2018 was a year of great changes for De Persgroep. After the complete takeover of Medialaan, the gradual integration of the audiovisual company was attended to, making the group a multimedia enterprise in Belgium with both online and offline market leaders in its portfolio for TV, news sites, newspapers, radio, and magazines.
In late 2018, Independer was acquired as well. Independer is the Netherlands' largest comparison platform for insurance and other financial products. The Online Services department, which will turn over more than 170 million euros in 2019, will become a new cornerstone of the group, in addition to publishing and broadcasting. Both acquisitions fit into the group's transformation aimed at growth and a continuously changing market. In addition, the group is still focusing on attaining healthy financial results. The group's turnover and net profits increased substantially.
Christian Van Thillo, CEO De Persgroep: "On the one hand, we're investing in the digital development of our news and entertainment media, and on the other, we're growing our Online Services branch into a new growth axis. The acquisitions of Medialaan and Independer will contribute substantively to achieving these strategic objectives. The challenges in a market that's changing at a breakneck pace are enormous, but we're mostly concentrating on the growth opportunities that digitization offers us. That's our focus in the years to come, and we want to combine that with handsome returns, generating sufficient means to fulfil our strategy."
The group's consolidated profit-and-loss account [BV1] shows a turnover increase of 9%, to almost 1.6 billion euros. EBITDA grew by 11%, to 241 million euros. Profit before tax amounted to 174 million euros, on which the group paid 47 million euros (27%) in corporation tax. Net profits increased by 15%, to 126 million euros.
The improved return is visible in all three countries. As a result of the complete takeover of Medialaan, EBITDA in Belgium rose to 95 million euros. In the Netherlands, that same figure rose by 7%, to 130 million euros. In Denmark, lastly, EBITDA went up substantially to 16 million euros.
Piet Vroman, CFO De Persgroep: "The group's financial results are developing healthily. In 2018, turnover and profitability grew handsomely and thanks to a doubled free cash flow from operations amounting to 134 million euros, we now have the means to further invest in our media enterprise's expansion. After 2018’s large acquisitions, the net financial debt amounts to 417 million euros, slightly under 1.6 times our EBITDA.” Piet Vroman, CFO De Persgroep
The group's newspapers, news sites, and magazines are evolving the same way everywhere: significant growth online and slight decline in print. The group's reader revenue decreased by 1.8%. This is the result of a decrease in print circulation of about 5% and a substantive growth of digital subscriptions, which are, however, sold at a lower price. The margins on digital and print subscriptions are practically identical. It's expected that this evolution will persist in years to come: turnover will drop slightly, but margins will remain stable or grow slightly.
It's remarkable that people's inclination to pay for digital news is rising substantially. The irresponsible way in which global internet platforms deal with "fake news", "hate speech", and extremist propaganda is an important reason why people are looking for information they can trust. In the future, the role and importance of quality journalism are only going to grow.
Advertising revenue from publishing remained stable thanks to the strong growth (+ 24%) of the digital turnover.
The TV and radio channels' market shares evolved positively, but the advertising market showed mixed results, with pressure on TV revenue and growth in the radio segment. The development of the online video offering, an obvious growth segment, is a particular point of interest. The most important product launch is Medialaan's new video platform. It will be marketed under the name VTM GO and is going online soon. In addition, the group would like to develop a paid video-on-demand platform with other local broadcasting groups, but unfortunately, that initiative is meeting with little enthusiasm. De Persgroep is now considering ways of entering into this market on its own.
De Persgroep operates a broad array of specialized service platforms that help users to make the right choices in domains such as jobs, cars, insurance, energy, consumer electronics, construction, and renovation. These are both classifieds and comparison websites. Last year, the Online Services department achieved a turnover of 100 million euros for the first time. Starting in early 2019, Independer's figures will also be consolidated, which will see the department turn over more than 170 million euros.
Recently, Online Services came under separate management, but it cooperates hand in glove with the group's other activities. Both in order to boost visitor numbers and for marketing purposes, online services and media go together perfectly.
Despite the enormous impact of digitization, it has now become clear that online and offline media will continue to coexist for a long time yet. Obviously, online media are growing, but there are significant differences between each type of medium and between each type of media user. Advertisers are moving around their budgets based on those changing markets, too. De Persgroep is continuing to cherish the offline media and will keep banking heavily on the digital growth markets.
To speed up the digital transformation, the group's management structure was recently modified. A coordinating Belgian-Dutch management structure was set up, with Eric Roddenhof at the helm. It’s in charge of making optimum use of the economies of scope between the two countries. Also, the group’s headquarters is set to relocate to Antwerp in September 2019. That move, too, is aimed at optimizing collaboration between the group’s different offices.