and distribution. He has instigated process changes and improvements which have delivered our best ever quality results in these areas. John also supports
Yellow Book in the development of their operations activities and is champion for our Health, Safety and Environmental activities. John was previously Deputy Managing Director of ITT World Directories UK and he has also held management positions in
GKN and Burmah Castrol.



Victoria Sharrar
Chief Sales Officer, Yellow BookVictoria leads 3,450 sales and sales management people across our US sales operations. Her focus on our win, keep and grow strategy has resulted in significant new directory launch and market growth
activities. She has also implemented a leadership development strategy and championed our sales efficiency improvement programmes in the US. Victoria was Vice President and General Manager of the R HDonnelley Proprietary East business that Yellow
Book acquired in 1997, where she had worked for over 12 years.



Joe Walsh Chief Executive Officer, Yellow BookJoe leads our Yellow Book business and throughout the year he has focused on the integration of Feist, and the continued growth of Yellow Book through further
acquisitions. Joe works closely with Yell UK on the sharing of best practice. Joe joioned Yellow Book in 1987 and served as its Chairman and Chief Executive Officer from 1993 until its acquisition by the Yell Group. Before then he co-founded IYP
Publishing in 1982 and joined Data National as Vice President of Sales in 1985 when IYP was acquired by them.



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##### Table of Contents

B. Compensation



The aggregate remuneration paid to or on behalf of all our senior management, including those members of management appointed as executive directors
during the 2005 financial year, was £6,913,205 (including salaries, fees, shares, commissions and bonuses).



These amounts exclude all pension and other post-retirement benefits provided to our executive directors and senior management, other than those required
to be paid or contributed to by law. These amounts also exclude expenses such as business travel, professional and business association dues and expenses reimbursed to our senior management.



Pension contributions paid in respect of our senior management as a group
during the 2005 financial year was £255,937.



The
remuneration paid to or on behalf of our highest-paid senior manager or executive director during the 2005 financial year was £1,248,374 in salaries, fees, shares, commissions, bonuses and pensions.



The remuneration of the directors of our parent for the year ended 31 March
2005 was as follows:



|                         |  |                                          |  |                   |  |                   |  |       |  |       |  |       |  |       |  |       |  |       |  |      
|------------------------ |  | ---------------------------------------- |  | ----------------- |  | ----------------- |  | ----- |  | ----- |  | ----- |  | ----- |  | ----- |  | ----- |  | -----
|                         |  | Performance-Salary/Fees related bonus(a) |  | Other benefits(b) |  | Share benefits(c) |  | Total
|                         |  | 2004                                     |  | 2005              |  | 2004              |  | 2005  |  | 2004  |  | 2005  |  | 2004  |  | 2005  |  | 2004  |  | 2005 
|                         |  | £000                                    |  | £000             |  | £000             |  | £000 |  | £000 |  | £000 |  | £000 |  | £000 |  | £000 |  | £000
|Executive Directors      |  |                                          |  |                   |  |                   |  |       |  |       |  |       |  |       |  |       |  |       |  |      
|John Condron             |  | 550                                      |  | 650               |  | 550               |  | 780   |  | 47    |  | 48    |  |      |  |      |  | 1,147 |  | 1,478
|John Davis(d)            |  | 340                                      |  | 376               |  | 340               |  | 450   |  | 22    |  | 25    |  |      |  |      |  | 702   |  | 851  
|Non-executive Directors  |  |                                          |  |                   |  |                   |  |       |  |       |  |       |  |       |  |       |  |       |  |      
|Robert Scott             |  | 129                                      |  | 155               |  |                  |  |      |  |      |  |      |  | 150   |  |      |  | 279   |  | 155  
|Charles Carey            |  | 57                                       |  | 60                |  |                  |  |      |  |      |  |      |  | 150   |  |      |  | 207   |  | 60   
|John Coghlan             |  | 64                                       |  | 65                |  |                  |  |      |  |      |  |      |  | 75    |  |      |  | 139   |  | 65   
|Joachim Eberhardt        |  | 63                                       |  | 65                |  |                  |  |      |  |      |  |      |  | 75    |  |      |  | 138   |  | 65   
|Lyndon Lea(e)            |  | 45                                       |  | 60                |  |                  |  |      |  |      |  |      |  |      |  |      |  | 45    |  | 60   
|Lord Powell of Bayswater |  | 50                                       |  | 50                |  |                  |  |      |  |      |  |      |  | 75    |  |      |  | 125   |  | 50   

---

|(a) | Comprises cash bonus of 100% of base salary and, in 2005 only, a further 20% of base salary payable in shares under the Deferred Bonus Plan. A description of the plan is on page 73.
Bonuses are awarded and payable during the first quarter after the year end.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Executive directors benefits are paid during the year and mainly comprise company cars, life assurance, private health cover, long-term disability insurance,
telecommunications services, health club membership and allowances for personal tax and financial advice.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Under an arrangement pre-dating our parent companys IPO, non-executive directors subscribed for shares in Yell Group plc at the date of the IPO at a discount to market value.
105,263 ordinary shares were issued for £150,000 to each of Charles Carey and Robert Scott, 52,632 ordinary shares were issued for £75,000 to each of Joachim Eberhardt, John Coghlan, and Lord Powell. Gains made on exercise of share
options by John Condron and John Davis are detailed in Note 22 to the financial statements.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | 2005 salary/fee includes a one-off ex-gratia payment of £1,245.
|--- | ---------------------------------------------------------------

|(e) | Lyndon Lea provided non-executive directors services to the company until 7 January 2004 via Hicks Muse where he was a partner. His fees for the year to 7 January 2004 were
therefore paid to Hicks Muse rather than to Mr Lea. From 8 January 2004 Mr Leas fees have been paid directly to him.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



At 31 March 2005, we had total outstanding loans of £20,000 made to our senior management in relation to a car ownership scheme.



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Pension Schemes



In the United Kingdom, Yell Group employees participate in the Yell pension plan (the Yell Pension Plan).



In the United States, the Yellow Book USA 401(k) Profit Sharing Plan (the
Yellow Book USA Pension Scheme) is available to Yell Groups eligible employees in the United States.



Yell Pension Plan



The
Yell Pension Plan was established with effect from 6 April 1981.



Group employees who prior to the Yell purchase participated in the BT pension scheme (the BT Pension Scheme) continued to do so until 31 October 2001. These employees were then offered membership of the Yell Pension Plan with effect from 1
November 2001. In October 2001, the Yell Pension Plan was amended to include two additional defined benefit sections so that former BT Pension Scheme members could receive substantially similar benefits under the Yell Pension Plan for future service
and an additional defined contribution section.



The Yell
Pension Plan now has four benefit sections, each of which is governed by a separate section within the scheme rules. The Yell Pension Plan is a funded, contributory, exempt-approved scheme. One of the conditions of approval by the UK Inland Revenue
is that the benefits for individual members do not exceed prescribed limits. Sections One to Three of the Yell Pension Plan provide defined benefits and are contracted out of the State Second Pension. Section Four attracts defined contributions and
members are contracted in to the State Second Pension.



Section
One provides defined benefits for those employees who were members of the Yell Pension Plan prior to the Yell purchase and is closed to new entrants. Section Two was designed to provide defined benefits similar to those provided under Sections B of
the BT Pension Scheme and is closed to new entrants. Former members of Section A of the BT Pension Scheme were also offered membership in Section Two of the Yell Pension Plan with effect from 1 November 2001. Section Three of the Yell Pension Plan
was designed to provide defined benefits similar to those provided under Section C of the BT Pension Scheme and is closed to new entrants.



Section Four of the Yell Pension Plan provides benefits on a defined contribution basis and generally is for employees joining the Yell Pension Plan after
1 October 2001 (other than those eligible to join Section Two or Section Three on 1 November 2001).



As at 31 March 2005, there were approximately 1,587 members of Sections One, Two and Three and 408 members of Section Four of the Yell Pension Plan and a
further 1,648 members who were covered for death benefits only.



There are no special arrangements for Directors or senior managers within the Yell Pension Plan, with the exception of John Davis, John Condron and one other senior manager. For further information see C. Board
PracticesDirectors Service Agreements and Senior Managements Employment Agreements.



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##### Table of Contents

Net Pension Liability



We currently operate a defined benefit pension scheme for our UK employees employed before 1 October 2001 that is accounted
for on a Statement of Standard Accounting Practice 24 Accounting for Pension Costs (SSAP 24) basis. At the last valuation date, 5 April 2002, under SSAP 24 and on an ongoing basis, the assets of the scheme were sufficient to
cover 102% of accrued benefits. Although there has been no formal valuation done since that time, it is likely that the funding position has worsened due to adverse changes in the capital markets and increased longevity.



We have also complied with the transitional disclosure requirements of UK
Financial Reporting Standard 17 Retirement Benefits (FRS 17). Valuations of this scheme for the purposes of FRS 17 were carried out at 31 March 2004 and 31 March 2005 by a qualified independent actuary. The liability, net of tax,
measured in accordance with FRS 17 was £69.6 million at 31 March 2005 and £46.5 million at 31 March 2004. The deficit at 31 March 2004 arose primarily as a result of adverse conditions in the capital markets. The increase in the deficit
in the 2005 financial year primarily reflects the increase in the liabilities of the scheme as a result of changing our assumptions regarding how long scheme members will live after retirement.



Our employer pension contribution to the defined benefit pension scheme
during the 2005 financial year was £16.2 million, including an additional annual contribution of £8.2 million. We expect to make an additional annual contribution of approximately £8.5 million in the next financial year. These
additional contributions are the first step in alleviating the £69.6 million (net of tax) pension deficit reported under FRS 17. Full details of the SSAP 24 and FRS 17 disclosures are given in Note 23 to the financial statements.



The Group currently contributes 13.05% of pensionable earnings to the Yell
Pension Plan Sections One, Two and Three. The Company currently makes contributions to Section Four of the Yell Pension Plan as follows:



|                                                 |  |                                                                |  
|------------------------------------------------ |  | -------------------------------------------------------------- | -
|Years of service completed at previous month end |  | Employer contribution rate(percentage of pensionable earnings) |  
|Up to 5                                          |  | 4                                                              | %
|5-9                                              |  | 6                                                              | %
|10-14                                            |  | 8                                                              | %
|15+                                              |  | 10                                                             | %

In common with most UK pension schemes, no attempt has been made to equalise between the sexes
guaranteed minimum pensions and associated entitlements arising out of the arrangements for contracting out of the State Earnings Related Pension Scheme up to 6 April 1997.



The Yell Pension Plan is managed by a board of independent trustees, who act after taking appropriate advice from actuaries,
lawyers and investment advisors. The trustees have appointed professional administrators and fund managers. Funds to meet the defined liabilities of Sections One, Two and Three are managed in line with an asset allocation strategy determined by the
trustees and agreed with the employer. The trustees offer members of the defined contribution Section Four a choice of investment funds which are administered by an independent manager, who directs funds in line with a members directions and
reports on the performance of independent fund managers.



Yellow Book USA
Pension Scheme



The Yellow Book USA Pension Scheme
provides deferred retirement and savings benefits to participants based upon the amounts contributed to the participants account by the employer and the employee and the investment return achieved on these accounts. The Yellow Book USA Pension
Scheme is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and is also qualified under Section 401(a) of the US Internal Revenue Code of 1986, as amended (the US Internal Revenue Code) and is therefore exempt
from federal taxes under Section 501(a) of the US Internal Revenue Code.



Participants may contribute up to 60% of their annual eligible compensation. Yellow Book makes matching contributions of 50% of the first 6% of participant contributions. During the 2005 financial year, Yellow Book
paid employers contributions of $5,260,468 to the Yellow Book Pension Schemes. Matching contributions vest according to a schedule based on years of service. In addition, Yellow Book may make discretionary profit-sharing contributions to the
Yellow Book Pension Scheme on behalf of eligible participants. Yellow Book did not make any discretionary sharing contributions to the Yellow Book Pension Schemes in the 2005 financial year. The assets of the plan are held separately from those of
the Group in an independently administered fund. For information on our pension schemes, see also note 23 of the notes to the financial statements included elsewhere in this annual report



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C. Board Practices



Please see Item 10.B. Additional InformationMemorandum and Articles of Association for a description of the provisions regarding
directors in the Articles of Association of Yell Group plc.



Board
Composition



Currently, the board of our parent is
composed of eight members. Each director has one vote. Resolutions will be adopted by a majority vote of those present at meetings. Our parents board of directors has established an audit committee and a remuneration committee.



Terms of Office



Non-executive directors each have a letter of appointment which sets out details of their appointments with a notice period
of three months.



The following table shows the details of
individual non-executive directors current term of office and period during which the person has served in that office:



|                         |  |                                  
|------------------------ |  | ---------------------------------
|Director                 |  | Start date of current appointment
|Robert Scott             |  | 1 July 2003                      
|Charles Carey            |  | 1 July 2003                      
|John Coghlan             |  | 1 July 2003                      
|Joachim Eberhardt        |  | 1 July 2003                      
|Lyndon Lea               |  | 1 July 2003                      
|Lord Powell of Bayswater |  | 1 July 2003                      



Yells Articles
of Association require one third of the Board to retire by rotation at the Annual General Meeting. However, the Board have decided that, in order to optimise accountability to shareholders, all directors shall submit themselves for re-election at
this years Annual General Meeting.



Non-Executive Directors
Remuneration



The Group endeavours to pay non-executive
directors fees that reflect a market competitive rate.



For the 2005 financial year, all the non-executive directors with the exception of Robert Scott received fees for their services of £50,000 per annum. Robert Scott received fees for his services as a non-executive director and as Yell
Group plcs Chairman of £150,000 per annum. In addition, a further fee of £10,000 per annum was payable to each non-executive director for chairing committees and £5,000 per annum was payable for membership of committees.



Non-executive directors are not eligible to participate in
Yell Group plcs share plans and Yell Group plc does not make any benefits available to them under other employee benefit arrangements or make any contributions to their personal pension plans.



Details of the remuneration paid to non-executive directors during the year
ended 31 March 2005 can be found on page 64.



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##### Table of Contents

Audit Committee



The Audit Committee is chaired by John Coghlan, who as Chief Financial Officer of Exel plc, is deemed by the Board to have recent and relevant financial
experience. The other members during the year were Bob Scott, Lord Powell of Bayswater and Joachim Eberhardt. With effect from 1 March 2005, Bob Scott resigned from the Audit Committee and Lord Powell of Bayswater was appointed, so that the
Committee now consists entirely of independent non-executive directors. It meets at least four times a year. The external auditors and the internal Head of Risk attend all meetings.



The committee assists the Board in fulfilling its duties regarding the reporting of financial and non-financial information
to shareholders. On behalf of the Board, the Audit Committee examines the effectiveness of the Groups internal controls and risk management by reviewing evidence of risk assessment activity, agreeing the scope of internal audit reviews,
reviews of the annual and interim financial statements and the nature and scope of the external audit. The Audit Committee has also carried out an evaluation of its own performance and that of the external auditors.



Yell operates a whistleblowing policy whereby confidential
matters can be brought to the attention of the General Counsel. Any investigations are jointly undertaken by the General Counsel and the Head of Risk, and the Audit Committee will have oversight of these investigations. It was agreed, following the
Audit Committee evaluation that the whistleblowing policy would be reviewed to ensure it continues to comply with current best practice. Any changes will be implemented with the approval of the Audit Committee in the forthcoming year.



The Audit Committee also reviews the independence and objectivity of our
external auditors. The nature of non-audit work which may be undertaken by our auditors has been defined and financial limits on the amount of this work have been established. Regular updates are prepared for the Audit Committee on the nature and
extent of non-audit services provided by our auditors. The auditors are also required to confirm their independence at least annually.



The Board formally reviewed the effectiveness of the systems of internal control during the last financial year.



Remuneration Committee



The Remuneration Committee is chaired by Joachim Eberhardt. Charles Carey was the other member of the committee during the
reporting period. Both members of the committee are non-executive directors, independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgment.



The Committee, which meets at least four times a year has responsibility for
making recommendations to the Board on Yell Group plcs policy on the remuneration of senior executives, for reviewing the performance of executive directors and senior management of Yell Group plc, and for determining, within agreed terms of
reference specific remuneration packages for each of the directors of Yell Group plc and members of senior management including pension rights, any compensation payments and the implementation of executive incentive schemes. In accordance with the
Committees terms of reference, no director may participate in discussions relating to their own terms and conditions of service or remuneration.



In the course of the reporting year, the Committee received advice from the Chief Executive Officer and the Yell Group plc Company Secretary. The
Committee also appointed and received advice from Deloitte & Touche LLP in respect of remuneration policy, market practice and corporate governance for senior management and other employees. Tax and risk management services were also received
from Deloitte & Touche LLP by the Company during the year.



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##### Table of Contents

Directors Service Agreements and Senior Managements Employment Agreements



Service contracts  Executive directors



The service contracts for both executive directors are for a rolling twelve
month period, in line with the Companys policy on executive directors service contracts.



The key terms of the executive directors service contracts are as follows:



|                                                              |  |                                                                                                                                                                                                                                           
|------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Aspect                                                        |  | Policy                                                                                                                                                                                                                                    
|Notice period (on termination by the company or the director) |  | 12 calendar months                                                                                                                                                                                                                        
|                                                              | 
|Termination payments if contract terminated without cause     |  | Payment if the notice period is served: Pro-rata bonus based on the greater of on target performance (65%) and projected performance determined by the board of directors (maximum
120%)                                                  
|                                                              | 
|                                                              |  | Payment if employment is terminated by the company without notice:95% of annual salary, benefits, pension contributions and on target bonus (65%) plus all conditional awards of shares and
share options vest immediately on termination.



Pension



Both the Chief Executive Officer and the Chief Financial Officer participate
in the Yell Pension Plan which is an Inland Revenue approved plan. Under the terms of the Yell Pension Plan applicable, both Executive Directors will receive retirement benefits on a defined benefit basis.



The Chief Executive Officer is a member of Section 2 of the Yell Pension
Plan. Under that Section, he accrues an annual pension of 1/80 of his Final Pensionable Earnings for each year of Pensionable Service. In addition, he accrues a one-off cash lump sum of 3/80 of his Final Pensionable Earnings for each year of
Pensionable Service. He is not subject to the Inland Revenues Earnings cap for pension purposes (due to his prior membership of the BT Pension Scheme) and is entitled to an enhancement of his Pensionable Service under the Yell Pension Plan (by
reference to the BT Pension Scheme) which will continue until 13November 2009. Under the terms of this enhancement, since 1July 1996, the Chief Executive Officer has been granted an additional 71 days of Pensionable Service for each actual year of
Pensionable Service in the BT Pension Scheme or the Yell Pension Plan. The effect of the enhancement is that if he remains a member of the Yell Pension Plan until his normal retirement date, the Chief Executive Officers forecasted total
Pensionable Service at age 60 will be 40 years.



The Chief
Financial Officer is a member of both Sections 1 and 3 of the Yell Pension Plan and under each Section accrues an annual pension of 1/60 of his Final Pensionable Earnings up to the Inland Revenues Earnings Cap for each year of Pensionable
Service giving a total accrual of 1/30 each year. He is contractually entitled to a pension based on uncapped pensionable salary for each year of service under the Yell Pension Plan. As he is subject to the Earnings Cap, the excess over the approved
benefit conferred under the Chief Financial Officers contractual arrangement is currently being provided on an unfunded basis. This unfunded unapproved pension promise was reviewed during the financial year. The review highlighted that an
overall entitlement of 1/45 is below the median for comparable executive roles and a majority (62%) of Chief Financial Officers in the FTSE100 have an accrual rate of 1/30. The amended promise increases his overall entitlement to 1/30 (1/45
previously) of his Pension Scheme Salary for each complete year of Pensionable Service and in proportion for a part year. For the avoidance of doubt, it should be noted that the revised entitlement will be applied to all periods of Pensionable
Service.



On 22 June 2001, we entered into service agreements
with Steve Chambers, Eddie Cheng, Paul Fry and John Satchwell, and on 1 May 2004 we entered into a service agreement with Ann Francke. Each agreement can be terminated at any time by either party upon 12 months notice. Each of these senior
managers is eligible to receive an annual bonus payment of 40% to 100% of his base salary. If a senior managers employment is terminated by us other than for cause, he will be entitled to his salary and the value of benefits for a period
equivalent to the notice period or any unexpired part thereof.



All agreements described above contain restrictions governing competition, solicitation of customers and solicitation of key employees, each lasting for a period of 12 months from termination of employment.



69



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##### Table of Contents

D. Employees



The following table reflects the number of employees by employment status in the Yell Group as at 31 March 2005:



|                     |  |                |  |               |  |      
|-------------------- |  | -------------- |  | ------------- |  | -----
|                     |  | United Kingdom |  | United States |  | Total
|Full-time employees  |  | 3,129          |  | 5,164         |  | 8,293
|Part-time employees  |  | 514            |  | 36            |  | 550  
|                     |  |                | 
|Total employees      |  | 3,643          |  | 5,200         |  | 8,843
|                     |  |                | 
|Full-time equivalent |  | 3,474          |  | 5,182         |  | 8,656



The following table
reflects the average number of employees(1)in the Yell Group for the periods indicated:



|                |  |                     |  |       |  |      
|--------------- |  | ------------------- |  | ----- |  | -----
|                |  | Year ended 31 March
|                |  | 2003                |  | 2004  |  | 2005 
|UK employees    |  | 3,319               |  | 3,414 |  | 3,569
|US employees    |  | 4,350               |  | 4,668 |  | 5,115
|Total employees |  | 7,669               |  | 8,082 |  | 8,684



|                    |  |                          |  |             
|------------------- |  | ------------------------ |  | ------------
|                    |  | Year ended 31 March 2005
|                    |  | UnitedKingdom            |  | UnitedStates
|                    |  | (%)                      |  | (%)         
|Marketing and sales |  | 58                       |  | 76          
|Other               |  | 42                       |  | 24          

---

|(1) | Full-time and full-time equivalent.
|--- | -----------------------------------



In the United Kingdom, some of our employees are represented by three labour unions which collectively represent approximately 250 full-time employees and
approximately 30 part-time employees. Membership in those unions is individual and voluntary. No unions have representation rights in respect of our employees in the United States.



We believe our relations with the unions of which our employees are members are on good terms.



E. Share Ownership



The following table reflects the share ownership of our directors in our parent, Yell Group plc at 26 May 2004:



|                         |  |               |  |               |  |                                               
|------------------------ |  | ------------- |  | ------------- |  | ----------------------------------------------
|Name                     |  | 31 March 2004 |  | 31 March 2005 |  | Proportion of share ownership at 31 March 2005
|                         |  | (number)      |  | (number)      |  | %                                             
|John Condron(a)          |  | 6,549,853     |  | 3,349,853     |  | 0.476                                         
|John Davis(a)            |  | 2,901,379     |  | 1,451,739     |  | 0.206                                         
|Robert Scott             |  | 105,263       |  | 105,263       |  | 0.015                                         
|Charles Carey            |  | 105,263       |  | 105,263       |  | 0.015                                         
|John Coghlan             |  | 52,632        |  | 52,632        |  | 0.007                                         
|Joachim Eberhardt        |  | 52,632        |  | 52,632        |  | 0.007                                         
|Lyndon Lea               |  | 200,000       |  | 200,000       |  | 0.028                                         
|Lord Powell of Bayswater |  | 52,632        |  | 2,632         |  | 0.000                                         

---

|(a) | On 12 November 2004 Mourant & Co Trustees Limited, as trustee for the Yell Employee Benefit Trust, (the Trust) acquired in the market, at an average price of
£4.09428 per share, a total of 1,598,002 Ordinary shares in Yell Group plc (the Shares).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Shares will be held by the Trust until they are transferred to participants in Yell Group plcs Capital Accumulation Plan (the Plan).
Neither John Condron nor John Davis is entitled to receive any of the Shares or be granted any benefit under the Plan.



The Trust is a discretionary trust and all employees (including John Condron and John Davis) are included in the class of potential beneficiaries.
Therefore, John Condron and John Davis are deemed to be interested in the Shares whilst they are held by the Trust. This interest will cease following distribution of the Shares to the participants in the Plan.



Accordingly, the Shares are not included in the table of directors
interests above.



70



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##### Table of Contents

The information summarised in the table below shows the directors share options under the Yell
Group Limited Senior Manager Incentive Plan, the Yell Group plc Executive Share Option Plan and the Yell Group plc Sharesave Plan as of March 2005. The Yell Group plc Sharesave Plan is an Inland Revenue approved share option plan which allows shares
to be acquired at a discount. Neither the Yell Group Ltd Senior Manager Incentive Plan nor the Yell Group plc Executive Share Option Plan are Inland Revenue approved share option plans. No other directors have share options under these, or any
other, share option plans operated by the Company.



|             |  |               |     |  |                        |  |                 |  |           |  |                        |  |               |  |                               |  |                                  |  |               
|------------ |  | ------------- | --- |  | ---------------------- |  | --------------- |  | --------- |  | ---------------------- |  | ------------- |  | ----------------------------- |  | -------------------------------- |  | --------------
|             |  | Type ofoption |     |  | At 31March2004(number) |  | Granted(number) |  | Exercised |  | At 31March2005(number) |  | ExercisePrice |  | Marketprice atdate ofexercise |  | Date from whichfirst exercisable |  | Date of expiry
|John Condron |  | SMIP          | (1) |  | 589,762                |  |                |  |          |  | 589,762                |  | 0.365p        |  |                              |  | 15 July 2003                     |  | 14 July 2013  
|             |  | EXEC          | (2) |  | 964,912                |  |                |  |          |  | 964,912                |  | 285p          |  |                              |  | 15 July 2006                     |  | 14 July 2013  
|             |  | EXEC          | (3) |  |                       |  | 404,480         |  |          |  | 404,480                |  | 401.75p       |  |                              |  | 11 Nov 2007                      |  | 10 Nov 2014   
|             |  | SAYE          | (4) |  | 3,548                  |  |                |  |          |  | 3,548                  |  | 260p          |  |                              |  | 1 Nov 2006                       |  | 1 May 2007    
|             |  |               |     |  |                        |  |                 |  |          
|             |  | Type ofoption |     |  | At 31March2004(number) |  | Granted(number) |  | Exercised |  | At 31March2005(number) |  | ExercisePrice |  | Marketprice atdate ofexercise |  | Date from whichfirst exercisable |  | Date of expiry
|John Davis   |  | EXEC          | (2) |  | 596,491                |  |                |  |          |  | 596,491                |  | 285p          |  |                              |  | 15 July 2006                     |  | 14 July 2013  
|             |  | EXEC          | (3) |  |                       |  | 233,354         |  |          |  | 233,354                |  | 401.75p       |  |                              |  | 11 Nov 2007                      |  | 10 Nov 2014   
|             |  | SAYE          | (4) |  | 6,096                  |  |                |  |          |  | 6,096                  |  | 260p          |  |                              |  | 1 Nov 2008                       |  | 1 May 2009    



The closing market
price of an ordinary share on 31 March 2005 was 473p. During the year the highest and lowest market prices were 475p and 303.5p respectively.

---

|(1) | SMIP = Yell Group Limited Senior Manager Incentive Plan. Options were granted and became exercisable on admission of the Companys shares to the London Stock Exchange on 15
July 2003. The options are not subject to performance conditions but a proportion of the underlying shares were subject to a sale restriction until 15 July 2004.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | EXEC(1)= Yell Group plc Executive Share Option
Scheme. These options were granted on flotation. Options granted over shares with a value of three times salary will only be exercisable if the adjusted EPS over an initial three year period is at least equal to RPI + 3% per annum at the end of the
period. If the target is not met it may be retested at the end of the fourth year. Options granted over shares with a value of two times salary will only be exercisable if the Yell Group plcs total shareholder return at the end of a three year
period exceeds the growth in the total shareholder return of the companies making up the FTSE 100. Options will be exercisable in full if the growth in the Yell Group plcs total shareholder return would put the Yell Group plc at the 25th
position or higher (taken from the top) of the FTSE 100. The proportion of options which may be exercised will be reduced on a straight-line basis to the 50th position of the FTSE 100, at which point 25% of the options may be exercised. If the Yell
Group plcs total shareholder return at the end of the three year period would place the Yell Group plc below the 50th position, no options will be exercisable.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | EXEC(2)= Yell Group plc Executive Share Option
Scheme. The exercise of these options is subject to the EPS growth of the Yell Group plc exceeding the growth in RPI by 3% per annum. Performance is measured over a three year period and there is no opportunity for retesting. Further detail can be
found on page 72.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | SAYE = Yell Group plc Sharesave Plan.
|--- | -------------------------------------



The members of our senior management team (in addition to the executive directors listed above), Steve Chambers, Eddie Cheng, Ann Francke, Paul Fry, James
Haddad, John Satchwell, Victoria Sharrar and Joseph Walsh, each hold ordinary shares and/or options for ordinary shares in Yell Group plc representing less than one percent of the beneficial ownership of the Company.



|             |  |                 |  |                           |  |                              |  |                                  |  |               
|------------ |  | --------------- |  | ------------------------- |  | ---------------------------- |  | -------------------------------- |  | --------------
|             |  | Granted(number) |  | At 31 March 2005 (number) |  | Marketprice at date of award |  | Date from whichfirst exercisable |  | Date of expiry
|John Condron |  | 161,792         |  | 161,792                   |  | 401.75p                      |  | 11 Nov 2007                      |  | 10 Nov 2014   
|John Davis   |  | 93,341          |  | 93,341                    |  | 401.75p                      |  | 11 Nov 2007                      |  | 10 Nov 2014   



The extent to which
the awards will vest will depend upon the Companys Total Shareholder Return (TSR) performance relative to the TSR performance of the FTSE 100 constituents (excluding investment trusts) over a three year period. To the extent that the
performance condition is not satisfied, the award will lapse and there will be no opportunity to retest the condition further.



For an award to vest, the Companys TSR performance must not be less than that of the median company in the comparator group. If the Company is
ranked at the median level, 30% of the award will vest, rising to 100% vesting at the upper quartile level.



71



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##### Table of Contents

Incentive Schemes



The Group has various stock option plans for employees and directors.



(a) The Yell Group Limited plans



In March 2002, the Yell Group introduced three stock option plans, the Yell Group Limited Employee Plan, the Yell Group Limited US Employee Plan and the
Yell Group Limited Senior Manager Incentive Plan. The plans were set up to provide employees with option awards over ordinary shares in Yell Group plc that would become exercisable on an exit event (e.g. sale or quotation). The option life under
these plans is ten years from date of grant.



(b) The Yell Group plc Yellow
Book (USA) West Management Share Option Scheme



In
September 2002, the Yell Group introduced a stock option plan, the Yell Group plc Yellow Book (USA) West Management Share Option Scheme for certain employees of the former McLeod directories. This plan provided employees with option awards for
ordinary shares of Yell Group plc that vest ratably on each anniversary of the grant date over a three-year period. The options could be exercised and sold on the later of the vesting date or the date of an exit event. The option life under the plan
is ten years from date of grant.



(c) The Yell Group plc Sharesave Plan



The Yell Group plc Sharesave Plan (the Sharesave) was
established in July 2003. Eligible employees who wish to participate must enter into a savings contract for a period of three or five years under which they will contribute payments of between £5 and £250 per month, and a bonus is added
at the end of three, five or seven years. In conjunction with the savings contract, an eligible employee is granted an option to subscribe for Ordinary shares of Yell Group plc out of the repayment made under that contract at the end of three, five
or seven years. The exercise price of any option will not be manifestly less than 80% of the market value of the Ordinary shares at the date of grant. The Sharesave is UK Inland Revenue approved and therefore no charge has been recorded to the
profit and loss account in accordance with the exemption available under UITF 17.



(d) The Yell Group plc Employee Stock Purchase Plan



The Yell Group plc 2003 Employee Stock Purchase Plan (the US ESPP) was established in July 2003. Eligible employees are entitled to purchase Ordinary shares of Yell Group plc at the lower of 85% of the fair market value of the Ordinary
shares on the date the Ordinary shares are offered and 85% of the fair market value of the Ordinary shares on the date ending the offer period when the Ordinary shares are purchased by the employee. All Ordinary shares must be purchased through the
savings accumulated during an offer period through payroll deductions.



(e)
The Yell Group plc Executive Share Option Scheme



The Yell
Group plc Executive Share Option Scheme (the UK Option Scheme) was established in July 2003, and contains an unapproved section and a section approved by the UK Inland Revenue. The price per Ordinary share of Yell Group plc at which options will be
exercised will be not less than the market value of the Ordinary shares at the date of grant. Options will normally be granted within a period of 42 days commencing on the day after the date on which the Group releases its quarterly, half-yearly or
final results for any financial period. In most circumstances an objective performance condition must be satisfied before an option can be exercised. Normally options may only be exercised three years after their initial date of grant with, where
appropriate, one re-test of the performance condition at the end of the fourth year. The option life under this plan is ten years from the date of grant.



(f) The Yell Group plc US Equity Incentive Plan



The Yell Group plc 2003 US Equity Incentive Plan (the US EIP) was established in July 2003. It allows the Company to issue both non-qualified and
incentive stock options and Ordinary shares of Yell Group plc. The Yell Group plc Board has sole discretion to determine who may receive awards under the USEIP and any performance conditions. The exercise price for incentive stock options will not
be less than 100% of the fair market value of the Ordinary shares on the date of grant. The option life under this plan is ten years from the date of grant. Stock awards may be made to officers or employees, and the purchase price, if any, is as
established by the Yell Group plc.



72



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##### Table of Contents

(g) The Capital Accumulation Plan



The Yell Group plc Capital Accumulation Plan was established in February 2004. It allows the Yell Group plc to make awards
of Ordinary shares, which vest three years from the date of grant, to employees. There are no performance criteria attached to the vesting of these shares, which are awarded to employees whom Yell Group plc wishes to retain as key talent within the
organisation. Awards are satisfied by purchasing existing shares on the open market rather than by issue of new shares.



(h) The Long Term Incentive Plan



The Yell Group plc Long Term Incentive Plan was established in July 2003 and is not intended to be approved by the Inland Revenue. The Yell Group plc
Board has sole discretion to determine which executives are granted awards under the LTIP. Awards are granted in the form of performance shares and in most circumstances an objective performance condition must be satisfied before an award vests.
Normally awards may only vest three years after their initial date of grant.



(i) The Deferred Bonus Plan



The Yell Group
plc Deferred Bonus Plan was established in November 2004. Under the plan, any bonus received by Executive Directors in excess of 100% of salary is subject to compulsory deferral into shares for a period of 3 years. There is no matching provided by
the Company and the shares will be forfeited if the director leaves the Company other than as a predetermined good leaver.



(j) The Yell Group plc Share Incentive Plan



The Yell Group plc Share Incentive Plan (the SIP) was established in July 2003 and is approved by the UK Inland Revenue. The SIP operates through a
UK-resident trust, that will purchase or subscribe for ordinary shares to be subsequently awarded to employees. Shares can be offered to employees using one or more of the following methods:



| |  |  | Free shares  up to £3,000 each year per employee to be held for at least 3 years in trust;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | Partnership shares  employee is able to purchase shares up to the value of £1,500, using monthly salary deductions (provided deductions do not exceed 10% of salary);
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Matching shares  up to 2 free shares for every partnership share held. To be held for at least 3 years in trust.
| | - |  | -----------------------------------------------------------------------------------------------------------------



No options or awards have been made under the SIP.



73



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##### Table of Contents

Options under share schemes



The following table summarises option activity for 2005 and 2004:



|                                                                                              |  |            |   |      |                                         |  |            |   |  |                                       
|--------------------------------------------------------------------------------------------- |  | ---------- | - | ---- | --------------------------------------- |  | ---------- | - |  | --------------------------------------
|                                                                                              |  | 2004       |   | 2005
|                                                                                              |  | Shares     |   |      | Weighted average exercise price (pence) |  | Shares     |   |  | Weighted average exercise price(pence)
|Outstanding at beginning of year                                                              |  | 11,046,925 |   |      | 18                                      |  | 19,158,211 |   |  | 190                                   
|Granted                                                                                       |  | 15,470,845 |   |      | 226                                     |  | 7,250,313  |   |  | 367                                   
|Exercised                                                                                     |  | (5,796,453 | ) |      | 3                                       |  | (5,594,339 | ) |  | 60                                    
|Expired or forfeited                                                                          |  | (1,563,106 | ) |      | 22                                      |  | (1,078,027 | ) |  | 253                                   
|Outstanding at end of year                                                                    |  | 19,158,211 |   |      | 190                                     |  | 19,736,158 |   |  | 289                                   
|Options exercisable at year end                                                               |  | 6,777,988  |   |      | 26                                      |  | 1,817,018  |   |  | 13                                    
|Shares available for future grant at year end                                                 |  | 57,398,341 |   |      |                                        |  | 50,557,360 |   |  |                                      
|Weighted-average fair value of options granted during the year                                |  | 15,470,845 |   |      | 69                                      |  | 7,250,313  |   |  | 77                                    
|Weighted-average exercise price equal to market value of ordinary shares at date of grant     |  | 9,284,545  |   |      | 268                                     |  | 5,399,867  |   |  | 401                                   
|Weighted-average exercise price less than market value of ordinary shares at date of grant    |  | 9,873,666  |   |      | 117                                     |  | 1,850,446  |   |  | 269                                   
|                                                                                             
|The following table summarises information about stock options outstanding at March 31, 2005:



|                    |  |                   |  |                                         |  |                  
|------------------- |  | ----------------- |  | --------------------------------------- |  | -----------------
|                    |  |                   | 
|Exerciseprice Pence |  | Numberoutstanding |  | Weighted average contractual life Years |  | Numberexercisable
|0                   |  | 255,133           |  | 13                                      |  |                 
|0.4                 |  | 1,631,538         |  | 8                                       |  | 1,631,538        
|128                 |  | 185,480           |  | 7                                       |  | 185,480          
|260                 |  | 2,952,012         |  | 3                                       |  |                 
|272                 |  | 906,884           |  | 4                                       |  |                 
|285                 |  | 2,801,158         |  | 8                                       |  |                 
|296                 |  | 4,984,534         |  | 9                                       |  |                 
|342                 |  | 73,142            |  | 9                                       |  |                 
|370                 |  | 650,000           |  | 1                                       |  |                 
|402                 |  | 5,296,277         |  | 10                                      |  |                 
|                    |  |                   | 
|                    |  | 19,736,158        |  | 8                                       |  | 1,817,018        



Further details of
options under the share schemes can be found under note 25.



