The GfK Group at a glance

Transcription

1 Report for the first nine months 2011

2 Report for the first nine months 2011 The GfK Group at a glance The GfK Group offers the fundamental knowledge that industry, retailers, services companies and the media need to make market decisions. It delivers a comprehensive range of information and consultancy services in the three business sectors Custom Research, Retail and Technology and Media. The No. 5 market research organization worldwide operates in more than 100 countries and employs over 11,000 staff. In 2010, the GfK Group s sales amounted to EUR 1.29 billion. in EUR million 1) 3. Quarter in % Q1 Q3 in % Earnings situation Sales , Gross income from sales Adjusted operating income Margin in per cent 2) Operating income published in ) EBITDA published in ) EBIT published in ) Other financial income / expenses published in ) Consolidated total income Basic earnings per share in EUR Adjusted earnings per share in EUR 4) published in ) Investment and finance Cash flow from operating activity Cash flow from investing activity Cash flow from financing activity Free cash flow after acquisitions, other investments and asset disposals as of in % as of in % Asset and capital position Total assets 1, , , , Equity Equity ratio Liquidity 5) Net debt 6) Employees No. of employees 10,546 11, ,244 11, Share of employees in the GfK companies outside Germany in per cent ) Rounded 2) Adjusted operating income in relation to sales 3) Starting from Q1/2011, currency exchange gains and losses resulting from financial transactions are reclassified from other operating income / expenses to other financial income / expenses; This results in changes in the figures for the previous year. The figures are reported to facilitate a comparison 4) Consolidated total income attributable to equity holders of the parent plus highlighted items divided by the weighted average number of shares in the reporting period 5) Cash and cash equivalents plus securities and fixed-term deposits 6) Liabilities to banks plus pension obligations, liabilities under leases and other interest-bearing liabilities less cash and cash equivalents and securities and fixed-term deposits 2_GfK

3 Business development at a glance of GfK Group Sales in EUR million Adjusted operating income in EUR million Month Month % % % % % % Earnings per share in EUR Cash flow from operating activity in EUR million Month Month % % % % % % Share of sectors in total sales 1) Share of regions in total sales 1) Custom Research 60.0 % Retail and Technology 29.0 % Germany 27.6 % North America 14.7 % Media 10.6 % Other 0.4 % Western Europe/ Middle East/Africa 37.8 % Central and Eastern Europe 7.1 % Latin Amerika 4.2 % Asia and the Pacific 8.6 % 1) Figures from the Management-Information System rounded 1) Figures from the Management-Information System rounded GfK_3

4 Report for the first nine months 2011 The sectors at a glance custom research The sector offers information and consulting services for operational and strategic marketing decisions in more than 90 countries worldwide. Custom Research provides a wide range of tests and surveys, in particular regarding product and pricing policy, brand management, communications, distribution and customer loyalty. On this basis, GfK supports products and services according to the product life cycle model from their development and launch through to maturity and phase-out. The portfolio of the Custom Research sector comprises syndicated data, collected for example by the household and doctor panels, and custom research studies that are exclusively tailored to specific questions. Consumers represent the data sources for the Custom Research sector (point of consumers). In EUR million 3. Quarter in % Q1 Q3 in % Sales Adjusted operating income Margin in per cent 1) Figures from the Management-Information System rounded 1) Adjusted operating income in relation to sales retail and technology The sector sources data from retail (point of sale). Clients are provided with information and consultancy services, which are based on syndicated surveys and analysis of retail sales of consumer goods and services in more than 90 countries. Services include the regular publication of surveys of the market segments office communications, photographic technology and optics, domestic appliances, information technology, telecommunications, sports equipment, tourism, fashion, consumer electronics and entertainment media. In EUR million 3. Quarter in % Q1 Q3 in % Sales Adjusted operating income Margin in per cent 1) Figures from the Management-Information System rounded 1) Adjusted operating income in relation to sales media The Media sector provides information services on reach and the intensity and nature of media usage and acceptance in around 30 European countries and the USA. The offering is directed at clients from media companies, agencies and the branded goods industry. It comprises syndicated surveys as well as specific, one-off studies and analyses. The Media sector draws its information from the various media, including television, radio, print, outdoor advertising and online. In EUR million 3. Quarter in % Q1 Q3 in % Sales Adjusted operating income Margin in per cent 1) Figures from the Management-Information System rounded 1) Adjusted operating income in relation to sales 4_GfK

5 Contents Letter to the shareholders 6 GfK share performance 7 Interim management report 8 1. General economic situation 9 2. Economic and financial development in the GfK Group 9 3. Cash flow and investment Assets and capital structure Trends in the sectors Regional trends Own the Future new corporate strategy focuses on global and digital customer requirements Number of employees Research and development Organization and administration s in participations in the third quarter of BISS fitness and efficiency program Important events after the reporting date of September 30, Marketing and Corporate Communications Opportunity and risk position Outlook 19 Consolidated financial statements 21 Notes to the consolidated financial statements 30 Additional information 32 GfK_5

