How To Calculate Sales Of A Research Company

Transcription

1 2011 Annual Report

2 Contents 1 GfK Group Letter to the shareholders Page 2 Contents Chapter one 2 Management Report Management Report Page 8 Chapter two Page 7 Page 34 3 Financial statements Chapter three Page 35 Page 90 Consolidated financial statements Page 36 Notes to the consolidated financial statements Page 42 Auditor s report Page 90

3 2 matthias hartmann Chief e xec utive o ffic er of GfK se

4 gfk 2011 Letter to the shareholders 3 Ladies and Gentlemen, I am delighted to have the opportunity that this letter to the shareholders gives me of addressing you directly for the first time. It is a particular pleasure for me to be able to report that the year under review has not only been a good one from the business perspective, but also a decisive one which has set a new course for the future of GfK. We have developed a new strategy, Own the Future, in tandem with a new organizational structure and we have made best use of 2011 to equip ourselves for the future. My special thanks are due most particularly to my predecessor, Prof. Dr. Klaus L. Wübbenhorst, whom I hold in the highest esteem, and from whom I have taken over as ceo on December 1, In this context, I should like to express my gratitude to him for his outstanding dedication to GfK. In his 20 years with GfK and 12 as ceo, he has been personally responsible for many of the chapters in the GfK success story. His work has given all of us on the GfK Management Board a good foundation on which to continue building a successful future. A future, which, since December 1, 2011, I share with my management board colleagues and more than 11,000 members of staff all over the world. A future, which we shall shape with the utmost dedication and energy. I should now like to briefly introduce myself. A business studies graduate (ba), my most recent position was as Global Head of Strategy and Industries for the ibm Group, where I was responsible for the global strategy and industry orientation of the ibm Global Business Services consultancy division. I spent around 25 years with ibm, dur-

5 gfk 2011 GfK Group Letter to the sharehol ders 4 ing which I was seconded to a variety of different countries including Germany, Belgium, Ireland and the usa. All this gave me the opportunity to acquire a great deal of experience, and I shall be devoting all my energy and conviction to making best use of this to shape the future of GfK. At a consultancy and technology group, I not only developed strategies, but also implemented them successfully and am therefore well-equipped to lead GfK into a successful future in our increasingly closely networked and globalized digital world. I am very much looking forward to the challenge. Glancing back at the results of the past year, I can report that 2011 was a successful one in the history of GfK. In a year-on-year comparison with the prior year, annual sales were up 6.2% to eur 1,374 million. This rise is mainly attributable to organic growth, which accounted for 5.8%, a result which once again confirms the effective performance of the GfK Group. In 2011, a positive contribution of 1.2% came from acquisitions and adjusted operating income also rose by 1.5% in the year as a whole to around eur 188 million. In the reporting year, all three of the Group s sectors made a contribution to organic sales growth. Once again, the strongest growth came from the Retail and Technology sector, which recorded 9.8% overall growth. The Custom Research sector also returned a pleasing increase in sales totaling 5.5%, while at 0.2%, the sales registered by what was formerly the Media sector remained virtually unchanged. We were able to achieve growth in all of our regions, with the exception of the usa. In Asia and the Pacific, with 8.2% organic growth and 2.6% attributable to acquisitions, business development was particularly dynamic. However, the gratifying rise in growth of 12.9% recorded in Central and Eastern Europe was somewhat dampened by currency effects to the tune of 4.0%. In Germany, 7.8% of sales growth was or-

6 gfk 2011 GfK Group Letter to the sharehol ders 5 ganic, with a further 2.7% coming from acquisitions. The growth dynamic was only curbed by developments in the North American region, where organic sales dropped back 4.9%. Nevertheless, at the beginning of 2012, we advanced our consistent expansion effort in the usa with the acquisition of Knowledge Networks, the second most major acquisition in the history of GfK. In its home market, Knowledge Networks is a leading provider of digital research, offering top-flight market research solutions tailored to the new era. For us, this acquisition represents an important addition which will generate significant synergies for our American business. Looking back over 2011 shows us that development has been very positive. This success is due for the most part to the sheer dedication and outstanding commitment of our staff of more than 11,000 GfK employees all over the world, to whom, on behalf of my colleagues on the Management Board, I should like to express my sincere thanks. It is with the greatest pleasure that I am looking forward to working with such a highly motivated team in the future. Turning now to the future, at the beginning of 2012, we see ourselves confronted by enormous challenges and by our undertaking to make the new corporate strategy, which was developed in 2011, a reality. We are determined to give GfK a new dimension. The potential lies in the complexity of our digital and globalized world: in the number of consumers that is constantly rising worldwide. In the diverse and global marketing channels and methods. In the dynamic development of markets in which competitors can literally spring up overnight. Our aspiration is to offer our clients perspective and added value in this new dimension.

7 gfk 2011 GfK Group Letter to the shareholders 6 Big Future is our overarching watchword for this new dimension. It enshrines not only our own aspirations, but even more, a promise to our clients. We bring clarity to the growing complexity of the situation by placing a consistent focus directly on the lifelong relationship consumers have with brands. Whatever consumers may choose, whether they obtain their information online, via mobile media or from classic retail channels, GfK will be there to offer its clients an increasingly integrative insight into consumer buying habits. Implementing our new strategy will enable us to continue growing. However, we have not just set ourselves new targets in terms of the content of the offering, but are also pursuing ambitious financial targets. We are aiming for sales totalling around eur 2 billion by the end of 2015 and are planning on significantly outperforming the organic growth of the market research sector in general over the next five years. The target we have set ourselves is 2% growth above the rate for the industry. We have started 2012 with momentum, confidence and a new strategy. We believe this will be a year of change and opportunity. We hope you will accompany us along the way and join us in grasping the opportunities arising. I should like to thank you, our shareholders and investors, for the confidence you have shown us to date: it will be my pleasure to continue building on this. Sincerely yours, matthias hartmann

8 2 Chapter Page 7 Page 34 ManageMent RepoRt 1. The economy Page 8 2. economic and financial development Page ReseaRch and development Page human ResouRces Page organization and administration Page declaration on corporate governance in accordance with section 289 a of The german commercial code (hgb) Page purchasing Page environment Page communications and marketing: completely in line with The new strategy Page internal control system for accounting Page opportunit y and Risk position Page major events since The end of The financial year Page outlook Page 33

