Yellow Pages Annual Report 2020

FY2020 Annual Report · Yellow Pages

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Table of Contents

Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

Consolidated Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

Consolidated Statements of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

Consolidated Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43

Notes To The Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44-83

Message to Shareholders

Dear Shareholders,

I am gratified to report that 2020 was another year of good performance and significant accomplishment by your company. Your management team and all of our
YP colleagues continued to strengthen and increase the value of our company, despite a global pandemic, generating strong cash while continuing to lay the groundwork
for the future. Notable accomplishments included:

•

Produced strong profitability. For the year, our profit (measured as Adjusted EBITDA margin1) was 39% of revenues, despite our investments in revenue
initiatives.

• Continued to build cash. As of the end of December 2020, our cash on hand was approximately $154 million.

•

Launched a NCIB for our common stock. Under our Normal Course Issuer Bid program, during 2020 the company purchased 273,190 common shares for cash
of $3.3 million.

Paid significant quarterly cash dividends. We initiated in the second quarter of 2020 a regular quarterly dividend of 11 cents per common share per quarter and
paid 33 cents per common share during 2020.

Positioned the company to be debt-free by June 1. We announced our intention to pay off our Exchangeable Debentures, at par, which are our only remaining
debt, excluding lease obligations, on or around May 31, 2021. Our cash on hand at the end of January 2021 already significantly exceeded the $107 million principal
amount of that debt.

• Navigated the sholes of the COVID-19 pandemic to produce only a modest effect. During the pandemic, we have continued our operations unabated and

produced financial results affected by only a handful of percentage points.

• Advanced our revenue initiatives. To prepare for the future, we have doubled our tele-sales capacity to significantly ramp up our acquisition of new accounts, and

we are executing on our programs to add to our strong portfolio of products.

We believe we have produced strong results and set our company on a promising course for the future.

Thank you for your continued support.

David A. Eckert
President and Chief Executive Officer

(1) Adjusted EBITDA is equal to Income from operations before depreciation and amortization and restructuring and other charges (defined herein as Adjusted EBITDA), as shown in Yellow Pages Limited’s consolidated
statements of income. Adjusted EBITDA margin is defined as the percentage of Adjusted EBITDA to revenues. Adjusted EBITDA and Adjusted EBITDA margin are not performance measures defined under IFRS and
are not considered an alternative to income from operations or net earnings in the context of measuring Yellow Pages performance. Adjusted EBITDA and Adjusted EBITDA margin do not have a standardized meaning
under IFRS and are therefore not likely to be comparable to similar measures used by other publicly traded companies. Adjusted EBITDA and Adjusted EBITDA margin should not be used as exclusive measures of
cash flow since they do not account for the impact of working capital changes, income taxes, interest payments, pension funding, capital expenditures, business acquisitions, debt principal reductions and other sources
and uses of cash, which are disclosed on page 26 of our MD&A. Management uses Adjusted EBITDA and Adjusted EBITDA margin to evaluate the performance of its business as it reflects its ongoing profitability.
Management believes that certain investors and analysts use Adjusted EBITDA and Adjusted EBITDA margin to measure a company’s ability to service debt and to meet other payment obligations or as common
measurement to value companies in the media and marketing solutions industry as well as to evaluate the performance of a business.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

February 10, 2021

This management’s discussion and analysis (MD&A) is intended to help the reader understand and assess trends and significant changes in the results of operations and
financial condition of Yellow Pages Limited and its subsidiaries for the years ended December 31, 2020 and 2019 and should be read in conjunction with our Audited
Consolidated Financial Statements and accompanying notes for the years ended December 31, 2020 and 2019. Please also refer to Yellow Pages Limited’s press release
announcing its results for year ended December 31, 2020 issued on February 11, 2021. Quarterly reports, the Annual Report, Supplemental Disclosure and the Annual
Information Form (AIF) can be found on SEDAR at www.sedar.com and under the ‘‘Investor Relations – Reports & Filings’’ section of our corporate website:
https://corporate.yp.ca/en. Press releases are available on SEDAR and under the ‘‘News – Press Releases’’ section of our corporate website.

The consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) and the financial information herein was
derived from those statements.

All amounts in this MD&A are in Canadian dollars, unless otherwise specified. Please refer to the section ‘‘Definitions Relative to Understanding Our Results’’ for a list of
defined non-IFRS financial measures and key performance indicators.

Our reporting structure reflects how we manage our business and how we classify our operations for planning and for measuring our performance.

In this MD&A, the words ‘‘we’’, ‘‘us’’, ‘‘our’’, the ‘‘Company’’, the ‘‘Corporation’’, ‘‘Yellow Pages’’ and ‘‘YP’’ refer to Yellow Pages Limited and its subsidiaries (including Yellow
Pages Digital & Media Solutions Limited, 411 Local Search Corp. (411.ca) dissolved as of September 30, 2020, YPG (USA) Holdings, Inc. and Yellow Pages Digital & Media
Solutions LLC (the latter two collectively YP USA).

Caution Regarding Forward-Looking Information

This MD&A contains assertions about the objectives, strategies, financial condition, including potential full repayment of the Company’s remaining exchangeable
debentures on or shortly after May 31, 2021, at par; to its common shareholders, a cash dividend payment of $0.11 per share per quarter; and results of operations and
businesses of YP. These statements are considered ‘‘forward-looking’’ because they are based on current expectations, as at February 10, 2021, about our business and
the markets we operate in, and on various estimates and assumptions.

Forward-looking information and statements are based on several assumptions which may lead to actual results that differ materially from our expectations expressed in,
or implied by, such forward-looking information and statements, and that our business strategies, objectives and plans may not be achieved. As a result, we cannot
guarantee that any forward-looking statement will materialize and we caution you against relying on any of these forward-looking statements. Forward-looking information
and statements are included in this MD&A for the purpose of assisting investors and others in understanding our business strategies, objectives and plans. Readers are
cautioned that such information may not be appropriate for other purposes. In making certain forward-looking statements, we have made the following assumptions:

•

that general economic conditions in Canada will not deteriorate significantly further and will begin to recover later in the year as the COVID-19 pandemic activity
restrictions are lifted;

that we will be able to attract and retain key personnel in key positions;

that we will be able to introduce, sell and provision the products and services that support our customer base and drive improvement in average revenue per
customer (‘‘ARPC’’);

that the decline in print revenues will remain at or below approximately 25% per annum;

that YP segment gross profit margins will not deteriorate materially from current levels;

that continuing reductions in spending will mitigate the cash flow impact of revenue declines on cash flows; and

that exposure to foreign exchange risk arising from foreign currency transactions will remain insignificant.

Forward-looking information and statements are also based upon the assumption that none of the identified risk factors that could cause actual results to differ materially
from the anticipated or expected results described in the forward-looking information and statements will occur.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

When used in this MD&A, such forward-looking statements may be identified by words such as ‘‘aim’’, ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goal’’, ‘‘intend’’,
‘‘objective’’, ‘‘may’’, ‘‘plan’’, ‘‘predict’’, ‘‘seek’’, ‘‘should’’, ‘‘strive’’, ‘‘target’’, ‘‘will’’, ‘‘would’’ and other similar terminology. These statements reflect current expectations
regarding future events and operating performance and speak only as at the date of this MD&A. The Corporation assumes no obligation to update or revise them to reflect
new events or circumstances, except as may be required pursuant to securities laws. Forward-looking statements involve significant risks and uncertainties, should not be
read as guarantees of future results or performance, and will not necessarily be accurate indications of whether or not such results or performance will be achieved.
A number of factors could cause actual results or performance to differ materially from the results or performance discussed in the forward-looking statements and could
have a material adverse effect on the Corporation, its business, results from operations and financial condition, including, but not limited to, the following risk factors
discussed under the ‘‘Risks and Uncertainties’’ section of this MD&A, and those described in the ‘‘Risk Factors’’ section of our AIF:

Management’s Discussion and Analysis

•

Failure by the Corporation to stabilize or grow its revenues and customer base;

The inability of the Corporation to attract, retain and upsell customers;

Substantial competition could reduce the market share of the Corporation;

A higher than anticipated rate of decline in print revenue resulting from changes in preferences and consumer habits;

The inability of the Corporation to successfully enhance and expand its offering of digital marketing and media products;

The inability of the Corporation to supply the relationships and technologies required to appropriately service the needs of its customers;

A prolonged economic downturn in principal markets of the Corporation;

A higher than anticipated proportion of revenues coming from the Corporation’s digital products with lower margins, such as services and resale;

The Corporation’s inability to attract and retain key personnel;

The Corporation’s business depends on the usage of its online and mobile properties and failure to protect traffic across the Corporation’s digital properties could
impair its ability to grow revenues and expand its business;

Failure by either the Corporation or the Telco Partners to fulfill their obligations set forth in the agreements between the Corporation and the Telco Partners;

• Work stoppages and other labour disturbances;

• Challenge by tax authorities of the Corporation’s position on certain income tax matters;

•

The loss of key relationships or changes in the level or service provided by mapping applications and search engines;

The failure of the Corporation’s computers and communication systems;

The inability of the Corporation to generate sufficient funds from operations, debt financings, equity financings or refinancing transactions;

Incremental contributions by the Corporation to its pension plans; and

An outbreak or escalation of a contagious disease may adversely affect the Corporation’s business greater than anticipated.

Definitions Relative to Understanding Our Results

Income from Operations before Depreciation and Amortization and Restructuring and Other Charges (Adjusted EBITDA and Adjusted EBITDA Margin)

We report on our Income from operations before depreciation and amortization and restructuring and other charges (defined herein as Adjusted EBITDA) as shown in Yellow
Pages Limited’s consolidated statements of income. Adjusted EBITDA and Adjusted EBITDA margin are not performance measures defined under IFRS and are not
considered to be an alternative to income from operations or net earnings in the context of measuring Yellow Pages performance. Adjusted EBITDA and Adjusted EBITDA
margin do not have a standardized meaning under IFRS and are therefore not likely to be comparable with similar measures used by other publicly traded companies.
Adjusted EBITDA and Adjusted EBITDA margin should not be used as exclusive measures of cash flow since they do not account for the impact of working capital changes,
income taxes, interest payments, pension funding, capital expenditures, business acquisitions, debt principal reductions and other sources and uses of cash, which are
disclosed on page 26 of this MD&A.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Adjusted EBITDA is derived from revenues less operating costs, as shown in Yellow Pages Limited’s consolidated statements of income. Adjusted EBITDA margin is defined
as the percentage of Adjusted EBITDA to revenues. We use Adjusted EBITDA and Adjusted EBITDA margin to evaluate the performance of our business as these reflect
its ongoing profitability. We believe that certain investors and analysts use Adjusted EBITDA and Adjusted EBITDA margin to measure a company’s ability to service debt
and to meet other payment obligations or as a common measurement to value companies in the media and marketing solutions industry as well as to evaluate the
performance of a business.

Adjusted EBITDA less CAPEX

Adjusted EBITDA less CAPEX is a non-IFRS financial measure and does not have any standardized meaning under IFRS. Therefore, it is unlikely to be comparable to
similar measures presented by other publicly traded companies. We define Adjusted EBITDA less CAPEX as Adjusted EBITDA, as defined above, less CAPEX, which we
define as additions to intangible assets and additions to property and equipment as reported in the Investing Activities section of the Company’s consolidated statements
of cash flows. We use Adjusted EBITDA less CAPEX as the key performance measure for our business as it reflects cash generated from business activities. We believe
that certain investors and analysts use Adjusted EBITDA less CAPEX to evaluate the performance of businesses in our industry. Adjusted EBITDA less CAPEX is also one
component in the determination of short-term incentive compensation for all management employees.

The most comparable IFRS financial measure to Adjusted EBITDA less Capex is Income from operations before depreciation and amortization and restructuring and other
charges (defined above as Adjusted EBITDA) as shown in Yellow Pages Limited’s consolidated statements of income. Refer to page 6 and page 11 of this MD&A for a
reconciliation of CAPEX and Adjusted EBITDA less CAPEX, respectively.

This MD&A is divided into the following sections:

1. Our Business and Customer Offerings

2. Results

3. Liquidity and Capital Resources

4. Critical Assumptions and Estimates

5. Risks and Uncertainties

6. Controls and Procedures

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

1. Our Business and Customer Offerings

Our Business

Yellow Pages, a leading digital media and marketing solutions provider in Canada, offers targeted tools to local businesses, national brands and consumers allowing them
to interact and transact within today’s digital economy.

Customer Offerings

Yellow Pages offers, through its YP segment, small and medium-sized enterprises (SMEs) across Canada full-serve access to one of the country’s most comprehensive
suites of digital and traditional marketing solutions, notably online and mobile priority placement on Yellow Pages digital media properties, content syndication, search
engine solutions, website fulfillment, social media campaign management, digital display advertising, video production and e-commerce solutions as well as print
advertising. The Company’s dedicated sales force and customer care team of approximately 300 professionals offer this full suite of marketing solutions to local businesses
across the country, while also supporting the evolving needs of its existing customer base of 125,400 SMEs.

Media Properties

The Company’s media properties, primarily desktop, mobile and print, continue to serve as effective marketplaces for Canadian local merchants, brands and consumers.
The Company’s network of media properties enables Canadians to discover businesses in their neighbourhoods across the services, real estate, dining and retail verticals.
Descriptions of the Company’s digital media properties, are found below:

•

YP™ – Available both online at YP.ca and as a mobile application, YP allows users to discover and transact within their local neighbourhoods through
comprehensive merchant profiles, relevant editorial content, reviews and booking functionalities;

• Canada411 (C411) – One of Canada’s most frequented and trusted online and mobile destinations for personal and local business information;

•

The Corporation is the official directory publisher for Bell, Telus, Bell Aliant, MTS Allstream, and a number of other incumbent telephone companies; and

411.ca – A digital directory service to help users find and connect with people and local businesses.

Key Analytics

The success of our business is dependent upon continuing to improve operating profitability and capital spending efficiency. Longer-term improvements in profitability are
dependent upon growth in digital revenues and retaining and growing our customer base. Key analytics for the year ended December 31, 2020 include:

•

Adjusted EBITDA – Adjusted EBITDA declined to $129.4 million or 38.8% of revenues for the year ended December 31, 2020, relative to $161.3 million or 40.0%
of revenues for the same period last year.

Adjusted EBITDA less CAPEX – Adjusted EBITDA less CAPEX decreased to $123.9 million for the year ended December 31, 2020 compared to $151.6 million for
the same period last year.

YP Segment Revenues – YP Segment digital revenues decreased 17.0% year-over-year and amounted to $333.5 million for the year ended December 31, 2020.

YP Customer Count1 and ARPC2 – YP Segment customer count decreased to 125 400 customers for the year ended December 31, 2020, as compared to 153,300
customers for same period last year. The customer count reduction of 27,900 for the year ended December 31, 2020 compares to a decline of 33,400 in the
comparable period of the previous year. YP Segment ARPC for the year ended December 31, 2020 was $2,540 as compared to $2,567 for the year ended
December 31, 2019 representing a modest decrease of 1.1% driven by decreased print spend per customer.

1 YP Customer Count is defined as the number of customers advertising through one of our products as at the end of the reporting period on a trailing twelve-month basis excluding 411.ca customers.
2 YP ARPC is defined as the YP average contracted revenue per customer on a trailing twelve-month basis excluding 411.ca.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

CAPEX
(In thousands of Canadian dollars)

For the three-month periods and years ended December 31,

Additions to intangible assets
Additions to property and equipment

CAPEX

Headcount1
As at December 31,

YP Total Headcount

Management’s Discussion and Analysis

2020

1,386
88

1,474

2019

1,973
8

1,981

2020

5,328
245

5,573

2019

9,647
91

9,738

2020

686

2019

768

Change

(82)

The Company defines headcount as total employees excluding employees on short term and long-term disability leave, and on maternity leave.

2. Results

This section provides an overview of our financial performance in 2020 compared to 2019 and 2018. We present several metrics to help investors better understand our
performance, including certain metrics which are not measures recognized by IFRS. Definitions of these non-IFRS financial metrics are provided on page 3 of this MD&A
and are important aspects which should be considered when analyzing our performance.

Highlights
(In thousands of Canadian dollars, except per share and percentage information)

For the years ended December 31,

Revenues
Income from operations before depreciation and amortization, and restructuring and other charges (Adjusted EBITDA)
Adjusted EBITDA margin
Net earnings
Basic earnings per share
CAPEX
Adjusted EBITDA less CAPEX
Cash flows from operating activities

$
$

$
$
$
$
$

2020

333,538
129,442
38.8%
60,298
2.27
5,573
123,869
126,998

$
$

$
$
$
$
$

2019

403,213
161,345
40.0%
94,669
3.57
9,738
151,607
144,759

$
$

$
$
$
$
$

2018

577,195
192,565
33.4%
82,809
3.13
12,036
180,529
134,659

Revenues
(In thousands of Canadian dollars)

Adjusted EBITDA
(In thousands of Canadian dollars)

2020

2019

2018

$ 333,538

$403,213

$577,195

Adjusted EBITDA less CAPEX
(In thousands of Canadian dollars)

2020

2019

2018

$123,869

$151,607

$180,529

2020

2019

2018

$129,442

$161,345

$192,565

Cash Flows from Operating Activities
(In thousands of Canadian dollars)

2020

2019

2018

$126,998

$144,759

$134,659

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Consolidated Operating and Financial Results
(In thousands of Canadian dollars, except per share and percentage information)

For the years ended December 31,

Revenues
Cost of sales

Gross profit
Other operating costs

Income from operations before depreciation and amortization, and restructuring and

other charges (Adjusted EBITDA)

Depreciation and amortization
Restructuring and other charges

Income from operations
Financial charges, net
Loss (gain) on sale of businesses

Earnings before income taxes
Provision for (recovery of) income taxes

Net earnings

Basic earnings per share
Diluted earnings per share

As at December 31,

Total assets
Senior Secured Notes (including current portion)
Exchangeable debentures

Total Senior Secured Notes and Exchangeable debentures to total assets

1 Certain comparative information has been restated to conform to the 2020 presentation.

Management’s Discussion and Analysis

% of
Revenues

38.3%

61.7%
22.9%

38.8%
8.3%
2.4%

28.1%
4.4%
0.1%

23.6%
5.5%

2019

403,213
158,674

244,539
83,194

161,345
39,109
12,499

109,737
39,600
367

69,770
(24,899)

% of
Revenues

39.4%

60.6%
20.6%

40.0%
9.7%
3.1%

27.2%
9.8%
0.1%

17.3%
(6.2%)

20181

577,195
237,541

339,654
147,089

192,565
76,094
15,862

100,609
54,729
(6,129)

52,009
(30,800)

18.1% $

94,669

23.5% $

82,809

% of
Revenues

41.2%

58.8%
25.5%

33.4%
13.2%
2.7%

17.4%
9.5%
(1.1%)

9.0%
(5.3%)

14.3%

$
$

$
$
$

3.57
3.16

2019

326,878
−
98,537

30.1%

$
$

$
$
$

3.13
2.78

2018

442,369
167,489
96,179

59.6%

$
$

$
$
$

2020

333,538
127,789

205,749
76,307

129,442
27,664
8,131

93,647
14,512
423

78,712
18,414

60,298

2.27
2.10

2020

367,913
−
101,115

27.5%

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Segmented Information

The Company’s operations are categorized into two reportable segments: YP and Other.

The YP segment provides small and medium-sized businesses across Canada digital and traditional marketing solutions, including online and mobile priority placement on
Yellow Pages owned and operated media, content syndication, search engine solutions, website fulfillment, social media campaign management and digital display
advertising, video production and print advertising. This segment also includes the 411.ca digital directory service helping users find and connect with people and local
businesses which was integrated with the Company’s wholly owned subsidiary, Yellow Pages Digital & Media Solutions Limited, as at September 30, 2019.

The Other segment includes YP Dine digital property allowing users to discover, search for and book local restaurants in addition to offering online ordering capabilities until
its sale on April 30, 2019. This segment also includes Mediative until its liquidation on January 31, 2019. Mediative’s offers included dedicated marketing and performance
media services to national clients Canada-wide. The operations of the businesses sold in 2018 were also included in this segment until their respective disposal date,
namely:

•

Totem which provided customized content creation and delivery for global brands until its sale on May 31, 2018;

• Western Media Group, magazines generating local lifestyle content specific to the Western Canada region until its sale as of May 31, 2018;

• RedFlagDeals.com™, a Canadian provider of online and mobile promotions, deals, coupons and shopping forums, until its sale on August 22, 2018;

• ComFree/DuProprio (CFDP) provided homeowners in Canada with media to sell their homes in a cost-effective manner until its sale on July 6, 2018;

•

Yellow Pages NextHome until its sale on July 23, 2018; and

JUICE Mobile’s proprietary Programmatic Direct and Real-Time Bidding platforms that facilitated the automatic buying and selling of mobile advertising between
brands and advertisers, until its sale on December 31, 2018.

Subsequent to the second quarter of 2019, there are no longer any operations being reported in the Other segment.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Analysis of Consolidated and Segmented Operating and Financial Results

Fiscal year 2020 versus 2019

Revenues

(In thousands of Canadian dollars, except percentage information)

For the years ended December 31,

Digital
Print

Other

Digital
Print

Total revenues

Management’s Discussion and Analysis

2020

252,252
81,286

333,538

−
−

−

252,252
81,286

333,538

$
$

2019

% Change

$
$

298,762
103,177

401,939

1,274
−

1,274

300,036
103,177

403,213

(15.6%)
(21.2%)

(17.0%)

nm
nm

(15.9%)
(21.2%)

(17.3%)

Total revenues for the year ended December 31, 2020 decreased by 17.3% year-over-year and amounted to $333.5 million as compared to $403.2 million for the same
period last year.

Total digital revenues decreased 15.9% year-over-year and amounted to $252.3 million for the year ended December 31, 2020 compared to $300.0 million for the year
ended December 31, 2019.

Total print revenues decreased 21.2% year-over-year and amounted to $81.3 million for the year ended December 31, 2020 as compared to print revenues of $103.2 million
for the year ended December 31, 2019.

As there are no longer any operations in the Other segment subsequent to the second quarter of 2019, the lower revenues for the year ended December 31, 2020 is due
to the YP Segment.

Reportable Segments Revenues

Revenues for the YP segment for the year ended December 31, 2020 decreased by $68.4 million or 17.0% year-over-year and amounted to $333.5 million compared to
$401.9 million for the same period last year. The decrease for the year ended December 31, 2020 is due to the decline of our higher margin YP digital media and print
products and to a lesser extent to our lower margin digital services products, thereby creating pressure on our gross profit margins. Revenues for 2020 were also impacted
by the COVID-19 pandemic which impacted customer spend and to a lesser extent customer renewal rates.

Digital revenues decreased 15.6% year-over-year and amounted to $252.3 million for the year ended December 31, 2020, this compares to $298.8 million for the same
period last year. The revenues were adversely impacted by a decline in the number of digital customers partially offset by a tenth consecutive quarter of higher spend per
customer despite pressure on spend due to the pandemic.

Print revenues decreased 21.2% year-over-year and amounted to $81.3 million for the year ended December 31, 2020. The revenues were adversely impacted by a decline
in the number of print customers and lower spend per customer.

Other

Due to the divestitures there were no revenues generated by the Other segment for the year ended December 31, 2020, resulting in a year-over-year decline of $1.3 million.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Gross Profit

(In thousands of Canadian dollars, except percentage information)

For the years ended December 31,

YP
Other

Total gross profit

Management’s Discussion and Analysis

2020

205,749
−

205,749

% of
Revenues

61.7% $
nm

2019

243,889
650

61.7% $

244,539

% of
Revenues

% Change

60.7%
51.0%

60.6%

(15.6%)
nm

(15.9%)

Gross profit decreased to $205.7 million or 61.7% of revenues for the year ended December 31, 2020, compared to $244.5 million, or 60.6% of revenues, for the same
period last year. The decrease in gross profit and increase in gross profit as a percentage of revenues is attributable to the YP segment.

Reportable Segments Gross Profit

Gross profit for the year ended December 31, 2020 totalled $205.7 million or 61.7% of revenues, compared to $243.9 million, or 60.7% of revenues, for the same period
in 2019. The decrease in gross profit is a result of the pressures from lower overall revenues and change in product mix which were partially offset by efficiencies in sales
and operations from optimization and cost reductions resulting in an increase in gross profit as a percentage of revenues.

Other

Due to the divestitures there was no gross profit generated by the Other segment for the year ended December 31, 2020, resulting in a year-over-year decline of $0.7 million
in Other gross profit for the year ended December 31, 2020.