74



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##### Table of Contents

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



A. Major Shareholders



We are a wholly owned
subsidiary of Yell Group plc, our parent.



At 19 May 2005, the
most recent practicable date, Yell Group plc had received notification from the following entities under Part VI of the Companies Act 1985, showing a material interest of 3% or more in Yell Group plc.



|                                                                   |  |               |  |                                            
|------------------------------------------------------------------ |  | ------------- |  | -------------------------------------------
|Shareholder                                                        |  | No. of Shares |  | Percentage of issued ordinary share capital
|FMR Corp and Fidelity International Limited and their subsidiaries |  | 93,422,379    |  | 13.27                                      
|Franklin Resources, Inc                                            |  | 49,499,804    |  | 7.03                                       
|Lloyds TSB Group Plc                                               |  | 41,705,374    |  | 5.92                                       
|Barclays Plc                                                       |  | 41,465,925    |  | 5.88                                       
|Aviva plc and its subsidiaries                                     |  | 29,973,015    |  | 4.25                                       
|Legal &General Group plc                                           |  | 25,299,234    |  | 3.59                                       
|MFSInvestment Management                                           |  | 22,779,265    |  | 3.24                                       



As at 1 April 2003
funds managed by Apax Partners, funds managed by Hicks Muse and directors and members of our management beneficially owned 44.35%, 44.35% and 11.30% of Yell Group plc, respectively. Upon admission of Yell Group plc to the London Stock Exchange on 15
July 2003, funds managed by Apax Partners and funds managed by Hicks Muse and directors beneficially owned approximately 19% each of the Company. Following the closing of the over-allotment arrangements in connection with the initial public offering
of Yell Group plc on 12 August 2003, funds managed by Apax Partners and funds managed by Hicks Muse and directors beneficially owned approximately 17% each of the Company. On January 7 2004, Apax Partners and Hicks Muse announced that they had sold
their respective entire shareholdings in Yell Group plc, representing in aggregate approximately 34% of the beneficial ownership of the company.



B. Related Party Transactions



There were no related party transactions in the fiscal year ended 31 March 2005.



C. Interests of Experts and Counsel



Not applicable.



75



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##### Table of Contents

ITEM 8. FINANCIAL INFORMATION



A. Consolidated
Statements and Other Financial Information



See Item 18.



Legal Proceedings



No member of the Yell Group is or has been engaged in or, so far as we are
aware, has pending or threatened, any legal or arbitration proceedings which may have, or have had in the 2005 financial year a significant effect on the Groups financial position, except as referred to below.



As we previously disclosed, a lawsuit filed by Verizon was settled in October
2004. Following publication of our half year results, Yellow Book USA was served with complaints filed as class actions in five US states and the District of Columbia. In these actions, the plaintiffs allege violations of consumer protection
legislation and are placing reliance on findings of the New York court in the now settled suit brought against Yellow Book USA by Verizon. On 13 May 2005, the court in New Jersey gave its preliminary approval to a comprehensive national settlement,
with no admission of liability. Notice of the terms of settlement will be published to class members and the final approval hearing is anticipated to be held in late summer 2005.



B. Significant Changes



Not applicable.



ITEM 9. THE OFFER AND LISTING



A. Offer and
Listing Details



Not applicable.



B. Plan of Distribution



Not applicable.



C. Markets



The Notes are listed on the Luxembourg Stock Exchange.



D. Selling Shareholders



Not applicable.



E. Dilution



Not
applicable.



F. Expenses of the Issue



Not applicable.



ITEM 10. ADDITIONAL INFORMATION



A. Share
Capital



Not applicable.



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##### Table of Contents

B. Memorandum and Articles of Association



Articles of Association



The Articles of Association of Yell Finance B.V. provides that its object is to carry on the business of a holding company. The Company has its registered
office at Frederick Roestestraat 123, 1076EE Amsterdam, The Netherlands and is registered with the commercial register under number 34157895. The business and affairs of the Company are managed by the board of directors (the Board). The Board, which
must consist of at least one Director but has no specified maximum number of directors, is elected by the Companys shareholders at a general meeting (a General Meeting). Board resolutions must be approved by an absolute majority of
the votes cast. General Meetings, which must be held at least once a year, may be called by any of the Board, individual directors or individual shareholders. Actions that must be approved at a General Meeting include, amongst other things, (i)
approving the Companys annual accounts, (ii) declaring dividends, (iii) increasing, reducing or authorising the transfer of the Companys share capital, (iv) appointing and removing directors, (v) approving certain Board resolutions and
(vi) winding up the Company.



C. Material Contracts



The following contracts are contracts (not entered into in the ordinary
course of business) which have been entered into by the Company or another member of the Yell Group within the two years immediately preceding the date of this document which are or may be material.



Senior Facilities Agreement



Yell Group plc and certain of its subsidiaries entered into a facilities
agreement originally dated 8 July 2003 (as amended and restated on 12 August 2003 and as further amended and restated on 26 August 2003) among, inter alios, Yell Group plc, the subsidiaries identified therein as borrowers and guarantors, ABN AMRO
Bank N.V. and HSBC Bank plc as joint mandated lead arrangers, the financial institutions named therein as lenders and HSBC Bank plc as facility agent and security trustee (the Senior Facilities Agreement).



Structure



The facilities made available to the members of the Yell Group comprised (i) a sterling term loan facility in an aggregate
amount of £664 million (Term Facility A1); (ii) a US dollar term loan faclity in an aggregate amount of $596 million (Term Facility A2 and together with Term Facility A1, the Term Facilities); and (iii) a
sterling denominated multicurrency revolving credit facility in an aggregate amount equal to £200 million (or its equivalent in other currencies) (Revolving Facility).



The Term Facilities were used to (i) refinance a certain proportion of the outstanding indebtedness under the prior senior
facilities agreement, being the senior facilities agreement originally dated 25 May 2001 (as amended on 22 June 2001, 10 July 2001, 1 August 2001, 13 March 2002, 12 April 2002, 31 May 2002 and as amended and restated on 11 November 2002) among,
inter alios, Yell Group plc, Yell Limited, Yellow Book Holdings, Inc., the companies identified therein as borrowers and guarantors, Merrill Lynch International, CIBC World Markets plc, Credit Suisse First Boston and Deutsche Bank AG London as
arrangers, the banks and financial institutions party thereto as lenders and Deutsche Bank AG London as facility agent and security agent (the Prior Senior Facilities Agreement); (ii) redeem 35% of the senior notes.



The Revolving Facility provides for revolving advances to be used for the
working capital, acquisitions and other general corporate purposes. Under the terms of the Senior Facilities Agreement, an amount of up to £50 million (or its equivalent in other currencies) of the Revolving Facility may also be made available
by way of, among other things, overdraft facilities, letter of credit, bonding or guarantee facilities, foreign exchange or derivative facilities.



Interest rates and fees



Advances under the various facilities bear interest at rates per annum equal to LIBOR (or, in the case of any advance in euro, EURIBOR) plus, where
appropriate, any applicable mandatory liquid asset costs (which are the adjustments required if The Bank of England mandates a change to the reserve requirements for lending banks), plus 1.50% per annum (the Margin). There is a margin
adjustment mechanism in relation to the Term Facilities and the Revolving Facility, commencing upon delivery of the financial statements for the financial period ending 31 March 2004, under which the Margin may be reduced to as low as 0.70% per
annum following reductions in Yell Group plcs leverage ratio as reflected in such financial statements. The leverage ratio is the ratio of Yell Group plcs consolidated total net debt to consolidated EBITDA (the Leverage
Ratio).



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Guarantees and security



The obligations of the subsidiaries of Yell Group plc under the Senior Facilities Agreement are guaranteed by, amongst others, Yellow Pages Limited,
Yell Holdings 2 Limited, Yell Limited, YH Limited, Yell SàrL, Yellow Book Group, Inc. and each of Yell Limiteds and Yellow Book Group, Inc.s material subsidiaries.



Each of Yellow Pages Limited, Yell Holdings 2 Limited, Yell Limited, YH Limited and each subsidiary guarantor incorporated
in the United Kingdom has granted a security interest over substantially all of its assets, including fixed charges over certain of its properties, debts, bank accounts, insurances, intellectual property and specified material agreements, and a
floating charge over all of its other business, assets and undertakings. In addition, the shares of Yell SàrL, Yell Holdings 2 Limited, Yell Limited, YH Limited, and the subsidiary guarantors incorporated in the United Kingdom have been
charged in favour of HSBC Bank plc as security trustee for the banks under the Senior Facilities Agreement.



Each of Yellow Book Group, Inc. and each borrower and/or subsidiary guarantor incorporated in the United States has granted a security interest over
substantially all of its assets, including, first-priority perfected liens over certain of its properties (including property), debts, bank accounts, insurances, intellectual property and specified material agreements. In addition, the shares of the
borrowers and the subsidiary guarantors incorporated in the United States have been pledged to HSBC Bank plc as security trustee for the banks under the Senior Facilities Agreement. Certain property owned by McLeodUSA in Cedar Rapids, Iowa has also
been mortgaged in favour of HSBC Bank plc (as security trustee as aforesaid).



Yell SàrL has granted a security interest over its shares in Yellow Book Group, Inc. as security for its obligations as a guarantor under the Senior Facilities Agreement.



The security provided to HSBC Bank plc as security trustee for the banks
under the Senior Facilities Agreement will be released at such time as (i) the Leverage Ratio is less than or equal to 3.50:1, and (ii) Yell Group plc has achieved external credit ratings of a minimum of BBB- from Standard & Poors and Baa3
from Moodys (with, in each case, a stable outlook or better).



Covenants



The Senior Facilities Agreement
contains certain customary negative covenants which restrict Yell Group plc and its subsidiaries (subject to certain agreed exceptions) from, amongst other things: (i) incurring additional indebtedness; (ii) giving guarantees and indemnities; (iii)
making loans to others; (iv) creating security interests on their assets; (v) making acquisitions and investments or entering into joint ventures; and (vi) disposing of assets.



Acquisitions of assets or companies whose business is similar or related to the business carried on by Yell Group plc and
its subsidiaries are, amongst other things, permitted subject to certain requirements (subject to certain agreed exceptions), including, without limitation, to the extent (i) no defaults exist at the time of the acquisition or would result
therefrom, (ii) such acquisitions do not exceed £200 million (rising to £350 million where (A) both prior to and after completion of the relevant acquisition the Leverage Ratio is less than or equal to 3.50:1, and (B) Yell Group plc has
achieved external credit ratings of a minimum of BBB- from Standard & Poors and Baa3 from Moodys (with, in each case, a stable outlook or better) prior to completion of any such acquisition) in any financial year (exclusive of
amounts funded by equity or from excess cash flow (subject to certain conditions)), (iii) the proposed acquisition assets for the period of 12 months prior to the date of their acquisition had positive EBITDA, and, (iv) the financial covenants set
out in the Senior Facilities Agreement will be met following such acquisition.



Dividends are, amongst other things, permitted to the extent that such dividends are permitted under the indentures for the senior notes.



The Senior Facilities Agreement requires the borrower to observe certain customary positive covenants including, but not
limited to, covenants relating to legal status, notification of default, making of claims, financial assistance, financial condition and hedging arrangements.



In addition, the Senior Facilities Agreement requires Yell Group plc and its consolidated subsidiaries to maintain specified consolidated financial
ratios for (i) consolidated total net debt to consolidated EBITDA, (ii) consolidated net senior debt to consolidated EBITDA (tested until 31 March 2005 only), and (iii) consolidated EBITDA to net cash interest payable.



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Maturity and amortisation



The Term Facility A1 is to be repaid in fixed semi-annual instalments of £40 million commencing on 31 March 2004,
increasing to fixed semi-annual instalments of £45 million beginning on 30 September 2005, increasing to fixed semi-annual instalments of £50 million beginning on 30 September 2006, with a final instalment equal to all amounts then
unpaid and outstanding being due and payable on 8 July 2008 (being the final maturity date of the Term Facilities and Revolving Facility).



The Term Facility A2 is to be repaid in one instalment on 8 July 2008. No amounts repaid by the subsidiaries of Yell Group plc that are borrowers under
the Senior Facilities Agreement may be reborrowed.



The
Revolving Facility ceases to be available for drawing on the date falling one month prior to the final maturity date. Each advance made under the Revolving Facility must be repaid on the last day of each interest period relating to it, although any
amounts repaid under the Revolving Facility are available for re-drawing.



Prepayments



All loans under the Senior
Facilities Agreement must be prepaid in full upon the occurrence of certain events including, (i) a change of control of Yell Group plc (if the majority lenders so require), (ii) from 100% of the net cash proceeds of any additional debt capital
markets issue, other than to the extent used to refinance the senior notes, reducing to 50% when (A) the Leverage Ratio is less than or equal to 3.50:1, and (B) Yell Group plc has achieved external credit ratings of a minimum of BBB- from Standard
& Poors and Baa3 from Moodys (with, in each case, a stable outlook or better), and (iii) from 50% of excess cash flow (reducing to 25% when the Levergage Ratio is 3.50:1 or better and reducing further to 0% when the Leverage Ratio is
3.00:1 or better.



Events of default



The Senior Facilities Agreement contains certain customary events of default
for facilities of its type (including Yell Group plc ceasing to have a listing for its ordinary shares on any recognised exchange in the United Kingdom or the United States), the occurrence of which would allow the lenders to accelerate all
outstanding loans and terminate their commitments under the Senior Facilities Agreement.



Hedging arrangements



The subsidiaries of Yell Group plc that are borrowers under the Senior Facilities Agreement are required by the terms of the Senior Facilities Agreement to enter into hedging arrangements to provide protection in respect of interest rate
risk exposure because the financing under the Senior Facilities Agreement is at floating interest rates. The lenders require that a minimum aggregate notional amount of 50% of the consolidated net debt is on a fixed interest basis. The hedging
requirement falls away in circumstances where (i) the Leverage Ratio is less than or equal to 3.50:1, and (ii) Yell Group plc has achieved external credit ratings of a minimum of BBB- from Standard & Poors and Baa3 from Moodys (with,
in each case, a stable outlook or better).



Hedging banks have
been granted security, guarantee and subordination rights which rank at least equally with the rights of the banks under the Senior Facilities Agreement.



Senior Sterling Notes, Senior Dollar Notes and Senior Discount Dollar Notes



Yell Finance B.V. has issued £250 million principal amount of 103/4% Senior Sterling Notes due 2011, $200 million principal amount of 103/4% Senior Dollar Notes due 2011 and $288.25 million principal amount at maturity of 131/2% Senior Discount Dollar Notes due 2011 (collectively, the Notes) under indentures (the Indentures) dated as of 6 August 2001 and amended 18 January 2002, in each case among
Yell Finance B.V., as the Issuer, Yellow Pages Limited as the Guarantor and The Bank of New York as the Trustee.



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The Notes are general unsecured obligations of Yell Finance B.V. and mature on 1 August 2011, unless previously redeemed.
The Senior Sterling Notes and Senior Dollar Notes bear interest at the rate of 103/4%, payable semi-annually in arrears on 1 February and 1 August in each year, commencing 1 February 2002. The Senior Discount
Dollar Notes were initially issued at a discount with an issue price of $521.33 per $1,000 principal amount at maturity. No interest is payable on the Senior Discount Dollar Notes prior to 1 August 2006. From and after 1 August 2006, each Senior
Discount Dollar Note will bear interest at the rate of 133/4%, payable semi-annually in arrears on 1 February
and 1 August in each year, commencing 1 February 2007.



The Notes will be subject to redemption at any time on or after 1 August 2006, at the option of the Issuer, in whole or in part, at the redemption prices set forth in the Indentures (initially par plus one-half the coupon declining to par
on or after 1 August 2009). In addition, the Issuer may redeem all but not less than all of any series of Notes on or prior to 1 August 2006 by paying a make-whole premium based on the Gilt Rate (as defined therein) or the Treasury Rate (as defined
therein).



Further, before 1 August 2004, the issuer had the
right to redeem up to 35% of the aggregate principal amount at maturity of each series of Notes with the net proceeds of a public equity offering at a price of 110.75% of the principal amount (in the case of the Senior Sterling Notes and Senior
Dollar Notes) or 113.50% of the accreted amount of the Senior Discount Dollar Notes, if at least 65% of the original aggregate principal amount at maturity of such series remains outstanding after such redemption. On 18 August 2003, we exercised
this right and redeemed 35% (£172.5 million) of our Senior Notes.



Unless previously called for redemption, if a Change of Control (as defined in the Indentures, which definition includes the requirement that a decline occur in respect of the rating of the Notes) shall occur at any time, then each holder
of Notes shall have the right to require that the Issuer purchase such holders Notes in whole or in part at a purchase price in cash in an amount equal to 101% of the principal amount of the Senior Sterling Notes and the Senior Dollar Notes
and 101% of the accreted value of the Senior Discount Dollar Notes.



The Indentures contain certain covenants which, amongst other things, restrict Yell Finance B.V.s ability and the Restricted Subsidiaries (as defined therein) to:



| |  |  | incur additional indebtedness;
| | - |  | ------------------------------



| |  |  | pay dividends or make distributions in respect of Yell Finance B.V.s equity interests or make certain other investments or restricted payments;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | issue certain guarantees;
| | - |  | -------------------------



| |  |  | enter into certain transactions with shareholders or affiliates;
| | - |  | ----------------------------------------------------------------



| |  |  | create certain liens;
| | - |  | ---------------------



| |  |  | sell certain assets; or
| | - |  | -----------------------



| |  |  | create consensual restrictions on the ability of Restricted Subsidiaries to pay dividends and make certain other payments and transfer of assets to us and the other Restricted
Subsidiaries.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, the Indentures limit
Yell Finance B.V.s ability to consolidate, merge or sell all or substantially all of its assets.



The Indentures also contain events of default, including:



| |  |  | non-payment of amounts due;
| | - |  | ---------------------------



| |  |  | failure to comply with provisions relating to a consolidation, merger or sale of all or substantially all of its assets;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | failure to repurchase the Notes in accordance with the terms of the Indentures;
| | - |  | -------------------------------------------------------------------------------



| |  |  | breach of covenants;
| | - |  | --------------------



| |  |  | cross-defaults by Yell Finance B.V. or its significant subsidiaries;
| | - |  | --------------------------------------------------------------------



| |  |  | certain judgment awards against Yell Finance B.V. or its significant subsidiaries; and
| | - |  | --------------------------------------------------------------------------------------



| |  |  | certain events of bankruptcy and insolvency.
| | - |  | --------------------------------------------



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Upon the occurrence of an event of default, the Trustee under the Indentures or the holders of 25% of outstanding Notes,
may declare the Notes immediately due and payable at 100% of the principal amount plus accrued and unpaid interest and liquidated damages, if any, to the date of declaration.



Subordination Agreement



Yell Group Limited (now Yell Group plc) and Yell Finance B.V. entered into a subordination agreement dated 6 August 2001 with, amongst others, the holders
of the DDBs and the trustee for the benefit of holders of the Notes (the Subordination Agreement). The terms of the Subordination Agreement are subject to those of the Intercreditor Deed.



The Subordination Agreement includes provisions that:



| |  |  | subordinate Yell Group plcs right of payment under the intercompany loans made to Yell Finance B.V. to the prior payment in full of the Notes;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | prohibit the maturity, redemption or repurchase of the intercompany loans prior to the maturity and repayment of the Notes;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | prohibit the Yell Group plcs subsidiaries from securing the intercompany loans by granting a lien on their assets or guaranteeing the intercompany loans;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | entitle the holders of Notes to payment in full before Yell Group plc is entitled to receive any payment in respect of the intercompany loans, in the event of Yell Finance
B.V.s dissolution, bankruptcy, insolvency or similar circumstances;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | prohibit the amendment of the intercompany loans in any manner adverse to the holders of the Notes, prior to the repayment of the Notes;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | prohibit Yell Finance B.V. from making any payments on the intercompany loans prior to the repayment of the Notes (other than permitted payments under the Indentures), setting off
any of the intercompany loans or securing the intercompany loans by a lien on Yell Finance B.V.s assets; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | prohibit any of the holders of the DDBs from taking any action in respect of the DDBs contrary to Yell Group plcs and Yell Finance B.V.s obligations under the
Subordination Agreement.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The provisions of the
Subordination Agreement also prohibit Yell Group plc from:



| |  |  | taking any enforcement action on the intercompany loans prior to the maturity and repayment of the Notes in full in cash;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | transferring or otherwise conveying any of the intercompany loans to any person other than Yell Finance B.V.; and
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | making any payments in respect of the DDBs or the BT Loan Notes; however, Yell Group plc may make such payments with its own funds or funds distributed to it in accordance with the
restricted payments covenant in the Indentures.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Keepwell Agreement



Yell Group Limited (now Yell Group plc) has entered into a keepwell agreement with Yell Finance B.V. dated as of 6 August
2001 (as amended and restated on 6 April 2002), which provides that in the event Yell Finance B.V., in its sole discretion, determines that it will have insufficient funds (including funds available from its subsidiaries under the senior credit
facilities) to meet its obligations under the Notes and under the bridge notes issued pursuant to a bridge credit facility put in place at the time of the McLeod acquisition in order to finance part of the McLeod acquisition costs (which bridge
notes facility was refinanced in full on 11 November 2002 as described above in Senior Facilities Agreement), it will promptly notify Yell Group plc, and Yell Group plc will make available to Yell Finance B.V. before the due date
of such obligations, funds sufficient to enable Yell Finance B.V. to satisfy such payment obligations (the Keepwell Agreement). Such funds will be made available to Yell Finance B.V. either as a capital contribution or a subordinated
loan in compliance with the terms of the Indentures and on the basis that no interest or principal payments may be made on any such subordinated loan unless Yell Finance B.V., immediately before and after such payment, is solvent in all respects and
such subordinated loan is subordinated to the Notes or the bridge notes in the event of bankruptcy or insolvency.



In accordance with certain requirements of the Dutch Central Bank, the Keepwell Agreement will be enforceable against Yell Group plc only by Yell Finance
B.V. and/or its liquidator or administrator in the event of a bankruptcy, or, as the case may be, a moratorium under Dutch law (surseance van betaling). The Keepwell Agreement is not enforceable by the holders of the Notes or the bridge
notes or the trustee on behalf of the holders of the Notes or the agent on behalf of the holders of the bridge notes.



Stamp Duty Agreement



On 25 May 2001, Yell Limited (now Castaim Limited and an affiliate of BT), Castaim Limited (now Yell Limited), BT Holdings Limited, Yellow Pages BV and BT
entered into an agreement relating to the stamp duty (the Stamp Duty Agreement) which governed the execution and keeping of the original versions of the Business Sale Agreement and the Umbrella Agreement (together the
Documents and each a Document) outside the United Kingdom.



Under the Stamp Duty Agreement, it was agreed that each party would not at any time cause or knowingly permit the Documents to be brought into the United Kingdom unless (i) it was necessary to produce the Document in
any judicial, arbitration, administrative or other legal proceedings; (ii) it was required to do so by any tax authority; (iii) it was required to do so by any government department or other regulatory body; or (iv) it was required to do so by law.



Subject to the above, it was also agreed that each party would
not argue or raise (or cause to be argued or raised) any question in any judicial, arbitration, administrative or other legal proceeding involving the Documents that a copy or certified copy of any of the Documents could not be produced as adequate
evidence in any such proceedings.



In the event that any of the
Documents is brought into the United Kingdom in the circumstances described above, then Yell Limited as the purchaser of the Yell business in the United Kingdom undertook that it would submit that Document as soon as reasonably practicable to the UK
Inland Revenue and would pay any stamp duty thereon. If Yell Limited fails to comply with that obligation, Castaim Limited has the right to present the relevant Document to the UK Inland Revenue, pay the stamp duty and require repayment of such
stamp duty from Yell Limited.



The Company is not aware of any
circumstances which would require either it or BT to bring any of the Documents into the United Kingdom and believes the risk of such circumstances arising to be remote. However, if stamp duty were to be paid on the Documents, the amount payable by
Yell would be in the order of £54.5 million plus applicable interest.



Management Incentive Plan Trust and Distribution Agreement (MIP Distribution Agreement)



The MIP Distribution Agreement works in conjunction with the Phantom DDB Plan and the US Equity Plan in the event that Yell Marketable Securities are
allocated to the US management participants in those plans. Pursuant to this agreement, Yell Group plc will deliver to Yell Management Company LLC any Yell Marketable Securities paid in respect of the Phantom Units or LLC Interests held by the
participants in the Phantom DDB Plan and the US Equity Plan.



The agreement remains partially in place and on 15 July 2004, the first anniversary of the initial public offering of Yell Group plc, any Yell Marketable Securities still held by Yell Management Company LLC will be distributed to the
participants of the Phantom DDB and US Equity Plan.



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McLeod Acquisition Agreement



The McLeod acquisition agreement was entered into between McLeodUSA Incorporated (the Parent), Yell Group
Limited (now Yell Group plc) and McLeodUSA Holdings, Inc. (the Seller), a wholly owned subsidiary of the Parent, on 19 January 2002 (the McLeod Acquisition Agreement), pursuant to which in April 2002, Yell Group plc acquired
all the issued share capital of McLeod, a wholly owned subsidiary of the Seller, in consideration of the payment of $600 million in cash.



The McLeod Acquisition Agreement contains warranties as to, amongst other things, ownership of the shares, employee benefit plans, intellectual property,
material contracts, and the assets and properties of McLeod .



Under the terms of the McLeod Acquisition Agreement, active employees of McLeod as of the closing date shall be provided with comparable benefits for the two years following the closing of the acquisition and will be given credit for past
service for purposes of eligibility and vesting under employee benefit plans. The Company has also agreed to maintain a major employment centre in Cedar Rapids, Iowa for a period of at least two years following the closing date of the acquisition.



The McLeod Acquisition Agreement also provides the Seller with
an exclusive right of first negotiation for a limited period of time in the event that Yell Group plc decides to sell McLeod to a third party and McLeod is operating as a stand-alone business and is not integrated with the businesses of Yell Group
Limited or any of its subsidiaries.



McLeod Operating Agreement



On 28 April 2003, Yellow Book/McLeod Holdings, Inc.
(Yellow Book/McLeod) assigned its rights under the Publishing, Branding and Operating Agreement, dated as of 16 April 2002 (the Branding Agreement), between Yellow Book/McLeod and McLeodUSA Incorporated and McLeodUSA
Telecommunications Services, Inc. (referred to together as McLeodUSA), to Yellow Book USA, Inc. (Yellow Book). Yellow Book then entered into an Amended and Restated Publishing, Branding and Operating Agreement, dated as of 29
April 2003 (the Amended Branding Agreement), with McLeodUSA.



Under the Branding Agreement, Yellow Book had been obliged to publish the directories acquired from McLeodUSA using the McLeod trademarks and trade dress on the covers. Any directories subsequently acquired in states
where McLeod provided telephone service as of the date of the Branding Agreement (McLeodUSA Service States) also had to be published with the McLeod trademarks and trade dress on the cover. The Branding Agreement also contained
restrictions on changing the geographic coverage of the affected directories and on discontinuing publication of the affected directories, and McLeodUSA had the right to ask Yellow Book to publish additional directories in McLeodUSA Service States.
If Yellow Book declined to publish such additional directories, Yellow Book would be precluded from publishing directories in the relevant geographic area for the term of the Branding Agreement. McLeodUSA also received up to eight pages in the
community section of many of the directories. The term of the Branding Agreement was five years from the effective date, with automatic renewals of two years, unless one of the parties sent notice of termination at least one year prior to the
expiration of the term. McLeodUSA paid Yellow Book an annual fee of $1,900,000, plus a fee for advertisements equal to Yellow Books cost of producing the advertisements



The Amended Branding Agreement does not require Yellow Book to publish directories with the McLeod trademarks and trade
dress. Instead, McLeodUSA receives a credit card-sized advertisement on the cover of each directory published in a McLeodUSA Service State. McLeodUSA also receives up to four pages in the community section of each directory and advertisements under
various headings. The Amended Branding Agreement does not contain any restrictions on changing the geographic coverage of the affected directories or on discontinuing publication of any of the directories. However, Yellow Book has agreed to maintain
a total circulation of at least thirty million with respect to the directories in the McLeodUSA Service States. In the event McLeodUSA wants Yellow Book to publish additional directories in the McLeodUSA Service States, the parties will discuss the
feasibility of publishing such additional directories, but Yellow Book is no longer precluded from publishing in the relevant geographic areas if it declines to publish the additional directories. McLeodUSA no longer pays an annual fee to Yellow
Book, nor does it pay for its advertisements in the directories. The term of the Amended Branding Agreement commences 29 April 2003 and expires 29 April 2008.



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NDC Acquisition Agreement



Yellow Book USA entered into an agreement with NDC Holdings II, Inc. (NDC Inc.), the stockholders of NDC Inc.
and Three Cities Research Inc. on 10 December 2002 (the NDC Acquisition Agreement) pursuant to which Yellow Book USA agreed to purchase all issued and outstanding shares of capital stock in NDC Inc. free and clear of all liens in
consideration for the payment of US$69,000,000.



The NDC
Acquisition Agreement contains certain representations and warranties given on an indemnity basis by the stockholders of NDC Inc. to Yellow Book USA relating to, amongst other things, liabilities, indebtedness, material adverse change, employees,
tax, intellectual property and commercial contracts. Yellow Book USA also gave certain representations and warranties to the stockholders of NDC Inc. on an indemnity basis in relation to, amongst other things, due incorporation and authorisation.
The period during which the parties can make a warranty claim expired on 30 June 2004 with the exception of certain specified warranties given to Yellow Book USA in respect of which the warranty period does not expire until 90 days after the
applicable statute of limitations for such relevant claim.



TransWestern
Merger Agreement



On 16 May 2005, Yellow Book USA
(Yellow Book), an indirect, wholly-owned subsidiary of Yell Group plc, Tapestry Acquisition, LLC (Tapestry), a wholly-owned subsidiary of Yellow Book, TransWestern Holdings, L.P. (TransWestern), TWP Rep Co., LLC
and Yell entered into an Agreement and Plan of Merger (the TransWestern Merger Agreement). Pursuant to the TransWestern Merger Agreement and the related transaction agreements, at the effective time Tapestry will merge with and into
TransWestern, with TransWestern surviving as a wholly owned subsidiary of Yellow Book. The merger consideration is US$1,575,000,000, subject to certain adjustments. In connection with the consummation of the transactions contemplated by the
TransWestern Merger Agreement, Yell Group plc has entered into a financing arrangement with its syndicate of lenders to fully finance the merger consideration. See Operating and Financial Review and Prospects  Post balance sheet
event. The completion of the transaction is subject to certain closing conditions including, but not limited to, completion of the financing transactions, shareholder approval and the receipt of regulatory approval.



The TransWestern Merger Agreement contains representations and warranties as
to, among other things, ownership of partnership interests, employee benefit plans, intellectual property, contracts and property of TransWestern. However, neither these representations and warranties nor any other representations and warranties
contained in the TransWestern Merger Agreement will survive the closing of the transaction.



D. Exchange Controls



None.



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E. Taxation



European Directive on the Taxation of Savings Income



The European Union has adopted a directive regarding the taxation of savings income. Subject to a number of important conditions being met, it is proposed
that Member States will be required from a date not earlier than 1 January 2005 to provide to the tax authorities of other Member States details of payments of interest and other similar income paid by a person to an individual in another Member
State, except that Austria, Belgium and Luxembourg will instead impose a withholding system for a transitional period unless during such period they elect otherwise. In the UK this directive has been implemented by the Reporting of Savings Income
Information Regulations 2003 (SI2003/3297).



United States



US Federal Income Tax Considerations



This is a discussion of the important US federal income tax consequences of
purchasing, holding and disposing of the senior sterling notes, the senior dollar notes and the senior discount dollar notes. Except to the limited extent discussed below, this discussion only applies to a US holder, defined as a
beneficial owner of a note that is:



| |  |  | a citizen or individual resident of the United States;
| | - |  | ------------------------------------------------------



| |  |  | a corporation (or other entity treated as a corporation for US federal income tax purposes) created or organised under the laws of the United States or any political subdivision
thereof or therein;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an estate, the income of which is includible in gross income for US federal income tax purposes regardless of the source; or
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | a trust, if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more US persons have the authority to
control all substantial decisions of the trust or (b) it has validly elected to be treated as a U.S. person.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



This discussion is for general information only and does not address all aspects of US federal income taxation that may be relevant to a particular US
holder based on such holders particular circumstances (including the potential application of the US alternative minimum tax), nor does it address any aspect of state, local or non-US tax laws, or the possible application of US federal gift or
estate taxes. This discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold Notes through a partnership or other pass-through entity. This discussion does not address the US federal income tax
consequences to US holders that are subject to special treatment, including US holders that:



| |  |  | are broker-dealers, traders, insurance companies, tax-exempt organisations, financial institutions or financial services entities;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | hold notes as part of a straddle, hedge or conversion transaction with other investments; or
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | own at least 10% of the issuers voting stock (directly, indirectly or constructively).
| | - |  | ---------------------------------------------------------------------------------------



This discussion considers only US holders that are beneficial owners of the notes that will own Notes as capital assets and
whose functional currency is the dollar. The discussion is generally limited to the tax consequences to holders who purchase Notes in connection with their initial issue at the issue price, and does not address any special rules that may
apply if the Notes are called before the maturity date. For this purpose the issue price of a note is the first price at which a substantial amount of the Notes are sold to the public for money, excluding sales to bond houses, brokers or
similar persons or organisations acting in the capacity of underwriters, placement agents or wholesalers. It does not describe any tax consequences arising out of the tax laws of any state, local or foreign jurisdiction.



This discussion is based upon the US Internal Revenue Code, existing and
proposed regulations thereunder, and current administrative rulings and court decisions. All of the foregoing are subject to change, possibly on a retroactive basis, and any such change could affect the continuing validity of this discussion.



You should consult your tax adviser concerning the application
of US federal income tax laws, as well as the laws of any state, local or foreign taxing jurisdiction, to your particular situation.



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Interest and Original Issue Discount



Stated interest on the senior sterling notes and the senior dollar notes.Interest paid on a senior dollar note
(including any amounts paid in respect of the guarantees) will be taxable to a US holder as ordinary income at the time it accrues or is received in accordance with such holders method of accounting for US federal income tax purposes.



Interest paid on a senior sterling note (including any amounts
paid in respect of the guarantees) also will be taxable to a US holder as ordinary income at the time it accrues or is received in accordance with such holders method of accounting for US federal income tax purposes. A US holder of a senior
sterling note that uses the cash method of accounting measures interest received by translating the amount of pounds sterling into dollars at the spot rate on the date of receipt or payment. A US holder of a senior sterling note that uses the
accrual method of accounting is generally required to determine interest income received using either of two methods. Under the first method, the dollar value of interest accrued is translated at the average rate for the interest accrual period (or,
with respect to an accrual period that spans two taxable years, the partial period within the taxable year). Under the second method, a US holder can make an election (which must be applied consistently to all debt instruments from year to year and
may not be revoked without the consent of the US Internal Revenue Service) to accrue interest on a senior sterling note at the pounds sterling spot rate on the last day of an interest accrual period or, if the last day of an accrual period is within
five business days of receipt, the spot rate on the date of receipt. A US holder will recognise exchange gain or loss, as the case may be, on the receipt of pounds sterling to the extent that the exchange rate on the date payment is received differs
from the rate applicable to the accrual of that income. This foreign currency gain or loss will generally be treated as ordinary income or loss, and sourced to the United States for foreign tax credit purposes.



Pounds sterling received as interest on the senior sterling notes will have a
tax basis equal to its dollar value at the time the interest payment is received. Gain or loss, if any, realised by a US holder on a sale or other disposition of that foreign currency will be ordinary income or loss and will generally be income from
sources within the United States for foreign tax credit purposes.



Original issue discount on the senior discount dollar notes. For the reasons set forth below, the senior discount dollar notes will be considered to have been issued with original issue discount (OID). OID arises when the
stated redemption price at maturity of a debt instrument exceeds its issue price (as defined above). For this purpose, the stated redemption price at maturity will equal the stated principal and the total amount of interest
provided for over the term of the notes other than qualified stated interest (which is defined as interest that is unconditionally payable at least annually throughout the term of the debt instrument). Because none of the interest
provided for under the terms of the senior discount dollar notes is unconditionally payable at least annually, all of the interest on the senior discount dollar notes is added to the stated redemption price at maturity. Consequently, the senior
discount dollar notes will be considered to have been issued with OID equal to the difference between the price at which a substantial amount of the senior discount dollar notes were sold to the public and the stated principal due on those notes
plus the sum of all of the interest payments provided for in the senior discount dollar notes.