9 gfk 2011 ManageMent RepoRt 8 1. the economy 1.1. Overall economic development in 2011: weaker growth than in the prior year The rate at which the global economy grew weakened somewhat in In a year-on-year comparison, global gdp rose by 3.8% in 2011, as against 5.2% in By the middle of the year, the economic climate had distinctly cooled in many of the industrial countries. There was great uncertainty in the eurozone, in particular, which adversely affected the capital markets and consequently, the corporate propensity to make investments. Even more marked was the deceleration in the rate of expansion in the major emerging economies, where restrictive fiscal and monetary policies had the effect of curbing growth. The overview below shows the development in the regions and countries important to GfK s operations: GDp GrOWth in % 1) Countries / regions ) ) Germany 4) France 4) uk Eurozone eu 27 5) Russia Central and Eastern Europe usa Latin America and Caribbean 4) China India Japan Asia and the Pacific 4) World 4) ) diw Principles of Economic Development ) Estimates 3) Forecast for Economic Development 2011 / ) International Monetary Fund (imf), January ) The Euroframe Autumn Report 2011 In Germany, at 3%, gdp growth was very slightly weaker in 2011 than in the prior year (3.6%). As in many of the industrialized countries of the eurozone, the growth dynamic proved to be somewhat reduced in the second half of the year. The diw, German Institute of Economic Research, attributes this to the significant decline evident in the manufacturing industry towards the end of the year. Employment was at an all-time high at year-end 2011 and this positive trend helped to sustain the stability of the consumer climate, even towards the end of the year, to make private consumption an important lynchpin of the economy. Month January February March April May June July August September October November December CONSUMer CLIMate: GerMaNY DeFIeS the euro CrISIS 1) Opinion trend Willingness to buy 2) Change from previous month in indicator points Consumer climate indicator 3) Change from previous month in % Consumer climate continues its upward trend Consumer climate upswing sustained Inflation impacts consumer mood Slight curb on consumer climate Euro crisis and energy prices affect consumer climate Good framework conditions strengthen consumer climate / 0 Sovereign debt crisis dampens consumer mood Consumer climate records only moderate decline Consumer climate bucks recessionary fears Consumer climate remains stable / 0 Upward trend in consumer climate sustained Stable consumer climate at year-end ) These findings are from the comprehensive GfK Consumer Climate maxx survey conducted each month since 1980 on behalf of the eu Commission. In the first half of the month a representative sample of around 2,000 subjects are asked about their perceptions of the overall economic situation, their willingness to buy and their income expectations. 2) The consumer confidence or willingness to buy indicator is based on the following question to consumers: do you think it is advisable to make purchases at the moment? (good time neither good time nor bad time bad time). 3) The consumer climate indicator describes private consumption. Key factors are income expectations and the willingness to buy. Economic expectations have a more indirect effect on the consumer climate, generally as a result of income expectations. As in the previous year, the economic development of the eurozone resided mainly with Germany. As the eurozone s major national economy, Germany gained considerable ground, while most of the other economies recorded only moderate growth. Ireland has recovered to record gdp growth of 0.4%, whereas conversely, at 5.0% and 2.2% respectively, gdp in Greece and Portugal shrank. The sovereign debt crisis in Greece generated a great deal of uncertainty in the financial sector and this, in turn, produced a negative effect on investment in the eurozone. It is anticipated that high rates of unemployment and compulsory savings in the public sector will continue to impact negatively on demand in both the private and public sectors in the countries affected most by the debt crisis.

10 gfk 2011 m anagement RepoRT The e c onomy The economic weakness in the eurozone is having a marked negative effect on growth perspectives in Central and Eastern Europe. Although the larger countries such as Poland and Turkey were still able to record growth amounting to 3.8% and 6.6% respectively, momentum had significantly slowed by the second half of The flow of capital from the eurozone has dwindled as a result of the uncertainty in the financial markets. Furthermore, the Balkan and south-east European banks often depend on the Greek and Italian commercial banks, so that the crisis of confidence in the eurozone is also having a detrimental effect on the funding conditions of the East European banks. Both these factors are curbing an already restrained investment climate. In 2011, the economy of the usa unexpectedly recorded growth totaling 1.7%. While gdp in real terms virtually stagnated at the beginning of the year, the world s biggest national economy registered strong growth in the second half of the year. This rise was buttressed in the main by private consumption. However, the financial crisis has eliminated a great many private assets in the usa, so that the upward trend is unlikely to be sustained. Although still recording a plus of 4.6%, compared with the previous year, the rate of growth has also cooled somewhat in Latin America. In particular, development in Mexico is highly contingent on the United States, with the result that expectations for this region are only moderate. No country in the world is experiencing greater growth than China. Although even here it has slowed down somewhat in comparison with the previous year, this was politically endorsed by the government. In the current five-year plan, China is aiming for growth of only 7.5% in order to avoid overheating as was the case in the aftermath of the financial crisis. The remaining economies in Asia also to a certain extent enjoyed strong positive developments. India achieved a growth rate of 7.7%. Despite industry now only managing modest expansion, key service providers in all sectors of retail, transport, finance and communications registered doubledigit growth. As a result of low export rates, the strong service sector and high domestic demand, India has been relatively unaffected by global developments. Japan remains the only exception, with negative growth as a result of the major crash in industrial production after the natural disaster and nuclear catastrophe in Market research sector: a rapid recovery in 2010 The market research sector made a rapid recovery in According to the esomar Industry Report 2011 which was published in 2011, global market research sales rose by 2.8% in 2010, while in the prior year, sales had dropped for the first time since market research sales records began by 4.6%. For 2011, esomar is anticipating further consistent growth of 3.0% for the sector. The usa was worst hit by the crisis, with consumer research sales declining for the second year in succession. However, due to the overall economic recovery there and stronger demand for panel and media research, the usa recorded growth amounting to 3.1% for the sector in 2010, adjusted by inflation. In Europe, development has been disparate. While the general economic situation in Spain, the uk, Greece and Ireland impacted the consumer research market adversely, Austria and Italy registered growth (11.9% and 5.2%) as a result of increased commitment to online research. For 2011, esomar is anticipating moderate growth for market research budgets in the more robust markets, and these also include Germany. Conversely, there is likely to a significant decline in sales in Spain, Greece, Portugal and Ireland. SaLeS and GrOWth by region usd million 1) Sales 2009 Sales 2010 Growth 2009 / 2010 in % 2) europe 13,104 13, eu 15 11,720 11, eu-accession countries Rest of Europe america 11,500 12, ) North America 10,061 10, Latin America 1,439 1, Asia and the Pacific 4,525 5, Middle east / africa total 29,624 31, ) local sales converted into usd at average exchange rate for the year 2) Growth adjusted by inflation 3) GfK calculations Source: esomar Industry Report 2011 The market research sector has grown by a factor of 3.5% in Asia and the Pacific, while Japan and China accounted for 60% of sales. Since Japan is unlikely to record further growth because of economic difficulties and the natural disasters which occurred in 2011, China, which registered growth of 9.7% in 2010, is once again carrying the hopes of the sector. Although starting from a somewhat low level in some cases, the dynamic upswing in the Asiatic region is markedly evident from the double digit growth rates recorded in Vietnam (up 24.6%), Singapore (up 15.4%), Pakistan (up 12.9%) and Malaysia (up 11.7%). The smallest consumer research market, the Middle East / Africa region, also recovered relatively well from the global economic crisis to record growth amounting to 4.3%. Growth has been boosted by increased demand for online and mobile research during the World Cup football championship in South Africa. However, in the Middle East, market research sales fell for the second year running on account of the prevailing political instability, a trend likely to continue in Latin America was the strongest growth region in 2010, with Brazil out in front registering growth totaling 26.5%. Sales amounting to usd 815 million have enabled the Latin Americans to overtake the Italians and occupy seventh place in the rankings of the world s major domestic consumer research markets. Estimated growth of 5.0% is again likely to secure Brazil a place in the Top 10 rankings for