6 Report for the first nine months 2011 Professor Dr. Klaus L. Wübbenhorst Chief Executive Officer of GfK se New headlines about the euro crisis seem to dominate daily stock market developments. These are turbulent times. You will be all the more pleased to find out that GfK has continued on its positive growth course. In the first nine months of 2011, we significantly increased sales year-on-year by 7.1% to EUR 999 million. Apart from North America, we recorded strong sales growth in all the regions. Business developed particularly well in Central and Eastern Europe as well as Latin America. We achieved a considerable increase in adjusted operating income of 8.7% to EUR million in the first nine months of Consolidated total income rose more sharply still by 30.9% to EUR 75.4 million. We also achieved a further improvement in the margin from 12.9% to 13.1%. This very positive development was carried by the Retail and Technology and Custom Research sectors. However, income in the Media sector was affected by a one-off write-down. Despite growing uncertainty, including rather modest business in the USA, we are confident about the remaining months of Our order book are well-filled, and at the end of October 96.8% of the orders expected for the year as a whole were already posted. The figure is significantly higher than the previous year s level. For 2011, we expect sales growth in organic terms at the upper end of our previous forecast of between 5% and 6% and a margin at the previous year s level. Our new business strategy, Own the Future, will form the basis for GfK s future from January In the last few months, we have created the necessary structures and posts, for example for global client groups and global product management. My special thanks go to all GfK employees. With their high level of commitment, they enable us to breathe life into our new strategy and expand our business at the same time. For our clients, Own the Future will enhance cooperation on the basis of an extensively networked global organization whose knowledge, experience and offering they will be able to access better and faster and which will provide them with even more accurate insights into the world of consumers. In financial terms, we have also set ourselves ambitious targets in our new strategy. These include sales of around EUR 2 billion and a margin of 16% by Own the Future marks the beginning of a new chapter in GfK s history. We will reinvent our company to ensure that we remain the partner of choice in market research for our clients, employees and shareholders in the future. For me personally, an important chapter in my life will come to an end. You are already aware that after almost 20 years at the helm of GfK I have decided not to extend my contract as CEO for personal reasons. I will be saying goodbye with mixed feelings. I know that this is the right time for a change. Yet, I also find it difficult to leave after so many years at GfK. I am proud of the company I am leaving. And I am glad to be able to hand over responsibility for the company to an experienced leader, Matthias Hartmann, who will take over as CEO of GfK on December 1, I wish Matthias Hartmann every success and enjoyment in his new role. An outstanding company with committed employees in a fascinating sector awaits him. Sincerely yours, Prof. Dr. Klaus L. Wübbenhorst 6_GfK

7 GfK share performance GfK share price performance from January 1, 2011, to September 30, 2011, in EUR 1) January February March April May June July August September 1) All values are indexed to the GfK share price, closing prices GfK SDAX DAX 30 Dow Jones Euro Stoxx Media After a strong price upturn at the beginning of the year, GfK shares moved sideways by the end of the first quarter of At the end of the reporting period, the shares closed at EUR 28.57, down considerably by -24% on the opening price on the first trading day in the current year. On February 2, 2011, the GfK share price recorded a new ten-year high of EUR The low for the year to date was recorded at EUR on August 9. GfK shares were also unable to escape the effects of the dislocations seen on the global stock markets since the beginning of August. Since then, the shares have rebounded slightly, although volatility remains high. Compared with the indices, the GfK share performance was average and mirrored the general volatility in the markets. Since August, the shares have significantly outperformed the Dax with a performance comparable to that of the SDax. The peer group comparison shows GfK shares doing well. Despite erratic stock exchange movements, the GfK share price performance was better than that of competitor Ipsos and similar to that of Aegis and WPP. In the third quarter of the year, three organizations started their coverage of GfK shares: JP Morgan Cazenove and Unicredit recommended the stock as buy and Whitman Howard recommended holding the stock. At the end of September, a total of 18 analysts were covering GfK shares. Of these, thirteen recommended the stock as buy and five rated it as hold. The ratings by analysts therefore steadily improved during the reporting period (December 2010: eight buys, six holds and one sell ). As at the end of September, the proportion of shares in free float was 43.9%. At this time, 0.4% of the shares were held by the GfK Management Board and Supervisory Board, 30.3% by institutional investors and 13.2% by private investors. GfK share performance 3. Quarter in % Q1 Q3 in % Share price at the end of the period in EUR % % High in EUR % % Low in EUR % % Number of no-par shares at the end of the period in 1,000 35,948 36, % 36,274 Stock market capitalization at the end of the period in EUR million 1, , % 1, GfK_7

