Financial

The Consolidated statement of comprehensive income (see Appendix) is presented on the basis of continued operations. The result from discontinued operations is presented separately for the second quarter of 2009. The discontinued operations terminated in 2010 do not have significant influence.

TMG achieved a recurring EBITA margin of 11.8% in the second quarter of 2010 (second quarter 2009: 8.4%). The EBITA result increased by € 4.9 million to € 18.0 million. There were almost no normalisations in the second quarter of 2009 and 2010.

The operating result (EBIT) was € 8.7 million in the second quarter of 2010 and as such is € 6.6 million higher than it was in the comparable period in 2009.

The improvement in the result is entirely due to the lower distribution costs resulting from the discontinuation of the Sunday edition of De Telegraaf newspaper effective December 2009 and the cost reductions realised as a result of the 2008-2010 cost reduction programme. This programme, with its objective of achieving a structural reduction of € 40 million to € 50 million in the annual cost level, has almost been completed. As a result of this programme, the cost level in comparison to the 30 June 2008 reference date has since declined by almost € 47 million. The portfolio has been changed, less profitable activities have been disposed, non-core activities have been outsourced and the objective in terms of workforce reduction has been achieved. On balance, the number of FTEs in comparison to the 30 June 2008 reference date declined by approximately 900 (of which 600 as a result of reorganisations) to approximately 2,800 FTEs.

Revenues

Revenues declined by 2.3% to € 150.3 million in the second quarter of 2010, primarily due to lower advertising revenues derived from printed publications. The trend in advertising revenues has been decreasing at a diminishing rate over the past four consecutive quarters. In comparison to the same period in the previous year, the trend is as follows: -16%, -12%, -6% and -2%.
Internet revenues are exhibiting a positive trend and rose by € 2.5 million to € 13.4 million in the second quarter. Between 30% and 40% of Dutch citizens aged 13 and over visit one or more TMG websites each month.

The costs of raw and auxiliary materials declined by € 1.7 million, primarily due to a drop in the cost of paper.

Personnel costs in the second quarter declined by 5.3% to € 53.4 million due to the decrease in the number of fulltime jobs. The workforce for continued operations was reduced by over 200 FTEs in comparison to 30 June 2009. The cost of hiring temporary personnel decreased by € 0.9 million.

Other operating expenses declined by € 3.6 million as a result of lower distribution costs due to the discontinuation of the Sunday edition of De Telegraaf.

The financial income and expenses in the second quarter of 2010 amounted to positive € 4,0 million compared to positive € 1.2 million in the same period of 2009. The result of associates includes TMG’s 6% share in the result of ProSiebenSat.1 Media AG (ProSiebenSat.1) for the second quarter of 2010. The revenues of ProSiebenSat.1 rose by 9.6% to € 761 million in the second quarter of 2010. The net result rose to € 74.5 million, which was primarily due to the growing German advertising market.

The result from discontinued operations amounted to € 2.7 million in the second quarter of 2009 due to the disposal and termination of operations in Sweden and Ukraine, and the sale of a number of Dutch magazines.

Cash Position
The cash position declined by € 11.9 million in the second quarter of 2010, primarily due to a € 16.7 million dividend payment. A dividend of € 0.35 per TMG share was distributed. Furthermore, approximately € 5 million was paid out in severance payments. Lower paper inventories, the sale of real estate, a lower accounts receivable position due to tighter controls and the improved EBITA result all positively influenced the liquidity trend.

Outlook
The increase in the result for the second quarter of 2010 cannot simply be extrapolated to the whole of 2010, because several important cost saving measures were already implemented throughout 2009.

The following factors will affect the operating result for the full year 2010:

Factors that have a positive influence:

• Continued effect of the cost measures implemented in 2009;
• Outsourcing of activities;
• Lower distribution costs due to the discontinuation;
• of the Sunday edition of De Telegraaf;
• Projected growth in the revenues derived from digital activities;
• Decreased cost of paper.

Factors that have a negative influence:

• Projected decline in advertising revenues in spite of the positive effect of the FIFA World Cup;
• Effect of increases pursuant to the collective labour agreement;
• Effect of inflation.

Given the trend in advertising revenues during the first half of the year, the recurring EBITA margin for all of 2010 is projected to be at least 9%.

Furthermore, the share in the result of ProSiebenSat.1 Media AG and a tax credit pursuant to the expected liquidation of Expomedia Group Plc influence the 2010 net result.

In conclusion

TMG is almost debt-free and occupies leading positions with big brands in a number of relevant markets. TMG is occupied in many ways with the changing media consumption of which digital media take a bigger part day by day. Aside from a focus on further cost reductions, a great deal of TMG’s attention in the time to come will be devoted to revenue growth, both from existing activities and through acquisitions.