11 gfk 2011 m anagement RepoRT e c onomic and financial d evelopment 10 The rise of Brazil and the continuous strong growth recorded by China once again highlight the importance of these countries for the consumer research sector. Although 65.3% of global consumer research sales are generated in the five top countries, the greatest growth potential lies outside the established markets. And change is rapid: whereas in 2008, Brazil was not even represented among the Top 10, two years later, it has rocketed into seventh place of the most important consumer research sales markets. To benefit from these and similar developments, a local presence in these emerging markets is essential for market research institutes. Global institutes would be best advised to offer the entire spectrum of market research methods and in this respect there is a marked trend towards online surveys, which now account for 24% of market research budgets globally. The composition of market research budgets in terms of research content provides another interesting insight into the industry. Market research SUbjeCtS Share of total Company sales in % 1 Market surveys (panels) 23 2 Media and coverage research 19 3 Other qualitative studies 12 4 Other 9 5 Customer satisfaction research, incl. crm 8 6 Advertising and brand tracking 7 7 Innovation research, product development 6 8 Market modeling 4 9 Usage & attitude 4 10 Other business-to-business studies 3 11 Advertising pretesting 2 12 Opinion and election polling 2 13 Other omnibus studies, participation investigations 1 Source: esomar Industry Report 2011 In accordance with this, in excess of 40% of classic market research budgets are allocated to research scheduled over a longer term, as well as panel, media and coverage studies under contract. The esomar Industry Report 2011 attributes the rapid recovery of the five biggest market research groups from the 2009 crisis to this rather broad-based spectrum of research subjects. Company top 10 OF the CONSUMer research SeCtOr Sales 2010 usd million Growth in % 1) 1 The Nielsen Company, usa 4, The Kantar Group, uk 2) 3, ims Health, usa 2) 2, GfK, Germany 1, Ipsos, France 1, Synovate, uk SymphonyIRI Group, usa Westat, usa intage, Japan 3) Arbitron, usa ) Growth in local currency, adjusted to take account of acquisitions / disposals 2) Estimated sales 3) Financial year ended in March Source: esomar Industry Report 2011, published September 2011 With the acquisition of Synovate in October 2011, Ipsos will become the third biggest institute in the world in 2011, followed by ims Health and GfK placed fourth and fifth. esomar ascertained two common aspects in the operations of the five top institutes. In the first instance, they are all focused on expanding their business internationally: the top 5 generate a total of between 52% and 91% of their operating sales outside their own country of origin. In the second instance, a comprehensive offering and surveys which cover longer periods of time ensure a degree of stability, even in more turbulent economic times. 2. economic and financial development 2.1. Introduction The GfK Group prepares its consolidated financial statements in accordance with the International Financial Reporting Standards (ifrs). The financial data for the sectors and regions originate from the Management Information System. The last financial year was shaped by the GfK Group s focus on the new strategy and its new brand image. To find out more, turn to chapter 9. The development of the order position in relation to the expected annual sales for the financial year is determined on a monthly basis. This statistic is a central management parameter for the Group and is monitored by the management of GfK in a timely manner. In general, around half the planned annual sales are already reported as assured contracts in the first quarter. The picture varies from sector to sector. For instance, in the Media sector, multi-year contracts are concluded for continuous tv and radio audience research, while in the panel based Retail and Technology sector, contracts are largely renewed in the first three months of the financial year. As a result of the lower proportion of continuous data collection in Custom Research and the greater weighting of ad hoc studies, incoming orders for this sector tend to be more evenly spread across the whole of the year.

