Telegraaf group raises dividend
Under continuing difficult circumstances N.V. Holdingmaatschappij De Telegraaf realized a net result over 2004 of € 22.1 million. Over 2003, there was still a net loss of € 25.8 million.
Although the profit target of € 20 million for 2004, announced last year, was amply realized with this achieved result, the quality of the profit differs from what was expected. The fact is that the result was achieved with an almost constant advertising turnover, while a growth of 5% had been expected. In addition, the increase in turnover of circulation amounted to less than 1%. The improvement of the result was therefore mainly achieved through further cost reductions.
Operating profit before depreciation/devaluation of goodwill came down from € 39.3 million over 2003 to € 16.2 million over 2004, including about € 15 million in reorganization costs and about € 16 million initial costs for new projects, among which the Sunday newspaper and Speurders.nl.
The total advertising volume of daily newspapers was once again lower in 2004, particularly with the regional dailies. At the door-to-door papers, the advertising turnover stabilized, while the magazines saw a decrease. The total advertising turnover remained just about constant, including the Sunday newspaper and the income from the internet.
Income from circulation increased slightly with a lower circulation. As is always the case in economic difficult circumstances, the so-called “pass-on factor” (for example lending the newspaper to neighbours) increased strongly, which kept the range up to standard. In the magazine sector, existing titles suffer under the large number of newly introduced magazines in the Dutch market.
Operating costs across the group increased by more than € 26 million compared to 2003; adjusted for reorganization costs and initial costs for new projects, however, the operating costs decreased by € 1 million. During the past year fewer pages were printed by the daily newspapers, in spite of the Sunday newspaper, which was introduced in March. Combined with a lower price for newsprint, this resulted in a decrease of costs for raw materials by 2%. Personnel costs stabilized and the increase in salaries and social security costs were countered balanced by the effects of the economy operations. Counted in full-time equivalents, an average of 4,354 employees worked for the group in 2004, compared with an average of 4,459 employees in 2003.
Results from participations
The results from participations increased by just about € 15 million to € 19,9 million over 2004, including a book profit of approximately € 13 million with regard to the sale of the share in ANP (a Dutch press agency) and the Brouwer Groep.
Because the widely expected economic recovery for 2004 did not materialize, and as it remains to be seen if such a recovery will emerge in 2005, optimism is therefore inappropriate for the time being. A further intervention to structurally reduce (fixed) costs is inevitable. Initiatives for this purpose have already been introduced at various divisions of the group. At the same time, room is given to future growth by investing in new products and in the development of employees.
The lower printing tariffs for the magazines, the effects of earlier reorganizations and the introduction of IFRS (among other things the cancellation of the depreciation of goodwill), will be a positive influence on the result over 2005. On the other hand, there is an allocation to provisions for reorganizations. In addition, a sum of € 20 million has once again been reserved for new projects.
In view of the many uncertainties with regard to the economic situation and the advertising market in particular, we consider it as yet too early to announce a concrete expectation regarding the result over 2005.
The general meeting of shareholders will be held in Amsterdam on Wednesday 20 April 2005. During this meeting it will be proposed to change the dividend policy. Up to now, the dividend policy has been aimed at a cash payment to the amount of 35% of the profits available for payment. It is proposed to determine future dividends within a range of 15% to 30% of the cash flow, taking into account that cash flow is defined as the sum total of net profits and depreciations, with the deduction of incidental depreciations as a result of impairment. In case of excessive cash positions, an extra dividend payment will be one of the options. For 2004, it is proposed to fix the dividend at € 0.30 per share. In doing so, € 15.8 million, or more than 71% of the net profit, will be paid out. Last year, € 0.11 per share was paid out.