Each US holder of a senior discount dollar note will generally be required to accrue and include OID in income on an annual basis in advance of the receipt of cash attributable to such income, whether such US holder
uses the cash or accrual method of accounting. The amount of OID that must be included in gross income for the taxable year will equal the sum of the daily portions of OID for each day of the taxable year on which the US holder held the
senior discount dollar note. The daily portion of OID required to be included in a US holders gross income in a taxable year is determined under a constant yield to maturity method by allocating to each day during the taxable year on which the
US holder holds the senior discount dollar note a ratable portion of the OID on the note attributable to the accrual period (i.e. the interval between compounding dates) in which such day is included. The amount of OID allocable to each accrual
period will equal the product of the adjusted issue price of the senior discount dollar note at the beginning of the accrual period (i.e. the original issue price plus previously accrued OID minus previous cash payments) multiplied by the yield to
maturity of the note (properly adjusted for the length of the accrual period). Finally, the yield to maturity of a senior discount dollar note is that discount rate which, when used in computing the present value of all principal and
stated interest payments to be made under the senior discount dollar note, produces an amount equal to the issue price of that senior discount dollar note. The amount of OID included in income by a US holder will be treated as interest income.



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Additional Amounts and Special Interest



We believe the likelihood that the issuer will pay additional amounts or special interest is remote or incidental (within
the meaning of the applicable US Treasury regulations). In any event, a US holder will be required to treat the gross amount of any Additional Amounts or Special Interest as ordinary interest income at the time such amount is received or accrued in
accordance with such US holders method of accounting for tax purposes. Consequently, the amount a US holder will include in gross income with respect to a note could exceed the amount includible by the US holder as stated interest.



Withholding Taxes and Foreign Tax Credit



Any UK taxes withheld and not refunded to a US holder may be eligible for
credit against that holders US federal income tax liability, subject to generally applicable limitations and conditions, including that the U.S. holder claim any applicable treaty benefits. Alternatively, those taxes are eligible for deduction
in computing the US holders taxable income. Stated interest, OID, Additional Amounts and Special Interest will constitute foreign source income for US foreign tax credit purposes. The income will generally constitute passive income
for US foreign tax credit purposes, unless the rate that applies to the US holder is 5% or more, in which case the income generally will constitute high withholding tax interest. Recently enacted legislation eliminates the high
withholding tax interest category for taxable years beginning after December 31, 2006. For such years, the foreign tax credit limitation categories are limited to passive income and general income. A US holder will not be
allowed to claim foreign tax credits (but would instead be allowed a deduction) for foreign taxes imposed on income with respect to the notes unless the US holder (i) holds such notes for more than 15 days during the 31-day period beginning on the
date that is 15 days before the right to receive payment arises (disregarding any period during which the US holder has a diminished risk of loss with respect to such notes) and (ii) is not under an obligation to make related payments with respect
to positions in substantially similar or related property. The calculation of foreign tax credits involves the application of complex rules that depend on a US holders particular circumstances. Accordingly, investors are urged to consult their
tax advisors regarding their ability to claim a credit for any foreign withholding taxes paid under the notes.



Dispositions of Notes



Senior dollar notes and senior discount dollar notes. Unless a non-recognition provision applies, a US holder will generally recognise gain or loss on the sale, exchange, repayment or other disposition of a senior dollar note or a
senior discount dollar note equal to the difference between:



| |  |  | the amount of cash received plus the fair market value of any property received on the sale, exchange, repayment or other disposition (other than amounts attributable to accrued
interest, which will be taxable as ordinary interest income); and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the US holders adjusted tax basis in the note.
| | - |  | -----------------------------------------------



A US holders adjusted tax basis in a senior dollar note or a senior discount dollar note generally will equal the cost of the note to the US holder
(net of accrued interest), and increased by amounts includible in income as OID. Because the senior dollar notes and senior discount dollar notes are held as a capital asset, such gain or loss will generally constitute capital gain or loss and will
be long-term capital gain or loss if the notes are held for longer than one year. If the US holder is an individual, any capital gain generally will be subject to US federal income tax at preferential rates if specified minimum holding periods are
met. The deductibility of capital losses is subject to certain limitations. Any gain recognised by a US holder on the sale, exchange, repayment or other disposition of a senior dollar note or a senior discount dollar note will generally be treated
as US source income for purposes of computing the US foreign tax credit limitation. Any loss recognised by a US holder on the sale, exchange, repayment or other disposition of a senior dollar note or a senior discount dollar note generally will be
treated as US source loss.



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Senior sterling notes.Gain or loss recognised by a US holder on the sale, exchange, repayment or
other disposition of a senior sterling note will generally be computed in the same way as gain or loss on the sale, exchange, repayment or other disposition of a senior dollar note. For this purpose, however, the cost of a senior sterling note to a
US holder will be the dollar value of the pound sterling purchase price, translated at the spot rate of the pound sterling on the date of purchase (or, in some cases, on the settlement date). The conversion of dollars into pounds sterling and the
immediate use of those pounds sterling to purchase a senior sterling note generally will not result in a taxable gain or loss to the US holder. A US holder will have a tax basis in any pounds sterling received on the sale, exchange, repayment or
other disposition of a senior sterling note equal to the dollar value of the pound sterling on the date of receipt.



The holding period for a sterling senior note, as well as the source of gain or loss recognised on the sale, exchange, repayment or other disposition of
such a note, generally will be the same as for a senior dollar note. However, upon the sale, exchange, repayment or other disposition of a senior sterling note, the foreign currency amount realised will be considered first to be the payment of
accrued but unpaid interest (on which exchange gain or loss is recognised as described above), then as accrued but unpaid original issue discount (on which exchange gain or loss is recognised as described above) and finally as a payment of
principal. With respect to such payment of principal, (i) gain or loss is computed in the foreign currency and translated on the date of sale, exchange, repayment or other disposition and (ii) exchange gain or loss is separately computed on the
foreign currency amount of the purchase price. A US holder will recognise exchange gain or loss measured by the difference between the currency exchange rate on the date of sale, exchange, repayment or other disposition and the exchange rate on the
date that the senior sterling note was acquired. Exchange gain or loss computed on accrued interest and principal is recognised, however, only to the extent of total gain or loss on the transaction. For purposes of determining the total gain or loss
on the transaction, a US holders tax basis in the note will generally equal the dollar cost of the note (as described above), increased by the dollar amounts includible in income as accrued interest or OID and reduced by the dollar amount of
any payments other than payments of qualified stated interest. Exchange gain or loss is generally treated as US source income or loss.



Information Reporting and Backup Withholding



The amount of interest (including OID) and principal paid or accrued on the notes to a US holder (other than corporations and other exempt recipients)
will be reported to the US Internal Revenue Service. Under the Internal Revenue Code, a US holder of a note may be subject, under certain circumstances, to backup withholding currently at a rate of 28% with respect to interest payments
thereon or the gross proceeds from a sale, exchange or other disposition (including repayment of principal) thereof. Backup withholding generally applies only if the US holder:



| |  |  | fails to furnish his or her social security or other taxpayer identification number certified under penalties of perjury within a reasonable time after the request therefore;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | furnishes an incorrect taxpayer identification number;
| | - |  | ------------------------------------------------------



| |  |  | fails to report properly interest or OID; or
| | - |  | --------------------------------------------



| |  |  | fails, under certain circumstances, to provide a certified statement, signed under penalty of perjury, that the taxpayer identification number provided is the correct number and
that such US holder is not subject to backup withholding.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A US holder of notes who does not provide his, her or its correct taxpayer identification number may be subject to penalties imposed by the US Internal Revenue Service. Any amount withheld from a payment to a US holder under backup
withholding rules will be refunded or allowed as a credit against such holders US federal income tax liability, provided that the required information is furnished to the US Internal Revenue Service. A US holder of a note should consult their
tax adviser as to their qualification for exemption from backup withholding and the procedure for obtaining such an exemption.



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United Kingdom



UK Tax Consequences



The following summary describes certain UK tax consequences of the ownership of the Notes but does not purport to be comprehensive. Except where expressly
stated, the summary relates only to the position of those persons who are the absolute beneficial owners of their Notes and the interest thereon and may not apply to special situations, such as those of dealers in securities. It is not intended to
apply to persons other than companies. Furthermore, the discussion below is generally based upon provisions of UK tax law and UK Inland Revenue practice as at the date hereof. These provisions may be repeated, revoked or modified (possibly with
retrospective effect) so as to result in UK tax consequences different from those described below.



Persons considering the purchase, ownership or disposition of the Notes should consult their own tax advisers concerning UK tax consequences in the
light of their particular situations as well as any consequences arising under the law of any other relevant tax jurisdiction. No representations with respect to the tax consequences to any particular holder of Notes are made hereby.



Interest on the Notes



The notes will constitute quoted Eurobonds within the meaning of
section 349(4) of the UK Income and Corporation Taxes Act 1988 (ICTA) provided they are listed on a recognised stock exchange within the meaning of section 841 of ICTA. The Luxembourg Stock Exchange is currently a recognised
stock exchange for these purposes. Accordingly, once the Notes are listed on the Luxembourg Stock Exchange (and provided they remain so listed), payments of interest on the Notes may be made without withholding on account of UK income tax.



Interest on the Notes constitutes UK source income for UK tax
purposes and, as such, may be subject to income tax by direct assessment even where paid without withholding except in the hands of a holder who is exempt from UK income tax under the terms of an applicable double taxation treaty or otherwise.
However, interest on a UK source received without deduction or withholding on account of UK tax will not be chargeable to UK tax in the hands of a holder of Notes who is not resident for tax purposes in the United Kingdom unless that holder of Notes
carries on a trade, profession or vocation in the United Kingdom through a UK branch or agency in connection with which the interest is received or to which the Notes are attributable. There are exemptions for interest received by certain categories
of agents (such as brokers and investment managers).



Accrued Income
Scheme-Individual Noteholders



For the purposes of the
provisions known as the Accrued Income Scheme, a transfer of a Note by a holder who is resident or ordinarily resident in the United Kingdom or a holder who carries on a trade in the United Kingdom through a branch or agency to which the
Note is attributable, may give rise to a charge to tax on income in respect of an amount as is just and reasonable.



Taxation of Chargeable Gains-Individual Noteholders



For the purposes of United Kingdom taxation of chargeable gains, Notes which are denominated in Sterling are expected to be treated as qualifying
corporate bonds by the UK Revenue and Customs. Accordingly, for UK chargeable gains tax purposes, no chargeable gain or allowable loss should arise on the disposal of Notes which are so denominated.



Notes which are denominated in Euro will not be qualifying corporate
bonds for the purposes of United Kingdom taxation of chargeable gains. Accordingly, a holder of Notes which are so denominated who is resident or ordinarily resident in the United Kingdom, or who carries on a trade in the United Kingdom to
which the holding of the Notes is attributable, may realise a chargeable gain or allowable loss on the disposal of their holding of Notes, including a gain or loss which is attributable to currency exchange differences.



UK Corporation Tax Payers



In respect of holders of Notes which are within the charge to UK corporation
tax will not be subject to the methods of taxation set out in Accrued Income SchemeIndividual Noteholders. Any returns, profits or gains (including interest and discount) arising from the notes or any fluctuation in their value
(whether attributable to currency fluctations or otherwise) will generally be charged to tax as income in each accounting period on a basis reflecting the treatment in the statutory accounts of such holders, calculated in accordance with the
holders authorised accounting method.



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Stamp Duty and Stamp Duty Reserve Tax



No stamp duty or stamp duty reserve tax is payable on the issue or transfer of the Notes.



Prospective purchasers of the Notes who are in any doubt as to their tax position or who
may be subject to tax in other jurisdictions should consult their own tax advisers.



F. Dividends and Paying Agents



Not
applicable.



G. Statement by Experts



Not applicable.



H. Documents on Display



We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the Exchange
Act), applicable to foreign private issuers and fulfill the obligation with respect to such requirements by filing reports with the United States Securities and Exchange Commission (the SEC). You may read and copy any document we
file with the SEC without charge at the SECs public reference room at 450 Fifth Street, N.W., Washington, DC 20549. Copies of such material may be obtained by mail from the Public Reference Branch of the SEC at such address, at prescribed
rates. Please call the SEC at l-800-SEC-0330 for further information on the public reference room.



As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our
officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not be required under the Exchange Act to file
periodic reports and financial statements with the SEC as frequently or as promptly as US companies whose securities are registered under the Exchange Act. A copy of each report submitted in accordance with applicable US securities laws is available
for public review at our principal executive offices.



I. Subsidiary
Information



Not applicable.



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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Market-related Risks



Interest is payable under our senior credit facilities at a variable rate. We could, therefore, be adversely affected if interest rates were to rise significantly. Under the senior credit facilities agreement dated 8 July 2003 we were
required to have fixed or capped interest on at least 50% of net interest payments during the 21 months following each month end. However, this requirement ceased once net debt fell below 3.5 times EBITDA, as defined in the credit facilities
agreement. Even so, we have fixed interest on 50% of the indebtedness under the senior credit facilities using interest rate swaps over the period to March 2007, with a review of this strategy on a quarterly basis. When combined with the fixed rate
senior notes, we have fixed our interest rates on approximately 65% of our total gross debt until March 2007, falling to approximately 32% thereafter. At 31 March 2005, we had £2.9 million net unrecognised gains on these instruments that will
be recognised when the interest is paid.



All of these
instruments are entered into for hedging purposes and, under UK GAAP, gains and losses on these instruments are deferred and only recognised in income when the underlying transaction is recorded. Such instruments have not been designated and do not
qualify for hedge accounting under the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards No 133 Accounting for Derivative Instruments and Hedging Activities for US GAAP purposes.



All significant cash inflows and outflows associated with our
operations in the United Kingdom are denominated in pounds sterling, and all significant cash inflows and outflows associated with our operations in the United States are denominated in US dollars. However, our financial statements are presented in
pounds sterling, and changes in the exchange rate between the US dollar and pounds sterling will affect the translation of the results of our operations into pounds sterling. The composition of our debt partially hedges exchange rate fluctuations,
because 41.9% of our net third-party debt and 35.7% of our net third-party interest expense are denominated in US dollars, thereby reducing our US EBITDA exposure by approximately 18.5%. We do not currently intend to use derivative instruments to
hedge any foreign exchange translation rate risk relating to US dollar-denominated notes or other US financial liabilities, although we will continue to review this practice.



At 31 March 2005, we had £463.5 million of third-party borrowings denominated in US dollars net of deferred financing
fees, and £851.0 million of third-party borrowings, also net of deferred financing fees, that accrue interest at variable rates, before taking into account hedging arrangements. The following examples illustrate the effect certain changes in
foreign exchange rates and interest rates would have had in the 2005 financial year. The following discussion of estimated amounts generated from the sensitivity analysis is forward-looking and involves risks and uncertainties. If the amount or mix
of long-term borrowings is different, then the following examples may not be indicative of the effects of changing exchange rates and interest rates.



If the variable interest rates had been a full percentage point higher or lower with no change in foreign exchange rates, then the interest payable with
respect to our variable-rate indebtedness in the 2005 financial year would have been £3.0 million higher or lower, taking into account our hedging arrangements, or £8.5 million higher or lower without taking into account hedging
arrangements.



If the average exchange rate of the US dollar as
measured against the pound sterling had been 10% higher or lower, with no change in variable rates of interest, then the interest payable in the 2005 financial year would have been approximately £3.8 million lower or £4.6 million higher,
respectively.



Our exposure to interest rate fluctuations will
depend on the amount of variable-rate indebtedness that we have outstanding and the extent of any hedging arrangements that we put in place. Similarly, our exposure to currency fluctuations will depend on the mix of US dollar and pounds
sterling-denominated indebtedness and the extent of any hedging arrangements.



For further information on financial instruments and our risk management see note 17 of the notes to the financial statements.



ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



Not applicable.



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PART II



ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



None.



ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS



None.



ITEM 15. CONTROLS AND PROCEDURES



Evaluation
of Disclosure Controls and Procedures



Based on their
review as of the end of the period covered by this annual report of the Groups disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer have concluded that the Groups current disclosure controls and
procedures are effective to ensure that material information regarding the Group is recorded, processed, summarised and reported in a timely manner and that the information is accumulated and communicated to management to allow timely decisions
regarding required disclosure.



Change in Internal Control over Financial
Reporting



During the period covered by this annual
report, there were no changes in the Groups internal control over financial reporting or in other factors that could significantly affect this control that materially affected, or that are reasonably likely to materially affect, the
Groups internal control over financial reporting. Nor has management identified any material weaknesses in the Groups internal control over financial reporting.



ITEM 16. [RESERVED]



ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT



Our board of directors has determined that John Coghlan is an audit committee financial expert as defined in Item 16A of the SECs Form 20-F.



ITEM 16B. CODE OF ETHICS



We have
adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. Our finance code of ethics was filed as Exhibit 14.1 to our 2004 annual
report.



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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES



The following fees were paid or are payable to the Yell Groups auditors for the years ended 31 March 2004 and 31 March 2005:



|                             |  |                     |  |     
|---------------------------- |  | ------------------- |  | ----
|                             |  | Year ended 31 March
|                             |  | 2004                |  | 2005
|                             |  | £                   |  | £   
|Audit fees                   |  | 0.6                 |  | 0.6 
|Audit-related fees           |  | 0.2                 |  | 0.3 
|Tax fees                     |  | 1.1                 |  | 0.5 
|All other fees(a)            |  | 4.3                 |  | 0.3 
|Total auditors remuneration |  | 6.2                 |  | 1.7 

---

|(a) | Fees in relation to accounting and tax advice of our parent companys global offer in the year ended 31 March 2004 (£3.6 million) were approved and incurred prior to the
parent companys flotation. Certain other fees in relation to due diligence totalling £0.5 million were approved and incurred in the year ended 31 March 2004 prior to our parent companys flotation.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES



Not applicable.



ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASER



Not applicable.



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PART III



ITEM 17. FINANCIAL STATEMENTS



We
have responded to Item 18. Financial Statements in lieu of this item.



ITEM 18. FINANCIAL STATEMENTS



Our consolidated financial statements, together with the reports thereon by the independent auditors, are filed as part of this annual report as pages F-2 to F-57. An index to these pages is given on page F-1.



ITEM 19. EXHIBITS



The exhibits
filed with or incorporated by reference into this annual report are listed below.



1.1 Deed of Incorporation of Yell Finance B.V. (incorporated herein by reference to Exhibit 3.1 to Yell Finance B.V.s Registration Statement on Form F-4 filed with the United States Securities and Exchange Commission on August 29,
2001, declared effective on August 30, 2001 (the Exchange Offer Registration Statement)).*



1.2 Articles of Association of Yell Finance B.V. (incorporated herein by reference to Exhibit 3.2 to the Exchange Offer Registration Statement).*



1.3 Memorandum of Association of Yellow Pages Limited (incorporated herein by reference to Exhibit 3.3 to the Exchange Offer Registration
Statement).*



1.4 Articles of Association of Yellow Pages Limited (incorporated
herein by reference to Exhibit 3.4 to the Exchange Offer Registration Statement).*



2.1 Indenture relating to 103/4% Senior Sterling
Notes due 2011, dated August 6, 2001, between Yell Finance B.V., Yellow Pages Limited, as Guarantor, and The Bank of New York, as Trustee (incorporated herein by reference to Exhibit 4.1 to the Exchange Offer Registration Statement).*



2.2 Indenture relating to 103/4% Senior Dollar Notes due 2011, dated August 6, 2001, between Yell Finance B.V., Yellow Pages Limited, as
Guarantor, and The Bank of New York, as Trustee (incorporated herein by reference to Exhibit 4.2 to the Exchange Offer Registration Statement).*



2.3 Indenture relating to 131/2% Senior Discount Dollar Notes due 2011, dated August 6, 2001, between Yell Finance B.V., Yellow Pages Limited, as Guarantor, and The Bank of New York, as Trustee (incorporated herein by reference to
Exhibit 4.3 to the Exchange Offer Registration Statement).*



2.4
Registration Rights Agreement, dated August 6, 2001, between Yell Finance B.V. and Yellow Pages Limited, as Guarantor, and Merrill Lynch International, Deutsche Bank AG London, CIBC World Markets plc, and the other Initial Purchasers as listed on
Schedule A of the Purchase Agreement, as Initial Purchasers (incorporated herein by reference to Exhibit 4.4 to the Exchange Offer Registration Statement).*



2.5 Subordination Agreement, dated August 6, 2001, between Yell Finance B.V., Yell Group Limited, as Parent and The Bank of New York, as Trustee (incorporated herein by
reference to Exhibit 4.5 to the Exchange Offer Registration Statement).*



2.6
Intercreditor Deed, dated June 22, 2001 (as amended on July 11, 2001, March 13, 2002, April 16, 2002, May 31, 2002 and November 11, 2002), with, amongst others, Yell Group plc and certain of its subsidiaries as Obligors, Yellow Pages Limited as the
Guarantor, Yell Finance B.V. as the Issuer of the High Yield Notes. Discount High Yield Notes and Further High Yield Debt, the Institutions named therein as the Senior Finance Parties and the funds managed or advised by Apax Partners and Hicks Muse
(the Intercreditor Deed). (The Intercreditor Deed and amendment prior to November 11, 2002 incorporated herein by reference to Exhibit 2.6 to Yell Finance B.V.s annual report on Form 20-F filed with the United States Securities and Exchange
Commission on July 19, 2002 (the 2002 Annual Report* and the amendment of November 11, 2002 incorporated herein by reference to Exhibit 2.6 to Yell Finance B.V.s annual report on Form 20-F filed with the United States Securities
and Exchange Commision on June 8, 2003 the 2003 Annual Report).*



2.7 Form of Sterling Note (incorporated herein by reference to Exhibit 4.7 to the Exchange Offer Registration Statement).*



2.8 Form of Dollar Note (incorporated herein by reference to Exhibit 4.8 to the Exchange Offer Registration Statement).*



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##### Table of Contents

2.9 Form of Discount Dollar Note (incorporated herein by reference to Exhibit 4.9 to the Exchange Offer Registration
Statement).*



2.10 Form of Guarantee (included in Exhibits 2.7, 2.8 and 2.9)
(incorporated herein by reference to Exhibits 4.7, 4.8 and 4.9 to the Exchange Offer Registration Statement).*



2.11 First Supplemental Indenture dated January 18, 2002, to the Indenture relating to 103/4% Senior Sterling Notes due 2011 incorporated herein by reference to Exhibit 4.1 to the Exchange Offer Registration Statement (incorporated herein by reference to Exhibit 2.11 to the 2002 Annual Report).*



2.12 First Supplemental Indenture dated January 18, 2002, to the Indenture relating to
103/4% Senior Dollar Notes due 2011 incorporated herein by reference to Exhibit 4.2 to the Exchange Offer
Registration Statement (incorporated herein by reference to Exhibit 2.12 to the 2002 Annual Report).*



2.13 First Supplemental Indenture dated January 18, 2002, to the Indenture relating to 131/2% Senior Discount Dollar Notes due 2011 incorporated herein by reference to Exhibit 4.3 to the Exchange Offer Registration Statement (incorporated herein by reference to Exhibit 2.13 to the 2002 Annual Report).*



4.1 Senior Facilities Agreement dated 8 July 2003 (as amended and restated on 12 August 2003
and as further amended and restated on 26 August 2003) among, inter alios, Yell Group plc, the subsidiaries identified therein as borrowers and guarantors, ABN AMRO Bank N.V. and HSBC Bank plc as joint mandated lead arrangers, the financial
institutions named therein as lenders and HSBC Bank plc as facility agent and security trustee (incorporated herein by reference to Yell Finance B.V.s annual report on Form 20-F filed with the United States Securities and Exchange Commission
on June 8, 2004 (the 2004 Annual Report)).*



4.2 Security
Agreement, dated June 22, 2001, between Yasmin Two (US) Inc. (now known as Yellow Book Holdings, Inc.), Yasmin One (US), Inc. (now known as Yellow Book Group Inc.), Yellow Book USA, Inc., Yellow Book GP, LLC, Yellow Book of Florida Directories,
L.P., Yellow Book of Illinois, LLC, Yellow Book Mid-Atlantic, L.P., Yellow Book of New York, Inc., Yellow Book Southern Directories, LLC, Yellow Book of Pennsylvania, Inc., and Yellow Book Delaware Inc. (incorporated herein by reference to Exhibit
10.2 to the Exchange Offer Registration Statement).*



4.3 Agreement, dated
August 6, 2001 as amended and restated on April 6, 2002, between Yell Group Limited and Yell Finance B.V. (incorporated herein by reference to Exhibit 10.3 to the Exchange Offer Registration Statement) (incorporated herein by reference to Exhibit
4.3 to the 2002 Annual Report).*



4.4 Yellow Book Last Acquisition Agreement
dated January 19, 2002 among McLeodUSA Inc. as Parent, Yell Group Limited (now Yell Group plc) and McLeodUSA Holdings, Inc as Seller (incorporated herein by reference to Exhibit 4.8 to the 2002 Annual Report).*



4.5 McLeod Operating Agreement dated April 16, 2002 (as amended and restated April 28, 2003)
among Yell Group Limited (now Yell Group plc), McLeodUSA Inc. and McLeodUSA Telecommunications Services, Inc (incorporated herein by reference to Exhibit 4.9 to the 2002 Annual Report)* and the amendment and restatement of April 28, 2003
(incorporated herewith by reference to Exhibit 4.5 to the 2004 Annual Report).*



4.6 Directors Service Contract, dated 10 July 2003, between John Condron and Yell Group plc (incorporated herein by reference to Exhibit 4.6 to the 2004 Annual Report).*



4.7 Directors Service Contract, dated 10 July 2003, between John Davis and Yell Group plc (incorporated herein by reference to Exhibit
4.7 to the 2004 AnnualReport).**



4.8 Stock Sale Agreement, dated as of
December 10, 2002, by and among NDC Holdings II, Inc., The Stockholders of NDC Holdings II, Inc., Three Cities Research, Inc., as Sellers Representative and Yellow Book USA, Inc. (incorporated herein by reference to Exhibit 4.8 to the 2003
Annual Report).*



4.9 Agreement and Plan of Merger by and among Yellow Book
USA, Inc, Tapestry Acquisition, LLC, Transwestern Holdings, L.P., TWP REP Co, LLL, as Representative, and Yell Group Plc, dated May 16, 2005.**



7.1 Statement Explaining Calculation of Ratio of Earnings to Fixed Charges.**



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##### Table of Contents

8.1 Subsidiaries of Yell Finance B.V. (please see list of principal subsidiaries under Item 4.C. Information on the
CompanyOrganizational Structure of this annual report on Form 20-F on page 37).



12.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section 302 of the Sarbanes-Oxley Act of 2002 of John Condron dated June 13, 2005.**



12.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section 302 of the Sarbanes-Oxley Act of 2002 of John Davis dated June
13, 2005.**



13.1 Chief Executive Officer certification, dated June 13, 2005,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**



13.2 Chief
Financial Officer certification, dated June 13, 2005, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**



14.1 Code of Ethics for the Chief Executive and Senior Financial Officers (incorporated herein by reference to Exhibit 14.1 to the 2004 Annual Report).*

---

|* | Incorporated by reference.
|- | --------------------------

|** | Filed herewith.
|-- | ---------------



---

##### Table of Contents

SIGNATURES



Each registrant hereby
certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this annual report on its behalf.



YELL FINANCE B.V.By:

/s/ JOHN CONDRONJohn CondronDirector and Chief Executive OfficerYELL FINANCE B.V.By:

/s/ JOHN DAVISJohn DavisDirector and Chief Financial OfficerYELLOW PAGES LIMITEDBy:

/s/ JOHN CONDRONJohn CondronDirector and Chief Executive OfficerYELLOW PAGES LIMITEDBy:

/s/ JOHN DAVISJohn DavisDirector and Chief Financial Officer




Date: June 13,
2005



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##### Table of Contents

INDEX TO FINANCIAL STATEMENTS



|                                                                                       |  |     
|-------------------------------------------------------------------------------------- |  | ----
|                                                                                       |  | Page
|YELL FINANCE B.V. AND ITS SUBSIDIARIES                                                 |  |     
|Statement of Managements Responsibilities and Report of Independent Auditors          |  | F-2 
|                                                                                       | 
|Audited Consolidated Financial Statements                                              |  |     
|Consolidated Profit and Loss Accounts for the years ended 31 March 2003, 2004 and 2005 |  | F-3 
|Consolidated Cash Flow Statements for the years ended 31 March 2003, 2004 and 2005     |  | F-4 
|Consolidated Balance Sheets at 31 March 2004 and 2005                                  |  | F-5 
|Notes to the Financial Statements                                                      |  | F-6 



F-1



---

##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



STATEMENT OF MANAGEMENTS RESPONSIBILITIES



The following statement, which should be read in conjunction with the Reports of Independent Auditors set out below, is made with a view to distinguishing for shareholders the respective responsibilities of the Management and of the
Independent Auditors in relation to the consolidated financial statements.



It is the responsibility of the Management to prepare financial statements for each period which present fairly the state of affairs of Yell Finance B.V. and its subsidiaries as at the end of the financial period and
the profit or loss for that period. The Management confirm that applicable accounting standards have been followed, and that suitable accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, have
been used in the preparation of the financial statements. They are also responsible for maintaining adequate accounting records, for safeguarding the assets of Yell Finance B.V. and its subsidiaries, and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.



REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and
Shareholders of Yell Finance B.V. and its subsidiaries.



We
have audited the accompanying consolidated balance sheets of Yell Finance B.V. and its subsidiaries at 31 March 2004 and 2005 and the related consolidated profit and loss accounts, statements of total recognised gains and losses and cash flow
statements for the years ended 31 March 2003, 2004 and 2005, all expressed in pounds sterling. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial
statements based on our audits.



We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statements presentation. We believe our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of
Yell Finance B.V. and its subsidiaries at 31 March 2004 and 2005 and the consolidated results of its operations and its cash flows for the years ended 31 March 2003, 2004 and 2005 in conformity with accounting principles generally accepted in the
United Kingdom.



Accounting principles generally accepted in
the United Kingdom vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in note 28 to the financial
statements.



PricewaterhouseCoopers LLP

London, England

6 June 2005



F-2



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



CONSOLIDATED PROFIT AND LOSS ACCOUNTS



Continuing Operations



|                                                            |  |               |  |                     |   |  |         |   |  |         |  
|----------------------------------------------------------- |  | ------------- |  | ------------------- | - |  | ------- | - |  | ------- | -
|                                                            |  |               |  | Year ended 31 March |  
|                                                            |  | Notes         |  | 2003                |   |  | 2004    |   |  | 2005    |  
|                                                            |  |               |  | £                   |   |  | £       |   |  | £       |  
|                                                            |  |               |  | (in millions)       |  
|Turnover                                                    |  | 2             |  | 1,114.0             |   |  | 1,186.9 |   |  | 1,285.3 |  
|Cost of sales                                               |  |               |  | (509.9              | ) |  | (552.9  | ) |  | (592.3  | )
|                                                            |  |               |  |                    
|Gross profit                                                |  |               |  | 604.1               |   |  | 634.0   |   |  | 693.0   |  
|Distribution costs                                          |  |               |  | (36.0               | ) |  | (34.5   | ) |  | (38.3   | )
|Administrative expenses                                     |  |               |  |                     |   |  |         |   |  |         |  
|Ongoing activities                                          |  |               |  | (369.7              | ) |  | (359.0  | ) |  | (373.5  | )
|Exceptional items                                           |  | 4             |  | (15.0               | ) |  | (90.1   | ) |  | (36.5   | )
|                                                            |  |               |  | (384.7              | ) |  | (449.1  | ) |  | (410.0  | )
|Operating profit                                            |  | 2,3           |  | 183.4               |   |  | 150.4   |   |  | 244.7   |  
|Net interest payable                                        |  |               |  |                     |   |  |         |   |  |         |  
|Ongoing activities                                          |  |               |  | (236.6              | ) |  | (136.1  | ) |  | (125.0  | )
|Exceptional items                                           |  | 4             |  |                    |   |  | (58.4   | ) |  |        |  
|                                                            |  | 6             |  | (236.6              | ) |  | (194.5  | ) |  | (125.0  | )
|(Loss) profit on ordinary activities before taxation        |  |               |  | (53.2               | ) |  | (44.1   | ) |  | 119.7   |  
|Tax credit (charge) on (loss) profit on ordinary activities |  |               |  |                     |   |  |         |   |  |         |  
|Before exceptional items                                    |  |               |  | 10.3                |   |  | (44.2   | ) |  | (63.0   | )
|On exceptional items                                        |  | 4             |  | 2.3                 |   |  | 37.2    |   |  | 13.7    |  
|                                                            |  |               |  |                    
|Taxation                                                    |  | 7             |  | 12.6                |   |  | (7.0    | ) |  | (49.3   | )
|                                                            |  |               |  |                    
|(Loss) profit for the financial year                        |  | 20            |  | (40.6               | ) |  | (51.1   | ) |  | 70.4    |  
|                                                           
|STATEMENTS OF TOTAL RECOGNISED GAINS AND LOSSES             | 
|                                                            |  |               |  | Year ended 31 March |  
|                                                            |  | Notes         |  | 2003                |   |  | 2004    |   |  | 2005    |  
|                                                            |  |               |  | £                   |   |  | £       |   |  | £       |  
|                                                            |  | (in millions) | 
|(Loss) profit for the financial period                      |  | 20            |  | (40.6               | ) |  | (51.1   | ) |  | 70.4    |  
|Currency movements                                          |  | 20            |  | (34.0               | ) |  | (65.0   | ) |  | (13.4   | )
|                                                            |  |               |  |                    
|Total recognised gains (losses) for the financial period    |  |               |  | (74.6               | ) |  | (116.1  | ) |  | 57.0    |  



The accompanying notes
form an integral part of these financial statements.



F-3



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



CONSOLIDATED CASH FLOW STATEMENTS



|                                                                      |  |       |  |                     |   |  |          |   |  |        |  
|--------------------------------------------------------------------- |  | ----- |  | ------------------- | - |  | -------- | - |  | ------ | -
|                                                                      |  |       |  | Year ended 31 March |  
|                                                                      |  | Notes |  | 2003                |   |  | 2004     |   |  | 2005   |  
|                                                                      |  |       |  | £                   |   |  | £        |   |  | £      |  
|                                                                      |  |       |  | (in millions)       |  
|Net cash inflow from operating activities                             |  |       |  | 309.1               |   |  | 253.5    |   |  | 355.1  |  
|                                                                      |  |       |  |                    
|Returns on investments and servicing of finance                       |  |       |  |                     |   |  |          |   |  |        |  
|Net interest paid                                                     |  |       |  | (139.5              | ) |  | (141.8   | ) |  | (145.7 | )
|Redemption premium paid                                               |  |       |  |                    |   |  | (19.7    | ) |  |       |  
|Finance fees paid                                                     |  |       |  | (16.1               | ) |  | (16.4    | ) |  |       |  
|                                                                      |  |       |  |                    
|Net cash outflow from returns on investments and servicing of finance |  |       |  | (155.6              | ) |  | (177.9   | ) |  | (145.7 | )
|                                                                      |  |       |  |                    
|Taxation                                                              |  |       |  | (9.7                | ) |  | (13.7    | ) |  | (27.8  | )
|                                                                      |  |       |  |                    
|Capital expenditure and financial investment                          |  |       |  |                     |   |  |          |   |  |        |  
|Purchase of tangible fixed assets                                     |  |       |  | (16.0               | ) |  | (24.5    | ) |  | (24.0  | )
|Purchase of shares in parent company                                  |  |       |  |                    |   |  | (5.8     | ) |  | (6.6   | )
|                                                                      |  |       |  |                    
|Net cash outflow for capital expenditure and financial investment     |  |       |  | (16.0               | ) |  | (30.3    | ) |  | (30.6  | )
|                                                                      |  |       |  |                    
|Acquisitions                                                          |  |       |  |                     |   |  |          |   |  |        |  
|Purchase of subsidiary undertakings, net of cash acquired             |  | 8     |  | (470.9              | ) |  | (108.9   | ) |  | (31.8  | )
|                                                                      |  |       |  |                    
|Net cash outflow for acquisitions                                     |  |       |  | (470.9              | ) |  | (108.9   | ) |  | (31.8  | )
|                                                                      |  |       |  |                    
|Net cash (outflow) inflow before financing                            |  |       |  | (343.1              | ) |  | (77.3    | ) |  | 119.2  |  
|                                                                      |  |       |  |                    
|Financing                                                             |  |       |  |                     |   |  |          |   |  |        |  
|Issue of ordinary share capital                                       |  | 20    |  | 0.1                 |   |  | 304.4    |   |  |       |  
|New loans issued                                                      |  |       |  | 485.7               |   |  | 1,082.5  |   |  | 2.5    |  
|Borrowings repaid                                                     |  |       |  | (211.9              | ) |  | (1,318.4 | ) |  | (85.0  | )
|                                                                      |  |       |  |                    
|Net cash inflow (outflow) from financing                              |  |       |  | 273.9               |   |  | 68.5     |   |  | (82.5  | )
|                                                                      |  |       |  |                    
|(Decrease) increase in net cash in the period                         |  |       |  | (69.2               | ) |  | (8.8     | ) |  | 36.7   |  
|                                                                      |  |       |  |                    
|(Increase) decrease in net debt resulting from cash flows             |  | 9     |  | (326.9              | ) |  | 162.9    |   |  | 119.2  |  



RECONCILIATION OF
OPERATING PROFIT TO NET CASH INFLOW FROM



OPERATING
ACTIVITIES



|                                          |  |                     |   |  |       |   |  |       |  
|----------------------------------------- |  | ------------------- | - |  | ----- | - |  | ----- | -
|                                          |  | Year ended 31 March |  
|                                          |  | 2003                |   |  | 2004  |   |  | 2005  |  
|                                          |  | £                   |   |  | £     |   |  | £     |  
|                                          |  | (in millions)       |  
|Total operating profit                    |  | 183.4               |   |  | 150.4 |   |  | 244.7 |  
|Depreciation                              |  | 22.5                |   |  | 22.9  |   |  | 23.0  |  
|Goodwill amortisation                     |  | 98.4                |   |  | 96.7  |   |  | 98.6  |  
|Increase in stocks                        |  | (23.0               | ) |  | (19.5 | ) |  | (23.0 | )
|Increase in debtors                       |  | (35.0               | ) |  | (3.8  | ) |  | (38.4 | )
|Increase (decrease) in creditors          |  | 58.4                |   |  | (3.7  | ) |  | 47.3  |  
|Other                                     |  | 4.4                 |   |  | 10.5  |   |  | 2.9   |  
|                                          |  |                     |  
|Net cash inflow from operating activities |  | 309.1               |   |  | 253.5 |   |  | 355.1 |  



The accompanying notes
form an integral part of these financial statements.