Adjusted EBITDA

(In thousands of Canadian dollars, except percentage information)

For the years ended December 31,

YP
Other

Total Adjusted EBITDA

2020

129,442
−

129,442

% of
Revenues

38.8% $
−

2019

161,014
331

38.8% $

161,345

% of
Revenues

% Change

40.1%
nm

40.0%

(19.6%)
nm

(19.8%)

Adjusted EBITDA decreased by 19.8% to $129.4 million or 38.8% of revenues for the year ended December 31, 2020, relative to $161.3 million or 40.0% of revenues for
the same period last year. The year-over-year results for the year ended December 31, 2020 were attributable to the YP Segment.

Reportable Segments Adjusted EBITDA

Adjusted EBITDA for the YP segment for the year ended December 31, 2020 totalled $129.4 million or 38.8% of revenues compared to $161.0 million or 40.1% of revenues
for the same period last year. The decrease in Adjusted EBITDA and Adjusted EBITDA margin for the year ended December 31, 2020 is the result of the overall revenue
pressures in the segment partially offset by efficiencies in sales and operations from continued optimization and reductions in other operating costs including reductions in
our workforce and associated employee expenses, reductions in the Company’s office space footprint and other spending reductions across the segment. The Company
received a total of $7.3 million in emergency wage subsidies during the year ended December 31, 2020. In addition, the first quarter of 2019 was favorably impacted by an
adjustment to the variable compensation expense due to employee attrition and previous year performances. Revenue pressures, coupled with increased headcount in our
salesforce partially offset by continued optimization, will create some pressure on margin in upcoming quarters.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Other

Due to the divestitures there was no Adjusted EBITDA generated by the Other segment for the year ended December 31, 2020, resulting in a year-over-year decline of
$0.3 million.

Management’s Discussion and Analysis

Adjusted EBITDA less CAPEX

(In thousands of Canadian dollars, except percentage information)

For the year ended December 31,

Adjusted EBITDA
CAPEX

Other

Adjusted EBITDA
CAPEX

Total Adjusted EBITDA less CAPEX

2020

129,442
5,573

123,869

−
−

−

129,442
5,573

123,869

$
$

2019

% Change

$
$

161,014
9,460

151,554

331
278

161,345
9,738

151,607

(19.6%)
(41.1%)

(18.3%)

nm
nm

(19.8%)
(42.8%)

(18.3%)

Adjusted EBITDA less CAPEX decreased by $27.7 million to $123.9 million for the year ended December 31, 2020, compared to $151.6 million during the same period last
year.

Reportable Segments Adjusted EBITDA less CAPEX

Adjusted EBITDA less CAPEX for the YP segment for the year ended December 31, 2020 totalled $123.9 million compared to $151.6 million for the same period last year.
The decrease for the year ended December 31, 2020 is mainly due to lower Adjusted EBITDA partially offset by lower capital expenditures due to decreased spending in
software development.

Depreciation and Amortization

Depreciation and amortization decreased to $27.7 million for the year ended December 31, 2020 compared to $39.1 million for the same period last year primarily due to
lower software development expenditures.

Restructuring and Other Charges

(In thousands of Canadian dollars)

For the years ended December 31,

Severance, benefits and outplacement
Settlement of litigation
Impairment of right-of-use assets and property and equipment and provision for future operation costs related to lease contracts for offices

closed

Pension settlement (recovery) costs and past service (recovery) costs, net
Other (recoveries) costs

Total restructuring and other charges

2020

2,895
−

5,512
−
(276)

8,131

2019

10,767
(99)

371
(980)
2,440

12,499

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Yellow Pages Limited recorded restructuring and other charges of $8.1 million for the year ended December 31, 2020 consisting mainly of restructuring charges of
$2.6 million associated with workforce reductions, a $2.1 million charge related to future operation costs provisioned related to lease contracts for office closures, as well
as a $4.6 million charge related to the impairment of property and equipment and right-of-use assets related to vacated office space, partially offset by a $1.2 million recovery
related to the surrender of vacated office space.

Restructuring and other charges of $12.5 million were recorded for the year ended December 31, 2019 consisting of restructuring charges of $12.1 million relating to
workforce reductions, a $1.9 million charge related to future operation costs provisioned related to lease contracts for office closures, a $0.3 million charge related to
software disposal, offset by a net recovery of $1.8 million from more favorable lease recoveries than anticipated.

Financial Charges

Financial charges decreased to $14.5 million for the year ended December 31, 2020 compared to $39.6 million for the same period last year. The decrease is primarily due
to a lower level of indebtedness due to the full repayment of the Senior Secured Notes in 2019. The Company’s effective average interest rate on our debt portfolio excluding
lease obligations as at December 31, 2020 was 8.0% (2019 – 9.0%).

Provision for (Recovery of) Income Taxes

The combined statutory provincial and federal tax rates were 26.5% for the year ended December 31, 2020 and 26.8% for the same period in 2019. The Company recorded
an expense of $18.4 million for the year ended December 31, 2020, including the recognition of previously unrecognized tax attributes and temporary differences of
$2.8 million. In comparison, the company recorded a recovery of income tax of $24.9 million for the year ended December 31, 2019, including recognition of previously
unrecognized tax attributes and temporary differences of $44.2 million. The Company recorded an income tax expense of 23.4% of earnings for the year ended
December 31, 2020 (2019 – an income tax recovery of 35.7%). These recoveries are non-cash items.

The difference between the effective and the statutory rates for the years ended December 31, 2020 and 2019 is mainly due to recognition of previously unrecognized tax
attributes and temporary differences and the non-deductibility of certain expenses for tax purposes.

Net earnings

Net earnings for the year ended December 31, 2020 amounted to $60.3 million as compared to net earnings of $94.7 million for the same period last year due to higher
recognition of previously unrecognized tax attributes and temporary differences in 2019. Earnings before taxes increased from $69.8 million in 2019 to $78.7 million for the
year-ended December 31, 2020 as lower Adjusted EBITDA was more than offset by lower restructuring and other charges, financial charges and depreciation and
amortization expenses.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Fiscal year 2019 versus 2018

Revenues

(In thousands of Canadian dollars, except percentage information)

For the years ended December 31,

Digital
Print

Other

Digital
Print

Intersegment eliminations

Digital
Print

Total revenues

Management’s Discussion and Analysis

2019

298,762
103,177

401,939

1,274
−

1,274

−
−

−

300,036
103,177

403,213

$
$

2018

% Change

$
$

357,705
127,897

485,602

84,534
8,043

92,577

(958)
(26)

(984)

441,281
135,914

577,195

(16.5%)
(19.3%)

(17.2%)

(98.5%)
(100.0%)

(98.6%)

nm
nm

(32.0%)
(24.1%)

(30.1%)

Total revenues for the year ended December 31, 2019 decreased by $174.0 million or 30.1% year-over-year and amounted to $403.2 million as compared to $577.2 million
for the same period in 2018. The decline in total revenues was due to the divestitures in the Other segment as well as lower digital and print revenues in the YP segment.

Total digital revenues decreased by $141.2 million or 32.0% year-over-year and amounted to $300.0 million for the year ended December 31, 2019 compared to
$441.3 million for the year ended December 31, 2018. The digital revenue decline was attributable to the divestitures in the Other segment as well as lower revenues in the
YP segment.

Total print revenues decreased by $32.7 million or 24.1% year-over-year and amounted to $103.2 million for the year ended December 31, 2019. The print revenue decline
for the year ended December 31, 2019 is a result of lower revenues in the YP segment and the divestitures in the Other segment.

Reportable Segments Revenues

Revenues for the YP segment for the year ended December 31, 2019 decreased by $83.7 million or 17.2% year-over year and amounted to $401.9 million compared to
$485.6 million for the same period in 2018. The decrease for the year ended December 31, 2019 is mainly due to the decline of our higher margin YP digital media and print
products and to a lesser extent to our lower margin digital services products, thereby creating pressure on our gross profit margins.

Digital revenues decreased 16.5% year-over-year and amounted to $298.8 million for the year ended December 31, 2019, compared to $357.7 million for the same period
in 2018. Digital revenues were adversely impacted by a decline in the number of digital customers partially offset by a sixth consecutive quarter of higher spend per
customer. The lower digital customer count is mostly attributable to a lower level of acquisition, driven in part by our focus on profitability.

Print revenues decreased by 19.3% year-over-year to $103.2 million for the year ended December 31, 2019. The results were adversely impacted by a decline in the number
of print customers and lower spend per customer.

Other

Other revenues amounted to $1.3 million for the year ended December 31, 2019 as compared to $92.6 million for the same period in 2018. The decline in other revenues
is due to the divestitures.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Gross Profit1

(In thousands of Canadian dollars, except percentage information)

For the years ended December 31,

YP
Other
Intersegment eliminations

Total gross profit

Management’s Discussion and Analysis

2019

243,889
650
−

% of
Revenues

60.7% $
51.0%
−

2018

306,157
33,660
(163)

244,539

60.6% $

339,654

% of
Revenues

% Change

63.0%
36.4%
nm

58.8%

(20.3%)
(98.1%)
nm

(28.0%)

1 Certain comparative information has been restated to conform with the 2019 presentation.

Gross profit for the year ended December 31, 2019 decreased to $244.5 million or 60.6% of total revenues compared to $339.7 million, or 58.8% of total revenues, for the
same period last year. The decrease in gross profit is due to the pressures from lower overall revenues and change in product mix in the YP segment and to the divestitures
in the Other segment. The increase in gross profit as a percentage of revenues is due to the dilutive effect on profitability of the lower margin Other segment in 2018.

Reportable Segments Gross Profit

Gross profit for the year ended December 31, 2019 totalled $243.9 million, or 60.7% of revenues, compared to $306.2 million, or 63.0% of revenues, for the same period
in 2018. The decrease in gross profit and gross profit as a percentage of revenues is a result of the pressures from lower overall revenues and change in product mix as
well as investments in customer care starting in the second quarter of 2019 and investments in new customer acquisitions in the fourth quarter of 2019. The revenue
pressures and customer care and new customer acquisition investments were partially offset by higher efficiencies in sales and operations from optimizations and cost
reductions, as well as an increased focus on the profitability of our products and services. These measures included workforce reductions primarily in non-customer facing
areas in the first quarter of 2018 and call center consolidations and optimization of our servicing model in the second quarter of 2018.

Other

Gross profit for the Other segment totalled $0.7 million, for the year ended December 31, 2019, as compared to $33.7 million, or 36.4% of revenues, for the same period
in 2018. The decrease in gross profit margin for the year ended December 31, 2019 is due to divestitures.

Adjusted EBITDA

(In thousands of Canadian dollars, except percentage information)

For the years ended December 31,

Other

Total Adjusted EBITDA

2019

% of
Revenues

2018

% of
Revenues

% Change

161,014

40.1% $

185,026

331

7,539

161,345

40.0% $

192,565

38.1%

8.1%

33.4%

(13.0%)

(95.6%)

(16.2%)

For the year ended December 31, 2019, Adjusted EBITDA decreased by $31.2 million or 16.2% to $161.3 million, compared to $192.6 million for the same period last year.
The Company’s Adjusted EBITDA margin amounted to 40.0% for the year ended December 31, 2019 compared to 33.4% for the same period in 2018. The decrease in
Adjusted EBITDA was the result of the revenue pressures in the YP segment as well as the divestitures in the Other segment. The increase in Adjusted EBITDA margin for
the year ended December 31, 2019 is mainly due to the dilutive effect on profitability of the lower margin Other segment in 2018 and reductions in both our cost of sales
and other operating costs. The reductions fully offset the revenue pressures in the YP segment for the year ended December 31, 2019.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Reportable Segments Adjusted EBITDA

Adjusted EBITDA for the YP segment for the year ended December 31, 2019 totalled $161.0 million compared to $185.0 million for the same period in 2018. The decrease
in Adjusted EBITDA is a result of lower overall revenues, pressures from the change in product mix and investments in customer care. The Adjusted EBITDA margin for the
YP segment for the year ended December 31, 2019 increased to 40.1% from 38.1% for the same period in 2018. The increase in Adjusted EBITDA margin for the year ended
December 31, 2019 is due to the revenue pressures and investments in customer care and investments in new customer acquisition being fully offset by an increased focus
on the profitability of our products and services and reductions in both our costs of sales and other operating costs. The decrease in cost of sales was mainly due to workforce
reductions primarily in non-customer facing areas in the first quarter of 2018 and to call center consolidations and optimization of our servicing model in the second quarter
of 2018. The decrease in other operating costs included reductions in our workforce and associated employee expenses, reductions in the Company’s office space footprint,
other spending reductions across the segment as well as an adjustment to the variable compensation expense in the first quarter of 2019 mainly due to employee attrition
and previous year performances.

Other

Adjusted EBITDA for the Other segment for the year ended December 31, 2019, amounted to $0.3 million. This compares to $7.5 million, or 8.1% of revenues, for the same
period in 2018. The year-over-year decrease is due to the divestitures.

Adjusted EBITDA less CAPEX

(In thousands of Canadian dollars, except percentage information)

For the years ended December 31,

Adjusted EBITDA
CAPEX

Other

Adjusted EBITDA
CAPEX

Total Adjusted EBITDA less CAPEX

2019

161,014
9,460

151,554

331
278

161,345
9,738

151,607

$
$

2018

% Change

$
$

185,026
9,556

175,470

7,539
2,480

5,059

192,565
12,036

180,529

(13.0%)
(1.0%)

(13.6%)

(95.6%)
(88.8%)

(99.0%)

(16.2%)
(19.1%)

(16.0%)

For the year ended December 31, 2019, Adjusted EBITDA less CAPEX decreased by $28.9 million or 16.0% to $151.6 million compared to $180.5 million for the same
period in 2018. Adjusted EBITDA less CAPEX for the year ended December 31, 2019 was mainly impacted by lower Adjusted EBITDA partially offset by decreased spending
on software development and was further negatively impacted by lease incentives received in 2018.

Reportable Segments Adjusted EBITDA less CAPEX

Adjusted EBITDA less CAPEX for the year ended December 31, 2019 totalled $151.6 million compared to $175.5 million for the same period in 2018. The decrease for the
year ended December 31, 2019 is mainly due to lower Adjusted EBITDA, partially offset by decreased spending on software development and was further negatively
impacted by lease incentives received in 2018.

Other

Adjusted EBITDA less CAPEX for the Other segment for the year ended December 31, 2019 is minimal, as compared to $5.1 million in the same period in 2018.
The year-over-year decrease is a result of the divestitures.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Depreciation and Amortization

Depreciation and amortization decreased to $39.1 million for the year ended December 31, 2019 compared to $76.1 million for the same period in 2018 primarily due to
lower software development expenditures.

Management’s Discussion and Analysis

Restructuring and Other Charges

(In thousands of Canadian dollars, except percentage information)

For the years ended December 31,

Severance, benefits and outplacement
Settlement of litigation
Impairment of right-of-use assets and future operation costs (recovery) related to lease contracts for offices closed
Pension settlement (recovery) costs and past service (recovery) costs, net
Other costs

Total restructuring and other charges

2019

10,767
(99)
371
(980)
2,440

12,499

2018

31,231
(14,095)
(2,029)
755
−

15,862

The Company recorded restructuring and other charges of $12.5 million for the year ended December 31, 2019 consisting of restructuring charges of $12.1 million relating
to workforce reductions, a $1.9 million charge related to future operation costs provisioned related to lease contracts for office closures, a $0.3 million charge related to
software disposal, offset by a net recovery of $1.8 million from more favorable lease recoveries than anticipated.

During the year ended December 31, 2018, the Company recorded restructuring and other charges of $15.9 million consisting of restructuring charges of $32.0 million
mainly due to workforce reductions, offset by the $14.1 million impact of a favorable litigation settlement on a contractual obligation with a vendor. Additionally, the
restructuring charges were offset by a net recovery of $1.6 million from more favorable lease recoveries than anticipated partially offset by the impairment of right-of-use
assets and a net recovery of $0.4 million from future operation costs related to lease contracts for office closures.

Financial Charges

Financial charges decreased to $39.6 million for the year ended December 31, 2019 compared to $54.7 million for the same period in 2018. The decrease is primarily due
to a lower level of indebtedness due to repayments of the Senior Secured Notes. The Company’s effective average annual interest rate on our debt portfolio excluding capital
leases as at December 31, 2019 was 9.0% (2018 – 9.2%).

Provision for (Recovery of) Income Taxes

The combined statutory provincial and federal tax rates were 26.8% for the year ended December 31, 2019 and 26.9% for the same period in 2018. The Company recorded
a recovery of income tax of $24.9 million for the year ended December 31, 2019, comprised of recognition of previously unrecognized tax attributes and temporary
differences of $44.2 million. The Company recorded an income tax recovery of 35.7% of earnings for the year ended December 31, 2019 (2018 – an income tax recovery
of 59.2%). These recoveries are non-cash items.

In comparison, the Company recorded a recovery of income taxes of $30.8 million for the year ended December 31, 2018, comprised of recognition of previously
unrecognized tax attributes of $8.5 million and a resolution of uncertain tax positions of $38.6 million. These recoveries are non-cash items.

The Company recorded an income tax recovery of 35.7% of earnings for the year ended December 31, 2019 this compares to an income tax recovery of 59.2% recorded
for the year ended 2018. The difference between the effective and the statutory rates for the year ended December 31, 2019 is mainly due to recognition of previously
unrecognized tax attributes and temporary differences and non-deductibility of certain expenses for tax purposes. The difference between the effective and the statutory
rates for the year ended December 31, 2018 is mainly due to recognition of previously unrecognized tax attributes, a resolution of uncertain tax positions and
non-deductibility of certain expenses for tax purposes.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Net earnings

The Company recorded net earnings of $94.7 million for the year ended December 31, 2019 as compared to $82.8 million for the same period in 2018. The increase in net
earnings for the year ended December 31, 2019 compared to the same period in 2018 is mainly due to the lower depreciation and amortization expenses and lower financial
charges from a reduced level of indebtedness due to repayment of the Senior Secured Notes partially offset by lower Adjusted EBITDA and lower recovery of income taxes.

Summary of Consolidated Quarterly Results

The following table shows selected consolidated financial data of Yellow Pages for the eight most recent quarters.

(In thousands of Canadian dollars, except per share and percentage information)

YP revenues
Other revenues and Intersegment

Eliminations

Total revenues
Operating costs
Income from operations before

depreciation and amortization, and
restructuring and other charges
(Adjusted EBITDA)
Adjusted EBITDA margin
Depreciation and amortization
Restructuring and other charges
Income from operations
Financial charges, net
(Gain) loss on sale of businesses
Earnings before income taxes
Provision for (recovery of) income taxes
Net earnings
Basic earnings per share
Diluted earnings per share

76,669

−
76,669
49,030

27,639
36.0%
6,249
221
21,169
2,014
−
19,155
2,340
16,815
0.63
0.58

$
$
$

80,281

−
80,281
52,969

27,312
34.0%
6,624
4,461
16,227
4,196
(79)
12,110
3,069
9,041
0.34
0.34

$
$
$

88,280

−
88,280
46,352

41,928
47.5%
7,190
134
34,604
4,121
4
30,479
8,440
22,039
0.83
0.73

$
$
$

2020

88,308

−
88,308
55,745

32,563
36.9%
7,601
3,315
21,647
4,181
498
16,968
4,565
12,403
0.47
0.44

$
$
$

93,507

−
93,507
58,751

34,756
37.2%
8,678
5,719
20,359
7,360
10
12,989
(40,608)
53,597
2.02
1.70

$
$
$

98,147

−
98,147
60,361

37,786
38.5%
9,221
2,347
26,218
7,019
160
19,039
5,200
13,839
0.52
0.49

$
$
$

106,610

162
106,772
63,350

43,422
40.7%
10,082
1,571
31,769
11,456
197
20,116
5,543
14,573
0.55
0.51

$
$
$

2019

103,675

1,112
104,787
59,406

45,381
43.3%
11,128
2,862
31,391
13,765
−
17,626
4,966
12,660
0.48
0.45

Year-over-year the quarterly revenues have decreased principally due to revenue declines in the YP segment associated with overall lower customer count partially offset
by an increasing ARPC over the nine quarters prior to the fourth quarter of 2020. The decline in ARPC in the fourth quarter of 2020 was driven by the lower print spend per
customer, while digital spend per customer continued to increase. Revenues were also affected by the COVID-19 pandemic starting in the second quarter of 2020, impacting
customer spend and to a lesser extent customer renewal rates. The decline in revenues of the Other segment is a result of the divestitures or liquidation of unprofitable or
non-synergistic businesses completed in the second quarter of 2019.

Operating costs decreased over the quarters due to lower Cost of sales, driven by an increased focus on the profitability of our products and services and reductions in our
cost structure from efficiencies in sales and operations, as well as lower Other operating costs from reductions in our workforce and associated employee expenses,
reductions in the Company’s office space footprint and other spending reductions across the YP segment. The second quarter of 2020 benefited from the receipt of a
$4.8 million emergency wage subsidy and paused campaign spending related to the COVID-19 pandemic while the third quarter was impacted by a $4.0 million increase
for the expense related to the vesting of the CEO’s long term incentive plan (LTIP) upon completion of his first contract term, resulting from the increase in the Company’s
share price, resumed spending mainly for the fulfillment of paused campaigns related to the COVID-19 pandemic partially offset by a $1.2 million emergency wage subsidy.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

The Company also received a $1.3 million emergency wage subsidy in the fourth quarter of 2020, Furthermore in 2019, the first quarter benefited from an adjustment to
the variable compensation expense, mainly due to employee attrition and previous year performances, while operating costs reduced subsequent to the completion of the
liquidation of Mediative division in the first quarter and the sale of YP Dine and Bookenda in the second quarter.

The Adjusted EBITDA margin declined through the quarters mainly due to lower revenue and pressures from the change in product mix partially offset by reductions in our
cost structure and emphasis on the profitability of our products and services. Furthermore in 2020, the second quarter benefited from the receipt of a $4.8 million emergency
wage subsidy and paused campaign spending related to the COVID-19 pandemic while the third quarter was impacted by a $4.0 million increase for the expense related
to the vesting of the CEO’s long term incentive plan (LTIP) and resumed spending mainly for the fulfillment of paused campaigns related to the COVID-19 pandemic partially
offset by a $1.2 million emergency wage subsidy. The Company also received a $1.3 million emergency wage subsidy in the fourth quarter of 2020. Furthermore in 2019,
the first quarter benefited from an adjustment to the variable compensation expense, mainly due to employee attrition and previous year performances.

Depreciation and amortization have been decreasing due to lower intangible assets resulting from decreasing software development expenditures as well as lower
intangible assets following the impairment recorded in the fourth quarter of 2017.

The Company’s restructuring and other charges mainly relate to workforce reductions and impairments of right-of-use assets and future operating costs related to lease
contracts for offices closed. The second quarter of 2020 benefited from a net recovery of $1.2 million relating to the surrender of some of the previously vacated office space.

The financial charges have been declining as a result of lower indebtedness. Financial charges in the fourth quarter of 2020 were further impacted by the recognition of the
$2.6 million change in fair value of the redemption option for cash for the Company’s exchangeable debentures (‘‘Redemption Option’’).

Earnings before income taxes has been relatively stable as decreasing Adjusted EBITDA was offset by decreasing restructuring and other charges, financial charges and
depreciation and amortization expense. Net earnings for the fourth quarters of 2019 and 2020 benefited from the recording of previously unrecognized tax attributes and
temporary differences of $44.2 million and $2.8 million in the provision for income taxes, respectively.

Analysis of Fourth Quarter 2020 Results

Revenues

(In thousands of Canadian dollars, except percentage information)

For the three-month periods ended December 31,

Digital
Print

Other

Digital
Print

Total revenues

2020

58,904
17,765

76,669

−
−

−

58,904
17,765

76,669

$
$

2019

% Change

$
$

$70,162
23,345

93,507

−
−

−

70,162
23,345

93,507

(16.0%)
(23.9%)

(18.0%)

−
−

−

(16.0%)
(23.9%)

(18.0%)

Total revenues for the fourth quarter ended December 31, 2020 decreased by 18.0% year-over-year and amounted to $76.7 million as compared to $93.5 million for the
same period last year. The decrease for the quarter ended December 31, 2020 is due to the decline of our higher margin YP digital media and print products and to a lesser
extent to our lower margin digital services products, thereby creating pressure on our gross profit margins. Revenues for the fourth quarter of 2020 were also impacted by
the COVID-19 pandemic which impacted customer spend and to a lesser extent customer renewal rates.

Total digital revenues decreased 16.0% year-over-year and amounted to $58.9 million during the fourth quarter of 2020 compared to $70.2 million for the same period last
year. The revenues were adversely impacted by a decline in the number of digital customers partially offset by a tenth consecutive quarter of higher spend per customer
despite pressure on spend during the quarter due to the pandemic.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Total print revenues decreased 23.9% year-over-year and amounted to $17.8 million during the fourth quarter of 2020 as compared to print revenues of $23.3 million in the
fourth quarter of 2019. The revenues were adversely impacted by a decline in the number of print customers and lower spend per customer.

