TMG annual report 2010
Transcription
TMG annual report 2010
TMG annual report 2010 This annual report is a translation of the original text in Dutch, which is the official version. In case of any discrepancies the Dutch version will prevail. The annual report is also available in the English language via: www.tmg.nl For more information: [email protected] Telegraaf Media Groep N.V. Visiting address: Basisweg 30, Amsterdam Mail address: P.O. Box 376, 1000 EB Amsterdam Telephone: +31 20 585 9111 TMG annual report 2010 TMG annual report 2010 5 contents 6FOREWORD BY THE EXECUTIVE BOARD 37 Corporate governance 38SUSTAINABILITY REPORT 8REPORT FROM THE SUPERVISORY BOARD 9MEMBERS OF THE EXECUTIVE AND SUPERVISORY BOARD 12 CONSOLIDATED KEY FIGURES 43FINANCIAL STATEMENTS 45 Consolidated Financial Statements 49Notes to the Consolidated Financial 90 Company Financial Statements 93Notes to the Company Financial Statements Statements 13 CONSOLIDATED INFORMATION 13 Financial Performance 98OTHER INFORMATION 16 Corporate Affairs 98 Subsequent Events 99 Independent Auditors’ Report 20Telegraaf Media Nederland 102 Provision in the Articles of Association 20 National Dailies 23 Free Local Papers (door-to-door) 23 Magazines Media Groep N.V. and Stichting Beheer 23 Digital Media van Prioriteitsaandelen Telegraaf Media Groep N.V. 25 Sky Radio Group concerning the appropriation of profit 103 Stichting Preferente Aandelen Telegraaf 104Annual report 2010 of Stichting Administratiekantoor van Aandelen Telegraaf Media- 26Keesing Media Group 27OTHER ACTIVITIES 27 Hyves 27 Mobillion 28 Telegraaf Media ICT (TMI) 28 Telegraaf Drukkerij Groep (TDG) 28 TMG Distributie 28 Shared Service Center (SSC) 29PARTICIPATING INTERESTS 32 RISK MANAGEMENT 36STATEMENT OF RESPONSIBILITY Groep N.V. 106 about TMG TMG annual report 2010 6 foreword by the Executive Board Compared to last year, the focus of operations in 2010 has shifted from measures designed to structurally lower costs, to expanding the portfolio with the objective of maintaining and expanding market leadership. TMG’s recurring operating result before amortisation (recurring EBITA) increased by € 15 million in 2010 in comparison to 2009. This represents a considerable increase in margin to 10.9%. This once again brings the long-term goal of 15% closer. The improvement in the result is primarily due to the implementation of the measures agreed upon in 2010 and previous years. The impact in 2010 is a reduction of € 35 million in the annual cost level. Revenues declined by € 20 million primarily due to the fact that advertising revenues generated by the daily newspapers across the full breadth of the market in 2010 did not benefit from the limited economic recovery in the Netherlands. The revenues of the acquired Hyves social network were, since November 2010, recognised as part of TMG’s revenues. TMG’s net result, including a revaluation of the interest in ProSiebenSat.1 Media AG in the amount of € 44 million, rose to € 81 million (2009: € 69 million including a revaluation of € 56 million). results On balance, the recurring EBITA of continued operations was € 65 million (2009: € 50 million) on € 592 million in revenues (2009: € 612 million). The margin consequently increased from 8.1% in 2009 to 10.9% in 2010. Advertising revenues generated by TMG’s newspapers, as well as its radio operations, were under pressure. The resulting decline in revenues was partially offset by the growth in online revenues. In terms of circulation, revenues on balance marginally declined due to the discontinuation of De Telegraaf on Sunday. This was offset by an increase in price and additional sales during the 2010 FIFA World Cup. The improvement in the recurring EBITA was primarily achieved through cost reduction measures, including the discontinuation of the Sunday edition of De Telegraaf, the outsourcing of activities and the effects of the reorganisation measures implemented earlier. The lower cost of paper also contributed to the improved results. business units The business units made demonstrable progress in 2010 in terms of collaboration and synergy. Revenues generated by Telegraaf Media Nederland declined modestly due to lower revenues from circulation as well as advertising. Pricing in particular was under pressure with regard to advertising revenue derived from printed media. Revenues from digital activities rose. In the past year, this business unit actively focused on a number of areas, including the continued development of the digital market with a focus on local markets and e-commerce, and on the establishment of its own video media unit. From an organisational perspective, a number of units were merged to form a single national media unit. In addition, the focus on regional and local markets was also strengthened. Because primarily the advertising markets were adversely affected, Keesing Media Group was barely affected by the economic uncertainties with respect to its traditional puzzle magazines. Additional investments were made in digital games in the past year. These games for the time being only represent a small share of Keesing Media Group’s revenues. Sky Radio Group achieved improved results on limitedly lower revenues. Sky Radio Group in 2010 devoted additional efforts to extending its FM radio licenses effective September 2011 and to the future of digital radio. It will continue along this track in 2011. According to the Minister of Economic Affairs, Agriculture and Innovation the FM licenses will be extended at fair market rates. Current plans call for the final decisions on this matter to be made by mid-May 2011. The social network Hyves was acquired in November 2010 and became part of TMG. Hyves occupies the number 1 position on the Dutch internet: over 9.1 million citizens in the Netherlands have a Hyves account of which 5.2 million are considered active users. TMG has high expectations of Hyves, both on a standalone basis, as well as in terms of its collaboration with other TMG media. Mobillion in 2010 revised its strategy by disposing of activities related to handling SMS traffic and by specialising in marketing and communication services via social media. Progress was made by the printing, distribution and ICT production units, as well as the Shared Service Center, in both the areas of quality, as well as cost control. Three particularly outstanding matters included the terminations of the transportation operations, the start up of collaboration with colleague newspaper publishers in the area of daily newspaper distribution and preparations for the conversion of TMG’s printing presses in Amsterdam. TMG annual report 2010 7 participating Interests ProSiebenSat.1 Media AG, the international TV and radio enterprise in which TMG holds a 6% strategic interest (13,127,832 voting shares) and a seat on the supervisory board of directors, also exhibited strong results due to the positive development of the German economy. Revenues in 2010 rose by 8.7% to € 3.0 billion and the operating result before depreciation and amortisation (recurring EBITDA) rose by 30% to over € 900 million. The share price of the preference shares followed this trend and rose from € 8.06 at year-end 2009 to € 22.50 at year-end 2010. The carrying value of the ordinary voting shares at 31 December 2010 was € 15.18 per share. public broadcasting There still is no level playing field for commercial publishers because the public broadcasters that are subsidised by government drain off a great deal of time and money from overall consumer media consumption and consequently also compete directly on the advertising markets. Commercial publishers who want to serve consumers as well as advertisers with successful media products, but who are also responsible for the profitability and continuity of their companies are consequently at a major commercial disadvantage. A minor improvement was the elimination of the Temporary Media Concentrations Act, effective January 2011. However, in addition to this, government should more clearly define the function and objectives of a public broadcaster, including STER’s role. This is the only way in which a level playing field can be created that enables daily newspapers publishers to maintain their individual daily newspaper titles, which would benefit multiformity. sustainability TMG is experiencing a growing demand for sustainabilityrelated reporting on the part of media consumers. In addition, other stakeholders also demand increased insight into the economic as well as social and environmental impacts of business operations. TMG is convinced that a carefully considered policy for corporate social responsibility (CSR), not only reduces negative impacts on the environment, but also leads to savings through the more efficient use of natural resources, innovations in the operating, commercial and editorial fields, client appreciation and motivated employees. challenges The Dutch economy is characterised by periods of growth and decline. This is influenced by many factors, including government incentive schemes and cost reduction measures. Due to the nature of its activities, TMG as a company is sensitive to economic cycles. Advertising markets especially move along with the rise and fall of the Dutch economy. As became apparent in 2010, this does not, for that matter, apply to all media types to the same degree or at the same point in time. Television in the Netherlands experienced marked growth during the past year, especially on the advertising side. In addition, consumption and expenditures related to digital media are growing notably. TMG’s ability to optimally anticipate these developments – in addition to achieving fartherreaching synergy among its business units – is its greatest challenge, greater even than the challenge presented by political and economic developments. outlook TMG is projecting stable circulation revenues in 2011. A key question is whether advertising revenues will recover from the decline experienced in recent years. The projections included in the New Year’s speech still assumed a modest decline in newspaper advertisements and a limited rise in radio advertising. However, advertising revenues derived from print and radio markedly declined in the first two months of this year in comparison to the same period in 2010. Revenues from digital activities exhibited further growth as projected, autonomously as well as due to the acquisition of Hyves. In total there was a modest decline in the Group’s revenue in the first two months of this year. Due to reorganisation measures, the rollout of collaboration in the area of newspaper delivery and the lower cost of paper, there was a decline in costs. On balance, there was a marginal improvement in the recurring EBITA. As stated TMG is projecting stable circulation revenues for 2011. It is impossible to predict to what extent the advertising trends in print and radio in the first two months of 2011 will be representative for the remainder of the year. Revenues from digital activities, in part due to the full-year effect of the Hyves acquisition, are projected to exhibit strong growth. In terms of costs, aside from inflation, TMG will be faced with the effect of the increases pursuant to the collective labour agreement (CAO), the higher cost of paper, effective in the second half of 2011, and higher pension premiums. This is offset by further cost reductions, including the collaboration with Wegener and NDC concerning the distribution of daily newspapers. If the pressure on advertising revenues in the first two months of 2011 persists for the remainder of the year, a limited decline in margin must be taken into account. Earlier projections called for an improvement in margin accompanied by a modest increase in revenues. In view of the successful fiscal year 2010, ProSiebenSat.1 proposes for a resolution by the Annual General Meeting of 1 July 2011 a dividend payment for 2010 of EUR 1.14 per preferred share and EUR 1.12 per common share. TMG holds 13,127,832 common shares. Executive Board Telegraaf Media Groep N.V. TMG annual report 2010 8 report from the Supervisory Board We hereby present the report, the balance sheet as at 31 December 2010 and the income statement for 2010 with explanatory notes, as compiled by the Executive Board. The financial statements have been audited and approved by Deloitte Accountants B.V. in Amsterdam, as stated in the independent auditor’s report. The Supervisory Board discussed the financial statements during the annual meeting with the auditor, after which we signed the financial statements to comply with the Board’s legal obligation pursuant to Article 2:101 Paragraph 2 of the Dutch Civil Code. The Supervisory Board met with the Executive Board six times during the past year. Topics such as the general, financial and operational state of affairs were addressed. Additional topics, such as the strategy and portfolio adjustments, including disposals and acquisitions, such as Hyves, and the policy focused on the groupwide approach to so-called excessive employee salaries, were also addressed. In our capacity as audit committee, we held four meetings with the CFO of the Executive Board and TMG’s Head of Group Internal Audit. The subjects discussed included the internal risk management and control system and their actual implementation, the status of operational and strategic risk management, IT systems, the 2010 audit findings and the 2009 audit follow ups. During the meeting of 11 March 2010, we discussed a number of areas with KPMG, including the financial portion of the 2009 Annual Report. The shareholders meeting of TMG held on 22 April 2010 approved the appointment of Deloitte as auditor. The 2010 management letter was discussed with Deloitte in the meeting of 28 October 2010. During the year under review, in the absence of Executive Board members, we discussed the performance of the Supervisory Board and its members. In the General Meeting of Shareholders dated 22 April 2010, the shareholders approved the nomination of Mr D.H.H.D. Ropers as a member to the Supervisory Board to fill the vacancy created by the death of Mr L.G. van Aken. Following the departure of Mr H.L. Weenen effective 1 August 2010, the Supervisory Board’s selection committee in the autumn of 2010 initiated the procedure required to fill this vacancy. Prof W. van Voorden recently decided to give up his seat effective 1 March 2011. We are grateful to both of them for their long-term commitments to the company. Also in the absence of Executive Board members, we discussed the composition and performance of the Executive Board, our relationship with the Executive Board, and the staffing of the vacancy that will be created in April 2011 by the departure of CEO Mr A.J. Swartjes, as a result of having reached the age of 62. On 7 December 2010, TMG’s shareholders, in a Extraordinary General Meeting of Shareholders, approved the amendment to the remuneration policy for new members of the Executive Board. This brings the policy more in line with the Corporate Governance Code. The shareholders were informed of the hiring of Mr H.M.P. van Campenhout as chairman of the Executive Board as of 16 February 2011, in relation to the departure of Mr Swartjes. We established the remuneration of the Executive Board on the basis of the recently amended remuneration policy. The results achieved in 2010 are cause for awarding a bonus of two months’ salary on the basis of the joint and individual targets achieved by the members of the Executive Board collectively and individually. In addition, we have decided to index the fixed salary component by 1.8% effective 1 January 2011. The remuneration of the members of the Executive Board is recorded in the 2010 Annual Report on page 96. The Executive Board’s remuneration policy is accessible via TMG’s website. Two of our members took part in consultation meetings with the Central Works Council during the year under review, and informal consultation took place with the executive committee of the Central Works Council. We would like to express our gratitude to the Executive Board and all employees for the manner in which they fulfilled their duties in 2010. In particular, we are grateful to Mr Swartjes, who after more than 33 years of service to the Group will be leaving at the end of April. Mr Swartjes joined the Group’s Executive Board in 1991 and has been its chairman since 2005. During this period, TMG’s fixed cost base was significantly reduced and the company transformed from primarily a newspaper operation to a multimedia company with a strong position in a changing media market. We recommend that: 1. The 2010 financial statements be approved as set out in the documents presented. 2. The Executive Board be granted discharge for the policies pursued in 2010. 3. The Supervisory Board be granted discharge for the supervision conducted in 2010. 4. A cash dividend of € 0.45 per share of € 0.25 nominal value be adopted for the 2010 financial year (2009: cash dividend of € 0.35 per share of € 0.25 nominal value). The dividend will be made available for payment on 5 May 2011 at Kas Bank N.V. in Amsterdam. Amsterdam, 10 March 2011 On behalf of the Supervisory Board A.J. van Puijenbroek, Chairman TMG annual report 2010 9 members of Executive Board and Supervisory Board Executive Board Supervisory Board mr. H.M.P. Van Campenhout (1960), CEO Mr H.M.P. Van Campenhout is Chief Executive Officer (CEO) since 16 February 2011 and succeeded drs. A.J. Swartjes. From 2001 until the beginning of 2010, Mr Van Campenhout has been working for Reed Elsevier, most recently as CEO of the Science & Technology division. During these years he built up a great deal of experience with the media industry, and he led successful transformations from print to digital. Subsequently, he was, for a short time, CEO of USG People. In the period from 1984 to 2001, he held various international management positions at Shell. These roles were largely focused on the exploitation of consumers markets. Mr. Van Campenhout studied law at Erasmus University Rotterdam and economics at Higher Economic School Rotterdam. A.J. van Puijenbroek (1947), Chairman Mr. Van Puijenbroek is a Dutch national and is director of VP Exploitatie N.V. As ancillary position he is member of the supervisory board of B.V. Textielfabrieken H. van Puijenbroek. His first appointment as supervisory board member of TMG dates from 15 May 1975. His current term is from 2007 – 2011. drs. F.Th.J. Arp RA (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. Mrs. ir. M. Tiemstra (1954) Mrs. Tiemstra is a Dutch national and is CEO of Arbo Unie and former member of the Executive Board of Eureko N.V. As ancillary position she is member of the supervisory board of AON Groep Nederland B.V. and member of the Supervisory Board of the National Maritime Museum of Amsterdam. Her first appointment as supervisory board member of TMG dates from 5 June 2003. Her current term is from 2007 – 2011. P. Morley msc (1956), COO Mr P. Morley is Chief Operating Officer since 1 December 2007. Before, he was CEO at Wolters Kluwer Nederland. Previously, Mr. Morley was CTO and member of the Executive Board of KPN and COO at Telfort. He studied mathematics and electrical engineering at Trinity College Dublin. drs. J.G. Drechsel (1955) Mr. Drechsel is a Dutch national and is CEO of BCD Holdings N.V. As ancillary positions he is member of the supervisory board of TRX Inc., Eneco Holding N.V, FleuraMetz B.V. and Parkmobile International B.V. His first appointment as supervisory board member of TMG dates from 26 september 2007. His current term is from 2007 – 2011. drs. A.J. Swartjes (1949) Mr A.J. Swartjes has been Chief Executive Officer since 1 January 2005 until 15 February 2011. Mr Swartjes will leave the company per 30 April 2011. From 1991 until 2005 he was a holding company director.This form of management ceased to exist in 2005. He joined the Telegraaf Groep in 1978, and has held various positions since that time. From 1974 to 1978 he worked at Reader’s Digest and Colgate/Palmolive. Mr Swartjes studied Economics at Erasmus University Rotterdam. drs. D.H.H.D. Ropers (1972), Secretary Mr. Ropers is a German national and is the general manager of Bol.com, the biggest webshop in the Netherlands. Mr. Ropers is also member of the board at the Dutch home shopping organisation Thuiswinkel.org. On 22 April 2010 Mr. Ropers has been appointed a member of the supervisory board of TMG. His current term expires 2014. Due to the step back of Mr. ir. H.L. Weenen as of 1 August 2010 and Prof. dr. W. van Voorden as of 1 March 2011 two of the seats in the Board are vacant. Our radio stations test each track and every sound bit, which must meet the expectations of our loyal listeners. FM frequencies remain critical to the success of radio stations, although the broadcast tracks are increasingly more often heard coming from a computer’s speakers. This increases interactivity with listeners. TMG annual report 2010 12 consolidated key figures 2010 2009 Revenues 592,297 611,840 Operating result Financial income and expenses Result before tax - continued operations 22,442 64,678 87,120 -2,870 62,738 59,868 Income tax Result discontinued operations, net of tax Net result of the year 6,159 0 80,961 907 10,365 69,326 Minority interest Result attributable to shareholders of Telegraaf Media Groep N.V. -865 81,826 -1,179 70,505 Proposed result appropriation (not included in the financial statements) Released/Deducted from reserves Dividend payment Pay-out ratio Cash flow from operating activities 60,338 21,488 26.3% 59,569 53,792 16,713 23.7% 49,252 Per share in € Result Cash flow from operating activities Dividend 1.71 1.25 0.45 1.48 1.03 0.35 Employees (FTE) at year end - continuing operations 2,851 2,808 In thousands of euros The 2010 and 2009 annual figures have been prepared in accordance with the IFRS guidelines applicable in 2010. The consolidated statement of comprehensive income is presented on a going-concern basis. The result from operations already discontinued or held for discontinuation were presented separately in 2009. This concerns the activities in Sweden and the Ukraine, the activities of the Telegraaf Tijdschriften Groep in the Netherlands that were sold, Media Librium and DataWire Sport. Keesing Reference Systems was sold in January 2010. The discontinued activities in 2010 are not significant and are therefore not presented separately. TMG annual report 2010 13 consolidated information financial performance results in summary • The recurring EBITA result was almost € 65 million in 2010 and as s uch is € 15 million higher than it was in 2009. • The recurring EBITA margin increased from 8.1% in 2009 to 10.9% in 2010. • Revenues from continued business operations declined by almost € 20 million (3.2%), to € 592 million, due to lower advertising revenues from newspaper and radio activities, and the cessation of less profitable distribution orders. Circulation revenues declined marginally by over € 5 million. Internet revenues (including two months of Hyves) rose strongly to over € 51 million. • Operating expenses related to continued activities, excluding amortisation and impairments, declined by approximately € 35 million due to a decrease of more than € 15 million in distribution costs, a decrease of over € 8 million in the cost of paper and a decrease of over € 12 million in personnel costs. • The net result of almost € 81 million (2009: over € 69 million) includes a revaluation of the interest in ProSiebenSat.1 Media AG in the amount of almost € 44 million (2009: revaluation of € 56 million). The decline in revenues in 2010 was more than offset by the lower costs of distribution, paper, outsourced work and personnel. The operating result (EBIT) was € 25.3 million higher than in 2009 and amounted to € 22.4 million. The recurring EBITA result rose by € 15.0 million to € 64.7 million in 2010. The recurring EBITA margin rose from 8.1% to 10.9%. A net profit of € 81.0 million was realised in 2010 (2009: € 69.3 million), including a revaluation of the interest in ProSiebenSat.1 Media AG in the amount of € 43.8 million. A revaluation of € 56 million was included in 2009. revenues 44.8% 5.6% 2.4% 0.6% 46.6% n Advertisements n Subscriptions + single copy sales nThird-party printing nDistribution nOther revenue results (normalised) EBITA In thousands of euros Revenues Other operating income Raw and auxiliary materials Personnel costs Other operating costs Depreciation EBITA Normalisations Restructuring costs Other Total normalisations Normalised EBITA Amortisation Impairment loss intangible assets Operational result 2010 2009 592,297 423 -44,377 -216,200 -258,399 -13,652 60,092 611,840 2,902 -52,556 -228,646 -274,301 -15,916 43,323 3,469 1,092 4,561 5,385 927 6,312 Advertising revenues in 2010 exhibited an unpredictable pattern across the various media types, as well as over the months of the year. This applies to TMG, as well as the media sector in general. This is caused by various factors: changes in the media landscape, fierce competition, events and most certainly economic conditions in the Netherlands. Advertising revenues on balance declined by € 12.0 million (4.3%) despite of events such as the 2010 FIFA World Cup, the Olympic Games and SAIL 2010. 64,653 Revenues in 2010 on balance decreased by € 19.5 million to € 592.3 million. 49,635 -37,650 -37,560 - 22,442 -8,633 -2,870 Revenues from paid circulation declined marginally by € 5.3 million, due to the discontinuation of the Sunday edition of De Telegraaf and marginally lower revenue from puzzle magazines in the Netherlands. The transition from De Telegraaf weekend subscriptions to three-day subscriptions went well and the decrease in revenues due to the discontinuation of the Sunday newspaper turned out to be limited. TMG annual report 2010 14 The revenues from distribution activities for third parties decreased by € 2.6 million in 2010 as a result of the termination of still remaining in-house transportation activities effective in December and the termination of less profitable distribution contracts. Internet revenues rose by € 9.3 million to € 51.2 million. The increase is primarily due to the growth in e-commerce activities (including the Webshop), the Hyves acquisition and the higher revenues from display advertising on news-related websites. Of the total revenues in 2010, € 36.5 million was realised abroad. Revenues abroad amounted to € 36.8 million in 2009. Revenues outside the Netherlands primarily concern circulation activities related to the daily newspaper De Telegraaf in Europe/Southern Europe and the single copy sales of puzzle magazines in France, Belgium, Denmark and Sweden. Other operating income declined by € 2.5 million, primarily due to the lower book profit from the sale of real estate. segment revenue x € 1 million 2010 Telegraaf Media Nederland 258.6 Daily newspapers Regional newspapers 94.1 Free local papers 50.4 Magazines 25.9 Internet 41.2 Other 9.4 479.6 Keesing Media Group Puzzle magazines Gaming 44.7 2.8 47.5 Sky Radio Group Radio Internet 38.8 0.8 39.6 Other activities Distribution Print third-party Internet Other activities Totaal 2009 43.6% 15.9% 8.5% 4.4% 7.0% 1.6% 81.0% Personnel costs declined by € 12.4 million in comparison to 2009, despite over € 3 million in charges in relation to the employee profit sharing scheme and the IFRS charges for employee benefits. Expenditures related to temporary personnel declined by almost € 3.4 million. added value (AV) per employee 7.4% 0.5% 7.9% 40.8 0.9 41.7 44.9% 15.6% 8.6% 4.3% 6.1% 1.6% 81.1% 45.1 3.4 48.5 6.6% 0.1% 6.7% 274.6 95.4 52.7 26.2 37.6 9.5 496.0 7.5% 0.5% 8.0% The Sunday edition of De Telegraaf was discontinued in December 2009. This resulted in a significant decrease in operating expenses, primarily related to distribution. The transition from weekend subscriptions to three-day subscriptions went well. The lower cost of paper combined with a modestly lower volume resulted in a € 8.4 million decrease in paper costs. 6.7% 0.1% 6.8% 14.0 3.6 6.4 1.6 25.6 2.3% 0.6% 1.1% 0.3% 4.3% 16.6 3.6 - 5.4 25.6 2.7% 0.6% 0.0% 0.9% 4.2% 592.3 100.0% 611.8 100.0% The revenues of Telegraaf Media Nederland and Sky Radio Group declined by € 16.5 million and € 2.1 million, respectively, primarily due to the decrease in advertising revenues. Keesing Media Group’s revenues declined by € 1.0 million. 