Annual report 2014
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TMG in Brief

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Company Profile

Telegraaf Media Groep N.V. (TMG) is one of the largest news media companies in the Netherlands. Our core activity consists of creating and marketing content. The key brands are De Telegraaf, DFT, Telesport, Metro, Autovisie, Privé, VROUW, a number of strong regional dailies such as the Haarlems Dagblad and Noordhollands Dagblad, and Radio Veronica, Classic FM and Sky Radio.

These brands form the heart of the company. Our challenge is to optimally serve the consumer with news and entertainment at any time of the day and via all available forms of distribution. The consumers’ needs are at the core of the choices we make. Through means of the collaboration among our brands we offer advertisers an attractive cross-media reach.

Revenue on the basis of continued operations at year-end 2014 was € 514.9 million and the Company had 2,259 employees (FTE) in service.

De Telegraaf is the largest newspaper in the Netherlands. Regionally, TMG operates in the provinces of Noord-Holland, Zuid-Holland, Utrecht and Flevoland. The key regional dailies are the Noordhollands Dagblad, Haarlems Dagblad, Leidsch Dagblad and De Gooi- en Eemlander. The free daily newspaper Metro primarily targets younger people between the ages of 18 and 35 on their way to work or school. The brands VROUW, Privé and Autovisie target specific target groups. We are reaching some 2.3 million listeners in the 20-49 years target group every day with our radio broadcasters Sky Radio, Radio Veronica, Classic FM and various digital music stations.

Aside from this, TMG has dozens of other brands and titles focused on providing news, entertainment, e-commerce, demand and supply in the personal consumer market and focused on TV production. Local and hyper-local news is provided by the free local papers (distributed door-to-door) and via Dichtbij.nl, an online news platform. TMG has two in-house printing plants. We publish puzzle magazines and digital puzzles in the Netherlands, Belgium, France, Denmark, Sweden, Germany and Spain via Keesing Media Group.

Our news and other products position us right at the centre of society. That entails responsibility for the impact of our products and production processes on people and the environment. Our policy in the area of Corporate Social Responsibility (CSR) is focused on sustainable market performance and helps us to increase the positive impact on people and the environment and to minimise the negative impact.

TMG is listed on the NYSE Euronext Amsterdam stock exchange and is part of the small-cap index (AScX). Market capitalisation at year-end 2014 stood at € 282.3 million.

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Consolidated Key Figures

In thousands of euros

2014

2013

 

 

 

 

 

 

Total income

514,866

542,318

 

 

 

Operating result

-31,400

-10,346

Financial income and expense

-7,158

225,929

Result continued operations before tax

-38,558

215,583

 

 

 

Income tax

-494

-4,985

Result discontinued operations after tax

-23

-42,694

Net result for the year

-38,087

177,874

 

 

 

Minority interest

-4,281

277

Result attributable to shareholders of Telegraaf Media Groep N.V.

-33,806

177,597

 

 

 

Proposed result appropriation (not included in the financial statements)

 

 

Deducted/Released from reserves

p.m.

177,597

Dividend payment

p.m.

-301,275

Pay-out ratio

p.m.

p.m.

 

 

 

Per share in €

 

 

Result

-0.73

3.83

Cash flow from operating activities

0.52

-0.33

Dividend

p.m.

6.50

 

 

 

Employees continued operations (fte) at year end

2,259

2,459

The 2014 and 2013 annual figures have been prepared in accordance with the IFRS-EU guidelines applicable in 2014. The significant accounting policies are included in the consolidated financial statements. The consolidated statement of profit and loss is presented on the basis of continued operations.

The result of discontinued activities or those held for sale is presented separately in 2014. The activities of Keesing Games, Mobillion, Hyves social network, Moviebites and Nobiles were already discontinued/sold in 2013. Relatieplanet was held for sale in 2013 as well as in 2014.

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Vision and Strategy

Ambition and vision

Telegraaf Media Groep wants to inform, inspire, entertain and create loyal consumers in the Netherlands. We deliver content to consumers, at the right place, at the right time and in the form selected by the consumer at that point: print, online, video, mobile and radio. We do this 24 hours per day and seven days per week. We create consumer loyalty via our strong brands, with news and entertainment. By exchanging data we optimally align our offer to consumer needs and opt for forms of distribution that match the consumption behaviour of our customers. Our brands jointly work on providing an attractive cross-media offer for both consumers and advertisers. We develop cross-industry partnerships to ensure a broader and more focused distribution of our products. This way we create value for our stakeholders.

