Our view: Hold
Share price: 837.5p (+19.5p)
Tom Moloney, the chief executive of Emap, is determined to "build a brand-led, multi-platform media group". Emap already has various consumer magazines, includingthe gossip title Closer and men's mag Zoo, along with the UK's second biggest radio business including stations such as Kiss and Magic. There is also a business to business unit.
Now Mr Moloney is focused on growing the group's digital operations. Revenues from the internet stand at pounds 100m according to yesterday's annual results, or 10 per cent of turnover, and the Emap boss wants to double them over the next three years. Given the growth enjoyed by online publishers at present this makes a lot of sense.
Clearly, translating business-to-business publications like the Middle East Economic Digest (MEED) to an online format and making money from it is going to be easier than doing the same with FHM or Zoo. The people who read MEED do so because they have to - they need to know the latest day rate for cranes in Dubai for their work - and so are willing to pay a monthly subscription fee. However, few will pay a monthly or yearly subscription fee for naked pictures of yet another female celebrity from an online version of FHM. Hence, Emap will have to amend its FHM offering for the internet.
As for the straight financials contained in Emap's full-year figures yesterday, they were on the whole positive. Pre-tax profits rose 9 per cent to pounds 223m and the dividend was raised by 20 per cent.
Mr Moloney also assured the City that the sale of the group's forever underperforming French consumer magazines division is on track to be announced by the end of September. This should fetch around pounds 400m and allow the company to return up to 170p a share to shareholders.
However, before readers rush out to buy into Emap, it is worth noting the risks it faces. First, it is vulnerable to a downturn in UK consumer advertising. Second, there is no guarantee the French unit will be sold at a reasonable price. Remember Daily Mail & General's aborted sale of its Northcliffe regional newspapers earlier this year? At 13 times forward earnings, the stock is not particularly cheap. For now Emap is just a hold.
Our view: Hold
Share price: 217.5p (+16.75p)
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