The consolidation of the French puzzle publisher Megastar Groupe effective 1 January 2012 has had a positive impact on the 2012 second quarter results. Compared to the second quarter 2011, the key results are as follows:

• Revenues declined marginally to € 144.3 million (2011: € 147.0 million);
• Internet revenues were € 16.9 million (2011: € 17.6 million) and represent 12% of revenues;
• Operating expenses were € 144.1 million and as such are € 2.6 million higher;
• The recurring EBITDA result decreased with € 19.2 million to € 9.0 million;
• The recurring EBITDA margin is 6.3% (2011: 13.1%);
• The share in the result of ProSiebenSat.1 Media AG declined by € 3.0 million and amounts to € 5.0 million (last year was inclusive of SBS Nederland and Belgium).

As indicated earlier, TMG, in the context of the ongoing strategy refinement process, considers 2012 a year of transition in which the projected recurring EBITDA result is expected to be approximately 20% lower than in 2011.

TMG publishes its interim management statement over the second quarter of 2012.Normally 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.

Here you'll find the appendices of the press release and TMG's semi-annual report 2012 .

2012 second quarter results

The consolidated overview of realised and unrealised results (see Appendix) is presented on the basis of total operations. The operations of the French MegaStar Groupe (acquired in December 2011) and Group-Deal (increase in interest from 40% to 60% in January 2012) were consolidated effective January 2012.

Circulation revenues rose by 7.3%, primarily due to the acquisition of the MegaStar Groupe (MegaStar). Advertising revenues declined by 12.3% compared to the same period last year. The decline in advertising revenues was 15.7% for newspapers, while advertising revenues increased by 3.9% for radio. Compared to the second quarter of 2011, online revenues declined by 3.6%.

Compared to the second quarter of 2011, operating expenses were marginally higher due to higher paper prices, the consolidation of MegaStar, additional sales costs due to the European Football Championships, the costs involved in the launch of MyRadio and the start-up losses of new activities.

The recurring EBITDA result decreased by € 10.2 million to € 9.0 million.

The share in the result of ProSiebenSat.1 Media AG (ProSiebenSat.1) was € 5 million; € 3 million lower than in the second quarter of 2011. Last year the result of ProSiebenSat.1 still included the results of SBS Nederland and Belgium.

Operating Performance

Developments of the business segments in the second quarter:

Telegraaf Media Nederland
The advertising revenues of printing activities declined by 16.1%. The free local papers (distributed door-to-door) were hit hardest with a decline of 17.5%. Regional dailies experienced a decline of 17.6% and the national titles saw their advertising revenues decline by 14.0%.

The European Football Championships generated additional advertising revenues; however due to the disappointing results of the Dutch team, this was less than expected. The Telesport & Hyves Oranjepoule broke the 200,000 participants barrier and as such was the largest European Football Championships pool in the Netherlands.

The integration of Holland Combinatie (free local papers) with HDC Media was initiated. Multiple free local papers titles were withdrawn from the market and/or integrated with other titles. In addition, work commenced on merging various departments of the two organisations. This has resulted in a decline in the number of staff members.

Online
In terms of numbers of visitors, Telegraaf.nl had a good second quarter. The site attracted approximately 3.8 million unique visitors per month. TMG’s network in June 2012 had a total of more than 7.5 million unique visitors; this represents a reach of almost 55% of all internet users in the Netherlands.

The pressure on the number of visitors to the Hyves site combined with competitors’ price promotions put pressure on revenues as well as on the result. This has in part resulted in a decline in revenues from online activities from € 17.6 million in the second quarter of 2011 to € 16.9 million in the second quarter of 2012.

Due to the further roll-out of activities, Dichtbij.nl’s revenues rose by € 0.8 million in the second quarter of 2012. Because of start-up losses, the result is still negative for the time being. It is expected that a break-even result will be realised by the end of 2012.

See below for the digital developments at Sky Radio Group and Keesing Media Group.

