Classified advertising directories firm Yell Group saw a 2.8 per cent drop in profits to £206.7m for the financial year ending 31 March 2008, from £212.7m the previous year.

Yell said it would aim to cut costs and reinvest the proceeds in internet operations, the most lucrative part of the business.

Chief executive John Condron blamed tightening economic conditions for slashing the shareholder dividend, but was positive about emerging from the credit crunch in good shape.

“Looking ahead, we see no let up in the economic pressures during the current year. However, we will continue to invest in all our products, focusing in particular on the internet to reinforce the foundations for further growth," he said.