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Contents
GfK Group III IV 1 2 4 9 10 14 18 27 Our corporate values GfK Group 2010 in figures Preface 2010 at a glance Report by the Supervisory Board The Supervisory Board Letter to the shareholders The Management Board Corporate Governance GfK shares
GfK Special: Digital 34 44 54 60 Online and cross-media advertising under the microscope: the GfK Media Efficiency Panel Digital Day Plug & Play: the Dialogatore a remote control for the digital world The third dimension conquers the screen
Financial statements of the GfK Group 103 Consolidated financial statements 110 Notes to the consolidated financial statements 157 Auditors report
Additional information 160 5-year review 164 Glossaries 170 List of GfK company abbreviations V VI VII Financial calendar Index Acknowledgements and contacts
II
Client driven Our clients needs drive our business. We continuously seek to better understand our clients needs, improve all aspects of existing research products, offer innovative products and to be an integral part of our clients information systems. Accuracy, sound methodology, excellent client service, flexibility, timely delivery and cost effectiveness all ensure that we meet and even exceed our clients expectations. We build long-term partnerships with our clients, contributing to their success.
Our people People are our main asset. Development through training, sharing ideas and sound experience is essential to our business. Our people have the freedom to explore and develop their talents and are empowered to achieve our common goals. We encourage and reward initiative, dedication and hard work. Fairness, good communication and working relationships at all levels and locations are key to our success.
Innovation We recognize that investing in continuous innovation in both the process and the end product is a prerequisite to meeting clients requirements. Our aim is to be at the cutting edge with our key business activities. Clients needs, evolving markets, new technology and the expertise and ideas of our people throughout the world are what drive innovation.
Global experience local knowledge We respect and learn from local business practices and cultures and provide knowledge tailored to local needs. Our global network comprises international teams, tools and products to provide multinational clients with consistent services. As proud members of the GfK Group, we share local and international expertise to continually improve all aspects of our business.
Growth Profitable growth results in greater opportunities. As individuals, teams and business units, we are aware of the impact of our decisions and actions at all levels. We use financial and non-financial measurements to review and improve performance on an ongoing basis. Our growth provides investors with a fair return on the financial resources they have entrusted to us.
III
2009 Sales ebitda Adjusted operating income1) Margin2) Operating income Income from ongoing business activity Consolidated total income Tax ratio Cash flow from operating activity Earnings per share Dividend per share Total dividend Number of employees at year-end in eur m in eur m in eur m in % in eur m in eur m in eur m in % in eur m eur eur in eur m full-time 1,164.5 159.1 147.2 12.6 88.9 75.5 60.5 19.8 134.7 1.42 0.30 10.8 10,058
2010 1,294.2 195.7 185.0 14.3 136.7 124.8 84.0 32.7 172.0 1.99 0.48 17.4 10,546
1) Adjusted operating income is derived from the operating income. The following expenses and income have been excluded: expenses and income in connection with reorganization and business combinations, write-ups and write-downs of additional assets identified on acquisitions, personnel expenses for share-based payments and long-term incentives and remaining other operating income and expenses, in particular, currency effects resulting from the reporting date valuation. 2) Adjusted operating income in relation to sales.
IV
Digital. THIS WORD FROM THE WORLD OF TECHNOLOGY HAS BECOME A SYNONYM FOR HOW WE COMMUNICATE AND INTERACT WITH ONE ANOTHER. HOW WE WORK, PLAY, WATCH MOVIES, LISTEN TO MUSIC OR TAKE PHOTOGRAPHS. AND HOW WE LIVE. DIGITAL HAS BECOME A WAY OF LIFE.
GfK_1
2010 at a glance
2010 at a glance
GfK GROUP
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03 01 04
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2010 at a glance
01 / January GfK Fernsehforschung marks 25 years of recording German tv audience ratings. The companys first panel data shows the tv viewing figures for January 1, 1985. Dr. Silvestre Bertolini, Managing Director of GfK Retail and Technology Italia, is elected President of the Italian market research association assirm for the second time. GfK TechTest is applied for the first time in the uk. Clients can use this tool to test a product idea or a new model of a product prior to market launch and compare it with similar products.
04 / April The British company GfK Kynetec is the only organization worldwide that maintains a global database covering the entire market for crop protection products. In addition to data on agricultural pesticides, it now also provides information on plant protection products that are not used in farming. GfK Panel Services Germany equips the members of its GfK Media Efficiency Panel with modified mobile phones that record their tv advertising exposure via sound recognition. The GfK Media Efficiency Panel enables detailed analysis of the effects of cross-media advertising campaigns on the actual purchase behavior of consumers. The us-based company GfK Mediamark Research & Intelligence (GfK mri) launches a pilot study on digital reading formats. From April to November 2010, this study tests how magazine readers can be questioned most effectively about their use of digital formats.
02 / February The Supervisory Board of GfK se extends the contract of Management Board member Debbie Pruent by five years. The new contract is effective as of January 1, 2011 and will run until December 31, 2015. GfK Retail and Technology uk surveys mobile phone sales in Ireland for the first time. The GfK Mobile Tracker now supplies information on the mobile phone market in a total of 75 countries worldwide.
05 / May GfK acquires a 40 % stake in German companies SirValUse Consulting and nurago. SirValUse is Europes largest consultancy company in the field of user experience and usability, while nurago is one of the leading providers of technologies for digital brand, media and usability research. GfK Middle East, which is based in the United Arab Emirates, becomes the first market research organization to establish an independent subsidiary in Saudi Arabia. In India, GfK increases its stake in subsidiary GfK Mode, part of the Custom Research sector, from 51 % to 100 %. With branches in 15 Indian cities and an office in Bangladesh, the company is particularly active in the areas of consumer and social research. GfK Retail and Technology East Africa opens its first subsidiary in Kenya. orf and most private Austrian radio stations extend their contracts with GfK Austria for the recording of radio audience figures in Austria until 2013. Coca-Cola North America names GfK Custom Research North America Research Partner of the Year, honoring the outstanding achievements of the GfK subsidiary in the previous year.
03 / March The Heinrich A. Litzenroth Memorial Health Center in Kalmunai, Sri Lanka, which was built with funds raised by GfK, is officially inaugurated. GfK Panel Services Germany launches GfK Web Value, a new instrument for measuring online usage that clients can use independently offline. It is based on the findings of the German Media Efficiency Panel, which records the online surfing behavior of more than 32,000 people. The Indian government commissions Indian GfK subsidiary GfK Mode to conduct a health survey covering the entire country for the next three years (Annual Health Survey).
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08 06 09
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06 / June As part of a new joint project with the Mobile Entertainment Forum (mef), an international trade organization operating in the field of mobile media, GfK Asia provides information on mobile entertainment. The GfK Mobile Content Industry Report contains download data on ringtones, music, images, videos and games for mobile phones. Following GfKs acquisition of the remaining 25 % stake in GfK Kynetec, which focuses on global market research in the areas of animal health, biotechnology and pesticides, the company is now 100 %-owned by the GfK Group. GfK TechTest is launched on the market in the usa and Germany.
09 / September Dr. Gerhard Hausruckinger joins the GfK se Management Board, with responsibility for the Retail and Technology sector. He manages the sectors business together with Dr. Grard Hermet until December 31, when the latter retires. The specialist magazine Inside Research names GfK mri the best us provider of syndicated market research for the third time. Manager Magazin names the GfK Annual Report the best in the sdax category in the Best Annual Reports competition.
10 / October GfK Panel Services Benelux sets up a GfK Media Efficiency Panel. The GfK Group celebrates the 20th anniversary of its presence in Central and Eastern Europe. Portuguese GfK subsidiary intercampus, an expert on cati, capi and Paper & Pencil surveys, celebrates its 20th anniversary. The Central Statistical Bureau of Latvia commissions GfK Custom Research Baltic to carry out the census in 2011. Mike Cooke, Global Director of Online Development at GfK nop in the uk, and Bruno Colin, Global Managing Director of Technology & Operations at GfK isl Custom Research France, are elected to the Management Board of the global market research association esomar. As of January 2011, Mike Cooke is appointed Vice President of the ten-member esomar Council.
07 / July French ad hoc specialists GfK isl and GfK Custom Research France complete a merger. The new company, which now operates under the name GfK isl Custom Research France, is one of the largest market research organizations in France.
08 / August The GfK Business and Technology department of GfK Custom Research North America opens a branch in San Francisco. 11 / November GfK Custom Research North America acquires interscope, a us-based company specializing in brand positioning in the retail sector. GfK Retail and Technology Germany celebrates its 40th anniversary. Flemish public transport operator De Lijn extends its contract with Belgian company GfK Significant, which has been recording how satisfied users are with public transport in Belgium since 2006, by a further five years.
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GfK GROUP
2010 at a glance
GfK GROUP
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D E AR S HAREH O LD ERS ,
In 2010, GfK was able to successfully overcome the effects of the global financial and economic crisis and to sustain the continuous growth achieved up to 2008. The fundamental basis of this success was the prompt introduction of a cost management program, clear rationalization measures, continued and uninterrupted efforts to maintain the consistently high quality of our products and services and an intensified focus on the needs and wishes of our customers. On behalf of the Supervisory Board, I should like to express my sincere thanks to all those involved, our employees, our employee representatives and the Management Board for the strength of their commitment and their hard work. Thanks and recognition are also due to the clients and business associates of the GfK Group. In the year under review, the Supervisory Board continued to discharge its obligations according to the law, the Articles of Association, the German Corporate Governance Code and the internal regulations of the company with due diligence. The Supervisory Board regularly advised the Management Board on management of the company and monitored its activities. The Supervisory Board was involved in every decision of essential importance to the company. The Management Board kept the Supervisory Board regularly and comprehensively informed of any developments relevant to its remit at the appropriate times in both written and oral form. The main issues related to the Groups business development, its income and financial position, its personnel situation, business strategy, corporate planning, investment program, compliance and risk management. Between board meetings, the ceo of the Management Board and Chairman of the Supervisory Board together discussed every issue of importance to the company.
meetings of the supervisory board and its committees The Supervisory Board met in person seven times in 2010. At these sessions, the Management Board reports were exhaustively discussed, and the prospects for the Groups growth were examined in detail and voted on accordingly. The main topics included the annual financial statements for 2009, business development in 2010, the budget for financial year 2011, discussions on the measures taken to ensure sustainable global growth and the adaptation measures introduced to strengthen the Groups competitive position and increase its financial power. A focus of particular interest was the future development of the Groups strategic positioning and its management organization, backed by support from a wellknown international consultancy. The project, which is not yet complete, was launched in autumn 2010 under the title: Where to play and how to win.
GfK_5
GfK GROUP
GfK GROUP
Another of the core issues was managing the challenges and business opportunities generated by the digital world. One of the major initiatives being advanced in this area is the GfK nis (Network Intelligence Solutions) project in the Retail and Technology sector, by which GfK is aiming to measure internet consumption using mobile terminals in the future. The Supervisory Board has been kept regularly informed of the projects progress. In 2010, the Supervisory Board once again deliberated on the provisions of the German Corporate Governance Code and issued the declaration of compliance in accordance with Section 161 of the German Stock Corporation Act (AktG) on December 16, 2010. The company is in compliance with the mandatory provisions with the exception of five of the requirements, and complies with all of the regulations where compliance is on a voluntary basis. The discrepancies are detailed and explained in the Corporate Governance report on pages 25ff of the present Annual Report. At the end of the financial year, and with the support of a reputable personnel management consultancy, the Supervisory Board commissioned an efficiency audit, the results of which will be available in the first quarter of 2011. To ensure its own efficiency, the Supervisory Board is supported in its work by four committees: the Audit Committee, the Personnel Committee, the Presidial Committee and the Nominations Committee. The Supervisory Board was kept regularly and exhaustively informed of the work of the Committees. The Audit Committee met eight times in the reporting period (five personal meetings and three tele-conferences) to discuss the companys business development, its income and financial position, and any planned investments. Additional focal points were issues of financing, questions pertaining to the accounting system and interim reporting, internal controlling, the internal audit, risk management and subjects relating to corporate governance and integrity. The Personnel Committee met six times (four personal meetings and two tele-conferences) and dealt intensively with ongoing development of the existing remuneration system and definition of targets for Management Board members in light of management board remuneration legislation. The details are indicated in the remuneration report on pages 21ff of the present Annual Report. The deliberations also centered on the selection of candidates to succeed the two Management Board members Dr. Grard Hermet and Wilhelm R. Wessels. The Presidial Committee held three meetings in person as well as a series of tele-conferences. These were aimed at preparatory work for Supervisory Board meetings, in particular on the following issues: further development of corporate strategy and management organization, preparations for the efficiency audit, internet and it strategy, the 2011 budget and compliance issues. The Nominations Committee held two personal meetings and several tele-conferences concerned with the selection of candidates to succeed Stephan Gemkow and the tailoring of the Board to the requirements of the diversity regulations (diversity and balance in the composition of the Supervisory Board).
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annual and consolidated accounts The 2010 annual financial statements of GfK se, prepared by the Management Board in accordance with the regulations of the German Commercial Code (hgb) and the ifrs International Financial Reporting Standards, were audited and given unqualified approval by the auditor, kpmg ag. Every member of the Supervisory Board received the audited financial statements at the appropriate time. The Supervisory Board assured itself of the impartiality of the auditor and of the auditors personnel. The Audit Committee deliberated on the accounts documents and the audit report at its session of March 18, 2011 and the Supervisory Board gave these consideration at the plenary session held during its accounts meeting on March 22, 2011. The auditors of both the annual and consolidated accounts were present at both these meetings. They reported on the audit in general and on particular aspects specified as mandatory for the issue of the auditors certificate. Beyond this, they responded in detail to questions from members of the Audit Committee and the Supervisory Board. The Supervisory Board noted and approved the auditors report and, having examined the financial statements prepared by the Management Board, gave its approval to discharge the accounts. In light of the current and anticipated financial position of the Group, the Supervisory Board deliberated on the proposal for appropriation of the profits put forward by the Management Board and, having found it to be appropriate, gave its approval.
changes in the composition of the management board and supervisory board On September 1, 2010, the Supervisory Board appointed Dr. Gerhard Hausruckinger to the Management Board as successor to outgoing member Dr. Grard Hermet. With the arrival of Dr. Hausruckinger, GfK is gaining a person of stature with international management experience and all the skills needed to further advance the development of the Retail and Technology sector. The Supervisory Board would like to thank Dr. Grard Hermet for his successful efforts over a period of 26 years with GfK. His complete dedication and creative entrepreneurship, coupled with his tireless commitment to introducing new business ideas and innovations to Retail and Technology, have made this sector one of the jewels in the GfK crown. On his departure from the Management Board on January 1, 2011, Dr. Hermet will continue to be available to GfK in a consultative capacity. His remit will be mainly concerned with promoting the GfK nis project. In October 2010, Wilhelm R. Wessels advised the Chairman of the Supervisory Board of his decision not to seek an extension to his service contract, which expires at the end of September 2011. The Supervisory Board noted this decision with regret. In the year under review, the Supervisory Board had not yet made a decision concerning a possible successor.
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GfK GROUP
GfK GROUP
In October 2010, Stephan Gemkow advised the Chairman of the Supervisory Board that the new provisions of the German Corporate Governance Code (which may restrict the number of Supervisory Board appointments held by Management Board members, if, in future, consolidated mandates are taken into consideration) were likely to compel him to resign his position on the Supervisory Board of GfK with effect from the date of the 2011 Annual General Meeting. The Supervisory Board noted this with much regret. An appropriate successor is still being sought. In February 2011, Professor Dr. Klaus L. Wbbenhorst informed the Supervisory Board that, for personal reasons, he will not be extending his current service contract, which will expire at the end of July 2012. The Supervisory Board regrets but respects Professor Wbbenhorsts decision, and has thanked him for announcing this at an early stage. In Professor Wbbenhorsts 20 years on the Management Board, GfK has developed from a company primarily focused on Germany to a world-class, international stock exchange-listed corporation. Some milestones in the development of the company under his regime were the restructuring of GfK in 1992, the stock exchange launch in 1999, the successful acquisition of nop World in 2005 and the transformation of GfK ag into GfK se in 2008.
outlook Over the years, GfK has gained a superb competitive position in attractive growth markets. The Supervisory Board is of the conviction that the company is well prepared from both a financial and personnel perspective to successfully meet the challenges and opportunities which lie ahead in 2011. This applies, in particular, to the new business opportunities presented to the company by increasing market digitization. Nuremberg, March 22, 2011
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Sandra Hofstetter
Since May 26, 2010 Independent Works Council Representative of GfK se, Nuremberg
Audit Committee
Stephan Gemkow, (Chairman since May 19, 2010) Dr. Christoph Achenbach, (Chairman up to May 19, 2010) Stefan Pfander Dieter Wilbois
Stefan Pfander
Deputy Chairman of the Supervisory Board Management Consultant
Stephan Lindeman
Research Director at Intomart GfK b.v., Hilversum, Netherlands
Personnel Committee
Dr. Wolfgang C. Berndt (Chairman) Dr. Arno Mahlert
Shani Orchard
Human Resources and Facilities Director at GfK Retail and Technology uk Ltd, West By eet, Surrey, uk
Hauke Stars
General Manager of Hewlett-Packard Schweiz GmbH, Dbendorf, Switzerland
Dr. Wolfgang C. Berndt (since May 19, 2010) Stefan Pfander Hauke Stars Dieter Wilbois
Stephan Gemkow
Member of the Management Board of Deutsche Lufthansa ag, Cologne
Dieter Wilbois
Independent Works Council Representative of GfK se, Nuremberg Chairman of the Group Works Council and the European se Works Council
Nominations Committee
Dr. Arno Mahlert (Chairman) Dr. Wolfgang C. Berndt Stefan Pfander
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GfK GROUP
GfK GROUP
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The title of our 2009 Annual Report was Courage. And our courage in dealing with the crisis has certainly paid off: from worry lines to laughter lines, and from being underworked to working overtime. More optimistic and relaxed describes the mood at the start of 2011. The uncertainties and doubts which marked the beginning of 2010 clearly receded during the course of the year, and ultimately, 2010 turned out to be an outstanding year for us. For the year just begun, there is every reason to believe that we will continue to enjoy positive development.
2010 review How did we manage to achieve this resounding success to record the best ever sales and result in the history of the company? I believe there are five reasons: First: the global recovery Our clients are once again doing better. After our industry registered negative growth in 2009 in the first ever decline recorded by our professional association, esomar, the consumer research market is again ripe for sustainable growth. This gives us the advantage of a tail wind to speed our progress, and no head wind to battle against. Second: globalization A consistent focus on the emerging economies acquisition coupled with organic growth has proved to be an engine of growth. We have increased our sales in Central and Eastern Europe by 25.2 %, in Latin America by 37.1 % and in Asia and the Pacific by 22.5 %. With the exception of North America, sales in all our regions are also above their 2008 level. Third: the digital media We are mixing just the right cocktail of acquisitions and organic growth. The SirValUse and nurago experts are growth drivers who, together with their GfK colleagues, are developing promising and innovative products across our three sectors. This gives us the capability of combining our traditional strengths with new technologies. The unique GfK Media Efficiency Panel has its origins in our household panels. The GfK WebValue Index, GfK Online Buzz Miner and GfK Ceres are further examples of developments which have set benchmark standards. GfK Network Intelligence Solutions, or GfK nis for short, represents a revolutionary new dimension in market research, and at this juncture, I can do no better than to quote one of our major shareholders: We are excited about the potential for the nis initiative.
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GfK GROUP
GfK GROUP
Fourth: our biss fitness and efficiency program Thirteen of our 30 or so programs are already complete. Efficiency gains and essential expenditure are running to schedule. The moveIT global it standardization program launched under the aegis of biss was virtually complete by the end of 2010. In addition to significant cost savings and quality improvements, moveIT has also proved to be an important preparatory trailblazer for our Global Operations project in the Custom Research sector. Fifth: Team GfK Of course, a good workflow at the GfK Group is also demanding and places a fair degree of stress on us all. Many GfK departments are currently working at the upper limits of what is reasonable over the longer term. My opinion on this is that more work is surely better than too little work, or indeed, none at all. However, having said this, constant overworking and permanent weekend work at the cost of private life is wrong. Our shared task is to find the right balance. Striking the right balance in the next chapter of his life is something I wish for our French colleague, Dr. Grard Hermet, who left the company at the end of 2010. He represents many of the facets which distinguish GfK: growing globalization, entrepreneurship, innovative market research and lasting success. I should like to express my sincerest thanks to him for his 26 years of dedicated service to the GfK Group in so many different places, from Azerbaijan to Yemen. I am convinced that his successor, Dr. Gerhard Hausruckinger, will also be instrumental in the continuing success story that is GfK. The future plans of my Management Board colleague Wilhelm R. Wessels also herald a change: after 32 years with GfK, he has decided not to extend his current service contract and will be leaving the company at the end of September 2011. I would also like to thank Wilhelm Wessels wholeheartedly for his many years of service to GfK, but as he will continue to be involved in steering GfKs course over the rest of this year, I will say goodbye properly at a later stage.
outlook for 2011 The GfK Group is valued for the fact that it always directs its activities along clear strategic lines. In 1995, this was Fit for Going Public. Five years later, the core strategic message was the Triple Ten Initiative, and since 2005, our strategy has concentrated on the central statements contained in our 5 Star Initiative. We are now well into 2011 and the time has come to put our current strategy to the test. Quite apart from the fact that five years have gone by since it was formulated, the world is now turning so much faster: reason enough for the Management Board and Supervisory Board to initiate a new strategy project. Indeed, for the first time in many years, we resolved not to rely solely on our own deliberations, but to seek the support of external experts.
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The project which emerged from this goes by the name of: Where to play and how to win? The key questions are: Where is there room for improvement in what we do? Where are there potential opportunities for growth in the digital media and in which regions in particular? How do we go about implementing the strategy? What are the priorities, what are the challenges we must confront and what resources are needed? The project is intended to give us the possibility of becoming even more competitive from our current position of strength, at a time when the economy has recovered. I shall keep you informed of the results of the project at the appropriate time. However, at this point, I should like to inform you of a personal decision, which, after 20 years with GfK and 13 of them as ceo, has not been an easy one for me to make. Our superb result for 2010 and the fact that I celebrated my 55th birthday in February mean that this is a good time for a change of management at GfK in the medium term, and for me personally, it is a welcome opportunity to seek fresh challenges in pastures new. It is for these reasons that I have decided not to renew my service contract beyond July 2012, when it expires. But I can promise you that until then and indeed, up to the appointment of my successor, I shall continue as before, with all my energy and total commitment to GfK. And I would certainly like to accompany GfK for a little longer on its way into the future. I have addressed an important focus of our vision for the coming years in the Annual Report under the theme Digital. The development of our digital society is both incalculably vast and dizzyingly fast. Computers and internet use are changing society, the media, consumer behavior and communications. Who are the users behind the hits? How do social networks influence brand image and buying behavior? What are the effects on society of the anywhere anytime culture of digital mobilization? It would be presumptuous to promise that we have all the right answers to these questions. However, in 2011 we are once again passionately committed to working with our clients in the search for the right questions and the appropriate answers. Sincerely yours,
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GfK GROUP
GfK GROUP
Digitally connected: (from left to right) Debra A. Pruent, Dr. Gerhard Hausruckinger, Pamela Knapp, Professor Dr. Klaus L. Wbbenhorst, Wilhelm R. Wessels, Petra Heinlein, Dr. Grard Hermet
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GfK GROUP
Pamela Knapp
born 1958 Chief Financial Officer (cfo), responsible for Financial Services, Human Resources and Central Services
professional career
Since 1998 Spokesman and, since 1999, ceo of GfK se, Nuremberg, appointed until 2012 2005 February 2010 President of the Chamber of Industry and Commerce for Middle Franconia in Nuremberg, Honorary President since 2010 1992 1997 Member of the Management Board of GfK ag, Nuremberg, responsible for Finances, Accounting, Financial Controlling, Personnel, Purchasing, Production and it 1991 1992 Member of the Management Board of kba-Planeta ag, Radebeul near Dresden 1984 1991 Employee of Bertelsmann ag, Gtersloh; most recently Managing Director of Druck- und Verlagsanstalt Wiener Verlag, Himberg near Vienna
professional career
Since November 2009 Member of the Management Board of GfK se, appointed until 2012 2004 2009 Member of the Group Executive Management and cfo of the Power Transmission & Distribution Group at Siemens 2000 2004 Head of Corporate Development Executives Department of the Siemens Group 1998 2000 Member of the Management Board and cfo of Siemens s.a, Belgium and Luxembourg 1994 1997 Head of Maintenance & Services of Mass Transit Vehicles of the Transportation Systems Group of Siemens 1992 1994 Head of Strategic Projects in the Transportation Systems Group of Siemens 1991 1992 m&a Consultant at Fuchs Consult GmbH 1987 1991 m&a Consultant at Deutsche Bank
education
2005 Awarded the title of Honorary Professor by Friedrich-Alexander University in Erlangen-Nuremberg 1984 Doctorate from the Technische Hochschule Darmstadt 1981 Graduated in Business Administration from the University/Gesamthochschule Essen
education
1987 Graduated in Economics from the Free University of Berlin
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Petra Heinlein
born 1958 Responsible for the Custom Research sector
professional career
Since September 2010 Member of the Management Board of GfK se, appointed until 2013 2008 2010 Chief Executive Officer (ceo) of Emnos GmbH, Munich 2006 2008 Managing Director of Retail segment and responsible for Management Consulting in the Product sector at Accenture, Kronberg 1994 2005 Consultant at Roland Berger Strategy Consultants in the Retail and Consumer Goods sector, Partner as of 2000, based in London and Munich 1992 1994 Project Manager for Corporate Development at Karstadt ag, Essen
professional career
Since 2002 Member of the Management Board of GfK se, appointed until 2011 2001 2001 Integration management on behalf of GfK ag 1992 2000 Managing Director of contest census in Frankfurt 1985 Joined GfK as Project Manager with GfK Marktforschung 1984 Research Assistant at the Arnold-Bergstraesser Institute, Freiburg im Breisgau
professional career
1999 December 2010 Member of the Management Board of GfK se 1988 2000 President of the French Marketing Association afm 1988 1998 Managing Director of GfK Sofema, France 1984 1998 Managing Director of GfK France; most recently General Manager of GfK Marketing Services, France 1978 1984 Employed by Burke Marketing Research, France
education
1984 Graduated in Political Science from the University of Bamberg
education
1978 Doctorate from the University of Grenoble 1975 mba from the French Business School (icn)
education
1992 Doctorate from the University of Regensburg 1988 Graduated in Business Administration from the University of Regensburg
Debra A. Pruent
born 1961 Responsible for the Custom Research sector
Wilhelm R. Wessels
born 1952 Responsible for the Custom Research and Media sectors
professional career
Since 2008 Member of the Management Board of GfK se, appointed until 2015 2006 2007 Chief Operating Officer (coo) of GfK Custom Research North America 2005 2006 President of GfK nop Products & Services, usa 1992 2005 Employed by us automotive industry market research company Allison-Fisher International, most recently ceo 1983 1992 Various management functions with General Motors Corporation, usa 1988 1990 Extraordinary Professor of Statistics at Oakland University, usa
professional career
Since 1996 Member of the Management Board of GfK se, appointed until 2011 1991 1996 Managing Director of GfK ag, Gesundheitsforschung / i + g Gruppe Gesundheitsund Pharma-Marktforschung 1986 1996 Managing Director of gpi, Gesellschaft fr Pharma-Informationssysteme, Nuremberg/ Frankfurt 1978 Joined GfK as Research Associate
education
1977 Graduated in Business Administration from the University of Saarbrcken
education
1986 Graduated in Applied Statistics from Oakland University, usa 1983 Graduated in Mathematics and Computer Science from Wayne State University, usa
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GfK GROUP
Corporate Governance
Corporate Governance
GfK GROUP
The management of GfK is committed to increasing the value added of the company on a responsible, transparent and sustained basis.
declaration of compliance without material restrictions The Management Board and the Supervisory Board issued their declarations of compliance pursuant to Section 161 of the German Stock Corporation Act (AktG) in conjunction with Art. 9 para. 1 c) (ii) of the European Company Statute Regulation (se Regulation) in December 2010. The declaration of compliance is on page 25. The company complies with all the recommendations under the German Corporate Governance Code (the Code), apart from the exemptions mentioned in the declaration of compliance.
management and control structure Pursuant to Art. 9 para. 1 c) (ii) of the se Regulation, GfK se is subject to the German Stock Corporation Act. It has a two-tier management and control structure. The Management Board consisted of six members until the end of August 2010 and seven from then until the end of year. Until the Annual General Meeting on May 19, 2010 GfK se had a Supervisory Board with nine members, which has been extended to ten since the amendment of the Articles of Association agreed at the Annual General Meeting on May 19, 2010. In the course of the change in the legal form of the company to a Societas Europaea (se), the Management Board and employee representatives agreed on regulations for the size and composition of the Supervisory Board of GfK se in an employee participation agreement. It was agreed that the Supervisory Board would be composed of ten members, of which four would be elected by the employees. For implementation of the employee participation agreement, it was decided at the Annual General Meeting on May 19, 2010 that the Articles of Association would be adapted accordingly in Article 9 (1), sentences 1 and 2. In accordance with the codes of procedure of the Supervisory Board, its representatives are independent. Alongside their activity for the GfK se Supervisory Board, the majority of the members also served on executive bodies or held senior positions in other companies during 2010. The Supervisory Board has formed four independent committees: the Presidial Committee, the Nominations Committee, the Personnel Committee and the Audit Committee. The Corporate Governance Code recommends that the Chairman of the Audit Committee should have particular expertise and experience in the application of accounting principles and internal financial controlling. The Audit Committee was chaired by Dr. Christoph Achenbach until the Annual General Meeting on May 19, 2010, and Stephan Gemkow has chaired this Committee since then. Mr Gemkow is a member of the Management Board of Deutsche Lufthansa ag and is responsible for the finance department at this company.
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In 2010, there were no consultancy and other service and works contracts between members of the Supervisory Board and the company. Further details of the activities of the Supervisory Board are given in the detailed Report by the Supervisory Board on page 4 onwards. The company has taken out a d & o insurance policy with an appropriate deductible for members of the Management and Supervisory Boards.
responsible risk management Systematic risk management has been in place at the company for many years and has been reviewed by the year-end auditors. Details are provided in the Risk Report on page 94 onwards.
transparency in communications With the aim of transparent communications, the company is pursuing its objective of providing the same information to all shareholders and interested members of the general public at the same time. All press releases and corporate communications are available via the website www.gfk.com. All publications, such as ad hoc reports, press releases, interim reports and annual reports, are also published in English. Speeches given by the ceo at the Annual General Meeting or with regard to quarterly results are recorded and available for a limited period via the GfK website. A nancial calendar, which can also be viewed on the website, provides information on all important publication and event dates. Newsletters in both electronic and printed form report on the latest news from the Group.
targets for management and for the composition of the supervisory board The Management Board and the Supervisory Board form the dual management and control structure pursuant to Art. 39 of the se Regulation, and work closely together in the best interests of the company. This also includes ensuring diversity in terms of the way in which management positions are lled and the composition of the Supervisory Board, whilst taking into account the specic situation of the company. The GfK Group has always set great store by diversity when lling management positions, and this principle is practiced within the Group. One of the dening features of GfK is that the diversity of its business is reected in the composition of its executive bodies. This applies to both the internationality of its managers and to their varied professional qualications and experience. There is also a high ratio of women both within the Group and on the Management Board. Approximately half of GfKs global workforce are women and three out of six seats on the Management Board of GfK se are occupied by women. To date, this is unique for a listed company in Germany. The members of the Supervisory Board who are shareholder representatives are appointed by the Annual General Meeting, although the Annual General Meeting is not bound by the nominations of the Supervisory Board. Employee representatives are appointed on the basis of the procedure stipulated in the employee participation agreement for the company.
GfK_19
GfK GROUP
Corporate Governance
Corporate Governance
Corporate Governance
GfK GROUP
The members of the Supervisory Board base their nominations on the requirements which are crucial for effective monitoring of the company. In terms of the stafng of the Supervisory Board, the Supervisory Board has therefore agreed the following goals for its composition in respect of Point 5.4.1 of the Corporate Governance Code: The Supervisory Board of GfK se shall be composed in such a way that qualied advising and supervision of the Management Board by the Supervisory Board is guaranteed with the aim of close cooperation between the executive bodies in the best interests of the company. The candidates recommended for election to the Supervisory Board shall, on the basis of their knowledge, abilities and professional experience, be able to perform the duties of a supervisory board member in an international corporation. Attention should be paid to their personality, integrity, commitment, professionalism and independence. The Supervisory Board shall be composed in such a way that its members together have the necessary knowledge, ability and professional experience to duly perform their tasks, especially in the following areas: nance, personnel, it, internet, market research, and any other management tasks. Given the companys international orientation, it is important to ensure that the Supervisory Board has a sufcient number of members with many years international experience. When electing new members, the aim is to at least maintain the currently existing proportion of Supervisory Board members with an international background. The Supervisory Board shall have a sufcient number of independent members. Signicant, nontemporary conicts of interest, for example due to the holding of executive positions or performing of consultancy tasks for competitors of GfK se or as a result of a business or personal relationship with the company or its Management Board, should be avoided. In addition, the members of the Supervisory Board shall, as hitherto, have sufcient time to perform their tasks, so that they can be exercised with the required regularity and diligence. The Supervisory Board should also include no more than two former members of the Management Board. Overall, the aim should be to achieve a balanced mix between managers who are still active in other companies and individuals who are no longer working in management. A suitable mix of ages should also be ensured. When submitting its nominations, the Supervisory Board shall also ensure in particular that there is an appropriate proportion of women. When screening potential candidates to elect a new member or to ll a position on the Supervisory Board that becomes vacant, qualied women should be included in the selection process and given due consideration in the nominations. There are currently three women on the ten-member GfK se Supervisory Board and the aim is to maintain at least this number when electing new members to the Supervisory Board, provided that suitable candidates are available. The standard age limit stipulated by the Supervisory Board in the codes of procedure is taken into account. The Supervisory Board will explain its nominations and the preceding search process to the Annual General Meeting in detail.
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remuneration report Remuneration of the Management Board The remuneration of the members of the Management Board comprises four components: a xed element; variable, short-term remuneration (short-term incentive sti); variable, long-term remuneration (long-term incentive lti); and the pension commitment. The structure of the remuneration system is reviewed regularly by the Supervisory Board in line with the recommendations of the Personnel Committee. The remuneration is based on the respective remits of members of the Management Board, their personal performance and that of the full Management Board. The components of the remuneration that are not performancerelated comprise element and the pension commitment. The performance-related remuneration consists of earnings which are dependent upon the attainment of predened annual targets (sti) as well as predened long-term targets (lti). In nancial year 2009, the remuneration of the Management Board was reviewed by an independent external remuneration expert for compliance with the requirements of the Act on the Appropriateness of Management Board Compensation (Vorstag), which came into force on August 5, 2009. As a result, the Supervisory Board agreed a revised system of variable remuneration elements.
Structure of variable remuneration elements The short-term variable remuneration (sti) is measured by the attainment of key nancial indicators and non-nancial targets. In order to ensure the continued protable growth of the GfK Group, the rst part of the sti is linked to the attainment of the key nancial indicators of margin and sales growth, whereby the attainment of these targets is measured at Group and at sector level. When evaluating target attainment, the two key indicators are not analyzed independently of each other, but rather predened combinations of the two key indicators are incentivised. Payment of the bonus elements resulting from the attainment of the nancial targets is also linked to compliance with a debt limit dened by the Supervisory Board. In addition to the key nancial indicators, the Supervisory Board denes non-nancial targets which contribute to the companys sustained development. The non-nancial targets are partly the responsibility of the Management Board as a whole and partly the individual responsibility of its respective members. The non-nancial targets for 2010 related to the subject areas of personnel and organizational development (in each case for the Management Board as a whole), compliance (for the ceo and cfo) and market position (for the coos). The maximum payout for elements of the variable short-term remuneration is 300 % of the target bonus, whereby amounts which exceed 200 % of the target bonus must be transferred to the variable long-term remuneration and are therefore linked to the long-term development of the company (clawback). The variable long-term remuneration comprises two components. The rst part is linked to the roce (return on capital employed) trend over a period of four years. The bonus curve for this is derived from the wacc (weighted average cost of capital) and the roce performance of the best competitors. Payment takes place at the end of the term based on the average roce performance of the previous four years.
GfK_21
GfK GROUP
Corporate Governance
Corporate Governance
Corporate Governance
GfK GROUP
The second part of the long-term remuneration is invested in virtual shares. These shares are held for at least four years, whereby the impact of the dividends distributed to shareholders is reproduced besides the share price movement (tsr concept). After the holding period has expired, the virtual shares can be exercised within two further years. The countervalue of the virtual shares is paid out in cash. The maximum payout for both elements of the long-term remuneration is limited to 500 % of the target bonus. No discretionary powers are envisaged for the variable short-term or longterm remuneration when assessing target attainment. In accordance with the provisions of the International Financial Reporting Standards (ifrs), the expense for the Long-Term Incentive Plan (ltip) has to be spread over the term of four years up to payment of the respective tranche. A shorter time period for distribution of the expense is then set if it is certain that the contract will not be extended any further. This applied to the Management Board members Dr. Grard Hermet and Wilhelm R. Wessels for 2010.
eur 000 Prof. Dr. Klaus L. Wbbenhorst (ceo) Pamela Knapp Dr. Gerhard Hausruckinger (from September 1, 2010) Petra Heinlein Dr. Grard Hermet (until December 31, 2010) Debra A. Pruent Wilhelm R. Wessels Remuneration 2010 Remuneration 2009
Long-Term Fixed Variable Total components components Incentive Plan remuneration 598.4 381.7 123.8 400.2 415.5 438.3 397.1 2,755.0 2,510.7 737.5 437.4 236.4 488.1 660.9 460.4 436.0 3,456.7 2,009.9 159.3 100.5 0.0 106.2 531.2 100.5 242.8 1,240.5 666.7 1,495.2 919.6 360.2 994.5 1.607.6 999.2 1,075.9 7,452.2 5,187.3
Allocated to pension plan 552.2 92.0 30.4 402.7 662.1 573.5 365.6 2,678.5 3,482.7
Structure of pension commitments In principle, the pension contracts for Management Board members are, with the exception of Management Board members Pamela Knapp and Dr. Gerhard Hausruckinger, uniformly structured as dened benet plans. After a member has completed three years service as a member of the Management Board (waiting period), the company grants a retirement pension, an early retirement pension, a disability pension and a widows/widowers and orphans pension. The xed annual remuneration of the beneciary, as agreed in the contract of employment, is deemed to be the pensionable income. Beneciaries receive a retirement pension when they leave the service of the company upon reaching the stipulated retirement age. After three years service as a member of the Management Board, the annual pension amounts to 30 % of the pensionable income.
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This increases by three percentage points for each additional full year of service. The retirement pension is limited to 60 % of pensionable income. It is granted on leaving the company upon reaching the age of 62. A reduced, early-retirement pension may be provided at the age of 60. If pension beneciaries leave the service of the company before their 62nd birthday due to a partial or complete reduction in earning capacity, they receive a disability pension for the duration of the partial or complete reduction in earning capacity. If the reduction in earning capacity still applies upon reaching the normal retirement age, the pension continues to be paid as a life-long pension. The disability pension is calculated in the same way as the retirement pension; only the service years until the beneciary leaves the company are included in the calculation, which is based on the pensionable income at the time when membership of the Management Board ends. In the calculation it is assumed that the beneciary has been a member of the Management Board for ten years. If he or she has been a member for more than ten years, the beneciarys disability pension will equal the entitlement acquired up to leaving the company. There is a different arrangement for Management Board member Debra A. Pruent, in whose calculation the entitlement to a disability pension assumes that she has been a member of the Management Board for three years. If she is a member for more than three years, her disability pension will be equal to that acquired up to leaving the company. The widows/widowers pension amounts to 60 % of the retirement pension or disability pension last paid; the orphans pension amounts to 30 % for full orphans and 15 % for half orphans. After the commencement of the pension, it is increased annually by two percentage points. The company can grant higher adjustments if the consumer price index shows a higher increase in prices. Pamela Knapp and Dr. Gerhard Hausruckinger, members of the Management Board who have been employed by the company since November 2009, as well as all members of the Management Board who are employed by the company in the future, shall receive retirement benets in the form of dened contribution plans instead of dened benet plans. Entitlement to contributions shall be accrued upon joining the company. The sum of the benet shall be based upon the contributions paid. In addition, under the contribution-based system, entitlement to disability pension and widows/widowers and orphans pension payments shall accrue upon commencement of the employment contract, wherein in the event of entitlement to the benet prior to the completion of three years service, it shall be assumed that the beneciary has already served as a member of the Management Board for three full years. Three members of the Management Board made share transactions subject to mandatory reporting requirements involving a total of 263,332 shares in the 2010 nancial year. As at December 31, 2010, the Management Board held a total of 154,287 shares and 119,998 options for GfK shares. No loans or advances were issued to members of the Management Board. Former members of the management of GfK GmbH, Nuremberg, and of the Management Board of GfK se, Nuremberg, and their dependents received a total remuneration of eur 0.9 million. There are provisions of eur 13.7 million for pension obligations to former Management Board members, their dependents and Managing Directors.
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GfK GROUP
Corporate Governance
Corporate Governance
Corporate Governance
GfK GROUP
Remuneration of the Supervisory Board The remuneration of the Supervisory Board is dened in the Articles of Association of GfK se. It is based on the tasks and responsibility of the members of the Supervisory Board. Article 16 of the Articles of Association of GfK se sets out the remuneration of the members of the Supervisory Board as follows: 1. In addition to expenses, members of the Supervisory Board shall receive a xed remuneration of eur 12,000.00, payable at the end of the nancial year. 2. A sum of eur 1,000.00 shall be granted for attendance at a Supervisory Board meeting. Remuneration shall be paid for attendance at a maximum of six Supervisory Board meetings. 3. The Chairman of the Supervisory Board shall receive two and a half times the amount of the sums stipulated in Points 1 and 2. The Deputy Chairman shall receive one and a half times the amount. 4. The remuneration shall increase by eur 10,000.00 for membership of a committee, and by eur 20,000.00 for the chairing of a committee. Committee remuneration shall be calculated exclusively on the basis of the respective function on the relevant committee (simple membership or chair), whichever receives the highest remuneration. 5. The company shall compensate every Supervisory Board member for any vat applying to their remuneration and the reimbursement of expenses. 6. Supervisory Board members who have only held their position for part of the nancial year shall be compensated on a pro rata basis.
eur 000 Dr. Arno Mahlert (Chairman) Stefan Pfander (Deputy Chairman) Dr. Christoph Achenbach Dr. Wolfgang C. Berndt Stephan Gemkow Sandra Hofstetter (since May 26, 2010) Stephan Lindeman Shani Orchard Hauke Stars Dieter Wilbois Total 2010 Total 2009
2010 95.0 57.0 38.0 58.0 37.0 10.2 18.0 28.0 37.0 38.0 416.2 370.3
As at December 31, 2010, the Supervisory Board held a total of 3,762 shares. Members of the Supervisory Board held no share options. Details of individual transactions by members of the Supervisory Board and the Management Board were published on the website in accordance with the German Corporate Governance Code. The remuneration report forms part of the consolidated nancial statements and the Group Management Report.
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declaration of the management board and supervisory board pursuant to section 161 of the german stock corporation act (aktg) in conjunction with art. 9 para. 1 c) (ii) of the se regulation Pursuant to Section 161 of the German Stock Corporation Act (AktG) in conjunction with Art. 9 para. 1 c) (ii) of the European Company Statute Regulation (se Regulation), the Management and Supervisory Boards of a listed se must declare each year the extent to which they have complied and will continue to comply with the recommendations of the Government Commission of the German Corporate Governance Code, published by the Germany Ministry of Justice in the ofcial section of the online German Federal Gazette, and which recommendations have not or will not be complied with. This declaration must be made available to shareholders at all times. The Code contains regulations, some of which are binding. In addition to outlining company law applicable to the se via Art. 9 para. 1 c) (ii) of the se Regulation, it also includes recommendations from which companies may deviate, although in this case, they are obliged to publish information on and substantiate such deviations every year. The Code also proposes suggestions, from which companies may deviate without the necessity for this to be disclosed.
declaration of compliance for 2010 The Management and Supervisory Boards of GfK se declare that they have complied with and will continue to comply with the recommendations of the Government Commission of the German Corporate Governance Code in the version of June 18, 2009 published by the German Ministry of Justice on August 5, 2009 in the ofcial section of the online German Federal Gazette and the recommendations in the version of May 26, 2010 published on July 2, 2010. Only the following recommendations have not been and will not be applied. Unless otherwise specied, the cited recommendations form part of the Code, both in the version of June 18, 2009 and in the version of May 26, 2010: 1) Point 4.2.3 paragraph 4 Point 4.2.3 paragraph 4 of the Code provides that: In concluding Management Board contracts, care shall be taken to ensure that the amount of any payments made to a Management Board member on premature termination of his/her contract without serious cause is limited. As part of the conversion to a Societas Europaea in February 2009, which is the legal successor of GfK ag and the contract party with respect to employment agreements with the Management Board members, contracts with members of the Management Board were not renegotiated nor have new contracts been signed. At the date of conversion existing contracts with Management Board members do not provide for a limitation for severance payments (severance payment cap) in the event of their contracts being terminated prematurely not for cause, however the longest term of these contracts expires by mid 2012. This recommendation has been and will be complied with when new contracts are signed with Management Board members, since the date of conversion into an se. 2) Point 5.2 paragraph 2 clause 1 Point 5.2 paragraph 2 clause 1 of the Code provides that: The Chairman of the Supervisory Board shall also chair the committees that handle contracts with members of the Management Board and prepare the Supervisory Board meetings.