Strategy

TMG focuses on the production of content for distribution via print, online, video, mobile and radio. Consumer behaviour is changing rapidly. The demand for products via digital and audiovisual media is increasing and the demand for print, in which our company traditionally has had a strong position is structurally declining. The business model originally was primarily based on delivery via print. TMG is faced with the challenge of successfully anticipating the opportunities and threats with its organisation, market approach and business models in this changing market.

At the end of 2014, TMG announced its direction for the future. The key word in that direction is focus. In 2015, a transition will be initiated on the basis of the following strategic principles:

  • The consumer is at the centre of everything we do.
    We anticipate individual preferences in terms of products and services, as well as distribution models: print, online, video, mobile and radio. We exchange data in order to align our offer with the needs of the customer.
  • Focus on the core business and key brands.
    Our core activity consists of the creation of content, particularly news and entertainment. Our key brands are De Telegraaf, DFT, Telesport, Metro, Autovisie, Privé, VROUW, the regional dailies – such as Haarlems Dagblad and Noordhollands Dagblad – and Radio Veronica, Classic FM and Sky Radio. In terms of the other brands and activities, we develop scenarios for the future for each component.
  • Focus on innovation.
    All brands and titles are continuously innovating in order to follow changed consumer behaviour. Particularly in the provision of regional, local and hyper-local news there is a need to catch up. The company strongly believes in the importance of regional and local news, but then better aligned with digital consumption.
  • Focus on internal collaboration.
    Our brands and titles jointly work on providing an attractive cross-media offer for consumers and advertisers. Business units in the back-office are working together in order to achieve efficiency gains in business operations.
  • Focus on external collaboration.
    We develop cross-industry partnerships to ensure a broader and more focused distribution of our products. Where we perceive opportunities we create new products ourselves on the basis of our strong brands, or look for collaboration with partners, particularly in the area of data and distribution.
  • We work with a flexible, efficient and competent organisation in which employees and their competencies match the growing demand for digital and audiovisual products and the declining demand for print.
  • Sustainability is increasingly more firmly anchored into our business strategy and in our reporting. We are positioned at the centre of society with our products and are aiming for a positive impact on our market performance as well as on people and the environment with our business processes. The 2014 Annual Report represents the first step towards integrated reporting.

TMG is changing rapidly. Unfortunately this unavoidably results in a loss of jobs. However, change also offers opportunities. We require dedicated and competent employees to develop and optimise new initiatives and to achieve the required changes. TMG wants to stimulate employees and to give them scope. Talent development and advancement are key areas of focus. We will initiate new initiatives in that area as well in 2015.

Strategic priorities and objectives specified last year

Strategic Priorities and Objectives for 2014

Achievements in 2014

Reinforcement of the key brands.

Introduction of tabloid format, renewal of the editorial boards, the digital Sunday newspaper, and the expansion of video and mobile reinforced De Telegraaf brand. The other key brands also developed initiatives for this purpose, in particular Metro, VROUW, Autovisie, and the regional dailies. The strength of the Radio Veronica and to a lesser extent the Sky Radio brand declined. At the end of 2014 a new policy was therefore introduced for the Sky Radio Group.

New initiatives for the growth and transformation of a strong online organisation.

In the online advertising market, growth was primarily experienced due to video, mobile and tablets. Holland Media Combinatie experienced limited digital growth.

The new initiatives for online and other growth were insufficient to be able to offset the decline in print.

Creating new business around De Telegraaf.

The sale of products and services via GroupDeal rose. The other commercial online activities only made a limited contribution to the strategic goals. The Water Sport Week and VaarTV (BoatingTV) were successful.

The development of additional business was not sufficient to be able to offset the total decline in De Telegraaf revenues.

The consolidation and optimisation of regional and local brands and titles, and implement the online ambition by integrating Dichtbij.

Complete integration of the back-offices of Holland Combinatie and HDC Media and merger to form a single company: Holland Media Combinatie. It was decided not to proceed with the integration of Dichtbij, because the opportunities for synergy turned out to be limited. The collective costs dropped steeply.

The 2012-2016 € 70-million cost reduction programme, including a 350-FTE staff reduction, was expanded by € 50 million in the second half of 2013 and by a further staff reduction of at least 350 FTEs. The ultimate 2016 date was therefore brought forward to 2014.

In comparison to year-end 2011, total cost reductions of € 102 million had been achieved by the end of 2014. In 2014 the number of number of employees (FTE) declined by 200. The reductions, primarily at HMC, fell behind schedule.

