Infoserve looks for funds to boost online growth

ONLINE search and marketing business Infoserve is to step up plans to raise funding for its next phase of growth, the company’s chief executive has said.

Steve Barnes said the comapny, whose search engines link consumers to local businesses, had plans to open a sales office in the centre of Leeds and was keen to establish “commercial possibilities and partnerships with people” which would require additional capital.

Mr Barnes said: “Our share (of the market) is growing. We’re small but significant and a good place for SMEs to reside.

“We need to get funding in place to push through to the next phase. We feel it is such a good time and opportunity to make the business bigger and better.”

Mr Barnes said despite falls in traditional advertising – such as local newspaper advertisements – and the economic decline, people were continuing to search for services via the internet and companies were still seeing the opportunities through services such as Infoserve.

“We cannot ignore the harsh reality of the overall market and our customer base is of course affected by the difficult trading conditions,” he said.

“We will have to be flexible and agile in switching focus away from those business categories most affected by the downturn in order to concentrate resources on growth areas.

“All indications are that online paid-for local search will continue to spearhead overall growth in online advertising and marketing but we will have to work hard to continue to drive productivity improvements from existing sales executives as well as seeking out further growth.”

Mr Barnes was speaking as Leeds-based Infoserve saw turnover for the year ended March 31 increase by 20% to £5.6m.

EBITDA profit was achieved in three of the six months in the second half of the financial year, while Infoserve’s operating loss was reduced to 800,000 from £2.7m.

Mr Barnes said a key indicator of progress was the increased productivity per sales person of 18% to £54,800 per year.

He said Infoserve would most likely approach the City first for further investment but added major shareholder David Hood was willing to invest further in the business.

Chairman James Newman said the group remained undercapitalised following costs associated with growing the sales team and developing new products and that additional funding was required to allow the group to grow.

Mr Newman said: “The market for online local search continues to grow and the group now has almost 3.5m businesses listed on its own business directories and a network of over 120 single industry vertical websites.

“The contracts with Yahoo! and Google have given the business a unique position to exploit the ever growing local search market through its close ties with both companies, who represent over 96% of the UK’s search and online advertising market.

“The board is confident, that despite the current economic turmoil, it will continue to grow its revenues and customer base and sustain the progress made in the last financial year.”

Infoserve is not proposing a dividend.