12 gfk 2011 m anagement RepoRT e c onomic and financial d evelopment Like its competitors, the GfK Group uses operating income as a key performance indicator. GfK is convinced that the explanations regarding business performance using the adjusted operating income will facilitate interpretation of the GfK Group s business development and enhance the informative value, in comparison with other major companies operating in the market research sector. Where income is mentioned below, this is the adjusted operating income. The margin is the ratio of adjusted operating income to sales. The adjusted operating income is calculated as follows: reconciliation OF adjusted OperatING INCOMe in eur million Change in % Operating income Expenses and income in conjunction with restructuring and company transactions Write-ups and write-downs of additional assets identified on acquisitions Scheduled amortization / depreciation Impairments / reversals Personnel expenses for share-based payments and long-term incentives Remaining other operating income less remaining other operating expenses total highlighted items adjusted operating income Where statements refer to the number of employees, in principle, this represents the total number of full-time posts. For this purpose, part-time posts have been converted to equate to full-time posts. The figures on the business development of the GfK Group and any percentage changes are based on figures in eur thousand. Accordingly, rounding differences may occur. The companies mentioned in the Management Report are referred to by their abbreviated names. The Additional information section of the Annual Report includes a list of the full names of the companies indicated gfk group: Reliable growth With sales amounting to eur 1,373.9 million, GfK comfortably achieved the forecast given at the beginning of 2011 of organic growth totaling 5% to 6%. Overall, sales were up by 6.2%. While sales were negatively impacted by 0.8% exchange rate effects, this was more than offset by the additional 1.2% from acquisitions. Organic sales growth amounted to 5.8%. DeVeLOpMeNt OF earnings 1) in eur million Change in % Sales 1, , Cost of sales Gross income from sales Selling and general administrative expenses Other operating income Other operating expenses ebitda as a percentage of sales adjusted operating income as a percentage of sales Highlighted items Operating income as a percentage of sales Income from participations ebit as a percentage of sales Financial income Financial expenses Other financial income Income from ongoing business activity Tax on income from ongoing business activity Tax ratio in % Consolidated total income Attributable to equity holders of the parent Attributable to minority interests Consolidated total income Earnings per share (undiluted) in eur ) Rounding differences may occur The cost of sales rose by a proportionately lower rate of 5.9% to eur million (2010: eur million), leading to an increase in the gross income from sales of 6.7% compared with the previous year to achieve eur million (2010: eur million). The cost of sales includes one-off depreciation on software used to measure tv coverage of the order of eur 5.1 million, and on two further software developments amounting to eur 2.7 million, which, based on the strategic standardization of software across the whole of the GfK Group, will no longer be used. Selling and general administrative costs rose by 7.4% and amounted to eur million in the year under review. The higher costs were attributable to consultancy services associated with the new strategy project and to the premature termination of a Management Board contract and another contract for the new incumbent, totaling an amount of eur 4.5 million in costs. Added to this, in the previous year, value reversals from customer relationships reduced the selling costs by eur 5.2 million (2011: eur 0.7 million). Income increased from eur million to eur million, and the operating margin reached 13.7%. For the final time, highlighted items included costs related to the biss fitness and efficiency program totaling eur 4.1 million (2010: eur 6.7 million). In addition, highlighted items also include writeups and amortization on hidden reserves disclosed as part of the purchase price allocation amounting to eur 27.7 million (2010: eur 16.4 million). The figure comprises scheduled amortization of eur 10.4 million (2010: eur 11.8 million) and the balance of impairment losses and reversals amounting to eur 17.3 million (2010: 11

13 gfk 2011 m anagement RepoRT e c onomic and financial d evelopment 12 eur 4.6 million). Impairments include amortization on corporate brands of the order of eur 12.9 million. These were carried out in light of the fact that the new strategy of GfK provides for a uniform brand presence under the umbrella brand of GfK. Beyond this, highlighted items also include expenses of eur 5.8 million (2010: eur 9.8 million) for long-term variable remuneration systems as well as the remaining other operating income and expenses, which amounted to eur 11.2 million (2010: eur 10.7 million). The balance of exchange rate gains and losses included in this item stands at eur 0.6 million (2010: eur 2.7 million). From 2011 on, exchange rate gains and losses associated with financial transactions will no longer be recorded under other operating income and expenses, but under other financial results. The previous year s figure was adjusted accordingly, so that exchange rate costs of the order of a net balance of eur 4,647 thousand were reposted. Furthermore, other operating expenses include settlements comprising eur 4.9 million (2010: eur 4.2 million) for posts in individual departments which were not subsequently filled in the context of the reorganization. Other special effects included here are costs amounting to eur 2.9 million relating to the move of the French GfK Group companies into new business premises, as well as the cost of the settlement of a license right dispute for an amount of eur 2.4 million. Operating income rose year-on-year by 1.8%, or eur 2.5 million, to eur million. The personnel cost ratio, which expresses the ratio of personnel expenses to sales, rose slightly from 42.6% in 2010 to 43.2% in the year under review. Personnel costs amounted to eur million (2010: eur million). In addition to the costs already indicated relating to the Management Board change, the rise in the number of employees by 911 to 11,457 at year-end is also reflected in the costs. In the year under review, the balance of write-ups and amortization / depreciation rose from eur 55.1 million in 2010 to eur 79.9 million. The figure includes scheduled amortization / depreciation of eur 52.1 million, representing a very slight rise on the previous figure of eur 50.2 million. The balance of impairment losses and reversals rose by eur 22.8 million to eur 27.8 million. While in 2010, the impairments referred almost exclusively to hidden reserves disclosed as part of the purchase price allocation, in 2011, the above indicated special amortization / depreciation amounting to eur 8.0 million related to software. Excluding the strategic depreciation on corporate brands, amortization / depreciation on hidden reserves disclosed as part of the purchase price allocation dropped back eur 0.2 million compared with the previous year, although at eur 3.2 million, the reversals contained therein were markedly below the prior year s value of eur 7.0 million. These one-off effects led to a slight decline in ebit (down 1.3% to eur million). The elimination of amortization / depreciation which has risen sharply from the ebit produced ebitda totaling eur million, a figure which is significantly above the prior year s level of eur million, and which therefore represents an increase of 11.4%. Income from participations rose from eur 3.9 million in 2010 to eur 4.4 million. Other financial income, which is the balance of financial income and expenses, amounted to eur 17.7 million in the year under review. This represents an improvement of eur 2.7 million on the previous year s figure. For the first time, this post includes earnings from the reduction of future purchase price obligations for company acquisitions running to eur 3.4 million. These arose as the result of a new ifrs regulation. In the case of liabilities of this type, which were incurred prior to the year 2010, value adjustments were posted under goodwill with no effect on the balance sheet total. Income from ongoing business activity rose by 0.6% from eur million to eur million in The income tax ratio was 29.8%, which is 2.9 percentage points below the ratio for the previous year of 32.7%. The income tax ratio for 2010 was negatively impacted by the effects of a new tax regulation governing non-deductible expenses. The effects of this were further exacerbated by the valuation of a currency derivative used to hedge the us dollar risk. As a result of the rise in the value of the dollar in 2011, no negative tax effect arose in the year under review. The GfK Group s consolidated total income rose by 4.9% from eur 84.0 million in 2010 to eur 88.1 million in the Gfk GrOUp: INCOMe and CONSOLIDateD total INCOMe in eur million Income 60.5 Consolidated total income