Management’s Discussion and Analysis

Gross Profit

(In thousands of Canadian dollars, except percentage information)

For the three-month periods ended December 31,

YP
Other

Total gross profit

2020

46,424
−

46,424

% of
Revenues

% of

2019

Revenues % Change

60.6% $ 54,799
−

−

60.6% $ 54,799

58.6%
−

58.6%

(15.3%)
−

(15.3%)

Gross profit totalled $46.4 million or 60.6% of revenues for the three-month period ended December 31, 2020, compared to $54.8 million, or 58.6% of revenues, for the same
period last year. The decrease in gross profit for the three-month period ended December 31, 2020 is a result of the pressures from lower overall revenues and change in
product mix which were partially offset by efficiencies in sales and operations from optimization and cost reductions, resulting in an increase in gross profit as a percentage
of revenues.

Adjusted EBITDA

(In thousands of Canadian dollars, except percentage information)

For the three-month periods ended December 31,

Other

Total Adjusted EBITDA

% of
Revenues

2020

% of

2019

Revenues % Change

27,639

36.0% $

34,756

37.2%

(20.5%)

−

27,639

36.0% $

34,756

37.2%

(20.5%)

Adjusted EBITDA decreased to $27.6 million or 36.0% of revenues in the fourth quarter ended December 31, 2020, relative to $34.8 million or 37.2% of revenues for the
same period last year. The decrease in Adjusted EBITDA and Adjusted EBITDA margin in the three-month period ended December 31, 2020 is the result of the revenue
pressures partially offset by efficiencies in sales and operations from optimization and reductions in other operating costs including reductions in our workforce and
associated employee expenses, reductions in the Company’s office space footprint and other spending reductions across the segment. The Company also received a
$1.3 million emergency wage subsidy during the three-month period ended December 31, 2020. Revenue pressures, coupled with increased headcount in our salesforce
partially offset by continued optimization, will create some pressure on margin in upcoming quarters.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Adjusted EBITDA less CAPEX

(In thousands of Canadian dollars, except percentage information)

For the three-month periods ended December 31,

Adjusted EBITDA
CAPEX

Other

Adjusted EBITDA
CAPEX

Total Adjusted EBITDA less CAPEX

Management’s Discussion and Analysis

2020

27,639
1,474

26,165

−
−

−

27,639
1,474

26,165

$
$

2019

34,756
1,981

32,775

−
−

−

34,756
1,981

32,775

$
$

% Change

(20.5%)
(25.6%)

(20.2%)

−
−

−

(20.5%)
(25.6%)

(20.2%)

Adjusted EBITDA less CAPEX decreased by $6.6 million to $26.2 million during the fourth quarter of 2020, compared to $32.8 million during the same period last year. The
decrease in Adjusted EBITDA less CAPEX for the three-month period ended December 31, 2020 is mainly due to lower Adjusted EBITDA partially offset by lower capital
expenditures due to decreased spending in software development.

Depreciation and Amortization

Depreciation and amortization decreased to $6.2 million for the three-month period ended December 31, 2020 compared to $8.7 million for the same period last year. The
decrease is primarily due to lower software development expenditures.

Restructuring and Other Charges

(In thousands of Canadian dollars)

For the three-month periods ended December 31,

Severance, benefits and outplacement
Impairment of right-of-use assets and property and equipment and provision for future operation costs (recovery) related to lease

contracts for offices closed

Pension settlement costs and past services costs (recovery), net
Other costs

Total restructuring and other charges

2020

926

(752)
−
47

221

2019

5,844

(336)
(980)
1,191

5,719

Restructuring and other charges of $0.2 million were recorded for the three-month period ended December 31, 2020 consisting mainly of restructuring charges of
$1.0 million associated with workforce reductions, a $1.1 million recovery for future operation costs provisioned related to lease contracts for offices closured, as well as a
$0.3 million charge related to the impairment of property and equipment and right-of-use assets related to vacated office space. For the three-month period ended
December 31, 2019, the Company recorded restructuring and other charges of $5.7 million consisting of restructuring charges of $6.0 million relating to workforce
reductions, and a $0.8 million charge relating to future operation costs provisioned related to lease contracts for office closures, offset by a $1.1 million recovery from more
favorable lease recoveries than anticipated.

Financial Charges

Financial charges decreased to $2.0 million for the three-month period ended December 31, 2020 compared to $7.4 million for the same period last year. The decrease is
due to the recognition of a $2.6 million change in fair value of the Redemption Option in the quarter ended December 31, 2020 and a lower level of indebtedness due to the
full repayment of the Senior Secured Notes in 2019.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Provision for (Recovery of) Income Taxes

The combined statutory provincial and federal tax rates were 26.5% and 26.8% for the three-month periods ended December 31, 2020 and 2019, respectively. The
Company recorded an expense of $2.3 million, including a recovery for the recognition of previously unrecognized tax attributes and temporary differences of $2.8 million
for the three-month period ended December 31, 2020. In comparison, the company recorded a recovery for income taxes of $40.6 million, including a recovery for the
recognition of previously unrecognized tax attributes and temporary differences of $44.2 million for the three-month period ended December 31, 2019. These recoveries
were non-cash items.

The difference between the effective and the statutory rates during the three-month period ended December 31, 2020 and 2019 is mainly due to recognition of previously
unrecognized tax attributes and temporary differences and the non-deductibility of certain expenses for tax purposes.

Net earnings

Net earnings for the three-month ended December 31, 2020 amounted to $16.8 million as compared to net earnings of $53.6 million for the same period last year due to
higher recognition of previously unrecognized tax attributes and temporary differences in 2019. Earnings before taxes increased from $13.0 million for the fourth quarter of
2019 to $19.2 million for the three-month period ended December 31, 2020, as lower Adjusted EBITDA was more than offset by lower restructuring and other charges,
financial charges and depreciation and amortization expenses.

3. Liquidity and Capital Resources
This section examines the Company’s capital structure, sources of liquidity and various financial instruments including its debt instruments.
Capital Structure
(In thousands of Canadian dollars, except percentage information)

As at December 31,

Cash

Exchangeable debentures
Lease obligations

Total debt
Equity (deficiency)

Total capitalization
Total debt net of cash to total capitalization

2020

153,492

101,115
52,874

153,989
29,301

183,290
0.3%

2019

44,408

98,537
57,885

156,422
(16,660)

139,762
80.1%

As at December 31, 2020, Yellow Pages had $0.5 million of total debt net of cash, compared to $112.0 million as at December 31, 2019.

The total debt net of cash to latest Twelve-Month Adjusted EBITDA1 ratio as at December 31, 2020 was nil compared to 0.7 times as at December 31, 2019. The decrease
is mainly due to a higher cash balance at December 31, 2020 entirely offsetting the lower Adjusted EBITDA.

Total Debt Net of Cash
to Latest Twelve-Month Adjusted EBITDA1 Ratio

Capital Structure
(In millions of Canadian dollars)

Dec. 31, 2020

0.0

Dec. 31, 2020

$29.3

$154.0

Dec. 31, 2019

0.7

Dec. 31, 2019

($16.7)

$156.4

Latest twelve-month income from operations before depreciation and amortization and restructuring and other charges (Latest Twelve-Month Adjusted EBITDA). Latest Twelve-Month Adjusted EBITDA is a non-IFRS
measure and may not be comparable with similar measures used by other publicly traded companies. Please refer to page 3 for a definition of Adjusted EBITDA.

Equity (deficiency)

Total Debt

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Asset-Based Loan

On October 19, 2017, the Company, through its subsidiary Yellow Pages Digital & Media Solutions Limited, renewed its five-year $50.0 million asset-based loan (ABL) and
extended the term of the ABL to August 2022. At the request of the Company, the ABL agreement was amended on November 18, 2019 to reduce the total commitment from
$50.0 million to $25.0 million. The ABL is being used for general corporate purposes. Through the ABL, the Company has access to the funds in the form of prime rate loans,
Banker’s acceptance (BA) equivalent loans or letters of credit. The ABL is subject to an availability reserve of $5.0 million if the Company’s trailing twelve-month fixed charge
coverage ratio is below 1.1 times. As at December 31, 2020, the Company’s fixed charge coverage ratio was 3.5 times. The Company had $3.4 million of letters of credit
issued and outstanding under the ABL. As such, $21.6 million of the ABL was available as at December 31, 2020.

The loan agreement governing the ABL contains restrictive covenants, including restrictions on the incurrence of additional indebtedness, the payment of dividends and
other payment restrictions (to the extent permitted by the Exchangeable Debentures indenture, the creation of liens, sale and leaseback transactions, mergers,
consolidations and sales of assets, and certain transactions with affiliates and its business activities.

As at December 31, 2020, the Company was in compliance with all covenants under the loan agreement governing the ABL.

Exchangeable Debentures

On December 20, 2012, the Company, through its subsidiary Yellow Pages Digital & Media Solutions Limited, issued $107.5 million of senior subordinated exchangeable
debentures (the Exchangeable Debentures) due November 30, 2022. As at December 31, 2020, and December 31, 2019, the face value of the Exchangeable Debentures
was $107.0 million and $107.1 million, respectively. As at December 31, 2020, the value of the Exchangeable Debentures less unaccreted interest was $101.1 million
compared to $98.5 million as at December 31, 2019.

Interest on the Exchangeable Debentures accrues at a rate of 8% per annum if, for the applicable interest period, it is paid in cash or 12% per annum, for the applicable interest
period, if the Company makes a Payment in Kind election to pay interest in respect of all or any part of the then outstanding Exchangeable Debentures in additional Exchangeable
Debentures. Interest on the Exchangeable Debentures is payable semi-annually in arrears in equal instalments on the last day of May and November of each year.

The indenture governing the Exchangeable Debentures contains restrictive covenants, including restrictions on the incurrence of additional indebtedness, the payment of
dividends and other payment restrictions, the creation of liens, sale and leaseback transactions, mergers, consolidations and sales of assets and certain transactions with
affiliates. The indenture does not contain the obligation to maintain financial ratios. Financial ratio restrictions only apply upon incurrence of indebtedness and other
transactions.

The indenture permits the Company to make restricted payments, including payment of dividends and common stock buybacks and certain payments associated with
management’s equity-based compensation, in an aggregate amount not to exceed $20.0 million since the date of the indenture. As at December 31, 2020, the Company
has made a cumulative total of $14.5 million of restricted payments, comprised of $8.8 million of dividend payments, $3.3 million related to common stock buyback and
$2.4 million related to certain management equity-based compensation payments, since the indenture went into effect. As at December 31, 2020, the Company was in
compliance with all covenants under the indenture governing the Exchangeable Debentures.

Exchange Option

The Exchangeable Debentures are exchangeable at the holder’s option into common shares at any time at an exchange price per common share equal to $19.04, subject
to adjustment for specified transactions.

Optional Redemption

The Company may redeem all or part of the Exchangeable Debentures at its option, upon not less than 30 nor more than 60 days prior notice, at a redemption price equal
to:

•

In the case of a redemption occurring prior to May 31, 2021, 110% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date;
or

In the case of a redemption occurring on or after May 31, 2021, 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption
date.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The Redemption Option is recorded at fair value in Financial and other assets on the consolidated statements of financial position with changes in fair value recognized in
financial charges. The fair value as at December 31,2020 was $2.6 million and was insignificant as at December 31, 2019.

The Company entered into a Normal Course Issuer Bid (‘‘NCIB’’) to purchase up to $6.6 million principal amount of its Exchangeable Debentures starting on April 20, 2020
and ending on April 19, 2021. The price which Yellow Pages Digital & Media Solutions Limited will pay for any such Exchangeable Debentures will be the prevailing market
price at the time of acquisition. All Exchangeable Debentures will be purchased for cancellation. As at December 31, 2020, YP purchased Exchangeable Debentures under
this NCIB program, with a carrying value of $52 thousand for cash and a face value of $56 thousand.

As announced on February 13, 2020, the Company intends to make an optional redemption payment to fully repay the remaining balance of its Exchangeable Debentures
on or shortly after May 31, 2021, according to the terms above (i.e., at redemption price of 100%).

Management’s Discussion and Analysis

Credit Ratings

Standard and Poor’s Global Ratings

B-/Corporate credit rating – stable outlook
B/Credit rating for Exchangeable Debentures

Liquidity

The Company’s principal source of liquidity is cash generated from operations and cash on hand. The Company expects to generate sufficient liquidity in the short term and
the long term to fund capital expenditures, working capital requirements and current obligations, and service its outstanding debt obligations. As at December 31, 2020, the
Company had $153.5 million of cash and $21.6 million available under the ABL. As at January 31, 2021, the Company had approximately $163.7 million of cash and
$21.6 million available under the ABL

Options

On December 20, 2012, as part of the implementation of Yellow Pages Limited’s Recapitalization transaction, a new stock option plan (the ‘‘Stock Option Plan’’) was
adopted. The Stock Option Plan is intended to attract and retain the services of selected employees of Yellow Pages Limited who are in a position to make a material
contribution to the successful operation of the business, provide meaningful incentive to management to lead Yellow Pages Limited through the transformation of its
business and to more closely align the interests of management with those of the shareholders of Yellow Pages Limited. A maximum of 1,290,612 stock options may be
granted under the Stock Option Plan. On May 11, 2018, an amendment to the Stock Option Plan was approved, increasing the maximum number of common shares
authorized for issuance upon the exercise of options, from 1,290,612 to 2,806,932. Participants are required to hold 25% of the common shares received pursuant to the
exercise of the stock options until the Participants meet the ownership guidelines which apply to their respective position.

At the Annual and Special Meeting of Shareholders held on May 13, 2020 an amendment to the 2012 Stock Option Plan was approved to provide for a cashless exercise
feature, payable in cash, without a full deduction of the underlying shares from the plan reserve. Subject to approval of the Board or the Human Resources and
Compensation Committee at the time of exercise, an option holder may elect to surrender an exercisable option for cancellation in exchange for a cash payment equal to
the amount by which the fair market value of the share on the date of surrender exceeds the exercise price. The underlying shares in respect of the surrendered option will
be added back to the plan reserve.

Stock options granted that are payable in cash upon certain conditions being met are presented as a liability.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Share Data

Outstanding Share Data

As at

Common shares outstanding
Exchangeable Debentures outstanding1
Common share purchase warrants outstanding
Stock options outstanding²

Management’s Discussion and Analysis

February 10, 2021

December 31, 2020

December 31, 2019

27,786,487
5,621,481
2,995,483
2,717,779

27,828,906
5,621,481
2,995,484
2,717,779

28,075,308
5,624,422
2,995,484
1,983,102

1 As at February 10, 2020, Yellow Pages had $107.0 million principal amount of Exchangeable Debentures outstanding, which amount is exchangeable into 5,621,481 common shares of Yellow Pages Limited at an

exchange price of $19.04, subject to adjustment for specified transactions pursuant to the indenture governing the Exchangeable Debentures.

Included in the stock options outstanding balance of 2,717,779 as at February 10, 2021 and December 31, 2020, nil stock options were exercisable as at those dates. Included in the stock options outstanding balance
of 1,983,102 as at December 31, 2019, of which nil stock options exercisable as at that date.

The Company entered into a normal course issuer bid (‘‘NCIB’’), commencing August 10, 2020, to purchase up to $5.0 million of Common Shares in the open market for
cancellation, on or before August 9, 2021. As at December 31, 2020, the Company had purchased under this NCIB program 273,190 common shares for cash of
$3.3 million. The related historical carrying value of these shares was reclassified from shareholder’s capital to deficit.

Dividend policy

On May 12th, 2020, the Company’s Board of Directors adopted a dividend policy of paying a quarterly cash dividend to its common shareholders of $0.11 per share. YP’s dividend
payout policy and the declaration of dividends on any of the Company’s outstanding common shares are subject to the discretion of the Board and, consequently, there can be no
guarantee that the dividend payout policy will be maintained or that dividends will be declared. Dividend decisions will continue to be dependent on YP’s operations and financial
results subject to the Board’s assessment on a quarterly basis which are, in turn, subject to various assumptions and risks, including those set out in this MD&A.

During the year-ended December 31, 2020, the Company declared three quarterly dividends of $0.11 per common share. The dividends were paid on June 15,
September 15 and December 15 of 2020 for a total consideration of $8.8 million to common shareholders.

On February 10, 2021, the Board of Directors declared a cash dividend of $0.11 per common share, payable on March 15, 2021 to shareholders of record as at
February 26, 2021. Future quarterly dividends will be subject to Board approval.

Contractual Obligations and Other Commitments
(in thousands of Canadian dollars)

Lease obligations1,2
Exchangeable Debentures (2022)1
Operating portion of lease obligations
Other

Total

52,874
107,033
49,280
30,260

Total contractual obligations

239,447

1 Principal amount.
2 Net present value.

1 year

3,011
−
3,691
15,680

22,382

Payments due for the years following December 31, 2020

2 – 3 years

4 – 5 years

Thereafter

6,330
107,033
7,539
12,314

7,578
−
7,639
1,204

133,216

16,421

35,955
−
30,411
1,062

67,428

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Lease obligations

We entered into finance lease agreements for premises. As at December 31, 2020, minimum payments under these finance leases up to 2033 total $52.9 million.

Operating portion of lease obligations

We rent our premises and office equipment under various leases for which an operating portion is recognized. As at December 31, 2020, minimum payments for the
operating portion under these leases up to 2033 total $49.3 million.

Purchase obligations

We use the services of outside suppliers to distribute and print our directories and have entered into long-term agreements with a number of these suppliers. These
agreements expire between 2021 and 2032. We also have purchase obligations under service contracts for both operating and capital expenditures. As at
December 31, 2020, we have an obligation to purchase services for $30.3 million over the next five years and thereafter. Cash from operations will be used to fund these
purchase obligations.

Pension Obligations

YP sponsors a pension plan registered with the Canada Revenue Agency and the Financial Services Commission of Ontario with defined benefit (DB) for employees hired
prior to January 1, 2006, and defined contribution (DC) components for the non Québec based employees hired on or after January 1, 2006 (the YP Pension Plan) as well
as a DC plan registered with the Régie des Rentes du Québec (the YP Québec Plan), for the Québec based employees hired on or after January 1, 2006. Both plans
together cover substantially all employees of the Company.

As at December 31, 2020, the DB component of the YP Pension Plan’s assets market value totalled $503.7 million and were invested in a diversified portfolio of Canadian
fixed income securities and Canadian and international equity securities. Its rate of return on assets was 14.17% for 2020, 0.17% above our benchmark portfolio.

The most recent actuarial valuation of the DB component of the YP Pension Plan for funding purposes was performed as at December 31, 2019. The valuation was prepared
consistent with the Ontario funding basis, which requires no solvency deficit contribution if the plan is above 85% solvent. It also includes a requirement to fund on a
going-concern basis a Provision for Adverse Deviation (‘‘PfAD’’), which is determined based on plan characteristics. There is no resulting solvency contribution, as it was
determined that the plan was above the 85% solvency threshold, but the annual required contribution to cover the PfAD will increase to $4.7 million from $1.8 million for a
10-year period starting in 2021. The next actuarial valuation for funding purposes will be prepared no later than as of December 31, 2022. For the benefit of our retirees,
as of June 2020 the Company doubled the monthly contributions to fund the deficit in our Defined Benefit Pension Plan, bringing the Company’s contribution for the year
ended December 31, 2020 from the required $1.8 million to $2.8 million.

As of December 31, 2019, the Company’s Defined Benefit Plan had a Prior Year Credit Balance (‘‘PYCB’’) of $7.3 million. During 2020, the Company drew down $1.4 million,
thereby reducing cash payments required and leaving a PYCB of $5.9 million as of December 31, 2020. The total cash payments for pension and other benefit plans made
by the Company in 2020 were $9.2 million (2019 – $10.2 million). Total cash payments for pension and other benefit plans expected in 2021 amount to approximately
$9.5 million.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Sources and Uses of Cash

(In thousands of Canadian dollars)

For the years ended December 31,

Cash flows from operating activities

Cash flows from operations, excluding change in operating assets and liabilities
Change in operating assets and liabilities

Cash flows used in investing activities

Additions to intangible assets
Additions to property and equipment
Payments received from net investment in subleases
Proceeds on sale of businesses
Business acquisition

Cash flows used in financing activities
Repayment of senior secured notes
Repurchase of exchangeable debentures
Repurchase of common shares
Issuance of lease obligations
Payment of lease obligations
Dividends paid

NET INCREASE IN CASH
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD

CASH, END OF PERIOD

Cash flows from operating activities

Management’s Discussion and Analysis

2020

2019

105,463
21,535

126,998

(5,328)
(245)
1,002
1,564
−

(3,007)

−
(56)
(3,277)
223
(2,989)
(8,808)

(14,907)

109,084
44,408

153,492

113,346
31,413

144,759

(9,647)
(91)
466
1,936
(400)

(7,736)

(170,231)
−
−
−
(3,836)
−

(174,067)

(37,044)
81,452

44,408

Cash flows from operating activities decreased by $17.8 million to $127.0 million for the year ended December 31, 2020 from $144.8 million for the same period last year.
The decrease is mainly due to lower Adjusted EBITDA of $31.9 million and a reduction of $9.9 million from the change in operating assets and liabilities offset by the lower
interest paid of $16.1 million and lower payments for restructuring and other charges of $8.0 million.

Cash flows used in investing activities

Cash flows used in investing activities decreased by $4.7 million year-over-year mainly due to lower investments in software development.

Cash flows used in financing activities

Cash flows used in financing activities decreased by $159.2 million to $14.9 million for the year ended December 31, 2020 compared to $174.1 million for the same period
last year due to the repayment of senior secured notes in 2019 partially offset by the $8.8 million of dividends paid over the last three quarters of the year ended
December 31, 2020 and $3.3 million paid to repurchase its common shares in 2020 under the NCIB program.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Financial and Other Instruments

(See Note 21 of the Audited Consolidated Financial Statements of the Company for the years ended December 31, 2020 and 2019).

The Company’s financial instruments primarily consist of cash, trade and other receivables, trade and other payables and Exchangeable Debentures.

As at December 31, 2020, the fair value of the Redemption Option was $2.6 million and was insignificant as at December 31, 2019. The fair value is calculated, using a
binomial option pricing model based on year-end markets rates and prices as well as historical volatility data.

4. Critical Assumptions and Estimates

When we prepare our consolidated financial statements in accordance with IFRS, we must make certain estimates and assumptions about our business. These estimates
and assumptions in turn affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the financial
statements.

In this section, we provide detailed information on these important estimates and assumptions which are under continuous evaluation by the Company.

Significant estimates

Management has revised the assumptions and estimates it would normally use to apply the Company’s accounting policies affecting the carrying value of certain assets
and the information disclosed in the notes to the consolidated financial statements in order to reflect the estimated impact of the COVID-19 pandemic. Any estimate of the
length and severity of these developments is subject to significant uncertainty, and, accordingly, estimates of the extent to which the COVID-19 pandemic may materially
and adversely affect the Company’s operations, financial results and condition in future periods are also subject to significant uncertainty. The impact of these changes in
accounting estimates is recognized during the period in which the change took place and all affected future periods.

The changes to the estimates and assumptions made by management that are critical to the determination of the carrying value of assets are addressed below.

Allowance for revenue adjustments

The Company records an allowance for revenue adjustments as a reduction to revenue. This reflects an estimate of claims expected from customers. The Company
updates its estimate of the allowance for revenue adjustments based on historical experience related to claims, as well as client-related factors. The Company updated its
assumptions related to its estimate of the allowance for revenue adjustments to reflect the potential impact of the COVID-19 pandemic on the rate of claims expected from
customers. This significant estimate could affect Yellow Pages Limited’s future results if actual claims are higher or lower than previously anticipated.

Estimate of the lease term

When the Company recognizes a lease, it assesses the lease term based on the conditions of the lease and assesses whether it will extend the lease at the end of the lease
contract, or exercise an early termination option. The Company determined that the term of its leases is the original lease term as it is not reasonably certain that the
extension of termination options will be exercised. This significant estimate could affect Yellow Pages Limited’s future results if the Company extends the lease or exercises
an early termination option.

Assessment of whether a right-of-use asset is impaired

The Company assesses whether a right-of-use asset is impaired, particularly when it vacates an office space and it must determine the recoverability of the asset,
depending on its capacity to sublease the assets or surrender the lease and recover its costs. The Company will examine its lease conditions as well as local market
conditions and estimate its recoverability potential for each vacated premise. The determination of the lease cost recovery rate involves significant management estimates
based on market availability of similar office space and local market conditions. This significant estimate could affect Yellow Pages Limited’s future results if the Company
succeeds in subleasing their vacated offices at a higher or lower rate or at different dates than initially anticipated.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Measurement of the ECL allowance on trade receivables

In relation to the impairment of trade receivables (including contract assets), the Company uses the expected credit losses (‘‘ECL’’) model, which requires the Company to
account for the ECL and changes in the ECL at each reporting date to reflect changes in credit risk since initial recognition of the trade receivable. The ECL related to doubtful
accounts for trade receivables (also referred to as allowance for doubtful accounts) is established based on various factors, including amongst others the age of the
exposure and in some case the customer’s solvency. As a result of the COVID-19 pandemic the Company applied the policy as described above using an additional factor
in assessing the credit risk applied to the ECL, based on the customer’s line of business and an estimation of the degree they may have been impacted by the pandemic.
This significant estimate could affect the Company’s future results if there is a further significant change in economic conditions or customer solvency or any new information
that may impact our assumptions.

