TMG Annual Report 2010
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TMG annual report 2010 WorldReginfo - 8036273e-0e3f-4581-98f0-62178304b470 This annual report is a translation of the original text in Dutch, which is the official version. In case of any discrepancies the Dutch version will prevail. The annual report is also available in the English language via: www.tmg.nl For more information: [email protected] Telegraaf Media Groep N.V. Visiting address: Basisweg 30, Amsterdam Mail address: P.O. Box 376, 1000 EB Amsterdam Telephone: +31 20 585 9111 WorldReginfo - 8036273e-0e3f-4581-98f0-62178304b470 TMG annual report 2010 WorldReginfo - 8036273e-0e3f-4581-98f0-62178304b470 WorldReginfo - 8036273e-0e3f-4581-98f0-62178304b470 TMG annual report 2010 5 contents 6 FOREWORD BY THE EXECUTIVE 37 Corporate governance BOARD 38 SUSTAINABILITY REPORT 8 REPORT FROM THE SUPERVISORY BOARD 43 FINANCIAL STATEMENTS 45 Consolidated Financial Statements 9 MEMBERS OF THE EXECUTIVE AND 49 Notes to the Consolidated Financial SUPERVISORY BOARD Statements 90 Company Financial Statements 12 CONSOLIDATED KEY FIGURES 93 Notes to the Company Financial Statements 13 CONSOLIDATED INFORMATION 13 Financial Performance 98 OTHER INFORMATION 16 Corporate Affairs 98 Subsequent Events 99 Independent Auditors’ Report 20 Telegraaf MEDIA NEDERLAND 102 Provision in the Articles of Association 20 National Dailies concerning the appropriation of profit 23 Free Local Papers (door-to-door) 103 Stichting Preferente Aandelen Telegraaf 23 Magazines Media Groep N.V. and Stichting Beheer 23 Digital Media van Prioriteitsaandelen Telegraaf Media Groep N.V. 25 Sky RADIO GROUP 104 Annual report 2010 of Stichting Administra- tiekantoor van Aandelen Telegraaf Media- 26 KEESING MEDIA GROUP Groep N.V. 27 OTHER ACTIVITIES 106 ABOUT TMG 27 Hyves 27 Mobillion 28 Telegraaf Media ICT (TMI) 28 Telegraaf Drukkerij Groep (TDG) 28 TMG Distributie 28 Shared Service Center (SSC) 29 PARTICIPATING INTERESTS 32 RISK MANAGEMENT 36 STATEMENT OF RESPONSIBILITY WorldReginfo - 8036273e-0e3f-4581-98f0-62178304b470 TMG annual report 2010 6 foreword by the Executive Board Compared to last year, the focus of operations in 2010 has Revenues generated by Telegraaf Media Nederland declined shifted from measures designed to structurally lower costs, to modestly due to lower revenues from circulation as well as expanding the portfolio with the objective of maintaining and advertising. Pricing in particular was under pressure with expanding market leadership. regard to advertising revenue derived from printed media. Revenues from digital activities rose. In the past year, this TMG’s recurring operating result before amortisation (recur- business unit actively focused on a number of areas, including ring EBITA) increased by € 15 million in 2010 in comparison the continued development of the digital market with a focus to 2009. This represents a considerable increase in margin to on local markets and e-commerce, and on the establishment 10.9%. This once again brings the long-term goal of 15% closer. of its own video media unit. From an organisational perspec- tive, a number of units were merged to form a single national The improvement in the result is primarily due to the implemen- media unit. In addition, the focus on regional and local mar- tation of the measures agreed upon in 2010 and previous years. kets was also strengthened. The impact in 2010 is a reduction of € 35 million in the annual cost level. Because primarily the advertising markets were adverse- ly affected, Keesing Media Group was barely affected by Revenues declined by € 20 million primarily due to the fact the economic uncertainties with respect to its traditional that advertising revenues generated by the daily newspapers puzzle magazines. Additional investments were made in across the full breadth of the market in 2010 did not benefit digital games in the past year. These games for the time from the limited economic recovery in the Netherlands. being only represent a small share of Keesing Media Group’s The revenues of the acquired Hyves social network were, since revenues. November 2010, recognised as part of TMG’s revenues. Sky Radio Group achieved improved results on limitedly TMG’s net result, including a revaluation of the interest in lower revenues. Sky Radio Group in 2010 devoted addi- ProSiebenSat.1 Media AG in the amount of € 44 million, rose tional efforts to extending its FM radio licenses effective to € 81 million (2009: € 69 million including a revaluation of September 2011 and to the future of digital radio. It will con- € 56 million). tinue along this track in 2011. According to the Minister of Economic Affairs, Agriculture and Innovation the FM licenses results will be extended at fair market rates. Current plans call for On balance, the recurring EBITA of continued operations was the final decisions on this matter to be made by mid-May € 65 million (2009: € 50 million) on € 592 million in revenues 2011. (2009: € 612 million). The margin consequently increased from 8.1% in 2009 to 10.9% in 2010. The social network Hyves was acquired in