Corporate Social Responsibility (CSR)

Our products put us right at the centre of society. That entails responsibility for the impact of our products and production processes on people and the environment. Our Corporate Social Responsibility (CSR) policy is focused on sustainable market performance and helps us achieve a positive environmental and social impact. The impact is spread across the entire supply chain: ranging from the purchase of materials to the products used by the consumer and from personnel development to the reduction in absence due to illness.

TMG purchases materials, such as paper, energy and ink. In addition, schooling, training and education services are purchased to optimise the knowledge and expertise of the organisation. Products, such as fuel and electricity are consumed during the production process and employees devote themselves to the creation of content and its exploitation. The resulting products are transported to customers (such as retail outlets) and consumers (such as subscribers), and are digitally distributed. The impact on consumers is felt at the end of this cycle (knowledge, entertainment) TMG’s key environmental impact is indirectly related to the consumption of energy and raw materials used for the production of purchased materials, such as paper and ink, and directly to the in-house consumption of fuel, electricity and semi-manufactured goods, CO2 emissions and the production of residual materials. The key social impact is inherent in the knowledge and wellbeing of employees and the impact of TMG’s products on society. 

The impact is monitored in several ways: on the basis of calculating the in-house emissions of CO2, the identification of the consumption of materials such as paper, energy and production resources, and the requirements that TMG imposes on the purchase of products in the environmental domain. The social impact is currently monitored on the basis of indicators, such as absence due to illness, and education and training. Specific objectives have been established for several indicators. One of these is the objective to maximise the share of certified paper in the total volume of newsprint.

Strategic CSR Themes

TMG also established its CSR policy on its stakeholders’ views. Meetings and analyses were conducted for this purpose in 2013. TMG has adopted the following strategic CSR themes on the basis of a materiality analysis, that includes a weighting of TMG’s potential impact and stakeholder views:

  • Raw Materials and Residual Materials;
  • Energy Efficiency;
  • Transparency;
  • Sustainability Reporting;
  • Good Employment Practices;
  • Social Involvement;
  • Partnerships and Sustainable Supply Chain Approach.

Furthermore, TMG endorses the principles of the UN Global Compact, the OECD Guidelines and the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work.

CSR Management and Control

The responsibility for establishing the CSR strategy and policy rests with TMG’s Executive Board. In 2014 a policy was developed to structurally implement the seven strategic CSR themes. TMG’s business units are responsible for the implementation of the CSR policy. The CSR Management System they apply comprises the following: the CSR policy, the CSR value model (to establish relevant and material CSR aspects so as to be able to initiate and monitor actions), tasks and responsibilities, CSR reporting and a support structure.

The specified objectives will be incorporated into the performance evaluation and remuneration of the involved line management. Effective from 2015, a CSR Steering Group will be created. The Steering Group will consist of the CEO (Chairman), the CFO, the CSR Manager, a corporate communication advisor and various other involved employees. The Executive Board disseminates the policy, the CSR Manager supports the business units and manages a number of temporary CSR Task Groups.

Transparency

Transparency is one of our strategic CSR themes. We express this in various ways, including with this first step towards an integrated annual report. In this report, we provide information about the financial and commercial performance, as well as the environmental and social performance, if relevant, for each business unit. To ensure transparent reporting, TMG adheres to the guidelines of the Transparency Benchmark adopted by the Dutch Ministry of Economic Affairs, and the guidelines of the Global Reporting Initiative (GRI 4) and the Carbon Disclosure Project (CDP). The CDP strives to lower CO2 emissions. See www.cdp.net and use the search term Telegraaf Media Groep to view TMG’s CDP reports. See http://corporate.tmg.nl/en/sustainability for the GRI Table.

Restructuring costs have been high in recent years. By eliminating these costs and focussing on normalised results there was insufficient focus on actual performance and the actual cash flows of the underlying business units. Effective from 2015, reporting and control will be adjusted.

Transparency in internal reporting is important to be able to properly evaluate the performance of business units, and to take the right measures on a timely basis. In recent years, high costs were frequently passed on to well-performing business units in order to enhance the declining result of underperforming business units. Effective from 2015, we will reduce the size of such internal transfers in internal reports. This makes responsibilities clearer and results more transparent.

A transparent annual report also provides clear information about our strategy and objectives and the progress made in this respect during the year under review.

In terms of transparency, two material CSR aspects are important for TMG: transparency of business operations and consistency with external schemes and systems, such as GRI, CDP and the Transparency Benchmark. In 2015, performance indicators (KPIs) and objectives will be established, in part on the basis of the stakeholder’s dialogue.

The scores achieved for the Transparency Benchmark and the Carbon Disclosure Project already provide some insight into TMG’s degree of transparency in 2014. In 2014, TMG rose to the 80th position in the Transparency Benchmark’s rankings. TMG wants to raise its CSR policy and the associated reporting to a higher level.

