Directories group Yell hailed a strong start to its financial year today, despite finding new UK advertisers harder to retain in a competitive market.

The former BT subsidiary, which listed on the London market last year, turned in half-year pre-tax profits of £85.6 million against losses of £109.7 million a year ago when the business was hit by restructuring and flotation charges. Underlying profits rose 9.8% to £206 million.

Yell said an "excellent" performance by its US arm and continued growth of its online business left it on track to meet full year market expectations, The group's UK arm has been on a drive to recruit 100,000 new advertisers a year for the last four years.

Although this has been achieved, it said today that the overall retention rate of advertisers fell to 75% in the six months to September 30 from 78% in the same period last year.

Yell said: "New advertisers are now proving more difficult to retain in a competitive market than those advertisers for whom the value of advertising in Yellow Pages is proven."

The strategy helped boost the number of print advertisers by 1.2% to 254,000, while turnover at the UK arm rose by 3.3% to £325 million.

Yell is the biggest supplier of classified directory advertising in the UK and has substantial operations in the US, employing about 8,500 people across the two countries.

In addition to the Yellow Pages and Business Pages, the group manages online directory Yell.com and the 118247 telephone service formerly known as Talking Pages.

Yell's US division saw turnover rise by 10.1% to £279.6 million, although fewer launches and rescheduling following acquisitions meant growth was expected to slow in the third quarter.

The number of advertisers using Yell.com grew rapidly during the six months, up 39.1% to 121,000.

Chief executive John Condron said: "Yell has delivered another set of strong results, which confirm that the group is well on track to meet full year expectations."

The interim dividend was raised by 40% to 4.2p.