Annual Report 2008

Annual Report 2008 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 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 available in the English language via: www.tmg.nl

For more information: [email protected]

Telegraaf Media Groep N.V.

Visiting address Basisweg 30, Amsterdam, the Netherlands

Mail address P.O. Box 376, 1000 EB Amsterdam, the Netherlands

Telephone: +31(0)20 - 585 9111 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 Annual Report 2008 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 Participating interests Executive Board

Corporate Staff Operating Companies

Sky Telegraaf Keesing Radio Media Media Group Nederland Group WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 Contents

06 Profile, Core Values and Mission 41 Financial Statements 43 Consolidated Financial Statements 07 Vision and Ambition, Objectives 47 Notes to the Consolidated Financial Statements 87 Company Financial Statements and Strategy 89 Notes to the Company Financial Statements 08 Report from the Executive Board 95 Other Information 97 Subsequent Events 10 Management information 98 Auditors’ Report 10 Members of the Executive Board 99 Provision in the Articles of Association concerning 11 Members of the Supervisory Board the appropriation of profit 12 Report from the Supervisory Board 100 Stichting Preferente Aandelen Telegraaf Media Groep N.V. and Stichting Beheer van Prioriteitsaandelen 13 Consolidated Keyfigures Telegraaf Media Groep N.V. 101 Stichting Administratiekantoor van Aandelen 14 Consolidated Information Telegraaf Media Groep N.V. 14 Financial Performance 17 Corporate Affairs 103 Organisational Structure 19 Telegraaf Media Nederland 104 Products and Activities 19 Telegraaf Media Nederland 19 National Dailies (paid) 106 Key Figures 21 National Dailies (free) 22 Regional Dailies 22 Free Local Papers 23 Magazines 23 Digital Media

2 5 Sky Radio Group 2 6 Keesing Media Group 2 7 Other Activities and Operating Companies 28 International

29 Participating Interests 31 Risk management 35 Statement of Responsibility 36 Corporate Governance 39 Corporate Responsibility WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 6 TMG Annual Report 2008 Profile | Core Values | Mission

Profile TMG is a reliable and committed employer. Employees are offered extensive development opportunities and good income. TMG (Telegraaf Media Groep) is the largest Dutch media In exchange, TMG expects its employees to proactively handle group. TMG’s three publishing groups, Telegraaf Media changes, to further develop themselves and to contribute to the Nederland, Sky Radio Group and Keesing Media Group have development of the enterprise in a drastically changing market leadership positions in daily newspapers, magazines, marketplace in a committed, and professional way. puzzle magazines, online and offline media and radio. TMG adopts a client-oriented approach in relation to suppliers TMG is the largest newspaper publisher in the Netherlands with of products and services. TMG would like to support them by the leading national dailies De Telegraaf and Sp!ts and has a optimising contacts with existing and potential clients and strong position in the Randstad area and surroundings with creating greater flexibility in this respect, through divergent regional dailies and (free) local papers. media forms.

TMG has a strong market position in the Netherlands in the TMG wants to provide information and entertainment to magazine market on the basis of titles aimed at specific target consumers, using various medium types, thus ensuring content groups in the segment of Entertainment, Automotive and Puzzles. is accessible anywhere at anytime. Intentional, focused on the interests of the general public or narrowly defined target groups, In the Dutch radio market, TMG holds a majority interest in informative and entertaining. Sky Radio (85,9%), the market leader among commercial radio stations. In terms of our shareholders, profitability, predictability of financial results and integrity are key. TMG is solidly financed. TMG is furthermore increasingly active in new, mostly digital, The company is for an important portion of its operating result forms of media via the (mobile) Internet and in combinations of dependent on the Dutch economy. various media types (cross media).

In the international scene, TMG holds a 6% interest in MISSION ProSiebenSat.1 Media AG, one of the largest European radio and television enterprises. In the Netherlands the stations SBS6, TMG is actively engaged in finding and creating loyalty Net5 and Veronica belong to ProSiebenSat.1 Media AG. among general and/or specific public interest groups and Outside the Netherlands, TMG is active in France, Belgium and communities and in exploiting their multi-media leisure time Denmark with puzzle magazines. consumption:

TMG employs over 3.000 people and achieves yearly revenues • Getting in touch with users, readers, listeners and viewers of about € 700 million. through a targeted offering of general and customised media products, by leveraging the reach of strong TMG brands and The shares in TMG are traded on the NYSE Euronext (Amsterdam). by cross promotion in various media platforms. • Creating loyalty by providing attractive content and applica- tions in the area of information and entertainment, including CORE VALUES news, music, puzzles and games. Made for and by users. • Exploiting the reach among public interest groups. TMG is a self-confident enterprise with a strong identity. The enterprise is focused on the long term with multi-media products for consumers.

TMG is solid and financially strong. The company’s policy reflects its core values professional, change-oriented and committed, while maintaining integrity in all areas. Everything is focused on responding to client desires and needs. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 7 Vision and Ambition | Objectives | Strategy

Vision and Ambition Objectives

TMG wants to organise the extremely broad multimedia • TMG achieved in 2008, including discontinued operations, a consumer offering that chaotically bombards the consumer, normalised EBITA margin of 7.2%, the same as 2007. in such a way that it arrives in a well-organised and • At the time of publication of the semi-annual results 2008, precisely targeted manner. This allows advertisers to grab the assumption was to reach a margin of at least 8% for the the consumer’s attention with a clear focus. whole year. A recurring ebita margin targeted to grow at a rate of 10% per year over the next three years. TMG is a vital media enterprise that is successful in reaching • Furthermore, the assumptions identified at the time were that the 35 year and older consumer group for its advertisers. the income developments and the rate at which cost reductions This target group tends to make extensive use of traditional and the outsourcing of non-core activities could be achieved, media – daily newspapers, radio, TV – and TMG enjoys a would affect improvements in margin. An also important prominent position in each of these sectors. factor is the further shaping of the multi media portfolio TMG is efficient in collecting and creating appealing content through acquisitions and divestments. for this target group in the area of news, music and games. • In accordance with the 2008 financial statements the 2008 normalised EBITA margin is 9.1%. Given the present TMG is also an innovative media enterprise and grows by economic developments this margin will be under pressure. focusing on the target group of the future: the ‘internet generation’ (mostly younger than 35 years of age), who spend much of their media time on the internet in general and using Strategy ‘social media’ in particular. TMG intends to become the trend-setting media enterprise for TMG’s enterprise strategy consists of the following the internet generation. TMG provides advertisers with an elements: opportunity to efficiently reach this target group. • TMG seeks growth by exploiting platforms of existing and new media, involving service to broad public interest groups, The company is convinced that success follows from the right whereby advertisers are offered reach on the basis of approach to the most important parts of traditional activities integrated media concepts centred on information and leading to greater efficiency and by carefully positioning itself in entertainment, including news, music, puzzles and games. the new media world as a means of realising essential growth. • To expand reach, TMG is developing a portfolio of different types of media companies that complement print media and/ or are innovative in relation to the publishers of print media (internet, digital). Geographical boundaries increasingly play less of a role. • Reaching the same general or specific public interest groups and communities via multiple media platforms creates opportunities for synergy, varying from integrated product concepts and propositions that combine ‘old’ and ‘new’ media to the cross-promotion of strong brands. • Reducing fixed costs in core operating units is crucial for TMG to be able to adapt to the new reality and to be able to continue to invest in growth in the areas of print, internet and digital. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 8 TMG Annual Report 2008 Report from the Executive Board

TMG (Telegraaf Media Groep N.V.) made significant Internationally, the strategy pursued up until now to enter progress during 2008 on reducing costs, divesting non-core markets and grow through magazines linked to internet activities, adjusting the multi-media portfolio through publications has been abandoned. Partly therefore the acquisitions and divestments. The recurring (normalised) operations in Sweden were sold to LRF Media and the disposal EBITA result achieved by TMG increased from € 61.8 million of business units in the Ukraine is at an advanced stage. in 2007 to € 62.4 million in 2008 on revenues of € 700.1 million and € 684.2 million respectively. The recurring EBITA The participation in ProSiebenSat.1 Media AG (ProSiebenSat.1) margin increased from 8.8% to 9.1%. is viewed by TMG as being of strategic importance due to the growth in the international consumption of this media type and The economic crisis, which deepened during the second the access to television in a fast changing media market. half of 2008, resulted not only in an significant restructuring provision (€ 52.3 million), but predominantly led to the impairment of the interests in ProSiebenSat.1 Media AG TMG’s Objectives (€ 294.8 million) and in Expomedia Group Plc (€ 18.7 million). Including the results of assets held for sale, TMG realised recurring EBITA of € 51.8 million in 2008. This resulted in a Including amortisation and tax a net loss of € 360.8 million margin of 7.2% on revenues of € 721.7 million. In 2007 these was incurred in 2008. In 2007, TMG made a net profit of figures were € 53.3 million, 7.2% and € 738.8 million respectively. € 399.3 million, mainly due to a gain of € 406.6 million on the At the time of publication of the semi-annual results 2008, the sale of interests in SBS Broadcasting S.à.r.l. and Wegener N.V. assumption was to reach a margin of at least 8% for the whole year. Given the further economic downturn during the last quarter of the year, particularly revenue development was Strategy negatively affected. Where possible, the decreased revenue TMG consists of three media companies, Telegraaf Media was absorbed by lowering the costs. Nederland, Sky Radio Group and Keesing Media Group, as well as three operating companies. As indicated at the publication of the semi-annual results, the recurring EBITA margin is targeted to grow at a rate of 10% per Steps were taken by Telegraaf Media Nederland (TMnl), by far year over the next three years. When in accordance with the the most important media company in terms of TMG’s 2008 financial statements, only ‘continued operations’ are taken operating result, in relation to optimisation (including the into account, a recurring EBITA margin of 9.1% has in fact been establishment of a Financial Shared Service Centre), portfolio realised in 2008. However, given economic developments, this adjustments (including the start up of the De Echo door-to-door margin is expected to come under pressure. paper in Rotterdam and the acquisition of an interest in Webregio.nl), divestments (the decision to sell a number of magazines in the Netherlands) and integration and synergy Cost Reductions and Reorganisation initiatives (including greater collaboration between HDC Media A key cost reduction programme was initiated during 2008. and Holland Combinatie in the Gooi area). This programme includes the headcount reduction of at least 425 FTE based on the situation at the end of June 2008. In the Netherlands, the Sky Radio Group and Keesing Media Evaluation of the various sub plans resulted in a planned Group took their first strategic steps into digital radio channels reduction of almost 500 FTE. (including 'Sky Radio Lovesongs' and 'Radio Veronica Top 1000 Aller Tijden’) and digital games (including the acquisition of The works councils in principle approved the plans and zigiz.com), respectively. agreement in principle was reached with the trade unions concerning the 2009 - 2010 Social Plan. In terms of the operating companies, the change in strategic direction for the distribution company to focus exclusively on As a result, headcount has been reduced by 130 during 2008. delivering daily newspapers is increasingly taking shape. The cumulative reduction must reach 425 FTE by the end of 2009, With respect to printing operations, the objective of realising while the remaining reduction of 75 FTE will be realised in 2010. cost reductions by increasing efficiency and optimising press These numbers exclude the staff associated with activities that capacity has high priority. In 2008, night press capacity was are held for sale and the reduction of 100 FTE as a result of the reduced by one press while maintaining the same production. rationalisation of TMG’s distribution operations in 2009. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 9 Report of the Executive Board

Shareholders • In terms of costs, restructuring measures and the planned TMG's shareholders’ base underwent a number of distinct outsourcing of a number of non-core activities will result in a changes during 2008 and at the beginning of 2009. The interest cost reduction of at least € 20 million. held by American shareholders was sharply reduced to below These cost reductions will be partly offset by the effects of the 10%. In the meantime, two Dutch major shareholders collectively 2008 and 2009 collective labour agreement (CAO) salary own an interest of more than 50% in TMG. increases and by the rising cost of paper. In 2008, TMG repurchased almost 2 million company shares for approximately € 47 million. Additional factors that will affect the net result for 2009 include lower financial income due to the ProSiebenSat.1 participation, lower restructuring expenses, and a positive effect from the To our Employees divested activities (gross € 11 million). TMG is market leader in many media fields, does not have much debt and the products strongly influence the talk of the The latest data concerning the deterioration of the economy day. Promising initiatives emerge. But more than ever it is also point to a decline of a magnitude not seen since the 1930s. important to work together enthusiastically and committed on The first two months of 2009 showed a significant company- TMG’s vision to be and stay the leading provider of information wide decline in advertisement revenues in comparison to the and entertainment. same period in 2008. As a consequence, the operating result is expected to be under pressure during 2009. The switchover to a more professional innovative culture, the cost saving measures instituted as a result of the economic TMG is almost debt-free and market leader with major brands in trends, the developments in the advertising market, and the several relevant media markets. The De Telegraaf daily development of the media landscape, imply changes that demand newspaper, Sky Radio and Denksport hold the top positions in a great deal from employees. It puts pressure on motivation, job the daily newspaper, radio, and puzzle and games markets, satisfaction and belief in the future. There is uncertainty and it respectively. These activities have prospects for a bright future, takes a long time before it is clear how and with whom TMG will also in their respective digital markets. TMG seeks to realise its continue and who will be let go. That this affects the morale of growth objectives. However, the primary focus in 2009 will be TMG’s employees is understandable. And this applies even more on strengthening market positions. more so to those people who have already left or who will be leaving our company. Amsterdam, 12 March 2009 That’s why the Executive Board is very appreciative of our employees’ efforts over the past year. Executive Board Telegraaf Media Groep N.V. A.J. Swartjes, Chairman 2009 Outlook As announced in the press release issued pursuant to the New Year’s speech, under the current economic conditions it is more than ever irresponsible to make any predictions concerning the results for 2009. It is, however, possible to identify a number of factors that could affect the development of the EBITA result:

• Circulation revenues from continued operations are projected to exhibit a positive trend, primarily due to price increases.

• The total advertising revenues from print and radio activities are projected to be significantly lower in comparison to 2008 due to the downturn. Revenues from digital activities on the other hand are expected to show a further increase this year. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 10 TMG Annual Report 2008 Members of the Executive Board As at 31 December 2008

drs. A. J. Swartjes (1949), CEO P. Morley MSc (1956), COO

Mr A.J. Swartjes is Chief Executive Officer since 1 January Mr P. Morley is Chief Operating Officer since 1 December 2005. From 1991 until 2005 he was a holding company director. 2007. Before, he was director at Wolters Kluwer Nederland. This form of management ceased to exist in 2005. Previously, mr. Morley was Chief Operating Officer at Telfort He joined the Telegraaf Groep in 1978, and has held various and member of the Executive Board at KPN. positions since that time. From 1974 to 1978 he worked at He studied mathematics and electrical engineering at Trinity Reader’s Digest and Colgate/Palmolive. College in Dublin. Mr Swartjes studied Economics at Erasmus University Rotterdam.

drs. F. Th. J. Arp (1954), CFO

Mr F.Th.J. Arp is Chief Financial Officer since 1 January 2005. Mr Arp was holding company director from 1 July 1997 to January 2005. From 1991 until 30 June 1997 he was a partner in the Deloitte & Touche Registered Accountants firm. Before that, he worked in the firm’s accounting practice. Mr Arp studied Business Economics and Accountancy at Erasmus University Rotterdam. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 11 Members of the Supervisory Board As at 31 December 2008

A.J. van Puijenbroek, chairman Mrs ir. M. Tiemstra

Age 61 Age 54 Nationality Dutch Nationality Dutch Profession/Principle position Profession/Principle position – Director N.V. Exploitatiemaatschappij van Puijenbroek – Chairman Executive Board Arbo Unie Ancillary positions – Former Associate Boer & Croon Executive Management – Chairman, Stichting Beheer van Prioriteitsaandelen TMG N.V. – Former member Executive Board Eureko B.V. (TMG priority share management trust) Ancillary positions – Secretary of Stichting Preferente Aandelen TMG N.V. – member Supervisory Board Koninklijke Nederlandse Munt (TMG preference shares trust) until 15 January 2009 – member Supervisory Board AON Groep Nederland B.V. – Supervisory Board member of B.V. Textielfabrieken First appointment 5 June 2003 H. van Puijenbroek Current term 2007 – 2011 First appointment 15 May 1975 Current term 2007 – 2011

