Semi-annual report 2000

The operating profit of N.V. Holdingmaatschappij De Telegraaf for the period from 1 January to 16 July 2000 rose from NLG 115.3 million to NLG 118.4 million, including the start-up loss on Sp!ts and the net profit of Uitgeversmaatschappij De Limburger B.V., which was not consolidated until 22 May 2000, once the NMa (Netherlands Competition Authority) had approved the takeover. The figure also takes account of the writing down of goodwill over a period of twenty years.

The balance of financial income and charges fell NLG 19.8 million, mainly as a result of taking into account start-up losses relating to the acceleration of Internet activities and interest charges incurred in financing the purchase of De Limburger and shares in Wegener.
As a result of this, plus a higher tax burden due to non-deductible start-up losses on participating interests, the net profit of N.V. Holdingmaatschappij De Telegraaf fell from NLG 82.3 million in 1999 to NLG 67.8 million in 2000. In the first half of 1998 the company booked a net profit of NLG 82.0 million. Net profits of NLG 145.2 million and NLG 142.8 million were realised for the whole of 1998 and 1999 respectively.
The operating profit was also affected to a large extent by:
  • a 10.8% rise in turnover to NLG 950.3 million; autonomous turnover (excluding Sp!ts and De Limburger) rose 6.6%. De Telegraaf’s advertising volume rose 3% during the period as a result of distinct growth in national brands and services (a sector susceptible to economic cycles) offset by a slight drop in both local brands and services and job and classified adverti-sements. The aggregate advertising volume of the national newspapers showed a 4% increase. The circulation of De Telegraaf declined marginally, mainly owing to fewer single-copy sales.
  • the increase in the number of staff. Measured in FTEs, the workforce grew from 4,707 in July 1999 to 5,398 in July 2000, including 562 staff of De Limburger. At year-end 1999, the figure stood at 4,756. Apart from the consolidation of De Limburger, the increase in the workforce was attributable mainly to staff growth in the information and communication technology sector as a result of developments in the area of electronic publishing.
  • the increase in other operating costs. Excluding Sp!ts and De Limburger, this item rose 14.3%, partly as a result of higher delivery costs, additional costs of Internet projects, including the launching of dft.nl (De Financiële Telegraaf on-line), costs of consultancy in connection with the NMa proceedings regarding De Limburger, the setting-up of Logistiek B.V., and the start-up costs of new magazines of De Telegraaf Tijdschriften Groep B.V.
  • the inability to achieve synergy in the Limburg region yet, since NMa approval of the takeover of De Limburger was not granted until May 2000.
Income from participating interests fell from a gain of NLG 3.4 million in the first six months of 1999 to a loss of NLG 10.9 million in 2000 as a result of:
  • start-up losses on participating interests in various Internet projects, including Jumptech, Matchcare and Woonkrant.nl, which have been allocated to the first half-year from the com-mencement date of the shareholding pro rata on the basis of the proportion of approved budgets for 2000.
These were offset by:
  • a higher cash dividend for 1999 from Wegener N.V.;
  • a profit from SBS Broadcasting B.V. in the first half of 2000, as against a loss for 1999 on account of the start-up costs of the TV station Net 5, which was launched on 1 March 1999.
The NMa recently ordered NOS and HMG to supply weekly TV programme data to De Telegraaf on pain of a financial penalty. As NOS subsequently won interim injunction proceedings against the NMa concerning the penalty, publication of a TV magazine as a Saturday supplement to 
De Telegraaf will have to be deferred once more.
A forecast of the group’s result for the whole of 2000 will be affected, amongst other things, by:
  • advertising volume, which, given the sustained economic growth, is expected to be approxi-mately the same as in 1999;
  • the start-up loss on the free afternoon newspaper News.nL in a print run of over 100,000 copies, which is to be introduced on 28 August 2000 and distributed at the railway stations of the four major cities;
  • the start-up loss on the men’s magazine FHM (For Him Magazine), which is to be introduced by De Telegraaf Tijdschriften Groep B.V. on 21 September 2000;
  • a substantially lower loss from Sp!ts.
Another factor are the new Internet activities, including:
  • the development of regional portals, a joint venture involving De Telegraaf, Noordelijke Dagblad Combinatie Holding B.V. and the regional dailies in the Telegraaf group;
  • the joint venture with Airtrade Holland in the travel business, which is to begin in the second half of 2000;
  • the introduction of the ‘scan-pen’ as a direct link between up-to-date information in print and additional information on the Internet.
Given the results for the period from 1 January to 16 July 2000, especially the effect of the new Internet activities mentioned above, the start-up costs of which are not activated, profits for 2000 as a whole are expected to be at least 20% down.