Result for the second quarter of 2011
Compared to the second quarter of 2010:
- Recurring EBITA margin was 11.0 % (second quarter of 2010: 11.8%)
- Recurring EBITA result decreased with € 1.6 million to € 16.2 million
- Revenues declined by € 3.3 million (2.2%) to € 147.0 million
- Internet revenues rose by € 4.2 million (31%) to € 17.6 million
- Operating expenses were € 141.5 million and were € 0.4 million lower
TMG publishes its interim management statement over the second quarter of 2011. 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.
The consolidated statement of comprehensive income (see Appendix) is presented on the basis of total operations. The operations of the Hyves social network were acquired in November 2010 and have since been consolidated. The Hyves operations were therefore not included in the results for the second quarter of 2010.
The recurring EBITA result declined by € 1.6 million to € 16.2 million in the second quarter, primarily due to lower advertising and circulation revenues.
Amounts in € millions
Printing for third parties
Advertising revenues declined by € 2.8 million (4.1%) to € 67.2 million in the second quarter of 2011. The World Cup Football Championships had a positive effect on advertising revenues in the second quarter of 2010. The decline in advertising revenues is in particular perceptible for the national daily newspapers in the category national brands and services. Radio advertising revenues were also under pressure.
Internet revenues (including Hyves and e-commerce) rose by over 31% to € 17.6 million.
Revenues from circulation declined by € 0.8 million (1.1%) to € 66.9 million. The decline is due to a reduction in promotion-based single copy sales and a reduction in the number of trial subscriptions. The various promotions related to the World Cup Football Championships last year had a positive effect on the number of trial subscriptions in the second quarter of 2010. The impact of the discontinuation of the Sunday edition of De Telegraaf is also still noticeable. For smartphones and tablets paid apps are now available for De Telegraaf, DFT.nl, the daily newspapers of HDC Media and Autovisie among others.
Income from distribution declined by € 0.8 million due to the outsourcing of transportation activities.
Other income increased by € 1.2 million due to higher revenues from video productions for third parties.
The costs of raw and auxiliary materials declined by € 1.3 million, primarily due to the lower cost of paper and lower circulation and page volumes.
Personnel costs increased by € 1.8 million (3.3%) in the second quarter due to a net increase of 30 in the number of FTEs and higher pension premiums. The growth in FTEs arising from new activities (Hyves and other internet) was offset by a reduction in personnel related to existing activities, primarily due to the joint distribution of dailies with NDC and Wegener and the termination of transportation activities. In addition to an increase in pension premiums at the beginning of 2011, one-time pension premiums for persons under a disability scheme were also recognised in the second quarter.
Other operating expenses declined by € 1.2 million due to the joint distribution initiative and organic savings.
The financial income and expenses in the second quarter of 2011 amounted to € 7.8 million, which is over € 3.8 million higher compared to the same period last year. The result from associates includes the 6% share in the result of ProSiebenSat.1 Media AG (ProSiebenSat.1) for the second quarter of 2011. ProSiebenSat.1’s result primarily rose for activities outside Germany. The results of the Belgian and Dutch activities are included in the second quarter results of ProSiebenSat.1. The sale of the Belgian activities was completed in the second quarter, that of the Dutch operations in the third quarter. During the Annual General Meeting of ProSiebenSat.1 of 1 July 2011 a dividend of € 1.12 per share was adopted for 2010 for the shares with voting rights. TMG owns 13,127,832 such shares. The dividend, subject to the deduction of tax, will be deducted from the value of TMG’s equity interest in ProSiebenSat.1, in the third quarter of 2011. During the shareholders meeting, TMG’s CEO H.M.P. van Campenhout, as the successor of A.J. Swartjes, was appointed as a member of the Supervisory Board of ProSiebenSat.1 and as a member of the Supervisory Board’s Remuneration Committee.
The cash position declined by € 33.2 million to € 1.3 million, primarily due to the dividend in the amount of € 0.45 per nominal share paid in the second quarter, representing an cash outflow of € 21.5 million (2010: € 16.7 million). In addition, the quantity of paper purchased represents an increase of more than € 11 million over the second quarter of 2010. The paper inventory was increased with due consideration to an expected further increase in the cost of paper in 2011. Furthermore, a number of relatively smaller acquisitions took place including the acquisition of Huizenzoeker.nl and Gaspedaal.nl.
The current FM licenses of the Dutch commercial radio stations, including the radio stations of Sky Radio Group, expiring effective 31 August 2011, were extended by six years at lower licensing fees and subject to conditions pertaining to switching over to digital radio in the Netherlands. Sky Radio Group raised objections to the appraisal of Radio Veronica’s A2 lot. This process is still ongoing.
In relation to the expansion of the colour capacity of printing presses, an investment in the amount of approximately € 5 million will be made in Drukkerij Noordholland’s printing plant this year.
In view of the current economic conditions, which involve declining consumer and producer confidence, for the full year a bigger than the earlier announced limited decline in recurring EBITA margin must be taken into account.
Because of the continuing pressure on advertising and circulation markets of mainly the print products TMG takes cost measures wherever possible. The full implementation of the combined home delivery of newspapers together with NDC and Wegener is an example thereof. Also TMG started a process of sharpening its strategy with realisation of growth as an starting point. TMG plans to provide greater clarity on this subject latest at the beginning of next year.
The effects of the cost measures, lower distribution costs thanks to the partnership with NDC and Wegener and the projected growth in revenues from digital activities have a positive influence on the development of the operating result over all of 2011. The projected decline in advertising revenues, the increase in the cost of paper, the effects of the increases pursuant to the collective labour agreement and inflation, as well as the start-up losses related to the expansion of the dichtbij.nl activities have a negative effect.
The following elements will furthermore impact the 2011 net result:
- The pro-rated share in the higher net result of ProSiebenSat.1 Media AG (including the impact of the sale of SBS the Netherlands and Belgium);
- The decrease in the amortisation of Sky Radio Group’s license rights and annual license payments;