L.G. van Aken

Prof. dr. W. van Voorden, Deputy Chairman Age 67 Nationality Dutch Age 66 Ancillary positions Nationality Dutch – Executive Board member, Stichting Beheer van Prioriteits Profession/Principle position aandelen TMG N.V. (TMG Priority share management trust) – Former Chairman of the Supervisory Board for – Executive Board member, Stichting Administratiekantoor Health Care Insurance (CTZ) Boekanier (administrative/managerial office) – Professor Emeritus, Erasmus University Rotterdam – Executive Board member, Stichting Administratiekantoor van – Professor Emeritus, University of Tilburg aandelen in H.J. Wols Holding B.V. (share trust office) Ancillary positions – Chairman of Stichting-Telegraafpensioenfonds – Former Chairman Supervisory Board Batenburg Beheer N.V. (Telegraaf pension fund trust) 1959 – Chairman Supervisory Board Panteia B.V. First appointment 30 May 2002 – Executive Board member, Stichting Administratiekantoor Current term 2006 – 2010 Ballast Nedam N.V. First appointment 4 June 1997 Current term 2005 – 2009 drs. J.G. Drechsel

Age 53 H.L. Weenen, secretary Nationality Dutch Profession/Principle position Age 64 – CEO BCD Holdings N.V. Nationality Dutch Ancillary positions First appointment 26 June 1980 – Chairman Supervisory Board TRX Inc. Current term 2008 – 2012 – Member Supervisory Board Eneco Holding N.V. First appointment 26 September 2007 Current term 2007 – 2011 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 12 TMG Annual Report 2008 Report from the Supervisory Board

We hereby present the report, the balance sheet as at We established the remuneration of the Executive Board on the 31 December 2008 and the income statement for 2008 with basis of our remuneration policy. The payment of individual explanatory notes, as compiled by the Executive Board. members of the Executive Board is recorded in the 2008 annual The financial statements have been audited and approved report on page 93. A summary of the 2008 Remuneration by KPMG Accountants N.V. in Amsterdam, as stated in the Report in the Dutch language is accessible on TMG’s website. auditor’s report included in this report. One board member took part in a consultation meeting with the The Supervisory Board discussed the financial statements with Central Works Council during the year under review and two the auditor during the annual meeting, after which we signed members took part in an informal meeting. the financial statements to comply with the Board's legal obligation pursuant to Article 2:101 Paragraph 2 of the Dutch We would like to express our gratitude to the Executive Board Civil Code. and all of TMG’s employees for the manner in which they The Supervisory Board met with the Executive Board nine times fulfilled their duties in 2008. during the past year. Topics such as strategy, internal risk management and control systems, and financial matters were Corporate Governance addressed during these meetings. Best practice provision III.2.1. states all Supervisory Board members, except for one person maximum, are independent. During the year under review, particular attention was devoted Because this is not the case for Messrs L.G. van Aken and to the following subjects: the ProSiebenSat1 option arrangement, A.J. van Puijenbroek we are not in compliance with the above- portfolio adjustments including acquisitions and disinvestments, mentioned provision. We attach a great deal of importance to the product and print strategy, and cost savings, including the having more than one board member with a high degree of reorganisation plans and its progress. commitment to the enterprise on the basis of experience or shareholder status. Nevertheless, the majority of board In our capacity as audit committee we held discussions with the members is independent Head of TMG’s Internal Audit Group during our meeting of in the sense of best practice provision III.2.2. This provides 30 October 2008. The subjects discussed included the internal sufficient assurance of independent supervision. management and control system and its actual implementation, the status of operational risk management, the 2008 audit findings and the 2009 audit plans. We consulted with the external auditor on two occasions. The audit report concerning We propose to the shareholders: the 2007 financial statements was discussed with the auditor in 1. The 2008 financial statements be approved as set out in the March 2008, and the 2008 management letter was discussed documents presented. in October of the same year. 2. The Executive Board be granted discharge for the policies pursued in 2008. During the year under review, we discussed the performance 3. The members of the Supervisory Board be granted discharge of the Supervisory Board, as well as the performance of its for the supervision conducted in 2008. members, the qualities desired in the board according to the 4. A cash dividend be adopted of € 0.35 per share of € 0.25 competency profiles, and the current composition of the board. nominal value for the 2008 financial year (2007: cash We discussed the management model, and the composition as dividend of € 1.00 per share of € 0.25 nominal value). well as the performance of the members of the Executive Board, in the absence of Executive Board members. The dividend will be made payable on 29 April 2009 at the Kas Bank N.V. in Amsterdam. Pursuant to his appointment to the board, Mr J.G. Drechsel completed the familiarisation programme for Supervisory Board Amsterdam, 12 March 2009 members. The programme consists of meetings with the management boards of operating companies and the heads of TMG’s staff departments. Ms Tiemstra participated in these On behalf of the Supervisory Board discussions together with Mr Drechsel. A.J. van Puijenbroek, Chairman Mr L.G. van Aken was able to attend only one board meeting for personal health reasons. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 13 Consolidated Key figures

In thousands of euro’s 2008 2007

Revenues 684,204 700,061

Operating result -37,043 -18,383 Financial income and expenses -314,271 421,843 Result before tax - continued operations -351,314 403,460

Income tax -10,190 -6,160 Result discontinued operations, net of tax -19,641 -10,336 Net result of the year -360,765 399,284

Minority interest -777 -813 Result attributable to shareholders of Telegraaf Media Groep N.V. -359,988 400,097

Proposed result appropriation (not included in the financial statements) Deducted/released from reserves -376,701 350,097 Dividend payment 16,713 47,750 Pay-out ratio p.m. 11.9% Cash flow from operating activities 64,962 62,130

Per share in €: Result -7.49 8.00 Cash flow from operating activities 1.35 1.24 Dividend 0.35 1.00

Employees (FTE) at year end - continuing operations 3,279 3,248 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 14 TMG Annual Report 2008 Consolidated information

FINANCIAL PERFORMANCE (NORMALISED) EBITA In thousands of euros 2008 2007 The 2008 and 2007 annual figures have been prepared in accordance with the currently applicable IFRS guidelines. Revenues 684,204 700,061 Other operating income 3,868 2,499 Raw and auxiliary materials -56,831 -61,352 The results from already discontinued operations or held for Personnel costs -306,526 -290,864 sale activities are separately presented in the consolidated Other operating expenses -291,554 -295,220 income statement for 2008 as well as in the comparable figures Depreciation -21,308 -23,158 over 2007. This concerns the operations of the Swedish EBITA 11,853 31,966 organisation that was sold during 2008 and the so-called held for sale activities, including several titles owned by the Telegraaf Normalisations Restructuring costs 52,293 11,903 Tijdschriften Groep in the Netherlands and the Ukraine, the Employee profit-share - 14,487 narrowcast activities of Media Librium and CARP's print Pension schemes - 1,213 operations. Other -1,759 2,196 Total normalisations 50,534 29,799 Normalised for exceptional items and amortisation, the operating Normalised EBITA 62,387 61,765 result increased from € 61.8 million (8.8% of revenue) to € 62.4 million despite pressure on the advertisements revenue. Amortisation and impairments -48,896 -50,349 The EBITA margin in 2008 therefore was 9.1% of revenues. Operating result -37,043 -18,383

Due to the economic malaise, the net result for 2008 was heavily impacted by impairments, particularly the participation Net revenues declined by € 15.9 million to € 684.2 million in in ProSiebenSat.1 acquired in 2008. In total, a net loss of 2008. Revenues were positively impacted by the modest € 5.1 € 360.8 million was incurred over 2008 compared to a positive million increase in circulation revenue, primarily due to higher net result of € 399.3 million over 2007. The (book) losses on the paid subscription income and a strong increase in other participation in ProSiebenSat.1 Media AG and the Expomedia revenues in the amount of € 6.9 million due to the full year effect Group Plc. amounted to a total of approximately € 324 million. of the Pilarczyck Media Groep acquired in 2007 and the Internet Furthermore, a restructuring provision in excess of € 52 million revenue which increased from over € 30 million in 2007 to over was recorded. This compares to a gain on the sale of the € 39 million in 2008. interests in SBS and Wegener in 2007. Revenues were negatively impacted by a € 13.8 million decline in advertising revenue primarily evident in the personnel ads, The operating result declined from negative € 18.4 million in classified ads and national brands and services segments. 2007 to negative € 37.0 million in 2008. Furthermore, among other issues, there was a pressure on prices due to the intensely competitive media market. Likewise, The 2.3% decline in revenues to € 684.2 million (2007: € 700.1 by outsourcing the distribution of free local papers to third million) is primarily due to the disappointing advertising parties and the termination of the distribution and print contract revenues and the termination of external printing and distribution by a third party, revenues from these activities declined by orders. This is somewhat offset by higher paid subscription € 14.1 million. revenues, while the revenues from single copy sales remained almost stable. Total operating expenses rose by € 4.2 million from € 720.9 million in 2007 to € 725.1 million in 2008. This rise includes an Organic advertising revenues declined in comparison to 2007 increase of € 11.9 million in restructuring expenses to € 52.3 with € 26.2 million to € 318.1 million. However, it was possible million due to the sharp reduction in personnel planned for 2009 to offset a major portion of this decline by the cost saving and 2010. Aside from the increase in the restructuring expenses, measures that had already been initiated in 2007. no provision was made for the profit sharing scheme in 2008, The decrease in direct manufacturing costs (€ 7.3 million) and which in 2007 amounted to € 14.5 million. in other normalised operating expenses (€ 15.8 million) were Furthermore, there was a significant decrease of € 10.2 million however insufficient to compensate the loss in revenues in for hiring temporary personnel, down to € 22.7 million. comparison to 2007. Expenses in general exhibited a downward trend in 2008 in comparison to 2007, due to the declining manufacturing costs WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 15 Consolidated information

(particularly paper and distribution costs) and due to a cost REVENUES (€ 684.2 MILLION) reduction programme instituted back in 2007. In addition, a € 10.3 million impairment was recognised pursuant to the impairment test (including amongst others Mobillion, Advertisements Keesing Reference Systems and Nobiles). Subscriptions + single copy sales The positive result in the amount of € 352.6 million realised Third-party printing from associates in 2007, primarily due to the sale of SBS Distribution Broadcasting S.a.r.l., was contrasted in 2008 by the negative Other revenue result from participations in the amount of € 131.3 million, primarily due to the € 18.7 million write off of the investment in Expomedia Plc., the 6% share in the negative result of 40.8% ProSiebenSat.1 Media AG over 2008 of € 10.2 million and the 0.9% impairment loss on this associate of € 99,8 million (see also 4.7% next paragraph). 5.1% 48.5% Financial income declined by € 61.1 million to € 15.7 million in 2008, whereby it should be noted that in 2007 the € 57.0 million book profit on the equity interest in Wegener was included in Of the total revenues, € 36.7 million (5.3%) was realised abroad. this amount. The proceeds related to the sale of SBS were Foreign revenues in 2007 amounted to € 39.4 million (5.6%), invested in term deposits that produced over € 13.3 million in whereby it should be noted that the business units in Sweden interest income up to October 2008. The financial expenses and Ukraine have been eliminated from these figures for 2007 include the impairment of the ProSiebenSat.1 Media AG put as well as 2008. These operations were either already sold during option in the amount of € 195.0 million to € 182.0 million at 2008 or will be divested or terminated during 2009. Revenues 25 September 2008. per employee (FTE) decreased by € 4,000 to € 207,000.

Both in 2008 and 2007 a tax gain was recorded, of € 10.2 The net revenue, average number of employees and revenue million and € 6.2 million, respectively. per employee trends over the past five years are as follows:

The net cash flow for 2008 was negative € 462.3 million. REVENUE PER EMPLOYEE1 € 65.0 million was generated from business operations, which is marginally higher than the comparable € 62.1 million figure for Average revenue 2007. The cash flow from investments was negative € 417.8 TMG revenue Average amount per employee (x € 1 million) fte (x € 1,000) million, primarily as a result of the € 377.1 million investment in the ProSiebenSat.1 Media AG participation effected in 2004*/** 694.3 4,354 159 September 2008. 2005*/** 736.7 4,317 171 2006** 678.1 3,826 177 2007 700.1 3,353 209 Revenues 2008 684.2 3,301 207 Revenues declined by € 15.9 million, or 2.3%, from € 700.1 1 million in 2007 to € 684.2 million in 2008. The revenues from Effect of temporary employees is not included in these figures. In 2008 this item declined with € 10 million compared to 2007. paid subscriptions increased with € 5.1 million primarily due to increased subscription prices. The revenues of advertisements * Including Limburg activities declined by € 13.8 million as a result of the economic recession. **Including discontinued operations 2008 The other revenues declined € 7.2 million due to the sale of the free local papers distribution operations. The revenue generated by the segment Publishing declined in 2008 by 0.5% in 2008 to € 583.7 million. This decrease is fully attributable to the disappointing advertising revenues compared to 2007. Revenues from the segment Radio also decreased by 3.4% to € 51.0 million, once again due to lower advertising WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 16 TMG Annual Report 2008 Consolidated information

revenues compared to 2007. Revenues from the segment Other Investment Activities decreased by 18.0% to € 49.5 million due to the The total amount invested in 2008 amounts to € 417.8 million and disposal of the free local papers distribution operations and the includes investments in property, plant and equipment, and in loss of print orders. The decline of the segment Radio as well as intangible assets (excluding goodwill) € 15.2 million, acquisitions of the segment Other Activities resulted in an increase in the € 39.0 million and the exercise of the ProSiebenSat.1 Media AG relative importance of the segment Publishing as a percentage option arrangement in the amount of € 377.1 million as a result of the total revenues from 83.8% in 2007 to 85.3% in 2008. of which TMG acquired a 6% economic interest in this enterprise. SEGMENT REVENUE

x 1 million 2008 2007 Dividend Policy The dividend is normally set within a bandwidth of 15% to 30% Print of the cash flow, with cash flow being defined as the sum of the Daily newspapers 312.9 45.7% 329.4 47.1% net profit and depreciation and amortisation, adjusted for the Regional newspapers 104.6 15.3% 108.1 15.4% Free local papers 58.1 8.5% 55.0 7.9% effects of revaluation and impairment included in the net result Magazines 30.2 4.4% 27.7 4.0% for the year. As a consequence of the high impairments Puzzle magazines 47.3 6.9% 49.1 7.0% application of the policy over 2008 would not result in a dividend Other 17.6 2.5% 30.6 4.5% payment. However, based on the operational cash flow and 583.7 85.3% 586.9 83.8% debt-free position, a dividend of € 0.35 per share is proposed.

Radio 51.0 7.5% 52.8 7.5% On a total of 47,750,000 outstanding shares this means a dividend payment of € 16.7 million. Other activities The dividend paid for in 2007 was € 1.00 per share. Distribution 33.4 4.9% 44.8 6.4% Print third-party 6.1 0.9% 8.3 1.2% Other activities 10.0 1.5% 7.3 1.0% 49.5 7.2% 60.4 8.6%

Total 684.2 100.0% 700.1 100.0%

Shareholders’ Equity Including the loss incurred during 2008, the distributed dividend in 2007 and the repurchased company shares in 2008, shareholders’ equity decreased sharply from € 866.8 million at the end of 2007 to € 411.6 million at the end of 2008. This represents a decrease from € 17.43 to € 8.62 per share. The dividend to be paid for 2008 is not yet reflected in equity.

Shares During 2008, TMG repurchased 1,990,200 (depositary receipts for) shares for a total amount of € 47,030,000. These shares have not been withdrawn, as a result of which the composition of the number of shares in comparison to 2007 remains unchanged. The number of issued shares consists of 50,000,000 ordinary shares and 960 priority shares of € 0.25 nominal value. Of the ordinary shares, 31,722,029 were converted into depositary receipts as at 31 December 2008, amounting to 63.4% (year-end 2007: 63.4%). WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 17 Consolidated information

Corporate Affairs The focus of the agreement is on promoting the ‘Work-to-Work’ principle. The agreement includes a number of changes in relation to the 2008 Social Plan. In particular, the structure has Human Resource Management been drastically changed if outplacement is the chosen option. Work on the organisation of Telegraaf Media Nederland For example, the mediation term is a maximum of 12 months (TMnl) continued during 2008. Early in the year, TMnl’s (previously 24 months). management team was already being confronted with pricing pressures, declining advertising revenues and rising Performance Management costs. This prompted a number of actions to be taken, A TMG-wide performance management system was developed including a drastic reorganisation. during 2008 and its rollout has been initiated. The system allows employee qualifications to be monitored and upgraded. This 2008 was characterised by the announcement of a wide range influences employability and therefore employee mobility as well. of actions designed to reduce personnel costs. This included The rollout will continue in 2009 by conducting planning and per- among other a personnel freeze and a tightening of various formance evaluation interviews in accordance with the new system. corporate regulations, including the communications and telephone expense regulations. Job Structure Work was initiated on updating the job descriptions for a large Salaries rose by 3.5%, primarily due to an increase pursuant to portion of the positions within TMG. Accurate and complete job the collective labour agreement (CAO). The focus on reducing descriptions are critical in terms of employability and the personnel costs resulted in a 30% reduction in the cost of performance management system. This project will continue to temporary personnel in comparison to 2007, among other things. be pursued in 2009.