Determining the discount rate for leases

IFRS 16 requires the Company to discount the lease payments using the rate implicit in the lease if that rate is readily available. If that rate cannot be readily determined,
the lessee is required to use its incremental borrowing rate (‘‘IBR’’). The Company generally used its IBR rate when recording leases initially, since the implicit rates were
not readily available due to information not being available from the Lessor regarding the fair value of underlying assets and directs costs incurred by the Lessor related to
the leased assets. The IBR for each lease was based on the commencement date of the lease and recalculated at the remeasurement date where applicable.

Useful lives of intangible assets and property and equipment

Yellow Pages Limited reviews the estimated useful lives of its intangible assets and property and equipment at the end of each reporting period. At the end of the current
reporting period, management determined that the useful lives of its intangible assets and property and equipment were adequate.

Employee future benefits

The present value of the defined benefit obligation is determined by employing the projected benefit method prorated on service using interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension liability.
Determination of the net benefit costs (recovery) requires assumptions such as the discount rate to measure defined benefit obligations and expected return on plan assets,
the projected age of employees upon retirement, the expected rate of future compensation and the expected healthcare cost trend rate. Actual results may differ from results
which are estimated based on assumptions.

COVID-19 may have various impacts on all benefit plans such as on mortality rates, volatile discount rates, and return on plan assets from the resulting global financial
turbulence. It may also have specific impacts on post-retirement benefits such as on claiming patterns of covered members and trend rates. The assumptions used to
remeasure the defined benefit obligation reflect current known market conditions. The effect of the outbreak on the mortality incidence for the plans is unknown at this time
and therefore no adjustments to the mortality assumptions or to any other assumptions have been made as of December 31, 2020.

Income taxes

Estimation of income taxes includes evaluating the recoverability of deferred tax assets based on an assessment of Yellow Pages Limited’s ability to utilize the underlying
future tax deductions against future taxable income before they expire. Yellow Pages Limited’s assessment is based upon existing tax laws and estimates of future taxable
income. If the assessment of Yellow Pages Limited’s ability to utilize the underlying future tax deductions changes, Yellow Pages Limited would be required to recognize
more or fewer of the tax deductions as assets, which would decrease or increase the income tax expense in the period in which this is determined. The carrying value of
deferred tax assets is reviewed at each reporting date, remeasured to the extent that probable sufficient taxable profits will be available, or reduced to the extent it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered in the foreseeable future. The Company updated its assumptions
related to the carrying value of the deferred tax assets to reflect the estimated impact of the COVID-19 pandemic as well as other factors to determine whether an adjustment
would be required to its valuation allowance as at December 31, 2020.

New significant accounting policies

Government grant

Government grants are recognized when there is reasonable assurance that the Company will comply with the conditions attaching to it and that the grant will be received.
Government grants related to an expense are recognized in profit or loss as a reduction in the related expense for which the grants are intended to compensate.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

In response to the negative economic impact of COVID-19, various government programs have been enacted to provide financial relief to businesses. The Company
determined that it qualified for the Canada Emergency Wage Subsidy (‘‘CEWS’’) program under the COVID-19 Economic Response plan for certain periods. The
contributions received are recorded as a reduction to operating costs in the consolidated statements of income.

Accounting standards

Standards, interpretations and amendments to published standards that are issued but not yet effective on the consolidated financial
statements

Amendments to IAS 37 - Provisions, Contingent Liabilities and Contingent Assets

On May 14, 2020, the International Accounting Standards Board (IASB) issued amendments to IAS 37 – Provisions, Contingent Liabilities, and Contingent Assets,
specifying which costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The amendments to IAS 37, clarify that
for the purpose of assessing whether a contract is onerous, the cost of fulfilling the contract includes both the incremental costs of fulfilling that contract and an allocation
of other costs that relate directly to fulfilling contracts. The amendments are effective for contracts for which an entity has not yet fulfilled all its obligations on or after
January 1, 2022. Earlier application is permitted. The Company is assessing the impact of adopting these amendments on its financial statements.

5. Risks and Uncertainties

The following section examines the major risks and uncertainties that could materially affect YP’s future business results.

Understanding and managing risks are important parts of YP’s strategic planning process. The Board requires that our senior management identify and properly manage
the principal risks related to our business operations. To understand and manage risks at YP, our Board and senior management analyze risks in three major categories:

1. Strategic risks - which are primarily external to the business;

2. Financial risks - generally related to matters addressed in the Financial Risk Management Policy and in the Pension Statement of Investment Policy and

Procedures; and

3. Operational risks - related principally to risks across key functional areas of the organization.

YP has put in place certain guidelines in order to seek to manage the risks to which it may be exposed. Please refer to the ‘‘Risk Factors’’ section of our AIF for a complete
description of these risk factors. Despite these guidelines, the Company cannot provide assurances that any such efforts will be successful.

Failure by the Corporation to stabilize or grow its revenues and customer base could have a material adverse effect on the Corporation, its business, results
from operations and financial condition

The Corporation's revenues remain adversely impacted by a lower customer count. Failure to provide existing customers with marketing solutions that meet their key
marketing objectives and generate return on investment may limit the Corporation's ability to retain existing customers. In addition, the inability of the Corporation's customer
acquisition strategies and channels to find and attract new customers may limit the Corporation's ability to grow its total customer count. These events could have a material
adverse effect on the Corporation, its business, results from operations and financial condition.

The inability of the Corporation to attract, retain and upsell customers could have a material adverse effect on the Corporation, its business, results from
operations and financial condition

The Corporation’s revenues remain adversely impacted by a lower customer count. Failure to provide existing customers with marketing solutions that meet their key
marketing objectives and generate return on investment may limit the Corporation’s ability to retain existing customers. In addition, the inability of the Corporation’s customer
acquisition strategies and channels to find and attract new customers may limit the Corporation’s ability to grow its total customer count. These events could have a material
adverse effect on the Corporation, its business, results from operations and financial condition.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Substantial competition could reduce the market share of the Corporation and could have a material adverse effect on the Corporation, its business, results
from operations and financial condition

The Corporation competes with other directory, advertising media and classified advertising businesses and across various media and platforms. This includes the internet,
newspapers, television, radio, mobile telecommunication devices, magazines, billboards and direct mail advertising. In particular, the directories business faces substantial
competition due to increased online penetration, through the use of online search engines and social networking organizations. The Corporation may not be able to compete
effectively with these online competitors, some of which may have greater resources. The Corporation’s internet strategy and its directories business may be adversely
affected if major search engines build local sales forces or otherwise begin to more effectively reach local businesses for local commercial search services. These
competitors may reduce their prices to increase their market share or may be able to offer their services at lower costs than the Corporation can.

The Corporation may be forced to reduce its prices or offer and perform other services in order to remain competitive. The Corporation’s failure to compete effectively with
its current or future competitors could have a number of impacts such as a reduction in its advertiser base, lower rates and increased costs. This could have a material
adverse effect on the Corporation, its business, results from operations and financial condition.

A higher than anticipated rate of decline in print revenue resulting from changes in preferences and consumer habits could have a material adverse effect on
the Corporation, its business, results from operations and financial condition

The Corporation could be materially adversely affected if the usage of print telephone directories declines at a rate higher than anticipated. The development of new
technologies and the widespread use of the internet is causing changes in preferences and consumer habits. The usage of internet-based products providing information,
formerly exclusively available in print directories, has increased rapidly. The internet has become increasingly accessible as an advertising medium for businesses of all
sizes. Further, the use of the internet, including as a means to transact commerce through mobile devices, has resulted in new technologies and services that compete with
traditional advertising mediums. In particular, this has a significant impact on print products, and the decrease in usage gradually leads to lower advertising revenues.
References to print business directories may decline faster than expected as users increasingly turn to digital and interactive media delivery devices for local commercial
search information.

The inability of the Corporation to successfully enhance and expand its offering of digital and new media products could have a material adverse effect on the
Corporation, its business, results from operations and financial condition

The transition from print to digital causes uncertainties surrounding whether and when new product introductions will compensate for the declining trend in print revenues.
If revenue from the Corporation’s digital products does not increase significantly, the Corporation’s cash flow, results of operations and financial condition will be materially
adversely affected.

The Corporation expects to derive a greater portion of its total revenue from its digital and other new media products, as directory usage continues to shift from print
directories to digital and other new media products.

The Corporation’s transformational expansion towards digital and new media products is subject to a variety of challenges and risks, including the following:

•

the Corporation may not continue to grow usage on its digital properties at the same rate as other providers or may grow at a slower rate than currently anticipated;

internet usage as a source of information and a medium for advertising may not continue to grow, or may grow at a slower rate than currently anticipated, as a result
of factors that the Corporation cannot predict or control;

the Corporation may incur substantial additional costs and expenses related to investments in its information technology, modifications to existing products and
development of new products and this may reduce profit margins in the future;

the Corporation may be unable to develop and market new products in a timely and efficient manner, as the Corporation’s markets are characterized by rapidly
changing technology, introductions and enhancements to existing products and shifting advertising customer and end-user demands, including technology
preferences;

the Corporation may be unable to improve its information technology systems so as to efficiently manage increased levels of traffic on the Corporation’s digital
properties and provide new services and products;

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

•

the Corporation may be unable to keep apprised of changes to search engines’ terms of service or algorithms, which could cause the Corporation’s digital
properties, or its advertising customers’ digital properties, to be excluded from or ranked lower in search results or make it more difficult or more expensive for the
Corporation to provide search engine marketing and search engine optimisation solutions to its advertising customers;

the Corporation’s advertising customers may be unwilling to grow their investment in digital advertising; and

the Corporation may be unable to increase or maintain the prices of its products and services in the future.

If any of the above-mentioned risks were to occur, the Corporation’s digital revenue, as well as its business, results from operations and financial condition could be
materially adversely affected.

The inability of the Corporation to supply the relationships and technologies required to appropriately service the needs of its customers could have a material
adverse effect on the Corporation, its business, results from operations and financial condition

The Corporation anticipates that it will continue to depend on various third-party relationships in order to grow its business, such as technology and content providers,
real-time advertising exchanges and other strategic partners. The Corporation may not be able to maintain such relationships and these third parties may experience
disruptions or performance problems, which could negatively affect the Corporation’s efficiency and reputation.

In addition, the Corporation relies heavily on information technology systems to manage critical functions of its digital and mobile marketing solutions. The future success
of the Corporation will depend in part upon its ability to continuously enhance and improve its existing solutions in a timely manner with features and pricing that meet
changing advertiser needs. As marketing via new digital advertising channels, such as mobile advertising is emerging, it may evolve in unexpected ways, and the failure
of the Corporation to adapt successfully to market evolution could have a material adverse effect on the Corporation, its business, results of operations and financial
condition.

A prolonged economic downturn in principal markets of the Corporation could have a material adverse effect on the Corporation, its business, results from
operations and financial condition

The Corporation derives revenues principally from the sale of advertising in Yellow Pages print and digital directories across Canada. The Corporation’s advertising
revenues, as well as those of directories publishers in general, typically do not fluctuate widely with economic cycles. However, a prolonged economic downturn or recession
affecting the Corporation’s markets, or any deterioration in general economic conditions, could have a material adverse effect on the Corporation’s business. The adverse
effects of an economic downturn or recession on the Corporation could be compounded by the fact that the majority of the Corporation’s customers are SMEs. Such
businesses have fewer financial resources and higher rates of failure than larger businesses and may be more vulnerable to prolonged economic downturns. Therefore,
these SMEs may be more likely to reduce or discontinue advertising with the Corporation, which could have a material adverse effect on the Corporation, its business,
results from operations and financial condition.

A higher than anticipated proportion of revenues coming from the Corporation’s digital products with lower margins, such as services and resale, could have
a material adverse effect on the Corporation’s profitability

Digital advertising sold on the Corporation’s owned and operated media currently operate at the highest level of profitability relative to digital service (websites, search
engine optimization, content syndication and Facebook) solutions and resale (SEM) solutions. Revenues sourced from digital service and resale solutions that are
proportionally materially higher than anticipated may have an adverse impact on the Corporation’s profitability.

The Corporation’s inability to attract and retain key personnel could have a material adverse effect on the Corporation, its business, results from operations
and financial condition

The success of the Corporation depends on the abilities, experience and personal efforts of senior management of the Corporation, including their ability to retain and attract
skilled employees. The Corporation is also dependent on the number and experience of its sales representatives and ISIT employees. The loss of the services of such key
personnel could have a material adverse effect on the Corporation, its business, its results from operations and financial condition.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

The Corporation’s business depends on the usage of its online and mobile properties and failure to protect traffic across the Corporation’s digital properties
could impair its ability to grow revenues and expand its business

The success of numerous of our customers’ marketing campaigns is dependent on how well they can attract valuable audiences. The Corporation will invest in order to
protect digital audiences across its network of online and mobile properties by enhancing the quality, completeness and relevance of the content distributed to its properties,
and by providing compelling verticalized sites and applications for local discovery. The Corporation may not be able to protect or grow traffic across its digital properties and
such investments may not prove to be cost-effective. There can be no assurance that current traffic or potential growth in traffic across the Corporation’s digital properties
may maintain or increase advertising customer renewal rates and/or annual spending or lead to a measurable increase in advertising customers.

Failure by either the Corporation or the Telco Partners to fulfill their obligations set forth in the agreements between the Corporation and the Telco Partners
could result in a material adverse effect on the Corporation, its business, results from operations and financial condition

We have three billing and collection services agreements. The agreement with Bell Canada (‘‘Bell’’) expires on December 31, 2023 and the agreement with Northwestel Inc.,
an affiliate of Bell expires, November 29, 2032. The agreement with TELUS Communications Inc. (TELUS) expires in 2031. Through these agreements, our billing is
included as a separate line item on the telephone bills of Bell and TELUS customers who use our services. Bell and TELUS (the Telco Partners) contract with third parties
to conduct monthly billing of customers who use them as their local telephone service providers. In addition, the Telco Partners provide collection services for the
Corporation with those customers who are also their customers. Additionally, the Corporation has entered into publishing agreements with each Telco Partner. If the
Corporation fails to perform its obligations under these agreements and the agreements are consequently terminated by such Telco Partner, other agreements with such
Telco Partner may also be terminated, including the Bell Canada Trademark License Agreement, the TELUS Trademark License Agreement, the MTS Inc. Branding and
Trademark Agreement and the Bell Canada Inc. Branding and Trademark Agreement, as well as non-competition covenants we benefit from with such Telco Partners.

We have agreements with outside service suppliers to print and distribute our directories and publications. These agreements are for services that are integral to our
business.

The failure of the Telco Partners or any of our other suppliers to fulfill their contractual obligations under these agreements could result in a material adverse effect on our
business.

Customers who do not use the Telco Partners as their local telephone provider as well as all new customers are billed directly by the Corporation.

Successfully prosecuted legal action against the Corporation, could adversely affect the results of operations and financial condition of the Corporation.

From time to time, the Corporation may be the subject of litigation arising out of its operations. The Corporation is not currently a party to any material litigation. However,
if any legitimate cause of action arose which was successfully prosecuted against the Corporation, the results of operations and financial condition could be adversely
affected. Claims under such litigation may be material or may be indeterminate. Various types of claims may be made including, without limitation, breach of contract,
negligence, tax and employment matters. The outcome of such litigation is uncertain and may materially impact the Corporation’s financial condition or results of operations
and the Corporation may be required to incur significant expenses or devote significant resources in defense against any such litigation. Moreover, unfavorable outcomes
or settlements of litigation could encourage the commencement of additional litigation.

Work stoppages and other labour disturbances could have a material adverse effect on the Corporation, its business, results from operations and financial
condition

Certain non-management employees of the Corporation are unionized. The Corporation currently has seven union agreements. Each of the union agreements have been
successfully renegotiated, four of which expire on December 31, 2021, two others on June 30, 2022 and the last on March 31, 2023. If the Corporation is unable to renew
the agreements with its unionized staff as they come up for renegotiation from time to time, it could result in additional work stoppages and other labour disturbances, which
could have a material adverse effect on our business.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

Challenge by tax authorities of the Corporation’s position on certain income tax matters could have a material adverse effect on the Corporation, its business,
results from operations and financial condition

In the normal course of the Corporation's activities, the tax authorities are carrying out ongoing reviews. In that respect, the Corporation is of the view that all expenses
claimed by the different entities of the group are reasonable and deductible and that the cost amount and capital cost allowance claims of such entities' depreciable
properties have been correctly determined. There is no assurance that the tax authorities may not challenge these positions. Such challenge, if successful, may have a
material adverse effect on the Corporation, its business, results from operations and financial condition.

The loss of key relationships or changes in the level of service provided by mapping applications and search engines could have a material adverse effect on
the Corporation, its business, results from operations and financial condition

The Corporation has entered into agreements with mapping applications and search engines to promote its online directories. These agreements facilitate access to the
Corporation’s content and customer advertising, allow the Corporation to generate a higher volume of traffic than it would on its own as well as generate business leads for
its advertisers, while retaining the client relationship. Loss of key relationships or changes in the level of service provided by the mapping applications and search engines
could impact performance of the Corporation’s internet marketing solutions. In addition, internet marketing services are provided by many other competitors within the
markets the Corporation serves and its clients could choose to work with other, sometimes larger providers of these services, or with other search engines directly. The
foregoing could have a material adverse effect on the Corporation, its business, results from operations and financial condition.

The failure of the Corporation’s computers and communications systems could have a material adverse effect on the Corporation, its business, results from
operations and financial condition

The Corporation’s business activities rely significantly on the efficient and uninterrupted operation of computers and communications systems as well as those of third
parties. The Corporation’s media properties, sales and advertising processing, data storage, production, billing, collection and day-to-day operations could be adversely
impaired by cyber-attacks, or the failure of such technology, which could in turn have a material adverse effect on the Corporation, its business, results from operations and
financial condition.

In addition, the Corporation’s computer and ISIT systems may be vulnerable to damage or interruption from a variety of sources and its disaster recovery systems may be
deemed ineffective. Any failure of these systems could impair the Corporation’s business. This could have a material adverse effect on the Corporation, its business, results
from operations and financial condition.

The inability of the Corporation to generate sufficient funds from operations, debt financings, equity financings or refinancing transactions could have a
material adverse effect on the Corporation, its business, results from operations and financial condition

The ability of the Corporation to make scheduled payments under its indebtedness will depend on, among other things, its future operating performance. There can be no
assurance that the Corporation will be able to generate sufficient cash from its operations to pay its debt obligations. The Corporation’s ability to generate sufficient funds
from operations, debt financings, equity financings or refinancing transactions is, to a large extent, subject to economic, financial, competitive, operational and other factors,
many of which are beyond the Corporation’s control.

There can be no assurance that the Corporation will continue to be able to obtain on a timely basis sufficient funds on terms acceptable to the Corporation to provide
adequate liquidity and to finance the operating and capital expenditures necessary to overcome the challenges associated with the evolution of its business and support
its business strategy if cash flows from operations and cash on hand are insufficient.

Failure to generate sufficient funds, whether from operations or debt or equity financings or refinancing transactions, could require the Corporation to delay or abandon some
of its anticipated expenditures or to modify its business strategy and could have a material adverse effect on the Corporation, its business, results from operations and
financial condition. Furthermore, competitors with greater liquidity or their ability to raise money more easily and on less onerous terms could create a competitive
disadvantage for the Corporation.

Incremental contributions by the Corporation to its pension plans could have a material adverse effect on the Corporation, its business, results from operations
and financial condition

The Corporation may be required to make incremental contributions to its pension plans in the future depending on various factors including future returns on pension plan
assets, long-term interest rates and changes in pension regulations, which may have a materially negative effect on the Corporation’s liquidity and results from operations.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Management’s Discussion and Analysis

The funding requirements of the Corporation’s pension plans, resulting from valuations of its pension plan assets and liabilities, depend on a number of factors, including
actual returns on pension plan assets, long-term interest rates, plan demographic and pension regulations. Changes in these factors could cause actual future contributions
to significantly differ from the Corporation’s current estimates and could require the Corporation to make incremental contributions to its pension plans in the future and,
therefore, could have a materially negative effect on the Corporation’s liquidity, business, results from operations and financial condition.

There is no assurance that the Corporation’s pension plans will be able to earn their assumed rate of return. A material portion of the Corporation’s pension plans’ assets
is invested in public equity securities. As a result, the ability of the Corporation’s pension plans to earn the rate of return that management has assumed depends significantly
on the performance of capital markets. The market conditions also impact the discount rate used to calculate the Corporation’s solvency obligations and thereby could also
significantly affect the Corporation’s cash funding requirements.

An outbreak or escalation of a contagious disease may adversely affect the Corporation’s business

A local, regional, national or international outbreak or escalation of a contagious disease, including the COVID-19 virus, Middle East Respiratory Syndrome, Severe Acute
Respiratory Syndrome, H1N1 influenza virus, avian flu or any other similar illness, or fear of the foregoing, could adversely impact the ability of the Corporation’s sales force
to interact with customers and potential customers, cause economic uncertainty decreasing the willingness of customers to purchase services from the Corporation, cause
labour shortages for the Corporation, interrupt supplies from third parties upon which the Corporation relies, increase operating costs, result in governmental regulation
adversely impacting the Corporation’s business and otherwise have an adverse effect on the Corporation’s business, financial condition and results of operations.

6. Controls and Procedures

As a public entity, we must take steps to ensure that material information regarding our reports filed or submitted under securities legislation fairly presents the financial
information of YP. Responsibility for this resides with management, including the President and Chief Executive Officer and the Chief Financial Officer. Management is
responsible for establishing, maintaining and evaluating disclosure controls and procedures, as well as internal control over financial reporting.

Disclosure Controls and Procedures (DC&P)

The evaluation of the design and effectiveness of DC&P (as defined in National Instrument 52-109) was performed under the supervision of the President and Chief
Executive Officer and the Chief Financial Officer. They concluded that the Company’s DC&P were effective, as at December 31, 2020.

Internal Control over Financial Reporting (ICFR)

The design and effectiveness of ICFR (as defined in National Instruments 52-109) were evaluated under the supervision of the President and Chief Executive Officer and
Chief Financial Officer. Based on the evaluations, they concluded that the Company’s ICFR was effective, as at December 31, 2020.

During the quarter beginning on October 1, 2020 and ended on December 31, 2020, no changes were made to the Company’s ICFR that has materially affected, or is
reasonably likely to materially affect, the Company’s ICFR.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Yellow Pages Limited

Opinion

We have audited the consolidated financial statements of Yellow Pages Limited (the ‘‘Company’’), which comprise the consolidated statements of financial position as at
December 31, 2020 and 2019, and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the years then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the ‘‘financial statements’’).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019, and
its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (‘‘IFRS’’).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards (‘‘Canadian GAAS’’). Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended
December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.

Recoverability of Deferred Tax Assets — Refer to Notes 3.20.2, 3.22 and 14 to the financial statements

Key Audit Matter Description

The Company recognizes deferred income taxes for tax attributes and differences between the carrying values and tax basis of assets and liabilities at enacted statutory
tax rates in effect for the years in which the differences are expected to reverse. The carrying value of deferred income tax assets are reviewed at each reporting date and
reduced to the extent it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered in the foreseeable future.

Given the significant estimation uncertainty related to future taxable income and the determination of the probability that the deferred tax asset will be realized, auditing these
estimates required a high degree of subjectivity in applying audit procedures and in evaluating the results of those procedures. This resulted in an increased extent of audit
effort including the involvement of income tax specialists.

How the Key Audit Matter Was Addressed in the Audit

Our audit procedures related to future taxable income and the determination of the probability that the deferred income tax assets will be realized included the following,
among others:

•

Evaluated future taxable income by:

•

Evaluating the Company’s ability to accurately estimate future taxable income by comparing actual results to the Company’s historical estimates.

Assessing the reasonability of estimates of future taxable income by evaluating key inputs to the estimates such as revenue and earnings margins against
historical performance, projections and trends.

Evaluating whether the estimates of future taxable income were consistent with evidence obtained in other areas of the audit.

• With the assistance of income tax specialists, assessed the probability that the deferred income tax assets will be realized by:

•

Assessing the existing temporary differences available for future utilization to evaluate deferred income tax assets available to the Company.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

•

Assessing the period and sufficiency over which the Company expects to utilize the underlying future tax deductions against future taxable income before they
expire.

Evaluating whether the taxable income in historical periods was of the appropriate character and available under the tax law.

