Report for the first nine months 2015 GfK Group

Transcription

1 CLARITY Report for the first nine months 2015 GfK Group Growth from knowledge

2 2 Report for the first nine months 2015 The GfK Group at a glance GfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK s 80 years of data science experience.this allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data, enabling its clients to improve their competitive edge and enrich consumers experiences and choices. in EUR million 1) 3. Quarter ) 2015 Change in % Q1 Q ) 2015 Change in % ) Earnings situation Sales , , , ,452.9 Gross income from sales EBITDA Adjusted operating income Margin in percent 3) 12.9% 12.8% 10.9% 10.6% 12.3% 12.3% Operating income EBIT Consolidated total income Basic earnings per share in EUR Investment and finance Cash flow from operating activity Cash flow from investing activity Cash flow from financing activity Free cash flow before acquisitions, other financial investments and asset disposals Free cash flow after acquisitions, other financial investments and asset disposals Change as of in % Change as of in % Asset and capital position Total assets 1, , % 1, , % Equity % % Equity ratio in per cent 39.9% 41.7% 41.1% 41.7% Liquidity 4) % % Net debt 5) % % Employees No. of employees 13,380 13, % 13,332 13, % 1) Rounded 2) Excluding the goodwill impairment of 59.5 million 3) Adjusted operating income in relation to sales 4) Cash and cash equivalents plus securities and fixed-term deposits 5) 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 6) Adjusted due to the reclassification between cost of sales and selling and general administrative expenses, see section 2 of the notes to the financial statements.

3 Report for the first nine months Business development at a glance of GfK Group Sales in EUR million Adjusted operating income in EUR million Month Change Month Change % % % % 1-9 1, , % % Earnings per share in EUR Cash flow from operating activity in EUR million Month Change Month Change % % % % % % Share of sectors in total sales in percent 1) Share of regions in total sales in percent 1) 55.7 Consumer Experiences 44.1 Consumer Choices 0.2 Other Northern Europe 17.5 Southern & Western Europe 8.3 Central Eastern Europe/META 4.1 Latin America 20.6 North America 12.3 Asia and Pacific ) Figures from the Management-Information System rounded 1) Figures from the Management-Information System rounded

4 4 Report for the first nine months 2015 The sectors at a glance Consumer Experiences The Consumer Experiences sector deals with consumer habits, behavior, perceptions and attitudes and answers the who, why and how of consumption. This research is based on flexible creative methods. GfK is developing pioneering new procedures to deliver a profound understanding of how consumers experience brands and services. In EUR million 3. Quarter Change in % Q1 Q Sales % % Adjusted operating income % % Margin in per cent 1) 6.4% 6.8% 5.3% 5.7% Figures from the Management-Information System rounded 1) Adjusted operating income in relation to sales Change in % Consumer Choices The Consumer Choices sector investigates what s selling when and where. It focuses on the continuous assessment of market segments and trends by analyzing all major sales and information channels and media. In EUR million 3. Quarter Change in % Q1 Q Sales % % Adjusted operating income % % Margin in per cent 1) 24.1% 23.0% 21.0% 19.9% Figures from the Management-Information System rounded 1) Adjusted operating income in relation to sales Change in %

5 Report for the first nine months contents Letter to the shareholders... 6 GfK share performance... 7 Interim management report General economic situation Economic and financial development in the GfK Group Cash flow and investment Assets and capital structure Trends in the sectors Regional trends Own the Future implementing the new corporate strategy Number of employees Research and development Organization and administration Changes in participations in the third quarter of Important events after the reporting date of 30 september Opportunity and risk position Outlook...16 Consolidated financial statements...17 Notes to the consolidated financial statements...26 Additional information...28