Employment Culture Employment increased during 2008 due to various acquisitions. In the context of the desirable shift to a more professional, This was offset by a reduction in employment due to reorgani- innovative culture, the initiated development started in 2008 is sations and the personnel freeze mentioned earlier. shaped further. Internally, the required focus was placed on Finally the net average number of fulltime jobs decreased from communicating associated core values. 3.665 in 2007 to 3.635 in 2008. Not taking into account the staff related to assets held for sale in 2007 as well as in 2008, the Management Development number of fulltime jobs decreased from 3.319 to 3.301. A Basic Management Training Programme was developed to improve the quality of the middle management cadre. Fifty-four A major reorganisation was announced at the publication of the managers completed this training programme by the end of 2008. semi-annual results. Initial plans called for a reduction of at The training programme will be continued in 2009. The same least 425 jobs in relation to the number existing at the end of applies to the high potential training programme. Thirteen June 2008. Further elaboration of the various sub-plans resulted employees with high potential completed the programme in 2008. in a planned TMG-wide reduction of almost 500 fulltime jobs. The higher management followed a skills programme aiming at This number excludes the reduction of 100 fulltime jobs the effective utilisation of regular consultations between announced by TMG Distributie at the end of the year. managers and employees. Over 130 jobs have been reduced according to plan by the end of 2008. By the end of 2009, a net reduction of 525 fulltime jobs (including TMG Distributie) must be completed. The remaining reduction will be effected in 2010.

Terms and Conditions of Employment The 2008 Social Plan was only completed in the spring of 2008. The most significant change in relation to the 2007 Social Plan was the decrease of exit compensation. Discussions concerning the contents of a new plan have begun in September 2008. Agreement in principle concerning the 2009-2010 Social Plan was reached with the trade unions in mid-February 2009. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 18 TMG Annual Report 2008 Consolidated information

Corporate Procurement Employee Participation The goal being pursued by Corporate Procurement is to The Central Works Council (CWC) in 2008 continued to make a concrete and positive contribution to improving the pursue the objective that it set for itself in 2007: to not only operating result, in collaboration with all the business. assume a mandatory advisory role pursuant to the Wet op This is accomplished by reducing total costs (direct and de Ondernemingsraden (WOR) (Works Councils Act), but indirect costs), leveraging the synergy between operating also to in fact be a professional sparring partner for the companies and increasing the added value provided by Executive Board. suppliers (e.g., quality, time-to-market and innovation). The CWC's Financial Committee demonstrated that it is capable In 2008, Corporate Purchasing specifically focused on super of contributing suggestions and beneficial and useful ideas in vising procurement projects and outsourcing of non-core relation to the new employee profit sharing scheme. operations (mail, outsourcing of printing, transport, IT, HR The sub-committees for DistriQ, now TMG Distributie, and the services and marketing & communications projects). And, internal facilities service, Home4Media, also demonstrated their among other the centralisation and standardisation of contracts, professionalism. pricing and the mandatory registration. These initiatives resulted in more synergies, improvement in quality and in a further cost The CWC dealt with a wide range of subjects during the past reduction. year. The most evident in this regard were the restructuring leading to a reduction of 500 jobs, the impact of the changed DistriQ strategy, the unbundling of the internal facilities service and the negotiations concerning the 2009 - 2010 Social Plan.

The reorganisation previously announced in 2008 caused some turmoil and is certainly expected to require the full attention of the CWC in 2009 as well.

The changes taking place will also have consequences for the composition of the CWC. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 19 Telegraaf Media Nederland

Telegraaf Media Nederland Due to price increases, subscription revenues showed a modest increase. However, this is offset by a limited decrease in the TMG has its origin in publishing activities. This is its source revenues derived from single copy sales. of success and at the same time it’s a major challenge in terms of achieving a proper balance between revenue and A reduction of over 100 fulltime jobs and significant savings expenses and in terms of its need for necessary change. related to temporary personnel and consulting costs clearly contributed to achieving a lower cost level. Since September 2007, the print and digital operations have been bundled into a single business unit: Telegraaf Media Nederland (TMnl). With over 250 titles, this business unit reaches over 7 million Dutch people every day. National Daily Newspapers

The objective of creating TMnl is to achieve synergy by exploiting In the consumer market, the Dutch daily newspapers are opportunities, sharing knowledge and saving costs. represented by products that are different in nature, scope TMnl’s goal for the coming years is to acquire a market leader- and publication frequency and are segmented by region and ship position in all market segments in which it is active and to by free or paid subscription. The Dutch circulation market in achieve returns in line with the market. TMnl wants to acquire the 2008 (fourth quarter 2007 – third quarter 2008) consisted of largest possible share of the consumer's media attention. over 5.4 million copies per day compared to 5.0 million in 2007. The 0.4 million increase in the number of copies To achieve this goal, changes have been made to TMnl’s includes the circulation of two new free newspapers, structure, methods of work and portfolio. An increase in launched in 2007. revenues and a permanent decrease in costs is being achieved by: The performance of the Dutch daily newspapers in the consumer market nowadays is not only assessed on the basis • Optimisation of the organisation. Improvements in the quality of movements in the circulation of paper products, but on the of processes have been achieved. Work is being carried out trend in digital forms of publication as well. smarter and more rapidly, at lower costs. In 2008 monthly, 6.1 million people (2007: 4.8 million) or approximately half of the Dutch population from 13 years of age • Adjustment of the product portfolio. TMnl assesses all and older, visited one of the websites of the daily newspapers. products for current and future returns, leadership position On average they visited one or more sites 17 times per month and potential. TMnl discontinues products that are not able (2007: 14 times). This increases the monthly reach by over 30%. to pass this test and acquires or develops titles/activities that contribute to returns and leadership positions. Furthermore, Within the Dutch net advertising market, the portion related to these titles broaden the available offering: This way TMnl daily newspapers amounted to € 900 million in 2007 follows the changing behaviour of consumers and advertisers. (2006: € 859 million). A decrease of 2.0% to € 882 million is projected for 2008. • Integration on as many fronts as possible. In-depth collaboration is the rule within TMnl. In this way opportunities are National Dailies (paid) exploited and costs reduced. The overall circulation of paid Dutch daily newspapers in 2008 (1 October 2007 - 30 September 2008) decreased by 2.2% to Although important steps were taken in all of the above areas 3.6 million copies per day (2007: 2.9% decrease to 3.7 million during 2008, TMnl’s operating result was lower than last year, copies). The portion of the circulation distributed abroad primarily due to the shortfall of economic conditions. However, decreased by 5.3% to almost 37,000 copies per day. Last year the decrease in revenues was to a large extent offset by cost the decrease was 2.2%, falling to almost 39,000 copies. reductions. The composition of the circulation is as follows: subscriptions: 91.1% (2007: 90.5%); single copy sales: 7.5% (2007: 7.7%) and Print Media other distributions: 1.5% (2007: 1.7%). The principal cause of the disappointing revenue trends for print The circulation of paid national dailies decreased by 1.8% media is the decline in the labour communications market and (2007: -4.1%). The circulation of regional dailies decreased by the fierce competition within the group of free daily newspapers. 2.6% (2007: -1.4%). WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 20 TMG Annual Report 2008 Telegraaf Media Nederland

The total advertising volume expressed in millimetres of paid DVDs and wine via newspaper, the internet and e-mail. dailies decreased in 2008 with 2% (2007: -8%). These numbers Projections call for this amount to grow sharply over the coming exclude the Sunday papers. years. The book ‘Tijdperk Holleeder’ turned out to be a best The categories brands and services and family announcements seller with sales topping 100,000 copies. remained at the same level as the previous year. The categories personnel and classified decreased by 5% and by 7%, In terms of its subscription service, the De Telegraaf offers two respectively. The paid national dailies performed worse than the new successful services: a Legal Service and RegioSelect, an regional dailies. The volume of the national dailies decreased e-mail news service that selects local and regional news from with 7%, while regional dailies lost 1%. various online news sources.

Advertising Uitgeversmaatschappij De Telegraaf The 2008 summer sports season was a success for the De Tele- The normalised operating result of the Uitgeversmaatschappij graaf. The European Football Championships and the Olympic De Telegraaf increased clearly in comparison to 2007 as a result Games demonstrated that both readers and advertisers of cost reductions. preferred the De Telegraaf during this period. Hundreds of Advertising revenues declined significantly by € 19 million, in advertisers found their way to the newspaper and its special comparison to 2007, primarily due to a decrease in revenues supplements, thus generating additional revenues. from personnel ads, ads placed by national brands and services, and classified ads. The fierce competition in the advertising market intensified. Subscription revenue rose by almost € 5 million in comparison Further price pressures resulted, among others from attractively to 2007 due to price increases offsetting the decrease in volume. priced blocks of advertising on television and the publication of Single copy sales declined due to a decrease in volume. two free daily newspapers of which one has since stopped publication. Circulation The De Telegraaf’s circulation stabilised during the first half of There was a sizeable decrease in the volume of personnel the year. Circulation declined by 2.5% and 2.2% respectively advertising, a trend that the De Telegraaf was also unable to during the third and fourth quarters in comparison with the escape. The same was true for classified ads. Uncertainty same periods in 2007. This resulted in an average circulation concerning economic growth and the financial crisis reinforced (from Monday to Saturday) for the De Telegraaf for 2008 of the pressure on rates during the last quarter. 695,730 copies per day compared to 703,584 copies per day in 2007. As such the De Telegraaf outperformed its competitors. Customised concepts and cross-media propositions have been The De Telegraaf’s share of the market for paid subscriptions developed to withstand the pressures on advertising revenues. rose from 18.9% in 2007 to 19.2% in 2008. The revenues in these categories are consequently increasing rapidly. The growth in the daily distribution of free newspapers with over 440,000 copies put pressure on the De Telegraaf’s single copy Editorial Board sales, as well as the number of subscribers in 2008. In 2008, De Telegraaf was high profile and leading in numerous Domestic single copy sales declined by 7.5% in 2008, while areas, such as politics, crime, sport and entertainment. The single copy sales abroad decreased by 3.6%. newspaper was leading in its coverage of the Olympic Games in China and the European Football Championships in Switzerland Subscription rates were increased effective 1 October 2008. and Austria. Aside from this, readers displayed an insatiable Single copy prices were increased effective 2 January 2009 for thirst for news about the impact of the credit crisis that spread the weekday newspaper as well as for the Saturday and Sunday from the US. However, stunning revelations about political papers. issues such as the resignation of Minister Vogelaar and the departure of Member of Parliament Duyvendak also caused a The quality of newspaper delivery was improved during 2008 by lot of commotion. A dialogue was established with the De tackling the areas with major delivery problems. Telegraaf’s millions of readers through the newspaper’s healthcare action ‘Kerstgroet aan de Zorg’ (Season’s Greetings Gross revenues amounting to approximately € 4 million were to the Healthcare Sector) that put a positive spotlight on some earned on the direct sale of a number of items, such as books, 15,000 nurses. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 21 Telegraaf Media Nederland

Modernisation of the newspaper was also a continuous focus of National Dailies (free) efforts. Preparations were made for the conversion of the format of De Telegraaf’s Sunday newspaper to tabloid-size at the The overall daily circulation of free national newspapers in beginning of 2009. The introduction of the TV tabloid pullout on The Netherlands in 2008 (1 October 2007 to 30 September Saturday and a weekly special on Sunday, and the editorial 2008, inclusive) was almost 1.8 million copies (2007: 1.3 innovation of the popular Reiskrant are perceived as important million copies). These figures are affected by the inclusion improvements. of two daily newspapers starting in the second quarter of 2007. Effective 2 October 2008, one of the free newspapers Distinguished, authoritative, reliable and innovative. These was once again pulled from the market. characteristics were further strengthened during the past year by promoting improved collaboration between the editorial boards of the newspaper and the popular Telegraaf.nl news portal. The BasisMedia topic of today’s discussions is determined by the De Telegraaf. In terms of circulation of Sp!ts, increasing the quality of distribution was one of the key areas of focus for 2008. The circulation Mr. J.J.M. Paradijs was appointed as the De Telegraaf’s Chief of Sp!ts rose by 2% to an average of 432.000 per day in 2008. Editor at the beginning of 2009. Mr Paradijs is the founder of the Vereniging Wakker Nederland (see also www.wakkernederland. Competition, which intensified during 2007 with the arrival of tv). This association was created as an aspiring member of the the De Pers and Dag newspapers, reached its peak during the Dutch Public Broadcasting Service network. The station has first quarter of 2008 causing a decline in advertising volume as since attracted the 50,000 members required to become a well as price. In particular the personnel market and the telecom recognised public service broadcaster. Wakker Nederland will sector contributed less during 2008 in terms of advertising. apply for certification to the Minister for Education, Culture & The declining revenues were, where possible, offset by a Science prior to 1 July 2009. package of cost saving measures. Once the station obtains its broadcasting permit it intends to bring forward the current issues faced by society for discussion In addition to cost savings, BasisMedia also underwent expan- in a sensible and clear manner so that more Dutch residents are sion during 2008. The interest in InfoPinnacle and SmartEvents able to identify with the Dutch Public Broadcasting Service. was increased to 100% and Nobiles Media was acquired. The rapidly deteriorating situation in the personnel market had a Internet clear impact on Nobiles Media’s operating result, while Telegraaf.nl’s reach increased during 2008. More visitors visited InfoPinnacle appeared to be more insensitive to this. The trends the site more often and viewed a greater number of pages. in the personnel market, as well as the lack of prospects for An average of 200 million pages was viewed each month during improvement over the short term were partly responsible for the 2008. This represents an increase of more than 30% in decision to halt the printed Carp publication at the end of the comparison to 2007. year. The focus was shifted to online and operations will be consolidated with the Vacaturekrant.nl. Telegraaf.nl on mobile internet had a successful year with a significant increase in the number of visitors, page requests and Sp!ts' internet activities have had a successful year 2008. the number of pages viewed during each visit. The number of The reach of the site Sp!tsnieuws.nl rose from approximately page views doubled in comparison to 2007. 235,000 unique visitors per month to approximately 1 million.

Telegraaf.nl completed a number of successful projects with social communities during the summer of 2008. Telegraaf.nl appeals to a new and younger target group with these projects.

Miscellaneous The interest in Ticketsplus.nl in the Netherlands, the largest online seller of tickets for theme parks, zoos, museums, fairs and events, was expanded to 75% in September 2008. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 22 TMG Annual Report 2008 Telegraaf Media Nederland

REGIONAL Dailies Free Local Papers

In 2008, the regional dailies also continued to face increased Within the global Dutch advertising market, the portion competition generated by the availability of free information, related to free local papers and newspapers amounted to including the internet, as well as regional and national radio, € 631 million in 2007 (2006: € 614 million). A further increase television and free local papers. of 2.5% to € 647 million is projected for 2008.

The overall daily circulation of regional newspapers in the Netherlands in 2008 (1 October 2007 - 30 September 2008) Holland Combinatie declined by 2.6% to 1.6 million copies per day Holland Combinatie’s organic revenue experienced a modest (2007: 1.7 million copies). decline, while the organically realised normalised result nevertheless rose limited. The weekend publications in particular experienced a difficult HDC Media year and a number of weekend publications were removed from HDC Media, publisher of Noordhollands Dagblad, Haarlems the marketplace. Dagblad, IJmuider Courant, Leidsch Dagblad, De Gooi- en By expanding the De Echo’s area of distribution to include the Eemlander, Almere Vandaag, Autocircuit, alphen.cc and a area around and within Rotterdam and through a number of number of internet services realised a significantly improved acquisitions, Holland Combinatie's total revenue experienced normalised result in 2008 compared to 2007. The decline in limited growth. The total normalised result was under pressure, advertising volume experienced by HDC Media across all particularly due to the start-up costs in Rotterdam and categories was 5%. This is 2% less than that experienced by decreased considerably. other regional newspapers in the Netherlands. The same applies to HDC Media’s circulation, which remained fairly stable in The year 2008 for Holland Combinatie was characterised by contrast to a decline for the overall group of regional newspapers. growth and acquisitions. The Amsterdams Stadsblad's titles A general cost reduction programme and a reduction in the were acquired from Argo Media in February. The tender for the number of FTE led to the improved result. placement of city ads was won in Rotterdam in April. This accelerated plans to publish a free local paper in Rotterdam. In terms of advertising, the publications were faced with a The De Echo appeared for the first time in the greater Rotterdam limited decline in revenues derived from local advertising and a area in September. At the same time, the 7 titles of Postiljon, significant decline in national and personnel advertising. the 3 Delta newspapers in the Rotterdam area and the 5 titles of Ons Utrecht were acquired from the Nederlandse Weekbladen The number of paid subscriptions decreased by 1.1%. The Groep. Holland Combinatie has therefore garnered a strong subscription price rose in 2008. Single copy sales experienced position in the readership and advertising markets in three of the a decline. The decline in revenue was limited due to the rate four large cities in the Randstad. increase. All mid-week titles started their own internet sites at the end HDC Media has created an independent department for the of May. in-house publication of books. The websites for the newspapers were renewed during 2008 resulting in increased numbers of visitors and page views.