November 2010 and became part of TMG. Hyves occupies the number 1 position on Advertising revenues generated by TMG’s newspapers, as well the Dutch internet: over 9.1 million citizens in the Netherlands as its radio operations, were under pressure. The resulting have a Hyves account of which 5.2 million are considered active decline in revenues was partially offset by the growth in online users. TMG has high expectations of Hyves, both on a stand- revenues. In terms of circulation, revenues on balance margin- alone basis, as well as in terms of its collaboration with other ally declined due to the discontinuation of De Telegraaf on TMG media. Sunday. This was offset by an increase in price and additional sales during the 2010 FIFA World Cup. Mobillion in 2010 revised its strategy by disposing of activities related to handling SMS traffic and by specialising in marketing The improvement in the recurring EBITA was primarily and communication services via social media. achieved through cost reduction measures, including the dis- continuation of the Sunday edition of De Telegraaf, the out- Progress was made by the printing, distribution and ICT sourcing of activities and the effects of the reorganisation production units, as well as the Shared Service Center, in both measures implemented earlier. The lower cost of paper also the areas of quality, as well as cost control. Three particularly contributed to the improved results. outstanding matters included the terminations of the transpor- tation operations, the start up of collaboration with colleague business units newspaper publishers in the area of daily newspaper distri- The business units made demonstrable progress in 2010 in bution and preparations for the conversion of TMG’s printing terms of collaboration and synergy. presses in Amsterdam. WorldReginfo - 8036273e-0e3f-4581-98f0-62178304b470 TMG annual report 2010 7 participating Interests media types to the same degree or at the same point in time. ProSiebenSat.1 Media AG, the international TV and radio en- Television in the Netherlands experienced marked growth terprise in which TMG holds a 6% strategic interest (13,127,832 during the past year, especially on the advertising side. voting shares) and a seat on the supervisory board of directors, In addition, consumption and expenditures related to digital also exhibited strong results due to the positive development of media are growing notably. TMG’s ability to optimally antici- the German economy. Revenues in 2010 rose by 8.7% to € 3.0 pate these developments – in addition to achieving farther- billion and the operating result before depreciation and amor- reaching synergy among its business units – is its greatest tisation (recurring EBITDA) rose by 30% to over € 900 million. challenge, greater even than the challenge presented by The share price of the preference shares followed this trend and political and economic developments. rose from € 8.06 at year-end 2009 to € 22.50 at year-end 2010. The carrying value of the ordinary voting shares at 31 December outlook 2010 was € 15.18 per share. TMG is projecting stable circulation revenues in 2011. A key question is whether advertising revenues will recover from the public broadcasting decline experienced in recent years. The projections included There still is no level playing field for commercial publish- in the New Year’s speech still assumed a modest decline in ers because the public broadcasters that are subsidised by newspaper advertisements and a limited rise in radio adver- government drain off a great deal of time and money from tising. However, advertising revenues derived from print and overall consumer media consumption and consequently also radio markedly declined in the first two months of this year in compete directly on the advertising markets. Commercial comparison to the same period in 2010. Revenues from digital publishers who want to serve consumers as well as advertis- activities exhibited further growth as projected, autonomously ers with successful media products, but who are also respon- as well as due to the acquisition of Hyves. In total there was a sible for the profitability and continuity of their companies are modest decline in the Group’s revenue in the first two months consequently at a major commercial disadvantage. A minor of this year. Due to reorganisation measures, the rollout of col- improvement was the elimination of the Temporary Media laboration in the area of newspaper delivery and the lower cost Concentrations Act, effective January 2011. However, in addition of paper, there was a decline in costs. On balance, there was a to this, government should more clearly define the function and marginal improvement in the recurring EBITA. objectives of a public broadcaster, including STER’s role. This is the only way in which a level playing field can be created that As stated TMG is projecting stable circulation revenues for 2011. enables daily newspapers publishers to maintain their individual It is impossible to predict to what extent the advertising trends daily newspaper titles, which would benefit multiformity.