Transformation to a leading cross media company

Key points of our strategy 2012-2016 are: Focus on three platforms Print, Online and Radio; Leveraging on strengths within portfolio; A total of €300 mln budgeted for acquisitions in print and online.;TMG from holding company to operational company, new organisation. Keesing Media Group: Target (inter)national growth from current core activities (a.o. intention to  acquire Megastar Groupe in France).

Key points strategy 2012-2016

Focus on three platforms: Print, Online and Radio.

  • Print: Strengthening leadership position in a consolidating market
  • Online: Acceleration of growth based on wide reach and focus on social media,  online video and e-commerce.
  • Radio: Integrating in portfolio

Leveraging on strengths within portfolio

  • Capitalise on shared content and shared sales organisation via cross media  approach

A total of €300 mln budgeted for acquisitions in print and online.

TMG from holding company to operational company, new organisation

Keesing Media Group: Target (inter)national growth from current core activities (a.o. intention to  acquire Megastar Groupe in France).

Outlook 2011

  • TMG expects revenues of between €570 and €590 million in 2011 and a recurring EBITDA of between €59 and €64 million.

Financial ambitions 2016 (including acquisitions)

  • Increase in revenues to €800-€900 million (40%-50%) compared with the expected revenues in 2011; approximately half of revenues from media other than print;
  • More than a doubling of recurring EBITDA to €120-€135 million compared with  expected recurring EBITDA in 2011; about two-thirds of recurring EBITDA  to come from media other than print;
  • Increase in recurring EBITDA margin from 10% to 15% in 2016;
  • Cost savings programme to result in €70 million savings in 2016;
  • A total of €300 million budgeted for acquisitions;
  • Dividend: In the next five years, TMG is striving to increase the dividend compared with 2011 (dividend payment in 2011: €0.45 per share).

Financial guidance 2012 - Investing in growth acceleration

  • Uncertain economic environment;
  • A transition year, in which TMG will invest in growth acceleration;
  • Revenue growth from online activities is still insufficient to offset the decline in revenues from print;
  • Implementation of planned measures and organisational adjustments;
  • Approximately 20% lower recurring EBITDA compared with the expected recurring EBITDA in 2011.

Herman van Campenhout, CEO TMG: “Over the past months, we have gone through a carefully thought out process within TMG. Based on our strengths we have mapped out the opportunities for TMG in the next five years. This has resulted in the strategy we are presenting today: the transformation of TMG to a leading cross media company in the Netherlands, resulting in a doubling of the operating profit in 2016, of which about two-thirds will be generated by media other than print. The already initiated actions will result in a better proposition for our customers, an acceleration of growth in online and value creation for our shareholders. I am convinced that this strategy, building on our strengths, will make us one of the most successful players in a dynamic market.
One of these important strengths is our content creation, both in word and video. We will now combine that strength to the greatest extent possible and we will make use of it across multiple platforms. At the same time, we will focus even more on enhancing content through aggregation and personalisation of information. Print is and will continue to be a significant driver of TMG’s cross media strategy. We will strengthen our position by taking advantage of opportunities in the printed media market, a market that will undoubtedly see further consolidation.
We will be aggressive in taking advantage of the opportunities offered by the fast-growing online market. We will guide consumers in their search for information, opinions, products and services and link the sale of products to that process. The focus is on online reach, social media, video online and the fast-growing e-commerce market. We will actively facilitate transactions, also for our B2B clients.
Another part of our strategy is the combination of our strengths and our strong brands. We will be exploiting the three platforms - Print, Online and Radio – in such a way that they reinforce each other and realise accelerated growth. The strength of content will be combined with our social network expertise and used as an integral part of our cross media approach.
TMG’s strategy translates directly into a firm financial ambition. Revenues, including acquisitions, will have increased by 40% to 50% in 2016 compared with 2011, with approximately half of revenues being generated by media other than print. Recurring EBITDA will have more than doubled by 2016 compared with 2011, with about two-thirds generated by media other than print.
Our people are of course a crucial factor in the execution of our strategy. The strategy demands a new organisational structure: a flat organisation that stimulates entrepreneurship. TMG will change from a holding company into an operational company with an executive team. Thanks to the strategy we are presenting today, the new organisational structure and the efforts of our professional and committed people, we are fully confident that we will be able to successfully realise our ambitions for 2016.”

Strategy 2012-2016

Print: Strengthening leadership position in a consolidating market

  • Combining the various print units in one powerful organisation;
  • Gradual introduction of regional sections in daily newspaper De Telegraaf;
  • Focus on high circulation through innovative retention programme;
  • Important role in market consolidation.

