N.V. Holdingmaatschappij De Telegraaf achieved a net profit of € 12.6 million for the period from 1 January 2004 up to and including 11 July 2004 against a net profit of € 6.7 million for the comparable period of 2003. The net profit per € 0.25 nominal share rose by 85% from € 0.13 to € 0.24.

The net profit for the first half of 2004 included the overall sum of € 3.0 million in extraordinary profits, consisting of € 10.5 million in extraordinary profits from investments against net (post-tax) charges of € 7.5 million for additional reorganisation measures, in particular at the regional daily newspapers and the Hollandse Huis-aan-huisbladen Combinatie B.V. (HHC), publisher of door-to-door papers. Disregarding these non-recurring items, net profit expanded by more than 43% from € 6.7 million to € 9.6 million, thanks to a slight increase in advertising sales and further cost cutting. 
The operating profit before goodwill amortisation (EBITA) fell from € 16.9 million over the first 28 weeks of 2003 to € 4.4 million for the same period in 2004. This reduction of € 12.5 million includes a gross sum of € 11.4 million in reorganisation provisions. Also included in this are the initial losses for new activities, among them De Telegraaf’s Sunday newspaper, the reintroduction of Speurders.nl and a number of new magazines in the Netherlands and Sweden. 
The costs of raw and auxiliary materials declined, despite an increase in consumption of more than 6% as a result of reductions in the price of paper in 2003 and 2004 having an effect. Staff costs remained almost the same; the increase in salary costs and higher pension and VUT early retirement scheme costs were compensated by the effect of earlier reorganisation measures. So the average number of workers calculated in full-time hours decreased in the first half of the year by 142 from 4,497 in 2003 to 4,355 in 2004. At 11 July 2004 there was a slight increase from the end of 2003 as a result of new projects. The other business costs expanded by € 19.3 million, € 11.4 million of this relating to the reorganisation provisions mentioned earlier. 
The investment proceeds include a book profit from the sale of a participation of around 20% in B.V. Algemeen Nederlands Persbureau ANP (current stake 8.84%) and of the participation in Brouwer Groep B.V. The 43% stake in the Brouwer group, including the (subordinated) loans, was transferred to third parties in June this year. The sum of € 3 million in cash was received in repayment of the loan made to the Brouwer group at the beginning of 2004 and a lump sum was agreed, to be received by 31 December 2006 at the latest, the cash value of which has been incorporated as a book profit. The buyer has taken over the current guarantees towards the Brouwer group.  
The other financial profits fell from € 2.4 million to € 1.2 million as a result of lower average interest rates and the cancellation of the loans granted to Brouwer Groep.
Circulation income grew by 1.5%. Paid circulation fell by an average of 3.6% at De Telegraaf and by more than 4% at the regional dailies. Increases of around 5% in the rates were able to compen-sate for the fall in circulation. 
Advertising sales showed positive overall development at the national daily newspapers De Telegraaf (+ 6.7%) and Sp!ts (+7.1%) and at the door-to-door papers (+1,5%). The regional dailies experienced a fall in sales, which ranged from 5.5% at Media Groep Limburg B.V. (MGL) to 12.8% at HDC Media B.V.
At De Telegraaf daily newspaper, volume for local and national brands and services widened by an average 23%. Recruitment advertisements stabilised, whilst classified advertisements shrank by around 13%. On 21 March this year the first edition of De Telegraaf’s Sunday newspaper was published. A maximum of € 10 million in start-up losses has been allocated to this project this year. Both single-copy sales and advertising turnover have shown above-average development, so the initial loss will come out lower. 
Sp!ts too realized an increase in advertising volume in the important national brand and services segment (+13%). Overall advertising volume at Sp!ts rose by more than 7%. As a result Sp!ts closes the first half of the year with a profit. 
At HDC Media 30% lower recruitment advertising volume in particular was responsible for falling advertising revenues. At MGL advertising volume fell in both the recruitment segment (36%) and national brands and services (12%). 
As a result of the development of results, especially at the regional newspapers and door-to-door papers, further reductions in the number of staff were announced in the second quarter of 2004, which will mean the loss of around another 150 jobs over the next two years. A total of € 11.4 million has been added to the provision for reorganisation. The effects this will have on the results will take a while to be seen.  
In the magazine sector too the picture is changing for the development of advertising sales. Overall sales expanded slightly (+3.4%), including the effect of the new titles CosmoGirl! and Esquire. Circulation revenue fell by contrast by an average of 4.6%, primarily because of the general stagnation on the single-copy sales market. 
At the Swedish magazines, revenue from the reader and advertising markets developed in accordance with expectations. 
When the 2003 annual report was published the expectation was expressed that the “normal” net profit in 2004 would come out at around € 20 million, based on expected growth in advertising revenues of 5% and the incorporation of costs of € 20 million for new projects. 
Although advertising sales over the first half of 2004 have increased by only 1.3%, the ordinary profit forecast is being maintained because of the effects of cost-cutting and what is expected to be a further (slight) improvement in the advertising market in the second half of 2004. 
Extraordinary profits and costs, including reorganisation costs, are expected to balance each other out over 2004 as a whole, to produce an overall net profit of around € 20 million, excepting unforeseen circumstances.
Amsterdam, 25 August 2004.