In thousands of euros |
1/1 - 30/6 2017 |
1/1 - 30/6 2016 |
---|---|---|
Total income |
155,997 |
171,908 |
Operating result |
-24,089 |
-7,043 |
Financial income and expenses |
493 |
-479 |
Result before tax |
-23,596 |
-7,522 |
Income tax |
-6,028 |
-1,755 |
Result from discontinued operations after taks |
6,175 |
8,901 |
Net result for the year |
-11,393 |
3,134 |
EBITDA, excl. supernumerary employees, acquisition costs and book losses |
-6,147 |
-1,611 |
EBITDA margin |
-3.9% |
-0.9% |
Per share in € |
||
Result |
-0.25 |
0.07 |
Cash flow from operating activities |
-0.55 |
-0.52 |
Employees (FTE) at period end |
1,289 |
1,497 |
The 2017 semi-annual accounts have been prepared in accordance with the IFRS-EU guidelines applicable in 2017. The results are presented on the basis of continued operations. The results of discontinued operations and/or operations held for sale are presented separately. These concern the radio activities of Sky Radio Group transferred in 2016 to the new radio company set up in collaboration with Talpa and the activiteities of Keesing Media Group with a view to the announced upcoming sale.
Under normal economic conditions, TMG's business operations are subject to seasonal fluctuations. Advertising revenues are higher in the second and fourth quarters of the year than in the remainder of the year. This is due to the public holidays occurring during these periods. The single-copy sales of De Telegraaf and Keesing Media Group's publications are higher in the third quarter due to the summer holiday period.
The results of Telegraaf Media Groep ('TMG') for the first half of 2017 were significantly lower than those for the first half of 2016. This development was already visible when the results for the first four months of 2017 were reported on 26 May. Excluding extraordinary and one-off items (particularly restructuring charges and the costs related to the two public offers), in the first half of 2017, TMG reported a negative EBITDA of € 6.1 million, compared to a negative EBITDA of € 1.6 million in the first half of 2016. This is mainly the result of the further decline in advertising revenues, which was also due to portfolio rationalisations. The above-mentioned EBITDA development relates to continuing operations and therefore excludes the results of Keesing Media Group ("Keesing") with a view to the announced upcoming sale and it also excludes the results of the entities contributed to the radio partnership with Talpa. Upon completion, the sale of Keesing will lead to a significantly positive cash position.
TMG has recently entered a new phase. As of 2 July, Mediahuis holds the majority (64.66%) of the shares in the company. On 21 June, Marc Vangeel (CEO) and Koos Boot (CFO) were appointed to the new Executive Board, and the new Supervisory Board was also appointed on that date (see https://www.tmg.nl/en/management-structure). Together with Mediahuis, TMG will resume building a media company with a solid market position, quality editorial boards and strong brands. Under the leadership of the new Executive Board, the focus now lies on TMG's core activities and brands. In the third quarter, the new Executive Board will present its plans to make TMG a strong and leading media company again.
On 18 July, TMG announced that the shares in Keesing will be sold to a partnership to be formed with Ergon Capital Partners, which is subject to approval of the shareholders and the advice of the works councils. TMG will take a 30% stake in this new partnership. The valuation agreed in this regard for 100% of the Keesing company amounts to € 150.0 million (enterprise value, debt and cash free). The net cash flow from the transaction is expected to amount to approximately € 130.0 million (taking into account a reinvestment for the 30% stake and the envisaged level of funding of the partnership, and assuming the bank balance of Keesing as at 30 June). The net cash flow from the transaction will be used to fully settle the credit facilities with the banks. In addition, it will enable the financing of normal operations, as well as the future plans with regard to TMG's core activities and brands.
In thousands of euros |
Period |
Period |
% |
---|---|---|---|
1/1-30/6 2017 |
1/1-30/6 2016 |
||
Continuing business activities 1 |
|||
B2C Subscriptions |
84,580 |
87,571 |
-3.4% |
B2B Advertisements |
38,951 |
49,519 |
-21.3% |
Other revenues |
32,466 |
34,818 |
-6.8% |
Total revenues |
155,997 |
171,908 |
-9.3% |
Personnel costs |
65,353 |
71,583 |
-8.7% |
Other costs |
96,791 |
101,936 |
-5.0% |
Total costs |
162,144 |
173,519 |
-6.6% |
EBITDA, excl. supernumerary employees, acquisition costs and book losses |
-6,147 |
-1,611 |
|
EBITDA-margin |
-3.9% |
-0.9% |
|
Supernumerary employees, acquisition costs and book losses |
-12,805 |
-293 |
|
EBITDA, incl. supernumerary employees, acquisition costs and book losses |
-18,952 |
-1,904 |
|
EBITDA-margin |
-12.1% |
-1.1% |
The decline in revenues was mainly due to the decline in total print advertising revenues from € 49.5 to € 39.0 million (–21.3%), including the effect of portfolio rationalisations (the discontinuation of Dichtbij, the partial discontinuation of activities in Rotterdam/Utrecht, and the sale of free local papers as of 1 June). Excluding the effect of portfolio rationalisations, total advertising revenues declined by 19.2%. This concerns a combination of a decline in print advertising revenues by 22.4% and an increase in digital advertising revenues by 2.4%. Besides the portfolio rationalisations, the main causes are the declining market of print advertising and the detrimental effect of restructuring implemented at the sales and marketing departments.