F-4



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS



|                                                              |  |               |  |             |   |  |          |  
|------------------------------------------------------------- |  | ------------- |  | ----------- | - |  | -------- | -
|                                                              |  |               |  | At 31 March |  
|                                                              |  | Notes         |  | 2004        |   |  | 2005     |  
|                                                              |  |               |  | £           |   |  | £        |  
|                                                              |  | (in millions) | 
|Fixed assets                                                  |  |               |  |             |   |  |          |  
|Intangible assets                                             |  | 10            |  | 1,725.3     |   |  | 1,635.0  |  
|Tangible assets                                               |  | 11            |  | 45.9        |   |  | 47.8     |  
|Investment                                                    |  | 12            |  | 7.6         |   |  | 11.8     |  
|                                                              |  |               | 
|Total fixed assets                                            |  |               |  | 1,778.8     |   |  | 1,694.6  |  
|                                                              |  |               | 
|Current assets                                                |  |               |  |             |   |  |          |  
|Stocks                                                        |  | 13            |  | 151.9       |   |  | 172.6    |  
|Debtors                                                       |  | 14            |  | 460.6       |   |  | 478.7    |  
|Cash at bank and in hand                                      |  |               |  | 18.4        |   |  | 53.1     |  
|                                                              |  |               | 
|Total current assets                                          |  |               |  | 630.9       |   |  | 704.4    |  
|                                                              |  |               | 
|Creditors: amounts falling due within one year                |  |               |  |             |   |  |          |  
|Loans and other borrowings                                    |  | 16            |  | (127.7      | ) |  | (150.2   | )
|Other creditors                                               |  | 18            |  | (231.0      | ) |  | (279.1   | )
|                                                              |  |               | 
|Total creditors: amounts falling due within one year          |  |               |  | (358.7      | ) |  | (429.3   | )
|                                                              |  |               | 
|Net current assets                                            |  |               |  | 272.2       |   |  | 275.1    |  
|                                                              |  |               | 
|Total assets less current liabilities                         |  |               |  | 2,051.0     |   |  | 1,969.7  |  
|                                                              |  |               | 
|Creditors: amounts falling due after more than one year       |  |               |  |             |   |  |          |  
|Loans and other borrowings                                    |  | 16            |  | (1,987.1    | ) |  | (1,548.8 | )
|                                                              |  |               | 
|Total creditors: amounts falling due after more than one year |  |               |  | (1,987.1    | ) |  | (1,548.8 | )
|                                                              |  |               | 
|Net assets                                                    |  |               |  | 63.9        |   |  | 420.9    |  
|                                                              |  |               | 
|Capital and reserves                                          |  |               |  |             |   |  |          |  
|Called up share capital                                       |  | 19            |  | 0.1         |   |  | 0.1      |  
|Share premium account                                         |  | 20            |  | 305.4       |   |  | 605.4    |  
|Deficit                                                       |  | 20            |  | (241.6      | ) |  | (184.6   | )
|                                                              |  |               | 
|Equity shareholders funds                                    |  |               |  | 63.9        |   |  | 420.9    |  



The accompanying notes
form an integral part of these financial statements.



F-5



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS



1. Basis of
preparation consolidation, and accounting policies



Basis of
preparation and consolidation



The principal activity
of Yell Finance B.V. and its subsidiaries (Yell Group) is publishing classified advertising directories in the United Kingdom and the United States.



The Yell Group comprises a number of legal entities. The principal entities included within the financial statements are shown below.



Up until 15 July 2003, management regarded funds managed or advised by Apax
Partners & Co. and Hicks, Muse, Tate & Furst Incorporated, which together purchased the Yell Group, as the ultimate controlling parties. On 15 July 2003, Yell Group plc, our parent company, completed raising £433.6 million in gross
proceeds through a global offer of shares to institutional investors in an initial public offering. From that date, Yell Group plc has been the ultimate controlling party of the Group.



Where the financial statements of subsidiary undertakings do not conform with the Yell Groups accounting policies,
appropriate adjustments are made on consolidation in order to present the Yell Group consolidated financial statements on a consistent basis. All companies within the Yell Group during the period of ownership have coterminous financial years. All
transactions between the Yell Groups businesses have been eliminated in the preparation of these consolidated financial statements. The results of companies and businesses acquired during the year are included in the financial information from
their respective dates of acquisition.



Intra-group
transactions, which have been eliminated on consolidation of the Group, have not been disclosed, as permitted by FRS 8 Related Party Disclosures.



The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenditure during the reporting period. Actual results could differ from those estimates. Estimates
are used principally when accounting for provision for doubtful debts, depreciation, employee pension and management incentive schemes and taxes.



Subsidiary undertakings



Brief details of principal subsidiary undertakings at each year end (except where noted), all of which are unlisted, are as follows:



|                           |  |                                |  |                                       |  |                         
|-------------------------- |  | ------------------------------ |  | ------------------------------------- |  | ------------------------
|                           |  | Activity                       |  | Group interest in allotted capital(a) |  | Country of operation(b) 
|Yell Limited               |  | Classified directory publisher |  | 100% ordinary                         |  | United Kingdom          
|Yellow Pages Sales Limited |  | Provision of sales services    |  | 100% ordinary                         |  | United Kingdom          
|Yellow Book USA, Inc.      |  | Classified directory publisher |  | 100% common                           |  | United States of America

---

|(a) | The proportion of voting rights held corresponds to the aggregate interest percentage held by the holding company and subsidiary undertakings, unless otherwise stated.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Incorporated in its country of operation.
|--- | -----------------------------------------



The companies listed above are those that materially affect the amount of profits and assets of the Group. A full list of all of our subsidiary
undertakings at the date of this document is available for inspection at the registered office of our parent company, Yell Group plc.



F-6



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



1. Basis of preparation, consolidation, and accounting policies (continued)



Accounting policies



Accounting convention



The financial statements have been prepared under the historical cost convention, in accordance with applicable accounting
standards in the United Kingdom and the Companies Act 1985. These differ significantly from those in the United States and a reconciliation to generally accepted accounting principles in the United States (US GAAP) is provided in note
28. A summary of the more important Yell Group accounting policies, which have been consistently applied, is set out below.



(a) Turnover



Group turnover, after deduction of sales allowances, value added tax and other sales taxes, comprises the value of products provided by the Yell Group
undertakings. Turnover from classified directories, Business Pages and other directories, mainly comprising advertising revenue, is recognised in the profit and loss account upon completion of delivery to the users of the directories. Other
turnover, principally from Yellow Pages 118 24 7 and Yell.com, is recognised from the point at which service is first provided over the life of the contract.



(b) Cost of sales



Cost of sales are the costs incurred in producing directories and other group products, including costs of the sales force and certain sales overheads
dedicated to the sale of advertising. Charges for doubtful debts are also included within cost of sales. Such costs are charged to the profit and loss account as a percentage of turnover based upon the actual bad debt experience as a proportion of
total billings.



(c) Advertising



The Yell Group expenses the costs of advertising its own products and
services as the costs are incurred.



(d) Interest



Interest payable is charged as incurred on an accruals basis.



(e) Foreign currencies



On consolidation, the assets and liabilities of foreign undertakings are translated into sterling at year-end exchange
rates. The results of foreign undertakings are translated into sterling at average rates of exchange for the period.



Exchange differences arising from the retranslation at period-end exchange rates of the net investment in foreign undertakings, less exchange differences
on borrowings that finance or provide a hedge against those undertakings, are taken through the statement of total recognised gains and losses to reserves and are disclosed in note 20.



All other exchange gains or losses are dealt with through the profit and loss account.



(f) Intangible fixed assets



Goodwill arising from the purchase of subsidiary undertakings represents the
excess of the fair value of the purchase consideration over the fair value of the net assets acquired and is amortised on a straight-line basis from the time of the acquisition over its estimated useful economic life. Estimated useful life is
determined after taking into account such factors as the nature and age of the business, as well as the typical life span of the acquired products to which goodwill attaches. Goodwill in respect of all acquired businesses is amortised over 20 years.



(g) Tangible fixed assets



Tangible fixed assets are stated at historical cost less depreciation. Cost
comprises the purchase price and any other costs of bringing an asset into use. Depreciation is provided on tangible fixed assets on a straight-line basis from the time they are available for use, so as to write off their costs over their estimated
useful economic lives taking into account any expected residual values. The lives assigned to significant tangible fixed assets range from two to six years.



F-7



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



1. Basis of preparation, consolidation, and accounting policies (continued)



Accounting policies (continued)



(h) Asset impairment



Intangible and tangible fixed assets are tested for impairment when an event that might affect asset values has occurred. An
impairment loss is recognised to the extent that the carrying amount cannot be recovered either by selling the asset or by the discounted future earnings from operating the assets. Goodwill is subject to an impairment review at the end of the first
full year following an acquisition and at any other time when the directors believe that an impairment may have occurred.



(i) Investments



Parent company shares are held at cost and are reviewed annually for impairment in value. The shares are held in an ESOP trust for the benefit of certain
employees.



(j) Leased assets



Rentals in respect of operating leases, under which substantially all the
benefits and risks of ownership remain with the lessor, are charged to the profit and loss account on a straight-line basis over the life of the lease.



Assets held under finance leases where substantially all the benefits and risks of ownership are transferred to the Yell Group are capitalised as tangible
fixed assets and depreciated over their useful economic lives. The capital element of the future obligations under the leases is included as a liability in the consolidated balance sheets, classified as appropriate as a creditor due within or after
one year. Lease payments are split between capital and interest elements using the annuity method and the interest is then charged to the profit and loss account.



(k) Stocks



Stocks, primarily directories in progress, are stated at the lower of cost and net realisable value. Directories in progress mainly comprise sales force
costs, artwork and other directory production costs, including appropriate overheads, pending completion of delivery of the relevant directories. Other stock represents paper stock held by the US business.



(l) Pension schemes



The Yell Group currently operates a defined benefit pension scheme for its UK employees employed before 1 October 2001 and
operates defined contribution pension schemes for its UK employees employed subsequent to 1 October 2001 and its US employees.



All pension schemes are independent of the Yell Groups finances. Actuarial valuations of the defined benefit scheme are carried out as determined by
the trustees at intervals of not more than three years, the rates of contribution payable and the pension cost being determined on the advice of the actuaries, having regard to the results of these valuations. In any intervening years, the actuaries
review the continuing appropriateness of the contribution rates. The cost of providing pensions is charged against profits over employees working lives with the Yell Group using the projected unit method.



Payments to the Yell Groups defined contribution schemes are charged
against profit as incurred.



The transitional arrangements of
FRS 17 Retirement Benefits have been applied in the preparation of these financial statements with the relevant disclosures shown in note 23.



(m) Employee share schemes



The cost of employee share options, except for options in Inland Revenue approved Sharesave schemes, is measured at the intrinsic value of the options
granted on the date of grant and is charged to the profit and loss account over the vesting period. The Group takes advantage of available exemptions in respect of accounting for discounts arising on the grant of options in Inland Revenue approved
Sharesave schemes. When the ESOP trust acquires and holds shares of our parent company, we present them as an investment in parent company shares.



F-8



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



1. Basis of preparation, consolidation, and accounting policies (continued)



Accounting policies (continued)



(n) Taxation



The charge (credit) for taxation is based on the profit (loss) for the period and takes into account deferred taxation.
Provision is made in full for deferred tax liabilities that arise from timing differences where transactions or events that result in an obligation to pay more tax in the future have occurred by the balance sheet date. Deferred tax assets are
recognised to the extent that they are regarded more likely than not to be recoverable.



Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws that have been enacted or substantially
enacted by the balance sheet date. Deferred tax assets and liabilities are not discounted.



(o) Financial instruments



All borrowings are initially stated at the fair value of consideration received after deduction of issue costs. Issue costs are charged to the profit and loss account together with the coupon, as finance costs, on a constant-yield basis
over the term of the borrowings, or over a shorter period where the lender can require earlier repayment.



The Yell Group considers its derivative financial instruments to be hedges when certain criteria are met. For interest rate derivatives, the instrument
must be related to assets or liabilities or a probable commitment and must also change the interest rate or the nature of the interest rate by converting a variable rate to a fixed rate or vice versa. Interest differentials under interest rate swap
agreements are recognised by adjustment of interest payable.



See note 17 for further details on the Groups financial instruments.



2. Segmental analysis



The Yell Group is a
publisher of classified advertising directories in the United Kingdom and the United States. Turnover is principally derived from the sale of advertising in such publications. The geographical analysis is stated on the basis of origin of operations,
although it would not be different had it been stated on the basis of customer origin.



The segmental information presented is based on the segmental operating results regularly reviewed by the Yell Groups chief operating decision maker (the CEO).



The Groups operations are split geographically between the United
Kingdom and the United States and have been managed on this basis. For the purposes of exercising day-to-day managerial and budgetary control, the UK management accounts are divided internally by product but these divisions are not self-standing
businesses. For the purpose of managing the UK business, most common costs are allocated entirely to classified directories. Control is exercised by comparing performance against budgets that are agreed in advance.



The CEO reviews the turnover and earnings before interest, tax, depreciation
and amortisation (EBITDA) before and after exceptional items within geographic segments. EBITDA, before exceptional items, together with turnover, are key financial measures that we use to assess our success in achieving growth and
operational efficiencies. Segmental information is provided below in respect of UK and US businesses.



F-9



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



2. Segmental analysis (continued)



Turnover



|                                                 |  |                     |  |         |  |         |  
|------------------------------------------------ |  | ------------------- |  | ------- |  | ------- | -
|                                                 |  | Year ended 31 March | 
|                                                 |  | 2003                |  | 2004    |  | 2005    |  
|                                                 |  | £                   |  | £       |  | £       |  
|                                                 |  | (in millions)       | 
|UK printed directories                           |  | 573.7               |  | 593.9   |  | 612.1   |  
|Other products and services                      |  | 41.2                |  | 41.0    |  | 52.3    |  
|                                                 |  |                     | 
|Total UK turnover                                |  | 614.9               |  | 634.9   |  | 664.4   |  
|                                                 |  |                     | 
|US printed directories:                          |  |                     |  |         |  |         |  
|US printed directories at constant exchange rate |  | 499.1               |  | 552.0   |  | 675.0   |  
|Exchange impact(a)                               |  |                    |  |        |  | (54.1   | )
|                                                 |  |                     | 
|Total US turnover                                |  | 499.1               |  | 552.0   |  | 620.9   |  
|                                                 |  |                     | 
|Group turnover                                   |  | 1,114.0             |  | 1,186.9 |  | 1,285.3 |  

---

|(a) | Constant exchanage rate states current year results at the same exchange rate as that used to translate the previous years results. Exchange rate impact is the difference
between the results reported at a constant exchange rate and the actual results using current year exchange rates.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-10



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





2. Segmental analysis (continued)



Profit and loss information



|                                                                         |  |                     |   |  |         |   |  |         |  
|------------------------------------------------------------------------ |  | ------------------- | - |  | ------- | - |  | ------- | -
|                                                                         |  | Year ended 31 March |  
|                                                                         |  | 2003                |   |  | 2004    |   |  | 2005    |  
|                                                                         |  | £                   |   |  | £       |   |  | £       |  
|                                                                         |  | (in millions)       |  
|UK operations                                                            |  |                     |   |  |         |   |  |         |  
|Turnover                                                                 |  | 614.9               |   |  | 634.9   |   |  | 664.4   |  
|                                                                         |  |                     |  
|UK printed directories operating profit                                  |  | 146.6               |   |  | 127.2   |   |  | 157.8   |  
|Other products and services operating profit (loss)                      |  | (4.3                | ) |  | 2.6     |   |  | 12.8    |  
|UK Operating profit                                                      |  | 142.3               |   |  | 129.8   |   |  | 170.6   |  
|Depreciation and amortisation(a)                                         |  | 69.2                |   |  | 69.4    |   |  | 70.1    |  
|                                                                         |  |                     |  
|UK operations EBITDA                                                     |  | 211.5               |   |  | 199.2   |   |  | 240.7   |  
|Exceptional items                                                        |  | 14.7                |   |  | 33.9    |   |  |        |  
|                                                                         |  |                     |  
|UK operations EBITDA before exceptionals                                 |  | 226.2               |   |  | 233.1   |   |  | 240.7   |  
|                                                                         |  |                     |  
|UK operations EBITDA before exceptionals as % of turnover                |  | 36.8                | % |  | 36.7    | % |  | 36.2    | %
|                                                                         |  |                     |  
|US operations                                                            |  |                     |   |  |         |   |  |         |  
|Turnover                                                                 |  | 499.1               |   |  | 552.0   |   |  | 620.9   |  
|                                                                         |  |                     |  
|Operating profit                                                         |  | 41.1                |   |  | 20.6    |   |  | 74.1    |  
|Depreciation and amortisation                                            |  | 51.7                |   |  | 50.2    |   |  | 51.5    |  
|                                                                         |  |                     |  
|US operations EBITDA                                                     |  | 92.8                |   |  | 70.8    |   |  | 125.6   |  
|Exceptional items, including non-recurring restructuring charges in 2003 |  | 4.0                 |   |  | 56.2    |   |  | 36.5    |  
|Exchange impact                                                          |  |                    |   |  |        |   |  | 14.3    |  
|                                                                         |  |                     |  
|US operations EBITDA before exceptionals at constant exchange rate       |  | 96.8                |   |  | 127.0   |   |  | 176.4   |  
|Exchange impact                                                          |  |                    |   |  |        |   |  | (14.3   | )
|                                                                         |  |                     |  
|US operations EBITDA before exceptionals                                 |  | 96.8                |   |  | 127.0   |   |  | 162.1   |  
|                                                                         |  |                     |  
|US operations EBITDA before exceptionals as % of turnover                |  | 19.4                | % |  | 23.0    | % |  | 26.1    | %
|                                                                         |  |                     |  
|Group                                                                    |  |                     |   |  |         |   |  |         |  
|Turnover                                                                 |  | 1,114.0             |   |  | 1,186.9 |   |  | 1,285.3 |  
|                                                                         |  |                     |  
|Operating profit                                                         |  | 183.4               |   |  | 150.4   |   |  | 244.7   |  
|Depreciation and amortisation                                            |  | 120.9               |   |  | 119.6   |   |  | 121.6   |  
|                                                                         |  |                     |  
|Group EBITDA                                                             |  | 304.3               |   |  | 270.0   |   |  | 366.3   |  
|Exceptional items, including non-recurring restructuring charges in 2003 |  | 18.7                |   |  | 90.1    |   |  | 36.5    |  
|Exchange impact                                                          |  |                    |   |  |        |   |  | 14.3    |  
|                                                                         |  |                     |  
|Group EBITDA before exceptionals at constant exchange rate               |  | 323.0               |   |  | 360.1   |   |  | 417.1   |  
|Exchange impact                                                          |  |                    |   |  |        |   |  | (14.3   | )
|                                                                         |  |                     |  
|Group EBITDA before exceptionals                                         |  | 323.0               |   |  | 360.1   |   |  | 402.8   |  
|                                                                         |  |                     |  
|Group EBITDA before exceptionals as % of turnover                        |  | 29.0                | % |  | 30.3    | % |  | 31.3    | %
|Group EBITDA before exceptionals                                         |  | 323.0               |   |  | 360.1   |   |  | 402.8   |  
|Exceptional items, including non-recurring restructuring charges in 2003 |  | (18.7               | ) |  | (90.1   | ) |  | (36.5   | )
|                                                                         |  |                     |  
|Group EBITDA                                                             |  | 304.3               |   |  | 270.0   |   |  | 366.3   |  
|Depreciation and amortisation                                            |  | (120.9              | ) |  | (119.6  | ) |  | (121.6  | )
|Net interest payable                                                     |  | (236.6              | ) |  | (194.5  | ) |  | (125.0  | )
|Taxation                                                                 |  | 12.6                |   |  | (7.0    | ) |  | (49.3   | )
|                                                                         |  |                     |  
|(Loss) profit for the financial year                                     |  | (40.6               | ) |  | (51.1   | ) |  | 70.4    |  

---

|(a) | In the year ended 31 March 2005, £67.7 million (2004£66.6 million; 2003£66.0 million) of depreciation and amortisation was allocated to UK printed
directories and £2.4 million (2004£2.8 million; 2003£3.2 million) was allocated to other products and services in the UK.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-11



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





2. Segmental analysis (continued)



|                         |  |               |   |  |         |  
|------------------------ |  | ------------- | - |  | ------- | -
|                         |  | At 31 March   |  
|                         |  | 2004          |   |  | 2005    |  
|                         |  | £             |   |  | £       |  
|                         |  | (in millions) |  
|Fixed assets             |  |               |   |  |         |  
|United Kingdom           |  | 1,033.7       |   |  | 984.0   |  
|United States            |  | 745.1         |   |  | 710.6   |  
|                         |  |              
|Group total              |  | 1,778.8       |   |  | 1,694.6 |  
|                         |  |              
|Net operating assets     |  |               |   |  |         |  
|United Kingdom           |  | 1,190.9       |   |  | 1,120.3 |  
|United States            |  | 987.8         |   |  | 999.6   |  
|                         |  |              
|Group total              |  | 2,178.7       |   |  | 2,119.9 |  
|                         |  |              
|Net (liabilities) assets |  |               |   |  |         |  
|United Kingdom           |  | (603.1        | ) |  | (264.7  | )
|United States            |  | 667.0         |   |  | 685.6   |  
|                         |  |              
|Group total              |  | 63.9          |   |  | 420.9   |  
|                         |  |              
|Total assets             |  |               |   |  |         |  
|United Kingdom           |  | 1,336.9       |   |  | 1,288.9 |  
|United States            |  | 1,072.8       |   |  | 1,110.1 |  
|                         |  |              
|Group total              |  | 2,409.7       |   |  | 2,399.0 |  



Net operating assets
comprise total assets less creditors, excluding loans and other borrowings. The majority of UK net operating assets relate to the UK printed directories business. The majority of external loans are included in the UK segment.



3. Operating profit



Operating profit for the Yell Group is stated after charging:



|                                                                |  |                     |  |       |  |      
|--------------------------------------------------------------- |  | ------------------- |  | ----- |  | -----
|                                                                |  | Year ended 31 March
|                                                                |  | 2003                |  | 2004  |  | 2005 
|                                                                |  | £                   |  | £     |  | £    
|                                                                |  | (in millions)      
|Staff costs (note 5)                                            |  | 299.0               |  | 311.4 |  | 357.3
|Advertising costs                                               |  | 46.4                |  | 53.1  |  | 55.0 
|Operating leases, excluding plant and equipment hire            |  | 13.2                |  | 14.0  |  | 13.5 
|Plant and equipment hire                                        |  | 1.2                 |  | 1.0   |  | 1.1  
|Depreciation of owned tangible fixed assets                     |  | 22.0                |  | 22.7  |  | 22.3 
|Depreciation of tangible fixed assets held under finance leases |  | 0.5                 |  | 0.2   |  | 0.7  
|Goodwill amortisation                                           |  | 98.4                |  | 96.7  |  | 98.6 
|Restructuring charges(a)                                        |  | 3.7                 |  |      |  |     
|Exceptional administrative costs:                               |  |                     |  |       |  |      
|IPO costs                                                       |  | 15.0                |  | 90.1  |  |     
|Costs of exceptional lawsuits                                   |  |                    |  |      |  | 36.5 

---

|(a) | The restructuring changes were incurred for the closure of a production site as part of the integration of the former McLeod directories.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------



The auditors remuneration has been disclosed in note 26.



F-12



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





4. Results before and after
exceptional items



|                         |  |               |  |                   |   |  |                        |   |  |                 |   |  |                   |   |  |                        |   |  |                |   |  |             |  
|------------------------ |  | ------------- |  | ----------------- | - |  | ---------------------- | - |  | --------------- | - |  | ----------------- | - |  | ---------------------- | - |  | -------------- | - |  | ----------- | -
|                         |  |               |  |                   |   |  |                        |   |  |                 |   |  | Net Profit (loss) |   |  | Taxation Profit (loss) |  
|                         |  | GrossProfit   |  | Distributioncosts |   |  | Administrativeexpenses |   |  | Operatingprofit |   |  | interestpayable   |   |  | beforetaxation         |   |  | credit(charge) |   |  | for theyear |  
|                         |  | £             |  | £                 |   |  | £                      |   |  | £               |   |  | £                 |   |  | £                      |   |  | £              |   |  | £           |  
|                         |  | (in millions) | 
|Year ended 31 March 2003 |  |               |  |                   |   |  |                        |   |  |                 |   |  |                   |   |  |                        |   |  |                |   |  |             |  
|Ongoing activities       |  | 604.1         |  | (36.0             | ) |  | (369.7                 | ) |  | 198.4           |   |  | (236.6            | ) |  | (38.2                  | ) |  | 10.3           |   |  | (27.9       | )
|Exceptional items        |  |              |  |                  |   |  | (15.0                  | ) |  | (15.0           | ) |  |                  |   |  | (15.0                  | ) |  | 2.3            |   |  | (12.7       | )
|                         |  |               |  |                   |   |  |                        |  
|Total                    |  | 604.1         |  | (36.0             | ) |  | (384.7                 | ) |  | 183.4           |   |  | (236.6            | ) |  | (53.2                  | ) |  | 12.6           |   |  | (40.6       | )
|                         |  |               |  |                   |   |  |                        |  
|Year ended 31 March 2004 |  |               |  |                   |   |  |                        |   |  |                 |   |  |                   |   |  |                        |   |  |                |   |  |             |  
|Ongoing activities       |  | 634.0         |  | (34.5             | ) |  | (359.0                 | ) |  | 240.5           |   |  | (136.1            | ) |  | 104.4                  |   |  | (44.2          | ) |  | 60.2        |  
|Exceptional items        |  |              |  |                  |   |  | (90.1                  | ) |  | (90.1           | ) |  | (58.4             | ) |  | (148.5                 | ) |  | 37.2           |   |  | (111.3      | )
|                         |  |               |  |                   |   |  |                        |  
|Total                    |  | 634.0         |  | (34.5             | ) |  | (449.1                 | ) |  | 150.4           |   |  | (194.5            | ) |  | (44.1                  | ) |  | (7.0           | ) |  | (51.1       | )
|                         |  |               |  |                   |   |  |                        |  
|Year ended 31 March 2005 |  |               |  |                   |   |  |                        |   |  |                 |   |  |                   |   |  |                        |   |  |                |   |  |             |  
|Ongoing activities       |  | 693.0         |  | (38.3             | ) |  | (373.5                 | ) |  | 281.2           |   |  | (125.0            | ) |  | 156.2                  |   |  | (63.0          | ) |  | 93.2        |  
|Exceptional items        |  |              |  |                  |   |  | (36.5                  | ) |  | (36.5           | ) |  |                  |   |  | (36.5                  | ) |  | 13.7           |   |  | (22.8       | )
|                         |  |               |  |                   |   |  |                        |  
|Total                    |  | 693.0         |  | (38.3             | ) |  | (410.0                 | ) |  | 244.7           |   |  | (125.0            | ) |  | 119.7                  |   |  | (49.3          | ) |  | 70.4        |  



Exceptional
administrative expenses of £36.5 million in the year ended 31 March 2005 are the costs from lawsuits explained in note 21.



Exceptional administrative expenses in the year ended 31 March 2004 relate to costs incurred in connection with our parent companys global offer,
including £57.0 million for employee incentive plans contingent upon IPO and £33.1 million of transaction costs. Of the £90.1 million exceptional administrative expenses, £33.9 million relates to our UK business and
£56.2 million to our US business. Exceptional administrative expenses in the year ended 31 March 2003 relate to costs incurred in connection with our parent companys initial public offering withdrawn in July 2002. Of the £15.0
million exceptional administrative expenses, £14.7million was charged to our UK business and £0.3 was charged to our US business. The exceptional interest payable in the year ended 31 March 2004 comprises £19.7 million senior note
redemption premium and £36.4 million accelerated amortisation of financing fees on our debt repaid in July and August 2003 and £2.3 million for arrangement fees for the withdrawn revolving credit facility. The exceptional tax credits in
the years ended 31 March 2004 and 2005 represent the effective tax on the exceptional items before tax.



5. Employees



|                                                                                                                            |  |                     |  |       |  |      
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------------- |  | ----- |  | -----
|                                                                                                                            |  | Year ended 31 March
|                                                                                                                            |  | 2003                |  | 2004  |  | 2005 
|Average monthly number of employees in the Yell Group (including executive directorssee note 22 for separate
disclosures): |  |                     |  |       |  |      
|United States                                                                                                               |  | 4,350               |  | 4,668 |  | 5,115
|United Kingdom                                                                                                              |  | 3,319               |  | 3,414 |  | 3,569
|                                                                                                                            |  |                     | 
|Total employees                                                                                                             |  | 7,669               |  | 8,082 |  | 8,684
|                                                                                                                            |  |                     | 
|Marketing and sales                                                                                                         |  | 5,631               |  | 4,913 |  | 5,591
|Other                                                                                                                       |  | 2,038               |  | 3,169 |  | 3,093
|                                                                                                                            |  |                     | 
|Total employees                                                                                                             |  | 7,669               |  | 8,082 |  | 8,684



F-13



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





5. Employees (continued)



|                                               |  |                     |  |       |  |      
|---------------------------------------------- |  | ------------------- |  | ----- |  | -----
|                                               |  | Year ended 31 March
|                                               |  | 2003                |  | 2004  |  | 2005 
|                                               |  | £                   |  | £     |  | £    
|                                               |  | (in millions)      
|Staff costs for the Yell Group during the year |  |                     |  |       |  |      
|Wages and salaries                             |  | 268.5               |  | 274.2 |  | 317.6
|Social security                                |  | 20.6                |  | 26.5  |  | 28.3 
|Other pension costs (note 23)                  |  | 9.9                 |  | 10.7  |  | 11.4 
|                                               |  |                     | 
|Total staff costs                              |  | 299.0               |  | 311.4 |  | 357.3



Details of the various
stock option plans are given in note 25.



6. Net interest payable



|                                                            |  |                     |   |  |       |   |  |       |  
|----------------------------------------------------------- |  | ------------------- | - |  | ----- | - |  | ----- | -
|                                                            |  | Year ended 31 March |  
|                                                            |  | 2003                |   |  | 2004  |   |  | 2005  |  
|                                                            |  | £                   |   |  | £     |   |  | £     |  
|                                                            |  | (in millions)       |  
|Senior credit facilities                                    |  | 87.6                |   |  | 68.2  |   |  | 50.4  |  
|Senior sterling and dollar notes(a)                         |  | 55.4                |   |  | 43.3  |   |  | 35.5  |  
|Subordinated parent company loan(a)                         |  | 70.1                |   |  | 21.3  |   |  | 34.0  |  
|Bridging facilities                                         |  | 10.3                |   |  |      |   |  |      |  
|Other                                                       |  | 0.6                 |   |  | 0.3   |   |  | 0.3   |  
|Amortisation of finance costs                               |  | 15.0                |   |  | 5.2   |   |  | 6.1   |  
|Exceptional interest and write off of financing fees on IPO |  |                    |   |  | 58.4  |   |  |      |  
|                                                            |  |                     |  
|Total interest payable                                      |  | 239.0               |   |  | 196.7 |   |  | 126.3 |  
|                                                            |  |                     |  
|Interest receivable                                         |  | (2.4                | ) |  | (2.2  | ) |  | (1.3  | )
|                                                            |  |                     |  
|Net interest payable                                        |  | 236.6               |   |  | 194.5 |   |  | 125.0 |  

---

|(a) | Interest on the senior discount dollar notes and the subordinated parent company loan rolls up into the principal balance and is not due until the maturity or repayment of the
respective loan. Yell Group settled 35% of the amounts previously outstanding on 18 August 2003.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



7. Tax charge (credit) on profit (loss) on ordinary activities



|                                                            |  |                     |   |  |       |   |  |      |  
|----------------------------------------------------------- |  | ------------------- | - |  | ----- | - |  | ---- | -
|                                                            |  | Year ended 31 March |  
|                                                            |  | 2003                |   |  | 2004  |   |  | 2005 |  
|                                                            |  | £                   |   |  | £     |   |  | £    |  
|                                                            |  | (in millions)       |  
|UK corporation tax at 30%                                   |  | 6.6                 |   |  | 22.0  |   |  | 34.4 |  
|Adjustment in respect of prior periods                      |  |                    |   |  |      |   |  | (2.1 | )
|Foreign taxes                                               |  | 0.5                 |   |  | 1.1   |   |  | 1.5  |  
|                                                            |  |                     |  
|Total current tax                                           |  | 7.1                 |   |  | 23.1  |   |  | 33.8 |  
|                                                            |  |                     |  
|Origination and reversal of timing differences              |  |                     |   |  |       |   |  |      |  
| UK                                                        |  | (2.5                | ) |  | (1.8  | ) |  | 2.6  |  
| Adjustment in respect of prior periods                    |  |                    |   |  |      |   |  | 2.7  |  
| Foreign                                                   |  | (17.2               | ) |  | (14.3 | ) |  | 10.2 |  
|Total deferred tax                                          |  | (19.7               | ) |  | (16.1 | ) |  | 15.5 |  
|                                                            |  |                     |  
|Tax (credit) charge on (loss) profit on ordinary activities |  | (12.6               | ) |  | 7.0   |   |  | 49.3 |  



F-14



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





7. Tax charge (credit) on profit
(loss) on ordinary activities (continued)



The effective
tax rate for each period is different from the standard rate of corporation tax in the United Kingdom (30%) as explained below:



|                                                                                                                |  |                     |   |  |       |   |  |       |  
|--------------------------------------------------------------------------------------------------------------- |  | ------------------- | - |  | ----- | - |  | ----- | -
|                                                                                                                |  | Year ended 31 March |  
|                                                                                                                |  | 2003                |   |  | 2004  |   |  | 2005  |  
|                                                                                                                |  | £                   |   |  | £     |   |  | £     |  
|                                                                                                                |  | (in millions)       |  
|(Loss) profit on ordinary activities before taxation                                                            |  | (53.2               | ) |  | (44.1 | ) |  | 119.7 |  
|(Loss) profit on ordinary activities multiplied by standard rate of corporation tax in the United Kingdom (30%) |  | (16.0               | ) |  | (13.2 | ) |  | 35.9  |  
|Effects of:                                                                                                     |  |                     |   |  |       |   |  |       |  
|Adjustments from prior years                                                                                    |  | (0.3                | ) |  | 0.4   |   |  | (2.1  | )
|Non-deductible goodwill amortisation                                                                            |  | 20.9                |   |  | 22.6  |   |  | 20.2  |  
|Higher tax rates on overseas earnings                                                                           |  | (0.3                | ) |  | (1.9  | ) |  | 1.3   |  
|Other expenses not deductible for tax purposes                                                                  |  | 4.0                 |   |  | 12.9  |   |  | (3.8  | )
|US tax losses (used) created in the year                                                                        |  | (2.7                | ) |  | 0.7   |   |  | (19.3 | )
|Other timing differences                                                                                        |  | 1.5                 |   |  | 1.6   |   |  | 1.6   |  
|                                                                                                                |  |                     |  
|Total current tax                                                                                               |  | 7.1                 |   |  | 23.1  |   |  | 33.8  |  
|                                                                                                                |  |                     |  
|Deferred tax in current year                                                                                    |  | (2.5                | ) |  | (1.8  | ) |  | 21.3  |  
|Recognition of deferred tax assets on prior year US tax losses                                                  |  | (17.2               | ) |  | (14.3 | ) |  | (5.8  | )
|                                                                                                                |  |                     |  
|Net tax (credit) charge                                                                                         |  | (12.6               | ) |  | 7.0   |   |  | 49.3  |  