6 6 Report for the first nine months 2015 Letter to the shareholders matthias hartmann Chief executive officer of GfK SE In the first nine months, our sales grew organically by 0.4 percent, and there were positive currency effects of 5.5 percent. Overall growth amounted to 6.0 percent, and sales reached 1,118.6 million. In the third quarter alone, organic growth amounted to 0.7 percent, while the figure for the second quarter was -0.7 percent. The adjusted operating income also grew in the first nine months: it rose by 4.2 million compared with the same period the previous year, attaining a figure of million and thus achieving a 3.6 percent increase. Because we are continuing to invest, the margin was 10.6 percent, which is somewhat lower than the figure for the first nine months of the previous year (10.9 percent). In the Consumer Experiences sector, we managed to stabilize sales in the course of this year, after a markedly negative sales trend in the previous year. In organic terms, sales declined by just 1.2 percent in the first nine months. However, thanks to positive currency effects, sales increased by 4.4 percent to million overall. In addition, the sector s globally standardized products were popular with our customers: they now account for 44 percent of Consumer Experiences order book worldwide. In the third quarter, our selective, digital-oriented acquisition strategy resulted in the acquisition of NORM, a Swedish company which specializes in digital consumer research methods and which carries out market research projects worldwide through virtual businesses and online shops. As part of GfK, it will be possible to carry out these activities on a larger scale and to incorporate them within other services in our product portfolio. GfK has successfully continued to optimize this sector. The global management system, with strict governance and control processes, enables us to respond to changes and adjust our capacities more rapidly. More specifically, these improvements resulted in a 12.0 percent increase in income to 35.3 million, despite a slight decline in sales and ongoing price pressure within competitive markets. The margin also increased by 0.4 percentage points to 5.7 percent (same period in the previous year: 5.3 percent). In the Consumer Choices sector, we increased sales after nine months by 8.5 percent to million compared with the same period the previous year. After a 0.4 percent decline in sales in the second quarter, the sector achieved organic growth of 4.7 percent in the third quarter as a result of new orders placed primarily by small and medium-sized customers. To a large extent, this compensated for the drop in growth in the second quarter. Compared with the same period in the previous year, income increased by 2.7 million to 98.3 million. However, because of investments and start-up losses in connection with the TV contract in Brazil, the margin fell from 21.0 percent in the same period in the previous year to 19.9 percent. In the third quarter, we also announced changes in the Management Board. From the start of the coming year, Alessandra Cama will be responsible for all operations functions across both sectors. She has been with GfK since 2011 and is currently in charge of our Consumer Choices business in Asia and the Pacific. This will improve our capacity to optimize our activities and thus to achieve cost savings. As part of their comprehensive sector responsibility, both Chief Commercial Officers will remain in charge of their sector and sector s products. In addition, they will each be allocated a region and specific industries, embracing both sectors on a One GfK basis. This will enable us to operate in the market in a more customer-oriented and integrated way. Also at the start of next year, David Krajicek will take over from Debbie Pruent at the helm of Consumer Experiences, as she has decided not to extend her contract, which expires at the end of this year. In recent years, Debbie has played a major role in the transformation of the Consumer Experiences sector. David Krajicek has undertaken various GfK management roles since 2004, and is currently in charge of Consumer Experiences in the USA. Overall, GfK is still in a very solid position after the third quarter. Even in the face of the ongoing challenges presented by the market environment, we are working as a team all over the world to prepare our business for future challenges beyond the quarterly perspective. We are confident that we will achieve our guidance for the current year. Sincerely, Matthias Hartmann

7 Report for the first nine months GfK share performance GfK share price performance from January 1, 2015, to september 30, ) in EUR January February March April May June July August September 1) All values are indexed to the GfK share price, closing prices, in EUR GfK DAX 30 Performance SDAXPerformance Dow Jones Euro Stoxx Media The opening price of GfK shares at the beginning of 2015 was In January and February GfK grew more strongly than the benchmark indices. While the SDAX continued to develop positively, GfK shares began a sideways trend and in March finally gave up most of the gains from January. The price development in the second quarter ran contrary to this. After an initial continued sideways movement, GfK shares increased significantly in June until they reached a high of on July 17th As with all the benchmark indices, the GfK share price experienced a significant fall in August, and while the SDAX and DJ Euro Stoxx Media made a partial recovery from this fall, the DAX and the GfK share continued to lose value up to the end of the period. As a result, the share price was 6.0 percent lower than it had been at the start of the year. In this period, the DAX fell by 1.1 percent, whereas the SDAX rose by 14.6 percent. In the first nine months of 2015, the average trading volume of GfK shares on the German stock exchanges 10,659 shares, which was above the previous year s figure of shares. GfK is covered by national and international financial analysts. At the end of September, out of the twelve analysts rating GfK shares, seven recommended the stock as buy and a further five as hold. At the end of June, the number of shares in free float stood at 43.6 percent. At that time, 0.03 percent of the shares were held by GfK s Management and Supervisory Boards, with 34.4 percent in institutional hands and 9.2 percent held by private investors. Analyst ratings as of Buy 5 Hold 0 Sell 7 5 GfK share 1) 2014 Q Q Q Number of shares in thousands 36,504 36,504 36,504 36,504 Market Capitalization EUR mio 1,241 1,254 1,431 1,143 High/Low EUR 43.86/ / / /31.30 Close EUR Earnings per share EUR ) ) as of reporting dates 2) Excluding the goodwill impairment of 59.5 million

