In 1996, the company realized a net profit of NLG 84.6 million, down 16.5% from the 1995 figure. The decline had been expected and is wholly attributable to start-up losses sustained by participating interests (notably a commercial TV venture) outside the company's core activities. Operating profit from the core activities increased as a result of higher turnover, which rose from NLG 1,151.5 million in 1995 to NLG 1,283.2 million in 1996. This figure includes the turnover of the special interest magazines and door-to-door papers acquired in 1996. Organic growth in turnover amounted to 7.7%, reflecting an increase in newspaper-advertising volume. Advertising income rose by NLG 66.4 million, from paid circulation by NLG 42.5 million, and from other activities by NLG 22.8 million. The average number of employees increased from 4,083 to 4,129 in full-time equivalents. Growth partly reflected the takeover of the special interest magazines and the employment of 63 of the original staff members. Turnover per employee increased from NLG 282,000 in 1995 to NLG 310,800 in 1996.
Newsprint prices were raised with effect from 1 January 1996. The market trend reversed in the second half of 1996.
Depreciation of tangible fixed assets decreased again. This item will see a marked increase when assets currently being built in Amsterdam, Alkmaar, Heerlen and Hoorn are put into use.
The increase in depreciation of intangible assets largely relates to the publishing rights paid on the takeover of the special interest magazines. These rights will be amortized against the result over a period of five years.
Operating profit increased from NLG 135.4 million in 1995 to NLG 143.4 million in 1996.
The dividend received from Wegener Arcade, including the net asset value of the dividend in certificates, has been stated under the heading 'participation income'. Our share (proportional to our interests) in the start-up losses of the commercial TV stations SBS6 and Sport7, and Internet provider Planet Internet has been deducted from this item. The amounts in goodwill paid on the acquisition of these participating interests have been charged against shareholders' equity.
Interest income fell as a result of the decrease in liquid assets relating to the acquisition of the special interest magazines and several new participating interests. Another factor affecting this item was lower interest rates.
The balance of financial revenue and charges fell from a positive result of NLG 19.3 million in 1995 to NLG 5.6 million negative in 1996.
The pre-tax result from ordinary trading declined from NLG 154.7 million in 1995 to NLG 137.9 million in 1996.
The corporate tax rate increased as start-up losses of participating interests were not eligible for fiscal set-off and the release from the WIR equalization account was lower than last year. As from 1997, no further amounts will be released. The depreciation of publishing rights of the special interest magazines are eligible for fiscal set-off.
The after-tax result from ordinary trading declined from NLG 101.0 million in 1995 to NLG 86.0 million in 1996.
In 1996, the balance of extraordinary items after taxes amounted to NLG 1.4 million negative compared with NLG 0.3 million positive for 1995.
Net profit, after extraordinary items, fell by 16.5% from NLG 101.3 million in 1995 to NLG 84.6 million in 1996. Net profit was higher than originally expected owing to the rise in operating profit.
Net earnings per share of NLG 0.50 par value fell from NLG 1.93 in 1995 to NLG 1.61 in 1996.
The cash flow amounted to NLG 190.5 million, compared with NLG 191.8 million in 1995.
An overview of the ratios over a large number of years is given on page 54.

The cost in excess of shareholders' equity paid on the acquisition of a participating interest may be differentiated in goodwill relating to a share transaction and goodwill relating to the acquisition of publishing rights or to an assets/liabilities transaction. If the acquisition relates to the company's core activities, the excess costs are amortized against the result. Paid publishing rights are often eligible for fiscal set-off, while goodwill paid on the acquisition of shares almost never is.
The economic value of newspapers is well in excess of the usual term over which goodwill/ publication rights are amortized. It has therefore been decided to amortize goodwill paid on the acquisition of a newspaper company against the result over a maximum period of twenty years.
Goodwill paid on the acquisition of a participating interest not relating to the company's core activities is amortized directly against shareholders' equity.