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GfK GROUP
Corporate Governance
Corporate Governance
Corporate Governance
GfK GROUP
The Personnel Committee is not chaired by the Chairman of the Supervisory Board but by the Supervisory Board member Dr. Berndt, who is suitably qualied to hold this ofce due to his many years experience in the eld of human resources. 3) Point 5.4.5 (as last amended on May 26, 2010) Point 5.4.5 of the Code regulates the recommended number of Supervisory Board mandates: Every member of the Supervisory Board must take care that he/she has sufcient time to perform his/her mandate. Members of the Management Board of a listed company shall not accept more than a total of three Supervisory Board mandates in non-group listed companies or in supervisory bodies of companies with similar requirements. The Supervisory Board member Mr Gemkow performs mandates in other Supervisory Boards and other comparable supervisory bodies. Most of his mandates are group positions within the Lufthansa Group. He is also a member in supervisory bodies of three additional commercial enterprises which are not part of the Lufthansa Group, which we believe may pose similar requirements as Supervisory Board mandates of listed companies. Mr Gemkow nevertheless allocates sufcient time to perform his mandates as a member of the GfK se Supervisory Board. 4) Point 5.4.6 paragraph 2 Point 5.4.6 paragraph 2 of the Code regulates the performance-linked and long-term remuneration components of Supervisory Board members It is the opinion of GfK se that linking the remuneration of the Supervisory Board directly to the performance of the company or its prots could lead to a conict of interests and might prejudice the impartial and objective monitoring and advising of the Management Board. For the purposes of ensuring that the Supervisory Boards independence is not affected by the achievement of short-term prots, the performance-related component of the annual remuneration has therefore been terminated in accordance with the resolution of the Annual General Meeting on May 20, 2009. 5) Point 7.1.4 Point 7.1.4 of the Code regulates the publication of information concerning other companies Every year, GfK se publishes a list of participations which gives information on all afliated and associated companies and other major participations. The information includes equity stake, shareholder equity and nancial year data. Information beyond this level concerning the last nancial years results of companies in which GfK se holds a not insignicant stake is not made available. Transparency at individual company level may prove a competitive disadvantage to GfK se.
Compliance Officer: Roland Frst Tel. + 49 911 395-2527 Fax + 49 911 395-4101 roland.fuerst@gfk.com http://www.gfk.com/group/investor/corporate_guidelines/corporate_governance/index.en.html
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stock exchanges playing catch-up The incipient recovery in the global economy following the nancial and economic crisis and stabilization in the capital markets accelerated in the past year. While stock markets were still adversely affected by the debt crisis and the associated currency risks in the rst half of 2010, the central banks expansionary money market policy, the sharp improvement in companies gures and strong domestic demand in both industrialized and emerging countries caused rising prices in the second half of 2010. The leading German index, the dax, ranked among the global winners with the greatest capital growth, gaining 16 % over the year. Only the New York-based nasdaq composite did better, rising 18 %. The years losers included the Euro Stoxx 50: the leading European index closed the year 5 % down. Its performance was impaired, in particular, by the pigs (Portugal, Ireland, Greece and Spain). Second-tier stocks performed even more strongly than the blue chips in the dax. Over the year as a whole, the mdax posted growth of 35 %, while the sdax grew by 46 %. Analysts and fund managers rate the excellent performance of small and mid-caps as evidence of the export strength of the German economy, which beneted, most notably, from strong demand from emerging markets in the past year.
GfK share price performance compared with the indices in full year 20101)
38 36 34 32 30 28 26 24 22 20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
1) All values are indexed to the GfK share price, closing prices, in EUR GfK dax 30 Performance sdax Performance Dow Jones Euro Stoxx Media
g f k shares consolidate their position at over eur 30 GfK shares trended upwards from the beginning of the year. The improvement in the economic situation, which was reected quarter by quarter in the GfK Groups order book and income development, led to considerable interest among buyers and consequently to a marked rise in the share price. Having started the year at eur 24.40, GfK shares closed the year at eur 37.60, which represents a gain of 54 %. The breaking of the eur 30 barrier, which was regarded as the resistance level from April 2010 onwards, led to continuous follow-up purchases from the end of August. GfK shares reached their annual high of eur 38.30 on the nal trading day.
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GfK GROUP
G f K shares
GfK Shares
GfK Shares
GfK GROUP
GfK Shares
Compared with the dax, sdax and Dow Jones euro stoxx media, GfK shares expanded their lead still further in the period under review, and also performed better than competitors wpp (+ 30 %) and Aegis (+ 18 %), both uk companies. Only the shares of the French market research company Ipsos outperformed GfK shares, gaining 68 %.
Highest and lowest value of GfK shares in full year 2010 (in eur)
40 38 36 34 32 30 28 26 24 22 20
Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 23.80 25.55 25.17 28.80 26.90 26.55 25.26 26.87 26.91 28.27 28.00 29.40 29.50 29.80 29.44 30.00 29.66 29.96 30.00 32.50 32.68 32.79 31.82 38.30
over four million shares traded A glance at the trading volume shows that in the main, foreign institutional investors from the usa, the uk and France in particular accounted for the most active interest in GfK shares. In total, over 90 % of trading occurred through funds, which do not pursue speculative investment strategies (non-hedge funds). In the year as a whole, a total of some 4.2 million GfK shares were traded. The average number of GfK shares traded per day on xetra alone was 15,897; this does not include off-oor trading of large blocks via the otc market. The exercising of options over the year as a whole resulted in the creation of 326,727 new GfK shares. At the end of the year, the share capital of GfK se amounted to eur 151,156,968.76, with 36,274,090 shares eligible for dividend payments.
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g f k shares ranked no. 2 in the sdax GfK was unable to expand its position further among all small and mid-cap listed companies in Germany. According to the Deutsche Brse ranking, it reached No. 48 (previous year: 47) in terms of market capitalization in the dax 100, which includes all mdax and sdax companies. The measurement is based on the market capitalization of the free oat. At GfK, this amounted to eur 534.11 million at the end of the last nancial year, while the market value of GfK based on all shares amounted to eur 1,363.91 million. In terms of shares traded, GfK reached No. 76 (previous year: 72). A different picture emerges if the sdax is taken as the only reference: in terms of market capitalization, GfK improved from No. 4 in 2009 to No. 2 in 2010. As a result, its index weighting rose from 4.4 to 4.7.
institutional investors increase their holdings With a stake of 56.4 %, the GfK Association remains the major single shareholder in GfK se. The reduction in the stake of 0.7 % year-on-year is attributable to GfK managers exercising their options and the associated creation of 326,727 new GfK shares. The proportion of shares in free oat is now around 43.6 % and is divided as follows: 0.5 % (previous year: 0.9 %) is in the hands of the Supervisory and Management Boards of GfK se, 18.9 % (previous year: 24.6 %) is held by private investors and 24.2 % (previous year: 17.5 %) by institutional investors. The proportion of private investors has therefore shifted in favor of institutional investors. At the end of the reporting year, the number of institutional investors was 62 (previous year: 60). A glance at the distribution at country level shows that around 45 % of the GfK shares in free oat were in German hands, with one third held in the usa, followed by the uk and France.
Breakdown of free float by country (%) UK 13.5 Other countries 3.2 Management and Supervisory Boards of GfK se 1.0 Germany 43.5 (private investors)1) Germany 1.2 (institutional investors)
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GfK GROUP
GfK Shares
GfK Shares
GfK GROUP
GfK Shares
587530 GfK se DE0005875306 GFK.DE GFK GR D:GFKX GFK.DE dax sdax Dow Jones Euro Stoxx Media
1) Compared with the initial public offering (ipo) of eur 15.41 at the time of the stock exchange launch on September 23, 1999 (adjusted by the capital increase from corporate funds)
interest from analysts remains high At the end of 2010, 14 banks were rating GfK shares. According to the German Association of Investor Relations (dirk), the coverage of sdax companies averages out at eight banks and this indicates that in the environment of small cap companies, GfK shares are rated by an aboveaverage number of banks. In mid-March 2010, the international bank hsbc resumed rating GfK in its coverage. At year-end 2010, ten analysts were recommending buy for GfK shares, with three analysts recommending hold and one analyst recommending sell.
substantial agreement at the annual general meeting At the ordinary Annual General Meeting of GfK se on May 19, 2010, the shareholders of GfK approved the resolutions proposed by the Supervisory and Management Boards by a majority of at least 89.7 %. Some 330 shareholders and shareholders representatives, representing around 85.0 % of all shares, participated in the Annual General Meeting. The agenda included the reappointment of all six shareholders representatives to the Supervisory Board. The shareholders also approved a resolution to distribute a dividend of eur 0.30 per no-par share for the nancial year 2009. The agm also granted another mandate for the acquisition and use of GfKs own shares. Previously, these mandates ran for a period of 18 months. The shareholders agreed to the proposal by the management to increase this period to the ve years permitted by law.
proposed dividend of eur 0.48 per share At the agm taking place on May 26, 2011, the Supervisory and Management Boards of GfK se will be proposing a dividend pay-out amounting to eur 0.48 per no-par share for nancial year 2010. This gure is in line with the dividend policy of recent years of achieving a pay-out ratio of approximately 20 %. In relation to the share price of eur 37.60 on December 30, 2010, this proposal corresponds to a dividend yield of 1.28 % and a total pay-out amounting to eur 17.4 million (previous year: eur 10.8 million).
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Unit High Low Closing price Average daily volume traded Number of no-par shares as at Dec 31 Stock market capitalization as at Dec 31 Ranking in sdax by sales by market capitalization Index weighting by market capitalization in sdax Dividend1) Total dividend1) Earnings per share Free cash flow per share
1) Applies to financial year 2010: proposal to the agm on May 26, 2011
2010 38.30 23.80 37.60 15,897 36,274,090 1,363.91 24 2 4.7 0.48 17.4 1.99 3.43
expanded dialog with the capital market In addition to the Accounts Press Conference and the agm in the year under review, GfK was present at 15 international investor conferences in Germany, the uk, France and the usa, two dvfa Analysts conferences in Germany, 14 road shows in Germany, the uk, France, Austria, Switzerland, Canada and the usa, one sales-force brieng, nine conference calls and around 390 one-to-one meetings with analysts and fund and sales managers. GfK also held its Capital Market Day for the third time in January 2010. A total of 34 international analysts and institutional investors took the opportunity of speaking to members of the GfK Management Board. GfK also heightened its prole in cooperation with associations for the protection of investors and stock market initiatives with a presence at ten share forums held throughout Germany and attended by private investors. It also gave a lecture at a university of business studies and economics.
excellence of investor relations At the awards ceremony for the German Investor Relations Prize 2010, which rates the best European nancial market communication, GfK se improved its ranking signicantly within the sdax companies, moving from No. 9 in 2009 to No. 2 in 2010. In the personal rankings, GfKs Global Head of Corporate Communications ranked third, as he did last year. The awards were based on the comments of more than 800 fund managers and analysts from 19 European countries, who work for around 300 fund companies, banks, brokers and insurance companies. The assessments included criteria such as transparency and precision in reporting, reliability of forecasts and knowledge of the industry. The competition is arranged by Wirtschaftswoche, Thomson Reuters and the German Association of Investor Relations (dirk).
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GfK GROUP
GfK Shares
QR codes
Most mobile phones and smartphones have a camera and can also decipher QR codes with the appropriate software. We have included links in the form of QR codes in the Special section of the GfK report. These provide access to web content that is optimized for mobile internet browsers (for example provided by BlackBerry, iPhones or Nokia). If you do not have a QR reader installed on your mobile phone, you can use your phone to visit the website www.mobile-barcodes.com and download the necessary software for your mobile phone.
This is how it works: 1 / Start the QR reader and point the camera towards the code 2 / Take a photograph of the code 3 / Conrm the link 4 / The website subsequently appears in the browser
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GfK Special
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Digital
Online and cross-media advertising under the microscope: The G f K Media Efficiency Panel
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The GfK Media Efciency Panel developed by GfK Panel Services is enabling advertisers to discover the optimal media mix and base their advertising decisions on reliable data. This innovative panel has achieved considerable success at an impressive pace. How does online advertising interact with ad campaigns in traditional media such as tv, cinema and print? How high is the return on investment of a particular cross-media campaign? How much additional sales revenue is generated by adding certain media channels to the mix? What is the optimum level of exposure per week? What level of reach do the individual media channels achieve? Is the social media environment suited to a particular advertising message? Does exposure to a tv advertising campaign prompt an individual to visit a homepage? Today, in this age of the internet and a wide variety of old and new media, these are the kinds of questions that advertisers are asking and the GfK Media Efciency Panel has the answers. In addition, GfK Panel Services offers advertisers and marketers reliable data that allows the sales impact of their online campaigns to be analyzed in the cross-media environment. Industry experts have praised the panel as a globally unique single-source approach to the integrated monitoring of exposure to ad campaigns in different media and the purchase of fast moving consumer goods. In mid-2010, the former Web Efciency Panel became the GfK Media Efciency Panel. The name was changed to reect the broader range of media being monitored: rather than simply observing the effects of online advertising alone, the panel now also focuses on the impact of web-based ad campaigns in conjunction with traditional tv commercials. Precise measurement of online usage and purchasing behavior using a browser plug-in It is worth taking a closer look at the methodology on which this panel is based. In Germany, 30,000 households report regularly to GfK on their purchases of fast moving consumer goods and 20,000 households report on which durable consumer goods they buy. Both panels are representative of all private households in Germany. A selection of 15,000 households, representing private internet users, take part in the GfK Media Efciency Panel. These samples allow relevant conclusions to be drawn regarding purchase behavior and media consumption.
Participants: 30,000 households report on purchases of fast moving consumer goods 20,000 households report on purchases of durable consumer goods
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Before being selected, participants in the online households were asked in-depth questions about their media consumption habits. This provides reliable data showing the extent to which online users also access established mass media such as radio, tv, newspapers and magazines. In order to measure online usage and the effect of cross-media campaigns on online searches and purchases in a targeted way, a plug-in is installed in the web browser of participants with their agreement. This records the accessed websites, entries in search machines and product research conducted on the websites of manufacturers and online shops, as well as product searches and completed purchases, and transmits the data to the GfK server. An important innovation in 2010 was the linking of data and ndings from this web panel with electronic monitoring of exposure to tv advertising. For this purpose, GfK Panel Services equipped 5,500 households in the GfK Media Efciency Panel with modied mobile phones that record exposure to tv advertising through sound recognition. Each individual activates the GfK-modied mobile phone when they are watching tv, and the device is able to recognize from the sound which advertisement is being viewed. The recorded data is then transmitted via the mobile network. Using extremely precise statistical transmission information provided by Thomson Media Control, GfK can then determine which tv program the panel participant was watching when he or she was exposed to a particular advertisement. It is therefore possible to ascertain precisely which advertising campaign a particular panel participant has viewed at what time. Exposure to advertising campaigns on Germanys eleven largest ad-carrying tv stations, which account for over 90 % of tv advertising, is measured in this way. The aim of the Media Efciency Panel is to analyze the sales impact of tv and online ad campaigns. Investigating cross-media effects together with Google and Coca-Cola One example of this kind of analysis, which investigates the effect of cross-media ad campaigns, is a joint survey by GfK, Google and Coca-Cola. The starting point for this was the Coca-Cola Christmas campaign, which last year featured tv, radio and movie theater advertising spots, billboards and print ads, as well as online banners, video ads and Google advertising. The GfK Media Efciency Panel was able to precisely record the exposure to these advertising messages and the actual purchase behavior of consumers. The ndings of the survey clearly show that the effectiveness of advertising is considerably increased by the interplay of the different media. The combined impact of tv advertising and video ads shown on YouTube had the most positive impact on sales in the CocaCola Christmas campaign: among consumers who saw the advertising message on both tv and YouTube within the space of one week, the purchase rate increased by 97 %. According to Coca-Cola Germany, the ndings show that online marketing can play an effective role in a media mix. Another particularly interesting feature of the survey is that it allowed cross-media monitoring to be carried out for the rst time; this showed how the individual types of media interact and have an effect on sales in the short term. The 85 surveys that GfK has conducted with the GfK Media Efciency Panel for numerous companies give a detailed picture of the effect of online advertising. It is clear that internet ad campaigns can be as successful as tv advertising and that they also increase the effectiveness of the latter. The great advantage for companies is that around 30 % of all online advertising exposure is exclusive and these users cannot be reached via the medium of tv. Online advertising does not necessarily appeal to new buyers, but tends to result in more intensive consumption. In order to be as effective as possible, ads should be stimulating and placed in a thematically appropriate setting.
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The GfK Media Efciency Panel has also shown that online advertising is as effective among the over-50s as it is with younger target groups something that is not common knowledge. Nevertheless, companies should not advertise exclusively on the internet, because cross-media campaigns still record the greatest success. Expansion to other industries: comprehensive analysis of banking products An important strategic goal achieved by GfK Panel Services in 2010 was expanding the GfK Media Efciency Panel to include surveys and analysis of other industries and goods for example, electronic goods and textiles, as well as services such as banking products.
GfK SPECIAL: DIGITAL
In another survey conducted in 2010 in close cooperation with Google and Deutsche Bank, GfK analyzed the importance of the internet in researching nancial products. The results were impressive: over 60 % of internet users visit websites with a nancial focus and 20 % enter nance-related search terms. The survey showed that the majority of German banking customers use online research to help them make their nancial decisions. Subsequently, 11 % of internet users also use the internet to acquire the desired nancial product online. However, for the majority of customers the ropo effect comes into play: research online, purchase ofine. In total, 49 % of Deutsche Banks new business is obtained as a result of customers carrying out online research in one form or another. Another nding of the survey was that search engines are the most inuential independent information source. Google is used by just over a third of all customers who carry out online research prior to signing a contract no other independent information source has a higher reach. Google users also research more intensively, visiting twice as many domains as other surfers. When they rst start their online research, customers tend to focus on brands and banks that are already known to them: most users go directly to the websites of banks and other information sources with which they are already familiar. The majority of search entries also include brand names. Nevertheless, the survey found that customers also frequently conduct research that is not focused on familiar brands before making nal product selections. GfK WebValue records user structure and dwell time on internet offers The panel is principally focused on the interaction of online media with other media. But the data obtained via the browser plug-in also allows further analysis to be carried out. For example, in September 2010 GfK Panel Services conducted an investigation of dwell times and user preferences on the internet. They found that approximately two-thirds of the population now has online access. Individual surfers spend particularly lengthy periods on gaming websites and social networks. The eBay auction portal was visited by around 40 % of all German internet users in July 2010, and each spent an average of just over two hours on the site during the month, which corresponds to a total usage time of over 38 million hours in Germany. In terms of reach, eBay was therefore signicantly ahead of other websites in July, while Facebook was in second place: total usage time was around 33 million hours and individual members of the
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increase in purchase rate as a result of the interplay between tv spots and YouTube video ads
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social network spent an average of almost three hours on the website in the month. The Google search engine ranked third, with a total of approximately 30 million hours; although the monthly average dwell time was just one hour, around three-quarters of all German internet surfers used Googles services. These are just a few striking examples of the data recorded by GfK WebValue which is made available to GfK clients. The research identies the reaches of more than 20,000 internet domains and enables detailed analysis of more than 3,000 internet domains on a monthly, quarterly and half-yearly basis. The major benet is that precise proles of the user structure can be identied for individual online offers: age, income, size of residence or the websites that the majority of users normally visit. This information is available at the click of a mouse, and allows comparison with competitor websites. Outlook: whats in store for 2011? As already mentioned, the strategic focus of GfK Panel Services is on expanding the GfK Media Efciency Panel to include further industries and goods, and also on obtaining more precise measurements in other media. A test for the measurement of mobile internet usage will be conducted in 2011. There are also plans to rapidly develop the GfK Media Efciency Panel into a panEuropean tool. It is already available in the uk and the Netherlands as well as in Germany, and expansion to include further countries is planned. The GfK Media Efciency Panel proves once again that GfK has its nger on the pulse and its clients are reaping the benets. /.
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interview
(?) How does Google use the ndings generated by the Media Efciency Panel to optimize the media efciency of advertisers? (!) Advertisers and not only those included in our own product portfolio often ask us about marketing strategies. They have condence in us and regard Google as a trusted advisor who can provide them with valuable advice. The online sphere is still a relatively new environment for many entrepreneurs and managers. Rupert Murdoch hit the nail on the head when he said that they are digital immigrants who did not grow up with the internet. With GfKs Media Efciency Panel, we can precisely determine the effect of different marketing tools. Supported by hard facts, we are able to tell a company how it can increase reach by 3 %, 4 % or even 5 % within a particular target group, for example. Or we might conclude that a company could potentially reduce its marketing expenditure by 10 % or more by optimizing its marketing and media mix. Our clients want to receive this advice and apply it beyond their search-related advertising, and the GfK Media Efciency Panel allows us to provide this service. (?) One nding of the survey is that search engine marketing commonly generates the highest return on investment. Why do you think this is? And what support does Google provide to its clients in this area? (!) The perfect time to bring a consumer and a provider together is, of course, when a specic search term has been entered in the Google search engine. In this case, the accuracy of the advertisement reaching its target is 100 %. Costs are only incurred when
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First name Surname Location Favorite website Favorite social media network
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the user actually clicks on the ad and consequently accesses the advertisers website. Googles AdWords is a unique product in the advertising world. We support our advertising clients in a variety of ways. First, with the GfK Media Efciency Panel, we help them to determine the importance of online advertising in their media mix. Second, we are then able to ascertain the optimal proportion of search advertising within overall online advertising, which includes video and display ads. Third, we support clients in devising optimal strategies for this eld, helping them to select keywords and optimize their own advertising activities this is one of AdWords essential elements. (?) A study conducted by Google, Deutsche Bank and GfK found that many banking customers carry out extensive online research before signing a contract. What feedback have you received from the market about this and has Google drawn any conclusions for its own services? (!) It was certainly a very interesting study. Together with Deutsche Bank and GfK, we investigated the relationship between research and online or ofine purchasing. Bank branches are still the most important sales channel for banking products and this will not be changing in the foreseeable future, because these are products for which customers require extensive consultation. However, 11 % of all banking products were purchased online in 2009 and the internet played a part in the research process for 60 % of all products. Banks should therefore not underestimate the support function of search engine marketing, as customers often turn to the internet to obtain information before they visit their high street branch. Banks must also become even more competent in their advisory services, because customers who go to the branch are already very well informed. In addition, individuals who have acquired information over the internet beforehand are prepared to spend more money than other customers. These ndings are also reected in the travel and mobile communications segments, where we have conducted similar surveys in collaboration with GfK. We have been able to draw two conclusions from these studies. On the one hand we are considering how we can strengthen the relationship between online and ofine in the future. For example, in the usa we are currently experimenting with online coupons in order to optimize the transfer between the internet and stores. On the other hand, our advertising clients are facing the same task: how can they successfully attract someone who has been researching online to their particular store and avoid losing out to a competitor? This ropo effect research online, purchase ofine will become increasingly important both for us and our clients in future.
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(?) What key features dene the advertising and marketing concept of Google Street View? How do you respond to critics of this tool? (!) It perhaps makes sense to respond to the second question rst. I always suggest that opponents should actually try using Street View. In all the investigations we have carried out, we have discovered that the level of criticism signicantly declines once people have experienced the tool for themselves. Lets assume you want to book a holiday and take a look on Google Maps. You see that there is a road between the hotel and the beach, but you do not know how heavy the road trafc will be. With Street View, you can see whether it is a small road with a zebra crossing, or a four-lane road that has a crash barrier in the middle. This tool allows internet users to picture an area very quickly, whether they are looking at a holiday destination or at hunting. Street View is an ideal addition to Google Maps, and the use of Google Maps has increased by 20 % in every country where we have launched Street View. To return to the rst part of your question: we dont have a separate marketing strategy for Street View because it is simply part of Google Maps and enhances this service. And we already have a variety of advertising options for this tool. Small and medium sized companies in particular, but also large corporations with many subsidiaries or branches, benet from the highly localized nature of advertising on Google Maps. (?) Online expenditure in Germany is still relatively low in comparison to the usa or the uk. Do you anticipate a change in this trend? (!) We are currently seeing extremely rapid growth in the entire eld of online advertising, which includes search engine marketing. Although Germans in general and German companies are analytical and number-driven in their decision-making, they are initially cautious when it comes to exploring new strategies. However, an increasing number have now realized that the eld of online advertising has proved its worth and are consequently strengthening the demand for such products. In Germany, we are proud to have some real trend drivers, including companies such as otto, which are generating more sales online than ofine. Overall, I think we still have some major growth potential to exploit. (?) How can GfK use the GfK Media Efciency Panel, for example to help make online advertising generally more transparent and strategic in future? (!) In my opinion, the GfK Media Efciency Panel is a major step forwards. There are possibly three areas where we can work together to make the tool even better. The rst relates to
(?) What digital trends do you predict for the next three years and how is Google preparing for these? (!) The search segment will not only become more important in future, but will also continue to be extremely active. We currently register more than one billion searches per day and this area is very dynamic. We know that approximately every 90 days, a third of all Google search requests are new searches. In addition, search terms comprising three, four or more words are becoming more common than one-word searches. Social networking is also booming at present, and many of our products such as Google Mail and YouTube include social features. People want to communicate with each other and the social aspect will therefore experience high growth rates over the next few years. We have to nd the right balance between communication and advertising in collaboration with our clients and this balance must also be accepted by users. A further area is online videos, which will complement tv and possibly even replace it in some elds. Accordingly, companies will need to develop advertising strategies for this medium. The nal point I would like to make is about mobile internet use. This segment is recording more rapid and dynamic growth than stationary internet usage ever did. In fact, internet use has jumped straight to mobile in some regions of the world, with broadband internet being entirely omitted. Regardless of whether that intermediate step is taken, mobile internet will become a key area of concentration for us in the next few years. /.
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the expansion of the panel, in order to make it more stable and improve the data quality. Secondly, we should aim to monitor other media more intensively, particularly those where consumption is currently still surveyed with questionnaires. Finally, we could begin to think about expanding the panel to include mobile internet usage, because this area will certainly be a signicant marketing driver in the coming years. Of course it is highly complex to record mobile internet use in a household panel. One issue is the fact that there are often several mobile end devices being used in each household and potentially even more than one per person.
SECTOR: Media
tv sets
recorded tv on pvr
recorded tv on dvd/vhs
on-demand tv
radio via tv
games consoles
radio
dvd s
instant messaging
emails
social networks
video clips
live/on-demand radio
streamed music
games online
internet usage
movies/videos/dvd s on computer
computer games
text messages/sms
books
instant messaging
podcasts
newspapers
magazines
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Digital day
GfK SPECIAL: DIGITAL
Our day-to-day life is governed by the media. We are exposed to media inuences from the minute we wake up to the minute we go to bed. GfK nop Media has now produced a study for Ofcom, the independent British regulatory authority for the media industry, investigating the inuence that digital media have on the British population and how consumers use different media during the day. It is, to date, the most detailed study of its kind. Ah, the good old days, when each household had a radio as large as a tea chest. Some also had a tv, which was just as large and heavy but only showed a few programs in black and white. And a number of trendsetters even had a telephone, which was usually xed to the wall and enabled conversations to be held with people out there in the big wide world. The amount of available media was limited. Then came the gramophone record, offering an alternative to the radio, and allowing music to be freely chosen depending on the occasion. A great deal has changed since then. In 1967, Canadian communications theorist Herbert Marshall McLuhan published a bestselling book. The nal title was actually the product of a typesetters mistake: originally the book was to have been called The Medium is the Message but it came back from the typesetter as The Medium is the Massage. McLuhan is reported to have exclaimed: Leave it alone! Its great, and right on target! Fast-forwarding to 2010, it appears that the professors little joke was actually quite prescient. GfK nop Media had to analyze 45 types of media usage in order to investigate the digital day of the British population. Guy Holcroft, Research Director at GfK nop Media, described the challenge of the Digital Day survey as follows: It is the most exceptional project I have ever been involved in. The analysis is not yet complete, and I think it will continue for some time to come. At the same time, he observed that old research methods have by no means been consigned to the scrap heap of history. Take, for example, the seven-day notebook that participants received prior to the start of the survey. The advantage of this tool is that all the data is available in one medium, is simple to handle and can be easily accessed by the participants. Online and telephone interviews lasting 20 minutes at a time were also conducted on a daily basis over seven days.
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different media activities were analyzed by GfK nop Media
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Together these processes enabled reliable data to be collected for analysis, which would not have been the case using only a diary approach without the daily interview. Despite daily interviews being conducted via online ash templates, or by telephone, accumulating the 7,000 digital days and more than 100,000 instances of media consumption was still a major task for the respondents as well as for GfK. Firstly, participants had to remember the length of time for which they had used a particular medium. Secondly, the multitasking factor played a role: did participants use just one medium or several at the same time? And how much attention were they paying to the medium in question? Here too, McLuhan showed considerable foresight: in his 1964 work Understanding Media, he already differentiated between hot and cool media. For example, he viewed lm as a hot medium, whereas tv was cool, and so were comics. In short: McLuhan categorized all forms of media which require more attention from the viewer as cool, whereas those that stimulate the senses and provide intense bursts of information were dened as hot. It was left to GfK nop Media to analyze in its report how participants behave when using gaming, mobile internet or text-based messaging services.
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The following measurements were made during the survey: the average person sleeps for around eight hours, which represents 30 % of a 24-hour day. Of the hours spent awake, he or she will spend 45 % of the time using media or telecommunications. However, the average user crams the equivalent of nine hours of media usage into these seven hours of media-based activity. By multitasking, he or she manages to use several forms of media at the same time for 90 minutes a day. In other words, the equivalent of over three hours of media usage takes place within 83 minutes, which means that an average of 2.25 forms of media are being used at the same time. One thing that is perhaps surprising about GfK nop Medias survey is that normal tv continues to occupy rst place in the rankings in terms of both daily reach and media usage spread over the week as a whole. Fixed network telephony, which is ranked in a modest fth place in daily reporting, climbs up to second place with a reach of almost 80 % in the weekly average gures. As might be expected, young people lead the way when it comes to media consumption. Whereas the average amount of time spent using media every day in England is 8.48 hours, the 16 24 age group spends 9.32 hours and 25 44 year-olds are not far behind, with 9.24 hours. Only in the 55 + age group does the time spent on media consumption fall considerably to an average of 7.47 hours. However, these gures only apply if the time spent multitasking is not taken into account, because while the younger generation pack around two-and-a-half minutes of media consumption into each of their 116 multimedia minutes, the 55 + age group is more restrained, only spending 49 minutes actively using a maximum of two forms of media at the same time. Social networks are now used by 25 % of the older generation, while over 40 % of young people aged between 12 and 15 are active on these sites. To sum up: tv is still king among the different forms of media and communications, even if sending emails ranks very highly in terms of reach, stated importance and attention paid. More than half of our waking hours are spent using media of one kind or another. The younger the user, the higher the proportion of media consumption is attributable to computers and smartphones. While the socialization of the older generation means they continue to favor conventional media and still consume print media as a matter of course, the younger generation is already largely digitized. Mobile gadgets that allow them to access media while on the move also promote a form of media consumption that differs markedly from the 55 + generation. Were Marshall McLuhan alive today, he might be gratied to see his differentiation between cool and hot media being borne out by the younger generation. /.
Other surprising ndings: just 10 % of users are responsible for generating more than half of the total volume of emails and mobile messaging. There are similar results for mobile internet usage via iPhones, Blackberrys, etc.: only 5 % of users are responsible for 80 % of transmitted data.
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First name Surname Location Favorite website Favorite social media network
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interview
(?) How would you describe Ofcom in a single sentence? (!) Ofcoms role is to make communications markets work for consumers, so our job is to make sure that consumers have the best access and are able to engage with communications markets across the uk. (?) Media and communications are the most important icons in everyday 21st century life. What role does Ofcom play in that wide eld? (!) Ofcoms role is to oversee the operation of media and communications in the uk. We make sure that consumers have access to these markets, that the markets are competitive, and that the players who are operating in them are offering fair deals to consumers. We also make sure that consumers are protected when engaging with these markets. (?) In the report by GfK and nop Media, we analyzed more than 45 different kinds of media. How does Ofcom deal with this variety of media in terms of regulation? (!) Well, it gets more complicated every year. But we have basic duties to regulate television, radio and the telecoms markets xed and mobile telecoms. And of course, the broadband market. But these markets are splintering; there are a lot of different markets, such as mobile broadband for instance, or internet television or digital radio. We need to keep abreast of market developments, and we do that through research and understanding our consumers. (?) Television seems to still be number one among the users. Will it stay that way? (!) There is no reason to say it wont stay that way, because television has adapted to the new environment very well. In the last ve years weve seen the emergence of at screen tvs and high denition television, and personal video recorders are now available across most of Europe. And in the uk and many other countries, more people are watching television than ever before. We will continue to experience a lot of innovation in television in the future. The next big thing will be video on demand and internet tv, which has been available in some countries, like France or Japan, for quite a while, and which is coming to the uk in the next couple of years. (?) Lets move on to another form of media. Radio is on the decline. Do you know the reason for this? (!) Well, radio is not necessarily on the decline. There are as many people listening to radio as there ever were, but theyre not listening as much. The reason for that is that radio is competing with a host of other media more so than television and particularly for advertising revenues. Advertising is attempting to spend money on the internet rather than on radio, and that reduces the revenue of commercial radio providers across most major countries. So, radio is struggling to make prots more than other sectors. (?) The role of Ofcom is becoming more and more multifaceted. How do you cope with that challenge? (!) We cope by trying to understand the technologies in the market place and looking ahead to see how things are developing. And we do that by talking to experts and to the big organizations that we regulate. But also by conducting research and consistently engaging with consumers and commissioning consumer research, such as the research with GfK on the Digital Day, which helps us understand how consumers are behaving, what they need and what we think will be the next big thing. (?) The traditional forms of media such as daily newspapers and magazines seem to be outdated or are the companies who run them not reacting to the digital revolution appropriately? Do you think that printed matter will survive? (!) I see no reason why printed matter wont survive. We havent seen any big newspaper closures in the uk for a long time. The regional newspaper sector, although it is losing money to the internet, is still healthy, and we are seeing a lot of innovation in the print market, for instance Metro, which is very successful. In the book world we are seeing publishers responding far more pragmatically to new technology, such as the Kindle and the iPad, than the record industry did. And I think many companies are learning the lessons of the record industry and embracing digital technology. (?) Aside from the print media we hear reports about social networks on an almost daily basis. Is that the medium we have to be afraid of? (!) Not at all, because its a medium that consumers are embracing. Its also a very innovative sector, and its shifting and changing all the time. But its pretty much being led by consumers and what they want, and strives to make life easier for them. Facebook, for example, is launching messaging services and email as a response to consumers wanting all their communications in one place. So, its a very dynamic and fast moving sector. Its far too early to say that is a bad thing.
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(?) Young versus old. How do young and old users differ in terms of media consumption?
"People will change the way they use technology depending on their different life stages." ."
(!) Oh, we are seeing some very interesting trends here, because the generation that grew up with the internet is now entering their early twenties. And we are nding that, for instance, people on Facebook in their twenties and thirties have very different ways of engaging with technology than the teenagers. That is what you might call a life stage effect. People arent taking habits with them throughout their lives; they are changing their habits as they get older. And Ill give you an example: email becomes more popular as people get older. Even the people who grew up with instant messaging are adapting to email as they get older, because its more appropriate for them. And this is very interesting, because what it is saying is that people will change the way they use technology depending on their different life stages. (?) Tradition versus lifestyle. Does social networking go hand in hand with a certain lifestyle? If so, why do traditional users keep their hands off it? (!) Social networking is now a mainstream activity. 60 % of people in the uk have access to social networks on a regular basis. And it is not just the young. We are seeing high levels of users among those aged between 30 and 40. Its only the very old who havent really started to engage with this, because they dont really use the internet. So, I would say that social networking is becoming a mainstream activity. Its not just something for early adopters or the young. (?) We spend more than half of our waking hours communicating. Is that the trend for the next decade or what do you expect for the future? (!) I see it continuing in this way. What we are nding is that people are becoming more adept at using different devices and performing different tasks at the same time. In the old days somebody would maybe watch tv and read a newspaper at the same time. But now we are in a world where people watch tv, surf the internet, send texts, and perhaps look at their emails all at the same time. And we found that young people in particular cram nine hours of media and communications activity into just six hours of time. We think this is a skill that they will take on into their later life. /.
(?) Digital versus analog. The digital virtual world seems to be gradually taking over most of our communication activities. Will there be enough revenues for all the companies? (!) I think there is room for both. And we are seeing this in the newspaper industry, because people still buy newspapers in large quantities. Increasing numbers of people are reading their news online. And the newspaper industry is trying to nd different revenue models to make the online world work as well as the analog world. We are seeing it in radio too, where many countries are switching or have analog and digital running side by side. There are different models for different parts of the market place. But there will always be people who want to read a newspaper or read a book. So the analog world wont be disappearing just yet. (?) Are consumers following this example or is the media landscape displaying more of a variety of user behavior? (!) There is a small group of consumers who are ahead of the game. We call them early adopters, and they would normally dene behavior patterns for other consumers. Its a mixture of early adopters embracing new ways of behaving and organizations creating the technology to meet those needs that is driving all this innovation and activity in the market place.
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SECTOR: Media
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First name Surname Location Favorite website Favorite social media network
(?) Nowadays media is a major aspect of our lives. Can you describe an average media day in your everyday life? (!) When I get up in the morning, I use my phone to check the time. And then I need the laptop to check emails. If I have time, or if I have the day off, I check Facebook. I then watch song videos from friends when they share them I do that on YouTube, using my laptop. I think those are the two things that I mostly use over the day. For now, I dont have a tv. I do have a radio, but I dont use that. (?) And what is your favorite type of media or form of communication? (!) I think for me, its my phone. I use it to text my friends. My latest acquisition is a phone with free Skype. So I use that to talk to my friends in my country, which is quite good. The phone is my means of communicating with my friends. (?) What is your main purpose for using media? Communication, entertainment, information or fun? (!) I think its communication rst and fun second. Because rst of all you contact your friends, and then you probably have some time to check websites and to read up on your personal interests Funny stories, funny videos, and sometimes movies as well. (?) If you look back about ve years, what has changed most dramatically between then and now in terms of using media? (!) Five years ago I was still at college, and at that time I didnt have my own laptop. So I used the mobile phone most of the time, and also the landline. But now I have my own laptop, and I use that to communicate with the rest of the world. So, I think the laptop is the biggest change for me. /.
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First name Surname Location Favorite website Favorite social media network
(?) Nowadays media is a major aspect of our lives. Can you describe an average media day in your everyday life? (!) Yes, I use every type of media that I know. When I wake up, I turn on the radio, and I listen to it while Im getting ready for work and having breakfast. Sometimes I might even turn it on in the car as Im heading to the station. Occasionally I look at the newspaper on the train. Then I get to work and turn the pc on to look at emails. I often use the pc to do my work, and then I take care of my management duties in the building. Perhaps I might read the news on the internet. Then when I get home, I probably watch the news on the tv and maybe some tv programs before going to bed. (?) And what is your favorite type of media or form of communication? (!) The tv. But in terms of communicating I prefer to use email and voicemail and the landline. (?) What is your main purpose for using media? Communication, entertainment, information or fun? (!) Well again, it depends on the type of media, but I prefer to watch tv for entertainment and for information. I use email more than voicemail, for example, to communicate. And I pick up the phone when I need to make urgent contact.
(?) If you look back about ve years, what has changed most dramatically between then and now in terms of using media? (!) I think that for mobile phones and email, the accessibility is better everywhere. You can pick up a message remotely that is the biggest change, I think. (?) And what is your favorite medium? (!) I guess I use the pc more than the tv. But thats really because I have to work as well as communicate with it. tv is more for relaxation and entertainment. (?) Have you changed your media consumption during the last ve years? (!) Yes, certainly. I like mobile phones. The only reason I have this Blackberry is to be able to do more things when on the go than with a normal mobile phone. And whereas ve years ago, we only had one tv in the living room, now there are several in one household. /.
>> Dermot Hughes: Can you describe an average media day in your everyday life?
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A digital device offering all the features that a market researcher could possibly want? It sounds like an impossible dream. The Dialogatore, which has been developed by Italian company GfK Eurisko, is a small plug and play miracle, making anything possible with its mobile communications system, touchscreen, camera, scanner, microphone, loudspeaker and straightforward user interface and all in real time, via a gprs transmission system. It all started with a problem: Italians do not have a great afnity with the internet. Barely a third of the population currently have online access. This is a major obstacle to market researchers, for whom the internet is, of course, now a vital tool. Giorgio Licastro, Media Measurement Managing Director at GfK Eurisko in Italy, is critical of this state of affairs: The traditional face-to-face interview has had its day, because it is very costly. And the other factor is time. Recording data, asking questions and collecting answers is very time-consuming, and from a nancial perspective this can no longer be justied. So what is the solution? It is actually very simple. A multimedia tool that enables panelists to perform a variety of tasks without rst having to wade through the pages of an instruction manual, while at the same time offering market researchers possibilities they had never even dreamed of. Giorgio Licastro: The Dialogatore is a very smart tool. It is essentially a small touchscreen computer with important additional features that make it easy for participants to collect the data we are looking for. The Dialogatore is, as its name indicates, a dialog machine that is able to perform a range of tasks in real time via both the input and output channels. Most importantly, the device, which was developed by Eurisko and a Milan-based electronics company, is incredibly easy to operate. It has no keyboard, only a six-inch touchscreen, making it ideal for private use, and it is only slightly larger than a normal mobile phone. This means it is more likely to be accepted by Italians, because telefoninos are widely used, particularly among the core target groups. And anyone who knows how to use a mobile phone is unlikely to nd the Dialogatore a challenge. The device is also accessible for those who are less procient in using technology, as the touchscreen displays all the steps in a way that is virtually self-explanatory.
40 %
internet af nity in Italy
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TOOL: Dialogatore
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The Dialogatore
This tool gives GfK Eurisko access to around 4,000 families, or almost 10,000 individuals, who represent a cross-section of Italian society. GfK Eurisko has access to very extensive data material for these test subjects, who may be either male or female and span a wide range of age groups and lifestyles, among other variables. With this data set it is easy to put together a representative group for a particular survey very quickly. The Dialogatore is always online and therefore constantly connected with GfK Euriskos servers. For closed questions, the panelist can simply click on an answer option on the touchscreen and Eurisko receives the results seconds later. Participants do not need to answer open questions in writing; the built-in microphone records the spoken answer, converts it into an mp3 le at lightning speed and forwards this digital message just as quickly as the touch impulse on the screen. Giorgio Licastro: We can even ask participants to open their fridge and photograph its contents. And we then have access to this information within a very short space of time. Isa Cecchini, Healthcare Department Director at GfK Eurisko: The majority of people who work with us in the healthcare eld are aged 60 or over. This group often doesnt cope very well with the internet, but with the Dialogatore we can reach 10,000 people with various conditions or illnesses. We can send questions or support people in their daily course of treatment. The best thing about Dialogatore, says Giorgio Licastro, is that it operates on a cordless basis. It only needs to be charged via the electricity network, and it doesnt require internet access or a telephone connection, it is a completely wireless device. As a result, we can send out a questionnaire from Eurisko and receive the answers on the same day. One important feature is the integrated scanner. This can read barcodes, giving GfK Eurisko a quick overview of magazines that are read, medicines that are taken, food products that are purchased and so on all everyday products that have this encoding for the supermarket till are covered. In other cases, the microphone is helpful, for example when evaluating radio listening habits. Test subjects only need to record a small extract of the program to which they are listening, and this allows the station to be identied. Since the Dialogatore enables all this information to be obtained with a minimum of effort, Mr Licastro is convinced that his surveys are representative and his data very solid. Its so simple. And thats important we dont just want to survey high-tech users, but also the average person on the street. An eighty-year-old woman could use the Dialogatore, for example, and she is also a consumer whose data are of interest to us. Eurisko has certainly taken a big step forward with the Dialogatore. After all, if a country like Italy is slow to react to the spread of the internet, consumer research must nd other methods. Mobile communications data services transmit the information at lightning speed and in both directions. On the user side, the Dialogatore enables a high volume of data and information to be sent to market and consumer researchers using a wide range of methods. It seems that the market researchers dream is possible after all. /.
We can even ask participants to open their fridge and photograph its contents. And we then have access to this information within a very short space of time.