8. Acquisitions



Acquisitions in 2005



In the year ended 31 March 2005, the Yell Group acquired a number of yellow
pages directories businesses in the US for consideration of $60.0 million (£31.8 million). The purchases were accounted for as acquisitions. The purchase prices were allocated to the acquired assets and liabilities as follows:



|                                               |  |               |   |  |                           |  |            |  
|---------------------------------------------- |  | ------------- | - |  | ------------------------- |  | ---------- | -
|                                               |  | Book value(a) |   |  | Fair value adjustments(b) |  | Fair value |  
|                                               |  | £             |   |  | £                         |  | £          |  
|                                               |  | (in millions) |  
|Fixed assets                                   |  |               |   |  |                           |  |            |  
|Tangible assets                                |  |              |   |  |                          |  |           |  
|                                               |  |               |  
|Total fixed assets                             |  |              |   |  |                          |  |           |  
|Current assets                                 |  |               |   |  |                           |  |            |  
|Stocks                                         |  | 0.4           |   |  |                          |  | 0.4        |  
|Debtors                                        |  | 4.6           |   |  |                          |  | 4.6        |  
|                                               |  |               |  
|Total current assets                           |  | 5.0           |   |  |                          |  | 5.0        |  
|Creditors: amounts falling due within one year |  | (0.2          | ) |  |                          |  | (0.2       | )
|                                               |  |               |  
|Net current assets                             |  | 4.8           |   |  |                          |  | 4.8        |  
|                                               |  |               |  
|Identifiable net assets                        |  | 4.8           |   |  |                          |  | 4.8        |  
|                                               |  |               |  
|Goodwill                                       |  |               |   |  |                           |  | 27.0       |  
|                                               |  |               |  
|Total cost                                     |  |               |   |  |                           |  | 31.8       |  
|                                               |  |               |  
|Consideration:                                 |  |               |   |  |                           |  |            |  
|Cash                                           |  |               |   |  |                           |  | 31.8       |  

---

|(a) | Translated from US dollars to pounds sterling at the exchange rates on the dates of acquisition.
|--- | ------------------------------------------------------------------------------------------------

|(b) | The provisional fair value adjustments principally comprise a revaluation of fixed assets and work in progress balances to estimated fair market value.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



F-15



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



8. Acquisitions (continued)



Acquisitions in 2004



In the year ended 31 March 2004, the Yell Group acquired yellow pages directories businesses in the United States totalling $198.9 million (£108.6
million) plus expenses of $0.5 million (£0.3 million). The purchases were accounted for as acquisitions. The purchase prices were allocated to the acquired assets and liabilities as follows:



|                                               |  |               |   |  |                           |   |  |            |  
|---------------------------------------------- |  | ------------- | - |  | ------------------------- | - |  | ---------- | -
|                                               |  | Book value(a) |   |  | Fair value adjustments(b) |   |  | Fair value |  
|                                               |  | £             |   |  | £                         |   |  | £          |  
|                                               |  | (in millions) |  
|Fixed assets                                   |  |               |   |  |                           |   |  |            |  
|Tangible assets                                |  |              |   |  | 1.2                       |   |  | 1.2        |  
|                                               |  |               |  
|Total fixed assets                             |  |              |   |  | 1.2                       |   |  | 1.2        |  
|Current assets                                 |  |               |   |  |                           |   |  |            |  
|Stocks                                         |  | 2.1           |   |  |                          |   |  | 2.1        |  
|Debtors                                        |  | 15.6          |   |  | (4.9                      | ) |  | 10.7       |  
|Cash at bank and in hand                       |  |              |   |  |                          |   |  |           |  
|                                               |  |               |  
|Total current assets                           |  | 17.7          |   |  | (4.9                      | ) |  | 12.8       |  
|                                               |  |               |  
|Creditors: amounts falling due within one year |  | (5.9          | ) |  | 0.4                       |   |  | (5.5       | )
|                                               |  |               |  
|Net current assets                             |  | 11.8          |   |  | (4.5                      | ) |  | 7.3        |  
|                                               |  |               |  
|Identifiable net assets                        |  | 11.8          |   |  | (3.3                      | ) |  | 8.5        |  
|                                               |  |               |  
|Goodwill                                       |  |               |   |  |                           |   |  | 100.4      |  
|                                               |  |               |  
|Total cost                                     |  |               |   |  |                           |   |  | 108.9      |  
|                                               |  |               |  
|Consideration:                                 |  |               |   |  |                           |   |  |            |  
|Cash                                           |  |               |   |  |                           |   |  | 108.9      |  

---

|(a) | Translated from US dollars to pounds sterling at the exchange rate on the date of acquisition.
|--- | ----------------------------------------------------------------------------------------------

|(b) | The fair value adjustments principally comprise a revaluation of fixed assets to estimated fair market value, and an alignment of accounting policies for revenue recognition.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The effect of acquisitions in the year on Yell
Groups cash flows before financing were as follows:



|                                                |  |                        
|----------------------------------------------- |  | -----------------------
|                                                |  | Year ended31 March 2004
|                                                |  | £                      
|Net cash inflow from operating activities       |  | 0.1                    
|Returns on investments and servicing of finance |  |                       
|Taxation paid                                   |  |                       
|Investing activities                            |  |                       
|                                                | 
|Net cash flow before financing                  |  | 0.1                    



F-16



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





8. Acquisitions (continued)



Acquisition of McLeod



On 16 April 2002, the Yell Group acquired McLeod for an aggregate purchase
price of $600.0 million (£417.0 million) plus expenses of $10.0 million (£6.9 million). The purchase was accounted for as an acquisition. The purchase price was allocated to the assets and liabilities of McLeod as follows:



|                                               |  |               |   |  |                           |   |  |            |  
|---------------------------------------------- |  | ------------- | - |  | ------------------------- | - |  | ---------- | -
|                                               |  | Book value(a) |   |  | Fair value adjustments(b) |   |  | Fair value |  
|                                               |  | £             |   |  | £                         |   |  | £          |  
|                                               |  | (in millions) |  
|Fixed assets                                   |  |               |   |  |                           |   |  |            |  
|Tangible assets                                |  | 24.4          |   |  | (1.4                      | ) |  | 23.0       |  
|                                               |  |               |  
|Total fixed assets                             |  | 24.4          |   |  | (1.4                      | ) |  | 23.0       |  
|Current assets                                 |  |               |   |  |                           |   |  |            |  
|Stocks                                         |  | 37.5          |   |  | (5.1                      | ) |  | 32.4       |  
|Debtors                                        |  | 67.1          |   |  | 1.1                       |   |  | 68.2       |  
|Cash at bank and in hand                       |  | 0.5           |   |  |                          |   |  | 0.5        |  
|                                               |  |               |  
|Total current assets                           |  | 105.1         |   |  | (4.0                      | ) |  | 101.1      |  
|                                               |  |               |  
|Creditors: amounts falling due within one year |  | (28.5         | ) |  | (1.7                      | ) |  | (30.2      | )
|                                               |  |               |  
|Net current assets                             |  | 76.6          |   |  | (5.7                      | ) |  | 70.9       |  
|                                               |  |               |  
|Identifiable net assets                        |  | 101.0         |   |  | (7.1                      | ) |  | 93.9       |  
|                                               |  |               |  
|Goodwill                                       |  |               |   |  |                           |   |  | 330.0      |  
|                                               |  |               |  
|Total cost                                     |  |               |   |  |                           |   |  | 423.9      |  
|                                               |  |               |  
|Consideration:                                 |  |               |   |  |                           |   |  |            |  
|Cash                                           |  |               |   |  |                           |   |  | 423.9      |  

---

|(a) | Translated from US dollars to pounds sterling at the exchange rate on the date of acquisition.
|--- | ----------------------------------------------------------------------------------------------

|(b) | The fair value adjustments principally comprise an impairment in the value of fixed assets following an impairment review, and an alignment of accounting policies for directories in
progress and revenue recognition.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The impact of
the McLeod acquisition on the Groups cashflows before financing was as follows:



|                                                |  |                          |  
|----------------------------------------------- |  | ------------------------ | -
|                                                |  | Year ended 31 March 2003 |  
|                                                |  | £                        |  
|                                                |  | (in millions)            |  
|Net cash inflow from operating activities       |  | 35.8                     |  
|Returns on investments and servicing of finance |  |                         |  
|Taxation paid                                   |  | (1.0                     | )
|Investing activities                            |  | (3.8                     | )
|                                                | 
|Net cash inflow before financing                |  | 31.0                     |  



The Group made other
US acquisitions in the year ended 31 March 2003 for cash of £47.4 million to acquire net assets with a book value of £16.0 million. These acquisitions gave rise to goodwill of £31.4 million recorded in the year.



F-17



---

##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





8. Acquisitions (continued)



Reconciliation of cash paid to the cash flow statement



|                                                                        |  |                     |   |  |       |  |     
|----------------------------------------------------------------------- |  | ------------------- | - |  | ----- |  | ----
|                                                                        |  | Year ended 31 March
|                                                                        |  | 2003                |   |  | 2004  |  | 2005
|                                                                        |  | £                   |   |  | £     |  | £   
|                                                                        |  | (in millions)      
|Cash consideration for:                                                 |  |                     |   |  |       |  |     
|Acquisition of McLeod                                                   |  | 423.9               |   |  |      |  |    
|Other acquisitions                                                      |  | 47.4                |   |  | 108.9 |  | 31.8
|Less:                                                                   |  |                     |   |  |       |  |     
|Cash acquired with subsidiaries                                         |  | (0.4                | ) |  |      |  |    
|                                                                        |  |                     |  
|Cash paid for purchase of subsidiary undertakings, net of cash acquired |  | 470.9               |   |  | 108.9 |  | 31.8



The effect of the
acquisitions on the results of the Yell Group during the year of the acquisitions includes the following for the years ended 31 March 2004 and 2005:



|                     |  |                     |   |  |      |  
|-------------------- |  | ------------------- | - |  | ---- | -
|                     |  | Year ended 31 March |  
|                     |  | 2004                |   |  | 2005 |  
|                     |  | £                   |   |  | £    |  
|                     |  | (in millions)       |  
|Turnover             |  | 0.7                 |   |  | 6.8  |  
|Cost of sales        |  | (0.4                | ) |  | (4.7 | )
|                     |  |                    
|Gross profit         |  | 0.3                 |   |  | 2.1  |  
|Distribution costs   |  |                    |   |  | (0.4 | )
|Administrative costs |  | (0.2                | ) |  | (1.3 | )
|                     |  |                    
|Operating profit     |  | 0.1                 |   |  | 0.4  |  



F-18



---

##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





9. Movements in net debt



Reconciliation of movement in net debt



|                                                                                                                              |  |                             |   |  |                                            |   |  |                       |   |  |          |  
|----------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | - |  | ------------------------------------------ | - |  | --------------------- | - |  | -------- | -
|                                                                                                                              |  | Totalcash lessbankoverdraft |   |  | Debt duewithin oneyear excludingoverdraft |   |  | Debt dueafterone year |   |  | Net debt |  
|                                                                                                                              |  | £                           |   |  | £                                          |   |  | £                     |   |  | £        |  
|                                                                                                                              |  | (in millions)               |  
|At 31 March 2002                                                                                                              |  | 100.1                       |   |  | (53.4                                      | ) |  | (2,050.7              | ) |  | (2,004.0 | )
|Cash inflow less interest and taxation paid and capital expenditures(a)                                                       |  | 143.9                       |   |  |                                           |   |  |                      |   |  | 143.9    |  
|Cash inflow from financing:                                                                                                   |  |                             |   |  |                                            |   |  |                       |   |  |          |  
| for acquisitions                                                                                                            |  | 408.8                       |   |  |                                           |   |  | (408.7                | ) |  | 0.1      |  
| after acquisitions                                                                                                          |  | 77.0                        |   |  |                                           |   |  | (77.0                 | ) |  |         |  
|Cash outflow on acquisitions                                                                                                  |  | (470.9                      | ) |  |                                           |   |  |                      |   |  | (470.9   | )
|Reclass of long-term to short-term debt                                                                                       |  |                            |   |  | (286.5                                     | ) |  | 286.5                 |   |  |         |  
|Borrowings repaid                                                                                                             |  | (211.9                      | ) |  | 211.9                                      |   |  |                      |   |  |         |  
|Finance fees paid                                                                                                             |  | (16.1                       | ) |  |                                           |   |  | 16.1                  |   |  |         |  
|Interest and amortised fees                                                                                                   |  |                            |   |  |                                           |   |  | (102.9                | ) |  | (102.9   | )
|Currency movements                                                                                                            |  | (0.9                        | ) |  | 15.2                                       |   |  | 50.7                  |   |  | 65.0     |  
|                                                                                                                              |  |                             |   | 
|At 31 March 2003                                                                                                              |  | 30.0                        |   |  | (112.8                                     | ) |  | (2,286.0              | ) |  | (2,368.8 | )
|Cash inflow from operating activities less interest paid and redemption premium and taxation paid and capital expenditures(a) |  | 48.0                        |   |  |                                           |   |  | 19.4                  |   |  | 67.4     |  
|Cash outflow on acquisitions                                                                                                  |  | (108.9                      | ) |  |                                           |   |  |                      |   |  | (108.9   | )
|Net proceeds from shares issued                                                                                               |  | 304.4                       |   |  |                                           |   |  |                      |   |  | 304.4    |  
|Reclass of long-term to short-term debt                                                                                       |  |                            |   |  | (41.9                                      | ) |  | 41.9                  |   |  |         |  
|Borrowings repaid                                                                                                             |  | (1,318.4                    | ) |  | 112.8                                      |   |  | 1,205.6               |   |  |         |  
|New loans acquired                                                                                                            |  | 1,082.5                     |   |  | (85.8                                      | ) |  | (996.7                | ) |  |         |  
|Finance fees paid                                                                                                             |  | (16.4                       | ) |  |                                           |   |  | 16.4                  |   |  |         |  
|Non-cash charges                                                                                                              |  |                            |   |  |                                           |   |  | (66.9                 | ) |  | (66.9    | )
|Currency movements                                                                                                            |  | (2.8                        | ) |  |                                           |   |  | 79.2                  |   |  | 76.4     |  
|                                                                                                                              |  |                             |   | 
|At 31 March 2004                                                                                                              |  | 18.4                        |   |  | (127.7                                     | ) |  | (1,987.1              | ) |  | (2,096.4 | )
|Cash inflow from operating activities less interest paid and taxation paid and capital expenditures(a)                        |  | 157.6                       |   |  | 41.9                                       |   |  | 31.6                  |   |  | 231.1    |  
|Cash outflow on acquisitions                                                                                                  |  | (31.8                       | ) |  |                                           |   |  |                      |   |  | (31.8    | )
|Purchase of shares in parent company                                                                                          |  | (6.6                        | ) |  |                                           |   |  |                      |   |  | (6.6     | )
|Reclass of long-term to short-term debt                                                                                       |  |                            |   |  | (148.9                                     | ) |  | 148.9                 |   |  |         |  
|Borrowings repaid                                                                                                             |  | (85.0                       | ) |  | 85.0                                       |   |  |                      |   |  |         |  
|New loans acquired                                                                                                            |  | 2.5                         |   |  |                                           |   |  | (2.5                  | ) |  |         |  
|Borrowings capitalised(b)                                                                                                     |  |                            |   |  |                                           |   |  | 300.0                 |   |  | 300.0    |  
|Non-cash charges                                                                                                              |  |                            |   |  | (0.5                                       | ) |  | (51.6                 | ) |  | (52.1    | )
|Currency movements                                                                                                            |  | (2.0                        | ) |  |                                            |   |  | 11.9                  |   |  | 9.9      |  
|                                                                                                                              |  |                             |   | 
|At 31 March 2005                                                                                                              |  | 53.1                        |   |  | (150.2                                     | ) |  | (1,548.8              | ) |  | (1,645.9 | )

---

|(a) | The £145.7 million (2004  £141.8 million; 2003  £139.5 million) of interest paid in the year ended 31 March 2005 included £73.5 million (2004
 £19.4 million; 2003  £nil) of interest that had been capitalised as long-term debt.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Agreement was reached in April 2004 to issue 10 shares of 100 euro each at a premium to settle £300,000,000 of parent company indebtedness.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------



F-19



---

##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



9. Movements in net debt (continued)



Reconciliation of net cash flow to movements in net debt



|                                                           |  |                     |   |  |          |   |  |          |  
|---------------------------------------------------------- |  | ------------------- | - |  | -------- | - |  | -------- | -
|                                                           |  | Year ended 31 March |  
|                                                           |  | 2003                |   |  | 2004     |   |  | 2005     |  
|                                                           |  | £                   |   |  | £        |   |  | £        |  
|                                                           |  | (in millions)       |  
|Decrease (increase) in net cash in the year                |  | (69.2               | ) |  | (8.8     | ) |  | 36.7     |  
|Net cash (outflow) inflow from increase (decrease) in debt |  | (257.7              | ) |  | 171.7    |   |  | 82.5     |  
|                                                           |  |                     |  
|Decrease (increase) in net debt resulting from cash flows  |  | (326.9              | ) |  | 162.9    |   |  | 119.2    |  
|Subordinated parent company loan                           |  |                    |   |  | 100.0    |   |  | 300.0    |  
|Interest and amortised fees                                |  | (102.9              | ) |  | (66.9    | ) |  | 21.4     |  
|Currency movements                                         |  | 65.0                |   |  | 76.4     |   |  | 9.9      |  
|                                                           |  |                     |  
|(Increase) decrease in net debt in the year                |  | (364.8              | ) |  | 272.4    |   |  | 450.5    |  
|Net debt at beginning of the year                          |  | (2,004.0            | ) |  | (2,368.8 | ) |  | (2,096.4 | )
|                                                           |  |                     |  
|Net debt at end of the year                                |  | (2,368.8            | ) |  | (2,096.4 | ) |  | (1,645.9 | )



F-20



---

##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



10. Intangible assets



Goodwill



|                                    |  |                 |  
|----------------------------------- |  | --------------- | -
|                                    |  | £ (in millions) |  
|Cost                                |  |                 |  
|Balance at 31 March 2003            |  | 1,985.1         |  
|Additions                           |  | 100.4           |  
|Fair value adjustment(a)            |  | 3.3             |  
|Currency movements                  |  | (117.3          | )
|                                    | 
|Total cost at 31 March 2004         |  | 1,971.5         |  
|                                    | 
|Amortisation                        |  |                 |  
|Balance at 31 March 2003            |  | 161.0           |  
|Charge for the year                 |  | 96.7            |  
|Currency movements                  |  | (11.5           | )
|                                    | 
|Total amortisation at 31 March 2004 |  | 246.2           |  
|                                    | 
|Net book value at 31 March 2004     |  | 1,725.3         |  
|                                    | 
|Cost                                |  |                 |  
|Balance at 31 March 2004            |  | 1,971.5         |  
|Additions                           |  | 27.0            |  
|Fair value adjustment(a)            |  | (1.3            | )
|Currency movements                  |  | (20.6           | )
|                                    | 
|Total cost at 31 March 2005         |  | 1,976.6         |  
|                                    | 
|Amortisation                        |  |                 |  
|Balance at 31 March 2004            |  | 246.2           |  
|Charge for the year                 |  | 98.6            |  
|Currency movements                  |  | (3.2            | )
|                                    | 
|Total amortisation at 31 March 2005 |  | 341.6           |  
|                                    | 
|Net book value at 31 March 2005     |  | 1,635.0         |  

---

|(a) | Fair value adjustments to goodwill were due to the finalisation of transaction costs and asset valuations in respect of acquisitions in prior years.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------



The acquisitions are detailed in note 8. The goodwill arising on acquisitions
has been amortised on a straight-line basis over its estimated useful life of 20 years.



F-21



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



11. Tangible fixed assets



Tangible fixed assets are summarised as follows:



|                                    |  |               |   |  |                       |   |  |                           |   |  |       |  
|----------------------------------- |  | ------------- | - |  | --------------------- | - |  | ------------------------- | - |  | ----- | -
|                                    |  | Buildings     |   |  | Leaseholdimprovements |   |  | Computersandequipment2004 |   |  | Total |  
|                                    |  | £             |   |  | £                     |   |  | £                         |   |  | £     |  
|                                    |  | (in millions) |  
|Cost                                |  |               |   |  |                       |   |  |                           |   |  |       |  
|Balance at 31 March 2003            |  | 10.1          |   |  | 2.3                   |   |  | 56.2                      |   |  | 68.6  |  
|Acquisitions                        |  | 0.9           |   |  | 0.1                   |   |  | 0.2                       |   |  | 1.2   |  
|Additions                           |  |              |   |  | 1.8                   |   |  | 23.0                      |   |  | 24.8  |  
|Disposals                           |  |              |   |  | (0.1                  | ) |  | (8.9                      | ) |  | (9.0  | )
|Currency movements                  |  | (1.5          | ) |  | (0.3                  | ) |  | (3.4                      | ) |  | (5.2  | )
|                                    |  |               |   | 
|Total cost at 31 March 2004         |  | 9.5           |   |  | 3.8                   |   |  | 67.1                      |   |  | 80.4  |  
|                                    |  |               |   | 
|Depreciation                        |  |               |   |  |                       |   |  |                           |   |  |       |  
|Balance at 31 March 2003            |  | 0.3           |   |  | 0.6                   |   |  | 20.6                      |   |  | 21.5  |  
|Charge for the year                 |  | 0.2           |   |  | 0.4                   |   |  | 22.3                      |   |  | 22.9  |  
|Disposals                           |  |              |   |  |                      |   |  | (8.4                      | ) |  | (8.4  | )
|Currency movements                  |  | (0.1          | ) |  | (0.1                  | ) |  | (1.3                      | ) |  | (1.5  | )
|                                    |  |               |   | 
|Total depreciation at 31 March 2004 |  | 0.4           |   |  | 0.9                   |   |  | 33.2                      |   |  | 34.5  |  
|                                    |  |               |   | 
|Net book value at 31 March 2004     |  | 9.1           |   |  | 2.9                   |   |  | 33.9                      |   |  | 45.9  |  
|                                    |  |               |   | 
|                                    |  | Buildings     |   |  | Leaseholdimprovements |   |  | Computersandequipment2004 |   |  | Total |  
|                                    |  | £             |   |  | £                     |   |  | £                         |   |  | £     |  
|                                    |  | (in millions) |  
|Cost                                |  |               |   |  |                       |   |  |                           |   |  |       |  
|Balance at 31 March 2004            |  | 9.5           |   |  | 3.8                   |   |  | 67.1                      |   |  | 80.4  |  
|Acquisitions                        |  | 0.3           |   |  |                      |   |  | 0.5                       |   |  | 0.8   |  
|Additions                           |  | 0.1           |   |  | 1.5                   |   |  | 23.2                      |   |  | 24.8  |  
|Disposals                           |  |              |   |  |                      |   |  | (6.9                      | ) |  | (6.9  | )
|Currency movements                  |  | (0.2          | ) |  | (0.1                  | ) |  | (0.8                      | ) |  | (1.1  | )
|                                    |  |               |   | 
|Total cost at 31 March 2005         |  | 9.7           |   |  | 5.2                   |   |  | 83.1                      |   |  | 98.0  |  
|                                    |  |               |   | 
|Depreciation                        |  |               |   |  |                       |   |  |                           |   |  |       |  
|Balance at 31 March 2004            |  | 0.4           |   |  | 0.9                   |   |  | 33.2                      |   |  | 34.5  |  
|Charge for the year                 |  | 0.2           |   |  | 0.7                   |   |  | 22.1                      |   |  | 23.0  |  
|Disposals                           |  |              |   |  |                      |   |  | (6.9                      | ) |  | (6.9  | )
|Currency movements                  |  |              |   |  |                      |   |  | (0.4                      | ) |  | (0.4  | )
|                                    |  |               |   | 
|Total depreciation at 31 March 2005 |  | 0.6           |   |  | 1.6                   |   |  | 48.0                      |   |  | 50.2  |  
|                                    |  |               |   | 
|Net book value at 31 March 2005     |  | 9.1           |   |  | 3.6                   |   |  | 35.1                      |   |  | 47.8  |  



The net book value of
fixed assets included amounts of £4.2 million (2004-£0.8 million, 2003-£0.2 million) in respect of assets held under finance leases.



F-22



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



12. Investments



|                             |  |               |  |      
|---------------------------- |  | ------------- |  | -----
|                             |  | At 31 March  
|                             |  | 2004          |  | 2005 
|                             |  | £             |  | £    
|                             |  | (in millions)
|Shares in parent company     |  | 5.8           |  | 9.8  
|Other investments            |  | 1.8           |  | 2.0  
|                             |  | 7.6           |  | 11.8 
|                             |  |              
|13. Stocks                   |  |               |  |      
|                             | 
|                             |  | At 31 March  
|                             |  | 2004          |  | 2005 
|                             |  | £             |  | £    
|                             |  | (in millions)
|Directories in progress      |  | 147.2         |  | 165.1
|Other                        |  | 4.7           |  | 7.5  
|                             |  |              
|Total stocks                 |  | 151.9         |  | 172.6
|                             |  |              
|14. Debtors                  |  |               |  |      
|                             | 
|                             |  | At 31 March  
|                             |  | 2004          |  | 2005 
|                             |  | £             |  | £    
|                             |  | (in millions)
|Trade debtors(a)             |  | 401.9         |  | 429.3
|Other debtors                |  | 8.7           |  | 8.1  
|Accrued income(a)            |  | 4.7           |  | 4.7  
|Prepayments                  |  | 10.6          |  | 17.9 
|Deferred tax asset (note 15) |  | 34.7          |  | 18.7 
|                             |  |              
|Total debtors                |  | 460.6         |  | 478.7

---

|(a) | The Yell Groups trade debtors and accrued income are stated after deducting a provision of £112.8 million at 31 March 2005 (2004£113.1 million) for doubtful
debts and sales allowances. The amount charged to the Yell Group profit and loss account for doubtful debts for the year ended 31 March 2005 was £72.6 million (year ended 31 March 2004£71.1 million; year ended 31 March
2003£67.6 million).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



All amounts
above fall due within one year except for the deferred tax asset, which may fall due after more than one year.



F-23



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



15. Deferred taxation



Deferred tax asset



|                                                     |  |                     |   |  |       |  
|---------------------------------------------------- |  | ------------------- | - |  | ----- | -
|                                                     |  | Year ended 31 March |  
|                                                     |  | 2004                |   |  | 2005  |  
|                                                     |  | £                   |   |  | £     |  
|                                                     |  | (in millions)       |  
|Balance at beginning of the year                     |  | 23.1                |   |  | 34.7  |  
|Amount credited (charged) to profit and loss account |  | 16.1                |   |  | (15.5 | )
|Adjustments relating to acquisitions                 |  | (1.9                | ) |  |      |  
|Currency movements                                   |  | (2.6                | ) |  | (0.5  | )
|                                                     |  |                    
|Balance at end of the year                           |  | 34.7                |   |  | 18.7  |  



The deferred tax
assets are included in debtors (note 14). The elements of all net deferred tax assets recognised in the accounts, including the cumulative unrecognised effect of net operating losses arising from operations in the United States, were as follows:



|                                                                                         |  |               |   |  |       |  
|---------------------------------------------------------------------------------------- |  | ------------- | - |  | ----- | -
|                                                                                         |  | At 31 March   |  
|                                                                                         |  | 2004          |   |  | 2005  |  
|                                                                                         |  | £             |   |  | £     |  
|                                                                                         |  | (in millions) |  
|Tax effect of timing differences due to:                                                 |  |               |   |  |       |  
|Amortisation and depreciation                                                            |  | (12.2         | ) |  | (4.9  | )
|Bad debt provisions                                                                      |  | 22.7          |   |  | 25.1  |  
|Recognised tax net operating losses                                                      |  | 40.0          |   |  | 20.9  |  
|Stocks valuation                                                                         |  | (22.6         | ) |  | (25.8 | )
|Accrued expenses                                                                         |  | 9.8           |   |  | 2.3   |  
|Other temporary differences                                                              |  | (3.0          | ) |  | 1.1   |  
|                                                                                         |  |              
|Recognised net deferred tax assets                                                       |  | 34.7          |   |  | 18.7  |  
|                                                                                         |  |              
|Unrecognised deferred tax assets relating to tax net operating losses from US operations |  | 7.7           |   |  |      |  



Tax losses of
£55.6 million are available to use against taxable income in the United States in future years. The benefits available in respect of tax net operating losses arising from US operations expire between 2018 and 2024 if not used.



F-24



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



16. Loans and other borrowings



|                                                   |  |              |  |               |  |        
|-------------------------------------------------- |  | ------------ |  | ------------- |  | -------
|                                                   |  |              |  | At 31 March  
|                                                   |  | Interestrate |  | 2004          |  | 2005   
|                                                   |  | %            |  | £             |  | £      
|                                                   |  |              |  | (in millions)
|Amounts falling due within one year                |  |              |  |               |  |        
|Senior credit facilities(a)(b)                     |  | 5.30         |  | 80.0          |  | 90.0   
|Revolving loan under senior credit facilities      |  | 5.70         |  | 5.0           |  |       
|Net obligations under finance leases               |  |              |  | 0.8           |  | 1.3    
|Subordinated parent company loan                   |  |              |  | 41.9          |  | 58.9   
|                                                   |  |              | 
|Total amounts falling due within one year          |  |              |  | 127.7         |  | 150.2  
|                                                   |  |              | 
|Amounts falling due after more than one year       |  |              |  |               |  |        
|Senior credit facilities(a)(b)                     |  | 5.30         |  | 856.6         |  | 761.0  
|Senior notes:                                      |  |              |  |               |  |        
|Senior sterling notes(c)(f)                        |  | 10.75        |  | 158.1         |  | 159.8  
|Senior dollar notes(d)(f)                          |  | 10.75        |  | 68.1          |  | 67.4   
|Senior discount dollar notes(e)(f)                 |  | 13.95        |  | 73.1          |  | 82.1   
|Subordinated parent company loan(g)                |  | 6.30         |  | 831.2         |  | 478.5  
|                                                   |  |              | 
|Total amounts falling due after more than one year |  |              |  | 1,987.1       |  | 1,548.8
|                                                   |  |              | 
|Net loans and other borrowings                     |  |              |  | 2,114.8       |  | 1,699.0

---

|(a) | Facilities comprise two term loans of £624.0 million and $596.0 million which are due in 2008. In addition to the term loans, the senior credit facilities include a revolving
credit facility of £200.0 million. At 31 March 2005, £nil was outstanding under the revolving credit facility (31 March 2004  £5.0 million). The senior credit facilities, including the revolving credit facility, have first
priority security over substantially all of the Yell Groups assets.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | The terms of the senior credit facilities require the Yell Group and its consolidated subsidiaries to maintain specified consolidated financial ratios for senior debt to Earnings
before Interest, Tax, Depreciation and Amortisation (EBITDA as defined in the senior credit facilities), EBITDA to net cash interest payable and, until 31 March 2005, total net senior debt to EBITDA. Certain of these financial ratios
have to be prepared for the preceding 12-month period and reported to the providers of the senior credit facilities on a six-monthly basis. The Yell Group has reported that it has maintained the financial ratios for the year ended 31 March 2005 in
compliance with these debt covenants.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | This represents a £162.5 million aggregate principal amount of 10.75% senior sterling notes due 2011. Interest is payable on 1 February and 1 August of each year. The notes
are unsecured and rank equally with each other and existing and future senior notes.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | This represents a $130.0 million aggregate principal amount of 10.75% senior dollar notes due 2011. Interest is payable on 1 February and 1 August of each year. The notes are
unsecured and rank equally with each other and existing and future senior notes.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) | This represents a $187.4 million aggregate principal amount of 13.50% senior discount dollar notes due 2011 discounted from 1 August 2006. The issue price of each senior discount
dollar note was $521.3 per $1,000.0 principal amount at maturity. Cash interest will not accrue on the senior discount dollar notes until 1 August 2006, at which time interest is payable on 1 February and 1 August of each year, beginning 1 February
2007. The notes are unsecured and rank equally with each other and existing and future senior notes. The 13.95% interest rate represents the rate of return from inception on the notes including the unwinding of the discount.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | The Senior sterling, Senior dollar and Senior discount dollar notes (the Notes) carry an issuer call option that allows the Group to redeem all or some of the Notes from
1 August 2006 upon payment of a premium of £19 million. The premium reduces on each anniversary until 1 August 2009, after which the Notes may be redeemed at any time at par.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(g) | The subordinated parent company loan includes interest that is rolled up monthly. Interest accumulated at an annual percentage rate of 10% before our parent companys IPO on 15
July 2003. Interest was not charged between 15 July 2003 and 31 March 2004. Interest has been accumulating at an annual percentage rate of 6.30% since 1 April 2004. Payments to settle amounts owed can only be made when our parent company makes
dividend payments to its shareholders, in line with restrictions imposed by our senior credit facilities and senior notes.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



16. Loans and other borrowings (continued)



These balances are shown net of unamortised deferred finance costs, which have been allocated as follows:



|                                              |  |                  |  |                      |   |  |           
|--------------------------------------------- |  | ---------------- |  | -------------------- | - |  | ----------
|                                              |  | At 31 March 2005
|                                              |  | Principalamount  |  | Deferredfinancecosts |   |  | Netbalance
|                                              |  | £                |  | £                    |   |  | £         
|                                              |  | (in millions)   
|Senior credit facilities                      |  | 859.6            |  | (8.6                 | ) |  | 851.0     
|Senior notes:                                 |  |                  |  |                      |   |  |           
|Senior sterling notes                         |  | 162.5            |  | (2.7                 | ) |  | 159.8     
|Senior dollar notes                           |  | 68.8             |  | (1.4                 | ) |  | 67.4      
|Senior discount dollar notes                  |  | 83.4             |  | (1.3                 | ) |  | 82.1      
|Subordinated parent company loan              |  | 537.4            |  |                     |   |  | 537.4     
|Revolving loan under senior credit facilities |  |                 |  |                     |   |  |          
|Other                                         |  | 1.3              |  |                     |   |  | 1.3       
|                                              |  |                  | 
|Total loans and borrowings                    |  | 1,713.0          |  | (14.0                | ) |  | 1,699.0   



Debt maturities are as
follows:



|                                 |  |                  |  |                      |   |  |            |  |                 |  |                      |   |  |           
|-------------------------------- |  | ---------------- |  | -------------------- | - |  | ---------- |  | --------------- |  | -------------------- | - |  | ----------
|                                 |  | At 31 March 2004 |  | At 31 March 2005    
|                                 |  | Principalamount  |  | Deferredfinancecosts |   |  | Netbalance |  | Principalamount |  | Deferredfinancecosts |   |  | Netbalance
|                                 |  | £                |  | £                    |   |  | £          |  | £               |  | £                    |   |  | £         
|                                 |  | (in millions)   
|Within one year, or on demand    |  | 125.8            |  | (4.2                 | ) |  | 121.6      |  | 150.2           |  | (6.6                 | ) |  | 143.6     
|                                 |  |                  |  |                      |   | 
|Between one and two years        |  | 88.2             |  | (4.5                 | ) |  | 83.7       |  | 100.0           |  | (4.1                 | ) |  | 95.9      
|Between two and three years      |  | 100.5            |  | (4.9                 | ) |  | 95.6       |  | 50.0            |  | (2.6                 | ) |  | 47.4      
|Between three and four years     |  | 52.6             |  | (5.2                 | ) |  | 47.4       |  | 619.6           |  | (0.7                 | ) |  | 618.9     
|Between four and five years      |  | 628.4            |  | (1.3                 | ) |  | 627.1      |  |                |  |                     |   |  |          
|After five years                 |  | 1,139.4          |  |                     |   |  | 1,139.4    |  | 793.2           |  |                     |   |  | 793.2     
|                                 |  |                  |  |                      |   | 
|Total after more than one year   |  | 2,009.1          |  | (15.9                | ) |  | 1,993.2    |  | 1,562.8         |  | (7.4                 | ) |  | 1,555.4   
|                                 |  |                  |  |                      |   | 
|Total loans and other borrowings |  | 2,134.9          |  | (20.1                | ) |  | 2,114.8    |  | 1,713.0         |  | (14.0                | ) |  | 1,699.0   



F-26



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



17. Financial instruments and risk management



Treasury policy



The Yell Group treasury functions primary role is to fund investments and to manage liquidity and financial risk, including risk from volatility in
currency and interest rates and counterparty credit risk. The treasury function is not a profit centre and its objective is to manage risk at optimum cost.



The board of directors sets the treasury functions policy and its activities are subject to a set of controls commensurate with the magnitude of the
investments and borrowings under its management.



Counterparty
credit risk is closely monitored and managed within controls set by the board of directors. Derivative financial instruments, including forward foreign exchange contracts, are normally used only for hedging purposes.



The principal financing and treasury exposures faced by the Yell Group arise
from working capital management, the financing of acquisitions and tangible fixed assets, the management of interest rate positions and the investment of surplus cash. The treasury function manages those exposures with the objective of remaining
within ratios covenanted with the senior lenders. The Yell Group has not purchased or issued any derivative contracts for trading or hedging purposes, except as referred to below.



The Yell Group financed its operations prior to 22 June 2001 primarily by a mixture of BTs net investment and loans.
Subsequent to 22 June 2001 and up until the initial public offering on 15 July 2003, the Yell Group financed its operations primarily by long-term debt. Subsequent to the initial public offering, the Yell Group funds the business largely from cash
flows generated from operations. Details of the Yell Groups borrowings are disclosed in note 16.



All significant cash inflows and outflows associated with the Yell Groups operations in the United Kingdom are denominated in pounds sterling, and
all significant cash inflows and outflows associated with operations in the United States are denominated in US dollars. However, the financial statements are presented in pounds sterling, and changes in the exchange rate between the US dollar and
pounds sterling will affect the translation of the results of our operations in the United States into pounds sterling. The composition of our debt partially hedges exchange rate fluctuations, because 41.9% of our third party debt and 35.7% of our
net third party interest expense are denominated in US dollars, thereby reducing our USEBITDA exposure by approximately 18.5%. The Group does not intend to hedge any foreign exchange rate risk relating to US dollar-denominated notes, although we
will continue to review this practice.