14 gfk 2011 m anagement RepoRT e c onomic and financial d evelopment 2.3. assets and capital position Compared with the prior year, the total assets of the GfK Group increased by eur 95.7 million to total eur 1,745.6 million. On the assets side of the balance sheet, the increase of eur 95.7 million in total assets was attributable to a rise of eur 23.5 million in non-current assets and an increase in current assets of the order of eur 72.2 million. Where non-current assets are concerned, goodwill rose by eur 35.4 million, of which eur 15.1 were due to changes in the group of consolidated companies and eur 20.8 million are accounted for by exchange rate effects. Other intangible assets dropped back by eur 10.4 million, a factor attributable to the reduction in the value of corporate brands amounting to eur 12.9 million. DeVeLOpMeNt OF balance Sheet GrOWth in eur million Change in % Share of total assets in % assets Non-current assets 1, , Current assets Liabilities Equity Non-current liabilities Current liabilities total assets 1, , Current assets, in particular, liquid assets, have risen (eur million). These are intended for use to reduce financial credits in At year-end 2010, liabilities from receivables had risen slightly from eur million to eur million. On the liabilities side of the balance sheet, the rise mainly reflected the change in equity, which increased by eur 83.4 million. In addition to the increase in profit reserves, mainly accounted for by the balance of retained earnings from consolidated income and dividend paid out, the negative level of other reserves was reduced by eur 18.7 million, and this is mainly attributable to exchange rate fluctuations not affecting income stemming from the revaluation of the US dollar and the British pound sterling. This has generated a rise in the equity ratio of 2.5 percentage points to 43.6% ( : 41.1%). DeVeLOpMeNt OF equity ratio in % At eur 7.3 million, long-term loans remained virtually unchanged, except for the restructuring of long-term leasing liabilities into short-term ones. In total, the reduction constituted eur 6.7 million. In terms of long-term interest-bearing financial liabilities, the Group financing has been restructured: in April 2011, GfK se issued a bond with a volume totaling eur 200 million for a term of five years and a fixed interest rate of 5%. The resources generated with this were used to repay existing bank loans and a debenture loan and to reduce the syndicated bank facility. Short-term loans, which amounted to eur 19.1 million above the previous year s level, were dominated by the rise of eur 14.0 million in short-term other loans. The associated interest liabilities alone rose by eur 6.8 million, a figure mainly accounted for by the above indicated bond. Interest is payable annually every April, so that at year-end, a major proportion of the amount of interest payable is ring-fenced under short term loans. Short-term interest-bearing financial liabilities declined (eur 4.6 million). The reduction in shortterm bank liabilities of eur 18.2 million was partly offset by a rise of eur 5.7 million in short-term leasing liabilities for the remaining term and the increase of liabilities for future company acquisitions (put options, earn-outs) comprising eur 9.1 million. Liabilities from receivables and orders in progress rose by a total of eur 5.7 million Investment and finance As an innovative market research company, GfK is constantly investing in establishing and expanding its panels, in new measuring techniques and technologies, such as in digital recording devices and the new market research methods associated with these, and in the expanding its data production and analysis systems. These measures make a decisive contribution to ensuring the future success of the company and in raising the entry barriers to potential competitors in the market. The range for these investments generally amounts to between 4% and 5% of sales. In addition, the GfK Group regularly invests in expanding its international network through acquisitions. Above a certain level, these financial investments are subject to the approval of the Supervisory Board. In 2011, the investments of the GfK Group totaled eur 77.3 million (2010: eur 89.6 million), of which eur 62.7 million (2010: eur 48.6 million) were spent on investments in software, office equipment and other tangible assets. Significantly more was invested in software in the year under review than in the prior year: while in 2011, investment in software amounted to eur 18.3 million, in 2011, the figure was eur 28.8 million, with far in excess of half this volume going to software developed by the company itself. In 2011, an amount of eur 14.6 million (2010: eur 38.9 million) was spent on acquiring consolidated companies, minority interests and other business units

15 gfk 2011 m anagement RepoRT e c onomic and financial d evelopment 14 Cash flow from ongoing operating activity remained virtually constant at eur million compared with the previous year s volume of eur million. The rise in working capital offset the positive effects of the increased depreciation. Taking account of expenses relating to capital expenditure amounting to eur 62.7 million, free cash flow totaled eur million (2010: eur million). As in the prior year, this enabled the company to fully finance the acquisitions carried out. DeVeLOpMeNt OF Free CaSh FLOW FrOM FINaNCING activities in eur million Change in % Cash flow from ongoing business Capital expenditure Free cash flow before acquisitions, other investments and asset disposals Acquisitions Other financial investments Asset disposals Free cash flow after acquisitions, other investments and asset disposals Changes in equity Net loan repayments Interest paid minus interest received Cash flow from financing activity Changes in cash and cash equivalents Net debt, defined as the balance of cash, cash equivalents and short-term securities less interest-bearing liabilities and pension obligations, fell from eur million to eur million, while payment funding rose by eur 51.1 million. The decline in bank liabilities of eur million is neutralized by an increase in other interest-bearing liabilities amounting to eur million, a figure which includes the eur 200 million bond issued in DeVeLOpMeNt OF Net INDebteDNeSS in eur million Change in % Liquid funds Short-term securities and time deposits Liquid funds and short-term securities Liabilities to banks Pension obligations Liabilities from finance leases Other interest-bearing liabilities Interest-bearing liabilities Net indebtedness The decline in net debt made a major contribution to the significant improvement in all ratios of net debt to key balance sheet and financial ratios. GearING and ratio OF Net INDebteDNeSS to ebit, ebitda and Free CaSh FLOW Gearing (net indebtedness / equity) in % Net indebtedness / ebit Net indebtedness / ebitda Net indebtedness / free cash flow Mandatory information under company law (section 315 (4) of the german Commercial Code hgb) The share capital of GfK se amounts to eur 152,158, as at December 31, 2011, divided into 36,503,896 no par value bearer shares. There are no restrictions in the Articles of Association relating to voting rights or the assignment of shares. All shares carry the same rights. GfK-Nürnberg Gesellschaft für Konsum-, Markt- und Absatzforschung e.v., (GfK Verein), Nuremberg, has a direct holding of 56.09% of the voting rights in GfK se. The company has not received notification of any other shareholders with a stake of 10% or more of the capital. Employees with an interest in the capital exercise their voting rights directly. Pursuant to Article 5 of the Articles of Association of GfK se, the Supervisory Board is responsible for determining the number of members of the Management Board. The Supervisory Board appoints the members of the Management Board for a maximum term of five years. Appointment for one term or several reappointments for a maximum term of five years is permitted. The Supervisory Board may appoint a member of the Management Board as the ceo and one or more as deputy CEOs. In addition, the legal regulations on appointing and removing members of the Management Board (sections 84, 85 of the German Stock Corporation Act, AktG), apply. The Articles of Association do not contain any regulations that exceed the statutory requirements of sections 133, 179 of the German Stock Corporation Act (AktG). Pursuant to Article 20 of the Articles of Association of GfK se, unless otherwise stipulated by mandatory legal regulations, resolutions to amend the Articles of Association require a majority of at least two thirds of the valid votes cast, or where at least half of the share capital is represented, a simple majority of the votes cast. In cases where the law additionally requires a majority of the share capital represented when the resolution is adopted, a simple majority of the share capital represented will suffice, unless a different majority is stipulated by law. The authorization to acquire own shares dated May 20, 2009 has been rescinded for the period from the coming into fore of the following new authorization. By resolution of the Annual General