The revenues from subscriptions decreased slightly, from € 87.6 million to € 84.6 million (–3.4%), with the decline in revenues due to fewer subscriptions being partly offset by price increases. The decline in the number of subscriptions is mainly visible at De Telegraaf and to a lesser degree at the regional dailies.
Costs, excluding restructuring charges, the book loss and one-off consultancy costs, declined from € 173.5 million to € 162.1 million (–6.6%). This cost decrease was mainly related to a decline in personnel costs following the restructuring implemented in 2016 and 2017 at, among other entities, the printing plants (the first quarter of 2016) and the sales and marketing departments (end of 2016, beginning of 2017). In addition, the transport and distribution costs decreased as a result of portfolio rationalisations and portfolio optimisation, as well as lower circulation. The costs of external advisers (excluding the one-off consultancy costs relating to the public offers and the procedures before the Enterprise Chamber) were also clearly lower. On the other hand, at approximately € 5.0 million, the start-up costs of the new online video platform Telegraaf VNDG clearly added to the costs in the first half of 2017.
The EBITDA result, including exceptional items, decreased from € 1.9 million negative to € 19.0 million negative.
The restructuring charges for the first half of 2017 amount to € 3.7 million (2016: € 0.3 million) and mainly relate to the restructuring of the Operations department following the sale of the free local papers and severance payments made to the Executive Board and members of Senior Managerment. The costs relating to the public offers (including the procedures before the Enterprise Chamber) amount to € 8.2 million and concern costs of financial and legal advice. In total, these one-off consultancy costs in 2016 and the first half of 2017 amount to approximately € 10.0 million.
The result from discontinued operations after taxes amounts to € 6.2 million (2016: € 8.9 million) and in 2017 relates only to the results of Keesing. In 2016, the results of the radio entities contributed to the partnership with Talpa (Sky Radio and Radio Veronica) were also included in this item in the amount of € 3.7 million. Keesing’s revenues rose from € 35.0 million to € 35.4 million (+1.1%), partly as a result of an increase in the number of issues compared to last year. The costs incurred by this business unit decreased by 4% from € 25.1 million to € 24.1 million, mainly due to process optimisations and other cost saving measures. This resulted in an increase in Keesing’s EBITDA by € 1.3 million, from € 10.0 million to € 11.3 million (+13.0%).
TMG’s net result decreased from a profit of € 3.1 million to a loss of € 11.4 million. As described above, the main reasons for this decrease were the revenue decline, high one-off consultancy costs, and start-up expenses related to Telegraaf VNDG.
As of 30 June 2017, TMG’s net cash position is € 20.1 million negative (this concerns the revolving current account facility of € 22.1 million minus € 2.0 million cash position) compared to a positive net cash position of € 14.5 million at year-end 2016. This decline is largely due to the negative EBITDA, restructuring charges paid, and the payment of the revalued Radio Veronica licence for the period 2011-2017 (€ 14.7 million including interest). In addition, there is the effect of recognising Keesing as ‘held for sale’, as a result of which Keesing’s bank balance is part of the assets held for sale (€ 4.7 million).
Adequate agreements were made with the banks about the financing of TMG for the current state of affairs and before and after the sale of Keesing. The net cash flow from the sale of Keesing will be used to fully settle the credit facilities with the banks. In addition, it will enable the financing of normal operations, as well as the future plans with regard to TMG’s core activities and brands.
Following the advice of the works councils and after approval of the Extraordinary Meeting of Shareholders on 31 August, 2017, the sale of Keesing is expected to be completed shortly thereafter.
Revenues from advertising and circulation are expected to remain under pressure in the second half of 2017. We will be able to partly offset the effect of this development by cost-savings.
During the Investor Relations Day in September 2016, goals were formulated for 2019, which also formed the basis of the goals for the current year. This was reported in TMG's Annual Report for 2016. Given the appointment of the new Board and considering the actual result developments and the pending sale of Keesing, these goals will be redetermined.
The new Executive Board will announce its plans for the future of TMG in the third quarter.
In compliance with Section 5:25d, subsection 2c of the Financial Supervision Act (Wft), the Executive Board declares that, to the best of its knowledge:
Amsterdam, 28 July 2017
Executive Board, Telegraaf Media Groep N.V.