The Yell Group borrows
at both fixed and floating rates of interest and, in order to achieve the objective of managing interest rate risk, partially hedges its risk through the use of interest-rate derivative instruments. Interest is payable under the senior credit
facilities at a variable interest rate. Under our current senior facilities agreement we were required to have fixed interest on at least 50% of all interest payments during the 21 months following each month end. This requirement ceased once the
Group leverage ratio fell below 3.5 times. Even so, we have fixed interest on at least 50% of the indebtedness under the senior credit facilities using interest rate swaps over the period to March 2007, with a review of this strategy on a quarterly
basis.



During the year ended 31 March 2005, as set out in note
9, net debt decreased from £2,096.4 million to £1,645.9 million, primarily as a result of cash inflows from operating activities. Additionally, we and our parent company agreed that we would settle £300.0 million of our
subordinated parent company loan by issuing 10 shares of 100 euros each at a premium.



Other financial instruments



The Yell
Group has short-term debtors and creditors which arise in the normal course of business and have been excluded from the disclosures which follow.



There has been no change in the role that financial instruments have in creating or changing the Yell Groups risk between 31 March 2005 and the date
of these financial statements.



F-27



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



17. Financial instruments and risk management (continued)



Currency risk profile



The interest rate profile of the Yell Groups financial assets and
liabilities was:



|                                             |  |               |   |  |           |   |  |          |  
|-------------------------------------------- |  | ------------- | - |  | --------- | - |  | -------- | -
|                                             |  | Sterling      |   |  | US dollar |   |  | Total    |  
|                                             |  | £             |   |  | £         |   |  | £        |  
|                                             |  | (in millions) |  
|Floating rate                                |  | 7.5           |   |  | 10.9      |   |  | 18.4     |  
|                                             |  |               |  
|Total financial assets at 31 March 2004      |  | 7.5           |   |  | 10.9      |   |  | 18.4     |  
|                                             |  |               |  
|Fixed rate                                   |  | (1,386.6      | ) |  | (295.7    | ) |  | (1,682.3 | )
|Floating rate                                |  | (278.0        | ) |  | (174.6    | ) |  | (452.6   | )
|                                             |  |               |  
|Total financial liabilities at 31 March 2004 |  | (1,664.6      | ) |  | (470.3    | ) |  | (2,134.9 | )
|                                             |  |               |  
|Net financial liabilities at 31 March 2004   |  | (1,657.1      | ) |  | (459.4    | ) |  | (2,116.5 | )
|                                             |  |               |  
|Total financial assets at 31 March 2005      |  | 8.4           |   |  | 44.7      |   |  | 53.1     |  
|                                             |  |               |  
|Fixed rate                                   |  | (995.9        | ) |  | (297.0    | ) |  | (1,292.9 | )
|Floating rate                                |  | (248.0        | ) |  | (172.1    | ) |  | (420.1   | )
|                                             |  |               |  
|Total financial liabilities at 31 March 2005 |  | (1,243.9      | ) |  | (469.1    | ) |  | (1,713.0 | )
|                                             |  |               |  
|Net financial liabilities at 31 March 2005   |  | (1,235.5      | ) |  | (424.4    | ) |  | (1,659.9 | )



Details of currency
denomination, interest and maturity profiles of specific borrowings are given in note 16. There are no material monetary assets or liabilities denominated in currencies other than local reporting currencies.



Interest rate profile



Details of year-end interest rates on borrowings are set out in note 16. The
Yell Group has entered into interest rate forward rate agreements and swaps for the purpose of hedging future floating interest rate movements. The Yell Group has fixed interest rates on at least 50% of the interest rate exposure on the indebtedness
under the senior credit facilities using interest rate swaps over the period to 31 March 2007.



For the fixed-rate financial liabilities, the average interest rates and the average periods for which the rates are fixed are:



|                                                        |  |          |  |           |  |                
|------------------------------------------------------- |  | -------- |  | --------- |  | ---------------
|                                                        |  | Sterling |  | US dollar |  | Totalborrowings
|At 31 March 2004                                        |  |          |  |           |  |                
|Weighted average interest rate (%)                      |  | 7.1      |  | 8.5       |  | 7.3            
|Weighted average period for which rate is fixed (years) |  | 3.0      |  | 4.2       |  | 3.4            
|At 31 March 2005                                        |  |          |  |           |  |                
|Weighted average interest rate (%)                      |  | 6.9      |  | 8.8       |  | 7.3            
|Weighted average period for which rate is fixed (years) |  | 2.8      |  | 3.8       |  | 3.2            



The floating-rate
financial liabilities bear interest at rates fixed in advance for periods ranging from one month to six months by reference to LIBOR.



Borrowing facilities and liquidity risk



The Yell Group has maintained committed banking facilities to mitigate any liquidity risk it may face. There were committed senior debt facilities at 31
March 2005 of £200 million (2004£200.0 million) of which £nil had been drawn down at 31 March 2005 (2004£5.0 million). These facilities expire on 7 July 2008.



F-28



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



17. Financial instruments and risk management (continued)



Fair values of financial assets and liabilities



The following table reflects the carrying amount and fair value of the Yell
Groups financial instruments at 31 March 2004 and 2005. The fair values of the financial instruments are the amounts at which the instruments could be exchanged in a current transaction between willing parties, other than in forced liquidation
or sale.



|                                   |  |                            |  |                            |   |  |                            |  |                            |  
|---------------------------------- |  | -------------------------- |  | -------------------------- | - |  | -------------------------- |  | -------------------------- | -
|                                   |  | Book valueat 31 March 2004 |  | Fair valueat 31 March 2004 |   |  | Book valueat 31 March 2005 |  | Fair valueat 31 March 2005 |  
|                                   |  | £                          |  | £                          |   |  | £                          |  | £                          |  
|                                   |  | (in millions)              | 
|Non-derivatives:                   |  |                            |  |                            |   |  |                            |  |                            |  
|Assets                             |  |                            |  |                            |   |  |                            |  |                            |  
|Cash at bank and in hand           |  | 18.4                       |  | 18.4                       |   |  | 53.1                       |  | 53.1                       |  
|Liabilities                        |  |                            |  |                            |   |  |                            |  |                            |  
|Short-term borrowings(a)(c)        |  | 127.7                      |  | 127.7                      |   |  | 150.2                      |  | 150.2                      |  
|Long-term borrowings(b)(c)         |  | 1,987.1                    |  | 1,987.1                    |   |  | 1,548.8                    |  | 1,603.9                    |  
|                                   |  |                            |  |                           
|Derivatives:                       |  |                            |  |                            |   |  |                            |  |                            |  
|Interest rate swaps                |  |                           |  | (3.2                       | ) |  |                           |  | (2.9                       | )
|Forward foreign exchange contracts |  |                           |  |                           |   |  |                           |  |                           |  

---

|(a) | The fair value of short-term borrowings approximated to carrying value due to the short maturity of the instruments.
|--- | --------------------------------------------------------------------------------------------------------------------

|(b) | The fair value of the Yell Groups notes and other long-term borrowings has been estimated on the basis of quoted market prices for the same or similar issues with the same
maturities where they existed, and on calculations of the present value of future cash flows using the appropriate discount rates in effect at the balance sheet dates, where market prices of similar issues did not exist.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Long-term borrowings are presented net of unamortised costs, which amount to £14.0 million at 31 March 2005 and £20.1 million at 31 March 2004. See Note 16 for further
details.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Gains and losses on instruments used
for hedging are not recognised until the exposure that is being hedged is itself recognised. Unrecognised gains and losses on the interest rate derivative instruments are as follows:



|                                                                    |  |                  |  |        |   |  |          
|------------------------------------------------------------------- |  | ---------------- |  | ------ | - |  | ---------
|                                                                    |  | At 31 March 2005
|                                                                    |  | Gains            |  | Losses |   |  | Net gains
|                                                                    |  | £                |  | £      |   |  | £        
|                                                                    |  | (in millions)   
|Unrecognised gains and losses on hedges at 31 March 2005, of which: |  | 3.3              |  | (0.4   | ) |  | 2.9      
|Expected to be recognised in the year to 31 March 2006              |  | 1.8              |  |       |   |  | 1.8      
|Expected to be recognised after 31 March 2006                       |  | 1.5              |  | (0.4   | ) |  | 1.1      



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



18. Other creditors



Amounts falling due within one year



|                                                  |  |               |  |      
|------------------------------------------------- |  | ------------- |  | -----
|                                                  |  | At 31 March  
|                                                  |  | 2004          |  | 2005 
|                                                  |  | £             |  | £    
|                                                  |  | (in millions)
|Trade creditors                                   |  | 26.0          |  | 22.9 
|Corporation tax                                   |  | 16.2          |  | 20.5 
|Other taxation and social security                |  | 22.9          |  | 23.1 
|Other creditors                                   |  | 4.4           |  | 4.3  
|Accruals                                          |  | 89.7          |  | 116.8
|Deferred income                                   |  | 71.8          |  | 91.5 
|                                                  |  |              
|Total other creditors falling due within one year |  | 231.0         |  | 279.1



19. Called up share capital



|                                                        |  |               |  |     
|------------------------------------------------------- |  | ------------- |  | ----
|                                                        |  | At 31 March  
|                                                        |  | 2004          |  | 2005
|                                                        |  | £             |  | £   
|                                                        |  | (in millions)
|Authorised                                              |  |               |  |     
|900 shares of 100 euro each                             |  | 0.1           |  | 0.1 
|                                                        |  |              
|Allotted, called up and fully paid                      |  |               |  |     
|360 shares issued to Yell Group plc (2004 - 350 shares) |  | 0.1           |  | 0.1 



20. Changes in equity
shareholders funds (deficit)



Reconciliation of movement in
the consolidated equity shareholders deficit



|                                               |  |               |  |              |  |                        |   |  |        |  
|---------------------------------------------- |  | ------------- |  | ------------ |  | ---------------------- | - |  | ------ | -
|                                               |  | Sharecapital  |  | Sharepremium |  | Profit andloss account |   |  | Total  |  
|                                               |  | £             |  | £            |  | £                      |   |  | £      |  
|                                               |  | (in millions) | 
|Balance at 31 March 2002                       |  | 0.1           |  | 0.9          |  | (50.9                  | ) |  | (49.9  | )
|Issuance of share capital (ordinary shares)(a) |  |              |  | 0.1          |  |                       |   |  | 0.1    |  
|Loss for the year                              |  |              |  |             |  | (40.6                  | ) |  | (40.6  | )
|Currency movements(b)                          |  |              |  |             |  | (34.0                  | ) |  | (34.0  | )
|                                               |  |               |  |             
|Balance at 31 March 2003                       |  | 0.1           |  | 1.0          |  | (125.5                 | ) |  | (124.4 | )
|Issuance of share capital (ordinary shares)(c) |  |              |  | 304.4        |  |                       |   |  | 304.4  |  
|Loss for the year                              |  |              |  |             |  | (51.1                  | ) |  | (51.1  | )
|Currency movements(b)                          |  |              |  |             |  | (65.0                  | ) |  | (65.0  | )
|                                               |  |               |  |             
|Balance at 31 March 2004                       |  | 0.1           |  | 305.4        |  | (241.6                 | ) |  | 63.9   |  
|Issuance of share capital (ordinary shares)(d) |  |              |  | 300.0        |  |                       |   |  | 300.0  |  
|Profit for the year                            |  |              |  |             |  | 70.4                   |   |  | 70.4   |  
|Currency movements(b)                          |  |              |  |             |  | (13.4                  | ) |  | (13.4  | )
|                                               |  |               |  |             
|Balance at 31 March 2005                       |  | 0.1           |  | 605.4        |  | (184.6                 | ) |  | 420.9  |  

---

|(a) | 100 shares of 100 euro each were issued on 16 April 2002 for £111,600.
|--- | ----------------------------------------------------------------------

|(b) | The cumulative foreign currency translation adjustment was a £116.1 million loss at 31 March 2005 (31 March 2004£102.7 million loss, 31 March 2003£37.7
million loss).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | 50 shares of 100 euro each were issued on 15 July 2003 for £304,401,000.
|--- | ------------------------------------------------------------------------

|(d) | Agreement was reached in April 2004 to issue 10 shares of 100 euro each at a premium to settle £300,000,000 of parent company indebtedness.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------



F-30



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





21. Financial commitments, contingent
liabilities and litigation



|                                                                                                               |  |               |  |     
|-------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ----
|                                                                                                               |  | At 31 March  
|                                                                                                               |  | 2004          |  | 2005
|                                                                                                               |  | £             |  | £   
|                                                                                                               |  | (in millions)
|Operating lease payments payable within one year of the balance sheet date were in respect of leases expiring: |  |               |  |     
|Within one year                                                                                                |  | 0.8           |  | 1.1 
|Between one and five years                                                                                     |  | 6.2           |  | 6.6 
|After five years                                                                                               |  | 5.8           |  | 6.0 
|                                                                                                               |  |              
|Total payable within one year                                                                                  |  | 12.8          |  | 13.7



Future minimum
operating lease payments for the Yell Group at 31 March 2005 are as follows:



|                                              |  |              
|--------------------------------------------- |  | -------------
|                                              |  | £            
|                                              |  | (in millions)
|Payable in the year ending 31 March:          |  |              
|2006                                          |  | 13.7         
|2007                                          |  | 12.2         
|2008                                          |  | 11.3         
|2009                                          |  | 10.5         
|2010                                          |  | 8.5          
|Thereafter                                    |  | 29.4         
|                                              | 
|Total future minimum operating lease payments |  | 85.6         



Operating lease
commitments are principally in respect of leases of land and buildings.



A lawsuit filed by Verizon was settled in October 2004. Following publication of our half year results, Yellow Book USA was served with complaints filed as class actions in five US states and the District of Columbia. In these actions, the
plaintiffs allege violations of consumer protection legislation and are placing reliance on findings of the New York court in the now settled suit brought against Yellow Book USA by Verizon. On 13 May 2005, the court in New Jersey gave its
preliminary approval to a comprehensive national settlement, with no admission of liability. Notice of the terms of settlement will be published to class members and the final approval hearing is anticipated to be held in late summer 2005. The total
estimated costs of settling these lawsuits is included in exceptional administrative expenses in note 4.



There are no contingent liabilities or guarantees other than those referred above and on page 60 of the Operating and Financial Review and Prospects and
those arising in the ordinary course of the Yell Groups business.



No material losses are anticipated on liabilities arising in the ordinary course of business.



F-31



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





22. Directors remuneration



The emoluments of the directors and the benefits
including those received under the long-term incentive plans were:



|                                                             |  |                  |  |       |  |      
|------------------------------------------------------------ |  | ---------------- |  | ----- |  | -----
|                                                             |  | Year to 31 March
|                                                             |  | 2003             |  | 2004  |  | 2005 
|                                                             |  | £                |  | £     |  | £    
|                                                             |  | (in thousands)  
|Salary                                                       |  | 795              |  | 890   |  | 1,026
|Other benefits                                               |  | 48               |  | 69    |  | 73   
|Performance-related bonus                                    |  | 795              |  | 890   |  | 1,230
|Non-executive directors fees and share benefits             |  | 197              |  | 933   |  | 455  
|                                                             |  |                  | 
|Aggregate emoluments                                         |  | 1,835            |  | 2,782 |  | 2,784
|Aggregate gains made on the exercise of share options        |  |                 |  | 2,714 |  |     
|Aggregate amounts receivable under long-term incentive plans |  | 46               |  |      |  |     
|                                                             |  | 1,881            |  | 5,496 |  | 2,784



Two directors (2004:
two, 2003: two) had retirement benefits accruing under a defined benefit pension scheme.



Directors detailed remuneration



|                                                   |  |                              |  |                            |  |       |  |      |  |       |  |     
|-------------------------------------------------- |  | ---------------------------- |  | -------------------------- |  | ----- |  | ---- |  | ----- |  | ----
|                                                   |  | John CondronYear to 31 March |  | John DavisYear to 31 March
|                                                   |  | 2003                         |  | 2004                       |  | 2005  |  | 2003 |  | 2004  |  | 2005
|                                                   |  | £                            |  | £                          |  | £     |  | £    |  | £     |  | £   
|                                                   |  | (in thousands)              
|Salary                                             |  | 485                          |  | 550                        |  | 650   |  | 310  |  | 340   |  | 376 
|Other benefits                                     |  | 27                           |  | 47                         |  | 48    |  | 21   |  | 22    |  | 25  
|Performance-related bonus(a)                       |  | 485                          |  | 550                        |  | 780   |  | 310  |  | 340   |  | 450 
|                                                   |  |                              |  |                            |  |      
|Aggregate emoluments                               |  | 997                          |  | 1,147                      |  | 1,478 |  | 641  |  | 702   |  | 851 
|Gains made on exercise of share options            |  |                             |  | 1,422                      |  |      |  |     |  | 1,292 |  |    
|Amounts receivable under long-term incentive plans |  | 46                           |  |                           |  |      |  |     |  |      |  |    
|                                                   |  | 1,043                        |  | 2,569                      |  | 1,478 |  | 641  |  | 1,994 |  | 851 

---

|(a) | Comprises cash bonus of 100% of base salary and, in 2005 only, a further 20% of base salary payable in shares under the Deferred Bonus Plan. A description of the plan is in note 25.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Non-executive directors fees



The non-executive directors, except Lord Powell of Bayswater, who held
office between 22 June 2001 and 31 March 2002 were appointed to the board of the Yell Group as representatives of Apax Partners Managing Entities and Hicks Muse. Monitoring fees charged to the Yell Group prior to our parent companys initial
public offering by these companies are detailed in note 24.



During the year ended 31 March 2003, additional non-executive directors were appointed.



F-32



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





22. Directors remuneration
(continued)



No fees were paid directly to non-executive
directors who were representatives of Apax Partners Managing Entities or Hicks Muse prior to the flotation of our parent company. Fees were paid to the following non-executive directors.



|                         |  |                  |  |      |  |     
|------------------------ |  | ---------------- |  | ---- |  | ----
|                         |  | Year to 31 March
|                         |  | 2003             |  | 2004 |  | 2005
|                         |  | £                |  | £    |  | £   
|                         |  | (in thousands)  
|Robert Scott             |  | 38               |  | 129  |  | 155 
|Charles Carey            |  | 38               |  | 57   |  | 60  
|John Coghlan             |  | 39               |  | 64   |  | 65  
|Joachim Eberhardt        |  | 38               |  | 63   |  | 65  
|Lyndon Lea               |  |                 |  | 45   |  | 60  
|Lord Powell of Bayswater |  | 44               |  | 50   |  | 50  



Retirement benefits



|                                                                                               |  |                         |  |                       |  |       |  |      |  |      |  |     
|---------------------------------------------------------------------------------------------- |  | ----------------------- |  | --------------------- |  | ----- |  | ---- |  | ---- |  | ----
|                                                                                               |  | John CondronAt 31 March |  | John DavisAt 31 March
|                                                                                               |  | 2003                    |  | 2004                  |  | 2005  |  | 2003 |  | 2004 |  | 2005
|                                                                                               |  | £                       |  | £                     |  | £     |  | £    |  | £    |  | £   
|                                                                                               |  | (in thousands)         
|Cumulative accrued annual pension                                                              |  | 195                     |  | 229                   |  | 280   |  | 17   |  | 27   |  | 57  
|Cumulative accrued lump sum                                                                    |  | 584                     |  | 686                   |  | 840   |  |     |  |     |  |    
|Transfer value of increase in accrued benefit in excess of inflation less member contributions |  | 659                     |  | 426                   |  | 705   |  | 35   |  | 54   |  | 224 
|Transfer value of accrued benefits at year end                                                 |  | 2,923                   |  | 3,647                 |  | 4,720 |  | 119  |  | 207  |  | 466 
|Change in accrued annual pension benefit, net of inflation                                     |  |                         |  |                       |  | 44    |  |      |  |      |  | 30  
|Change in one-off cash sum, net of inflation                                                   |  |                         |  |                       |  | 133   |  |      |  |      |  |    
|Change in transfer value over year less member contributions                                   |  | 876                     |  | 691                   |  | 1,034 |  | 45   |  | 73   |  | 244 



Beneficial and non-beneficial
interests



The interests of directors and their
families in Yell Group ordinary shares are shown below:



|             |  |             |  |          
|------------ |  | ----------- |  | ---------
|             |  | At 31 March
|             |  | 2004        |  | 2005     
|             |  | Number      |  | Number   
|John Condron |  | 6,549,853   |  | 3,349,853
|John Davis   |  | 2,901,379   |  | 1,451,739



F-33



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



23. Pensions



SSAP 24Accounting for Pension Costs



Pension costs in respect of the Yell Pension Plan (YPP), the BT Pension Scheme (BTPS) and the defined contribution schemes were:



|                                                   |  |                     |  |      |  |     
|-------------------------------------------------- |  | ------------------- |  | ---- |  | ----
|                                                   |  | Year ended 31 March
|                                                   |  | 2003                |  | 2004 |  | 2005
|                                                   |  | £                   |  | £    |  | £   
|                                                   |  | (in millions)      
|Amounts expensed for YPP (defined benefit section) |  | 8.0                 |  | 8.3  |  | 7.9 
|Amounts expensed for defined contribution schemes  |  | 1.9                 |  | 2.4  |  | 3.5 
|                                                   |  |                     | 
|Total                                              |  | 9.9                 |  | 10.7 |  | 11.4



Yell Pension Plan
(YPP)Defined benefit Section



There are three
defined benefit sections of the YPP, which have been closed to new entrants since 1 October 2001. There is also an unfunded, unapproved scheme for certain employees.



The pension cost for the year ended 31 March 2005 was based on the valuation at 5 April 2002. The valuation, carried out by
professionally qualified independent actuaries, used the projected unit method in conjunction with a market value of assets. The principal assumptions used and the results of the valuations are set out below:



|                                               |  |                                          
|---------------------------------------------- |  | -----------------------------------------
|Valuation method                               |  | 5 April 2002Rates perannum%Projected unit
|Return on existing and future assets           |  | 6.0 to 6.5                               
|Average increase in retail price index         |  | 2.7                                      
|Average future increases in wages and salaries |  | 4.2                                      
|Average increase in pensions                   |  | 2.7                                      
|Dividend growth                                |  |                                         



At 5 April 2002 (the
last valuation date) the market value of assets was £102.7 million. The results of the valuation show that the assets of the scheme were sufficient to cover 102% of the benefits that had accrued to members by that date after allowing for
expected future increases in salaries. The date for the next valuation is expected to be no later than 5 April 2005.



For the year ended 31 March 2005, the Yell Group made regular contributions totalling £7.5 million to the defined benefit section (year ended 31
March 2004£8.5 million; year ended 31 March 2003£7.9 million). In addition, a contribution of £0.5million (2004£0.9 million) in respect of benefit improvements was made, and an additional annual contribution
of £8.2 million in respect of deficit funding (2004£nil). The Group intends to make an additional annual contribution of approximately £8.5 million in the 2006 financial year. There are no provisions held on the balance sheet
in respect of this plan at 31 March 2005 or 2004. The group has a prepayment of £8.6 million at 31 March 2005 (2004£0.3million). The funding policy differs from the accounting policy primarily in that for funding purposes the Group
contributes to target a funding level of 105% in the above assumptions.



The YPP assets are invested in UK and overseas equities, fixed interest and index linked securities, deposits and short-term investments. The assets are held in separate trustee administered funds. The trustees set asset allocation targets
at 31 March 2004 and 2005 in which approximately 55% of the assets held should be equity investments and 45% should be debt securities.



F-34



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





23. Pensions (continued)



Defined contribution schemes



In addition to the defined contribution section Four of the YPP, the Group
sponsors a 401(k) plan for the majority of Yellow Book employees in the United States. The plan allows employees to contribute a portion of their pre-tax and/or after-tax income in accordance with specified guidelines. Yellow Book matches a
percentage of the employee contributions up to certain limits. The assets of the plan are held separately from those of Yellow Book in an independently administered fund.



The pension cost in respect of these schemes represents contributions payable to the funds and amounted to £2.9
million in the year ended 31 March 2005 (year ended 31 March 2004£2.4 million; year ended 31 March 2003£1.9 million) for the Yellow Book scheme, and £0.6 million (year ended 31 March 2004£0.4 million; year
ended 31 March 2003£0.2 million) for section four of the YPP). Outstanding contributions amounted to £nil at 31 March 2005 (2004£nil).



FRS 17Retirement benefits



A valuation of the YPP for the purposes of FRS 17 was carried out at 31 March 2002 and updated to 31 March 2003, 2004 and
2005 by a qualified independent actuary. The following key assumptions were used:



|                  |  |             |  |             |  |            
|----------------- |  | ----------- |  | ----------- |  | -----------
|                  |  | At 31 March
|                  |  | 2003        |  | 2004        |  | 2005       
|                  |  | % per annum |  | % per annum |  | % per annum
|Discount rate     |  | 5.4         |  | 5.4         |  | 5.4        
|Salary increases  |  | 4.0         |  | 4.4         |  | 4.4        
|Pension increases |  | 2.5         |  | 2.9         |  | 2.9        
|Inflation rate    |  | 2.5         |  | 2.9         |  | 2.9        



The assets in the YPP
and the annual expected rates of return were:



|                |  |               |  |               |  |               |  |       |  |     |  |      
|--------------- |  | ------------- |  | ------------- |  | ------------- |  | ----- |  | --- |  | -----
|                |  | At 31 March  
|                |  | 2003          |  | 2004          |  | 2005         
|                |  | %             |  | £             |  | %             |  | £     |  | %   |  | £    
|                |  | (in millions) |  | (in millions) |  | (in millions)
|Equities        |  | 7.8           |  | 49.9          |  | 7.7           |  | 66.4  |  | 7.7 |  | 82.5 
|Corporate Bonds |  | 5.4           |  | 15.8          |  | 5.4           |  | 3.7   |  | 5.4 |  | 6.8  
|Gilts           |  | 4.8           |  | 28.4          |  | 4.7           |  | 52.3  |  | 4.7 |  | 61.2 
|                |  |               |  |               |  |              
|Total           |  |               |  | 94.1          |  |               |  | 122.4 |  |     |  | 150.5



The expected rates of
return were set by reference to yields available on government bonds at the measurement date and appropriate risk margins.



The following amounts as at 31 March 2003, 2004 and 2005 were measured in accordance with the requirements of FRS 17 and show the net balance sheet
liability at the year end if FRS 17 had been adopted:



|                                                     |  |               |   |  |        |   |  |        |  
|---------------------------------------------------- |  | ------------- | - |  | ------ | - |  | ------ | -
|                                                     |  | At 31 March   |  
|                                                     |  | 2003          |   |  | 2004   |   |  | 2005   |  
|                                                     |  | £             |   |  | £      |   |  | £      |  
|                                                     |  | (in millions) |  
|Total market value of assets                         |  | 94.1          |   |  | 122.4  |   |  | 150.5  |  
|Present value of scheme liabilities                  |  | (141.2        | ) |  | (188.8 | ) |  | (249.9 | )
|Deficit in the scheme                                |  | (47.1         | ) |  | (66.4  | ) |  | (99.4  | )
|Related deferred tax asset, based on 30% rate of tax |  | 14.1          |   |  | 19.9   |   |  | 29.8   |  
|                                                     |  |               |  
|Net balance sheet liability                          |  | (33.0         | ) |  | (46.5  | ) |  | (69.6  | )



F-35



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



23. Pensions (continued)



The following amounts explain the change in the deficit in the scheme for the years ended 31 March 2004 and 2005 as if FRS 17 had been adopted:



|                                       |  |                     |   |  |       |  
|-------------------------------------- |  | ------------------- | - |  | ----- | -
|                                       |  | Year ended 31 March |  
|                                       |  | 2004                |   |  | 2005  |  
|                                       |  | £                   |   |  | £     |  
|                                       |  | (in millions)       |  
|Deficit in scheme at beginning of year |  | (47.1               | ) |  | (66.4 | )
|Movement in year:                      |  |                     |   |  |       |  
|Current service cost                   |  | (10.4               | ) |  | (13.7 | )
|Contributions                          |  | 9.4                 |   |  | 16.2  |  
|Past service costs                     |  | (0.8                | ) |  | (0.7  | )
|Other finance costs                    |  | (1.5                | ) |  | (2.3  | )
|Actuarial loss                         |  | (16.0               | ) |  | (32.5 | )
|                                       |  |                    
|Deficit in scheme at 31 March          |  | (66.4               | ) |  | (99.4 | )



The full actuarial
valuation at 5 April 2002 updated to 31 March 2005 showed a deficit of £99.4 million. Improvements in benefits costing £0.5 million were made in the year ended 31 March 2005 and contributions of £7.5 million (13.05% of pensionable
earnings), plus an additional contribution of £8.2 million in respect of deficit funding, were made. In addition, a contribution of £0.8 million in respect of benefit improvements made in the previous year was made on 1 April 2004. In
the year ended 31 March 2005, the Yell Group made contributions at an average rate of 13.05% of pensionable earnings inclusive of expenses and life assurance premiums. Yell Groups trustees have agreed that contributions for the next two years
will be at the same rate with an evaluation of future contribution rates after the next full valuation.



The actuarial loss in the year ended 31 March 2005 was primarily the result of changing our assumptions regarding how long members will live after
retirement.



As the scheme is closed to new members, under the
projected unit method, the current service cost will increase as the members of the scheme approach retirement.



The history of experience gains and losses follows:



|                                                                                                                 |  |                     |    |  |       |    |  |       |   
|---------------------------------------------------------------------------------------------------------------- |  | ------------------- | -- |  | ----- | -- |  | ----- | --
|                                                                                                                 |  | Year ended 31 March |   
|                                                                                                                 |  | 2003                |    |  | 2004  |    |  | 2005  |   
|Difference between the expected and actual return on scheme assets                                               |  |                     |    |  |       |    |  |       |   
| (loss) gain (£ in millions)                                                                                    |  | (27.4               | )  |  | 11.4  |    |  | 2.2   |   
| (loss) gain (% of scheme assets)                                                                               |  | (29                 | )% |  | 9     | %  |  | 1     | % 
|                                                                                                                 |  |                     |   
|Experience gains and losses on scheme liabilities                                                                |  |                     |    |  |       |    |  |       |   
| loss (£ in millions)                                                                                           |  | (4.7                | )  |  | (8.4  | )  |  | (5.8  | ) 
| loss (% of present value of scheme liabilities)                                                                |  | (3                  | )% |  | (4    | )% |  | (2    | )%
|                                                                                                                 |  |                     |   
|Total amount to be recognised in the statement of total recognised gains and losses upon full adoption of FRS 17 |  |                     |    |  |       |    |  |       |   
| loss (£ in millions)                                                                                           |  | (45.7               | )  |  | (15.9 | )  |  | (32.5 | ) 
| loss (% of present value of scheme liabilities)                                                                |  | (32                 | )% |  | (8    | )% |  | (13   | )%



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



23. Pensions (continued)



If the above amounts had been recognised in the financial statements, Yell Groups net liabilities and profit and loss account deficit at 31 March
2004 and 2005 would have been as follows:



|                                              |  |               |   |  |        |  
|--------------------------------------------- |  | ------------- | - |  | ------ | -
|                                              |  | At 31 March   |  
|                                              |  | 2004          |   |  | 2005   |  
|                                              |  | £             |   |  | £      |  
|                                              |  | (in millions) |  
|Net assets excluding pension asset(a)         |  | 63.6          |   |  | 412.3  |  
|Pension liability                             |  | (46.5         | ) |  | (69.6  | )
|                                              |  |              
|Net assets including FRS 17 pension liability |  | 17.1          |   |  | 342.7  |  
|                                              |  |              
|Deficit excluding pension liability           |  | (241.6        | ) |  | (184.6 | )
|Pension reserve                               |  | (46.5         | ) |  | (69.6  | )
|                                              |  |              
|Deficit including FRS 17 pension liability    |  | (288.1        | ) |  | (254.2 | )

---

|(a) | Excluding SSAP 24 balance sheet items.
|--- | --------------------------------------



If the above amounts had been recognised in the financial statements, the Yell Groups profit and loss account and statement of total recognised
gains and losses for the years ended 31 March 2004 and 31 March 2005 would have included the following:



Amounts charged to operating profit



|                       |  |                     |  |      |  |     
|---------------------- |  | ------------------- |  | ---- |  | ----
|                       |  | Year ended 31 March
|                       |  | 2003                |  | 2004 |  | 2005
|                       |  | £                   |  | £    |  | £   
|                       |  | (in millions)      
|Current service cost   |  | 8.8                 |  | 10.4 |  | 13.7
|Past service cost      |  | 0.3                 |  | 0.8  |  | 0.7 
|                       |  |                     | 
|Total operating charge |  | 9.1                 |  | 11.2 |  | 14.4



Net amount credited to net
interest payable



|                                         |  |                     |   |  |      |   |  |       |  
|---------------------------------------- |  | ------------------- | - |  | ---- | - |  | ----- | -
|                                         |  | Year ended 31 March |  
|                                         |  | 2003                |   |  | 2004 |   |  | 2005  |  
|                                         |  | £                   |   |  | £    |   |  | £     |  
|                                         |  | (in millions)       |  
|Expected return on pension scheme assets |  | 7.9                 |   |  | 6.5  |   |  | 8.3   |  
|Interest on pension scheme liabilities   |  | (6.6                | ) |  | (8.0 | ) |  | (10.6 | )
|                                         |  |                     |  
|Net loss on pension scheme               |  | 1.3                 |   |  | (1.5 | ) |  | (2.3  | )



Amount recognised in statement
of total recognised gains and losses



|                                                                             |  |                     |   |  |       |   |  |       |  
|---------------------------------------------------------------------------- |  | ------------------- | - |  | ----- | - |  | ----- | -
|                                                                             |  | Year ended 31 March |  
|                                                                             |  | 2003                |   |  | 2004  |   |  | 2005  |  
|                                                                             |  | £                   |   |  | £     |   |  | £     |  
|                                                                             |  | (in millions)       |  
|Actual return less expected return on pension scheme assets                  |  | (27.4               | ) |  | 11.4  |   |  | 2.2   |  
|Experience losses arising on the scheme liabilities                          |  | (4.7                | ) |  | (8.4  | ) |  | (5.8  | )
|Changes in assumption underlying the present value of the scheme liabilities |  | (13.6               | ) |  | (19.0 | ) |  | (28.9 | )
|                                                                             |  |                     |  
|Actuarial loss                                                               |  | (45.7               | ) |  | (16.0 | ) |  | (32.5 | )



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



24. Related Party Transactions



There were no related party transactions in the year ended 31 March 2005.



Transactions with funds managed or advised by Apax Partners & Co. and Hicks, Muse, Tate and Furst Incorporated
(Hicks Muse)



Funds managed or advised by
Apax Partners and Hicks Muse have held deep discount bonds issued by our parent company of £610 million subscribed amount. Details of these bonds are given in note 16. All of the deep discount bonds were redeemed in the year ended 31 March
2004.



Under the arrangement put in place following the
acquisition from BT, Apax Partners Managing Entities and affiliates of Hicks Muse charged monitoring fees of £25.8 million for the year ended 31 March 2004 (2003£3.2 million), of which £nil (2003£0.9 million)
remained outstanding at the year end.



No transaction or
monitoring fees were payable after 15 July 2003, the date of our parent companys initial public offering. Apax Partners Managing Entities and affiliates of Hicks Muse ceased being related parties on 6 January 2004, when they sold their equity
interests in our parent company.



25. Employee Share Schemes



Our parent company, Yell Group plc, has various stock option plans for
employees and directors. The maximum number of options available for grant under these plans is discussed in Section E, Share Ownership.



Description of schemes



(a) The Yell Group Limited Plans



In March 2002, our parent company introduced three stock option plans, the Yell Group Limited Employee Plan, the Yell Group Limited US Employee Plan and the Yell Group Limited Senior Manager Incentive Plan. The plans
were set up to provide employees with option awards for shares that would become exercisable on an exit event (e.g. sale or quotation). The option life under these plans is ten years from date of grant.



(b) The Yell Group plc Yellow Book (USA) West Management Share Option Scheme



In September 2002, our parent company introduced a stock
option plan, the Yell Group plc Yellow Book (USA) West Management Share Option Scheme for certain employees of the former McLeod directories. This plan provided employees with option awards for shares that vest ratably on each anniversary of the
grant date over a three-year period. The options could be exercised and sold on the later of the vesting date or the date of an exit event. The option life under the plan is ten years from the date of grant.



(c) The Yell Group plc Sharesave Plan



The Yell Group plc Sharesave Plan (the Sharesave) was established in July
2003. Eligible employees who wish to participate must enter into a savings contract for a period of three or five years under which they will contribute payments of between £5 and £250 per month, and a bonus is added at the end of three,
five or seven years. In conjunction with the savings contract, an eligible employee is granted an option to subscribe for Ordinary shares of Yell Group plc, our parent company, out of the repayment made under that contract at the end of three, five
or seven years. The exercise price of any option will not be manifestly less than 80% of the market value of the Ordinary shares at the date of grant. The Sharesave Plan is Inland Revenue approved and therefore no charge has been recorded to the
profit and loss account in accordance with the exemption available under UITF 17.





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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



25. Employee Share Schemes (continued)



(d) The Yell Group plc Employee Stock Purchase Plan



The Yell Group plc 2003 Employee Stock Purchase Plan (the US ESPP) was established in July 2003. Eligible employees are entitled to purchase Ordinary
shares of Yell Group plc, our parent company (Ordinary shares), at the lower of 85% of the fair market value of the Ordinary shares on the date the Ordinary shares are offered and 85% of the fair market value of the Ordinary shares on
the date ending the offer period when the Ordinary shares are purchased by the employee. All Ordinary shares must be purchased through the savings accumulated during an offer period through payroll deductions.