Shareholders' equity
In 1996, movements in shareholders' equity were attributable to:
­ the write-down of the goodwill paid on the acquisition of the participating interests in SBS6,
Sport7 and an increase in the stake in Planet Internet;
­ the decrease in the statutory reserves as a result of an approximated decline in Wegener's
shareholders' equity in connection with, among other things, the merger with Arcade;
­ the addition to the other reserves in accordance with the proposed 1996 profit appropriation.
As a result, shareholders' equity fell from NLG 789.1 million at year-end 1995 to NLG 767.5 million at year-end 1996.
Following the amendment to the articles of association on 29 August 1996, shares with a nominal value of NLG 4.­ were split into eight shares with a nominal value of NLG 0.50. After the split-up there were 52,499,200 ordinary shares and 960 priority shares outstanding. At year-end 1996, a total number of 24,248,544 share certificates were outstanding, representing 46.2% of the issued share capital. At the end of 1995, this figure stood at 46.1%.
At year-end 1996, shareholders' equity per share of NLG 0.50 nominal value amounted to NLG 14.62 compared with NLG 15.03 at the end of 1995.
Another consequence of the amendment to the articles of association besides the stock-split was that the company became subject to Annex X to the Dutch Stock Exchange Regulations of the Amsterdam Exchanges N.V. The articles of association were also brought into line with the altered regulations. The one-percent rule concerning decertification was abolished.

Dividend proposal
Last year it was decided that an expected temporary drop in the net profit in 1996 as a result of start-up losses sustained by participating interests in the field of commercial TV need not affect the dividend policy. A one-off dividend payout ratio of over 40% is therefore acceptable.
We propose a cash dividend of NLG 0.68 per share of NLG 0.50 par value. This represents a distribution percentage of 42.2%.
In 1995, a dividend of NLG 5.40 per share of NLG 4.­ par value was paid out, or NLG 0.675 per share of NLG 0.50 par value, accounting for 35.0% of the net profit.

Increase in scale
In 1996, the company made an energetic effort to realize an increase in scale and to broaden and diversify its range of activities. Action undertaken within the framework of core activities included:
­ On 1 January, the publication rights of the special interest magazines Elegance, Residence, Hitkrant, Autovisie, OOR and MAN were acquired from Bonaventura. In 1996, these magazines were fully consolidated into De Telegraaf Tijdschriften Groep B.V.
As from 1 January 1997, the company will be responsible for the printing work and after-press of two of these magazines.
­ On 6 February, De Telegraaf-i was introduced on the Internet. In 1997, this activity will be expanded by new initiatives.
­ On 1 January, the door-to-door paper De Zaankanter was taken over and in April the remaining 25% of the share capital of Handelspost Beheer B.V. was acquired. On 1 January 1997, the publishing rights of Veluwe B.V., a publisher of door-to-door papers in the province of Gelderland, were taken over.
­ At the end of 1996, negotiations got underway about the acquisition of the shares of Houdstermaatschappij De Gooi- en Eemlander B.V., which publishes a regional newspaper and door-to-door papers in 't Gooi and Almere, and operates a cable TV information service in 't Gooi.
The addition of De Gooi- en Eemlander to the company is of great strategic importance.
The province of Noord-Holland is the home market of many of the company's publications, and the company has operated a door-to-door paper in 't Gooi and Almere for many years.
De Gooi- en Eemlander employs approximately 200 staff. With effect from 1 January 1997, operation in the company has been entrusted to Hollandse Dagbladcombinatie B.V., which already operates the regional newspapers Noordhollands Dagblad, Haarlems Dagblad, IJmuider Courant and Leidsch Dagblad. As of 11 January 1997, the printing orders of De Gooi- en Eemlander and the door-to-door papers were fully integrated in Amsterdam.
­ On 1 February 1997, De Trompetter B.V., a wholly-owned subsidiary of Limburgs Dagblad, took over De Kempen Pers B.V., a publisher of door-to-door papers in Eindhoven and surrounding area, which borders on areas in which De Trompetter B.V. is already operating door-to-door papers.
Outside the core activities, the company was diversified and broadened as follows:
­ In May 1996, a 30% participating interest was acquired in the Dutch commercial TV station SBS6. The station is developing in line with expectations.
­ The 5% interest in Sport7 was less successful. This sports station was taken off the air on 8 December 1996. Settlement of the affairs of Sport7 will continue well into 1997.
­ The 37.5% interest in Planet Internet was particularly disappointing as regards financial results.
With effect from 1997, Planet Internet merged with World Access/Videotex Nederland. Our interest in Planet Internet was terminated with effect from the merger date. On the other hand, an option (expiring on 1 July 1997) was acquired to take a maximum interest of 15% in the newly established company Videotex Nederland N.V.
­ The company abandoned plans for participating in KabelTelevisie Amsterdam (KTA).
On 1 September 1996, De Telegraaf and A2000 (UPC and US West), jointly set up Media Groep West instead, De Telegraaf having a 75% interest. A2000 is entitled to eventually increase its stake to 50%. The cable TV information service KabelNieuws van de Dag has initially been entrusted to Media Groep West under the name NieuwsNet9 (NN9). Media Groep West will see further growth through new electronic services on the A2000 cable network.