2005*/**/*** 2006**/*** 2007*** 2008 2009 2010 TMG added value (x € 1 million) Average number fte Average AV per employee (x € 1.000) 4,317 3,826 3,353 3,284 2,988 2,806 92 83 104 93 103 111 395.6 318.3 348.0 304.7 308.9 312.2 * Including Limburg activities ** Including discontinued operations 2008 *** Including discontinued operations 2009 The number of employees in continued operations rose from 2,808 FTEs at year-end 2009 to 2,851 FTEs at year-end 2010, primarily due to the acquisition of Hyves in November 2010. The average number of FTEs in 2010 was 2,806, a decrease of 182 FTEs in comparison to the previous year. The average added value per employee rose from € 103,000 in 2009 to € 111,000 in 2010. The other operating expenses were € 15.9 million lower than in 2009. Distribution costs in 2010 were significantly lower, primarily due to the discontinuation of the Sunday edition of TMG annual report 2010 15 De Telegraaf, the optimisation of distribution activities and the outsourcing of transportation activities effective December 2010. The costs associated with outsourced work declined due to the discontinuation of the Sunday edition of De Telegraaf and lower external printing costs. Depreciation declined by € 2.3 million, primarily due to the sale of properties and the full depreciation of the printing presses of Drukkerij Noordholland. An amount of € 37.7 million in amortisation expenses was recorded in 2010 (2009: € 37.6 million). Hyves was acquired in 2010. Its subsequent amortisation had a marginal impact on the total amortisation expenses. Due to the economic situation, impairment losses totalling € 8.6 million were recognised in 2009, as a result of which the total amount of amortisation and impairment losses was € 46.2 million. The result from associates totalled € 65.1 million in 2010 (2009: € 63.8 million). Aside from the result of the 6% interest in ProSiebenSat.1 in the amount of € 18.8 million (2009: € 8.7 million), a revaluation in the amount of € 43.8 million was recognised (2009: € 56 million) due to the structurally improved future cash flow projections. The impairment of the associate ProSiebenSat.1 in the amount of € 99.8 million at year-end 2008 was therefore fully recovered at year-end 2010. The financial income and expenses are inclusive of the results from associates, which primarily include the effects of the associate ProSiebenSat.1, and the proceeds from the sale of Keesing Reference Systems, Mobillion’s SMS activities and the activities of 402Events. In addition, the interest rate impacts associated with the liquidity position in 2010 are recognised as part of the financial income and expenses. The corporate income tax amounted to € 6.2 million in 2010 (2009: € 0.9 million). The effective corporate income tax amounted to 7.1% in 2010 compared to 1.5% in 2009. The net cash flow in 2010 was € 18.7 million negative, primarily due to the acquisition of Hyves (2009: € 22.2 million positive). The net cash flow from operating activities improved by € 10.3 million to € 59.6 million due to an improved result and lower redundancy payments. The cash flow from investment activities amounted to € 49.2 million negative, primarily due to acquisitions, including Hyves. The negative cash flow from financing activities totalled € 29.2 million due to dividend payments of € 16.7 million and the repayment of long-term liabilities, including the annual FM licence payments by Sky Radio Group. The approach that will be used for extending the FM licenses should become clear during 2011. shareholders’ equity At year-end 2010, shareholders’ equity attributable to TMG’s shareholders had risen to € 531.1 million compared with € 466.0 million at year-end 2009. Comprehensive income attributable to shareholders of TMG for 2010 total € 81.8 million, while dividends totalling € 16.7 million were paid for 2009. Equity per share totalled € 11.12 at year-end 2010, compared with € 9.76 at year-end 2009. The dividend to be paid for 2010 is not yet reflected in the shareholders’ equity as at 31 December 2010. shares There are 47,750,000 ordinary shares and 960 priority shares of € 0.25 nominal value in issue. Of the ordinary shares, 29,176,077 had been converted into depositary receipts as at 31 December 2010, amounting to 61.1% (year-end 2009: 60.9%). investments The total net amount invested in 2010 was € 49.2 million (2009: divestment of € 2.6 million). In 2010, this primarily relates to the acquisition of Hyves and software investments. In 2009, the divestments primarily related to the sale of cars when the car fleet was outsourced. In 2010 it was decided to invest approximately € 20 million in expanding the colour printing capacity of the printing presses in Amsterdam. This will provide greater flexibility in terms of colour printing options, among other things. The investment is essential in view of market developments and the goal of remaining market leader. dividend policy The dividend is normally set within a range of 15% to 30% of the cash flow, with cash flow being defined as the sum of net result and depreciation. A cash dividend payment of € 0.45 per share is proposed. On a total of 47,750,000 outstanding shares and depositary receipts for shares, this equates to a payout of € 21.5 million. The dividend for 2009 was € 0.35 per share. TMG annual report 2010 16 consolidated information corporate affairs The Human Resources Shared Service Center (HRSSC) was implemented within the Group’s HRM department in 2010. An important project that will continue to be pursued in 2011 is the approach to excessive salaries. An important step has been taken by TMG towards the decentralised management of absence due to sickness. Other subjects included the introduction of a digital salary stub, new car regulations, integration of companies into the central salary administration system, renewal of the Social Plan and the transition of a part of the personnel to the new collective labour agreement (CAO) for Newspaper Publishers. terms and conditions of employment, salaries, collective labour agreements (CAOs) above-market salaries Agreement was reached with the Central Works Council (CWC) at the end of 2009 concerning the approach for dealing with salaries that exceed the maximum of a salary scale by more than 10%. This agreement was implemented effective October 2010. For the time being it only applies to employees covered by the Grafimedia CAO and the CAO for Newspaper Publishers, senior staff and employees not covered by a CAO. The impact of this approach becomes evident when the above-market portion of the salary is offset by (future) CAO increases. The trade unions disagree with the procedure and its substance and initiated legal proceedings at the end of 2010. There is as yet no clarity concerning the course of the process and the expected timing of a ruling. TMG also wants to formulate agreements on this topic for employees covered by other CAOs during the CAO negotiations starting up at the beginning of 2011. CAOs The uncoupling of administrative daily newspaper staff from the Grafimedia CAO was effected in 2010. A new CAO for Newspaper Publishers was implemented. The reason for this is that the Grafimedia CAO is primarily focused on graphic-technical personnel. The CAO for Newspaper Publishers has, since February 2010, been applicable to over 1,000 TMG employees. The terms and conditions of employment remain the same under the new CAO. New CAO provisions were agreed upon in 2010 for all CAOs within TMG. This did not include any structural salary increases for 2010. social plan The trade unions, CWC and TMG reached agreement in December on a TMG Social Plan for 2011. The Social Plan in principle remained the same as the previous Social Plan. car regulations The TMG Car Regulations were amended in 2010. Cost considerations played a key role in this regard. Based on the principle of corporate social responsibility, the option of environmentally friendly cars is promoted. pensions TMG’s pension plan for the majority of its personnel is administered by the Stichting Telegraafpensioenfonds 1959. Over the course of 2010, it became clear that the effects of higher life expectancy and declining interest rates would affect this fund. This led to amendments to the pension plan to be implemented effective 1 January 2011. These amendments concern the lowering of the accrual rate to 1.75% (from 1.875%) and an increase in the social insurance contributions. The employer’s contribution is 17% (was 14%), while the employee’s premium is 8.5% of the pensionable salary (was 7%). investing in employees young journalists In the context of the Young Journalists Incentive Scheme introduced by the former Minister for Education, Culture and Science, Ronald Plasterk, 9 young journalists were employed over and above the regular complement and assigned to various daily newspaper editorial boards. The scheme is temporary and is in addition to the influx of young employees project based on the Newspaper Journalists CAO. employability An employability project was initiated in the second half of 2010. Employees were offered workshops and employability scans with the objective of improving their position on the job market. This project will be continued in 2011. organisation absence and reintegration In relation to managing absence due to sickness, the company transitioned from a central control model managed by an internal occupational health & safety service to decentralised management by supervisory staff. The approach involves fulfilling a proactive role in providing absence due to sickness and reintegration counselling, in which there is a sharper focus on the options open to an employee to return to work. The first results of this new policy appear positive: the absence due to sickness percentage dropped in relation to last year (forecast 3.9% compared to 4.7% in 2009). Furthermore, the changed ways of working and the changed organisation structure resulted in lower costs. TMG annual report 2010 17 Human Resources Shared Service Center (HRSSC) The HRSSC has taken shape and comprises the merged salary administration units in Alkmaar and Amsterdam. The salary administration groups of Sky Radio Group, WebRegio and GS Media will be added to this starting in 2011. The approach to dealing with excessive salaries was a theme on the CWC agenda in 2010 as well. Agreement on this subject was reached in 2009, following negotiations between the Executive Board and the CWC. The CWC is carefully monitoring progress in the implementation of this agreement. Central Works Council (CWC) What the future will bring in the changed media sector remains to be seen. TMG is working hard at maintaining and expanding its top position in the Dutch media landscape, but it is also in the throes of reorganising, centralising and reducing costs, resulting in uncertain times for TMG employees. Changes were made to TMG’s Executive Board in February 2011, due to the departure of Mr Ad Swartjes as CEO, as a result of reaching the age of 62 in April 2011. The CWC was therefore introduced to his proposed successor, Herman van Campenhout, in 2010 and issued a positive recommendation in support of his planned appointment. Ad Swartjes has made an important contribution to the transformation of TMG from a print-oriented family business to a broadly-oriented media company. His vision of putting the client at the centre has been of major importance to our organisation. His openness to the CWC was very much appreciated by the Board. He viewed the CWC as an important interlocutor and consequently always promoted opportunities to increase its quality. Hopefully the new CEO will adopt Ad Swartjes’ vision related to employee participation and like Ad will make frequent use of the available knowledge and competencies. A number of items were submitted to the Central Works Council (CWC) for advice or approval in 2010. The CWC consistently took the interests of employees and the company into account in reviewing each item. As in 2009, 2010 was also an exciting year, for the company as well as employees. The reorganisation of the internal facilities service was completed, financial administrations were merged and the HRSSC department was restructured. The CWC is aware of the fact that it is necessary to reduce costs in order to safeguard the continuity of the company, but also always keeps an eye on what these changes mean to individual employees. The advices have asked for this aspect to be given due consideration. The CWC also drew attention to the increasing work pressures. To what extent can you reorganise? The merger of a number of activities to create Telegraaf Media Nederland | Landelijke Media (National Media department) concerns a radical organisational change that has a substantial – but not in detail predictable – impact on the affected employees and the organisation. This is why the CWC consequently recommended that semi-annual evaluations be conducted so that course corrections can be made on a timely basis if necessary. In its recommendations, the CWC emphasised that the individual characteristics of products should continue to be clearly discernable: the highest possible level of collaboration in the back-office, but a clear signature at the front-end. The CWC approved the new ‘complaints procedure governing undesirable behaviour’. The CWC considers having more confidential counsellors within the company and proper internal communications on this subject a good thing. The CWC also approved TMG’s new strategic training policy, which in CWC’s opinion will stand employees as well as the company in good stead. The idea of linking the strategic training policy to the Performance Management System was well received. In addition to internal matters, the CWC also issued advice on other matters. For example, the CWC looked in depth at the acquisition of Hyves. Now that the advertising revenues from newspapers are declining, it is necessary to devote more effort to revenues from digital activities. The CWC is of the opinion that the acquisition of Hyves is an excellent fit in this regard. The CWC is devoting continuous attention to increasing the quality of consultations. Various courses were taken for this purpose, including the critical assessment of the council’s own performance. Future projections for the newspaper medium these days paint a sombre picture. Nevertheless, the De Telegraaf has never had as many readers for its paper and online combination as it does today. The fact that there is a shift from paper to screen is indisputable; however, the pace at which this is happening is unpredictable. TMG annual report 2010 20 Telegraaf Media Nederland As a media operator, Telegraaf Media Nederland is involved in gathering, creating and profitably exploiting information and entertainment (infotainment). Telegraaf Media Nederland is the leading provider of infotainment to the Dutch domestic market. To achieve its business objectives, the policy is focused on maintaining and expanding its share of consumer time and/or consumer media time, as well as its share of company and consumer media expenditures. ers collaborate with each other. In addition, there currently is a single commercial business and a single editorial board with end-responsibility. Revenues from printed publications were generally under pressure in 2010. Advertising revenues declined limitedly. Its development during the year was unpredictable. While the 2010 FIFA World Cup had a positive impact in the summer, the fourth quarter was disappointing. The circulation market experienced a modest decrease in circulation volume. Subscription revenues declined modestly, primarily due to the discontinuation of the Sunday edition of De Telegraaf daily newspaper. In part due to the declining print market trend, the growth of the digital markets is steadily increasing in importance. It is evident that the additional efforts made in 2010 have resulted in a clear growth in digital revenues. The collaboration between regional dailies and free local newspapers (distributed door-to-door) was continued in 2010 and will be intensified in 2011. Various steps were also implemented in the local and regional markets in the digital domain: further growth of Webregio.nl, start up of the Dichtbij.nl pilot and the Vandaag.nl concept. In 2011, these initiatives will be brought closer together and further rolled out in the marketplace. The decline in revenues was amply offset by cost reductions. Distribution costs declined, in part due to the discontinuation of the Sunday edition of De Telegraaf daily newspaper. Automation costs declined due to further rationalisation and staff reductions resulted in decreased personnel costs. Printing costs also declined due to a decrease in the cost of paper. On balance, Telegraaf Media Nederland’s EBITA result rose considerably. Based on its ambition and the objectives it sets for itself, Telegraaf Media Nederland in 2008 embarked on a succession of changes to its structure, mode of operation and portfolio. Since then, structural decreases in costs have been realised in various ways, such as reducing the number of employees, despite of the expansion in digital activities, and by making changes to the portfolio. Telegraaf Media Nederland expects to be able to realise growth by: 1. Focusing on the ‘Greater Randstad conurbation’; 2. Focusing on segments and themes; 3. Realising new revenues from existing clients (e-Commerce); 4.Realising new revenues by exploiting content on new media carriers, such as mobile telephones and tablets. Effective 1 November, the national activities within Telegraaf Media Nederland were combined organisationally. Work is organised on the basis of a matrix structure in which the Daily Newspaper & Magazines and the Digital & Segments publish- The segment approach has been further extended and will be expanded in 2011. The position in the various market segments will be further improved by adjusting products, through different forms of collaboration and acquisitions. daily newspapers In the consumer market, the Dutch daily newspapers are represented by products that are different in nature, scope and publication frequency. Furthermore they are segmented by region and by free or paid newspapers. The Dutch circulation market in 2010 (fourth quarter 2009 to third quarter 2010, inclusive) consisted of approximately 5 million copies per day, almost the same number as in 2009 (source: HOI). Visits to the internet sites of Dutch daily newspapers remained more or less stable. One in two Dutch residents in 2010 visited one or more daily newspaper sites each month and on average did so 20 times per month. Especially well-educated Dutch residents appear to be frequent visitors to the daily newspaper internet sites (source: STIR). Within the global Dutch net advertising market, the portion related to daily newspapers amounted to € 616 million in 2009 (2008: € 815 million). A decrease of 4.5% to € 588 million is projected for 2010 (source: Nielsen). national dailies (paid) The overall circulation of paid Dutch daily newspapers in 2010 (fourth quarter 2009 to third quarter 2010, inclusive) declined by 2.1% to 3.5 million copies per day (2009: 3.0% decline and 3.5 million copies). The decline of 2.1% applied to the paid national daily newspapers as well as the regional daily newspapers (2009: -3.2% and - 2.7% respectively). (Source: HOI). The total advertising volume of paid dailies, expressed in millimetres, decreased by 5% in 2010 (2009: -9%). For the category brands and services, it rose by 2% and for the categories personnel, family announcements and classified ads, it declined by 32%, 6% and 12% respectively. TMG annual report 2010 21 The regional daily newspapers performed better on the advertising market than the national dailies. The volume of the paid national dailies declined by 12%, while regional dailies lost 2% in volume (source: ASS). De Telegraaf daily newspaper The recurring EBITA result achieved by De Telegraaf Daily Newspaper rose strongly compared to 2009. Revenue declined due to economic developments and their impact on the advertising market, and through the discontinuation of De Telegraaf on Sunday. The discontinuation in particular, despite the increase in price, caused a modest decline in circulation revenues. The decrease in revenue was more than offset through cost reductions, including lower distribution costs due to the discontinuation of the Sunday newspaper, the lower cost of paper, staff reductions, increased efficiency and expansion of elements of self-service. A key project that is to be implemented in 2011 is the joint distribution of De Telegraaf together with the newspapers published by Wegener and NDC. This project is expected to contribute to a further reduction in the cost of daily newspaper distribution. De Telegraaf Editorial Board The successes achieved by the Dutch soccer team during the 2010 FIFA World Cup naturally received a great deal of coverage in De Telegraaf, that during the last summer sometimes literally took on the colour orange for days. A team of reporters and editors provided news, analyses and backgrounders for the newspaper, online, in extra specials and via webTV. 2010 was a spectacular sport year that also included the Olympic Winter Games in Vancouver. It was also a turbulent year for Dutch politics with the fall of the Balkenende Cabinet, elections and an extended cabinet formation period. Crime reporting, including the flight of Joran van der Sloot, also stood out. Through these, as well as countless other high profile revelations, it was possible to set the topic of today’s discussion throughout the Netherlands. De Telegraaf’s editorial board was reorganised in 2010 as a result of which it is now possible to direct the newspaper, internet, mobile, moving images and magazines from a central news desk. In addition, journalistic activities related to entertainment (Privé) and cars (Autovisie) were consolidated during the past year. Following the introduction of a free Telegraaf app and a paid app designed to read the newspaper via the iPad, the editorial board will in the near future undertake new initiatives designed to fully exploit the many possibilities offered by the new generation of tablets. In addition, the provision of news on digital media will be improved, as a result of which reach, partly due to the increase in mobile, will be further increased. These developments will be managed by the deputy executive editor, digital, appointed effective January 2011. circulation The circulation of De Telegraaf in 2010 (measured during the fourth quarter 2009 to the third quarter 2010, inclusive) on average was 655,517 copies per day compared to 677,356 copies per day a year earlier. This 3.2% decrease exceeds the average 2.1% contraction of the paid dailies market and as a result De Telegraaf’s share of the paid dailies market declined somewhat from 19.2% in 2009 to 18.9% in 2010 (source: HOI). De Telegraaf’s subscription rates were on average increased by 5% effective October 2010. The price of daily subscriptions throughout the country on average rose by 3.5%. De Telegraaf in 2010 was successful in shifting the emphasis to maintaining and expanding paid circulation and phasing out free circulation (e.g., sampling). Paid circulation in 2010 was 0.8% below 2009 levels and in total 2.8 million fewer free copies were distributed. The discontinuation of the Sunday edition was compensated by a renewed weekend supplement and a thicker Saturday and Monday edition for readers. In part as a result of these interventions, the impact on circulation was less than expected. De Telegraaf in 2010 derived maximum benefits from the successful course of events for the Dutch team in the 2010 FIFA World Cup: overall circulation on average rose by 7.2% during the World Cup. During this period, 1.5 million additional newspapers were sold (single copy sales and World Cup subscriptions). The total De Telegraaf circulation is expected to be under pressure in 2011 as well. In addition to a continued structural decline in the daily newspaper market, the lack of major sport events, the further cleanup of free circulation and the increased subscription rates play a role in this. Newspapers and television still remain the most important sources of news for De Telegraaf subscribers. This was one of the findings of the 2010 readership survey. Telegraaf readers consider their newspaper primarily high profile. The VROUW magazine’s success continued throughout 2010, both in terms of the market and financially. The reach of the VROUW increased and the number of advertisers, as well as the advertising volume grew. Activities are increasingly being organised around the VROUW brand. TMG annual report 2010 22 advertisements The declining trend experienced by the advertising market for daily newspapers, persisted for De Telegraaf as well. Aside from a loss in volume, prices were under pressure once again as well. Efforts to realise additional revenues in June and July during the 2010 FIFA World Cup in South Africa were successful. In hindsight, it is possible that there was a shift of advertising funds as well: the last quarter of 2010 was disappointing in relation to the same quarter in 2009. Collaboration between De Telegraaf and Sp!ts was intensified. Combined reach propositions are being formulated for a number of markets. Efforts to target the job fairs advertising market for the titles De Telegraaf, Sp!ts and the Vacaturekrant have been managed centrally since last year. The decline in this advertising market appears to be slackening. national dailies (free) The advertising volume of the Dutch free daily newspapers declined by 9%, due primarily to a decline in the personnel market (source: ASS). The total circulation of free national daily newspapers in the Netherlands in 2010 (fourth quarter 2009 to third quarter 2010, inclusive) consisted of approximately 1.1 million copies per day compared to approximately 1.2 million copies per day in 2009 (source: HOI). Branded content is currently put on the market by Sp!ts under the Sp!tsLAB label and up until now has resulted in a significant number of successful collaborative initiatives between advertisers, agencies and editorial boards. regional dailies The regional daily newspapers were also affected by the poor economic conditions in 2010. The marked decline in the total advertising volume experienced by the regional daily newspapers in the Netherlands in 2009 was followed by a further decline in 2010 (source: ASS). The overall circulation of regional daily newspapers in the Netherlands in 2010 (fourth quarter 2009 to third quarter 2010, inclusive) declined by 2.1% to 1.55 million copies per day (2009: 2.7% decline to 1.59 million copies). (Source: HOI). TMG’s regional daily newspapers (Noordhollands Dagblad, Haarlems Dagblad, IJmuider Courant, Leidsch Dagblad, De Gooi- en Eemlander, Almere Vandaag, alphen.cc) were faced with a marginal decline in revenues in 2010. A further reduction in the personnel complement and cost savings in many different areas, however, ensured that the result nevertheless exhibited a marked improvement. Sp!ts exhibited a sharply improved result. The failure of a turnaround in advertising revenues to appear led to further cost reductions at Sp!ts. Circulation was further reduced. This was on the one hand achieved by optimising the various points of publication and on the other hand by discontinuing distribution channels making a low contribution in terms of the pass-on factor, such as hospitals and colleges. The circulation revenues of TMG’s regional dailies exhibited a marginal increase. The total daily circulation in 2010 (fourth quarter 2009 to third quarter 2010, inclusive) declined by 2.2% (2009: 2.6%). The number of paid subscriptions declined by 2.0% (2009: 2.2%), which is 0.1% more favourable than the performance of the aggregate of all regional dailies; however, this was more than offset by the increase in subscription rates. Advertising revenues declined by more than 6%. While volumes increased, price pressures were high. The revenues from local advertisers remained at par; however, revenues from personnel ads and from the domestic advertising market declined. In the commercial domain, collaboration with De Telegraaf was further expanded, as indicated above. This has resulted in the announcement of a full integration of the sales activities of Sp!ts, De Telegraaf, online and magazines, to take place in 2011. The improved collaboration in the area of media agencies in 2010 led to further improvements in the competitive position. In the editorial domain, a partnership was initiated with an external party in October for the purpose of enriching products with mobile content. A technology has been developed that makes it possible to use an iPhone or an Android phone to create a link between online and print. The newspaper currently contains articles every day with a Sp!ts link logo containing a link to online videos and background articles. Advertisers can also acquire a link this way and the first advertisers have already experimented with this approach. A great deal of effort was devoted to online projects in 2010. The project ‘Vandaag’ (Today) was initiated with a grant from the Netherlands Press Fund and involves the phased launch of a number of new local websites throughout the entire circulation area. Editors publish high quality news on these websites after which citizens are invited to do the same. In addition, the websites of the titles have been renovated and iPhone applications have been launched. A photo webshop has been opened and the Plus membership has been introduced that awards privileges to subscribers, such as access to all online publications. The objective of these initiatives is to commit the paying subscriber where possible. A partnership agreement was concluded with the regional public broadcaster RTV NoordHolland as a result of which the number of platforms on which regional news can be presented increases. TMG annual report 2010 23 Efforts at optimising operations were implemented on many fronts. The administration of the HRM department and the salary administration were moved to the HRSSC. The Circulation department was reorganised, increasing its effectiveness through means of the clustering of tasks. The ‘Jong voor Oud’ (Young for Old) project initiated at the end of 2009, has resulted in a rejuvenation of the editorial board’s staff complement due to the fact that 20 older editors made room for 11 younger entrants. free local papers (distributed door-to-door) Within the global Dutch net advertising market, the portion related to free local papers (distributed door-to-door) amounted to € 568 million in 2009 (2008: € 634 million). An increase of 2% to € 579 million is projected for 2010 (source: Nielsen). The advertising revenues and the result were under pressure in 2010. Revenues have fallen back, particularly in the areas in which TMG has been distributing free local newspapers for longer periods of time. This is primarily due to the pressure on prices in the market and the decline of advertising volume in the personnel, car and property markets. Various cost reduction efforts, including a reduction in the personnel complement, adjusted advertising/editorial relationships and the removal of a number of non-profitable titles from the marketplace, sharply improved the result. The autonomous expansion and acquisitions in Utrecht and Rotterdam resulted in a marked growth in revenues in comparison to 2009. The Weekmedia publications also exhibited a marked growth in revenues in 2010. The national advertising portal Local Media Partners (LMP), which is responsible for national ad sales for a number of publications, including the Telegraaf Media Nederland’s free local papers, continued to develop as an organisation in 2010 and has furthermore signed up various local partners in order to expand its national reach. LMP today is a recognised national advertising portal for large media agencies. magazines The total circulation of general interest magazines in the Netherlands (excluding sponsored and daily newspaper magazines) declined by 1.3% and amounted to over 25 million copies in the third quarter of 2010 (2009: 25.9 million copies). (Source: NUV General Interest Magazines Group). The Dutch advertising market for general interest magazines in 2009 amounted to € 259 million. This represents a decline of 26% in comparison to 2008 (€ 348 million). Revenues for 2010 are expected to remain stable (source: Nielsen). The brands of Telegraaf Tijdschriften Groep were further integrated into Uitgeversmaatschappij De Telegraaf in 2010. Privé, VROUW and Autovisie are leading brands in their respective segments and each consists of a magazine, newspaper pages in De Telegraaf and associated websites. VROUW has managed to develop significantly in the advertising market and achieved a sharp increase in revenues. As a result, VROUW’s development has outpaced the development of the women’s magazines market. Reader appreciation for VROUW is high. In 2010, VROUW acquired the URL Vrouw.nl and will use this site to further strengthen the brand online as well. The magazine Privé is faced with circulation and advertising market pressures, but is managing to keep the number of subscriptions up to par. Market share has been lost in the advertising market, however. The integration of the editorial boards of the Privé weekly, the page in De Telegraaf and the website is creating a strong base for expanding the number one position in Entertainment. The Autovisie magazine struggled with declining circulation, while advertising revenues by contrast exhibited a notable increase. The latter is partly due to the integral sales approach used in the car market. A number of partnerships were concluded at the end of 2010 that resulted in a turnaround in the decline in circulation. digital media The net media expenditures on the internet in 2009 amounted to over € 800 million. This figure is projected to increase by almost 4% to € 847 million in 2010. The market can be broken down as follows: Display, Classifieds, Search and Miscellaneous. The Display Market in 2009 was € 205 million in size and is expected to reach € 209 million in 2010. Classifieds was € 175 million in 2009 and is projected to be € 176 million in 2010. Search was € 410 million in 2009 and is projected to grow to € 435 million in 2010. Miscellaneous: € 25 million in 2009 with a projection of € 27 million for 2010 (source: Nielsen). Telegraaf.nl’s reach further increased in 2010. Telegraaf.nl in 2010 received about 1.3 million unique visitors each day. The average number of page views per month was 380 million (2009: 290 million). Two new websites were launched under the Telegraaf.nl banner in 2010: Mijnbedrijf.nl and Filmenuitgaan.nl. Telegraaf.nl’s advertising revenues grew to € 11.3 million. The growth in revenues was realised on the basis of standard display advertising (banners) as well as customised concepts. TMG annual report 2010 24 Telegraaf.nl also exhibited growth on the mobile internet. The iPhone app has since been downloaded 400,000 times. Telegraaf.mobi is one of the most often visited mobile sites in the Netherlands. This site receives more than 600,000 unique visitors with 50 million page views each month. The free Telegraaf HD iPad app launched in June 2010 was recently selected as the ‘best iPad app’ in the category News & Magazines NL, by Apple. In addition, a paid application has also been developed for De Telegraaf on the iPad. A number of key steps were taken in 2010 in terms of adopting a segment-oriented approach. The basic premise in this regard is to coordinate existing TMG components in such a way that the different segments within the consumer as well as advertising market can be optimally serviced. Organisation changes were implemented for this purpose in 2010 related to the market segments Automotive, Travel, Entertainment, Boating and Job Fairs. This resulted in a re-launch of the Autovisie.nl (car news), Autotekoop.nl (previously the Autotelegraaf used car site) and Reiskrant.nl websites. In addition to optimising existing positions, plans specifically call for the market position within the various segments to be strengthened on the basis of launches and acquisitions. In 2011, the impacts of the substantive and organisational changes must become evident in the financial results achieved by the relevant segments. In addition, the segment-oriented approach will be expanded to include other segments. Nobiles Media and InfoPinnacle were confronted with a further decline in advertising revenues, primarily due to negative developments on the job market. This put the result under pressure. The grouping of elements in various business units related to the job market into Telegraaf Media Nederland | Arbeidsmarktcommunicatie has resulted in tighter collaboration and in achieving synergy in targeting the market / achieving market share and in optimising costs. Telegraaf Media Nederland has expanded its 50% interest in JAAP.NL to full ownership. This has enabled Telegraaf Media Nederland to move into second position on the online housing market. Various future scenarios have been developed for Speurders.nl. Hyves.nl plays an important role in a number of these scenarios. These scenarios will be further defined in 2011. De Telegraaf’s webshop grew significantly in 2010, in terms of sales as well as product range, number of visitors and transactions. The Webshop attracts 300,000 unique visitors each month. The product range is diverse and primarily consists of books, DVDs, CDs, gadgets, consumer electronics and household appliances. Revenues in 2010 increased by € 1.8 million to € 6.2 million. WebRegio operates in 85 regions with local and regional news and