Revenues and Allowance for Revenue Adjustments— Refer to Notes 3.18, 3.22, 5, 17 and 21 to the financial statements

Key Audit Matter Description

The Company’s revenues consist of contract-based fees made up of a significant volume of low-dollar value transactions and relate to digital and print revenues. While
digital revenues are primarily recognized over the term of the contract from the point at which service is first provided over the life of the contract, revenues from print
products are recognized at a point in time upon delivery of the print directories. Further, the Company estimates an allowance for revenue adjustments, which is recorded
as a reduction of revenue and reflects an estimate for claims expected from customers. This estimate is based in part on the Company’s historical claims experience.

Auditing of revenues and the allowance for revenue adjustments required significant audit effort due to the volume of transactions, the highly manual process associated
with portions of the revenue recognition process and the estimation uncertainty inherent to the determination of the allowance. This required a high degree of subjectivity
in applying audit procedures and in evaluating the results of those procedures.

How the Key Audit Matter Was Addressed in the Audit

Our audit procedures related to revenues and the estimate related to the allowance for revenue adjustments included the following, among others:

•

Evaluated revenues by:

•

Testing the mathematical accuracy of the Company’s revenue recognition that is reliant upon manual processes.

Assessing the customer contracts and fulfillment of service for a selection of revenue transactions and evaluating whether the contracts were properly
recognized into revenues based on the terms and conditions of each contract.

Analyzing revenue recorded by comparing actuals to independently developed expectations.

Inspecting evidence from a combination of sources, where necessary, assessing considerations for contradictory evidence and evaluating whether revenue
was appropriately recognized.

•

Evaluated the allowance for revenue adjustments by:

•

Assessing the methodologies used by the Company to estimate the allowance for revenue adjustments by understanding the processes adopted to monitor and
manage claims and collections, testing the mathematical accuracy of this calculation and testing the data used to establish this estimate.

Assessing the Company’s ability to accurately estimate the allowance for revenue adjustments by comparing actual results to the Company’s historical
estimates. For a selection of historical customer claims, assessed claims to credits issued, debits recorded to revenue, the original contract, correspondence
between the customer and the sales representative, and other supporting documents.

Other Information

Management is responsible for the other information. The other information comprises:

• Management’s Discussion and Analysis; and

•

The information, other than the financial statements and our auditor’s report thereon, in the Annual Report.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection
with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude
that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

The Annual Report is expected to be made available to us after the date of the auditor’s report. If, based on the work we will perform on this other information, we conclude
that there is a material misstatement of this other information, we are required to report that fact to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose

of expressing an opinion on the effectiveness of the Company’s internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Company to cease to continue as a going concern.

•

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on
the financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements
of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Gianmarco Lombardi.

(signed) Deloitte LLP1

Montréal, Québec
February 10, 2021

1 CPA auditor, CA, public accountancy permit No. A125494

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Consolidated Statements of Financial Position
(in thousands of Canadian dollars)

As at

ASSETS
CURRENT ASSETS

Cash
Trade and other receivables (Notes 5 and 21)
Prepaid expenses
Deferred publication costs
Net investment in subleases (Note 6)
Income taxes receivable (Note 14)

TOTAL CURRENT ASSETS

NON-CURRENT ASSETS
Deferred commissions
Financial and other assets (Notes 12 and 21)
Right-of-use assets (Note 6)
Net investment in subleases (Note 6)
Property and equipment (Note 7)
Intangible assets (Note 8)
Deferred income taxes (Note 14)

TOTAL NON-CURRENT ASSETS

TOTAL ASSETS

LIABILITIES AND EQUITY
CURRENT LIABILITIES

Trade and other payables (Note 9)
Provisions (Note 10)
Deferred revenues (Note 5)
Current portion of lease obligations (Note 6)

TOTAL CURRENT LIABILITIES

NON-CURRENT LIABILITIES

Provisions (Note 10)
Post-employment benefits (Note 11)
Lease obligations (Note 6)
Exchangeable debentures (Note 13)

TOTAL NON-CURRENT LIABILITIES

TOTAL LIABILITIES

CAPITAL AND RESERVES
DEFICIT

TOTAL EQUITY (DEFICIENCY)

TOTAL LIABILITIES AND EQUITY (DEFICIENCY)

The accompanying notes are an integral part of these consolidated financial statements.

December 31, 2020

December 31, 2019

153,492
64,430
4,826
2,115
1,206
−

226,069

1,921
4,009
11,081
25,609
6,609
70,700
21,915

141,844

367,913

35,056
22,076
1,496
3,011

61,639

986
125,009
49,863
101,115

276,973

338,612

6,555,780
(6,526,479)

29,301

367,913

44,408
87,250
5,563
2,492
926
344

140,983

3,610
829
14,060
25,611
12,309
89,749
39,727

185,895

326,878

33,662
26,644
2,667
2,767

65,740

1,576
122,567
55,118
98,537

277,798

343,538

6,595,802
(6,612,462)

(16,660)

326,878

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Consolidated Statements of Income
(in thousands of Canadian dollars, except share and per share information)

For the years ended December 31,

Revenues (Note 17)
Operating costs (Note 16)

Income from operations before depreciation and amortization, and restructuring and other charges
Depreciation and amortization (Notes 6,7 and 8)
Restructuring and other charges (Note 10)

Income from operations
Financial charges, net (Note 19)
Loss on sale of businesses (Note 4)

Earnings before income taxes
Provision for (recovery of) income taxes (Note 14)

Net earnings

Basic earnings per share

Weighted average shares outstanding – basic earnings per share (Note 15)

Diluted earnings per share

2020

333,538
204,096

129,442
27,664
8,131

93,647
14,512
423

78,712
18,414

60,298

2.27

2019

403,213
241,868

161,345
39,109
12,499

109,737
39,600
367

69,770
(24,899)

94,669

3.57

26,602,728

26,523,234

2.10

3.16

Weighted average shares outstanding – diluted earnings per share (Note 15)

32,558,101

32,526,598

The accompanying notes are an integral part of these consolidated financial statements.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Consolidated Statements of Comprehensive Income
(in thousands of Canadian dollars)

For the years ended December 31,

Net earnings

Other comprehensive (loss) income:

Items that will not be reclassified subsequently to net earnings
Actuarial (losses) gains (Note 11)
Income taxes relating to items that will not be reclassified subsequently to net earnings

Other comprehensive (loss) income

Total comprehensive income

The accompanying notes are an integral part of these consolidated financial statements.

2020

2019

60,298

94,669

(1,931)
512

(1,419)

9,814
(2,634)

7,180

58,879

101,849

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Consolidated Statements of Changes in Equity
(in thousands of Canadian dollars)

For the years ended December 31,

Shareholders’
capital
(Note 15)

Restricted

shares Warrants

Compound
financial
instruments1

Stock-based
compensation
and other
reserves

Reduction
of capital
reserve

Total capital
and reserves

Deficit

2020

Total
equity

Balance, December 31, 2019

4,031,685 $

(21,421) $

1,456

3,619

123,410 $

2,457,053 $

6,595,802 $

(6,612,462) $

(16,660)

Other comprehensive loss
Net earnings

Total comprehensive income
Repurchase of exchangeable

debentures (Note 13)

Repurchase of common shares
Shared issued under the stock

option plan (Note 18)

Dividends to shareholders (Note 15)
Restricted shares settled
Restricted shares (Note 18)
Stock options (Note 18)
Common shares subject to
repurchase (Note 15)

−
−

−

−
(39,231)

300
−
−
−
−

−

−
−

−

−
−

−
−
2,103
−
−

−

−
−

−

−
−

−
−
−
−
−

−

−
−

−

(2)
−

−
−
−
−
−

−

−
−

−

−
−

(77)
42
(2,103)
(642)
567

(979)

−
−

−

−
−

−
−
−
−
−

−

−
−

−

(2)
(39,231)

223
42
−
(642)
567

(979)

(1,419)
60,298

58,879

−
35,954

−
(8,850)
−
−
−

(1,419)
60,298

58,879

(2)
(3,277)

223
(8,808)
−
(642)
567

−

(979)

Balance, December 31, 2020

3,992,754 $

(19,318) $

1,456

3,617

120,218 $

2,457,053 $

6,555,780 $

(6,526,479) $

29,301

Shareholders’
capital
(Note 15)

Restricted
shares

Warrants

Compound
financial
instruments1

Stock-based
compensation
and other
reserves

Reduction
of capital
reserve

Total capital
and reserves

Balance, December 31, 2018
Other comprehensive income
Net earnings

Total comprehensive income
Restricted shares settled
Restricted shares (Note 18)
Stock options (Note 18)

4,031,685 $

(23,421) $

−
−

−
−
−
−

−
−

−
2,000
−
−

1,456
−
−

3,619 $
−
−

−
−
−
−

124,755 $

2,457,053 $

6,595,147 $

−
−

−
(2,000)
(515)
1,170

−
−

−
−
−
−

−
−

−
−
(515)
1,170

2019

Total
deficiency

(119,164)
7,180
94,669

101,849
−
(515)
1,170

Deficit

(6,714,311) $
7,180
94,669

101,849
−
−
−

Balance, December 31, 2019

4,031,685 $

(21,421) $

1,456

3,619 $

123,410 $

2,457,053 $

6,595,802 $

(6,612,462) $

(16,660)

The equity component of the exchangeable debentures presented above is net of income taxes of $1.3 million (2019 - $1.3 million).

The accompanying notes are an integral part of these consolidated financial statements.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Consolidated Statements of Cash Flows
(in thousands of Canadian dollars)

For the years ended December 31,

OPERATING ACTIVITIES

Net earnings
Adjusting items

Stock-based compensation (recovery) expense equity settled
Depreciation and amortization
Restructuring and other charges
Financial charges, net
Loss on sale of businesses (Note 4)
Provision (recovery) for income taxes
Change in operating assets and liabilities
Funding of post-employment benefit plans in excess of costs
Restructuring and other charges paid (Note 10)
Interest paid
Income taxes received, net

INVESTING ACTIVITIES

Additions to intangible assets
Additions to property and equipment
Payments received from net investment in subleases
Proceeds on sale of businesses (Note 4)
Business acquisition

FINANCING ACTIVITIES

Repayment of senior secured notes (Note 12)
Repurchase of exchangeable debentures (Note 13)
Repurchase of common shares (Note 15)
Issuance of common shares (Note 15)
Payment of lease obligations (Note 6)
Dividends paid (Note 15)

NET INCREASE (DECREASE) IN CASH
CASH AND RESTRICTED CASH, BEGINNING OF YEAR

CASH, END OF YEAR

The accompanying notes are an integral part of these consolidated financial statements.

2020

2019

60,298

94,669

(75)
27,664
8,131
14,512
423
18,414
21,535
(3,364)
(10,038)
(10,762)
260

126,998

(5,328)
(245)
1,002
1,564
−

(3,007)

−
(56)
(3,277)
223
(2,989)
(8,808)

(14,907)

109,084
44,408

655
39,109
12,499
39,600
367
(24,899)
31,413
(4,043)
(17,994)
(26,881)
264

144,759

(9,647)
(91)
466
1,936
(400)

(7,736)

(170,231)
−
−
−
(3,836)
−

(174,067)

(37,044)
81,452

153,492

44,408

YELLOW PAGES LIMITED ANNUAL REPORT 2020

1. Description

Yellow Pages Limited, through its subsidiaries, offers local and national businesses access to digital and print media and marketing solutions to reach consumers in all the
provinces and territories of Canada. References herein to Yellow Pages Limited (or the ‘‘Company’’) represent the financial position, financial performance, cash flows and
disclosures of Yellow Pages Limited and its subsidiaries on a consolidated basis.

Yellow Pages Limited’s registered head office is located at 1751 Rue Richardson, Montreal, Québec, Canada, H3K 1G6 and the common shares of Yellow Pages Limited
are listed on the Toronto Stock Exchange (‘‘TSX’’) under the symbol ‘‘Y’’.

The Board of Directors (the ‘‘Board’’) approved the consolidated financial statements for the years ended December 31, 2020 and 2019 on February 10, 2021 for publication
on February 11, 2021.

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

2. Revised standards

2.1 Standards, interpretations and amendments to published standards that are issued but not yet effective on the consolidated financial

statements

Amendments to IAS 37 - Provisions, Contingent Liabilities and Contingent Assets

3. Basis of presentation and significant accounting policies

3.1 Statement of compliance

These consolidated financial statements of Yellow Pages Limited and its subsidiaries were prepared by management in accordance with International Financial Reporting
Standards (IFRS). These financial statements have been prepared in accordance with the following significant accounting policies that have been applied consistently to
all periods presented throughout the consolidated entities.

3.2 Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for the revaluation of certain assets and liabilities (including derivative
instruments) at fair value as explained in the policies below.

3.3 Functional and presentation currency

The consolidated financial statements are presented in Canadian dollars, which is the functional and presentation currency of Yellow Pages Limited.

3.4 Basis of consolidation

3.4.1 Subsidiaries

Subsidiaries that are directly controlled by Yellow Pages Limited or indirectly controlled through other consolidated subsidiaries are fully consolidated. Subsidiaries are all
entities over which Yellow Pages Limited exercises control.

Subsidiaries are fully consolidated from the effective date of acquisition up to the effective date of disposal. Intercompany assets, liabilities, and transactions between fully
consolidated companies are eliminated. Gains and losses on internal transactions with controlled companies are fully eliminated. Accounting policies and methods are
modified where necessary to ensure consistency of accounting treatment at the Yellow Pages Limited level.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

3.4.2 Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at
the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by Yellow Pages Limited in exchange for control of the acquired entity.
Transaction costs associated with business acquisitions are recognized in the statement of income, as incurred.

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

3.5 Cash

3.5.1 Cash

Cash consists of funds on deposit and, from time to time, highly liquid investments with a purchased maturity of three months or less.

3.6 Financial instruments

Financial assets and financial liabilities are recognized in the Company’s statement of financial position when the Company becomes a party to the contractual provisions
of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets
or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value
through profit or loss are recognized immediately in profit or loss.

3.6.1 Financial assets

Initial recognition and measurement

Financial assets are classified into the following specified categories: ‘‘amortized cost’’; ‘‘fair value through other comprehensive income for equity investment’’ (‘‘FVOCI –
equity investment’’); and ‘‘fair value through profit or loss’’ (‘‘FVTPL’’).

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Company’s business model for
managing them.

The Company’s business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines
whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement

Financial asset at amortized cost

The Company measures financial assets at amortized cost if both of the following conditions are met:

•

The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest rate (‘‘EIR’’) method and are subject to impairment. Gains and losses are
recognized in profit or loss when the asset is derecognized, modified or impaired.

The Company’s financial assets at amortized cost include trade and other receivables, net investment in subleases, and cash.

Financial assets at fair value through other comprehensive income for equity investment (‘‘FVOCI – equity investment’’)

Upon initial recognition, the Company can elect to classify irrevocably its equity investments as equity instruments designated at FVOCI when they meet the definition of
equity under IAS 32 — Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognized as other income in the statement of profit or loss when the right
of payment has been established, except when the Company benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains
are recorded in OCI.

Financial asset at fair value through profit or loss (‘‘FVTPL’’)

Financial assets at FVTPL include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets
mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near
term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial
assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business
model. Financial assets at FVTPL are carried in the statement of financial position at fair value with net changes in fair value recognized in the statement of profit or loss.

The Company has a loan receivable associated with a forward contract under this category. The loan receivable is included in other receivables.

An embedded derivative is a component of a hybrid contract that also includes a non-derivative host – with the effect that some of the cash flows of the combined instrument
vary in a way similar to a stand-alone derivative. A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and
accounted for as a separate derivative if it is separated from the host when certain conditions are met and accounted for as a separate derivative. Embedded derivatives
are measured at fair value with changes in fair value recognized in profit or loss.

The redemption option for cash for the Company’s exchangeable debentures (‘‘Redemption Option’’) acts as an embedded derivative.

Derecognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially
all the risks and rewards of ownership of the asset to another party.

There is no reclassification on derecognition of equity investments at FVOCI.

Impairment of financial assets

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss (‘‘ECL’’) model. The ECL model requires the Company to account for the ECL and
changes in the ECL at each reporting date to reflect changes in credit risk since initial recognition of the financial assets. For trade receivables (including contract assets),
the Company applied the simplified approach permitted under IFRS 9, which requires lifetime ECL to be recognized from initial recognition. While cash and other receivables
and net investment in subleases are also subject to the impairment requirements under IFRS 9, the identified ECL was insignificant. The lifetime ECL related to doubtful
accounts for trade receivables (also referred to as allowance for doubtful accounts) is established based on various factors, including amongst others the age of the
exposure and in some case the customer’s solvency.

At each reporting date, the Company assesses whether financial assets are credit impaired. The Company will consider a financial asset to be in default when the indebted
party is unlikely to pay its obligations to the Company in full, without recourse by the Company to actions such as realizing security (if any). The Company elected to consider
that default does not occur when a financial asset is 90 days past due as the Company has reasonable and supportable information to demonstrate that a more lagging
default criterion is more appropriate and that default risk is not necessarily increased. In assessing whether an indebted party is in default, the Company will consider
indicators that are qualitative (e.g. breach of conditions), quantitative (e.g. overdue status), and data developed internally and obtained from external sources. Inputs into
the assessment of whether a financial asset is in default and their significance may vary over time to reflect circumstances. The same factors are considered when
determining whether to write-off amounts charged to the ECL allowance for trade receivables against the customer accounts receivable. The assessment of the probability
of default and loss given default is based on historical data adjusted for current customer circumstances. No customer accounts receivable is written-off directly to the bad
debt expense.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

3.6.2 Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities designated at fair value through profit or loss (‘‘FVTPL’’), loans and borrowings, payables, or as
derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognized initially at fair value and, in the case of loans and
borrowings and payables, at fair value less transaction costs.

The Company’s financial liabilities include trade and other payables, lease obligations, loans and borrowings including bank overdrafts, and derivative financial instruments.

Yellow Pages Limited recognizes all financial liabilities, specifically exchangeable debentures, and trade and other payables, initially at fair value less transaction costs and
subsequently at amortized cost, using the effective interest method.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Loans and borrowings

This is the category most relevant to the Company. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the
EIR method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is
calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as finance
charges in the statement of profit or loss. This category applies to exchangeable debentures.

Derecognition

The Company derecognizes financial liabilities when, and only when, the Company's obligations are discharged, cancelled or have expired. The difference between the
carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

3.7 Deferred publication costs

Deferred publication costs are recognized for direct and incremental publication costs incurred during the sale, manufacturing and distribution of telephone print directories
as well as the sale, provisioning and fulfillment of digital products and services. The intangible asset represents costs that will be recovered in future periods, when the
related directories revenues, digital products and services revenues are recognized. An asset is capitalized when the following conditions are met:

•

Yellow Pages Limited has control over the contract for which the costs were incurred;

The control results from past events;

Future economic benefits are expected to flow to Yellow Pages Limited; and

The asset is identifiable, non-monetary and without physical substance.

Deferred publication costs are initially measured at cost and are recognized in operating costs upon delivery of the publication or fulfillment of the digital products and services.

3.8 Deferred commissions

Deferred commissions paid represent costs to obtain new sales contracts. These costs are amortized on a straight-line basis over a two-year period as this reflects the
expected period of benefit. The Company recognizes as an expense the commissions paid for contract renewals with revenue recognized within one year or less.

3.9 Property and equipment

Property and equipment are recognized at cost less accumulated depreciation and impairment losses. The various components of property and equipment are depreciated
separately based on their estimated useful lives and therefore, their depreciation periods are significantly different. The cost of an asset includes the expenses that are
directly attributable to its acquisition.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Subsequent costs are included in the carrying value of the asset or recognized as a separate component, where necessary, if it is probable that future economic benefits
will flow to Yellow Pages Limited and the cost of the asset can be reliably measured. All other repair and maintenance costs are expensed in the year they are incurred.
Depreciation is calculated using the straight-line method, based on the capitalized costs, less any residual value over a period corresponding to the useful life of each asset.

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

As at December 31, 2020, the expected useful lives are as follows:

Office equipment
Computer equipment
Leasehold improvements

10 years
3 years
Shorter of term of lease or useful life

The residual value, the depreciation method and the useful life of an asset are reviewed at a minimum annually. Property and equipment are tested for impairment when
an indication of impairment exists. When the asset’s recoverable amount is less than its net carrying value, an impairment loss is recognized. Where an individual asset does
not generate independent cash inflows, Yellow Pages Limited determines the recoverable amount of the cash generating units (‘‘CGUs’’) or group of CGUs to which the
asset belongs.

3.10 Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the
Company assesses whether:

•

The contract involves the use of an identified asset;

The Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

The Company has the right to direct the use of the asset.

At inception, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone prices.

3.10.1 As a lessee

The Company recognizes a right-of-use asset and a lease obligation at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises
the initial amount of the lease obligation adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate
of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset
or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use
asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease obligation. Right-of-use assets are tested for impairment in
accordance with IAS 36 – Impairment of Assets, and impairments are recorded in restructuring and other charges on the consolidated statements of income.

The lease obligation is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit
in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Generally, the Company uses its incremental borrowing rate (‘‘IBR’’)
as the discount rate.

The lease obligation is subsequently measured at amortized cost using the effective interest method (EIR) and is adjusted for accrued interest and lease payments when
there is a change in future lease payments arising from a change in an index or rate. It is remeasured if there is a change in the Company's estimate of the amount expected
to be payable under a residual value guarantee, if there are modifications to the lease conditions such as a change of square footage of a lease, or if the Company changes
its assessment of whether it will exercise a purchase, extension or termination option.

When the lease obligation is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss
if the carrying amount of the right-of-use asset has been reduced to zero.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

For short-term leases (lease term of 12 months or less) and leases of low-value assets, as permitted, the Company has opted to recognize a lease expense on a straight-line
basis. This expense is presented within Operating Costs in the consolidated statements of income. The amounts related to these low value leases are insignificant.

3.10.2 As a lessor

When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease.

To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership
incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the
Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

The Company assessed and classified its subleases as finance leases, and therefore derecognized the right-of-use assets relating to the respective head leases being
sublet, recognized lease receivables equal to the net investment in the subleases, retained the previously recognized lease obligations in its capacity as lessee, recognized
the related interest expense thereafter and recognized interest income on the subleases receivable in its capacity as finance lessor.

3.11 Intangibles assets

Intangible assets acquired through a business combination are identified and recognized separately from goodwill where they arise from legal or contractual rights or are
capable of being separated from the acquiree and sold, transferred, licensed or exchanged. The cost of such intangible assets is deemed to be their fair value at the
acquisition date. Intangible assets not acquired through a business combination are reported at cost less accumulated amortization and accumulated impairment losses.

Internally-generated intangible assets, consisting of software used by the Company, are recognized to the extent the criteria in IAS 38 Intangible Assets are met.
Development costs for internally-generated intangible assets are capitalized at cost if, and only if, Yellow Pages Limited can demonstrate:

•

the technical feasibility of completing the asset so that it will be available for use or sale;

the intention to complete the intangible asset and use or sell it;

the ability to use or sell the intangible asset;

how the intangible asset will generate probable future economic benefits;

the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the date when the intangible asset first meets the
recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditures are charged to the statement of income in
the period in which they are incurred.

Internally-generated intangible assets include the cost of software tools and licenses used in the development of Yellow Pages Limited’s systems, as well as all directly
attributable payroll and consulting costs. These items are not amortized until the assets are available for use.

Following initial recognition, intangible assets are carried at cost less any accumulated amortization and any accumulated impairment loss. Intangibles assets are
amortized, as follows:

Non-competition agreements
Customer-related intangible assets
Trademarks
Domain names
Software

Straight-line over shorter of 7 years or life of agreement
Straight-line over a period not exceeding 3 years
Straight-line over 10 years
Straight-line over 4 – 12 years
Straight-line over 3 years

The estimated useful life and amortization method are reviewed at the end of each reporting period or annual reporting period, with the effect of any changes in estimate
being accounted for on a prospective basis.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from the de-recognition
of an intangible asset, measured as the difference between the net disposal proceeds or fair value, as applicable, and the carrying value of the asset, are recognized in the
statement of income when the asset is de-recognized.

3.12 Impairment of tangible and intangible assets

At each reporting date, Yellow Pages Limited determines whether there are any indications that the carrying values of its finite life tangible and intangible assets are
impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible
to estimate the recoverable amount of an individual asset, Yellow Pages Limited estimates the recoverable amount of the CGU or group of CGUs to which the asset belongs.
A CGU is the smallest identifiable group of assets that generate cash inflows that are independent of those from other assets.

Intangible assets with indefinite useful lives, intangible assets not yet available for use and goodwill, if any, are tested for impairment annually, and whenever there is an
indication that the asset may be impaired. A majority of the Company’s intangible assets do not have cash inflows independent of those from other assets and as such, are
tested within their respective CGUs.