Sky Radio Group
Sky Radio 101 FM’s market share of the key advertising 20 to 49-year-old age group increased to 9.3% measured during May and June, 2012, compared to 8.3% in the same period last year. Radio Veronica and Classic FM also saw clear growth to 10.3% (2011: 8.1%) and 0.6% (2011: 0.3%), respectively.

The Sky Radio Group’s revenues increased by € 0.2 million in the second quarter of 2012, counter to market development.

The Sky Radio Group introduced the first personal radio station in the Netherlands: MyRadio. By allowing listeners to ‘like’, ‘dislike’ or ‘skip’ tracks, they can quickly personalise their own play lists. The result is radio that is better attuned to the listener’s taste than traditional radio. Listeners can listen to their personal radio station at any time, from anywhere.

The court recently ruled against the Sky Radio Group in the legal proceedings concerning the appraisal of Radio Veronica's FM lot on the basis of which the government sets the amount of the license fees owed. The Sky Radio Group has since filed an appeal against this ruling with the Trade and Industry Appeals Tribunal.

Keesing Media Group
Due to the acquisition of MegaStar, revenues from puzzle magazines increased by € 5.6 million to € 16.5 million in the second quarter of 2012. The revenues from gaming activities declined significantly and amount to € 0.6 million.

Digitisation also plays an important role in the puzzle market. Denksport’s iPad application was recently introduced in the Netherlands. This app has since been downloaded more than 150,000 times. The app is free of charge and offers per category of difficulty a free sample of the puzzles that can be purchased. This allows the user to see which level of a specific type of puzzle suits him/her before purchasing. Denksport publishes new puzzles each month. iPad apps have been launched in France, Belgium and Denmark as well for Sport Cérébral, Denksport and Tankesport, respectively.

Other
De Persgroep Nederland BV (Persgroep), NDC Mediagroep BV (NDC), Koninklijke Wegener NV (Wegener) and TMG signed a letter of intent in April 2012 concerning the implementation of a distribution model for the collective distribution to subscribers and separate sales outlets of morning newspapers that currently are not yet jointly distributed. The objective of the partnership is to lower the distribution costs of the relevant daily newspapers, while retaining the quality of delivery. This is expected to be implemented over the next eighteen months. The letter of intent also includes the aim of growing into a common delivery organisation over a number of years.

Financial Performance

The breakdown of revenues is as follows:

Circulation revenues increased by € 4.9 million, primarily due to the acquisition of MegaStar. Circulation revenues from daily newspapers declined marginally.

All newspaper titles were affected by the € 8.3 million decline in advertising revenues. The free local papers (distributed door-to-door) were hardest hit in the second quarter of 2012 with a decline of 17.5%. While all advertising categories were subject to a decline, this was primarily evident in the categories personnel, regional/local and classified ads. The additional revenues derived from the European Football Championships offset the decline somewhat, but were disappointing due to the poor showing of the Dutch team.

Radio advertising revenues rose by 3.9% compared to the second quarter of 2011.

Revenues from internet activities were € 16.9 million and declined by € 0.7 million in comparison to last year due to the disappointing Hyves revenues.

The cost of raw and auxiliary materials rose by € 1.4 million compared to the second quarter of 2011, primarily caused by an increase in the consumption of paper due to the acquisition of MegaStar and due to the higher cost of paper.

Personnel costs in the second quarter of 2012 amounted to € 55.8 million, which represents an increase of € 0.6 million in comparison to the second quarter of 2011.

The number of employees was 2,925 FTEs. This represents an increase of 113 FTEs, primarily due to the acquisition of MegaStar.