In the ‘t Gooi area editorial and commercial collaboration was achieved between HDC Media and Holland Combinatie, TMnl’s free local papers business unit.

Pursuant to a European tender, HDC Media works with three other companies to provide all services required to market and promote tourism in the Province of Noord-Holland. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 23 Telegraaf Media Nederland

MAGAZINES Privé is and remains the market leader in the Dutch gossip segment and managed to increase its readership market share The total circulation of general interest magazines in the to 38% in 2008. Furthermore, Privé also managed to further Netherlands (excluding sponsored and magazines included increase its share of the advertising market to 49% in spite of with newspapers) amounted to 26.8 million copies in the severe pressure on expenditures in this segment. The exclusive third quarter of 2008 compared to 27.1 million copies during reporting of the marriage of Frans Bauer provided the impetus the same period in 2007. for a major increase in single copy sales and these editions consequently were the best sold during the past year. The Dutch advertising market for general interest magazines was valued at € 356 million in 2007 and as such rose modestly The restyling of Autovisie in March 2008 immediately resulted in compared to 2006 (€ 347 million). A decrease of approximately an increase in single copy sales allowing Autovisie to maintain 2% to € 349 million is projected for 2008. its number 2 position in the car publications segment. 2008 was also a year in which carmakers reduced their advertising expenditures by 25%. This decline was felt by all titles in this Telegraaf Tijdschriften Groep segment. To meet the challenges of the coming year, Autovisie To be able to generate sufficient returns over time, the Telegraaf will implement the second stage of its restyling and will also Tijdschriften Groep (TTG) was faced with several choices: to issue a second publication designed to compete in the reduce its scale or to grow organically or on the basis of advertising market for car publications aimed at the high-end of acquisitions. The opportunities for growth did not appear feasible the market. in actual practice. TMG consequently in November announced its intent to sell a large portion of the TTG portfolio. Only the titles Privé, VROUW and Autovisie will be retained by TMG Digital Media because these titles are closely allied with the De Telegraaf daily newspaper and consequently make a significant financial as The digital operations were accommodated by Telegraaf Digital well as strategic contribution. Habbo Hotel will also be retained Media Nederland in 2008 and were distributed across the by TMG. following units:

The titles Elegance, Residence, CosmoGirl! and Hitkrant were sold to Pelican Magazines Hearst and the title JAN was sold to Online Marketing & Sales G+J Uitgevers in 2009. Negotiations on the sale of FHM and One of Digital Media’s spearheads is to increase the return on Motoplus are in a final stage. existing internet sites through improved collaboration, knowledge sharing, linking reach, jointly developing and enriching TTG’s normalised result sharply improved in 2008. On balance knowledge about customers and to operate as a single powerful this is due to a marginal decline in revenue and a marked entity on the national advertising market. Enhanced synergy decline in operating costs. here leads to increased returns.

VROUW by far has the highest circulation among weekly women's magazines and saw its readership increase to 1 million Database Publishing readers during 2008. Projections are for its reach and advertising Vacaturekrant.nl has reduced its number of employees and has revenues to propel the magazine into the number 3 market posi- been successful in various partnerships with local and regional tion in 2009. As a result VROUW managed to grow into a solid parties. competitor for the Libelle and Margriet women’s magazines Autotelegraaf.nl created a new sales organisation and it too has within two years. Furthermore, with a 7.6 rating, readers clearly entered into collaborative arrangements with local and regional highly appreciate VROUW magazine and refer to it as their parties. weekend present. Speurders.nl primarily focused on cost reduction. Speurders.nl In December 2008, the related website, www.vrouw.telegraaf.nl entered into partnerships with various external parties, as a drew the most unique visitors of all the women related magazines. result of which the number of objects in important categories Thus leaving the websites of renowned women magazines rose significantly. behind. Brixter.nl was launched as a test in the home market, alongside the Woonkrant.nl website and brand. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 24 TMG Annual Report 2008 Telegraaf Media Nederland

Bohil Media continued to perform well. Economic conditions are is increasingly characterised by protracted and complex having a clear impact on the boating market, however, due to development processes, high development costs and modest its leading market position, Bohil is experiencing relatively little production and sponsorship margins. These activities will be impact from this in comparison to its competitors. undertaken with reduced goals and risks in 2009. However, the potential of achieving C-status as a public television station by The interest in Relatieplanet.nl was increased to 100% in 2008. Vereniging Wakker Nederland might have an impact on the level Relatieplanet.nl has managed to further reinforce its position as at which goals are set at a later stage. a market leader. In spite of the current economic problems that are tempering ambitions, a strong increase in the consumption of video over Web & Mobile the Internet and its use by advertisers is being experienced. The group between 18 and 35 years is an important target Video Media has successfully completed its first video projects group in the goal of achieving a maximum share of the media for advertisers. This included not only programmes, but the consumed by consumers. GeenStijl.nl has a good reach within development of complete video internet environments (channels) precisely this group. This is why TMG expanded its interest in for advertisers as well. GS Media BV to 100% at the beginning of 2008. In addition to In 2009, Video Media will primarily focus on the latter video the company’s operations and the GeenStijl and Dumpert production and exploitation forms. brands, the takeover has also provided TMG with new earning models and internet and web log expertise based on a new The Pilarczyk Media Group mainly produces automotive television journalistic style. GS Media has a monthly reach of approximately programmes. The advertising production house Carmichael & 3.5 million unique visitors and a loyal group of supporters Pilarczyk develops concepts and productions in television, consisting of so-called ‘responders’. Internet, video, audiovisual advertising and commercials and GeenStijl can serve as a stepping stone to new products for a company presentations. Both companies have shown growth in higher educated critical target group of people under 35 years revenue in 2008. of age. This was evident from the support garnered by the PowNed broadcasting organisation and the Sp!tsnieuws.nl site In 2008, Media Librium (narrowcasting activities) enlarged its launched in April. This has generated various synergy benefits reach again by adding important new canals, such as shopping and led to cost savings, strengthening of the market position centers and the Amsterdam trams. Ultimately, the increasing and an increase in the number of visitors. Furthermore, scale doesn’t contribute enough to the necessary growth in GS Media is already realising relatively high returns. revenue and result. Therefore it has been decided to sell this activity. An interest of 70% was acquired in Webregio Media at the beginning of 2008. This being an important acquisition in the context of achieving a market leadership position in the Small Media Technology and Medium Enterprise segment of local and regional advertising The Media Technology unit carries technical end-responsibility markets in the Randstad. Furthermore, in part thanks to this for all digital production platforms, provides direction for the acquisition, synergy benefits were realised among Webregio, internal media technology policy, and coordinates technical HDC Media, Holland Combinatie and De Telegraaf. implementation. The unit thus makes an important contribution Webregio.nl was expanded by 8 new regions (16 regions in to the synergy targets set by Telegraaf Media Nederland. total) and is experiencing a strong growth in revenues.

Sugababes.nl is focused on the target group between 13 and 21 years of age and has gone through a difficult year. Organisational Structure The strategic options are currently being reviewed. At the end of 2008 it was decided to integrate the digital media in existing activities of the publishing groups Telegraaf Media Video Media Nederland, Sky Radio Group en Keesing Media Group. This unit was primarily involved in TV production activities in This integration will be finalised in the course of 2009. 2008. Successful projects were developed for commercial and public stations during 2008. However, the TV production market WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 25 Sky Radio Group

Radio especially for the most important key advertising targets. With a joint 18% to 22% market share in the total radio listeners The Dutch radio net advertising market in 2008 amounted to market, Sky Radio Group accounted for approximately 25% € 261 million and rose 1.4% in relation to 2007 (net € 257 of national radio advertising expenditures. million) (source: RAB). For 2009 a further increase of 2% is expected to net € 266 million. The growth in advertising income for the Sky Radio Group was lagging, due to the economic conditions over the last two months of 2008 and due to the effect of the sale of Sky Radio Sky Radio Group Hessen at the end of 2007. The result for 2008 was satisfactory. Due to a purchase of management shares, TMG’s interest in Sky Radio Group increased from 85% to 85.9%. Important challenges for the Sky Radio Group are the realisation of optimal collaboration with various other TMG companies, the Sky Radio Group is the largest commercial radio enterprise in expansion of its digital operations and of course the run-up to the Netherlands with four popular analogue radio stations, each the redistribution of radio frequencies in 2011. with its own target group: Sky Radio 101 FM, Radio Veronica, Classic FM and TMF Radio. Furthermore, the radio group owns various digital radio stations. Collectively, the radio stations reach almost 5.5 million Dutch listeners per week.

The Sky Radio Group’s radio stations’ listening data was good, WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 26 TMG Annual Report 2008 Keesing Media Group

Puzzles & games considerably, primarily due to the carry-over effect of the acquisition of aforementioned puzzle activities in 2007. Keesing Media Group (KMG) pursued its strategy – a focus Profitability in France on the other hand was under pressure on puzzle and (digital) games-related activities – in 2008. due to strong competition. The traditional puzzle-related activities were strengthened through the acquisition of the puzzle magazines and brands Expectations are that the economic crisis will cause the market, Puzzelsport, Bingo!, Jan Meulendijks en 10 voor Taal and particularly in France, to be subjected to further pressure in there was an initial foray into the world of digital gaming. 2009. A few cost saving initiatives are planned for this year.

Aside from a strong belief in the future of traditional paper In the area of digital games, initially a slow increase in revenue puzzle products, KMG is convinced of the need to be able to offset is projected. At the same time a number of investments serve its target groups in the digital domain as well. designed to position Keesing properly in this area will take place. The company Zigiz was acquired for this purpose in mid-2008 and a minority interest was acquired in Himes. This company publishes Trivia games. Zigiz.com aims at digital games and is an international player. The intent is to transfer the knowledge in the area of traditional puzzles to these new operations on the one hand and to further expand these digital operations and allow them to advance jointly on the other hand. The total profitability of puzzle operations has increased WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 27 Other Activities and Operating Companies

Other Activities transport unit continues operations under the name DistriQ Transport. Mobillion Mobillion designs, develops and manages mobile services and Due to the fact that the recruitment and retention of delivery internet environments for profit and non-profit organisations. personnel has become increasingly difficult, dozens of temporary Their solutions are focused on improving and strengthening personnel were also used in 2008. They are allocated to regions communications and interaction among people (communities), where TMG Distributie temporarily has substantial shortages in companies and clients (marketing) and among government and delivery personnel. citizens. All solutions are based on in-house developed products and resources in the area of SMS, MMS, 0800/0900, Due to new recruiting and retention campaigns and a new system mobile marketing and so-called social media. of compensation, the quality of delivery strongly improved, Since its establishment in 2000, Mobillion has achieved a market particularly during the second half of the year. leadership position in the SMS market. The company is of importance for the other TMG publishers. In spite of the efforts made in this respect during 2008, attempts to divest the transport organisation were not successful.

Operating Companies At the end of 2008 the decision was made to close down three of the five transport business units, effective 1 April 2009. Telegraaf Drukkerij Groep The affected business units are in Alkmaar, Heerlen and Horst. A project was initiated in 2008 with the objective of further The Alkmaar operations will be transferred to Amsterdam and optimising printing capacity. This has resulted in the ability to the work in Heerlen and Horst will be fully outsourced as of maintain the same nightly production while press capacity was April. This involves the loss of 100 of the over 180 jobs. reduced by one press. The De Echo Rotterdam and the Amsterdams Stadsblad publications initiated by the Holland In 2009, much attention will also be devoted to curbing delivery Combinatie are also produced on the in-house presses this way costs due to a tight labour market for delivery personnel, other during off-peak hours. rising costs and the loss of efficiency caused by dropping circulation numbers. The plans for 2009 include projects designed to reduce product In this regard, TMG, on its own or in consultation with other unit costs. daily newspaper publishers, will actively pursue the search for The commercial order book grew in relation to last year, in spite new delivery models, including a scenario that calls for full of strong competition. outsourcing to a third party.

TMG Distributie Telegraaf Media ICT (TMI) A large-scale restructuring took place at TMG Distributie TMI takes care of an important part of the information supply for (formerly DistriQ) at the end of 2007 and the beginning of 2008. primary processes of TMG. Because of the integral importance The company currently consists of three units: of IT for the business of TMG, a Corporate Information Manager • The delivery organisation. Since the disposal of the free local (CIM) has been appointed in order to give extra attention to papers distribution operations, this business unit is exclusively secure that importance on a management level. In the area of dedicated to the delivery of newspapers and the distribution information supply it implements the wish to improve the of Sp!ts. strategic attention and the mutual coordination and synergy • The transport organisation. This business unit is responsible between businesses. for the transport of newspapers from printing plant to transhipment locations throughout the country and transport In 2008 the quality of the service and the transparency of under contract to third parties. IT costs was improved. Also action has been taken to keep • The internal administrative support unit. information supply efficient, among others by combining a number of activities. The original name DistriQ was dropped at the beginning of 2008. The delivery organisation and the administrative support unit A decrease of the (internal) revenue was compensated by have since operated under the name TMG Distributie, while the reducing operational costs. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 28 TMG Annual Report 2008 International

TMG has indicated to have the objective to realise a larger France, Belgium and Denmark share of total revenues abroad. This objective remains Outside the Netherlands, KMG’s subsidiary Keesing Puzzles & unchanged. Games is active in France, Belgium and Denmark.

Up to the middle of 2008, using a strong market position in the The market position in France experienced limited improvement, magazines sector as a basis, efforts were made in Sweden and whereby profitability was subjected to pressure due to the Ukraine to develop opportunities for the exploitation of several battle for market share with competitors. The sales team was media types (digital media, newspapers, puzzles and radio). brought up to strength, which considerably increased the The ability to achieve focus, coherence, synergy and growth did presence in the marketplace. not achieve the required degree of success, while these are prerequisites for successful international expansion. The market position in Belgium remained strong.

After a thorough evaluation and analysis, as well as on the basis Because of the introduction of the brand name ‘Tankesport’, of economic trends during 2008, a decision was taken to adjust puzzle magazines in Denmark clearly stood out, leading to the international strategy and to provide it with greater focus. improved results in comparison to last year. The strategy is to be shaped on the basis of puzzles & games and other digital developments that in principle are always border transcending.

Sweden Swedish operations primarily consisting of magazines and their corresponding internet sites were sold to LRF Media, the third largest publisher of magazines in the Swedish market, in December. TMG Sweden’s 70 employees were transferred together with the magazines.

