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Shares in Yell Group, the UK-based directories publisher, recovered much of their recent losses as the company’s full-year results reassured investors after concerns it had paid too much for Spanish rival TPI.

The shares, which had fallen more than 14 per cent since Yell in late April offered €3.3bn for TPI, rose by as much as 8.6 per cent by mid-afternoon on Tuesday.

The company raised its dividend by more than a fifth to 10.2p and reported strong growth in its UK online business, Yell.com, and further growth in the US driven by its recent acquisitions.

Pre-tax profits for the year were 35.4 per cent higher at £317m ($597m) on revenues of £1.62bn. The earnings per share of 32.8p exceeded analysts’ consensus forecasts.

Yell sought to expand its presence outside the UK, as its print directories there are subject to regulatory price controls and a competition review. Yell made several US acquisitions during the year, with the biggest being TransWestern, bought in May 2005 for $1.58bn. Year-on-year revenue growth was 26.1 per cent and on a pro-forma basis, incorporating TransWestern’s 2005 results, would have been 13.3 per cent.

“The integration of TransWestern is complete and we expect an uplift in its performance to begin to flow through next financial year,” said John Condron, chief executive.

UK revenue grew 5.2 per cent £698.9m, driven by its Yell.com business, exceeding the company’s guidance of at least 3 per cent. Revenue in the US, where Yell has made a number of smaller acquisitions in addition to TransWestern, was £922.4m, which represented 15 per cent organic growth and also exceeded company guidance of at least 12 per cent.

Customer retention rates - an important measure of repeat business from advertisers - held firm at 75 per cent in the UK and in the US fell one percentage point to 70 per cent.

The UK classifieds directory industry has, since April 2005, been under investigation by the Competition Commission, which could have implications for Yell as its UK business has been subject to regulatory price controls since it was spun off from BT in 2001.

The Competition Commission on Friday said its provisional findings report would be published in June rather than May, to “allow full consideration of material and submissions recently received from the parties”.

Analysts at Panmure Gordon said in an early note to investors that Yell’s results were slightly ahead of their forecasts and “in the current market environment this should be seen as encouraging”. Numis Securities said it may raise its forecasts in light of Tuesday’s better-than-expected results, although this could be offset by weakness in the dollar, as 40 per cent of Yell’s profits are made in the US.

Copyright The Financial Times Limited 2017. All rights reserved.
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