(e) The Yell Group plc Executive Share Option Scheme



The Yell Group plc Executive Share Option Scheme (the UK Option Scheme) was
established in July 2003, and contains an unapproved section and a section approved by the Inland Revenue. The price per Ordinary share at which options will be exercised will be not less than the market value of the Ordinary shares at the date of
grant. Options will normally be granted within a period of 42 days commencing on the day after the date on which our parent company releases its quarterly, half- yearly or final consolidated results for any financial period. In most circumstances an
objective performance condition must be satisfied before an option can be exercised. Normally options may only be exercised three years after the initial date of grant, with, where appropriate, one re-test of the performance condition at the end of
the fourth year. The option life under this plan is ten years from the date of grant. Stock awards may be made to officers or employees, and the purchase price, if any, is as established by our parent company.



(f) The Yell Group plc US Equity Incentive Plan



The Yell Group plc 2003 US Equity Incentive Plan (the US EIP) was
established July 2003. It allows our parent company to issue both non-qualified and incentive stock options and Ordinary shares. The Board of our parent company has sole discretion to determine who may receive awards under the US EIP and any
performance conditions. The exercise price for incentive stock options will not be less than 100% of the fair market value of the Ordinary shares on the date of grant. The option life under this plan is ten years from the date of grant. Stock awards
may be made to officers or employees, and the purchase price, if any, is as established by our parent company.



(g) The Capital Accumulation Plan



The Yell Group plc Capital Accumulation Plan (CAP) was established in March 2004. It allows our parent company to award Ordinary Shares, which vest three years from the date of grant, to employees. There are no
performance criteria attached to the vesting of these shares, which are awarded to employees whom our parent company wishes to retain as key talent within the organisation.



Awards are satisfied by purchasing existing shares on the open market rather than by the issue of new shares.



(h) The Long Term Incentive Plan



The Yell Group plc Long Term Incentive Plan (the LTIP) was established in
July 2003 and is not intended to be approved by the Inland Revenue. The Board has sole discretion to determine which executives are granted awards under the LTIP. Awards are granted in the form of performance shares and in most circumstances an
objective performance condition must be satisfied before an award vests. Normally awards may only vest three years after their initial date of grant.



(i) The Deferred Bonus Plan



The Yell Group plc Deferred Bonus Plan was established in November 2004. Under the plan, any bonus received by Executive Directors in excess of 100% of
salary is subject to compulsory deferral into shares for a period of 3 years. There is no matching provided by the Company and the shares will be forfeited if the director leaves the Company other than as a predetermined good leaver.



F-39



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)





25. Employee Share Schemes
(continued)



(j) The Yell Group plc Share Incentive Plan



The Yell Group plc Share Incentive Plan (the SIP) was
established in July 2003 and is approved by the UK Inland Revenue. The SIP operates through a UK-resident trust, that will purchase or subscribe for ordinary shares to be subsequently awarded to employees. Shares can be offered to employees using
one or more of the following methods:



| |  |  | Free shares  up to £3,000 each year per employee to be held for at least 3 years in trust;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | Partnership shares  employee is able to purchase shares up to the value of £1,500, using monthly salary deductions (provided deductions do not exceed 10% of salary);
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Matching shares  up to 2 free shares for every partnership share held. To be held for at least 3 years in trust.
| | - |  | -----------------------------------------------------------------------------------------------------------------



No options or awards have been made under the SIP.



Options under share schemes



Options granted, exercised and lapsed under these share option schemes
during the years ended 31 March 2004 and 2005 and options exerciseable at 31 March 2004 and 2005 were as follows:



|                            |  |                       |   |  |                          |   |  |            |   |  |                     |  |                             
|--------------------------- |  | --------------------- | - |  | ------------------------ | - |  | ---------- | - |  | ------------------- |  | ----------------------------
|                            |  | Savingsrelatedschemes |   |  | Other shareoptionschemes |   |  | Total      |   |  | Exerciseprice range |  | Weightedaverageexerciseprice
|Outstanding, 31 March 2002  |  |                      |   |  | 9,750,735                |   |  | 9,750,735  |   |  | 0.4p                |  | 0.4p                        
|Granted                     |  |                      |   |  | 1,506,805                |   |  | 1,506,805  |   |  | 128p                |  | 128p                        
|Expired or forfeited        |  |                      |   |  | (210,615                 | ) |  | (210,615   | ) |  | 0.4p                |  | 0.4p                        
|Outstanding, 31 March 2003  |  |                      |   |  | 11,046,925               |   |  | 11,046,925 |   |  | 0.4p128p           |  | 18p                         
|Granted                     |  | 4,563,964             |   |  | 10,906,881               |   |  | 15,470,845 |   |  | 0.0p296p           |  | 226p                        
|Exercised                   |  |                      |   |  | (5,796,453               | ) |  | (5,796,453 | ) |  | 0.4p128p           |  | 3p                          
|Expired or forfeited        |  | (113,065              | ) |  | (1,450,041               | ) |  | (1,563,106 | ) |  | 0.4p260p           |  | 22p                         
|Outstanding, 31 March 2004  |  | 4,450,899             |   |  | 14,707,312               |   |  | 19,158,211 |   |  | 0.0p296p           |  | 269p                        
|Granted                     |  | 1,595,313             |   |  | 5,655,000                |   |  | 7,250,313  |   |  | 0.0p402p           |  | 367p                        
|Exercised                   |  | (700,691              | ) |  | (4,893,648               | ) |  | (5,594,339 | ) |  | 0.4p260p           |  | 60p                         
|Expired or forfeited        |  | (836,625              | ) |  | (241,402                 | ) |  | (1,078,027 | ) |  | 0.4p402p           |  | 253p                        
|                            |  |                       |   |  |                         
|Outstanding, 31 March 2005  |  | 4,508,896             |   |  | 15,227,262               |   |  | 19,736,158 |   |  | 0.0p402p           |  | 289p                        
|                            |  |                       |   |  |                         
|Exerciseable, 31 March 2003 |  |                      |   |  |                         |   |  |           |   |  |                    |  |                            
|Exerciseable, 31 March 2004 |  |                      |   |  | 6,777,988                |   |  | 6,777,988  |   |  | 0.4p128p           |  | 26p                         
|Exerciseable, 31 March 2005 |  |                      |   |  | 1,817,018                |   |  | 1,817,018  |   |  | 0.4p128p           |  | 13p                         



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



25. Employee Share Schemes (continued)



The following table summarises option activity for 2003, 2004 and 2005:



|                                                                                            |  |            |  |                                           |  |            |  |                                           |  |            |  |                                          
|------------------------------------------------------------------------------------------- |  | ---------- |  | ----------------------------------------- |  | ---------- |  | ----------------------------------------- |  | ---------- |  | -----------------------------------------
|                                                                                            |  | Shares     |  | 2003Weighted averageexercise price(pence) |  | Shares     |  | 2004Weighted averageexercise price(pence) |  | Shares     |  | 2005Weighted averageexercise price(pence)
|Options outstanding at end of year                                                          |  | 11,046,925 |  | 18                                        |  | 19,158,211 |  | 190                                       |  | 19,736,158 |  | 289                                      
|Options exercisable at year end                                                             |  |           |  |                                          |  | 6,777,988  |  | 26                                        |  | 1,817,018  |  | 13                                       
|Shares available for future grant at year end                                               |  | 23,336,091 |  |                                           |  | 57,398,341 |  |                                           |  | 50,557,360 |  |                                          
|Weighted-average exercise price equal to fair value of ordinary shares at date of grant     |  | 1,506,805  |  | 128                                       |  | 7,929,324  |  | 292                                       |  | 5,399,867  |  | 401                                      
|Weighted-average exercise price greater than fair value of ordinary shares at date of grant |  |           |  |                                          |  | 7,541,521  |  | 157                                       |  | 1,850,446  |  | 269                                      



The weighted average
fair value of the 1,506,805 options, 15,470,845 options and 7,250,313 options granted during the years ended 31 March 2003, 2004 and 2005, respectively, were 25 pence per option, 69 pence per option and 77 pence per option, respectively



The following table summarises information about stock options outstanding
at March 31, 2005:



|                    |  |                     |  |                                 |  |                  
|------------------- |  | ------------------- |  | ------------------------------- |  | -----------------
|Options outstanding |  | Options exercisable
|Exerciseprice       |  | Numberoutstanding   |  | Weightedaveragecontractual life |  | Numberexercisable
|Pence               |  |                     |  | Years                           |  |                  
|0                   |  | 255,133             |  | 13                              |  |                 
|0.4                 |  | 1,631,538           |  | 8                               |  | 1,631,538        
|128                 |  | 185,480             |  | 7                               |  | 185,480          
|260                 |  | 2,952,012           |  | 3                               |  |                 
|272                 |  | 906,884             |  | 4                               |  |                 
|285                 |  | 2,801,158           |  | 8                               |  |                 
|296                 |  | 4,984,534           |  | 9                               |  |                 
|342                 |  | 73,142              |  | 9                               |  |                 
|370                 |  | 650,000             |  | 1                               |  |                 
|402                 |  | 5,296,277           |  | 10                              |  |                 
|                    |  | 19,736,158          |  | 8                               |  | 1,817,018        



The Group awarded
1,613,683 shares (20041,774,327 shares; 2003nil shares) under the CAP during the year ended 31 March 2005. An employee benefit trust held 3,333,207 shares (20041,735,203 shares; 2003nil shares) at 31 March 2005 to satisfy
past awards when they vest in the future.



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



26. Auditors remuneration



The following fees were paid or are payable to the Yell Groups auditors for the years ended 31 March 2003, 31 March
2004 and 31 March 2005:



|                                   |  |                     |  |      |  |     
|---------------------------------- |  | ------------------- |  | ---- |  | ----
|                                   |  | Year ended 31 March
|                                   |  | 2003                |  | 2004 |  | 2005
|                                   |  | £                   |  | £    |  | £   
|                                   |  | (in millions)      
|Audit services                     |  |                     |  |      |  |     
|Statutory audit                    |  | 0.6                 |  | 0.6  |  | 0.6 
|Audit-related regulatory reporting |  | 0.1                 |  | 0.2  |  | 0.1 
|Further assurance services         |  | 0.6                 |  | 0.2  |  | 0.3 
|Tax services                       |  |                     |  |      |  |     
|Compliance services                |  | 0.1                 |  | 0.1  |  | 0.2 
|Advisory Services                  |  | 0.2                 |  | 1.0  |  | 0.3 
|Other services                     |  |                     |  |      |  |     
|Other services not covered above   |  | 0.3                 |  |     |  | 0.2 
|                                   |  |                     | 
|Total auditors remuneration       |  | 1.9                 |  | 2.1  |  | 1.7 



In addition to the
amounts above, fees in relation to accounting and tax advice in respect of our parent companys postponed IPO in the year ended 31 March 2003 and our parent companys global offer in the year ended 31 March 2004, which were approved and
incurred prior to our parent companys IPO, were £4.3 million and £3.6 million respectively. In addition, certain fees in relation to due diligence totalling £0.5 million in the year ended 31 March 2004 were approved and
incurred prior to our parent companys IPO.



27. Post balance sheet
event



On 17 May 2005, the Group announced that the US
business had entered into a definitive agreement for the purchase (the Acquisition) of Transwestern Holdings, L.P. (Transwestern) from Thomas H. Lee Partners, CIVC Partners, LLC and Transwestern management for $1,575 million (£829 million) in
cash. Transwestern is a leading independent directory publisher in the US, with an extensive footprint in 25 states, including core positions in California and Texas, which complements Yellow Books footprint. Transwestern published 332
directories during the year ended 31 December 2004. Transwestern also offers online yellow pages advertising services through WorldPages.com.



At 17 May 2005 the Group had in principle agreed a new £2 billion credit facility, fully underwritten by ABN AMRO, BNP paribas, Citibank, HSBC and
JPMorgan Chase, to refinance all of the existing bank debt of £860 million and to fund the Acquisition, if the Acquisition is completed. Our senior notes remain unaffected.



The Acquisition is subject to shareholder approval and Hart Scott Rodino clearance in the USA. Therefore, completion of the
Acquisition cannot be assured.



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



28. United States Generally Accepted Accounting Principles



The Yell Groups consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United Kingdom (UK GAAP), which differ in certain respects from those applicable in the United States (US GAAP).



|I | Differences between United Kingdom and United States generally accepted accounting principles
|- | ---------------------------------------------------------------------------------------------



The following are the main differences between UK and US GAAP which are relevant to the Yell Groups financial
statements.



(a) Directories in progress



Under UK GAAP, the cost of directories in progress deferred in stock
represents direct fixed and variable costs as well as directly attributable overhead costs. Under US GAAP, the deferred costs associated with directories in progress would comprise the production costs and the incremental direct costs associated
with selling and creating the directories.



Directories in
progress acquired in a business purchase are valued at replacement value under UK GAAP and at fair value under US GAAP. Under UK GAAP this difference is included in goodwill. Under US GAAP, the fair value is charged to the profit and loss upon
delivery of the related directories.



(b) Pensions



Under both UK and US GAAP, pension costs are charged against profits over
employees working lives. Differences between the UK and US GAAP figures arise from the requirement to use different actuarial methods and assumptions and a different method of amortising surpluses or deficits, when accounting for a single
employer scheme.



(c) Goodwill and other intangibles



Under UKGAAP the purchase price of acquisitions is allocated to the fair
market value of identifiable tangible and intangible assets, with the excess recorded as goodwill with an estimated economic life of 20 years. Goodwill is not amortised under US GAAP and is subject to an annual impairment test. The Yell Group
completed its impairment tests of goodwill as of 31 March 2004 and 2005 and determined that goodwill balances were not impaired. Under USGAAP the purchase price of acquisitions is allocated to the fair value of identifiable tangible and intangible
assets, including acquired customer relationships that are amortised over eight to nine years and brand names that are amortised over five to forty years. The aggregate amortisation expense for the years ended 31 March 2004 and 2005 and the
estimated aggregate amortisation expense for the succeeding five years, assuming a constant US dollar exchange rate, are as follows:



|                               |  |              
|------------------------------ |  | -------------
|                               |  | £            
|                               |  | (in millions)
|Aggregate amortisation expense |  |              
|For year ended 31 March 2004   |  | 86.5         
|For year ended 31 March 2005   |  | 73.0         
|                               | 
|Estimated amortisation expense |  |              
|For year ending 31 March 2006  |  | 60.1         
|For year ending 31 March 2007  |  | 49.9         
|For year ending 31 March 2008  |  | 41.9         
|For year ending 31 March 2009  |  | 35.8         
|For year ending 31 March 2010  |  | 30.6         



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YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



28. United States Generally Accepted Accounting Principles (continued)



Goodwill



The changes in the net book value of goodwill for the years ended 31 March 2004 and 31 March 2005 are as follows:



|                                                                |  |               |  |       |   |  |            |  
|--------------------------------------------------------------- |  | ------------- |  | ----- | - |  | ---------- | -
|                                                                |  | UK            |  | US    |   |  | Yell Group |  
|                                                                |  | £             |  | £     |   |  | £          |  
|                                                                |  | (in millions) | 
|Balance at 31 March 2003                                        |  | 599.4         |  | 578.0 |   |  | 1,177.4    |  
|Goodwill acquired during year                                   |  |              |  | 76.1  |   |  | 76.1       |  
|Reversal of valuation allowance on deferred tax assets acquired |  |              |  | (8.2  | ) |  | (8.2       | )
|Fair value adjustments(a)                                       |  |              |  | 3.3   |   |  | 3.3        |  
|Currency movements                                              |  |              |  | (85.6 | ) |  | (85.6      | )
|                                                                |  |               | 
|Balance at 31 March 2004                                        |  | 599.4         |  | 563.6 |   |  | 1,163.0    |  
|Goodwill acquired during year                                   |  |              |  | 20.5  |   |  | 20.5       |  
|Reversal of valuation allowance in deferred tax assets acquired |  |              |  | (16.9 | ) |  | (16.9      | )
|Fair value adjustments(a)                                       |  |              |  | (3.6  | ) |  | (3.6       | )
|Currency movements                                              |  |              |  | (13.9 | ) |  | (13.9      | )
|                                                                |  |               | 
|Balance at 31 March 2005                                        |  | 599.4         |  | 549.7 |   |  | 1,149.1    |  

---

|(a) | The fair value adjustment to goodwill was due to the finalisation of transaction costs in respect of acquisitions in prior years.
|--- | ---------------------------------------------------------------------------------------------------------------------------------



Intangible assets under US GAAP comprise:



|                                             |  |               |   |  |         |  
|-------------------------------------------- |  | ------------- | - |  | ------- | -
|                                             |  | At 31 March   |  
|                                             |  | 2004          |   |  | 2005    |  
|                                             |  | £             |   |  | £       |  
|                                             |  | (in millions) |  
|Gross book value                             |  |               |   |  |         |  
|Acquired customer relationships              |  | 498.1         |   |  | 501.3   |  
|Brand names                                  |  | 511.6         |   |  | 510.2   |  
|Additional minimum liability                 |  | 1.1           |   |  | 1.7     |  
|Goodwill                                     |  | 1,163.0       |   |  | 1,149.1 |  
|                                             |  |              
|Total gross book value under US GAAP         |  | 2,173.8       |   |  | 2,162.3 |  
|                                             |  |              
|Accumulated amortisation                     |  |               |   |  |         |  
|Acquired customer relationships              |  | (224.6        | ) |  | (283.3  | )
|Brand names                                  |  | (39.6         | ) |  | (51.7   | )
|                                             |  |              
|Total accumulated amortisation under US GAAP |  | (264.2        | ) |  | (335.0  | )
|                                             |  |              
|Net book value in accordance with US GAAP    |  | 1,909.6       |   |  | 1,827.3 |  
|Net book value in accordance with UK GAAP    |  | 1,725.3       |   |  | 1,635.0 |  
|                                             |  |              
|Estimated UK to US GAAP adjustments          |  | 184.3         |   |  | 192.3   |  



Additionally, under US
GAAP, the difference between the retail value and net replacement value of directories in progress is included in directories in progress and charged against profits when the directories are delivered. Under UK GAAP the difference is included in
goodwill.



F-44



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



28. United States Generally Accepted Accounting Principles (continued)



(d) Derivative financial instruments



Certain financial risks are managed through the use of financial
instruments, mainly interest rate swaps/collars. These contracts provide economic hedging to the Company; however, they do not qualify as hedges for US GAAP accounting purposes under Statement of Financial Accounting Standards No 133
Accounting for Derivative Instruments and Hedging Activities as amended and interpreted. Derivative financial instruments are recorded on the balance sheet at fair value. Therefore, unrealised gains/losses must be recorded in the profit
and loss account at each reporting date. For the interest rate derivative contracts, a gain of £6.1million would have been recorded for the year ended 31 March 2005 (2004gain of £21.7 million, 2003loss of £13.6million)
under US GAAP, within interest expense. The asset at 31 March 2005 would have been £2.9 million (2004liability of £3.2million, 2003liability of £24.9 million). These movements reflect fluctuations in the fair value of
the US dollar and pounds sterling floating interest rate swaps since the contracts were agreed, and the unwinding of losses previously recognised under US GAAP which have been recorded as expense under UK GAAP.



(e) Employee option plans



Under UK GAAP, compensation expense on awards of stock options and other
share-based compensation is measured based on the intrinsic value of the awards, if any, at the date of grant. Under US GAAP, compensation expense is measured based on the fair value of the awards at the date of grant. The fair value of each option
grant during the period from 1 April 2001 through June 2003 was estimated at the date of grant using the minimum-value method. The fair value of each option grant subsequent to June 2003 was estimated at the date of grant using the Black-Scholes
option valuation method. The total charge for employee stock-based compensation expense under USGAAP was £6.3 million in 2005 (2004£12.3 million). The Group used the following weighted-average assumptions in its estimations of fair
value:



|                        |  |                     |   |  |           |   |  |           |  
|----------------------- |  | ------------------- | - |  | --------- | - |  | --------- | -
|                        |  | Year ended 31 March |  
|                        |  | 2003                |   |  | 2004      |   |  | 2005      |  
|Risk free interest rate |  | 4.3                 | % |  | 4.4       | % |  | 4.6       | %
|Expected dividend yield |  | 0                   | % |  | 3         | % |  | 3         | %
|Expected volatility     |  | 0                   | % |  | 35        | % |  | 20        | %
|Expected life of option |  | 5.0 years           |   |  | 3.7 years |   |  | 3.6 years |  



(f) Deferred taxation



The reconciling adjustment for deferred taxation
comprises the tax effects arising from the other UK to US GAAP adjustments listed in the reconciliation below, together with the effect of an adjustment of £16.9 million for the year ended 31 March 2005 (2004£8.2 million) to
reverse tax benefits associated with the reversal of a valuation allowance recorded on purchase which under US GAAP results in a reduction to goodwill.



At 31 March 2005, the adjustment to decrease shareholders funds (deficit) of £136.9 million (2004£182.9 million decrease,
2003£223.9 million decrease) included the tax effect of other US GAAP adjustments. This comprised an adjustment increasing current deferred tax assets by £81.4 million (2004£35.7 million, 2003£21.1 million),
increasing non-current deferred tax assets by £nil at 31 March 2005 (2004£nil, 2003£14.0 million) which were net of a £nil million (2004£7.7 million, 2003£54.6 million) valuation allowance
for deferred tax assets arising from operations in the United States, and £218.3 million (2004£218.6 million, 2003£259.0 million) of non-current deferred tax liabilities. Deferred tax assets arising from operations in
the United Kingdom are considered to be recoverable for all years presented, and are all considered to be current assets.



(g) Gross profit under US GAAP presentation



Under UK GAAP, doubtful debt expenses are included in cost of sales. Under US GAAP, these expenses do not meet the criteria to be classified as cost of
sales and thus would be included in administrative expenses. Additionally, distribution costs would be included in cost of sales under US GAAP.



F-45



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



28. United States Generally Accepted Accounting Principles (continued)



|II | Profit (loss) and shareholders (deficit) funds reconciliation statements
|-- | -------------------------------------------------------------------------



The following statements summarise estimated adjustments, gross of their tax effect, which reconcile profit (loss) and
shareholders (deficit) funds from that reported under UK GAAP to that which would have been reported had US GAAP been applied.



|                                                   |  |                     |   |  |       |   |  |       |  
|-------------------------------------------------- |  | ------------------- | - |  | ----- | - |  | ----- | -
|                                                   |  | Year ended 31 March |  
|                                                   |  | 2003                |   |  | 2004  |   |  | 2005  |  
|                                                   |  | £                   |   |  | £     |   |  | £     |  
|                                                   |  | (in millions)       |  
|(Loss) profit for the financial year under UK GAAP |  | (40.6               | ) |  | (51.1 | ) |  | 70.4  |  
|Adjustment for:                                    |  |                     |   |  |       |   |  |       |  
|Directories in progress                            |  |                     |   |  |       |   |  |       |  
| Deferred costs                                   |  | (23.9               | ) |  | (20.8 | ) |  | (14.3 | )
| Acquisition accounting(a)                        |  | (24.2               | ) |  |      |   |  |      |  
|Pensions                                           |  | 0.1                 |   |  | (8.0  | ) |  | (13.2 | )
|Goodwill                                           |  | 98.3                |   |  | 96.7  |   |  | 98.6  |  
|Other intangible assets                            |  | (106.8              | ) |  | (86.5 | ) |  | (73.0 | )
|Derivative financial instruments                   |  | (13.6               | ) |  | 21.7  |   |  | 6.1   |  
|Employee option costs                              |  |                    |   |  | (1.3  | ) |  | (3.1  | )
|Other items                                        |  | 2.9                 |   |  | (0.6  | ) |  | (0.8  | )
|Deferred taxation                                  |  | 28.7                |   |  | 28.6  |   |  | 25.3  |  
|                                                   |  |                     |  
|Net (loss) profit as adjusted for US GAAP          |  | (79.1               | ) |  | (21.3 | ) |  | 96.0  |  

---

|(a) | Represents certain adjustments that arose as a result of acquisitions.
|--- | ----------------------------------------------------------------------



Shareholders (deficit) funds



|                                                      |  |               |   |  |        |  
|----------------------------------------------------- |  | ------------- | - |  | ------ | -
|                                                      |  | At 31 March   |  
|                                                      |  | 2004          |   |  | 2005   |  
|                                                      |  | £             |   |  | £      |  
|                                                      |  | (in millions) |  
|Shareholders funds under UK GAAP                     |  | 63.9          |   |  | 420.9  |  
|Adjustment for:                                       |  |               |   |  |        |  
|Directories in progress                               |  | (103.2        | ) |  | (115.6 | )
|Pensions                                              |  | (0.3          | ) |  | (13.5  | )
|Additional minimum pension liability                  |  | (37.9         | ) |  | (59.0  | )
|Goodwill                                              |  | (562.3        | ) |  | (485.9 | )
|Other intangible assets                               |  | 746.6         |   |  | 678.2  |  
|Derivative financial instruments                      |  | (3.2          | ) |  | 2.9    |  
|Other items                                           |  | 2.3           |   |  | 1.5    |  
|Deferred taxation                                     |  | (182.9        | ) |  | (136.9 | )
|                                                      |  |              
|Shareholders (deficit) funds as adjusted for US GAAP |  | (77.0         | ) |  | 292.6  |  



F-46



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



28. United States Generally Accepted Accounting Principles (continued)



|III | Consolidated statements of cash flows
|--- | -------------------------------------



Under UK GAAP, the Consolidated Statements of Cash Flows are presented in accordance with UK Financial Reporting Standard No 1, Cash Flows
Statement (FRS 1). The statements prepared under FRS 1 present substantially the same statements as that required under Statement of Financial Accounting Standards No 95 Statement of Cash Flows (SFAS 95).



Under SFAS 95, cash and cash equivalents include cash and
short-term investments with original maturities of three months or less. Under FRS 1, cash comprises cash in hand and at bank and overnight deposits, net of bank overdrafts.



Under FRS 1, cash flows are presented for operating activities; returns on investments and servicing of finance; taxation;
capital expenditure and financial investments; acquisitions and disposals; dividends paid to the Companys shareholders; and financing. SFAS 95 requires a classification of cash flows as resulting from operating, investing and financing
activities.



Cash flows under FRS 1 in respect of interest and
finance fees paid and taxation would be included within operating activities under SFAS 95.



The following statements summarise the statements of cash flows as if they had been presented in accordance with US GAAP.



|                                                                           |  |                     |   |  |        |   |  |       |  
|-------------------------------------------------------------------------- |  | ------------------- | - |  | ------ | - |  | ----- | -
|                                                                           |  | Year ended 31 March |  
|                                                                           |  | 2003                |   |  | 2004   |   |  | 2005  |  
|                                                                           |  | £                   |   |  | £      |   |  | £     |  
|                                                                           |  | (in millions)       |  
|Net cash provided by operating activities                                  |  | 143.8               |   |  | 56.1   |   |  | 181.6 |  
|Net cash used in investing activities                                      |  | (486.9              | ) |  | (139.2 | ) |  | (62.4 | )
|Net cash provided by (used in) financing activities                        |  | 273.9               |   |  | 74.3   |   |  | (82.5 | )
|Net (decrease) increase in cash and cash equivalents at end of the year(a) |  | (69.2               | ) |  | (8.8   | ) |  | 36.7  |  
|Effects of exchange rate changes on cash and cash equivalents              |  | (0.9                | ) |  | (2.8   | ) |  | (2.0  | )
|Cash and cash equivalents at beginning of the year                         |  | 100.1               |   |  | 30.0   |   |  | 18.4  |  
|Cash and cash equivalents at end of the year(a)                            |  | 30.0                |   |  | 18.4   |   |  | 53.1  |  

---

|(a) | Cash and cash equivalents under US GAAP are the same as cash at bank and in hand under UK GAAP for all years presented.
|--- | -----------------------------------------------------------------------------------------------------------------------



|IV | Unaudited pro forma financial information
|-- | -----------------------------------------



The following table reflects unaudited condensed pro forma financial information under UK GAAP as if the McLeod and other acquisitions had occurred as of
1 April 2002, for the year ended 31 March 2003.



|                  |  |                         |  
|----------------- |  | ----------------------- | -
|                  |  | Year ended31 March 2003 |  
|                  |  | £                       |  
|                  |  | (in millions)           |  
|Group turnover    |  | 1,126.3                 |  
|Loss for the year |  | (38.5                   | )



F-47



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



28. United States Generally Accepted Accounting Principles (continued)



|V | Pensions
|- | --------



The effect of the following USGAAP disclosures for the YPP is shown in the above reconciliation statements. The annual pension charge is based on
measurements at the balance sheet date for the previous year. The measurement date of benefit obligations and net assets is the same as the balance sheet date.



The components of the pension cost for the YPP comprised:



|                                                                         |  |                     |   |  |      |   |  |      |  
|------------------------------------------------------------------------ |  | ------------------- | - |  | ---- | - |  | ---- | -
|                                                                         |  | Year ended 31 March |  
|                                                                         |  | 2003                |   |  | 2004 |   |  | 2005 |  
|                                                                         |  | £                   |   |  | £    |   |  | £    |  
|                                                                         |  | (in millions)       |  
|Service cost                                                             |  | 9.1                 |   |  | 12.6 |   |  | 15.2 |  
|Interest cost                                                            |  | 6.6                 |   |  | 8.0  |   |  | 10.5 |  
|Expected return on scheme assets                                         |  | (7.9                | ) |  | (6.5 | ) |  | (8.1 | )
|Amortisation of net obligation at date of limited application of SFAS 87 |  |                    |   |  | 3.1  |   |  | 3.4  |  
|Recognised losses                                                        |  | 0.1                 |   |  |     |   |  |      |  
|Amortisation of prior service cost                                       |  |                    |   |  |     |   |  | 0.1  |  
|                                                                         |  |                     |  
|YPP pension costs for the year under US GAAP                             |  | 7.9                 |   |  | 17.2 |   |  | 21.1 |  



The information
required to be disclosed in accordance with Statement of Financial Accounting Standard No 132 (revised 2003) Employers Disclosures about Pensions and Other Postretirement Benefitsan amendment of FASB Statements No 87, 88 and
106 (SFAS 132 R) concerning the funded status of the YPP at and for the years ended 31 March 2004 and 2005, based on the valuation at 5 April 2002 is as follows:



|                                                                      |  |                                   |   |  |       |  
|--------------------------------------------------------------------- |  | --------------------------------- | - |  | ----- | -
|                                                                      |  | At and for theyear ended 31 March |  
|                                                                      |  | 2004                              |   |  | 2005  |  
|                                                                      |  | £                                 |   |  | £     |  
|                                                                      |  | (in millions)                     |  
|Changes in benefit obligation                                         |  |                                   |   |  |       |  
|Present value of scheme liabilities at the beginning of the year      |  | 147.9                             |   |  | 194.9 |  
|Service cost                                                          |  | 12.6                              |   |  | 15.2  |  
|Interest cost                                                         |  | 8.0                               |   |  | 10.5  |  
|Employees contributions                                              |  | 3.7                               |   |  | 3.3   |  
|Actuarial movement                                                    |  | 24.6                              |   |  | 33.8  |  
|Benefits paid or payable                                              |  | (2.7                              | ) |  | (1.9  | )
|Plan amendments                                                       |  | 0.8                               |   |  | 0.6   |  
|                                                                      |  |                                  
|Benefit obligation at the end of the year                             |  | 194.9                             |   |  | 256.4 |  
|                                                                      | 
|                                                                      |  | At 31 March                       |  
|                                                                      |  | 2004                              |   |  | 2005  |  
|                                                                      |  | £                                 |   |  | £     |  
|                                                                      |  | (in millions)                     |  
|Amounts recognised in the statement of financial position consist of: |  |                                   |   |  |       |  
|Accrued pension costs                                                 |  | (37.9                             | ) |  | (63.9 | )
|Intangible asset                                                      |  | 1.1                               |   |  | 1.7   |  
|Charge to equity                                                      |  | 36.8                              |   |  | 57.3  |  
|                                                                      |  |                                  
|Net accrued pension costs recognised                                  |  |                                  |   |  | (4.9  | )



F-48



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



28. United States Generally Accepted Accounting Principles (continued)



The accumulated benefit obligation of £214.4 million at 31 March 2005
(2004£160.3 million) was calculated on the assumption that pension increases start immediately.



|                                                           |  |               |   |  |        |  
|---------------------------------------------------------- |  | ------------- | - |  | ------ | -
|                                                           |  | At 31 March   |  
|                                                           |  | 2004          |   |  | 2005   |  
|                                                           |  | £             |   |  | £      |  
|                                                           |  | (in millions) |  
|Changes in scheme assets                                   |  |               |   |  |        |  
|Market value of scheme assets at the beginning of the year |  | 94.1          |   |  | 122.4  |  
|Actual return on scheme assets                             |  | 17.8          |   |  | 10.5   |  
|Employers contributions                                   |  | 9.5           |   |  | 16.2   |  
|Employees contributions                                   |  | 3.7           |   |  | 3.3    |  
|Benefits paid or payable                                   |  | (2.7          | ) |  | (1.9   | )
|                                                           |  |              
|Market value of assets at the end of the year              |  | 122.4         |   |  | 150.5  |  
|                                                           | 
|                                                           |  | At 31 March   |  
|                                                           |  | 2004          |   |  | 2005   |  
|                                                           |  | £             |   |  | £      |  
|                                                           |  | (in millions) |  
|Funded status under US GAAP                                |  |               |   |  |        |  
|Projected benefit obligation in excess of scheme assets    |  | (72.6         | ) |  | (105.9 | )
|Unrecognised prior service cost(a)                         |  | 1.1           |   |  | 1.7    |  
|Other unrecognised net actuarial losses                    |  | 71.5          |   |  | 99.3   |  
|                                                           |  |              
|Prepaid pension costs under US GAAP                        |  |              |   |  | (4.9   | )

---

|(a) | The unrecognised prior service cost is being amortised over 15 years.
|--- | ---------------------------------------------------------------------



The benefit obligation for the main pension scheme was determined using the following assumptions at 1 April 2003, 1 April 2004 and 1 April 2005:



|                             |  |                    |  |      |  |     
|---------------------------- |  | ------------------ |  | ---- |  | ----
|                             |  | Rates (per annum)%
|                             |  | 2003               |  | 2004 |  | 2005
|Discount rate                |  | 5.40               |  | 5.40 |  | 5.40
|Rate of future pay increases |  | 4.00               |  | 4.40 |  | 4.40
|Pension increases            |  | 2.50               |  | 2.90 |  | 2.90
|Expected return on assets    |  | 6.50               |  | 6.35 |  | 6.35



We expect to pay
approximately £16.5 million of annual pension contributions in the 2006 financial year. The following table sets out our best estimate of future benefits payable by the defined benefit pension scheme.



|                                     |  |              
|------------------------------------ |  | -------------
|                                     |  | 31 March 2005
|                                     |  | £            
|                                     |  | (in millions)
|Expected net benefit payable within: |  |              
|2006 financial year                  |  | 1.9          
|2007 financial year                  |  | 2.2          
|2008 financial year                  |  | 2.5          
|2009 financial year                  |  | 2.9          
|2010 financial year                  |  | 3.3          
|Financial years 2011 through 2015    |  | 27.4         



The assets in the
defined benefit pension scheme and the expected rates of return on assets are shown in note 23



F-49



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



NOTES TO THE FINANCIAL STATEMENTS (continued)



29. Valuation and Qualifying Accounts and Reserves



The following table presents the movements in provision and valuation
allowances:



|                                     |  |                            |  |                          |  |                                   |   |  |                  |   |  |                      
|------------------------------------ |  | -------------------------- |  | ------------------------ |  | --------------------------------- | - |  | ---------------- | - |  | ---------------------
|                                     |  | Balance atbeginning ofyear |  | Charged toprofit andloss |  | Charged to otheraccounts/acquired |   |  | Deductions/other |   |  | Balance atend of year
|                                     |  | £                          |  | £                        |  | £                                 |   |  | £                |   |  | £                    
|                                     |  | (in millions)             
|Year ended 31 March 2003             |  |                            |  |                          |  |                                   |   |  |                  |   |  |                      
|Allowance for doubtful debts         |  | 71.4                       |  | 115.9                    |  | 19.2                              |   |  | (101.0           | ) |  | 105.5                
|Unrecognised net deferred tax assets |  | 37.7                       |  |                         |  | (10.5                             | ) |  |                 |   |  | 27.2                 
|                                     |  |                            |  |                          | 
|Year ended 31 March 2004             |  |                            |  |                          |  |                                   |   |  |                  |   |  |                      
|Allowance for doubtful debts         |  | 105.5                      |  | 72.5                     |  | 2.3                               |   |  | (67.2            | ) |  | 113.1                
|Unrecognised net deferred tax assets |  | 27.2                       |  |                         |  | (19.5                             | ) |  |                 |   |  | 7.7                  
|                                     |  |                            |  |                          | 
|Year ended 31 March 2005             |  |                            |  |                          |  |                                   |   |  |                  |   |  |                      
|Allowance for doubtful debts         |  | 113.1                      |  | 112.2                    |  | (0.7                              | ) |  | (111.8           | ) |  | 112.8                
|Unrecognised net deferred tax assets |  | 7.7                        |  |                         |  | (5.8                              | ) |  | (1.9             | ) |  |                     



30. Supplemental Guarantor
Information



The notes issued by Yell Finance B.V. (the
Issuer) pursuant to Rule 144A under the US Securities Act 1933 and described in note 16 are guaranteed by Yellow Pages Limited and certain subsidiaries (the Guarantor). Yellow Pages Limited and certain subsidiaries are the wholly owned guarantor
subsidiaries of Yell Finance B.V. who jointly and severally, fully and unconditionally guarantee the debt securities that were issued. Yellow Pages Limited has granted a security interest over substantially all of its assets including a fixed charge
over certain of its properties, debts, bank accounts, insurances, intellectual property and specified agreements and a floating charge over all of its other undertakings and assets. Substantially all of Yell Finance B.V.s income and cash flow
is generated by its subsidiaries. As a result, funds necessary to meet the debt service obligations are provided in large part by distributions or advances from Yellow Pages Limited and its subsidiaries.