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(?) Do you know how to use the Dialogatore? (!) Yes, of course. (?) Do you like this digital form of communication? (!) Yes, because it is extremely easy. (?) Does the Dialogatore help you in your everyday life? (!) Absolutely, the device is very helpful. (?) What do you think is special about the Dialogatore? (!) I think that the Dialogatore offers the possibility to learn more about life in Italian society and the daily routine of the people using it. Researchers are able to identify how people live their lives. Through my choices, I can contribute to this, modify my own choices and, as a result, help to make consumption behavior more transparent. (?) Is the Dialogatore a nuisance or a pleasure? (!) It is not a nuisance, but I would not say it is a pleasure either. I suppose it is somewhere in between. It is there, it is available and it can also be helpful. I do sometimes feel a little monitored, but thats all right. (?) Does the Dialogatore make you feel as though your views are important? (!) Yes, I think that the questions and answers trigger certain changes, and these can inuence lifestyle. The evaluation has an effect on our day-to-day life. For example, supermarkets only used to offer packets of ravioli containing a minimum of two servings, but because many people live alone they now also offer smaller packets.
I think this change can ultimately be attributed to market research. And the Dialogatore offers an opportunity to monitor all these things. (?) Would you recommend the Dialogatore to friends or people who are not so well versed in technology? (!) Denitely. I have had it for almost a year now and am glad that I can make an important contribution to research through my involvement. It is also far easier to use than a computer or mobile phone. It is not necessary to be procient in the use of technology you can simply have fun using it. /.
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(?) Do you know how to use the Dialogatore? (!) Yes, I am very familiar with the device because I have already been using it for some time. (?) Do you like this digital form of communication? (!) Yes, very much. (?) Does the Dialogatore help you in your everyday life? (!) Yes, it does up to a point. I use it to keep an eye on the pharmaceutical products that I purchase in the pharmacy. (?) Is the Dialogatore a nuisance or a pleasure? (!) If I feel it is becoming a burden or boring me, then I can always press the button to switch it off. (?) Does the Dialogatore make you feel as though your views are important? (!) Yes, but I think that market researchers should also bear in mind that we all have individual interests. Sometimes the questions are too generalized. (?) Would you recommend the Dialogatore to friends or people who are not so well versed in technology? (!) Yes, I denitely would. It is a fast method of communication, is user friendly and does not require the user to be a computer or internet expert. Simply operating the device can be a pleasure. /.
(?) Do you know how to use the Dialogatore? (!) Yes, our family has been using the Dialogatore since May 2010. We receive two to three requests per week. (?) Do you like this digital form of communication? (!) Yes, I really like it because I think this will be the method of communication in the future. It is very interactive and fast. In short: simple and effective. (?) Is the Dialogatore a nuisance or a pleasure? (!) Well, it is denitely not a nuisance to me and my family. First of all, it is silent and just has one led light that blinks if there is a request for someone in the family. It is very respectful of our family life! (?) Does the Dialogatore make you feel as though your views are important? (!) Yes, because the requests and tests are to some extent personalized. Some questions are for my father, while others are tailored to me or my sister. They target specic aspects of our lives. For example, requests relating to sport are appropriate for my sister and me, but not for my father, while questions about taxation are only really aimed at him. (?) Would you recommend the Dialogatore to friends or people who are not so well versed in technology? (!) Yes, denitely. The problems that some people encounter when using digital devices do not occur with the Dialogatore. It is really easy to operate and manage because it has a touchscreen I think this is the easiest way to use a device. /.
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Why is it that we see three dimensionally? Do we also wish to extend this experience to movies and the tv? What are Hollywood and tv producers doing to make this a possibility? And what do consumers think about these new developments? All fascinating questions to which GfK Retail and Technology has been nding out the answers. Nature still does it best engineers who work with tv and movie theater technology have a reverential respect for the human sensory system. At an early stage in the development of the species, evolution settled on the combination of a pair of eyes with efcient image processing in the brain. Human beings see in depth, so it is no wonder that, shortly after the invention of photography, the pioneers of image reproduction began to strive to recreate the third dimension. As early as 1849, just ten years after Louis Daguerre had introduced the rst photographic images on silver plates, the Scottish physicist Sir David Brewster presented the rst stereoscopic camera. In order to view the 3d images, both partial images had to be placed in a lens frame the stereoscope. The further development of this technology led to the viewmaster in the early 1950s a 3d viewer for stereoscopic image plates, which some may remember from childhood. In the 1950s, the world of the moving image also conquered the third dimension. Starting in the usa and then crossing over to Europe a few years later, the rst 3d lms found their way into movie theaters. These worked using the anaglyph method: the two partial images for the right and left eye were projected on top of each other in red and green, and a pair of cardboard glasses with one red and one green lm enabled the two images to be seen separately by each of the viewers eyes. The result was a more or less 3d, black and white image with strange color effects. For a long time, the inexpensive anaglyph process was key to 3d technology: reproduction was possible in almost all media via normal color printing, color lm, or color tv transmissions, and the glasses made of cardboard and colored lm could be manufactured cheaply. As a result, red-green 3d images appeared in magazines and books and eventually on tv. But the engineers had more ambitious goals. They particularly wanted to show 3d images in the movie theater and on tv in color, and ideally without any need for irritating and technologically complex glasses. This last objective, at least, still represents a big hurdle: 3d screens that do not require special glasses are currently still at the laboratory
Share of 3d tvs in overall sales of at screen tv sets: South Korea 10.3 % Australia 9.9 % Switzerland 8.3 % Singapore 7.0 % Germany 5.6 % France 4.7 % United Arab Emirates 4.6 % Japan 4.4 % Russia 3.3 % China 2.4 % South Africa 1.7 % India 1.6 %
Source: GfK Retail and Technology, Sales from January to December 2010
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stage of development; they all have small diagonals and can only be viewed at specialist conferences and trade fairs. The latest technology features glasses that operate using the polarization or the shutter process. Both enable good reproduction quality in color but also involve highly complex technology. The polarization principle is primarily used in movie theaters: two projectors cast the partial images for the left and right eye onto the screen with light waves that are ltered in such a way that they only oscillate in one direction. Filter lenses in the glasses worn by the audience only allow light waves that are oscillating in a particular direction to enter and therefore separate the image impressions for the left and right eyes. The complication here lies in the projection technology, which means that the process is more suited to the movie theater. The shutter technique also originates in the movie theater, but it has proved the most suitable process for adaptation to tvs or home movie theater systems. Here too, the basic principle is simple: the projector or screen shows the partial images for the left and right eyes on an alternate basis, and in synchronization with this, the left and right lenses of the 3d glasses open and close. This is achieved with special electrically powered lenses. However, the system requires a great deal of high-performance electronics: the images must be shown with a high alternating frequency so that each eye sees a sufcient number of partial images, ensuring that the picture does not icker. The left and right lenses of the shutter glasses must also open and close at a rapid speed of 25, 50, 75 or even 100 partial images per second. And the image formation on the screen must constantly be synchronized with the switch function of the glasses, so that this complex optical trick does not fall out of step. This look behind the scenes explains why 3d movies and 3d tv in color and with good image quality have only been technologically feasible for a relatively short period of time. And of course, a great deal of effort is also required on the production side to create 3d material in the lm and tv studios. Yet despite all this, the third dimension is very much in the media industry spotlight at present. Right at the center of the entertainment universe, in the Hollywood district of Los Angeles, studio bosses are currently very focused on 3d. Their hope is to tempt audiences away from their home movie screens and back into movie theaters with their impressive 3d lm images. Some Hollywood bosses were very surprised and a little put out at how quickly tv manufacturers jumped on the 3d technology bandwagon. But this could hardly have come as a surprise to industry experts: following the great market success of high denition tv (hdtv), 3d was the next natural milestone. All manufacturers of consumer electronics have been working to recreate the third dimension in the home since 2010, and some started to focus on this eld even earlier. Today, anyone with aspirations to be part of the technological elite must at least own a tv set with a 3d-ready logo, which shows that the set is equipped with the technology to display 3d content. The necessary shutter glasses and, if applicable, an infra-red or radio transmitter to synchronize the glasses and the formation of images can be purchased separately. The 3d lm Avatar entered movie theaters in 2009 and is, to date, the most nancially successful lm of all time, recording box ofce takings of usd 1.85 billion. It also triggered a 3d boom, at least in movie theaters, and it was then an obvious step for tv manufacturers to use this momentum to introduce 3d to living rooms and home movie theaters.
over 80
countries are included in GfK Retail and Technologys in the eld of consumer electronics.
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Further information
In a few years, 3d will be a standard feature of most tv sets and Blu-ray players.
Hiroshi Sakamoto, Senior General Manager Home Entertainment Business Group at Sony
The arrival of 3d in our homes was not unexpected. Providers like Sony have been concentrating on the third dimension in their research for many years. A major step in this direction was already taken a decade ago the development of high frame frequencies, such as the motionow technology introduced by Sony in the year 2000 but even among experts, few understood the full implications. This technology displayed a higher number of individual images than were transmitted from the tv station and therefore paved the way for the alternating display of two partial images for the left and right eye. At the us Consumer Electronics Show (ces) in January 2009, Sony presented the rst prototypes of 3d at screen televisions. Hiroshi Sakamoto, Senior General Manager of the Home Entertainment Business Group at Sony, is in no doubt: In a few years, 3d will be a standard feature of most tv sets and Blu-ray players. Engineers at Sony and other providers are already working hard to introduce 3d tv images that do not require shutter glasses. But until these processes are ready to be launched on the market, we will have to be patient for a little while longer. What do consumers have to say about all this? Will they show the same enthusiasm for investing in 3d-capable at screen tvs as they did for purchasing tickets to see Avatar? How prepared are they, possibly just ve years after buying their hd-ready tv, to invest in a new set incorporating 3d technology? What contents must be offered in 3d on Blu-ray, in tv programs and on the internet in order to boost the propensity to buy 3d hardware? Manufacturers of tv sets, the retail sector, software industry and other market players are all extremely interested in the answers to these questions. Consequently, it is precisely these questions that GfKs Retail and Technology sector is exploring as part of its observation of the consumer electronics market. GfKs retail panel offers tv set manufacturers, software providers and other market players detailed and up-to-the-minute market data for over 80 countries. This enables internationally active providers to obtain targeted information on the particular conditions in the relevant regional markets, as well as to compare statistics such as market potential, sales gures or market shares in these countries. Even if market success is currently still limited in some countries, the gures speak volumes. In 2010, approximately 2 million 3d-capable tv sets were sold worldwide; 900,000 of these were in Europe and around 200,000 in Germany alone. GfK Retail and Technology is forecasting considerable growth for 2011, predicting that global sales will increase to 12 million 3d-capable tv sets, 4.5 million of which will be sold in Europe as a whole and around 1 million in Germany. At 5.6 % of the overall market, the market share in Germany in 2010 was average compared with other countries. Japan recorded a similar gure, with a share of 4.4 %, while South Korea (10.3 %) and Hong Kong (9.8 %) were out in front. What is clear is that despite positive market growth, manufacturers and software providers still have a substantial amount of work ahead of them, and GfK will continue to be a reliable partner in supporting their endeavors. /.
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since 2010, All manufacturers of consumer electronics have been working to recreate the third dimension in household living rooms and some began to focus on this field even earlier.
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Hiroshi Sakamoto, Senior General Manager of the Home Entertainment Business Group, Sony Corporation
First name Surname Location Favorite website Favorite social media network
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interview
(?) 3d has been an important driver of consumer electronics sales in 2010 and will be for the foreseeable future. However, sales of 3d devices remain quite low. How would you explain this? (!) What you say is correct, or rather, it was correct. The announcement of a 3d tv launch at the ifa 2009 in Berlin triggered a media hype over the arrival of 3d in the home. When we launched the technology in spring 2010 together with competitors like Samsung, Panasonic, lg and Philips, we were all disappointed and a little discouraged by the reaction of the market. Frankly, the sales gures were much lower than our expectations until the beginning of October. However, the situation changed in November, when our sales increased ve-fold compared to our competitors. We hope this situation continues. The reason it happened is that we started a big promotion campaign together with the Playstation 3 in October. At the Games Convention in August, Sony Computer Entertainment announced the latest version of the Playstation 3 and the launch of the game Gran Turismo 5 for Christmas, and published a software update for 3d Blu-ray reproduction capability on the Playstation 3. This took 3d into the fast lane. (?) How have the regional markets developed in terms of 3d technology? And where are sales highest? (!) Traditionally, the biggest market has been the us, followed by Europe and Japan. Because of the 3d and 3d-ready classications, the situation on the overall market doesnt look so good. However, if we count 3d-ready tvs tvs sold without the glasses things look better. The highest sales gures come from the us, and then Europe and Japan are almost on the same level. For example, Sony only has one tv set that has glasses inside the box all other tvs are 3d-ready. (?) In which market segments is 3d particularly strong? Does 3d-ready tend to be a feature of high-end products or is it also represented in the middle and lower price segments?
(!) The price of a 3d tv might seem relatively high in some countries, but two pairs of glasses are included, making a kind of complete 3d set. We say the two pairs of glasses are free, but in reality we budget for part of the glasses cost in the price of the tv. In Japan, we changed the message, to emphasize that Sony 3d tvs have as good a picture as those with the best 2d pictures, and that 3d-ready tvs have a fully-edged 3d tv function. This approach has resulted in the 3d market becoming more active in Japan. (?) How has Hollywood reacted to the rapid introduction of 3d technology for the home? The studios primary aim was to use 3d technology to tempt more viewers into movie theaters. Have they accepted the developments in consumer electronics or are they trying to thwart this progress? (!) We are sure that both have a positive inuence on one another. More people have been visiting the movie theaters as a result of 3d and now viewers are happy that they can also enjoy 3d at home. Because of this, we have increased our sales of 3d Blu-ray players, for example. But to be frank, the number of movie titles is not that big because most movies are still shot with a 2d camera. With Disney animations, converting from 2d to 3d is not that difcult; however, it is not so easy with real images and movies. We are working not only with Sony Pictures but also with Warner and Disney to promote 3d movies as well as Blu-ray discs with 3d content. Warner apparently has a special kind of conversion technology that allows a 2d production to be turned into a 3d movie. This means that in future Harry Potter could be released in 3d on Blu-ray, for example, as well as other popular titles. We are expecting a lot in this respect. (?) In connection with this: how satised are you with the 3d software range in general? What growth rates do you expect to see in this segment in the next twelve months? (!) I know that by the end of 2010 we will have launched around 40 titles on the market. In 2011 it will be 50 and all big titles.
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(?) What is the situation regarding the entry of 3d into the tv schedules? Up to now, the range of 3d tv programs has been very limited. Are viewers waiting for their tvs to open up the third dimension? (!) For terrestrial broadcasts, 3d isnt easy to introduce. Only Australia has 3d terrestrial broacasting technology. However, espn in the usa and Sky in Europe offer 3d programs via satellite. So we are working with broadcasters to increase the 3d offering via satellite and cable. In Japan, some large broadcasters already have a 3d channel, and from next month, two other broadcasters will also start offering 3d programs via satellite. So, in relative terms it is easier for satellite and cable viewers to enjoy 3d tv programs. In the terrestrial segment, development will probably take longer.
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(?) Sony is the only provider to offer a complete range of products: Blu-ray, Playstation 3, 3d tvs and lm productions by Sony Pictures. Does this boost sales and create sustainable synergies? (!) Our product range, starting with the ps3 for lms and games, will boost the market. Our line of Blu-ray players are 3d-ready and we also have Blu-ray home movie theater equipment. So we are very well positioned with our consumer electronics products. And Sony Pictures will be far more active in 2011 than Disney, for example. Sony Pictures will take a committed approach to producing 3d lms. (?) How do you assess the future of 3d? (!) The 3d feature is now better positioned strategically. It is not a high-end feature, and in the near future it will become a standard attractive feature in tv sets, as well as in Blu-ray players. Price conditions will be much more affordable over the next few years. The 3d glasses were also pretty expensive at rst, which is one of the reasons why the market didnt expand rapidly, but this will also change over the next three years. In addition, the demand for and range of 3d content will increase on tv, the internet and social media such as YouTube. 3d is well on the way to becoming a key purchasing factor. /.
>> Hiroshi Sakamoto: What does the future hold for 3d?
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1. The economy 2. Economic and financial development 3. Research and development 4. Human Resources 5. Organization and administration 6. Corporate Governance statement in accordance with Section 289 a of the German Commercial Code (hgb) 7. Purchasing 8. Environment 9. Corporate communications and marketing 10. Accounting-related internal control system 11. Opportunity and risk position 12. Major events since the end of the financial year 13. Outlook
72 74 86 91 92
92 92 93 93 93 94 100 100
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MANAGEMENT REPORT
1.1 Overall economic development: global recovery In terms of gdp, the global economic crisis only lasted from autumn 2008 to summer 2009, after which the economy picked up again considerably until summer 2010. This trend reversal was driven in 2009 by the government economic program and scal measures introduced in many of the industrialized nations and the almost unchecked economic expansion in some emerging countries, especially in the Peoples Republic of China. In 2010 as a whole, growth in the global economy amounted to 5 %. However, since mid-2010, the pace of the global recovery has slowed signicantly, varying considerably from region to region. While the economy in many developed countries cooled substantially in the second half of the year, the economic output in some emerging countries had to be curbed through monetary and scal policy instruments to prevent overheating. The following overview shows the development in the regions and countries important to GfKs operations:
MANAGEMENT REPORT
Month January
Opinion trend
Consumer climate restrained start to new year February Economic expectations dampen consumer climate March Spring awakens hopes of economic recovery April Spring-like mood in the consumer climate Debt crisis weakens May consumer expectations June Consumer climate stable despite austerity package discussions July Consumer climate in summer high August Consumer climate slightly on the upswing September Consumer climate at 3-year high October Germans expect economic high November Consumers in the mood for preChristmas spending DecemConsumer climate ber takes a breather
24.2
1.2
3.3
2.9
33.8
5.5
5.5
+ 5.8
Sources: 1) DIW Principles of Economic Development 2011/2012 2) Estimates 3) Forecast for Economic Development 2010/2011 4) International Monetary Fund (IMF) 5) The Euroframe Autumn Report 2010
1) These ndings are from the comprehensive GfK consumer climate maxx survey conducted each month since 1980 on behalf of the eu Commission. In the rst half of the month, a representative sample of around 2,000 subjects are asked about their perceptions of the overall economic situation, their propensity to buy and their income expectations. 2) The consumer condence or propensity to buy indicator is based on the following question to consumers: do you think it is advisable to make purchases at the moment? (good time neither good time nor bad time bad time). 3) The consumer climate indicator describes private consumption. Key factors are income expectations and the propensity to buy. The economic outlook has a more indirect effect on the consumer climate, generally as a result of income expectations.
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The picture for the eurozone member states is extremely varied. While Germany pulls the whole average up, most economies recorded only moderate growth. Development in Spain and Ireland stagnated and in Greece, gdp contracted for the second year in a row at 4.0 %. This mixed picture hardened over the course of the year, since high unemployment rates and austerity measures adversely impacted private and public sector domestic demand in some countries. Economic development also varied considerably in the different countries in Central and Eastern Europe. In Poland and Turkey in particular, growth was stable as a result of increased domestic demand. In addition, the debt levels of private households and companies were lower than in the rest of the region. The recovery was weak in the Baltic countries, which were particularly hard hit by the recession, and production continued to stagnate. The economy in the usa recorded relatively strong growth of 2.7 % in 2010. Boosted by monetary and scal policy support measures carried out by the Fed and the government, output and investment increased. In contrast, the conditions for private households barely improved. High unemployment rates and austerity measures resulted in weak consumer demand. After Asia, Latin America is the engine of the global economy. The South American countries beneted especially from the general upswing and domestic demand recovered again very quickly in 2010. Growth in major economies such as Argentina and Brazil was even stronger than before the recession. More than any other region, Asia deed the crisis. Export growth, state intervention and strong domestic demand led to many emerging Asian economies recording an upturn again in 2010. Even Japan, an industrialized nation, saw its economy expand by 4.4 %. This positive development is primarily attributable to increased private domestic demand. Alongside other measures, this was fostered by tax incentives on the purchase of eco-friendly cars and household products.
1.2 Market research sector: sales decline for first time in 2009 For the rst time since market research sales records began in the late 80s, industry association esomar reported a drop in sales for 2009. According to the esomar Industry Report 2010, sector sales fell worldwide by 4.6 %. However, in the usa, the biggest market for market research, the negative growth was lower than feared. Although market research budgets declined for the second year in a row, negative growth stood at 3.5 %. In contrast, Europe was relatively hard hit with a fall of 5.9 %. However, sales in the market research sector in the previous year (2008) had proven relatively stable compared with 2007. As before, the three biggest markets in Europe are the uk, Germany and France, which are far ahead of the other countries.
in usd million Europe eu 15 eu accession countries Rest of Europe America North America Latin America Asia and the Pacic Middle East/Africa Total
4.6
1) Growth adjusted by ination, based on sales in local unit of currency 2) GfK calculations Source: esomar Industry Report 2010
At 4.6 %, demand for market research in Latin America also decreased. Although market research sales in Brazil were down by 6.9 % on an ination-adjusted basis, the country still made it into the top 10 national market research markets in 2009. Surveys ahead of the elections in 2010 constituted a major revenue earner. The Asia and the Pacic region recorded the lowest drop in sales, with development in the ve major countries varying considerably. In the most important market, Japan, market research sales declined by 4.0 %, with a 10.6 % decrease in the third market, Australia, and 6.0 % in India, which ranks fth. In contrast, sales in the second biggest market, China, increased by 2.8 % and by as much as 16.6 % in South Korea, the fourth biggest market in the Asia and the Pacic region. The Middle East/Africa region was especially hard hit by the global economic crisis, which led in particular to declining sales from market research budgets in South Africa and the Middle East.
Top 10 national consumer research markets: sales, growth and share of the sectors overall sales
Sales 2008 8,866 4,154 3,334 3,042 1,641 890 912 784 763 689 25,075 32,361 Sales 2009 8,557 3,248 2,897 2,688 1,769 918 757 657 631 587 22,709 28,945 Growth Share of 2008/2009 sector sales in %1) 2009 in % 3.2 6.1 5.0 3.4 4.0 2.8 9.9 8.2 8.3 6.9 4.6 29.6 11.2 10.0 9.3 6.1 3.2 2.6 2.3 2.2 2.0 78.5
in usd million usa uk Germany France Japan China Italy Spain Canada Brazil Top 10 total World
2.1 Introduction The GfK Group prepares its consolidated nancial statements in accordance with the International Financial Reporting Standards (ifrs). The nancial data for the sectors and regions originate from the Management Information System. For GfK, the order situation is an important early indicator for the future development of the Groups business. The development in the assured volume of orders in relation to the expected annual sales for the nancial year is determined monthly. This ratio is a central management parameter for the Group and is monitored by the management of GfK in a timely manner. In general, around half the planned annual sales are already reported as assured contracts in the rst quarter. The picture varies from sector to sector. As a result of the lower proportion of continuous data collection in Custom Research and greater weighting for ad hoc studies, incoming orders in this sector tend to be more evenly spread across the whole of the year. In the panel-based Retail and Technology sector, contracts are largely renewed in the rst three months of the nancial year. In contrast, in Media multi-year contracts are concluded for continuous tv and radio audience research. The gures for income set out below refer to adjusted operating income. Like its competitors, the GfK Group uses adjusted operating income as a key performance indicator. GfK is convinced that the explanations regarding business performance using the adjusted operating income will facilitate interpretation of the GfK Groups business development and enhance the informative value, in comparison with other major companies operating in the market research sector. Where income is mentioned below, this is the adjusted operating income. The margin is the ratio of adjusted operating income to sales. The adjusted operating income is calculated as follows:
1) Growth adjusted by ination, based on sales in local unit of currency Source: esomar Industry Report 2010
Particularly in difcult economic times, the global presence of a market research organization represents a decisive competitive edge, as only well-positioned companies can develop promising markets such as China, Brazil or South Korea. Furthermore, clients increasingly require multi-country studies based on instruments that are not only highly innovative but also tailored to the respective culture. This is why the GfK Group further expanded its global full-service network again in 2010, maintaining its fourth place ranking in the top 10 companies in the market research sector.
MANAGEMENT REPORT
1) Growth in local currency, adjusted to take account of acquisitions/disposals 2) Estimated sales 3) Financial year ended in March 2010 Source: esomar Industry Report 2010, published in September 2010
Despite the unchanged ranking for the top 10 organizations, in 2009, the market research industry also reected the impact of the global economic crisis, while sales had remained stable worldwide in 2008, the rst year of the crisis. Particularly affected were budgets in the ad hoc and media segments which could be cancelled easily. But all signs pointed to a trend reversal, which started as early as the fourth quarter of 2009. This is especially true of the GfK Group. While esomar estimates that the industry grew by 3 % in 2010, the GfK Group expanded by 11.1 %. The crisis therefore only had a brief negative impact on the market research industry and the GfK Group.
74_GfK
Where statements herein refer to the number of employees, in principle, this represents the total number of full-time posts. For this purpose, part-time posts have been converted to equate to full-time posts. The gures on the business development of the GfK Group and any percentage changes are based on gures in eur 1,000. Accordingly, rounding differences may occur. The companies mentioned in the Management Report are referred to by their abbreviated names. The Additional information section of the Annual Report includes a list of the full names of all the companies indicated.
At eur 421.9 million, gross income from sales was up 20.1 % on the previous year. The 7.3 % increase in the cost of sales to eur 872.3 million was more than offset by the rise in sales. Selling and general administrative expenses rose by 7.1 % and amounted to eur 268.1 million in nancial year 2010. Income climbed from eur 147.2 million to eur 185.0 million. The operating margin reached 14.3 %, substantially higher than the previous years margin of 12.6 %. Highlighted items include costs relating to the biss tness and efciency program amounting to eur 6.7 million (2009: eur 16.0 million). The highlighted items also include write-ups and amortization on hidden reserves disclosed as part of the purchase price allocation amounting to eur 16.4 million (2009: eur 27.5 million). The gure comprises scheduled amortization of eur 11.8 million (2009: eur 15.7 million) and the balance of impairment losses and reversals amounting to eur 4.6 million (2009: eur 11.8 million). Furthermore, highlighted items include expenses of eur 9.8 million (2009: eur 3.0 million) for long-term variable remuneration systems as well as the remaining other operating income and expenses. These amounted to eur 15.4 million (2009: eur 11.8 million). The balance of exchange rate gains and losses included in this item stands at eur 7.3 million (2009: eur 4.8 million). Settlements amounting to eur 4.2 million (2009: eur 3.9 million) for posts which were not subsequently lled adversely affected the remaining other expenses.
MANAGEMENT REPORT GfK_75
2.2 GfK Group: best result in GfKs history With sales of eur 1,294.2 million, GfK signicantly surpassed not only the adjusted forecast in its half-year report 2010, but also the previous years gure. Overall, sales rose by 11.1 %. Currency effects increased sales by 3.6 %, while acquisitions added 0.2 %. The organic rise in sales amounted to 7.3 %.
Development of earnings1)
in eur million Sales Cost of sales Gross income from sales Selling and general administrative expenses Other operating income Other operating expenses ebitda as a percentage of sales Adjusted operating income as a percentage of sales Highlighted items Operating income as a percentage of sales Income from participations ebit as a percentage of sales Financial income Financial expenses Other nancial income Income from ongoing business activity Tax on income from ongoing business activity Tax ratio in % Consolidated total income Attributable to equity holders of the parent Attributable to minority interests Consolidated total income Earnings per share (undiluted) in eur
1) Rounding differences may occur
2009 1,164.5 813.2 351.3 250.3 24.0 36.1 159.1 13.7 147.2 12.6 58.3 88.9 7.6 3.9 92.8 8.0 6.2 23.5 17.3 75.5 14.9 19.8 60.5 51.0 9.5 60.5 1.42
2010 1,294.2 872.3 421.9 268.1 19.6 36.7 195.7 15.1 185.0 14.3 48.3 136.7 10.6 3.9 140.6 10.9 12.2 28.0 15.8 124.8 40.8 32.7 84.0 71.7 12.3 84.0 1.99
Change in % + 11.1 + 7.3 + 20.1 + 7.1 18.3 + 1.6 + 23.0 + 25.7 17.2 + 53.8 1.5 + 51.5 + 99.1 + 19.4 8.8 + 65.3 + 173.0 + 38.8 + 40.6 + 29.2 + 38.8 + 40.1
Operating income rose year-on-year by eur 47.8 million, or 53.8 %, to eur 136.7 million. The personnel cost ratio, which expresses the ratio of personnel expenses to sales, stood at 42.6 % (2009: 43.8%). In absolute terms, personnel expenses stood at eur 550.7 million (2009: eur 510.5 million). This reects the rise in the number of employees by 488 to 10,546 in total in 2010. The balance of write-ups and amortization/depreciation dropped from eur 66.3 million in the previous year to eur 55.1 million. Scheduled amortization/depreciation, especially on software and xtures and ttings, reduced slightly from eur 51.5 million in the previous year to eur 50.2 million. Impairment losses reduced by eur 6.9 million to eur 11.9 million. This reects the pleasing business performance and improved projections for the coming years. ebit in the GfK Group increased year-on-year by 51.5 % to eur 140.6 million. ebitda climbed from eur 159.1 million in the previous year to eur 195.7 million in nancial year 2010. At eur 3.9 million, income from participations corresponds to the previous years gure. Other nancial income, which is the balance of nancial income and expenses, amounted to eur 15.8 million in nancial year 2010. This represents an improvement of eur 1.5 million on the previous year. In addition to the reduction in liabilities to banks of eur 52.2 million, the fall in interest rates on the GfK Groups variable-rate liabilities also had a positive impact. Other nancial income includes income from currency hedges amounting to eur 3.4 million (2009: eur 0.2 million). This income compensates part of the negative currency balance reported in other income and expenses.
Overall, the above effects led to an increase in income from ongoing business activity of 65.3 % to eur 124.8 million in 2010. At 32.7 %, the income tax ratio was 12.9 percentage points above the ratio for the previous year of 19.8 %. The previous years ratio was inuenced by positive extraordinary effects and a signicant rise was therefore expected. In addition, part of the increase stems from a new tax regulation governing non-deductible expenses. There were also negative tax effects from previous years amounting to eur 2.4 million (2009: positive effect eur 2.3 million), primarily as a result of provisioning for tax risks at subsidiaries.
In eur million Assets Non-current assets Current assets Liabilities Equity Non-current liabilities Current liabilities
31.12. 2009
31.12. 2010
Change in %
1,157.9 363.5
1,232.2 417.7
+ 6.4 + 14.9
74.7 25.3
The GfK Group: Income and consolidated total income 2008 2010 in eur million
2008 + 158.7 + 82.0 + 147.2 + 60.5 + 185.0 + 84.0
Consolidated total income
Total assets
2009
2010
Income
The GfK Groups consolidated total income therefore increased from eur 60.5 million in the previous year to eur 84.0 million in 2010. This corresponds to a rise of 38.8 %.
MANAGEMENT REPORT
The changes on the liabilities side include a decrease in noncurrent liabilities of eur 14.9 million and a rise in current liabilities of eur 19.0 million. In the long-term segment, the change results primarily from the eur 34.6 million decline in non-current nancial liabilities and simultaneous increase in long-term provisions of eur 16.3 million. In the short-term segment, the reduction in current nancial liabilities of eur 33.6 million was more than offset by the rise in other current liabilities, especially liabilities to employees, of eur 22.4 million and the increase in liabilities on orders in progress of eur 18.0 million. Furthermore, future purchase price obligations for acquisitions (put options and bonds) fell by eur 18.0 million to eur 60.2 million. Equity also climbed from eur 553.0 million in the previous year to eur 677.5 million. This change in equity is essentially due to the expansion in retained earnings of eur 51.9 million and the increase in other reserves of eur 54.8 million. Most of this line item is attributable to currency uctuations not affecting income, which stem particularly from the revaluation of the us dollar, British pound and Swiss franc. The equity ratio increased as at December 31, 2010 by 4.8 percentage points to 41.1 % (2009: 36.3%).
76_GfK
Net debt, dened as the balance of cash, cash equivalents and short-term securities less interest-bearing liabilities and pension obligations, fell from eur 499.8 million to eur 428.5 million. In addition to the decline in bank liabilities of eur 52.2 million, this reected the eur 18.0 million decrease in future purchase price obligations for company acquisitions to eur 60.2 million reported under other interest-bearing liabilities. This is primarily due to the exercising of options for Adimark Chile, GfK Mode India, Shopping Brasil and the GfK Kynetec Group.
The decline in net debt made a major contribution to the signicant improvement in all ratios of net debt to key balance sheet and nancial ratios.
MANAGEMENT REPORT GfK_77
Gearing and ratio of net debt to ebit, ebitda and free cash ow
2009 2010 63.2 % 3.05 2.19 3.47 Gearing (net debt/equity) Net debt/ebit 90.4 % 5.39 3.14 5.84
30.3
85.8
+ 183.3
2.3 Mandatory information under company law (Section 315 (4) of the German Commercial Code hgb) The share capital of GfK se amounts to eur 151,156,968.76 as at December 31, 2010, divided into 36,274,090 no-par value bearer shares. There are no restrictions in the Articles of Association relating to voting rights or the assignment of shares. All shares carry the same rights. GfK-Nrnberg Gesellschaft fr Konsum-, Markt- und Absatzforschung e.V. (the GfK Association), Nuremberg, has a direct holding of 56.45 % of the voting rights in GfK se. The company has not received notication of any other shareholders with a stake of 10 % or more of the capital. Employees with an interest in the capital exercise their voting rights directly. Pursuant to Article 5 of the Articles of Association of GfK se, the Supervisory Board is responsible for determining the number of members of the Management Board. The Supervisory Board appoints the members of the Management Board for a maximum term of ve years. Appointment for one term or several reappointments for a maximum term of ve years is permitted. The Supervisory Board may appoint one member of the Management Board as the ceo and one or more as Deputy ceos. In addition, the legal regulations on appointing and removing members of the Management Board (Sections 84, 85 of the German Stock Corporation Act, AktG) apply. The Articles of Association do not contain any regulations that exceed the statutory requirements of Sections 133, 179 of the German Stock Corporation Act (AktG). Pursuant to Article 20 of the Articles of Association of GfK se, unless otherwise stipulated by mandatory legal regulations, resolutions to amend the Articles of Association require a majority of at least two-thirds of the valid votes cast, or where at least half of the share capital is represented, a simple majority of the votes cast. In cases where the law additionally requires a majority of the share capital represented when the resolution is adopted, a simple majority of the share capital represented will sufce unless a different majority is stipulated by law. The authorization to acquire own shares dated May 20, 2009 has been rescinded for the period from the coming into force of the following new authorization. By resolution of the Annual General Meeting on May 19, 2010, up until May 18, 2015, pursuant to Section 71 (1) clause 8 of the German Stock Corporation Act (AktG), the company is authorized, with the consent of the Supervisory Board, to acquire own shares up to a maximum of 10 % of the share capital in place at the time when the authorization came into force. Together with other shares held by the company or attributable to it pursuant to Sections 71 a ff of the German Stock Corporation Act (AktG), the shares acquired may not account for more than 10 % of the share capital at any time. The authorization may not be used by the company for the purposes of trading in own shares. The authorization can be exercised by the company, or by third parties for the account of the company, in whole or in part, once or on several occasions, to meet one or several purposes. The acquisition of own shares takes place as the Management Board chooses through a purchase offer addressed to all share-
holders or by means of a public call to issue such an offer or via the stock market. If the shares are acquired via the stock market, the price per share paid by the company (excluding incidental acquisition costs) may not be more than 5 % above or 5 % below the price per share determined in xetra trading (or comparable successor system) in the opening auction on the trading day. If the acquisition is carried out via public purchase offer or public call to issue such an offer, the purchase price offered or minimum and maximum of the price range per share (excluding incidental acquisition costs) may not be more than 10 % above or below the closing price in xetra trading (or comparable successor system) on the trading day prior to the day of publication of the offer or call to issue such an offer. If, after publication of a purchase offer or public call to issue such an offer, signicant deviations from the relevant price occur, the offer, or call to submit such an offer, may be adjusted. In this case, any adjustment will be based on the closing price in xetra trading (or comparable successor system) on the trading day prior to the day of publication. The purchase offer or call to submit such an offer may contain further terms and conditions. If the purchase offer is oversubscribed or if, in the event of a call to submit an offer, not all of several equal offers can be accepted, acceptance can be carried out by quotas. Preferential acceptance of low numbers of up to 100 shares per shareholder can be stipulated for the acquisition of shares offered. The Management Board is authorized, with the consent of the Supervisory Board, to use the shares acquired by virtue of this authorization, earlier authorizations or otherwise acquired pursuant to Sections 71ff German Stock Corporation Act (AktG) for all legally permissible purposes, especially the following: The shares can also be sold by means other than via the stock market or through an offering to all shareholders providing the cash price paid for the shares at the time of the sale is not signicantly below the stock exchange price for similar shares in the company, whereby the relevant stock market price within the meaning of the above regulation is the mean of the closing prices for shares in the company in xetra trading (or comparable successor system) during the last ve trading days before sale of the shares; in this case, the number of shares to be sold may not exceed 10 % of the share capital of the company at the time when the resolution was passed by the Annual General Meeting today or if lower 10 % of the registered capital of the company at the time of the sale of the shares; this 10 % of the share capital limit includes those shares issued during the term of validity of this authorization in direct or corresponding application of Section 186 (3) clause 4 of the German Stock Corporation Act (AktG) with simplied exclusion of subscription rights; furthermore, this 10 % of the share capital limit includes those shares issued to service convertible bonds with conversion rights and/or option rights, where the convertible bonds are issued during the term of validity of this authorization pursuant to Section 186 (3) clause 4 of the German Stock Corporation Act (AktG) excluding subscription rights. The shares can be offered or transferred to third parties as part of a merger of companies or acquisition of companies, parts of companies or participations or acquisition of other assets.
MANAGEMENT REPORT
78_GfK
The shares can be used to meet conversion and/or option rights and obligations in relation to convertible bonds or bonds with warrants issued by the company or Group companies. The shares can be called in without the call-in or its implementation requiring a further resolution of the Annual General Meeting. The call-in will lead to a reduction of the capital. In deviation from this, the Management Board can decide that the share capital will not change as a result of the call-in pursuant to Section 8 (3) of the German Stock Corporation Act (AktG). In this case, the Management Board is authorized to amend the number of shares in the Articles of Association. The authorizations can be exercised once or on more occasions, separately or together, for all or part of the volume of own shares acquired. The subscription right of shareholders to these shares is excluded to the extent that the shares are being used in accordance with the above authorization. GfK se does not have any compensation agreements with the members of the Management Board and the employees in the event of a takeover offer.
Media: The Media sector delivers information services on range, intensity and type of media usage and acceptance in 30 countries in Europe and the usa. The data source for the Media sector comprises tv, radio, print and online media. The services are directed at clients from media companies, agencies and the branded goods industry. The range of available services includes continuous, as well as special one-off studies and analyses.
Other 0.4
1) Rounding differences may occur
Media 10.3
Custom Research: The Custom Research sector supplies information and consulting services for operational and strategic marketing decisions in over 80 countries worldwide. Point of consumer is the data source for the Custom Research sector. Custom Research offers a broad spectrum of tests and studies, in particular for product and pricing policy, brand management, communications, distribution and customer loyalty. In line with the product lifecycle model, GfK monitors products and services from development and launch through maturity to saturation phase. Retail and Technology: Point of sale is the data source for the Retail and Technology sector. The information and consulting services are based on retail data from continuous surveys and analyses of consumer goods and services in the retail sector in more than 80 countries worldwide. The services comprise regular surveys on the following market segments: automotive accessories and parts, ofce communications, diy and garden, electrical household appliances, photographic technology and optics, it, fashion, telecommunications, tourism, consumer electronics and entertainment media.
Media 8.4
1) Rounding differences may occur Other 4.1 % not taken into account on the chart
Margin by sector in %
Custom Research + 5.6 + 8.0 Retail and Technology + 29.4 +30.7 Media + 13.1 + 11.7
Actual 2009 Actual 2010
GfK_79
MANAGEMENT REPORT
GfK offers its clients from the consumer goods industry, retail, media and the service sector a comprehensive range of information and consulting services in the three sectors Custom Research, Retail and Technology and Media. The sectors are based on the respective sources of the data required for the offering: point of consumers, point of sale and point of media.
Other: The sectors are supplemented by the Other division, which, in particular, covers GfKs central services for its subsidiaries and other services not related to market research. The division includes parts of GfK Austria, parts of GfK cr Group usa, parts of GfK iss, parts of GfK Malta Group and parts of GfK Switzerland, GfK Data Services, GfK Marketing Sciences and departments of GfK Group Services.
Economic development: impact of the crisis more than offset All three GfK sectors increased their sales in nancial year 2010. The Custom Research and Retail and Technology sectors recorded signicant increases in income, with Retail and Technology further improving its already high margin. Custom Research: Custom Research is the sector with the highest sales in the GfK Group and in 2010 it overcame the nancial and economic crisis and substantially increased sales to eur 785.6 million. Sales were up 10.8 % year-on-year, with 6.4 percentage points of this attributable to organic growth. One key factor driving this pleasing growth in sales was the upturn in business with clients from the automotive and nancial market sectors. Further growth was generated in nancial year 2010 in it and telecommunications, as well as with new clients and market research instruments such as the GfK Media Efciency Panel. The GfK Media Efciency Panel is a single source approach that is unique worldwide and combines exposure to advertising on the internet and tv with the purchase of fast moving consumer goods. This makes it possible to evaluate the sales success of tv and online advertising campaigns. Development was particularly positive in the Western Europe/Middle East/Africa region, which recorded the strongest sales growth. Substantial increases were also seen in the Germany, Central and Eastern Europe, and Latin America regions. Furthermore, acquisitions added 0.6 percentage points, while currency effects had a positive impact on sales with growth of 3.7 percentage points. GfK also strengthened its network in the usa with the acquisition of consultancy company Interscope, one of the leading specialists in brand positioning in retail. In terms of income, the sector recorded the highest growth rate with a disproportionately strong rise of 59.9 % to eur 63.2 million. The margin improved in nancial year 2010 from 5.6 % to 8.0 %. Alongside positive development in the economic framework conditions, which led to higher capacity utilization, the biss tness and efciency program also contributed to the income increase. At 54.1 percentage points, nearly all of the expansion in income is based on organic growth. In addition, currency inuences added 4.9 percentage points to this positive development, while 0.9 percentage points stemmed from acquisition-related changes.
Custom Research: breakdown of growth of sales and income in %1)
Total growth + 10.8 + 59.9 Growth from acquisitions + 0.6 + 0.9 Organic growth + 6.4 + 54.1 Currency effects + 3.7 + 4.9
Sales Income
Retail and Technology: Once again in 2010, the sector continued the success recorded in previous years, with Retail and Technology sales increasing by eur 45.0 million to eur 370.8 million. Organic growth accounted for 10.8 percentage points of the overall expansion of 13.8 %. Currency inuences contributed 3.6 percentage points to growth, while acquisitions accounted for a decline in sales of 0.6 %. This effect is due to the transfer of surveys for fast moving consumer goods from GfK Switzerland to The Nielsen Company. The GfK StarTrack global production and reporting system facilitates cost-effective production to the same standards worldwide and forms the basis for continuous sales growth. Development in 2010 was positive in all core segments, such as consumer electronics, telecommunications, it, photographic technology and major and small domestic appliances. Telecommunications and small domestic appliances recorded the highest growth rates here. There was also dynamic growth in the new tourism and fashion segments. In addition, higher order volumes in business activities with major clients have been achieved. All GfK regions contributed to the growth in sales, with a major share achieved in the Asia and the Pacic region. After a decline in sales in the previous year, the Western Europe/Middle East/Africa region also reported positive growth rates again.
MANAGEMENT REPORT
80_GfK
In nancial year 2010, the sector, which has the highest income in the GfK Group, signicantly increased its income by 18.8 % to eur 113.9 million. At 13.4 percentage points, growth was largely organic. Currency effects increased income by 4.2% and acquisitions by 1.1 %. The margin rose again from the previous years already very high level of 29.4 % to an excellent 30.7 %.
At eur 15.6 million, the level of income in nancial year 2010 did not match the gure in the previous year (eur 16.6 million). In organic terms, the decline in income amounted to 11.1 percentage points, while currency effects improved income by 5.2 percentage points. This decline in income was primarily due to increased expenses for the roll-out of the new measurement technology in Germany and the resultant rise in scheduled depreciation for this and the special production and evaluation software. To secure existing business in the long term and to develop new business potential, an additional eur 4 million was dedicated to the new GfK AdMeasure product from subsidiary GfK mri as well as to stable panel operations using the new measurement technology in Germany. In nancial year 2010, the sector achieved a margin of 11.7 % (2009: 13.1 %).