The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset (or CGU) for which the
estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying value, the carrying value of the asset (or CGU) is reduced to its recoverable amount.
An impairment loss is recognized immediately in the statement of income.

If the recoverable amount of a CGU or group of CGUs is less than the carrying amount, the impairment loss is allocated first to reduce the carrying amount of goodwill, if
any, and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. The Company does not reduce the carrying value of an
asset below the highest of its fair value less costs of disposal and its value in use.

3.13 Trade and other payables

Trade and other payables, including accruals, are recorded when Yellow Pages Limited is required to make future payments as a result of purchases of assets or services.
Trade and other payables are carried at amortized cost.

3.14 Provisions

Provisions are recognized when Yellow Pages Limited has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources
will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks
and uncertainties surrounding the obligation. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time
is recognized as a financial charge. Provisions are reversed when new external factors, such as market conditions, or internal factors indicates that the recoverable amount
is higher or lower than originally anticipated.

3.14.1 Onerous contracts

Present obligations arising under onerous contracts are recognized and measured as provisions. An onerous contract is considered to exist where Yellow Pages Limited
has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

3.14.2 Restructuring

A restructuring provision is recognized when Yellow Pages Limited has developed a detailed formal plan for the restructuring and has raised a valid expectation in those
affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring
provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not
associated with the ongoing activities of the entity.

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

3.15 Employee benefits

3.15.1 Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive
obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in the statement of
income when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

3.15.2 Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. Yellow Pages Limited’s net obligation in respect of defined benefit pension
plans is calculated separately for each plan by estimating the amount of future benefits that employees have earned in return for their service in the current and prior periods;
that benefit is discounted to determine its present value. The fair value of any plan assets is deducted from the obligation. The discount rate is the yield at the reporting date
on high-quality corporate bonds that have terms to maturity approximating to the terms of the related pension liability adjusted for a spread to reflect any additional credit
risk and that are denominated in the currency in which the benefits are expected to be paid. The calculation is performed annually by a qualified actuary using the projected
benefit method prorated on service.

Yellow Pages Limited recognizes all actuarial gains and losses arising subsequently from defined benefit plans in OCI. Re-measurement, comprising actuarial gains and
losses, the effects of changes to the asset ceiling, if applicable, and the return on plan assets, excluding net interest on the defined benefit obligation, is reflected immediately
in the statement of financial position with a charge or credit recognized in OCI. Re-measurement recognized in OCI is reflected immediately in retained earnings and will
not be classified to the statement of income. Past service costs are recognized in the statement of income in the period a plan amendment is announced to employees. The
net interest amount, which is calculated by applying the discount rate to the net defined liability or asset of defined benefit plans, is included within net financial charges while
service costs are recorded in operating expenses.

3.15.3 Other long-term employee benefits

Yellow Pages Limited’s net obligation in respect of long-term employee benefits other than pension plans is the amount of future benefit that employees have earned in
return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any related asset is deducted. The
discount rate is the yield at the reporting date on high quality corporate bonds that have terms to maturity approximating the terms of the related obligation. The calculation
is performed using the projected unit credit method. Any actuarial gains or losses are recognized in the period in which they arise.

3.15.4 Termination benefits

Termination benefits are recognized as an expense when Yellow Pages Limited can no longer withdraw the offer of those benefits, or if earlier, when there is no realistic
possibility of withdrawal from a formal detailed plan to either terminate employment before the normal retirement date, or from providing termination benefits as a result of
an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if Yellow Pages Limited has made an offer
of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.

3.15.5 Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid if Yellow Pages Limited has a present legal or constructive obligation to pay this amount as a result of a past
service provided by the employee and the obligation can be estimated reliably.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

3.15.6 Share-based payment transactions

Yellow Pages Limited’s restricted share units, performance share units, deferred share units, stock options and share appreciated rights granted to employees and directors
are measured at the fair value of the equity instruments at the grant date.

The restricted share units, performance share units and deferred share units granted may be settled in cash or equity at the Company’s option. If the restricted share unit
and performance share unit plan is funded, eligible employees will receive, upon vesting of the instruments, common shares. The funded portion of these plans is treated
as equity-settled instruments and recorded accordingly in equity and operating costs over the vesting period. In the event these plans are unfunded, Yellow Pages Limited
will pay to the eligible employees and directors, upon vesting of the instruments, an amount in cash. The fair value determined at the grant date of the equity-settled
instruments is expensed on a straight-line basis over the vesting period, based on Yellow Pages Limited’s estimate of share-based instruments that will eventually vest.

The unfunded portion of these plans is treated as cash-settled instruments and recorded as a liability. The share appreciation rights are settled in cash and recorded
accordingly as a liability. At each reporting period, the liabilities from these plans are re-measured at fair value with any changes recorded in operating costs. Certain of the
Company’s stock options and restricted share units will be settled in cash upon certain conditions being met. These stock options and restricted share units are recorded
as a liability, which is re-measured at fair value at each reporting period with any changes recorded in operating costs.

At each reporting period, Yellow Pages Limited revises its estimate of the number of share-based instruments expected to vest. The impact of the revision of the original
estimate, if any, is recognized in the statement of income, with a corresponding adjustment to the reserve or corresponding liability.

3.16 Equity instruments issued

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by Yellow Pages
Limited are recorded at the proceeds received, net of direct issue costs.

Transaction costs incurred by Yellow Pages Limited in issuing, acquiring or reselling its own equity instruments are accounted for as a deduction from equity to the extent
that they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

3.17 Operating segments

Disclosure of segment information is reported in a manner consistent with the internal reports regularly reviewed by Yellow Pages Limited’s Chief Operating Decision Maker
in order to assess each segment’s performance and to allocate resources to them. The Chief Operating Decision Maker, who is responsible for allocating resources and
assessing performance of the operating segments, has been identified as the President and Chief Executive Officer. The Company’s operations are divided into two
reportable segments: YP and Other. The accounting policies the Company uses for its reportable segments are the same as those used in its consolidated financial
statements. Subsequent to the second quarter of 2019 there are no longer any operations being reported in the Other segment.

3.18 Revenues

Yellow Pages Limited’s revenues consist of contract-based fees made up of a significant volume of low-dollar value transactions and relate to digital and print revenues.
The Company’s revenues are measured at the fair value of the consideration received or receivable after deduction of an allowance for revenue adjustments and sales
taxes. The consideration amounts are generally fixed.

Revenues from print products are recognized at a point in time upon delivery of the print directories. Print revenues are generally billed on a monthly basis over the year
of publication.

Digital revenues from classified and display advertisements are recognized into income over the term of the contract on a monthly basis from the point at which service is
first provided over the life of the contract, which is generally 12 months, since the customer receives and consumes the benefits of the advertisement simultaneously over
the period of display of the advertisement. Certain revenues, such as website and video design fees, are recognized at a point in time upon completion of the design of the
website and video since the satisfaction of performance obligation is completed at that time.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Unless the product description states otherwise, customer contracts are automatically renewed for consecutive subsequent periods equal in length to the initial term, unless
the client gives the Company a written notice of non-renewal per the contract terms and conditions.

Payments terms for all customers are generally due upon receipt of the invoice. The disaggregation of revenue by product group and operating segment has been disclosed
in the Segmented Information note.

The allowance for revenue adjustments is recorded as a reduction of revenue and reflects an estimate for claims expected from customers. This estimate is based in part
on the Company’s historical claims experience.

3.19 Borrowing costs

Borrowing costs directly attributable to the acquisition or construction of qualifying assets, which are assets that necessarily take a substantial period of time to get ready
for their intended use, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs are
recognized in profit or loss in the period in which they are incurred. The Company currently has not capitalized any borrowing costs.

3.20 Taxation

Income tax expense represents the sum of the current and deferred tax.

3.20.1 Current income tax

Taxable profit differs from profit as reported in the consolidated statement of income because it excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. Yellow Pages Limited’s liability for current income tax is calculated using tax rates that have been
enacted or substantively enacted by the reporting date.

3.20.2 Deferred tax

Deferred tax is recognized on differences between the carrying values of assets and liabilities in the consolidated financial statements and the corresponding tax basis used
in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences, and
deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where Yellow Pages Limited is
able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such investments and interests are only recognized to the extent it is probable that there will be sufficient taxable
profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying value of deferred tax assets is reviewed at each reporting date and reduced to the extent it is no longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax
rates (and tax laws) that have been enacted or substantively enacted by the reporting date. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which Yellow Pages Limited expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off tax assets against tax liabilities and when they relate to income taxes levied
by the same taxation authority and Yellow Pages Limited intends to settle its tax assets and liabilities on a net basis.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

3.20.3 Current and deferred tax for the period

Current and deferred taxes are recognized as an expense or income in the statement of income, except when they relate to items that are recognized outside net earnings
(whether in OCI or directly in equity), in which case the tax is also recognized outside net earnings, or where they arise from the initial accounting for a business combination.
In the case of a business combination, the applicable tax effects are taken into account in the accounting for the business combination.

3.21 Government grant

3.22 Significant estimates

The preparation of consolidated financial statements requires management to make estimates and assumptions that can affect the carrying value of certain assets and
liabilities, income and expenses and the information disclosed in the notes to the consolidated financial statements. Management reviews these estimates and assumptions
on a regular basis to ensure their pertinence with respect to past experience and the current economic situation. Items in future financial statements could differ from current
estimates as a result of changes in these assumptions. The impact of changes in accounting estimates is recognized during the period in which the change took place and
all affected future periods.

The estimates made by management that are critical to the determination of the carrying value of assets and liabilities are addressed below.

Significant estimates

Allowance for revenue adjustments

Estimate of the lease term

When the Company recognizes a lease, it assesses the lease term based on the conditions of the lease and assesses whether it will extend the lease at the end of the lease
contract, or exercise an early termination option. The Company determined that the term of its leases is the original lease term as it is not reasonably certain that the
extension or early termination options will be exercised. This significant estimate could affect Yellow Pages Limited’s future results if the Company extends the lease or
exercises an early termination option.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Assessment of whether a right-of-use asset is impaired

The Company assesses whether a right-of-use asset is impaired, particularly when it vacates an office space and it must determine the recoverability of the asset, to the
extent that the Company can sublease the assets or surrender the lease and recover its costs. The Company will examine its lease conditions as well as local market
conditions and estimate its recoverability potential for each vacated premise. The determination of the lease cost recovery rate involves significant management estimates
based on market availability of similar office space and local market conditions. This significant estimate could affect Yellow Pages Limited’s future results if the Company
succeeds in subleasing their vacated offices at a higher or lower rate or at different dates than initially anticipated.

Measurement of ECL allowance for trade receivables

In relation to the impairment of trade receivables (including contract assets), the Company uses the expected credit losses (‘‘ECL’’) model, which requires the Company to
account for the ECL and changes in the ECL at each reporting date to reflect changes in credit risk since initial recognition of the trade receivable. The ECL related to doubtful
accounts for trade receivables (also referred to as allowance for doubtful accounts) is established based on various factors, including amongst others the age of the
exposure and in some cases the customer’s solvency. As a result of the COVID-19 pandemic the Company applied the policy as described above using an additional factor
in assessing the credit risk applied to the ECL, based on the customer’s line of business and an estimation of the degree they may have been impacted by the pandemic.
This significant estimate could affect the Company’s future results if there is a further significant change in economic conditions or customer solvency or any new information
that may impact our assumptions.

Determining the discount rate for leases

IFRS 16 requires the Company to discount the lease payments using the rate implicit in the lease if that rate is readily available. If that rate cannot be readily determined,
the lessee is required to use its IBR. The Company generally used its IBR rate when recording leases initially, since the implicit rates were not readily available due to
information not being available from the lessor regarding the fair value of underlying assets and directs costs incurred by the lessor related to the leased assets. The IBR
for each lease was determined on the commencement date of the lease and recalculated at the remeasurement date where applicable.

Useful lives of intangible assets and property and equipment

Employee future benefits

Income taxes

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

deferred tax assets is reviewed at each reporting date, remeasured to the extent that probable sufficient taxable profits will be available, or reduced to the extent it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered in the foreseeable future. The Company updated its assumptions
related to the carrying value of the deferred tax assets to reflect the estimated impact of the COVID-19 pandemic as well as other factors and to determine whether an
adjustment would be required to its valuation allowance as at December 31, 2020.

4. Loss on sale of businesses

On July 6, 2018, the Company’s wholly-owned subsidiary, Yellow Pages Digital & Media Solutions Limited, sold ComFree/DuProprio (‘‘CFDP’’) to Purplebricks Group PLC
(‘‘PB’’) for cash consideration of $51.0 million on a cash free debt free basis, subject to a working capital adjustment. Of the $1.8 million balance that had been placed in
escrow, the Company received $1.4 million, and recorded a loss of $0.4 million related to the amount it no longer expects to receive for the year ended December 31, 2020.

On April 30, 2019, the Company sold its business in restaurant booking and table management through the asset sales of YP Dine, Bookenda and its 40% interest in the
Bookenda International business for a total consideration of $2.2 million (including working capital adjustment). Of this amount, $0.2 million in escrow was released twelve
(12) months after the sale on May 4, 2020. The sale resulted in the recognition of a $0.4 million loss in the consolidated statements of income for the year ended
December 31, 2019.

5. Contract assets and liabilities

The following table provides information about contract assets, which are included in trade and other receivables.

As at

Contract assets
Allowance for revenue adjustments and ECL

Contract assets net of allowance for revenue adjustments and ECL

December 31, 2020

December 31, 2019

31,210
(2,892)

28,318

41,785
(3,703)

38,082

The contract assets, which are included in trade and other receivables, consist of payments for print products on delivered directories that are not yet due from the customer
and represent the Company’s right to consideration for the services rendered. Any amount previously recognized as a contract asset is reclassified to trade receivables once
it is invoiced to the customer.

The change in contract assets for the year ended December 31, 2020 is primarily related to the fluctuation in print revenue. The contract liabilities consist of deferred
revenues which primarily relate to the advanced consideration received from customers for which revenue is recognized over time. The revenues related to the performance
obligations that are unsatisfied (or partially unsatisfied at the reporting date) are expected to be recognized over the next twelve (12) months.

6. Leases

During the years ended December 31, 2020 and 2019, the Company vacated some office locations which it has surrendered, subleased or anticipates to sublease resulting
in a decrease in right-of-use assets and property and equipment related to these office locations, consisting mainly of leasehold improvements and office equipment, as well
as a decrease in lease obligations and increase in investment in subleases. During the year ended December 31, 2020 the Company also acquired computer equipment
under finance leases, resulting in an increase in right-of use assets as well as an increase in lease obligations.

The impact of the above resulted in the following:

•

A reduction in right-of-use assets of $1.7 million (2019 - $17.5 million);

A reduction in lease obligations of $2.0 million (2019 - $14.1 million);

An increase in net investment in subleases of $0.1 million (2019 - $19.3 million); and

A reduction in property and equipment of $3.9 million (2019 - $14.1 million).

As a result of the transactions described above the Company recorded a net expense of $3.4 million (2019 – net recovery of $1.8 million) to restructuring and other charges
for the year ended December 31, 2020.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Lease obligations

The following table summarizes the continuity of the lease obligations:

As at

Lease obligations, opening balance
Additions
Surrenders or disposals
Payment of lease obligations

Lease obligations, closing balance

Less current portion

Non-current portion

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

December 31, 2020

December 31, 2019

57,885
2,027
(4,049)
(2,989)

52,874

3,011

49,863

75,320
496
(14,095)
(3,836)

57,885

2,767

55,118

The following table provides the maturities of the contractual lease obligations on an undiscounted basis for the next five years and thereafter:

As at

Less than one year
One to five years
Thereafter

Total undiscounted lease obligations

Amounts recognized in the consolidated statements of income

For the years ended

Depreciation expense on right-of-use assets
Impairment on right-of-use assets
Interest expense on lease obligations
Interest income on investment in subleases

December 31, 2020

December 31, 2019

7,078
27,707
47,529

82,314

7,109
27,809
57,587

92,505

December 31, 2020

December 31, 2019

$
$
$
$

(1,255)
(973)
(4,110)
1,885

$
$
$
$

(1,542)
−
(4,799)
1,582

YELLOW PAGES LIMITED ANNUAL REPORT 2020

6.1 As a lessee

The Company leases offices, which typically run for a period of 15 to 18 years. Some leases include an option to renew the lease for an additional period of five years after
the end of the contract term.

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

6.1.1 Right-of-use assets1

Right-of-use assets, opening balance
Additions
Depreciation expense
Impairment
Surrenders or disposals2

Right-of-use assets, closing balance

2020

14,060
2,027
(1,255)
(973)
(2,778)

11,081

2019

32,583
496
(1,542)
−
(17,477)

14,060

1 Right-of-use assets consist primarily of office spaces.
2

In 2019, the Company wrote-off office equipment under finance leases of $7.9 million cost and equivalent accumulated depreciation, therefore the impact on the net book value of the right-of-use-assets was $nil.

6.2 As a lessor

The Company subleases offices that it originally leased in 2014, 2015 and 2017. The Company has classified these subleases as finance leases, because the subleases
cover the remaining term of the respective head lease.

6.2.1 Net investment in subleases

Net investment in subleases, opening balance
Additions
Accretion of net investment in subleases
Payment received from sub-lessees

Net investment in subleases, closing balance

Less current portion

Non-current portion

2020

26,537
48
1,232
(1,002)

26,815

1,206

25,609

2019

7,392
19,287
324
(466)

26,537

926

25,611

YELLOW PAGES LIMITED ANNUAL REPORT 2020

6.2.2 Maturity analysis – contractual undiscounted cash flows

As at

Less than one year
One to two years
Two to three years
Three to four years
Four to five years
Thereafter

Total undiscounted lease payments receivable

Unearned interest income

Net investment in subleases

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

December 31, 2020

December 31, 2019

2,307
3,146
3,157
3,196
3,350
25,406

40,562

13,747

26,815

3,022
3,066
3,128
3,143
3,255
27,919

43,533

16,996

26,537

YELLOW PAGES LIMITED ANNUAL REPORT 2020

7. Property and equipment

Cost
As at December 31, 2019
Additions
Disposals, write-offs and transfers

As at December 31, 2020

Accumulated depreciation
As at December 31, 2019
Depreciation expense
Disposals, write-offs and transfers

As at December 31, 2020

Net book value as at December 31, 2020

Cost
As at December 31, 2018
Additions
Disposals, write-offs and transfers

As at December 31, 2019

Accumulated depreciation
As at December 31, 2018
Depreciation expense
Disposals, write-offs and transfers

As at December 31, 2019

Net book value as at December 31, 2019

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Office
equipment

Computer
equipment

Leasehold
improvements

8,355
−
(1,011)

7,344

7,006
153
(456)

6,703

641

Office
equipment

20,604
25
(12,274)

8,355

12,429
247
(5,670)

7,006

1,349

41,455
79
(1,522)

40,012

39,262
1,297
(1,463)

39,096

916

Computer
equipment

43,052
91
(1,688)

41,455

38,561
2,222
(1,521)

39,262

2,193

15,254
166
(4,726)

10,694

6,487
580
(1,425)

5,642

5,052

Leasehold
improvements

51,336
−
(36,082)

15,254

34,484
806
(28,803)

6,487

8,767

2020

Total

65,064
245
(7,259)

58,050

52,755
2,030
(3,344)

51,441

6,609

2019

Total

114,992
116
(50,044)

65,064

85,474
3,275
(35,994)

52,755

12,309

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Intangible assets

Cost
As at December 31, 2019
Additions
Disposals, write-offs and transfers

As at December 31, 2020

Accumulated amortization
As at December 31, 2019
Amortization expense
Disposals, write-offs and transfers

As at December 31, 2020

Net book value as at December 31, 2020

Cost
As at December 31, 2018
Additions
Disposals, write-offs and transfers2

As at December 31, 2019

Accumulated amortization
As at December 31, 2018
Amortization expense
Disposals, write-offs and transfers2

As at December 31, 2019

Net book value as at December 31, 2019

1 Software under development amounted to $3.6 million (2019 - $1.9 million).
2 Disposals and write-offs mainly relate to decommissioned software.

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Trademarks
and domain
names

Non-
competition
agreements

2020

Software1

Total intangible
assets

90,611
−
−

90,611

27,807
7,851
−

35,658

54,953

Trademarks
and domain
names

90,689

(78)

90,611

20,062
7,823
(78)

27,807

62,804

258,983
−
−

258,983

−

258,983

−

Non-
competition
agreements

259,669

(686)

258,983

259,669

(686)

258,983

–

258,825
5,328
(188)

263,965

231,880
16,528
(190)

248,218

15,747

Software1

381,967
9,647
(132,789)

258,825

335,498
26,469
(130,087)

231,880

26,945

608,419
5,328
(188)

613,559

518,670
24,379
(190)

542,859

70,700

2019

Total intangible
assets

732,325
9,647
(133,553)

608,419

615,229
34,292
(130,851)

518,670

89,749

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Impairment of intangible assets

As a majority of the intangible assets do not generate cash inflows that are largely independent of those from other assets or group of assets, the Company performs its
impairment analysis of its intangible assets at the CGU level. Following the organizational changes made throughout fiscal 2018 and during the first quarter of 2019, the
Company has one remaining group of CGUs to which assets belong: YP (refer to Note 17). In 2020 and 2019, the Company performed an assessment of indicators of
impairment on the finite life intangible assets and no further impairment analysis was required.

Yellow Pages Limited has accumulated impairment losses on intangible assets and property and equipment in the amounts of $1,379.6 million and $21.9 million,
respectively.

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

9. Trade and other payables

As at

Trade
Accrued interest on exchangeable debentures
Payroll related
Long-term incentive plans
Other accrued liabilities
Common shares subject to repurchase (Note 15)

10. Provisions

December 31, 2020

December 31, 2019

18,726
723
3,235
6,981
4,412
979

35,056

18,557
723
4,123
5,106
5,153
−

33,662

Yellow Pages Limited recorded restructuring and other charges of $12.5 million for the year ended December 31, 2019 consisting of restructuring charges of $12.1 million
relating to workforce reductions, a $1.9 million charge related to future operation costs provisioned related to lease contracts for office closures, a $0.3 million charge related
to software disposals offset by a net recovery of $1.8 million from more favorable lease recoveries than anticipated.

The provisions for restructuring and other charges represent the present value of the best estimate of the future outflow of economic benefits that will be required to settle
the provisions and may vary as a result of new events affecting the severances and charges that will need to be paid.

Other provisions include provisions primarily for vacation and short-term incentive plans.

As at December 31, 2019
Charges
Payments

As at December 31, 2020
Less current portion

Non-current portion

Provisions for
restructuring1

Provisions for
other charges1

Other
provisions

Total
provisions

7,429
2,883
(8,005)

2,307
2,018

289

1,642
3,712
(2,033)

3,321
2,624

697

19,149
17,320
(19,035)

17,434
17,434

−

28,220
23,915
(29,073)

23,062
22,076

986

Included in the restructuring and other charges of $8.1 million on the statement of income is a net recovery of $1.5 million not affecting the provision.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

As at December 31, 2018
Charges
Payments

As at December 31, 2019
Less current portion

Non-current portion

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Provisions for
restructuring1

Provisions for
other charges1

Other
provisions

Total
provisions

$ 9,131
10,839
(12,541)

$ 7,429
6,187

$ 1,242

4,586
2,509
(5,453)

1,642
1,513

129

25,766
13,202
(19,819)

19,149
18,944

205

39,483
26,550
(37,813)

28,220
26,644

1,576

Included in the restructuring and other charges of $12.5 million on the statement of income is a net recovery of $0.8 million not affecting the provision.

11. Post-employment benefits

Yellow Pages Limited maintains pension plans with defined benefit and defined contribution components which cover substantially all of the employees of Yellow Pages
Limited. Yellow Pages Limited maintains unfunded supplementary defined benefit pension plans for certain executives and also maintains other retirement and

post-employment benefits (‘‘other benefits’’) plans which cover substantially all of its employees.

The defined benefit plans typically expose the Company to actuarial risks such as investment, interest rate, longevity and salary risks.

Investment risk

Interest risk

Longevity risk

Inflation risk

The present value of the defined benefit plan obligation is calculated using a discount rate determined by reference to high quality corporate bond yields; if the actual
return on plan assets is below the assumed rate, it will create a plan deficit. Currently, the defined benefit plan has a relatively balanced investment in equity
securities and debt instruments. Due to the long-term nature of the defined benefit plan obligation, the pension committee considers it appropriate that a reasonable
portion of the plan assets should be invested in equity instruments to leverage the return generated by the fund.

A decrease in the bond interest rate will increase the defined benefit plan obligation, particularly on a solvency basis. Although this will be partially offset by an
increase in the return of the defined benefit plan’s investments, the impact may be material as pension liabilities are sensitive to variations in interest rates.