16 gfk 2011 m anagement RepoRT e c onomic and financial d evelopment Meeting on May 19, 2010, up until May 18, 2015, pursuant to section 71 (1) clause 8 of the German Stock Corporation Act (AktG), the company is authorized, with the consent of the Supervisory Board, to acquire own shares up to a maximum of 10% of the share capital in place at the time when the authorization came into force. Together with other shares held by the company or attributable to it pursuant to sections 71 a ff of the German Stock Corporation Act (AktG), the shares acquired may not account for more than 10% of the share capital at any time. The authorization may not be used by the company for the purposes of trading in own shares. The authorization can be exercised by the company, or by third parties for the account of the company, in whole or in part, once or on several occasions, to meet one or several purposes. The acquisition of own shares takes place as the Management Board chooses through a purchase offer addressed to all shareholders by means of a public call to issue such as an offer or via the stock market. If the shares are acquired via the stock market, the price per share paid by the company (excluding incidental acquisition costs) may not be more than 5% above or 5% below the price per share determined in xetra trading (or comparable successor system) in the opening auction on the trading day. If the acquisition is carried out via public purchase offer or public call to issue such an offer, the purchase price offered or minimum and maximum of the price range per share (excluding incidental acquisition costs) may not be more than 10% above or below the closing price in xetra trading (or comparable successor system) on the trading day prior to the day of publication of the offer or call to issue such an offer. If, after publication of a purchase offer or public call to issue such an offer, significant deviations from the relevant price occur, the offer, or call to submit such an offer, may be adjusted. In this case, any adjustment will be based on the closing price in xetra trading (or comparable successor system) on the trading day prior to the day of publication. The purchase offer or call to submit such an offer may contain further terms and conditions. If the purchase offer is oversubscribed or if, in the event of a call to submit an offer, not all of several equal offers can be accepted, acceptance can be carried out by quotas. Preferential acceptance of low numbers of up to 100 shares per shareholder can be stipulated for the acquisition of the shares offered. The Management Board is authorized, with the consent of the Supervisory Board, to use the shares acquired by virtue of this authorization, earlier authorizations or otherwise acquired pursuant to sections 71 ff of the German Stock Corporation Act (AktG) for all legally permissible purposes, especially the following: The shares can also be sold by means other than via the stock market or through an offering to all shareholders providing the cash price paid for the shares at the time of the sale is not significantly below the stock exchange price for similar shares in the company, whereby the relevant stock market price within the meaning of the above regulation is the mean of the closing prices for shares in the company in xetra trading (or comparable successor system) during the last five trading days before the sale of the shares; in this case, the number of shares to be sold may not exceed 10% of the share capital of the company at the time when the resolution was passed by the Annual General Meeting today, or if lower 10% of the registered capital of the company at the time of the sale of the shares; this 10% of the share capital limit includes those shares issued during the term of validity of this authorization in direct or corresponding application of Section 186 (3) clause 4 of the German Stock Corporation Act (AktG) with simplified exclusion of subscription rights; furthermore, this 10% of the share capital limit includes those shares issued to service convertible bonds with conversion rights and / or option rights, where the convertible bonds are issued during the term of validity of this authorization pursuant to Section 186 (3) clause 4 of the German Stock Corporation Act (AktG) excluding subscription rights. The shares can be offered or transferred to third parties as part of a merger of companies or acquisition of companies, parts of companies or participations or acquisition of other assets. The shares can be used to meet conversion and / or option rights and obligations in relation to convertible bonds or bonds with warrants issued by the company or Group companies. The shares can be called in without the call-in or its implementation requiring a further resolution of the Annual General Meeting. The call-in will lead to a reduction of the capital. In deviation from this, the Management Board can decide that the share capital will not change as a result of the call-in pursuant to Section 8 (3) of the German Stock Corporation Act (AktG). In this case, the Management Board is authorized to amend the number of shares in the Articles of Association. The authorizations can be exercised once or on more occasions, separately or together, for all or part of the volume of own shares acquired. The subscription right of shareholders to these shares is excluded to the extent that the shares are being used in accordance with the above authorization. GfK se does not have any compensation agreements with the members of the Management Board and the employees in the event of a takeover offer Sectors: understanding consumers and markets GfK offers its clients from the consumer goods industry, retail, media and the service sector a comprehensive range of information and consulting services in the three sectors Custom Research, Retail and Technology and Media. The sectors are based on the respective sources of the data required for the offering: point of consumer, point of sale and point of media. Custom Research: The Custom Research sector supplies information and consulting services for operational and strategic marketing decisions all over the world. 15