information. The number of regions in which WebRegio operates with its own editorial content was increased to 27. A partnership was created in 2010 between Webregio.nl, Telegraaf.nl and Dichtbij.nl (an online platform in which users can find and share relevant hyper-local information). Pilots were conducted in Eindhoven, Woerden, Zwolle and Heino in 2010. The intent is for Dichtbij.nl to ultimately provide national coverage. Relatieplanet once again achieved a high return in 2010, in part due to its market leadership position. Competition in the dating market is however increasing due the entry of new players. Relatieplanet passed the 3.8 million registrations mark and was first in the Netherlands to develop mobile applications for a number of mobile devices, including iPhone, Java phones and iPad. In addition, Datingcadeau (gift coupon) and the Datingcollege service, an online course/training institute that provides training and coaching in the field of online dating were developed. Relatieplanet is proud of the fact that in November 2010, just like the year before, it earned the title ‘Most Popular Dating site’ within the ‘Website of the Year’ competition. In February, the Tros Radar consumer television show had already chosen Relatieplanet as the most effective paid dating site in the Netherlands. News facts, revelations and journalistic investigations appear interchangeably on GeenStijl. GeenStijl, as well as Dumpert are growing at double digit rates in terms of visitors and page views. Over 230,000 unique visitors visit the site each day, as a result of which the site is in the top 10 most often visited news sites in the Netherlands. Dumpert.nl is the largest video platform in the Netherlands with 3 million unique visitors each month. GS Media’s advertising revenues rose strongly last year. The return rose sharply as well. With 200 million registered users, Habbo Hotel is the largest virtual community for teenagers in the world. The number of unique visitors to the Dutch joint venture created by the conceivers of Habbo and TMG rose sharply in 2010. In addition, the proceeds from the sale of virtual goods and advertising revenues rose considerably. Habbo Hotel in the Netherlands consequently experienced the best year ever in 2010, in terms of revenues as well as result. In the field of television production, Video Media (VM) took a major step forward in 2010: the ‘Droomhuis Gezocht’ (Looking for a Dream Home) programme developed and produced in-house for the public broadcaster Max (an average of almost 1.8 million viewers per broadcast) turned into a veritable viewing statistics success story. VM in 2010 produced the daily morning show ‘Ochtendspits’, the weekly current affairs programme ‘Uitgesproken’ and the evening radio programme ‘Avondspits’ for the new broadcaster WNL. In addition, a documentary series was produced for National Geographic at the end of the year (‘Dagboek van onze Helden’ (Diary of our Heroes)), as well as the ‘Christmas Greeting’ for the public broadcasters Max and WNL TMG annual report 2010 25 Sky Radio Group The size of the Dutch radio advertising market in 2010 was over € 230 million compared to almost € 220 million in 2009, representing an increase of approximately 5%. In spite of television and internet competition, the market consequently partially recovered from the 16% decline in the previous year (source: Radio Advies Bureau). TMG holds an 87.4% interest in Sky Radio Group, the largest commercial radio enterprise in the Netherlands. Sky Radio Group reaches over 5 million Dutch listeners per week with its popular radio stations, such as Sky Radio 101 FM, Radio Veronica, Classic FM and various online radio stations. The advertising revenues of Sky Radio Group declined from € 41.7 million in 2009 to € 39.6 million in 2010. As a result, the market share of advertising spending declined slightly. The result improved due to further cost reductions. Radio Veronica’s modified programming and the rising listener figures of Sky Radio 101 FM are expected to result in a small increase in the share of advertising expenditures in 2011. The continuity of the enterprise in the coming years remains highly dependent on the allocation of FM channels. The current Sky Radio 101 FM and Radio Veronica FM licenses expire on 31 August 2011. The Minister of Economic Affairs, Agriculture and Innovation has let it be known that the current license holders qualify for extension subject to the condition that they must collaborate on, and invest in, the digitisation of the radio landscape. The current permit holders will be required to pay compensation in line with the market for the extensions, which is expected to be lower than the current fees. Collaboration with other TMG business units has produced the necessary synergy benefits. In 2010, Sky Radio Group added new online radio stations such as Sky Radio NL and Veronica Rock Radio to its suite of radio stations. With new digital developments, such as interactive iPhone apps, Android apps, new streaming technology and new interactive websites, Sky Radio Group assumed a leading role in the digital radio world. This position will be further strengthened in 2011. TMG annual report 2010 26 Keesing Media Group Keesing’s profitability came out lower in 2010 than in 2009. The decline is primarily due to the sale of Keesing Reference Systems at the beginning of the year and the relatively high start-up costs incurred by Keesing Games. The profitability of the traditional puzzle books declined marginally, due to ‘package offerings’ on the part of competitors. The decline in the Netherlands for the large part was offset by improved profitability in France. Revenues in France remained almost the same as last year; however, due to the introduction of a new system, the efficiency of single issue sales increased, resulting in a considerable improvement in margin. Keesing has since introduced the first puzzle apps for the iPad. The expectations for the puzzle market for this type of tablet are high, although it will nevertheless take several years before a significant share of revenues will be earned this way. Keesing Games, which will have to expand its digital offer to include more than just puzzles, was affected by a number of technical problems in 2010 that have since been resolved. TMG annual report 2010 27 other activities Hyves Last year it became clear that social media is well on its way to becoming an integral part of the daily lives of Dutch internet users. The growth in the use of sites such as Hyves, Facebook and Twitter, as well as the attention devoted to this phenomenon in the media, is visible proof of this. Hyves became part of TMG in November 2010. This provides many new opportunities for growth and collaboration for both parties. From a financial perspective, 2010 was a record year for Hyves, in terms of revenues as well as result. 2010 market trends Social media in 2010 continued its rapid advance in terms of use and attention without let up. Research by Statistics Netherlands (CBS) shows that the use of social media in the Netherlands has moved into second place within Europe, after Poland. 91% of younger people is active on social networks (source: CBS). The growth of international players, such as Facebook, Twitter and LinkedIn creates a greater dynamic and attention for Social Media in general. In part due to the young character of the market, all players profit from the growth in visits and revenues. Hyves, in all respects, is clearly the number 1, in part due to the focus on local relevancy and personal attention to Hyves users. Compared to number 2 in the market, Facebook, Hyves daily has 2.4 times as many visitors, who furthermore on average spend 3.5 times as much time on the site (source: Comscore, November 2010). connecting citizens throughout the Netherlands Based on its orientation on and anchoring in the Netherlands, Hyves has proven itself capable of further expanding its strong market position. Its mission, ‘Hyves Verbindt Nederland’ (Connecting Citizens throughout the Netherlands) has created a clear focus and good results. Examples of key activities include: • S trengthening the number 1 position in the Netherlands. Over 9.1 million citizens in the Netherlands have a Hyves account of which 5.2 million are considered to be active users. In November 2010, an average of 3.3 million Dutch citizens visited the website each day, spending over 1.9 billion minutes online (source: Comscore, November 2010). • The launch of several new products, such as Hyves Afrekenen (online payments in collaboration with the Rabobank), Hyves Mobile (mobile operator in collaboration with T-Mobile), Hyves Games (online games platform in collaboration with Spil Games), Hyves TV (watching social TV) and Nu in Nederland (what is happening in the Netherlands?). Hyves also played a role during the national elections and organised the first ‘live chat debate’ in the world involving all party leaders. In part by continuously expanding mobile applications and new functionality, such as mobile chat, the mobile use of Hyves also grew strongly in 2010. • The ability of Hyves users to experience the 2010 FIFA World Cup close up, thanks to the media partnership with the KNVB – the Royal Dutch Football Association – and Hyves’ own reporters. In addition, Hyves’ collaboration with De Telegraaf’s Telesport resulted in the largest World Cup football pool in the Netherlands, with over 250,000 participants. At the end of November, Hyves became a media partner of NOC*NSF for the purpose of encouraging top sportsmen, as well as promoting recreational sports in the Netherlands. • The successes achieved on behalf of clients via integrated social campaigns. An example of this is the organ donor recruiting campaign. This campaign resulted in over 25,000 registrations over a few weeks (by comparison, the earlier TV donor show resulted in 7,000 registrations). Mobillion Mobillion specialises in providing services in the marketing and communications market using social media. The decision for the time being is to focus on products for the job market and the fundraising market. The Recruitr product, focused on the job market, is currently being used by more than 35 companies. iCollect, an instrument designed to recruit canvassers and volunteers via social media, was introduced at the end of 2010. This product will soon be followed by iGive, a service focused on online fundraising within social media. Mobillion’s share of the Interactive Voice Response market (0800/0900) has increased due to a number of new clients, some of which come from the world of television. Due to a shrinking (premium) SMS market in the Netherlands, the so-called ‘SMS Brokerage’ (the technical and administrative settlement of SMS traffic) was disposed. Collaboration with other TMG units significantly increased in the past year. TMG annual report 2010 28 Telegraaf Media ICT (TMI) Shared Service Center (SSC) A quality and affordable information management function proved to be a key production factor in 2010 as well. Progress was made last year in the area of improving the information management function in terms of quality, cost and risk management, continuity and governance. The consolidation of a number of corporate services into the Shared Service Center continued in 2010. Key in the subsequent professionalisation initiative was a reduction in integral costs and improvement in the quality of the services provided, through process optimisation, automation and the design of the management organisation. In 2011, the focus will be on strengthening the management organisation and supplier management. This will take the form of further intensifying collaboration with internal clients, as well as suppliers, and providing a more targeted focus in managing their contribution to TMG. Further steps will be taken in 2011 designed to produce greater efficiency, lower costs, better governance and further consolidation of the generic information management function, and improved connectivity. Telegraaf Drukkerij Groep (TDG) TDG implemented a number of reorganisations in 2010 due to the discontinuation of the Sunday edition of De Telegraaf and the completion of the conversion to Computer to Plate. The reorganisations did not have any negative effects on production. Effective 2011, investments are being made and work is being done on the technical conversion of the newspaper printing presses in Amsterdam. This will result in expanding the full-colour options available for newspapers. This involves an amount of approximately € 20 million, to be disbursed in the next two years. TMG Distributie TMG Distributie achieved autonomous savings in its logistics network without compromising on the quality of delivery and in addition started up a strategic partnership for the distribution of newspapers with Royal Wegener and NDC Media at the end of 2010. The objective of that partnership is to, through joint delivery, achieve further delivery cost savings in the distribution regions served by Wegener and NDC, while maintaining distribution quality levels. In that context, joint delivery took place in the Twente region, at the end of 2010. This area will be expanded at the beginning of 2011 to include the province of Groningen and part of the Province of Drenthe. A further phased rollout to other regions will take place during the course of 2011. The last two transport locations of DistriQ Transport, Rotterdam and Amsterdam, were closed in 2010. These closures were accompanied by a reduction of 74 jobs. TMG Distributie is currently making exclusive use of external carriers for the primary transport from the printer to transhipment points and is realising significant cost savings as a consequence. TMG annual report 2010 29 participating interests ProSiebenSat.1 Media AG TMG has a 12% interest (13,127,832 shares) in the share capital with voting rights of ProSiebenSat.1 Media AG (ProSiebenSat.1), representing an economic interest of 6%. ProSiebenSat.1 is an international media combination, primarily in the domain of television and radio, with a strong market position and strong financial results. The interest is consistent with TMG’s multimedia strategy. Through the presence of ProSiebenSat.1 in the Dutch market, TMG maintains prospects related to television activities in the Netherlands. Based on the 12% interest in the shares with voting rights, TMG has a seat on the Supervisory Board and a seat on the remuneration committee, and in this way is able to exercise influence on the policies pursued by ProSiebenSat.1. financial performance In part due to the positive development of the German economy, ProSiebenSat.1 was also able to exhibit rising results in 2010. Revenues in 2010 rose by 8.7% to € 3.0 billion compared to € 2.8 billion in 2009. The recurring EBITDA rose to over € 900 million (2009: € 697 million), in part due to realised synergy benefits and cost savings. valuation Pursuant to the IFRS accounting principles, TMG’s equity interest in ProSiebenSat.1 is classified as an associate, i.e. a participating interest over which significant influence can be exercised. The acquisition value of the shares is € 182 million, which is the exercise price of the option at the time (€ 377 million) subject to the deduction of the already recognised impairment of € 195 million when the option was exercised in 2008, which is irreversible in accordance with the IFRS guidelines. The valuation of the interest in the ProSiebenSat.1 associate as at 31 December 2008 includes an impairment of € 99.8 million due to expected structural pressure on revenues and the result in 2009 and beyond. As a result of the realised cost savings and improved prospects, € 56 million of this impairment was reversed as at December 2009. In part due to the sharply improved cash flow and the once again improved prospects related to the revenues and the result, the remaining € 43.8 million of the impairment was reversed as at 31 December 2010. The current IFRS regulations preclude the possibility of further impairment reversals. In addition, in recent years TMG’s 6% share in the net result of ProSiebenSat.1 was recognised as the result from an associate and incorporated into the balance sheet valuation. As at 31 December 2010, TMG’s interest in ProSiebenSat.1 was valued at over € 199 million, or € 15.18 per share. The share price of the preference shares (without voting rights) rose from € 8.06 per share on 31 December 2009 to € 22.50 on 31 December 2010. The carrying value of the common shares at 31 December 2010 was € 199.3 million (2009: € 136.8 million). ProSiebenSat.1 in the Netherlands Revenues from television advertising expenditures (spot advertising) amounted to € 863 million in 2010, a growth of 10.6% in comparison to 2009 (source: SPOT). SBS Nederland ProSiebenSat.1 is represented in the Dutch market by the commercial television channels SBS6, Net5 en Veronica TV and by Veronica Magazine, the market leader in Dutch TV magazines. On average SBS Nederland’s market share of the viewer market was 24% in the 20 to 49 age group, which is a key target group for advertisers. The SBS6 television channel in 2010 had an average market share of 11.9% (2009: 14.2%). The Net5 channel had an average market share of 5.8% (2009: 6.9%) and Veronica TV had an average market share of 6.3% (2009: 6.5%). In terms of the baseline used for comparison, SBS Nederland in 2009 achieved the highest market share since its foundation. The decline in 2010 is primarily caused by the intensified competition from commercial as well as public broadcasters. The competition of the public broadcasters in particular became evident during the Olympic Games and the 2010 FIFA World Cup. SBS Nederland in 2010 achieved a higher market share of the advertising market than its market share of the viewer market. ProSiebenSat.1 has announced its intent to sell parts of the enterprise, including SBS Benelux and/or SBS Scandinavia. TMG – depending on the conditions under which this would be feasible – is interested in acquiring SBS Nederland. The amount of time people spend on social media is increasing by the day. Mobile telephones and tablets are increasingly used for this purpose. This combines two key developments of the near future. TMG annual report 2010 32 risk management description of the risk management system Taking risks is an unavoidable part of achieving company objectives and strategy for any company. To be able to manage these risks to the maximum possible extent, TMG has developed a risk management methodology focused on increasing risk awareness within the company and on acquiring and maintaining insight into operational risks. By applying a standardised and systematic approach in all business units, TMG can compare the risk profiles of its business units and consolidate them for the purpose of developing a TMG-wide risk profile. TMG uses a framework for this purpose that is subdivided into the following risk categories: strategic, operational, financial and compliance. This risk framework is derived from the COSO Model (Committee of Sponsoring Organisations of the Treadway Commission). COSO identifies the relationship between company risks and the internal control system. Risk management within TMG is embedded in business operations and is also used as a management tool. The Audit Committee of the Supervisory Board monitors the quality of the risk management, the internal risk management and the risk management methodology. evaluation of the internal risk management system The following improvements were made to the risk management system in 2010: • The policy was fine tuned making it mandatory for management to implement risk management in a structural way as described in this policy. • The risk management function is implemented at the TMG level. • The implementation of operational risk management within Telegraaf Media Nederland has been delegated to the line organisation. A start on a similar transition has been made by the other business units and will be given further form in 2011. • The process owners once each quarter assess the risk profile on the basis of any changes to the process and identify the actions that will be taken to further limit risks. They regularly carry out audits to check the operation of the most important control measures. • As part of the planning and control cycle, management once every quarter reports on the updated risk profiles, the status of outstanding actions and the outcome of the audits of the most important control measures. • Internal Audit checks the management of risks as part of its audits and reports on its findings to the Executive Board and the Audit Committee. Internal Audit makes use of completed risk analyses in carrying out its audits. • The external auditor uses the completed risk analyses and audits of the most important control measures as much as possible. • The findings of the external accountant and Internal Audit are incorporated into the risk analyses and monitoring takes place as part of the planning and control cycle. • Specific attention is devoted to the analysis of fraud risks at TMG and the identification of control measures to prevent it. Although TMG has set up a good risk management methodology, it is not possible for this system to provide an absolute guarantee for achieving the enterprise’s objectives, nor can this system completely prevent substantive errors, fraud or a violation of laws and regulations. strategic risk management Strategic risk management is integrated into TMG’s planning and control cycle. Strategic workshops are held every year by the business units as well as the Executive Board together with Group staff members. A strategic risk management workshop was also held in 2010 with the Executive Board and the staff with end-responsibility from TMG’s three media enterprises, in which the major risks were identified and discussed. The risks are identified and assessed on the basis of the objectives for the coming three years during the strategic workshops. As part of the planning and control cycle, the business units once every quarter report on the most important risks and the progress on the actions to be taken. The risks are discussed during the quarterly meetings of the Executive Board. The quality of the implementation of the risk management process is part of the performance assessment of the management members of the business units. The Executive Board and the Group staff members take action on the most important business unit-transcending risks. In 2010, the strategic risks of the business units were further integrated into the group-wide strategic risks. As such, combined cause and effect analyses were executed and actions formulated. operational risk management A uniform framework of standards was developed for the primary and supporting processes, which applies to each business unit. The key risks and the expected control measures were identified for each process. Risk analyses are carried out in which the control measures are identified, the operational risks evaluated and if necessary actions are formulated to better control these risks. Key risk analyses carried out for the first time, or repeated, in 2010 concern the sale of ads, subscriptions or single copy sales, the editorial board, printing and salary administration processes, information security, change management and the facilities services processes. TMG annual report 2010 33 financial risk management Financial risks are separately identified in the annual report and are also monitored as such. TMG recognises the market, credit, foreign exchange and interest rate risks as part of its normal business operations. Furthermore, the trend in the price of paper can affect the operating result. These risks however only have a modest impact on TMG’s financial position. For this reason TMG only carries out an internal sensitivity analysis of these risks at a high level. Significant items in the financial statements are selected on the basis of their material financial significance. Control measures are identified as part of the processes for these items. The operation of these control measures is tested. compliance risk managementt The compliance risks are monitored by the Compliance Officer. Various control measures designed to limit compliance risks were implemented. TMG’s code of conduct was modified in 2010, with specific attention being given to subjects such as fraud and the continuity plan. A fraud policy and process has been developed and a risk analysis was performed. A risk analysis of the continuity planning process will follow in 2011. The compliance risks will be further integrated into the risk framework in 2011. progress of actions related to risks identified in 2010 Further to the major strategic risks identified in 2009 for the 2010 financial year, the following is a report of the actions implemented for the purpose of mitigating the identified risks. ‘Insufficient ability to achieve targeted results due to unfair competition, due to the opportunities provided to public broadcasters in the domain of multimedia information’ Attempts to mitigate this risk were made through efforts designed to make this issue and its urgency clear to involved parties. For example, TMG in collaboration with other players (NDP, VCR and Vestra) in 2010 submitted a report to the Ministry of Education, Culture and Science on the market distortion caused by public broadcasters. A ruling by the courts has determined that the minister must test new initiatives for market distortion. The coalition agreement concluded by the new cabinet in 2010 includes a statement concerning future reductions in spending on public broadcasters. TMG will continue to make efforts designed to create a fair competitive environment. This risk has therefore once again been included in the top 5 in 2011. At the same time, TMG will continue to make efforts to strengthen its own position through the development of differentiating products and services. ‘Advertising revenues are falling more than expected due to a persistent poor economy, fierce price competition, attacks by competitors and other media types’ The advertising market is in full motion. Pursuant to the shift of advertising budgets between media types, TMG continues to adjust its product portfolio to the wishes and demands of the marketplace. The bundling of national media within Telegraaf Media Nederland also makes it possible to better meet the wishes and demands of the consumer and advertising markets. Pursuant to organisational changes, ad sales for De Telegraaf, Sp!ts and the digital brands now take place centrally. In addition, the segment-oriented approach makes it possible to better exploit synergy benefits. Flexibility is essential in order to keep pace with developments. Self-service is increasingly important for optimising processes. In order to mitigate the impact of declining advertising revenues, TMG is also expanding its portfolio, for example, by the farther-reaching development of e-commerce activities. ‘Insufficiently capable of effecting the migration to and development of the digital world on a timely basis, as a result of which TMG fails to anticipate changing media consumption behaviour in time’ In the 2009 recession year, attention was primarily focused on achieving cost reductions and improved returns by optimising existing activities. The migration to the digital world was accelerated in 2010. TMG wants to be accessible with its portfolio on all electronic resources that are popular or are becoming popular. The objective in this respect is to generate revenues from consumers and ad sales via mobile telephones and tablets, among others. TMG has initiated the creation of a New Business Fund designed to stimulate the accelerated growth of young innovative companies through means of participating interests/minority participating interests in innovative digital initiatives. Based on the strengths of TMG’s brands, TMG supports the entrepreneurs in the area of marketing and communications and consequently gains access to a network of internet entrepreneurs that makes it possible to bundle competencies and experience. The Keesing Media Group is focused on the development of digital games. Sky Radio Group rolled out new streaming technology. In addition, a number of new online radio channels was introduced, such as Sky Radio Dance Classics, for example. An additional important further step into the digital world was made with the acquisition of Hyves, and consequently a strong position has been taken in the world of social media. ‘The continuity and reliability of ICT and other processes, data and systems’ Progress was made in the area of information security and risks strongly declined by using a project-oriented way of working. A risk analysis of information security and the change manage- TMG annual report 2010 34 ment process was conducted in 2010. The risk management framework is monitored once every quarter. The information security policy was renewed. A start on structuring the new ICT organisation was made in 2010. TMG is highly dependent on ICT systems and telecommunication networks. TMG is primarily focused on generic ICT services (versus customised applications), which reduce the organisation’s risk exposure. This is evident in the creation of standard workstations, where possible, and a reduction in the number of applications used. The maintenance backlog of the key components of the ICT data Centers was eliminated in 2010. risk and control measures identified for 2011 Strategic risk management workshops were conducted toward the end of 2010 in all business units. The objective was to identify the risks that could impact the 2011 objectives. Together with the business unit-transcending risks that have been identified, they result in the following summary of key strategic risks for 2011. ‘Due to the lack of a cohesive media policy on the part of government, TMG is insufficiently capable of achieving result due to unfair competition’ Media legislation in the Netherlands is designed in such a way that print, digital, television and radio are considered separate entities. This could not be further from the truth. Market players are increasingly becoming direct competitors due to the fact that the distinction between media types is becoming blurred. An example of this is the risk of unfair competition between public broadcasters and commercial market players, including in the area of the internet. In spite of farther-reaching technological developments (internet and digital radio, the introduction of G4), there is in addition a continued risk that government will fail to sufficiently lower the license fees for FM lots, while competition from all sides is intensifying. A positive point is that since 1 January 2011, the Temporary Media Concentrations Act ceased to be in effect, as a result of which cross-ownership constraints are eliminated. The government that came into power last year has indicated that it will cut back spending on public broadcasters. In addition, the Minister of Education, Culture and Science is required to assess the negative impact of market distorting decisions via ex ante market tests. The effect of such decisions is however only discernable after three to five years. TMG needs to transition to digital now, which is why it is precisely now that unfair competitions is a major risk. TMG will continue its efforts to bring this issue and its urgency to the attention of the involved parties. ‘Advertising revenues are declining beyond expectations’ The pressure on the advertising market remains high, so that the actions initiated last year will be continued in the area of cross media, ad networks (an ad network, as a kind of sales intermediary, represents multiple websites and the associated target groups to advertisers) and the realisation of further synergy within the ad sales for national titles. In the area of digital ads, new techniques and billing models are emerging in rapid succession. Further attention will be devoted to organising ad sales for mobile telephones and tablets in 2011. The initiated self-service-related actions will be continued. TMG has high expectations of the e-commerce activities. In addition, TMG remains alert to its cost structure in which the flexibilisation of costs, including printing and distribution costs, remains of key importance. ‘The declining return related to traditional activities cannot be offset on a timely basis by (growing) digital activities’ Investment in digital initiatives will continue through acquisitions on the one hand and the development of new products by Keesing Games and InfoPinnacle, for example, and the renewal of sites such as Relatieplanet, on the other hand. The New Business Fund will be expanded with new initiatives that are consistent with TMG’s strategy in 2011. Furthermore, synergy will be realised with Hyves. As such, Hyves will be used for launching the games of the Keesing Media Group. Digital knowledge and capacity is essential to TMG. Attracting and retaining employees with knowledge