Yell Group is growing its online revenues in an anemic online ad environment, despite diminished profits, but it has crucially won backing from shareholders for an equity-raising £660 million rights issue and agreement from lenders to extend debt repayments to 2014.
Across the group, for the six months to September 30, digital revenue was up 17 percent to £196.5 million, one fifth of total revenues — but Yell complains that the “nervousness and caution” of the recession is causing customer to scale back spending. And while online revenue is going in the right direction, it is slowing: for the year to March 31, online ads grew 38 percent, so the growth rate has more than halved since then.
Overall revenue was down 15.6 percent to £982.8 million at constant currencies and profits nose-dived 69.7 percent year on year to £25.8 million. CEO John Condron gives a positive spin, saying Yell continues to invest in online and “reshape our business to take advantage of the opportunities of changing consumer behaviour.”
But Yell execs will be most pleased that the company’s complex debt escape act is all but completed and it has secured 95 percent shareholder approval for a rights issue to raise £660 million through the issuing of 1.5 billion discounted new shares — more than the £500 million Yell originally planned for. The company’s debt facilities have been renegotiated until 2014, on the condition that the rights issue is agreed by shareholders at an EGM on November 26. More details in a separate release.
– In the UK, Yell.com advertising revenue was up 8.7 percent to £87.3 million from 10.1 million advertisers — the site now contributes 23 percent of UK revenue.
– Yell’s 55 printed Yellow Pages editions made 19.7 percent less revenue year-on-year of £206.6 million; the advertising books had 174,000 advertisers, 14.7 percent less than the year-ago people. Yell spells it out its business model problem: “The acquisition of new print advertisers was not enough to offset those that were not retained”.
– As the country waits for the recession to end, Yell predicts it’s here for a while yet. “It’s too early to declare that confidence has definitively returned to our core target customer base,” Yell warns, adding that it doesn’t expect any year-on-year improvement in revenue this year.
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