The environment and investments

Over the years, care for the environment has become a normal part of day-to-day management.
Our guiding principle is the durable further development of processes, with the least possible strain on the environment. The company's environmental policy is aimed at reducing emissions and the amount of raw and waste materials.
After preparations for important investments were made in 1995, these were further developed in 1996 and a start has been made with their implementation.

Construction work on the new office building adjacent to the present main building was started in 1996 and the conversion of the former printing works was embarked upon. The new office tower, of which an art impression is shown on page 34, will accommodate about six hundred work stations. The printing works building will mainly have a technical purpose with workshops, stockrooms, etc. The conversion project is scheduled to be completed by the end of 1997, while the new office building should be finished in the second half of 1998.

The minor structural work that needed to be done in the existing printing works, which will house the extension of the rotogravure press, is scheduled to be completed by the end of 1996. The press extension will be delivered in 1997.

The new rotary offset press ordered in 1996 will be operational by the end of 1998.

It was decided that the newspaper press will be replaced. The Hoorn facility mainly produces the company's door-to-door papers and printed matter for third parties. Realization of the plan is slated for the year 2000.

Investments in digital engraving have optimized the preparation phase of the printing process. The after-press process of single-section printing will be sped up through investment in after-press equipment.

Paid circulation of De Telegraaf as at 30 September 1996 was 3,600 (0.5%) higher than the previous figure, totalling an average of 760,000 copies a day. The rise in the number of copies was entirely attributable to growth in paid subscription. Paid circulation of De Courant Nieuws van de Dag fell off slightly, by 750, to 55,850 copies. Joint paid circulation of De Telegraaf/De Courant Nieuws van de Dag increased by 2,850, to 815,850 copies a day.
Paid circulation of the Dutch newspapers, on aggregate, increased by 1,642, to 4,753,811 copies. Including the regional newspapers (also De Gooi- en Eemlander) published by subsidiaries, the group's proportion of total circulation came to 25.5% at year-end 1996, compared with 24.3% at year-end 1995 (excluding De Gooi- en Eemlander).
The advertising turnover of De Telegraaf/De Courant Nieuws van de Dag went up by 11.6%, to NLG 362.0 million. In 1996, advertising volume of De Telegraaf increased by 4.8%, mainly owing to the categories of national brands and services and personnel ads.
Advertising volume of the national dailies, on aggregate, rose by 3.8%. The market share of De Telegraaf increased by 0.3%, to 30.8%.
Advertising volume of De Courant Nieuws van de Dag increased by 0.4%.
Advertising volume of all Dutch national and regional newspapers combined rose by 2.5%. The gross advertising turnover of the newspapers increased by 8.5% to NLG 1,826 million.
De Telegraaf group's proportion of total advertising turnover amounted to 25.5% in 1996 compared with 25.0% in 1995.
On 1 January 1997, advertising rates were raised collectively by 2%.

Price policy

The Dutch newspapers' collective price adjustment policy with regard to advertising and subscription
rates is of great importance for an economically healthy industry and, by extension, for the
continued pluralism of the press. It means that competition between the newspapers centres on their editorial content and angle. The Dutch newspapers have applied for an exemption from
horizontal price-fixing regulations. In april 1997 a negative advice has been issued as regards the request for exemption. The danger of (forced) abandonment of price-fixing agreements is that competition no longer centres on the content of the product but becomes focused on the price of the product, both horizontally and vertically in the industrial column. The minister has granted an exemption from the regulation against vertical price-fixing until 2003.