of digital markets will be a point of focus in further actions. ‘Control on the distribution platform of digital competitors is being lost’ The traditional physical distribution of newspaper content is partially shifting to digital distribution to a large number of different devices and via different networks. On the one hand this creates opportunities because digital distribution makes the delivery of content simpler, faster and cheaper. However, this also creates threats because distribution to a large extent is not in the hands of the owners and suppliers of that content. The latter also applies to TMG. Direct control over the way in which content is made accessible is reduced, which creates risks related to copyright and commerce. For advertisers, efficiently reaching target groups on the basis of target group analyses in particular is essential. The question ‘whose client is this?’ plays an important role in this regard. For TMG it is therefore important that the organisation has and maintains proper insight into the impact that this change in distribution brings with it and also anticipates the opportunities available to it to continue to exercise control over client data and conditions. TMG annual report 2010 35 ‘The continuity and reliability of ICT and other processes, data and systems is being endangered’ Contrary to earlier plans/project plans, the structuring of the new ICT organisation is now further being realised in the line. A great deal of effort is being made on improving connectivity. This project will be implemented in 2011. With the set up of the Group Information Management Office, a start has been made on further professionalising the ICT function within TMG. In addition, activities have been started up to further rationalise applications, as well as various upgrade projects. financial fisks Market, credit, liquidity, foreign exchange and interest rate risks. For a more detailed description and quantification of the abovementioned financial risks and the management of these risks, please see page 85 of the financial statements. other risks The key strategic and financial risks are identified in the annual report. Operational and compliance risks were assessed as less severe than the key strategic and financial risks during the risk analyses. Consequently, these risks are not summarised here. In summary, a number of operational risks is influenced by the change to more of a coordinating organisation, due to the outsourcing of activities. This requires different management and knowledge for which new risk analyses must be conducted. The changed risks are specifically identified within the organisation, but for the time being are considered manageable. An additional activity that will be carried out in this area this year is a separate risk analysis of the ICT coordinating management function. In terms of compliance, many activities were undertaken in recent years. In renewing activities, such as the games of Keesing Media Group, the risks related to applicable laws and regulations are taken into consideration. TMG annual report 2010 36 in control statement executive board – statement of responsibility / in control statementt in compliance with Section 5:25c subsection 2c of the Financial Supervision Act (Wft), the Executive Board declares that: 1.1.the financial statements provide a true and fair view of the assets, liabilities, financial position and the profit or loss of the publishing institution and the companies jointly included in the consolidation; and 2.the annual report presents a true and fair view of the position on the balance sheet date, the performance during the financial year of the publishing institution and that of its affiliated companies, the figures of which are included in its financial statements, and that the annual report describes the material risks facing the publishing institution. in compliance with best practice provision II.1.5 of the Code, the Executive Board declares that: the Executive Board is of the opinion that the internal risk management and control systems as described in this annual report provide a reasonable degree of assurance that the financial reporting does not contain any material misstatements and that these systems functioned as expected during the financial year. Amsterdam, 10 March 2011 Executive Board Telegraaf Media Groep N.V. H.M.P. van Campenhout - CEO (as of 16 February 2011) F.Th.J. Arp - CFO P.M. Morley - COO A.J. Swartjes (CEO up to 16 February 2011) TMG annual report 2010 37 corporate governance best practices The Executive Board and the Supervisory Board support the principles of the Corporate Governance Code (effective 1 January 2009). In this section, TMG provides an explanation of its deviations from the Code. In the special general meeting of TMG on 7 December 2010, the shareholders approved a number of adjustments to the remuneration policy of the Executive Board. Due to these adjustments and new legislation, a number of ‘explain’ elements no longer apply. The so-called corporate governance statement, including the comprehensive ‘comply or explain’ summary concerning TMG’s Code is available at www.tmg.nl under ‘Corporate Governance’. Deviations from the Corporate Governance Code: best practice provision III.3.5 Maximum term of office for Supervisory Board members. This provision is not adhered to. It is noted that many positions in society are occupied for longer periods. Experience and expertise are extremely important. The connection with and knowledge of the company prevail. principle III.5 / best pactice provisions III.5.6 and III.5.11 Composition and role of the key committees of the Supervisory Board. The Code states that if the Supervisory Board consists of more than four members, it shall appoint an audit committee, a remuneration committee and a selection and appointment committee. The current Supervisory Board has four members (six seats). The audit and remuneration committee consists of all members of the Supervisory Board. In view of the commitment and wide-ranging expertise of the members and the nature and scope of the company, such core committees consisting of only part of the Board will not be appointed. The Supervisory Board Chairman is also the chairman of the audit and remuneration committee. If necessary a selection and appointment committee will be composed ad hoc. best practice provision IV.1 To the best of its ability, the company enables shareholders to vote and communicate with all (other) shareholders by proxy. TMG does not allow shareholders to vote by proxy in the General Meeting of Shareholders. In principle, shareholders should attend the meeting in order to be able to discuss matters with other shareholders present and so form an opinion. best practice provision IV.2.8 Proxies. It is possible for the management of the Trust Office to issue proxies to depositary receipt holders, even during times of war. The practice of binding voting instructions from a depositary receipt holder to the management is not supported, as the Board is of the opinion that that those wishing to vote ought to be present at the general meeting of shareholders. Holders of depositary receipts can freely convert their depositary receipts into shares in order to obtain voting rights. best practice provision IV.3.1 Webcasting, etc., of meetings with analysts, presentations to analysts, presentations to investors and institutional investors and press conferences. This provision is not adhered to as regards ’one-on-one’ meetings. However, group presentations can be viewed via webcasts (www.tmg.nl). After they are given, presentations will be posted on the group’s website. best practice provision IV.3.9 Material changes in the company’s Articles of Association and proposals to appoint managing directors and supervisory directors must be proposed separately to the general meeting. TMG is a statutory two-tier entity. The Executive Board is appointed by the Supervisory Board. The Supervisory Board notifies the shareholders of a proposed appointment. corporate governance takeover directive For additional information on this subject visit www.tmg.nl, under the section ‘Corporate Governance’. TMG annual report 2010 38 sustainability report vision As a media business operating at the heart of society, TMG not only encounters a growing demand for reporting on sustainability among media consumers, but also a growing demand among other interested parties for insight into the economic, as well as social and environmental impacts of business operations. TMG is convinced that a carefully considered policy for corporate social responsibility (CSR) not only reduces negative impacts on the environment, but also leads to savings through the more efficient use of natural resources, innovations in the operating, commercial and editorial fields, client appreciation and motivated employees. TMG therefore strives to reduce the negative effects of business operations, while at the same time increasing the positive impact, where possible. objective The CSR policy that was initiated in 2009, in the first instance concentrates on reducing TMG’s environmental impact. The company’s objective is to reduce CO2 emissions in the next three to five years by 40% in comparison to 2010. This objective is related to the CO2 emission of office buildings, printers and in-house managed transportation (Scope 1 and 2 as defined in the Greenhouse Gas Protocol) plus CO2 emissions from business travel by air. cordance with the guidelines of the Global Reporting Initiative (GRI), starting with the 2010 financial year. This way all interested parties are provided with an integral picture of the results achieved in the area of sustainable environmental policy, as well as responsible social policy. Steps were taken in 2010 to comply with the GRI guidelines. This process had not yet been completed when this report was published. climate footprint A methodology designed to properly measure TMG’s impact on the environment was developed in 2009 and 2010. This has resulted in the availability of a climate footprint in 2010, of sufficient quality and precision for possible inclusion in the annual report. The methodology will be subjected to further improvements for the purpose of achieving more direct control over environmental impacts. The footprint contains the direct, business operations-related emissions of all TMG business units in the Netherlands and abroad, with the exception of Hyves. This business unit will be incorporated starting in 2011. Activities in which TMG has a less than 50% interest are not included. climate footprint TMG 2010 breakdown by source Electricity Natural gas In 2010, the emissions directly related to business operations plus business travel by air amounted to 24,000 tonnes of CO2. TMG wants to achieve the targeted CO2 reduction by increasing energy efficiency and by making use of sustainable energy where possible. In addition, TMG is striving for the most efficient possible use of water and limiting and recycling waste streams. TMG realises that its business operations, in addition to direct environmental impact, also result in indirect environmental impacts, including the consumption of water, energy and wood in the production of purchased paper and the consumption of fuel by outsourced transportation operations. TMG also strives to reduce the impact within the chain where possible and to include sustainability performance as a structural criterion in the selection of suppliers. In last year’s annual report, TMG indicated its intent to report on the results achieved in the area of sustainability in ac- Fuel 24% 49% 27% Classified by origin, half of the total of 24,000 tonnes of CO2 emissions is due to the generation of the electricity consumed by TMG, a quarter is due to the consumption of natural gas and another quarter is due to the fuel used for transport. Of the electricity consumed by TMG, 4% is green power. TMG annual report 2010 39 climate footprint TMG 2010 of energy, water and paper consumption, and where possible uses occasions when replacements are due, for this purpose. breakdown by function Offices 7% Printing 42% 17% facilities In 2010, Sky Radio Group replaced all traditional lighting in its offices with energy saving lighting. In addition, it fully converted to green power. HDC Media in Alkmaar last year optimised it climate control installations as a measure for counteracting unnecessary energy consumption in cooling its buildings. Transport personnel Distribution 34% The double glazing in TMG’s largest office building in Amsterdam is being replaced to as much as possible avoid energy loss. The cooling installations have been optimised in several areas for the purpose of lowering energy consumption. In 2011, collaboration in the area of daily newspaper distribution with Wegener and NDC is expected to result in lower energy consumption by distribution points. Classified by function, 34% of TMG’s direct CO2 emissions are attributed to in-house printing presses, 42% is due to the energy consumed by offices and in-house data centres, 17% is attributed to the personal transportation of TMG employees (including business travel by air) and 7% is attributed to the distribution of publications by TMG itself. water, waste and recycling Water plays a key role, for cooling buildings, as well as for use in sanitary facilities and in support of the printing process. TMG in 2010 consumed 51 million litres of water in total: 45 million litres for cooling and for use in sanitary facilities in TMG’s own offices and printing facilities, and over 5 million litres for the in-house printing of newspapers. 6,700 tonnes of waste are produced by in-house managed processes, printing processes and buildings. The distribution is 92% paper waste (primarily paper used for adjusting the printing presses), 6% residual waste, 1% hazardous waste (from ink filtered from water and chemicals used in the printing process) and 1% glass and foil (packaging materials for newspapers and paper). 93% of the waste (paper, glass and foil) is fully recycled. The 6% residual waste is 80% reused for the production of fuel pellets. The hazardous waste is incinerated by a waste plant specifically designed for this purpose. offices and ICT As is evident from the information above, offices are the largest source of direct, business operations-related CO2 emissions. TMG strives to make continuous improvements in the efficiency Due to the growing share of digital services in TMG’s activities, the need for data Center capacity is growing as well. TMG strives to as much as possible control the environmental impact of cooling and energy consumption in data Centers. In any outsourcing of data Centers, the energy efficiency of external suppliers is specifically taken into consideration. A printer policy was also developed in 2010, and work on replacing individual printers by centrally located multifunctional printers that are as standard configured to print black and white and double-sided has started. printing process and paper The printing of newspapers, magazines and puzzle books is TMG’s second principal source of direct, business operations-related environmental impact. As indicated earlier, the two in-house printers account for 34% of TMG’s climate footprint, primarily due to the printing presses’ power consumption. In 2010, the printer in Alkmaar implemented a new printing press control system. In the coming years, the printer in Amsterdam will convert its printing presses. This will also include the installation of a new control system. These measures are expected to result in a more efficient use of water, energy, paper and ink. TMG’s indirect environmental impact is much greater than its direct impact due to the quantity of water, fuel and energy required for the production of the 106,000 tonnes of paper purchased annually. The origin of the wood pulp used is also a key environmental factor due to the issue of responsible forest management. TMG annual report 2010 40 In 2010, TMG procured its paper from renowned paper producers in Europe, in particular from factories in the Netherlands, Belgium, the United Kingdom, Sweden and Norway. The newspaper paper purchased – over 80% of the total – was more than half produced from recycled paper. Keesing Media Group, a publisher of puzzle books, in 2011 will fully convert to the use of paper carrying the sustainability quality mark FSC or PEFC. Keesing has placed the orders for certified paper, works with certified printers and as a company has applied for FSC and PEFC certification. transport and distribution Almost 300,000 km were travelled from the paper producers to TMG’s printers in Alkmaar and Amsterdam: a third by boat and the rest by truck. Furthermore, it is estimated that 34.5 million kilometres were driven in 2010 - with trucks, delivery vans and cars - to transport all publications from the printers to the distribution points and shops. TMG has terminated its own transportation operations and now exclusively works with external transporters. The very last segment of the distribution chain is largely covered by bicycle: It is estimated that 25 million clean kilometres are driven by bicycle each year in 12,000 newspaper districts. TMG uses its coordinating role in the distribution process to as much as possible limit the number of kilometres driven. This results in cost savings, and also reduces emissions from fuel consumption. This is accomplished in two ways: by optimising routes and by combining transport. Various route optimisations have reduced the number of kilometres travelled by around 800,000 kilometres. By combining transport with Wegener and NDC – a project that is currently being implemented – it is estimated that an annual reduction of 9 million kilometres can be achieved. Both reductions in the number of kilometres travelled result in a reduction in CO2 emissions. staff mobility The sustainable leasing policy for passenger cars went into effect in 2010. The available options for newly to be acquired lease cars is limited to cars with an A, B or C rating (the most fuel efficient options). In addition, TMG incentivises the selection of clean passenger cars by awarding a bonus. Further refinement is being considered, depending on the level of support for the new policy. sustainable procurement On procurement, the supplier’s policy related to corporate social responsibility (CSR) is included as a standard selection criterion for new, as well as existing contracts. This is resulting in a growing group of preferred suppliers with a strong CSR profile, such as catering, waste management, office supplies, car leasing and temporary agency work. Where possible, efforts are made to further define the CSR policy’s content in collaboration with suppliers. An agreement has been negotiated with Adecco this year, stipulating that temporary agency staff working for TMG will in principle only be compensated for public transportation or bicycle kilometres and must be living within a limited radius of their location of work. In the area of energy, the opportunities for making greater use of green power will be identified this year. news and reporting on sustainability TMG wants to make a contribution to informing the public at large in a critical and practical way about sustainability themes. Although this subject has formed part of reporting for some time, an important step was made in 2010 with the launch of the De Groene Telegraaf (the ‘Green Telegraph’). Each week, two pages with sustainability-related news are being offered in De Telegraaf on Saturdays. A recent appreciation survey shows that the De Groene Telegraaf fulfils an important readers’ need. The pages are not only read by hundreds of thousands of readers every week, the content’s level of appreciation is high as well. A previous reader survey already highlighted the fact that Telegraaf readers attach a great deal of importance to the CSR policy pursued by the companies where they purchase their products. TMG will continue to pursue this track this year, and, in addition to the De Groene Telegraaf will also publish specials related to sustainability themes. Furthermore, this spring, the first winner of the Top 100 Green Companies competition organised last year, will be selected. TMG financial statements 2010 Always accessible. Anyone can do whatever needs to be done for work or personal purposes, anywhere and at any time. The use of mobile applications is developing at a breakneck pace. This is why we are always present everywhere with our media and brands. TMG financial statements 2010 45 consolidated statement of comprehensive income In thousands of euros Note 2010 2009 Continued operations 592,297 423 592,720 611,840 2,902 614,742 Raw and auxiliary materials 6 44,377 Personnel costs 7 216,200 Depreciation 8 13,652 Amortisation and impairment 8 37,650 Other operating expenses 9 258,399 Total operating expenses 570,278 22,442 Operating result 52,556 228,646 15,916 46,193 274,301 617,612 Result from associates 10 65,078 Financial income 10 1,298 Financial expenses 10 -1,698 Financial income and expenses 64,678 87,120 Result of continued operations, before tax 63,827 713 -1,802 62,738 6,159 80,961 907 58,961 Result of discontinued operations 13 - Gain on sale of discontinued operations, net of tax Net result for the year (realised) 80,961 10,365 69,326 - 80,961 594 69,920 Net result attributable to: 81,826 Shareholders of Telegraaf Media Groep N.V. Non-controlling interests -865 Net result for the year (realised) 80,961 70,505 -1,179 69,326 Comprehensive income attributable to: 81,826 Shareholders of Telegraaf Media Groep N.V. Non-controlling interests -865 Total comprehensive income for the year 80,961 71,099 -1,179 69,920 Earnings per share Net result attributable to shareholders of ordinary 24 81,826 shares Telegraaf Media Groep N.V. Weighted average number of ordinary shares 24 47,750,000 Basic and diluted earnings per share (EUR) 1.71 Basic and diluted earnings continued operations per share (EUR) 1.71 70,505 47,750,000 1.48 1.26 Revenues 4 Other operating income 5 Total income Income tax 11 Result of continued operations Other comprehensive income for the year, net of tax Total comprehensive income for the year -2,870 59,868 TMG financial statements 2010 46 consolidated statement of financial position as at 31 December In thousands of euros Note 2010 2009 ASSETS Non-current assets Intangible assets 14 396,898 Property, plant and equipment 15 52,056 Investments in associates 16 199,436 Deferred tax assets 28 4,632 Other receivables 17 3,963 Total non-current assets 656,985 Current assets 18 7,401 Inventories Tax receivables 12 428 Trade and other receivables 19 80,555 Cash and cash equivalents 20 39,584 Assets classified as held for sale 21 11,728 Total current assets 139,696 796,681 Total assets 381,360 60,646 136,976 10,633 5,907 595,522 14,736 352 80,798 56,506 14,882 167,274 762,796 Equity and liabilities Shareholders’ equity Issued capital 11,938 Other reserves 519,137 Attributable to equity holders Telegraaf Media Groep N.V. 22 531,075 11,938 454,024 465,962 2,477 533,552 3,335 469,297 Liabilities 25 16,654 Interest-bearing loans and borrowings Post-employment benefit liabilities 26 23,336 Restructuring provisions 27 1,973 Deferred tax liabilities 28 27,691 Total Non-current liabilities 69,654 18,618 26,932 7,657 25,702 78,909 Non-controlling interests Total shareholders’ equity Interest-bearing loans and borrowings 25 1,393 Accounts payables and other current liabilities 29 170,142 Restructuring provisions 27 14,212 Tax payables 12 7,728 Liabilities classified as held for sale 21 - Total Current liabilities 193,475 263,129 Total liabilities 796,681 Total equity and liabilities 11,828 173,385 19,507 7,287 2,583 214,590 293,499 762,796 TMG financial statements 2010 47 consolidated statement of cash flows In thousands of euros Note 2010 2009 Cash flow from operating activities 80,961 69,326 Adjustments for: 15 13,652 Depreciation of property, plant and equipment Amortisation of intangible assets 14 37,650 Impairment losses intangible assets 14 - Impairment losses property, plant and equipment 15 - Net financing costs 10 400 Share in result investments accounted for according to the ‘equity’ method 10 -18,375 Reversal on impairment losses 10 -43,800 Gain on sale of property, plant and equipment 5 -423 Gain on sale of non-current financial assets 10 -35 Gain on sale of discontinued operations, net of tax 10, 13 -2,868 Income tax 11 6,159 73,321 Change in inventories 7,335 Change in trade and other receivables 5,414 Change in prepayments -1,571 Change in accounts payable and other current liabilities -7,720 Change in provisions and post-employment benefit liabilities -14,654 62,125 Interest received (paid) 611 Income taxes paid -3,167 Net cash from operating activities 59,569 16,193 37,664 8,633 55 2,315 -8,267 -56,000 -2,607 440 -8,072 -6,049 53,631 3,626 12,895 -4,898 2,297 -28,321 39,230 -565 10,587 49,252 Cash flows from investing activities 14 -4,555 Investments in intangible assets Investments in property, plant and equipment 15 -4,723 Acquisition of subsidiaries, net of cash acquired 3 -43,738 Acquisition of associated companies -497 Divestment of associated companies 35 Divestment of other investments - Disposal of operation, net of cash disposed of 13 3,210 Divestments of property, plant and equipment 1,122 Net cash from (used in) investing activities -49,146 -7,005 -4,161 -3,010 -602 35 500 2,036 14,826 2,619 Cash flows from financing activities 23 -16,713 Dividends paid Withdrawal of borrowings 419 Redemption of borrowings -12,867 Change in non-controlling interests 7 Net cash from (used in) financing activities -29,154 -16,713 76 -14,263 1,245 -29,655 Net increase (decrease) in cash and cash equivalents -18,731 22,216 20 21 20 56,506 1,809 39,584 33,592 698 56,506 Net result for the year Cash and cash equivalents at 1 January Change in cash classified as held for sale Cash and cash equivalents at 31 December TMG financial statements 2010 48 consolidated statement of changes in equity Attributable to equity holders of Telegraaf Media Groep N.V. Trans- Non- Total share Issued lation Treasury Retainedcontrolling holders’ In thousands of euros Note capital reserve shares earnings Total interests equity Balance at 1 January 2009 12,500 -594 -53,194 452,864 411,576 3,269 414,845 Net result for the year Other comprehensive income 22 Total comprehensive income for the year - - - 594 - - 70,505 - 70,505 594 -1,179 - 69,326 594 - 594 - 70,505 71,099 -1,179 69,920 Dividends paid to shareholders 23 Repurchase of own shares 22 Change in non-controlling interests Balance as at 31 December 2009 - -562 - 11,938 - - - - - 53,194 - - -16,713 -52,632 - 454,024 -16,713 - - 465,962 - - 1,245 3,335 -16,713 1,245 469,297 Net result for the year Other comprehensive income 22 Total comprehensive income for the year - - - - - - 81,826 - 81,826 - -865 - 80,961 - - - - 81,826 81,826 -865 80,961 Dividends paid to shareholders 23 Change in non-controlling interests Balance as at 31 December 2010 - - 11,938 - - - - - -16,713 - 519,137 -16,713 - 531,075 - 7 2,477 -16,713 7 533,552 TMG financial statements 2010 49 notes to the consolidated financial statements contents page 50 60 62 64 64 64 64 65 65 65 66 67 67 69 71 72 74 74 note 1.Significant accounting policies 2. Segment reporting 3. Business combinations 4. Revenues 5. Other operating income 6. Raw and auxiliary materials 7. Personnel costs 8.Depreciation, amortisation and impairment 9. Other operating expenses 10. Financial income and expense 11. Income tax 12. Current tax assets and liabilities 13. Discontinued operations 14. Intangible assets 15. Property, plant and equipment 16. Investments in associated companies 17. Other receivables 18. Inventories page 75 75 76 76 77 77 78 79 82 83 84 85 87 88 88 88 89 89 note 19. Trade and other receivables 20.Cash and cash equivalents 21. Assets and liabilities held for sale 22. Shareholders’ equity 23. Dividend 24.Earnings per share 25.Interest-bearing loans and borrowings 26.Post-employment benefit liabilities 27. Restructuring provision 28. Deferred tax assets and liabilities 29.Accounts payable and other current liabilities 30.Financial risk management 31. Off balance sheet liabilities 32. Investment commitments 33. Contingent liabilities 34.Related parties 35. Interests in joint ventures 36.Subsequent events TMG financial statements 2010 50 1. significant accounting policies corporate information Telegraaf Media Groep N.V. (the ‘Company’) domiciled in 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 the operation of, and participation in, digital media, radio and television. The company’s shares are listed on the NYSE Euronext in Amsterdam. The consolidated financial statements of the Company for the year ended 31 December 2010 comprise the company and its subsidiaries (together referred to as TMG) and jointly controlled entities and TMG’s interest in associates. The financial statements have been compiled by the Executive Board, and have together with the Supervisory Board been signed on 10 March 2011. statement of compliance The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the International Accounting Standards Board (IASB) and as adopted by the European Union, and the interpretations of these standards by the IASB. basis for preparation The financial statements are presented in euros, rounded to the nearest thousand. Non-current assets and disposal groups held for sale are stated at the lower of the carrying amount and the fair value less costs to sell. The principles for the valuation of assets and liabilities and the determination of the result of the company financial statements of Telegraaf Media Groep N.V., are in conformity with article 402, Book 2 of The Netherlands Civil Code. changes in accounting policies The accounting policies have been applied consistently for the years 2010 and 2009 as presented in these consolidated financial statements. As a consequence of a change in IFRS standards the following change in accounting policy has applied: business combinations As of 1 January 2010 IFRS 3 (revised) ‘Business combinations’ became effective. The changes have consequences for the valuation of minority interests, transaction costs incurred (direct in result), valuation and recognition after acquisition of contingent consideration and step acquisition. The changes have an impact on the recognition of goodwill and reported results within the period an acquisition incurred and prospective reported results. The change in accounting policy is applied prospectively and had no material impact on TMG’s financial position. In 2010 TMG acquired 100% of the shares of Hyves. The change in accounting policy, as a consequence of this acquisition, has no significant impact on the financial position. For more disclosure see note 3. consolidated and s eparate financial statements As of 1 January 2010 IAS 27 (amended) ‘Consolidated and Separate financial statements’ became effective. Under the new accounting policy, changes of non-controlling interests are accounted for as transactions with equityholders in their capacity as equityholders and therefore no goodwill is recognised as a result of such a transaction. Previously, goodwill was recognized arising on the acquisition of a non-controlling interest in a subsidiary. The change in accounting policy is applied prospectively and had no material impact on TMG’s financial position. changes in presentation The discontinued operations have in 2009 an effect on the financial position of TMG. The presentation of the statement of comprehensive income is primarily based on continued operations. The presentation of, and certain terms used in, the statement of financial position, statement of comprehensive income and certain notes has been changed in 2010 to provide additional and more relevant information. Certain comparative amounts have been reclassified to conform to the current period presentation. None of the changes are significant. critical accounting estimates and judgements In the process of applying TMG’s accounting policies, management has made judgements, estimates and assumptions, which affect the application of the accounting principles and the amounts recognised in the financial statements. The estimates and the related assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances. The outcomes of these form the basis for the evaluation of the carrying value of assets and liabilities where this is not easily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of the estimates are applied in the pe- TMG financial statements 2010 51 riod during which the estimate is revised, if the revision only has consequences for the period in question. If the revision has consequences for both the period under review and future periods, the estimate is revised in both the period of revision and future periods. