Yell Group's revenues fell more than a tenth in its first half as its directories business continued to struggle, and the company revealed it was in talks with its lending banks to avoid breaching covenants.
The new management of Yell unveiled a dramatic plan to go digital in July in an attempt to salvage a company labouring under a mountain of debt, and said it was making "significant progress" in the plan.
Yet revenues fell 12 per cent to £787m in the first half, as the company has come under "cyclical and structural pressure", according to analysts at Numis. The broker also noted the declines reflect "the economic pressure on the group's small and medium-sized enterprise clients". Print-directory revenues were down almost 20 per cent.
The company said it was in talks with its banks to renegotiate covenant levels before Christmas, and needs agreement from two-thirds of its syndicate of 300 lenders. While Yell is confident it will remain within the limits this year, Numis predicts it will breach its covenants some time before March 2013.
It needs to renegotiate its covenants to allow more breathing room to invest in turning the company into a digital operation.