8 Report for the first nine months 2011 GfK achieves another significant increase in sales and income First nine months: sales up 7.1% to EUR 999 million, margin stands at 13.1% (previous year: 12.9%) Rise in adjusted operating income of 8.7% to EUR million (previous year: EUR million) Consolidated total income up 30.9% to EUR 75.4 million Regions: emerging markets with significant sales increase Net debt reduced by EUR 74.8 million like-for-like Order books record 96.8% of expected sales for the full year at the end of October Outlook: organic sales growth at the upper end of previous forecast of between 5% and 6% and margin at previous year s level expected In the third quarter of 2011, the GfK Group continued the positive growth trend already established in the first half of the year and increased sales for the first nine months of 2011 by 7.1% to EUR 999 million (same period in the previous year: EUR 932 million). At 7.0 percentage points, a major share of growth was organic. Compared with the first nine months of the previous year, adjusted operating income rose by 8.7% to EUR million. The margin was up from 12.9% in the same period of the previous year to 13.1%. This positive development was carried by the Custom Research and Retail and Technology sectors. Income in the Media sector was affected by a one-off write-down and the income in the Other segment by costs relating to the implementation of the Own the Future strategy as well as non-recurring expenses for the early termination of the contract of a Management Board member. As a result of significantly lower figures for the highlighted items, EBIT rose by 23.4% on the previous year to EUR million and consolidated total income by 30.9% to EUR 75.4 million. With the exception of North America, all regions recorded strong sales growth. Sales growth was particularly pleasing in Central and Eastern Europe (up 18.2%) and Latin America (up 13.0%). The order situation in the GfK Group remains very satisfactory. At the end of October, a total of 96.8% of sales expected for the whole of 2011 had already been posted or were in the order book. This was significantly higher than the previous year s level of 94.4%. 8_GfK

9 Interim management report 1. general economic situation Economic developments have been mixed in the year to date. In the third quarter, modest economic growth was recorded overall. The growth trend in Germany and most of the emerging markets was relatively strong, whereas most of the Western industrialized nations recorded a slowdown in the economy. The structural problems of public authorities and concerns about their impact on economic growth have now come to the fore. 2. economic and financial development in the gfk group In the first nine months of 2011, GfK achieved a considerable upturn in sales and income year-on-year. Sales were up by 7.1% in total to EUR 999 million. Growth of 7.0 percentage points was largely of an organic nature. GfK has therefore outstripped the growth achieved by its major competitors, as was also the case in the first half of the year. Acquisitions pushed up sales by 1.2 percentage points while currency fluctuations reduced growth by 1.0 percentage point. All three sectors contributed to organic sales growth. Despite the uncertain general economic situation, GfK achieved a pleasing increase in sales of 5.2% in organic terms in the third quarter of GfK Group: key figures in Millionen Euro 3. Quarter Quarter 2011 in % Q1 Q3 in % Sales Adjusted operating income Margin in percent 2) Operating income (published in 2010) (41.6) (93.6) EBITDA 53.0 (published in 2010) 1 (54.9) EBIT 40.9 (published in 2010) 1 (42.8) Other financial income / expenses 3.4 (published in 2010) 1 ( 5.3) (133.1) (96.2) ( 12.0) Consolidated total income Free cash flow after acquisitions, other investments and asset disposals Earnings per share in EUR Adjusted earnings per share in EUR (published in 2010) 1 (0.80) (2.11) 1) Starting from Q1/2011, currency exchange gains and losses resulting from financial transactions are reclassified from other operating income / expenses to other financial income / expenses; This results in changes in the figures for the previous year. The figures are reported to facilitate a comparison. 2) Adjusted operating income in relation to sales 3) Consolidated total income attributable to equity holders of the parent plus highlighted items divided by the weighted average number of shares in the reporting period GfK_9

10 Report for the first nine months 2011 Adjusted operating income 1) In EUR million Q1 Q published Q1 Q reclassified Q1 Q Operating income Expenses and income in connection with reorganization and business combinations Amortization and impairment of additional assets on acquisitions Personnel expenses for share-based payments and long-term incentives Remaining other operating income Remaining other operating expenses Total highlighted items Adjusted operating income ) Rounded Adjusted operating income (hereinafter: income) rose to EUR million in the first nine months of 2011, which represents an increase of 8.7% on the same period in the previous year. In organic terms, growth in income amounted to 9.8%. Acquisitions and currency effects marginally reduced income by 0.1 and 1.1 percentage points respectively. The Margin of the Group increased from 12.9% to 13.1%. Income in the third quarter of 2011 was considerably impacted by a write-down in the Media sector of EUR 4.5 million, applied as a result of an impairment test relating to software in use to measure TV ratings, and expenses relating to the implementation of the Own the Future strategy and one-off expenses incurred for the early termination of the contract of a Management Board member totaling EUR 2.9 million. Adjusted for these non-recurring factors, the margin for the third quarter amounted to 15.7% (same quarter in the previous year: 15.0%). Within the sectors, Custom Research and Retail and Technology, in particular, achieved an increase in income for the first nine months of 15.4% and 15.9% respectively. Excluding the non-recurring factor of the write-down, the decline in income in the Media sector amounts to only 2.8%. However, as a result of the write-down, the sector s income was down by 43.1%. Like its competitors, the GfK Group uses adjusted operating income as a key performance indicator. The explanations regarding business performance using the adjusted operating income 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. Adjusted operating income is determined by eliminating expenses and income items of the sectors and the Group that distort the evaluation of operating earnings power from operating income. The balance of these expenses and income, which are referred to as highlighted items, decreased considerably compared with the previous years. In the first nine months of 2011, the highlighted items amounted to EUR million after EUR million in the same period of the previous year. The difference between adjusted operating income and EBIT has thus diminished considerably compared with the previous years. The individual components of highlighted items developed as follows: The reorganization expenses incurred for the BISS fitness and efficiency program, which will be completed on schedule in the current year, totaled EUR 1.8 million in the first nine months of 2011 (previous year: EUR 4.5 million). These are reported under Expenses in connection with reorganization and business combinations. 10_GfK