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated statements are: • intangible assets (useful life and impairment - see note 14); • property, plant and equipment (useful life - see note 15); • associated companies (impairment - see note 16); • trade receivables (impairment - see note 19); • post employment benefit liabilities (actuarial assumptions - see note 26); • restructuring provision (the amount of severance payments and severance alternatives - see note 27); • income tax (rate and recoverability deferred tax - see note 28). Judgements made by management in the application of IFRS that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in the accompanying notes. basis of consolidation The consolidated financial statements of Telegraaf Media Groep N.V. comprise the company and all of its subsidiaries and joint ventures. The consolidation is based on the valuation and the accounting principles of the parent company. subsidiaries Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. associated companies Associates are those entities in which TMG has a significant influence, but no control, over the financial and operating policies. Subsidiaries and joint ventures are no associated companies. The consolidated financial statements include TMG’s share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. TMG’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include TMG’s share of the income and expenses and equity movements of equity accounted investees, after adjustments to align the accounting policies with those of TMG, from the date that significant influence or joint control commences until the date significant influence or joint control ceases. Impairment is accounted for immediately in the statement of comprehensive income. When TMG’s share of losses exceeds its interest in the associate, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that TMG has incurred legal or constructive obligations or made payments on behalf of an associate. transactions eliminated on consolidation Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of TMG’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. The results of the subsidiaries acquired or disposed of during the financial year are included in the consolidated financial statements as of or till the effective transaction date. If necessary, changes are made to the figures of subsidiaries to align the accounting principles with those of TMG. foreign currency joint ventures Joint ventures are those entities established by contractual agreement over whose activities TMG has joint control and in which strategic decisions are taken by unanimous consent. The consolidated financial statements include TMG’s proportional share of the entities assets, liabilities, revenues and expenses with items of a similar nature on a line-by-line basis, from the date that joint control commences until the date that joint control ceases. foreign currency transactions Transactions in foreign currencies are translated into euros at the foreign exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to euros at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the statement of comprehensive income. Non-monetary assets and liabilities TMG financial statements 2010 52 that are measured in terms of historical cost in foreign currency are translated at the exchange rate applying on the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to euros at foreign exchange rates ruling at the dates the fair value was determined. financial statements of foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to euros at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to euros at the date of the transaction. Foreign exchange differences arising on translation are recognised directly in a separate component of equity. Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognised directly in equity in the translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the translation reserve is transferred to the statement of comprehensive income. intangible assets goodwill Goodwill represents amounts arising on acquisitions of subsidiaries, joint ventures and associates. In respect of acquisitions, goodwill represents the difference between the cost of the acquisition and the fair value of the identifiable assets liabilities and contingent liabilities acquired. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is attributed to cash generating units and is not amortised. Instead, it is tested annually for impairment (see accounting policy impairments). In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associate. Whenever an interest in a subsidiary, associate or joint venture is sold, the corresponding goodwill is included in the determination of the result of the transaction. Negative goodwill that arises during an acquisition is included directly in the statement of comprehensive income. Acquisitions of non-controlling interests are accounted for as transactions with equityholders in their capacity as equityholders and therefore no goodwill is recognised as a result of such transactions. other intangible assets Other intangible assets concern licences, (internally developed) software, trademarks and publishing rights. The other intangible assets acquired by TMG are stated at cost less accumulated amortisation 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 processes, are capitalised if the product or process is technically and commercially feasible can be separately identified, the expenses are estimated reliably, and TMG has sufficient resources to complete the development. The capitalised costs comprise the cost of material, direct labour and an appropriate proportion of overheads. With regard to the capitalized internal hours, a legal reserve is stated. Other development expenditure is recognised in the statement of comprehensive income as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortization and impairment losses. subsequent expenditure Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. In that case, the costs are capitalised in so far as they increases the economic benefits. borrowing costs Borrowing costs are capitalised on qualifying assets. amortisation Amortisation is charged to the statement of comprehensive income on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows: • trademarks and publishing rights 5 - 50 years • licences 5 years • software 3 - 5 years The amortisation method and estimated useful lives are assessed annually. lease Lease agreements, where TMG has substantially all the risks and rewards of ownership are classified as financial leases. Upon initial recognition the leased asset is measured at an amount equal TMG financial statements 2010 53 to the lower of its fair value and the present value of minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases, which assets are not recognised in TMG’s statement of financial position. value less attributable transaction costs. They are then capitalised at amortised cost, whereby a difference between the cost and the redemption amount on the basis of the effective interest method is included in the statement of comprehensive income over the duration of the receivables. property, plant and equipment inventories Inventories are stated at the lower of cost or net realisable value. The net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the selling expenses. The cost of the inventories is based on the ‘first in, first out’ principle (FIFO) and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. owned assets Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (see accounting policy impairments). Property, plant and equipment that is being constructed or developed for future use is stated at cost until construction or development is complete. subsequent expenditure TMG recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to TMG and the cost of the item can be measured reliably. All other costs are recognised in the statement of comprehensive income as an expense when incurred. securities borrowing costs Borrowing costs are capitalised on qualifying assets. Other financial instruments held by TMG are classified as being available for sale and are stated at fair value, with any resulting gain or loss being recognised in the shareholders’ equity, except for impairment losses and, in the case of monetary items such as debt securities, foreign exchange gains and losses. depreciation Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated useful life of each part of a property, plant and equipment. Land is not depreciated. investments in debt instruments and shares Financial instruments held for trading are classified as current assets and are stated at fair value, with any gain and loss recognised in the statement of comprehensive income. When TMG has the positive intent and ability to hold financial instruments to maturity, they are stated at amortised cost less impairment losses. When these investments are derecognised, the cumulative gain or loss recognised directly to the shareholders’ equity is recognised in the statement of comprehensive income. The estimated useful lives are as follows: • buildings 20 - 25 years • machinery and equipment 5 - 10 years • other tangible fixed assets 3 - 5 years The depreciation method, estimated useful life and residual value are assessed annually. other receivables Other receivables consist of prepaid operational leases and non-current receivables. Participations, in which TMG has significant influence, are valued at fair value or at cost. Prepaid operational leases comprise the purchased leaseholds of the land of the campus of Amsterdam. These are amortised on a straight-line basis over the duration of the leaseholds concerned. Non-current receivables are initially recorded at fair Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in the statement of comprehensive income. The fair value of the financial instruments classified as held for trading and available for sale is their quoted bid price at the balance sheet date. Financial instruments classified as held for trading or available for sale investments are recognised by TMG on the date it commits to purchase. Investments held to maturity are recognised on the day they are transferred to TMG and are removed from the statement of financial position on the day they are disposed of. financial instruments TMG uses none derivative financial instruments to hedge interest rate risk exposures. Embedded derivatives are separated TMG financial statements 2010 54 from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through the statement of comprehensive income. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in the statement of comprehensive income when incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for in the statement of comprehensive income. If the range of various estimates in fair value of financial instruments is substantial and the probabilities of the various estimates can not be reasonably assessed, the financial instrument is stated at cost instead of fair value less impairments, if any. TMG does not apply hedge accounting. trade and other receivables Trade and other receivables are stated at cost less impairment losses. cash and cash equivalents Cash comprises cash balances and call deposits. impairments The carrying amount of TMG’s assets other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is an indication of impairment. If such indication exists, the asset’s recoverable amount is estimated (see the policy for calculation of recoverable amount). ers’ equity, and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the statement of comprehensive income, even though the financial asset has been derecognised. The amount of cumulative loss that is recognised in the statement of comprehensive income is the difference between the cost and the current fair value, less any impairment loss on that financial asset previously recognised in the statement of comprehensive income. calculation of recoverable amount The recoverable amount of TMG’s investments in securities held to maturity and receivables valued at the amortised cost of acquisition is calculated as the present value of the expected future cash flows, discounted at the original effective interest rate (i.e. the effective interest calculated at the time at which these financial assets are initially entered). Receivables with a short residual term are not discounted to the present value. For the other assets and associates, the realisable value is the fair value less cost to sell, or the value in use if this is higher. When determining the value in use the present value of the estimated future flows is calculated using a pre-tax discount rate that reflects both the current market valuations of the time value of money 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 the cash generating unit to which the asset belongs. Impairment losses are recognised in the statement of comprehensive income. Impairment losses recognised for cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (or groups of units) and then to reduce the carrying amount of the other assets in the unit (or groups of units) on a pro rata basis. reversal of impairment 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 occurring after the impairment loss was recognised. Impairment loss on goodwill will not be reversed. Impairments on non-quoted equity instruments (financial instrument), that is not carried on fair value, because its fair value cannot be reliably measured, will not be reversed. In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Impairment is only reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. When a decline in the fair value of an available for sale financial asset has been recognised directly in the sharehold- issued capital TMG’s ordinary shares are designated as the Company’s equity. For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each balance sheet date to determine whether there is an indication for impairment. An impairment loss is recognised whenever the carrying amount of an asset, or the cash-generating unit exceeds its recoverable amount. TMG financial statements 2010 55 minority interests Minority interests are the portion of the profit and loss and net assets of a subsidiary attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by TMG. In the event of both a written put and a call option on the shares, these shares will be included in TMG’s economic interest, and not classified as a minority interest. The remaining interest is classified as a liability, based on the most realistic estimate. withdrawal shares When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, is net of any tax effects and is recognised as a deduction from equity. For repurchased shares classified as treasury shares that are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/ from retained earnings. Withdrawn shares are deducted from issued capital for nominal value, and the resulting surplus or deficit on the transaction is transferred to/from retained earnings. interest-bearing loans and borrowings Interest-bearing loans and borrowings are recognised initially at fair value. Subsequent to initial recognition, interest-bearing loans are stated at amortised cost, with any difference between cost and redemption value being recognised in the statement of comprehensive income over the period of the borrowings on an effective interest basis. share-based remunerations Share-based remunerations are valued at the (expected) present value of the shares owned by the management at vesting date. The grant date fair value of shares granted to management is recognised and allocated to the period that the management is unconditionally entitled to sell the shares to TMG. Expenses are recognised when payment of shares is unconditional or realised. In the event of both a written put and a call option on the shares, these shares will be included in TMG’s economic interest. At the same time, a management obligation is included. The valuation is the discounted fair value of the shares at vesting date. Estimates of fair values are reassessed annually. post-employment benefit liabilities TMG has established various pension schemes, some under its own management, with Stichting-telegraaf-pensioenfonds 1959 and some placed with external parties such as industry wide pension funds and insurance companies. a. defined benefit plans TMG’s net obligation in respect of defined benefit plans is calculated separately for each scheme by estimating the amount of future benefits that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Any unrecognised past service costs and the fair value of plan assets are deducted hereon. The discount rate is the yield as at the balance sheet date on AAA credit rated bonds that have maturity dates approximating to the terms of TMG’s obligations. The calculation is performed by a certified actuary using the ‘projected unit credit’ method. In respect of actuarial gains and losses that arise while calculating TMG’s obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain and loss exceeds 10 per cent of the greater of the present value of the defined benefit obligation and the fair value of plan assets, that portion is recognised in the statement of comprehensive income over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain and loss is not recognised. Where the calculation results in a benefit to TMG, the recognized asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan. When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the statement of comprehensive income on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the statement of comprehensive income. The result ensuing from the curtailment or termination of a defined benefit plan is incorporated in the statement of comprehensive income immediately when the curtailment or termination exists. The result consists of the change in the present value of the defined benefit obligation and the fair value of plan assets and previous actuarial results and past service costs which have not been accounted for. A curtailment exists if there is a material reduction in the number of employees covered by the pension plan or if the plan changes substantially. b. defined contribution plans Obligations for contributions to defined contribution plans are recognised as an expense in the statement of comprehensive income as incurred. Industry wide pension funds of which no reliable information is available, are stated as a defined contribution plans. TMG financial statements 2010 56 provisions A provision is recognised in the statement of financial position when TMG has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic assets will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the specific risks related to the liability.. restructuring provision A provision for restructuring is recognised when TMG and the works council have approved a detailed and formalised restructuring plan and the restructuring has either commenced or has been announced publicly. TMG has no possibility to 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/or function categories. To the extent they can be reliably estimated, benefits falling due more than 12 months after the balance sheet date are discounted to their present value. accounts payable and other current liabilities Accounts payable and other current liabilities are stated at cost. determination of fair values A number of TMG’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. property, plant and equipment The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of other plant, equipment, fixtures and fittings is based on the quoted market prices for similar items. intangible assets The fair value of publishing rights and trademarks acquired in a business combination is based on the discounted esti- mated 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. trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. derivatives The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated future cash flows based on terms and maturity of each contract and using market interest rates for similar instruments at the measurement date. share based payment transactions The fair value of share based payment transactions is based on the expected cash value of the cash flow from the subsidiary. Factors affecting valuation include strike price of the instrument, the expected cash flow from the entity and the discount rate. revenue The revenues exclude value added tax and after discounts. Revenues from the sale of goods are recognised in the statement of comprehensive income when the significant risks and rewards of ownership have been transferred to the buyer. Revenues relating to services provided are included in the statement of comprehensive income in proportion to performance in the same financial year. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods, or when there is continuing management involvement with the goods. barter transactions If advertisement space or time are exchanged or swapped for advertisement space or time which are similar as regards the nature, fair value and same target population, such an exchange is not recognised as a revenue-generating transaction. If this condition is not applicable, the exchange will be regarded as a transaction which generates revenue. The amount of the revenue is determined on the basis of the fair value of the goods or services received, plus or minus any cash or assets which have been received or paid which can be converted into cash, on short term. If the fair value of the received goods or services cannot be reliably determined, the revenue TMG financial statements 2010 57 is determined on fair value of the exchanged goods or services plus or minus cash or assets which can be converted into cash, on short term. government grants Government grants are recognised in the statement of financial position initially as received in advance and are recognised as income when there is reasonable assurance that it will be received and that TMG will comply with the conditions attached to it. Grants that compensate TMG for the expenses are recognised in the statement of comprehensive income on a systematic basis in the same period the expenses are made. expenditure lease payments Payments made under operating leases are recognised in the statement of comprehensive income on a straight-line basis over the term of the lease. Lease incentives received are recognised in the statement of comprehensive income as an integral part of the total lease expense. Minimum lease payments from financial leases are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic interest rate on the remaining balance of the liability. Conditional lease payments are incorporated by revising the minimal lease payments during the remaining lease term as soon as the adaptation of a lease is confirmed. 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 the sale of the associate is stated on the date the transaction is effected. The financial income and expenses comprise (the reversal of) impairment losses of associates and financial instruments (see accounting policy impairment losses). 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 exchange gains and losses. Interest income and expenses are recognised in the statement of comprehensive income as it accrues using the effective interest calculation method. Dividend income is recognised in the statement of comprehensive income on the date of the entity’s right to receive payments. Foreign currency gains and losses are reported on a net basis. Borrowing costs that are not directly attributable to an acquisition are recognised in the statement of comprehensive income using the effective interest method. income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the statement of comprehensive income except to the extent that it relates to items recognised directly in shareholders’ equity, in which case it is recognised in shareholders’ equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: non tax-deductible goodwill, the initial recording of assets or liabilities which affect neither the commercial nor the fiscal profit, and differences related to investments in subsidiaries in so far as these are probably not going to be settled in the foreseeable future. The amount of the provision for deferred tax liabilities is based on the way in which the carrying amount of the assets and liabilities is expected to be realised or settled, with the tax rates being used as determined on the balance sheet date, or to which a material decision has already been taken on the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. The deferred tax liabilities and assets are netted if there is a legal entitlement to settle current and deferred tax, the income tax is charged by the same Tax Authorities and TMG intends to net the amounts. segment reporting An operating segment is a clearly distinguishable component of TMG that is engaged in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with other TMG components. All operating segments’ operating results are reviewed regularly by the Executive Board to make decisions about allocation of resources. TMG financial statements 2010 58 assets classified as held for sale and discontinued operations On initial classification as held for sale, non-current assets and disposal groups are recognised at the lower of the carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale are included in the statement of comprehensive income, even when there is a revaluation. The same applies to gains and losses on subsequent re-measurement. A discontinued operation is a component of TMG’s business that represents a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view of resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. A disposal group that is to be abandoned may also qualify. cash flow statement The consolidated statement of cash flows is stated in accordance with the indirect method. A distinction is made between the operating, investment and financing activities. The cash flow from operating activities is adjusted for items in the statement of comprehensive income and changes in the statement of financial position which have no effect on the cash flow for the year. new accounting standards and interpretations not yet adopted Certain new standards, amendments to standards and interpretations are not mandatory for TMG in 2010 and are not early adopted in these financial statements. The following standards are applicable on or after 1 January 2011 (unless otherwise stated) and will then be adopted by TMG: • • • IAS 24 (revised 2009) Related Party Disclosures (1 January 2011) IAS 37 amendment – Liabilities IFRS 2 amendment – Group-settled Share Based Payment Transactions • IFRIC 14 amendment – The limit on a Defined Benefit assets, Minimum Funding Requirements and their Interaction (1 January 2011). 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. TMG financial statements 2010 59 TMG financial statements 2010 60 2. segment reporting In thousands of euros Telegraaf Media Nederland 2010 2009 2010 2009 Revenues from third-party transactions Revenues from transactions with other segments 479,553 10 479,563 496,029 52 496,081 39,638 100 39,738 41,662 91 41,753 59,404 6,759 52,645 44,249 15,018 29,231 17,374 23,955 -6,581 16,602 24,439 -7,837 -23 128 -674 -11,708 40,368 -433 119 -342 -7,529 21,046 -32 17 -667 2,663 -4,600 - 26 -1,175 2,602 -6,384 - 40,368 3,697 24,743 - -4,600 - -6,384 Segment assets Investments in associates Total assets at 31 December 187,755 154 187,909 202,941 51 202,992 162,713 - 162,713 189,010 - 189,010 Segment liabilities Total liabilities at 31 December 143,528 143,528 142,914 142,914 32,609 32,609 48,935 48,935 Total revenues Segment result before amortisation Amortisation and impairment Operating result Result from associates Financial income Financial expenses Income tax Result of continued operations Gain on sale of discontinued operations, net of tax Net result for the year (realised) Sky Radio Group Segment investments 3,753 8,032 120 167 Total investments 3,753 8,032 120 167 8,705 9,293 24,450 24,766 Total depreciation and amortisation Restructuring costs 1,097 58 -119 413 Impairment losses intangible assets - 7,614 - 318 Other material non-cash items 1,097 7,672 -119 731 1,771 1,929 106 113 Average number of FTEs operating segments TMG comprises the following main operating segments: • Telegraaf Media Nederland: The publishing of national and regional newspapers, magazines and free door-to-doorpapers, internetactivities and organising exhibitions. • Sky Radio Group: The operation of several radio stations in The Netherlands. • Keesing Media Group: The publishing of puzzle booklets and the operating of (digital) casual gaming activities. • Other activities: Other activities include, amongst others, the printing and distribution of newspapers, providing of office space and related facilities, the provision of (internal) ICT services, mobile services and and the operating of a social media platform. • Headoffice/Eliminations TMG financial statements 2010 61 Keesing Media Group Other activities Headoffice/Eliminations Total 2010 2009 2010 2009 2010 2009 2010 2009 47,501 49 47,550 48,541 76 48,617 25,605 179,276 204,881 25,608 213,885 239,493 - -179,435 -179,435 - -214,104 -214,104 592,297 - 592,297 611,840 611,840 11,123 4,288 6,835 11,478 4,159 7,319 -9,112 2,355 -11,467 -10,903 1,836 -12,739 -18,697 293 -18,990 -18,103 741 -18,844 60,092 37,650 22,442 43,323 46,193 -2,870 1,747 801 -48 -2,323 7,012 - 98 -585 -1,148 5,684 858 40 -123 3,202 -7,490 - 110 -1 3,710 -8,920 62,528 312 -186 2,007 45,671 64,260 360 301 1,458 47,535 65,078 1,298 -1,698 -6,159 80,961 63,827 713 -1,802 -907 58,961 - 7,012 300 5,984 - -7,490 - -8,920 - 45,671 6,368 53,903 - 80,961 10.365 69,326 120,419 - 120,419 122,087 - 122,087 123,000 -97 122,903 115,719 - 115,719 3,358 199,379 202,737 -3,938 136,926 132,988 597,245 199,436 796,681 625,819 136,977 762,796 20,542 20,542 20,742 20,742 37,295 37,295 33,325 33,325 29,155 29,155 47,583 47,583 263,129 263,129 293.499 293,499 1,648 1,648 2,529 2,529 3,827 3,827 4,505 4,505 152 152 -638 -638 9,500 9,500 14,595 14,595 4,589 4,518 13,267 14,268 291 631 51,302 53,476 197 - 197 341 - 341 2,293 - 2,293 4,516 - 4,516 1 - 1 57 701 758 3,469 - 3,469 5,385 8,633 14,018 196 197 626 687 107 62 2,806 2,988 Segment information is presented in respect of TMG’s business and geographical segments. The segmentbase results is based on the organisational management within TMG and the nature of the (publishing) activties. On a monthly basis, results are reported to the Executive Board to make decisions about performance and allocation of resources within the publishing segments. The facilitating activities such as printing, distribution an ICT are reviewed at Headoffice and not allocated to operating segments. The activities of social media are included in other activities. The inter-segment pricing, principally the printing and distributing of newspapers and the support of ICT projects and -infrastructure, are determined on at arm’s length basis. The intercompany financing is unallocated. Segment results, assets and liabilities include items directly attributable to the segment as well as, those that can be allocated on reasonable basis. The decrease in revenues at Telegraaf Media Nederland and Sky Radio Group is caused by less advertisement revenues. Improving results at Telegraaf Media Nederland is due to lower distribution and paper costs. The investments of a segment include the total cost incurred during the reporting period for the acquisition of assets of the segment which are expected to be in use for more than one reporting period. TMG financial statements 2010 62 geographical segments For the presentation of information based on geographical segments, the geographical location of the clients is used for the segments’ revenues. The segments’ non-current assets are determined on the basis of the geographical location of those non-current assets. revenues and non-current assets are divided in geographical segments as follows: In thousands of euros 2010 Revenues Non-current Assets1) The Netherlands Other countries Total 555,789 36,508 592,297 650,945 1,408 652,353 In thousands of euros Revenues 2009 Non-current Assets 1) 575,032 36,808 611,840 583,329 1,560 584,889 The Netherlands Other countries Total 1) Except for deferred tax assets. The revenues in other countries concern the publishing of puzzle magazines and newspapers. 