8 8 Report for the first nine months 2015 GfK maintains sales growth and increases Adjusted operating income Sales up in organic terms by 0.4 percent, with overall growth of 6.0 percent Currency effects remain positive Adjusted operating income increases by 3.6 percent, with a margin of 10.6 percent (previous year: 10.9 percent) EBITDA increased to million (previous year: million) Guidance for the year confirmed GfK increased its sales and income in the first nine months of 2015, with organic sales growth of 0.4 percent, as well as positive currency effects of 5.5 percent. Total sales in the first nine months amounted to 1,118.6 million, which constitutes overall growth of 6.0 percent. In the third quarter alone, organic growth reached 0.7 percent, while the figure for the second quarter was -0.7 percent. There were also positive results in terms of income: adjusted operating income for the first nine months amounted to million, which represents an increase of 4.2 million compared with the same period of the previous year. As a result of investments in future growth, the margin fell by 0.2 percent - from 10.9 percent in the same period the previous year to 10.6 percent. By and large, the Consumer Experiences sector got back on an even keel, having accepted significant declines in sales in the previous year as part of its realignment process. In organic terms, sales fell by 1.2 percent, whilst income improved by 12.0 percent and the margin was increased to 5.7 percent (previous year: 4.6 percent decline in sales in organic terms, margin of 5.3 percent). Meanwhile, in the Consumer Choices sector, organic sales increased by 2.7 percent, and income increased by 2.9 percent. Thanks to increased investment activity, the margin remained high at 19.9 percent, but this was lower than the previous year s figure of 21.0 percent. Business shrank in organic terms in Northern Europe, but remained stable in Southern and Western Europe, and every other region experienced organic growth. At the end of September, 91.5 percent of the expected annual sales had already been posted or were in the order book (previous year: 94.9 percent). This is one of the lower figures achieved in the last four years, which range from 91.0 percent to 96.1 percent.

9 Report for the first nine months Interim management report 1. General economic situation In the course of 2015 so far, growth in the global economy as a whole lost some momentum, and there were divergent developments in most industrial countries and in the emerging economies. In particular, the global decline in commodity prices had very mixed effects, but these were relatively positive overall. In Northern Europe, economic performance continued to improve, while growth rates began to increase again in many Southern and Western European countries. Moreover, a relaxed monetary policy and falling unemployment rates helped the economy in North America. In contrast, China s growth fell somewhat, as the strong yuan and a decline in foreign demand slowed down the growth of the exporting nation. Japan was not yet able to reap any benefits from the relaxation of its currency policy. Meanwhile, the economic situation in Brazil was still strained, and the Argentinian economy was hampered, in particular, by very high inflation. The euro fell significantly against the US dollar and the British pound in the first quarter, but the currency markets settled down somewhat in the course of the year, and the euro gained a little against both currencies in the second and third quarters, respectively. 2. Economic and financial development in the GfK Group GfK s business has been realigned over the last three years. In particular, this affected the Consumer Experiences sector, for which improving both income and margin remains the priority. Meanwhile, the Consumer Choices sector continues to pursue a growth strategy. The necessary structural changes for the realignment of the Consumer Experiences sector have largely been completed, but the sector still needs to adapt to customer requirements, which are still changing all the time. In the reporting period, sales were stabilized and the margin was improved. The Consumer Choices sector achieved organic growth, but ongoing investing activity is currently having a negative effect on this sector s margin. In the Group as a whole, sales increased by 6.0 percent to 1,118.6 million. Organic growth amounted to 0.4 percent, and currency effects of +5.5 percent had a significant positive impact. In line with the focus on organic growth, acquisition activity was limited. Hence, acquisitions accounted for just 0.1 percent of growth. While sales in the Consumer Experiences sector fell by just 1.2 percent in organic terms after a significant drop in the previous year, the Consumer Choices sector achieved a 2.7 percent increase in organic sales. After shrinking in the second quarter, the Group achieved organic growth of 0.7 percent in the third quarter, which was driven by the strong sales performance in the Consumer Choices sector. GfK Group: key figures In EUR million (rounded) 3. Quarter Quarter 2015 Change in % Q1 Q Q1 Q Change in % Sales , , EBITDA Adjusted operating income Margin in percent 1) 12.9% 12.8% 10.9% 10.6% Operating income EBIT Other financial income / expenses Consolidated total income Cash flow from operating activities Earnings per share in EUR ) Adjusted operating income in relation to sales 2) Percentage points The adjusted operating income (hereinafter: income) increased by 3.6 percent to million in the first nine months of 2015 (same period in the previous year: million). Both sectors contributed to this improvement. On the other hand, the margin fell to 10.6 percent, a 0.2 percent drop compared with the previous year. This figure was affected by investments in setting up panels and the StarTrack production platform for GfK s point of sales tracking.