17 gfk 2011 m anagement RepoRT e c onomic and financial d evelopment 16 The consumer (Point of consumer) is the data source for the Custom Research sector. Custom Research offers a broad spectrum of tests and studies, in particular for product and pricing policy, brand management, communications, distribution and customer loyalty. In line with the product lifecycle model, GfK monitors products and services from development and launch through maturity and saturation phase. Retail and Technology: The retail outlet, (Point of sale) is the data source for the Retail and Technology sector. The information and consulting services are based on retail data from continuous surveys and analysis of consumer goods and services in the retail sector. The services comprise regular surveys on the following market segments: automotive accessories and spares, office communications, diy and garden, electrical household appliances, photographic technology and optics, it, fashion, telecommunications, tourism, consumer electronics and entertainment media. Media: The Media sector delivers information services on range, intensity and type of media usage and acceptance across Europe and the usa. The data source for the Media sector comprises tv, radio, print and online media. Other: The sectors are supplemented by the Other division, which, in particular, covers GfK s central services for its subsidiaries and other services not related to market research. The division includes parts of GfK Austria, of GfK iss, of the GfK Malta Group and of GfK Switzerland, as well as the activities of GfK us Shared Service Holding, GfK Group it, GfK Marketing Sciences and GfK Group Services. proportion OF SeCtOr SaLeS to total SaLeS in % 1) 60.4 Custom Research 29.6 Retail and Technology 9.7 Media 0.4 Other 1) Rounding differences may occur 65.8 Retail and Technology 34.6 Custom Research 5.8 Media MarGIN by SeCtOr in % 1) ) Rounding differences may occur Other 6.2% not taken into account on the chart StrUCtUre OF SaLeS and INCOMe GrOWth in % 1) Total growth Growth from acquisitions 0.4 Organic growth Currency effects Sales Income 1) Rounding differences may occur Custom Research Retail and Technology Media MarGIN by SeCtOr in % 1) economic development: stable continuation of The 2010 development TRend In 2011, the Custom Research and Retail and Technology sectors recorded an increase in both sales and income. Both these sectors were virtually able to maintain the high margins of In a yearon-year comparison, Media sector sales remained constant, but the impact of special effects meant that the 2010 levels of income and margin could not be maintained. Custom Research: In 2011, the Custom Research sector registered pleasing growth in sales, Compared with the previous year, sales were up 5.5% to eur million, with 4.8 percentage points of this of a largely organic nature, a development mainly attributable to the positive development of business with clients in the it and telecommunications sectors, the automotive sector and the public sector. Additional growth was achieved with the GfK Media Efficiency Panel (mep) market research tool. In the Netherlands, GfK successfully won a five year contract with Google for use of the mep, and this has already generated sales in In Germany, too, mep business has been expanded further. All the regions reported positive growth rates, with the exception of North America, where the difficult market environment, in particular, led to a decline in sales

18 gfk 2011 m anagement RepoRT e c onomic and financial d evelopment In tandem with organic growth, acquisitions added further to positive sales development. At the beginning of the year, GfK added to its stake with the acquisition of another 20% in SirValUse, market leader in User Experience consulting and nurago, one of the leading global experts in digital brand, media and usability, bringing GfK s holding in each to 60%. Beyond this, GfK intensified its activities in the growth region of Asia and the Pacific with the takeover of MarketWise, one of the leading Thai full service market research companies. In Japan, further shares were acquired in the Joint Venture with ntt data smis and ntt data Corporation, and Nippon Media s Mystery Shopping division was also acquired. Overall, acquisitionrelated changes contributed 1.9 percentage points to growth in total. However, at 1.2 percentage points, exchange rate effects had a negative impact. Income was up 2.8% to eur 65.0 million. Organic growth generated a 5.7% increase in income, while acquisitions and currency effects produced a negative effect of 1.3% and 1.6% respectively. After 8.0% in the prior year, the Custom Research sector achieved a margin of 7.8% in The main reason for this margin slippage was a write-down of eur 1.7 million on software which will no longer be used as a result of the standardization of software applications for the Custom Research sector in the context of the new corporate strategy. If this special effect is excluded, income would have run to eur 66.7 million, representing a margin of 8.0%. CUStOM research: key FIGUreS 1) in eur million Change in % Sales Income Margin in % ) Employees 6,018 6, ) Rounding differences may occur 2) Percentage points Organic growth amounted to 9.5 percentage points, while at 0.1 percentage points, currency effects and acquisitions were both only of minor importance. Nearly every area of core segment business recorded positive growth rates in In particular, the telecommunications, small domestic appliance and it segments registered above-average growth. Business with major clients also made a considerable contribution to growth. Sales increases were achieved by the sector in all GfK regions, with Germany and Asia and the Pacific contributing the lion s share. In Germany, growth is mainly attributable to international contracts won there and then distributed internally across the GfK network. The Latin American and Central and Eastern European regions also recorded dynamic growth. In the year under review, the sector increased its income by 8.5% to eur million, while at 30.3%, the margin was virtually maintained at the extremely high level of the previous year, (30.7%). retail and technology: key FIGUreS 1) in eur million Change in % Sales Income Margin in % ) Employees 3,507 3, ) Rounding differences may occur 2) Percentage points Total growth Growth from acquisitions retail and technology: breakdown OF GrOWth OF SaLeS and INCOMe in % 1) Total growth CUStOM research: breakdown OF GrOWth OF SaLeS and INCOMe in % 1) Growth from acquisitions Organic growth Currency effects Sales Income 1) Rounding differences may occur Organic growth Currency effects Sales Income 1) Rounding differences may occur Retail and Technology: Once again, 2011 has been another very successful year for the sector. Sales were up by eur 36.2 million to eur million. With growth running at 9.8%, this sector recorded the highest level of growth within the whole of the GfK Group. Media: Compared with the prior year, at 0.2%, sales in the Media sector remained more or less constant at eur million, with organic growth of 1.4 percentage points offsetting the negative exchange rate effects of 1.5 percentage points. Higher sales were achieved in the usa in print media research business using GfK AdMeasure, a product launched during the year under review. The year 2011 also saw higher sales generated in Germany, because by the end of 2010, the new enhanced tc Score measuring system had been fully installed. GfK also recorded rising sales with clients including Fraport, the University of Hamburg and the Media-Analyse working group. Central and Eastern Europe reg-