Media: key gures1) Retail and Technology: breakdown of growth of sales and income in %1)
Total growth + 13.8 + 18.8 Growth from acquisitions 0.6 + 1.1 Organic growth + 10.8 + 13.4 Currency effects
Sales Income
+ 3.6 + 4.2
+ 5.3
0.0 0.0
Media: The ongoing growth trend of the rst three quarters of 2010 continued in the fourth quarter. Sales in the sector increased year-on-year by 5.3 % to eur 133.1 million, with organic growth contributing 2.1 percentage points and positive currency effects 3.2 percentage points. In the North America and Germany regions as well as Central and Eastern Europe, development was very positive. The Media sector achieved increased sales with clients in the tv segment in particular. North American subsidiary GfK mri recorded a year-on-year rise in incoming orders in the print segment following the market launch of the new GfK AdMeasure product. In Germany, the new, expanded measurement technology tc Score, which was launched in 2009 in the GfK Fernsehforschung tv panel, was the main contributor to higher sales. Surveys carried out in the multi-media studies segment included, amongst others, one for the British Broadcasting Corporation (bbc) covering internet usage and other media channels as well as tv. In addition, the tv audience measurement contract in the Netherlands was extended again. Increased incoming orders in the region Central and Eastern Europe, especially in the tv and print sector, also contributed to the positive development in the nancial year.
+ 2.1
+ 3.2 + 5.2
Sales
Income
GfK_81
MANAGEMENT REPORT
Other: Sales in this division amounted to eur 4.7 million in the reporting period (2009: eur 3.1 million). The income shortfall stood at eur 7.7 million (2009: eur 4.8 million). This was due to higher expenses for personnel and consulting services as well as general business costs, especially in Central Services. The number of employees rose in the Other division in nancial year 2010 by 22 to 467 full-time posts.
Region Latin America Asia and the Pacic Central and Eastern Europe Latin America North America and Western Europe/ Middle East/ Africa Asia and the Pacic North America Latin America Germany Western Europe/ Middle East/ Africa
GfK Kleiman Sygnos 2009 3.1 4.8 445 2010 4.7 7.7 467 Change in % + 50.0 60.0 + 4.9 GfK Mode Interscope GfK Kynetec
Share increase
From 51 to 100
Custom Research Custom Research Retail and Technology Custom Research Media
2.5 Regions: growth in all regions The GfK Groups 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 Pacic: Germany Founded in 1934, GfK has been conducting research in its home market for 76 years. Since the 1960s, GfK has been extending its international network from its base in Germany. Western Europe/Middle East/Africa GfK has been active in Western Europe since the 1960s and covers 16 countries in total. GfK is represented in 13 countries in the Middle East and in a total of 15 countries in Africa. Central and Eastern Europe GfK established its rst subsidiary here in 1989. Today, GfK covers 22 countries. North America GfK was rst represented in the usa in 1999 with a subsidiary. In 2005, GfK also entered the market in Canada. Latin America Having started with its own company in Brazil in 2002, GfK now operates in 13 countries. Asia and the Pacic This region joined the GfK network in 1985. In 2010, GfK covered 20 countries.
MANAGEMENT REPORT
GfK recorded increased sales in all regions in nancial year 2010, with particularly strong growth in the Latin America, Central and Eastern Europe and Asia and the Pacic regions. Together these regions accounted for around 19 % of Group sales. In the fastgrowing bric countries, GfK has already established major market positions which it expanded in 2010. While growth in the North America region was driven by currency effects, Germany showed a substantial recovery following the nancial and economic crisis.
82_GfK
Germany: In nancial year 2010, sales by the GfK companies in Germany rose by 13.1 % to eur 340.8 million. This positive development was primarily attributable to the Custom Research and Retail and Technology sectors. GfK is the clear market leader in Germany.
Central and Eastern Europe: The GfK companies in the region achieved sales totaling eur 89.7 million in nancial year 2010, compared with eur 71.7 million in the previous year. In local currency, sales were up by 20.7 %. The currency effect amounted to 4.5 percentage points. Overall, sales increased by 25.2 %.
Western Europe/Middle East/Africa: As before, GfK generated the highest proportion of sales in this region in nancial year 2010. Overall, sales here rose by 5.4 % to eur 483.0 million. Organic growth added 3.3 percentage points to sales, while currency effects accounted for 2.5 percentage points.
North America: GfK generated sales of eur 219.3 million in North America, compared with eur 207.2 million in nancial year 2009. For the full year, positive currency effects increased sales by 6.0 percentage points. In organic terms, sales remained almost unchanged during the reporting period, at 0.8 percentage points. This is primarily due to reduced HealthCare activities in the Custom Research sector. Acquisitions offset this effect with 0.7 percentage points.
Change in % + 5.4 + 1.4 In eur million Sales Number of employees 2009 207.2 936 2010 219.3 931
GfK_83
MANAGEMENT REPORT
MANAGEMENT REPORT
Moscow London
Frankfurt am Main
84_GfK
Dubai
New York
Singapore
GfK_85
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Latin America: Compared to the previous year, the GfK Group increased its sales by 39.5 % to eur 54.9 million in the Latin America region during the reporting period. Currency effects added 12.0 percentage points to sales, while acquisitions increased sales by 5.4 percentage points. The region achieved the highest organic sales growth in the GfK Group.
3.1 Custom Research Within the Custom Research sector in Germany, GfK Panel Services equipped the participants of its GfK Media Efciency Panel (GfK mep) with modied mobile phones in April. These enable participants exposure to tv advertising to be registered through sound recognition. The GfK Media Efciency Panel uses a globally unique single-source approach, which links advertising exposure on the internet, and more recently through the television, to the purchase of fmcgs. As a result, GfK is able to evaluate the sales impact of online and tv advertising campaigns. The GfK Media Efciency Panel is based on GfKs household panel, which comprises approximately 30,000 German households that report their purchases on a daily basis. In addition, the GfK mep is also used in the Netherlands and in partnership with Kantar WorldPanel in the uk. GfK is currently assessing potential areas of application in France, Japan and the usa. GfK WebValue allows GfK to offer an up-to-date insight into all relevant key gures for German households internet use on a monthly basis. The tool measures the reaches of around 20,000 domains and also provides detailed analyses for more than 3,000 domains. GfK WebValue identies which pages are visited, and in what order, by various target and lifestyle groups, and reveals correlations between the use of the internet and consumption of other media. In the medium term, this new tool is set to be implemented in all countries where there is a GfK Media Efciency Panel.
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Asia and the Pacic: Sales rose by 22.5 % from eur 86.9 million in 2009 to eur 106.5 million in 2010. Consequently, the region broke through the eur 100 million barrier for the rst time. Organic growth in sales stood at 9.1 percentage points. Acquisitions increased sales by 0.9 percentage points, while positive currency effects added 12.5 percentage points.
1)
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In partnership with SirValUse, GfK has developed an index to represent a websites usage intensity as a single gure: the GfK WebValue Index (wvi). In contrast to traditional reach measurement, the index provides data on qualitative usage characteristics e.g. retention (loyalty), power user, bounce rate, page impressions and length of visit for 5,000 different websites at present. The index value can be between 0 and 100, with the GfK wvi increasing the more intensively a website is used. With this information source, GfK and SirValUse are establishing a currency that allows websites to be qualitatively compared, both within an industry and across different industries. Reports are currently compiled on a quarterly basis for the automotive, e-commerce, games and travel industries. The objective is to include all industries that are represented online. GfK MarketObsurvey.dx enables GfK to analyze the online behavior of specic target groups. The special feature of this instrument is that it combines both qualitative and quantitative data derived from monitoring and surveys. Clients can therefore gain a more in-depth insight into the usage patterns of their target group, their motives and strategies when searching for information, and the latest trends: what weighting do different online services have in users research? How do users become aware of an online service? How do they behave on the websites of competitors? What role do advertising, search engines and user opinions play? And how do users evaluate these experiences? What do they like and dislike? GfK MarketObsurvey.dx identies relevant websites and the interaction between the research and opinion-forming processes. Users can also be asked for their situation-specic opinions and assessments, whether in the form of closed questions, rating scales, open comments or a diary. In relation to specic websites, ndings such as user frequency, dwell time and intensity are recorded within previously dened categories. By categorizing relevant websites into different user groups, GfK can chart where users nd information, purchase products or make recommendations. The technology used as a basis for this, which is provided by nurago, can be applied in usability and media research for exploring various issues which are not limited in terms of time or to the companys own website. GfK SiteObsurvey.dx combines the monitoring of natural website surng behavior with targeted satisfaction surveys in order to analyze the strengths and weaknesses of an online presence. This allows a websites limitations or barriers to be revealed. Clients can use the ndings they obtain to improve the user experience and conversion rate for their website. Alongside ad hoc surveys, GfK can use this method to continuously measure user experience. Data obtained by GfK records to what extent individual objectives have been reached, both objectively and subjectively, how different motives impact on user satisfaction, the needs and preference of the user and the impact of user experience on the perception of a brand.
GfK ExposureEffects.dx allows clients to evaluate online campaigns and compare their current exposure within a target group with the media plan. By using cookies in the online panels, GfK ExposureEffects.dx can identify which consumer proles have been reached by particular websites featuring an advertising campaign. The comparison between consumers who have been selected for a specic campaign and those who have not been chosen allows advertising impact to be measured effectively. In conjunction with a subsequent survey of users who have been reached by the campaign, conclusions about perceptions of advertising can be drawn. GfK Marktforschung uses the GfK Ceres tool to investigate the online information exchange between consumers about different brands. To achieve this, forum contributions are evaluated and researchers subsequently identify what topics have been discussed and which product attributes were assessed positively or negatively. This allows GfK to determine trends at a very early stage and evaluate authentic information about majority opinion without any interviewer interference. In order to establish the impact of online social media platforms such as Facebook and Twitter on the development of certain products brand images, this data is combined with the new GfK Brand Buzz Miner dx. This new approach establishes the impact that online buzz, created through information exchange on social networks, has on brand image and consumers purchasing behavior. Previously, it was difcult for companies to evaluate new technical concepts or new technology applications prior to their market launch, as there were no corresponding comparative tests in the respective categories. Using the newly developed GfK TechTest, it is now possible to compare new concepts and ideas with similar concepts and existing products prior to product development. This facilitates swift and effective feedback to support clients during important developments and market launches and, at the same time, save on development costs. So how does it work? If a company has an idea, a GfK graphic designer prepares a storyboard. GfK then sets up an online survey with the relevant target group to test the appeal and uniqueness of the idea, its importance and credibility, as well as how willing potential customers would be to pay for it. GfK TechTest enables marketing and development departments to quickly assess whether a new product can be successfully launched in the market. GfK evaluates every new concept in the context of similar offerings to support clients in their decisions for or against a market launch and makes recommendations regarding the best introductory price and optimal product positioning. Products already in the market can also be evaluated using GfK TechTest, for example to specify a new price strategy or relaunch a product. GfK TechTest was developed in the uk in 2009 and launched in Germany and the usa in 2010. Other countries will follow in 2011.
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G f K SiteObsurvey.dx
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GfK SiteObsurvey.dx combines the monitoring of natural website surfing behavior with targeted satisfaction surveys in order to analyze the strengths and weaknesses of an online presence. This allows a websites limitations or barriers to be revealed. Data obtained by GfK records to what extent individual goals have been reached, both objectively and subjectively, and how different motives impact on user satisfaction.
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New software developed by GfK GeoMarketing, GfK RegioGraph Strategy, is the big brother to the previous versions, GfK RegioGraph Analysis and GfK RegioGraph Planning. This software opens up entirely new areas of application, enabling companies in the elds of retail sales and industry to evaluate comprehensive data on areas of potential, at both regional and even more localized levels, on digital maps. This software solution seamlessly combines GfKs entire regional database with software-supported map analyses. The ofcial product launch of GfK RegioGraph Strategy took place at CeBIT 2011. Qualitative market researchers are often confronted with the problem that participants in group discussions tend to rationalize and justify their attitudes, which does not actually bring to light what truly moves, drives and inuences them. In this respect, GfK Inside Journey offers a valuable addition to the qualitative method range. This new practice can be applied within focus groups and is based on dialogic introspection, a method that was developed under Professor Kleining of Hamburger Forschungswerkstatt (Hamburg Research Workshop) and has been modied for application in market research by GfK. For this method, participants engage with a topic or stimulus for much longer and more intensively and precisely observe their own reactions and perceptions. They subsequently report their reactions without being asked any questions or inuenced in any way. This generates exceptionally in-depth, unadulterated and multifaceted insights into consumers experiences. This year, the process has been successfully implemented in countries as wide-ranging as China, Mexico, India, Russia, Egypt and the usa. The GfK Automotive Pricing Tool (apt) is a further development of the traditional pricing approaches and is specically tailored to the special features of the automotive market. The tool comprises ve modules, which cover the different aspects of price determination. One module, GfK coreprice, is a conjoint-based instrument for the pricing of car models in the competitive environment. The second core module, GfK dyo Cconcept, relates to the pricing of equipment parts, enabling clients to gain information about price optimization of equipment ranges. The other modules relate to questions of equipment packaging and the scope of standard equipment for cars. GfK apt has so far mainly been coordinated from Germany and applied in Europe, but will be rolled out internationally from 2011. Two expert teams are being established in the usa and China, and these will support GfK clients on the American continent and in Asia with pricing research. Since 2010, the GfK roi Evaluator has allowed fmcg clients to evaluate the sales impact of the individual components making up a marketing campaign prior to nationwide implementation in the test market GfK MarketingLab. Clients obtain precise information, in the form of driver analysis, about the current return on investment of each individual marketing activity. This allows them to optimize the sales potential of their marketing mix. Through this method, GfK is able to provide answers to the following questions: how high will the overall sales increase be as a result of the new marketing campaign? And how strong is the impact of each individual measure within the marketing mix?
3.2 Retail and Technology GfK Network Intelligence Solution (GfK nis) is a new research methodology based on the analysis of information transiting on the internet protocol (ip) ow on mobile networks. This innovative technology makes it possible to monitor mobile internet behavior and exposure to advertising campaigns in real time. Analysis is then carried out via the GfK StarTrack online portal.
3.3 Media From April to November 2010, GfK mri in the usa explored the most effective way to survey magazine readers on their use of digital formats. The aim is to add new, appropriate questions on the topic of digital reading to the half-yearly magazine readership survey The Survey of the American Consumer. The pilot study is based on 1,000 in-home interviews with us consumers. In terms of content, the survey focuses on the consumption of print magazines, magazine websites, electronic magazines, and mobile magazines, which can be accessed via mobile phones, smartphones or mobile applications, as well as the use of e-readers such as the new iPad. GfK will be able to use the most conclusive statements to ensure that future surveys use wording that is intelligible and clear to all. Intomart GfK, based in the Netherlands, is further expanding its Appreciation Panel, an evaluation panel for tv, radio and internet. The system is structured in such a way that panel members are asked about their daily tv, radio and internet consumption and provide their assessment and perception of the content. The panel is currently active in the Netherlands, the uk, Germany and Ireland. The Universal Meter System (ums) is a complete media measuring instrument, which elevates the standard of media research to an entirely new level. This combination of different measuring technologies in a central measuring instrument aims to incorporate as many electronic types of media consumption as possible. The central element is the xed meter device (umx), which records all household media consumption through the television. By integrating the Mediawatch portable meter, which is worn by the participant and measures individual radio, tv and print consumption, GfK can also measure out-of-home consumption in addition to the media consumption in the home. The internet meter usx measures media consumption on the computer, as well as internet usage in general, using a special usb stick. Finally, GfK uses an additional device, the ip Sniffer, to register the tcp/ip data ow from ip set-top boxes. This allows information about channels, time-shift tv and video on demand to be collected.
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MODULE 1
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The GfK Automotive Pricing Tool (apt) is a further development of the traditional pricing approaches and is specifically tailored to the special features of the automotive market. The tool comprises five modules, which cover the different aspects of price determination.
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4. human resources
4.6 Employees As at the end of nancial year 2010, the number of employees in the GfK Group amounted to 10,546. This is a rise of 488 employees, or 4.9 %, on the previous year, with 0.7 percentage points of this increase resulting from acquisitions and new consolidations. 8,715 members of staff were employed at foreign GfK companies, an increase of 447 on 2009. In total, 82.6 % of GfK employees worked outside Germany, and internationalization therefore remained at a very high level compared with the previous year. The Asia and the Pacic and Central and Eastern Europe regions recorded the biggest increase in personnel numbers. In Asia and the Pacic, the expansion of resources in Pakistan for a coding project in the Retail and Technology sector and the transfer of employees from a panel acquisition in China contributed to the rise. In Latin America, a newly consolidated company in Peru, in particular led to higher personnel numbers. There were only marginal changes in the number of employees in other regions. At sector level, the increase in personnel was attributable to Retail and Technology and Custom Research, with the number of employees in the Media sector remaining virtually unchanged on the previous year.
4.1 Global employee survey In October 2010, the third global Employee Engagement Survey was carried out. 82 % of all GfK employees worldwide took part in the survey, demonstrating the high level of acceptance of this initiative. Various measures were implemented throughout 2010 to promote engagement at global and local level. Overall, the Employee Engagement Index (eei) of the GfK Group remained constant, although many GfK companies recorded a signicant rise on their previous eei.
4.2 Succession Management The global roll-out of GfKs Succession Management system, which is supported by a network of certied hr experts, progressed swiftly in 2010. The aim is to identify employees who could take on a higher level of responsibility in the future. To achieve this, several hundred interviews were conducted in 2010.
4.3 Retention Given the positive economic development in the industry, an increased willingness to change companies is to be expected. Consequently, GfK has created a comprehensive set of retention tools. Targeted action plans are drawn up on the basis of an analysis of individual motives for resigning.
Number of employees by sector in %1)
Custom Research 57.1 Retail and Technology 33.3
4.4 Diversity At GfK, diversity is the inclusion of different thinking, experiences and backgrounds across all entities and organizational levels. For GfK, diversity means more then gender and race: its about the experiences, expertise and knowledge that a person has gained. A diverse workforce not only enriches GfKs corporate culture, but also broadens the talent base, supports GfKs global growth and the companys image as an attractive employer. GfK has already achieved a great deal in this regard. More than 80 % of our employees are based outside Germany and women make up 54 % of our global workforce. At senior and middle management levels, the percentage of women amounts to around 30 % and women make up 50 % of GfKs Management Board.
Total 100%
Other 4.4
Media 5.3
Total 100%
4.5 Further training and organizational development In 2010, a range of initiatives to promote further training and personnel development were launched within GfK. The Retail and Technology sector introduced its sophisticated e-Learning system Path to Knowledge worldwide. The Custom Research Academy was also re-launched with a focus on strategically important training initiatives. 4.7 Staff turnover The staff turnover rate at the GfK Group expresses the number of employee resignations in relation to the average number of employees in the Group in the nancial year. In 2010, this ratio climbed by 3.5 percentage points to 12.8 % (2009: 9.3 %). After staff turnover reduced considerably in 2009 as a result of the global nancial and economic crisis, the economic recovery led to an upturn in the labor market. Nevertheless, the staff turnover rate remained below the level recorded before the crisis (2008: 13.5 %).
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4.8 Total remuneration and shares of the Management Board and Supervisory Board Information on the remuneration of the Management and Supervisory Boards and their shareholdings is given in the tables and explanations in the remuneration report in the Corporate Governance report on page 21ff. There were no loans or advances to members of the Management and Supervisory Boards.
6. corporate governance statement in accordance with section 289 a of the german commercial code (hgb)
The management of GfK se is committed to increasing the value added of the company on a responsible, transparent and sustained basis. This includes policy principles and guidelines, as well as cooperation based on trust. By adopting the Corporate Governance Code, GfK se demonstrates that it complies with the rules of good corporate governance and monitoring and is transparent in its relations with national and international investors. The Corporate Governance Statement, including the full version of the Declaration of Compliance, as well as details of corporate governance practices and a description of the Code of Conduct of the Management Board and Supervisory Board are published under: http://www.gfk.com/group/investor/corporate_guidelines/ declaration_on_corporate_governance/index.en.html The Corporate Governance report can be found on pages 18ff of this Annual Report.
7. purchasing
The GK Group is run by a Management Board consisting of six members. In nancial year 2010, Dr. Gerhard Hausruckinger joined as the successor to Dr. Grard Hermet. As a result, from September to the end of the year the Management Board comprised seven members. The Chief Executive Ofcer (ceo), Professor Dr. Klaus L. Wbbenhorst, is responsible for Strategy, Internal Audit, Marketing Sciences, Corporate Communications and it Services. The Chief Financial Ofcer (cfo), Pamela Knapp, is responsible for Finance, Accounting, Controlling, Tax, Mergers and Acquisitions, Legal and Compliance, Human Resources and Central Services. The role of Chief Operating Ofcer (coo) for the three sectors Custom Research, Retail and Technology and Media is performed at Management Board level as follows: The Custom Research sector is headed up jointly by three members of the Management Board: Petra Heinlein, Debra A. Pruent and Wilhelm R. Wessels. Up to the end of 2010, the Retail and Technology sector was headed by Dr. Grard Hermet. As of September 1, 2010, he was jointly responsible for the sector with Dr. Gerhard Hausruckinger. The Media sector is managed by Wilhelm R. Wessels.
Purchasing traditional capital goods is of minor importance for GfK and its business activities. The purchasing processes for which centralized purchasing or uniform standards are practical comprise it products and services, travel, ofce space and other items of standard ofce equipment. The Global Procurement Guidelines and Global Travel Policy were implemented to ensure uniform processes worldwide. The moveIT project, which was set up for it products and services in 2008, will be completed in 2011. This is aimed at providing a global it infrastructure for GfK and standardizing and consolidating services in the eld of it. Three computing centers act as the central service provider for all companies in the GfK Group. Purchasing of it and telecommunications infrastructure and products is carried out under centrally negotiated terms used by all companies in the GfK Group. An online purchasing tool for ofce supplies has been available since the end of 2010. At the start of 2011, GfK began work to optimize its worldwide travel management with a travel agent. Implementation of an online booking tool that can be used worldwide, coupled with additional local support in the various countries, should lead to optimization of terms and conditions and hence a reduction in costs. The same applies for real estate management, where a centralized it-based contract management procedure was introduced together with a global provider. In the next step, contracts are continually reviewed and optimization potential identied using ongoing portfolio analysis. All other purchasing processes are regulated in a set of guidelines and the individual departments are responsible for carrying out these processes in compliance with the specied regulations.
5.2 Administration: Group-wide functions centralized In Group Services in the GfK Group, the Finance, Legal Services and Transactions, Human Resources, Central Services and Corporate Communications departments fulll centralized functions throughout the Group. The Finance department includes Group Accounting, Financial Accounting, Operational Accounting, Group Controlling, Tax and Group Treasury. The Legal Services and Transactions department deals with legal matters and compliance.
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8. environment
The careful and responsible use of natural resources is important to the GfK Group. Through internal guidelines and recommendations, all employees are therefore urged to optimize consumption and observe the principles of environmental protection when carrying out their business activities and using consumables. The Central Services and it Services departments are responsible for the purchase and appropriate disposal of materials in Germany. Outside Germany, the individual GfK companies are responsible for these activities themselves.
9.2 Marketing: spotlight on industry events The GfK Group subsidiaries conduct their marketing activities independently but in close consultation with Corporate Communications. Trade fairs and conferences are a key element of marketing within the GfK Group. GfK appeared as the main sponsor at the major international market research trade fairs such as the arf (Advertising Research Foundation) Annual Convention in New York and the Annual Conference of market research association esomar in Athens. GfK companies worldwide also support national industry events, presenting papers and holding workshops on behalf of GfK.
10. internal control system for accounting 9. corporate communications and marketing
Corporate Communications is responsible Group-wide for the GfK Groups communications. The division is divided into three departments: Press Relations, Internal Communications/Corporate Identity and Investor Relations. The Investor Relations department and its duties are outlined separately in the chapter GfK Shares (pages 27ff) in the Image section of this Annual Report. The GfK Groups internal control and risk management system comprises the principles, structures, processes and measures introduced by the company management which are set to ensure the commercial success of the company, the correctness and reliability of internal and external nancial reporting as well as compliance with the appropriate laws and standards.
9.1 Communications: international networking Communications using digital media and international networking are becoming increasingly important for GfK. Of the press releases published on the Groups international website www.gfk.com, 31 % are focused on Germany, while 60 % center on other countries or the ndings of multi-country surveys. A year earlier, press releases from Germany still accounted for 43 %, with a total of 30 % attributable to press releases from other countries and multi-country surveys. The three sectors Custom Research, Retail and Technology and Media internationally linked and centralized their communications and marketing in 2010. In the Press Relations division, this is reected in the adjusted organizational structure, which is tailored to the needs of the three sectors, thereby strengthening the communications interface with operating activities. In 2010, the use of digital media was expanded and four videos of ceo Professor Dr. Klaus L. Wbbenhorst talking about GfKs nancial gures were published on the Group website for the rst time. Corporate Communications also began to introduce social media channels on GfK websites. Corporate Communications produced a total of eleven in-house communications videos for employees. The topics covered included ceo webcasts on nancial gures, GfKs brand positioning and strategy, and compliance. Corporate Communications informed employees of news throughout the Group in 33 international and 15 German newsletters sent out by email. In December, GfK published Social Media Guidelines offering guidance on how employees can appropriately represent the company in social networks, blogs, forums, online lexica and microblogging services, as well as photo and video platforms.
Control environment and control activities The control environment of the GfK Group is essentially characterized by the existing rules of conduct and the resultant attitudes and actions of each employee. The foundation on which this conduct is based is derived from the company guidelines with which every employee undertakes to comply (Code of Conduct, Corporate Values). Implementing these guidelines ensures responsible corporate governance and adherence to fundamental ethical and moral values in the workplace. The extensive guidelines also represent another essential element of the internal control environment. These guidelines standardize the main nancial processes in the GfK Group to ensure the quality of working results remains high. Internal Audit plays an important role in this regard. In addition to regular auditing of the appropriateness of and compliance with guidelines and measures, Internal Audit makes recommendations to optimize existing processes (best practice).
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Whistleblowing taking the initiative: GfK encourages all staff to report any actual or suspected infringements of any statutory or internal regulations. Staff members can contact their superiors, GfK se Human Resources or GfK se Internal Audit. If employees do not wish to use these channels, they can also make an anonymous report to an external ombudsman under the terms of GfKs whistleblowing regulations.
and nancial management. This ensures compliance with guidelines and internal processes and at the same time, the decisions taken are practical decisions from both an operational and nancial point of view. These decisions and the associated approvals must also be documented. Risk monitoring at GfK is carried out on a continuous basis. Each employee is responsible for monitoring risk in his or her environment. For risks that have already been identied, risk owners are in place. These individuals monitor the actual risk using specic early warning indicators and dened ratios according to the type of risk. If a change in the risk position is evident, countermeasures can be ne-tuned in good time.
Information and communication GfK has open information and communication structures. This ensures that amendments to laws, guidelines and instructions are actively conveyed and made permanently available to employees. All guidelines are accessible worldwide on the intranet. GfK has comprehensive and regular risk and nancial reporting in place, through which corporate management and the Supervisory Board is promptly and comprehensively informed of the companys risk situation. In addition to the standardized reporting, the Management Board is directly informed on an ad hoc basis in the event of the sudden occurrence of material risks and in the event of instances of fraud (ad hoc reporting).
Monitoring Risk monitoring at GfK is essentially carried out via a system of checks and balances and documented controls. Specied business transactions must be approved by both the operational management
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Supervisory Board
Management Board
Group level Identication Sector level Risk and opportunity process Company level Assessment Management
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Principles of risk management To safeguard the continued success of the GfK Group in the market, the GfK Group must consistently exploit opportunities as they arise. At the same time, the manner in which risks are taken has to be acceptable from both a business and ethical perspective. To this end, risk policy principles were drawn up which form the basis for the entire opportunity and risk management system of the GfK Group. The key tenets, which are integrated in GfKs structures and business processes, are: Only those risks which are known can be controlled and managed. Risks are systematically assessed, communicated and prioritized. Risk management is a duty for everyone.
signicantly reduce the severity of the loss for GfK in the event of occurrence. Risk management also comprises continual monitoring of the individual risk identied in order to be able to react promptly to possible changes. The identication of opportunities is mainly carried out at sector level. This ensures integration in the respective sector strategy, thereby anchoring risk and opportunity management in the strategy of the sectors and ultimately, the Group. Risk reporting is carried out via an annual risk inventory and ad hoc reporting. The annual risk inventory ensures a comprehensive assessment of the overall risk situation of the GfK Group. In principle, all GfK companies are obliged to conduct an annual risk inventory. To obtain a complete picture of the risk situation for the Group, xed risk areas are dened within which the potential individual risks of the companies are assessed. Once the reported risks have been validated and aggregated at sector level, sector-specic opportunity and risk workshops are held. The aim is to identify material sectorrelevant risks across all companies, whereby individual risks can be leveled out or risks aggregated and reassessed at sector level.
Responsibilities Risk Management Committee: Under the terms of its overall responsibility for the opportunity and risk management system, the Management Board has established a Risk Management Committee, which is tasked with the central coordination and continual further development of the risk management system. Its standing members include the cfo/hr Director as Chairperson, the Global Head of Corporate Finance, as well as an employee responsible for risk management from the Group Controlling department. The Committee is charged with identifying the relevant risks and informing the Management Board and Supervisory Board of the current risk position within the Group. Risk management coordinators: The direct responsibility for early identication, management and communication of risks locally lies with the business management of the individual GfK companies. Local risk management coordinators promote risk awareness and ensure that the prescribed central principles are implemented by the respective organizations. Risk owners: For each identied risk, a risk owner is nominated in whose remit the risk lies. The risk owner is tasked with actively managing the risk and taking appropriate countermeasures to prevent the risk occurring or mitigate the potential loss or damage. The risk owner can be an individual employee or a group of employees at management level.
Process and reporting The risk process at Group level, sector level and company level comprises the three steps of identication, assessment and management. Every employee is responsible for identifying risks within his or her remit. This is carried out either within the respective local GfK companies, by the sector management team at sector level or, where the risk affects the whole GfK Group, at Management Board level. Subsequently each risk is assessed using the criteria probability of occurrence and potential severity of loss. Specied materiality thresholds determine whether the identied risk constitutes a material risk. As part of risk management, measures are dened and implemented to prevent the risk occurring or to
Risk and opportunity report for the Management and Supervisory Boards
Changes in the risk situation during the year are covered by ad hoc reporting and reported at Management Board level. Every GfK company is obligated to report new risks as well as changes in existing material risks via their monthly business activity reports. The Risk Management Committee must be informed directly if the potential loss severity of new risks arising during the year is signicant and action at sector and Group level is required.
Individual risks and opportunities Sector opportunities and risks: All GfK sectors are seeing an increase in competition, for example through the entry of local market research companies. There is persistently erce competition for the marketing budgets of major companies; however, the dependency of the GfK Group on such major companies continues to remain limited. The share of Group sales accounted for by the 10 top clients is unchanged at 15 %. No sector generates more than 5 % of Group sales with a single client. The level of bad debts is also insignicant in GfKs broad-based client portfolio and the liquidity position of the Group has not been detrimentally affected. The specic risks and opportunities in the individual GfK sectors are explained below. Custom Research: The portfolio comprises continuous data gathering, such as from the household panel, and ad hoc surveys tailored exclusively to individual questions. In syndicated business, largescale surveys are carried out in advance and then offered to the market. The main risks in the sector are as follows: In the ad hoc sector in particular, there is strong competition from small local providers, as well as from international market research companies. These local competitors frequently only service niche markets and can offer substantial price advantages through their lean cost structures. GfK counters this risk by continually optimizing its own cost structures and developing high quality surveys prepared using the latest methods which offer customers considerable quality benets. One impact of the global nancial and economic crisis has been the cut in market research budgets at many companies and public organizations as part of cost-saving measures. Through its continually rened offering, modern research methods and longstanding customer relationships, GfK is also well equipped to face this challenge. In syndicated business, the risk relates to the fact that large-scale surveys are carried out in advance without a xed buyer in place for the data that is gathered. However, this type of business is predominantly on offer where the experience of the past shows that there are likely to be takers. Changes in consumer behavior constitute another risk. In particular, decisions made and implemented with the aid of new media require new market research methods and technologies. GfK started work on developments in this area at an early stage and has progressed this by the acquisition of interests in nurago and SirValUse. Both companies have developed pioneering technologies for the collection of market research data in the digital age. Overall, the Custom Research sector is well equipped to deal with these risks. Long-standing customer relationships and a comprehensive portfolio of products and services provide GfK with a solid foundation for success, as do its valuable databases, comprehensive household panels and high data quality. Promising opportunities could also lead to additional growth.
11.2 Assessing opportunities and risk: details Macro-economic factors The economy: At the end of nancial year 2010, economic indicators and other signs increasingly showed that the international nancial crisis had been overcome in large areas of the world. Germanys impressive economic recovery is likely to continue in 2011 and an upturn in demand and fall in unemployment is also expected in the usa. The situation is more critical in some eu countries, and the risk of a two-speed Europe has not yet been banished and is contingent on European monetary policy and national scal policy. The GfK Group operates worldwide and is highly diversied in terms of its client, market and product portfolios, enabling it to cope with a renewed economic downturn in some countries. In addition, the stronger accent on Asia and Latin America as growth regions gives GfK good opportunities for further positive development in the global market.
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Consequently, the GfK Group does not anticipate any signicant risks arising from macro-economic development. Industry: The market research industry will benet from the improved economic framework conditions. Development in the industry has tracked global development in the past and as the global outlook is very positive, the market research sector is expected to expand worldwide. However, growth rates will differ from region to region. While only moderate growth is expected in North America, development in market research sales in Asia and Latin America will be much more dynamic. Germany will remain the engine of growth in Europe. With its global network, the GfK Group is a full service provider offering a wide spectrum of surveys and analyses and is therefore superbly placed not only to meet the challenge of ercer competition in the industry, but also to benet from the positive trends in the emerging countries. Globalization and changes in consumer behavior mean that companies are in greater need of advice with regard to their marketing decisions. Information on the sales potential of a product in different markets is therefore becoming increasingly important. At the same time, more and more purchase decisions are made with the aid of new media and take account of ecological aspects. With its wide range of methods to measure the usage of digital media and its advice on strategy, the GfK Group is ideally positioned to provide its clients with the optimum decision-making basis.
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Further expansion of global key account management for major customers is set to facilitate cross-sector offerings around the world. With its global operations approach, GfK offers its major international clients uniform data quality and reporting standards. This is a key aspect for major clients and allows special market research instruments to be used under different local and regional conditions. Expanding its presence in the growth regions of Asia and the Pacic and Latin America is one of the greatest opportunities for the sector. Although the trend towards using new media for purchase decisions poses a threat to traditional business models, it also offers huge opportunities. GfK already successfully links purchases of fast moving consumer goods with online advertising and further expansion of online research is one of the companys key aims. In the wake of global convergence of mobile internet use, the GfK Media Efciency Panel (mep) and special software enable the company to obtain market data on the use of mobile devices. The Custom Research sector sees further potential in consistency in its own product portfolio and service offering worldwide. This will enable synergies to be leveraged and cost-savings potential realized, while ensuring global cooperation within the GfK network at the same time. Retail and Technology: GfK is a leading global provider in this sector and is distinguished above all by its global network, based on a uniform production and reporting system (GfK StarTrack) as well as its own extensive database. Measures were successfully implemented in the past nancial year, with the result that the previous risks in Retail and Technology are no longer categorized as material. An optimized contingency plan was established to counter risk on the data procurement side. The risk of losing major clients has also become less pronounced. The very high level of customer loyalty and high quality offering ensured an excellent follow-on order rate among these clients. The strategic focus of the sector also opens up numerous opportunities: Development of GfK StarTrack Explorer, which allows clients to create and call up reports that are tailored to their own individual requirements. By expanding the range of functions on offer, GfK is further increasing its technological lead in the market and consequently enhancing customer loyalty. At the same time, the aim is to optimize reporting frequency right up to calling up market data in real time. The offering is being continually expanded with new products and services, which have attracted new client groups. For example, the Retail and Technology sector has already established a tourism panel and is delivering the rst reports to renowned travel agents. The aim is to extend the customer base to include airlines and travel destination countries. The market position is being further expanded with new services such as GfK Total Store Reporting, which provides an overview of the full range of items.
The mobile web is also of particular importance for Retail and Technology. Mobile internet use is currently growing worldwide as fast as the internet itself once did. All activities of mobile internet users can be measured in real time using GfK Network Intelligence Solution (GfK nis). For example, it can evaluate how many people were online using what devices, what websites they visited and for how long. The particular feature here is that GfK nis tracks the whole market across providers within all of the mobile phone networks cooperating with GfK. The data is gathered on an anonymized basis and evaluated so that the user cannot be identied by name. GfK nis has already been successfully tested in several countries. The Retail and Technology sector is also set to drive forward expansion of the international network. The aim is to increase the companys presence in Africa, Asia, Latin America and Eastern Europe. A signicant share of sector sales is already generated in these growth markets and substantial sales increases continue to be achieved by rolling out established products and services in countries that were not previously covered. Media: The Media sector prepares studies on tv and radio audience research as well as on print media (for example, newspapers and magazines). The opportunity and risk situation arises from current developments in these client segments. Traditionally, tv and radio research is characterized by long-term client contracts. Although the dependency on major clients presents a risk, it is also associated with a certain amount of opportunity potential. Through our long-standing cooperation with clients, we have acquired specic expertise which is leveraged as a competitive advantage. As in previous years, market conditions for print media remain difcult. Publishers are cutting market research budgets, thereby increasing the pressure on costs and prices for market surveys. Alongside intensive customer services, this risk will be countered through the market launch of innovative products, in particular. Overall, the media market is dominated by extensive changes. New receiver technologies, digitization and changes in tv viewing habits present complex challenges for tv audience measurement in particular. The mobile tv offering is constantly growing for example. GfK is very well positioned in this market and sees considerable opportunity potential for the future here. The new ums technology will allow integrated measurement of tv, radio and internet usage in the future. Through instruments such as MediaWatch, GfK provides mobile data metering for out-of-home viewing, including watching giant tv screens in public spaces at major events. The new GfK tc Score measuring technology enables time-delayed tv viewing to be measured. The development of the Evogenius international software platform represents a contemporary, holistic instrument for the production and analysis of media usage data. The Media sector intends to develop markets for its product portfolio in new countries by establishing a global sales and marketing department.
GfK_97
MANAGEMENT REPORT
Personnel risks: The changed economic environment has also affected the labor market. As before, recruiting and retaining qualied staff remains one of the most important tasks for GfK companies. GfK offers a varied qualication and training program and is constantly working to optimize its personnel concepts in order to recruit, integrate and keep management and specialist staff in the longer term. Financial risks: GfKs arrangements to cover its nancing requirement include a syndicated banking facility comprising a variable revolving credit line. Around 55 % of the syndicated credit line totaling eur 250 million had been drawn down at the year-end. This credit line is available to GfK se in full until October 2011. From October 2011 to October 2012, the amount reduces to around eur 218 million. In addition to the syndicated credit line, GfK also has bilateral credit lines amounting to around eur 91 million at its disposal. The GfK Group secured additional liquidity through bilateral bank loans of eur 70 million with a term of up to ve years. In total, on the reporting date the unutilized credit lines amounted to eur 204.0 million (2009: eur 165.7 million). The funding elements indicated and an existing cash holding of around eur 54.8 million at the reporting date assure the Groups liquidity. The covenants agreed for the syndicated credit facility and the loan notes were comfortably met in all reporting periods in 2010. As a result, the credit margins for the GfK Group improved substantially compared with 2009. Foreign currency risk: As a global company, the GfK Group is exposed to currency risks. The transaction risk results from the sale and purchase of goods and services which are not paid for in the local currency of the respective GfK business unit. As a result of the high level of local business, all GfK operating companies have sales and expenses in the local currency and the currency risk of the GfK Group is therefore restricted. Group guidelines also require all GfK companies to monitor their currency risks and hedge against currency uctuations for projects over a certain size.
As a rule, GfK provides in-house nancing in local currency for subsidiaries. The ensuing currency risks are hedged by Group Treasury using derivatives, among other means. Hedging transactions usually run for a maximum of 15 months. The offsetting effects of the underlying transaction and the currency hedge are recognized in the income statement and are consequently identiable. The currency translation risk results from the conversion of the balance sheets and income statements of GfK companies outside the eurozone into euros, the reporting currency of the GfK Group. These translation-related effects are shown under equity in the GfK consolidated nancial statements. Participations are covered by natural hedges. To do this, the nancing is in the currency of the respective company, so that the currency uctuations are kept to a minimum. In order to eliminate volatility in the income statement relating to the reporting date valuation of currency liabilities, GfK uses hedge accounting according to ifrs pursuant to ias 39 for this long-term nancing, and valuation effects are reported under equity accordingly. Interest rate risk: At GfK, interest rate risks mainly arise for nancial liabilities. The majority of the interest rate hedges relating to the nancing of the nop World acquisition expired in April and the GfK Group was able to benet from low short-term interest rates in 2010. At the same time, new xed-rate agreements for eur 70 million with terms of up to ve years were concluded in 2010. As at December 31, 2010, GfK se had hedged around 29 % of its nancial liabilities with xed-rate agreements. The proportion of nancial liabilities with interest rate hedging was down on the previous year (40 %). As at the reporting date, the interest rate hedges had a negative fair value of eur 0.2 million (2009: eur 1.2 million). The transactions are only conducted with reputable German and international banks with rst class credit standing and an s&p rating of between aa- and bbb-. In addition, the counterparty risk is reduced as transactions are spread across several banks.
MANAGEMENT REPORT
98_GfK
Legal risks: In many countries, such as Brazil, Germany, France and the uk, the subject of apparent self-employment is still an issue. This harbors the risk that the interviewers and other freelancers working for GfK could become liable for social security contributions. GfK adjusts the employment terms to the respective national legislation. GfK is involved in civil proceedings in a number of different countries, which are based on various legal grounds. However, the management does not believe that these present any signicant risk to the GfK Group. Risks ensuing from acquisitions: The acquisition of new companies and their integration into the Group is associated with risks. To counter these risks, GfK has established extensive due diligence processes and proven post merger integration procedures. Company valuations are carried out using varying methods and business plans are critically reviewed. it and other risks: Installation, maintenance and further development of security measures to protect information systems and the data they contain are essential for GfK. Precautionary measures serving to ensure the security of information technology and its applications have always been given the highest priority. GfK has taken all necessary measures at its central computing center location in Nuremberg to ensure the greatest possible it operating security and these measures are updated on an ongoing basis. The Group-wide it security policy based on the recognized British Standard 7799, adopted by the Management Board, was implemented worldwide in 2008 and species the mandatory it security standards for the Group. The moveIT project involves concentrating the global computing center services in a small number of global locations, as well as extending the Group-wide it standards. As a result, all the security measures and standards relevant to the Group will focus on these computing center locations and any residual risks in it security will be minimized. All the aforementioned measures, as well as the it strategy of the GfK Group and the Group-wide it security measures, are coordinated by the Chief Information Ofcer (cio), who reports directly to the ceo. Security issues are dealt with in cooperation with the it security specialists based in GfK companies in Germany and abroad. it audits also form an integral component of the audit conducted by the Internal Audit department and are carried out locally by it specialists. No major it risks are currently identied in the GfK Group. Other risks: As part of the established risk management system, continual monitoring is carried out to check whether other risks have arisen and whether countermeasures need to be taken. Risks relating to losses and liabilities are either covered locally or by Group-wide umbrella insurance. No substantial risks relating to research and development activities are currently identied. The development of large-scale, costintensive innovation projects is monitored via regular reporting. No material other risks are currently identied in the GfK Group.
11.3 Assessing risks and opportunities: overall view The risks of GfK are limited and should not materially affect the net assets, nancial position or result of operations of the Group. An overall assessment of the risk position of GfK also shows that no lasting threat to business development is to be expected as a result of individual risks or the interaction or accumulation of risks. Potential opportunities for the GfK Group have been identied, particularly in relation to the further expansion of its global network and the availability of an innovative product portfolio that incorporates state-of-the-art technology and responds optimally to client needs. The core competence of reliable and high-quality consulting opens up further opportunities to position the company in the market. The following table provides an overview of the key points relating to the risks and opportunities for the GfK Group:
Strengths Internal factors broad, high quality and innovative portfolio of services and products strategic consultancy continual expansion of the offering international network high level of customer loyalty high level of staff expertise
External factors
global expansion of market research industry, especially in the regions of Asia and Latin America
cuts in market research increasing need for informabudgets on customers side tion and advice on customers new consumer trends due side as a result of new conto technology advances sumer trends (e.g. use of new media, ecological viewpoint) changes in legislation Demand for high quality products
To summarize, it can be concluded that the overall risk position of the GfK Group continues to be assessed as low. No risks have currently been identied which might jeopardize the continued existence of the GfK Group.