3. business combinations On 12 November 2010, TMG acquired 100% voting equity interest in Startphone Limited, de owner of social network Hyves. The acquisition of Hyves is an important strategic step for TMG, because it provides a significant impulse to realising TMG’s objective of achieving a larger share of its result from digital media. Social networks are taking on an increasingly important role in the consumer orientation and purchasing process. And that in turn enhances their attraction to advertisers. In 2009 no material acquistions took place. For acquisitions of prior years the call option on the remaining interest of Nieuwsmedia B.V. (Geen Stijl) has been executed. In 2009 the estimate of WebRegio B.V., has been changed with an adjustment in the valuation and acquisition payables of this subsidiary. The adjustment has no significant influence on the financial position of TMG. TMG financial statements 2010 63 In thousands of euros Startphone Ltd Other acquisitions Total 25,101 558 4,034 9,361 -6,275 - -5,477 27,302 - 7 91 44 - -60 -125 -43 25,101 565 4,125 9,405 -6,275 -60 -5,602 27,259 Goodwill: Goodwill on acquisition 25,791 Total consideration 53,093 93 50 25,884 53,143 Acquisition cash flow: Total consideration 53,093 Cash acquired -9,361 Net cash outflow 43,732 50 -44 6 53,143 -9,405 43,738 Intangible assets Property, plant and equipment Trade and other receivables Cash Deferred tax liabilities Other non-current liabilities Current liabilities Net identifiable assets and liabilities the effect of the acquisition of Hyves on the consolidated assets and liabilities TMG was as follows: In thousands of euros Before acquisition date After acquisition date Intangible assets Property, plant and equipment Trade and other receivables Cash Deferred tax liabilities Current liabilities Net identifiable assets and liabilities - 558 4,034 9,361 - -5,477 8,476 25,101 558 4,034 9,361 -6,275 -5,477 27,302 Goodwill on acquisition Total 25,791 53,093 The identified intangible assets with total value of 25,101 primarily involve brand name, customer relationships and database. The amortisation period for the brand name is 10 years, the customer relationships within 1 year and the database is amortised in 5 years. The goodwill represents the value of future economic benefits related to partnering with TMG’s brands and products. The goodwill is not deductible for tax purposes. The fair value of the trade receivables is 1,949. The trade receivables are shown net of impairment losses. The acquisition costs of 763 are included in the statement of comprehensive income. The acquisition of Startphone Limited in 2010 had a positive effect on revenues of 4,602 and 615 on net result. If the acquisition of Startphone Limited had taken place on 1 January, the revenues and net result would have been 20,513 and 2,576 respectively. TMG financial statements 2010 64 4. revenues 2010 2009 Advertisements Circulation Print third parties Distribution Other activities Total 265,264 276,131 3,584 14,003 33,315 592,297 277,277 281,388 3,600 16,622 32,953 611,840 In thousands of euros The revenue of 592,297 (2009: 611,840) includes barter transactions of 2,283 (2009: 1,330). The other activities consist of SMS-, gaming and internet activities. 5. other operating income 2010 2009 Net gain on disposal of property, plant and equipment Grants Other Total 423 - - 423 2,571 269 62 2,902 2010 2009 Paper and ink Auxiliary materials Total 41,014 3,363 44,377 49,404 3,152 52,556 Note 2010 2009 Wages and salaries Compulsory social security contributions Contributions to pension schemes 26 Other personnel costs Restructuring costs 27 Total 154,366 21,571 18,579 18,215 3,469 216,200 160,137 21,028 18,849 23,247 5,385 228,646 In thousands of euros 6. raw and auxiliary materials In thousands of euros 7. personnel costs In thousands of euros The personnel costs decreased caused by a FTE reductionprogram in 2008, which has been finished in 2010 largely. The average amount of employees (FTE) is 2,806 (2009: 2,988). The other personnel costs decreased because of less temporary personnel. TMG financial statements 2010 65 8. depreciation, amortisation and impairment Note 2010 2009 Amortisation 14 Impairment intangible assets 14 Depreciation 15 Total 37,650 - 13,652 51,302 37,560 8,633 15,916 62,109 In thousands of euros The intangible assets impairments in 2009 were mainly related to Bohil Media B.V., Weekbladen Groep Midden Nederland B.V., Nobiles Media B.V., and 402EVENTS.COM B.V. 9. other operating expenses 2010 2009 Transport and distribution costs Subcontracted work and technical production costs Sales costs Editorial costs Impairment of trade receivables Other operating expenses Total 86,305 40,150 29,485 20,392 4,022 78,045 258,399 101,750 46,014 27,432 20,295 3,070 75,740 274,301 In thousands of euros The other operating expenses of 78,045 (2009: 75,740) consist of IT expenses 24,655 (2009: 23,579), housing expenses 16,064 (2009: 16,702) and other general expenses 37,326 (2009: 35,461). 10. financial income and expense 2010 2009 2,903 18,375 43,800 65,078 -440 8,267 56,000 63,827 Financial income 1,298 713 Financial expenses Total -1,698 -1,802 64,678 62,738 In thousands of euros Result from associates Result on sale of associates Share of result associates Reversal of impairment losses TMG holds a 12% interest in ordinary shares with voting rights in ProSiebenSat.1 Media AG (economic interest: 6%). The associated company is valued at the ‘equity’-method. The share in the result of 18,768 (2009: 8,670) in ProSiebenSat.1 Media AG is included in Share of result associates. At the end of 2008 an impairment loss was recognised on the associate ProSiebenSat.1 Media AG of 99,800. This impairment loss has been reversed at the end of December 2010 for 43,800 (2009: 56,000) due to structurally improved expectations about future cash flows (see note 16). TMG financial statements 2010 66 11. income tax Note 2010 2009 Current tax Current year Adjustment from prior years 3,759 88 1,796 165 Deferred tax 21 2,312 Origination and reversal of temporary differences Total income tax 6,159 -8,010 -6,049 6,159 907 6,159 907 Tax on discontinued operations 13 - Tax on gain on sale of discontinued operations 13 - Income tax from discontinued operations - 6,159 Total income tax -7,649 693 -6,956 In thousands of euros Tax on continued operations Income tax reported in the consolidated statement of comprehensive income -6,049 2010 2009 Result continued operations before tax Result discontinued operations before tax Gain on sale of discontinued operations, before tax Result before tax 87,120 - - 87,120 59,868 -4,070 7,479 63,277 Tax rate in the Netherlands 25.5% 25.5% Income tax based on Dutch tax rate Effect of tax rate in foreign jurisdictions Non-deductible expenses Tax exempt results Unrecognised losses carried forward Advantage from unrecognised prior losses carried forward Tax facilities Other changes in tax rates Over (under) provided prior years Losses realised on liquidation Total 22,216 179 569 -16,788 236 - -134 -277 158 - 6,159 16,136 6 2,552 -19,134 320 -788 -296 165 -5,010 -6,049 In thousands of euros The tax exempt results in 2010 and 2009 includes the reversal on the impairment and share in result of ProSiebenSat.1 Media AG. TMG financial statements 2010 67 reconciliation of the effective tax rate The effective tax rate on the result from all activities was negative 7.1% in 2010 (2009: 9.6% negative). The relationship between the tax rate in the Netherlands and the effective tax rate on continued operations is as follows: 2010 2009 Dutch income tax rate 25.5 25.5 Tax effects of: 0.2 - Deviating rates - Tax-exempt results and non-deductible costs -18.5 - Losses realised on liquidation 0.0 - Other effects -0.1 Effective tax rate 7.1 0.0 -26.2 -7.9 -1.0 -9.6 In percentages 12. current tax assets and liabilities The current tax asset of 428 (2009: 352) represents the amount of taxes recoverable in respect of current and prior periods that exceeds payments. The current tax liability of 7,728 (2009: 7,287) represents the income tax to be paid over current and prior years after deduction of payments. 13. discontinued operations In 2010 the activities of Keesing Reference Systems B.V., the SMS-activities of Mobillion and the exhibitions of 402 Events were disposed. The discontinued activities has no significant effect on the result of TMG and therefore not separately classified. sold 2009 The Netherlands • The magazines Elegance, Residence, Hitkrant, JAN, FHM, CosmoGirl! and Motoplus. The TTG titles Privé, Vrouw and Autovisie are continued, because these titles are closely allied with the De Telegraaf daily newspaper and the markets served by that company. These titles are recorded under continued operations. • The 84% interest in Media Librium B.V., market leader in digital out-of-home media. • The 70% interest in DataWire Sport B.V., supplier of sport results and other sport information. terminated 2009 The Ukraine • The portfolio of magazines, including the corresponding websites. The discontinued operations involve Telegraaf Media Nederland, Keesing Media Group and other activities segments. The net cash flow and statement of financial position of discontinued activities relate to the sale of the assets and liabilities of The Netherlands and the Ukraine. TMG financial statements 2010 68 Note 2009 Result of discontinued operations Revenues 7,366 Wages and salaries Compulsory social security contributions and pension schemes Other personnel costs Restructuring costs 27 Amortisation 14 Impairment loss 14 Depreciation 15 Other operating expenses Total expenses 3,462 650 17 78 103 333 6,160 10,803 Result from discontinued operations -3,437 Financial income and expenses Income tax Result from discontinued operations, net of income tax -1,226 -7,649 2,986 Gain on sale of discontinued operations Tax on gain on sale of discontinued operations Net result for the year (realised) 8,072 693 10,365 Basic and diluted earnings per share (EUR) - discontinued operations 0.22 Cash flow of discontinued operations Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Net cash from discontinued operations -5,359 1,453 1,308 -2,598 In thousands of euros overview sold assets and liabilities in 2009: 2009 Intangible assets Property, plant and equipment Non-current financial assets Trade and other receivables Accounts payable and other current liabilities Restructuring provision Interest-bearing loans and other borrowings Net identifiable assets and liabilities -1,274 -937 -102 -1,988 6,360 1,349 628 4,036 Cash received Discontinued cash Net cash inflow Consideration to receive 5,695 -3,659 2,036 In thousands of euros 2,000 TMG financial statements 2010 69 14. intangible assets Trade names and Assets publishingunder con- In thousands of euros Note rights Licences Goodwill Software struction Total Cost Cumulative amortisation Impairment Carrying amount at 1 January 2009 116,942 14,235 6,914 95,793 124,131 63,319 - 60,812 322,284 59,799 20,922 241,563 65,512 34,763 11,192 19,557 312 - - 312 629,181 172,116 39,028 418,037 Movements carrying amount Investments Discontinued operations 13 Amortisation 8, 13 Impairment loss 8, 13 Assets under construction in use Transfer to assets held for sale 21 Total movements 1,429 -850 -7,224 -601 - 223 -7,023 - - -24,094 - - - -24,094 3,649 -348 - -8,032 - 200 -4,531 3,899 -76 -6,346 - 774 -184 -1,933 1,678 - - - -774 - 904 10,655 -1,274 -37,664 -8,633 239 -36,677 Cost Cumulative amortisation Impairment Carrying amount at 1 January 2010 115,365 19,080 7,515 88,770 124,131 87,413 - 36,718 270,868 4,882 28,954 237,032 65,564 36,748 11,192 17,624 1,216 - - 1,216 577,144 148,123 47,661 381,360 Movements carrying amount Investments Acquisitions through business combinations 3 Discontinued operations Amortisation 8, 13 Transfer to assets held for sale Total movements 244 25,101 -2,337 -8,806 - 14,202 - - - -21,403 - -21,403 22 25,884 - - - 25,906 3,471 - -15 -7,441 234 -3,751 818 - - - -234 584 4,555 50,985 -2,352 -37,650 15,538 Cost Cumulative amortisation Impairment Carrying amount at 31 December 2010 138,648 28,161 7,515 102,972 123,667 108,352 - 15,315 296,776 4,884 28,954 262,938 68,929 43,864 11,192 13,873 1,800 - - 1,800 629,820 185,261 47,661 396,898 Trade names and publishing rights concern acquired trade names and publishing rights of including Sky Radio Group and Keesing Media Group. Given the strong alliance between trade names and publishing rights, these items are not listed separately. The amortisation of the trade names (38,800) of Sky Radio Group is 50 years. The amortisation period of the other trade names and publishing rights ranges from 5 to 20 years. In 2010 TMG acquired the trade names and publishing rights of Hyves (25,101). The licences relate to the broadcasting rights of Sky Radio Group and are acquired under contract to 2011. The amortisation period amounts to 5 years. Licences include also the annual contributions of Sky Radio Group to the Telecom agency. The annual payments to the Telecom agency till 1 September 2011 are recognised for an amount of nil (2009: 10,978). The related non-current liability is accounted for in note 25. Goodwill through business combinations mainly relates to Sky Radio Group (97,327), Relatieplanet B.V. (16,302) and Keesing Media Group (74,700) and Hyves (25,791). In addition, 12,000 (2009: 12,000) relates to synergy effects of the Telegraaf Drukkerij Groep B.V. resulting from acquisitions. Goodwill is believed to be indefinite and is therefore not amortised. All intangible assets have been acquired externally. TMG financial statements 2010 70 intangible assets under construction This includes information systems (partly self-developed) at Telegraaf Media Nederland B.V. and the development of a renewed website at Uitgeversmaatschappij De Telegraaf. The information systems will be in use in 2011. impairment test For the impairment test, intangible assets are allocated to cash-generating units, being the lowest level within TMG for which there are separately identifiable cash flows. The carrying value of intangible assets attributed to the cash-generating units as at 31 December 2010 and 2009 is as follows: intangible assets 2010 2009 Telegraaf Media Nederland Sky Radio Group Keesing Media Group Other activities Unallocated 71,685 152,550 105,330 64,062 3,271 396,898 75,850 176,505 111,102 14,842 3,061 381,360 2010 2009 Telegraaf Media Nederland Sky Radio Group Keesing Media Group Other activities Unallocated Total 50,500 97,327 74,700 37,791 2,620 262,938 50,387 97,327 74,700 12,000 2,618 237,032 In thousands of euros Total goodwill In thousands of euros The recoverable amount of the cash-generating units is based on the value in use calculations. Cash-flow projections are based on actual operating results and cash flow forecasts, the budget 2011 and the long-term plans up to and including 2013. The cash flows after 2013, which are extrapolated on the basis of 0% growth, are also taken into account. Radio is excepted where a growth rate of 3% is applied. The forecast cash flows are calculated based on a pre-tax discount rate of 8.5% (2009: 8.3%). The discount rate and growth factors were determined on the basis of the risk profile for TMG as a whole. These assumptions have been applied to all cash-generating units in TMG. The values assigned to the key assumptions represent management’s assessment of future trends in the media industry and are based on both external sources and internal sources (historical data). A modification in assumptions and estimates could have consequences for the recoverable amount of an asset and the expected economic lifetime with an effect on the statement of comprehensive income. In 2010 no impairment on intangible assets occurred (2009: 8,633). An increase of 1% of the WACC would result in an additional impairment loss of 9,288 (2009: 14,054). In 2009 the impairments on intangible assets were related to Telegraaf Media Nederland. TMG financial statements 2010 71 15. property, plant and equipment In thousands of euros Note Other Assets Land and Machines and tangible under con- buildings installations fixed Assets struction Total Cost Cumulative depreciation Carrying amount at 1 January 2009 162,107 118,499 43,608 238,298 213,671 24,627 89,826 72,998 16,828 740 - 740 490,971 405,168 85,803 Movements carrying amount Investments Divestments Discontinued operations 13 Depreciation 8, 13 Impairment loss 8, 13 Assets under construction in use Transfer to assets held for sale 21 Total movements 495 -178 -37 -4,932 - 738 -1,947 -5,861 1,165 48 - -7,400 - - - -6,187 2,211 -10,950 -886 -3,861 -55 - 1,103 -12,438 69 - -14 - - -738 12 -671 3,940 -11,080 -937 -16,193 -55 -832 -25,157 Cost Cumulative depreciation Impairment Carrying amount at 1 January 2010 160,272 122,525 - 37,747 238,697 220,257 - 18,440 66,086 61,641 55 4,390 69 - - 69 465,124 404,423 55 60,646 Movements carrying amount Investments Acquisitions through business combinations 3 Divestments Discontinued operations 13 Depreciation 8, 13 Assets under construction in use Total movements 681 - -6 - -4,432 155 -3,602 1,182 - -224 - -6,719 195 -5,566 1,676 565 -211 -6 -2,501 809 332 1,405 - - - - -1,159 246 4,944 565 -441 -6 -13,652 -8,590 Cost Cumulative depreciation Impairment Carrying amount at 31 December 2010 160,619 126,474 - 34,145 238,653 225,779 - 12,874 61,493 56,716 55 4,722 315 - - 315 461,080 408,969 55 52,056 Property, plant and equipment consist of land and buildings, machines and installations of the printing facility and other equipment. In 2009 the passenger car fleet of TMG is sold to Terberg Leasing B.V. In the same time with the sale to Terberg Leasing B.V. an operational lease agreement was concluded for the passenger car fleet. The value of the land and buildings based on the Real Estate Appraisal Act amounts to approximately 98,393 (2009: 99,371). assets under construction The ‘assets under construction’ item concerns on-going replacement investment at HDC Media B.V. en Telegraaf Drukkerij Groep B.V. The assets will be in use in 2011. TMG financial statements 2010 72 16. investments in associated companies TMG has the following investments in associated companies: 2010 2009 Participations München 6.0% ProSiebenSat.1 Media AG 1) De Nationale Regiopers B.V./C.V. Almere 15.8% Expomedia Plc 2) London 20.0% AM van Gaal Media B.V. Amsterdam 20.0% Media Menu Beheer B.V. / Media Menu C.V. Groningen 33.3% Dutch Creative Industry Fund B.V. Amsterdam 40.0% GroupDeal B.V. Amsterdam 40.0% Lokale Media Partners Vof Amsterdam 25.0% 6.0% 15.8% 20.0% 20.0% 33.3% 40.0% 0.0% 0.0% Location economic interest 6%, voting rights 12% in state of insolvency 2009 en 2010 1) 2) In thousands of euros Carrying amount 199,320 ProSiebenSat.1 Media AG 1) 116 Other 199,436 Total 136,752 224 136,976 summary financial information associated companies - figures are based on 100% participation: In thousands of euros Assets Liabilities Shareholders’ equity Revenues Result 5,290,400 1,025,900 3,000,000 312,700 2009 6,174,735 5,593,902 ProSiebenSat.1 Media AG 580,833 2,760,840 144,538 2010 ProSiebenSat.1 Media AG 1) 1) 6,316,300 Based on preliminary, unaudited, Q4 figures of ProSiebenSat.1 Media AG. ProSiebenSat.1 Media AG TMG has 12% interest (6% economic interest) in the ordinary shares with voting rights of ProSiebenSat.1 Media AG. Although TMG owns less than 20% of the voting shares, it has evident significant influence on operational and financial policy of ProSiebenSat.1 Media AG. TMG has voting rights in the general meeting of shareholders to decide on possible dividend payments as well as one of the nine membership positions in the Supervisory Board. Furthermore TMG has a membership in a subcommittee. Given the governance structure of ProSiebenSat.1 Media AG a substantial number of decisions require approval from the Supervisory Board. The 12% interest in ordinary shares with voting rights of ProSiebenSat.1 Media AG is stated as an associate. TMG received the 12% interest after payment of 377,082. In 2008 an impairment loss has been recorded on the financial instrument of 195,000, corresponding the IFRS guidelines this impairment loss could not be reversed. TMG financial statements 2010 73 the movements in the associated company ProSiebenSat.1 Media AG as from the acquisition per 25 September 2008 is as follow: In thousands of euros Carrying value associate ProSiebenSat.1 Media AG per 25 September 2008 182,082 Share in result associate Impairment associate Carrying value associate ProSiebenSat.1 Media AG per 1 January 2009 -10,200 -99,800 72,082 Reversal of impairment associate Share in result associate Carrying value associate ProSiebenSat.1 Media AG per 31 December 2009 56,000 8,670 136,752 Reversal of impairment associate Share in result associate Carrying value associate ProSiebenSat.1 Media AG per 31 December 2010 43,800 18,768 199,320 The ordinary shares ProSiebenSat.1 Media AG with voting rights (non-listed), owned by TMG, amounted at the end of 2010 and 2009 13,127,832. valuation as per 31 December 2010 At the end of 2010 is concluded that the cashflow 2010 and expected future cashflow 2011 and further, exceed the assumptions applied at the end of 2009. The expected future cash flows of ProSiebenSat.1 Media AG increased sustainable corresponding the estimation of TMG and available market data. After 2011 TMG expects a recurring EBITDA growth rate of 3% for 2012 and 2013 and 1.5% for the years thereafter. The pre-tax discount-rate used is 8.06% whereby an adjustment of the discount rate by 1% will significantly impact the valuation. A discount factor of 25% has been applied to listed preference shares in relation to the ordinary voting shares . TMG concluded that there were objective indications in 2010, to reverse 43,800 of the impairment loss 2008 on the associated company. It is sufficiently certain that the improvements in result and cash flows will sustain. At the end of 2009 56,000 was reversed. In 2010 the impairment loss at the end of 2008 was fully reversed. In accordance with IFRS guidelines, TMG has valued its equity interest in ProSiebenSat.1 Media AG at the higher of the calculated value in use and the fair value. The reversal of the impairment loss is recorded through the statement of comprehensive income. TMG financial statements 2010 74 valuation as per 31 December 2009 When assessing the valuation of the associated company ProSiebenSat.1 Media AG as per 31 December 2009, TMG analysed whether there were indications for an impairment loss or reversal of an impairment loss. The expected future cash flows of ProSiebenSat.1 Media AG increased compared to the prior year. TMG estimated the expected future cash flows of ProSieben Sat.1 Media AG based on assumptions of available market data. After the transition year 2010, TMG expects a recurring EBITDA growth rate of 5% for 2011 and 2012 and 1.5% for the years thereafter. The pre-tax discount rate used is 9.84%, whereby an adjustment of the discount rate by 1% will significantly impact the valuation. A discount factor of 25% has been applied to listed preference shares in relation to the ordinary voting shares. TMG concluded that there were objective indications, to reverse 56,000 of the impairment loss 2008 on the associated company, in 2009. It is sufficiently certain that the improvements in result and cash flows will sustain. In accordance with IFRS guidelines, TMG has valued its equity interest in ProSiebenSat.1 Media AG at the higher of the calculated value in use and the fair value. The reversal of the impairment loss is recorded through the statement of comprehensive income. other investments in associated companies The 15.8% interest (2009: 15.8%) in the Nationale Regiopers is a partnership with other regional newspaper publishers in the Netherlands for advertising sales. As a consequence of the economic interest and the membership in the Supervisory Board of Nationale Regiopers, TMG has significant influence. As a consequence of the worldwide weakening of the macroeconomic environment, the results of Expomedia Plc were in 2008 under pressure, therefore refinancing of the business in December 2008 could not be realised. Since Devember 2008 Expomedia Plc is in state of insolvency. In January 2009 the firm is in receivership. TMG’s has valued its 20% interest in Expomedia Plc at nil in late 2008. TMG’s share in the total profit or loss from the above-mentioned associated companies over 2010 amounts to 18,375 (2009: 8,267). Loss making associated companies are valued at nil. All negative results of associates are recorded in the statement of comprehensive income. 17. other receivables 2010 2009 Non-current receivables Prepaid operational lease Non-current receivables Total 2,537 1,426 3,963 2,687 3,220 5,907 2010 2009 Raw materials Auxiliary materials Total 4,594 2,807 7,401 12,948 1,788 14,736 In thousands of euros 18. inventories In thousands of euros No impairments are stated on inventories in 2010 and 2009. The carrying value is considered to reflect the fair value. TMG financial statements 2010 75 19. trade and other receivables 2010 2009 Trade receivables Other receivables Prepayments and accrued income Total 60,578 2,962 17,015 80,555 64,656 4,773 11,369 80,798 In thousands of euros Trade receivables are shown net of impairment losses. During the current year, such losses amounted to 4,022 for bad debts (2009: 3,070). For more information see note 30, Financial risk management. fair value For current receivables, the nominal value is considered to reflect the fair value. 20. cash and cash equivalents 2010 2009 Bank Call deposits 31,681 7,903 39,584 56,506 56,506 In thousands of euros Total At balance sheet date 7,903 was placed in deposits. The remaining term of the the deposits is 1 month maximum. The fair value is deemed equal to the nominal value. 21. assets and liabilities held for sale 2010 2009 Assets Intangible assets Property, plant and equipment Inventories Trade and other receivables Cash Total - 11,728 - - - 11,728 253 11,884 59 877 1,809 14,882 Liabilities Interest-bearing loans and borrowings Accounts payables and other current liabilities Restructuring provision Total - - - - 95 2,410 78 2,583 In thousands of euros The property, plant and equipment concern company premises of subsidiaries classified as held for sale. TMG expects the sale of the company premises as highly probable. Sale in the last two years was not realised despite sufficient interest. Keesing Reference Systems B.V. was classified as assets and liabilities held for sale at the end of 2009 and was sold in January 2010. TMG financial statements 2010 76 22. shareholders’ equity issued capital At 31 December 2010 the authorised share capital comprised 99,999,040 ordinary shares, 100,000,000 preference shares and 960 priority shares, which were issued and paid up as follows: Number of shares Ordinary shares Priority shares Ordinary shares Priority shares 47,750,000 - 47,750,000 960 - 960 50,000,000 2,250,000 47,750,000 960 960 On issue as at 1 January Shares withdrawn On issue at 31 December 2010 2009 All shares have been paid up and have a nominal value of € 0.25. No preference shares have been issued. The holders of priority shares receive a dividend of five percent of the nominal amount of the shares. The remaining profit is at the disposal of the meeting of shareholders. The holders of ordinary shares and priority shares are entitled to cast one vote per share during the meeting. Each TMG shareholder has access to the meeting of shareholders and the right to cast a vote. A summary of the legal and statutory provisions relating to the appropriation of the profit and the other statutory rights associated with the ordinary shares, priority shares and preference shares is included under ‘Other Information’ as from page 102. The right to issue TMG preference shares is granted by Stichting Beheer van Prioriteitsaandelen Telegraaf Media Groep N.V. to Stichting Preferente aandelen Telegraaf Media Groep N.V. TMG has a call option to issue preference shares, which will then be managed by Stichting Preferente aandelen Telegraaf Media Groep N.V. At present, no preference shares have been issued. The provisions in the articles of association governing remuneration of preference shares are in line with the market. The option to issue preference shares is valued at nil. translation reserve The translation reserve is realised in 2009 with the formal termination of the activities in Sweden and the Ukraine. The translation reserve comprises all the foreign exchange differences arising from the translation of the financial statements of foreign operations in Sweden and the Ukraine. repurchased shares At the end of 2010 TMG had no repurchased own ordinary shares. The repurchased shares 2008 were withdrawn in August 2009. The cost of in 2008 repurchased ordinary shares and in 2009 withdrawn ordinary shares was 47,030. TMG financial statements 2010 77 23. dividend in the year under review TMG paid out the dividend over the prior financial year determined by the meeting of shareholders: 2010 2009 € 0.35 per (depositary receipt for an) ordinary share (2009: € 0.35) 16,713 16,713 In thousands of euros As regards the 960 priority shares, 5% of the nominal amount was paid out as dividend. after 31 December 2010, the Executive Board made the following dividend proposal for 2010: 2010 € 0.45 per (depositary receipt for an) ordinary share (2009: € 0.35) 21,488 In thousands of euros The dividends have not been provided for and there are no income tax consequences. 24. earnings per share basic earnings per share The calculation of the basic earnings per share as at 31 December 2010 is based on the result attributable to ordinary shareholders of 81,826 (2009: 70,505) and a weighted average number of ordinary shares which has been outstanding during 2010 of 47,750,000 (2009: 47,750,000), as shown below: 2010 2009 Earnings per share Result attributable to equity holders of ordinary shares in Telegraaf Media Groep N.V. Weighted average number of ordinary shares Basic earnings per share (EUR) 81,826 47,750,000 1.71 70,505 47,750,000 1.48 In thousands of euros diluted earnings per share The calculation of the diluted earnings per share at 31 December 2010 is based on the result attributable to ordinary shareholders of 81,826 (2009: 70,505) and a weighted average number of ordinary shares, after adjustment in line with all potential diluting effects on the ordinary shares, which has been outstanding during 2010, of 47,750,000 (2009: 47,750,000). No shares were diluted in 2009 and 2010. TMG financial statements 2010 78 25. interest-bearing loans and borrowings This note provides information on the contractual terms of TMG’s interest-bearing loans and borrowings. For more information about TMG’s exposure to interest rate and foreign currency risk, see note 30. In thousands of euros 2010 Total Current Non-current Interest-bearing loans Other financing Total 10,638 7,409 18,047 - 1,393 1,393 10,638 6,016 16,654 In thousands of euros 2009 Totaal Current Non-current Interest-bearing loans Other financing Total 11,166 19,280 30,446 - 11,828 11,828 11,166 7,452 18,618 Non-current interest-bearing loans and borrowings of 1,393 (2009: 11,828) are classified as current liabilities. Year of Carrying maturity amount 2010 Carrying amount 2009 Interest-bearing loans Shareholders loan Veronica Holding B.V. 8,400 - 10,638 to Sienna Holding B.V. EUR 4.1% (2009: 4.1%) Other loans EUR - - - - Total 10,638 10,219 947 11,166 Other financing Non-current liabilities - - - - Sky Radio Group licences EUR Acquisition payables EUR - - - 7,365 Other non-current liabilities EUR - - - 44 Total 7,409 10,978 8,261 41 19,280 In thousands of euros Currency Nominal interest rate Nominal value terms and debt repayment schedule For all loans, the effective interest is equal to the nominal interest. other financing Non-current liabilities relating to the licences of Sky Radio Group involve annual payments to the Telecom agency till 1 September 2011. Besides the payment of a one-time fee to acquire the licensing rights, Sky Radio Group has also an obligation to make annual payments to the Telecom agency. The annual payments to Telecom are listed under intangible assets as nil (2009: 10,978). The intangible assets are amortised over the contractual period. The interest payments associated with financial liabilities are recorded as financial charges, while the annual payment is deducted from the non-current liability. The fair value of the liabilities does not differ materially. TMG financial statements 2010 79 The acquisition payables includes liabilities concerning the acquisition of Nobiles Media B.V., WebRegio B.V. and Sky Radio Group. The management shares Sky Radio Group comprise a share based compensation. The amount is not significant. Sky Radio Group management has a put option to sell the shares on due date to TMG. The fair value share price has been determined in accordance with a pre-determined formula. At the end of 2010 the current part amounts 1,393 (2009: 850). In 2010 the last tranche of the management shares Keesing Media Group was bought by TMG against excerise price. 