Ukraine The Ukrainian operations are reduced. The digital activities were sold. Two magazines were discontinued and negotiations are still underway concerning the sale of the remaining package of magazines. TMG halted publication of the free Obzor newspaper. Discussions are still underway with a number of parties concerning the possibility of restarting this newspaper. Discussions are also underway with the joint owners of Gala Media concerning the sale of the 24% interest in this radio station. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 29 Participating Interests

Prosiebensat.1 Media AG opportunities for synergy that are created on the basis of the (12% of voting shares) formation of the new ProSiebenSat.1 television combination. A move like this is also consistent with TMG’s international and Kohlberg Kravis Roberts & Co (KKR) and Permira acquired multimedia strategy. Due to the presence of ProSiebenSat.1 in a majority interest in the leading German media group the Dutch market, TMG also maintains prospects in relation to ProSiebenSat.1 Media AG (ProSiebenSat.1) at the end of television in the Netherlands. 2006. This German media group consequently made a bid on all SBS shares in the spring of 2007. After investigating Financial Performance various options, TMG decided to sell its 20% interest in SBS The pro forma adjusted operating result for the combination to ProSiebenSat.1. This transaction in 2007 involved an (recurring EBITDA) was approximately € 783 million for 2007 on amount of € 433 million. revenues amounting to € 3.2 billion. Primarily due to the economic decline, revenues in 2008 decreased to € 3.1 billion At the same time TMG acquired an option to purchase 12% with a recurring EBITDA of approximately € 675 million. (13,127,832 pieces) of the voting shares in ProSiebenSat.1 from KKR/Permira. The option price was € 34.71 per share reduced Valuation by the payable dividends due during the period 6 March 2007 Pursuant to the application of IAS 28, the participating interest up to the date on which the option was exercised. The option qualifies as an associate, i.e., a subsidiary over which significant could be exercised during the period of 1 June to 15 June 2008, influence can be exercised. inclusive. The acquisition value of the shares is € 182 million, being the option’s exercise price (€ 377 million) subject to the deduction Directly linked to this option was the right, in case TMG would of the already recognised impairment of € 185 million at 30 June not exercise its call option, of Lavena Holding 4 GmbH – the 2008 on the option at that time and € 10 million at company via which the investment funds advised by KKR and 25 September 2008. Permira control their majority interest in ProSiebenSat.1 – to sell 12% of the voting shares to TMG at a put price of € 28.71 per The 6% share in the fourth quarter 2008 results of Prosieben- share, minus any dividend payments that excessively exceeded Sat.1. amounts to negative € 10.2 million. Because an impair- the average dividend during the period between 6 March 2007 ment exists as a result of the pressure on revenues and the up to the date on which the option was exercised. The option operating result in 2008 and 2009, it was decided to recognise could be exercised during the period of 1 June to 15 August an additional impairment in the amount of € 99.8 million. As a 2008, inclusive. result the value of the interest at 31 December 2008 was € 72 million (€ 5.48 per share). Due to the economic trends in general and the deteriorating market conditions for ProSiebenSat.1 in particular, TMG In summary, TMG’s loss on its participation in ProSiebenSat.1 decided not to exercise its call option. The 12% interest was over 2008 is € 305 million, as follows: acquired on 25 September 2008 at the put option price of € 28.71 per share. This resulted in the reinvestment of an amount - Share in negative result € 10.2 million of € 377 million from the € 433 million in proceeds from the sale - Impairment on the option, as per 30-6-2008 € 185.0 million of the SBS participating interest. In addition to ordinary voting - Impairment as per 25-9-2008 € 10.0 million shares, ProSiebenSat.1 has issued an equal number of - Impairment of the 12% interest € 99.8 million non-voting preference shares. As a result TMG’s interest is Total € 305.0 million equivalent to a 6% economic interest. For a detailed explanation of the valuation please see page 69 In addition to the 12% interest in the voting shares, TMG acquired of the financial statements. two seats on ProSiebenSat.1’s Aufsichtsrat (Supervisory Board).

Strategic Considerations With this interest TMG participates in an international media combination with a strong market position and good financial results. Furthermore, this way TMG also participates in the expected international growth and the exploitation of the WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 30 TMG Annual Report 2008 Participating Interests

ProSiebenSat.1 Dutch TV Operations EXPOMEDIA GROUP PLC (20%) The Dutch market for television expenditures was valued at € 863 million in 2007 (2006: € 810 million). Expenditures in 2008 TMG acquired its interest in Expomedia in 2005. The aim are projected to go up by 4.0% to € 898 million. of the transaction was to have the opportunity to profit from the growth in the trade fairs, events and conferences segment and to obtain access to new markets. SBS Nederland Expomedia operates in developed media markets (United ProSiebenSat.1 Media AG is represented in the Dutch market Kingdom and Germany) and in emerging markets such as by three commercial television channels: SBS 6, Net 5 and Poland, Russia and India. Veronica and the market leader in Dutch television magazines Veronica Magazine. After continuous revenue growth and a first positive result in 2007, the company was heavily hit in almost all countries in Key sporting events in 2008, such as the European Football 2008 as a result of the global economic crisis. Championships and the Olympic Games, were broadcasted via Expomedia was especially confronted with cancellations during the Public Broadcasting Service network. In spite of this intense the fourth quarter, as a result of which many trade fairs had to competition, 2008 was the best year ever in terms of viewer be cancelled. ratings for the three ProSiebenSat.1 channels. They collectively Drastic restructuring measures were immediately taken but achieved a record market share in eight of the twelve months. were not enough to stop the company from experiencing a The group’s average market share over 2008 was 27% in the 20 shortage in financial resources. Shareholders, including TMG, to 49 age group, which is a key target group for advertisers, were not prepared to provide financial support in view of the thereby surpassing the 26.3% record achieved in 2007. lack of prospects for a recovery in operating results. On this basis a decision was taken to completely write down TMG’s SBS 6's 13.6% average market share in 2008 was its highest interest (€ 18.7 million). market share since its inception. Net 5 closed off the year with an average market share of 7%. TV Veronica's average market share was 6.5%. AM VAN GAAL MEDIA (20%)

SBS Nederland achieved a larger market share in the advertising TMG owns a 20% interest in AM van Gaal Media, a publisher of market than the total viewer market share. general interest magazines, primarily targeted at women. After the sale of an important part of the magazine portfolio this participation is no longer considered to be strategic. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 31 Risk Management

Description of the Risk Furthermore, a management organisation will be set up and Management System charged with keeping the applicable instruments up to date. Operational risk management has been a structural component TMG’s Executive Board is responsible for the internal risk of the planning & control cycle within TMnl since 2008. management system, including the proactive monitoring of the The other TMG business units will also adopt this approach strategic and operational risks within the TMG organisation. over the course of 2009. The CEO is responsible for the strategic risk management and the CFO for the operational risk management. Evaluation of Internal Risk Management System Strategic Risk Management TMG conducts annual strategic risk management workshops Aside from the measures taken to implement an effective at the TMG Groep level, as well as for all reporting business risk management system, a number of steps remain to be units. The purpose of these workshops is to identify and assess completed in 2009 concerning the management of operational risks that have an impact on the achievement of the objectives risks. The management of operational risks will be further for the coming year. Based on the outcome of these workshops embedded within line management during 2009. and the overarching risks identified by the Executive Board in collaboration with corporate staff, actions are taken to mitigate The risk management system cannot provide an absolute the identified risks where possible. The results from this process guarantee that the company’s objectives shall be realised. Nor and the progress achieved are included in the internal quarterly can such a system completely prevent significant errors, fraud reports and are subsequently discussed. The risk management or violations of laws and regulations. process is part of the performance evaluation of the management team members of the various business units and the planning and control cycle used within TMG.

Operational Risk Management At the beginning of 2007 TMG initiated a TMG-wide approach to the operational risk management process. The objective is to use a structured method to provide insight into the operational risks on a process by process basis and to arrive at a judgment concerning the extent to which the risks are managed. A uniform framework was developed centrally for all primary and supporting processes in 2007 and 2008. The framework applies to the various business units. Based on the activities that are part of the process, the key risks as well as the expected control measures are identified within this framework. Risk analyses have been carried out for the advertising, circulation, distribution, printing, human resources, procurement and financial management processes. The degree to which these risks are managed was established on the basis of self-assessments conducted by the business units. TMG considers operational risk management part of line management’s responsibilities. As such, action plans have been developed for all risks rated as important by management within TMnl. The progress achieved against these risks is monitored on a quarterly basis. Work will continue in 2009 to ensure that control activities are measurable. This will involve the identifi- cation, monitoring and testing of the key controls required for each process. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 32 TMG Annual Report 2008 Risk Management

Progress of Actions Related to The inadequate or slow realisation of the identified cost Risks Identified for 2008 saving opportunities in the traditional publishing houses. During the second half of 2008, the cost savings approach was Further to the strategic risks identified in 2007 for the 2008 intensified among the business units involved in the publishing financial year, the following is a report of the actions of newspapers. The result is the contemplated decision to implemented by the company in 2008 for the purpose of reduce the number of fulltime jobs by almost 500 positions. reducing the identified risks. The major portion of this reduction will be realised in the course of 2009, extending into 2010. In addition, a decision was taken Insufficient ability to rapidly anticipate shifts in the consumer in 2008 to halt or dispose of a number of loss-making activities and advertising markets and/or activities making an inadequate contribution. This A number of investments were made in digital activities during included a number of magazine titles and Media Librium in the 2008: Netherlands, as well as publishing activities in Sweden and the • The acquisition of a 100% interest in GeenStijl and Relatieplanet. Ukraine. Furthermore, work is actively being pursued on the • The acquisition of digital gaming activities in support of the outsourcing of a number of non-core activities within distribution expansion of the Keesing Media Group in the area of Puzzles and ICT among others. & Games. • The creation of an online community around Radio Veronica Insufficient coherence in providing direction to the various in collaboration with a third party. business units by TMG Corporate. Purpose of these investments is to shape the shift from traditional During the first half of 2008, an external consulting bureau to digital media further. submitted a proposal that refined the TMG management model. In addition, there is successful growth in the Telegraaf.nl and A large number of recommendations was accepted and their DFT.nl ‘flagships’. implementation was initiated during the second half of 2008. TMG will further simplify its structure during the ongoing Insufficient ability to realise the envisioned synergy reorganisation. In specific terms, this means that three between various business units. publishing groups are created within TMG, i.e., Telegraaf Media In terms of synergy on the cost side of things, steps are being Nederland, Sky Radio Group and Keesing Media Group. Digital taken in the form of a partial integration of the IT, Finance, activities will report to the responsible publishing group with Marketing and support staff services within Telegraaf Media a specific focus on the creation of synergy. In addition, a Nederland (TMnl) and also by integration of the TMnl support distinction will be made between activities that are required to staff services with those of TMG. Progress is being achieved in focus on achieving further efficiency (print) and activities the commercial arena by creating a ‘Commercial Board’ focused on innovation and growth (new media). The chain designed to stimulate cross-media sales, primarily involving responsibility (publishing, printing and distribution) is assigned newspaper and radio activities. Furthermore, a number of to the COO. Furthermore TMG and TMnl's staff departments successes were realised in the area of cross-media promotion will be merged to the maximum possible extent. among newspapers, radio and puzzle magazines. The opportunities here have not yet been fully exploited.

Inadequately developed ‘SMART’ culture Four core values were identified to support TMG’s transforma- tion to a more professional culture. The TMG management profile was created that translates these four core values into specific management competences. The core values and the envisaged professional culture in the meantime have become part of the management training programmes within TMG. Of the four core values, the value 'professionalism’ is most closely aligned to the 'SMART' aspect of the culture. A Performance Management policy was developed in 2008 that was implemented TMG-wide as of January 2009. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 33 Risk Management

Risks and Control Measures Further setbacks in the economy than projected. Identified for 2009 Fixed costs are and will be transformed into flexible costs where possible. TMG has chosen to adopt a highly intensive and The risk management progress will be reviewed with the in-depth approach to the implementation of cost saving business units on a quarterly basis. Strategic risk manage- measures. ment workshops were conducted towards the end of 2008 in all business units. The objective was to identify the risks Future trends concerning radio frequencies. that could impact objectives for 2009. Aforementioned risks, The Sky Radio Group is devoting a lot of effort to ensuring it together with the overarching risks identified by the properly anticipates the upcoming frequency allocation in 2011. Executive Board in collaboration with corporate staff, result in the following summary of key strategic, operational and financial risks. Operational risks

Delays in implementation of reorganisation due to Strategic risks internal/external factors. To perform an open and constructive dialogue with the works Insufficient focus on growth achieved through renewal councils, the editorial committees and the trade unions. and innovation. With due consideration to the focus on cost savings, TMG will Inability to generate the envisaged synergy. continue to develop the already adopted positions. A develop- Positive synergy effects can be created among publishers, ment budget has been allocated for this purpose. printers and distribution houses on the basis of a chain Where possible, TMG will continue to adopt new positions and management approach. Furthermore, measures have been is hereby confident that during and after the completion of the taken to encourage collaboration within the back-office. cost saving period, new opportunities will continue to present themselves in the area of digital media. High dependency on ICT systems in support of our operations. Insufficient ability to rapidly anticipate shifts in the The operational organisation is increasingly dependent on the consumer market. availability of ICT systems and telecommunication networks that TMG will continue to strive for the rejuvenation of the target direct the operational process. Important examples of this include group within the three core publishing groups, i.e., Telegraaf the publication of the newspaper, communications with the Media Nederland, the Sky Radio Group and the Keesing Media client in case of delivery problems and the ability to accept Group (hereinafter: KMG) by specifically developing products advertising. that are already focused on this target group (e.g., TMF Hitradio, Aside from existing procedures and contingency plans designed GeenStijl.nl, Habbo.nl, Sugababes.nl, Zigiz.com games and to limit this risk, a decision was taken to appoint a Corporate ’Skyradio.nl’). This will be a particular point for attention in the Information Manager with central coordinating responsibility for takeover policy. Furthermore, specific attention will be the ICT function within TMG. devoted to the joint opportunities inherent in the three core publishing organisations. Operational risks related to the primary processes

Insufficient ability to rapidly anticipate shifts in the Advertising advertising market. The risk analysis of the advertising process demonstrates that TMG is developing various business and payment models in the there is potential for TMG to make further improvements in its online/digital domain for the consumer as well as the advertising pre-sales process. The desired centralised client profile across markets. Investments are also being made in the instruments the various publishers is inadequate. Furthermore, it was noted required for this purpose. Furthermore, TMG expects that that although the focused and relevant market information advertisers will also continue to look for major newspaper, radio exists, it is fragmented across the various organisational and television campaigns, focused on broad target groups at components. A Commercial Board has since been created that competitive rates. A separate consultation structure has been is used by the publishers to jointly serve certain clients. created to accelerate coordination and synergy between the three core publishing organisations in this area. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 34 TMG Annual Report 2008 Risk Management

Circulation Distribution The analysis of the circulation process noted that when new The shortage of delivery personnel remains a point for concern software is implemented, data are not systematically recorded within the distribution process. It requires a great deal of effort to the degree that they should be. During the past year a lot of on the part of the organisation to keep the number of delivery attention was devoted to the management of information using personnel, and consequently the quality of delivery, up to par. the CRM system. As a result the complaints process was better The distribution organisation in 2008 created insight into the streamlined in terms of the registration and processing of costs per delivery region. The insights thus obtained make it complaints. In addition, a chain management position was possible to make focused decisions in terms of cost savings. created. This resulted in the organisation of structured meetings between publishers, the printer and the distributor designed to jointly analyse and solve bottlenecks in the process. Financial risks

Print Market, credit, liquidity, foreign exchange and interest Due to the reorganisation at TMG, the deadlines for submitting rate risks. pages to the printer may be subjected to more than the usual For a more detailed description and quantification of the pressures. This may jeopardise the reliability of deliveries by the abovementioned financial risks and the management of these printer. Furthermore, there is a high degree of dependence risks, please see page 82 of the financial statements. throughout the chain on various ICT systems that communicate with each other. A catch-up programme will be implemented in 2009 to eliminate the maintenance backlog related to the presses. This will further increase the lifespan of the presses and the reliability of delivery. All this will require maximum attention from the organisation and its management in 2009. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 35 Statement of Responsibility

Executive Board – Statement of Responsibility

In compliance with Section 5:25c subsection 2c of the Financial Supervision Act (Wft), the Executive Board confirms that:

1. ”The financial statements provide a true and fair view of the assets, liabilities, financial position and the profit or loss of Telegraaf Media Groep N.V. and the companies included in the consolidation, and

2. The annual report provide a true and fair view of the status on the balance sheet date of Telegraaf Media Groep N.V.’s performance during the financial year and that of its affiliated companies whose information has been included in its financial statements and that the essential risks faced by Telegraaf Media Groep N.V. are stated in the annual report.”

Amsterdam, 12 March 2009

Executive Board Telegraaf Media Groep N.V.

