Summary annual results 2009

Wegener:   Satisfied with performance during crisis
Firm cost reductions compensate 82% of total revenue drop

• Operating profit (before exceptional items) declined only by EUR 18.8m
  (to EUR 57.3m), thanks to substantial savings on costs

• Economic crisis led to a sharp fall of advertising revenue of EUR 80.0m
  (to EUR 288.7m)

• Net profit EUR 7.9m; before exceptional items EUR 32.6m

• Share in AD NieuwsMedia and printing plant in The Hague sold

• Net debt position improved by EUR 33.4m (to EUR 117.0m)

• Outlook for 2010 still uncertain

Royal Wegener realised an operating profit before exceptional items for 2009 of EUR 57.3m compared to EUR 76.1m in 2008, or a decline of 25%. The operating result after exceptional items was EUR 18.2m (-34%).

Revenue fell in 2009 to EUR 586.3m (-15%). As a result of the economic crisis, advertising sales were under heavy pressure, both for the dailies and the free door-to-door newspapers. Thanks to, in particular, effective cost-saving measures and the implementation of the Delta reorganisation plan, the effect of these declines on the operating profit could be limited. Partly as a consequence of these measures, the permanent staffing had declined as of   year-end by 686 FTE.

Net profit for 2009 was EUR 7.9m, compared to EUR 11.3m in 2008. Exclusive of exceptional items, the net profit was 32.6m (2008: EUR 46.7m).

The sale of the 37% interest in AD NieuwsMedia, the sale of the printing plant in The Hague, the acquisition of PCM Lokale Media and the collaboration with De Pers, all of which were effected in the second half of 2009, make a comparison between the 2008 and 2009 financial results complicated. If the figures for 2009 and 2008 are adjusted for the results of these activities, the ‘autonomous’ development of Koninklijke Wegener N.V. can be broken down as follows:

For Wegener, a change in the organisational structure was the dominant theme in 2009. Under the name of “Delta”, a reorganisation was implemented aimed at creating a flexible organisation based to a larger degree on variable costs with a structurally lower cost level, an organisation that is also able to give impetus to quality and that satisfies the conditions for a future as a cross-media organisation. The Delta programme led to the merging of all publishing activities (daily newspapers, free door-to-door newspapers and online services) and their corresponding supporting departments with the staff departments of the holding company in a single new publishing unit: Wegener Media BV. The supporting departments and staff services were fully integrated in their own areas of operations.
The Delta programme was almost entirely completed in 2009, a huge accomplishment considering the fact that, at the same time and under difficult circumstances, it was business as usual. This has effectively placed Wegener in a better position for a future as a cross-media organisation.

But Wegener’s attention was not focused solely on reorganisations and cost cutting measures. Many new initiatives were developed and innovations were introduced or prepared in the course of 2009 – not only in online activities, but also in printed products.
For instance, new weeklies were set up for Rotterdam and Limburg, city magazines for Eindhoven and Nijmegen/Arnhem were introduced, and collaborative ventures established with other free door-to-door newspaper publishers. Among some conspicuous online initiatives was the introduction of two hyper-local websites, which received prestigious INMA Awards from the International Newspaper Marketing Association, for new housing estates in Apeldoorn and Zwolle. Other initiatives included the establishment of the internet courtroom (“internetrechter.nl”), the website “allesoverdegriep.nl” (information H1N1 influenza), the calendar of open days for secondary schools (“opendagkalender.nl”) and “lekkerpuzzelen.nl”, a website for puzzle lovers.

In early February 2009 Wegener completed the sale of its 49% holding in Deutsche Post Selekt Mail Nederland CV, a distributor of addressed mail, to Deutsche Post International BV. Deutsche Post paid EUR 4m.

In mid-2009 Koninklijke Wegener NV and LMG Netherlands I BV announced they were considering a merger linking the two Mecom companies in a single division.
On 11 November 2009 it was announced that the merger had been postponed for tax reasons. In a response to this decision, Governance for Owners, a 13.28% shareholder of Koninklijke Wegener NV, informed the Enterprise Division of the Amsterdam Court of Appeal that the need for preliminary relief it had previously requested and the urgent need for holding an inquiry into the company’s affairs had been removed for the time being.