11 Amortization of disclosed hidden reserves from purchase price allocation (PPA) decreased in the reporting period to EUR 7.6 million compared with the like-for-like figure of EUR 8.9 million. Any unscheduled amortization is applied regularly at the end of each financial year. In this context, the brands capitalized as part of purchase price allocation will also be checked. Personnel expenses for share-based payment and long-term incentives amounted to EUR 4.2 million. This corresponds to a reduction of EUR 2.2 million on the previous year and is attributable to the lower share price compared with the same period in the previous year. The balance of Remaining other operating income and Remaining other operating expenses was EUR 0.7 million in the reporting period, after EUR -4.8 million in the previous year. This amount is impacted primarily by currency effects and the profits already reported in the first quarter from the deconsolidation of a subsidiary, in which a stake was sold. In the period from January to September 2011, EBITDA increased by EUR 28.1 million to EUR million (previous year: EUR million). At EUR 3.5 million, Income from participations was significantly up compared with EUR 2.6 million in the same quarter of the previous year. EBIT totaled EUR million. It rose by a pleasing 23.4% from EUR 98.4 million in the previous year. The Other financial result, which represents the balance of other financial income and other financial expenses, stood at EUR million after EUR million. Interest paid to third parties increased from EUR 14.6 million to EUR 15.4 million. The rise in interest expenses following the issue of a 5-year bond was almost entirely compensated by income from derivatives to hedge against currency risks. Starting with the first quarter of 2011, currency gains and losses resulting from financial transactions have been reclassified from other result to the financial result in accordance with IFRS. This provides more appropriate reporting of the relevant items. The Tax ratio was down from 31.7% in the previous year to 29.6%. As already explained in the last two quarterly reports, the tax ratio was affected by the fact that certain tax expenses which were previously deductible are no longer recognized as such. As a result, the US dollar-related measurement of a cross-currency swap produced deferred tax expenses. This swap is expected to run to the end of In the third quarter of 2011, deferred tax expenses arising from this were considerably down on those reported in the two previous quarters. In the first nine months, Income attributable to minority interests was up by EUR 1.2 million to EUR 9.8 million compared with the previous year. Basic and diluted Earnings per share climbed by EUR 0.44 compared with the same period in the previous year and amounted to EUR As at September 30, 2011, the total number of GfK SE shares in circulation was 36,503,896. The slightly higher number compared with the number of shares at the beginning of the year was due to the exercise of stock options. The program will end this year. To increase comparability with its peer group, GfK has additionally published Adjusted earnings per share since the 2009 annual report. This is the consolidated total income attributable to the shareholders of the parent company plus the highlighted items divided by the average number of shares in the reporting period. In the reporting period, adjusted earnings per share totaled EUR 2.16 (previous year: EUR 2.05). GfK_11