A.J. Swartjes - CEO F.Th.J. Arp - CFO P.M. Morley - COO WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 36 TMG Annual Report 2008 Corporate Governance

Corporate Governance Best Practices best Practice Provision iii.2.1 Independence of Supervisory Board members with the The Executive Board and the Supervisory Board support the exception of not more than one person. principles of the December 2003 Corporate Governance Code. Independent supervision will be adequately safeguarded if the The shareholders of Telegraaf Media Groep approved any majority of the Supervisory Board members can be deemed to deviations from the code during the general meeting of be independent according to III.2.2 (criteria for independence). shareholders held on 20 April 2005. Because of its long-term vision, the company regards it as very important to have more than one Supervisory Board member The Executive Board and the Supervisory Board have familiarised with a high level of commitment to the company due to themselves with the updated Code dated 10 December 2008, experience or share ownership. prepared by the Frijns Committee. This Code becomes effective during the financial year commencing on or after 1 January 2009. TMG’s perspective will be communicated to best Practice Provision iii.3.5 the shareholders of Telegraaf Media Groep in a timely manner. Maximum period of appointment for Supervisory Board members. In this section, Telegraaf Media Groep N.V. (TMG) provides an This provision is not applied (see also the comments under explanation of its deviations from the Code. The full ‘Comply or III.2.1). There are many positions in society that are occupied for Explain’ summary concerning TMG’s Code is available on its longer periods. Experience and expertise are extremely website www.tmg.nl. important. The connection with and knowledge of the company prevail. Deviations from the December 2003 Corporate Governance Code:

best Practice Provision ii.1.1 best Practice Provision iii.5 Maximum appointment term of 4 years. Composition and role of the key committees According to company policy, a Board member is an employee of the Supervisory Board. of the company with a permanent appointment. Periodic The Code states that if the Supervisory Board consists of appointments create the risk of conflicts of interest, between more than four members, it shall appoint an audit committee, the long-term interests of the company and an appointment a remuneration committee and a selection and appointment period of the Board member, of maximum four years. committee. The current Supervisory Board has six members. Shareholders can exert their influence annually during the General In view of the commitment and wide-ranging expertise of the Meeting as regards granting of discharge to the Executive members and the nature and scope of the company, these Board under the corporate governance code. The Supervisory committees will not be appointed. Board evaluates the Executive Board’s performance annually.

best Practice Provision iii.7.3 Principle ii.2. Remuneration ii.2.7 Rules governing ownership of and disclosure of transactions The remuneration of the Executive Board contains a fixed in securities by Supervisory Board members, other than component and a variable component. The variable component securities issued by their ’own’ company. pertains to an individual bonus and to the group profit share This provision is not observed: it represents too great an scheme that applies to all employees. TMG does not have any invasion of Supervisory Board members’ privacy. option schemes or remuneration in the form of shares. In the General Meeting, the shareholders agreed to the Executive Board’s remuneration policy. best Practice Provision iv.2.2 Maximum remuneration in the event of dismissal of Management of the trust office shall appoint the managers Executive Board Members. of the trust office. This principle is only applied in part. Each member of the The current composition of the management satisfies this best Executive Board is an employee of the company. It is this practice provision. It should be noted that Stichting Beheer van working relationship that determines the remuneration in the prioriteitsaandelen Telegraaf Media Groep N.V. is entitled to event of dismissal, as the situation dictates, which remuneration recommend two of the five Board members for appointment to may be determined by the competent court. the position of Board member, in consultation with the WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 37 Corporate Governance

Executive Board and the Supervisory Board. However, such a Corporate Governance Takeover recommendation is not binding. Directive Information

Information on the directive on takeover bids in the context best Practice Provision iv.2.8 of Article 1 of the Decree to Implement Article 10 Directive Proxies. on Takeover Bids. It is possible for the management of the trust office to issue proxies to depositary receipt holders, even during times of war. The authorised capital of Telegraaf Media Groep N.V. (TMG) The practice of binding voting instructions from a depositary amounts to € 50,000,000 consisting of: receipt holder to the management is not supported, as the 99,999,040 ordinary shares Board is of the opinion that those wishing to vote ought to be 960 priority shares present at the general meeting of shareholders. Holders of 100,000,000 preference shares depositary receipts can freely convert their depositary receipts into shares in order to obtain voting rights. Each share carries a nominal value of € 0.25. Each share is entitled to one vote. best Practice Provision iv.3.1 TMG’s issued capital is € 12,500,240 consisting of 50,000,000 Webcasting, etc., of meetings with analysts, presentations ordinary shares and 960 priority shares. to analysts, presentations to investors and institutional investors and press conferences. The TMG depositary receipts for ordinary shares are listed on This provision will not apply as regards the so-called ’one-on-one’ the NYSE Euronext in Amsterdam, and can be traded freely and meetings. However, group presentations can be viewed via web converted without limitation. casts (www.tmg.nl). After they are given, presentations will be posted on the group’s website. The Stichting Beheer van Prioriteitsaandelen Telegraaf Media Groep N.V. (Priority Share Management Trust) owns the 960 TMG priority shares. Pursuant to TMG’s articles of association, the Priority Share Management Trust has a number of rights, including the right to issue shares, grant rights to acquire shares, restrict or rule out the preferential right of subscription to ordinary shares, to determine the number of members on the Executive Board, to grant prior approval for certain decisions of the Executive Board, to reserve profit, to distribute dividend in the form of shares and to propose mergers, spin-offs, amendments to the articles of association or dissolution.

The Stichting Preferente aandelen Telegraaf Media Groep N.V. has the right to acquire a number of preference shares in TMG’s capital that corresponds to 50% of the total number of ordinary shares issued, for the exercise of these rights.

The company does not impose any limitation on the transfer of ordinary shares or on the issue of depositary receipts for shares in collaboration with the company. Priority shares and preference shares (if issued) can only be transferred with the approval of the Supervisory Board. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 38 TMG Annual Report 2008 Corporate Governance

Pursuant to the Wet op het financieel toezicht (Financial Super- important reasons or due to drastic changes in circumstances vision Act) and the Besluit melding zeggenschap kapitaalbelang as a result of which the company cannot be reasonably in uitgevende instellingen (Disclosure of Major Holdings in expected to maintain the Supervisory Board member. Listed Companies Act) the following significant participations in The general meeting of shareholders can, on the basis of a TMG were reported to the Authority for Financial Markets (AFM) majority of votes cast, representing at least one third of the (source: www.afm.nl at the beginning of March 2009): issued capital, rescind its confidence in the entire Supervisory Board. (See TMG’s articles of association at www.tmg.nl). • Stichting Administratiekantoor van aandelen Telegraaf Media Groep N.V. The general meeting of shareholders can only take a decision to • Stichting Preferente aandelen Telegraaf Media Groep N.V. amend the articles of association on the basis of a proposal • Stichting Beheer van prioriteitsaandelen Telegraaf Media submitted by the Priority Share Management Trust. Groep N.V. • N.V. Exploitatiemaatschappij van Puijenbroek Shares are issued on the basis of a decision taken by the • Cyrte Investments B.V. Priority Share Management Trust’s management board. The • Aviva plc. general meeting of shareholders can be requested to extend the • Tweedy Browne Company LLC Priority Share Management Trust’s appointment as the body • M.M.J.J. Boekhoorn authorised to issue shares, for a maximum period of five years • Navitas B.V. each time (see Article 5 of TMG’s articles of association at www.tmg.nl). During the meeting of 17 April 2008, the share- Other than described in relation to priority shares above, the holders appointed the Priority Share Management Trust as shares do not convey any special rights. the authorised body until 1 July 2010.

TMG does not provide any Share Incentive Plans for employees. TMG is entitled to acquire fully paid company shares or depositary receipts for shares with due consideration to the As described above depositary receipts have been issued in applicable legal provisions. Shares, other than for no value, can collaboration with the company. only be acquired if the general meeting of shareholders has so authorised the Executive Board. The authorisation is valid for a As far as TMG is aware, TMG’s shareholders are not party to an period of at most 18 months. The general meeting of shareholders agreement that could result in limiting the transfer of shares or must specify the number of shares or depositary receipts for the issue of depositary receipts for shares in collaboration with shares that may be acquired, how they may be acquired and the company or in a restriction of voting rights. the applicable price range, in granting the authorisation (Article 13 of TMG’s articles of association at www.tmg.nl). During the The two-tier board structure applies to TMG. The Executive general meeting of shareholders on 17 April 2008, the share- Board is appointed by the Supervisory Board. The general holders authorised the TMG’s Executive Board until 18 October meeting of shareholders is informed of any planned appoint- 2009, to purchase, on the stock exchange or otherwise, ments. The Supervisory Board cannot dismiss a member of the company shares or depositary receipts for shares up to no more Executive Board before the general meeting of shareholders has than one tenth of the issued capital at a price not lower than the been consulted about the planned dismissal and the member of nominal value and not higher than 10% above the average the Executive Board has been given the opportunity to answer closing prices of the depositary receipts for ordinary shares to the general meeting of shareholders. published in the Daily Official List during the five consecutive days prior to the date of purchase. Members of the Supervisory Board are appointed by the general meeting of shareholders on the recommendation of the Supervisory Board. The general meeting of shareholders and the Works Council can recommend persons for nomination to the Supervisory Board. The Works Council has a so-called strengthened right of recommendation for a third of the members on the Supervisory Board. If a request is made to that effect, the Commercial Chamber can dismiss a Supervisory Board member due to dereliction of duties, due to other WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Annual Report 2008 39 Corporate Responsibility

policy • To reduce CO2 emissions, the routes used by trucks to transport the products from the newspaper printers to the The importance of corporate responsibility is being transhipment points are optimised. increasingly recognised. The sustainable development of economic, social and environmental aspects is also of • The rental and/or purchase of trucks is limited to vehicles significant importance to TMG to ensure the long term equipped with a Euro 5 engine. These engines use less fuel development and continuity of the enterprise. Among other and produce lower emissions than traditional engines. things, this requires the further development of policy, its implementation and transparency in terms of the three • Unsold newspapers and magazines are recovered from aspects mentioned above. single copy sales outlets and delivered to paper recyclers.

This annual report primarily deals with the economic and • The employee car fleet will be outsourced to a leasing strategic aspects of TMG's business operations. The section on company in 2009, whereby specific attention will be given to Human Resource Management only deals in limited form and to acquiring a ‘green lease’. a limited extent with the social aspects of the company, because this information will be presented in a more elaborate • TMG is using cogeneration to produce its own electricity and form in a separate Social Annual Report that will be published this way is able to supply a portion of its own energy needs, via www.tmg.nl. primarily for its office buildings. The residual heat created In terms of the environmental aspect, it goes without saying that during the cogeneration process is used to heat buildings. TMG’s business operations comply with all existing Dutch laws and regulations in this area. The effort required to ensure this is • An energy monitoring system continuously measures the the case has been coordinated at the corporate level for many quantity and type of energy consumed by each building, years now and has been embedded in the daily operations of making it possible to immediately make adjustments the various business units. whenever any variances are noted.

Aside from the measures implemented pursuant to laws and • Further energy-saving measures have been implemented in regulations, TMG, based on its own sense of responsibility office buildings on the basis of a recent energy consumption – and in general consistent with economic incentives – has scan. taken environmental management-related measures that exceed mandatory environmental requirements. Examples of • During the renovation of the head office, the technical this can be found in a number of areas, such as the TMG installations in the building were set up in such a way that the business units involved in production, transport and distribution, building can be designated as energy efficient. buildings and procurement. In this report, TMG is limiting itself to providing a number of examples. Starting next year, the • TMG separates its waste into separate waste streams (paper, report will deal more extensively with this topic. batteries, glass and other waste) and processes it accordingly.

Examples of corporate responsibility at TMG, specifically Last but not least, it is worth mentioning that in the early related to the ‘environmental’ aspect include: nineties of the previous century, De Telegraaf donated an 800,000 m2 forest to society. This forest, called De Telegraaf- • Where possible the company uses recycled paper. bos – De Telegraaf Woods – is part of the Diemerbos and is managed by the Dutch Forestry Service. It is located to the • Newsprint is purchased from reputable suppliers of paper. southeast of Amsterdam in the area bounded by the A1 and The wood pulp used by these suppliers for the production of A9 motorways and the Amsterdam-Amersfoort railway. paper is obtained from sustainably managed forests that are especially cultivated for the purpose of producing paper. The Corporate responsibility is important to TMG and therefore wood pulp comes with the relevant internationally recognised has its attention. Further steps will be taken in this area in certifications. the near future. This will be covered in the next report. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 Financial Statements 2008 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Financial Statements 2008 43 Consolidated income statement

In thousands of euros Note 2008 2007

Continued operations

Revenues 4 684,204 700,061 Other operating income 5 3,868 2,499 Total income 688,072 702,560

Raw and auxiliary materials 6 56,831 61,352 Personnel costs 7 306,526 290,864 Depreciation, amortisation and impairment 8 70,204 73,507 Other operating expenses 9 291,554 295,220 Total operating expenses 725,115 720,943

Operating result -37,043 -18,383

Result from associates 10 -131,336 352,561 Financial income 10 15,735 76,885 Financial expenses 10 -198,670 -7,603 Financial income and expenses -314,271 421,843

Result of continued operations, before tax -351,314 403,460

Income tax 11 -10,190 -6,160 Result after tax before gain on discontinued operations -341,124 409,620

Result of discontinued operations Gain on sale of discontinued operations, net of tax 13 -19,641 -10,336 Net result for the year -360,765 399,284

Attributable to: Shareholders of Telegraaf Media Groep N.V. -359,988 400,097 Minority interest -777 -813 Net result for the year -360,765 399,284

Earnings per share Result attributable to shareholders of ordinary shares Telegraaf Media Groep N.V. 24 -359,988 400,097

Weighted average number of ordinary shares 24 48,041,840 49,992,892

Basic and diluted earnings per share (EUR) -7.49 8.00

Basic and diluted earnings discontinued operations per share (EUR) -0.41 -0.21 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 44 TMG Financial Statements 2008 Consolidated balance sheet As at 31 December

In thousands of euros Note 2008 2007

Assets

Non-current assets Intangible assets 14 418,037 429,603 Property, plant and equipment 15 85,803 112,155 Investments in associates 16 71,833 22,626 Deferred tax assets 29 9,138 – Other investments 17 4,602 7,293 Total non-current assets 589,413 571,677

Current assets Inventories 18 18,417 16,401 Tax receivables 12 8,529 17,576 Trade and other receivables 19 93,224 119,540 Cash and cash equivalents 20 33,592 496,025 Assets classified as held for sale 21 18,841 11,992 Total current assets 172,603 661,534

Total assets 762,016 1,233,211

Equity and liabilities

Shareholders’ equity Issued capital 12,500 12,500 Other reserves 399,076 854,315 Attributable to equityholders Telegraaf Media Groep N.V. 22 411,576 866,815

Minority interest 3,269 4,021 Total shareholders’ equity 414,845 870,836

Liabilities Interest-bearing loans and borrowings 25 27,242 38,074 Post-employment benefit liabilities 27 29,377 29,684 Restructuring provisions 28 12,356 10,201 Deferred tax liabilities 29 32,264 33,892 Non-current liabilities 101,239 111,851

Interest-bearing loans and borrowings 25 15,847 21,760 Accounts payable and other current liabilities 30 178,772 206,178 Restructuring provisions 28 41,856 13,205 Tax payables 12 3,102 7,247 Liabilities classified as held for sale 21 6,355 2,134 Current liabilities 245,932 250,524

Total liabilities 347,171 362,375

Total equity and liabilities 762,016 1,233,211 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Financial Statements 2008 45 Consolidated statement of cash flows

In thousands of euros Note 2008 2007

Cash flow from operating activities

Result for the year -360,765 399,284

Adjustments for: Depreciation of property, plant and equipment 15 22,769 23,923 Amortisation of intangible assets 14 39,152 37,866 Impairment loss financial instruments 10 195,000 – Impairment loss intangible assets 14 24,671 12,951 Net financing costs -11,485 -10,788 Share in result investments accounted for according to the ‘equity’ method 10 13,926 1,981 Impairment loss on associated companies 10 118,488 – Gain on sale of property, plant and equipment 5 -2,868 -703 Gain on sale of non-current financial assets 10 370 -411,561 Gain on sale of discontinued operations, net of tax 13 -8,006 – Income tax 11 -10,143 -6,676 21,109 46,277

Change in inventories -2,062 -6,438 Change in trade and other receivables 20,301 14,922 Change in prepayments -1,698 -3,114 Change in accounts payable and other current liabilities -22,458 24,392 Change in provisions and post-employment benefit liabilities 30,396 -11,054 45,588 64,985

Interest received (paid) 17,702 -2,452 Income taxes received (paid) 1,672 -403 Net cash from operating activities 64,962 62,130

Cash flows from investing activities Interest received – 21,016 Dividends received – 913 Investments in intangible assets 14 -7,500 -7,159 Investments in property, plant and equipment 15 -7,783 -10,504 Acquisition of subsidiaries, net of cash acquired 3 -39,048 -34,106 Acquisition of associated companies -377,933 -2,936 Divestment of associated companies 891 413,035 Divestment of other investments – 191,047 Disposal of operation, net of cash disposed of 13 8,792 2,618 Divestments of property, plant and equipment 4,738 15,400 Divestment of other investments – 2,272 Net cash from (used in) investing activities -417,843 591,596