19 gfk 2011 m anagement RepoRT e c onomic and financial d evelopment 18 istered an increase in sales from additional contracts for the existing tv audience research panel in the Ukraine, as well as a new contract for radio monitoring and a national readership survey in Romania. Also worth noting is the fact that an agreement for electronic tv audience reach research has been signed in Portugal, which will start producing sales in As a result of budget cuts in the public sector, several contracts in the Western Europe / Middle East / Africa region could not be extended. At eur 10.8 million, the operating result for the year under review was down on that of the previous year (2010: eur 15.6 million). The primary reason for this is a new write-down of the order of eur 5.1 million in total resulting from an impairment test of existing software in use to measure tv audience reach. In addition, tv audience reach measurement equipment no longer in use in Romania has been written-down to the tune of eur 0.8 million. The North American region developed positively due to higher sales and only a moderate increase in costs. In the year under review, the sector generated a margin of 8.1% (2010: 11.7%). Adjusted by the one-off effect of the software writedown, the operating result constituted eur 15.8 million, with a margin running at 12.0%. MeDIa: key FIGUreS 1) in eur million Change in % Sales Income Margin in % ) Employees ) Rounding differences may occur 2) Percentage points Total growth Growth from acquisitions MeDIa: breakdown OF GrOWth OF SaLeS and INCOMe in % 1) 30.6 Organic growth 27.8 Currency effects Sales Income 1) Rounding differences may occur Other: In the reporting period, sector sales developed consistently to record eur 4.9 million (2010: eur 4.7 million). The income shortfall for 2011 stood at eur 11.6 million (2010: eur 7.7 million). The rise resulted from expenses relating to the development and implementation of the new strategy and costs associated with the appointment of a new ceo. The staff complement rose by 17 to total 484 employees. Other: key FIGUreS 1) in eur million Change in % Sales Income Employees ) Rounding differences may occur 2.7. Regions: a global presence in local markets Worldwide, the GfK Group network of companies extends to over 100 countries. The Group s operations are divided geographically into six regions: Germany, Western Europe / Middle East / Africa, Central and Eastern Europe, North America, Latin America and Asia and the Pacific. Business developed particularly dynamically in the growth regions of Asia and the Pacific, Central and Eastern Europe and Latin America in GfK enjoyed the marked benefits of the increasing importance of these regions for the market research industry, so that it was able to achieve high organic growth rates in these markets. Around 20% of GfK global sales were generated in these regions in 2011, with pleasing sales growth also achieved in the home market of Germany. The West European / Middle East / Africa region also recorded good growth rates and only in North America did sales decline. Company Custom Research nttd Data smis activities Etilize GfK Custom Research Beijing GfK Custom Research Japan GfK Egypt ChaNGeS IN the Gfk NetWOrk Investment activity Stake changes in % Sector region Acquisition Asset deal Custom Research Share increase Share increase Share increase Share increase From 51 to 75 From 66 to 90 From 66 to 86 From 74 to 100 Retail and Technology Custom Research Custom Research Custom Research GfK MarketWise Acquisition 100 Custom Research GfK Retail and Technology (Cyprus) GfK SirValUse Consulting and nurago GfK Skopje Share increase Share increase Share increase From 60 to 100 From 40 to 60 From 51 to 100 Incoma GfK Acquisition From 75 to 85 Retail and Technology Custom Research Custom Research Custom Research Asia and the Pacific North America Asia and the Pacific Asia and the Pacific Western Europe / Middle East / Africa Asia and the Pacific Western Europe / Middle East / Africa Germany Central and Eastern Europe Central and Eastern Europe mbi Joint venture 25 Media North America Mystery Shopping Nippon Media activities Oz Toys Acquisition Asset deal Custom Research Disinvestment From 51 to 25 Retail and Technology Asia and the Pacific Asia and the Pacific

20 gfk 2011 m anagement RepoRT e c onomic and financial d evelopment Germany: In the year under review, sales rose by 10.5% to eur million, with organic growth accounting for 7.8% and acquisitions adding a further 2.7% to sales. This keeps GfK in pole position as the market leader in its home market of Germany. GerMaNY: key FIGUreS 1) in eur million Change in % Sales Employees 1,831 2, ) Rounding differences may occur Central and Eastern Europe: In the year under review, GfK achieved sales totaling eur 97.7 million in this region. Organic growth returned a pleasing 12.9% increase, however, conversely, currency effects impacted negatively to the tune of 4.0%. Overall, sales in Central and Eastern Europe registered a rise of 8.8%. CeNtraL and eastern europe: key FIGUreS 1) in eur million Change in % Sales Employees 1,657 1, ) Rounding differences may occur 19 GerMaNY: breakdown OF GrOWth OF SaLeS in % 1) Total growth CeNtraL and eastern europe: breakdown OF GrOWth OF SaLeS in % 1) Growth from acquisitions Organic growth Total growth Growth from acquisitions Currency effects Organic growth ) Rounding differences may occur Currency effects 4.0 Western Europe / Middle East / Africa: In 2011, this region once again generated the highest proportion of sales for GfK. Overall growth was 7.8%, and an increase in sales generated total sales of eur million, of which organic growth accounted for 7.0% and positive currency effects contributed 0.8%. WeSterN europe / MIDDLe east / africa: key FIGUreS 1) in eur million Change in % Sales Employees 3,463 3, ) Rounding differences may occur 1) Rounding differences may occur North America: The continuing difficult market situation in the Custom Research sector and adverse exchange rate development contributed to the failure to achieve the sales level of the previous year in the year under review. In 2011, sales of the order of eur million were generated in the region. In tandem with negative organic sales growth of 4.9%, this declining trend was further exacerbated by adverse currency effects of 5.3%. However, these effects were partially offset by just 1.5% from new acquisitions. WeSterN europe / MIDDLe east / africa: breakdown OF GrOWth OF SaLeS in % 1) Total growth Growth from acquisitions Organic growth NOrth america: key FIGUreS 1) in eur million Change in % Sales Employees ) Rounding differences may occur NOrth america: breakdown OF GrOWth OF SaLeS in % 1) Currency effects ) Rounding differences may occur Total growth 8.7 Growth from acquisitions Organic growth 4.9 Currency effects 5.3 1) Rounding differences may occur