12 Report for the first nine months cash flow and investment Cash flow from operating activities for the first nine months of 2011 of EUR million was slightly up on the previous year s level (first nine months of 2010: EUR million). At the end of the first half of 2011, the cash flow of EUR 10.5 million was below the previous year s level. Consequently, quarter-on-quarter, the cash flow rose considerably by EUR 11.3 million, or 18.7%. Investments in operating business were increased by EUR 3.4 million to EUR 36.1 million, in order to boost organic growth. At the same time, at EUR 10.0 million (first nine months of 2010: EUR 31.1 million), acquisitions totaled a far lower volume than in the previous year. In total, cash outflows from Investing activities were therefore down to EUR 42.8 million in the first nine months of the current financial year after EUR 68.4 million in the same period of the previous year. Accordingly, Free cash flow after acquisitions, other investments and asset disposals increased significantly to EUR 82.4 million (previous year: EUR 56.0 million). In the reporting period, cash inflow from Financing activity amounted to EUR 9.0 million (previous year: cash outflow of EUR 63.9 million). Since not all the funds raised as part of the bond issue could be used to pay off existing liabilities, the balance of bank loans raised and repaid produced a positive cash flow of EUR 34.7 million. There has been a sharp rise in the outflow of funds to minority shareholders from EUR 4.0 million to EUR 10.2 million. This rise resulted from the purchase price paid to increase the shareholdings in two companies in the first quarter of 2011, without a change in control. At the end of the first nine months of 2011, GfK had Cash and cash equivalents of EUR million (September 30, 2010: EUR 37.0 million). The unutilized credit lines amounted to EUR million as at September 30, assets and capital structure During the first nine months of 2011, GfK s total assets were up by EUR 93.5 million to EUR 1,743 million on the figure at year-end This was primarily due to an increase in cash and cash equivalents of EUR 91 million. At the same time, revenue reserves increased by EUR 43 million and short-term financial liabilities by EUR 36 million. As at September 30, 2011, equity totaled EUR 726 million (December 31, 2010: EUR 677 million). The rise resulted from the higher revenue reserves. The equity ratio was a good 41.6% (December 31, 2010: 41.1%). As at September 30, 2011, the share capital of GfK SE amounted to approximately EUR 152 million. On September 30, 2011, Net debt totaled EUR million. This includes the balance of liabilities to banks plus pension obligations, liabilities under leases and other interest-bearing liabilities less cash and cash equivalents and short-term securities. In comparison with the end of the second quarter of 2011, net debt fell by EUR 58.6 million and compared with September 30, 2010 by as much as EUR 74.8 million. This amount includes liabilities from purchase price payments already agreed of EUR 59.5 million. As at September 30, 2011, the ratio of modified net debt to EBITDA stood at 1.19 (September 30, 2010: 1.78) and the ratio of EBITDA to modified interest expenses was (September 30, 2010: 18.94). The bond issue has enhanced the maturity profile for GfK, however, it has also increased the interest level. 12_GfK

13 5. trends in the sectors Structure of sales growth by sectors 1) Total 1.5% 1.9% 6.5% Custom Research 6.9 % 0.1% 0.1% 10.2% Retail and Technology 10.4 % 2.2% 1.8% Media 0.4 % 11.2% 7.0% Other 2) 4.1 % 1.0% 1.2% 7.0% Total 7.1 % 1) Figures from the Management-Information System rounded Currency Acquisitions Organic 2) Other division Custom Research: In the first nine months of 2011, the Custom Research sector achieved considerable sales growth. The sector increased sales by 6.9% year-on-year to EUR 598 million. Organic growth amounted to 6.5%. Currency effects had a negative impact with 1.5 percentage points, but were more than compensated by acquisitions, which contributed a further 1.9 percentage points to growth. The excellent business trend in telecommunications, fast moving consumer goods (FMCG) and the automotive industry impacted positively, in particular. Apart from North America where sales were down on the previous year, all regions contributed to sales growth with significant increases. In North America, negative effects on income were limited by stringent cost management. Custom Research 1) In EUR million Q1 Q3 in % Sales Adjusted operating income Margin in per cent 2) ) Figures from the Management-Information System rounded 2) Adjusted operating income in relation to sales Overall, the income trend in the sector was very positive, with income rising by 15.4% to EUR 38.7 million in the first nine months of Organic growth amounted to 18.0%. Acquisitions and currency effects reduced income by 0.4 and 2.2 percentage points respectively. The margin improved from 6.0% in the previous year to 6.5%. GfK_13

14 Report for the first nine months 2011 Retail and Technology 1) In EUR million Q1 Q3 in % Sales Adjusted operating income Margin in per cent 2) ) Figures from the Management-Information System rounded 2) Adjusted operating income in relation to sales Retail and Technology: Compared with the same period in the previous year, the Retail and Technology sector again achieved double-digit sales growth of 10.4% to EUR 299 million. At 10.2 percentage points, this growth was largely organic in nature, with currency effects and acquisitions of 0.1 percentage points each playing only a minor role. The sector thus again achieved the strongest sales performance within the GfK Group. Sales increases were reported in all regions, with Germany and Asia and the Pacific making the highest contributions. In Germany, the sales increase primarily resulted from international contracts concluded in the country and passed on within the GfK network. With regard to the different business segments, growth in telecoms, small domestic appliances (SDA) and IT was well above average. The sector also saw a substantial improvement in income. The rise from EUR 79.4 million in same period of the previous year to EUR 92.1 million represents an increase of 15.9%. As with sales growth, at 15.7 percentage points, the upturn in income was largely organic. The margin in the sector of 30.8% surpassed the high level of 29.4% achieved in the first nine months of Media 1) In EUR million Q1 Q3 in % Sales Adjusted operating income Margin in per cent 2) ) Figures from the Management-Information System rounded 2) Adjusted operating income in relation to sales Media: Sales in the Media sector were up 1.8% in organic terms. However, at -2.2 percentage points, the negative impact of currency effects led overall to a marginal fall in sales of 0.4% to EUR 98 million. On an organic basis, sales growth was particularly high in Germany and North America. Income for the sector totaled EUR 6.4 million. The figure was adversely affected by a write-down of EUR 4.5 million, which was applied following an impairment test relating to software already partly used to measure TV ratings. The impairment test was triggered by the launch of work on a further upgrade of the Evogenius software. The business plans used as a basis in the impairment test required a partial write-down of the assets capitalized to date. The risk recorded based on the impairment test as at September 30, 2011 will be compared with the latest data as at December 31, _GfK