The transactions with PCM Uitgevers were completed at the end of July 2009. This involved Wegener’s sale of its 37% share in AD NieuwsMedia and the group’s printing plant in The Hague, as well as Wegener’s purchase of PCM Lokale Media (PLM), a publisher of free door-to-door newspapers in Rotterdam and environs. The transaction involving PCM Lokale Media BV was completed on 15 July, and that involving AD NieuwsMedia BV and the printing plant in The Hague on 31 July 2009. On balance, the profit on the disposal was about EUR 1m. The disposal had a positive effect on the group’s debt position and did hardly lead to a change in operating profit.

Wegener’s purchase of PLM has strengthened its position on the media market in the Randstad conurbation, which is economically the most important area of the Netherlands. The collaborative venture with daily newspaper De Pers, the better-quality free newspaper, served to further strengthen Wegener’s position there. Wegener provides advertising sales, distribution, printing and back office activities, while editorial co-operation is an option. Introduction of Maasstad Pers, a better-quality weekly free door-to-door newspaper serving Rotterdam and environs, is the first result. The co-operation with De Pers has also given Wegener decision-making power with respect to the circulation and the possible regional editions of De Pers. For this publishing right Wegener agreed a price of EUR 16m.

In September 2009 the Dutch Competition Authority NMa started an investigation of an alleged violation of the condition imposed by NMa when it approved Wegener’s acquisition of the VNU dailies in 2000, which required the titles PZC and BN/DeStem to be retained in the market separately in Zeeuws Vlaanderen. This investigation had not been completed by the end of 2009. NMa is expected to publish its report in the first quarter of 2010.

At the end of 2009, agreement was reached with the Pensioenfonds voor de Grafische Bedrijven (PGB) on Wegener’s voluntary affiliation with this pension fund as well as the transfer of the Algemeen Pensioenfonds Wegener (APW) to PGB as of 1 January 2010. This step was prompted by the conviction that the long-term interests of participants in APW will be better served in a larger pension fund such as PGB. Other aspects that played a role in this decision were the increasing professionalisation of pension administration and asset management, and a stronger financial position of PGB, with a view to the future supplements to be paid. For the implementation of the Wegener pension scheme, PGB asks a lower pension contribution than was the case for APW. The financial margin this yields will be utilised to finance new pension commitments to certain groups of (former) employees to repair past service obligations which were not awarded in the past (the ”moratorium shortfall”). To cover these commitments, a provision for future employer contributions was made at the end of 2009 in the amount of EUR 25.4m (in the income statement presented as an exceptional charge in staff costs). On balance, the outgoing cash flows for pension contributions will remain unchanged. To compensate for the difference in the funding ratio between APW and PGB at the time of the transfer, Wegener made a one-off contribution of EUR 1.5m, also recognisable as an exceptional expense.

Activities
Daily newspapers
Advertising sales in Wegener’s regional dailies fell by 24% in 2009 compared to 2008. The major part of this decline was due to a decrease in the number of recruitment advertisements, where sales fell by 53%. But advertising sales in the financial services and automotive sectors were also under heavy pressure from the economic crisis. For the entire year of 2009, the Wegener dailies saw a decline in the average paid circulation of 2%. Because of indexation of the price of a subscription and a different ratio between the various types of subscriptions, revenue from circulation was 0.3% higher than in the preceding year.

In 2009, the dailies renewed their efforts to develop new turnover flows. The seven news sites achieved a substantial increase in the number of unique visitors per month, and web shops specifically devoted to wine, health and living were established.

Overall revenue at Wegener NieuwsMedia fell by 11% in 2009.