Investments in subsidiaries are accounted for at cost; accordingly, entries
necessary to consolidate Yell Finance B.V. and the Guarantor and its consolidated subsidiaries are reflected in the eliminations column. Separate complete financial statements of Yell Finance B.V. and the Guarantor would not provide additional
material information that would be useful in assessing the financial composition of Yellow Pages Limited and subsidiaries.



The following information sets out the consolidating profit and loss accounts and cash flow statements for the three years ended 31 March 2005 and the
consolidating balance sheets at 31 March 2004 and 2005 under UKGAAP.



The Yell Group has not provided reconciliations from UK GAAP to US GAAP for the columns relating to the guarantor entities as such reconciliations would not materially affect an investors understanding of the nature of the guarantee.
All reconciling items as shown in note 28 relate to the Guarantor.



F-50



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



CONSOLIDATING PROFIT AND LOSS ACCOUNTS



|                                            |  |                                        |   |  |             |   |  |              |   |  |              |  
|------------------------------------------- |  | -------------------------------------- | - |  | ----------- | - |  | ------------ | - |  | ------------ | -
|                                            |  | Year ended 31 March 2003               |  
|                                            |  | Yell Finance B.V. Yellow Pages Limited |   |  |             |   |  |              |  
|                                            |  | (Issuer of notes)                      |   |  | (Guarantor) |   |  | Eliminations |   |  | Consolidated |  
|                                            |  | £                                      |   |  | £           |   |  | £            |   |  | £            |  
|                                            |  | (in millions)                          |  
|Group turnover                              |  |                                       |   |  | 1,114.0     |   |  |             |   |  | 1,114.0      |  
|Cost of sales                               |  |                                       |   |  | (509.9      | ) |  |             |   |  | (509.9       | )
|                                            |  |                                        |   | 
|Gross profit                                |  |                                       |   |  | 604.1       |   |  |             |   |  | 604.1        |  
|Distribution costs                          |  |                                       |   |  | (36.0       | ) |  |             |   |  | (36.0        | )
|Administrative costs                        |  | (9.9                                   | ) |  | (374.8      | ) |  |             |   |  | (384.7       | )
|                                            |  |                                        |   | 
|Total operating (loss) profit               |  | (9.9                                   | ) |  | 193.3       |   |  |             |   |  | 183.4        |  
|                                            |  |                                        |   | 
|Interest payable                            |  | (146.6                                 | ) |  | (239.0      | ) |  | 146.6        |   |  | (239.0       | )
|Interest receivable                         |  | 146.6                                  |   |  | 2.4         |   |  | (146.6       | ) |  | 2.4          |  
|                                            |  |                                        |   | 
|Net interest payable                        |  |                                       |   |  | (236.6      | ) |  |             |   |  | (236.6       | )
|                                            |  |                                        |   | 
|Loss on ordinary activities before taxation |  | (9.9                                   | ) |  | (43.3       | ) |  |             |   |  | (53.2        | )
|Tax credit on loss on ordinary activities   |  |                                       |   |  | 12.6        |   |  |             |   |  | 12.6         |  
|                                            |  |                                        |   | 
|Loss for the financial year                 |  | (9.9                                   | ) |  | (30.7       | ) |  |             |   |  | (40.6        | )



YELL GROUP



CONSOLIDATING PROFIT AND LOSS ACCOUNTS



|                                                     |  |                                        |   |  |             |   |  |              |   |  |              |  
|---------------------------------------------------- |  | -------------------------------------- | - |  | ----------- | - |  | ------------ | - |  | ------------ | -
|                                                     |  | Year ended 31 March 2004               |  
|                                                     |  | Yell Finance B.V. Yellow Pages Limited |   |  |             |   |  |              |  
|                                                     |  | (Issuer of notes)                      |   |  | (Guarantor) |   |  | Eliminations |   |  | Consolidated |  
|                                                     |  | £                                      |   |  | £           |   |  | £            |   |  | £            |  
|                                                     |  | (in millions)                          |  
|Group turnover                                       |  |                                       |   |  | 1,186.9     |   |  |             |   |  | 1,186.9      |  
|Cost of sales                                        |  |                                       |   |  | (552.9      | ) |  |             |   |  | (552.9       | )
|                                                     |  |                                        |   | 
|Gross profit                                         |  |                                       |   |  | 634.0       |   |  |             |   |  | 634.0        |  
|Distribution costs                                   |  |                                       |   |  | (34.5       | ) |  |             |   |  | (34.5        | )
|Administrative costs                                 |  | (8.4                                   | ) |  | (440.7      | ) |  |             |   |  | (449.1       | )
|                                                     |  |                                        |   | 
|Total operating (loss) profit                        |  | (8.4                                   | ) |  | 158.8       |   |  |             |   |  | 150.4        |  
|                                                     |  |                                        |   | 
|Interest payable                                     |  | (100.2                                 | ) |  | (248.6      | ) |  | 152.1        |   |  | (196.7       | )
|Interest receivable                                  |  | 152.1                                  |   |  | 2.2         |   |  | (152.1       | ) |  | 2.2          |  
|                                                     |  |                                        |   | 
|Net interest payable                                 |  | 51.9                                   |   |  | (246.4      | ) |  |             |   |  | (194.5       | )
|                                                     |  |                                        |   | 
|Profit (loss) on ordinary activities before taxation |  | 43.5                                   |   |  | (87.6       | ) |  |             |   |  | (44.1        | )
|Tax credit (charge) on loss on ordinary activities   |  | (15.2                                  | ) |  | 8.2         |   |  |             |   |  | (7.0         | )
|                                                     |  |                                        |   | 
|Profit (loss) for the financial year                 |  | 28.3                                   |   |  | (79.4       | ) |  |             |   |  | (51.1        | )





F-51



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



CONSOLIDATING PROFIT AND LOSS ACCOUNTS



|                                                     |  |                                        |   |  |             |   |  |              |   |  |              |  
|---------------------------------------------------- |  | -------------------------------------- | - |  | ----------- | - |  | ------------ | - |  | ------------ | -
|                                                     |  | Year ended 31 March 2005               |  
|                                                     |  | Yell Finance B.V. Yellow Pages Limited |   |  |             |   |  |              |  
|                                                     |  | (Issuer of notes)                      |   |  | (Guarantor) |   |  | Eliminations |   |  | Consolidated |  
|                                                     |  | £                                      |   |  | £           |   |  | £            |   |  | £            |  
|                                                     |  | (in millions)                          |  
|Group turnover                                       |  |                                       |   |  | 1,285.3     |   |  |             |   |  | 1,285.3      |  
|Cost of sales                                        |  |                                       |   |  | (592.3      | ) |  |             |   |  | (592.3       | )
|                                                     |  |                                        |   | 
|Gross profit                                         |  |                                       |   |  | 693.0       |   |  |             |   |  | 693.0        |  
|Distribution costs                                   |  |                                       |   |  | (38.3       | ) |  |             |   |  | (38.3        | )
|Administrative costs                                 |  |                                       |   |  | (410.0      | ) |  |             |   |  | (410.0       | )
|                                                     |  |                                        |   | 
|Total operating profit                               |  |                                       |   |  | 244.7       |   |  |             |   |  | 244.7        |  
|                                                     |  |                                        |   | 
|Interest payable                                     |  | (72.9                                  | ) |  | (126.9      | ) |  | 73.5         |   |  | (126.3       | )
|Interest receivable                                  |  | 73.5                                   |   |  | 1.3         |   |  | (73.5        | ) |  | 1.3          |  
|                                                     |  |                                        |   | 
|Net interest receivable (payable)                    |  | 0.6                                    |   |  | (125.6      | ) |  |             |   |  | (125.0       | )
|                                                     |  |                                        |   | 
|Profit on ordinary activities before taxation        |  | 0.6                                    |   |  | 119.1       |   |  |             |   |  | 119.7        |  
|Tax credit (charge) on profit on ordinary activities |  | 1.6                                    |   |  | (50.9       | ) |  |             |   |  | (49.3        | )
|                                                     |  |                                        |   | 
|Profit for the financial year                        |  | 2.2                                    |   |  | 68.2        |   |  |             |   |  | 70.4         |  



F-52



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



CONSOLIDATING CASH FLOW STATEMENTS



|                                                                           |  |                                        |   |  |             |   |  |              |   |  |              |  
|-------------------------------------------------------------------------- |  | -------------------------------------- | - |  | ----------- | - |  | ------------ | - |  | ------------ | -
|                                                                           |  | Year ended 31 March 2003               |  
|                                                                           |  | Yell Finance B.V. Yellow Pages Limited |   |  |             |   |  |              |  
|                                                                           |  | (Issuer of notes)                      |   |  | (Guarantor) |   |  | Eliminations |   |  | Consolidated |  
|                                                                           |  | £                                      |   |  | £           |   |  | £            |   |  | £            |  
|                                                                           |  | (in millions)                          |  
|Net cash (outflow) inflow from operating activities                        |  | (28.3                                  | ) |  | 337.4       |   |  |             |   |  | 309.1        |  
|                                                                           |  |                                        |   | 
|Returns on investments and servicing of finance Interest received (paid)   |  | 10.3                                   |   |  | (149.8      | ) |  |             |   |  | (139.5       | )
|Finance fees paid                                                          |  | (6.2                                   | ) |  | (9.9        | ) |  |             |   |  | (16.1        | )
|                                                                           |  |                                        |   | 
|Net cash outflow for returns on investments and servicing of finance       |  | (4.1                                   | ) |  | (159.7      | ) |  |             |   |  | (155.6       | )
|                                                                           |  |                                        |   | 
|Taxation                                                                   |  |                                       |   |  | (9.7        | ) |  |             |   |  | (9.7         | )
|                                                                           |  |                                        |   | 
|Capital expenditure and financial investment                               |  |                                        |   |  |             |   |  |              |   |  |              |  
|Purchase of tangible fixed assets                                          |  |                                       |   |  | (16.0       | ) |  |             |   |  | (16.0        | )
|Amounts loaned to subsidiaries                                             |  | (53.0                                  | ) |  |            |   |  | 53.0         |   |  |             |  
|Investment in subsidiary                                                   |  | (0.1                                   | ) |  |            |   |  | 0.1          |   |  |             |  
|                                                                           |  |                                        |   | 
|Net cash (outflow) inflow for capital expenditure and financial investment |  | (53.1                                  | ) |  | (16.0       | ) |  | 53.1         |   |  | (16.0        | )
|                                                                           |  |                                        |   | 
|Acquisitions                                                               |  |                                        |   |  |             |   |  |              |   |  |              |  
|Purchase of subsidiary undertakings, net of cash acquired with subsidiary  |  |                                       |   |  | (470.9      | ) |  |             |   |  | (470.9       | )
|                                                                           |  |                                        |   | 
|Net cash outflow for acquisitions                                          |  |                                       |   |  | (470.9      | ) |  |             |   |  | (470.9       | )
|                                                                           |  |                                        |   | 
|Net cash (outflow) inflow before financing                                 |  | (77.3                                  | ) |  | (318.9      | ) |  | 53.1         |   |  | (343.1       | )
|                                                                           |  |                                        |   | 
|Financing                                                                  |  |                                        |   |  |             |   |  |              |   |  |              |  
|Issue of ordinary share capital                                            |  | 0.1                                    |   |  | 0.1         |   |  | (0.1         | ) |  | 0.1          |  
|Proceeds from third-party borrowings                                       |  | 173.7                                  |   |  | 250.7       |   |  |             |   |  | 424.4        |  
|Proceeds from parent company borrowings                                    |  | 61.3                                   |   |  | 53.0        |   |  | (53.0        | ) |  | 61.3         |  
|Third-party borrowings repaid                                              |  | (157.8                                 | ) |  | (54.1       | ) |  |             |   |  | (211.9       | )
|                                                                           |  |                                        |   | 
|Net cash inflow (outflow) from financing                                   |  | 77.3                                   |   |  | 249.7       |   |  | (53.1        | ) |  | 273.9        |  
|                                                                           |  |                                        |   | 
|Decrease in net cash in the year                                           |  |                                       |   |  | (69.2       | ) |  |             |   |  | (69.2        | )



F-53



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



CONSOLIDATING CASH FLOW STATEMENTS



|                                                                              |  |                                        |   |  |             |   |  |              |   |  |              |  
|----------------------------------------------------------------------------- |  | -------------------------------------- | - |  | ----------- | - |  | ------------ | - |  | ------------ | -
|                                                                              |  | Yell Finance B.V. Yellow Pages Limited |  
|                                                                              |  | (Issuer of notes)                      |   |  | (Guarantor) |   |  | Eliminations |   |  | Consolidated |  
|                                                                              |  | £                                      |   |  | £           |   |  | £            |   |  | £            |  
|                                                                              |  | (in millions)                          |  
|Net cash (outflow) inflow from operating activities                           |  | (15.8                                  | ) |  | 269.3       |   |  |             |   |  | 253.5        |  
|                                                                              |  |                                        |   | 
|Returns on investments and servicing of finance                               |  |                                        |   |  |             |   |  |              |   |  |              |  
|Interest received (paid)                                                      |  |                                       |   |  | (141.8      | ) |  |             |   |  | (141.8       | )
|Redemption premium paid                                                       |  | (19.7                                  | ) |  |            |   |  |             |   |  | (19.7        | )
|Finance fees paid                                                             |  |                                       |   |  | (16.4       | ) |  |             |   |  | (16.4        | )
|                                                                              |  |                                        |   | 
|Net cash inflow (outflow) for returns on investments and servicing of finance |  | (19.7                                  | ) |  | (158.2      | ) |  |             |   |  | (177.9       | )
|                                                                              |  |                                        |   | 
|Taxation                                                                      |  |                                       |   |  | (13.7       | ) |  |             |   |  | (13.7        | )
|                                                                              |  |                                        |   | 
|Capital expenditure and financial investment                                  |  |                                        |   |  |             |   |  |              |   |  |              |  
|Purchase of tangible fixed assets                                             |  |                                       |   |  | (24.5       | ) |  |             |   |  | (24.5        | )
|Purchase of shares in parent company                                          |  |                                       |   |  | (5.8        | ) |  |             |   |  | (5.8         | )
|Amounts loaned to subsidiaries                                                |  | (80.8                                  | ) |  |            |   |  | 80.8         |   |  |             |  
|Investment in subsidiary                                                      |  | (604.4                                 | ) |  |            |   |  | 604.4        |   |  |             |  
|                                                                              |  |                                        |   | 
|Net cash (outflow) inflow for capital expenditure and financial investment    |  | (685.2                                 | ) |  | (30.3       | ) |  | 685.2        |   |  | (30.3        | )
|                                                                              |  |                                        |   | 
|Acquisitions                                                                  |  |                                        |   |  |             |   |  |              |   |  |              |  
|Purchase of subsidiary undertakings, net of cash acquired with subsidiary     |  |                                       |   |  | (108.9      | ) |  |             |   |  | (108.9       | )
|                                                                              |  |                                        |   | 
|Net cash outflow for acquisitions                                             |  |                                       |   |  | (108.9      | ) |  |             |   |  | (108.9       | )
|                                                                              |  |                                        |   | 
|Net cash (outflow) inflow before financing                                    |  | (720.7                                 | ) |  | (41.8       | ) |  | 685.2        |   |  | (77.3        | )
|                                                                              |  |                                        |   | 
|Financing                                                                     |  |                                        |   |  |             |   |  |              |   |  |              |  
|Issue of ordinary share capital                                               |  | 304.4                                  |   |  | 604.4       |   |  | (604.4       | ) |  | 304.4        |  
|Proceeds from third-party borrowings                                          |  |                                       |   |  | 503.1       |   |  |             |   |  | 503.1        |  
|Proceeds from parent company borrowings                                       |  | 579.4                                  |   |  | 80.8        |   |  | (80.8        | ) |  | 579.4        |  
|Third-party borrowings repaid                                                 |  | (163.1                                 | ) |  | (1,155.3    | ) |  |             |   |  | (1,318.4     | )
|                                                                              |  |                                        |   | 
|Net cash inflow (outflow) from financing                                      |  | 720.7                                  |   |  | 33.0        |   |  | (685.2       | ) |  | 68.5         |  
|                                                                              |  |                                        |   | 
|Decrease in net cash in the year                                              |  |                                       |   |  | (8.8        | ) |  |             |   |  | (8.8         | )



F-54



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



CONSOLIDATING CASH FLOW STATEMENTS



|                                                                          |  |                                        |  |             |   |  |              |  |              |  
|------------------------------------------------------------------------- |  | -------------------------------------- |  | ----------- | - |  | ------------ |  | ------------ | -
|                                                                          |  | Year ended 31 March 2005               | 
|                                                                          |  | Yell Finance B.V. Yellow Pages Limited |  |             |   |  |              | 
|                                                                          |  | (Issuer of notes)                      |  | (Guarantor) |   |  | Eliminations |  | Consolidated |  
|                                                                          |  | £                                      |  | £           |   |  | £            |  | £            |  
|                                                                          |  | (in millions)                          | 
|Net cash inflow from operating activities                                 |  |                                       |  | 355.1       |   |  |             |  | 355.1        |  
|                                                                          |  |                                        |  |            
|Returns on investments and servicing of finance Interest paid             |  |                                       |  | (145.7      | ) |  |             |  | (145.7       | )
|                                                                          |  |                                        |  |            
|Net cash outflow for returns on investments and servicing of finance      |  |                                       |  | (145.7      | ) |  |             |  | (145.7       | )
|                                                                          |  |                                        |  |            
|Taxation                                                                  |  |                                       |  | (27.8       | ) |  |             |  | (27.8        | )
|                                                                          |  |                                        |  |            
|Capital expenditure and financial investment                              |  |                                        |  |             |   |  |              |  |              |  
|Purchase of tangible fixed assets                                         |  |                                       |  | (24.0       | ) |  |             |  | (24.0        | )
|Purchase of shares in parent company                                      |  |                                       |  | (6.6        | ) |  |             |  | (6.6         | )
|                                                                          |  |                                        |  |            
|Net cash (outflow) for capital expenditure and financial investment       |  |                                       |  | (30.6       | ) |  |             |  | (30.6        | )
|                                                                          |  |                                        |  |            
|Acquisitions                                                              |  |                                        |  |             |   |  |              |  |              |  
|Purchase of subsidiary undertakings, net of cash acquired with subsidiary |  |                                       |  | (31.8       | ) |  |             |  | (31.8        | )
|                                                                          |  |                                        |  |            
|Net cash outflow for acquisitions                                         |  |                                       |  | (31.8       | ) |  |             |  | (31.8        | )
|                                                                          |  |                                        |  |            
|Net cash inflow before financing                                          |  |                                       |  | 119.2       |   |  |             |  | 119.2        |  
|                                                                          |  |                                        |  |            
|Financing                                                                 |  |                                        |  |             |   |  |              |  |              |  
|Proceeds from third-party borrowings                                      |  |                                       |  |            |   |  |             |  |             |  
|Proceeds from parent company borrowings                                   |  |                                       |  | 2.5         |   |  |             |  | 2.5          |  
|Third-party borrowings repaid                                             |  |                                       |  | (85.0       | ) |  |             |  | (85.0        | )
|                                                                          |  |                                        |  |            
|Net cash outflow from financing                                           |  |                                       |  | (82.5       | ) |  |             |  | (82.5        | )
|                                                                          |  |                                        |  |            
|Decrease in net cash in the year                                          |  |                                       |  | 36.7        |   |  |             |  | 36.7         |  



F-55



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



CONSOLIDATING BALANCE SHEETS



|                                                                          |  |                                        |   |  |             |   |  |              |   |  |              |  
|------------------------------------------------------------------------- |  | -------------------------------------- | - |  | ----------- | - |  | ------------ | - |  | ------------ | -
|                                                                          |  | At 31 March 2004                       |  
|                                                                          |  | Yell Finance B.V. Yellow Pages Limited |   |  |             |   |  |              |  
|                                                                          |  | (Issuer of notes)                      |   |  | (Guarantor) |   |  | Eliminations |   |  | Consolidated |  
|                                                                          |  | £                                      |   |  | £           |   |  | £            |   |  | £            |  
|                                                                          |  | (in millions)                          |  
|Fixed assets                                                              |  |                                        |   |  |             |   |  |              |   |  |              |  
|Intangible assets                                                         |  |                                       |   |  | 1,725.3     |   |  |             |   |  | 1,725.3      |  
|Tangible assets                                                           |  |                                       |   |  | 45.9        |   |  |             |   |  | 45.9         |  
|Investment                                                                |  | 605.5                                  |   |  | 7.6         |   |  | (605.5       | ) |  | 7.6          |  
|Total fixed assets                                                        |  | 605.5                                  |   |  | 1,778.8     |   |  | (605.5       | ) |  | 1,778.8      |  
|                                                                          |  |                                        |   | 
|Current assets                                                            |  |                                        |   |  |             |   |  |              |   |  |              |  
|Stock                                                                     |  |                                       |   |  | 151.9       |   |  |             |   |  | 151.9        |  
|Debtors                                                                   |  |                                       |   |  | 460.6       |   |  |             |   |  | 460.6        |  
|Intercompany debtors                                                      |  | 897.8                                  |   |  |            |   |  | (897.8       | ) |  |             |  
|Cash at bank and in hand                                                  |  |                                       |   |  | 18.4        |   |  |             |   |  | 18.4         |  
|                                                                          |  |                                        |   | 
|Total current assets                                                      |  | 897.8                                  |   |  | 630.9       |   |  | (897.8       | ) |  | 630.9        |  
|                                                                          |  |                                        |   | 
|Creditors: amounts falling due within one year Loans and other borrowings |  | (41.8                                  | ) |  | (85.9       | ) |  |             |   |  | (127.7       | )
|Other creditors                                                           |  | (7.1                                   | ) |  | (223.9      | ) |  |             |   |  | (231.0       | )
|                                                                          |  |                                        |   | 
|Total creditors: amounts falling due within one year                      |  | (48.9                                  | ) |  | (309.8      | ) |  |             |   |  | (358.7       | )
|                                                                          |  |                                        |   | 
|Net current assets                                                        |  | 848.9                                  |   |  | 321.1       |   |  | (897.8       | ) |  | 272.2        |  
|                                                                          |  |                                        |   | 
|Total assets less current liabilities                                     |  | 1,454.4                                |   |  | 2,099.9     |   |  | (1,503.3     | ) |  | 2,051.0      |  
|                                                                          |  |                                        |   | 
|Creditors: amounts falling due after one year Loans and other borrowings  |  | (1,130.5                               | ) |  | (856.6      | ) |  |             |   |  | (1,987.1     | )
|Intercompany loans                                                        |  |                                       |   |  | (897.8      | ) |  | 897.8        |   |  |             |  
|                                                                          |  |                                        |   | 
|Total creditors: amounts falling due after one year                       |  | (1,130.5                               | ) |  | (1,754.4    | ) |  | 897.8        |   |  | (1,987.1     | )
|                                                                          |  |                                        |   | 
|Net assets (liabilities)                                                  |  | 323.9                                  |   |  | 345.5       |   |  | (605.5       | ) |  | 63.9         |  
|                                                                          |  |                                        |   | 
|Capital and reserves                                                      |  |                                        |   |  |             |   |  |              |   |  |              |  
|Share capital                                                             |  | 305.5                                  |   |  | 605.5       |   |  | (605.5       | ) |  | 305.5        |  
|Funds (deficit)                                                           |  | 18.4                                   |   |  | (260.0      | ) |  |             |   |  | (241.6       | )
|                                                                          |  |                                        |   | 
|Equity shareholders funds                                                |  | 323.9                                  |   |  | 345.5       |   |  | (605.5       | ) |  | 63.9         |  



F-56



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##### Table of Contents

YELL FINANCE B.V. AND ITS SUBSIDIARIES



CONSOLIDATING BALANCE SHEETS



|                                                                          |  |                                       |   |  |             |   |  |              |   |  |              |  
|------------------------------------------------------------------------- |  | ------------------------------------- | - |  | ----------- | - |  | ------------ | - |  | ------------ | -
|                                                                          |  | At 31 March 2005                      |  
|                                                                          |  | Yell Finance B.V.Yellow Pages Limited |   |  |             |   |  |              |  
|                                                                          |  | (Issuer of notes)                     |   |  | (Guarantor) |   |  | Eliminations |   |  | Consolidated |  
|                                                                          |  | £                                     |   |  | £           |   |  | £            |   |  | £            |  
|                                                                          |  | (in millions)                         |  
|Fixed assets                                                              |  |                                       |   |  |             |   |  |              |   |  |              |  
|Intangible assets                                                         |  |                                      |   |  | 1,635.0     |   |  |             |   |  | 1,635.0      |  
|Tangible assets                                                           |  |                                      |   |  | 47.8        |   |  |             |   |  | 47.8         |  
|Investment                                                                |  | 605.5                                 |   |  | 11.8        |   |  | (605.5       | ) |  | 11.8         |  
|Total fixed assets                                                        |  | 605.5                                 |   |  | 1,694.6     |   |  | (605.5       | ) |  | 1,694.6      |  
|                                                                          |  |                                       |   | 
|Current assets                                                            |  |                                       |   |  |             |   |  |              |   |  |              |  
|Stock                                                                     |  |                                      |   |  | 172.6       |   |  |             |   |  | 172.6        |  
|Debtors                                                                   |  |                                      |   |  | 478.7       |   |  |             |   |  | 478.7        |  
|Intercompany debtors                                                      |  | 872.7                                 |   |  |            |   |  | (872.7       | ) |  |             |  
|Cash at bank and in hand                                                  |  |                                      |   |  | 53.1        |   |  |             |   |  | 53.1         |  
|                                                                          |  |                                       |   | 
|Total current assets                                                      |  | 872.7                                 |   |  | 704.4       |   |  | (872.7       | ) |  | 704.4        |  
|                                                                          |  |                                       |   | 
|Creditors: amounts falling due within one year Loans and other borrowings |  | (58.9                                 | ) |  | (91.3       | ) |  |             |   |  | (150.2       | )
|Other creditors                                                           |  | (5.5                                  | ) |  | (273.6      | ) |  |             |   |  | (279.1       | )
|                                                                          |  |                                       |   | 
|Total creditors: amounts falling due within one year                      |  | (64.4                                 | ) |  | (364.9      | ) |  |             |   |  | (429.3       | )
|                                                                          |  |                                       |   | 
|Net current assets                                                        |  | 808.3                                 |   |  | 339.5       |   |  | (872.7       | ) |  | 275.1        |  
|                                                                          |  |                                       |   | 
|Total assets less current liabilities                                     |  | 1,413.8                               |   |  | 2,034.1     |   |  | (1,478.2     | ) |  | 1,969.7      |  
|                                                                          |  |                                       |   | 
|Creditors: amounts falling due after one year Loans and other borrowings  |  | (787.7                                | ) |  | (761.1      | ) |  |             |   |  | (1,548.8     | )
|Intercompany loans                                                        |  |                                      |   |  | (872.7      | ) |  | 872.7        |   |  |             |  
|                                                                          |  |                                       |   | 
|Total creditors: amounts falling due after one year                       |  | (787.7                                | ) |  | (1,633.8    | ) |  | 872.7        |   |  | (1,548.8     | )
|                                                                          |  |                                       |   | 
|Net assets                                                                |  | 626.1                                 |   |  | 400.3       |   |  | (605.5       | ) |  | 420.9        |  
|                                                                          |  |                                       |   | 
|Capital and reserves                                                      |  |                                       |   |  |             |   |  |              |   |  |              |  
|Share capital and share premium                                           |  | 605.5                                 |   |  | 605.5       |   |  | (605.5       | ) |  | 605.5        |  
|Funds (deficit)                                                           |  | 20.6                                  |   |  | (205.2      | ) |  |             |   |  | (184.6       | )
|                                                                          |  |                                       |   | 
|Equity shareholders funds                                                |  | 626.1                                 |   |  | 400.3       |   |  | (605.5       | ) |  | 420.9        |  



F-57



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##### Table of Contents

EXHIBIT INDEX



The exhibits filed with or incorporated by reference into this annual report are listed below.



1.1 Deed of Incorporation of Yell Finance B.V. (incorporated herein by reference to Exhibit
3.1 to Yell Finance B.V.s Registration Statement on Form F-4 filed with the United States Securities and Exchange Commission on August 29, 2001, declared effective on August 30, 2001 (the Exchange Offer Registration Statement)).*



1.2 Articles of Association of Yell Finance B.V. (incorporated herein by
reference to Exhibit 3.2 to the Exchange Offer Registration Statement).*



1.3
Memorandum of Association of Yellow Pages Limited (incorporated herein by reference to Exhibit 3.3 to the Exchange Offer Registration Statement).*



1.4 Articles of Association of Yellow Pages Limited (incorporated herein by reference to Exhibit 3.4 to the Exchange Offer Registration Statement).*



2.1 Indenture relating to 103/4% Senior Sterling Notes due 2011, dated August 6, 2001, between Yell Finance B.V., Yellow Pages Limited, as Guarantor, and The Bank of New York, as Trustee
(incorporated herein by reference to Exhibit 4.1 to the Exchange Offer Registration Statement).*



2.2 Indenture relating to 103/4% enior Dollar Notes due 2011, dated August 6,
2001, between Yell Finance B.V., Yellow Pages Limited, as Guarantor, and The Bank of New York, as Trustee (incorporated herein by reference to Exhibit 4.2 to the Exchange Offer Registration Statement).*



2.3 Indenture relating to 131/2% Senior Discount Dollar Notes due 2011, dated August 6, 2001, between Yell Finance B.V., Yellow Pages Limited, as Guarantor, and The Bank of New York, as
Trustee (incorporated herein by reference to Exhibit 4.3 to the Exchange Offer Registration Statement).*



2.4 Registration Rights Agreement, dated August 6, 2001, between Yell Finance B.V. and Yellow Pages Limited, as Guarantor, and Merrill Lynch International, Deutsche Bank
AG London, CIBC World Markets plc, and the other Initial Purchasers as listed on Schedule A of the Purchase Agreement, as Initial Purchasers (incorporated herein by reference to Exhibit 4.4 to the Exchange Offer Registration Statement).*



2.5 Subordination Agreement, dated August 6, 2001, between Yell Finance B.V., Yell Group
Limited, as Parent and The Bank of New York, as Trustee (incorporated herein by reference to Exhibit 4.5 to the Exchange Offer Registration Statement).*



2.6 Intercreditor Deed, dated June 22, 2001 (as amended on July 11, 2001, March 13, 2002, April 16, 2002, May 31, 2002 and November 11, 2002), with, amongst others, Yell
Group plc and certain of its subsidiaries as Obligors, Yellow Pages Limited as the Guarantor, Yell Finance B.V. as the Issuer of the High Yield Notes. Discount High Yield Notes and Further High Yield Debt, the Institutions named therein as the
Senior Finance Parties and the funds managed or advised by Apax Partners and Hicks Muse (the Intercreditor Deed). (The Intercreditor Deed and amendment prior to November 11, 2002 incorporated herein by reference to Exhibit 2.6 to Yell
Finance B.V.s annual report on Form 20-F filed with the United States Securities and Exchange Commission on July 19, 2002 (the 2002 Annual Report)* and the amendment of November 11, 2002 incorporated herein by reference to Exhibit
2.6 to Yell Finance B.V.s annual report on Form 20-F filed with the United States Securities and Exchange Commision on June 8, 2003 the 2003 Annual Report).*



2.7 Form of Sterling Note (incorporated herein by reference to Exhibit 4.7 to the Exchange Offer Registration Statement).*



2.8 Form of Dollar Note (incorporated herein by reference to Exhibit 4.8 to the Exchange
Offer Registration Statement).*



2.9 Form of Discount Dollar Note (incorporated
herein by reference to Exhibit 4.9 to the Exchange Offer Registration Statement).*



2.10 Form of Guarantee (included in Exhibits 2.7, 2.8 and 2.9) (incorporated herein by reference to Exhibits 4.7, 4.8 and 4.9 to the Exchange Offer Registration Statement).*



2.11 First Supplemental Indenture dated January 18, 2002, to the Indenture relating to 103/4% Senior Sterling Notes due 2011 incorporated herein by reference to Exhibit 4.1 to the Exchange Offer Registration Statement (incorporated herein by
reference to Exhibit 2.11 to the 2002 Annual Report).*



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##### Table of Contents

2.12 First Supplemental Indenture dated January 18, 2002, to the Indenture relating to 103/4% Senior Dollar Notes due 2011 incorporated herein by reference to Exhibit 4.2 to the Exchange Offer Registration
Statement (incorporated herein by reference to Exhibit 2.12 to the 2002 Annual Report).*



2.13 First Supplemental Indenture dated January 18, 2002, to the Indenture relating to 131/2% Senior Discount Dollar Notes due 2011 incorporated herein by reference to Exhibit 4.3 to the Exchange Offer Registration Statement (incorporated herein by reference to Exhibit 2.13 to the 2002 Annual Report).*



4.1 Senior Facilities Agreement dated 8 July 2003 (as amended and restated on 12 August 2003
and as further amended and restated on 26 August 2003) among, inter alios, Yell Group plc, the subsidiaries identified therein as borrowers and guarantors, ABN AMRO Bank N.V. and HSBC Bank plc as joint mandated lead arrangers, the financial
institutions named therein as lenders and HSBC Bank plc as facility agent and security trustee (incorporated herewith by reference to Yell Finance B.V.s annual report on Form 20-F filed with the United States Securities and Exchange Commission
on June 8, 2004 (the 2004 Annual Report)).*



4.2 Security
Agreement, dated June 22, 2001, between Yasmin Two (US) Inc. (now known as Yellow Book Holdings, Inc.), Yasmin One (US), Inc. (now known as Yellow Book Group Inc.), Yellow Book USA, Inc., Yellow Book GP, LLC, Yellow Book of Florida Directories,
L.P., Yellow Book of Illinois, LLC, Yellow Book Mid-Atlantic, L.P., Yellow Book of New York, Inc., Yellow Book Southern Directories, LLC, Yellow Book of Pennsylvania, Inc., and Yellow Book Delaware Inc. (incorporated herein by reference to Exhibit
10.2 to the Exchange Offer Registration Statement).*



4.3 Keep-Well Agreement,
dated August 6, 2001 as amended and restated on April 6, 2002, between Yell Group Limited and Yell Finance B.V. (incorporated herein by reference to Exhibit 10.3 to the Exchange Offer Registration Statement) (incorporated herein by reference to
Exhibit 4.3 to the 2002 Annual Report).*



4.4 Yellow Book Last Acquisition
Agreement dated January 19, 2002 among McLeodUSA Inc. as Parent, Yell Group Limited (now Yell Group plc) and McLeodUSA Holdings, Inc as Seller (incorporated herein by reference to Exhibit 4.8 to the 2002 Annual Report).*



4.5 McLeod Operating Agreement dated April 16, 2002 (as amended and restated April 28, 2003)
among Yell Group Limited (now Yell Group plc), McLeodUSA Inc. and McLeodUSA Telecommunications Services, Inc (incorporated herein by reference to Exhibit 4.9 to the 2002 Annual Report)* and the amendment and restatement of April 28, 2003
(incorporated herein by reference to the Exhibit 4.5 to the 2004 Anual Report).*



4.6 Directors Service Contract, dated 10 July 2003, between John Condron and Yell Group plc (incorporated herein by reference to Exhibit 4.6 to the 2004 Annual Report).*



4.7 Directors Service Contract, dated 10 July 2003, between John Davis and Yell Group plc (incorporated herein by reference to Exhibit
4.7 to the 2004 Annual Report).*



4.8 Stock Sale Agreement, dated as of
December 10, 2002, by and among NDC Holdings II, Inc., The Stockholders of NDC Holdings II, Inc., Three Cities Research, Inc., as Sellers Representative and Yellow Book USA, Inc. (incorporated herein by reference to Exhibit 4.8 to the 2003
Annual Report).*



4.9 Agreement and Plan of Merger by and among Yellow Book
USA, Inc, Tapestry Acquisition, LLC, Transwestern Holdings, L.P., TWP REP Co, LLL, as Representative, and Yell Group Plc, dated May 16, 2005.**



7.1 Statement Explaining Calculation of Ratio of Earnings to Fixed Charges.**



8.1 Subsidiaries of Yell Finance B.V. (please see list of principal subsidiaries under Item 4.C. Information on the CompanyOrganizational Structure of this annual
report on Form 20-F on page 37).



12.1 Certification Pursuant to 18 U.S.C.
Section 1350, as Adopted by Section 302 of the Sarbanes-Oxley Act of 2002 of John Condron dated June 13, 2005.**



12.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section 302 of the Sarbanes-Oxley Act of 2002 of John Davis dated June 13, 2005.**



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##### Table of Contents

13.1 Chief Executive Officer certification, dated June 13, 2005, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.**



13.2 Chief Financial Officer certification, dated June 13, 2005,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**



14.1 Code of
Ethics for the Chief Executive and Senior Financial Officers (incorporated herein by reference to Exhibit 14.1 to the 2004 Annual Report).*

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|* | Incorporated by reference.
|- | --------------------------

|** | Filed herewith.
|-- | ---------------