15 In addition to the write-down, currency effects of -5.1 percentage points also had a negative impact on income. Adjusted for the non-recurring factor of the write-down, income amounted to EUR 10.9 million. In organic terms, growth in income before the write-down was 2.3%. The sector margin was 6.5%. Adjusted for the non-recurring factor of the write-down, the margin was 11.1%, which is only slightly below the previous year s figure of 11.4%. Other 1) In EUR million Q1 Q3 in % Sales Adjusted operating income ) Figures from the Management-Information System rounded Other: The sectors are complemented by Other, which comprises, in particular, the head office services of GfK for its subsidiaries and other non-market research-related services. In the first nine months of 2011, sales generated by the Other segment amounted to EUR 3.6 million (previous year: EUR 3.8 million). Of the costs incurred by the segment, EUR 6.2 million were not covered compared with EUR 3.7 million in the same period of the previous year. This increase resulted from costs totaling EUR 2.9 million relating to the strategic Own the Future project as well as one-off expenses in connection with the early termination of the contract for a Management Board member. 6. regional trends Structure of sales growth in the regions 1) Total 2.7% 9.2% Germany 11.9 % Western Europe/ 0.7% 8.2% Middle East/Africa 8.9 % Central and Eastern Europe 3.1% 18.2% 15.0 % 7.0% 5.5% 2.1% North America 10.4 % 13.0% Latin America 13.1 % 1.6% 0.9% 9.3% Asia and the Pacific 11.8 % 1.0% 1.2% 7.0% Total 7.1 % 1) Figures from the Management-Information System rounded Currency Acquisitions Organic GfK_15

16 Report for the first nine months 2011 Regions: sales growth 1) EUR million Q1 Q3 in % Germany Western Europe/Middle East/Africa Central and Eastern Europe North America Latin America Asia and the Pacific Total ) Figures from the Management-Information System rounded The GfK Group s network of subsidiaries covers over 100 countries worldwide. In geographic terms, the business is divided into six regions: Germany, Western Europe/Middle East/Africa, Central and Eastern Europe, North America, Latin America as well as Asia and the Pacific. Apart from North America, all regions recorded significant sales growth in the first nine months of In Germany, sales generated by the GfK companies saw another double-digit increase of 11.9%. Of this, acquisitions accounted for 2.7 percentage points and organic growth for 9.2 percentage points. Sales totaled EUR 275 million. Western Europe/Middle East/Africa is the strongest sales region with EUR 378 million. In the reporting period, sales improved by 8.9%. This increase was mainly driven by organic growth of 8.2 percentage points. Currency effects boosted the figure by 0.7 percentage points. The strongest growth of 15.0% was recorded in the Central and Eastern Europe region, which achieved sales of EUR 71.0 million. On an organic basis, growth was as high as 18.2%, while currency effects made a negative contribution of -3.1 percentage points. In North America, GfK generated sales of EUR 147 million in the first nine months of 2011, which equates to a decline of 10.4%. Most of this was due to currency effects, which accounted for -7.0 percentage points. In organic terms, the decrease amounted to -5.5 percentage points. Acquisitions increased sales in the region by 2.1 percentage points. The GfK companies in Latin America achieved sales growth of 13.1% in the first nine months of the current year to generate total sales of EUR 42 million. At 13.0 percentage points, growth in this region was almost entirely organic in nature. There was also a significant increase in sales to EUR 86 million in the Asia and the Pacific region. Of the overall growth of 11.8%, organic growth accounted for 9.3 percentage points, with acquisitions and currency effects contributing 0.9 and 1.6 percentage points respectively. 7. own the future implementation of new corporate strategy is progressing On June 30, 2011, GfK presented its new corporate strategy which will come into effect as of January 1, 2012, as has been reported in H1 report. Since the strategy has been announced the necessary structures have been drafted, which will allow the successful implementation of the ambitious objectives. 16_GfK