Strategic CSR Theme

KPI

Unit

2014 Objective

2014 Result

2013 Result

Transparency

Participation in CSR Benchmarks

 

 

 

 

TMG’s Transparency Benchmark score

#

Top 100

 

80

149

TMG’s Carbon Disclosure Project’s score

#

> 70

 

75

62

Stakeholder Dialogue

TMG attaches a great deal of importance to regular consultation with stakeholders concerning the company’s direction and their wishes and expectations concerning TMG. The Executive Board and the management boards of business units are involved in this in various ways.

Stakeholder Selection

During the stakeholder identification process, the stakeholders’ actual/potential influence on TMG was reviewed. In terms of stakeholder selection, the stakeholders were subdivided according to the degree of influence on TMG and the degree of importance to TMG.

The summary below only contains the groups of stakeholders that are of crucial importance to TMG in terms of its business model: customers (consumers and advertisers), suppliers, shareholders, employees and partners.

Stakeholders

Dialogue Form

Dialogue Frequency

Dialogue Content

Customers (media consumers)

One-on-one

Customer panels

Social media

Daily

Delivery

Content as such

Customers (advertisers and media agencies)

One-on-one

Daily

Reach, expression of content, objectives, opportunities, prices.

Internal stakeholders (employees, Supervisory Board, Executive Board, management/management boards, works councils).

 

Full organisation meetings

Department meetings

Bilateral meetings

Planning & Evaluation cycle

Meetings with Works Councils

Direct mutual contacts

Regularly

Weekly

Regularly

Yearly

Regularly

Daily

New organisation structure, strategy, acquisition policy, terms and conditions of employment

Shareholders

Meeting of Shareholders

Formal and informal meetings

Periodically/Yearly

Regularly

TMG’s financial health

Suppliers

One-on-one

Daily

Price, quality, sustainability

 

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Organisation and Management

As at 31 December 2014

Executive Board

Geert-Jan van der Snoek, CEO Telegraaf Media Groep N.V. (effective 1 July 2014)  

Leo Epskamp, CFO Telegraaf Media Groep N.V. (effective 1 September 2014)

Directors

Harry de Wit, Managing Director TMG Landelijke Media (effective 1 November 2014)

Ferdy Demmers and Gert Jan Oelderik, Management Board, Holland Media Combinatie (effective 1 November 2014)

Philip Alberdingk Thijm, Managing Director, Keesing Media Group (effective 1 July 2014)

Geert-Jan van der Snoek, Managing Director, Sky Radio Group (temporary since 1 October 2014)

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The TMG Share

Shares and Share Price

At the end of 2014, TMG’s issued and paid-up share capital consisted of 46,350,000 ordinary shares and 960 priority shares, with a collective market value of € 282.3 million as at 31 December 2014. The number of ordinary shares remained unchanged in 2014. TMG is listed on the NYSE Euronext Amsterdam stock exchange and is part of the small-cap index (AScX). The ISIN code is NL0000386605.

Distribution of share ownership and protection of control

Insofar as this is known to TMG, the following shareholders have reported a direct equity interest in TMG of 3% or more to the AFM pursuant to the Dutch Financial Supervision Act (Wft): VP Exploitatie N.V. (30.5%) and the Telegraaf Media Groep N.V. Share Administration Trust (62.7%). The latter holds the shares for the purpose of administration. Within the Telegraaf Media Groep N.V. Share Administration Trust the following holders of depositary receipts for shares reported an interest of 3% or more: Dasym Investment Strategies B.V. (20.06%), Delta Lloyd (7.12%), M.M.J.J. Boekhoorn (5.0%), Navitas (5.01%), Tweedy Browne Company LLC (4.71%) and M.S. Paarlberg (3.35%). For an overview of all outstanding and potentially available defensive measures to guard against a possible takeover of control of TMG see the Other Information chapter: TMG Preference Shares Trust and TMG Priority Share Management Trust

Share price trends and key figures per ordinary share

The TMG share closed the year at a price of € 6.09. This was 33% lower than the share price at the end of 2013 (€ 9.11).

 

2014

2013

Earnings per share

 - 0.73

3.83 

Diluted earnings per share

 - 0.73

3.83

Dividend

 TBD

6.50 

In 2013, there was an unusually high dividend payment in relation to the sale of the 6% interest in ProSiebenSat.1 Media AG. For an explanation of the earnings per share, see the Financial Statements, Note 24. Earnings per Share.

