RE: RE: Response from IR re TD articleThe question I sent to IR was specifically arount the statement:
Dividend distribution as a corporation likely to be much lower than
as an income trust. Accordingly, we no longer expect the company to
continue distributions at the same level after tax in 2011 that it pays out
pre-tax in 2010.
My response back from IR as posted previously was:
Unfortunately the analyst at TD was mistaking. In fact he issued another note to clarify his statement.
As mentioned in our latest MD&A dated November 6, 2008, following the October 31, 2006 government announcement on taxation of trusts, we indicated that we would continue to monitor closely the Fund’s payout ratio over the 2007-2010 period. In the periodic review of distributions, we will continue to take into account the current and prospective performance of our business, with the objective of continuing to progressively reduce our payout ratio during the transition period from an income trust to a corporate structure.
We intend to continue to increase cash distributions during the transition period, but at a more moderate pace than in the past period prior to 2007. With Distributable Cash per unit expected to grow at sustainable growth rates in excess of cash distributions, the payout ratio is expected to decline to the low 70% range by 2010, which will provide the necessary flexibility to fund cash taxes starting in 2011.
Our objective is to be in a position to maintain the 2010 level of cash distributions to our shareholders in 2011, after a conversion to a corporate structure, despite the cash taxes that will then be payable by YPG. These distributions will then be treated as dividends, providing an additional advantage to taxable investors.
Therefore, we believe that our ability to generate growing free cash flow from operations will provide the necessary flexibility to fund cash income taxes, which should position us well for a successful transition from an income trust to a corporation on or about December 31, 2010. Please refer to Section 6 – Outlook for more details on the proposed rules on the conversion from an income trust to a corporation in our MD&A for the period ended June 30, 2008.
Management has not changed it's intentions.
Regards,
_____________________
Anne-Sophie Roy
Director, Corporate Finance and Investor Relations
Directrice générale, Finances de l’entreprise et relations avec les investisseurs
Groupe Pages Jaunes / Yellow Pages Group
(514) 934-2828
www.ypg.com