Result for the first quarter of 2012
Compared to the first quarter of 2011:
- Revenues rose marginally to € 137.7 million (first quarter 2011: € 136.9 million).
- Internet revenues were € 16.9 million (first quarter 2011: € 16.4 million) and represent 12% of total revenues.
- The recurring EBITDA result decreased from € 12.5 million to € 7.5 million.
- The recurring EBITDA margin is 5.4% (first quarter 2011: 9.1%).
- The share in the result of ProSiebenSat.1 Media AG rose from € 0.8 million to € 3.1 million.
TMG publishes its interim management statement over the first quarter of 2012.
TMG’s activities are subject to seasonal fluctuations. During the second and the fourth quarter of the year, advertising revenues are higher than during the remainder of the year. The fourth quarter is the most important quarter for advertising revenues. The single-copy sales of De Telegraaf and Keesing Media Group’s publications are significantly higher in the third quarter.
First Quarter 2012 Results
The consolidated statement of comprehensive income (see Appendix) is presented on the basis of total operations. The operations of French MegaStar Groupe (acquired in December 2011) and GroupDeal (increase in interest from 40% to 60% in January 2012) were consolidated for the first time effective January 2012. The acquisition of MegaStar Groupe has made the Keesing Media Group a market leader in France in the area of puzzle magazines.
Circulation revenues rose by 7.4%, in part due to the acquisition of the MegaStar Groupe. Advertising revenues declined by 8.1%. The decline in advertising revenues was 10.8% for newspapers, while advertising revenues increased by 4.6% for radio. Online revenues also increased compared to the first quarter of 2011.
Due to the increased cost of paper, the continued rollout of Dichtbij.nl and the consolidation of the MegaStar Groupe, operating expenses were marginally higher in comparison to the first quarter of 2011.
The recurring EBITDA result declined by € 5.0 million to € 7.5 million in the first quarter, primarily due to the lower advertising revenues of newspaper operations. The recently acquired operations of the MegaStar Groupe and GroupDeal performed in accordance with projections in the first quarter of 2012.
The share in the net result of ProSiebenSat.1 Media AG (ProSiebenSat.1) was € 3.1 million, more than € 0.8 million higher than in the first quarter of 2011. Last year the result of ProSiebenSat.1 also included the results of SBS Nederland and Belgium.
Developments of the business segments in the first quarter:
Telegraaf Media Nederland
The advertising revenues of printing activities - still a significant portion of total sales - declined by 10.8%. The free local papers (distributed door-to-door) were hit hardest with a decline of 16.5%. Regional dailies experienced a decline of 13.7% and the national titles saw their advertising revenues decline by 6.7%.
De Telegraaf renewed the weekend supplement in March: a modified editorial formula and expansion of the use of colour.
Advertising revenues stayed virtually the same for magazines. The first edition of VROUW Glossy appeared in March and will be published four times this year. The editorial board will derive its inspiration from the year’s seasons for these special editions. The five-year anniversary of VROUW was celebrated in the first quarter with a concert for 5,500 readers in the Heineken Music Hall.
The operations of Lokale Media Partners were halted in March and the national advertising sales for the free local papers (distributed door-to-door) were brought back in-house. In addition, the regional dailies of HDC Media entered a partnership with Wegener for the sale of national advertising. Nationale Regiopers, the joint advertising sales office of the Dutch regional dailies halted its activities effective 1 March 2012.
The integration of Holland Combinatie (free local papers) with HDC Media was initiated.
In terms of numbers of visitors, Telegraaf.nl had a good first quarter. On average the site scored a record number of 4 million unique visitors per month. TMG’s network in March 2012 had a total of more than 8 million unique visitors; this represents a reach of almost 60% of all internet users in the Netherlands.
Sky Radio Group
Recent listener figures once again showed that the Sky Radio Group is the clear number one among various groups, including the target group of women 20 - 49 years of age. In the last six months the market share of women 20 -34 years of age rose by over 17%.
Radio Veronica in partnership with Voetbal International started up VI Radio in the first quarter. Updates on national and international developments related to soccer are broadcasted daily.
Furthermore, the first hearing in the legal proceedings concerning the level of payments to the government for the extension of the license agreement effective September 2011 took place in the first quarter. A ruling on this is not expected over the short term.
Keesing Media Group
The integration of the MegaStar Groupe into the operations of the Keesing Media Group in France and the realisation of the targeted synergy effects were key areas of focus during the first quarter.
In the Netherlands, the free Denksport puzzle app has already been downloaded more than 100,000 times. The app has had a high ranking in the app store in recent months and is highly valued there as well.
Since the emergence of the major American social networks in the Netherlands, Hyves has been forced to share its market position with other players and has seen its visitor figures decline. By adding content and on the basis of its local signature, Hyves differentiates itself from the American players. With 3.7 million active users Hyves consequently is still one of the Dutch top sites in terms of reach. Synergy is realised and the proposition strengthened through partnership with other TMG brands, such as De Telegraaf, Telesport, Privé, Radio Veronica and Dumpert.