Depreciation and amortisation charges declined by € 4.4 million primarily due to the fully written down valuation of 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 € 5.0 million to € 67.3 million, primarily due to the higher cost of sales on account of the European Football Championships, the MyRadio marketing and development costs and the higher costs resulting from the increase in e commerce activities. Distribution costs declined by € 1.0 million in the second 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 decreased by € 3.6 million from € 7.8 million to € 4.2 million. TMG’s share in the result of ProSiebenSat.1 Media AG (ProSiebenSat.1) for the second quarter of 2012 was € 5.0 million and declined by € 3.0 million in comparison to the second quarter of 2011. Last year the result of ProSiebenSat.1 still included the results of the Dutch and Belgian operations. The carrying value of the participation in ProSiebenSat.1 as at 30 June 2012 was € 221.1 million or € 16.85 per (ordinary) share in ProSiebenSat.1.

Taxes

The variance between the effective tax burden (-65%) and the nominal tax burden (25%) is mainly due to the exempted results of the associate ProSiebenSat.1 for 2011 as well as 2012; furthermore a accrual for taxes in the amount of € 2.5 million was also released in the second quarter.

Cash Position

The dividend of € 0.47 per TMG share was paid in the second quarter of 2012. This represents an outgoing cash flow of € 21.8 million. In addition, the dividend on the shares with voting rights in ProSiebenSat.1 in the amount of € 1.15 per share was received in May 2012. Including a refund of income tax at source on the 2010 dividend of approximately € 2.6 million, this resulted in an incoming cash flow of almost € 13.7 million.

The cash position improved by over € 6 million to € 11.6 million in the second quarter of 2012 compared to the end of March 2012. This increase is primarily due to drawdown’s under credit facilities and the receipt of the ProSiebenSat.1 dividend.

Strategy implementation

Immediately after the announcement of the annual 2011 results, the employee participation bodies were notified of the proposed changes to the organisation resulting from the strategy plans in order to obtain their advice. In the second quarter, after proper and constructive consultation with these bodies, it was decided to adjust the plans on a number of points, mainly to safeguard the journalistic independence of the editorial departments and better utilise the central role of the brands. The details of these adjusted plans were submitted to the Central Works Council, which recently issued a positive advice regarding the headlines of the plan. This means that work on implementing the plans can now be started.

Outlook

During the presentation of the new strategy at the end of last year, TMG indicated that it wanted to transform itself into a leading cross-media company over the next five years by accelerating online growth. Aside from exploiting puzzIe activities, TMG is putting the focus on the print, online and radio platforms, bundling strengths within the portfolio, effecting acquisitions in print and online, and reducing costs.

In this respect the year 2012 was marked as a transition year in which, in addition to the transformation of the organisation, due consideration must be given to the not very bright economic circumstances and to the start-up costs of new online activities. This is why TMG indicated that the recurring EBITDA result for 2012 was expected to be approximately 20% lower than the € 62.5 million realised in 2011.

In view of the highly disappointing advertising revenues achieved by print and online activities in the first six months of 2012 and the rather gloomy economic outlook in the Netherlands for the rest of the year, the projected recurring EBITDA result of around € 50 million for 2012 will be dropped. Due to the uncertainty about the further development of advertising revenues during the rest of the year, no specific new projection will be communicated. However, we are able to provide the following guidance. A recurring EBITDA result of € 16.5 million was realised in the first six months of 2012, including approximately € 4 million in start-up losses for new online activities. In addition to the all important 4th quarter, the following measures in particular will have an impact on the operating result trend in the second half of the year in comparison to the first half of the year:

• Lower autonomous personnel costs, in part due to the integration of Holland Combinatie and HDC Media;
• Lower distribution costs due to the start of the joint newspaper delivery with De Persgroep as from this coming September;
• Lower costs at Hyves.nl;

Of influence are also:

• Lower start-up losses at Dichtbij.nl;
• Lower paper prices.

Appendices :

• Consolidated statement of comprehensive income second quarter 2012;
• Consolidated statement of comprehensive income first half of 2012;
• Recurring EBITA result second quarter 2012;
• Semi-annual Report 2012

The Semi-annual Report is also available via www.tmg.nl and will be distributed in a printed form later this month.

August 17th, 2012 (11.00 hours CET) an analyst meeting will take place (Dutch spoken – with an accompanying presentation in English). This meeting will be live webcasted via www.tmg.nl.