10 10 Report for the first nine months 2015 Like its competitors, the GfK Group uses adjusted operating income as a key performance indicator. The explanations regarding business performance using 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. The adjusted operating income is determined by eliminating other expenses and income items that distort the evaluation of operating earnings power from operating income. These highlighted items resulted in net expenses of 21.0 million. In the same period the previous year, net expenses amounted to 20.9 million. The organizational streamlining measures adopted at the beginning of the year were continued. This is reflected in the highlighted item, income and expenses in connection with reorganization and improvement projects. In this context, particularly in Southern and Western Europe, severance expenses amounted to 8.2 million (same period in 2014: 7.0 million). Moreover, other expenses, including those intended to optimize the long-term rental situation and to standardize processes and software, led to an increase in expenses of 2.6 million in total, which resulted in a figure of 12.8 million. Adjusted operating income 1) In EUR million Q1 Q Q1 Q Operating income Write-ups and write-downs of additional assets identified on acquisitions Income and expenses in connection with share and asset deals Income and expenses in connection with reorganization and improvement projects Personnel expenses for share-based incentive payments Currency conversion differences Income and expenses related to one-off effects and other exceptional circumstances Total highlighted items Adjusted operating income ) rounded Income from participations fell by 3.3 million to 2.2 million in the first nine months of To a large extent, this decline was a consequence of losses incurred as part of a reorganization of participations in France. Nevertheless, EBIT was increased by 3.2 percent, having fallen by 2.4 percent in the first half-year. Moreover, EBITDA rose by 1.6 percent to million. There was barely any change in other financial income, which represents the balance of other financial income and other financial expenses: it amounted to million, as compared with a figure of million in the first nine months of The tax ratio fell to 36.1 percent from the previous year s figure of 37.5 percent. Yet, for the first half-year, it was still significantly higher than the figure for the same period in the previous year. These fluctuations in the course of the year were produced primarily by currency effects and the valuation of recognized loss carryforwards, which are revalued each quarter. The consolidated total income increased by 6.8 percent to 51.4 million. 3. Cash flow and investment In the first nine months of 2015, cash flow from operating activity fell from million in the same period the previous year to million. This was largely due to the payout of a sum provided for in the previous year for taxes and fines in Turkey. Operating working capital performed well in the third quarter, which compensated for the decline in the second quarter. Overall, there was a slight improvement in the reduction of operating working capital, from 24.3 million to 25.0 million. Investments in intangible assets increased by 15.3 million to 46.8 million. Investments in setting up panels in Brazil and, to a lesser extent, in Saudi Arabia accounted for a large proportion of this increase. In addition, investments were also made in software. Investments in tangible assets fell by 1.8 million to 20 million. Spending on the acquisition of consolidated companies amounted to 9.0 million, which was 3.3 million higher than that of the previous year. This spending concerns the acquisition of NORM Research & Consulting AB as well as earn-out payments for acquisitions in previous years. Overall, cash outflow from investing activities increased from 60.9 million to 74.9 million. Hence, free cash flow after acquisitions, other investments and asset disposals fell from 71.9 million in the same period in the previous year to 45.3 million. At the end of September 2015, GfK had cash and cash equivalents of million (30 September 2014: 88.5 million). The unutilized credit lines amounted to million at the end of September (30 September 2014: million).