No profits were generated in the financial year 2014, consequently there will be no profit at the disposal of the General Meeting of Shareholders relating to the financial year 2014.

Dividend Policy

In 2014, at the proposal of the Executive Board, the General Meeting of Shareholders on 24 April adopted a resolution to set the dividend effective from the 2014 financial year dependent on the recurring operating cash flow. That is, the recurring EBITDA of the total operations subject to the deduction of the license fees owed by the Sky Radio Group (cash out), taxes, interest and replacement investments. The basic principle is a payout of 30% - 40% of this net operating cash flow, as far as possible within the statutory provisions and the covenants with banks.

For a complete overview of our policy concerning the appropriation of profit, see Other Information, Provisions in the articles of association concerning the appropriation of profit.

Financial Calendar

The TMG Annual General Meeting of Shareholders (AGM) will take place on 23 April 2015. At that time the Executive Board will report to the shareholders on the policy pursued. Effective from 11 March 2015, the agenda of the AGM can be viewed at www.tmg.nl. TMG’s shareholders meet at least once a year during a General Meeting. This meeting is convened by the Executive Board or by the Supervisory Board.

Event

Date

Time

Comments

Press release Annual Figures

11 March 2015

Prior to trading

 

Press conference

11 March 2015

09:30-10:30

Including audio webcast

Meeting with analysts

11 March 2015

14:00-16:00

Including audio webcast

2014 Annual Report

11 March 2015

16:00

Available online

Last date of registration for AGM

26 March 2015

 

 

Annual General Meeting

23 April 2015

10:30 

@ TMG, Basisweg 30, Amsterdam

2015 first quarter result

22 April 2015

Prior to trading

 

2015 second quarter result

31 July 2015

Prior to trading

 

2015 third quarter result

23 October 2015

Prior to trading

 

Information for Investors

All public information concerning our performance, strategy and activities is available at http://tmg.nl/investors. If the Executive Board makes a presentation for analysts, investors and other interested parties, such as during the publication of the annual figures, it will be audio broadcast live on this website. The audiocasts and associated presentations can also be viewed at a later date. 

The mission of
Paul
Jansen

Paul Jansen spends more time in the Dutch Parliament than at home on the couch, all in the name of achieving his mission for De Telegraph. "I want to explain the facts."

Name: Paul Jansen
Age: 47
Position: political commentator
Brand: De Telegraaf

"Working at De Telegraaf means top journalism for the largest paper in the Netherlands and that's why I love working here. It's the premier league for reporters. There's no ignoring De Telegraaf. Our 'in your face' layout is a clear statement; our front page is immediately recognisable.

My mission is to establish relationships between events, like my history teacher who did exactly that at secondary school. It was because of him that I became a journalist. I want to explain the facts, so that other people can form their opinions. In my analyses, I want to tell the story behind the news, explain it and clarify it. Of course, everybody has an opinion about politics but most people don't progress further than 'they've messed up again in The Hague'. For nearly 20 years now, De Telegraaf has offered me the opportunity to do something about that.

I live in Leiden, though my family (wife and four children) thinks that I live in Parliament. The political world has been very unstable in recent years, so there's plenty for me to do. And you simply can't put your finger accurately on the news if you're not there. You need to get up close in politics. Get your feet dirty in order to really know what's happening.

Top journalism for the largest newspaper in the Netherlands”

The high-spots are the general elections, or cabinet crises. Everything and everyone is on the move and nobody can estimate the final effect. It's that unpredictability which makes politics so fascinating to follow. And yet it can be boring, when debates last for hours on end. And it may well just be a charade, because the decisions have already been taken behind the scenes. All that's left is for the politicians to go through a round of point-scoring. I really don't sit in on all those debates, you know. In any case, my work is mainly about maintaining my network - heading into the corridors, with time to talk to people.

Balancing on a thin line


The information from my network is often coloured, All politicians try to win over constituents in their own way. My task is to make the story as clear and as objective as possible. I want to give readers an insight into the political game and the stakes involved. What are the consequences? What interests and considerations are involved? I explain what's happening on the stage and give them a look behind the scenes. If I don't share that information, politicians will wrap the public around their little fingers.

When it comes to complicated themes, parliamentary journalism is a question of balancing on a thin line. You want to simplify the story but you need to cover the essentials. If I can't do so, then I sometimes simply won't write the story. Fortunately, I have room to give more extensive analyses and in-depth explanations in my weekly column and in the TV programme Vandaag de Dag, in which I occasionally feature. That's a fantastic sideline. Whatever the platform used, you always feel like you're part of a leading concern. TMG has the punching power, image and potential to continue to grow. I'm delighted to contribute to that."

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