Yellow Pages Income Fund Reports Strong Second Quarter Financial ...

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"Our management team and colleagues continue to deliver on ourplan and commitments," said Marc P. Tellier, President andChief Executive Officer of Yellow Pages Group. "This sustainedgrowth shows our ability to grow the company and grow it profitablyas evidenced by our strong EBITDA margin performance in both of ourbusinesses. We are also pleased by the progress our teams aremaking in terms of technology deployment, the introduction of newproducts both print and online and further initiatives to improveperformance. These investments will position us well for sustainedgrowth in 2009 and beyond."

Online revenues from Directories and Vertical Media combinedamounted to $61.4 million in the quarter. This represents organicgrowth of 44% over the second quarter of 2007. On an annualizedbasis, online revenues reached $245.6 million.

In the second quarter, Distributable cash(1) reached $190.9million, an increase of 7.7% over the same period last year.Distributable cash per unit grew by 9.1% to reach $0.36, comparedto $0.33 in the second quarter of 2007.

Directories

For the second quarter, Adjusted Revenues in directories reached$340.1 million, an increase of 5.6% over the second quarter of2007. Our continued solid organic revenue growth was augmented thisquarter by the full-quarter contribution of Aliant DirectoryServices which we acquired in April of 2007. Adjusted EBITDAincreased by 7.2% to $203.0 million, while the Adjusted EBITDAmargin was 59.7% which represents an improvement of 90 basis pointsover the second quarter of 2007. On a comparable basis, AdjustedRevenues increased by 4% and Adjusted EBITDA increased by 5.3%.

Vertical Media

Revenues at Trader reached $90.6 million in the quarter. EBITDAwent from $30.0 million to $32.4 million, representing an increaseof 8.2% over the same period last year. The EBITDA margin was 35.8%compared with 33% for the second quarter of 2007. Trader'smanagement continues to focus on further enhancing the experienceof both users and advertisers. The company has investedsignificantly in the automotive vertical over the last 18 months.One of our key investments, the Trader Dealer Showroom (TDSR), acombination of dealer services, print and online media, has beenembraced by a majority of online Trader dealers in Ontario and isnow being rolled-out across Canada.

During the second quarter of 2008, Trader's entry in the new carmarket was supported by a multi-media campaign. The nation-wideadvertising campaign aims at positioning Auto Trader(TM) as themost compelling source of automotive information in Canada. Traderis also launching compelling products in other verticals, notablyreal estate to harness the potential of this vertical.

Acquisition of Directory Systems & Services From VOLTInformation Sciences

YPG announced on July 30, 2008 the acquisition of the assets ofVOLT Information Sciences, Inc. (VOLT)'s directory systems andservices as well as directory publishing operations for a purchaseprice of USD$178 million, net of working capital adjustments,payable in cash at closing. The acquisition represents a keymilestone in the evolution of YPG's technological platform. VOLTand YPG have been partners for more than 17 years and thisacquisition is expected to play an important role in reinforcingthe integration of YPG's back- and front-office systems andcapabilities. As part of this transaction, YPG will also acquirethe publishing operations of Data National, a directory publisherin selected mid-Atlantic and Southeast American markets under theCommunity Phonebook brand name. The acquisition is expected to beimmediately accretive to Distributable cash per unit.

Normal Course Issuer Bid

During the second quarter YPG initiated its Normal Course IssuerBid for up to 25 million units. Since the inception of the bid onApril 3, 2008, the company has repurchased 9.8 million units forcancellation for an amount of $94.6 million. The company believesthat the current trading price of its units does not reflect itsstrong fundamentals and future prospects. YPG's corporate creditand stability ratings were confirmed following the announcement ofthe Normal Course Issuer Bid and again following the proposedacquisition of VOLT.

Increase in Cash Distributions

Based on the assessment of year-to-date performance in 2008 and theexpectation of continuing momentum in operational and financialmetrics in 2009, the Fund is increasing cash distributions per unitby 3.5% to the level of $1.17 annually from $1.13 currently. Thisincrease will be effective on September 15, 2008 to unitholders ofrecord on August 29, 2008.

"We believe our continuing strong performance and prospectsfor 2009 support this seventh increase in cash distributions sinceour IPO in August 2003," mentioned Christian M. Paupe,Executive Vice President and Chief Financial Officer. "YPGcontinues to be well positioned for a successful transition from anincome trust to a corporation on or about December 31, 2010. We areconfident that the growth in our Distributable cash will allow usto progressively reduce our payout ratio over the 2008-2010 periodtaking into account future expected cash income taxes whilesustaining cash distributions."

2009 Outlook

Each year, we establish targets to advance our goals and drive ourresults through execution of initiatives to maximize revenue growthand cash flow generation in both of our operating platforms. Thesetargets are reviewed periodically.

We expect 2009 to be another strong year for the Directoriessegment resulting from the full integration of recently acquiredbusinesses, the introduction of new print and online products aswell as other initiatives to sustain organic growth. For fiscal2009, guidance for growth on a comparable basis for the Directoriessegment remains unchanged at 4% to 5% in Adjusted Revenues and 4%to 7% in Adjusted EBITDA.