26. post-employment benefit liabilities 2010 2009 2008 2007 2006 Present value of unfunded obligations Present value of funded obligations Present value of obligations 5,764 35,336 41,100 6,057 37,163 43,220 7,221 37,374 44,595 9,814 38,481 48,295 23,055 23,975 47,030 Fair value of plan assets Present value of net obligations -17,452 23,648 -16,135 27,085 -15,745 28,850 -17,337 30,958 -20,498 26,532 Unrecognised actuarial gains and losses Recognised liability for defined benefit obligations -312 -153 527 -1,274 -1,552 23,336 26,932 29,377 29,684 24,980 2010 2009 2008 2007 Experience adjustments arising on plan liabilities Experience adjustments arising on plan assets Adjusted assumptions plan liabilities 406 - -1,316 -4,381 - 3,980 1,130 - 1,894 3,644 - 929 In thousands of euros In thousands of euros defined contribution plan The pension schemes of Sky Radio Group and Keesing Media Group and a part of the Amsterdam and Alkmaar companies of TMG is executed by Stichting-Telegraafpensioenfonds 1959. As of 1 January 2008 the pension scheme of Keesing Media Group and as of 1 October 2009 the average salary regulation of Sky radio Group is executed by Stichting-Telegraafpensioenfonds 1959. The transfer has no significant financial consequences for TMG. gross commitment for defined benefit pension rights TMG contributes to a defined benefit plan on the basis of which a part of employees have (additional) pension rights. In determining the provision, account is taken of other employee schemes including allowances for the healthcare costs of retired employees, early retirement and anniversary schemes. The release of provisions (or investments) through discontinued activities in 2006 came about due to the sale of the Limburg activities. In 2008, the scheme for pension premium supplementary (including the risk) at disability is executed by Stichting-Telegraafpensioenfonds 1959, for which a release in the liability (or investments) came about. TMG financial statements 2010 80 the principle actuarial assumptions at the balance sheet date are 2010 2009 Discount rate at 31 December Expected return on plan assets at 31 December Future salary increases Adjustment for inflation Increase in social security benefits 3.8% 5.4% 1.0% 2.0% 2.0% 4.9% 5.5% 1.5% 2.0% 1.5% In weighted averages The expected return on plan assets is the weighted average expected return, based on the expected investment mix of shares (40%), and fixed-interest securities (60%). The actual return in 2010 amounted 8.7% (2009: 13.3%) on investments at StichtingTelegraafpensioenfonds 1959. movements in obligation for defined benefit pension schemes Note 2010 2009 As at 1 January 43,220 44,595 Service costs Past service costs Interest expenses From restructuring provision 27 Actuarial losses (gains) Release of provisions due to scheme reduction Payments As at 31 December 910 125 1,683 3,651 854 -119 -9,224 41,100 1,045 -432 2,101 6,602 403 -2,635 -8,459 43,220 2010 2009 As at 1 January 16,135 15,745 Contributions Expected return Actuarial gains (losses) Release of investments due to scheme reduction Payments As at 31 December 11,213 661 -1,367 34 -9,224 17,452 11,659 707 -2,661 -856 -8,459 16,135 In thousands of euros movements in fair value of plan assets In thousands of euros TMG financial statements 2010 81 the plan assets consist of the following: 2010 2009 Property shares Shares Bonds Deposits Plan assets with insurance companies As at 31 December 704 3,847 6,403 250 6,248 17,452 446 3,491 6,273 16 5,909 16,135 In thousands of euros The increase in changes of the liabilities (or investments) is caused by new early retirement schemes from the restructuring provision. The following funds, which also qualify as defined benefit schemes, have informed TMG that they are not able to provide us with any details for the calculation of (our share in) surpluses or deficits: • Pensioenfonds Grafische Bedrijven (pension scheme for employees in the printing and allied trades). • Stichting bedrijfstakpensioenfonds voor het beroepsvervoer over de weg (pension scheme for the goods haulage sector). • Stichting vrijwillig vervroegde uittreding voor het beroepsgoederenvervoer over de weg en de verhuur van mobiele kranen (early retirementscheme for employees in the goods haulage sector and the rental of mobile cranes). • Stichting Prepensioenfonds voor het beroepsgoederenvervoer over de weg en de verhuur van mobiele kranen (pre-pension scheme for employees in the goods haulage sector and the rental of mobile cranes). These plans qualify as defined pension schemes but are processed as defined contribution plans. TMG is not responsible for any shortfall in an early retirement/pension plan, nor is it required to make up any shortfall. The referenced sectoral plans in general had a coverage ratio of below 105% at the end of 2009. Foundations concerned prepared a recovery plan and submit it to DNB. The coverage ratio of the Pensioenfonds Grafische Bedrijven was at end of 2010 approximately 4% above the minimum set by law of 105%. The possibility that the future pension contributions for the relevant schemes will be increased cannot be precluded. TMG estimates the contributions to be paid under the defined benefit schemes during 2011 at 8,490 (2010: 8,311), as far as can be estimated reasonably. employee benefit expenses in the statement of comprehensive income: Note 2010 2009 Pension costs allocated to the year of service Past service cost Interest on the liability Expected return on plan assets Amortisation unrecognised gains/(losses) Total contribution to defined benefit schemes 910 125 1,683 661 270 3,649 1,045 -432 2,101 707 842 4,263 Result on account of curtailment/termination Contribution to defined contribution schemes Total 7 -153 15,083 18,579 -1,779 16,365 18,849 In thousands of euros TMG financial statements 2010 82 27. restructuring provision Note 2010 2009 Balance as at 1 January 27,164 54,212 Provisions made during the financial year 7 To post-employment benefit liabilities 26 Release 7 Discontinued operations 21 Provisions used Balance as at 31 December 7,690 -3,651 -4,221 - -10,797 16,185 5,385 -6,602 -78 -25,753 27,164 Non-current Current Total 1,973 14,212 16,185 7,657 19,507 27,164 In thousands of euros Separate restructuring plans were developed for the TMG-group and TMG Distributie B.V. in the fall of 2008. The restructuring plans are in principle approved by the CWC, but the sub-plans must still be submitted to the Works Councils of the relevant subsidiaries. The restructuring plans have been communicated to TMG employees in various ways thereby creating the justified expectation among employees that the reorganisation will in fact be carried out. The reorganisation has already been initiated for various components following approval by the Works Council. Largely all parts of the restructuring plan are, after approval WC, finished. TMG envisions a reduction of 600 FTEs on the basis of the restructuring plans, a significant portion is effected in 2009 and 2010. Additional is in 2010 provided for the discontinuance of the transport activities, Landelijke Media and Telegraaf Media ICT. In 2009 a restructuring provision is been made caused by the termination of the sunday edition of De Telegraaf for an amount of 5,385. The restructuring provision concerns the commitments related to job placement services and the discharge of employees at Telegraaf Tijdschriften Groep B.V., Holland Combinatie B.V., Uitgeversmaatschappij De Telegraaf B.V., HDC Media B.V., Telegraaf Drukkerij Groep B.V., TMG Distributie B.V. and staff departments. A change in assumptions and estimates could impact the actual cost of the reorganisation, including the method of discharge (buyout or job placement services) and timing. The current portion amounts to 14,212 (2009: 19,507). TMG financial statements 2010 83 28. deferred tax assets and liabilities the deferred tax assets and liabilities recognised can be allocated as follows at the end of the financial year: In thousands of euros 2010 Assets Liabilities Balance Intangible assets Property, plant and equipment Post-employment liabilities schemes Provisions Carry-forward loss compensation Net tax asset/liability (-) - - - - 4,632 4,632 -26,804 -747 -71 -69 - -27,691 -26,804 -747 -71 -69 4,632 -23,059 Assets Liabilities 2009 Balance Intangible assets Property, plant and equipment Post-employment liabilities schemes Provisions Carry-forward loss compensation Other items Net tax asset/liability (-) - - 963 - 9,670 - 10,633 -24,220 -699 - -70 - -713 -25,702 -24,220 -699 963 -70 9,670 -713 -15,069 In thousands of euros The carry-forward loss compensation is expected to be fully compensated with future profits within the fiscal unity TMG. unrecognised deferred tax assets in de statement of financial position With regard to (start-up) losses at a few subsidiaries, no deferred tax assets were recognised on the balance sheet, because the expectation is that these will not be realised in short time. At the end of 2010, unrecognised deferred tax assets amounted to 1,504 (2009: 1,368). The unused losses in the Netherlands remain within the limit of 9 years. The decrease is mostly caused by discontinued operations. TMG financial statements 2010 84 movement in temporary differences during the year In thousands of euros Balance 1 January 2010 Recognised in result -24,220 -699 963 -70 9,670 -713 -15,069 3,094 -48 -1,034 1 -5,038 713 -2.312 Balance 1 January 2009 Recognised in result -30,161 -1,175 1,447 -738 7,887 -443 6,076 279 -484 668 1,794 -323 - 8,010 -135 197 - - -11 53 -57 47 -24,220 -699 963 -70 9,670 -713 -15,069 2010 2009 Subscriptions paid in advance Other amounts paid in advance Trade payables to suppliers Employee benefits payable (holidays/-allowance and profit share) Other taxes and social security premiums Other liabilities and deferred income Total 48,770 1,750 21,808 28,500 21,098 48,216 170,142 49,202 2,963 25,556 26,973 19,465 49,226 173,385 Intangible assets Property, plant and equipment Post-employment liabilities schemes Provisions Carry-forward loss compensation Other items Net tax asset/liability (-) In thousands of euros Intangible assets Property, plant and equipment Post-employment liabilities schemes Provisions Carry-forward loss compensation Other items Reclassification assets held for sale Net tax asset/liability (-) 29. 57 -23,126 (De-) Balance 31 Consolidated December 2010 -5,678 - - - - - -5,678 -26,804 -747 -71 -69 4,632 -23,059 (De-) Balance 31 Consolidated December 2009 accounts payable and other current liabilities In thousands of euros Other liabilities and deferred income consist of (estimates for) editorial and distribution expenses, other general expenses, returned products and commissions to be paid. The fair value of the liabilities does not differ from the nominal value recognised here. TMG financial statements 2010 85 30. financial risk management TMG recognises the market, credit, currency and interest rate risk involved in regular business operations. The trends in the price of paper can also have a substantial effect on the business result. These risks have a slight material impact on the financial position of TMG, therefore internally a high level sensitivity analysis is performed. The Executive Board has overall responsibility for the establishment and oversight of TMG’s Risk control framework. The Executive Board makes an annual assessment of the strategic risks at both the central and decentralised level and evaluates the developments and monitoring of the strategic risks quarterly. TMG’s risk management policies are established to identify and analyse the risks faced by TMG, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and TMG’s activities. TMG, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. Group Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Executive Board and Supervisory Board. market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and share prices will affect TMG’s income or the value of its investment of financial instruments in a negative way. The objective of market risk management is to manage and control market risk exposures within acceptable ranges. TMG has a policy of not using any forward, swap and/or future contracts. In 2010 and 2009 no interest-rate swap contracts were arranged. TMG also has the policy of restricted use of external financing, except for important acquisitions. See further note on interest-rate risk. The current economic conditions were in 2009 for TMG reason to change future expectations on results. As a consequence of these assumptions impairments took place on assets in 2009. credit risks Credit risk arises principally from TMG’s receivables if a customer fails to meet its contractual obligation. The (industry-wide) terms of payment applied, the relatively limited dependence on individual customers and the historical payment behaviour of our customers make it unnecessary to use financial instruments to limit this risk. The credit risk is principally concentrated in The Netherlands. The credit risk is unchanged compared to 2009. impairment losses Customers are required to pay within pre-set time limits. Exceeding the deadline results in service deliveries being halted. Customers are primarily media outlets, companies and subscribers. The aging of trade receivables at balance sheet date was: In thousands of euros Total Not past due 68,036 72,978 44,956 48,341 Balance as at 31 December 2010 Balance as at 31 December 2009 Past due 30 Past due 60 and 60 days and 90 days 14,276 12,808 2,292 4,222 Past due 90 Past due 180 and 180 days and 360 days 1,782 2,936 2,265 3,043 More than 360 days 2,465 1,628 TMG financial statements 2010 86 The difference on the balance as at 31 December 2009 and Note 19 is caused by discontinued operations. TMG has established an impairment risk provision for estimated losses on trade receivables. The impairment is based on payment arrears and the stipulated deadlines. Changes in the impairment provision for trade receivables during the year were as follows: 2010 2009 Balance as at 1 January 7,493 8,599 Additions Use Balance as at 31 December 4,022 -4,057 7,458 3,172 -4,278 7,493 In thousands of euros currency risk TMG incurs currency risks to a very limited extent due to activities outside the euro zone, namely Denmark. The activities in Sweden and the Ukraine were discontinued in 2009. The net cash in and outflows of entities and their timing is such that no significant currency positions are created as a result. Sensitivity of TMG to foreign exchange rates is therefore very small. At the end of 2010 TMG had no forward contracts. TMG has the policy of responding to significant currency exposures by concluding forward contracts to cover the risks over a period of one year. For an individual entity within TMG, a currency exposure is deemed to be significant if the size of revenue in any calendar month exceeds 500, and the cash flow has a probability of more than 50%. interest-rate risk The most relevant interest-rate risk for TMG involves a mismatch between interest payments and the cash flows from financed assets. However, TMG is on balance a recipient of interest since the net debt position is more than compensated by the interestbearing cash and cash equivalents. Given the limited size of the debt position, TMG is hardly affected by interest-rate fluctuations, nor do they have any significant influence on TMG’s financial position and result. other market-price risk Of the commodities traded on the global market, TMG only purchases paper, but to the extent that fluctuations in its price can have a substantial impact on the business result. TMG has decided not to hedge the risk of increasing paper prices because (a) TMG already has long-term contracts with paper suppliers and (b) large manufacturers of paper have taken up positions on the futures market making it insufficiently liquid to hedge significant volumes in a manner that would be attractive to TMG. liquidity risk TMG has hardly any liquidity risk given the limited financial liabilities and the liquidity position. Liquidity risk is the risk that TMG will not be able to meet its financial obligations as they fall due. The aim of liquidity risk management is to maintain sufficient liquidity in order, as far as possible, to cover existing and future financial liabilities under normal and difficult circumstances and without incurring unacceptable losses or damaging the reputation of TMG. At balance sheet date a 45,000 euro overdraft facility that is unsecured, unrestricted and without expiry date. Interest would be payable at the EURIBOR one-month rate plus 1.25 basis points, on the balance-sheet date 559 (2009: 590) of this credit line was being used. maturity profile of TMG’s financial liabilities: In thousands of euros Interest-bearing loans and borrowings Trade and other payables Total Total 18,047 170,142 188,189 6 months or less 6 - 12 months 1 - 2 years 2 - 5 years More than 5 years 1,393 158,186 159,579 - 11,956 11,956 243 - 243 16,378 - 16,378 33 33 TMG financial statements 2010 87 capital management The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of business. The Executive Board monitors the return of capital, which TMG defines as the net result divided by total shareholders’ equity, excluding non-controlling interests. The Executive Board also monitors the level of dividends to ordinary shareholders. From time to time TMG purchases its own shares on the market. Buy and sell decisions are made on a specific transaction basis by the Executive Board within limits set by the Supervisory Board and the annual meeting of shareholders; TMG does not have a defined share-buy-back plan. Neither TMG nor any of its subsidiaries are subject to externally imposed capital requirements. 31. off balance sheet liabilities non-cancellable off balance sheet operational leases expire as follows: 2010 2009 < 1 year 1-5 years > 5 years Total 20,270 17,247 25 37,542 14,072 31,919 272 46,263 In thousands of euros In the financial year 2010, an expense of 7,352 (2009: 7,739) was included in the statement of comprehensive income for operational leasing. Telegraaf Drukkerij Groep B.V. has agreements with paper suppliers for which the liabilities within 1 year amount to 24,875 and within 1 and 5 years amount to 3,750. TMG has a long term agreement for printing puzzle magazines and newspapers with a third party. The yearly purchase obligation is 8,350. Within the framework of the termination of non-core activities, Telegraaf Media Groep B.V. entered into an agreement with Atos Origin concerning the subcontracting of the generic ICT services of Telegraaf Media ICT B.V.. The total value of the contract for the remaining period till 31 December 2011, is expected to be 9,000 (2009: 19,000). litigation At Franken B.V., a former subsidiary of Telegraaf Media Groep, a litigation has been started in which former employees of Franken B.V. sue TMG for supplementary payment. The litigation is not finished. TMG provided for this litigation. A number of TMG group companies face legal proceedings. These cases primarily concern employment relations, disputes and rectifications of publications. We have every faith in a positive outcome in the case of all these proceedings and do not expect them to have a significant effect on TMG’s consolidated financial position. TMG financial statements 2010 88 32. investment commitments In the financial year 2009 and 2010, TMG did not enter into significant agreements for development of software, or other investments. 33. contingent liabilities At the end of 2010 bank guarantees of 852 (2009: 696) were issued to cover rental agreements. 34. related parties identity of related parties TMG has a related party relationship with its subsidiaries, associates (see section 16 of the notes), joint ventures (see section 35 of the notes), Stichting-Telegraafpensioenfonds 1959 and Stichting Preferente Aandelen Telegraaf Media Groep N.V. A list of Telegraaf Media Groep N.V. participations has been published at the Chamber of Commerce in Amsterdam. The following shareholders have, at 31 December 2010 following the AFM register, an interest of more than 20% in TMG’s capital: • Stichting Administratiekantoor Telegraaf Media Groep N.V. • VP Exploitatie N.V. • Cyrte Investments B.V. transactions with Executive Board and Supervisory Board For a specification of the remunerations per manager please refer to the company statement of comprehensive income (Note 8). The note on related parties refers to TMG senior management, namely the Executive and Supervisory Boards. The total remuneration is included in Personnel costs (see section 7 of the Notes to the consolidated financial statements). other related party transactions Transactions with related parties relate to associated companies (revenues 2010: 15,301; revenues 2009: 7,525). Receivables with related parties were 5,030 (2009: 2,716) as at 31 December for which a provision is made of 200 (2009: 1,324). In 2010 TMG paid 11,792 (2009: 12,317) premium to Stichting-Telegraafpensioenfonds 1959. Including employees contributions the premium amounted to 17,518 (2009: 19,000). All outstanding balances with these related parties are priced on an arm’s length basis and are settled in cash within six months of the reporting date. None of the balances is secured. TMG financial statements 2010 89 35. interests in joint ventures the group has an interest in the following joint ventures: 2010 2009 Participations 49.0% TTG Sulake B.V. Amsterdam Adventure Holding B.V. Zeist 33.3% JAAP.NL B.V. 1) Amsterdam 100.0% 49.0% 33.3% 50.0% 1) Location from April 2010 100% consolidated. the consolidated financial statements include the following items which correspond to TMG’s interest in the joint venture’s assets and liabilities, revenues and costs (proportionate consolidation): 2010 2009 Non-current assets Current assets Non-current liabilities Current liabilities Balance of assets and liabilities 55 1,468 -1,634 -590 -701 72 1,025 -1,418 -699 -1,020 2010 2009 Revenues Expenses Financial income and expense Income tax Net result 2,262 -1,170 -92 -292 708 1,704 -1,259 -83 -183 179 In thousands of euros In thousands of euros 36. subsequent events Reference is made to ‘Other Information’ for an explanation on the subsequent events. company financial statements 2010 TMG financial statements 2010 91 company statement of comprehensive income 2010 2009 Result of subsidiaries (after tax) 85,743 70,787 Other income and expense (after tax) Net result for the year (realised) -3,917 81,826 -282 70,505 Other comprehensive income for the year, net of tax Total comprehensive income for the year - 81,826 594 71,099 In thousands of euros TMG financial statements 2010 92 company statement of financial position as at 31 December, before approportion of result In thousands of euros Note 2010 2009 non-current assets Intangible assets Goodwill 2 28,390 Non-current financial assets 460,293 Subsidiaries Deferred tax assets 3,600 Total non-current financial assets 3 463,893 492,283 Total non-current assets 2,599 344,902 10,004 354,906 357,505 CURRENT ASSETS Subsidiaries 4 Total current assets Total assets 354,517 354,517 396,443 396,443 846,800 753,948 shareholders’ equity Issued capital Other reserves Retained earnings Total shareholders’ equity 5 11,938 437,311 81,826 531,075 11,938 383,519 70,505 465,962 NON-CURRENT liabilities Interest-bearing loans 6 - 2,103 current liabilities Subsidiaries 239,690 Borrowings and other financing 66,704 Accounts payable and other current liabilities 9,331 Total current liabilities 315,725 315,725 Total liabilities 846,800 Total shareholders’ equity and liabilities 255,123 24,953 5,807 285,883 287,986 753,948 TMG financial statements 2010 93 notes to the company financial statements contents page note 94 94 94 95 95 95 95 96 97 1. 2. 3. 4. 5. 6. 7. 8. 9. Significant accounting policies Intangible assets Non-current financial assets Receivables Shareholders Equity Non-current liabilities Off-balance sheet liabilities Remuneration of Executive Board and Supervisory Board members Service fee external auditor TMG financial statements 2010 94 1. significant accounting policies general The company financial statements have been prepared in accordance with the provisions in Part 9, Book 2 of the Netherlands Civil Code. As regards determining the principles for the valuation of assets and liabilities and the result of its company financial statements, Telegraaf Media Groep N.V. uses the option provided for in Article 2:362, paragraph 8 of the Netherlands Civil Code. This means that the principles for the valuation of assets and liabilities and the determination of the result (hereinafter to be referred to as the ‘accounting principles’) of the company financial statements of Telegraaf Media Groep N.V. are the same as those used for the consolidated IFRS financial statements. Investments in subsidiaries, in which TMG has significant influence, are accounted for in accordance with the equity method. These consolidated IFRS financial statements have been prepared in accordance with the standards of the International Accounting Standards Board and approved by the European Union. Please refer to pages 50 to 59 for a description of these principles. Share in result of subsidiaries, joint ventures and associates includes the share of Telegraaf Media Groep N.V. in the results of these participations. Results on transactions which have involved the transfer of assets and liabilities between Telegraaf Media Groep N.V. and its participations and between participations themselves have not been processed in so far as these cannot be regarded as having been realised. A reference is made to the Notes to the consolidated financial statements, unless otherwise stated. In conformity with article 402, Book 2 of the Netherlands Civil Code, a condensed statement of comprehensive income is included in the company financial statements of Telegraaf Media Groep N.V. 2. intangible assets 2010 2009 Goodwill Cost Impairment Carrying amount at 1 January 3,300 701 2,599 11,979 8,679 3,300 Movements carrying amount Investments Impairment Total movements 25,791 - 25,791 -701 -701 Cost Impairment Carrying amount at 31 December 29,091 701 28,390 3,300 701 2,599 2010 2009 Subsidiaries Share in equity 460,293 344,902 3,600 10,004 463,893 354,906 In thousands of euros 3. non-current financial assets In thousands of euros Deferred tax assets Total TMG financial statements 2010 95 movements in non-current financial assets can be shown as follows: In thousands of euros Subsidiaries Deferred tax assets Total Carrying amount at 1 January 2010 344,902 10,004 354,906 Movements in carrying amount Share in result of investments Investments Movements in temporary differences during year Intercompany Carrying amount at 31 December 2010 85,743 27,443 - 2,205 460,293 - - -6,404 - 3,600 85,743 27,443 -6,404 2,205 463,893 2010 2009 Subsidiaries Other receivables and accrued income Total 354,481 36 354,517 396,443 396,443 4. receivables In thousands of euros 5. shareholders’ equity For the consolidated statement of changes in equity see page 48 and note 22 of the consolidated financial statements. The legal translation reserve amounted to nil (2009: nil). The translation reserve caused by discontinued activities in Sweden and the Ukraine is reported in the 2009 statement of comprehensive income. 6. non-current liabilities The loans in 2009 were related to management shares with regard to Sky Radio Group and Keesing Media Group. Further details are included in the notes to the consolidated statement of financial position (Note 25). 7. off-balance sheet liabilities joint and several liability and guarantees Pursuant to Article 403, paragraph 1, subparagraph f of Book 2 of the Dutch Civil Code, the company holds itself liable for the debts arising from the legal transactions of the Dutch group companies in which it holds an interest of 95% or more, with the exception of Holland Combinatie Participaties B.V. A list of group companies has been filed with the Chamber of Commerce and will be made available by the company upon request. fiscal unity TMG, along with almost all of its wholly-owned subsidiaries in the Netherlands, is a single fiscal unity for both income tax and VAT. Within the fiscal unity, TMG companies are jointly and severally liable for tax liabilities to the Tax Authorities. TMG financial statements 2010 96 8. remuneration of executive board and supervisory board members remuneration policy for the Executive Board During the extraordinary general meeting of shareholders held of TMG N.V. on 7 December 2010, the amended remuneration policy for the Executive Board has been approved. The remuneration policy is available on the website of TMG (www.tmg.nl). The remuneration structure is unchanged and consists of a fixed and variable element. The fixed element consists of the annual salary and the vacation allowance. The variable component consists of a) the existing profit sharing scheme for all Telegraaf Media Groep N.V. employees and b) an individual bonus. The individual bonus varies between 0 and 2 monthly salary payments; 60% is determined on the basis of the degree to which the collective targets of the Executive Board are realised and 40% on the basis of the degree to which the individual targets of the members of the Executive Board are realised. In addition, the Supervisory Board may decide to award an additional bonus and shall render account of any such award at the annual general meeting of shareholders. In setting the remuneration for the members of the Executive Board, the Supervisory Board takes various factors into account within the framework of the general remuneration policy, such as the required competences, skills, as well as the responsibilities of the members of the Executive Board. remuneration The achieved results in 2010 substantiate a payment of variable compensation on the basis of the collective targets and on the basis of personal objectives. The Supervisory Board decided to pay a variable bonus equal to two monthly salary payments and an 1.8% adjustment for inflation was applied to the fixed salaries of each member of Executive Board effective 1 January 2011. Included in the periodical remuneration is a variable component over the former financial year for Mr. Swartjes of 79,764 (2009: nil) and Mr. Arp 72,876 (2009: nil) and Mr. Morley 72,876 (2009: nil). The remuneration of the Supervisory Board is based on indexation of retail price all families (2000=100) as of 1 January 2007. remuneration of the Executive Board In euros 2010 Deferred remuneration Members of the Executive Board A.J. Swartjes 596,631 186,195 526,112 F.Th.J. Arp 545,111 168,517 471,778 P. Morley MSc. 545,111 176,278 471,778 186,116 168,437 176,278 Periodical remuneration Deferred remuneration 2009 Periodical remuneration remuneration of the Supervisory Board In euros Periodical remuneration 2010 2009 Periodical remuneration Deferred remuneration Members of the Supervisory Board A.J. van Puijenbroek 31,580 - 31,213 Dr. W. van Voorden*** 26,252 - 25,949 H.L. Weenen* 15,314 - 25,949 Mrs. M. Tiemstra 26,252 - 25,949 L.G. van Aken** - - 8,606 J.G. Drechsel 26,252 - 25,949 D.H.H.D. Ropers 18,198 - - - * Mr. H.L. Weenen has decided to resign from the Board effective on 1 August 2010. ** Mr. L.G. van Aken passed away on 7 April 2009. ***Mr. W. van Voorden has decided to resign from the Board effective on 1 March 2011. Deferred remuneration TMG financial statements 2010 97 share ownership at 31 December 2010 Members of the Executive Board A.J. Swartjes F.Th.J. Arp P. Morley MSc. Members of the Supervisory Board A.J. van Puijenbroek Dr. W. van Voorden Mrs. M. Tiemstra J.G. Drechsel D.H.H.D. Ropers 9. Depositary receipts Shares for shares - - - 646 - 64 - - - - - service fee external auditor the service fee recognized in the financial statements for the external auditor Deloitte Accountants B.V. pursuant to art. 382a BW2 is as follows: 2010 2009 Audit of the Financial statements Other assurances services Tax services Other-non-audit services Total 427 40 - - 467 549 98 3 650 In thousands of euros In 2009 KPMG Accountants N.V. was the external auditor. Amsterdam, 10 March 2011 Executive Board H.M.P.van Campenhout, chairman A.J. Swartjes (resigning) F.Th.J. Arp RA P. Morley MSc. Supervisory Board A.J. van Puijenbroek, chairman Mrs. M. Tiemstra J.G. Drechsel D.H.H.D. Ropers , secretary TMG annual report 2010 98 other information subsequent events In mid February 2011, TMG entered investment commitments for increasing the full color printing capacity of its Amsterdam facilities for an amount of approximately € 20 million. TMG annual report 2010 99 independent auditor’s report To the Annual General meeting of Shareholders of Telegraaf Media Groep N.V. report on the financial statements We have audited the accompanying financial statements 2010 of Telegraaf Media Groep N.V., Amsterdam. The financial statements include the consolidated financial statements and the company financial statements. The consolidated financial statements comprise the consolidated statement of financial position as at 31 December 2010, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes, comprising a summary of the significant accounting policies and other explanatory information. The company financial statements comprise the company balance sheet as at 31 December 2010, the company profit and loss account for the year then ended and the notes, comprising a summary of the accounting policies and other explanatory information. management’s responsibility Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the executive board report in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore management is responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. opinion with respect to the consolidated financial statements In our opinion, the consolidated financial statements give a true and fair view of the financial position of Telegraaf Media Groep N.V. as at 31 December 2010, its result and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code. opinion with respect to the company financial statements In our opinion, the company financial statements give a true and fair view of the financial position of Telegraaf Media Groep N.V. as at 31 December 2010 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code. report on other legal and regulatory requirements Pursuant to the legal requirement under Section 2:393 sub 5 at e and f of the Dutch Civil Code, we have no deficiencies to report as a result of our examination whether the executive board report, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2:392 sub 1 at b-h has been annexed. Further we report that the executive board report, to the extent we can assess, is consistent with the financial statements as required by Section 2:391 sub 4 of the Dutch Civil Code. Amsterdam, 10 March 2011 Deloitte Accountants B.V. Signed by: P. Kuijpers Hundreds of thousands of people each day view our video productions online. They often draw more viewers than regular television programmes. The expectation is that such use will rapidly increase and that the viewing figures will continue to grow. TMG annual report 2010 102 other information provisions of the articles of association concerning the appropriation of profit In relation to the appropriation of profit, Article 33 of the articles of association of Telegraaf Media Groep N.V. stipulates that: 1.Each year the Executive Board, subject to the approval of the Supervisory Board and the Stichting Beheer van Prioriteitsaandelen Telegraaf Media Groep N.V. (TMG Preference Shares Trust), determines the portion of the profit – the positive balance on the income statement – that will be transferred to reserves. 