HispanicBusiness

The number of advertisers receiving the PriorityPlus service and purchasing high-end products increased in the first quarter of 2013, with this trend expected to continue throughout the year. These initiatives have also resulted in an improved customer experience and an abatement of the revenue pressure stemming from our larger, high- spend advertisers.

Enhancing the User Experience

Improving the user experience is key in attracting the right consumer audiences to our network of properties and promoting the success of our advertisers. During the first quarter of 2013, YPG's network of sites reached 8.5 million unduplicated unique visitors, representing 31% of Canada's online population.

User adoption of the Company's mobile applications also continues to grow, with total downloads having exceeded 5.5 million by the end of the first quarter of 2013. This compares to 4 million downloads at the same period last year. During the quarter, the Yellow Pages™ application was launched on the new BlackBerry 10 and Windows 8 platforms. The ShopWise application was also enhanced to deliver a native experience for Android users.

YellowAPI is currently one of the largest business information databases in the country, holding curated content on over 1.5 million Canadian business listings. The network currently enrolls over 2,750 developers who build mobile applications using YPG's business information. YellowAPI also powers local search in Canada through partnerships with Yahoo! Canada web and mobile, Poynt and Telus. In addition, YPG maintains a strategic relationship with Google to provide local listings and has agreements in place for data exchange with TripAdvisor and OpenTable.

In April 2013, the Company launched a second installation of its Meet the New Neighbourhood ad campaign to solidify brand perception and introduce the Yellow Pages brand to generations unfamiliar with our digital products and services. The second installation of the campaign highlights the Yellow Pages mobile application and the role it plays in connecting mobile consumers with local businesses. The ad campaign can be viewed at www.ypg.com, and will run on television stations and local cinemas in major cities across Canada until June 2013.

Capital Structure

As at March 31, 2013, Yellow Media had approximately $724 million of net debt. This compares to $782 million of net debt as at December 31, 2012.

The net debt to latest twelve month EBITDA ratio as at March 31, 2013 was 1.3 times compared to 1.4 times as at December 31, 2012.

Pursuant to the indenture governing the 9.25% Senior Secured Notes due November 30, 2018, the Company is required to use an amount equivalent to 75% of its consolidated Excess Cash Flow for the immediately preceding six-month period ending March 31 or September 30 to redeem the Senior Secured Notes at par. These mandatory redemption payments will be made on a semi-annual basis on the last day of May and November of each year, commencing on May 31, 2013.

The Company is required to make a minimum annual aggregate mandatory redemption payment of $100 million for the combined payments due on May 31, 2013 and November 30, 2013. The Company anticipates making a $26 million mandatory redemption payment on May 31, 2013, and has sufficient financial liquidity to meet the minimum annual aggregate mandatory redemption payment of $100 million in 2013.

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