Semi-annual result 2002
As a result of a further cyclical downturn, profit of N.V. Holdingmaatschappij De Telegraaf was again under pressure. For the period from 1 January to 14 July 2002, the company made a net profit of € 11.3 million as compared to € 19.3 million for the corresponding period in 2001. Net earnings per share of € 0.25 par value fell by 41.5% from € 0.37 to € 0.21.
From 1 January 2002, the figures of the Biegelaar Groep have not been included in the consoli-dated accounts as a result of the legal merger of the Biegelaar Groep and the Brouwer Groep. The result of the 43% stake in this new combination is shown under ‘income from participating interests’.
Group turnover declined by over € 70 million from € 454.7 million to € 384.4 million. € 45 million of this is attributable to the deconsolidation of Biegelaar Groep B.V. Organic consolidated turnover fell by approximately 6%. A slight rise in income from subscriptions and single-copy sales, which account for approximately 38% of turnover, was offset by a substantial drop in advertising income at the national and regional newspapers.
Operating costs fell by € 47 million, € 44.4 million of which related to the Biegelaar Groep. The effects of the retrenchment measures, including the reorganisation of the Amsterdam operations now being carried out, will make a contribution to a further cost reduction from the second half-year on in particular. Of the more than 300 FTEs declared redundant, 125 have now left the company or have been re-deployed to fill vacancies elsewhere within the company.
Daily newspaper De Telegraaf
Advertising turnover at daily newspaper De Telegraaf fell by approximately 17%. In regular advertising the decline again occurred in the staff and national brands & services categories, which recorded a volume loss of 33.3% and 18.5%, respectively. Classified ad (Speurders) turnover shrank by 19%, divided over the categories of staff, property and cars. In contrast, subscription turnover rose by over 6% as a result of the rate increase. Single copy turnover also went up. Paid circulation fell off marginally.
The cost-cutting measures implemented in the course of 2001 and 2002 were mainly designed to bring about a reduction in staff costs. Losses relating to Internet activities were also reduced through the integration of print and on-line activities and the disposal of Internet services that were not part of the core activities.
Newsprint costs were down as a result of lower volume and a decrease in the price of newsprint, which became effective from the second quarter of 2002 on. This was offset by a rise of about 13% in distribution costs.
The ‘Sp!ts’ morning freesheet was also affected by the adverse economic climate; advertising volume fell by 27%, again mainly in the staff and national brands & services categories. Still, turnover remained virtually stable owing to the 26% rate increase reflecting the rise in circulation. Total distributed circulation continued to grow this year to 407,000 copies.
At Media Groep Limburg B.V. advertising turnover fell by 9% as volume declined by 11%. Paid circulation decreased by 1.8%. Costs decreased as a result of cost-cutting operations and declining volumes. Within the framework of the drive towards optimisation, measures are currently being prepared to close down the printing company at Maastricht at an accelerated pace. Further retrenchment plans have been made by the editorial boards of Dagblad De Limburger and Limburgs Dagblad to help Limburgs Dagblad get out of the red.
The regional newspapers of Hollandse Dagbladcombinatie B.V. also lost about 9% in advertising turnover. Here paid circulation of Noordhollands Dagblad remained stable, while the paid circulation of the other regional titles fell by an average of 2%. The costs savings arising from the integration into a joint rump newspaper for the afternoon papers, effected in June 2001, resulted in lower personnel costs but did not make up for the loss in advertising volume. Prompted by the structural decline in the results, particularly at the regional newspapers in Haarlem, Leiden and ‘t Gooi, a new study is being conducted into the possibility of further cost-cutting. Decisions about this will be taken in the second half of this year.
The decline in advertising turnover at Hollandse Huis-aan-huisbladen Combinatie B.V. was limited to 5%, while Uitgeversmaatschappij De Trompetter B.V. in Limburg/Brabant even achieved 7% sales growth. Here, too, new initiatives are being developed, including the publication of a special entitled ‘!n’ in collaboration with daily newspaper De Telegraaf.
At the magazine division advertising turnover in the Netherlands fell by an average of 10%. The ‘Privé’ magazine achieved a slight rise in advertising turnover. On balance, circulation income remained stable. Circulation of the glossy magazines (Residence and Elegance) was under pressure, while men’s magazine FHM managed to realise a considerable increase in circulation. The marginal profitable magazine ‘OOR’ was sold at the beginning of 2002.
The result of the Swedish magazines was substantially higher than last year’s owing to reduced start-up losses at Residence and Cosmopolitan and better results achieved by the other magazines.
The economic tide notwithstanding, we continue to invest in the possibilities of the multimedial society. For instance, the provision of paid information through the Internet is in preparation, the first revenue generated by the provision of information via SMS and i-Mode have been realised and digitally printed editions of daily newspaper De Telegraaf are sold worldwide (albeit as yet on a limited scale). In addition, an experiment is being set up involving the possibility of a subscrip-tion to the Saturday editions of daily newspaper De Telegraaf, as yet in a limited area of the Netherlands. Finally, from 2004 on, fairs will be organised in collaboration with CEE Exhibitions.
Income from participating interests
Net income from participating interests increased by € 5 million. Lower losses on Internet interests and a better result from the interest in SBS Broadcasting B.V. were offset by a share in the loss of the Brouwer/Biegelaar combination. Printing activities, too, were affected by the poor economic climate.
Other financial revenues
The improved cash flow resulted in a rise in interest income. On balance, a sum of approximately € 63 million was released as a result of the sale of Biegelaar Groep. Out of this sum, a long-term loan of € 30 million, carrying an interest rate of 7.5%, was extended to the new Brouwer/Biegelaar combination.
At the annual meeting, held in April last, the board stated that it expected the normal net result for the whole of 2002 (excluding extraordinary expenditure) to surpass the € 16.5 million realised in 2001, even though the normal result for the first six months of 2002 would fall considerably short of the comparable figure recorded for the first half year in 2001.
The expectation for the first six months came true. However, the profit forecast for the whole of 2002 must be adjusted downwards because the advertising market is expected to continue its negative trend in the second half of this year. The cost savings resulting from the reorganisation and lower newsprint prices will not be sufficient to offset the consequences of the general economic decline.
Besides, within the framework of the above-mentioned reorganisation plans targeting, in particular, the regional daily newspapers, additional provisions to the (gross) amount of approximately € 25 million will be required. They will be charged to this year’s result. As a consequence, the net group result (after deduction of extraordinary expenditure) could show a slight loss.