The year of the preparation

“In 2017 we initiated a major new growth phase”

For De Persgroep, 2017 was a year with two faces. It began slowly, but in the second half the turnover did better than expected. In closing the financial year, CFO Piet Vroman is thus satisfied with the results achieved.

“Because of structural digital developments, the correlation between economic growth, and the advertising and reader revenues, is much less visible. But it´s still there.”

“We concluded 2017 in perfect health. Admittedly, our EBITDA fell by four percent to 216 million euros, but that’s much better than we expected one year ago. After all, the media sector remains in full commotion, and moreover 2016 as reference was a top year for us. The turnover remained virtually stable at 1.45 billion euros. The year started off particularly slowly, but in the second half the results in each case exceeded the forecasts. The reviving European economy was certainly not foreign to this. Because of structural digital developments, the correlation between economic growth, and the advertising and reader revenues, is much less visible. But it´s still there. We also aren´t dissatisfied with the net current result of 109 million euros. And with 21 million euros on the balance sheet, we had virtually no net financial debt.”

Higher tax burden

Piet Vroman explains a number of things that influenced 2017: “The Belgian government´s Summer Agreement included a one-off higher tax burden last year. The tax losses from the past were valued on the balance sheet at a rate of 34%. That rate is now gradually falling to 25%, as a result of which the ´value´ of the losses is diminishing in accounting terms. It’s a bit bizarre that one makes a loss when the tax burden falls, but that´s just the way this technique works.”

“As far as the funds flow is concerned, compared to the realised 216 million euros we had a rather low conversion to operating free cash-flow. Partly this is as a result of working capital elements carried forward from the previous financial year, but here too the greatest effect comes from a faster outflow of taxes to be paid.”      

Fine growth in the Netherlands

When we look at the individual countries, Vroman is once again especially satisfied about the developments in the Netherlands. “Although our portfolio there focuses above all on publishing and still contains a lot of paper, the decrease in our EBITDA is the smallest there: minus three percent. In Belgium that´s minus seven percent. So the Dutch economy is doing extremely well, and we’re feeling that. Thanks to a good focus and a tremendous team, De Persgroep gained even more market share in print media. We are also doing an excellent job of catching up in the digital advertising market as well. Our digital display revenues are rising there by fifty percent, so in terms of euros that is in the meantime a major turnover supplement. And although the market share of Qmusic was under pressure last year in the Netherlands, our radio branch also enjoyed a top financial year.”

Magazines do unexpectedly well

The more difficult first half of 2017 was primarily noticeable in Belgium. “Not only did the television market have a hard time, the print advertising market took something of a beating last year. Yet we continue to invest fully in new models for the future. Also in Belgium our radio stations performed very well, and online we continue to focus heavily on HLN.be, by far the largest news site in the country. Moreover, we are especially satisfied about the development of our magazine portfolio, where the positive dynamic induced by our new showbiz approach really stands out. Reports of the death of the magazine business have proven to be greatly exaggerated. It remains an important financial pillar in our group – we´re happy that we have them.”

Transition year in Denmark

In Denmark the EBITDA rose by six percent. “Yet we were going through a transition year there: the CEO departed in mid-2017, while the new one – Anders ­Krab-Johansen – could only begin in December. Frits Campagne filled the role of interim CEO. In Denmark we note an acceleration in digital growth, but simultaneously also an acceleration in the decline of print media. The Scandinavian countries are clearly in the lead when it comes to the digital revolution. But naturally that offers us a chance to learn from these experiences.”

“The merger of Medialaan and De Persgroep Publishing, each of which are successful on their own turf, brings us into unfamiliar territory.”

New story

A healthy, very stable P&L and a virtually debt-free balance sheet allow De Persgroep to make a major new jump in 2018. “With the full acquisition of Medialaan, the share of the audiovisual group´s activities is rising from 18% to 30%. That’s a beautiful diversification of the turnover and profit streams. But at the same time we are facing our greatest challenge ever. The merger of Medialaan and De Persgroep Publishing, two companies that are each successful on their own turf, brings us into unfamiliar territory. If we do this right – bringing the two media companies together and managing them on the basis of a single vision – then we will be a big step further along in the development of our group.

Ambitious expectations

The transaction was finalised in January 2018, as a result of which Medialaan will also be immediately included in the consolidation for the full financial year. De Persgroep transferred its fifty percent of shares in Mediafin to Roularta, paying in an additional 220 million euros on top of that. In exchange it received the other fifty percent of Medialaan. “We arranged the financing with our five house banks. Moreover, we are very thankful to our financial partners for their support, with which we could realise our third big growth spurt of this century: in 2009 we purchased PCM and doubled our turnover to 900 million euros, and grew the EBITDA from 75 to 140 million euros; in 2015 we took over Mecom-Wegener and the turnover rose to 1.4 billion euros – and the EBITDA from 140 to more than 200 million euros; now we are aiming at a turnover increase of ten percent to 1.6 billion euros. The EBITDA too should be able to quickly grow by ten percent. It is true that we will have to assume some debt, around 200 million euros. 2017 was the year of the preparation, in 2018 the new story is being implemented. And as of 2019 we hope to be able to pluck its fruits.”

© 2017 - 2018 De Persgroep
Made with passion @Comfi
© 2017 - 2018 De Persgroep
Made with passion @Comfi