Yell today announced profits had plunged by more than 2,000 into the red as the online directories business works to reinvent itself as a digital emarketplace and provider of ecommerce websites to small businesses.
In its financial results for the year to March 31, published today, the company said group revenues were down by 14% to £1.6bn while it went into the red at the bottom line, with pre-tax losses of £1.4bn, down from profits of £66.3m last year, a fall of 2,237%.
Last July the company announced a strategy to transform its business, replacing its “declining legacy directories business” with new digital services. Today it said those digital services, which are to be rebranded as hibu, would be “tailored to the converging needs of SMEs and consumers,” addressing small businesses’ need to “grow, transact and be efficient in the digital world, and the consumers’ need to connect locally to the goods and services they want, in a way that saves them time and money and moves their lives forward.” In the full-year digital revenue increased by 7%, rising to 29% of the company’s income. Digital services revenues rose by 111.7% to £134.4m.
But the increases were not fast enough to make up for a “faster than expected” drop in revenues from both print and digital directories as small businesses, hit by falling confidence, adapt their advertising strategies to meet changing consumer behaviour. In the full-year, print and other directory revenue fell by 20.7% over the previous year. In the fourth quarter alone that fall stood at 22.3%. “This decline,” said Yell in its full-year statement, “reflects both fewer customers and lower revenue per advertisers as SMEs are both reducing their expenditure and moving to other forms of advertising.”
And while the company also reduced its debt levels by 20%, or £565m to over the year, to £2.2bn, most of its debt matures in April 2014. The company said it would talk to lenders and shareholders in coming months to put in place new capital structures. It said that cash flow forecasts project that it will meet its interest payments in full over the current financial year, “nevertheless, the directors are making full disclosure, as required by accounting standards, to indicate the existence of a material uncertainty, which may cast significant doubt about the group’s ability to continue as a going concern.”
Today chief executive Mike Pocock said: “In July, we announced a bold new four year strategy to transform the Group, capitalising on our unique position in the SME community and building a broad range of new digital services to replace our declining legacy directories business with a much more customer focused digital business. Since then, we have built and piloted new products, established important new partnerships, reorganised the group to work as one business and brought in essential new skills. We have also delivered far more than the £100m of cost savings promised over two years, reset our covenants and reduced our debt burden by over 20% or £565m.”