The present value of the defined benefit plan obligation is calculated based on assumptions regarding mortality rates of plan participants both during and after their
employment. An increase in the life expectancy of the plan participants will increase the defined benefit obligation.

The present value of the defined benefit plan obligation is calculated by reference to the inflation rate. As such, a higher inflation rate than projected will increase the
defined benefit plan’s liability.

The present value of the defined benefit obligation and the related current service cost and past service costs were measured using the projected benefit method prorated
on service. This was based on the actuarial valuation and the present value of the defined benefit plan obligation which was carried out by Morneau Shepell, Fellows of the
Canadian Institute of Actuaries and Society of Actuaries, as at December 31, 2019, and extrapolated to December 31, 2020. For funding purposes, an actuarial valuation
of the defined benefit component of the Yellow Pages pension plans was also performed as at December 31, 2019. The actuarial valuation for the other benefits was
performed by HUB International as at November 1, 2018 and the results were extrapolated to December 31, 2020.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The changes in the defined benefit obligations and in the fair value of assets and the reconciliation of the funded status of the defined benefit plans to the amount recorded
on the consolidated statements of financial position as at December 31, 2020 and 2019 were as follows:

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

As at

Fair value of plan assets, beginning of year
Employer contributions
Employee contributions
Interest income
Return on plan assets excluding interest income
Benefit payments
Administration costs

Fair value of plan assets, end of year

Accrued benefit obligation, beginning of year
Current service cost
Employee contributions
Benefit payments
Interest cost
Recovery of past service costs
Actuarial (gains) losses due to:
Experience adjustments
Changes in financial assumptions

Defined benefit obligation, end of year

Net defined benefit obligation

December 31, 2020

Pension benefits1

Other benefits

Pension benefits1

December 31, 2019
Other benefits2

484,029
4,448
430
14,450
47,368
(44,153)
(654)

505,918

572,740
2,905
430
(44,153)
17,231
−

4,564
42,510

596,227

(90,309)

−
2,412
−
−
−
(2,412)
−

−

33,856
8
−
(2,412)
1,023
−

−
2,225

34,700

(34,700)

443,861
5,025
673
16,093
66,115
(47,320)
(418)

484,029

543,106
2,974
673
(47,320)
19,939
−

(1,026)
54,394

572,740

(88,711)

−
2,374
−
−
−
(2,374)
−

−

33,107
6
−
(2,374)
1,164
(980)

−
2,933

33,856

(33,856)

Including unfunded supplementary defined benefit pension plans.

2 As at May 16, 2019, there was a remeasurement resulting from the elimination of the Medical Services Plan (‘‘MSP’’) premiums for British Columbia residents. The past service cost for the elimination of the MSP

premiums was calculated based on the April 30, 2019 discount rates.

While all the plans are not considered fully funded for financial reporting purposes, registered plans are funded in accordance with the applicable statutory funding rules and
regulations governing the particular plans.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The significant assumptions adopted in measuring Yellow Pages Limited’s pension and other benefit obligations as at December 31, 2020 and 2019 were as follows:

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

As at

Post-employment benefit obligation

Discount rate, end of year
Rate of compensation increase1
Inflation Rate

Net benefit plan costs

Discount rate (current service cost), end of preceding year
Discount rate (interest expense), end of preceding year
Rate of compensation increase1
Inflation Rate
Weighted average duration (years)

December 31, 2020

December 31, 2019

Pension benefits

Other benefits

Pension benefits

Other benefits

2.60%
1.85%
1.50%

3.20%
3.10%
1.90%
1.40%
14

2.60%
n.a
2.00%

3.20%
3.10%
n.a
2.00%
14

3.10%
1.90%
1.40%

3.90%
3.80%
1.90%
1.40%
15

3.10%
n.a
2.00%

3.80%
3.80%
n.a
2.00%
13

1 As at December 31, 2020: 1.50% plus a productivity, merit and promotional scale, and as at December 31, 2019: 1.40% plus a productivity, merit and promotional scale.

For measurement purposes, actual per capita cost of covered medical care benefits was used for 2020, and the rate of increase was assumed at 5.28% for the next 4 years
followed by a linear decrease to 3.42% by 2040 and to remain at that level thereafter. For dental care benefits, actual per capita cost was used for 2020, and the rate of
increase was assumed at 4.00% for the next 4 years followed by a linear decrease to 3.57% by 2040 and to remain at that level thereafter.

The following table shows how the defined benefit obligation as at December 31, 2020 would have been affected by changes that were reasonably possible at that date in
each significant actuarial assumption:

Decrease of 0.25% in discount rate, end of year
Increase of 0.25% in the inflation rate
Increase of 1% in health care cost trend rates

Pension benefits

Other benefits

$
$
$

21,501
6,978
n.a

$
$
$

1,199
−
2,299

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The net benefit plan costs included in the statements of income and other comprehensive income are comprised of the following components:

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

For the years ended December 31,

Current service cost1
Administration costs1
Recovery of past service costs2

Service cost

Interest cost
Interest income

Net interest on the net defined benefit obligation (Note 19)

Net benefit costs recognized in the statement of income

Actuarial (gains) losses recognized in OCI

Total net benefit plan costs (recovery) for the Yellow Pages (‘‘YP’’) defined benefit plans
Net benefit plan costs for the YP defined contribution plans1

Total net benefit plan costs (recovery)

Included in operating costs.

Included in restructuring and other charges.

Pension benefits

Other benefits

Pension benefits

Other benefits

2020

2019

2,905
654
−

3,559

17,231
(14,450)

2,781

6,340

(294)

6,046
2,275

8,321

8
−
−

1,023
−

1,023

1,031

2,225

3,256
−

3,256

2,974
418
−

3,392

19,939
(16,093)

3,846

7,238

(12,747)

(5,509)
2,792

(2,717)

6
−
(980)

(974)

1,164
−

1,164

190

2,933

3,123
−

3,123

No significant workforce reductions occurred during the years ended December 31, 2020 and 2019.

For the postretirement plan, the May 16, 2019 announcement regarding the elimination of the British Columbia Medical Services Plan (‘‘MSP’’) premiums gave rise to a
recovery of past service cost of $1.0 million in 2019.

Plan assets include primarily Canadian and foreign equities, government and corporate bonds, debentures and secured mortgages. Plan assets are held in trust and the
asset allocation was as follows as at December 31, 2020 and 2019:

(in percentages - %)

Fair value of the plan assets:

Pooled fund units

Canadian pooled equity funds
Global pooled equity funds
Emerging markets pooled equity funds
Canadian pooled fixed-income funds
Pooled real estate funds
Pooled private equity funds
Pooled infrastructure funds

Cash and cash equivalents

December 31, 2020

December 31, 2019

6.5
28.0
12.0
42.5
9.0
1.0
0.5
0.5

7.5
30.0
12.5
44.5
4.0
0.5
0.5
0.5

As at December 31, 2020 and 2019, the publicly traded equity securities did not directly include any shares of Yellow Pages Limited.

The total cash payments for pension and other benefit plans made by Yellow Pages Limited amounted to $9.2 million for 2020 (2019 – $10.2 million). Total cash payments
for pension and other benefit plans expected in 2021 amount to approximately $9.5 million.

Yellow Pages Limited’s funding policy is to make contributions to its pension plans based on various actuarial cost methods as permitted by pension regulatory bodies.
Yellow Pages Limited is responsible to adequately fund the plans. Contributions reflect actuarial assumptions concerning future investment returns, salary projections and
future service benefits.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

In addition, Yellow Pages Limited recorded an expense for provincial, federal and state pension plans of $2.3 million for the year ended December 31, 2020
(2019 – $3.0 million).

As at December 31, 2020, Yellow Pages Limited had recognized an accumulated balance of $52.0 million, net of income taxes of $16.7 million, in actuarial losses in OCI.

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

12. Senior secured notes

The table below represents the continuity of the Senior secured notes:

As at

Senior secured notes, opening balance
Repayment of senior secured notes
Discount accretion for the year1

Senior secured notes, closing balance

The variance of unaccreted discount for the year ended December 31, 2019.

Senior Secured Notes

December 31, 2020

December 31, 2019

−
−
−

−

167,489
(170,231)
2,742

−

On October 19, 2017, Yellow Pages Limited, through its wholly-owned subsidiary, Yellow Pages Digital & Media Solutions Limited, issued $315.0 million aggregate principal
amount of 10.00% Senior Secured Notes (the ‘‘Notes’’) due November 1, 2022 at an issue price of $980 per $1,000 principal amount of the Notes, a $6.3 million discount.
The Company had the option to redeem all of part of the Notes prior to due date at premiums decreasing from 102% to 100% beginning November 1, 2018. The Notes
accrued interest at a rate of 10.00% per annum and were payable in semi-annual instalments in arrears on May 1 and November 1 of each year. In 2019, the Company
made, in aggregate, mandatory principal redemption payments of $100.7 million and optional redemption payments of $69.6 million, and fully repaid the outstanding
balance of the Notes.

Asset-Based Loan

The loan agreement governing the ABL contains restrictive covenants, including restrictions on the incurrence of additional indebtedness, the payment of dividends and
other payment restrictions (to the extent permitted by the Exchangeable Debentures indenture), the creation of liens, sale and leaseback transactions, mergers,
consolidations and sales of assets, and certain transactions with affiliates and its business activities.

As at December 31, 2020, the Company was in compliance with all covenants under the loan agreement governing the ABL.

13. Exchangeable debentures

As at

Principal amount of exchangeable debentures (at maturity, November 30, 2022)
Less unaccreted interest

Exchangeable debentures

December 31, 2020

December 31, 2019

107,033
5,918

101,115

107,089
8,552

98,537

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The table below represents the continuity of the Exchangeable debentures:

As at

Exchangeable debentures, opening balance
Repurchase of exchangeable debentures
Interest accretion for the year

Exchangeable debentures, closing balance

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

December 31, 2020

December 31, 2019

98,537
(52)
2,630

101,115

96,179
−
2,358

98,537

Interest on the Exchangeable Debentures accrues at a rate of 8% per annum if, for the applicable interest period, it is paid in cash or 12% per annum, for the applicable
interest period, if the Company makes a Payment in Kind election to pay interest in respect of all or any part of the then outstanding Exchangeable Debentures in additional
Exchangeable Debentures. Interest on the Exchangeable Debentures is payable semi-annually in arrears in equal instalments on the last day of May and November of each
year.

The indenture permits the Company to make restricted payments, including payment of dividends and common stock buybacks and certain payments associated with
management’s equity-based compensation, in an aggregate amount not to exceed $20.0 million since the date of the indenture. As at December 31, 2020, the Company
has made a cumulative total of $14.5 million of restricted payments, comprised of $8.8 million of dividend payments, $3.3 million related to common stock buyback, and
$2.4 million related to certain management equity-based compensation payments, since the indenture went into effect. As at December 31, 2020, the Company was in
compliance with all covenants under the indenture governing the Exchangeable Debentures.

Exchange Option

Optional Redemption

The Company may redeem all or part of the Exchangeable Debentures at its option, upon not less than 30 nor more than 60 days prior notice, at a redemption price equal
to:

•

In the case of a redemption occurring prior to May 31, 2021, 110% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date;
or

In the case of a redemption occurring on or after May 31, 2021, 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption
date.

The Redemption Option is recorded at fair value on the consolidated statements of financial position as Financial and other assets with changes in fair value recognized
in financial charges. The fair value as at December 31, 2020 was $2.6 million and was insignificant at December 31, 2019.

The Company entered a Normal Course Issuer Bid (‘‘NCIB’’) to purchase up to $6.6 million principal amount of its Exchangeable Debentures starting on April 20, 2020 and
ending on April 19, 2021. The price which Yellow Pages Digital & Media Solutions Limited will pay for any such Exchangeable Debentures will be the prevailing market price
at the time of acquisition. All Exchangeable Debentures will be purchased for cancellation. As at December 31, 2020, YP purchased Exchangeable Debentures under this
NCIB program, with a carrying value of $52 thousand for cash and a face value of $56 thousand.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

14. Income taxes

A reconciliation of income taxes at Canadian statutory rates with reported income taxes is as follows:

Earnings before income taxes
Combined Canadian federal and provincial tax rates1
Income tax expense at statutory rates
Increase (decrease) resulting from:

Recognition of previously unrecognized tax attributes and temporary differences
Non-deductible expenses for tax purposes
Other

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

For the years ended December 31,

2020

78,712
26.50%
20,857

(2,773)
241
89

2019

69,770
26.84%
18,726

(44,241)
616
−

Provision for (recovery of) income taxes

18,414

(24,899)

The combined applicable statutory tax rate decreased mainly by provincial allocation of revenues earned and the decreased in the Quebec, Alberta and Nova Scotia statutory tax rate.

Provision for (recovery of) income taxes includes the following amounts:

For the years ended December 31,

Current
Deferred

Total

2020

90
18,324

18,414

2019

−
(24,899)

(24,899)

Deferred income tax (assets) liabilities are attributable to the following items:

Deferred
financing
costs

Non-capital
losses carry
forward

Deferred
revenues

Post-employment
benefits

Accrued
liabilities

Exchangeable
Debentures

Intangible
assets

Deferred income
tax (assets)
liabilities, net

Balance, December 31, 2019
Expense (benefit) to statement of

income

Expense (benefit) to OCI

(993)

(11,780)

(710)

1,147
−

9,580
−

316
−

Balance, December 31, 2020

154

(2,200)

(394)

−

(8,613)

2,373

(20,004)

(39,727)

−
(512)

(512)

(1,877)
−

(689)
−

9,847
−

18,324
(512)

(10,490)

1,684

(10,157)

(21,915)

Deferred
financing
costs

Non-capital
losses carry
forward

Deferred
revenues

Post-employment
benefits

Accrued
liabilities

Exchangeable
Debentures

Intangible
assets

Deferred income
tax (assets)
liabilities, net

2,398

(16,269)

−

(6,574)

−

3,043

−

(17,402)

Balance, December 31, 2018
Expense (benefit) to statement of

income

Expense to OCI
Other

(3,391)
−
−

4,489
−
−

Balance, December 31, 2019

(993)

(11,780)

(710)
−
−

(710)

3,940
2,634
−

(8,613)
−
−

(670)
−
−

(19,944)
−
(60)

(24,899)
2,634
(60)

−

(8,613)

2,373

(20,004)

(39,727)

YELLOW PAGES LIMITED ANNUAL REPORT 2020

As at December 31, 2020, the Company and its subsidiaries have not recognized deferred income tax assets with respect to US operating losses of $274.6 million, which
expire gradually between 2028 and 2037 and indefinitely when incurred after 2017, Canadian capital losses of $10.1 million which can be utilized indefinitely and US capital
losses of $5.1 million which expire in 2024.

As at December 31, 2020, the Company and its subsidiaries have not recognized deductible temporary differences of $596.3 million (2019 – $675.7 million).

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

15. Shareholders’ capital

Common shares − Issued

For the year ended December 31, 2020

Balance, December 31, 2019
Common shares repurchased
Shared issued under stock option plan

Balance, December 31, 2020

For the year ended December 31, 2019

Balance, December 31, 2018
Exchange of common share purchase warrants

Balance, December 31, 2019

Number of Shares

28,075,308
(273,190)
26,788

Amount

4,031,685
(39,231)
300

27,828,906

3,992,754

Number of Shares

28,075,308
−

28,075,308

Amount

4,031,685
−

4,031,685

Yellow Pages is authorized to issue an unlimited number of common shares.

The holders of the common shares of Yellow Pages are entitled to one vote per common share at all meetings of shareholders of the Company. The holders of the common
shares of Yellow Pages are entitled to receive any dividend declared by the Board of Directors of the Company on the common shares. In the event of the liquidation,
dissolution or winding-up of Yellow Pages, whether voluntary or involuntary, the holders of the common shares of Yellow Pages are entitled to receive, after payment of all
liabilities of Yellow Pages and subject to the preferential rights of any class of shares of Yellow Pages ranking in priority to the common shares of Yellow Pages, the remaining
assets and property of Yellow Pages.

The total number of common shares of Yellow Pages Limited held by the trustee for the purpose of funding the RSU Plan amounted to 1,399,786 as at December 31, 2020.
(see Note 18).

Under the Stock Option Plan, the maximum number of common shares authorized for issuance upon the exercise of options is 2,806,932 (see Note 18). During the year
ended December 31, 2020, 26,788 common shares were issued upon the exercise of options.

Share repurchases

The Company entered into a normal course issuer bid (‘‘NCIB’’), commencing August 10, 2020, to purchase up to $5.0 million of Common Shares in the open market for
cancellation, on or before August 9, 2021. As at December 31, 2020, the Company repurchased under this NCIB program 273,190 common shares for cash of $3.3 million.
The related historical carrying value of these shares was reclassified from shareholder’s capital to deficit.

As at December 31, 2020, a $1.0 million financial liability, with a corresponding amount in equity, was recorded in Trade and other payables on the consolidated statements
of financial position in relation with the NCIB. This liability represented the value of common shares expected to be repurchased by a designated broker under an automatic
share purchase plan from January 1, 2021 to February 12, 2021. This automatic share purchase plan allows for the purchase of the Company’s common shares under
pre-set conditions at times when the Company would ordinarily not be permitted due to regulatory restrictions or self-imposed blackout periods. These common shares are
included in the outstanding common shares as at December 31, 2020.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Dividends

During the year ended December 31, 2020, the Company declared three quarterly dividends of $0.11 per common share. The dividends were paid on June 15,
September 15 and December 15 of 2020 for a total consideration of $8.8 million to common shareholders.

Warrants

On December 20, 2012, the Company issued 2,995,506 common share purchase warrants (‘‘Warrants’’).

As at December 31, 2020 and 2019, the Company had a total of 2,995,484 Warrants outstanding for an amount of $1.5 million.

Each Warrant is transferable and entitles the holder to purchase one common share of Yellow Pages Limited at an exercise price of $28.16 per Warrant payable in cash
at any time on or prior to December 20, 2022. The fair value of the Warrants on December 20, 2012 was $1.5 million. The fair value of the Warrants was calculated using
a binomial option pricing model with the following assumptions:

Risk free interest rate
Expected life
Expiry date
Expected volatility

Earnings per share

2.27%
10 years
December 20, 2022
33.5%

The following table presents the weighted average number of shares outstanding used in computing earnings per share and the weighted average number of shares
outstanding used in computing diluted earnings per share as well as net earnings used in the computation of basic earnings per share to net earnings adjusted for any
dilutive effect:

For the years ended December 31,

Weighted average number of shares outstanding used in computing basic earnings per share1
Dilutive effect of restricted share units and performance share units
Dilutive effect of stock options
Dilutive effect of exchangeable debentures

Weighted average number of shares outstanding used in computing diluted earnings per share1

For the years ended December 31,

Net earnings used in the computation of basic earnings per share
Impact of assumed conversion of exchangeable debentures, net of applicable taxes

Total net earnings used in the computation of diluted earnings per share

2020

26,602,728
121,348
212,544
5,621,481

32,558,101

2020

60,298
8,229

68,527

2019

26,523,234
378,942
−
5,624,422

32,526,598

2019

94,669
7,993

102,662

The weighted average number of shares outstanding used in the earnings per share calculation is reduced by the shares held by the trustee for the purpose of funding the restricted share unit and performance share
unit plan (the ‘‘RSU and PSU Plan’’).

For the years ended December 31, 2020 and 2019, the diluted earnings per share calculation did not take into consideration the potential dilutive effect of the Warrants as
well as stock options that are not in the money and therefore are not dilutive.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

16. Operating costs

For the years ended December 31,

Salaries, commissions and benefits
Supply chain and logistics1
Other goods and services2
Information systems
Remeasurement of ECL, net of recovery (Note 21)

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

2020

91,241
67,702
14,326
21,936
8,891

2019

112,965
73,738
18,085
26,027
11,053

204,096

241,868

1 Supply chain and logistics costs relate to external supplier costs for manufacturing and distribution of our print and online products.
2 Other goods and services include promotion and advertising costs, real estate, office services, consulting services including contractors and professional fees.

During the year ended December 31, 2020, the Company applied for the Canada Emergency Wage Subsidy offered by the Government of Canada. The Company was
eligible for the subsidy as it met the criteria for certain periods. Yellow Pages Limited received non-refundable contributions of $7.3 million during the year ended
December 31, 2020, for admissible salaries related to its workforce. The contributions are recorded as a reduction to operating costs in the consolidated statements of
income.

On November 6, 2020, the House of Commons adopted Bill C-9 (the ‘‘Bill’’) which proposes the extension of the CEWS program until June 2021 including several other
revisions to the CEWS rules. The Bill received Royal Assent on November 19, 2020 and is now law. Details of the program until March 2021 are provided. However, for the
periods after March 2021 details have not yet been provided. The Company is evaluating the effect of these changes on its eligibility to qualify for any further subsidies.

17. Segmented information

The Company’s operations are categorized into two reportable segments: YP and Other.

The YP segment provides small and medium-sized businesses across Canada digital and traditional marketing solutions, including online and mobile priority placement on
Yellow Pages owned and operated media, content syndication, search engine solutions, website fulfillment, social media campaign management and digital display
advertising, video production and print advertising. This segment also includes the 411.ca digital directory service helping users find and connect with people and local
businesses which was integrated with the Company’s wholly-owned subsidiary, Yellow Pages Digital & Media Solutions Limited, as at September 30, 2019.

The Other segment includes YP Dine digital property allowing users to discover, search for and book local restaurants in addition to offering online ordering capabilities until
its sale on April 30, 2019. This segment also includes Mediative until its liquidation on January 31, 2019. Mediative’s offers included dedicated marketing and performance
media services to national clients Canada-wide. Subsequent to the second quarter of 2019, there are no longer any operations being reported in this segment.

Segment results include items directly attributable to the segment as well as those that can be allocated on a reasonable basis. The Company accounts for transactions
between reportable segments in the same manner it accounts for transactions with external customers and eliminates them on consolidation. There were no transactions
between the reportable segments for the years ended December 31, 2020 and 2019. The President and Chief Executive Officer (‘‘CEO’’) is the Chief Operating Decision
Maker and he uses Income from operations before depreciation and amortization, and restructuring and other charges less capital expenditures, to measure performance.
The Chief Operating Decision Maker also reviews revenues by similar products and services, such as Print and Digital.

Print revenues are recognized at a point in time, whereas 100% of digital revenues were recognized over the term of the contract for the year ended December 31, 2020
and 99% of digital revenues were recognized over the term of the contract and 1% at a point in time for the year ended December 31, 2019, respectively.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The following tables present financial information for the years ended December 31, 2020 and 2019.

For the year ended December 31, 2020

Revenues
Digital
Print

Total revenues
Operating costs

Income from operations before depreciation and amortization, and restructuring and other charges
Depreciation and amortization
Restructuring and other charges
Financial charges, net
Loss on sale of businesses
Provision for income taxes

Net earnings

252,252
81,286

333,538
204,096

129,442

Additions to intangible assets and property and equipment

5,573

For the year ended December 31, 2019

Revenues
Digital
Print

Total revenues
Operating costs

Net earnings

298,762
103,177

401,939
240,925

161,014

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Other

Yellow Pages
Limited

−
−

−

Other

1,274
−

1,274
943

331

252,252
81,286

333,538
204,096

129,442
27,664
8,131
14,512
423
18,414

60,298

5,573

Yellow Pages
Limited

300,036
103,177

403,213
241,868

161,345
39,109
12,499
39,600
367
(24,899)

94,669

9,738

Additions to intangible assets and property and equipment

9,460

278

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

18. Stock-based compensation plans

Yellow Pages Limited’s stock-based compensation plans consist of restricted share units, performance share units, deferred share units, stock options and share
appreciation rights.

Restricted Share Unit and Performance Share Unit Plan

On May 6, 2013, Yellow Pages Limited adopted a restricted share unit and performance share unit plan (the ‘‘RSU and PSU Plan’’) to reward key employees and officers
of Yellow Pages Limited (the ‘‘Participants’’). Following the implementation of the RSU and PSU Plan, Yellow Pages Limited granted to Participants a number of restricted
share units (‘‘RSUs’’) and/or performance share units (‘‘PSUs’’), as applicable, based on the volume weighted average trading price of the common shares for the five days
immediately preceding the grant date. The RSUs are time-based awards and will vest upon the continuous employment of the Participants for a period of 36 months starting
from the date of the grant or such other period not exceeding 36 months determined by the Board of Directors. The PSUs are performance-based awards and will vest upon
confirmation by the Board of Directors of the achievement of specified performance targets and upon the continuous employment of the Participants for a period of 36
months starting from the date of the grant or such other period not exceeding 36 months determined by the Board of Directors. The PSUs for which the performance targets
have not been achieved shall automatically be forfeited and cancelled. The number of PSUs that vest could potentially reach up to one-and-a-half times the actual number
of PSUs awarded if the actual performance reaches the maximum level of performance targets. At December 31, 2020, there are no PSUs outstanding.