1996 was the last year in which TrosKompas and TV-krant were operated by De Telegraaf
Tijdschriften Groep. TrosKompas had been handled by the company since 1 October 1966 and
TV-krant was introduced in 1991. The current contract expired at year-end 1996. The contract with TROS, which owns the magazines, was not renewed and TROS backed out of the new collaboration agreement. The consequences are very serious: a loss in turnover of approximately NLG 50 million a year and job losses for about a hundred employees. Magazine staff stationed in Amsterdam have been re-employed at the Amsterdam facilities, partly causing temporary overstaffing.
The rotogravure printing works of Biegelaar en Jansen B.V. in Maarssen and the after-press firm of Franken Deventer, where the work associated with the production of the two magazines accounted for 20% and 35% of the respective work forces, will have to work for third parties to make up for the loss of turnover. A provision has been set up for 1997 (charged against the 1996 result) to meet the costs arising from the change in situation.
A claim for damages has been filed against TROS.
In the face of increased competition, the entertainment magazine Privé reinforced its market leadership. In 1997, Privé will celebrate its twentieth anniversary. This is also the year in which the magazine will be given a more youthful appeal.
In their first year of operation, the glossy magazines Elegance, Residence and MAN, and the titles Hitkrant, Autovisie and OOR proved a valuable addition. The integration of personnel and activities went very smoothly. In 1997, two of the magazines will be fully company-produced.
In 1996, the range of sports magazines was expanded to include Voetbal Totaal, Volleybal Magazine and Deep (targeted at snowboarders) as an insert of Surf Magazine. The Olympisch TV Magazine was developed and distributed door-to-door before the Olympic Games.


In early 1996, the company acquired a 30% participating interest in the new Dutch commercial
TV station SBS6. The station developed in line with expectations, in both the viewers and advertising markets. The negative operating result was larger than budgeted as a result of the stagnating advertising market. Thanks to alert management, costs were kept well under control. SBS6 secured the rights (until mid-1999) for broadcasting Second Division and Amstel Cup football matches. By exchanging coverage with other stations, SBS6 will be able to produce a fully-fledged football programme.
Sport7, in which the company had acquired a 5% stake before the start in August, was taken off the air in early December when it turned out that the KNVB (Royal Dutch Football Association) did not own the rights to the matches and viewers could not be offered an adequate product.
In the provinces Noord- and Zuid-Holland and in Limburg, where the company operates daily newspapers and/or door-to-door papers, the company (together with other publishers and public TV stations) has a stake in regional TV.

Electronic Highway

Since 6 February 1996, the newspaper De Telegraaf has a website on the Internet, entitled 'De Telegraaf-i', which has developed into one of the Netherlands' most frequently visited Internet addresses. The number of advertisers on De Telegraaf-i is growing quickly. In addition to the daily releases on De Telegraaf-i, special services are offered, including access to the Telegraaf-i file.

Other activities

In 1996, the results of Hollandse Huis-aan-huisbladen Combinatie B.V., in which independent
door-to-door activities in the western part of the country have been merged, showed very
satisfactory growth.
The result of Hollandse Dagbladcombinatie B.V., publisher of Noordhollands Dagblad, Haarlems Dagblad, IJmuider Courant and Leidsch Dagblad, showed further improvement. Joint paid circulation of these newspapers fell by 0.2%. Advertising volume increased.
The result of Limburgs Dagblad was virtually unchanged, paid circulation increased by 1.3%, advertising volume was up by 7.6%. Extra costs were mainly attributable to a sweeping programme of newspaper regionalization.
Turnover of the rotogravure printing works of Biegelaar en Jansen B.V. increased by 7.5%, but the added value lagged behind. Lower depreciation kept the result at its previous satisfactory level.
Both turnover and result of the after-press firm of Franken B.V. decreased slightly.

Participating interests

As at 31 December 1996, the participating interest in Wegener N.V. amounted to
1,459,114 certificates, or 21.8% of the issued share capital. As at 31 December 1995, this figure stood at 23.8%. No purchases or sales were made in 1996. The dividend was partly paid out in certificates (23,919).


Group results for the first two months of 1997 lagged behind last year's corresponding figure, but recovery has set in since. These downward and upward movements are largely attributable to changes in newspaper advertising volume. In addition, the falling away of TrosKompas/TV-krant had a strong effect on the subsidiaries in question, as the resulting decrease in turnover could not be fully offset.
Movements in advertising volume will have a huge impact on the group's performance for the whole of 1997. Another factor impacting the result will be the lower price of newsprint with
effect from 1 January 1997. The overall pay rise provided for in the sector's collective bargaining agreement of 1 February 1997 was higher than budgeted.
The 1997 net profit will reflect the favourable effect of the decrease in SBS6's start-up losses and the fact that liquidation costs of Sport7 have been included in the 1996 accounts as much as possible.
The 1997 result is therefore expected to be better than the result achieved in 1996, but is unlikely, as yet, to match the corresponding 1995 figure.

The Board

L.G. van Aken
J. Olde Kalter
H. Schor
A.J. Swartjes

Amsterdam, April 1997.

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