The management of the seven Wegener dailies responded with vigour to the rapidly deteriorating economic circumstances. Substantial savings were achieved in all cost categories. As a result of reorganisations launched and a strict policy on filling vacant positions, the level of staffing was substantially reduced. As part of these cost-reducing measures, in May 2009 the covenant between Wegener and the journalists’ trade union NVJ, which included an agreement to maintain the number of jobs in the editorial departments of the dailies, was suspended temporarily and in part until new agreements have been made.

At the end of 2009 Wegener announced that it would terminate its participation in Nationale Regiopers CV (NRp) as of the end of 2010. The NRp, the sales organisation of publishers of regional dailies for national advertisers, was founded in 1998 as an initiative of the various publishers of regional dailies. Wegener is taking this step to be better able to achieve its cross-media ambitions on the national advertisers’ market. Wegener intends to integrate the sale of national advertisements for its regional dailies and websites into its existing department, National Sales & Marketing, of Wegener Huis-aan-huisMedia in Houten.

Free door-to-door newspapers
For the first time in years, Wegener’s free door-to-door newspapers (WHM) were faced with a decline in revenue. The economic crisis put advertising sales under quite some pressure. Advertising revenue declined by 15% to EUR 151.4m.

In 2009, WHM took great steps toward realising its objective of achieving national coverage. Thanks to the acquisition of PLM, the co-operative venture with medium-size publishers in the provinces of North and South Holland, and the introduction of De Weekkrant in Limburg at the start of 2010, Wegener can boast an almost complete national coverage for its free door-to-door newspapers. This has further strengthened its position in the national advertising market.

Because advertising sales fell substantially in 2009, the management of WHM responded by immediately taking effective cost-cutting measures at the beginning of 2009; these remained in force throughout the year.

Total revenue of the free door-to-door newspapers fell by 14% in 2009.

Digital
The news sites attracted considerably more visitors. On average, the number of unique visitors per month (source: STIR, Foundation for Internet Advertising) in 2009 was 32% higher than in 2008. In addition, AutoTrack gave a remarkable performance and increased its revenue in 2009, despite the fact that the automotive market had been hard hit by the crisis. JobTrack, the site for job vacancies, did feel the heavy pressure of the economic crisis on its sales. Although the number of recruitment ads declined, the decline was significantly smaller than that in recruitment ads in the printed papers. Both Reisradar and the start-up SpotAJob were terminated in 2009.

Pressure on online advertising sales (bannering) and lower revenue from recruitment advertisements on JobTrack meant that total internet turnover fell by 16% compared to 2008; revenue of internet products in 2009 totalled EUR 18.2m.

Printing group
The volume to be printed by Wegener NieuwsDruk (WND) was under pressure in 2009. The volume of regular publications of both internal and external clients declined, due to fewer editorial and advertising pages as well as lower circulation. Furthermore, some publications (such as specials) were taken off the market or continued as internet publications. The sale of AD NieuwsMedia and the printing plant in The Hague also led to a considerable decline in external printing revenue – after all, 63% of AD’s printing orders were external. Because of this, external revenue declined by a total of 22%.

To replace and adjust (reduce) its press capacity, in 2009 WND almost completed its project to renew the production capacity in Best. Three modern presses and packaging lines are now operational. This meant that the printing plant in Breda could be closed in 2008, while sufficient production capacity became available in Apeldoorn so that the printing plant in Nijmegen could be closed at the end of June 2009. The printing plant in The Hague was sold to PCM Uitgevers (presently de Persgroep Nederland) as part of the total transaction involving AD NieuwsMedia. Wegener now has three printing plants that are well equipped to handle newspaper production (Best, Apeldoorn and Enschede).

There is now intensive co-operation with the newspaper printing plant in Heerlen (also a division of Mecom) and as a result of the sale of the printing plant in The Hague to de Persgroep Nederland, the printing of a considerable package of free door-to-door newspapers has been outsourced to de Persgroep Nederland.

Because capacity costs could be limited and additional cost-cutting measures taken, the operating profit of Wegener NieuwsDruk was unchanged despite declining revenue.