In the Vertical Media segment, the focus has been on investing inpeople and technology while harmonizing business processes tomaximize operating efficiencies. In 2009, Vertical Media isexpected to grow its revenues by 2% to 4% while EBITDA is expectedto grow between 4% and 7% as benefits accrue to results ofoperations from the deployment of technology and stronger organicsales execution.

Online advertising should represent a growing share of our mediamix with advertisers both in Directories and Vertical Media as weexpand our offers of multi-product / multi-media solutions. Weexpect annualized online revenues for Directories and VerticalMedia combined to grow by approximately 30% annually on a sustainedbasis. Our objective is to grow the online proportion ofDirectories revenues generated online from 11.2% currently to atarget of approximately 20% as we exit 2010.

We maintain our 2008 objective of growing our Distributable cash ata rate between 8% and 10% per unit and we are targeting the samerate of growth for 2009.

Outlook - Key Performance Indicators
2008 Progress Year-to-date and 2009 Objectives

Six-month
Period ended
2008 Target June 30, 2008 2009 Target
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Directories (1)
Adj. Revenues Growth 4% to 5% 4.1% 4% to 5%
Adj. EBITDA Growth 4% to 7% 5.6% 4% to 7%

Vertical Media (1, 2)
Revenues Growth 5% to 7% 0.1% 2% to 4%
EBITDA Growth 7% to 9% 9.7% 4% to 7%

Consolidated Metrics
Online Revenues (1) approx. 30% 46% approx. 30%
Distributable Cash per unit 8% to 10% 10.9% 8% to 10%

(1) Comparable basis, as though we had owned Aliant and LesPac fromJanuary 1, 2007.

(2) See additional disclosure on revenue trends for each ofTrader's businesses in Canada and the United States in theSegmented Information - Vertical Media section in our August 7,2008 Management's Discussion and Analysis.

Investor Conference Call

Yellow Pages Income Fund will hold an analyst and media call at1:00 p.m. (Eastern Time) on Thursday, August 7, 2008 to discusssecond quarter results. The call may be accessed by dialling (416)641-6105 within the Toronto area, or 1 866 696-5895 outside ofToronto. The call will be simultaneously webcast on the Company'sweb site at http://www.ypg.com/page.php/en/1/517.html .

The conference call will be archived in the Investor Center of thesite at www.ypg.com. A playback of the call can also be accessedfrom August 7 to August 15, 2008 by dialling (416) 695-5800 fromwithin the Toronto area, or 1 800 408-3053 outside Toronto. Theconference passcode is 3267239.

About Yellow Pages Income Fund

Yellow Pages Income Fund indirectly holds an approximate 98%ownership interest in Yellow Pages Group and Trader Corporation.Yellow Pages Group is Canada's leading local commercial searchprovider. It publishes annually more than 340 Yellow Pages(TM) andresidential directories. The Company owns and manages Canada's mostvisited online directories, YellowPages.ca(TM) andCanada411.ca(TM), as well as CanadaPlus.ca(TM), a network of sevenlocal city sites. Trader Corporation is a Canadian leader in printand online vertical media with approximately 200 publications and20 web sites covering four product verticals: automotive, realestate, generalist, as well as employment and other. Its mainbrands include Auto Trader(TM), Auto Hebdo(TM), The BargainFinder(TM), Buy&Sell(TM), Renters News(TM) and Home Renters'Guide(TM). For more information about the Fund, visit www.ypg.com.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements about theobjectives, strategies, financial conditions, results of operationsand businesses of the Fund. These statements are forward-looking asthey are based on our current expectations, as at August 7, 2008,about our business and the markets we operate in, and on variousestimates and assumptions. Our actual results could materiallydiffer from our expectations if known or unknown risks affect ourbusiness, or if our estimates or assumptions turn out to beinaccurate. As a result, there is no assurance that anyforward-looking statements will materialize. Risks that could causeour results to differ materially from our current expectations arediscussed in section 7 of our August 7, 2008 Management'sDiscussion and Analysis. We disclaim any intention or obligation toupdate any forward-looking statements, except as required by law,even if new information becomes available, as a result of futureevents or for any other reason.

Enclosure: Financial Highlights

Financial Highlights
(in thousands of Canadian dollars, except unit information)

-------------------------------------------------------------------------
For the three-month periods For the six-month periods
ended June 30, ended June 30,
Yellow Pages Income
Fund 2008 2007 2008 2007
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Revenues $430,442 $411,110 $845,013 $795,351
Income from
operations 185,121 170,337 356,550 329,750
Net earnings 135,686 127,573 262,674 248,524
Basic earnings
per unit $0.26 $0.24 $0.50 $0.47
Cash flow from
operating
activities $181,839 $175,262 $327,177 $327,724
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Adjusted Revenues(1) $430,620 $412,801 $845,749 $797,929
Adjusted EBITDA(1) 235,444 219,433 462,047 422,381
Adjusted EBITDA
margin 54.7% 53.2% 54.6% 52.9%
Distributable
cash(1) $190,942 $177,308 $373,961 $341,300
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Weighted average
number of units
outstanding 526,113,061 530,376,724 528,078,713 530,428,376
Distributable
cash per unit $0.36 $0.33 $0.71 $0.64
Distributions
declared $148,538 $144,551 $298,376 $289,166
Distributions
declared per unit $0.28 $0.27 $0.57 $0.55