Cash flows from financing activities Dividends paid 23 -47,750 -25,000 Repurchase of own shares 22 -47,030 -6,164 Withdrawal of borrowings – 383 Redemption of borrowings -14,424 -192,746 Change in minority interest -165 – Net cash used in financing activities -109,369 -223,527

Net (decrease) increase in cash -462,250 430,199

Cash at 1 January 20 496,025 67,347 Effect of exchange rate fluctuations on cash held -223 -83 Change in cash classified as held for sale 40 -1,438 Cash at 31 December 20 33,592 496,025 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 46 TMG Financial Statements 2008 Consolidated statement of changes in equity

Attributable to equity holders of Telegraaf Media Groep N.V. Total Issued Translation Other legal Treasury Retained Minority shareholders’ In thousands of euros Note capital reserve reserves shares earnings Total interests equity

Balance, 1 January 2007 13,125 36 1,434 -54,415 537,861 498,041 6,487 504,528

Result for the year – – – – 400,097 400,097 -813 399,284 Foreign currency translation 22 – -159 – – – -159 – -159 Total income and expense for the year – -159 – – 400,097 399,938 -813 399,125

Capitalised development costs – – -1,434 – 1,434 – – – Dividends paid to shareholders 23 – – – – -25,000 -25,000 – -25,000 Repurchase of own shares 22 – – – -6,164 – -6,164 – -6,164 Withdrawal of own shares 22 -625 – – 54,415 -53,790 – – – Minority interest arising on business combinations – – – – – – -1,653 -1,653 Balance as at 31 December 2007 12,500 -123 – -6,164 860,602 866,815 4,021 870,836

Result for the year – – – – -359,988 -359,988 -777 -360,765 Foreign currency translation 22 – -471 – – – -471 – -471 Total income and expense for the year – -471 – – -359,988 -360,459 -777 -361,236

Dividends paid to shareholders 23 – – – – -47,750 -47,750 – -47,750 Repurchase of own shares 22 – – – -47,030 – -47,030 – -47,030 Minority interest arising on business combinations – – – – – – 25 25 Balance as at 31 December 2008 12,500 -594 – -53,194 452,864 411,576 3,269 414,845 WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Financial Statements 2008 47 Notes to the consolidated financial statements

contents page Note page Note 48 1. Significant accounting policies 72 19. Trade and other receivables 56 2. Segment reporting 72 20. Cash and cash equivalents 58 3. Business combinations 73 21. Assets and liabilities held for sale 60 4. Revenue 73 22. Shareholders’ equity 60 5. Other operating income 74 23. Dividend 61 6. Raw and auxiliary materials 75 24. Earnings per share 61 7. Personnel costs 75 25. Interest-bearing loans and borrowings 61 8. Depreciation, amortisation and impairment 77 26. Share-based remunerations 61 9. Other operating expenses 77 27. Post-employment benefit liabilities 62 10. Financial income and expense 80 28. Restructuring provision 63 11. Income tax 80 29. Deferred tax assets and liabilities 64 12. Current tax assets and liabilities 81 30. Accounts payable and other current liabilities 64 13. Discontinued operations 82 31. Financial risk management 66 14. Intangible assets 84 32. Off balance sheet liabilities 68 15. Property, plant and equipment 84 33. Investment commitments 69 16. Investments in associated companies 84 34. Contingent liabilities 72 17. Other investments 85 35. Related parties 72 18. Inventories 86 36. Interests in joint ventures 86 37. Subsequent events WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 48 TMG Financial Statements 2008

1. significant accounting policies terms used in, the balance sheet, income statement and certain notes has been changed in 2008 to provide additional and more Corporate information relevant information. Certain comparative amounts have been reclassified to conform to the current period presentation. Telegraaf Media Groep N.V. (the ‘company’) domiciled in None of the changes are significant. Amsterdam, the Netherlands is a media company with a leading market position and recognized brands in the Netherlands. The activities primarily are the publication of printed media and Critical accounting estimates and judgements the operation of, and participation in, digital media, radio and television. The company’s shares are listed on the NYSE Euronext In the process of applying TMG’s accounting policies, manage- in Amsterdam. ment has made judgements, estimates and assumptions, which affect the application of the accounting principles and the The consolidated financial statements of the Company for the amounts recognised in the financial statements. The estimates year ended 31 December 2008 comprise the company and its and the related assumptions are based on historical experience subsidiaries (together referred to as TMG) and jointly controlled and other factors, that are believed to be reasonable under the entities and TMG’s interest in associates. circumstances.

The financial statements have been compiled by the Executive The outcomes of these form the basis for the evaluation of the Board, and have together with the Supervisory Board been carrying value of assets and liabilities where this is not easily signed on 12 March 2009. apparent from other sources. The resulting accounting estimates will, by definition, seldom equal the related actual results.

Statement of Compliance The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of the estimates are applied in the The consolidated financial statements have been prepared in period during which the estimate is revised, if the revision only accordance with the International Financial Reporting Standards has consequences for the period in question. If the revision (IFRS) as adopted by the International Accounting Standards has consequences for both the period under review and future Board (IASB) and as adopted by the European Union, and the periods, the estimate is revised in both the period of revision interpretations of these standards by the IASB. and future periods.

The areas involving a higher degree of judgement or complexity, Basis for preparation or areas where assumptions and estimates are significant to the consolidated statements are: The financial statements are presented in euros, rounded to ••intangible assets (useful life and impairment - see note 14); the nearest thousand. They are prepared on the historical cost ••property, plant and equipment (useful life - see note 15); basis, except that the following assets and liabilities are stated ••non-quoted financial instruments (impairment - see note 16); at their fair value: financial instruments available for sale. ••associated companies (impairment - see note 16); ••trade receivables (impairment - see note 19); Non-current assets and disposal groups held for sale are stated ••post employment benefit liabilities (actuarial assumptions - at the lower of the carrying amount and the fair value less costs see note 27); to sell. ••restructuring provision (the amount of severance payments and severance alternatives - see note 28); The principles for the valuation of assets and liabilities and the ••income tax (rate and recoverability deferred tax - see note 29). determination of the result of the company financial statements of Telegraaf Media Groep N.V., are in conformity with article 402, Judgements made by management in the application of IFRS Book 2 of The Netherlands Civil Code. that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the The accounting policies have been applied consistently for next year are discussed in the accompanying notes. the years 2008 and 2007 as presented in these consolidated financial statements. Basis of consolidation

Changes in presentation The consolidated financial statements of Telegraaf Media Groep N.V. comprise the company and all of its subsidiaries and joint The discontinued operations have an effect on the financial ventures. The consolidation is based on the valuation and the position of TMG. The presentation of the income statement accounting principles of the parent company. is primarily based on continued operations. The comparative financial figures 2007 have been reclassified to conform to the current period presentation. The presentation of, and certain WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Financial Statements 2008 49

Subsidiaries Foreign currency Subsidiaries are entities controlled by the company. Control exists when the Company has the power, directly or indirectly, to Foreign currency transactions govern the financial and operating policies of an entity so as to Transactions in foreign currencies are translated into euros at the obtain benefits from its activities. In assessing control, potential foreign exchange rate at the date of the transaction. Monetary voting rights that presently are exercisable or convertible are assets and liabilities denominated in foreign currencies at taken into account. The financial statements of subsidiaries are the balance sheet date are translated to euros at the foreign included in the consolidated financial statements from the date exchange rate ruling at that date. Foreign exchange differences that control commences until the date that control ceases. arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms Joint ventures of historical cost in foreign currency are translated at the exchange Joint ventures are those entities established by contractual rate applying on the date of the transaction. Non-monetary assets agreement over whose activities TMG has joint control and and liabilities denominated in foreign currencies that are stated in which strategic decisions are taken by unanimous consent. at fair value are translated to euros at foreign exchange rates The consolidated financial statements include TMG’s proportionate ruling at the dates the fair value was determined. share of the entities assets, liabilities, revenues and expenses with items of a similar nature on a line-by-line basis, from the Financial statements of foreign operations date that joint control commences until the date that joint The assets and liabilities of foreign operations, including goodwill control ceases. and fair value adjustments arising on consolidation, are translated to euros at foreign exchange rates ruling at the balance sheet date. Associated companies The revenues and expenses of foreign operations are translated Associates are those entities in which TMG has a significant to euros at the date of the transaction. Foreign exchange influence, but no control, over the financial and operating policies. differences arising on translation are recognised directly in a Subsidiaries and joint ventures are no associated companies. separate component of equity. Foreign exchange gains and The consolidated financial statements include the TMG’s share losses arising from a monetary item receivable from or payable of the total recognised gains and losses of associates on an to a foreign operation, the settlement of which is neither planned equity accounted basis, from the date that significant influence nor likely in the foreseeable future, are considered to form part commences until the date that significant influence ceases. of a net investment in a foreign operation and are recognised The difference between the purchase price of TMG’s share and directly in equity in the translation reserve. When a foreign ope- the fair value of the identified assets, liabilities and contingent ration is disposed of, in part or in full, the relevant amount in the liabilities of the associated company is goodwill. The goodwill is translation reserve is transferred to the income statement. included in the carrying amount of the investment and is tested for impairment as part of the investment. An impairment is accounted for immediately in the income statement. When the Intangible assets TMG’s share of losses exceeds its interest in the associate, the carrying amount is reduced to nil and recognition of further losses Goodwill is discontinued except to the extent that TMG has incurred legal Goodwill represents amounts arising on acquisitions of subsi- or constructive obligations or made payments on behalf of an diaries, joint ventures and associates. In respect of acquisitions, associate. goodwill represents the difference between the cost of the acquisition and the fair value of the identifiable assets liabilities Transactions eliminated on consolidation and contingent liabilities acquired. Goodwill is stated at cost less Intra-group balances and any unrealised gains and losses or any accumulated impairment losses. Goodwill is attributed to income and expenses arising from intra-group transactions are cash generating units and is not amortised. Instead, it is tested eliminated in preparing the consolidated financial statements. annually for impairment (see accounting policy impairments). In respect of associates, the carrying amount of goodwill is Unrealised gains arising from transactions with associates and included in the carrying amount of the investment in the associate. jointly controlled entities are eliminated to the extent of the Whenever an interest in a subsidiary, associate or joint venture TMG’s interest in the entity. Unrealised losses are eliminated in is sold, the corresponding goodwill is included in the determination the same way as unrealised gains, but only to the extent that of the result of the transaction. Negative goodwill that arises during there is no evidence of impairment. an acquisition is included directly in the income statement. The results of the subsidiaries acquired or disposed of during the financial year are included in the consolidated financial Other intangible assets statements as of the effective transaction date. If necessary, Other intangible assets concern licences, (internally developed) changes are made to the figures of subsidiaries to align the software, trademarks and publishing rights. The other intangible accounting principles with those of TMG. assets acquired by the TMG are stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy impairments). Expenditure for development activities, whereby the research results are applied to a plan or design for the production of new or substantially improved products and WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 50 TMG Financial Statements 2008

processes, are capitalised if the product or process is technically benefits embodied with the item will flow to the TMG and the and commercially feasible can be seperately identified, the ex- cost of the item can be measured reliably. All other costs are penses are estimated reliably, and TMG has sufficient resources recognised in the income statement as an expense as incurred. to complete the development. The capitalised costs comprise the cost of material, investments, direct labour and an appropriate Depreciation proportion of overheads. With regard to the capitalised internal Depreciation is charged to the income statement on a straight-line hours, a legal reserve is stated. Other development expenditure basis over the estimated useful life of each part of a property, is recognised in the income statement as an expense as incurred. plant and equipment. Land is not depreciated.

Capitalised development expenditure is stated at cost less The estimated useful lives are as follows: accumulated amortisation (see below) and impairment losses. ••buildings 20 - 25 years ••machinery and equipment 5 - 10 years Subsequent expenditure ••other tangible fixed assets 3 - 5 years Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits The depreciation method, estimated useful life and residual embodied in the specific asset to which it relates. In that case, value are assessed annually. the costs are capitalised in so far as this increases the economic benefits. Other investments Amortisation Amortisation is charged to the income statement on a straight- Other investments are participations, prepaid operational leases line basis over the estimated useful lives of intangible assets unless and long-term receivables. The participations, in which the such lives are indefinite. Other intangible assets are amortised TMG does not have power of control, are valued at fair value from the date they are available for use. or at cost. Prepaid operational leases comprise the purchased leaseholds of the land on the campus in Amsterdam. These are The estimated useful lives are as follows: amortised on a straight-line basis over the duration of the lease- ••trademarks and publishing rights 8 - 50 years holds concerned. Non-current receivables are initially recorded ••licences 5 years at cost price less attributable transaction costs. They are then ••software 3 - 5 years capitalised at amortised cost, whereby a difference between the cost and the redemption amount on the basis of the effective The amortisation method and estimated useful lives are assessed interest method is included in the income statement over the annually. duration of the receivables.

Lease Inventories

Lease agreements, where TMG has substantially all the risks Inventories are stated at the lower of cost or net realisable value. and rewards of ownership are classified as financial leases. The net realisable value is the estimated selling price in the ordinary Upon initial recognition the leased asset is measured at an course of business, less the estimated costs of completion and amount equal to the lower of its fair value and the present value the selling expenses. The cost price of the inventories is based of minimum lease payments. Subsequent to initial recognition, on the ‘first in, first out’ principle (FIFO) and includes expenditure the asset is accounted for in accordance with the accounting incurred in acquiring the inventories and bringing them to their policy applicable to that asset. Other leases are operating leases, existing location and condition. which assets are not recognised in TMG’s balance sheet.

Securities Property, plant and equipment Investments in debt instruments and shares Owned assets Financial instruments held for trading are classified as current Property, plant and equipment are stated at cost less accu- assets and are stated at fair value, with any gain and loss mulated depreciation and impairment losses (see accounting recognised in the income statement. When TMG has the positive policy impairments). Property, plant and equipment that is being intent and ability to hold financial instruments to maturity, they constructed or developed for future use is stated at cost until are stated at amortised cost less impairment losses. construction or development is complete. Other financial instruments held by TMG are classified as being available for sale and are stated at fair value, with any resultant Subsequent expenditure gain or loss being recognised in the shareholders’ equity, except TMG recognises in the carrying amount of an item of property, for impairment losses and, in the case of monetary items such plant and equipment the cost of replacing part of such an item as debt securities, foreign exchange gains and losses. When when that cost is incurred if it is probable that the future economic these investments are derecognised, the cumulative gain or loss WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Financial Statements 2008 51

recognised directly to the shareholders’ equity is recognised loss is recognised whenever the carrying amount of an asset, in Income statement. Where these investments are interest- or the cash-generating unit exceeds its recoverable amount bearing, interest calculated using the effective interest method Impairment losses are recognised in the income statement. is recognised in income statement. The fair value of the financial instruments classified as held for Impairment losses recognised for cash generating units are trading and available for sale is their quoted bid price at the allocated first to reduce the carrying amount of any goodwill balance sheet date. Financial instruments classified as held allocated to cash-generating units and then to reduce the carrying for trading or available for sale investments are recognised by amount of the other assets in the unit on a pro rata basis. TMG on the date it commits to purchase. Investments held to maturity are recognised on the day they are transferred to TMG When a decline in the fair value of an available for sale financial and are removed from the balance sheet on the day they are asset has been recognised directly in the shareholders’ equity, disposed of. and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the income statement, even though the financial Financial instruments asset has been derecognised. The amount of cumulative loss that is recognised in income statement is the difference between TMG, to a limited extend uses, derivative financial instruments the acquisition cost and the current fair value, less any impairment to hedge interest rate risk exposures. Embedded derivatives are loss on that financial asset previously recognised in the income separated from the host contract and accounted for separately statement. if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate Calculation of recoverable amount instrument with the same terms as embedded derivative would The realisable value of TMG’s investments in securities held to meet the definition of a derivative, and the combined instrument maturity and receivables valued at the amortised cost of acqui- is not measured at fair value through profit and loss. sition is calculated as the present value of the expected future cash flows, discounted at the original effective interest rate Derivatives are recognised initially at cost; attributable transaction (i.e. the effective interest calculated at the time at which these costs are recognised in income statement when incurred. financial assets are initially entered). Receivables with a short Subsequent to initial recognition, derivatives are measured at residual term are not discounted to the present value. For the fair value, and changes therein are accounted for in income other assets and associates, the realisable value is the fair value statement. If the range of various estimates in fair value of less cost to sell, or the value in use if this is higher. When deter- financial instruments is substantial and the probabilities of the mining the value in use the present value of the estimated future various estimates can not be reasonably assessed, the financial flows is calculated using a pre-tax discount rate that reflects instrument is stated at cost instead of fair value. TMG does not both the current market valuations of the time value of money apply hedge accounting. and the specific risks related to the asset. For an asset that generates no cash receipts which are significantly independent of those of other assets, the realisable value is determined for Trade and other receivables the cash generating unit to which the asset belongs.