AD NieuwsMedia
Sale of the 37% share in AD NieuwsMedia took place at the end of July. Until the sale, AD NieuwsMedia also had to contend with the economic crisis. Advertising revenue declined in the first seven months of 2009 by more than 30% compared to the same period in 2008. This was offset by a rise in circulation revenue, which was entirely due to a price increase at the beginning of the year. However, paid circulation of AD NieuwsMedia was still under pressure and showed a decline of 3.8%. All in all, in the first seven months of 2009 AD NieuwsMedia was unable to contribute to Wegener’s operating profit.

Financial
The 2009 consolidated financial statements have been drawn up in accordance with IFRS and in accordance with Dutch legislation and regulations. Use was made of the facility offered under the law to apply the same principles for company financial statements as for consolidated financial statements. The auditors have issued an unqualified auditor’s report with respect to the financial statements.

The notes to the financial statements include information on the exceptional items in the financial statements. The exceptional items relate to the sale of AD NieuwsMedia and the printing plant in The Hague, costs of reorganisations (staff redundancy and provisions for onerous leases), one-time pension expenses (costs of financing the “moratorium shortfall” and one-time compensation for the difference in funding ratio for the transition to PGB), an one-off amortisation of prepaid finance costs and the tax effects on these items.

A dividend of EUR 1.6m will be paid on the financing preference shares for 2009. The same amount was distributed in dividend for the preceding year. All outstanding financing preference shares that are not held by Wegener are in the hands of Mecom.

Investments
Investments in 2009 came to EUR 32m, including those in tangible fixed assets, coming to EUR 13m. The decline in investments in 2009 compared to 2008 largely relates to the finalisation of the investments in the new printing plant (buildings and presses) in Best. The investments in intangible assets (EUR 19m) primarily concerned the capitalisation of the publishing rights for the circulation of daily newspaper De Pers.

Financing
Wegener’s bank financing is part of the financing arrangement concluded for the Mecom group as a whole in 2007. New agreements within the existing financing arrangement were made with these banks in 2009, as a result of which the terms and conditions have been widened. Almost all Mecom group companies (which includes Wegener) guarantee the debts that arise from this group facility. Each group company guarantees the total sum.

Wegener’s net interest-bearing debt as at end of 2009 was EUR 117.0m (end of 2008: EUR 150.5m). On 31 December 2009 the total debt of the Mecom group arising from the aforementioned financing arrangement was EUR 437.1m (end of 2008: EUR 739.8m).

2009 Financial statements
The figures shown in this press release are taken from the 2009 financial statements of Koninklijke Wegener NV as drawn up on 15 March 2010. This press release does not contain the financial statements in full. The financial statements published today have not yet been adopted by the General Meeting of Shareholders. The annual report for 2009 will be published later on the website www.wegener.nl.

Outlook for 2010
In connection with the present economic situation, it is impossible to express any concrete expectations about advertising revenue in particular and thus about the company’s profit in 2010. Various signals point to some recovery of the economy; however, this still looks extremely fragile and will not yet immediately be reflected in Wegener’s revenue figures for 2010. On the other hand, costs will be lower, thanks in part to the reorganisations that have been carried out and to lower costs of newsprint.

Investments in 2010 will come to approximately EUR 17m, which is substantially lower than previous years, primarily because the project to renew the printing presses in Best has been almost completed.

Average staffing will show some further decline in 2010, primarily as a result of the reorganisations implemented in 2009.

Net debt position naturally depends on developments in results. The level of net debt as at year-end of 2010 will also be partly determined by the aforementioned (lower) investment level. It is expected that EUR 24m will be paid in 2010 for costs of reorganisations (which will be withdrawn from the provision made at the end of 2009). No changes are expected in 2010 to the financing arrangement as it was in place at the end of 2009.

General Meeting of Shareholders
The General Meeting of Shareholders will be held on Tuesday 18 May 2009 in Apeldoorn. At this meeting it will be proposed that no dividend for 2009 be paid on ordinary shares or the associated depository receipts.

Apeldoorn, the Netherlands, 17 March 2010

Management Board
Koninklijke Wegener NV

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