EMAP Chief Resigns As Results Come In Line With Expectations
Kevin Hand, chief executive of EMAP, has resigned with immediate effect, the media group announced this morning. Although the statement from EMAP did not state the reasons for Hand’s departure, it is likely that his position became untenable after the failure to consolidate the US business Petersen which he headed (see EMAP Reported To Be Close To US Sale).
The company’s year-end financial results, also released this morning, came in slightly ahead of analysts’ expectations. Normalised operating profit was 4% up at £234 million; pre-digital profit before tax rose by 5% £197 million. Post digital profit was only slightly down at £143 million, partly reflecting EMAP’s decision to dramatically reduce spend on its digital operations (see Emap Announces Cuts To New Media Investment Plans). Total revenues were up 5% at £1.15 billion.
Exceptional costs to hit EMAP included £10 million for the restructuring of the EMAP Digital division and a write-down on the value of the EMAP USA (Petersen) business, which is now potentially up for sale. Nevertheless, the Board of EMAP maintains that it is reviewing all of its options with regard to the US business. Revenues at EMAP USA were down 7% year on year.
EMAP UK delivered growth in both underlying revenues, up 10%, and underlying operating profits, up 12%. In terms of consumer magazine advertising, the creation of Emap Advertising, the Group’s internal advertising sales agency, impacted performance in the first half with like-for-like sales down by 3%. Improving efficiency in the sales operation led to a 1% growth in the second half. There was a strong performance in the fourth quarter where revenues were 7% ahead, against a market which was flat, says EMAP.
Consumer circulation revenues continued to grow strongly in the second half, rising 13%, generating 10% underlying growth for the full year. Notably strong, after a rocky start, is Entertainment magazine Heat, now selling 222,000 copies a week, without promotion.
In the group’s radio businesses revenues were up 19% for the whole year, driven by a 26% leap in the first half and a slowing 12% growth in the second. EMAP had a stronger quarter than most other major radio operators, according to the latest RAJAR listening figures.
In business to business, recruitment advertising has maintained its exceptional growth, with a rise of 28% in the second half, following a 27% growth in the first half. All core markets have remained strong – in particular healthcare, public sector and media.
At EMAP France growth slowed in the second half, due to a slowing of the French magazine advertising market generally.
Commenting on the results, ABN Amro said: “EMAP has faced a difficult period over the last two years with Petersen, the challenges of the internet, internal issues brought about by the creation of the UK network structure and the changes in the advertising sales system. These problems have been exacerbated by a perception that EMAP had ‘lost its touch’ in terms of new launches. Much of this became associated with Kevin Hand’s leadership and he has paid the price for EMAP’s period of under-performance.”
Group chief executive Robin Miller said: “Despite the significant organisational change which we have gone through in the last twelve months the achievement of strong double digit underlying profits in the UK and France shows the resilience and strength of our core businesses.
“Going forward this resilience, along with a determination to focus our investment in those areas where we have strong market positions, will provide the impetus for future growth. The fact that we are reviewing the future of our US business is well known and we expect to be in a position to make a final announcement on this in the near future.
“We have started the new financial year reasonably well but the advertising outlook remains uncertain. With renewed focus and a clear emphasis on delivery we are determined to realise value for shareholders.”
ABN Amro: Add