-------------------------------------------------------------------------

(1) Non-GAAP Measures

In order to provide a better understanding of the results, the Funduses the term EBITDA (income from operations before depreciationand amortization). In addition, the terms Adjusted Revenues andAdjusted EBITDA are used to reflect revenues and EBITDA adjustedfor certain items. Management believes these measures arereflective of ongoing operations. The Fund also uses the termDistributable cash and cash flow from operating activities, net ofchange in operating assets and liabilities, maintenance capitalexpenditures, amounts to service debt obligations, taxes and otheritems affecting cash generated from the ongoing operations of thebusiness. These terms do not have any standardized meaningprescribed by Canadian GAAP and may not be comparable to similarmeasures presented by other issuers. Management believes EBITDA,Adjusted Revenues, Adjusted EBITDA, and Distributable cash to beimportant measures as they allow management to assess theperformance of the ongoing business. The tables below are areconciliation of Adjusted Revenues, EBITDA, Adjusted EBITDA, andDistributable cash to the most comparable Canadian GAAP financialmeasures:

Adjusted Revenues and Adjusted EBITDA

For the three-month For the six-month
periods ended June 30, periods ended June 30,
2008 2007 2008 2007

Revenues $430,442 $411,110 $845,013 $795,351
Elimination of
purchase accounting
impact 178 1,691 736 2,578
Adjusted Revenues $430,620 $412,801 $845,749 $797,929
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Income from
operations $185,121 $170,337 $356,550 $329,750
Depreciation and
amortization 50,860 49,982 106,824 94,012
Income from
operations before
depreciation and
amortization 235,981 220,319 463,374 423,762
Elimination of
purchase accounting
impact (537) (886) (1,327) (1,381)
Adjusted EBITDA $235,444 $219,433 $462,047 $422,381
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Distributable Cash

For the three-month For the six-month
periods ended June 30, periods ended June 30,
2008 2007 2008 2007

Cash flow from
operating
activities $181,839 $175,262 $327,177 $327,724

Operating non-cash
items(1) (5,079) (5,915) (10,889) (11,151)
Change in operating
assets and
liabilities(2) 16,775 12,313 62,757 34,750
Maintenance capital
expenditures(3) (5,313) (5,052) (10,528) (9,963)
Other(4) 2,720 700 5,444 (60)

Distributable cash $190,942 $177,308 $373,961 $341,300
-------------------------------------------------------------------------
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Weighted average
number of units
outstanding 526,113,061 530,376,724 528,078,713 530,428,376
Distributable
cash per unit $0.36 $0.33 $0.71 $0.64
Distributions
declared $148,538 $144,551 $298,376 $289,166
Distributions
declared per
unit $0.28 $0.27 $0.57 $0.55
Payout ratio(5) 78% 82% 80% 86%

(1) Represents operating items with no impact on current cash flowsuch as pension expense and employee-related expenses throughrestricted unit awards. The likelihood of those elementsmaterializing into outflows on a long-term basis is such thatmanagement believes it should be included in the calculation inorder to reflect the cash generated from the ongoing operations.

(2) Changes in operating assets and liabilities are not considereda source or use of distributable cash. As a result, it is excludedfrom the calculation as it would introduce cash flow variabilityand affect underlying cash flow available for distributions.

Various working capital items, including but not limited to thetiming of receivables collected and payment of payables andaccruals, can have a significant impact on the determination offree cash flow available for distribution. Accordingly, managementexcludes the impact of changes in non-cash working capital items toremove the resulting variability of including such amounts in thedetermination of free cash flow available for distribution.Realized changes in working capital and working capital acquired byway of acquisition are typically funded from excess free cash flowavailable for distribution or the Fund's cash on hand and availablecredit facilities.

(3) Maintenance capital expenditures refer to capital expendituresthat are necessary to sustain current productive capacity.Management believes that maintenance capital expenditures should befunded by cash flow from operating activities. Capital spending fornew initiatives are expected to improve future distributable cashand as such are not deducted from cash flow from operatingactivities. Transition capital is provided for as part of thefinancing plan of specific business acquisitions and is thereforenot funded from distributable cash.

(4) Includes non-controlling interest related to the LesPACpartnership formed in April 2007, tax related amounts and otheramounts that do not reflect the ongoing operations of the business.

(5) The level of distributions paid is reviewed periodically totake into account the current and prospective performance of thebusiness and other items considered to be prudent.

Contacts:
Media Relations: Yellow Pages Income Fund
Annie Marsolais
Director, Corporate Communications
514-934-4016annie.marsolais@ypg.com
Investor Relations: Yellow Pages Income Fund
Anne-Sophie Roy
Senior Manager, Corporate Finance
514-934-2828anne-sophie.roy@ypg.com

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