GfK_99
MANAGEMENT REPORT
Opportunities
Risks
Outlook
13.2 Market research sector: looking to the future Financial year 2010 was an excellent year for GfK. In the year as a whole, the Group increased its sales by 11.1 % to eur 1,294.2 million. Organic sales growth totaled 7.2 % and at 14.3 %, the margin outstripped the companys own forecast. Growth impetus came from all regions. Double-digit organic growth in sales was achieved in Germany, Central and Eastern Europe and Latin America. GfK beneted from the rapid recovery in these regions and the companys consistent global focus. Globalization will remain a key topic for the market research industry in the future as well. Only a global full-service organization knows the particular features of a local market, can work in the relevant language and can link the information to an international, comprehensive picture made up of comparable individual components. To continue its success in the international arena, GfK is investing in standardizing methods, software and survey contents. In addition to globalization, the internet will dominate the process of change in the market research industry. For example, the internet will soon be the most important platform for market research and is also becoming increasingly important as an object of research itself. Monitoring types of usage and measuring the impact of online advertising are just two examples of this. The opinions on goods and services that are posted on the web are of key importance and have a major inuence on consumer behavior. Known as the online buzz, the opinions of consumers published on the internet can determine the success or failure of brands and products. Analyzing the online buzz will be a key task for market research going forward, and GfK already offers its clients various services in this eld. Digitization and the ensuing ood of data represents another challenge for the market research industry. To date, its main task has been to gather representative data. In future, however, the service provided by market research will not be limited to optimum data procurement; it will have to condense and analyze the data ows gained through new technologies and the online buzz and translate these into recommendations for action. A market research organization such as GfK does not just present the data freely obtainable from the internet, but acts as an information specialist and expert in consumer insights. Strategic client consulting is rmly embedded in GfKs own corporate strategy as fact-based consultancy. Digitization will also speed up the processes of data collection and analysis. GfK is well aware of the growing importance of fast access to information and the international expansion of computer-aided interviews follows this trend. In its retail panel,
Major changes in the GfK network since the end of the nancial year
Investment activity Share increase Stake changes in % from 40 to 60
Company
Region Germany
SirValUse
MANAGEMENT REPORT
13. outlook *
13.1 Macro-economic situation: continued recovery with residual risk Although global economic output continues to grow, expansion in 2011 will be lower than in the previous year. In the rst instance, in many national economies there is an absence of domestic demand as a driver and in the second, some emerging countries have used monetary and scal policy instruments to slow their economies to prevent overheating. The International Monetary Fund therefore expects global economic growth of 4.4 % in 2011 compared with 5.0 % in 2010. The strained situation in nancial markets remains a residual risk for further economic development. From a European perspective, the debt crisis could lead to exchange rate uctuations and a slowdown in domestic demand in particular. In addition, increased ination expectations harbor risks of interest rate rises, which could hamper economic recovery.
* 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 of sales proceeds and income for 2011. Such statements are subject to risks and uncertainties, for example, economic effects such as exchange rate uctuations and changes in interest rates. Some uncertainties or 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 or accept any obligation to update predictive statements on an ongoing basis.
100_GfK
GfK has already adjusted its reporting to the weekly product change on the shelves for many product groups and countries. And through its online co-creation platform, the Custom Research sector is bringing clients and their end consumers together in real time, regardless of where they are located. GfK therefore not only has a global presence, but is able to react exibly to challenges in the industry as a result of the extensive methodological expertise of its staff.
The Management Board believes that as a broad-based enterprise specializing in market research, the GfK Group is superbly positioned to balance out economic uctuations. GfK will therefore be in a position to secure sustainable growth in sales and income in the medium term.
13.3 Outlook and order intake Assuming a sustained economic upturn, GfK expects organic growth in sales of around 5 % to 6 % for nancial 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 planned investments, especially in the digital segment and in growth regions, GfK is setting itself a challenging target for its margin, that is the ratio of adjusted operating income to sales, of at least 14.3 %. 2011 is already off to a promising start. As at the end of February 2011, the order book covers a total of 43.2 % of expected annual sales (previous year: 41.1 %).
Pamela Knapp
Petra Heinlein
Debra A. Pruent
Wilhelm R. Wessels
102_GfK
Consolidated income statement Consolidated statement of comprehensive income Consolidated balance sheet Consolidated cash flow statement Consolidated equity change statement Notes to the consolidated financial statements for 2010 Supervisory Board Management Board Shareholdings of the GfK Group
Declaration on the German Corporate Governance Code 156 Auditors report 157
Note Sales Cost of sales Gross income from sales Selling and general administrative expenses Other operating income Other operating expenses Operating income1) Income from associates Other income from participations ebit Other nancial income Other nancial expenses Income from ongoing business activity Tax on income from ongoing business activity Consolidated total income Attributable to equity holders of the parent: Attributable to minority interests: Consolidated total income Basic earnings per share (eur)
FINANCIAL STATEMENTS
2010 1,294,208 872,344 421,864 268,094 19,602 36,631 136,741 3,489 340 140,570 12,225 28,037 124,758 40,774 83,984 71,651 12,333 83,984 1.99 1.99
5. 6.
7. 8. 9.
3. 3.
3,820 66 92,792
12. 13.
14.
15. 15.
1.42 1.42
1) Reconciliation to internal management indicator adjusted operating income amounting to eur 184,986 thousand (2009: eur 147,154 thousand) is shown in the Management Report.
104_GfK
Note Pre-tax amount Consolidated total income Currency translation differences Valuation of net investment hedges for foreign subsidiaries Changes in fair value of cash ow hedges (effective portion) Changes in fair value of securities available-for-sale Actuarial gains/losses on dened benet plans Other comprehensive income Total comprehensive income Attributable to: Equity holders of the parent Minority interests Total comprehensive income 25. 24. 29. 29. 75,459 13,058 3,919 594 21 4,605 11,757 87,216
2009 Tax effect 14,935 0 1,233 187 5 1,123 82 14,853 Post-tax amount 60,524 13,058 2,686 407 16 3,482 11,839 72,363 Pre-tax amount 124,758 57,990 2,531 622 3 9,549 46,529 171,287
2010 Tax effect 40,774 0 797 196 0 1,523 2,124 38,650 Post-tax amount 83,984 57,990 1,734 426 3 8,026 48,653 132,637
GfK_105
FINANCIAL STATEMENTS
Note
31.12.2009
31.12.2010
assets
Goodwill Other intangible assets Tangible assets Investments in associates Other nancial assets Deferred tax assets Non-current other assets and deferred items Non-current assets Trade receivables Current income tax assets Securities and xed-term deposits Cash and cash equivalents Current other assets and deferred items Current assets Assets 20. 14. 21. 22. 19. 16. 16. 17. 18. 18. 14. 19. 791,075 201,765 104,820 11,491 9,544 32,600 6,634 1,157,929 270,683 18,243 957 42,361 31,268 363,512 1,521,441 838,748 210,997 108,387 17,318 11,015 38,901 6,826 1,232,192 315,569 13,307 1,382 54,755 32,703 417,716 1,649,908
150,297 197,278 277,467 100,402 524,640 28,374 24. 25. 26. 14. 27. 553,014 65,687 360,893 69,896 3,389 499,865 25. 14. 26. 3. 3. 27. 10,889 25,291 136,225 60,231 118,689 117,237 468,562 968,427 1,521,441
151,157 206,868 329,357 45,626 641,756 35,702 677,458 81,965 326,324 72,175 4,456 484,920 16,531 25,919 102,597 66,103 136,696 139,684 487,530 972,450 1,649,908
Non-current interest-bearing nancial liabilities Deferred tax liabilities Non-current other liabilities and deferred items Non-current liabilities Short-term provisions Current income tax liabilities Current interest-bearing liabilities Trade payables Liabilities on orders in progress Current other liabilities and deferred items Current liabilities Liabilities Equity and liabilities
106_GfK
Note Consolidated total income Write-downs/write-ups of intangible assets Write-downs/write-ups of tangible assets Write-downs/write-ups of other nancial assets Total write-downs/write-ups Increase/decrease in inventories and trade receivables Increase/decrease in trade payables and liabilities on orders in progress Changes in other assets not attributable to investing or nancing activity Changes in other liabilities not attributable to investing or nancing activity Prot/loss from disposal of non-current assets Non-cash income from associates Increase/decrease in long-term provisions Other non-cash income/expenses Net interest income Change in deferred taxes Current income tax expense Taxes paid a) Cash ow from operating activity Cash outows for investment in intangible assets Cash outows for investment in tangible assets Cash outows for acquisitions of consolidated companies and other business units, net of cash acquired Cash outows for other nancial assets Cash inows from disposal of intangible assets Cash inows from disposal of tangible assets Cash inows from the sales of consolidated companies and other business units, net of cash disposed of Cash inows from disposal of other nancial assets b) Cash ow from investing activity Cash inows from equity contributions Cash outows to equity holders of parent Cash outows to minority interests Cash inows from loans raised Cash outows from repayment of loans Interest received Interest paid c) Cash ow from nancing activity Changes in cash and cash equivalents (total of a), b) and c)) Changes in cash and cash equivalents owing to exchange gains/losses and valuation Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period 22. 22. 30. 30. 24. 24. 30. 12., 13. 14. 14. 3. 16. 17.
2009 60,524 44,127 22,131 904 67,162 9,270 469 1,270 9,544 321 1,147 7,980 3,296 16,394 17,479 32,424 36,290 134,650 18,650 30,328 54,770 2,893 1,666 298 28 288 104,361 0 16,536 6,920 154,047 142,391 3,447 17,876 26,229
2010 83,984 31,875 23,266 804 55,945 36,071 15,059 4,993 11,096 53 935 12,511 9,338 16,644 4,763 45,473 41,316 172,011 26,490 22,118 35,070 5,927 1,104 559 204 1,548 86,190 10,450 10,784 6,203 78,422 135,783 3,182 16,231 76,947
FINANCIAL STATEMENTS GfK_107
Subscribed capital Balance at January 1, 2009 Total comprehensive income for the period: Consolidated total income Other comprehensive income: Foreign currency translation differences Net gain/loss on hedge of net investment in foreign operation Effective portion of changes in fair value of cash ow hedges, net of tax Net change in fair value of available-for-sale nancial assets, net of tax Dened benet plan actuarial gains and losses, net of tax Other comprehensive income Total comprehensive income for the period Transactions with owners, recorded directly in equity: Dividends to shareholders Other changes Transactions with owners, recorded directly in equity Balance at December 31, 2009 Balance at January 1, 2010 Total comprehensive income for the period: Consolidated total income Other comprehensive income: Foreign currency translation differences Net gain/loss on hedge of net investment in foreign operation Effective portion of changes in fair value of cash ow hedges, net of tax Net change in fair value of available-for-sale nancial assets, net of tax Dened benet plan actuarial gains and losses, net of tax Other comprehensive income Total comprehensive income for the period Transactions with owners, recorded directly in equity: Contributions by and distributions to owners:
FINANCIAL STATEMENTS
150,297
50,975
3,490 0 0 0 0 3,490 47,485 16,536 1,561 0 150,297 150,297 0 197,278 197,278 14,975 277,467 277,467 71,651
Issuing of new shares Dividends to shareholders Changes in ownership interests in subsidiaries that do not result in a change of control: Acquisition of minority interests Other changes Transactions with owners, recorded directly in equity Balance at December 31, 2010 Note
860
9,590 10,784
623 278 860 151,157 24. 9,590 206,868 24. 11,685 329,357 24.
108_GfK
Other reserves Translation reserve 131,061 Hedging reserve 15,494 Fair value reserve 4 Total 476,969 Minority interests 23,327 Total equity 500,296
50,975 12,898 2,686 407 16 12,898 12,898 2,279 2,279 16 16 12,898 2,686 407 16 3,490 11,671 62,646 16,536 1,561 0 118,163 118,163 0 17,773 17,773 0 12 12 14,975 524,640 524,640 71,651 56,087 1,734 426 3 56,087 56,087 1,308 1,308 3 3 56,087 1,734 426 3 8,076 46,700 118,351
9,549 160
3,482 11,839 72,363 23,935 4,290 19,645 553,014 553,014 83,984 57,990 1,734 426 3
50 1,953 14,286
10,450 17,324
GfK_109
FINANCIAL STATEMENTS
2. consolidation principles
The annual nancial statements of GfK se and all material subsidiaries whose nancial and operating policies are controlled directly or indirectly are included in the consolidated nancial statements of GfK se. The nancial statements of all companies included in the consolidated nancial statements have been prepared according to uniform accounting principles. Companies in which the GfK Group has a participation of no more than 50 %, but over which signicant inuence can be exercised, are generally accounted for at equity as associates. All other companies in the GfK Group are reported at acquisition cost. A list of GfK se shareholdings is provided in Section 41. of these Notes. Capital consolidation is carried out in accordance with ifrs 3, Business Combinations, on the basis of purchase accounting, whereby the acquisition costs of the participation are charged against the parent companys pro rata share in the revalued equity of the subsidiary at the acquisition date. Intangible assets acquired in business combinations and identied as part of purchase price allocation are entered on the balance sheet at fair value. Any difference arising on the assets side after this crediting and purchase price allocation is reported under non-current assets as goodwill. From nancial year 2010 onwards, GfK applies the revised version of ifrs 3 (Business Combinations) and the amendments to ias 27 (Consolidated and Separate Financial Statements). Material changes relate to the accounting treatment of minority interests and the remeasurement, through prot or loss, of already existing shares at the time control was gained for successive company acquisitions. In such cases, the goodwill is determined at the time when control was gained and is the difference between the remeasured carrying value of investment plus acquisition costs for buying the new shares less the pro rata net assets attributable to GfK. Changes in the participation quota without change of control are to be recorded solely as equity transactions. Incidental acquisition costs in connection with business combinations are no longer capitalized from 2010 onwards, but recognized as expenses. For possible adjustments to acquisition costs, as a result of future events which are recognized as liabilities at the time of acquisition, no adjustment is made to goodwill in the remeasurement for new liabilities from earn-outs and rights of minority shareholders to make delivery (put options and bonds) after January 1, 2010. Instead, these changes are reported under net nancial income in the income statement.
The annual nancial statements of the parent company, GfK se, have been prepared in accordance with hgb and published in the online Federal Gazette (Bundesanzeiger) under hr b 25014. Section 37. of these Notes describes standards, interpretations and amendments to ifrs that have been applied for the rst time or that have been published but not yet applied.
110_GfK
All transactions and balances among the companies of the GfK Group which are included in the consolidated nancial statements are eliminated when preparing the consolidated nancial statements. Differences arising from debt consolidation are recorded in the income statement. Intercompany results and asset movements are eliminated with impact on the income statement if they are signicant. Associates and joint ventures are included at equity (one-line consolidation). They are stated for the rst time at the acquisition date. First-time valuation is in line with full consolidation. Any difference on the assets side arising from offsetting the carrying amount of the participation against the pro rata equity capital at initial valuation is included in the equity book value. From January 1, 2010, the consolidation on transition from equity valuation to full consolidation no longer takes place with no impact on the income statement, as was the case previously. The investment in the associate is valued at fair value at the time of the acquisition of additional shares with impact on the income statement. The acquisition costs included in capital consolidation comprise the fair value of the previously existing investment and the acquisition costs for the majority acquisition. Prots or losses from mergers arising from the merger of two consolidated companies in the GfK Group are eliminated. Mergers therefore have no impact on the income statement of the GfK Group. Company mergers involving external minority shareholders do not give rise to any change in the total minority interests or the consolidated total income. Shares in the equity of subsidiaries attributable to external minority interests are shown separately under equity. Shares in the subsidiaries results attributable to external minority interests are shown as a separate item in the income statement.
The exchange rates against the euro of the key currencies for the GfK Group are indicated in the table below.
Main currencies Country USA UK Switzerland Singapore Japan Unit of currency 1 USD 1 GBP 100 CHF 1 SGD 100 JPY
Euro mean rate on balance sheet date 31.12.2009 31.12.2010 0.70 1.13 67.42 0.50 0.75 0.75 1.17 79.97 0.58 0.92
Euro average rate during reporting period 2009 0.72 1.12 66.36 0.49 0.77 2010 0.76 1.17 73.05 0.56 0.87
Income statement The income statement is prepared in accordance with the cost of sales accounting method. Expenses are shown by function.
Sales The method of recognizing sales is largely determined according to ias 18 and depends on the nature of the underlying transaction: Panel business involves surveying individuals, households and companies and is characterized by the fact that the same circumstances are analyzed at the same, regular intervals on the basis of the same sample and always using the same methods. For business involving panels, the GfK Group recognizes sales pro rata temporis according to the progress of the project. Thus, the sales for a project are distributed evenly over its duration. Each month during the term of a contract, the same sales are recognized in terms of amount. Ad hoc research business is the systematic, empirical research used as the basis of marketing decisions in all areas of the marketing mix. This includes tests and surveys on product and pricing policy, brand positioning and brand management relating to traditional and modern forms of communication with consumers and users. It is employed with the goal of optimizing distribution and enhancing customer loyalty. Ad hoc research business is valued using the percentage of completion method. Progress on the project is determined as the ratio of the actual costs incurred to the overall anticipated costs of the project. The estimate of total cost is continuously checked during the life of the project. Changes in the estimate of total cost ow into the calculation of recognizable sales at the time at which they can be anticipated. The costs to be included in this calculation comprise all direct personnel expenses and other cost of sales as well as pro rata indirect costs. Provisions are set up for expected losses on orders in progress when they can be anticipated. Syndicated business analyzes markets and market players without this being specically commissioned by a client to whose requirements the survey would be tailored. The completed survey is marketed without customer-specic adjustments. Syndicated surveys may be conducted once or on a recurring basis, without fullling the distinct and highly specic features of a panel. Various market participants may be questioned in repeated surveys, or the studies may be published at different intervals. In terms of determining sales, syndicated business is treated like panel business if it is comparable to panel business in nature because it involves repeated surveys where the cost behavior pattern is relatively evenly distributed over the term.
3. accounting policies
Currency translation Transactions in foreign currencies are translated into the functional currency of the reporting company at the exchange rate on the date on which they were carried out. As at the balance sheet date, monetary items are translated at the exchange rate on that date and non-monetary items are valued at the historical rate on the transaction date. Differences resulting from these conversions are, in principle, reported with impact on the income statement. The balance sheets of foreign subsidiaries not prepared in euros as well as hidden reserves disclosed as part of purchase price allocation and goodwill from mergers and acquisitions are translated into euros in accordance with the functional currency concept, based on the mean exchange rates on the reporting date. The annual average euro exchange rate, calculated as the mean of all month-end exchange rates, is applied to the income statements of these subsidiaries. Differences arising from the translation of asset and liability items at the exchange rate on the reporting date compared with the translation on the prior reporting date are reported in equity without impact on the income statement. Exchange rate differences arising from capital consolidation and differences arising from translation of the annual result in the balance sheet (reporting date rate) and the income statement (average rate) are reported in other reserves.
GfK_111
FINANCIAL STATEMENTS
Accounting policies
For other syndicated business, the method of recognizing sales depends on the empirical estimate of the protability of the respective survey: If a prot from the survey is probable, it is valued the same as an ad hoc research contract. If it is not yet sufciently certain that enough purchasers will be found for a survey, the sale is recognized corresponding to the accumulated costs. If the value of the actual incoming orders is below that of the costs incurred, recognizable sales are limited to the value of incoming orders. As soon as it is certain that the value of orders exceeds the costs, sales are recognized according to the method used for ad hoc research contracts. In all other business transactions, sales are only recognized once the work has been completed and invoiced.
Operating income Operating income in the GfK Group comprises gross income from sales, less selling and general administrative expenses, and net other income comprising other operating income and other operating expenses.
Adjusted operating income The indicator adjusted operating income is used internally to manage the GfK Groups business. It is derived from operating income. To calculate adjusted operating income, the following expenses and income items are excluded: expenses and income in connection with reorganization and business combinations, write-ups and write-downs of additional assets identied on acquisitions, personnel expenses for share-based payments and long-term incentives and remaining other operating income and expenses.
Cost of sales, selling and general administrative expenses In addition to personnel expenses, services rendered and scheduled depreciation/amortization of tangible and intangible assets, the cost of sales, selling and general administrative expenses comprise all other costs directly linked to the operational activity of the GfK Group. They mainly include personnel expenses from the long-term incentive plans, as well as scheduled write-downs of additional assets identied on acquisitions and impairments of non-current assets. Income from associates Income from associates comprises income and expenses resulting from the valuation of pro rata shares in associates at equity.
Other income from participations Other income from participations essentially comprises dividends from non-consolidated afliated companies and other participations of the GfK Group, prot and loss from the disposal of such companies and income and expenses from prot transfer agreements with these companies.
Research and development costs Research and development costs are basically recorded as expenses at the time they are incurred and shown under cost of sales. Development costs incurred within the GfK Group, particularly for setting up new panels, are shown under other intangible assets if the recognition criteria are met. Internally generated intangible assets are only capitalized if they have resulted from the development phase and not the research phase and if further precisely dened preconditions have been cumulatively fullled. These include the technical viability of project completion, the scheduled completion and use, as well as the usefulness to the company or saleability of the intangible asset. Future economic benets and the availability of the necessary technical, nancial and other resources to complete the project must also be reported. Reliable calculation of the costs associated with the intangible asset during its development phase is also a precondition for capitalization of internally generated intangible assets.
ebit The performance indicator ebit (earnings before interest and taxes) has been included as a sub-total in the income statement. ebit is determined by adding income from associates and other income from participations to operating income.
Other financial income and expenses Other nancial income and expenses comprise interest income and expenses, income and expenses from the valuation of derivative nancial instruments used to hedge against interest rate risks, transaction costs for loans from banks, expenses relating to writeoffs of lendings and other nancial income. Interest expenses also include additional interest on previously discounted debt. Such additional interest relates, for example, to future purchase price components from acquisitions, which are stated on the liabilities side at fair value. Interest is recorded as income or expense at the time it is incurred. Interest is deferred on the basis of the effective interest rate method.
FINANCIAL STATEMENTS
Other operating income and expenses Other operating income and expenses comprise income and expenses relating to operations, for which the allocation to sales or functional costs would not be appropriate. They include mainly exchange rate gains and losses, prot and loss from the disposal of xed assets, impairments not attributable to functional costs and recoverable value and expenses for legal disputes.
112_GfK
Income from ongoing business activity The income from ongoing business activity indicator has been included in the income statement as a sub-total. Income from ongoing business activity corresponds to consolidated total income before tax on income.
Earnings per share The earnings per share (eps) reported in the consolidated income statement show the proportion of consolidated total income attributable to equity holders of the parent, which relates to the weighted average number of shares in the reporting period, taking into account, on a pro rata basis, the options exercised during the nancial year. To calculate diluted earnings per share, the average number of shares is adjusted by the options as yet not exercised which are in the money as at the reporting date.
Tax on income Tax on income from ongoing business activity comprises the current and deferred tax expense. Current taxes are calculated by the companies within the GfK Group according to valid tax law in their country of registration. Deferred taxes are calculated according to the liability method whereby deferred tax assets and liabilities are entered on the balance sheet for temporary differences between the carrying amounts attributed in the consolidated nancial statements and the tax basis of the assets and liabilities. Any effects on deferred taxes from changes in tax law are incorporated in the income statement from the date on which the tax law is passed. Deferred tax assets are only entered on the balance sheet if it is probable that they can be recognized at a future date. This is generally the case where the relevant company is sufciently likely to achieve enough taxable prot to use the tax benet. If deferred tax assets already recorded are not expected to be recognized within the foreseeable future as a result of new information, carrying values are adjusted. Applying its discretionary powers, the management assumes a maximum period of time for the realization of deferred tax assets of seven years for subsidiaries which are not making a sustained loss, otherwise the period of time assumed is shorter. Tax on items recognized directly in equity is not included in the income statement. No deferred taxes are amortized in relation to currency differences from intra-Group loans in foreign currency, which represent a net investment in the business operations of subsidiaries and are recognized at equity. This is due to the fact that there are no plans in place to realize temporary differences in the foreseeable future.
Stock options for employees and executives of the GfK Group Up until 2005, selected executives of the GfK Group were entitled to convert part of their variable remuneration into stock options in GfK se. The option term is ve years; options cannot be exercised until two years after issue. The GfK Group applies ifrs 2 for stock options issued. This remuneration, which is to be settled with equity instruments, was valued at the fair value on the grant date. The obligation was entered as expense in the income statement whilst the counter-entry was made under capital reserve.
Long-term incentive plans for employees and executives of the GfK Group Since nancial year 2006, selected executives of the GfK Group have been entitled to convert part of their variable remuneration into virtual GfK shares. Virtual shares entitle the holders to cash payments at the end of the three-year performance period. GfK grants a corresponding volume of additional performance shares. The payment for the performance shares, which is also due at the end of the performance period, depends on the achievement of two performance targets, the total shareholder return (tsr) on GfK shares compared with the tsr on shares of companies listed in the dj Euro Stoxx Media Index, and on the increase in operating prot at the GfK Group, which corresponds to adjusted operating income, over a three-year period. The amount payable at the end of the performance period is accumulated as provisions. The amount of the provisions is based on an actuarial opinion.
FINANCIAL STATEMENTS GfK_113
Impairments If an asset is impaired and is therefore depreciated, the cost of impairment is included in the income statement. The value of assets with an indenite life and intangible assets under development is checked once a year by means of an impairment test. An impairment test is also carried out if triggering events occur, which may signicantly affect the value of the assets concerned. Impairments on intangible assets are applied if the recoverable amount is below the amortized cost of acquisition or production. The recoverable amount is dened as the higher of the two sums of the fair value, less costs to sell or value in use of an asset whose expected future cash ows at the GfK Group are based on a minimum three-year period, planned in detail, and discounted on the basis of a discount rate to be determined individually at market conditions. The growth rate of the cash ows beyond the period of detailed planning is usually taken into account by reducing the discount rate by one to two percentage points. Expenses arising from the decline in the value of brands are reported in the income statement under other operating expenses while impairments on surveys, panels, client bases, long-term contracts and software are shown under functional costs.
From nancial year 2010 onwards, a different arrangement applies for members of the Management Board of GfK se. The members of the Management Board are granted an individual bonus amount, half of which is converted into virtual shares and half into a performance-based long-term cash bonus. The conversion into virtual shares of the target amount of virtual shares is based on the GfK share price in the 20 trading days preceding the start of the performance period. The shares may rst be exercised after a four-year blocking period during a two-year exercise period in specic trading windows. If a dividend is paid to shareholders, the number of virtual shares increases in the corresponding value. The following applies to the performance-based long-term cash bonus: after expiry of a four-year performance period, the beneciary is entitled to payment of an amount in cash. The amount is determined by the extent to which the specied performance target (average return on capital employed of GfK, or GfK roce, for the four-year period) was achieved by December 31 of the third year following the year in which the bonus was granted. Payment for the corresponding term is calculated on the basis of the audited nancial statements.
Accounting policies
If the employment ends prior to expiry of the performance period as a result of notice being given or resignation, the bonuses granted to members of the Management Board of GfK se expire without compensation.
Other intangible assets Where an intangible asset has been subject to impairment, there is a maximum write-up to the amount recoverable if a higher amount is recoverable at a later date. The carrying value after the write-up may not exceed the carrying value which would have resulted had the impairment not taken place in the past. The write-up is reported in the income statement in the position which previously included the impairment. Internally generated intangible assets At the GfK Group, internally generated intangible assets mainly comprise software and panel set-up costs. As a rule, software developed by companies in the GfK Group is used internally for analyzing and processing market research data. In some cases, it is destined for external users and was written specically to meet user requirements. Internal costs of software development are capitalized under non-current assets if the criteria according to ias 38 are met. Amortization commences on completion of the software. Panel set-up costs generally involve capitalized development costs for setting up new panels or expanding existing panels. Capitalized panel set-up costs include: Spending on materials and services used in constructing panels Wages and salaries and other employment expenses for staff directly involved in setting up panels Overheads necessarily incurred in panel set-up and which can reasonably and regularly be allocated to this, based on cost accounting. Costs arising from the preparation and application phase and maintenance costs for current panels cannot be capitalized. They are included in expenses. Panel set-up costs are only subject to scheduled amortization if they are directly incurred in conjunction with a specic, xedterm current client order. As a rule, the amortization period in such cases is based on the duration of the contract or the useful life. In all other cases, the useful life of panels is indenite and they are not subject to scheduled amortization. The value of panels is checked at least once a year as part of an impairment test. Expenses for research activities are reported as expenses in the period under review. Development costs which did not result in a capitalizable intangible asset are also reported as expenses.
Intangible assets Goodwill Goodwill arising from the capital consolidation of subsidiaries and that transferred from subsidiaries nancial statements into the consolidated nancial statements is reported by the GfK Group under intangible assets. In business combinations, goodwill represents the remaining difference in assets after the costs of acquisition of the participation are offset against the proportion of acquired revalued equity. Goodwill from the acquisition of companies which do not report in euros is recorded in the reporting currency of the acquired subsidiary. The exchange rate at the time of rst consolidation is used to calculate the goodwill at initial recognition. Subsequent measurements are based on the mean rate as at the reporting date. The GfK Group checks the recoverability of its cash generating units, including goodwill, as part of an impairment test once a year or when triggering events or changed circumstances arise. For this purpose, goodwill is allocated to four cash generating units corresponding to the sectors, matching the internal Group control. The cash generating units are therefore the three sectors Custom Research, Retail and Technology and Media, supplemented by Other. Recoverability of goodwill is indicated when the recoverable amount is not less than the carrying amount of the cash generating unit. The recoverable amount corresponds to the fair value less costs to sell or the value in use if higher. The GfK Group calculates the fair value less costs to sell as part of the impairment test, using the discounted cash ow procedure based on anticipated future cash ow from the relevant current ve-year plan. The growth in cash ow after the ve-year period (perpetuity) is taken into account by reducing the discount interest rate by 1.7 percentage points (2009: 1.7 percentage points). Similar to the discount interest rate, this deduction from the growth rate is derived from available external capital market data. The discount rate is determined by carrying out a weighted average capital costs calculation, taking into account the standard industry capital structure and standard industry nancing costs. The resulting discount rate was 6.7 % to 7.0 % as at September 30, 2010 (2009: between 7.4 % and 7.7 %), depending on the cash generating unit. The discount rate before tax as at September 30, 2010 was 8.8 % to 10.1 %. The discount rate takes into account the respective equity and country risk as well as tax advantages from the external nancing of the cash generating unit concerned.
FINANCIAL STATEMENTS
114_GfK
Miscellaneous intangible assets Miscellaneous intangible assets include, in particular, software acquired, surveys, customer relations and brands. Miscellaneous intangible assets are entered in the balance sheet at amortized cost and are subject to scheduled, straight line amortization. This does not apply to customer relations and brands. As a rule, the useful life of software and miscellaneous intangible assets is three to ten years. Customer relations are generally subject to diminishing balance amortization over a period of four to 22 years at an individually determined customer churn rate of between 7 % and 44.7 %. Brands are not subject to scheduled amortization and have an indenite useful life. They are subject to an impairment test at least once a year. The interest on borrowing relating to qualifying assets is capitalized. Intangible assets with an indenite useful life are subject to an impairment test at least once a year.
Financial instruments Financial instruments are contracts which result in a nancial asset with one company and a nancial liability or an equity instrument with another. Financial assets comprise, in particular, cash and cash equivalents, equity instruments held in other companies (e.g. participations), trade receivables, other loans granted and receivables, and primary nancial instruments and derivatives held for trading purposes. Financial liabilities regularly constitute a return entitlement in cash or other nancial liabilities. At the GfK Group, they primarily comprise amounts due to banks, trade payables, liabilities under nance lease agreements and derivative nancial instruments. In the GfK Group, nancial instruments are entered on the balance sheet as bought or sold on the trade date, i.e. on the date on which the obligation to buy or sell a nancial instrument was entered into. In the case of xed-income nancial instruments, interest rate changes may result in a change in fair value and in the case of variable-rate nancial instruments, in uctuations in interest payments. In principle, current receivables and liabilities are not subject to interest rate risks. Financial assets and nancial liabilities are recorded if the GfK Group is a contractual party in relation to a nancial instrument. Financial assets are valued at fair value when they are rst recognized. With regard to nancial assets which are not subsequently valued at fair value and recognized in prot or loss, the transaction costs directly attributable to the acquisition are taken into account. The fair values stated on the balance sheet regularly correspond to the market prices of the nancial assets. Where these cannot be determined directly on the basis of an active market, they are valued using standard market procedures (valuation models). These are based on instrument-specic market parameters. Non-interestbearing and low-interest nancial assets with a term of more than one year are discounted. For nancial assets with a remaining term of less than one year, it is assumed that the fair value corresponds to the nominal value. Financial assets are taken off the books if the contractual rights to payments arising from the nancial assets expire or if the nancial assets are transferred with all material risks and rewards. The loans and long-term deposits reported under other nancial assets are assigned to the loans and receivables category. They are valued at amortized cost using the effective interest rate method. Financial assets held for trading purposes are valued at fair value. In addition to securities and xed-term deposits, they include derivative nancial instruments which are not linked to an effective hedge agreement according to ias 39 and whose classication as nancial assets held for trading is therefore mandatory. Any gain or loss resulting from the subsequent valuation of nancial assets that are held for trading is reported in the income statement. With regard to the accounting policies applied to nancial investments, management has stipulated at its discretion as the competent body that nancial investments are never classied as held to maturity, but instead always as available for sale. At the GfK Group, the category of available-for-sale nancial assets represents the residual amount of primary nancial instruments, for which ias 39 applies and which were not allocated to a different category. They comprise investments in afliated companies reported under other nancial assets, other participations and other available-for-sale securities.
Tangible assets Tangible assets are valued at cost less cumulative depreciation. The interest on borrowing relating to qualifying assets is capitalized. Cumulative depreciation generally includes scheduled straight line depreciation up to the balance sheet date and any impairments recorded. The depreciation period corresponds to the useful life. Assets in the course of set-up are not subject to scheduled depreciation. The GfK Group normally applies the useful life periods shown in the following table.
Asset Administrative buildings it equipment Cars and other vehicles Ofce equipment Ofce furniture
The item xtures and ttings also includes unnished technical equipment. Lease arrangements are entered on the balance sheet according to ias 17, with either a nance or an operating lease depending on the type of contract. Finance leases are characterized by the fact that risks and rewards of leased assets are generally transferred to the lessee. With a nance lease, the leased item is capitalized by the lessee and a corresponding leasing liability is recorded. The leasing liability is equivalent to either the present value of the minimum lease payments or the fair value of the leased asset at the start of the lease arrangement if lower. The capitalized leased asset is subject to scheduled straight line depreciation. The depreciation period is the lease term or the economic useful life, whichever is shorter. Subject to fulllment of the preconditions, an impairment is recorded. The lease liability is amortized over the contractual period through lease payments. Discounts are written up by applying a constant interest rate to the remaining debt and recorded in interest expenses within other nancial expenses. With operating leases, the leased assets are entered on the balance sheet of the lessor. The lessee records the regular payments as rental expense.
GfK_115
FINANCIAL STATEMENTS
Accounting policies
In principle, the valuation is based on the fair value derived from the market price where a price quoted in an active market is available. Any gains and losses subsequently resulting from the valuation at fair value are directly recognized in equity. This does not apply if the item relates to permanent or material impairments, or exchange rate-related changes in the value of debt instruments. These are reported in the income statement. The accumulated gains and losses from the valuation at fair value, which are stated in equity, are only reported in the income statement on disposal of the nancial assets. If the fair value cannot reliably be determined for equity instruments that are not quoted on the stock exchange, participations are valued at cost in particular (less impairments where applicable). Impairment expenses are stated if the carrying value of a nancial asset is higher than the present value of future cash ows. An impairment test is carried out on every reporting date. In order to ascertain and objectively verify impairment, the following triggering events are considered: The debtor faces considerable nancial difculties. Observable data show that a measurable reduction in expected future cash ows has occurred since the asset was rst recognized. To decide whether an impairment is required, the existing loans which are allocated to the loans and receivables category and therefore subsequently valued at amortized cost are analyzed. On the relevant reporting date, it is checked whether there is an objective indication of impairment that should be taken into account on the balance sheet. The impairment amount is calculated on the basis of the difference between the carrying value and the recoverable value, in other words, the present value of expected future cash ows which is discounted at the original effective interest rate of the nancial instrument. To simplify matters, cash ows from current liabilities are not discounted. Financial liabilities are valued at fair value when they are recognized for the rst time. The directly attributable transaction costs are also stated for nancial liabilities that are not subsequently valued at fair value, and amortized over the term using the effective interest rate method. Primary nancial liabilities are in principle valued at amortized cost. They include nancial liabilities, trade payables and other nancial liabilities and deferred items. Non-interest-bearing and low-interest liabilities with a term of more than one year are discounted. With regard to liabilities with a term of less than one year, it is assumed that the fair value corresponds to the repayment value.
The mandatory classication of any derivative nancial instruments which are not linked to effective hedge agreements is held for trading. Accordingly, they must be included in the income statement at fair value. If the fair value is negative, a nancial liability is stated. Financial liabilities are taken off the books if the contractual obligations have been settled, extinguished or have expired. Borrowing costs are recorded as expenses in the period in which they were incurred. The market value of nancial instruments to be valued at fair value is generally established on the basis of stock exchange prices. If no stock exchange prices are available, the nancial instruments are valued using standard market procedures (valuation methods) based on instrument-specic market parameters. The discounted cash ow method is used to establish the fair value, taking into account individual credit ratings and other market circumstances in the form of prevailing market credit ratings and liquidity spreads for determining the present value. There are no liquid markets for nancial instruments in the loans and receivables category, which are valued at amortized cost. For short-term loans and receivables, it is assumed that the market value corresponds to the carrying value. For all other loans and receivables, the market value is established by discounting the expected future cash ows. The interest rates applied for loans are those which would be used for new loans with a similar risk structure, original currency and loan term. For shares in unlisted companies, it is assumed that the carrying value corresponds to the market value. The market value could only be reliably established on the basis of concrete acquisition negotiations. Trade payables and other current nancial liabilities generally have a remaining term of less than one year, so the carrying value approximately corresponds to the fair value. For non-current nancial liabilities, the fair values are determined as the present values of the payments associated with the liabilities.
FINANCIAL STATEMENTS
116_GfK
Derivative financial instruments, hedge accounting The GfK Group concludes transactions throughout the world in various currencies, which may involve currency risks. In addition, short-term investments, investments in securities and borrowing from banks take place in various currencies and can result in risks due to changes in exchange rates, interest rates and market prices. More detailed information on currency and interest rate risks as well as the goals, strategies and processes of the risk management is provided in the risk report, which is part of the Management Report. The GfK Group uses currency forward transactions, combined interest rate and currency swaps as well as interest rate swaps to hedge against currency and interest rate risks. Derivative nancial instruments are reported at cost as asset or liability at the time of the transaction and subsequently valued at fair value. The valuation of derivative nancial instruments is carried out using standard market procedures based on instrumentspecic market parameters. Market prices are calculated on the basis of present value and option price models. Where possible, the relevant market prices and interest rates on the balance sheet date are used as input parameters for these models. In hedge accounting, changes in the value of derivative nancial instruments are recorded differently, depending on whether the instrument is a fair value hedge, cash ow hedge or net investment hedge. If the derivative nancial instrument is used to hedge against the risk of changes in the value of assets or liabilities, it represents a fair value hedge. In this case, changes in the value of both the hedged underlying item and the derivative nancial instrument are taken to the income statement. With changes in the value of cash ow hedges used to hedge underlying transactions against risks from uctuations in future payment ows, the effective portions of the fair value uctuations are initially reported under income and expense recognized directly in equity. If the effectiveness of a hedge is not in the range of 80 % to 125 %, the hedge is liquidated. The ineffective portions of hedges are charged directly to the income statement. The risk regarding the amount of future cash ows applies, in particular, to variable-rate loans and planned transactions that are highly likely to occur. Once the hedged transaction affects the income statement, the prots and losses accumulated in the income and expense recognized directly in equity must be released with impact on the income statement. Net investment hedges can be used to secure net investment in foreign subsidiaries. This may, for example, involve a foreign currency loan in the local currency of the acquired participation. Any exchange gains or losses resulting from the cut-off date valuation of the foreign currency loan relating to the effective portion are recorded in income and expense recognized directly in equity, as is the case for cash ow hedges. If the hedge is considered highly effective, the exchange gains and losses from the hedging instrument are posted in the income and expense recognized directly in equity. The release with impact on the income statement of this item does not occur at the end of term of the hedging instrument, but only upon sale or liquidation of the hedged item.
The prerequisite for using any type of hedge accounting is that the link between the hedged item and the hedging instrument is accurately documented. It must also be recorded how the hedging instrument used compensates the risk relating to the hedged item highly effectively and which methods are used to substantiate the effectiveness. Generally, the part of the changes in value not covered by the hedged item is taken to the income statement. In addition, the GfK Group enters into hedge agreements which do not meet the stringent regulations of ias 39 and cannot therefore be reported according to the rules of hedge accounting. From a nancial point of view, these hedge agreements also comply with the risk management principles. Furthermore, hedge accounting is not applied to foreign currency hedges relating to reported cash assets and liabilities, since the gains and losses realized on the underlying instruments as a result of currency translation and reported in the income statement according to ias 21 are linked to the gains and losses on the derivative hedging instruments and virtually offset each other in the income statement.
Receivables and other assets Trade receivables include both billed and unbilled receivables. Non-invoiced receivables can arise in the context of the valuation of sales. Receivables are stated at nominal value or, in the case of identiable specic risks, at the lower attributable value. These valuation allowances take sufcient account of the default risk. Group-wide guidelines regulate hedging against the risk of non-payment. Accordingly, a value adjustment of 50 % must be applied to receivables that are six to nine months overdue. If receivables are overdue by nine to twelve months, the value adjustment amounts to 75 %. If receivables are more than twelve months overdue, or the client company is in the process of being wound up, a valuation allowance of 100 % must be applied. Exceptions are possible, subject to authorization by the relevant management. A credit check of new clients should be obtained from a recognized credit agency if the order volume exceeds 0.1 % of the companys external sales. If no satisfactory data about the client is available, two-thirds of the order value is payable prior to delivery of the relevant data. The credit rating of existing clients must also be monitored on the basis of the specied rules. In addition, the credit risk is minimized through issuing invoices for prepayments and on-account payments.
Inventories Inventories are valued at the lower of cost and net realizable value. Due to their subordinated importance to the consolidated nancial statements of the GfK Group, inventories are reported under other current assets and deferred items.
Cash and cash equivalents Cash and cash equivalents contain cash on hand and in banks, as well as liquid investments with a remaining term of less than three months.
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FINANCIAL STATEMENTS
Accounting policies
Equity and liabilities Capital reserve GfK ses equity which is not part of the subscribed capital attributable to capital contributions of shareholders, and which does not result from generated income, is reported under the capital reserve. Services that are linked to deposits for the purposes of acquiring shares or granting privileges, as well as other services aimed at strengthening equity, are also reported under the capital reserve. Retained earnings Amounts created from income in the nancial year under review or prior nancial years are reported as retained earnings. This includes a statutory reserve to be created from income. In addition, the actuarial gains and losses from dened benet plans are included in retained earnings. Other reserves Other reserves comprise changes in Group equity, which initially are not reported in the income statement and which do not involve contributions by shareholders or distributions to shareholders. These changes result from exchange rate differences, unrealized prots and losses from available-for-sale securities and the valuation of hedging instruments (cash ow and net investment hedges). Minority interests Any non-controlling shares are reported as minority interests.
Trade payables and other liabilities Trade payables and other liabilities are stated at repayment value. Obligations under invoices outstanding are reported under trade payables.
Liabilities on orders in progress Liabilities on orders in progress comprise payments on account and accrued amounts from the recognition of sales. Within this item, sales are accrued which have arisen from contractually agreed invoices for prepayments or payments on account, but cannot yet be recognized as sales according to the above described sales recognition methods.
Consolidated cash flow statement The cash ow statement shows the changes to the balance sheet item cash and cash equivalents resulting from cash ows from operating activity, investing activity and nancing activity. The cash ow from operating activity is derived indirectly from changes to balance sheet entries. These are adjusted for the effects of currency translation and changes in the scope of consolidation. As a consequence, only a limited reconciliation is possible between the changes in the balance sheet items according to the consolidated cash ow statement and the arithmetical changes in the consolidated nancial statements, the schedule of movements in non-current assets and other information in the notes to the nancial statements.
Provisions In principle, provisions are set up when an obligation to a third party will probably result in an outow of funds. In addition, the level of the obligation needs to be estimated reliably. Long-term provisions are discounted if they are interest-free or low-interest. Provisions for pensions are valued in accordance with the projected unit credit method, in which future compensation increases are taken into account. The amount shown on the balance sheet represents the present value of the obligation, adjusted by the unrecognized past-service costs after offsetting the fair value of the plan assets. The discount rate is based on the interest rate for prior-ranking xed-income corporate bonds. Payments for dened contribution plans are stated as expenses when they occur. Actuarial gains and losses on dened benet plans are recorded directly in retained earnings without impact on income in exercise of the option in ias 19. Estimates To a certain extent, estimates and assumptions cannot be avoided in the consolidated nancial statements. They may affect assets and liabilities as well as contingencies on the balance sheet date and the income and expenses for the nancial year. These estimates were made by the management, taking into account all known facts to the best of their knowledge. Nevertheless, the actual amounts may deviate from such estimates. The most important estimates regarding the future performance of the GfK Group and its economic environment are described in the Outlook section of the Management Report.