Trade and other receivables are stated at cost less impairment Reversal of impairment losses. An impairment loss for a security held to maturity or a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event Cash and cash equivalents occurring after the impairment loss was recognised. Impairment loss incurred on an unquoted equity instrument not valued at Cash comprises cash balances and call deposits. fair value, because its fair value cannot be reliably measured, shall not be reversed. An impairment loss in respect of goodwill is not reversed. Impairments Impairment loss on goodwill will not be reversed. Impairments The carrying amount of TMG’s assets other than inventories and on non-quoted equity instruments, that is not carried on fair deferred tax assets, are reviewed at each balance sheet date to value, because its fair value cannot be reliably measured, will determine whether there is an indication of impairment. If such not be reversed. In respect of other assets, an impairment indication exists, the asset’s recoverable amount is estimated loss is reversed if there has been a change in the estimates (see the policy for calculation of recoverable amount). used to determine the recoverable amount. An impairment is only reversed to the extent that the asset’s carrying amount For goodwill, assets that have an indefinite useful life and intan- does not exceed the carrying amount that would have been gible assets that are not yet available for use, the recoverable determined, net of depreciation or amortisation, if no impairment amount is estimated at each balance sheet date to determine loss had been recognised. whether there is an indication for impairment. An impairment WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 52 TMG Financial Statements 2008

Issued capital Post-employment benefit liabilities

TMG’s ordinary shares are designated as the Company’s equity. The group has established various pension schemes, some under its own management, with Stichting-Telegraafpensioenfonds 1959 and some placed with external parties such as industry wide Minority interests pension funds and insurance companies.

Minority interests are the portion of the profit and loss and net a. Defined benefit plans assets of a subsidiary attributable to equity interests that are TMG’s net obligation in respect of defined benefit plans is not owned, directly or indirectly through subsidiaries, by TMG. calculated separately for each scheme by estimating the In the event of both a written put and a call option on the shares, amount of future benefits that employees have earned in return these shares will be included in TMG’s economic interest, and for their service in the current and prior periods. That benefit is not classified as a minority interest. discounted to determine its present value. Any unrecognised past servicecosts and the fair value of plan assets are deducted hereon. The discount rate is the yield as at the balance sheet Treasury shares date on AAA credit rated bonds that have maturity dates approxi- mating to the terms of TMG’s obligations. The calculation is When share capital recognised as equity is repurchased, performed by a certified actuary using the ‘projected unit credit’ the amount of the consideration paid, which includes directly method. In respect of actuarial gains and losses that arise attributable costs, is net of any tax effects and is recognised while calculating TMG’s obligation in respect of a plan, to the as a deduction from equity. For repurchased shares classified extent that any cumulative unrecognised actuarial gain and as treasury shares that are sold or reissued subsequently, the loss exceeds 10 per cent of the greater of the present value of amount received is recognised as an increase in equity, and the the defined benefit obligation and the fair value of plan assets, resulting surplus of deficit on the transaction is transferred to/from that portion is recognised in the income statement over the retained earnings. Withdrawn shares are deducted from issued expected average remaining working lives of the employees capital for nominal value, and the resulting surplus or deficit on participating in the plan. Otherwise, the actuarial gain and loss the transaction is transferred to/from retained earnings. is not recognised.

Where the calculation results in a benefit to TMG, the recognised Interest-bearing loans and borrowings asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future Interest-bearing loans and borrowings are recognised initially refunds from the plan or reductions in future contributions to at cost less attributable transaction costs. The borrowing costs the plan. When the benefits of a plan are improved, the portion are directly attributable to the qualifying asset. Subsequent to of the increased benefit relating to past service by employees initial recognition, interest-bearing loans are stated at amortised is recognised as an expense in the income statement on a cost, with any difference between cost and redemption value straight-line basis over the average period until the benefits being recognised in the income statement over the period of the become vested. To the extent that the benefits vest immediately, borrowings on an effective interest basis. the expense is recognised immediately in the income statement.

The result ensuing from the curtailment or termination of a defined Share-based remunerations benefit plan is incorporated in the income statement immediately when the curtailment or termination exists. The result consists of Share-based remunerations are valued at the (expected) present the change in the present value of the defined benefit obligation value of the shares owned by the management at vesting date. and the fair value of plan assets and previous actuarial results and past service costs which have not been accounted for. The grant date fair value of shares granted to management is A curtailment exists if there is a material reduction in the number recognised and allocated to the period that the management is of employees covered by the pension plan or if the plan changes unconditionally entitled to sell the shares to TMG. Expenses are substantially. recognised when payment of shares is unconditional or realized. b. Defined contribution plans In the event of both a written put and a call option on the shares, Obligations for contributions to defined contribution plans are these shares will be included in TMG’s economic interest. At the recognised as an expense in the income statement as incurred. same time, a management obligation is included. The valuation is the discounted fair value of the shares at vesting date. Estimate of fair values are reassessed annually. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Financial Statements 2008 53

Provisions Trade and other receivables The fair value of trade and other receivables is estimated as the A provision is recognised in the balance sheet when TMG has present value of future cash flows, discounted at the market rate a present legal or constructive obligation as a result of a past of interest at the reporting date. event and it is probable that an outflow of economic benefits will Derivatives be required to settle the obligation. If the effect is material, pro- The fair value of interest rate swaps is based on broker quotes. visions are determined by discounting the expected future cash Those quotes are tested for reasonableness by discounting es- flows at a pre-tax rate that reflects current market assessments timated future cash flows based on terms and maturity of each of the time value of money and, where appropriate, the specific contract and using market interest rates for similar instruments risks related to the liability. at the measurement date.

Restructuring provision Share based payment transactions A provision for restructuring is recognised when TMG and the The fair value of share-based payment transactions is based on employees council has approved a detailed and formalised the expected cash value of the cash flow from the subsidiary. restructuring plan and the restructuring has either commenced Factors affecting valuation include strike price of the instrument, or has been announced publicly. TMG has no possibility to the expected cash flow from the entity and the discount rate. withdraw the reorganisation plan. Termination benefits are recognised as an expense when TMG is demonstrably committed to either terminating the employment of current employees and/ Revenue or function categories. The revenues exclude value added tax and any discounts. To the extent this can be reliably estimated, benefits falling due Revenues from the sale of goods are recognised in the income more than 12 months after the balance sheet date are discounted statement when the significant risks and rewards of ownership to their present value. have been transferred to the buyer. Revenues relating to services provided are included in the income statement in proportion to performance in the same financial year. Accounts payable and other current liabilities No revenue is recognised if there are significant uncertainties Accounts payable and other current liabilities are stated at cost. regarding recovery of the consideration due, associated costs or the possible return of goods, or when there is continuing management involvement with the goods. Determination of fair values Barter transactions A number of TMG’s accounting policies and disclosures require If advertisement space or time are exchanged or swapped for the determination of fair value, for both financial and non-financial advertisement space or time which are similar as regards the assets and liabilities. Fair values have been determined for nature, fair value and same target population, such an exchange measurement and/or disclosure purposes based on the following is not recognised as a revenue-generating transaction. If this methods. When applicable, further information about the assump- condition is not applicable, the exchange will be regarded as tions made in determining fair values is disclosed in the notes a transaction which generates revenue. The amount of the specific to that asset or liability. revenue is determined on the basis of the fair value of the goods or services received, plus or minus any cash or assets which Property, plant and equipment have been received or paid which can be converted into cash, The fair value of property, plant and equipment recognised as on short term. If the fair value of the received goods or services a result of a business combination is based on market values. cannot be reliably determined, the revenue is determined on fair The market value of property is the estimated amount for which value of the exchanged goods or services plus or minus cash or a property could be exchanged on the date of the valuation assets which can be converted into cash, on short term. between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each Government grants acted knowledgeably, prudently and without compulsion. Government grants are recognised in the balance sheet initially The market value of items of plant, equipment, fixtures and as income when there is reasonable assurance that it will be fittings is based on the quoted market prices for similar items. received and that TMG will comply with the conditions attached to it. Grants that compensate TMG for the expenses are recog- Intangible assets nised in the income statement on a systematic basis in the The fair value of publishing rights and trademarks acquired in same period the expenses are made. a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trademark being owned. The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 54 TMG Financial Statements 2008

Expenditure probably not going to be settled in the foreseeable future. The amount of the provision for deferred tax liabilities is based on Lease payments the way in which the carrying amount of the assets and liabilities Payments made under operating leases are recognised in the is expected to be realised or settled, with the tax rates being income statement on a straight-line basis over the term of the used as determined on the balance sheet date, or to which a lease. Lease incentives received are recognised in the income material decision has already been taken on the balance sheet statement as an integral part of the total lease expense. date. A deferred tax asset is recognised only to the extent that Minimum lease payments from financial leases are apportioned it is probable that future taxable profits will be available against between the finance charge and the reduction of the outstanding which the asset can be utilised. Deferred tax assets are reduced liability. The finance charge is allocated to each period during to the extent that it is no longer probable that the related tax the lease term so as to produce a constant periodic interest rate benefit will be realised. on the remaining balance of the liability. Conditional lease payments are incorporated by revising the minimal lease payments during The deferred tax liabilities and assets are netted if there is a the remaining lease term as soon as the adaptation of a lease is legal entitlement to settle current and deferred tax, the income confirmed. tax is charged by the same Tax Authorities and TMG intends to net the amounts. Financial income and expenses Result from associates concerns TMG’s share in the total result of the associate, when TMG has significant influence. Result on Segment reporting the sale of the associate is stated on the date the transaction is effected. A segment is a distinguishable component of TMG that is engaged either in providing products and services (business The financial income and expenses comprise impairment losses segment), or in providing products or services within a particular of associates and financial instruments (see accounting policy economic environment (geographical segment), which is subject impairment losses). to risks and rewards that are different from those of other segments. The financial income and expenses comprise interest payable on borrowings calculated using the effective interest method, interest income on funds invested, dividend income and foreign Assets classified as held for sale and discontinued exchange gains and losses. operations

Interest income is recognised in the income statement as it On initial classification as held for sale, non-current assets and accrues using the effective interest calculation method. disposal groups are recognised at the lower of the carrying Dividend income is recognised in the income statement on the amount and fair value less costs to sell. date of the entity’s right to receive payments. Foreign currency gains and losses are reported on a net basis. Impairment losses on initial classification as held for sale are included in the income statement, even when there is a revaluation. The same applies to gains and losses on subsequent Income tax re-measurement.

Income tax on the profit or loss for the year comprises current A discontinued operation is a component of TMG’s business that and deferred tax. Income tax is recognised in the income state- represents a separate major line of business or geographical ment except to the extent that it relates to items recognised area of operations, or is a subsidiary acquired exclusively with directly in shareholders’ equity, in which case it is recognised in a view of resale. shareholders’ equity. Classification as a discontinued operation occurs upon disposal Current tax is the expected tax payable on the taxable income or when the operation meets the criteria to be classified as held for the year, using tax rates enacted or substantially enacted at for sale, if earlier. A disposal group that is to be abandoned may the balance sheet date, and any adjustment to tax payable in also qualify. respect of previous years.

Deferred tax is provided using the balance sheet liability method, Cash flow statement providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes The consolidated cash flow statement is stated in accordance and the amounts used for taxation purposes. The following with the indirect method. A distinction is made between the temporary differences are not provided for: non tax-deductible operating, investment and financing activities. The cash flow goodwill, the initial recording of assets or liabilities which affect from operating activities is adjusted for items in the income neither the commercial nor the fiscal profit, and differences statement and changes in balance sheet which have no effect related to investments in subsidiaries in so far as these are on the cash flow for the year. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Financial Statements 2008 55

Effect of new accounting standards and interpretations not yet adopted

Certain new standards, amendments to standards and interpretations are not mandatory for TMG in 2008 and are not early adopted in these financial statements. The following standards are applicable on or after 1 January 2009 (unless otherwise stated) and will then be adopted by TMG:

••IAS 1 revised - Presentation of Financial Statements ••IAS 23 revised - Borrowing Costs ••IAS 27 amendment - Consolidated and separate financial statements (Effective 1 January 2010) ••IAS 32 en IAS1 amendment - Puttable financial instruments and Obligations arising on liquidation ••IAS 39 Recognition & measurement - Eligible hedged items (Effective 1 January 2010) ••IAS 38 en IFRS 7 - Reclassification of Financial Assets ••IFRS 1 en IAS 27 amendment - Cost of an investment in a subsidiary ••IFRS 2 amendment - Vesting conditions and cancellations ••IFRS 3 revised - Business Combinations. The TMG financial statements must be prepared in accordance with the revised IFRS 3 accounting principles effective in 2010. The revised IFRS 3 accounting principles are prospectively applied and therefore do not affect the previous periods in the 2010 financial statements. Costs that are directly related to an acquisition shall no longer be capitalised but shall be directly charged to the Income Statement. The accounting treatment of changes in control will be changed. TMG is currently in the process of assessing the impact of the changed standard on the operating results and its financial position. ••IFRS 8 Operating segments ••IFRIC 13 Customer Loyalty Programs ••IFRIC 15 Agreements for the construction of real estate ••IFRIC 16 Hedges of Net Investment in a Foreign Operation ••IFRIC 17 Distribution of Non-cash Assets to Owners ••IFRIC 18 Transfers of Assets from customers

TMG expects that the adoption of these new standards, amendments to standards and IFRIC interpretations in the future will have no material impact on TMG’s financial statements. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 56 TMG Financial Statements 2008

2. segment reporting

Publishing Radio Other activities Eliminations Total In thousands of euros 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007

Revenue from third-party transactions 583,695 586,874 50,967 52,798 49,542 60,389 – – 684,204 700,061 Revenue from transactions with other segments 961 1,854 64 273 235,019 230,289 -236,044 -232,416 – – Total revenue 584,656 588,728 51,031 53,071 284,561 290,678 -236,044 -232,416 684,204 700,061

Segment result before amortisation 36,716 66,517 24,722 25,010 -30,410 -17,541 – – 31,028 73,986 Amortisation and impairment 18,397 20,591 23,903 27,348 6,597 2,410 – – 48,897 50,349 Segment result 18,319 45,926 819 -2,338 -37,007 -19,951 – – -17,869 23,637

Unallocated revenue and costs -19,174 -42,020 Operating result -37,043 -18,383

Result from associates -131,336 352,561 Financial income and expenses -182,935 69,282 Income tax -10,190 -6,160 Net result of continued operations -341,124 409,620

Net result from discontinued operations -19,641 -10,336 Net result for the year -360,765 399,284

Segment assets 296,447 310,077 219,720 251,661 150,849 192,889 – – 667,016 754,627 Investments in associates 71,833 22,626 Unallocated assets 23,167 455,958 Total assets 762,016 1,233,211

Segment liabilities 152,795 166,851 60,421 80,867 51,463 50,557 – – 264,679 298,275 Unallocated liabilities 82,492 64,100 Total liabilities 347,171 362,375

Segment investments 52,487 48,532 650 907 9,600 15,005 – – 62,737 64,444 Unallocated investments -3,073 14,588 Total investments 59,664 79,032

Depreciations, amortisation and impairments 20,746 23,608 24,502 27,990 24,914 21,865 – – 70,162 73,463 Unallocated depreciation and amortisation 42 43 Total depreciation and amortisation 70,204 73,506

Average number of FTEs 2,216 2,209 112 134 889 921 – – 3,217 3,264 Unallocated FTEs 84 89 Total FTEs 3,301 3,353

Business segments The group comprises the following main business segments: ••Publishing: The publishing of national and regional newspapers, magazines, puzzle booklets and free door-to-door papers. ••Radio: The operating of several radio stations in the Netherlands and Germany (until December 2007). ••Other: Other activities include, among other things, the printing and distribution of newspapers, providing of office space and related facilities, providing (internal) ICT services, organising exhibitions and trade fairs and the operating of mobile telephone services.

The discontinued operations in 2008 concern: ••in the Publishing segment the activities of Telegraaf Tijdschriften Groep B.V. except for Vrouw, Privé en Autovisie, Careermedia B.V. (Carp), TTG Sverige A.B. and Telegraaf Media Ukraine; ••in the ‘other’ segment the activities of Media Librium B.V. and Datawire B.V. WorldReginfo - 9701bc24-2c91-4db4-a80d-86d6b3458885 TMG Financial Statements 2008 57