Editorial strength is the basis of the content creation that TMG currently exploits to a large degree via its print media. TMG’s print activities currently account for over 70% of TMG’s total revenues. TMG will continue to strengthen its print position through strategic initiatives, such as the combination of the various print units in one powerful organisation, the gradual addition of regional sections to De Telegraaf and the introduction of an innovative retention programme for subscribers. In addition, Print will also play a significant role as a driver for TMG’s cross media approach. The strategic initiatives to safeguard TMG’s current top position in print in the future, together with cost-saving measures, will ensure that Print will also generate constant returns in the long term. As market leader, TMG is excellently positioned to create additional value by capitalising on economies of scale, thanks to the opportunities offered by the continuing consolidation of the printed media market.

Online: Acceleration of growth based on wide reach, and focus on social media, online video and e-commerce.

  • Strengthen leadership in reach through combining activities, use of own and  aggregated content, Hyves technology, online video and the introduction  of regional and themed portals;
  • Capitalisation on wide national reach through the expansion of webshop  activities and the creation of shop-in-shop e-commerce propositions;
  • Take a leading position in selected Classified categories;
  • TMG sees ample opportunities to realise accelerated growth in the relatively young and fast-changing online market. This growth acceleration can be realised by combining online activities that are currently mostly organised separately, realising synergies and economies of scale, the exploitation of own and aggregated content, the Hyves technology and through the introduction of regional and themed portals. TMG enhances information by interpretation, aggregation and personalisation that information. Social media, video online and e-commerce are important growth pillars in the online strategy. In order to monetise premium content more effectively, TMG will continue to step up its efforts targeting digital subscriptions and paid apps. TMG will make clear choices for categories based on two criteria: the attractiveness of the category itself and the potential for TMG to carve out a leading position.

Radio: Integration in portfolio.

  • Proactive exploitation of content from TMG portfolio for radio;
  • Joint advertising sales.

The focus for radio is on increasing TMG’s share of the listeners’ market by enhancing content and by doing so increasing TMG’s share of advertising market spending. Radio is a complementary part of TMG’s cross media strategy, with the focus on sharing editorial content across several platforms, personalised radio, cross-promotion of various TMG titles and joint advertising sales.

Combining the strengths within portfolio: Cross media approach

  • Editorial strength combined in a content organisation, split in national and  regional;
  • TMG-wide sales organisation for cross media clients;
  • Centralising technological innovation.

TMG shares its content, reach, social network functionality, advertising sales strengths and technology across the entire portfolio. TMG combines its strengths by sharing content and driving the traffic between media and platforms, the use of social media functionality on websites and the sale of cross media campaigns. TMG will increase its focus on technological innovations and develop new competencies in order to anticipate and respond to market trends.

Keesing Media Group: Target international growth.
Keesing Media Group (KMG) will realise growth through the expansion of its current core activities to new platforms and other countries or language areas. The product development for these new platforms is focused on digital products. Growth through continued internationalisation will result in greater economies of scale. KMG is the market leader in the Netherlands, Belgium and Denmark. In line with the strategy, KMG is planning to acquire Megastar Groupe, a French publisher of puzzle magazines, with annual revenues of €24 million. With this acquisition KMG will become the market leader in France.

Financial ambitions

Through this strategy, TMG will in the next five years move from being a media group mainly focused on print to a cross media company. TMG’s financial ambitions for 2016 have been set in comparison to a forecast for 2011 of revenues within a bandwidth of €570-€590 million and a recurring EBITDA within a bandwidth of €59-€64 million.

Revenues and recurring EBITDA 2016, including acquisitions

  • Increase in revenues to €800-€900 million, and approximately half of this from  media other than print;
  • Increase in recurring EBITDA to €120-€135 million, with about two-thirds of  this from media other than print;
  • Increase in recurring EBITDA margin from 10% to 15% in 2016.

Autonomous revenues and recurring EBITDA 2016

  • Increase in revenues to €650-€700 million;
  • Increase in recurring EBITDA to €75-€85 million.

These financial ambitions are driven by TMG’s transformation to a cross media business, the implementation of cost-efficiency measures and the realisation of synergies between the three platforms. The new five-year cost-saving programme, which will deliver cost savings of €70 million to the end of 2016 will also contribute to the realisation of these financial ambitions.

Acquisitions also play a role in the strategy. TMG’s acquisition criteria are: solely in the strategic segments, only when synergies can be realised and a ROC of at least 12%. TMG has budgeted an amount of €300 million for acquisitions, which will require an estimated €250 million in external financing (less than two times recurring EBITDA).

In the next five years, TMG is targeting an increase in dividend payments compared with 2011 (dividend payment in 2011 was €0.45 per share for 2010).

Financial guidance

  • Gross reorganisation costs of €35 million in connection with the planned  cost-reduction measures will be largely accounted to 2011;
  • Possible impairments, pertaining primarily to Sky Radio Group, will amount to a maximum of €60 million accounted to 2011 where possible.