17 GfK has created new global and regional management roles and responsibilities for global products and client groups. The selection of the job holders took place last quarter and the new positions are largely filled already. The processes and cooperation will now be defined in details in global workgroups so that the new organization can start successfully on 1st January For clients this means working with a more connected global organization that delivers more powerful insights, and having better access to GfK s wealth of expertise, global services and knowledge of consumer trends. As announced in GfK s last quarterly report, the Management Board has also introduced long-term growth and income targets in the context of the new corporate strategy. By 2015, sales of around EUR 2 billion are to be achieved with 16% margin. The goal is to realize organic growth on a scale that considerably outperforms the sector average. 8. number of employees As at September 30, 2011, the GfK Group had 11,328 employees, 782 more than at the end of At the end of the third quarter, the Group employed 9,323 staff outside Germany and 2,005 in Germany. Newly consolidated companies accounted for 224 employees. Otherwise, the staff build-up took place primarily in the growth regions of Central and Eastern Europe, Asia and the Pacific as well as Latin America. In the first nine months of the year, personnel expenses amounted to EUR million (previous year: EUR million). The personnel cost ratio, which expresses the ratio of personnel expenses to sales, remained unchanged at 43.7%. 9. research and development In the Media sector, the development of the Evogenius product package focuses on a new Evogenius reporting tool, which will be used for standardized as well as specific analysis in TV research. GfK MRI has developed a new product in cooperation with comscore, which links the online media usage of American consumers with their use of other media. The product is based on a standardized database, comscore-mri Fusion. GfK Panel Services has developed the new GfK Total Market Insights concept, which facilitates linking data about consumers financial transactions online with the digital sales data of individual retailers. The concept delivers detailed market reports and shopper insights at a fraction of the costs previously associated with this kind of research. 10. organization and administration After Professor Dr. Klaus L. Wübbenhorst, the long-standing CEO of GfK SE, advised the Supervisory Board in February 2011 that he would not be extending his contract which runs until the end of July 2012 for personal reasons, on August 1, 2011 Matthias Hartmann was appointed to take over from Professor Wübbenhorst. Hartmann will be assuming responsibility for GfK on December 1, 2011 in his capacity as Chief Executive Officer. In his last position as Global Head of Strategy and Industries, the business management graduate was responsible for the global strategy and direction of IBM Global Business Services, the consulting arm of the IBM Group. Hartmann has international experience and GfK_17

18 Report for the first nine months 2011 worked for IBM in many different countries. As a strategic thinker and consultant with a strong track record in the technology group, he has all the necessary qualities to lead GfK in a digital and increasingly networked world, drive forward innovation and achieve the targets set in GfK s new business strategy, Own the Future. As planned, Professor Wübbenhorst will be leaving the Management Board when Hartmann joins. In the 20 years Professor Wübbenhorst spent on the Management Board, 13 of which as CEO, GfK has evolved from a company with a focus on Germany to a leading listed global Group with an international outlook. At the end of September, Wilhelm R. Wessels left the Management Board of GfK SE, as scheduled, when his contract expired. Wessels was last responsible for the Media sector and has played an important role in the internationalization of the GfK Group over the last 33 years. 11. changes in participations in the third quarter of 2011 In July 2011, GfK increased its shareholding in GfK Egypt by 26% to now 100%. As a leading market research company in the region, GfK Egypt offers research as well as consultancy services in the telecommunications, food, finance and property, retail and pharmaceutical sectors. In July, GfK also acquired the mystery shopping activities of Nippon Media. The company was established in 1982 and specializes in providing services to customers from the telecommunications and energy supply sectors. Mystery shoppers check the quality of services in the retail and service sectors by shopping without revealing their actual identity. In August 2011, GfK acquired a stake in the US company Media Behavior Institute (MBI) together with The Nielsen Company. Like The Nielsen Company, GfK holds 25% of the shares, with the remaining 50% of the shares held by the two founders of the company. Based in New York, MBI will provide 2,000 Americans with smartphones that have a special app as part of its syndicated USA TouchPoints survey. With the help of this app, the total media usage of consumers is measured at half-hour intervals, and this data is combined with lifestyle habits. The comprehensive measurements are virtually in real-time and thus enable the media, advertising companies and agencies to align advertising messages to their target groups with great accuracy. s in the GfK Network during the third quarter of 2011 Company Reason for investment Shareholding in % Sector Region GfK Egypt Increase from 74 to 100 Custom Research Western Europe/Middle East/Africa MBI Acquisition 25 Media North America Mystery Shopping activities of Nippon Media Acquisition Asset Deal Custom Research Asia and the Pacific 12. biss fitness and efficiency program The Group-wide fitness and efficiency program BISS is on schedule and will have fully met its objectives by the end of this financial year. As of the end of the first nine months of 2011, 22 projects had been successfully completed. EBIT improved by EUR 30.9 million in the first nine months of the 18_GfK