11 Report for the first nine months Assets and capital structure In the first nine months of 2015, GfK SE s total assets increased by 94 million compared with the figure at year-end 2014 to 1,861 million. This increase was largely the result of currency effects in the first quarter. These currency effects were also the main reason why goodwill increased by 33 million, and the 7 million increase in other intangible assets is largely attributable to the same effects. Currency effects were particularly strong in the first quarter, but the trend regressed somewhat in the third quarter: despite the acquisition of NORM Research & Consulting AB, goodwill fell by 18 million compared with the figure as at 30 June The separate balance sheet item of assets held for sale, which amount to 33 million, primarily includes other intangible assets ( 15 million) and goodwill ( 8 million) of the Animal & Crop Health business, which GfK plans to sell in the first half of As at 30 September 2015, equity increased by 71 million to 776 million (31 December 2014: 705 million). Apart from the increase in retained earnings, the main factor here was the 49 million increase in other reserves caused by currency effects. Equity remained constant in the third quarter. Compared with the year-end figure, the equity ratio increased by 1.8 percent to 41.7 percent. GfK SE s equity remained constant at 153 million. Compared with the end of September in the previous year, net debt fell by 13 million and amounted to million on 30 September 2015 (30 September 2014: million). This decline counteracted the increase from the first half of 2015, thus bringing net debt back to its yearend 2014 level. The ratio of modified net debt to EBITDA was 1.92 as at the reporting date (30 September 2014: 1.85). Gearing (net debt to equity) fell to 50.6 percent as at 30 September 2015 (year-end 2014: 55.7 percent). Once again, the covenants agreed with the banks were met comfortably. As at 30 September, the revolving credit facility amounting to 200 million had not been drawn. 5. Trends in the sectors GfK conducts its business activities in two sectors, Consumer Experiences and Consumer Choices. Structure of sales growth by sectors 1) Total 1.2% 0.1% 5.5% Consumer Experiences 4.4% 0.2% 2.7% 5.6% Consumer Choices 8.5% 34.9% 9.0% Other 2) 25.9% 0.1% 0.4% 5.5% Total 6.0% 1) Figures from the Management-Information System rounded Currency Acquisitions Organic 2) Other division The Consumer Experiences sector deals with consumer behavior, perceptions and attitudes and answers the who, why and how of consumption. GfK is developing pioneering and sophisticated procedures in order to gain a greater understanding of how consumers experience brands and services. The Consumer Choices sector investigates what consumers are buying and when and where they are buying it. The main focus here is on continuous measurement of market volumes and trends. All the significant sales and information channels and media (including digital) are included in the process of analysis. Consumer Experiences 1) in EUR million 2014 Q1 Q Change in % Sales % Adjusted operating income % Margin in per cent 2) 5.3% 5.7% 1) Figures from the Management-Information System rounded 2) Adjusted operating income in relation to sales

12 12 Report for the first nine months 2015 Consumer Experiences: By and large, after the successful advancement of the realignment process in this sector, sales got back on an even keel after a markedly negative trend in the previous year. In organic terms, sales fell by 1.2 percent, whilst the decline was rather more significant in the third quarter than in the first six months of the year. However, thanks to positive currency effects, sales increased overall by 4.4 percent to million. Moreover, the globally standardized products that were introduced as part of the realignment have been successful, and not only with new contracts but also with contract extensions. As at the end of September, globally standardized products accounted for 44 percent of incoming orders worldwide (previous year: 37 percent). The introduction of a global management system, combined with strict control and governance processes, has significantly increased visibility, which makes it possible to respond to changes and adjust capacities more rapidly. Hence, in spite of an organic decline in sales and ongoing price pressure, this sector actually increased its profitability. Income increased by 12.0 percent to 35.3 million, and the margin was up from 5.3 percent in the same period in the previous year to 5.7 percent. Consumer Choices 1) in EUR million 2014 Q1 Q Change in % Sales % Adjusted operating income % Margin in per cent 2) 21.0% 19.9% 1) Figures from the Management-Information System rounded 2) Adjusted operating income in relation to sales Consumer Choices: As it had been at the half-year mark, total growth in the Consumer Choices sector was 8.5 percent, while sales amounted to million, compared with million in the same period the previous year. Currency conversions had slightly less impact than previously, so organic growth was the more significant factor in the increase in sales in the third quarter. After a drop of 0.4 percent in the second quarter, business in the sector enjoyed organic growth of 4.7 percent in the third quarter. In point of sales tracking (previously: retail tracking), GfK was able to compensate for a large proportion of the sales lost in the second quarter and conclude more new contracts. In particular, small and medium-sized customers continue to drive growth in this area of business. Meanwhile, in audience measurement, GfK completed the process of setting up the panel in Brazil, so it was possible to start supplying data at the beginning of the fourth quarter. Three of the four originally envisaged TV broadcasters are initially being suppliedwith data, as the other broadcaster, Bandeirantes, ran into financial difficulty and the contract with this customer had been reversed. The rest of the audience measurement business also had a significant positive impact on growth in the third quarter. The Consumer Choices sector income increased by 2.7 million to 98.3 million. However, this sector s margin fell from 21.0 percent in the same period in the previous year to 19.9 percent. Other 1) in EUR million 2014 Q1 Q Change in % Sales % Adjusted operating income % 1) Figures from the Management-Information System rounded Other: In addition to these two sectors, there is also the Other category, which includes the central services that the GfK Group provides for its subsidiaries and other services unrelated to market research. Sales in the Other category in the first nine months of 2015 amounted to 2.3 million, a rather lower figure than for the same period in the previous year (same period in 2014: 3.1 million). Moreover, expenses in this area were higher, on account of an increase in investment intended to improve the infrastructure and to modernize methods and processes. Income amounted to million, compared with million in the same period the previous year. Among other factors, this was a consequence of the centralization of various functions, for which the expenses are now included in the Other category.