2.A dividend is made payable on the preference shares from the profit remaining after the transfer to reserves in accordance with the previous paragraph, at a rate equal to the 12-month Euro Inter-bank Offered Rate (EURIBOR) effective on the date on which the relevant preference shares are issued (“the Rate”). The Executive Board then reviews the Rate annually, commencing on the date one year after the date of issue of the relevant preference shares and subsequently on the date one year after the fixing of the Rate in the preceding calendar year. The Rate is increased by three percentage points. The dividend is determined on the basis of the average applicable Rates in the relevant financial year, weighted by the number of days for which the applicable Rates applied. If the Rate cannot be determined on the date in question, the Rates will be reviewed on the next date on which the Rate can be determined. The dividend on the preference shares will be paid only for the number of days on which the relevant shares were actually in issue in the relevant financial year. 3.If in any financial year the dividend on preference shares as provided for at the second bullet point above, cannot or can only partially be paid, due to a lack of sufficient profit, the shortfall is paid from the distributable portion of equity. The dividend is calculated on the paid-up portion of the nominal amount. 4.A dividend is subsequently paid to the holders of priority shares in the amount of five percent of the nominal value of their shares. 5.The profit then remaining is at the disposal of the General Meeting of Shareholders. No additional dividend may however be paid from this amount on the priority shares or the preference shares. 6.Distribution of profit is limited to the distributable portion of equity. 7.If a loss is incurred in any one year, no dividend is then paid in that year. In addition, in subsequent years a dividend may only be paid after sufficient profit has been made to cover the loss. Based on a proposal submitted by the Stichting Beheer van Prioriteitsaandelen Telegraaf Media Groep N.V., the General Meeting of Shareholders may however decide to settle such a loss with the attributable portion of equity or also make a dividend payable from the distributable portion of the equity. 8.Profit is distributed after the financial statements, showing that the distribution is permissible, have been adopted. 9.The Executive Board, subject to the approval of the Supervisory Board and the Priority Share Management Trust, can decide to proceed with the payment of an interim dividend, provided that the interim statement of assets and liabilities demonstrates compliance with the provision in paragraph six. This statement is related to the capital position on at the earliest the first day of the third month prior to the month in which the decision to proceed with the payment of an interim dividend is announced. This statement is prepared in accordance with the application of generally accepted standards. The statement of assets and liabilities includes the amounts that are to be included as reserves pursuant to the law. The statement is signed by the members of the Executive Board. If the signature of one or more of the members is missing, this is clearly stated together with the reason for this. The statement of assets and liabilities is deposited within eight days following the day on which the decision to proceed with payment is made, at the offices of the commercial register. 10.The shares held by the company in its own capital do not count in determining the distribution of profit. TMG annual report 2010 103 Stichting Preferente Aandelen Telegraaf Media Groep N.V. and Stichting Beheer van Prioriteitsaandelen Telegraaf Media Groep N.V. Overview of all outstanding and potentially available defensive measures to guard against a possible takeover of control of Telegraaf Media Groep N.V. This summary identifies the circumstances under which these defensive measures would likely be invoked. The right to issue preference shares of Telegraaf Media Groep N.V. is granted by the Stichting Beheer van Prioriteitsaandelen Telegraaf Media Groep N.V. (TMG Priority Share Management Trust). The Stichting Preferente Aandelen Telegraaf Media Groep N.V. has the right to acquire, in part or in whole, a number of preference shares in the capital of Telegraaf Media Groep N.V. for the exercise of these rights that corresponds to 50% of the total number of ordinary shares issued, for the exercise of (a portion of) these rights. Stichting Preferente Aandelen Telegraaf Media Groep N.V. The purpose of the Stichting Preferente Aandelen Telegraaf Media Groep N.V. (TMG Preference Shares Trust) is as follows: 1.To protect the interests of the Telegraaf Media Groep N.V., with registered office in Amsterdam, hereinafter also referred to as the company, of its affiliated companies and all involved parties, whereby such measures are taken as required to protect to the maximum possible extent against influences that could threaten the continuity, independence or identity, in conflict with these interests. 2.To protect against the influence of third parties that could affect the editorial independence, as well as the principles that serve as the basis on which the opinion-forming publications of the companies within the group are edited. The Stichting Preferente aandelen Telegraaf Media Groep N.V. is an independent trust as defined in Section 5:71 subsection 1 under c of the Financial Supervision Act (Wft). The Trust attempts to achieve this goal by: • acquiring preference shares in the company and by exercising the rights associated with these shares; • by exercising other rights that are granted to the Trust pursuant to the law, articles of association or an agreement. Stichting Beheer van Prioriteitsaandelen Telegraaf Media Groep N.V. The objective of the Management Trust is to acquire and manage the priority shares of the company and, on this basis, to ensure the continuity of the company’s management, ward off any influences on the company’s management that could affect the independence of the company in conflict with its interests and to promote sound policy in the interests of the company. The Trust takes the purpose for which the preference shares may be issued into consideration in relation to the provisions stated under 1) above, in accordance with the explanation provided in support of the proposal to amend the Articles of Association approved by the General Meeting of Shareholders of the company on 20 December 1983. The disposal, encumbrance or in any other way disposing of shares fall outside such purpose, except: • disposal to the company itself or to an affiliated group company to be designated by the company; • collaboration in the repayment and withdrawal of shares; • encumbrance of shares (without the transfer of voting rights) with a view to contracting a financial loan or credit for the sole purpose of paying up (part of) the nominal value of preference shares in the company to be acquired by the Trust. On 21 March 2008, Telegraaf Media Groep N.V. authorised the Trust to submit a request for an inquiry, within the meaning of Article 2:346c of the Dutch Civil Code. The management board of the Trust consists of one chairman and four members. As at 31 December 2010, the composition of the board is as follows: S.E. de Jong (Chairman), A. den Bandt, A.H.M. van Roosmalen, J.H.M. Lindenbergh and J.P. Witsen Elias. No preference shares were outstanding on the balance sheet date. The authorities associated with the priority shares include the decision to issue shares, set the number of directors and the right to propose an amendment to the Articles of Association or dissolution of the company before the General Meeting of Shareholders can decide on such matters. The 960 priority shares are held by the Stichting Beheer van Prioriteitsaandelen Telegraaf Media Groep N.V., whose management board as at 31 December 2010 consists of E.H. van Puijenbroek (Chairman), M. Tiemstra (Secretary), prof. dr.W. van Voorden and A.R. van Puijenbroek. TMG annual report 2010 104 annual report 2010 of Stichting Administratiekantoor van Aandelen Telegraaf Media Groep N.V. Telegraaf Media Groep N.V. (TMG) is a listed company.Depositary receipts for shares in TMG are traded via the Euronext Amsterdam N.V. One of the purposes of the Stichting Administratiekantoor van aandelen Telegraaf Media Groep N.V. is to issue convertible bearer depositary receipts for shares in exchange for which the Trust acquires and holds ordinary shares in its own name, for administration. The Trust administers the acquired ordinary shares and exercises the rights associated with these shares, including the voting rights. In exercising the rights associated with the shares, the Trust will primarily focus on the interests of the holders of depositary receipts with due consideration of the interests of TMG and its affiliated companies. The issue of depositary receipts for shares is a measure designed to prevent the absence of shareholders at the General Meeting of Shareholders from resulting in a minority of shareholders, by happenstance or otherwise, that is subsequently able to take over control of the meeting. Shareholders are entitled to attend the General Meeting of Shareholders, and to speak and vote at this meeting. Holders of depositary receipts are entitled to attend and speak at this meeting. Holders of depositary receipts may obtain a proxy for the duration of the meeting from the management board of the Stichting Administratiekantoor van aandelen Telegraaf Media Groep N.V. (TMG Share Administration Trust) that entitles them to vote. TMG’s depositary receipts for shares can be converted without limitation. The issue of depositary receipts for shares therefore does not constitute an anti-takeover measure for TMG. The notes explaining the deviations from the Corporate Governance Code may be found on page 37 of this annual report. During 2010, the number of convertible depositary receipts for shares in the TMG issued by the Stichting Administratiekantoor van aandelen Telegraaf Media Groep N.V. rose by 119,740 depositary receipts and amounted to 29,176,077 (at a nominal value of € 0.25) as at 31 December 2010, corresponding to a nominal amount of € 7,294,019.25. An equal number of shares were administered by the Trust against these depositary receipts. On 15 April 2010 several meetings took place. The items discussed during the regular management board meeting (minutes available on the Trust’s website http://administratiekantoor.tmg.nl) include the Trust’s financial statements and report for the 2009 financial year, and the Trust’s finances. TMG’s financial statements and the proposed dividend for 2009 were extensively discussed with Mr A.J. Swartjes, TMG’s CEO. The agenda of the General Meeting of Shareholders held on 22 April 2010 was also discussed at this meeting, and preliminary discussions were held concerning the follow-up Meeting of the Holders of Depositary Receipts for Shares. The Meeting of the Holders of Depositary Receipts for Shares subsequently took place in the afternoon (minutes available on the Trust’s website http://administratiekantoor.tmg.nl). Agenda items included a discussion of the minutes of the Meeting of Holders of Depositary Receipts for Shares held on 16 April 2009, a review of the TMG N.V. General Meeting of Shareholders held on 22 April 2009, the activities of the management board during the year and preparations for the TMG N.V. General Meeting of Shareholders held on 22 April 2010. The chairman identified a number of questions that the management board wished to table during the upcoming meeting of shareholders. Only two holders of depositary receipts for shares were present at this meeting. At that point the Trust was in the possession of over 60% of the outstanding shares. In the meeting with the holders of depositary receipts for shares, the management board announced that it was going to deliberate on the meeting of holders of depositary receipts for shares in 2011. The board subsequently evaluated the meeting of holders of depositary receipts for shares. It was agreed that the notice for the 2011 meeting of holders of depositary receipts for shares will emphasise that the purpose of the meeting is to prepare for the TMG N.V. General Meeting of Shareholders. The TMG Annual General Meeting of Shareholders was held on 22 April 2010 in Amsterdam (www.tmg.nl). The Trust’s management board issued proxies with full voting rights for the duration of the meeting to the holders of depositary receipts for shares present during the meeting. The management board represented 25.5%, while the holders of depositary receipts for shares with proxies represented 35.5% of the votes present during this meeting The chairman of the Trust’s management board complimented the Executive Board on the cost reductions that had been launched, which made the result quite tol- TMG annual report 2010 105 erable, and the fact that the bonus over 2009 had been foregone. The objective of achieving a 15% margin was criticised. This objective is subject to conditions, such as the recovery of the economy and sufficient growth in digital activities, while no time limit has been set. Furthermore, the management board expressed its doubt about the possibility of offsetting the loss in revenues due to the decline in circulation by an increase in rates. It was noted that digital revenues only comprise 6% of the total and that the annual report does not convey a sense of urgency in terms of making digital a real pillar of the company’s business operations. What is the Executive Board’s focus in terms of the development of digital activities and is it worth contemplating the idea of strengthening the Executive Board with another person who is digitally well-grounded and focused, be it after the departure of Mr Swartjes as CEO next year or as a fourth member of the Board? The management board voted for the adoption of the 2009 financial statements, the proposed profit appropriation, and the discharge of the Executive Board of responsibility for the policies pursued and the discharge of the Supervisory Board of responsibility for the supervision exercised during the year under review. The Trust voted for the appointment of Mr D.H.H.D Ropers as a member of the Supervisory Board. Mr Ropers’ independence was questioned, now that Cyrte Investments has major interests in TMG as well as bol.com, where Mr Ropers is Managing Director. The Trust voted for Deloitte as the Group’s auditor. The proposal to authorise the Executive Board to purchase company shares and the extension of the authority of the Stichting Beheer van Prioriteitsaandelen TMG [Priority Share Management Trust] to issue ordinary shares and the granting of rights to acquire shares and to restrict or rule out preferential right of subscription to ordinary shares (including the granting of rights to acquire ordinary shares), was also supported by the Trust. The management board held its regular autumn meeting on 17 September 2010 (minutes available on the Trust’s website http://administratiekantoor.tmg.nl). Mr F.Th.J. Arp, CFO of TMG’s Executive Board provided a briefing on the Group’s results in the first six months of the year, as presented to a few investor relations and several major shareholders as well. The following items were discussed during this meeting: TMG’s semi-annual figures, the Trust’s finances, the minutes of the meeting of 15 April 2010 and the draft minutes of TMG’s shareholders meeting, the appointment of Mazars as the Trust’s auditor, changes to the Trust’s website and the date for the 2011 Meeting of Holders of Depositary Receipts for Shares. The Special General Meeting of Shareholders of TMG took place on 7 December 2010. The Trust supported the proposal to amend the remuneration of the Executive Board and to amend TMG’s articles of association. The remuneration of the board members of the Trust consists of € 8,000 per year for the Chairman and € 6,000 per year for the other board members, paid per calendar year in arrears. The annual costs of the activities of the Share Administration Trust primarily consist of expenses related to stock exchange listings and processing costs, for a total of € 30,171, costs for the Meeting of Holders of Depositary Receipts for Shares, including advertising expenses, totaling € 478, costs for maintaining the Trust’s website, totalling € 5,257 and administration costs amounting to € 3,570. The total expenses of the Trust over 2009 amounted to € 71,813 (2009:€ 61,344). The management board of the Stichting Administratiekantoor van aandelen Telegraaf Media Groep N.V. is independent in the sense of Article 2:113(3) of the Dutch Civil Code and consists of the following members, including mention of the former and/or current positions held: W.M. Lammerts van Bueren, Chairman: Emeritus Professor in International University Collaboration/ Economic Sciences EUR W.P. Moleveld, Vice Chairman: Emeritus Professor of Accounting Nyenrodeusiness University E.S. Schneider, Secretary: Independent management consultant, in particular for publishers and printers (until 2006) W. Ruijgrok: Former Director of the Confederation of Netherlands Industry and Employers (VNO-NCW) J.F.H.M. van Exter: Managing Director, Corus Services Nederland B.V. Amsterdam, 10 March 2011 Stichting Administratiekantoor van aandelen Telegraaf Media Groep N.V. c/o Basisweg 30 1043 AP AMSTERDAM TMG annual report 2010 106 about TMG profile TMG (Telegraaf Media Groep) is one of the largest Dutch media groups. TMG’s three publishing groups, Telegraaf Media Nederland, Keesing Media Group and Sky Radio Group have market leadership positions in daily newspapers, magazines, puzzle magazines, online and offline media and radio. TMG is the largest newspaper publisher in the Netherlands with the leading national dailies De Telegraaf and Sp!ts and has a strong position in the Randstad area and surroundings with regional dailies and (free) local papers. TMG has a strong market position in the Netherlands in the magazine market on the basis of titles aimed at specific target groups for instance in the segments of Entertainment, Automotive and Puzzles. Keesing Media Group is the market leader in puzzle booklets. The company is also developing a position in the market of casual games. In the Dutch radio market, TMG holds a majority interest in Sky Radio (87.3%), the market leader among commercial radio stations. TMG is furthermore increasingly active in new, mostly digital, forms of media via the (mobile) Internet, in combinations of various media types (cross media) and via TMG’s social network Hyves.nl. In the international scene, TMG holds a 6% interest in ProSiebenSat.1 Media AG, one of the largest European radio and television enterprises. In the Netherlands the stations SBS6, Net5 and Veronica belong to ProSiebenSat.1 Media AG. Outside the Netherlands, TMG is active in France, Belgium, Denmark and Sweden with puzzle magazines. TMG employs approximately 3.000 FTE’s. TMG is listed at NYSE Euronext Amsterdam and is part of the AScX Index. core values TMG is a self-confident enterprise with a strong identity. The enterprise is focused on the long term with media products aimed at the multimedia information and spare time market of 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. TMG is a reliable and committed employer. Employees are offered extensive development opportunities and good income. In exchange, TMG expects its employees to proactively handle changes, to further develop themselves and to contribute to the development of the enterprise in a drastically changing marketplace in a committed, and professional way. TMG wants to provide objective and independent information and entertainment to consumers, using various medium types, thus ensuring content is accessible anywhere at any time. Intentional, focused on the interests of the general public or narrowly defined target groups, informative and entertaining. TMG adopts a client-oriented approach in relation to suppliers of products and services. TMG wants to support them by optimising contacts with existing and potential clients and by creating greater flexibility in this respect, through divergent media forms. In terms of our shareholders, continuity, profitability and integrity are key. TMG is solidly financed. The company is for its operating result dependent on the Dutch economy. mission TMG is actively engaged in getting in touch and creating loyalty among general and/or specific public interest groups and communities and in exploiting their multimedia leisure time consumption: • By getting in touch with users, readers, listeners and viewers through a targeted offering of general and customised media products, by leveraging the reach of strong TMG brands and by cross promotion in various media platforms and via social networks. • By creating loyalty by providing attractive content and applications in the area of information and entertainment, including news, music, puzzles and games. Made for and by users. And by utilising the possibilities offered by social networks. • By exploiting the reach among public interest groups. The outcome is revenues from consumers and advertisers, which diverge more and more from the traditional revenue streams. TMG annual report 2010 107 vision and ambition strategy TMG wants to organise the extremely broad multimedia consumer offering that bombards the consumer, in such a way that it arrives in a well-organised and precisely targeted manner. This way of targeting is important for consumers and allows advertisers to grab the consumer’s attention with a clear focus. TMG’s enterprise strategy consists of the following elements: • TMG seeks growth by exploiting platforms of existing and new media, involving service to broad public interest groups, whereby advertisers are offered reach on the basis of integrated media concepts centred on information and entertainment, including news, music, puzzles and games and social networks. • 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 (digital). • 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 and digital. On the one hand TMG reaches primarily the 35 year and older consumer group - the ‘digital immigrants’ - for its advertisers. This target group tends to make extensive use of traditional media – daily newspapers, radio, TV – and TMG enjoys a prominent position in each of these sectors. TMG is efficient in collecting and creating appealing content for this target group in the area of news, music and games. On the other hand TMG is also an innovative media enterprise and grows by focusing on the target group of the future: the ‘digital natives’ (mostly younger than 35 years of age), who spend much of their media time on the internet in general and using ‘social media’ in particular. TMG intends to become the trend-setting media enterprise for the internet generation. TMG provides advertisers with an opportunity to efficiently reach this target group. The company is convinced that success follows from the right approach to the most important parts of traditional activities leading to greater efficiency and by carefully positioning itself in the new media world as a means of realising essential growth. targets Mainly in Dutch market TMG is focused on a profitable exploitation of media products reaching consumers during their multi-media leisure time spend: • The recurring EBITA margin rose from 8.1% in 2009 to 10.9% in 2010 thanks to measures taken in 2010 and earlier. • Mid 2008, TMG stated the intention to increase the recurring EBITA margin with yearly 10% in the three years to come. Given the economic circumstances during 2009 that target turned out to be impossible to reach. In 2010 an important step has been taken regarding the original target. As from 2008 the yearly recurring EBITA margin developed as follows: 9.1%, 8.1% and 10.9%. The realisation of the original target is therefore again almost on scheme. • TMG is steadfast in the goal of achieving a 15% margin eventually. To achieve this, TMG is reliant not only on further autonomous growth in digital activities, but also on acquisitions of relatively high performing digital activities. TMG annual report 2010 108 about TMG Telegraaf Media Nederland Reaches an audience of over 8.8 million Dutch people with more than 250 titles – online content, magazines, regional newspapers, free local newspapers and daily newspapers. magazines supply & demand In total more than 3 million objects are on offer on various supply and demand sites. Speurders.nl for instance offers 400,000 different books; 600,000 tickets for events are sold via Telegraaftickets.nl. Supply and demand sites Botentekoop.nl (Boats for Sale), Botenbank.nl and magazine Boten (Boats) have more than 22.000 boats on offer. 27% of Dutch women reads at least one of the magazine titles. For all Privé readers to attend the same concert would require Amsterdam’s ArenA to be leased on 34 different occasions. newspapers The newspapers reach almost 4 million readers every day. Our market share is 42%. 3.7 million households receive one of the free local newspapers each week. Hyves THE BIGGEST SOCIAL NETWORK IN THE NETHERLANDS REACHES MORE THAN 8 MILLION UNIQUE VISITORS AND HAS 9 MILLIONS DUTCH USERS. audiovisual e-mail Commercial messages are sent on a regular basis to 3,5 million unique e-mail addresses from 28 titles. The Pilarczyk Mediagroep produced 7 different TV programmes each week in 2010. Over 185 episodes were produced throughout the year, each with an average of over 250,000 viewers. In 2010 Telegraaf Media Nederland | Video Media produced more than 200 hours of video for TV and online platforms, dozens of formats and more than 100 episodes for public as well as commercial broadcasters. internet With 8.7 million unique visitors the TMG network of sites reaches 64% of all Dutch people. TMG annual report 2010 109 mobile Mobile internet is rapidly gaining in popularity. TMG’s mobile platforms and apps reach an audience of more than 975.000 unique visitors per month and realises more than 120 million page views. Mobile news platform Telegraaf.mobi attracts mobile visitors and generates about 50 million page views whereas the iPhone app generates 40 million page views. The reach of the Telegraaf iPad app continues to grow every month and currently accounts for more than 10 million page views. events Various events are organised each year. Automotive events, Singles parties, job fairs, entrepreneur meetings and events especially designed for women. Keesing Media Group puzzles & games is a market leader in puzzles and games. Keesing publishes over 100 puzzle titles and is active in digital puzzles and games. More than 65% of the Netherlands’ population over 15 years of age likes to puzzle. This means that in no less than 4.9 million households there is someone who works on a puzzle from time to time and generally this is a puzzle published by Denksport. With more than 50 million games played per month, Zigiz is one of the most often-visited casual games platforms. radio More than 5 million unique listeners on a weekly basis tune into at least one of the three radio brands: Sky Radio 101 FM is the non-stop music station of the Netherlands; Radio Veronica is in the top three stations tuned into by men; and Classic FM is the largest special interest radio station. Three radio stations, eight online stations: 110,880 minutes of radio per week. Sky Radio Group reaches more than 5 million unique listeners per week with three radio stations and eight online stations. cross media Our unit Cross media knows what’s on in society. This knowledge is part of their DNA, and is being used in developing advertiser campaigns. Cross media bridges brands and society. It is called Societal Inside Based Campaigning. This results in creative concepts which are beyond advertising. They create events in media. TMG TMG TMG Annual annual jaarverslag Report report 2010 111 about TMG main structure TMG March 2011 Executive Board: • mr. H.M.P. van Campenhout - CEO (as of 16 February 2011) • drs. F.TH.J. Arp RA - CFO • P. Morley msc - COO • drs. A.J. Swartjes Participating Interests (CEO up to 16 February 2011) Corporate Staff Sky Radio Group Telegraaf Media Nederland Keesing Media Group Subsidiaries and participating Interests Landelijke Media • HDC Media • Holland Combinatie • Subsidiaries and participating Interests Subsidiaries and participating Interests Other activities Other media activities, including Hyves • Other activities: Telegraaf Media ICT Telegraaf Drukkerij Groep TMG Distributie Shared Service Center TMG TMGAnnual annualReport report 2010 113 about TMG key figures 2010* 2002 2001 Shareholders’ equity x € 1,000 ** 531,075 465,962 411,576 866,815 498,041 530,468 444,643 428,333 454,079 464,761 TMG equity in percentage of the total equity and liabilities 66.7% 61.1% 54.0% 70.3% 47.8% 68.8% 65.2% 64.5% 62.5% 60.6% Current ratio 0.72:1 0.78:1 0.7:1 2.64:1 1.04:1 1.08:1 1.23:1 1.06:1 0.98:1 0.72:1 Current gearing 2.00:1 1.57:1 1.17:1 2.37:1 0.91:1 2.20:1 1.87:1 1.81:1 1.67:1 1.54:1 Revenue TMG x € 1,000 Cash flow from operating activities x € 1,000 Net result x € 1,000 ** 592,297 611,840 684,204 738,795 784,460 736,686 686,853 683,556 704,462 822,220 59,569 81,826 2009* 2008* 2007* 49,252 64,962 62,130 70,505 -359,988 400,097 2006* 60,195 49,599 2005* 2004* 73,600 64,970 65,428 22,125 2003 62,172 -25,765 33,059 -4,913 74,992 -29,510 Net result TMG in percentage of the total revenue 13.8% 11.5% -52.6% 54.2% 6.3% 8.9% 3.2% -3.8% -0.7% -3.6% Operating result in percentage of the total revenue 3.8% -0.5% -5.4% -3.8% -2.1% 7.2% 1.1% 3.5% 3.1% 1.2% Average total revenue per employee (fte) Personnel end of year (fte) 207,751 204,743 207,272 201,590 188,981 170,632 157,752 153,298 150,205 2,851 2,988 3,278 3,594 3,782 4,362 4,316 4,357 4,553 151,561 5,393 Return on equity Pay out ratio 15.4% 26.3% 15.1% 23.7% -87.5% p.m. 46.2% 11.9% 9.9% 50.0% 12.3% 35.3% 5.0% 23.6% -6.0% p.m. -1.1% p.m. -6.4% p.m. Per TMG share with a nominal value of € 0.25 (rounded to whole euro cents) Shareholders’ equity Cash flow from operating activities Net result Dividend 11.12 1.25 1.71 0.45 9.76 1.03 1.48 0.35 8.62 1.35 -7.49 0.35 17.43 1.24 8.00 1.00 9.96 1.20 0.99 0.50 10.10 1.40 1.25 0.44 8.47 1.24 0.42 0.30 8.16 1.18 -0.49 0.11 8.65 0.63 -0.09 0.11 8.85 1.43 -0.56 0.11 Lowest share price Highest share price Closing share price as at 31 December 14.52 16.45 14.95 8.95 14.80 13.14 8.86 24.86 12.45 19.69 26.87 25.00 19.00 23.00 19.85 17.06 20.64 18.25 16.05 18.90 18.25 13.00 19.00 17.99 13.00 24.47 15.44 14.00 22.90 17.09 * Based on IFRS principles **Attributable to Telegraaf Media Groep N.V. credits a publication of Telegraaf Media Groep N.V., Amsterdam editorial: Concern Communicatie & Investor Relations editorial financial information: Concern Financiën enAdministratie layout: RadeMakkers typeface: Gotham, Bodoni printing and binding: Stadsdrukkerij Amsterdam N.V. paper: Go! Matt, cover: 250 grams | inside: 135 grams Amsterdam, March 2011
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