Shares in Yell rose 16 per cent today after the debt-laden owner of Yellow Pages announced it had increased earnings and cash and was trading within its banking covenants.

Investors welcomed the better-than-expected figures for the three months ended 30 June and a strong performance in the online business, sending the shares up by 11.5p to 82.5p.

The directories group’s stock has fallen more than 80 per cent in the past 12 months over fears that a mixture of its unwieldy debt and the effect of the advertising downturn might make it the next credit crunch casualty.

However, today’s results revealed that the company trimmed net debt from £3.75 billion in the year to the end of March to £3.68 billion at the end of June. The group's market capitalisation is about £555m.

John Condron, chief executive at Yell, said: “Our bank facilities are committed until 2011, and we expect to meet our repayment and dividend requirements for the next nine months from cash generation.

"Drawings on our £400 million revolving credit facility and other short-term lines were £44 million at the end of the period.”

He said the group was on track to meet expectations, adding: “Yell continues to show resilience, despite the increasingly difficult economic times.

"While we expect further pressure on our revenue, we are on track to meet the EBITDA (earnings before interest, tax, depreciation and amortisation) guidance we have given for the year.”

The group, which publishes directories in the UK, US, Spain and Latin America, said its online business is contributing 16 per cent of group revenues, up from 12 per cent last year.

John Davis, chief financial officer at Yell, said the company’s performance had been aided by the euro exchange rate.

He said: “We have shown good deleveraging with net debt at 4.9 times annualised EBITDA compared with 5.1 times at the end of March.”

The group’s revenue for the first quarter rose 6.2 per cent to £468.4 million, an increase of almost 3 per cent at constant exchange rates. Cash profits — earnings before interest, taxation and depreciation — fell from £155.7 million to £154.8 million.

Earlier this month Yell faced an investor revolt over its bonus payments.

The Association of British Insurers (ABI), whose members control about 20 per cent of the stock market, issued an “amber-top alert”, signalling concerns over generous management bonuses at Yell after the share price fall of the past year.

Senior executives have received bonuses worth 110 per cent of their salaries.