Pursuant to the terms of the RSU and PSU Plan, if the RSU and PSU Plan is funded, Participants will receive, upon vesting of the RSUs and PSUs, common shares of the
Company acquired on the open market. The funded portion of this plan is treated as equity-settled instruments and recorded accordingly in equity and operating costs over
the vesting period. In the event the RSU and PSU Plan is unfunded, Yellow Pages Limited will pay to the Participant an amount in cash, equivalent to the number of RSUs
or PSUs that have vested, making them cash-settled units In addition, certain of the Company’s restricted share units will be settled in cash upon certain conditions being
met. These restricted share units are recorded as a liability, which is re-measured at fair value at each reporting period with any changes recorded in operating costs.

During the years ended December 31, 2020 and 2019, nil common shares of Yellow Pages Limited were purchased on the open market of the TSX by the trustee appointed
under the RSU and PSU Plan for the purpose of funding of the RSU and PSU Plan. The total number of common shares of Yellow Pages Limited held by the trustee for the
purpose of funding the restricted share unit (the ‘‘RSU Plan’’) amounted to 1,399,786 as at December 31, 2020.

The following table summarizes the continuity of the RSUs presented as a liability during the years ended December 31:

Outstanding, beginning of year
Granted
Dividends credited2
Settled
Variation due to change in fair value and vesting

Outstanding, end of year3

Number of RSUs

156,839
321,671
9,244
(160,137)
−

327,617

2020
Liability1

972
859
42
(1,850)
808

831

Number of RSUs

156,839
−
−
−
−

156,839

2019
Liability1

556
416
−
−
−

972

The liability related to the RSUs is recorded in trade and other payables, and the expense related to the vested RSUs and the variation due to change in fair value are included in operating costs.

2 Dividends in the form of additional RSUs are credited to the participant’s account on each dividend payment date and are equivalent in value to the dividend paid on common shares.
3

The number of restricted shares vested as of December 31, 2020 is 66,259 (2019 – 121,986)

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The following table summarizes the continuity of all the RSUs and PSUs, including those shown in the table above, during the years ended December 31:

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Number of

Outstanding, beginning of year
Granted
Reduction in payout related to under-achievement of targets2
Settled
Dividends credited3
Forfeited

Outstanding, end of year

Weighted average remaining life (years)

RSUs1

318,536
359,395
−
(226,775)
13,072
(15,263)

448,965

1.66

2020

PSUs

60,406
−
(15,105)
(45,301)
−
−

−

RSUs1

399,503
87,684
−
(94,153)
−
(74,498)

318,536

0.88

2019

PSUs

189,063
−
(49,774)
−
−
(78,883)

60,406

0.08

Included in the RSUs outstanding balance as at December 31, 2020 are 327,617 RSUs granted in July 2020 as well as dividends credited related to this grant, representing a liability of $0.8 million (2019 – nil) recorded
in trade and other payables and the expense related to the units vested and the variation due to changes in stock price is included in operating costs.

The reduction in payout is related to the under-achievement of certain performance targets resulting in a reduction of 25% for the year ended December 31, 2020 (2019 – reduction of 100%).

3 Dividends in the form of additional RSUs are credited to the participant’s account on each dividend payment date and are equivalent in value to the dividend paid on common shares.

During the year ended December 31, 2020, an expense of $2.0 million (2019 – a recovery of $0.5 million) was recorded in the consolidated statement of income in operating
costs in relation to the RSU and PSU Plan.

Deferred Share Unit Plan

On June 12, 2013, Yellow Pages Limited adopted a deferred share unit plan (the ‘‘DSU Plan’’). The DSU Plan was amended in October 2013 to provide for the participation
by eligible employees as designated by the Board of Directors. The Company shall settle the vested deferred share units (‘‘DSUs’’) in cash or in common shares of Yellow
Pages Limited acquired on the open market at the discretion of the Company when a Director leaves the Board of Directors or an eligible employee ceases employment
with the Company.

The following table summarizes the continuity of the deferred share units (‘‘DSUs’’) during the years ended December 31:

Outstanding, beginning of year
Granted²
Forfeited
Settled
Dividends credited3
Variation due to change in stock price

Outstanding and vested, end of year

Number of DSUs

325,435
53,719
(4,196)
(45,556)
10,406
−

339,808

2020
Liability1

2,948
447
−
(416)
115
1,163

4,257

Number of DSUs

255,755
69,680
−
−
−
−

325,435

2019
Liability1

1,557
433
−
−
−
958

2,948

The liability related to the DSU Plan is recorded in trade and other payables, and the expense related to the units vested and the variation due to changes in stock price is included in operating costs.

The liability related to the DSUs granted represents the portion that is vested as at December 31.

3 Dividends in the form of additional DSUs are credited to the participant’s account on each dividend payment date and are equivalent in value to the dividend paid on common shares.

During the year ended December 31, 2020, an expense of $1.7 million (2019 – an expense of $1.4 million) was recorded in the consolidated statement of income in
operating costs in relation to the Deferred Share Unit Plan.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Stock options

Stock options granted that are payable in cash upon certain conditions being met are presented as a liability.

The following table summarizes the continuity of the stock options presented as a liability during the years ended December 31:

Outstanding, beginning of year
Granted
Settled
Variation due to change in fair value and vesting

Outstanding, end of year2

Number of options

701,875
1,567,487
(701,875)
−

1,567,487

2020
Liability1

1,078
1,488
(2,434)
1,571

1,703

Number of options

701,875
−
−
−

701,875

2019
Liability1

365
−
−
713

1,078

The liability related to the stock options is recorded in trade and other payables, and the expense related to the vested options and the variation due to change in fair value are included in operating costs.

The number of stock options vested as of December 31, 2020 is 399,129 (2019 – 545,903)

The following table summarizes the continuity of all stock options under the Stock Option Plan, including those in the table above, during the year ended December 31:

Outstanding, beginning of year
Granted
Exercised
Settled
Forfeited

Outstanding, end of year

Exercisable, end of year

Number of options

Weighted average
exercise price per option

Number of options

Weighted average exercise
price per option

2020

2019

1,983,102
2,004,069
(26,788)
(701,875)
(540,729)

2,717,779

−

$
$
$
$
$

7.11
9.51
8.33
7.97
6.79

8.71

−

1,347,052
884,784
−
−
(248,734)

1,983,102

−

$
$
$
$
$

8.39
5.86
−
−
9.61

7.11

−

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The following table provides additional information about Yellow Pages Limited’s Stock Option Plan as at December 31:

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Exercise price

$5.86
$7.61
$7.97
$8.79
$10.47
$12.10
$17.83

Outstanding, end of year

Exercisable, end of year

Number of options
outstanding

Weighted average
remaining life

Number of options
outstanding

Weighted average
remaining life

2020

2019

458,536
251,979
−
1,567,487
19,869
419,908
−

2,717,779

−

2.2
1.1
−
2.0
1.6
1.9
−

1.9

−

762,777
495,256
701,875
−
19,869
−
3,325

1,983,102

−

3.2
2.1
0.7
−
2.6
−
3.2

2.0

−

Stock options were valued using a binomial option pricing model. Expected volatility is determined by the implied volatility from the current market price of the Company’s
outstanding warrants. The following table shows the key inputs into the valuation model for year ended December 31:

Weighted average grant date share price
Exercise price
Expected volatility
Option life
Risk-free interest rate
Weighted average remaining life

$
$

2020

9.51
9.51
60.3%
2.5 years
0.80%
2.0 years

$
$

2019

5.86
5.86
61.1%
4 years
2.18%
3.2 years

During the year ended December 31, 2020, an expense of $3.6 million (2019 – an expense of $1.9 million) was recorded in the consolidated statement of income in
operating costs in relation to the Stock Option Plan.

Share appreciation rights plan

On September 15, 2017, Yellow Pages Limited adopted a share appreciation rights plan (the ‘‘SAR Plan’’) to provide incentive compensation to key employees and officers
of Yellow Pages Limited (the ‘‘Participants’’) who are in a position to make a material contribution to the successful operation of the business and to more closely align the
interests of management with those of shareholders of Yellow Pages Limited. The SARs are time-based awards and will vest upon the continuous employment of the
Participants at a date determined by the Board of Directors. Pursuant to the terms of the SAR Plan, the Participants will receive, upon vesting of the SARs, a payment in
cash representing the excess of the fair value of Yellow Pages Limited’s shares on the vesting date less the fair value of Yellow Pages Limited’s shares on the grant date.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The following table summarizes the continuity of the share appreciation rights (‘‘SARs’’) during the year ended December 31:

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Outstanding, beginning of year
Granted
Settled
Variation due to change in fair value and vesting

Outstanding, end of year2

Number of SARs

701,875
174,165
(701,875)
−

174,165

2020
Liability1

1,078
594
(2,434)
952

190

Number of SARs

701,875
−
−
−

701,875

2019
Liability1

365
−
−
713

1,078

The liability related to the SAR Plan is recorded in trade and other payables, and the expense related to the units vested and the variation due to change in fair value are included in operating costs.

The number of SARs vested as of December 31, 2020 is 44,348 (2019 – 545,903)

SARs were valued using a binomial option pricing model. Expected volatility is determined by the implied volatility from the current market price of the Company’s
outstanding warrants. The following table shows the key inputs into the valuation model as at December 31:

Weighted average grant date share price
Exercise price
Expected volatility
Weighted average SAR life
Risk-free interest rate
Weighted average remaining life

$
$

2020

8.79
8.79
63.9%
2.5 years
0.60%
2.0 years

$
$

2019

9.12
7.97
41.0%
3 years
2.04%
0.7 years

During the year ended December 31, 2020, an expense of $1.5 million (2019 – an expense of $0.7 million) was recorded in the consolidated statement of income in
operating costs in relation to the SARs plan.

19. Financial charges, net

The significant components of the financial charges, net are as follows:

For the years ended December 31,

Interest on senior secured notes1 and exchangeable debentures
Amortization of financing costs
Optional redemption price premium on senior secured notes
Interest on lease obligations, net of interest income on investment in subleases
Net interest on the defined benefit obligations
Redemption Option
Other, net

Financial charges, net

The senior secured notes were repaid in full in November 2019.

2020

11,195
66
−
2,225
3,804
(2,627)
(151)

2019

24,661
6,013
1,091
3,217
5,010
−
(57)

14,512

39,600

YELLOW PAGES LIMITED ANNUAL REPORT 2020

20. Commitments and contingencies

a) As at December 31, 2020, Yellow Pages Limited has commitments under purchase and service contract obligations for both operating and capital expenditures for each
of the next five years and thereafter, and in the aggregate of:

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

2021
2022
2023
2024
2025
Thereafter

Total commitments

19,371
11,467
8,386
4,838
4,005
31,473

79,540

b) Yellow Pages Limited has three billing and collection services agreements. The agreement with Bell Canada (‘‘Bell’’) expires on December 31, 2023 and the agreement
with Northwestel Inc., an affiliate of Bell expires, November 29, 2032. The agreement with TELUS Communications Inc. (‘‘TELUS’’) expires in 2031.

Pursuant to publication agreements with Bell and TELUS, Yellow Pages Limited produces alphabetical listing telephone directories for each of these companies in order
for them to meet their regulatory obligations.

The Company also has other agreements with Bell and TELUS, providing for the use of listing information and trademarks for the publications of directories. If the Company
materially fails to perform its obligations under the publication agreements mentioned above and as a result these publication agreements are terminated in accordance with
their terms, these other listing information and trademark licenses with Bell and TELUS, as the case may be, may also be terminated. These other agreements with Bell and
TELUS will terminate between 2031 and 2037.

c) Yellow Pages Limited entered into directory printing agreements with its printing suppliers to print, bind and furnish alphabetical, classified and combined directories as
well as other publications. It also entered into distribution agreements.

d) Yellow Pages Limited is subject to various claims and proceedings which have been instituted against it during the normal course of business for which certain of the
claims are provided for and included in trade and other payables, and provisions based on management’s best estimate of the likelihood of the outcome. Management
believes that the disposition of the matters pending or asserted is not expected to have any material adverse effect on the financial position, financial performance or cash
flows of Yellow Pages Limited.

21. Financial risk management

Credit Risk

Credit risk stems primarily from the potential inability of a customer or counterparty to a financial instrument to meet its contractual obligations. Yellow Pages Limited is
exposed to credit risk with respect to cash, trade receivables from customers and investment in subleases. The carrying value of financial assets represents Yellow Pages
Limited’s maximum exposure. Credit risk associated with cash is minimized substantially by ensuring that these financial assets are placed with creditworthy counterparties.
An ongoing review is performed to evaluate changes in the status of counterparties.

Yellow Pages Limited’s extension of credit to customers involves judgment. Yellow Pages Limited has established internal controls designed to mitigate credit risk, including
a formal credit policy managed by its credit department. New customers, customers increasing their advertising spend by a certain threshold and customers not respecting
payment terms are subject to a specific vetting and approval process. Yellow Pages Limited considers that it has limited exposure to concentration of credit risk with respect
to trade receivables from customers due to its large and diverse customer base operating in numerous industries and its geographic diversity. There are no individual
customers that account for 10% or more of revenues and there are no trade receivables from any one individual customer that exceeds 10% of the total balance of trade
receivables at any point in time during the year.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Bell and TELUS provide Yellow Pages Limited with customer collection services with respect to advertisers who are also their customers. As such, they receive money from
customers on behalf of Yellow Pages Limited. Yellow Pages Limited retains the ultimate collection risk on these receivables.

The components of trade and other receivables are as follows:

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

December 31, 2020

December 31, 20192

As at

Current
Past due less than 180 days
Past due over 180 days

Trade receivables1

Other receivables3

Trade and other receivables

44,686
7,138
5,980

57,804

6,626

$64,430

62,743
9,689
6,153

78,585

8,665

87,250

2019

ECL allowance

2,697
3,456
11,427

17,580

Trade and other receivables are presented net of allowance for revenue adjustments (‘‘AFRA’’) and ECL of $34.3 million as at December 31, 2020 ($31.6 million as at December 31, 2019).

2 Certain comparative information has been restated to conform to current year presentation to more accurately allocate the AFRA to each aging bucket.
3 Other receivables as at December 31, 2020 and December 31, 2019 included a loan receivable of $4.4 million associated with a forward contract.

The following table provides information about the exposure to credit risk and the ECL allowance for trade receivables (including contract assets).

For the years ended December 31,

2020

Current
Past due less than 180 days
Past due over 180 days

Total

Expected credit
loss rate

Gross carrying
amount1

ECL allowance

Expected credit
loss rate

Gross carrying
amount1

2.8%
29.2%
70.2%

45,952
10,076
20,062

76,090

1,266
2,938
14,082

18,286

4.1%
26.3%
65.0%

65,440
13,145
17,580

96,165

The gross carrying value is net of the allowance for revenue adjustments of $16.0 million as at December 31, 2020 ($14.0 million as at December 31, 2019).

The following table shows the movement in ECL allowance that has been recognized for trade receivables (including contract assets).

As at

Balance, beginning of the year
Remeasurement of ECL allowance, net of recovery
Amounts written-off

Balance, end of year

December 31, 2020

December 31, 2019

17,580
8,891
(8,185)

18,286

20,538
11,053
(14,011)

17,580

Yellow Pages Limited estimates the loss allowance on the net investment in subleases at the end of the reporting period at an amount equal to lifetime ECL. None of the
net investment in subleases at the end of the reporting period is past due, and taking into account the historical default experience and the future prospects of the industries
in which the lessees operate, together with the value of collateral held over the net investment in subleases, the ECL on net investment in subleases is insignificant.

(i) Interest Rate Risk

Yellow Pages Limited is exposed to interest rate risks resulting from fluctuations in interest rates on its ABL with rates which are generally based on the Prime rate or
Canadian BA rate. Yellow Pages Limited does not use derivative instruments to reduce its exposure to interest rate risk. The Company manages its interest rate risk by
maximizing the interest income earned on excess funds while maintaining the necessary liquidity to conduct its day-to-day operations.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Yellow Pages Limited may also be exposed to fluctuations in long-term interest rates relative to the refinancing of its debt obligations upon their maturity. The interest rate
on new long-term debt issuances will be based on the prevailing rates at the time of the refinancing, and will also depend on the tenor of the new debt issued. There are
no upcoming maturities that will require refinancing. As interest rates on the Exchangeable Debentures are fixed, the Company is not exposed to interest rate fluctuation
risk.

(ii) Foreign Exchange Risk

Yellow Pages Limited is exposed to foreign exchange risk arising from various currency transactions, the financial risks which are not significant. Foreign exchange
transaction risk arises primarily from commercial transactions that are denominated in a currency that is not the functional currency of Yellow Pages Limited’s business unit
that is party to the transaction. Yellow Pages Limited is exposed to fluctuations in the U.S. dollar. The effect on net earnings from existing U.S. dollar exposures of a one
point increase or decrease in the Canadian/U.S. dollar exchange rate is not significant. The Company’s expenditures, net of revenues, denominated in U.S. dollars were
approximately $16.0 million for the year ended December 31, 2020 (2019 – $9.5 million). As at December 31, 2020, there were no foreign currency contracts outstanding.

Liquidity Risk

Liquidity risk is the exposure of Yellow Pages Limited to the risk of not being able to meet its financial obligations as they become due.

Yellow Pages Limited manages this risk by maintaining detailed cash forecasts and long-term operating and strategic plans. The management of liquidity requires a constant
monitoring of expected cash inflows and outflows which is achieved through a detailed forecast of the Company’s liquidity position to ensure adequate and efficient use of
cash resources.

The Company expects to meet its financial obligations through internally generated cash and cash on hand.

The following are the contractual maturities of the financial liabilities and assets and related capital amounts:

Non-derivative financial liabilities
Exchangeable debentures1
Trade and other payables
Provisions
Lease obligations

Total, net

1 Principal amount.

Fair value hierarchy

Payments due for the years following December 31, 2020

Total

107,033
35,056
23,062
52,874

218,025

1 year

−
35,056
22,076
3,011

60,143

2 – 3 years

4 – 5 years

107,033
−
783
13,908

121,724

−
−
203
35,955

36,158

The three levels of fair value hierarchy are as follows:

•

Level 1 – inputs are unadjusted quoted prices of identical instruments in active markets.

Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – inputs used in a valuation technique are not based on observable market data in determining fair values of the instruments.

Determination of fair value and the resulting hierarchy requires the use of observable market data whenever available. The classification of a financial instrument in the
hierarchy is based upon the lowest level of input that is significant to the measurement of fair value.

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

The fair value of the exchangeable debentures is evaluated based on quoted market prices as at the statement of financial position date. The Company has not adopted
any hedge accounting during the period.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The following schedule represents the carrying value and the fair value of financial instruments not measured at fair value in the consolidated statement of financial position
as at December 31, 2020. The fair value of cash, trade and other receivables, and trade and other payables are not included, as their carrying amount is a reasonable
approximation of fair value due to their short-term maturity:

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

Exchangeable debentures

22. Capital disclosures

Level

Carrying Value

Fair Value

101,115

108,772

Yellow Pages Limited’s objective in managing capital is to ensure sufficient liquidity to cover financial obligations and investment requirements. Reducing debt and
associated interest charges is one of the Company’s primary financial goals which will improve its financial flexibility and support the implementation of its strategic
objectives. Yellow Pages Limited monitors its capital structure and makes adjustments based on the objectives described above in response to changes in economic
conditions and the risk characteristics of the underlying assets and the Company’s working capital requirements. The primary measure used by Yellow Pages Limited to
monitor its financial leverage is its ratio of net debt to Latest Twelve Month Adjusted EBITDA2. Yellow Pages Limited also uses other financial metrics to monitor its financial
leverage including Fixed Charge Coverage Ratio and net debt to total capitalization.

Yellow Pages Limited’s capital is comprised of net debt, Exchangeable Debentures and equity attributable to shareholders of Yellow Pages Limited as follows:

As at

Cash

Exchangeable debentures1 (Note 13)
Lease obligations (Note 6)

Total debt
Equity (deficiency)

Total capitalization
Total debt net of cash, to total capitalization

For the years ended December 31,

Latest Twelve Month Adjusted EBITDA2
The total debt net of cash to latest Twelve-Month Adjusted EBITDA ratio2

December 31, 2020

December 31, 2019

153,492

101,115
52,874

153,989
29,301

183,290
0.3%

2020

129,442
0.0

44,408

98,537
57,885

156,422
(16,660)

139,762
80.1%

2019

161,345
0.7

1 Represents the principal amount less unaccreted interest on the Exchangeable debentures.
2

Latest twelve-month income from operations before depreciation and amortization and restructuring and other charges (‘‘Latest Twelve Month Adjusted EBITDA’’). Latest Twelve Month Adjusted EBITDA is a non-IFRS
measure and may not be comparable with similar measures used by other publicly traded companies.

23. Guarantees

In the normal course of operations, Yellow Pages Limited has entered into agreements which are customary in the industry that provide for indemnifications and guarantees
to counterparties in transactions involving business acquisitions, business dispositions and sale of assets. Yellow Pages Limited has entered into agreements which contain
indemnification of its directors and officers indemnifying them against expenses (including legal fees), judgments, fines and any amount actually and reasonably incurred
by them in connection with any action, suit or proceeding in which the directors and/or officers are sued as a result of their service, if they acted honestly and in good faith
with a view to the best interests of Yellow Pages Limited. Yellow Pages Limited benefits from directors’ and officers’ liability insurance which it has purchased. No amount
has been accrued in the consolidated statements of financial position as at December 31, 2020 and 2019 with respect to these indemnities.

YELLOW PAGES LIMITED ANNUAL REPORT 2020

The nature of these guarantees prevents Yellow Pages Limited from making a reasonable estimate of the maximum potential amount it could be required to pay to
counterparties.

Notes to the Consolidated Financial Statements – December 31, 2020
(all tabular amounts are in thousands of Canadian dollars, except share information)

24. List of subsidiaries

As at

Canada

Yellow Pages Digital & Media Solutions Limited
411 Local Search Corp.1
YP Dine Solutions Limited 2
Bookenda Limited 2

USA

YPG (USA) Holdings, Inc.
Yellow Pages Digital & Media Solutions, LLC

Principal activity

Proportion of ownership

December 31,

Digital and print media marketing solutions provider
Digital media marketing solutions provider
Local digital restaurant guides provider
Booking and reservation management system provider

Holding company
Operational support services provider

2020

100%
−
−
−

100%
100%

2019

100%
100%
100%
100%

100%
100%

1 Effective September 30, 2019, 411 Local Search Corp. was liquidated into Yellow Pages Digital & Media Solutions Limited. The corporation was dissolved on September 30, 2020.
2 On December 31, 2019, YP Dine Solutions Limited and 4400348 Canada Inc. (‘’Bookenda Limited’’) were liquidated into Yellow Pages Digital & Media Solutions Limited. The corporations were dissolved on

September 30, 2020.

25. Related party disclosures

Key management personnel compensation

Yellow Pages Limited’s key management personnel have authority and responsibility for planning, directing and controlling the Company’s activities and consist of
Yellow Pages Limited’s executive team and the Board of Directors.

Total compensation expense for key management personnel, and the composition thereof, is as follows:

For the years ended December 31

Salary, board fees and short-term incentive plans
Post-employment benefits
Share-based compensation expense, including share price revaluation
All other compensation
Termination benefits

2020

5,375
397
7,178
2,082
−

2019

6,331
137
3,038
417
841

15,032

10,764

YELLOW PAGES LIMITED ANNUAL REPORT 2020

Executive Team

Board of Directors

Head Office

David A. Eckert
President and Chief Executive Officer

John R. Ireland
Senior Vice-President, Organizational
Effectiveness

Franco Sciannamblo
Senior Vice-President, Chief Financial Officer

Sherilyn King
Senior Vice President - Sales, Marketing and
Customer Service

Treena Cooper
Senior Vice President, Secretary and General
Counsel

Susan Kudzman
Director and Chair of the Board

David A. Eckert
Director
President and Chief Executive Officer

Craig Forman
Director
Chair of the Corporate Governance and
Nominating Committee

Robert Hall
Director
Chair of the Audit Committee

Kalpana Raina
Director

Paul W. Russo
Director
Chair of the Human Resources and
Compensation Committee

1751 rue Richardson
Montréal, Québec H3K 1G6

Investor Relations

Telephone: 1 877 956-2003
E-mail: ir.info@yp.ca

Auditor

Deloitte LLP

TSX Symbols

Y
YPG.DB Senior Subordinated Unsecured

Common Shares

Y.WT

Exchangeable Debentures
Warrants

Transfer Agent

AST Trust Company
2001 Boul. Robert-Bourassa, Suite 1600
Montréal, Québec H3A 2A6
Telephone: 1 800 387-0825
E-mail: inquiries@canstockta.com

For further information on Yellow Pages Limited, visit our corporate website at corporate.yp.ca.