13 Report for the first nine months Regional trends The GfK Group offers its products and services in over 100 countries via a network of subsidiaries. In geographic terms, the business is divided into six regions: Northern Europe, Southern and Western Europe, Central Eastern Europe/META, Latin America, North America, and Asia and the Pacific. Structure of sales growth in the regions 1) Total 3.7% 0.3% 3.2% Northern Europe 0.2% 0.1% Southern & Western Europe 0.0% 8.1% 6.8% Central Eastern Europe/META 1.4% 3.1% 10.5% Latin America 7.3% 1.8% 21.2% North America 23.0% 4.8% 11.9% Asia and the Pacific 16.7% 0.1% 0.4% 5.5% Total 6.0% 1) Figures from the Management-Information System rounded Currency Acquisitions Organic In the region with the strongest sales, Northern Europe, GfK companies sales remained virtually unchanged at million, compared with million in the same period in the previous year. The sales figure was boosted by positive currency effects, but sales in organic terms fell by 3.7 percent. This decline is attributable to weaker business performance in Great Britain as well as Germany, among other factors. The fact that a contract originally booked in the region was relocated to the USA, as part of a merger between two customers, also affected the sales figure. After a 4.9 percent decline in the first half of the year, sales in the third quarter were just 1.2 percent lower than in the same period in the previous year. In Southern and Western Europe, sales remained stable, although the economic situation was still difficult in many countries in the region (organic growth and total growth of 0.0 percent). Although there was a small amount of growth in the half-year, there was a slightly regressive trend in the third quarter. Business performance was particularly impressive in Central Eastern Europe/Meta (Middle East, Turkey, Africa), where sales increased by 6.8 percent in organic terms. However, strong currency effects counteracted this performance, so sales actually fell by 1.4 percent to 93.0 million overall. In the third quarter, Central Eastern Europe/META achieved the strongest organic growth of all the regions: 14.1 percent. Moreover, in spite of the crisis, business continued to grow in Russia. Likewise, Latin America achieved a strong sales performance. GfK companies in the region achieved organic business growth of 10.5 percent, thus defying the negative trends in some South American economies. However, because of negative currency effects, total growth in the region amounted to 7.3 percent. In North America, sales increased by 43.0 million to million. To a large extent, this 23.0 percent increase is attributable to the fall of the euro against the US dollar in the first quarter, but sales in the region also achieved organic growth of 1.8 percent. Asia and the Pacific also enjoyed good organic growth, attaining a figure of 4.8 percent, although this trend slowed down in the third quarter. Moreover, thanks to positive currency effects, sales in the region increased overall by 16.7 percent to million. GfK also achieved a positive business performance in China, not only in the automotive sector, but also with new Chinese customers in the area of Consumer Electronics.