19 year as a result of BISS. Compared with the contribution of EUR 19.6 million in the first nine months of 2010, this is a further rise of EUR 11.3 million. In the third quarter of 2011, restructuring costs of EUR 1.8 million were reported under highlighted items. 13. important events after the reporting date of september 30, 2011 No important events which require reporting occurred after the reporting date. 14. marketing and corporate communications The Corporate Communications department has Group-wide responsibility for the external and internal communications of the GfK Group and is divided into three teams: Public Relations, Corporate Design/Corporate Identity and Investor Relations. The quality of GfK s financial reporting has been recognized once again. In the Best Annual Report Awards, GfK s annual report ranked fourth among 50 S-Dax listed companies. The awards are organized by manager magazine. The criteria evaluated are content, writing style and design. 15. opportunity and risk position Despite the considerable improvement in sales and income in the year to date, the risk position of the GfK Group is affected by the uncertainty relating to the economic environment. Apart from these macroeconomic conditions, there are no material changes compared with the opportunity and risk position of the GfK Group described in the Group Management Report as at December 31, No risks have been identified that could jeopardize the continued existence of the Group. If the global economic situation should worsen significantly and severely affect the business of GfK clients, this could also impact on GfK. The GfK business model is subject to seasonally related fluctuations. Traditionally, sales and income trends are significantly better in the fourth quarter than the other quarters, given that the year-end business is highly relevant to clients operations. No reliable forecast can be made as to the extent to which this effect will occur in the current financial year. Thanks to its global network as a full-service provider, the GfK Group is well-positioned. GfK meets new challenges in the market research industry with an innovative portfolio of products and services tailored to client requirements. 16. outlook The International Monetary Fund (IMF) reduced its forecast for global development again in September compared with its forecast made in June, but is still expecting growth of 4.0% in the current year. Expectations for the USA were downgraded by a full percentage point to 1.5%. At the same time, the IMF adjusted its forecast for the emerging markets by only -0.2 percentage points to 6.1%. For Germany, the IMF expects a comparatively robust development with 2.7% growth and for the industrialized nations 1.6% in total. GfK_19

20 Report for the first nine months 2011 Although the global economy is expected to record further growth, risk awareness is intensifying all the time and making a forecast difficult. The structural problems of public authorities and concerns about their impact on the real economy are increasingly coming to the fore. The budget consolidations announced are perceived as an adverse factor in terms of economic growth, and the risk of another credit crunch in the event of further problems arising in the financial sector is now also being discussed. Consumers are reacting accordingly, and this was reflected in the latest European consumer climate survey conducted by GfK in September. Economic expectations have worsened considerably among European consumers. At the same time, their willingness to buy showed a mixed picture. GfK continues to expect a strong performance for financial year The well-filled order books are an important indicator in this respect. At the end of October, a total of 96.8% of the orders expected for the year as a whole were already posted. The figure is significantly higher than the previous year s level of 94.4%. At the same time, there are some factors which are fueling uncertainty. For the USA, a modest level of business is expected, due to the continued consumer restraint. Despite these uncertainties, the company still expects organic sales growth at the upper end of the previous forecast of between 5% and 6% in financial year 2011, based on the companies included in the scope of consolidation at the start of the year. All three sectors will contribute to this with positive organic growth in sales. Despite the cost burden arising from implementing the Own the Future strategy, the unscheduled write-down in the Media sector and expenses relating to the early termination of the contract for a Management Board member, GfK is confident of achieving a margin on adjusted operating income in relation to sales that will match the previous year s level. *The outlook contains predictive statements on future developments, which are based on current management assessments. Words such as anticipate, assume, believe, estimate, expect, intend, could/might, planned, projected, should, likely and other such terms are statements of a predictive nature. Such predictive statements contain comments on the anticipated development sales proceeds and income for Such statements are subject to risks and uncertainties, for example, economic effects such as exchange rate fluctuations and changes in interest rates. Some uncertainties and other unforeseen factors which might affect ability to achieve targets are described under risk position in the Management Report. If these or other uncertainties and unforeseen factors arise or the assumptions on which the statements are based prove to be incorrect, actual results could materially differ from the results indicated or implied in these statements. We do not guarantee that our predictive statements will prove to be correct. The predictive statements contained herein are based on the current Group structure and are made on the basis of the facts on the day of publication of the present document. We do not intend nor accept any obligation to update predictive statements on an ongoing basis. 20_GfK

21 Consolidated income statement of GfK Group from July 1 to September 30, 2011 in EUR 000 (according to IFRS, not audited) Q published % of sales Q reclassified % of sales Q % of sales abs. % Sales 322, % 322, % 338, % 15, % Cost of sales 214, % 214, % 224, % 10, % Gross income from sales 108, % 108, % 113, % 5, % Selling and general administrative expenses 66, % 66, % 70, % 3, % Other operating income % 3, % 4, % 1, % Other operating expenses % 5, % 3, % 1, % Operating income 41, % 39, % 44, % 4, % Income from associates % % % % Other income from participations % % % % ebit 42, % 40, % 45, % 4, % Other financial income 2, % % 1, % 2, % Other financial expenses 7, % 2, % 9, % 6, % Income from ongoing business activity 37, % 37, % 37, % % Tax on income from ongoing business activity 11,654 11,654 7,516 4, % Consolidated total income 25, % 25, % 29, % 3, % Attributable to equity holders of the parent: 21, % 21, % 26, % 4, % Attributable to minority interests: 3, % 3, % 3, % % Consolidated total income 25, % 25, % 29, % 3, % Basic earnings per share (eur) % Diluted earnings per share (eur) % Adjusted earnings per share (eur) % For information: Personnel expenses 136, % 136, % 145, % 9, % Depreciation/amortization 12, % 12, % 16, % 4, % ebitda 54, % 52, % 62, % 9, % GfK_21