FINANCIAL STATEMENTS
Financial liabilities Financial liabilities include interest-bearing liabilities relating to nancing, particularly loans from banks and other lenders, liabilities under nance leases and other interest-bearing liabilities. The GfK Group reports rights to make delivery (put options or bonds) held by minority shareholders and variable purchase prices in connection with buying shares as purchase price elements which depend on future events and are impacted by future sales and ebit. The minority interests affected by this are not reported as minority interests. The associated non-current or current nancial liabilities are generally valued at fair value. Interest added to payment obligations is reported under interest expenses.
118_GfK
Associated companies The consolidated nancial statements as at December 31, 2010 report on participations in one (2009: two) associated company in Germany and 13 (2009: 16) associated companies abroad. As at May 1, 2010, a 40 % stake was acquired in SirValUse Consulting GmbH, Hamburg, Germany. The participation in Infotab Research GmbH, Munich, Germany, was sold in December 2010. Ernst und GfK Grundstcksgesellschaft, Nuremberg, Germany, was wound up in December 2010. In March 2010, Bureau voor Reclame Statistiek Hoofddorp b.v., Hoofddorp, the Netherlands, was wound up. The participations in ggc-nop Limited, London, uk, and Phononet ag, Zurich, Switzerland, were sold in February and July 2010 respectively.
Additions 0 3 3
Disposals 0 6 6
For reasons of materiality, the 51 % stake in GfK Conecta s.a.c., Lima, Peru, acquired in 2009, and its holding company, GfK Custom Research Latam Holding, s.l., Valencia, Spain, were not consolidated until January 1, 2010. Both companies activities are based in the Custom Research sector. GfK Retail and Technology Asia Holding b.v. (the former ifr Nederland b.v.), Amsterdam, the Netherlands, was consolidated for the rst time on October 1, 2010. The company has since been the holding company for the Asian GfK companies with activities in the Retail and Technology sector. On January 1, 2010, the Custom Research sector companies Doane Marketing Research, Inc., Saint Louis, Missouri, usa, and Marketeam Associates of Ohio Inc., Cleveland, Ohio, usa were merged with Marketeam Associates of Missouri, Inc., Saint Louis, Missouri, usa, which then changed its name to Doane Marketing Research, Inc. Datarectory, Inc., Saint Louis, Missouri, usa, was wound up. In addition, GfK HealthCare Nederland b.v., Bussum, the Netherlands, was merged with Intomart GfK b.v., Hilversum, the Netherlands, on January 1, 2010. On July 1, 2010, gfk isl s.a., Issy les Moulineaux, France, whose activities are also based in the Custom Research sector, was merged with gfk custom research france sarl, Rueil-Malmaison, France, which changed its name to gfk isl, custom research france sas, Rueil-Malmaison, France. The shares in Orange Interactive Research ab, Stockholm, Sweden, were sold on December 20, 2010. The company has been divested.
Other participations The number of other participations is three (2009: four). The participation in tmc Thomson Media Control GmbH & Co. kg, Baden-Baden, Germany, was sold in March 2010.
5. sales
Sales are broken down according to type as shown in the table below:
2009 Sales in respect of third parties, billed Sales in respect of third parties, unbilled Sales in respect of related parties and groups Sales in respect of Group companies Sales 1,137,716 21,752 2,982 2,082 1,164,532
The breakdown of sales according to sector and region is shown under Section 33. Segment reporting.
6. cost of sales
FINANCIAL STATEMENTS GfK_119
2009
Companies of minor importance The GfK Group did not include 40 (2009: 47) companies in the consolidated nancial statements during the reporting year, because they were of minor signicance for the net assets, nancial position and income of the Group. External sales, total assets and annual income from these companies together totaled between 0.4 % and 1.9 % of the corresponding gures in the consolidated nancial statements.
Personnel expenses Depreciation and amortization Other cost of sales Cost of sales relating to Group companies Cost of sales (before research and development costs) Research and development costs Cost of sales (including research and development costs)
2009 Operating income Expenses and income in connection with reorganization and business combinations Write-ups and write-downs of additional assets identied on acquisitions Personnel expenses for share-based payments and long-term incentives Remaining other operating income 88,906 16,013 27,531 3,043 19,913 31,574 147,154
In the prior year, the remaining other operating expenses included vat payments for prior years totaling eur 1,986 thousand.
Expenses and income in connection with reorganization and business combinations Expenses and income in connection with reorganization and business combinations comprise expenses of eur 6,649 thousand (2009: eur 16,013 thousand) arising from the biss tness and efciency program. The biss-related expenses primarily include costs of external consultancy and training services as well as severance pay.
Miscellaneous operating income mainly consists of income from refund claims, income from insurance policies and prots on the disposal of tangible assets.
Write-ups and write-downs on additional assets identified on acquisitions The composition of write-ups and write-downs on additional assets identied on acquisitions and the allocation to items in the income statement are shown in the table below.
2010 23,224 2,328 3,083 7,996 36,631 Scheduled amortization Cost of sales Selling and general administrative expenses Scheduled amortization of current assets Cost of sales Impairments Cost of sales Selling and general administrative expenses Other operating expenses Reversal of impairments Cost of sales Selling and general administrative expenses Other operating income Amortization of hidden charges 0 0 4,087 463 27,531 508 5,206 1,287 314 16,356 570 11,408 1,275 3,231 85 6,782 2,441 2,328 15,597 0 6,480 5,555
2009 Exchange losses Depreciation and amortization Personnel expenses Miscellaneous Other operating expenses
FINANCIAL STATEMENTS
2009
2010
Personnel expenses primarily comprise severance payments in relation to positions which were no longer lled. Miscellaneous operating expenses include amortization of software projects, rental and lease expenses for parts of buildings which are no longer used, losses on the disposal of assets, expenses in respect of government authorities and expenses relating to liability, penalties and damages.
2009 Wages and salaries Social security contributions and expenses for pensions Personnel expenses 427,930 82,575 510,505
Further details are provided in Section 16, in the sub-section Amortization and impairments on intangible assets.
120_GfK
Personnel expenses for share-based payments and long-term incentives Since 2009, no personnel expenses have arisen under the plan for granting option rights to executives of the GfK Group, because no new tranches have been issued since 2007. The total value of each tranche was distributed over two years to the day after the options were issued, which corresponds to the period between issue and the date on which options could be exercised for the rst time. Expenses of eur 9,124 thousand (2009: expenses of eur 3,043 thousand) were incurred in 2010 for the 5 Star Long-Term Incentive Plan for GfK Group employees and managers. This is the amount transferred to the relevant provisions in addition to the premium waiver of the employees included for 2010, which is based on calculations by an expert. Details are provided in the section entitled Accounting policies. The table below shows the number, term and value of virtual shares and virtual performance shares issued as part of the 5 Star Long-Term Incentive Plan.
instruments and eur 4,550 thousand (2009: eur 3,166 thousand) in interest expenses on future purchase price liabilities (put options or bonds) for the acquisition of shareholdings. Further information about the use of derivative nancial instruments is provided in Section 28. Financial instruments and Section 29. Risk management.
2009 Current tax expenses/income Taxes on income from other periods Tax income resulting from tax losses not previously utilized Tax income resulting from the use of tax refunds not previously utilized Other actual taxes on income Current tax expenses/income Deferred tax expenses/income from the formation or reversal of temporary differences from changes in the tax rate/new taxes based on previously non-utilized tax losses and interest carried forward/tax credits based on new tax losses incurred and applied and interest carried forward/tax credits from the utilization of loss carried forward and interest carried forward/tax credits 794 683 3,694 2,216 1,675 11,085 692 17,489 14,935 850 146 0 33,420 32,424
Tranche Year issued Year of payment Number of virtual shares issued Number of virtual performance shares issued Fair value of a virtual share at the time of issue in EUR Fair value of a virtual performance share at the time of issue in EUR
3 2008 2011
4 2009 2012
For the Long-Term Incentive Plan for members of the GfK se Management Board, expenses of eur 724 thousand were incurred. Launched in 2010, the new plan has a term of four years and replaces the 5 Star Long-Term Incentive Plan for Management Board members from tranche 5 onwards. A total of 43,310 virtual shares were granted with an issue price of eur 23.67 per share.
from write-ups and write-downs on additional assets identi ed on acquisitions Other deferred tax expenses Deferred tax expenses/income Taxes on income from ongoing business activity
The balance sheet for 2010 recorded a deferred tax asset due to non-utilized tax losses totaling eur 10,796 thousand (2009: eur 7,596 thousand). In addition, there was a deferred tax asset from interest carried forward and tax credits amounting to eur 12,669 thousand (2009: eur 9,148 thousand).
FINANCIAL STATEMENTS GfK_121
The tax rate used to calculate deferred taxes for GfK se and its German subsidiaries that form part of a tax group comprises corporation tax of 15 % plus the solidarity surcharge of 5.5 % on the corporation tax debt paid as well as the effective trade tax rate of 15.645 %. This results in a tax rate of 31.470 % as at December 31, 2010. The deferred taxes of the remaining German companies are calculated according to the relevant municipal factor of the trade tax rate. The deferred taxes of the companies outside Germany are calculated according to the respective country-specic tax rates.
2009 Interest and similar expenses due to banks Other interest expenses Interest expenses Miscellaneous nancial expenses Other nancial expenses 10,746 8,892 19,638 3,835 23,473
The decrease in interest expenses due to banks mainly results from the reduction in amounts due to banks compared with the prior year. Other interest expenses comprise eur 3,430 thousand (2009: eur 3,683 thousand) in expenses from derivative nancial
The table below contains a reconciliation of the anticipated income tax expense on the income tax expense stated in nancial year 2010. To calculate the anticipated tax expense, the tax rate valid during the reporting year for the parent company GfK se, which was 31.470 % (2009: 31.470 %), is multiplied by the pre-tax result.
2009 Total tax rate Expected tax expense Increase/reduction in income tax debt resulting from: Tax-exempt income Differences in tax rates Change in temporary differences not recognized as deferred tax assets, loss carried forward, interest carried forward and tax credits Change in permanent differences Adjustment of deferred tax due to changes in tax rates Consolidation of taxable income from participations Expenses from future purchase price liabilities that cannot be utilized for tax purposes Deviating tax base Tax from prior years Non-deductible expenses Other Tax expense reported 3,593 4,708 4,611 4,596 31.470 % 23,747 2010 31.470 % 39,261
31.12.2009 Goodwill Other intangible assets Tangible assets Investments in afliates Investments in associates and other participations Other nancial assets Non-current other assets and deferred items Non-current assets Receivables and current other assets Securities and xed-term deposits, cash and cash equivalents Current assets Long-term provisions Non-current other liabilities and deferred items 5,989 3,921 4,718 3,295 76 2,634 2,841 23,474 391 15 406 9,476 3,737 13,213 323 12,555 12,878 16,743 66,714 17,666 57,928 6,124 1,561 121 239 286 83,925 12,467 36 12,503 246 4,050 4,296 804 2,482 3,286 104,010 37,296
31.12.2010 5,036 2,928 4,981 3,348 7 32 2,181 18,513 408 8 416 9,854 3,149 13,003 1,799 17,394 19,193 23,464 74,589 21,818 57,056 6,558 1,539 2 519 4,264 91,756 13,905 6 13,911 787 257 1,044 104 1,048 1,152 107,863 33,274
1,930 815 683 274 996 2,151 2,285 2,131 350 1) 14,935
1)
2,578 190 129 579 1,432 1,618 2,435 6,460 1,093 40,774
Non-current liabilities Short-term provisions Current other liabilities and deferred items Current liabilities Losses carried forward and interest carried forward/tax credits Deferred tax assets Goodwill Other intangible assets Tangible assets Investments in afliates Investments in associates and other participations Other nancial assets Non-current other assets and deferred items Non-current assets Receivables and current other assets Securities and xed-term deposits, cash and cash equivalents Current assets Long-term provisions Non-current other liabilities and deferred items Non-current liabilities Short-term provisions Current other liabilities and deferred items Current liabilities Deferred tax liabilities Net deferred tax liabilities
The item Tax from prior years comprises the negative tax impact in prior years arising from provisions for tax risks at subsidiaries of eur 3,466 thousand. The rise in non-deductible expenses of eur 4,329 thousand on the prior year resulted primarily from a change in the tax treatment of exchange gains and losses on hedging transactions in connection with the disposal of participations (bmf letter dated August 25, 2010). The following income tax assets and liabilities have been recorded in the balance sheet:
31.12.2009 Non-current income tax assets Current income tax assets Total income tax receivables
FINANCIAL STATEMENTS
31.12.2010 2,141 13,307 15,448 50 25,919 25,969 Deferred tax assets Deferred tax liabilities Net deferred tax liabilities 31.12. 2009 32,600 69,896 37,296 31.12.2010 38,901 72,175 33,274
Deferred taxes are reported in the balance sheet as shown in the following table.
Non-current income tax liabilities Current income tax liabilities Total income tax liabilities
Non-current income tax assets are reported under the balance sheet item Non-current other assets and deferred items. The non-current income tax liabilities are included in the balance sheet item Non-current other liabilities and deferred items. The deferred taxes result from the balance sheet items shown in the following table.
Taxes resulted on items posted directly to equity as shown in the table below.
31.12.2009 Tax in cumulative other equity from net investment hedges Tax in cumulative other equity from securities Tax in cumulative other equity from cash ow hedges Tax in cumulative other equity from actuarial gains/losses from dened bene t plans Tax posted directly in equity 8,404 2 242 2,237 5,923
122_GfK
As at December 31, 2010, the Group had domestic tax loss carryforwards amounting to eur 81 thousand (2009: eur 81 thousand), which can be utilized for corporation tax and trade tax purposes. In addition, there are foreign tax loss carryforwards totaling eur 57,716 thousand (2009: eur 43,235 thousand). The domestic tax loss carryforwards can be carried forward without restriction in terms of time and amount. Of the foreign loss carryforwards, the amount of eur 16,076 thousand may be carried forward without limit. The amount of eur 18,015 thousand is available for carryforward until 2025 at the latest, and eur 12,984 thousand until 2020 at the latest. A total of eur 10,641 thousand can be carried forward until 2015 at the latest. The estimate of their future realizability governs the recognition and valuation of deferred tax assets. This is dependent on the generation of future taxable prots during accounting periods in which tax valuation differences are reversed and tax loss carryforwards, interest carried forward and tax credits can be applied. In view of expected future performance, it is assumed probable that the relevant benets of the recognized deferred tax assets will be realized according to the provisions of ifrs. For companies which reported deferred tax receivables for tax loss carryforwards and which were in a loss-making situation in the year under review or the previous year, additional deferred tax assets of eur 3,106 thousand (2009: eur 1,061 thousand) are stated, since there is sufcient assumption of future prots. The items for which no deferred tax assets have been stated are shown in the table below.
The average share price during the exercise window was below the exercise price of the options under tranches 6 and 7. As a result, there is no dilution effect in respect of the earnings per share. Additional information about the stock option program is provided in Section 24. of these Notes. Business events involving potential ordinary shares did not arise after the balance sheet date.
Acquisition and manufacturing costs As at January 1, 2009 Exchange rate changes Changes in scope of consolidation Additions Disposals Reclassications As at December 31, 2009 As at January 1, 2010 Exchange rate changes Changes in scope of consolidation Additions Disposals Reclassications As at December 31, 2010 Cumulative amortization As at January 1, 2009 Exchange rate changes
Goodwill 773,989 12,260 42,756 1 0 0 829,006 829,006 42,077 6,987 917 56 272 878,659
Total intangible assets 1,131,724 10,534 89,643 18,726 16,018 217 1,234,826 1,234,826 63,569 9,433 28,717 2,648 88 1,333,985
31.12.2009 Temporary differences Losses carried forward Interest carried forward/tax credits Total 1,257 18,902 9,959 30,118
19,440 88 46 7,071 6,910 2,887 0 0 22,446 22,446 167 0 8,013 237 284 0 22 30,651
144,259 1,618 10,144 22,310 5,454 15,946 4,087 109 181,609 181,609 10,351 20 19,022 1,875 11,556 7,001 4 213,678
201,222 1,298 10,190 29,381 12,364 18,833 4,087 109 241,986 241,986 12,498 20 27,035 2,112 11,840 7,001 26 284,240
FINANCIAL STATEMENTS GfK_123
Of the tax losses not recognized as deferred tax assets, an amount of eur 4,895 thousand lapses within the next ve years. eur 1,527 thousand will lapse within the next six to ten years and eur 2,404 thousand in the next eleven to 15 years. The remaining eur 12,341 thousand will lapse after more than 15 years or include amounts with no time limit on their use. Of the taxable interest carried forward/tax credits, eur 160 thousand will lapse within the next six to ten years. The remaining eur 744 thousand are amounts with no time limit on their use. The GfK Group reports deferred taxes on retained prots from foreign subsidiaries where these prots are distributable and are to be distributed in the foreseeable future. No tax liabilities were deferred in relation to temporary differences amounting to eur 10,881 thousand (2009: eur 1,538 thousand) in view of the fact that there is no pay-out intention. Pay-outs to shareholders of GfK se do not result in income tax consequences at GfK se level.
Changes in scope of consolidation Additions Disposals Impairments Reversal of impairments Reclassications As at December 31, 2009 As at January 1, 2010 Exchange rate changes Changes in scope of consolidation Additions Disposals Impairments Reversal of impairments Reclassications As at December 31, 2010 Carrying values
As at January 1, 2009 As at December 31, 2009 As at January 1, 2010 As at December 31, 2010
The changes in the scope of consolidation under acquisition and manufacturing costs mainly comprise adjustments in goodwill as a result of variable purchase price elements in connection with acquisitions, which were agreed prior to January 1, 2010.
Intangible assets of major importance The sum total of all intangible assets of major importance is shown in the table below. These gures relate to intangible assets with an individual value of more than eur 5 million.
An impairment test is carried out at least once a year to determine whether and to what extent existing goodwill is to be impaired. No impairment adjustment was required as a result of the impairment tests for 2009 and 2010. There were therefore no impairment expenses for either nancial year. The table below provides an overview of the goodwill tested in the impairment test and the material assumptions used in the impairment test.
31.12.2009 Goodwill Software Brands Customer relations Surveys Panels 791,075 25,270 18,277 15,347 21,019 7,492
Custom Research Carrying value of goodwill as at September 30, 2010 Duration of detailed planning period Average annual growth in external sales in the detailed planning period Average margin (adjusted operating income/external sales) in the detailed planning period Growth per year after the end of the detailed planning period Discount rate as at September 30, 2010 528,905 5 years 6%
Goodwill and brands have an indenite useful life and are not subject to scheduled amortization. Software relates to the internally developed StarTrack analysis and production system in the Retail and Technology sector with a remaining useful life of four years as well as the Evogenius software for the Media sector, which has a remaining useful life of nine years. The survey and brands stem from the purchase price allocation as part of the acquisition of the former nop World. The useful life for the survey is ten years. The customer relations with an initial useful life of 19 years resulted from the purchase price allocation as part of the acquisition of GfK arbor, llc, Media, Pennsylvania, usa, which was merged with GfK Custom Research, llc, New York, New York, usa. The panel resulted from the purchase price allocation as part of the acquisition of the GfK Kynetec Group.
9% 1.7 % 7.0 %
29 % 1.7 % 6.7 %
14 % 1.7 % 7.0 %
The value of the panel set-up costs and brands with an indenite useful life was also checked as part of an impairment test. The table below provides an overview of the material intangible assets with an indenite useful life tested in the impairment test and the material assumptions used in the relevant impairment test.
Amortization and impairments of intangible assets Amortization and impairments charged on intangible assets are included in the income statement under the items shown in the following table.
Basis of recoverable amount Duration of detailed planning period Average annual growth in external sales in the detailed planning period Average margin (adjusted operating income/external sales) in the detailed planning period Growth per year after the end of the detailed planning period Discount rate
6%
4%
3%
2009 Cost of sales Selling and general administrative expenses Other operating expenses Total
FINANCIAL STATEMENTS
31 % 1.7 % 7.3 %
6% 1.7 % 7.3 %
21 % 1.7 % 7.1 %
The impairment adjustments were identied in the impairment test, which was based on updated capital market data and the adjusted business planning. The breakdown of impairment expenses is as follows:
The average external sales growth p.a. is in line with historical values and sales growth in the market research industry prior to the nancial and economic crisis. The planned margins are based on past empirical values. Future increases in margins in the Custom Research and Media sectors will result, in particular, from the positive effects after the end of the global economic crisis. In the Custom Research sector, additional synergetic effects are expected from the cross-sector use of technology, data collection and the use of standard methods as well as coordinated global key account management.
2009 Surveys Customer relations Brands Panels Other assets Software Order book Long-term contracts Total 8,739 1,275 3,231 2,542 0 2,771 224 51 18,833
124_GfK
Assuming that a perpetuity growth rate of only 1.7 % is already applied in the planning for 2014 and 2015, with all other planning assumptions unchanged, no impairment requirement arises on goodwill in any of the corporate sectors. Based on an assumed discount rate of approx. 9.5 % for Custom Research and approx. 8.2 % for Media in the impairment test for goodwill, with all other assumptions unchanged, the fair value less selling costs would correspond to the carrying value of the relevant asset.
Miscellaneous intangible assets The breakdown of miscellaneous intangible assets is shown in the table below.
31.12.2009 Disclosed hidden reserves from purchase price allocation: Customer relations Brands 44,070 29,508 26,856 25,131 344 88 13,907 0 430 4,753 145,087
31.12.2010
46,903 30,063 26,942 16,332 142 0 15,256 5,994 510 5,320 147,462
Goodwill The allocation of goodwill to the cash generating units is shown in the following table.
Panels Surveys Order book Contracts Software 31.12.2009 31.12.2010 537,013 151,088 150,647 838,748 Acquired panels Panel set-up costs Sundry intangible assets Miscellaneous intangible assets
The increase in goodwill of eur 47,673 thousand resulted from a rise of eur 7,576 thousand from changes in the scope of consolidation and other changes, as well as an exchange rate-driven gain of eur 40,097 thousand.
The item acquired panels is reported for the rst time in the year under review. In addition to a new panel acquired in Japan, this item includes reclassications of panels which already existed in the prior year, most of which were shown under the item licenses. Brands which have been identied and capitalized as part of the purchase price allocation have an indenite useful life. They are established brands with a high degree of brand recognition. The allocation of brands to the sectors is shown in the table below.
Internally generated intangible assets Internally generated intangible assets primarily comprise internally developed software totaling eur 45,691 thousand (2009: eur 42,471 thousand) as well as panel set-up costs of eur 14,757 thousand (2009: eur 13,425 thousand). Panel set-up costs only have a limited useful life if the panel was created for a specic, xed-term client order. Capitalized panel set-up costs amounting to eur 10,469 thousand (2009: eur 9,486 thousand) have an indenite useful life. The allocation of panel set-up costs to the sectors is shown in the table below.
31.12.2009 Custom Research Retail and Technology Media Panels set up internally with an indenite useful life 7,644 894 948 9,486 31.12.2010 9,243 1,187 39 10,469
31.12.2009 Custom Research Retail and Technology Media Brands 17,467 70 11,971 29,508
In addition, panels were also identied as part of the purchase price allocation. Most of these have an indenite useful life. The allocation of panels with an indenite useful life to the sectors is shown in the table below.
31.12.2009 Custom Research Retail and Technology Panels acquired with an indenite useful life 10,296 15,388 25,684
10,200
Operating lease The payments listed in the table below under operating lease agreements were carried as expenses:
Acquisition and manufacturing costs As at January 1, 2009 Exchange rate changes Changes in scope of consolidation Additions Disposals Reclassications As at December 31, 2009 As at January 1, 2010 Exchange rate changes Changes in scope of consolidation Additions Disposals Reclassications As at December 31, 2010 Cumulative depreciation As at January 1, 2009 Exchange rate changes Changes in scope of consolidation Additions Disposals Impairments Reversal of impairments Reclassications As at December 31, 2009 As at January 1, 2010 Exchange rate changes Changes in scope of consolidation Additions Disposals Impairments Reversal of impairments Reclassications As at December 31, 2010 Carrying values As at January 1, 2009
FINANCIAL STATEMENTS
Land and buildings 50,386 18 150 1,176 85 109 51,718 51,718 3,337 12 322 167 4 55,218
Fixtures and ttings 236,296 1,396 2,906 31,161 13,499 326 257,934 257,934 6,485 100 23,454 16,049 84 271,840
Total tangible assets 286,682 1,378 3,056 32,337 13,584 217 309,652 309,652 9,822 112 23,776 16,216 88 327,058
2009 Minimum lease payments Contingent lease payments Less sub-lease payments received Lease payments 31,3201) 213 393 31,140
1) The valuation of the prior years gures was adjusted where this was not appropriate.
As at December 31, 2010, the future minimum lease payments under non-terminable agreements were due as follows:
Payable Within one year Between one and ve years After more than ve years Future minimum lease payments under operating leases
172,974 1,177 1,468 20,893 12,935 0 0 460 183,117 183,117 4,462 59 21,819 15,274 102 0 26 194,311
193,186 1,177 1,468 22,130 13,020 0 0 109 204,832 204,832 5,928 59 23,165 15,441 102 0 26 218,671
The main operating leases in the GfK Group involve leases on land and buildings, some with options to extend the lease. They have differing future expiry dates. Finance lease The carrying values of capitalized leased assets as at December 31, 2010 are shown in the table below.
31.12.2009 Buildings Other leased assets Capitalized leased assets 9,237 2,529 11,766
Determination of the present value and due date of future minimum lease payments are shown in the tables below.
31.12.2009 30,174 30,003 30,003 30,858 63,322 74,817 74,817 77,529 93,496 104,820 104,820 108,387 Payable Within one year Between one and ve years After more than ve years Future minimum lease payments Minimum lease payments 2,504 11,008 0 13,512 Less interest 105 1,206 0 1,311 Present value minimum lease payments 2,399 9,802 0 12,201
A land charge has been entered on a piece of land with company buildings in Nuremberg with a carrying value of eur 8,843 thousand (2009: eur 9,073 thousand) for the potential granting of a loan by a bank. Similar to the prior year, no secured liabilities existed as at the reporting date.
31.12.2010 Minimum lease payments 2,766 9,509 0 12,275 Less interest 90 687 0 777 Present value minimum lease payments 2,676 8,822 0 11,498
Payable
Leasing The GfK Group leases ofce premises and business equipment under long-term lease agreements. As a rule, the lease installments consist of a minimum lease payment plus a contingent lease payment whose level is governed by the level of use of the leased assets. In cases in which the GfK Group bears the risks and opportunities arising from the use of the leased assets to a substantial extent, these are capitalized (nance lease). Otherwise, the lease installments are carried as an expense (operating lease).
Within one year Between one and ve years After more than ve years Future minimum lease payments
126_GfK
In the reporting year, there were no contingent lease installments to be recognized as expenses. There were no sub-lease arrangements under nance leases. The main nance leases held by the GfK Group are for buildings and part buildings, software, and xtures and ttings. In April 1992, GfK se entered into a sale-and-leaseback agreement for part of the ofce building at Nordwestring 101, Nuremberg, which qualies as a nance lease. The lease was concluded for 30 years with an original obligation amount of eur 13,012 thousand. The original lease period without right of cancellation ends in March 2012, but with the option to acquire the building for eur 7,533 thousand. The nance lease liability is eur 11,498 thousand (2009: eur 12,201 thousand), of which eur 2,676 thousand (2009: eur 2,399 thousand) has a remaining term of under one year.
The carrying amount for these shares and the income from associates are not materially affected by including these nancial statements with differing reporting dates. Moreover, preparing interim nancial statements would not have been possible for practical reasons.
Other financial assets The breakdown of other nancial assets is shown in the table below.
31.12.2009 Shares in afliated companies Other participations Loans to afliated companies Loans to associates Other loans Other available-for-sale securities Long-term deposits Other nancial assets 4,393 1,500 2,190 675 252 410 124 9,544
The shares in afliated, non-consolidated companies and other participations are classied as available-for-sale and reported at amortized cost, as no market prices exist for them, other methods of realistically estimating the fair value are not practicable and determining the market value reliably would only be possible as part of concrete acquisition negotiations. A sale of the shares is not currently intended. Further information on the GfK Groups shares in afliated companies and other participations is provided in the list of shareholdings in Section 41. of these Notes.
2009 Assets Liabilities Sales Total income for the period 59,193 18,594 61,838 12,073
The change in the gures shown in the table above resulted essentially from the acquisition of SirValUse Consulting GmbH, Hamburg, Germany. The 40.0 % stake was acquired as at May 1, 2010 and valued at equity from that date. Ernst und GfK Grundstcksgesellschaft, Nuremberg, Germany, was wound up in December 2010. During the reporting period, there were no material pro rata losses on the shareholdings in associates. As in the previous year, the equity valuation was based on nancial statements with differing reporting dates for the following associated companies: Media Focus (arge), Hergiswil, Switzerland (November 30, 2010) Sports Tracking Europe, b.v., Amstelveen, Netherlands (September 30, 2010) npd Intelect, l.l.c., Port Washington, New York, New York, usa (September 30, 2010)
31.12. 2009 Financial non-current other assets and deferred items Non-nancial non-current other assets and deferred items Non-current other assets and deferred items Financial current other assets and deferred items Non-nancial current other assets and deferred items Current other assets and deferred items 3,979 2,655 6,634 11,088 20,180 31,268
GfK_127
FINANCIAL STATEMENTS
31.12.2009 Billed trade receivables Unbilled trade receivables Less valuation allowances Trade receivables 224,326 51,097 275,423 4,740 270,683
Allocations to valuation allowances totaled eur 3,231 thousand (2009: eur 3,525 thousand). In addition, currency effects of eur 362 thousand (2009: eur 222 thousand) increased the gure. These impairment expenses are reported in the income statement under selling and general administrative expenses. Reversals of valuation allowances amounted to eur 666 thousand (2009: eur 1,093 thousand). Valuation allowances of eur 1,014 thousand (2009: eur 2,899 thousand) were utilized.
Valuation allowances amounting to eur 343 thousand (2009: eur 402 thousand) were recorded on nancial other assets and deferred items in the reporting year. They are reported under other operating expenses. No income resulted from reversals of valuation allowances. In the reporting year, valuation allowances of eur 16 thousand (2009: eur 0 thousand) were utilized. Non-nancial other assets and deferred items as at the reporting date were as follows:
FINANCIAL STATEMENTS
31.12.2009 Credit with banks Cash equivalents and xed-term deposits with a remaining term of less than 3 months Checks in transit Cash in hand and checks Cash and cash equivalents 39,138 3,186 1,249 1,286 42,361
31.12.2009 Non-nancial non-current other assets and deferred items with a remaining term of more than one year Receivables from income taxes Receivables from tax and other authorities Miscellaneous non-nancial non-current other assets and deferred items Non-nancial non-current other assets and deferred items Non-nancial current other assets and deferred items with a remaining term of up to one year Deferred items Receivables from tax and other authorities Receivables from employees Receivables from utilities Miscellanous non-nancial current other assets and deferred items Non-nancial current other assets and deferred items 13,094 3,320 825 857 2,084 20,180 914 1,113 628 2,655
31.12.2010
There are no material restrictions on the availability of cash and cash equivalents.
31.12.2009 14,538 3,479 877 564 1,695 21,153 Trade receivables of which: neither impaired nor overdue of which: non-impaired and overdue as follows by up to 30 days by between 31 and 90 days by between 91 and 180 days by between 181 and 360 days by more than 360 days of which: new terms negotiated, as otherwise overdue 63,389 24,555 6,500 1,648 1,110 0 270,683 173,481
128_GfK
In the GfK Group, a considerable portion of the trade receivables is due on the billing date. Trade receivables which are not due include unbilled receivables amounting to eur 60,306 thousand (2009: 51.097 thousand). With regard to trade receivables with no impairment, there was no indication as at the reporting date of circumstances that may negatively affect their value. Information about the guidelines on monitoring receivables and the credit rating of clients as well as the criteria for setting up valuation allowances relating to receivables, which apply throughout the Group, is provided in Section 3. under Accounting policies.
Authorized capital GfK se has authorized capital, on the basis of which the Management Board is authorized, with the consent of the Supervisory Board, to increase the share capital against cash and/or contributions in kind on one or more occasions until May 22, 2012 by up to a total amount of eur 55,000 thousand, whereby the shareholders subscription rights may be excluded.
Contingent capital The contingent capital (contingent capital I and II) is used for granting stock options to the senior management teams of the company and its afliated companies within the meaning of Sections 15ff. of the German Stock Corporation Act (AktG). Contingent capital I covered stock options under tranches 1 to 6, which were issued in the period from 2000 to 2005. An amount of eur 3,499 thousand of contingent capital I expired following the exercising of stock options from tranche 6 in 2010 through the issue of 313,383 no-par shares with an arithmetical nominal value of eur 802 thousand. Contingent capital II of eur 3,400 thousand facilitates the issue of 780,000 no-par bearer shares. It was created to service the stock options issued in 2006 under tranche 7, which can still be exercised up to 2011. In 2010, contingent capital II was utilized to issue 13,344 no-par shares with an arithmetical nominal value of eur 58 thousand. As at year-end 2010, an amount of eur 3,342 thousand of contingent capital II remains for exercising stock options, which corresponds to 766,656 no-par bearer shares. By resolution of May 23, 2007, the companys contingent capital was increased by eur 21,250 thousand through the issue of up to 5,000,000 new no-par bearer shares (contingent capital III). The contingent capital III is used to grant shares to holders or creditors of options and/or convertible bonds issued on the basis of the authorization of the Annual General Meeting of May 23, 2007. The contingent capital of the company totaled eur 24,592 thousand as at December 31, 2010, which corresponds to 5,766,656 no-par shares.
31.12.2009 Current other assets and deferred items (excluding inventories and receivables from employees) of which: neither impaired nor overdue of which: non-impaired and overdue as follows by up to 30 days by between 31 and 90 days by between 91 and 180 days by between 181 and 360 days by more than 360 days of which: new terms negotiated, as otherwise overdue 2,337 2,610 2,142 432 717 0 29,815 21,577
With regard to non-impaired current other assets and deferred items, there was no indication as at the reporting date that the debtors would be unable to fulll their payment obligations.
24. equity
Subscribed capital GfK ses share capital increased as a result of the exercise of stock options in 2010. Under the stock option program, stock option holders from tranche 2005/2010 were able to acquire GfK se no-par shares in the ratio of 1:1.2 and from tranche 2006/2011 in the ratio of 1:1 by returning their stock options in 2010. A total of 326,727 no-par shares were acquired in 2010 through exercising 274,498 options. Following the issue of the new shares, the subscribed capital, the capital reserve and the number of no-par bearer shares issued changed as follows:
Stock options As a result of the capital increase in 2004 out of company funds and the issue of bonus shares in the ratio of 5:1, the subscription right in respect of the issued options of tranches 1 to 5 increased from one share to 1.2 shares per option. The exercise prices were adjusted accordingly. For tranche 6, to which GfK executives were invited to subscribe before the capital increase but which was only issued after the capital increase, the number of shares to be granted was also adjusted in the above ratio. For tranche 7, to which GfK executives were invited to subscribe after the capital increase in 2004, one option corresponds to the right to subscribe one share.
Tranche
Subscribed capital eur 000 Carried forward as at January 1, 2010 Issue of new shares by converting options from contingent capital As at December 31, 2010 150,297 860 151,157
The 36,274,090 no-par shares are fully paid-up. Each shareholder is entitled to receive dividends on his shares in accordance with the respective prot distribution resolution. Each share grants one vote at the Annual General Meeting.
6 7
Options exercised
Shares issued
GfK_129
FINANCIAL STATEMENTS
The development of the stock options issued is shown in the table below.
Proposed appropriation of profits In accordance with the German Stock Corporation Act (AktG), the dividend that may be distributed is determined by the retained prot reported in the annual nancial statements of the parent company, GfK se. These are prepared under the provisions of the German Commercial Code (hgb). The retained earnings and retained prot of GfK se reported under the provisions of the hgb are available for distribution to shareholders in their entirety. The capital reserve may not be distributed to shareholders. A proposal will be made to the Annual General Meeting to distribute a dividend of eur 17,412 thousand (eur 0.48 per no-par share) to shareholders out of the retained prot for 2010 of eur 128,437 thousand and to transfer eur 111,025 thousand to other retained earnings.
2009 No. of options 1,075,194 57,802 171,756 845,636 845,636 Weighted average price in EUR/share 31.65 31.66 25.81 32.83 32.83 No. of options 845,636 274,498 10,374 90,162 470,602 470,602
2010 Weighted average price in EUR/share 32.83 32.00 33.48 31.92 33.48 33.48
Balance at start of year Options granted Exercised Forfeited Expired Repayments Balance at year-end Exercisable at year-end
The average share price in the exercise window in 2010 amounted to eur 29.08 per share. Since nancial year 2009, no further personnel expenses have been incurred in connection with the stock option program. The fair value of the stock options issued by GfK in the years 2001 to 2006 was calculated as at the date of granting on the basis of a Black-Scholes option pricing model, which takes account of the issue terms and conditions. The parameters considered when calculating the fair value and the overall amounts based on it are shown in the table below.
25. provisions
Long-term provisions The breakdown of long-term provisions is shown in the table below:
31.12.2009 Pension provisions Other long-term provisions Long-term provisions 46,010 19,677 65,687 31.12.2010 55,672 26,293 81,965
Tranche Implicit volatility on issue date in % Risk-free investment interest in %1) Term in years Fair value per option in EUR Total value per program
1) Interest rate of zero coupon bonds with a maturity of three years
Pension provisions Pension provisioning within the GfK Group is based on both dened contribution plans and dened benet plans for each company. For dened contribution plans, which are nanced exclusively on the basis of external funds, there are no further obligations for GfK companies other than paying contributions. Expenses for dened contribution plans also include employer contributions to statutory pension plans. Pension commitments are based on statutory or contractual arrangements or are on a voluntary basis. The basis of assessment for contributions to dened contribution plans is mainly the length of service with the company and the wage or salary level of the employee. However, the benets can vary depending on the legal, scal and economic framework conditions of the country concerned. The expenses for dened contribution plans amounted to eur 15,890 thousand in 2010 (2009: eur 14,790 thousand). The pension obligations arising from dened benet plans are reported according to the projected unit credit method. Actuarial reports are produced annually by independent actuaries for dened benet plans. The actuaries apply statistical and actuarial calculations to determine the assets and provisions to be carried on the balance sheet. Determining the present value of dened benet plans and pension assets is based on empirical and statistical estimated values, such as future salary increases, mortality rates or expected long-term returns on the plan assets. Discrepancies between the actual values and these estimated values are expressed as actuarial gains or losses. The GfK Group is utilizing the option under ias 19, whereby actuarial gains and losses are not recognized in the income statement but recognized directly in equity. In the year under review, actuarial losses of eur 9,627 thousand (2009: eur 4,618 thousand) were reported in this way. This change also comprises the effects of currency
The calculation of volatility is based on historical volatility data for GfK shares (weekly average prices, net of any extraordinary past prices) for the expected term of the options. The average weighted remaining term for the stock options was 1.0 years (2009: 1.6 years) as at December 31, 2010.
The statement of changes in equity precedes these Notes. The change in the difference from currency translation in the year under review of eur 56,087 thousand, recognized directly in equity, resulted mainly from the revaluation of the pound sterling, the us dollar and the Swiss franc. Of the amounts reported under other reserves, no material gains and losses were transferred to the income statement in nancial year 2010, as was also the case in 2009. During the reporting year, eur 10,784 thousand (2009: eur 16,536 thousand) were distributed to GfK se shareholders. This corresponds to eur 0.30 (2009: eur 0.46 eur) per share. Consolidated total income attributable to minority interests amounted to eur 14,286 thousand (2009: eur 9,717 thousand). A total of eur 6,540 thousand (2009: eur 7,399 thousand) was paid out to minority interests.
130_GfK
translation. The cumulative amount recognized in retained earnings in this respect totaled eur 21,091 thousand (2009: eur 11,464 thousand) as at December 31, 2010. The values indicated represent the relevant gures before deferred taxes and excluding minority interests. The calculation of obligations and, in certain cases, associated plan assets, is based on the actuarial and statistical assumptions listed in the table below (weighted average).
2009 Fair value of plan assets as at January 1 Change in scope of consolidation Expected return on plan assets Actuarial gains/losses Exchange rate changes Employer contributions Participant contributions Bene ts paid Bene ts paid in Switzerland under the freedom of capital movements Plan settlements Fair value of plan assets as at December 31 45,039 0 1,701 556 119 3,011 1,604 1,906 1,326 3,087 45,473
2010 45,473 0 1,753 717 8,432 3,605 1,494 1,877 2,290 1,700 54,173
2009 Discount rate Rate of salary increase Fluctuation rate Expected growth in pensions Expected long-term return on plan assets 4.14 % 2.39 % 0.41 % 0.91 % 3.48 %
Mortality rates for GfK companies in Germany were taken from the 2005 g guideline tables by Dr. Klaus Heubeck. The breakdown of pension provisions reported in the balance sheet is shown in the table below.
The plan assets for funded pension obligations essentially comprise nancial instruments amounting to eur 38,678 thousand (2009: eur 30,167 thousand). The general expected return on the plan assets was determined based mainly on experience from the past ten years. The expected return on plan assets in the nancial statements for 2010 was on average 3.47 % (2009: 3.48 %). The actual results from the plan assets amounted to eur 1,037 thousand in 2010 (2009: eur 2,264 thousand). According to GfK estimates, contributions of around eur 2,502 thousand will be payable into funded pension plans over the coming year (2009: eur 2,329 thousand). The amounts reported in the income statement break down as shown in the table below.
31.12.2009 Present value of unfunded obligations Present value of funded obligations Present value of overall obligations Fair value of plan assets Refund claims Impact of ceiling in accordance with IAS 19.58 (b) Net present value of obligations Pension provisions Other assets Net amount reported on balance sheet 37,296 54,072 91,368 45,473 179 23 45,739 46,010 271 45,739
31.12.2010 41,220 68,517 109,737 54,173 189 0 55,375 55,672 297 55,375
2009 Service cost 2,961 3,656 1,701 7 40 664 4,285 Interest cost Expected return on plan assets Expected return from refund claims Past service cost Pro t/loss from curtailment or discontinuation of pension plans Pension expenses
The movement in the present value of the dened benet obligation (dbo) during the period under review is shown in the table below.
2009 Present value of dened bene t obligation as at January 1 Change in scope of consolidation Current service cost Interest cost Participant contributions Actuarial gains/losses Exchange rate changes Bene ts paid Bene ts paid in Switzerland under the freedom of capital movements Past service cost Plan reductions Plan settlements Present value of dened benet obligation as at December 31 86,450 295 2,961 3,656 1,609 5,211 231 3,546 1,326 40 664 3,087 91,368
2010 91,368 0 3,298 3,789 1,499 6,624 10,488 3,813 2,290 474 0 1,700 109,737
The exchange rate changes reected in the above table to a major extent resulted from the revaluation of the Swiss franc. The same applies to the exchange rate changes in plan assets shown in the table below.
GfK_131
FINANCIAL STATEMENTS
The pension expenses are included mainly in cost of sales, selling and general administrative expenses and in interest expenses.
Long-term other provisions The movement in long-term other provisions in the period under review is shown in the table below.
Potential contractual losses 7,226 535 0 544 1,667 2,868 0 0 7,104
Remaining term Other 1,583 167 0 0 672 939 150 530 2,681 Total 19,677 818 31.12.2009 Total 400,426 12,200 84,492 497,118 0 544 13,726 6,470 701 1,301 26,293 Remaining term Of which More between Of which one and more than than one year ve years ve years 270,450 8,822 47,052 326,324 270,450 8,822 45,452 324,724 0 0 1,600 1,600 Amounts due to banks Liabilities under nance leases Other nancial liabilities Interest-bearing nancial liabilities Less than one year 97,280 2,399 36,546 136,225 Of which More between Of which one and more than than one year ve years ve years 303,146 9,801 47,946 360,893 303,146 9,801 44,968 357,915 0 0 2,978 2,978
As at January 1, 2010 Currency effects Change in scope of consolidation Write-ups to discounted provisions Additions Reclassications to short-term provisions Utilization Release As at December 31, 2010
Personnel provisions mainly comprise commitments relating to employees leaving and from provisions for anniversary expenses based on contractual agreements. In addition, they include provisions for long-term incentive programs of eur 11,822 thousand (2009: eur 5,554 thousand). The provision for potential contractual losses relates to two longterm lease agreements at non-standard terms as well as other rental agreements. The agreements accounting for the highest amounts are at companies of the former nop World. The agreements at GfK Mediamark Research & Intelligence, llc, New York, New York, usa, and GfK Custom Research, llc, New York, New York, usa, have been in place since 2005 and 2002 respectively. The remaining terms are six and nine years respectively. The agreed rent has been compared with the current and estimated future market rates and the amount in excess has been recognized in the provisions. As these are interestfree commitments, the present value has been used. The discount on the contracts involving the highest amounts was calculated at interest rates of 6.79 % and 4.45 % respectively. The nominal amount of the commitment of GfK Mediamark Research & Intelligence, llc, New York, New York, usa, was eur 4,141 thousand (usd 5,556 thousand) as at the reporting date (2009: eur 4,285 thousand or usd 6,148 thousand). The nominal amount of the commitment of GfK Custom Research, llc, New York, New York, usa, was eur 3,133 thousand (usd 4,203 thousand; 2009: eur 3,826 thousand or usd 5,489 thousand). A share of these commitments is reported under short-term provisions. In the year under review, write-ups to these discounted provisions of eur 544 thousand (2009: eur 358 thousand) were applied.