14 14 Report for the first nine months 2015 Regions: sales growth 1) in EUR million 2014 Northern Europe % Southern & Western Europe % Central Eastern Europe/META % Latin America % North America % Asia and the Pacific % Total 1, , % 1) Figures from the Management-Information System rounded Q1 Q Change in % 7. Own the Future implementing the new corporate strategy Since 1 January 2012, GfK has pursued its Own the Future strategy. The aim of the strategy is to make global use of strengths within GfK for specific client groups and in various regions in the future. GfK has changed from a network of local units to a global organization in the three years of implementing this strategy. Today, GfK has a global matrix-based organizational model, global standardized product portfolios and company structures. This not only offers the opportunity to create added value for clients, but also to optimize costs and increase return on investment. This foundation will be used in the current year with the motto Shape for Growth, to increase productivity ( Shape ), as well as to increase sales and income ( Growth ). In order to achieve this, all digital offers will be perfectly matched in a consistent way and global service centers will be used. The share of global products in sales will continue to be expanded, in order to provide customer solutions more rapidly and effectively. Particular focus placed on digital products and investment in new technologies and opportunities to consolidate and accumulate data. An example of this is the GfK Reference Layer Concept for calibrating large amounts of data. In times of big data, the amounts of data to be evaluated have multiplied, but they are mostly unstructured, and it is difficult to separate the signal from the noise. GfK has various reference data, such as data from consumer panels and GfK cross media link, which it uses to calibrate and evaluate unstructured data. 8. Number of employees As at 30 September 2015, the GfK Group had 13,453 employees, 73 more than at the end of of the Group s new employees come from newly-consolidated companies. As part of a Data and Technology reorganization, employees from one sector have been transferred to the other. Once the figures have been adjusted in light of this effect, the number of employees in the Consumer Choices sector has increased by 300 since the start of the year, and decreased by 259 in the Consumer Experiences sector. Meanwhile, the number of employees in the Other category has increased by 32. There were particularly notable increases in the rapidly-growing region of Latin America and in the Middle East. Among other things, GfK set up large TV measurement panels in both regions. In the regions of North America and Southern and Western Europe, which have not enjoyed growth in recent periods, restructuring measures resulted in a reduction in the number of employees. Personnel expenses increased by 9.4 percent to million compared with the same period in the previous year, although this increase slowed down somewhat in the third quarter (the figure for the individual quarter was 5.9 percent). Currency effects had a major impact on this figure, as did the increased number of employees and the increase in severance payments. Hence, the personnel expenses ratio i.e. the ratio of personnel expenses to sales increased from 49.6 percent to 51.2 percent but was still lower than the figure of 51.4 percent for the first half-year. 9. Research and Development GfK has a dedicated team and clear processes established to identify innovative capabilities and drive them into GfK methods and products. Since the process has been introduced, a significant number of ideas have been processed and identified as promising and have been prioritized for further investigation and development. The assessment of all ideas received according to strategic criteria ensures that development is in line with the concrete commercial application of these ideas. Among others, the following projects were promoted in the third quarter 2015: GfK is expanding its biometric passive measurement portfolio by incorporating technology for voice analytics. This technology can automatically process voice recordings to extract inferences about the emotions of the speaker from the prosodic or paralinguistic cues in speech. For example, this can be used in telephone interviews in order to interpret the emotions conveyed by consumers voices. The focus here is on the way in which things are said. Combining this with automated text analytics, GfK is building Market Research tools that will allow us to automatically translate qualitative data into quantitative parameters for analysis. Early analysis of spontaneous reactions captured with this technology suggests that the data may be more predictive of relevant behavior than conventional procedures.

15 Report for the first nine months GfK has also developed a technology that is able to analyze and visualize the global social graph surrounding any social media conversation (topic or theme), in order to enable our customers to analyze and obtain findings from large quantities of social network data within a short timeframe. This system allows GfK to see how social actors are segmented and observe the volume and pattern of conversation flows across these segments and the key members that comprise them. This provides unprecedented exploratory visibility into how topics unfold in social media and how various individuals and groups influence the content and flow of influence across the social media landscape. Thus it is possible to quickly and effectively obtain relevant and valuable findings from the large quantity of data to be analyzed. 10. Organization and administration The Group has embraced the challenges associated with globalization and set up an organizational structure that enables the local GfK companies to respond to market opportunities quickly and efficiently. The GfK Group includes 139 consolidated subsidiaries, 12 associated companies, four minority interests and 29 non-consolidated subsidiaries. The Group s headquarter are in Nuremberg, Germany. In September, the Group announced impending Management Board changes. Debbie Pruent, currently Management Board member responsible for Consumer Experiences, has decided to retire and therefore not to extend her contract, which expires at the end of In its meeting on September 11, 2015, the Supervisory Board appointed David Krajicek, currently Regional COO North America, Consumer Experiences, to the Management Board as Chief Commercial Officer Consumer Experiences. Alessandra Cama, currently Regional COO APAC, Consumer Choices, will be appointed to the Management Board as the new Chief Operations Officer responsible for all local and global operations functions across GfK. Gerhard Hausruckinger and David Krajicek will still be in charge of customer relations as Chief Commercial Officers. With this lineup, GfK intends to increase the productivity of its operations through further automation, and by using economies of scale and improving efficiency. These changes will be effective as of 1 January Changes in participations in the third quarter of 2015 In August GfK acquired NORM Research & Consulting AB, a Sweden-based market research company specialized in virtual shopper research. Their core product is a software that simulates shopping environments for various market research purposes. With the research results, clients can optimize their pricing, assortment, packaging, planograms and product launches. Changes in the GfK Network during the third Quarter 2015 Company Reason for investment Shareholding in % Sector Country NORM Research & Consulting AB Acquisition 0% to 100% CE Northern Europe 12. Important events after the reporting date of 30 september 2015 On 1 October, GfK began to deliver TV ratings from its panel in Brazil, which comprises more than 6,000 households in all income brackets. For the first time, this includes households in slums, which are important for the advertising industry. Now that it has launched its panel, GfK can provide its customers in Brazil with measurement data and valid analysis software, which will enable them to obtain accurate and representative data about TV audiences, and thus to plan their investments more efficiently. The project in Brazil is one of the biggest contracts in GfK history. 13. Opportunity and risk position The risk position and opportunities of the GfK Group are described in the Group Management Report as at 31 December No material changes have occurred compared with the description provided there and no risks have been identified that could jeopardize the continued existence of the Group. The GfK Group s risk position is impacted by the ongoing uncertainties related to the economic environment. If the global economic situation should worsen significantly and severely affect the business of GfK clients, this would also impact GfK. The GfK business model is subject to seasonally-related fluctuations. Traditionally, sales and income trends are significantly better in the fourth quarter than in the other quarters, since year-end business is highly relevant to GfK s clients operations. Thanks to its global network as a full-service provider, the GfK Group is well-positioned. GfK is equipped to meet new challenges in the market research industry with an innovative portfolio of products and services tailored to client requirements.

