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Royal Wegener: 2007 operating result rises more than 20%On 28 August 2007, Mecom Group plc (Mecom) made a public offer for all outstanding (depository receipts for) ordinary shares of Royal Wegener, the Dutch media group. As of the end of October, Mecom held 86.4% of the ordinary shares, thus having full control of Wegener, although the company remains listed on the Euronext Amsterdam Exchange. During 2007, Wegener’s focus was entirely directed toward the group’s newspaper operations and the allied activities in the Netherlands. In contrast with reporting for 2006, there is no distinction between ‘continuing’ and ‘discontinued’ operations in this announcement. Consolidated group revenue amounted to EUR 679 million, which was 1.6% above the figure for 2006. On a standalone basis, the figure was 2.2% higher. The operating result before exceptional items reached EUR 65.0 million, an increase of 22% over the EUR 53.4 million for 2006. The cash earnings, representing the net result before exceptional items and after the preference dividend, equalled EUR 33.4 million, which is an increase of 38% over the 2006 figure. Publishing activities For Wegener NieuwsMedia, which publishes the group’s regional daily newspapers, revenue from advertisers rose by 3.7% to EUR 180 million. In February 2007, all of the dailies were successfully converted to compact tabloid format, and the transition was accompanied by a large number of new paid trial subscriptions. Subscriber and newsstand revenue rose by 1.0%, to EUR 196 million, and broke last years’ trend of gentle decline. Following the conversion to the tabloid format, the company introduced a group structure with central services and a standardised production procedure. This change was accomplished during the year, and represents a structural cost reduction of EUR 25 million on an annual basis. The restructuring of the dailies operations, including the integration of Media Groep Limburg, 100% owned since mid-2006 by Mecom, will be pursued during 2008. The Limburg unit publishes two regional dailies in that province in the southeast of the Netherlands. At AD NieuwsMedia, the joint venture with PCM publishers, in which Wegener has a 37% financial interest that is represented in the group’s consolidated figures, advertising revenues were off by 11%, strongly influenced by the national advertisers. From the second quarter of 2007, the AD organisation assumed direct responsibility for sale of national advertising, previously handled by PCM. Subscriber revenue for AD were markedly more stable than in the previous years, showing a decline of 2.4%. Despite the revenue declines, AD NieuwsMedia was able in 2007 to record its first positive operating result. For the group’s free door-to-door newspaper operations – Wegener Huis-aan-huisMedia – 2007 was again a very good year. Advertising revenue reached EUR 168 million, up 5.7% above the figure for 2006. In no minor way aided by the 2006 introduction of the tabloid format and a standardized formula – Dé Weekkrant (the weekly) – the unit further strengthened its market-leading position, with more efficient production methods and an enhanced proposition to offer advertisers, especially national ones. Early in 2008, two new Dé Weekkrant publishing units were introduced in the northern Dutch provinces of Groningen and Friesland, areas previously not reached by the group’s operations. As in 2006 revenue from the group’s online activities grew with 28%, rising to EUR 15 million. The primary influences in the increase were the automotive website AutoTrack.nl and the employment site, JobTrack.nl. At the end of the year, two new sites were launched: one for small and medium-sized businesses, DeOndernemer.nl, and a travel information and tour booking site, ReisRadar.nl. For the group’s graphic production operations, Wegener NieuwsDruk, there was major focus on preparations for renewal of the printing presses at Best, in the southern part of the country. Two new presses will be installed at this location during 2008. When the new presses are operational, at the end of the year, the printing plant at Breda, in the same region, will be closed. The overall project will be completed in 2009. This will be accompanied by decisions regarding the Mecom printing plant at Heerlen, in Limburg province, within the overall configuration of Wegener’s graphic production activities. Financial As indicated, Mecom owns 86.4% of the ordinary shares. In addition, Mecom has acquired all of the outstanding cumulative financing preference shares. On these cumulative financing preference shares, a dividend for 2007 amounting to EUR 1.6 million will be paid. As a consequence of the Mecom acquisition, the previously existing financing arrangements for the Wegener group have been discontinued, and Wegener is now covered by the Mecom group-wide financing program. Investments in tangible and intangible fixed assets totalled EUR 28.2 million, compared with EUR 17.6 million in 2006. The 2007 figure was lower than the anticipated EUR 50 million because of later delivery schedules for the new printing presses. Outlook for 2008 Investments will rise in 2008 to approximately EUR 55 million, primarily for the project to expand and replace printing presses at Best.
The 2008 General Meeting of Shareholders will be held in Apeldoorn on 8 May. At the meeting it will be proposed, as earlier indicated in the public offer and the prospectus of Mecom Group plc of 28 August 2007, to declare no dividend on (depository receipts for) ordinary shares. Also at this meeting, and as announced on 27 February 2008, Jan C. Houwert will step down as chairman of the Management Board of Royal Wegener. Apeldoorn, The Netherlands, 13 March 2008
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