31.12.2010 Amounts due to banks Liabilities under nance leases Other nancial liabilities Interest-bearing nancial liabilities
Other nancial liabilities included loan liabilities totaling eur 8,509 thousand (2009: eur 5,404 thousand) as at December 31, 2010, of which eur 8,326 thousand (2009: eur 4,904 thousand) concerned related parties. In addition, other nancial liabilities comprised purchase price liabilities which depend on future events (put options and bonds) for the acquisition of participations amounting to eur 60,231 thousand (2009: eur 78,277 thousand). As at December 31, 2010, the weighted average interest rate for the amounts due to banks was 2.51 % after interest rate hedging (2009: 2.85 %). The nancial liabilities become due in the next ve years and thereafter, as shown in the table below.
FINANCIAL STATEMENTS
31.12.2009
Short-term provisions The movement in short-term provisions in the year under review is shown in the table below.
Authorities Potential contrac- and insurance companies tual losses 2,741 194 850 9
Within one year1) One to two years Two to three years Three to four years Four to ve years More than ve years Sales Sundry 1,729 157 71 10 Total 10,889 516 Interest-bearing nancial liabilities
Personnel As at January 1, 2010 Currency effects Change in scope of consolidation Additions Reclassi cations from long-term provisions Utilization Release As at December 31, 2010 5,498 146
1) Includes current account liabilities payable on demand in the context of credit lines
The weighted average interest rate for loans and credit lines is 1.98 % (2009: 2.78 %) before interest rate hedging. As in the prior year, no collateral is in place for amounts due to banks and liabilities under leases of eur 359,734 thousand (2009: eur 412,626 thousand).
8 3,793
0 0
0 2,805
0 946
0 64
8 7,608
101 50 0 196
132_GfK
Financial current other liabilities from operating business mainly comprise amounts owed to households and respondents (eur 8,777 thousand; 2009: eur 6,937 thousand), interviewers (eur 6,695 thousand; 2009: eur 5,659 thousand) as well as customers (eur 2,926 thousand; 2009: eur 2,124 thousand). Financial current other liabilities from non-operating business primarily include liabilities for external year-end closing costs (eur 2,093 thousand; 2009: eur 2,759 thousand) and legal and consultancy costs (eur 1,020 thousand; 2009: eur 1,271 thousand). The breakdown of the partial amount non-nancial other liabilities and deferred items is as follows:
31.12.2009 Financial non-current other liabilities and deferred items Non-nancial non-current other liabilities and deferred items Non-current other liabilities and deferred items Financial current other liabilities and deferred items Non-nancial current other liabilities and deferred items Current other liabilities and deferred items 1,856 1,533 3,389 36,096 81,141 117,237
31.12.2009 Non-nancial non-current other liabilities and deferred items with a remaining term of more than one year Liabilities due to employees 1,096 437 1,533
31.12.2010
The breakdown of the partial amount nancial other liabilities and deferred items is as follows:
Miscellaneous non-nancial non-current other liabilities and deferred items Non-nancial non-current other liabilities and deferred items
31.12.2009 Financial non-current other liabilities and deferred items with a remaining term of over one year Non-derivatives: Financial other liabilities from operating business Liabilities relating to rent Liabilities to related parties Miscellanous nancial non-current other liabilities and deferred items Financial non-current other liabilities and deferred items Financial current other liabilities and deferred items with a remaining term of less than one year Non-derivatives: Financial other liabilities from operating business Financial other liabilities from non-operating business Liabilities relating to rent Liabilities to related parties Interest due Miscellaneous nancial current other liabilities and deferred items Sub-total: non-derivatives Derivatives: Derivative nancial instruments used as hedges Derivative nancial instruments not used as hedges Sub-total: derivatives Financial current other liabilities and deferred items Total: Financial other liabilities and deferred items of which non-derivatives of which derivatives 1,124 144 1,268 36,096 37,952 36,684 1,268 20,708 6,123 2,746 1,636 1,165 2,450 34,828 524 341 4 987 1,856
31.12.2010
Non-nancial current other liabilites and deferred items with a remaining term of less than one year Liabilities due to employees Liabilities arising from other taxes Miscellaneous non-nancial current other liabilities and deferred items Non-nancial current other liabilities and deferred items 55,503 24,776 862 81,141 72,457 29,340 1,498 103,295
Non-nancial current liabilities due to employees mainly comprise liabilities for the payment of bonuses (eur 35,295 thousand; 2009: eur 23,622 thousand) and holiday claims (eur 11,883 thousand; 2009: eur 10,788 thousand) as well as liabilities arising from social security (eur 10,377 thousand; 2009: eur 9,823 thousand).
GfK_133
FINANCIAL STATEMENTS
Financial instruments
Assets Other nancial assets Investments in afliated companies Other participations Loans to afliated companies Loans to associates Other loans Other available-for-sale securities Long-term xed-term deposits Trade receivables Short-term securities and xed-term deposits Financial other assets and deferred items Deposits Receivables from suppliers Assets from share and asset deals Interest receivables Derivative nancial instruments (with hedging) Derivative nancial instruments (without hedging) Miscellaneous nancial other assets and deferred items Cash and cash equivalents Loans and receivables Loans and receivables Loans and receivables Loans and receivables Assets valued at fair value with impact on the income statement Loans and receivables 2,806 2,745 1,891 1,115 28 535 5,947 42,361 Financial assets available for sale Financial assets available for sale Loans and receivables Loans and receivables Loans and receivables Financial assets available for sale Loans and receivables Loans and receivables Assets valued at fair value with impact on the income statement 4,393 1,500 2,190 675 252 410 124 270,683 957
Liabilities Interest-bearing nancial liabilities Amounts due to banks Liabilities from nance lease Other nancial liabilities Trade payables Financial other liabilities and deferred items Financial other liabilities from operational business Financial other liabilities from non-operational business
FINANCIAL STATEMENTS
Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost
Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost Liabilities valued at fair value and charged to the income statement Financial liabilities valued at amortized cost
Liabilities from leasing Liabilities to related parties Interest liabilities Derivative nancial instruments (with hedging) Derivative nancial instruments (without hedging) Miscellaneous nancial other liabilities and deferred items Aggregated under ias 39 valuation categories Loans and receivables Financial assets available for sale Assets valued at fair value with impact on the income statement Financial liabilities valued at amortized cost Liabilities valued at fair value and charged to the income statement
134_GfK
Recognition and measurement in the balance sheet according to ias 39 Fair value recognized Fair value with impact on directly in equity the income statement
Amortized costs
Acquisition costs
Financial instruments
Assets Other nancial assets Investments in afliated companies Other participations Loans to afliated companies Loans to associates Other loans Other available-for-sale securities Long-term xed-term deposits Trade receivables Short-term securities and xed-term deposits Financial other assets and deferred items Deposits Receivables from suppliers Assets from share and asset deals Interest receivables Derivative nancial instruments (with hedging) Derivative nancial instruments (without hedging) Miscellaneous nancial other assets and deferred items Cash and cash equivalents Loans and receivables Loans and receivables Loans and receivables Loans and receivables Assets valued at fair value with impact on the income statement Loans and receivables 3,282 3,188 1,524 314 40 576 5,664 54,755 Financial assets available for sale Financial assets available for sale Loans and receivables Loans and receivables Loans and receivables Financial assets available for sale Loans and receivables Loans and receivables Assets valued at fair value with impact on the income statement 5,302 1,500 2,365 1,061 139 448 200 315,569 1,382
Liabilities Interest-bearing nancial liabilities Amounts due to banks Liabilities from nance lease Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost Other nancial liabilities Trade payables Financial other liabilities and deferred items Financial other liabilities from operational business
FINANCIAL STATEMENTS
Liabilities valued at fair value and charged to the income statement Financial liabilities valued at amortized cost
Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost Financial liabilities valued at amortized cost Liabilities valued at fair value and charged to the income statement Financial liabilities valued at amortized cost
Financial other liabilities from non-operational business Liabilities from leasing Liabilities to related parties Interest liabilities Derivative nancial instruments (with hedging) Derivative nancial instruments (without hedging) Miscellaneous nancial other liabilities and deferred items Aggregated under ias 39 valuation categories Loans and receivables Financial assets available for sale Assets valued at fair value with impact on the income statement Financial liabilities valued at amortized cost Liabilities valued at fair value and charged to the income statement
136_GfK
Recognition and measurement in the balance sheet according to ias 39 Fair value recognized Fair value with impact on directly in equity the income statement
Amortized costs
Acquisition costs
Financial instruments
31.12.2009 Financial assets valued at fair value Derivative nancial instruments not used as hedges Derivative nancial instruments used as hedges Short-term securities and xed-term deposits Financial liabilities valued at fair value Derivative nancial instruments not used as hedges Derivative nancial instruments used as hedges Total 144 1,124 252 535 28 957
Level 1
Level 2
Level 3
0 0 957
535 28 0
0 0 0
The sensitivity analysis approximately quanties the risk that can arise under certain assumed conditions if specic parameters change. The new earn-outs included in 2010 were affected by a simultaneous parallel appreciation of the interest rate by one percentage point and the reduction in ebit by ten percentage points while all other factors remained constant. This reduced existing liabilities and increased the net nancial income by eur 1,098 thousand each. The decrease in the interest rate by one percentage point with a simultaneous rise in ebit by ten percentage points income in an increase in liabilities and a reduction in the net nancial income of eur 112 thousand each.
0 0 957
0 0 0
31.12.2010 Financial assets valued at fair value Derivative nancial instruments not used as hedges Derivative nancial instruments used as hedges Short-term securities and xed-term deposits Financial liabilities valued at fair value Derivative nancial instruments not used as hedges Derivative nancial instruments used as hedges Purchase price components which depend on future events Total 808 251 5,310 4,371 576 40 1,382
Level 1
Level 2
Level 3
0 0 1,382
576 40 0
0 0 0
Market risk Market risks arise from potential changes in risk factors that result in a decrease in the market value of the transactions affected by these risk factors. For the GfK Group, exchange rate risks and interest rate risks are particularly relevant.
0 0 0 1,382
0 0 5,310 5,310
Exchange rate risks Exchange rate risks can arise in the GfK Group from transactions conducted in a currency other than the respective functional currency. The main currencies are shown in thousand euros in the tables below.
31.12.2009
No material valuation results were recognized directly in equity in nancial year 2010 as part of recognizing changes in the value of nancial instruments in the available-for-sale category. Interest income from nancial assets and liabilities recognized directly in equity at fair value, which is calculated using the effective interest rate method, amounted to eur 2,414 thousand (2009: eur 3,244 thousand). At the same time, the corresponding interest expenses amounted to eur 19,058 thousand (2009: eur 19,639 thousand).
FINANCIAL STATEMENTS
Loans Trade receivables Cash and cash equivalents Interest-bearing nancial liabilities Trade payables Liabilities from orders in progress Derivative nancial instruments Net exposure
238 0 7,782
19 7,698 58,030
0 3,790 493
0 7,112 2,469
The purchase price components which depend on future events reect earn-out agreements concluded after December 31, 2009. They are valued as at the reporting date on the basis of market interest rates that are appropriate for the relevant term. In the year under review, no changes in value occurred with impact on the income statement, since the underlying transactions took place at the end of the nancial year. No change in value was offset against equity without impact on the income statement.
138_GfK
31.12.2010 Loans Trade receivables Cash and cash equivalents Interest-bearing nancial liabilities Trade payables Liabilities from orders in progress Derivative nancial instruments Net exposure
SGD 0 441 0
JPY 1,471 10 0
Interest rate risks Interest rate risks can impact on variable-rate nancial instruments and on xed-income nancial instruments not valued at amortized cost. Changes in the market value of xed-income nancial assets and liabilities are not recognized in the income statement; moreover, there are no interest rate derivatives which are allocated to xedincome instruments as fair value hedges in accordance with ias 39 and reported in fair value hedge accounting. A change in interest rates on the reporting date, therefore, has no impact on the income statement or the equity as these items are measured at amortized cost. The tables below provide an overview of variable-rate nancial instruments:
4 5,360 86,510
0 9,706 5,292
0 12,545 253
The exchange rates of the most important currencies to the euro are shown in Section 3. Accounting policies. The sensitivity analysis approximately quanties the risk that can arise under certain assumed conditions if specic parameters change. The table below shows how equity and net income are affected by a simultaneous parallel appreciation of all foreign currencies of 10 % against the euro while all other factors remain constant.
Remaining term 31.12.2009 Loans Financial liabilities Liabilities to related parties Derivatives Total amount 3,117 340,791 5,154 159,952 182,876 Less than one year 1,103 50,543 4,041 139,952 86,471 One to ve years 2,014 290,248 1,113 20,000 269,347 More than ve years 0 0 0 0 0
31.12.2009 Income statement 745 5,139 744 330 120 958 8,036 Overall impact 745 7,122 5,034 330 120 958 10,003
31.12.2010 Income statement 749 7,031 140 1,500 461 1,280 10,881 Overall impact 749 7,587 8,115 1,500 461 1,280 11,712
Net exposure
Equity EUR USD GBP CHF SGD JPY Total 0 12,261 5,778 0 0 0 18,039
Remaining term 31.12.2010 Loans Financial liabilities Liabilities to related parties Derivatives Net exposure Total amount 2,486 264,865 4,454 23,563 243,270 Less than one year 2,486 50,981 3,193 1,118 50,570 One to ve years 0 213,884 1,261 22,445 192,700 More than ve years 0 0 0 0 0
The impact of exchange rate uctuations is concentrated on the us dollar and pound sterling in particular.
The effects before tax on the equity and income statement of a change in interest rates for variable-rate nancial instruments of 100 basis points on the reporting date are shown in the table below. The minimum interest rate applied to take account of changes in interest rates was 0 %. This analysis assumes that all other variables, especially exchange rates, remain constant.
GfK_139
FINANCIAL STATEMENTS
Risk management
31.12.2009 Equity Interest rate change in percentage points Variable-rate instruments Interest rate swaps Cash ow sensitivity +1 0 480 480 1 0 119 119 Income statement +1 2,238 1,514 724 1 2,238 1,517 721
The total interest rate and interest rate and currency swaps mature in the next ve years as shown in the table below.
Maturity Less than one year Between one and two years Between two and three years Between three and four years Between four and ve years
31.12.2010 Equity Interest rate change in percentage points Variable-rate instruments Interest rate swaps Cash ow sensitivity +1 0 250 250 1 0 250 250 Income statement +1 2,449 253 2,196 1 1,845 255 1,590
1) The allocation of the prior years gures was adjusted where this was not appropriate.
The derivative nancial instruments are valued on a markingto-market basis, in accordance with the market conditions as at the reporting date. In addition, the Groups own calculations are checked for plausibility on the basis of the market assessments provided by the banks. As at December 31, 2010, the GfK Group essentially had currency hedging contracts relating to the Australian dollar, us dollar, Singapore dollar, Japanese yen, pound sterling and Swiss franc. GfK se charges its subsidiaries a management fee for central Group services. To protect selected subsidiaries from possible exchange rate risks, GfK se invoices these Group services in local currency. The resultant exchange rate risk at GfK se arising from increases in the euro exchange rate against the foreign currencies of these invoices is eliminated through currency forward transactions with various banks relating to the relevant payment dates. The GfK Group used net investment hedges to hedge net investments in foreign subsidiaries. In the year under review, effective changes in the value of a loan in us dollars, which was concluded as part of the acquisition of the former nop World, as well as existing us dollar loans for the nancing of GfK arbor, llc, Media, Pennsylvania, usa (merged with GfK Custom Research, llc, New York, New York, usa), and GfK v2, llc, Blue Bell, Pennsylvania, usa (merged with GfK Healthcare, lp, East Hanover, New Jersey, usa), of eur 2,531 thousand before tax (2009: eur 3,919 thousand) and eur 1,734 thousand after tax (2009: eur 2,686 thousand), were recognized directly in equity without impact on the income statement. In the case of derivatives used as part of cash ow hedges, changes in values are reported under other reserves. In the year under review, the change in other reserves amounted to eur 622 thousand before tax (2009: eur 594 thousand) and eur 426 thousand after tax (2009: eur 407 thousand). Liabilities from cash ow hedges have a carrying value of eur 19,975 thousand (2009: eur 159,887 thousand). The expected outow of funds from the underlying transactions which are hedged by these cash ow hedges amounted to eur 1,019 thousand (2009: eur 4,467 thousand). Of this, eur 777 thousand (2009: eur 3,514 thousand) will occur and impact on income in less than one year and eur 242 thousand (2009: eur 953 thousand) in a period of between one and ve years. In the reporting year, no material ineffective portions were recorded in relation to cash ow hedges and net investment hedges. The gains and losses from derivative nancial instruments are posted in other nancial income or expenses respectively. The income from nancial instruments contained in this gure, which was not reported as part of hedge accounting, amounted to a total of eur 10,740 thousand (2009: eur 4,323 thousand), while expenses amounted to eur 8,714 thousand (2009: eur 4,239 thousand).
The column headed equity only shows the impact of changes that are recognized directly in equity. Changes which would impact on the income statement are not shown in the column headed equity.
Derivative financial instruments The GfK Group uses derivative nancial instruments to hedge against exchange rate and interest rate risks. If the prerequisites for hedge accounting are met, derivative nancial instruments are reported as part of cash ow hedges.
Derivative nancial instruments Assets Interest rate swaps as cash ow hedges Interest rate and currency swaps not used as hedges Interest rate caps as cash ow hedges Currency forward transactions not used as hedges as cash ow hedges Liabilities Interest rate swaps as cash ow hedges
FINANCIAL STATEMENTS
1,120 44 0 100 4
Interest rate and currency swaps not used as hedges Interest rate caps as cash ow hedges Currency forward transactions not used as hedges as cash ow hedges
The nominal volume of derivative nancial instruments comprises the total of the nominal amounts of individual put and call option contracts. The fair value is calculated on the basis of the valuation of all contracts at the prices recorded on the valuation date.
140_GfK
Credit risks The default risk linked to the positive fair values of the derivatives is estimated to be low, as transactions are only concluded with renowned German and foreign banks. Furthermore, the default risk is reduced by spreading the transactions across several banks. The maximum default risk of the GfK Group amounts essentially to the carrying value of all nancial assets. The global activities of the GfK Group and the large number of customers, which include many established major companies, reduce the concentration of the default risk.
ebitda to interest expenses must be higher than 4.0. In the event of these covenants being breached, the credit margin of the banks providing the nance increases and a new agreement on the covenants to be met in future must be concluded with the creditors. The GfK Group comfortably met both covenants as at December 31, 2010. The GfK Group only concludes nancing transactions with renowned German and foreign banks. The default risk and risk concentration is further reduced by spreading the transactions across several banks. At the beginning of 2010, the GfK Group secured fresh liquidity through ve bilateral bank loans amounting to eur 70.0 million, with terms ranging from one to five years. The funding elements indicated and an existing cash holding of eur 54.8 million as at the reporting date assure the sound nancial basis of the Group. Based on the 2010 budgeting process, detailed twelve-month liquidity and nance planning is prepared and compared with the available credit lines. This enables the GfK Group to respond at an early stage to any potential liquidity bottlenecks identied. The tables below show the contractually agreed, undiscounted interest and principal repayments on primary nancial liabilities and derivative nancial instruments of the GfK Group at negative fair value for 2009 and 2010.
Liquidity risks As at December 31, 2010, the GfK Group had conrmed loans and credit lines of eur 552,187 thousand (2009: eur 566,116 thousand), of which eur 203,951 thousand (2009: eur 165,690 thousand) have not been used. The GfK Group has undertaken to meet certain covenants as part of a syndicated credit facility and the issue of a loan note. The ratio of net debt to modied ebitda, which is established on the basis of specic criteria, must be lower than 3.25. The ratio of modied
Remaining term up to 31.12.2009 Carrying value Non-derivative nancial liabilities Amounts due to banks Liabilities under nance leases Other nancial liabilities Trade payables Miscellaneous nancial liabilities Derivative nancial liabilities of which valued at fair value and charged to the income statement Total 400,426 12,200 84,492 60,231 36,684 1,268 144 595,301 418,756 13,512 93,803 60,231 36,684 1,290 146 624,276 105,086 2,504 37,628 60,231 34,828 1,333 151 241,610 57,414 2,478 4,875 0 1,856 14 2 66,637 225,666 8,229 5,205 0 0 57 7 239,043 30,590 293 37,993 0 0 0 0 68,876 0 8 8,102 0 0 0 0 8,110 Gross outows 2010 2011 2012 2013 > 2013
Remaining term up to 31.12.2010 Carrying value Non-derivative nancial liabilities Amounts due to banks Liabilities under nance leases Other nancial liabilities of which valued at fair value and charged to the income statement Trade payables Miscellaneous nancial liabilities Derivative nancial liabilities of which valued at fair value and charged to the income statement Total 348,236 11,498 69,187 5,310 66,103 38,217 1,059 808 534,300 367,290 12,276 73,759 5,589 66,103 38,217 1,069 816 558,714 88,024 2,766 22,175 1,863 66,103 35,329 368 281 214,765 201,668 8,741 8,990 1,863 0 2,888 701 535 222,988 61,766 349 34,696 1,863 0 0 0 0 96,811 646 297 0 0 0 0 0 0 943 15,186 7,898 0 0 0 0 0 23,207
FINANCIAL STATEMENTS GfK_141
Gross outows
2011
2012
2013
2014
> 2014
123
This presentation does not indicate budgeted gures. It reects the nancial instruments held as at the reporting date and for which contractual agreements regarding payments are in place. Foreign currency amounts were translated with the exchange rate as at the reporting date. No material nancial assets were provided as collateral.
majority shareholder of GfK se. The corresponding interest expenses stood at eur 56 thousand (2009: eur 23 thousand). In addition, sales of eur 1,244 thousand (2009: eur 1,530 thousand) were realized with this shareholder. Furthermore, loan obligations of eur 1,971 thousand (2009: eur 0 thousand) arose vis--vis the joint partners in SirValUse Consulting GmbH, Hamburg, with the corresponding interest expenses of eur 57 thousand (2009: eur 0 thousand). In connection with the acquisition of shares by GfK se in SirValUse Consulting GmbH, Hamburg, purchase price payments totaling eur 1,915 thousand (2009: eur 0 thousand) were made to the minority shareholder dih Finanz und Consult GmbH, Frankfurt am Main, a wholly owned subsidiary of Deutsche Industrie-Holding GmbH, Frankfurt am Main. Peter Zhlsdorff is a partner and advisory board member in the latter. Mr Zhlsdorff is President of the majority shareholder of GfK se, GfK-Nrnberg, Gesellschaft fr Konsum-, Markt- und Absatzforschung e.V. (GfK Association), Nuremberg. Provisions in connection with the long-term incentive programs (eur 17,342 thousand; 2009: eur 7,413 thousand) represent a commitment to selected managers of the GfK Group. Of this, eur 11,822 thousand (2009: eur 5,554 thousand) have a remaining term of more than one year. Unless stated otherwise, amounts owed to and by related parties mainly have a remaining term of less than one year. Material receivables, liabilities, income and expenses with nonconsolidated afliated companies, associated companies and other participations of the GfK Group are specied in the Notes above under the respective items.
31.12.2009 Commitments arising from maintenance, service and license agreements guarantees and sureties order commitments 4,477 1,229 2,638
Income tax payments resulted overall in a cash outow of eur 41,316 thousand in nancial year 2010 (2009: eur 36,290 thousand). No funds were acquired in the reporting year through the purchase of subsidiaries (2009: eur 2,151 thousand).
Of these commitments, eur 4,645 thousand (2009: eur 5,834 thousand) have a remaining term of less than one year. In addition, there are the following contingent liabilities and nancial commitments: bwv Holding ag, St. Gallen, Switzerland, sold holdings in two Swiss and one Austrian joint stock company with agreement dated July 28, 2004. GfK se has assumed a purchase price payment obligation of up to eur 5,998 thousand (chf 7,500 thousand) to cover claims by the purchaser arising from contractual infringements. This guarantee ends as at December 31, 2014.
142_GfK
Following the acquisition of the nop World Group in 2005, the GfK Group was restructured in part and sub-groups and intermediate holding companies were set up. GfK se has issued a conditional declaration to three of the managing directors of the holding companies, which releases them from any future claims that may be made by third parties in connection with their positions as managing directors of these companies. A purchase price commitment of eur 10,167 thousand relates to the future acquisition of additional shares in SirValUse Consulting GmbH, Hamburg, of which eur 3,154 thousand have a remaining term of less than one year. It is possible that subsequent tax payments may be necessary following future tax audits at GfK Group companies. This also applies in terms of possible liabilities due to social security agencies. An amount of approximately eur 10 million is estimated for such risks relating to the GfK companies in Latin America. The occurrence and amount of such future liabilities cannot be estimated with certainty. Future commitments arising from lease agreements are described in Section 17, Tangible assets, in the sub-heading Leasing.
cycle. Consumers represent the main data source for the Custom Research sector. In the Retail and Technology sector, data is collected from the retail industry. Clients are provided with information and consultancy services, which are based on regular surveys and analysis of sales of consumer goods and services in retail. Services comprise regularly published surveys. The Media sector provides information services on reach, intensity and how media and media offerings are used as well as on their acceptance. The services are aimed at clients from media companies, agencies and the branded goods industry. The sector makes available regular, as well as special, one-off surveys and analyses. The source of information for the Media sector encompasses all types of media. The sectors are complemented by Other, which comprises, in particular, the head ofce services of GfK for its subsidiaries and non market research-related services. The division primarily combines some departments of GfK Switzerland ag, Hergiswil, Switzerland, and the following GfK se divisions: GfK Data Services, GfK Methoden- und Produktentwicklung (method and product development) and certain departments within GfK Group Services. The Group measures the success of its sectors by reference to the adjusted operating income according to internal reporting. The adjusted operating income of a sector is determined on the basis of the operating income before interest and taxes, by deducting the following expense and income items: expenses and income in connection with reorganization and business combinations, writedowns on additional assets identied on acquisitions, personnel expenses from share-based payment and long-term incentives, other operating income and other operating expenses. Segment reporting on the sectors includes no information about segment assets and investments, since these are not calculated for the individual sectors for the purposes of internal reporting and internal management and are not reported to the Management Board. Income from third parties comprises sales established in accordance with ifrs. Income from other sectors is only generated by the Other division and excluded in the reconciliation account for consolidated sales. In principle, intra-Group transactions are recorded under the same conditions as for third parties. Scheduled amortization (excluding impairments) comprises depreciation and amortization on tangible and intangible assets respectively in accordance with ifrs, excluding write-downs on additional assets identied on acquisitions.
FINANCIAL STATEMENTS GfK_143
Segment information about the sectors for nancial years 2009 and 2010 is shown in the table below.
Income from third parties 2009 Custom Research Retail and Technology Media Other Reconciliation Group 709,171 325,840 126,376 3,145 0 1,164,532 2010 785,592 370,823 133,077 4,716 0 1,294,208
Scheduled depreciation/ amortization 2009 21,346 8,160 6,036 372 0 35,914 2010 22,985 10,370 4,280 530 0 38,165
Adjusted operating income 2009 39,538 95,852 16,555 4,791 0 147,154 2010 63,205 113,858 15,588 7,665 0 184,986
Supplement disclosures
The reconciliation of scheduled depreciation/amortization to the additions stated under (scheduled) depreciation/amortization for tangible and intangible assets in the consolidated schedule of movement in assets is as follows:
2009 Non-current assets 2009 Scheduled depreciation/amortization Amortization on additional assets identied on acquisitions Depreciation/amortization in consolidated schedules of movement in assets (see Sections 16 and 17) 35,914 15,597 51,511 2010 38,165 12,035 50,200 Other nancial assets Deferred tax assets Non-current assets according to the consolidated balance sheet 1,115,785 9,544 32,600 1,157,929
With regard to the reconciliation of adjusted operating income to operating income, reference is made to Section 11 of the Notes. Information about geographical regions comprises details about the regions in which the GfK Group operates. These are Germany, Western Europe/Middle East/Africa, Central and Eastern Europe, North America, Latin America and Asia and the Pacic. The Western Europe/Middle East/Africa and Central and Eastern Europe regions comprise all the countries in the European Union with the exception of Germany, as well as other European countries where the GfK Group is represented. In addition, Egypt, South Africa and the United Arab Emirates are allocated to the Western Europe/Middle East/Africa segment. The Central and Eastern Europe segment also includes Russia and Kazakhstan. The North America segment includes the United States of America and Canada. Argentina, Brazil, Chile, Ecuador, Colombia, Mexico, Peru and Venezuela are allocated to the Latin America segment. Asia and the Pacic includes subsidiaries in the countries Australia, China, India, Indonesia, Japan, Malaysia, Pakistan, Singapore, South Korea, Thailand and Vietnam. The information about geographical regions is based on nancial information, which is used to prepare the consolidated nancial statements. In accordance with ifrs 8, the non-current assets to be stated do not comprise nancial instruments, deferred tax assets, services after termination of employment or rights arising from insurance policies. The information about the regions for nancial years 2009 and 2010 is shown in the table below. Income from third parties has been allocated to the individual regions according to where the relevant subsidiarys head ofce is located. Non-current assets also include shares in associated companies.
FINANCIAL STATEMENTS
The division of income from third parties according to groups of comparable services corresponds to the above segment information for the Custom Research, Retail and Technology and Media sectors. As in the previous year, none of the sectors recorded income from third parties in excess of 10 % of consolidated sales with a single client in the year under review.
Income from third parties 2009 Germany Western Europe/ Middle East/Africa Central and Eastern Europe North America Latin America Asia and the Pacic Group 301,265 458,119 71,744 207,165 39,366 86,873 1,164,532 2010 341,109 482,874 89,750 219,234 54,791 106,450 1,294,208
Non-current assets 2009 175,671 505,785 22,428 322,945 30,128 58,828 1,115,785 2010 183,870 527,992 22,393 341,537 35,017 71,467 1,182,276
144_GfK
In November 2008, the iasb published a revised version of ifrs 1 (First Time Adoption of ifrs), which replaced the existing ifrs 1 and is aimed at clarifying the content of the standard and making it easier to apply. The changes relate solely to the format of ifrs 1. The standard must be applied for companies which prepare nancial statements in accordance with ifrs for the rst time from January 1, 2010 onwards. The revised version was adopted by the European Union in November 2009. The changes have no impact on the consolidated nancial statements of the GfK Group. In November 2008, the iasb also published ifric 17 (Distributions of Non-cash Assets to Owners). The interpretation regulates how a company should measure other assets as cash equivalents (noncash assets) when such assets are transferred to shareholders as prot distribution. Application of ifric 17 is mandatory for nancial years starting on or after November 1, 2009. The interpretation was adopted by the European Union in November 2009. The changes have no impact on the consolidated nancial statements of the GfK Group. In January 2009, the iasb published ifric 18 (Transfers of Assets from Customers), which provides additional information regarding the accounting for transfers of assets from customers, which the company must use either to connect the customer to a network or to grant the customer permanent access to the supply of goods and services. ifric 18 also describes cases in which a company receives cash equivalents subject to the condition of acquiring or producing one of the above assets. The interpretation was adopted by the European Union in November 2009. The changes have no impact on the consolidated nancial statements of the GfK Group. In April 2009, the iasb published the Improvements to ifrss 2009 as part of the annual improvements project, which resulted in a number of changes to ifrs standards. Unless regulated separately in the relevant standard, the Improvements to ifrss are to be applied to nancial years starting on or after January 1, 2009. Earlier application is permissible. The European Union adopted the improvements in March 2010. The changes have no material impact on the consolidated nancial statements of the GfK Group. In June 2009, the iasb published amendments to ifrs 2 (Group Cash-settled Share-based Payment Transactions), which clarify the treatment of share-based payments settled in cash within the Group. Companies which receive goods or services as part of a share-based compensation agreement must report these goods or services, irrespective of which company within the Group fullls the associated obligation or whether the obligation is settled in shares or in cash. In line with ias 27, a group comprises only the parent company and its subsidiaries. The changes must be applied for the rst time to nancial years starting on or after January 1, 2010. The amendments were adopted by the European Union in March 2010. The changes have no impact on the consolidated nancial statements of the GfK Group. In July 2009, the iasb published amendments to ifrs 1 (Additional Exemptions for First-time Adopters). The amendments relate to the retrospective application of ifrs in certain situations and are aimed at ensuring that companies do not incur unreasonable costs when switching to ifrs accounting. The standard affects companies which apply ifrs for the rst time. The amendments must be applied for the rst time to nancial years starting on or after January 1, 2010. The amendments were adopted by the European Union in June 2010. The changes have no impact on the consolidated nancial statements of the GfK Group.
GfK_145
FINANCIAL STATEMENTS
Supplement disclosures
Standards or interpretations adopted by the eu whose application is not yet mandatory for financial years starting on January 1, 2010 In October 2009, the iasb published the amendments to ias 32 (Amendments to ias 32 Classication of Rights Issues), which were adopted by the European Union in December 2009. These amendments to ias 32 clarify the treatment of certain subscription rights if the instruments issued are not denominated in the issuers functional currency. If such instruments are offered to the current holders at a xed amount on a pro rata basis, they should also be classied as equity instruments if their subscription rights price is expressed in a currency which differs from the issuers functional currency. The changes must be applied for the rst time to nancial years starting on or after February 1, 2010. These amendments will have no material impact on the consolidated nancial statements of the GfK Group. In November 2009, the iasb published a revised version of ias 24 (Related Party Disclosures). The changes include a clarication of the denition of the term related party. The rst-time application of ias 24 is mandatory for nancial years starting on or after January 1, 2011. The revised version was adopted by the European Union in July 2010. The changes will have no material impact on the consolidated nancial statements of the GfK Group. In November 2009, the iasb also published an amendment to ifric 14 (Amendment to ifric 14 Prepayments of a Minimum Funding Requirement). The amendment to ifric 14 is relevant if a company is subject to a minimum funding requirement and makes advance contribution payments, in order to fulll this minimum funding requirement. The amendment enables companies to recognize the benet from such prepayments as an asset in these cases. Application of the amendment to ifric 14 is mandatory from January 1, 2011. The amendment was adopted by the European Union in July 2010. The changes will have no material impact on the consolidated nancial statements of the GfK Group. In November 2009, the iasb additionally published ifric 19 (Extinguishing Financial Liabilities with Equity Instruments). The interpretation claries that the equity instruments issued to a creditor for extinguishing nancial liabilities form a component of the compensation paid in accordance with ias 39.41. The corresponding equity instruments must generally be valued at fair value. The difference between the carrying value of the nancial liability to be taken off the books and the amount at rst-time recognition of the equity instruments issued must be reported in the income statement. ifric 19 must be applied to nancial years starting on or after July 1, 2010. The interpretation was adopted by the European Union in July 2010. The changes will have no impact on the consolidated nancial statements of the GfK Group. In January 2010, the iasb published an amendment to ifrs 1 (Limited Exemption from Comparative ifrs 7 Disclosures for First-time Adopters). This amendment exempts parties applying ifrs for the rst time from the additional disclosures to be made in 2009 under ifrs 7. Application is mandatory from July 1, 2010. The amendment was adopted by the European Union in June 2010. The changes will have no impact on the consolidated nancial statements of the GfK Group.
In May 2010, the iasb published the Improvements to ifrss 2010 as part of the annual improvements project, which resulted in a number of changes to ifrs standards. Unless regulated separately in the relevant standard, the Improvements to ifrss are to be applied to nancial years starting on or after July 1, 2010. Earlier application is permissible. The European Union adopted the improvements in February 2011. The changes will have no material impact on the consolidated nancial statements of the GfK Group.
Standards or interpretations resolved by the iasb but not yet adopted by the eu In November 2009, the iasb published ifrs 9 (Financial Instruments). The standard regulates the requirements in terms of the classication and valuation of nancial instruments. ifrs 9 creates only two valuation categories. The changes must be applied to nancial years starting on or after January 1, 2013. Earlier application is permissible. Adoption by the European Union is currently outstanding. The changes will impact on the consolidated nancial statements of the GfK Group with regard to the classication and valuation of nancial instruments. In October 2010, the iasb published amendments to ifrs 7 Financial Instruments: Disclosures (Disclosures Transfers of Financial Assets). They relate, in particular, to additional disclosure requirements regarding the transfer of nancial assets. They are aimed at making it easier to understand the link between the nancial assets transferred and the corresponding nancial liabilities. The amendments to ifrs 7 must be applied in nancial years starting on or after July 1, 2011. Adoption by the European Union is currently outstanding. The changes will have no material impact on the consolidated nancial statements of the GfK Group. In December 2010, the iasb published an amendment to ifrs 1 (Severe Hyperination and Removal of Fixed Dates for First-time Adopters). As a result of this amendment to ifrs 1, rules have been included for cases in which a company was temporarily unable to comply with the ifrs requirements because its functional currency was subject to hyperination. This amendment to ifrs 1 must be applied for the rst time in nancial years starting on or after July 1, 2011. The changes will have no impact on the consolidated nancial statements of the GfK Group. In December 2010, the iasb also published an amendment to ias 12 (Deferred Tax on Investment Property). With regard to investments property, it is often difcult to assess whether temporary tax differences will be reversed under continued use or as part of a sale. The amendment to ias 12 now claries that the reversal generally occurs on the basis of a sale. The amended ias 12 must be applied for the rst time in nancial years starting on or after January 1, 2012. Adoption by the European Union is currently outstanding. The changes will have no impact on the consolidated nancial statements of the GfK Group.
FINANCIAL STATEMENTS
146_GfK
Number of staff In the year under review, 10,377 (2009: 10,307) staff were employed on average. The annual average number of staff was determined on the basis of the full-time equivalent. The average was calculated using the key dates of March 31, June 30, September 30 and December 31. The allocation of staff to sectors is shown in the table below.
2009 Custom Research Retail and Technology Media Other Managing Directors/Management Board members Trainees Full-time employees 6,010 3,183 560 384 10,137 108 62 10,307
Total remuneration and shares of the Management Board and Supervisory Board Total remuneration granted to the Management Board for its duties in the nancial year amounted to eur 7,452 thousand (2009: eur 5,187 thousand). Total remuneration for the Supervisory Board in the nancial year amounted to eur 416 thousand (2009: eur 370 thousand). Information about the individual remuneration paid to the Management Board and Supervisory Board and the structure of the relevant remuneration components for the Management Board as well as the shares held by Management Board members is provided in the remuneration report of the Corporate Governance report on pages 21ff. The Supervisory Board holds 3,762 shares. The members of the Supervisory Board hold no stock options. Former members of the management of GfK GmbH, Nuremberg, and the Management Board of GfK se, Nuremberg, as well as their surviving dependants, received total payments of eur 914 thousand (2009: eur 916 thousand). Provisions of eur 13,657 thousand (2009: eur 11,289 thousand) have been set up for pension commitments to former Management Board members, their surviving dependants and managing directors.
FINANCIAL STATEMENTS GfK_147
Exemption of subsidiaries from the obligation to prepare financial statements Pursuant to Section 264 (3) of the German Commercial Code (hgb), GfK Retail and Technology GmbH, Nuremberg, encodex International GmbH, Nuremberg, and GfK GeoMarketing GmbH, Bruchsal, are exempt from preparing, having audited and disclosing annual nancial statements and a management report in accordance with the provisions for joint stock companies pursuant to Sections 264ff. hgb.
There were no loans and advances to members of the Management Board or Supervisory Board.