16 16 Report for the first nine months Outlook GfK expects that the global economy will continue to achieve moderate growth over the rest of the year. In its October 2015 bulletin, the ECB expects growth of 1.4 percent for the Eurozone in the current year. The recovery will continue, but will do so more slowly than previously assumed. For the global economy as a whole, the World Bank expects growth of 2.8 percent, whilst assuming that growth will weaken in the emerging economies. However, there is still uncertainty because of the political crises in the Eurozone and the Ukraine, as well as the various centers of conflict in the Middle East. The level of investment will remain high in the financial year. We currently assume that total capital expenditure investment will increase slightly compared with the previous year s figure of 90 million. Amortization and depreciation will amount to approx. 70 million and will therefore be around 10 million higher than the 2014 figure. They will also continue to increase in the coming years by virtue of increased investing activity. In the Consumer Experiences sector, the focus is on stabilizing sales at the level generated in Its transformation in the direction of more profitable activities and digital products will be continued, while purely local and less profitable contract research projects will be scaled back. As a result, the sector is not expected to contribute to growth in It is even possible that sales in this sector will continue to fall. However, it is expected that the margin will continue to improve moderately. In the Consumer Choices sector, the new growth and margin potential is to be consistently exploited. The core business area, point of sales tracking, will be expanded further, and new panels will gradually make positive contributions to sales and revenue growth. In the area of audience measurement, the process of setting up new TV audience measurement panels is being completed, and these contracts will make a substantial contribution to this field of business in the fourth quarter. However, these contracts cannot be expected to make a positive contribution to income until Expansion into new regions and countries remains a priority. The Management Board assumes that this sector will grow more rapidly than in the previous year, and that it will thus continue to increase its share of sales in relation to Group sales as a whole. The margin is not expected to change significantly compared with the previous year, in spite of the increased share attained by the audience measurement business, which has a lower margin than that of the point of sales tracking business. At the end of September, 91.5 percent of the expected annual sales had already been posted or were in the order book (previous year: 94.9 percent). This is one of the lower figures achieved in the last four years, which range from 91.0 percent to 96.1 percent. For 2015, the Group expects to return to moderate organic growth. The adjusted operating income is expected to improve, and the margin is expected to increase to a level of around 12.4 percent to 12.8 percent. In 2016, the Group wishes to grow more quickly than the market in organic terms, and GfK still aims to achieve a margin between 14 percent and 15 percent. *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.

17 Report for the first nine months Consolidated income statement of GfK Group from july 1 to september 30, 2015 in EUR 000 (according to IFRS, not audited) Q ) % of sales Q % of Change sales abs. % Sales 356, % 371, % 14, % Cost of sales 250, % 257, % 6, % Gross income from sales 106, % 113, % 7, % Selling and general administrative expenses 63, % 66, % 3, % Other operating income 1, % 1, % % Other operating expenses 8, % 8, % % Operating income 2) 35, % 39, % 4, % Income from associates 1, % 1, % % Other income from participations % % % ebit 36, % 41, % 4, % Other financial income 4, % % 3, % Other financial expenses 11, % 10, % 1, % Income from ongoing business activity 29, % 31, % 2, % Tax on income from ongoing business activity 12,149 9,078 3, % Consolidated total income 17, % 22, % 5, % Attributable to equity holders of the parent: 13, % 19, % 5, % Attributable to minority interests: 3, % 3, % % Consolidated total income 17, % 22, % 5, % Basic earnings per share (eur) % Diluted earnings per share (eur) % Adjusted earnings per share (eur) % For information: Personnel expenses 177, % 188, % 10, % Depreciation/amortization 17, % 16, % 1, % ebitda 54, % 57, % 3, % 1) Adjusted due to the reclassification between cost of sales and selling and general administrative expenses, see section 2 of the notes to the consolidated financial statements. 2) Reconciliation to internal management indicator adjusted operating income amounting to EUR 47,676 thousand (Q EUR 46,029 thousand) as indicated on page 10.