In spite of the pressures on Hyves’ revenues, online activities achieved growth in the first quarter.
TMG has increased its interest in GroupDeal B.V. from 40% to 60%. These activities are consequently consolidated in TMG’s results effective January 2012. The Dutch GroupDeal company (www.groupdeal.nl) bundles the power of group purchasing with social media via daily national offers and specific offers in larger Dutch cities. This enables GroupDeal to offer buyers the lowest possible prices from the best local companies. GroupDeal grew to number 2 in its market over the last year and a half.
The De Persgroep Nederland BV (Persgroep), NDC Mediagroep BV (NDC), Telegraaf Media Groep NV (TMG) and Koninklijke Wegener NV (Wegener) signed a letter of intent in April 2012 concerning the implementation of a distribution model for the collective home delivery of morning newspapers to subscribers and separate sales outlets.
The objective of the partnership is to lower the distribution costs of the relevant daily newspapers, while retaining the quality of delivery. The letter of intent also includes the aim of growing into a common delivery organisation over a number of years. As such the parties respond to the appeal of the Temporary Committee on Innovation and the Future of the Press (Brinkman Committee) to develop a single distribution network for all daily newspapers.
The breakdown of revenues is as follows:
|Amounts in millions of euros||1/1 - 31/3/2012||1/1 - 31/03/2011|
|Printing for third parties||0.8||0.8|
Circulation revenues increased by € 4.8 million in part due to the acquisition of the MegaStar Groupe in France. In spite of two additional publication days, the circulation revenues of the national daily newspapers declined marginally.
All newspaper titles were affected by the € 4.6 million decline in advertising revenues. The free local papers (distributed door-to-door) were hardest hit in the first quarter of 2012 with a decline of 16.5%. While all advertising categories were subject to a decline, this was primarily evident in the categories personnel and regional/local. Two additional publication days and the national excitement about whether or not the ‘Elfstedentocht’ (11-city skating race) would take place compensated somewhat for the decline.
Revenue from internet activities was € 16.9 million and rose in comparison to last year (first quarter 2011: € 16.4 million).
The costs of raw and auxiliary materials rose by € 2.3 million primarily due to the higher cost of paper in comparison to the first quarter of 2011. Furthermore, the cost of paper rose by approximately € 1 million due to the acquisition of the MegaStar Groupe in France.
Personnel costs in the first quarter amounted to € 54.9 million, an increase of € 1.8 million in comparison to the first quarter of 2011. The number of employees was 2,956. This represents an increase of 134 FTEs, primarily due to the acquisition of the MegaStar Groupe and the rollout of Dichtbij.nl since May 2011.
Depreciation and amortisation charges declined by € 4.4 million primarily due to the amortised valuation of the Sky Radio Group’s FM license permits in September 2011 and the lower amortisation of the fees paid to the Dutch government concerning the FM licenses.
Other operating expenses rose by approximately € 1.3 million to € 64.0 million, primarily due to the higher cost of sales of e-commerce activities and the cost of work outsourced for WNL video productions. Distribution costs declined by € 1.2 million in the first quarter of 2012. This is still primarily due to the effects of the termination of the transport activities and the collaboration with Wegener and NDC during 2011.
Financial income and expenses increased by € 2.0 million to € 2.3 million. TMG’s share in the result of ProSiebenSat.1 Media AG (ProSiebenSat.1) for the first quarter of 2012 was € 3.1 million and rose by € 0.8 million in comparison to the first quarter of 2011. The book value of the participation in ProSiebenSat.1 as at 31 March 2012 was € 229.8 million or € 17.50 per (ordinary) share in ProSiebenSat.1.
A credit facility in the amount of € 38.1 million was concluded at the end of 2011 to finance the acquisition of the MegaStar Groupe in France. Interest charges consequently increased as a result.
The cash position declined by approximately € 9 million to € 6 million in the first quarter of 2012. The decline is in part due to a payment in support of the investment in the full-colour printing facility for the printer in Amsterdam, the share buyback programme and redundancy payments.
The dividend of € 0.47 per share will be paid during the second quarter of 2012. This represents an outgoing cash flow of approximately € 21.9 million. The dividend on the shares with voting rights in ProSiebenSat.1 in the amount of € 1.17 per share will be received in May. This will result in an incoming cash flow, prior to income tax at source, of almost € 15.4 million.
An open and constructive dialogue about the strategy plans is currently underway with the employee participation bodies. This is expected to be completed this summer.
Assuming unchanged market conditions, TMG is maintaining its projected decline of approximately 20% in the EBITDA result for 2012 in comparison to 2011. In this respect it should be noted that the decline in the first quarters will be higher, but lower in later quarters, due to the effects in the second half of the year of:
- The rollout of the strategy;
- The decline in the cost of paper;
- The effects of the expansion of the combined daily newspaper delivery.
- Press release, inclusive of:
- Consolidated statement of comprehensive income first quarter 2012
- Recurring EBITDA result first quarter 2012