Supervisory Board
Dr. Arno Mahlert Chairman Non-Executive Director Seats held on other supervisory boards and comparable supervisory bodies: Eterna Mode GmbH, Passau, Germany (Chairman, since July 1, 2010) Springer Science + Business Media s.a., Luxembourg, Luxembourg (Chairman, until February 28, 2010) Saarbrcker Zeitung GmbH, Saarbrcken, Germany (Deputy Chairman) dal Deutsche Afrika-Linien GmbH & Co. kg, Hamburg, Germany maxingvest ag, Hamburg, Germany Peek & Cloppenburg kg, Hamburg, Germany (since June 23, 2010) Zeitverlag Gerd Bucerius GmbH & Co., Hamburg, Germany
Stephan Gemkow Member of the Management Board of Deutsche Lufthansa ag Seats held on other supervisory boards and comparable supervisory bodies: Delvag Luftfahrtversicherungs-ag, Cologne, Germany (Chairman) lsg Lufthansa Service Holding ag, Neu-Isenburg, Germany (Chairman) Lufthansa AirPlus Servicekarten GmbH, Neu-Isenburg, Germany (Chairman) Lufthansa Cargo ag, Kelsterbach, Germany (Chairman) Lufthansa Systems ag, Kelsterbach, Germany (Chairman) Lufthansa Technik ag, Hamburg, Germany (Chairman) Amadeus it Group s.a., Madrid, Spain Amadeus it Holding s.a., Madrid, Spain Evonik Industries ag, Essen, Germany JetBlue Airways Corp., New York, New York, usa
Stefan Pfander Deputy Chairman Management Consultant Seats held on other supervisory boards and comparable supervisory bodies: PETMedical ag, Zumikon, Switzerland (Chairman) Treofan Holdings GmbH, Raunheim, Germany (Chairman) Sweet Global Network e.V., Munich, Germany (Deputy Chairman) Barry Callebaut ag, Zurich, Switzerland maxingvest ag, Hamburg, Germany
Sandra Hofstetter (since May 26, 2010) Independent Works Council representative at GfK se Deputy Chairman of the Works Council at GfK se Deputy Chairman of the European se Works Council
Stephan Lindeman Research Director at Intomart GfK b.v., Hilversum, Netherlands Chairman of the Works Council at Intomart GfK b.v., Hilversum, Netherlands Deputy Chairman of the European se Works Council
Dr. Christoph Achenbach Managing Director and Business Consultant Seats held on other supervisory boards and comparable supervisory bodies: Reinert GmbH & Co. kg, Versmold, Germany (Chairman, since January 1, 2010) Peek & Cloppenburg kg, Hamburg, Germany (since June 23, 2010) SinnLeffers GmbH, Hagen, Germany (until August 31, 2010) Hauke Stars General Manager, Hewlett-Packard Schweiz GmbH, Dbendorf, Switzerland Shani Orchard Human Resources and Facilities Director, GfK Retail and Technology uk Ltd, West Byeet, Surrey, uk Member of the Steering Committee of the European se Works Council
FINANCIAL STATEMENTS
Dr. Wolfgang C. Berndt Non-Executive Director Seats held on other supervisory boards and comparable supervisory bodies: omv ag, Vienna, Austria (Deputy Chairman, since May 26, 2010) Bank of Scotland plc, Edinburgh, Scotland (until May 6, 2010) Cadbury plc, London, uk (until April 30, 2010) hbos plc, Edinburgh, Scotland (until May 6, 2010) Lloyds Banking Group plc, London, uk (until May 6, 2010) Lloyds tsb Bank plc, London, uk (until May 6, 2010) miba ag, Laakirchen, Austria miba Beteiligungs ag, Laakirchen, Austria bast ag, Vienna, Austria (since September 23, 2010)
Dieter Wilbois Independent Works Council representative at GfK se Chairman of the Group Works Council Chairman of the European se Works Council
148_GfK
Professor Dr. Klaus L. Wbbenhorst Chief Executive Ofcer (ceo) Responsible for Strategy, Internal Audit, Marketing Sciences, Corporate Communications and it Services Seats held on supervisory boards and comparable supervisory bodies: bu Holding GmbH & Co. kg, Nuremberg, Germany (Chairman) ergo Versicherungsgruppe ag, Dusseldorf, Germany
Dr. Grard Hermet (until December 31, 2010) Chief Operating Ofcer (coo) Retail and Technology sector Seats held on supervisory boards and comparable supervisory bodies: npd Intelect, l.l.c., New York, New York, usa
Debra A. Pruent Chief Operating Ofcer (coo) Custom Research sector Seats held on supervisory boards and comparable supervisory bodies: Advertising Research Foundation (arf), New York, New York, usa
Pamela Knapp Chief Financial Ofcer (cfo) Responsible for Finance, Accounting, Controlling, Tax, Mergers and Acquisitions, Legal and Compliance, Human Resources and Central Services Seats held on supervisory boards and comparable supervisory bodies: Monier Holding gp s.a., Luxembourg, Luxembourg
Wilhelm R. Wessels Chief Operating Ofcer (coo) Custom Research and Media sectors Seats held on supervisory boards and comparable supervisory bodies: Leoni ag, Nuremberg, Germany staedtler Noris GmbH, Nuremberg, Germany staedtler Stiftung, Nuremberg, Germany TriStyle Mode GmbH & Co. kg, Frth, Germany
Dr. Gerhard Hausruckinger (since September 1, 2010) Chief Operating Ofcer (coo) Retail and Technology sector
GfK_149
FINANCIAL STATEMENTS
Financial year
Afliated companies (Germany), included in the consolidated nancial statements (details according to ifrs commercial balance sheet ii) encodex International GmbH, Nuremberg enigma GfK Medien- und Marketingforschung GmbH, Wiesbaden GfK GeoMarketing GmbH, Bruchsal GfK North America Holding GmbH, Nuremberg GfK North America Investment GmbH, Nuremberg GfK Retail and Technology GmbH, Nuremberg ifr Deutschland GmbH, Dusseldorf media control GfK international GmbH, Baden-Baden Media Markt Analysen GmbH & Co. kg, Frankfurt/Main Modata GmbH, Berlin Afliated companies (abroad), included in the consolidated nancial statements (details according to ifrs commercial balance sheet ii) Adimark Investigaciones de Mercado Ltda., Providencia, Santiago, Chile Adimark s.a., Providencia, Santiago, Chile a Investments ulc, London, uk Barterstore ulc, London, uk Beijing Sino Market Research Co., Ltd., Beijing, China Bilesim Internasyonal Arastirma Organizasyon Danismanlik ve Ticaret a.s., Istanbul, Turkey China Market Monitor Co., Ltd., Beijing, China Collect Investigaciones de Mercado s.a., Providencia, Santiago, Chile Corporacin Empresarial asa sa de cv, Mexico City, Mexico Dealtalk Limited, London, uk Doane Marketing Research, Inc., Saint Louis, Missouri, usa Encodex Japan k.k., Osaka, Japan Etilize (Private) Limited, Karachi, Pakistan Etilize, Inc., Rolling Hills Estates, California, usa GfK Centar za istrazivanje trzista d.o.o., Zagreb, Croatia
FINANCIAL STATEMENTS
95.00 100.00 100.00 100.00 100.00 3) 95.00 10) 100.00 3) 70.00 4) 100.00 100.00 3)
2010 2010 2010 2010 2010 2010 2010 2010 2010 2010
1951) 6931) 1,0221) 242,8331) 190,7191) 140,6281) 1,713 2,748 349 372
99.00 3) 100.00 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 51.00 3) 100.00 3) 100.00 3) 63.00 3) 100.00 3) 51.00 3) 100.00 3) 51.00 3) 100.00 3) 100.00 3) 100.00 100.00 100.00 3) 100.00 3) 94.80 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3)
2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010
3,122 603 716 4,980 200 106 1,305 637 343 3,114 1,638 666 144 6,858 681 189 5,806 0 6,363 388 21,757 1,880 10,604 560 130 4 241
GfK Conecta s.a.c., Lima, Peru GfK (u.k.) Ltd., West Byeet, Surrey, uk GfK Animal Healthcare Limited, West Byeet, Surrey, uk GfK Arastirma Hizmetleri a.s., Istanbul, Turkey GfK Ascent-mi Limited, West Byeet, Surrey, uk GfK Asia Pte Ltd., Singapore, Singapore GfK Audimetrie n.v., Brussels, Belgium GfK Austria GmbH, Vienna, Austria GfK Belgrade d.o.o., Belgrade, Serbia GfK bh d.o.o., Sarajevo, Bosnia and Herzegovina GfK Blue Moon Quantitative Research Pty. Limited, St Leonards, Australia GfK Blue Moon Research and Planning Pty. Limited, St Leonards, Australia
1) Profit and loss transfer agreement 2) Details according to commercial balance sheet II 3) Full indirect shareholding 4) Partially indirect shareholding
5) Details not available 6) Details as per provisional financial statements drawn up under national law 7) Newly established in 2010
8) In liquidation 9) Stub period 10) Shareholding of the minority shareholder is regulated by separate agreement
150_GfK
Company name and registered ofce GfK Chart-Track Limited, London, uk GfK Colombia s.a., Bogot, Colombia GfK Custom Research Australia Holding Pty. Limited, Sydney, Australia GfK Custom Research Baltic, Riga, Latvia GfK Custom Research Beijing Co., Ltd., Beijing, China GfK Custom Research Brasil Pesquisa de Mercado Ltda., So Paulo, Brazil GfK Custom Research Japan kk, Tokyo, Japan GfK Custom Research Latam Holding, s.l., Valencia, Spain GfK Custom Research Pte. Ltd., Singapore, Singapore GfK Custom Research, llc, New York, New York, usa GfK Czech, s r.o., Prague, Czech Republic GfK Danmark a/s, Frederiksberg, Denmark GfK Daphne Communication Management b.v., Amstelveen, Netherlands GfK emer Ad Hoc Research, s.l., Valencia, Spain GfK Equity Research Inc., Boston, Massachusetts, usa GfK eurisko rom s.r.l., Iasi, Romania GfK eurisko S.r.l., Milan, Italy GfK Healthcare Holding, Inc., Wilmington, Delaware, usa GfK Healthcare, lp, East Hanover, New Jersey, usa gfk hellas e.p.e., Athens, Greece gfk holding mexico, s.a. de c.v., Mexico City, Mexico GfK Holding, Inc., Wilmington, Delaware, usa GfK Hungria Piackutat Kft., Budapest, Hungary GfK Immobilier Socit responsabilit limite, Rueil-Malmaison, France gfk isl, custom research france sas, Rueil-Malmaison, France GfK Kasachstan too, Almaty, Kazakhstan GfK Kleiman Sygnos s.a., Buenos Aires, Argentina GfK Kynetec France sas, Saint Aubin, France GfK Kynetec Group Limited, St Peter Port, Guernsey, uk GfK Kynetec Limited, Bristol, uk gfk latinoamerica holding, s.l., Valencia, Spain GfK LifeStyle Tracking Japan kk, Tokyo, Japan GfK Malta Holding Limited, Portomaso, Malta GfK Malta Services Limited, Portomaso, Malta GfK Market Consulting (Beijing) Co. Ltd., Beijing, China GfK Marketing Services Hong Kong Limited, Hong Kong, China GfK Marketing Services Japan k.k., Tokyo, Japan GfK Mediamark Research & Intelligence, llc, New York, New York, usa GfK Mode Pvt Ltd, Kolkata, India GfK Music sarl, Rueil-Malmaison, France GfK Mystery Shopping Services Ltd., London, uk GfK Nielsen India Private Limited, Mumbai, India
Share in the capital in % 55.00 3) 99.40 3) 100.00 51.00 3) 66.00 95.00 66.00 95.00 100.00 100.00 3) 100.00 3) 100.00 100.00 3) 50.10 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 100.00 100.00 3) 100.00 3) 100.00 3) 100.00 100.00 3) 90.00 100.00 3) 100.00 100.00 3) 51.00 3) 100.00 100.00 100.00 3) 99.00 3) 100.00 3) 84.20 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 50.10 3)
Financial year 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010
Equity (eur '000) 378 160 4,835 468 877 5,621 1,192 95 8,147 45,055 891 274 215 5,498 1,229 97 9,287 464 8,249 1,520 798 177,777 2,310 375 515 175 107 375 25,728 3,070 3,398 1,016 246,779 129,783 1,192 1,595 16,002 21,313 2,912 172 211 1,264
FINANCIAL STATEMENTS GfK_151
1) Profit and loss transfer agreement 2) Details according to commercial balance sheet II 3) Full indirect shareholding 4) Partially indirect shareholding
5) Details not available 6) Details as per provisional financial statements drawn up under national law 7) Newly established in 2010
8) In liquidation 9) Stub period 10) Shareholding of the minority shareholder is regulated by separate agreement
Company name and registered ofce GfK nop Field Interviewing Services Limited, London, uk GfK nop Field Marketing Services Limited, London, uk GfK nop Limited, London, uk GfK nop Mystery Shopping Services Limited, London, uk GfK nop Services Limited, London, uk GfK nop Telephone Interviewing Services Limited, London, uk GfK nop u.k. Holding Limited, London, uk GfK Norge a/s, Oslo, Norway GfK Panelservices Benelux b.v., Dongen, Netherlands GfK Polonia Sp. z o.o., Warsaw, Poland GfK portugal Marketing Services, Limitada, Lisbon, Portugal GfK Research Dynamics, Inc., Mississauga, Canada GfK Research Matters ag, Basel, Switzerland GfK Retail and Technology (Thailand) Ltd., Bangkok, Thailand GfK Retail and Technology Argentina s.a., Buenos Aires, Argentina GfK Retail and Technology Asia Holding b.v., Amsterdam, Netherlands GfK Retail and Technology Baltic sia, Riga, Latvia GfK Retail and Technology Benelux b.v., Amstelveen, Netherlands GfK Retail and Technology Brasil Ltda., So Paulo, Brazil GfK Retail and Technology Chile Limitada, Santiago, Chile GfK Retail and Technology China Co. Ltd., Shanghai, China GfK Retail and Technology Espaa, s.a., Valencia, Spain Gfk Retail and Technology France sas, Rueil-Malmaison, France GfK Retail and Technology Hong Kong Limited, Hong Kong, China GfK Retail and Technology Italia S.r.l., Milan, Italy GfK Retail and Technology Korea Limited, Seoul, South Korea GfK Retail and Technology Malaysia Sdn. Bhd., Kuala Lumpur, Malaysia GfK Retail and Technology Market Research Vietnam Limited, Ho Chi Minh City, Vietnam GfK Retail and Technology Middle East fz-llc, Dubai, United Arab Emirates GfK Retail and Technology South Africa (Proprietary), Sandton, South Africa
FINANCIAL STATEMENTS
Share in the capital in % 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 100.00
3)
Financial year 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010
Equity (eur '000) 398 167 59,607 125 299 456 25,383 929 8,785 3,630 2,492 1,228 1,865 190 607 143 660 8,153 3,171 1,286 20,360 7,770 7,090 1,913 7,099 2,835 841 123 3,484 432 332 10,665 508 10,026 1,671 411 405 2,190 30,083 9,528 147 2,565
100.00 3) 80.00 3) 100.00 100.00 100.00 3) 95.10 3) 89.48 3) 100.00 3) 100.00 3) 95.00 3) 100.00 3) 100.00 3) 50.10 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 100.00 100.00 3) 70.00 100.00 3)
GfK Retail and Technology Taiwan Ltd, Taipei, Taiwan, China GfK Retail and Technology uk Ltd, West Byeet, Surrey, uk GfK Retail and Technology usa, llc, Wilmington, Delaware, usa GfK Retail and Technology, Australia Pty. Limited, Sydney, Australia GfK Romania-Institut de Cercetare de Piata Srl, Bucharest, Romania GfK Slovakia Intitt pre prieskum trhu s r.o., Bratislava, Slovakia gfk slovenija, trne raziskave d.o.o., Ljubljana, Slovenia GfK Sverige Aktiebolag, Lund, Sweden GfK Switzerland ag, Hergiswil, Switzerland GfK Telecontrol ag, Hergiswil, Switzerland GfK uk Entertainments Ltd., London, uk GfK Ukraine, Kiev, Ukraine
1) Profit and loss transfer agreement 2) Details according to commercial balance sheet II 3) Full indirect shareholding 4) Partially indirect shareholding
5) Details not available 6) Details as per provisional financial statements drawn up under national law 7) Newly established in 2010
8) In liquidation 9) Stub period 10) Shareholding of the minority shareholder is regulated by separate agreement
152_GfK
Company name and registered ofce GfK us Holdings, Inc., Wilmington, Delaware, usa GfK-Bulgaria, Institut fr Marktforschung EGmbH, Soa, Bulgaria GFKEcuador s.a. Investigacion Estrategica, Quito, Ecuador GfK-memrb Marketing Services Limited, Nicosia, Cyprus GfK-rus Gesellschaft mbH, Moscow, Russia ifr Europe Ltd., London, uk ifr France s.a., Rueil-Malmaison, France ifr Italia S.r.L., Milan, Italy ifr Marketing Espaa s.a., Madrid, Spain ifr Monitoring Canada Inc., Niagara Falls, Canada ifr Monitoring usa Inc., Niagara Falls, New York, usa incoma Research, s.r.o., Prague, Czech Republic Informark Pty. Ltd., Braddon, Australia Institut Franais de Recherche-i.f.r. s.a., Rueil-Malmaison, France Interactive Research Limited, London, uk intercampus-recolha, tratamento e distribuio de informao, Limitada, Lisbon, Portugal Intomart GfK b.v., Hilversum, Netherlands Intomart GfK Group b.v., Hilversum, Netherlands merc Analistas de Mercados c.a., Caracas, Venezuela merc Analistas de Mercados s.a. de c.v., Mexico City, Mexico metris-mtodos de recolha e investigao social, lda, Lisbon, Portugal mil Research Group Limited, London, uk National Opinion Polls Limited, London, uk nop World Limited, London, uk Numbers Services Limited, London, uk Oz Toys Marketing Services Pty. Ltd., Sydney, Australia pt. GfK Retail and Technology Indonesia, Jakarta, Indonesia Roperasw Europe Limited, Leatherhead, Surrey, uk Shopping Brasil Tecnologia da Informao Ltda, Porto Alegre, Brazil Signicant GfK bvba, Heverlee, Belgium Telecontrol Bulgaria Switzerland ag, Hergiswil, Switzerland
Share in the capital in % 100.00 3) 100.00 3) 99.80 3) 60.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00
3)
Financial year 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010
Equity (eur '000) 232,640 943 390 428 5,913 395 570 138 114 242 725 34 116 18,548 655 1,255 14,302 1,347 1,001 4,839 1,141 575 2,740 53,197 966 30 145 3,815 1,571 4,207
FINANCIAL STATEMENTS GfK_153
100.00 3) 100.00 3) 75.00 3) 100.00 3) 100.00 100.00 3) 69.10 3) 100.00 3) 100.00 3) 100.00 3) 51.00 3) 71.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 51.00 3) 100.00 3) 100.00 3) 86.03 3) 100.00 3) 100.00 3)
2,016
Afliated companies (Germany) not included in the consolidated nancial statements (details according to hgb commercial balance sheet i) 1-2-3 MysteryWorldNet GmbH, Hamburg GfK Middle East cr Holding GmbH, Nuremberg GfK Siebte Vermgensverwaltungs GmbH, Nuremberg GfK Vierte Vermgensverwaltungs GmbH, Nuremberg Gplus GmbH, Nuremberg Media Markt Analysen Verwaltungs-GmbH, Frankfurt/Main 100.00 59.00 100.00 100.00 100.00 100.00 2010 2010 2010 2010 2010 2010 13 397 15 251) 403 28
1) Profit and loss transfer agreement 2) Details according to commercial balance sheet II 3) Full indirect shareholding 4) Partially indirect shareholding
5) Details not available 6) Details as per provisional financial statements drawn up under national law 7) Newly established in 2010
8) In liquidation 9) Stub period 10) Shareholding of the minority shareholder is regulated by separate agreement
Financial year
Afliated companies (abroad) not included in the consolidated nancial statements Adnders b.v., Hoofddorp, Netherlands caticall recolha de informao assistida por computador, lda., Lisbon, Portugal gfk Egypt ltd, Cairo, Egypt GeoAdimark s.a., Providencia, Santiago, Chile GfK Retail and Technology Colombia Limitada, Bogot, Colombia GfK Albania, Tirana, Albania GfK Custom Research Development and Training Center eig, Brussels, Belgium GfK Kynetec Poland, Poznan, Poland GfK m2 GmbH, Hergiswil, Switzerland GfK Marketing Services Eastern Europe Holding spol. z o. o., Warsaw, Poland GfK Martin Hamblin Limited, London, uk GfK Mediacontrol Latina s.l., Valencia, Spain Gfk Middle East fz-llc, Dubai, United Arab Emirates gfk panama s.a., Panama City, Panama GFK Retail & Technology Egypt , l.l.c., Cairo, Egypt GfK Retail & Technology Ltd., Ramat Gan, Israel GfK Retail and Technology East Africa Limited, Nairobi, Kenya GfK Retail and Technology North Africa sarl, Casablanca, Morocco GfK Retail and Technology Peru s.a.c., Lima, Peru gfk Skopje ltd Skopje, Skopje, Macedonia GfK Stratgie et dveloppement Groupement d'intrt Economique, Rueil-Malmaison, France GfK-Media Research Middle East sa, Hergiswil, Switzerland GfK-rt Nigeria Limited, Lagos, Nigeria ifr Asia Co. Ltd., Beijing, China ifr Central Europe Market Research llc, Budapest, Hungary ifr Field sarl, Rueil-Malmaison, France ifr Polska Sp. z o.o., Warsaw, Poland
FINANCIAL STATEMENTS
100.00 3) 100.00 3) 74.00 3) 100.00 3) 99.50 3) 100.00 3) 81.00 4) 100.00 3) 70.00 100.00 3) 100.00 53.45 100.00 3) 100.00 3),7) 99.84 90.00 100.00 51.00
3),7)
2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010
654 34 227 216 158 76 0 119 527 5 0 1 479 4109) 739) 417 19) 420 4499) 5 260 39 122 156 215 57 32 110
5)
3)
100.00 3),7)
3)
100.00 3),7)
3)
100.00 3) 67.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 100.00 3) 70.00 3) 100.00
3)
ifr rus Limited, Moscow, Russia ifr South America, sa, Buenos Aires, Argentina ifr u.k. Ltd., London, uk intercampus estudos de mercado, lda, Maputo, Mozambique Intomart DataCall b.v., Hilversum, Netherlands Media Control ag, Zurich, Switzerland Server s.a., Providencia, Santiago, Chile
1) Profit and loss transfer agreement 2) Details according to commercial balance sheet II 3) Full indirect shareholding 4) Partially indirect shareholding
5) Details not available 6) Details as per provisional financial statements drawn up under national law 7) Newly established in 2010
8) In liquidation 9) Stub period 10) Shareholding of the minority shareholder is regulated by separate agreement
154_GfK
Company name and registered ofce Associated companies (Germany) (details according to hgb commercial balance sheet i) SirValUse Consulting GmbH, Hamburg Associated companies (abroad) agb Nielsen, medijske raziskave, d.o.o., Ljubljana, Slovenia Common Technology Centre eeig, London, uk Consumer Zoom sas, Rueil-Malmaison, France Europanel Raw Database gie, Brussels, Belgium i + g Infratest Medical Research Inc., Rhode Island, usa MarketingScan snc, Rueil-Malmaison, France Media Focus (arge), Hergiswil, Switzerland mrc-Mode Pvt. Limited, Dhaka, Bangladesh npd Intelect, l.l.c., Port Washington, New York, usa Sports Tracking Europe b.v., Amstelveen, Netherlands St. Mamet Saisie Informatique (smsi) s.a.r.l., Saint-Mamet-la-Salvetat, France Starch Research Services Limited, Toronto, Ontario, Canada Watch Media (Cyprus) ltd, Nicosia, Cyprus Other participations (abroad) Qosmos sa, Amiens, France symphony iri group limited, Maidenhead, Berkshire, uk
Financial year
40.00
2010
3,399
21.00 3) 25.00 3) 30.00 4) 50.00 4) 50.00 50.00 50.00 3) 36.00 25.00 25.00 20.40 49.00
3) 3) 3) 8)
2010 2010 2010 2010 2010 2010 2009/2010 2009/2010 2009/2010 2009/2010 2010 2009/2010 2010
748
5)
976
5) 5)
3,036
5) 5)
42,281
5)
713 144
5)
20.00 3)
12.26 4) 5.80 4)
2010 2010
6,531
5)
1) Profit and loss transfer agreement 2) Details according to commercial balance sheet II 3) Full indirect shareholding 4) Partially indirect shareholding
5) Details not available 6) Details as per provisional financial statements drawn up under national law 7) Newly established in 2010
8) In liquidation 9) Stub period 10) Shareholding of the minority shareholder is regulated by separate agreement
GfK_155
FINANCIAL STATEMENTS
Pamela Knapp
Petra Heinlein
FINANCIAL STATEMENTS
Debra A. Pruent
Wilhelm R. Wessels
156_GfK
GfK_157
FINANCIAL STATEMENTS
158_GfK
Additional information
5-year overview Glossary of financial terminology Glossary of specialist GfK terms List of GfK companies mentioned Financial calendar Index Acknowledgements
GfK_159
2006 1,112.2 + 18.7 442.3 + 18.5 51.2 + 14.8 150.5 + 20.3 13.5 173.1 + 12.8 15.6 118.5 + 46.9 10.7 3.4 87.9 121.9 + 11.9 11.0 93.5 + 1.4 71.2 + 5.5 23.8
2007 2) 1,162.1 + 4.5 465.2 + 5.2 59.7 + 16.6 157.6 + 4.7 13.6 188.4 + 8.8 16.2 125.6 + 6.0 10.8 3.0 10.8 128.6 + 5.5 11.1 104.2 + 11.5 78.9 + 10.7 24.3
2008 1,220.4 + 5.0 494.3 + 6.3 59.2 0.8 158.7 + 0.7 13.0 192.0 + 1.9 15.7 128.9 + 2.6 10.6 3.9 + 28.2 132.8 + 3.2 10.9 113.0 + 8.4 82.0 + 4.0 27.4
2009 1,164.5 4.6 510.5 + 3.3 66.3 + 11.9 147.2 7.3 12.6 159.1 17.2 13.7 88.9 31.0 7.6 3.9 0.6 92.8 30.1 8.0 75.5 33.2 60.5 26.2 19.8
2010 1,294.2 + 11.1 550.7 + 7.9 55.1 16.8 185.0 + 25.7 14.3 195.7 + 23.0 15.1 136.7 + 53.8 10.6 3.9 1.5 140.6 + 51.5 10.9 124.8 + 65.3 84.0 + 38.8 32.7
ADDITIONAL INFORMATION
5-year overview
160_GfK
2006 1,120.8 + 2.1 375.4 4.0 298.6 56.6 91.6 42.6 + 20.2 14.0 97.8 466.4 + 9.4 1,029.8 3.1 1,496.2 + 0.5 542.5 + 3.7
2007 1,088.3 2.9 382.5 + 1.9 284.5 73.7 + 30.2 49.2 + 15.7 24.5 + 74.1 509.6 + 9.3 961.2 6.7 1,470.8 1.7 472.9 12.8
2008 1,085.0 0.3 361.6 5.5 300.1 101.5 + 37.7 50.5 + 2.5 51.0 + 108.6 500.3 1.8 946.3 1.5 1,446.6 1.6 481.5 + 1.8
2009 1,157.9 + 6.7 363.5 + 0.5 318.5 106.7 + 5.1 49.0 3.0 57.7 + 13.1 553.0 + 10.5 968.4 + 2.3 1,521.4 + 5.2 499.8 + 3.8
2010 1,232.2 + 6.4 417.7 + 14.9 295.0 89.6 16.0 48.6 0.8 41.0 28.9 677.5 + 22.5 972.4 + 0.4 1,649.9 + 8.4 428.5 14.3
Key indicators cash ow statement eur million/percent Cash ow from operating activity Change in % on prior year Cash ow from investing activity Change in % on prior year Cash ow from nancing activity Change in % on prior year Free cash ow Change in % on prior year
GfK_161
ADDITIONAL INFORMATION
5-year overview
2006 1.86 2.77 1.93 116.3 444.8 313.3 801.2 0.36 12.8 1.10 32.82 35,156
2007 1.98 2.88 3.33 92.8 367.5 251.0 397.8 0.45 16.1 1.64 27.50 35,682
2008 2.04 2.87 2.66 96.2 362.6 250.8 505.0 0.46 16.5 2.09 22.02 35,884
2009 1.42 3.04 2.38 90.4 538.6 314.2 583.4 0.30 10.8 1.24 24.13 35,947
2010 1.99 3.33 3.43 63.2 304.8 218.9 347.2 0.48 17.4 1.28 37.60 35,967
Adjusted earnings per share in eur1) Free cash ow per share in eur1) Net debt in relation to equity in % (gearing) ebit in % ebitda in % free cash ow in % Dividend per share in eur Total dividend in eur million Dividend yield in % Year-end share price in eur1) Weighted number of shares (in thousands)
1) Adjusted for capital increase 2) Adjusted by the effects of the settlement with ubm
ADDITIONAL INFORMATION
5-year overview
162_GfK
2006 755.2 + 21.0 235.4 + 12.3 117.0 + 21.7 269.6 + 6.3 457.7 290.3 + 12.7 167.4 + 31.6 64.4 + 22.4 257.3 23.7 280.9 + 35.7 39.6 + 0.4
2007 773.0 + 2.4 260.8 + 10.8 124.5 + 6.4 290.3 + 7.7 480.5 + 5.0
2008 782.8 + 1.3 304.1 + 16.6 130.1 + 4.5 316.1 + 8.9 487.2 + 1.4
2009 709.2 9.4 325.8 + 7.2 126.4 2.9 301.3 4.7 458.1 6.0
2010 785.6 + 10.8 370.8 + 13.8 133.1 + 5.3 340.8 + 13.1 483.0 + 5.4
50.8 + 28.4
74.8 + 47.3
86.9 + 16.1
106.5 + 22.5
7,903 + 5.1
9,070 + 14.8
9,692 + 6.9
10,058 + 3.8
10,546 + 4.9
GfK_163
ADDITIONAL INFORMATION
5-year overview
Cost of sales
Total of all types of operating costs which can be directly allocated to clients orders. These include, in particular, costs for external data procurement, costs for interviewees and interviewers.
E
ebit
Abbreviation for earnings before interest and taxes, calculated as > Operating income plus income from associates plus > Other income from participations.
ebitda
Earnings before interest, taxes, depreciation and amortization calculated as > ebit plus depreciation and amortization charges.
Equity
Equity comprises funds from the equity holders available to the company as capital contributions and/or deposits and retained profit as well as equity attributable to minority interests.
Affiliated companies
Companies which are controlled by the parent. As a rule, the parent holds the majority of the voting rights and capital of the company.
Current assets
The total of all short-term receivables, deferrals, funds, securities and inventories reported on the assets side of the balance sheet.
Equity ratio
Balance sheet equity in relation to total assets. The higher the indicator, the lower the level of indebtedness.
Assets
Resources that are at the disposal of the company as a result of events in the past and which should represent an economic benefit in future.
Current liabilities
The total of all short-term provisions, liabilities and deferrals reported on the liabilities side of the balance sheet.
Asset structure
The asset structure describes the relationship between non-current assets and current assets. It is determined on the basis of the ratio of noncurrent assets to current assets multiplied by 100.
F
Financial liabilities
Total assets less equity.
D
Deferred taxes
Tax assets or liabilities reported in the balance sheet to equalize the difference between the tax debt actually assessed and the commercial tax burden based on the financial reporting in accordance with > ifrs for the commercial balance sheet. The basis for determining deferred taxes is the difference between the value of the assets and liabilities reported in the balance sheet in accordance with ifrs and the local tax balance sheet.
Associated companies
> Minority participations in companies on whose business or company policy a decisive, but not a controlling, influence is exercised. Associated companies are in principle valued at equity.
G
Goodwill
Intangible business asset that represents the value of the intangible assets of a company at the time of its acquisition that are not separately capitalizable, such as the expertise of staff. This is calculated as the purchase price of the company less revalued equity on a pro rata basis.
B
Borrowings
Total assets less equity.
Dividend yield
C
Cash flow
Balance of funds inflow and outflow affecting payment.
H
Highlighted items
The costs that are not taken into account in > Adjusted operating income: expenses and income connected with restructuring and corporate transactions, write-ups and amortization on disclosed hidden reserves as part of the purchase price allocation, share-based payments and long-term incentives, other income and expenses, including, in particular, effects from the valuation of foreign exchange items on the reporting date.
ADDITIONAL INFORMATION
Glossaries
164_GfK
I
ias
The International Accounting Standards (ias) were developed and published by the iasc from 1973 to 2000. Unless specific standards have been revoked, they are still valid in full today. Since the reworking of ias 1 in 2003, the old ias have been collectively referred to as ifrs. Any existing standards are developed further as ias and all new standards are known as > ifrs.
N
Net debt
Liquid funds and securities less pension liabilities and financial liabilities.
P
Purchase price allocation
Allocation of the purchase price when companies are acquired to assets and liabilities not previously reported or not in such amounts.
Non-current assets
Assets that benefit business operations in the longer term. In addition to intangible assets, tangible assets and investments, these include deferred tax assets and other non-current receivables and deferrals.
R
roce
Abbreviation of return on capital employed. The adjusted ebit is divided by the average invested capital. The adjusted ebit is obtained by adjusting the > ebit for the currency result and expenditure on the stock option plan and share-based payments, as well as one-off effects. To calculate the average invested capital, the total assets figure is adjusted by non interest-bearing liabilities.
ifrs
The International Financial Reporting Standards (ifrs) are accounting principles developed and published by the iasb. In addition to the actual ifrs, the > ias that are still valid and the interpretations of the ifric and sic are grouped under the ifrs.
Non-current liabilities
Total of all long-term provisions, liabilities, deferred tax liabilities and other deferrals reported on the liabilities side of the balance sheet.
Impairment
Write-down of assets in addition to scheduled amortization/depreciation, or in place of scheduled amortization/depreciation in the case of intangible assets with an indefinite useful life. Impairment tests are used to establish whether the carrying value of assets is higher than the recoverable amount for the asset. The asset is written down to the recoverable value as necessary.
O
Operating income
Gross income from sales less > Selling and general administrative expenses plus > Other operating income less > Other operating expenses.
S
Selling and general administrative expenses
Operating costs, not directly aligned to individual client orders, such as general marketing or accounting measures.
Income
> Adjusted operating income.
Sector
GfK manages its business via the three sectors Custom Research, Retail and Technology and Media. The three sectors emerged from the five divisions Custom Research, Retail and Technology, Consumer Tracking, Media and HealthCare, which existed until the end of 2007.
M
Majority participations
> Affiliated companies.
Margin
A margin represents the relationship of an indicator (> Income, > ebit, > ebitda, etc.) to sales.
Income from > Affiliated companies not included in the scope of consolidation and > Other participations as well as expenses and income from write-ups or write-downs of book values of investments plus gains/losses from the disposal of participations.
T
Tax ratio
Tax on income from operating activity in relation to > Income from ongoing business activity.
Minority participations
Generic term for > Associated companies and > Other participations. The participation quota is below 50 %.
Other participations
Companies in which a participation is held but on whose business policy no decisive influence is exercised. The participation quota is below 20%.
A
Ad hoc research
Empirical research carried out on a one-off basis and relating to a specific question, which is used as a resource for marketing decision-making. > Custom Research.
D
Deep Packet Inspection (dpi)
Approach which monitors and filters data packages. Applied in the > Retail and Technology sector as part of the > GfK nis tool for analyzing the internet surfing behavior of mobile phone users.
F
5 Star Incentive Program
Part of the remuneration system for the GfK Groups management. The amount of these partial remuneration payments varies depending on the share price trend and the key figures in the consolidated accounts.
Appreciation panel
Evaluation panel for tv, radio and the internet.
Dialogatore
Tool developed by GfK Eurisko, Italy, which makes it possible to survey panel participants via gprs in real time. The device is equipped with a touchscreen, camera, scanner, microphone, loudspeaker and straightforward user interface.
Face-to-face interview
Direct interview, conducted orally. Respondents do not see the questionnaire, but are asked the relevant questions by the interviewer.
C
Central and Eastern Europe
Region of the GfK Group.
Dialogic introspection
Method in which participants engage with the topic or stimulus for far longer and more intensively than is the case with a traditional > Group discussion. Participants observe their own reactions and feelings, and subsequently note these down without being questioned or influenced. This process produces in-depth, undistorted and diverse insights into the experiences of consumers.
Fact-based consultancy
Strategic client consulting based on figures. One of the five aims of GfKs corporate strategy.
Focus group
A focus group comprises a number of people with common interests or other shared characteristics which are relevant for the research area. The test subjects, who have never previously met, discuss a particular topic under the supervision of a moderator.
Conjoint analysis
Multivariate analysis method used to determine complex patterns of consumer preference.
Consumer electronics
Also known as brown goods, which comprise products such as tv sets, dvd players, games consoles and mp3 players. > Retail and Technology.
E
Economic expectations
Indicator of the > GfK Consumer Climate. This index is based on the following question to consumers: How do you think the general economic situation will develop in the next twelve months? (improve stagnate deteriorate). > Propensity to buy, > Income expectations.
Fundamental research
Market research is based on the findings of many different sciences, including psychology, sociology and statistics. Fundamental research reviews those findings and establishes by independent investigation whether and under which circumstances these findings can be applied in market research.
Consumer panel
> Sample of households which provide regular information on their purchases. > Panel.
Consumer tracking
Survey of consumer households and individuals which is repeated on a regular basis. > Household panel, > Panel, > Tracking.
esomar
World organization for market research.
G
Germany
Region of the GfK Group.
Content analysis
Content analysis is a fundamental component of > Qualitative market research. Using a variety of techniques, written content from a qualitative survey is analyzed to determine its meaning.
Cross-media campaign
Integrated, intermedia advertising campaign.
Custom Research
Glossaries
ADDITIONAL INFORMATION
166_GfK
GfK TechTest
GfK instrument for comparing new concepts or ideas with similar concepts for existing products prior to product development and analyzing the planned products chances of success.
GfK Ceres
Tool that allows GfK to analyze the online information exchange between consumers about different brands.
GfK ExposureEffects.dx
GfK tool that allows clients to evaluate online campaigns and compare their current exposure within a target group with the media plan.
GfK MarketObsurvey.dx
Tool which enables GfK to analyze the online behavior of specific target groups by combining both qualitative and quantitative data derived from observation and surveys.
Group discussion
A group of six to twelve participants discusses a particular topic under the supervision of one or more moderators. The objective is to collate information on collective attitudes, opinions and judgments. If possible, the moderators should direct the conversation so that all participants are given the opportunity to voice their opinions. The group discussion allows the process of forming opinions to be observed and uses the creative potential of respondents. This provides a wellfounded insight into the psychological processes through which consumers perceive and evaluate product concepts and advertising measures. The discussions are recorded on tape or video, or by a secretary, and evaluated using > Content analysis, for example. > Focus group.
GfK SiteObsurvey.dx
GfK tool that combines the monitoring of natural website surfing behavior with targeted satisfaction surveys in order to analyze the strengths and weaknesses of an online presence.
GfK StarTrack
SysTem to Analyze and Report on TRACKing data. it platform used to produce and evaluate data in the > Retail and Technology sector.
GfK_167
ADDITIONAL INFORMATION
Glossaries
H
Household panel
Representative sample of households which report regularly on their purchases.
M
Market segmentation
Division of an overall market into sub-markets using different categories. Segmentation can be by product type, price class, geographic demography or psychological and socio-economic lifestyle features and value categories of consumers.
P
Panel
A survey of individuals, households, companies etc. to obtain data on a single subject at regular intervals over a longer period, using the same > Sample and carried out using the same methods each time. > Consumer tracking, > Household panel, > tv panel, > Tracking.
I
Income expectations
Indicator of the > GfK Consumer Climate. This index is based on the following question to consumers: How do you think the financial situation of your household will develop in the next twelve months? (improve stagnate deteriorate). > Economic expectations, > Propensity to buy.
Media
Media is one of GfKs sectors. It provides information services on the reach, intensity and nature of media usage and acceptance. > tv audience research, > tv panel, > Media research, > Reach research.
Potential data
Detailed market data, for example GfK Purchasing Power, which incorporates all municipalities and postcode areas of Germany. The data provides a regional evaluation of sales potential and localization of target groups.
MediaWatch
An electronic metering device incorporated into a wristwatch, used to measure consumption of various forms of media. > Media, > Media research, > Reach research.
Propensity to buy
Indicator of the > GfK Consumer Climate. Consumers inclination to make major purchases in the foreseeable future. The propensity to buy is one of the indicators used in the GfK Consumer Climate study, and is based on the following question to consumers: Do you think that it is advisable to make major purchases at the moment? > Economic expectations, > Income expectations.
K
kes
Knowledge Exchange Solution. GfK initiative on global knowledge sharing between employees.
Media research
Systematic, empirical research used as a basis for decision making by media companies and their advertising clients. > Media, > tv audience research, > Reach, > Reach research.
L
Latin America
Region of the GfK Group.
N
North America
Region of the GfK Group.
Q
Qualitative market research
Surveys conducted using exploratory, unstructured conversational interview and observation techniques and evaluated interpretatively.
O
Online research
Surveying of individuals and other survey units via the internet.
Surveys conducted using standardized interview and observation techniques and analyzed using statistical methods and it platforms.
ADDITIONAL INFORMATION
Glossaries
168_GfK
R
Radio research
Monitoring the listening habits of radio audiences. > Media, > MediaWatch.
T
Test market
Largely self-contained sub-market, in which a new product is tested in a reality-based situation, e.g. a superstore specifically equipped for this purpose or in a region that is representative of a whole country. GfK offers test markets in Germany and France.
U
Universal Meter System (ums)
Media measuring instrument that combines different measuring technologies in a central instrument and records all electronic types of media consumption.
Reach
The percentage of the total population or a specific target group reached by a medium. A central concept in media planning and > Media research. > tv panel, > Reach research.
Reach research
The continuous recording of media usage. Part of > Media research. > Media, > Reach.
W
Western Europe/Middle East/Africa
Region of the GfK Group.
Tracking
Surveys of individuals, households and companies, repeated at regular intervals and using the same interview method each time. Unlike a > Panel, the data is not necessarily collected from the same sources each time, but the structure of the sample is the same in each case. > Sample, > Consumer tracking.
Retail panel/research
Regular surveying of sales, product categories and products via a representative sample of different types of retail outlet and sales channels. > Retail and Technology, > Tracking.
tv audience research
tv audience research is used to determine audience share. > Media, > Media research, > Reach, > tv panel.
S
Sample
The observation data and/or survey units which are selected from all of the units and included in a specific survey. > Panel.
tv panel
A representative group of households whose tv viewing is continuously recorded via tv meters and used as a basis for determining audience share and ratings. > tv audience research, > Media, > Panel, > Reach.
Segmentation
> Market segmentation.
Single-source approach
Method that allows questions on various topic areas to be answered, e.g. information on purchase behavior and media consumption, in one > Panel. > GfK Media Efficiency Panel.
Storyboard
Illustrative visualization of a concept or idea.
Syndicated business
Market or market player surveys that are not necessarily commissioned by a client or tailored to suit client requirements, and which are offered on the market without client-specific adaptation. Syndicated surveys can be carried out on a oneoff or repeated basis, without the need to conform to the strict limitations of a panel.
Glossaries
forward > > GfK_169 ADDITIONAL INFORMATION
Adimark
Adimark s.a., Providencia, Santiago, Chile Adimark Investigaciones de Mercado Ltda., Providencia, Santiago, Chile Server s.a., Providencia, Santiago, Chile GeoAdimark s.a., Providencia, Santiago, Chile Collect Investigaciones de Mercado s.a., Providencia, Santiago, Chile
GfK iss
GfK se, GfK Integrated Software Services division, Nuremberg, Germany
GfK Asia
GfK Asia Pte Ltd., Singapore, Singapore
GfK Kynetec
GfK Kynetec Group Limited, St Peter Port, Guernsey, uk GfK Kynetec Limited, Bristol, uk Doane Marketing Research, Inc., Saint Louis, Missouri, usa GfK Kynetec Poland, Pozna, Poland GfK Animal Healthcare Limited, West Byfleet, Surrey, uk GfK Kynetec France sas, Saint Aubin, France
GfK Austria
GfK Austria GmbH, Vienna, Austria
GfK Switzerland
GfK Switzerland ag, Hergiswil, Switzerland
G-Plus
Gplus GmbH, Nuremberg, Germany
Intercampus
intercampus-recolha, tratamento e distribuio de informao, Limitada, Lisbon, Portugal
GfK Eurisko
GfK Eurisko S.r.l., Milan, Italy
List of GfK companies
Intomart GfK
Intomart GfK b.v., Hilversum, Netherlands
GfK Fernsehforschung
GfK se, Fernsehforschung division, Nuremberg, Germany
nurago
nurago GmbH, Hanover, Germany
GfK GeoMarketing
GfK GeoMarketing GmbH, Bruchsal, Germany
GfK Mode
GfK Mode Pvt Ltd, Kolkata, India
Shopping Brasil
Shopping Brasil Tecnologia da Informao Ltda, Porto Alegre, Brazil
ADDITIONAL INFORMATION
GfK mri
GfK Mediamark Research & Intelligence, llc, New York, New York, usa
SirValUse
SirValUse Consulting GmbH, Hamburg, Germany
GfK isl
GFK isl sas, Issy les Moulineaux, France
GfK nop
GfK nop Limited, London, uk
170_GfK
March 31, 2011 Accounts press conference, Nuremberg March 31, 2011 Analysts conference, Frankfurt am Main May 16, 2011 Interim quarterly report as at March 31 May 26, 2011 Annual General Meeting, Frth August 15, 2011 Interim half-year report as at June 301) November 14, 2011 Interim nine-month report as at September 301)
1)
March 12, 2012 Accounts press conference, Nuremberg May 15, 2012 Annual General Meeting, Frth May 15, 2012 Interim quarterly report as at March 311) August 14, 2012 Interim half-year report as at June 301) November 14, 2012 Interim nine-month report as at September 301)
Index
111ff. Accounting and valuation methods 75f., 80f., 82ff. Acquisitions 74 Adjusted operating income see Income 3, 11, 72, 80f., Asia and the Pacific 82, 84, 86 114, 161 Assets 114 intangible 111, 119, 164 Associated companies 106 Balance sheet Notes to the accounts 161 Total assets 12, 75, 80 biss Cash flow 107, 161 from financing activity IV, 71, 107, 161 from ongoing business activity 107, 161 from investment activity 107, 118, 142 Cash flow statement 11, 80f., 82f., 163 Central and Eastern Europe Consolidated 103ff. financial statements IV, 76, 104f., 107 income 119 Consolidation 166 Consumer Tracking 93 Corporate Communications and Marketing 18ff. Corporate Governance 114, 125 Corporate value/goodwill 34, 54, 69f., 82, 94f., Custom Research 163, 166 107,121 Deferred taxes IV, 30, 162 Dividend 30 Dividend yield 75, 104, 160, 164 ebit IV, 75, 160, 164 ebitda III, IV, 12, 91, 163 Employees 93 Environment 106, 118f., 129, 169 Equity 77, 164 ratio 115, 133 Financial instruments 118 Financial liabilities 113 5 Star Incentive 77, 162 Gearing 72, 60f., 82f., 163 Germany 91f. Human Resources Income IV, 104, 113, 160 from ongoing business activity 104, 107, 123, 162 per share see Shares operating see Operating income
75, 112, 160, 162 Income from participations 165 Other 104, 111 Income statement 113 Income tax 77, 161 Investments 11, 73, 80ff., 163 Latin America 126 Leasing 125, 161 Liabilities 10ff., 14f., 147, 149 Management Board IV, 79f.,160 Margin 44, 79, 81, 89, Media 163, 168 77, 162 Net debt 11, 73, 80ff., 163 North America IV, 75, 112, 160 Operating income see Income 94ff.. Opportunities and risks 92 Organization and administration Profit for the year see Consolidated income 144 Proforma statements (ifrs 3) 118, 130f. Provisions 88 Purchasing 86f. Research and Development 60, 79ff., 89, 163, Retail and Technology 169 162 roce IV, 73, 79, 111, 160 Sales 143f. Segment reporting 150ff. Shareholdings 27, 104 Shares IV, 31, 74, 107 Income 123, 162 31 Key indicators 27 Share price performance 29 Shareholder structure Staff see Employees 108f. Statement of changes in equity 4ff., 147, 148 Supervisory Board 115, 126 Tangible assets Taxes see Income tax IV, 160 Tax ratio 81 tv research 73, 80f., 82ff., 163 Western Europe, the Middle East and Africa Yield see Margin
VI
ACKNOWLEDGEMENTS
The present Annual Report is available in German and English. Both versions and supplementary press information are available for download from www.gfk.com. Annual reports, interim reports and press information are available from: Corporate Communications public.relations@gfk.com investor.relations@gfk.com Contacts Bernhard Wolf Global Head of Corporate Communications Tel. + 49 911 395 2012 Fax + 49 911 395 4075 bernhard.wolf@gfk.com Marion Eisenbltter Public Relations Tel. + 49 911 395 2645 Fax + 49 911 395 4041 marion.eisenblaetter@gfk.com Publisher GfK se Nordwestring 101 90419 Nuremberg, Germany http://www.gfk.com Editorial support services Abacus Presse & pr, Jo Clahsen Translation arb limited, London Design Scheufele Hesse Eigler Kommunikationsagentur GmbH, Frankfurt am Main, Germany Photography Gabo: pages 10, 14 15 Andreas Chudowski: pages 4, 34, 37, 39, 4041, 44, 46, 47, 48, 51, 52, 53, 54, 56, 58, 59, 60, 62, 65, 66, 68, 69
Gabo Gabo is considered to be one of the most important photographers in Germany today. She mainly photographs well-known personalities from the worlds of politics, sport, film and tv. Born in Hamburg, she first became interested in photography as a teenager, and initially worked as a photographic model for ten years before moving behind the camera in 1985. In addition to her work with both German and international personalities and in the fields of fashion and advertising, she is also a film director.
Andreas Chudowski Andreas Chudowski was born on the Baltic coast in 1983. After graduating from high school, he first moved to Dusseldorf and later to Berlin, learning the art of photography as an assistant in both cities. Several years later he took the plunge and began working as a freelancer, and has since achieved success as a photographer in the fields of portraits/people and advertising. In his freelance work he often focuses on topics and people relating to the internet, its increased significance for society and the progress with which it is associated.
VII
Gf k . G row th f ro m k n owle dg e