Yell screams debt, investors run for cover

Revenues at Yell, the company which publishes the Yellow Pages, continued to fall in the final three months of 2011 compared to the same period of 2010.

The news of a 15.1% year-on-year fall in revenues will further depress investors, already worried about the company's £2.6bn debt mountain that it managed to restructure between December and January.

Total revenues for the period were £382.8m, although within that figure digital services (which the firm is hoping will be its saviour) saw revenues up 111.8% to £35.4m.

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Digital directories, or the Internet version of the Yellow Pages, fell 15.7% compared to the year before, to £77.6m.

Print (the Yellow Pages) and enquiry service revenues fell 22.0% to £269.8m.

Earnings before interest, tax, depreciation and amortisation came in at £108.6m, down £12.7m.

Profit after tax for the period was £16.6m, a rise of £15m.

Mike Pocock, the Chief Executive charged with helping Yell escape from under its debt mountain was very keen to point out the revenue boost at Digital Services, claiming the division is now at an annual run rate of £140m.

He admitted however that: "The deteriorating macro environment and a more competitive digital directory market are driving a faster rate of directory revenue decline."

In the risk statement accompanying the update Yell says: "It is clear that the group faces challenges and material uncertainties" related to the value of its fast diminishing brands or "intangible assets".

Yell also admits there is a risk it may have to renegotiate its financial covenants again and that, if the lenders were minded, this would "cast doubt on the future capital funding of the group". In other words, if things get worse and Yell can't keep to its current borrowing requirements, then the lenders could pull the plug.

The shares dropped 16% in early trading. In the last five years Yell, which used to be in the FTSE 100, has seen its value decline by 99.07%.

BS